EXHIBIT 3.1
________________________________________________________________________________
Certificate of Incorporation
of
Triad Hospitals, Inc.
______________
DELAWARE
________________________________________________________________________________
Certificate of Incorporation
of
Triad Hospitals, Inc.
FIRST: The name of the Corporation is Triad Hospitals, Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have the authority to issue is One Hundred Million
(100,000,000) shares, divided into two classes of which Ten Million (10,000,000)
shares, par value $.01 per share, shall be designated Preferred Stock, and
Ninety Million (90,000,000) shares, par value $.01 per share, shall be
designated Common Stock.
A. Preferred Stock
1. Issuance. The Board of Directors is expressly authorized, subject
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to limitations prescribed by law, to provide for the issuance of shares of
Preferred Stock in one or more series, to establish the number of shares to
be included in each such series, and to fix the designations, powers,
preferences, and rights of the shares of each such series, and any
qualifications, limitations or restrictions thereof. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative
vote of the holders of at least 80% of the voting power of all of the then
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class,
without a separate vote of the holders of the Preferred Stock, unless a
vote of any such holders is required pursuant to the terms of any such
series of Preferred Stock.
2. Series A Junior Participating Preferred Stock.
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Section 1. Designation and Amount. Ninety Thousand (90,000)
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shares of the Preferred Stock of the Corporation shall be designated
as "Series A Junior Participating Preferred Stock," par value $.01 per
share (the "Series A Preferred Stock"). The number of shares of such
series of Preferred Stock may be increased or decreased by resolution
of the Board of Directors; provided, however, that no decrease shall
reduce the number of shares of such series of Preferred Stock to a
number less than the number of shares then outstanding plus the number
of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants
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or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
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(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends,
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 first day of March, June, September
and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $10 or
(b) subject to the provision for adjustment hereinafter set forth,
1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on
the Common Stock 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 declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount 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 of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this
Section 2 immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided, however, 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 $10 per
share on the Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
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(C) 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,
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.
Section 3. Voting Rights. The holders of shares of Series A
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Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the 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.
(B) Except as otherwise provided herein, in a resolution or
resolutions adopted by the Board of Directors providing for the
issuance of a series of Preferred Stock or any similar stock (a
"Certificate of Designation"), 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 entitled to vote generally
in the election of directors shall vote together as a single class on
all matters submitted to a vote of stockholders of the Corporation.
(C) Except as otherwise provided herein, or by law, holders of
Series A Preferred Stock shall have no special voting rights and their
consent shall not be
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required (except to the extent they are entitled to vote with holders
of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
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(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 of paragraph A of this Article Fourth 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:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends, 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;
(iii) 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) to the
Series A Preferred Stock, provided, however, 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 (both as to dividends and upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) redeem or 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.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
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Stock purchased 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
reissued as part of a new series of Preferred Stock
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subject to the conditions and restrictions on issuance set forth
herein or in any Certificate of Designation providing for the issuance
of a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
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liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) 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 $1,000 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, however, 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 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to
the holders of 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 distributions made ratably on the
Series A Preferred Stock and all 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 declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) 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.
Section 7. Consolidation, Merger, etc. In case the Corporation
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shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 1,000 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
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in
each such case the amount set forth in the preceding sentence with
respect to the
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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.
Section 8. No Redemption. The shares of Series A Preferred
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Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with
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respect to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Corporation's Preferred
Stock.
Section 10. Amendment. This Certificate of Incorporation shall
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not be amended in any manner which 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 at least two-thirds of the outstanding shares of Series
A Preferred Stock, voting together as a single class.
B. Common Stock.
Section 1. Dividends. Subject to the preferential rights, if
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any, of the holders of any series of Preferred Stock then outstanding,
the holders of the Common Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally
available for the purpose, dividends payable either in cash, in
property or in shares of Common Stock or other securities of the
Corporation.
Section 2. Voting Rights. Subject to the rights, if any, of the
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holders of any series of Preferred Stock then outstanding, and except
as otherwise required by law, the holders of the Common Stock shall
exclusively possess all voting power, and at every annual or special
meeting of stockholders of the Corporation, each holder of Common
Stock shall be entitled to one vote, in person or by proxy, for each
share of Common Stock standing in such holder's name on the books of
the Corporation.
Section 3. Liquidation, Dissolution or Winding Up. Upon any
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voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, the holders of the Common Stock shall be
entitled to share ratably in all assets of the Corporation available
for distribution to its stockholders, subject to the preferential
rights, if any, of the holders of any series of Preferred Stock then
outstanding.
FIFTH: The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. The Board of Directors may
exercise all such authority and powers of the Corporation and do all such lawful
acts and things as are not by statute or this Certificate of Incorporation
directed or required to be exercised or done by the stockholders.
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A. Number of Directors. The number of directors of the Corporation
(exclusive of directors to be elected by the holders of one or more series
of the Preferred Stock of the Corporation which may be outstanding, voting
separately as a series or class) shall be fixed from time to time by action
of not less than a majority of the members of the Board of Directors then
in office, but in no event shall such number of directors of the
Corporation be less than three nor more than fifteen.
B. Classes. The directors, other than those who may be elected by
the holders of any series of Preferred Stock under specified circumstances,
shall be divided with respect to the time for which they severally hold
office, into three classes, as nearly equal in number as reasonably
possible, with the term of office of the first class to expire at the 2000
annual meeting of stockholders, the term of office of the second class to
expire at the 2001 annual meeting of stockholders and the term of office of
the third class to expire at the 2002 annual meeting of stockholders. At
each annual meeting of stockholders, commencing with the 2000 annual
meeting, (i) directors shall be elected to succeed those directors whose
terms expire for a term of office to expire at the third succeeding annual
meeting of stockholders after their election, and (ii) if authorized by a
resolution of the Board of Directors, directors may be elected to fill any
vacancy in the Board of Directors, regardless of how such vacancy was
created. Directors need not be stockholders. All directors shall hold
office until the expiration of the term for which elected and until their
successors are elected, except in the case of the death, resignation,
disqualification or removal of any director.
C. Stockholder Nomination of Director Candidates and Introduction of
Business. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting
of the stockholders of the Corporation shall be given in the manner
provided in the By-Laws of the Corporation.
D. Vacancies. Subject to the rights, if any, of the holders of any
series of Preferred Stock then outstanding, and unless the Board of
Directors otherwise determines, newly created directorships resulting from
any increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation, disqualification or
removal may be filled only by a majority vote of the directors then in
office, though less than a quorum, and directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which
the term of office of the class to which they have been elected expires or,
in the case of newly created directorships, shall hold office until such
time as determined by the directors electing such new director (in a manner
consistent with paragraph B of this Article Fifth). No decrease in the
number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.
E. Removal. Subject to the rights, if any, of the holders of any
series of Preferred Stock then outstanding, any director, or the entire
Board of Directors, may be removed from office at any time, but only for
cause and only by the affirmative vote of the holders of at least 80% of
the voting power of all of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors,
voting together as a single class.
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SIXTH: Subject to the rights, if any, of the holders of any series of
Preferred Stock then outstanding, no action required to be taken or which may be
taken at any annual or special meeting of the stockholders of the Corporation
may be taken without a meeting, and the power of the stockholders to consent in
writing, without a meeting, to the taking of any action, including (without
limitation) the power of stockholders to adopt or amend the By-Laws of the
Corporation by written consent, is hereby specifically denied.
SEVENTH: Subject to the rights, if any, of the holders of any series of
Preferred Stock then outstanding, special meetings of the stockholders of the
Corporation may be called only by (a) the Chairman of the Board of Directors, if
one shall have been elected or (b) the Chief Executive Officer of the
Corporation, and, in addition, a special meeting shall be called by the Chairman
of the Board or the Chief Executive Officer at the request in writing of a
majority of the Board of Directors. The ability of the stockholders to call a
special meeting is hereby specifically denied.
EIGHTH: In furtherance and not in limitation of the powers conferred upon
it by the laws of the State of Delaware, the Board of Directors shall have the
power to adopt, amend, alter or repeal the By-Laws of the Corporation. The
Corporation's By-Laws may also be adopted, amended, altered or repealed by the
stockholders at any annual or special meeting by the affirmative vote of the
holders of at least 80% of the voting power of all shares of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class.
NINTH: Elections of directors need not be by written ballot unless the By-
Laws of the Corporation shall otherwise provide.
TENTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing shall not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law is hereafter amended to permit
further elimination or limitation of the personal liability of directors, then
the liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Delaware General Corporation Law as so
amended. Any repeal or modification of this Article Tenth shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
ELEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them or between this Corporation
and its stockholders or any class of them, any court of equitable jurisdiction
within the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
Section 291 of the Delaware General Corporation Law or on
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the application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of the
Delaware General Corporation Law, order a meeting of the creditors or class of
creditors, or of the stockholders or class of stockholders of this Corporation,
as the case may be, to be summoned in such manner as the said court directs. If
a majority in number representing three-fourths in value of the creditors or
class of creditors, or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which said application has been made, be
binding on all the creditors or class of creditors, or on all of the
stockholders or class of stockholders, of this Corporation, as the case maybe,
and also on this Corporation.
TWELFTH:
A. As used in this Article Twelfth, the following terms shall have
the meanings set forth below:
"Business Combination" shall mean (a) any merger or consolidation of
the Corporation or a Subsidiary with a Related Person, (b) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition other than in the
ordinary course of business to or with a Related Person of any assets of
the Corporation or a Subsidiary having an aggregate fair market value of
$25,000,000 or more, (c) the issuance or transfer by the Corporation of any
shares of Voting Stock or securities convertible into or exercisable for
such shares (other than by way of pro rata distribution to all
stockholders) to a Related Person, (d) any recapitalization, merger or
consolidation that would have the effect of increasing the voting power of
a Related Person, (e) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation or a Subsidiary proposed,
directly or indirectly, by or on behalf of a Related Person, (f) any merger
or consolidation of the Corporation with another Person proposed, directly
or indirectly, by or on behalf of a Related Person unless the entity
surviving or resulting from such merger or consolidation has a provision in
its certificate or articles of incorporation, charter or similar governing
instrument which is substantially identical to this Article Twelfth or (g)
any agreement, contract or other arrangement or understanding providing,
directly or indirectly, for any of the transactions described in clauses
(a) through (f) above.
"Related Person" shall mean any individual, partnership, corporation,
trust or other Person which, together with its "affiliates" and
"associates," as defined in Rule 12b-2 under the Exchange Act as in effect
on April 23, 1999, and together with any other individual, partnership,
corporation, trust or other Person with which it or they have any
agreement, contract or other arrangement or understanding with respect to
acquiring, holding, voting or disposing of Voting Stock, "beneficially
owns" (within the meaning of Rule 13d-3 under the Exchange Act on said
date) an aggregate of 10% or more of the outstanding Voting Stock. A
Related Person, its affiliates and associates and all such other
individuals, partnerships, corporations and other Persons with whom it or
they have any such agreement, contract or other arrangement or
understanding, shall be deemed a single Related Person for purposes of this
Article Twelfth; provided, however, that the members of the Board of
Directors of the Corporation shall not be deemed to be
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associates or otherwise to constitute a Related Person solely by reason of
their board membership. A person who is a Related Person as of (i) the time
any definitive agreement relating to a Business Combination is entered
into, (ii) the record date for the determination of stockholders entitled
to notice of and to vote on a Business Combination or (iii) immediately
prior to the consummation of a Business Combination, shall be deemed a
Related Person for purposes of this Article Twelfth.
"Continuing Director" shall mean any member of the Board of Directors
of the Corporation who is not an "affiliate" or "associate" of the Related
Person and was a member of the Board of Directors prior to the time that
such Related Person became a Related Person, and any successor of a
Continuing Director who is unaffiliated with such Related Person and is
recommended to succeed a Continuing Director by a majority of the
Continuing Directors.
"Person" shall mean any individual, firm, corporation or other entity.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation in which such Person, directly or indirectly, owns or controls,
at the time of determination, at least a majority in interest of the
outstanding voting stock (having by the terms thereof voting power under
ordinary circumstances to elect a majority of the directors of such
corporation, irrespective of whether or not stock of any other class or
classes of such corporation shall have or might have voting power by reason
of the occurrence of a contingency); or (ii) any non-corporate entity in
which such Person either (a) directly or indirectly, at the time of
determination, has at least a majority ownership interest, or (b) at the
date of determination, is a general partner or an entity performing similar
functions (for example, manager of a limited liability company or a trustee
of a trust).
"Voting Stock" shall mean any shares of the Corporation entitled to
vote generally in the election of directors.
"Entire Board of Directors" shall mean the total number of directors
which the Corporation would have if there were no vacancies.
"Market Value" shall mean the average of the high- and low-quoted
sales price on the date in question (or, if there is no reported sale on
such date, on the last preceding date on which any reported sale occurred)
of a share on the Composite Tape for the New York Stock Exchange Listed
Stocks, or, if the shares are not listed or admitted to trading on such
exchange, on the principal United States securities exchange registered
under the Exchange Act on which the shares are listed or admitted to
trading, or, if the shares are not listed or admitted to trading on any
such exchange, the mean between the closing high-bid and low-asked
quotations with respect to a share on such date as quoted on the National
Association of Securities Dealers Automated Quotations System, or similar
system then in use, or, if no such quotations are available, the fair
market value on such date of a share as at least 66 2/3% of the Continuing
Directors shall determine.
B. In addition to any other vote required by this Certificate of
Incorporation or the Delaware General Corporation Law, the affirmative vote
of the holders of not less
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than 85% of the outstanding Voting Stock held by stockholders other than a
Related Person by or with whom or on whose behalf, directly or indirectly,
a Business Combination is proposed, voting as a single class, shall be
required for the approval or authorization of such Business Combination;
provided, however, that the 85% voting requirement shall not be applicable
and such Business Combination may be approved by the vote required by law
or by any other provision of this Certificate of Incorporation if either:
1. The Business Combination is approved by the Board of Directors of
the Corporation by the affirmative vote of at least 66 2/3% of the
Continuing Directors, or
2. All of the following conditions are satisfied:
(A) The aggregate amount of cash and the fair market value of
the property, securities or other consideration to be received per
share of capital stock of the Corporation in the Business Combination
by the holders of capital stock of the Corporation, other than the
Related Person involved in the Business Combination, shall not be less
than the highest of (i) the highest per share price (including
brokerage commissions, soliciting dealers' fees, and dealer-management
compensation, and with appropriate adjustments for recapitalizations,
stock splits, stock dividends and like transactions and distributions)
paid by such Related Person in acquiring any of its holdings of such
class or series of capital stock, (ii) the highest per share Market
Value of such class or series of capital stock within the twelve-month
period immediately preceding the date the proposal for such Business
Combination was first publicly announced or (iii) the book value per
share of such class or series of capital stock, determined in
accordance with generally accepted accounting principles, as of the
last day of the month immediately preceding the date the proposal for
such Business Combination was first publicly announced;
(B) The consideration to be received in such Business
Combination by holders of capital stock other than the Related Person
involved shall, except to the extent that a stockholder agrees
otherwise as to all or part of the shares which he or she owns, be in
the same form and of the same kind as the consideration paid by the
Related Person in acquiring capital stock already owned by it,
provided, however, that if the Related Person has paid for capital
stock with varying forms of consideration, the form of consideration
for shares of capital stock acquired in the Business Combination by
the Related Person shall either be cash or the form used to acquire
the largest number of shares of capital stock previously acquired by
it; and
(C) A proxy statement responsive to the requirements of the
Exchange Act and regulations promulgated thereunder, whether or not
the Corporation is then subject to such requirements, shall be mailed
to the stockholders of the Corporation for the purpose of soliciting
stockholder approval of such Business Combination and shall contain at
the front thereof, in a prominent place, (i) any recommendations as to
the advisability (or inadvisability) of the Business Combination which
the Continuing Directors may choose to state and (ii) the
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opinion of a reputable investment banking firm selected by the
Continuing Directors as to the fairness of the terms of such Business
Combination, from a financial point of view, to the stockholders
(other than the Related Person) of the Corporation.
C. A Related Person shall be deemed for purposes of this Article
Twelfth to have acquired a share of the Corporation at the time when such
Related Person became the beneficial owner thereof (as such term is defined
in paragraph A of this Article Twelfth). With respect to shares owned by
affiliates, associates and other Persons whose ownership is attributed to a
Related Person, if the price paid by such Related Person for such shares is
not determinable, the price so paid shall be deemed to be the higher of (i)
the price paid upon acquisition thereof by the affiliate, associate or
other Person or (ii) the Market Value of the shares in question at the time
when the Related Person became the beneficial owner thereof.
For purposes of this Article Twelfth, in the event of a Business
Combination upon consummation of which the Corporation would be the
surviving corporation or would continue to exist (unless it is provided,
contemplated or intended that as part of such Business Combination a plan
of liquidation or dissolution of the Corporation will be effected), the
term "other consideration to be received" in paragraph B.2.(A) of this
Article Twelfth shall include (without limitation) common stock or other
capital stock of the Corporation retained by stockholders of the
Corporation (other than Related Persons who are parties to such Business
Combination).
Nothing contained in this Article Twelfth shall be construed to
relieve any Related Person from any fiduciary obligation imposed by law.
D. Notwithstanding any other provision of this Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that a lesser percentage may be permitted by law), any amendment,
addition, alteration, change or repeal of this Article Twelfth, or any
other amendment of this Certificate of Incorporation or the By-Laws of the
Corporation inconsistent with or modifying or permitting circumvention of
this Article Twelfth, must first be proposed by the Board of Directors of
the Corporation, upon the affirmative vote of at least 66 2/3% of the
directors then in office at a duly constituted meeting of the Board of
Directors called for such purpose, and thereafter approved by the
affirmative vote of the holders of not less than 85% of the then
outstanding Voting Stock held by stockholders other than a Related Person
by or with whom or on whose behalf, directly or indirectly, a Business
Combination is proposed, voting as a single class; provided, however, that
this paragraph D shall not apply to, and such 85% vote shall not be
required for, any such amendment, addition, alteration, change or repeal
recommended to stockholders of the Corporation by the affirmative vote of
not less than 66 2/3% of the Continuing Directors. For the purposes of this
paragraph D only, if at the time when any such amendment, addition,
alteration, change or repeal is under consideration there is no proposed
Business Combination, the term "Continuing Directors" shall mean the Entire
Board of Directors.
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THIRTEENTH: The Board of Directors, each committee of the Board of
Directors and each individual director, in discharging their respective duties
under applicable law and this Certificate of Incorporation and in determining
what they each believe to be in the best interests of the Corporation and its
stockholders, may consider the effects, both short-term and long-term, of any
action or proposed action taken or to be taken by the Corporation, the Board of
Directors or any committee of the Board of Directors on the interests of (i) the
employees, associates, associated physicians, distributors, patients or other
customers, suppliers or creditors of the Corporation and its subsidiaries and
(ii) the communities in which the Corporation and its subsidiaries own or lease
property or conduct business, all to the extent that the Board of Directors, any
committee of the Board of Directors or any individual director deems pertinent
under the circumstances (including the possibility that the interests of the
Corporation may best be served by the continued independence of the
Corporation); provided, however, that the provisions of this Article Thirteenth
shall not limit in any way the right of the Board of Directors to consider any
other lawful factors in making its determinations, including, without
limitation, the effects, both short-term and long-term, of any action or
proposed action on the Corporation or its stockholders directly; and provided
further, that this Article Thirteenth shall be deemed solely to grant
discretionary authority to the Board of Directors, each committee of the Board
of Directors and each individual director and shall not be deemed to provide to
any specific constituency any right to be considered.
FOURTEENTH: Each person who was or is made a party or is threatened to be
made a party to or is involved (including, without limitation, as a witness) in
an actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "Indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as such a director,
officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the full extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment), or by other applicable law as
then in effect, against all expense, liability and loss (including attorneys'
fees, judgments, fines, excise taxes under the Employee Retirement Income
Security Act of 1974, as amended from time to time ("ERISA"), penalties and
amounts to be paid in settlement) actually and reasonably incurred or suffered
by such Indemnitee in connection therewith.
A. Procedure. Any indemnification under this Article Fourteenth
(unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification
of the Indemnitee is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the Delaware General
Corporation Law, as the same exists or hereafter may be amended (but, in
the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said
law permitted the
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Corporation to provide prior to such amendment). Such determination shall
be made (a) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding (the "Disinterested Directors"), or (b) if such a quorum of
Disinterested Directors is not obtainable, or, even if obtainable, a quorum
of Disinterested Directors so directs, by independent legal counsel in a
written opinion, or (c) by the stockholders.
B. Advances For Expenses. Costs, charges and expenses (including
attorneys' fees) incurred by a director or officer of the Corporation in
defending a civil or criminal action, suit or proceeding shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director
or officer to repay all amounts so advanced in the event that it shall
ultimately be determined that such director or officer is not entitled to
be indemnified by the Corporation as authorized in this Article Fourteenth.
Such costs, charges and expenses incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the majority of the
Disinterested Directors deems appropriate. The majority of the
Disinterested Directors may, in the manner set forth above, and upon
approval of such Indemnitee, authorize the Corporation's counsel to
represent such person, in any action, suit or proceeding, whether or not
the Corporation is a party to such action, suit or proceeding.
C. Procedure for Indemnification. Any indemnification or advance of
costs, charges and expenses under this Article Fourteenth, shall be made
promptly, and in any event within 60 days upon the written request of the
Indemnitee. The right to indemnification or advances as granted by this
Article Fourteenth, shall be enforceable by the Indemnitee in any court of
competent jurisdiction, if the Corporation denies such request, in whole or
in part, or if no disposition thereof is made within 60 days. Such
Indemnitee's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in
any such action shall also be indemnified by the Corporation. It shall be a
defense to any such action (other than an action brought to enforce a claim
for the advance of costs, charges and expenses under this Article
Fourteenth, where the required undertaking, if any, has been received by
the Corporation) that the Indemnitee has not met the standard of conduct
set forth in the Delaware General Corporation Law, as the same exists or
hereafter may be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide
prior to such amendment), but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, its independent legal counsel and its stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the Indemnitee is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, as the same exists or hereafter may be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
that said law permitted the Corporation to provide prior to such
amendment), nor the fact that there has been an actual determination by the
Corporation (including its Board of Directors, its independent legal
counsel and its stockholders) that the
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Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the Indemnitee has not
met the applicable standard of conduct.
D. Other Rights; Continuation of Right to Indemnification. The
indemnification and advancement of expenses provided by this Article
Fourteenth shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advancement of expenses may be entitled
under any law, by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding office or while employed
by or acting as agent for the Corporation, and shall continue as to a
person who has ceased to be a director, officer, employee or agent, and
shall inure to the benefit of the estate, heirs, executors and
administrators of such person. All rights to indemnification under this
Article Fourteenth, shall be deemed to be a contract between the
Corporation and each director, officer, employee or agent of the
Corporation who serves or served in such capacity at any time while this
Article Fourteenth, is in effect. Any repeal or modification of this
Article Fourteenth, or any repeal or modification of relevant provisions of
the Delaware General Corporation Law or any other applicable laws shall not
in any way diminish any rights to indemnification of such director,
officer, employee or agent or the obligations of the Corporation arising
hereunder with respect to any action, suit or proceeding arising out of, or
relating to, any actions, transactions or facts occurring prior to the
final adoption of such modification or repeal. For the purposes of this
Article Fourteenth, references to "the Corporation" include all constituent
corporations absorbed in a consolidation or merger as well as the resulting
or surviving corporation, so that any person who is or was a director,
officer, employee or agent of such a constituent corporation or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall stand in the same position under
the provisions of this Article Fourteenth, with respect to the resulting or
surviving corporation, as he would if he or she had served the resulting or
surviving corporation in the same capacity.
E. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was or has agreed to
become a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise against any liability asserted against him or her and
incurred by him or her or on his or her behalf in any such capacity, or
arising out of his or her status as such, whether or not the Corporation
would have the power to indemnify him or her against such liability under
the provisions of this Article Fourteenth; provided, however, that such
insurance is available on acceptable terms, which determination shall be
made by a vote of a majority of the Board of Directors.
F. Savings Clause. If this Article Fourteenth, or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction,
then the Corporation shall nevertheless indemnify each person entitled to
indemnification under paragraph A of this Article Fourteenth, as to all
expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes, penalties and amounts to be paid in settlement)
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actually and reasonably incurred or suffered by such person and for which
indemnification is available to such person pursuant to this Article
Fourteenth, to the full extent permitted by any applicable portion of this
Article Fourteenth, that shall not have been invalidated and to the full
extent permitted by applicable law.
FIFTEENTH: In furtherance and not in limitation of the powers conferred by
law or in this Certificate of Incorporation, the Board of Directors (and any
committee of the Board of Directors) is expressly authorized, to the extent
permitted by law, to take such action or actions as the Board of Directors or
such committee may determine to be reasonably necessary or desirable to (A)
encourage any person to enter into negotiations with the Board of Directors and
management of the Corporation with respect to any transaction which may result
in a change in control of the Corporation which is proposed or initiated by such
person or (B) contest or oppose any such transaction which the Board of
Directors or such committee determines to be unfair, abusive or otherwise
undesirable with respect to the Corporation and its business, assets or
properties or the stockholders of the Corporation, including, without
limitation, the adoption of such plans or the issuance of such rights, options,
capital stock, notes, debentures or other evidences of indebtedness or other
securities of the Corporation, which rights, options, capital stock, notes,
debentures, evidences of indebtedness and other securities (i) may be
exchangeable for or convertible into cash or other securities on such terms and
conditions as may be determined by the Board of Directors or such committee and
(ii) may provide for the treatment of any holder or class of holders thereof
designated by the Board of Directors or any such committee in respect of the
terms, conditions, provisions and rights of such securities which is different
from, and unequal to, the terms, conditions, provisions and rights applicable to
all other holders thereof.
SIXTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, and to add
or adopt new provisions, in the manner now or hereafter prescribed by statute,
and all rights conferred upon stockholders herein are granted subject to this
reservation. In addition to any affirmative vote required by applicable law or
any other provision of this Certificate of Incorporation or specified in any
agreement, and in addition to any voting rights granted to or held by the
holders of any series of Preferred Stock, the affirmative vote of the holders of
not less than 80% of the voting power of all securities of the Corporation
entitled to vote generally in the election of directors shall be required to
amend, alter, change or repeal, or to add or adopt any provisions inconsistent
with, Articles Fifth, Sixth, Seventh, Eighth, Tenth, Eleventh, Thirteenth,
Fourteenth, Fifteenth and Sixteenth of this Certificate of Incorporation.
SEVENTEENTH: The name and mailing address of the incorporator is Donald P.
Fay, Triad Hospitals, Inc., 13455 Noel Road, 20th Floor, Dallas, Texas 75240.
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IN WITNESS WHEREOF, the undersigned incorporator hereby acknowledges
that the foregoing certificate of incorporation is his act and deed and that the
facts stated therein are true on this 27th day of April, 1999.
By: /s/ Donald P. Fay
---------------------------
Donald P. Fay
Incorporator
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