EXHIBIT 3.1
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
GRAY COMMUNICATIONS SYSTEMS, INC.
I.
The name of the corporation is Gray Communications Systems, Inc.
II.
Effective the date hereof, the Section entitled "PREFERRED STOCK" of
Article 4 of the Articles of Incorporation of Gray Communications Systems, Inc.
is hereby amended by adding the subsection entitled "SERIES C CONVERTIBLE
PREFERRED STOCK" as set forth in Exhibit A attached hereto.
III.
All other provisions of the Articles of Incorporation, including the
remaining sections of Article 4, shall remain in full force and effect.
IV.
This Amendment was duly adopted on March 14, 2002 by the Board of
Directors in accordance with the provisions of ss. 14-2-602(d) and ss.
14-2-1002(9) of the Georgia Business Corporation Code, and pursuant to said code
sections, shareholder action was not required.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be executed by its duly authorized officer on this the 15th day of
April, 2002.
GRAY COMMUNICATIONS SYSTEMS, INC.
/s/ James C. Ryan
--------------------------------------------------
Name: James C. Ryan
Title: Vice President and Chief Financial Officer
By: Neal H. Ray, Power of Attorney
Exhibit A
SERIES C CONVERTIBLE PREFERRED STOCK
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series C Convertible Preferred Stock" (the "SERIES C PREFERRED
STOCK"), and the number of shares constituting the Series C Preferred Stock
shall be 5,000 and if and to the extent further shares are needed in order to
pay dividends in shares of Series C Preferred Stock as provided for in Section 3
hereof, the Board of Directors of the Corporation (the "BOARD OF DIRECTORS" or
the "BOARD") will authorize additional shares of Series C Preferred Stock so
that at all times, so long as Series C Preferred Stock is outstanding, there
will be a sufficient number of Series C Preferred Stock authorized and reserved
to pay dividends as provided for in Section 3 hereof in shares of Series C
Preferred Stock for the next succeeding four quarters.
Section 2. Rank. All Series C Preferred Stock shall rank, as to payment
of dividends and as to distribution of assets upon liquidation, dissolution, or
winding up of the Corporation, whether voluntary or involuntary (any such event,
a "LIQUIDATION EVENT"):
(i) senior to (A) all classes or series of common stock of the
Corporation, whether voting or non-voting, including, without limitation , the
Class A Common Stock, no par value (the "CLASS A COMMON STOCK"), and the Class B
Common Stock, no par value (the "CLASS B COMMON STOCK"), whether now or
hereafter issued (collectively, the "COMMON STOCK") and (B) all other shares,
interests, participations or other equivalents (however designated) of capital
stock of the Corporation which does not constitute Parity Stock or Senior Stock
(as each such term is defined below) (all of the foregoing collectively referred
to as "JUNIOR STOCK");
(ii) on a parity with (A) the Series A Preferred Stock, no par value,
now or hereafter issued, (B) the Series B Preferred Stock, no par value, now or
hereafter issued and (C) each other
series or class of Preferred Stock (as defined in Article 4 of the Restated
Articles of Incorporation of the Corporation) hereafter created, the terms of
which expressly provide that such series or class ranks on a parity with the
Series C Preferred Stock as to dividends and distribution of assets upon a
Liquidation Event (collectively referred to as "PARITY STOCK"); and
(iii) junior to each series or class of Preferred Stock hereafter
created, the terms of which expressly provide that such class or series ranks
senior to the Series C Preferred Stock as to dividends and distributions of
assets upon a Liquidation Event (collectively referred to as "SENIOR STOCK").
Section 3. Dividends and Distributions. The holders of shares of Series
C Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for such purposes, dividends
at the rate of $800.00 per annum per share (which amount shall increase to
$850.00 per annum per share commencing on the seventh anniversary of the date of
the initial issuance of shares of Series C Preferred Stock) (as such dollar
amounts and the references to $10,000.00 in Section 4 hereof and in Section 5(a)
hereof may be appropriately adjusted to reflect any stock split, stock dividend,
reclassification, recapitalization or similar event involving the Series C
Preferred Stock), which shall be fully cumulative and shall accrue without
interest from the date of original issuance of such share (whether or not
declared by the Board of Directors). Dividends shall be payable when, as, and if
declared by the Board of Directors. Dividends shall be payable, at the
Corporation's option in cash, or in additional shares (whether whole or
fractional) of Series C Preferred Stock valued, for the purpose of determining
the number of shares (or fraction thereof) of such Series C Preferred Stock to
be issued, at the value of $10,000.00 per whole share, quarterly on March 31,
June 30, September 30 and December 31 of each year commencing June 30, 2002
(except that if any such date is a Saturday,
Sunday, or legal holiday, then such dividend shall be payable on the next day
that is not a Saturday, Sunday, or legal holiday) to holders of record as they
appear on the stock books of the Corporation on the 15th day of the month in
which the dividend is to be paid. The amount of dividends payable per share of
Series C Preferred Stock for each quarterly dividend period shall be computed by
dividing the annual dividend amount by four. The amount of dividends payable for
the initial dividend period and any period shorter than a full quarterly
dividend period shall be computed on the basis of a 360-day year of twelve
30-day months. No dividends or other distributions, other than dividends payable
solely in shares of Junior Stock, shall be paid, declared or set apart for
payment on, and except for the use of Common Stock to enable option holders to
exercise stock options pursuant to the stock option plans of the Corporation and
its subsidiaries, no purchase, redemption, or other acquisition shall be made by
the Corporation of any shares of Junior Stock (and no moneys shall be paid to or
made available to a sinking fund for the redemption of any shares of such stock)
unless and until all accrued and unpaid dividends on the Series C Preferred
Stock, including the full dividends for the then current dividend period, shall
have been, or contemporaneously are, declared and paid.
If at any time any dividend on any Senior Stock shall be in default, in
whole or in part, no dividend shall be paid, declared or set apart for payment
on the Series C Preferred Stock unless and until all accrued and unpaid
dividends with respect to the Senior Stock, including the full dividends for the
then current dividend period, shall have been, or contemporaneously are,
declared and paid. No full dividends shall be paid, declared or set apart for
payment on any Parity Stock for any period unless all accrued but unpaid
dividends have been, or contemporaneously are, respectively paid, declared or
set apart for such payment on the Series C Preferred Stock. No full dividends
shall be paid, declared or set apart for payment on the Series
C Preferred Stock for any period unless all accrued but unpaid dividends have
been, or contemporaneously are, respectively paid, declared or set apart for
payment on the Parity Stock for all dividend periods terminating on or prior to
the date of payment of such full dividends. When dividends are not paid,
declared or set aside in full upon the Series C Preferred Stock and the Parity
Stock, all dividends paid, declared or set apart for payment upon shares of
Series C Preferred Stock and the Parity Stock shall be respectively paid,
declared or set apart for payment pro rata, so that the amount of dividends
paid, declared or set apart for payment, as the case may be, per share on the
Series C Preferred Stock and the Parity Stock shall in all cases bear to each
other the same ratio that accrued and unpaid dividends per share on the shares
of Series C Preferred Stock and the Parity Stock bear to each other.
Any reference to "distribution" contained in this Section 3 shall not
be deemed to include any stock dividend or distributions made in connection with
any Liquidation Event.
Section 4. Liquidation Preference. In the event of a Liquidation Event,
the holders of Series C Preferred Stock shall be entitled to receive out of the
assets of the Corporation, whether such assets constitute stated capital or
surplus of any nature, an amount equal to the sum of (i) dividends accrued and
unpaid thereon to the date of final distribution to such holders, without
interest, and (ii) $10,000.00 per share (such sum, as of any given time, the
"LIQUIDATION PREFERENCE") and no more, before any payment shall be made or any
assets distributed to the holders of Junior Stock; provided, however, that the
holders of Series C Preferred Stock shall be entitled to such payment only in
the event that the Corporation's payments with respect to the liquidation
preference of the holders of Senior Stock are fully met. After the liquidation
preferences of the Senior Stock are fully met, the entire assets of the
Corporation available for
distribution shall be distributed ratably among the holders of the Series C
Preferred Stock and any Parity Stock in proportion to the respective
preferential amounts to which each is entitled (but only to the extent of such
preferential amounts). After payment in full of the Liquidation Preference of
the shares of the Series C Preferred Stock, the holders of such shares shall not
be entitled to any further participation in any distribution of assets by the
Corporation. Neither a consolidation or merger of the Corporation with another
corporation nor a sale or transfer of all or part of the Corporation's assets
for cash, securities, or other property will be considered a Liquidation Event.
Section 5. Redemption of Series C Preferred Stock.
(a) Redemption at Option of the Corporation. At any time on or after
the fifth anniversary of the date of the initial issuance of shares of Series C
Preferred Stock, the Corporation at its option, may redeem at any time all, or
from time to time a portion, of the Series C Preferred Stock on any date set by
the Board of Directors (any such date, an "OPTIONAL REDEMPTION DATE"), at a
redemption price equal to the sum of (i) $10,000.00 per share plus (ii) an
amount per share equal to all dividends on the Series C Preferred Stock accrued
and unpaid on such share, pro rata to the date fixed for redemption (or through
the date of actual payment if the Corporation fails to satisfy its payment
obligations upon a holder's compliance with the procedures set forth in Section
5(c) hereof) (such amount, as of any given time, the "REDEMPTION PRICE"). The
Redemption Price shall be payable in cash.
In case of the redemption of less than all of the then outstanding
Series C Preferred Stock, the Corporation shall effect such redemption pro rata.
Notwithstanding the foregoing, the Corporation shall not redeem less than all of
the Series C Preferred Stock at any time outstanding
until all accrued but unpaid dividends upon all Series C Preferred Stock then
outstanding shall have been paid.
(b) Mandatory Redemption of Series C Preferred Stock. On the tenth
anniversary of the date of the initial issuance of shares of Series C Preferred
Stock (the "MANDATORY REDEMPTION DATE"), the Corporation shall redeem all of the
then outstanding shares of Series C Preferred Stock at a price per share equal
to the Redemption Price. The Redemption Price shall be payable in cash. In the
event the Corporation fails for any reason to satisfy such repurchase obligation
on the Mandatory Redemption Date (the "MANDATORY REDEMPTION OBLIGATION"), the
Mandatory Redemption Obligation shall be discharged as soon as the Corporation
is able to do so. If and for so long as any Mandatory Redemption Obligation with
respect to the Series C Preferred Stock shall not be fully discharged, the
Corporation shall not (i) redeem, purchase, or otherwise acquire any Parity
Stock or discharge any mandatory or optional redemption, sinking fund or other
similar obligation in respect of any Parity Stock (except in connection with a
redemption, sinking fund or other similar obligation to be satisfied pro rata
with the Series C Preferred Stock) or (ii) declare any dividend or make any
distribution on Junior Stock, redeem, purchase or otherwise acquire any Junior
Stock or discharge any mandatory or optional redemption, sinking fund or other
similar obligation in respect of any Junior Stock.
(c) Mechanics of Redemption. Not more than 60 nor less than 30 days
prior to an Optional Redemption Date or the Mandatory Redemption Date, as
applicable, the Corporation shall give notice by a nationally recognized
overnight courier and sent by facsimile transmission with receipt confirmed, to
the holders of record of the Series C Preferred Stock to be redeemed, addressed
to such shareholders at their last addresses as shown on the books of the
Corporation. Each such notice of redemption shall specify the date fixed for
redemption, the Redemption
Price, the place or places of payment, that payment will be made upon
presentation and surrender of the Series C Preferred Stock, that accrued but
unpaid dividends to the date fixed for redemption will be paid on the date fixed
for redemption, and that on and after the redemption date, dividends will cease
to accrue on such shares.
Any notice which is sent to a holder as herein provided shall be
conclusively presumed to have been duly given, whether or not the holder of the
Series C Preferred Stock receives such notice; and failure to give such notice,
or any defect in such notice, to the holders of any shares designated for
redemption shall not affect the validity of the proceedings for the redemption
of any other shares of Series C Preferred Stock. On or after the date fixed for
redemption as stated in such notice, each holder of the shares called for
redemption shall surrender the certificate (or certificates) evidencing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the Redemption Price and thereupon
the Corporation shall pay, or cause to be paid, the full Redemption Price for
the shares so surrendered in cash, provided that if a certificate is not
surrendered by a holder of record of shares of Series C Preferred Stock
represented by such certificate but such holder delivers an affidavit to the
Corporation stating that the certificate or certificates representing its shares
of Series C Preferred Stock have been lost, stolen or destroyed and executes an
agreement reasonably satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such lost, stolen or
destroyed certificates, payment of the full Redemption Price shall be made to
such holder. In the case of an optional redemption by the Corporation pursuant
to Section 5(a) hereof, if fewer than all the shares represented by any such
surrendered certificate (or certificates) are redeemed, a new certificate shall
be issued representing the unredeemed shares. If, on the date fixed for
redemption, funds necessary for the
redemption shall be available therefor and shall have been irrevocably deposited
in a separate account for the benefit of the holders of the shares called for
redemption in a nationally recognized financial institution, then,
notwithstanding that the certificates evidencing any shares so called for
redemption shall not have been surrendered, the dividends with respect to the
shares so called shall cease to accrue after the date fixed for redemption, the
shares shall no longer be deemed outstanding, the holders thereof shall cease to
be shareholders, and all rights whatsoever with respect to the shares so called
for redemption (except the right of the holders to receive the Redemption Price
without interest upon surrender of their certificates therefor) shall terminate.
The Corporation shall cause any monies deposited by the Corporation pursuant to
the foregoing provision and unclaimed by the holders of the shares called for
redemption at the end of one year from the date fixed for redemption, to the
extent permitted by law, to be returned by such financial institution to the
Corporation, after which the holders of shares of Series C Preferred Stock so
called for redemption who have not claimed the Redemption Price shall look only
to the Corporation for the payment thereof. Shares of Series C Preferred Stock
redeemed by the Corporation shall be restored to the status of authorized but
unissued shares of Preferred Stock of the Corporation, without designation as to
series, and may thereafter be reissued, but not as shares of Series C Preferred
Stock.
Section 6. Conversion Rights. The Series C Preferred Stock will be
convertible into Class B Common Stock as follows:
(a) Conversion. Subject to and upon compliance with the provisions of
this Section 6 hereof, the holder of any shares of Series C Preferred Stock will
have the right at such holder's option, at any time or from time to time, to
convert any of such shares of Series C Preferred Stock into fully paid and
nonassessable shares of Class B Common Stock at the Conversion Price
in effect on the Conversion Date without the payment of any additional
consideration by the holder thereof (as such terms are defined below); provided,
however, that none of the persons (as defined below) specified in New York Stock
Exchange Rule 312.03(b) may convert shares of Series C Preferred Stock unless
and until the issuance of such shares to such persons has been approved by the
requisite vote of the shareholders of the Corporation, or unless otherwise
permitted by the New York Stock Exchange or the rules thereof.
(b) Conversion Price. Each share of Series C Preferred Stock will be
converted into a number of shares of Class B Common Stock determined by dividing
(i) the Liquidation Preference by (ii) the Conversion Price in effect on the
Conversion Date. The Conversion Price at which shares of Class B Common Stock
will initially be issuable upon conversion of the shares of Series C Preferred
Stock will be $14.39. The Conversion Price will be subject to adjustment as set
forth in Section 6(e) hereof. Subject to Section 6(g) hereof, no dividends will
accrue or be paid on any share of Series C Preferred Stock subsequent to the
conversion of such share.
(c) Mechanics of Conversion. The holder of any shares of Series C
Preferred Stock may exercise the conversion right specified in Section 6(a)
hereof by surrendering to the Corporation or the transfer agent of the
Corporation the certificate or certificates for the shares to be converted,
accompanied by written notice specifying the number of shares to be converted
and stating therein such holder's name or the name or names of such holder's
nominees in which such holder wishes the certificate or certificates evidencing
the shares of Class B Common Stock issuable upon such conversion to be issued;
provided, however, that the Corporation will not be obligated to issue to any
such holder or such holder's nominees the certificate or certificates evidencing
the shares of Class B Common Stock issuable upon such conversion, unless (i)
(A) the certificate or certificates evidencing the shares of Series C Preferred
Stock are either delivered to the Corporation or the transfer agent of the
Corporation or (B) such holder delivers an affidavit to the Corporation stating
that the certificate or certificates representing its shares of Series C
Preferred Stock have been lost, stolen or destroyed and executes an agreement
reasonably satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such lost, stolen or destroyed
certificates and (ii) if shares of Class B Common Stock are to be issued in the
name of any person other than the holder, the holder establishes to the
satisfaction of the Corporation that any transfer or other applicable taxes have
been paid or are not payable. Conversion will be deemed to have been effected on
the date when delivery is made of notice of an election to convert and the
certificate or certificates evidencing the Series C Preferred Stock shares to be
converted and any other documents required by the immediately preceding sentence
(the "CONVERSION DATE"). Subject to the provisions of Section 6(e)(vi) hereof,
as promptly as practicable thereafter, the Corporation will issue and deliver to
or upon the written order of such holder a certificate or certificates for the
number of full shares of Class B Common Stock to which such holder or such
holder's nominees is entitled and a check or cash with respect to any fractional
interest in a share of Class B Common Stock as provided in Section 6(d). Subject
to the provisions of Section 6(e)(vi) hereof, the person (which term, when used
herein, shall include any corporation, individual, limited liability company,
joint stock company, joint venture, partnership, unincorporated association,
governmental regulatory entity, country, state or political subdivision thereof,
trust, municipality or other entity as well as a natural person) in whose name
the certificate or certificates for shares of Class B Common Stock are to be
issued will be deemed to have become a holder of record of such Class B Common
Stock on the applicable Conversion Date. Upon conversion of only a portion of
the number of
shares covered by a certificate representing shares of Series C Preferred Stock
surrendered for conversion, the Corporation will issue and deliver to or upon
the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Series C Preferred Stock representing the unconverted
portion of the certificate so surrendered.
(d) Fractional Shares. No fractional shares of Class B Common Stock or
scrip will be issued upon conversion of shares of Series C Preferred Stock. If
more than one share of Series C Preferred Stock is surrendered for conversion at
any one time by the same holder, the number of full shares of Class B Common
Stock issuable upon conversion thereof will be computed on the basis of the
aggregate number of shares of Series C Preferred Stock so surrendered by such
holder. Instead of any fractional shares of Class B Common Stock which would
otherwise be issuable upon conversion of any shares of Series C Preferred Stock,
the Corporation will pay a cash adjustment in respect of such fractional
interest in an amount equal to that fractional interest based on the Market
Price of the Class B Common Stock.
(e) Adjustments. The Conversion Price and conversion rights relating to
the Series C Preferred Stock will be subject to adjustment from time to time as
follows; provided, however, that none of the provisions in this Section 6(e)
shall apply in the case of a Liquidation Event, as to which the provisions of
Section 4 will apply:
(i) Definitions. For purposes of this Section 6(e) and certain
other sections herein, the following definitions shall apply.
(1) "BUSINESS DAY" means any day other than Saturday,
Sunday, or any day on which banks in New York City are authorized or
obligated by applicable law to close.
(2) "MARKET PRICE" of any security as of any given
time means the average of the closing prices of such security's sales
on all securities exchanges on which such security may at the time be
listed, or, if there has been no sales on any such exchange on any day,
the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices
quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on
any day such security is not quoted in the NASDAQ System, the average
of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case
averaged over a period of the 30 consecutive Business Days prior to the
day as of which "Market Price" is being determined. If at any time such
security is not listed on any securities exchange or quoted in the
NASDAQ System or the over-the-counter market, the "Market Price" shall
be the fair value thereof determined in good faith by the Board of
Directors.
(3)
(ii) Reorganization, Reclassification or Recapitalization of
the Corporation. In case of (a) a capital reorganization,
reclassification or - recapitalization of the Class B Common Stock
(other than any Liquidation Event or in the cases referred to in
Sections 6(e)(iii) through 6(e)(iv) hereof), (b) the Corporation's
consolidation or merger with or into another corporation in which the
Corporation is not the surviving entity, or any - such transaction if
the Corporation is the surviving entity but the shares of the
Corporation's Class B Common Stock outstanding immediately prior to the
transaction are converted, by virtue of the transaction, into other
property, whether in the form of securities, cash or
otherwise (other than a Liquidation Event), or (c) the sale or transfer
of the Corporation's property as an entirety or substantially as an
entirety (other than a - Liquidation Event), then, as part of such
reorganization, reclassification, recapitalization, merger,
consolidation, sale or transfer, lawful provision shall be made so that
there shall thereafter be deliverable upon the conversion of a share of
Series C Preferred Stock, and without payment of any additional
consideration, the number of shares of Common Stock or other securities
or property to which the holder of the number of shares of Class B
Common Stock which would otherwise have been deliverable upon the
conversion of the Series C Preferred Stock immediately prior to such
reorganization, reclassification, recapitalization, consolidation,
merger, sale or transfer would have been entitled to receive in such
reorganization, reclassification, recapitalization, consolidation,
merger, sale or transfer, all subject to further adjustment as provided
in this Section 6(e). This Section 6(e)(ii) shall apply to successive
reorganizations, reclassifications, recapitalizations, consolidations,
mergers, sales and transfers and to the conversion of the Series C
Preferred Stock into the stock or securities of any other corporation
into which the Series C Preferred Stock shall become convertible.
Concurrently with the consummation of such transaction, the corporation
formed by or surviving any such transaction (if other than the
Corporation), or the person to which such sale or conveyance shall have
been made, shall enter into an agreement assuming the obligation (but
only if such obligation is not assumed by operation of law) to deliver
to each holder of Series C Preferred Stock such shares of stock,
securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to acquire.
(iii) Reclassifications. If the Corporation changes any of the
securities into which the Series C Preferred Stock is convertible into
the same or a different number of securities of any other class or
classes, each share of Series C Preferred Stock shall thereafter
represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to
the securities into which the Series C Preferred Stock was convertible
immediately prior to such reclassification or other change and the
Conversion Price therefor shall be appropriately adjusted.
(iv) Splits and Combinations. If the Corporation at any time
subdivides (by way of stock split, stock dividend or otherwise) any of
its outstanding shares of Class B Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, if the
outstanding shares of Class B Common Stock are combined (by way of
stock split or otherwise) into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall
be proportionately increased.
(v) Rounding of Calculations; Minimum Adjustment; Successive
Adjustments. All calculations under this Section 6(e) will be made to
the nearest cent or the nearest one hundredth (1/100th) of a share, as
the case may be. Any provision of this Section 6 to the contrary
notwithstanding, no adjustment in the Conversion Price will be made if
the amount of such adjustment would be less than $0.05, but any such
amount will be carried forward and an adjustment with respect thereto
will be made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so
carried forward, will aggregate $0.05 or more. In the event that, as a
result of the provisions of any subparagraph of this Section 6(e), the
holder of this Series C
Preferred Stock upon subsequent conversion shall become entitled to
receive any shares of capital stock of the Corporation other than Class
B Common Stock, the number of such other shares so receivable upon
conversion of this Series C Preferred Stock shall thereafter be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions contained herein.
(vi) Timing of Issuance of Additional Class B Common Stock
Upon Certain Adjustments. In any case in which the provisions of this
Section 6(e) require that upon the occurrence of an event an adjustment
be made, such adjustment will become effective immediately after a
record date for such event (or, if no record date is set, immediately
after such event). The Corporation may defer, until the occurrence of
such event, (A) issuing to the holder of any share of Series C
Preferred Stock converted after any such record date and before the
occurrence of such event any additional shares of Class B Common Stock
issuable upon such conversion by reason of the adjustment required by
such event over and above the shares of Class B Common Stock issuable
upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount of cash in lieu of a fractional share
of Class B Common Stock pursuant to Section 6(d) hereof; provided,
however, that the Corporation will deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive
such additional shares and such cash, upon the occurrence of the event
requiring such adjustment.
(f) Statement Regarding Adjustments. Whenever the Conversion Price is
adjusted as provided in Section 6(e) hereof, the Corporation will file, at the
office of any transfer agent for the Series C Preferred Stock and at the
principal office of the Corporation, a statement showing in detail the facts
requiring such adjustment and the Conversion Price in effect after such
adjustment and the Corporation will also cause a copy of such statement to be
sent by a nationally recognized overnight courier and sent by facsimile
transmission with receipt confirmed, to each holder of shares of Series C
Preferred Stock at such holder's address appearing on the Corporation's records.
Where appropriate, such copy may be given in advance and may be included as part
of a notice required to be mailed under the provisions of Section 6(h) hereof.
(g) Conditional Conversion. If it is proposed that a registration of
Class B Common Stock is intended to be filed, except on Form S-4 or S-8 (or any
successor forms), which includes the secondary registration on behalf of holders
of Class B Common Stock, the Corporation will notify the holders of Series C
Preferred Stock of such proposed registration and such holders may conditionally
exercise their right to convert any or all of such shares of Series C Preferred
Stock so held in accordance with this Section 6 and participate in such proposed
registration in accordance with the registration rights granted to such holders
by the Corporation, if any. Only the number of shares of Series C Preferred
Stock conditionally converted pursuant to this Section 6(g) to shares of Class B
Common Stock that are actually sold under an effective registration statement
will be deemed converted pursuant to Section 6(a) hereof. If such registration
is not declared effective or is withdrawn, any conditional exercise pursuant to
this Section 6(g) will be null and void ab initio. The number of shares of
Series C Preferred Stock conditionally converted pursuant to this Section 6(g)
to shares of Class B Common Stock that are not actually sold under an effective
registration statement will be deemed not to be converted pursuant to Section
6(a) hereof and the conditional conversion of such shares will be null and void
ab initio upon the termination of the offering under such registration statement
and such shares will be deemed to have been outstanding (including, without
limitation, for purposes of accruing
dividends) during the period such shares were conditionally converted pursuant
to this Section 6(g). The foregoing right of conditional conversion of Series C
Preferred Stock shall also apply in the case of any proposed transaction
described in subparagraph (ii) of Section 6(e) and, if such transaction does not
occur, such conditional exercise will be null and void ab initio and such Series
C Preferred Stock will be deemed to have been outstanding during such period of
conditional exercise.
(h) Notice to Holders. If the Corporation proposes to take any action
of the type described in Sections 6(e)(ii), (iii) or (iv) hereof, the
Corporation will give notice to each holder of shares of Series C Preferred
Stock, in the manner set forth in Section 6(f), which notice will specify the
record date, if any, with respect to any such action and the approximate date on
which such action is to take place. Such notice will also set forth such facts
with respect thereto as will be reasonably necessary to indicate the effect of
such action (to the extent such effect may be known at the date of such notice)
on the Conversion Price and the number, kind, or class of shares or other
securities or property which will be deliverable upon conversion of shares of
Series C Preferred Stock (if any). In the case of any action which would require
the fixing of a record date, such notice will be given at least ten days prior
to the date so fixed, and in case of all other action, such notice will be given
at least 10 days prior to the taking of such proposed action. Failure to give
such notice, or any defect therein, will not affect the legality or validity of
such action.
(i) Costs. The Corporation will pay all documentary, stamp, transfer,
or other transactional taxes attributable to the issuance or delivery of shares
of Class B Common Stock upon conversion of any shares of Series C Preferred
Stock; provided, however, that the Corporation will not be required to pay any
taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificate for such shares in a
name other than that of the holder of the shares of Series C Preferred Stock in
respect of which such shares are being issued.
(j) Reservation of Shares. The Corporation will reserve at all times so
long as any shares of Series C Preferred Stock remain outstanding, free from
preemptive rights, out of its treasury stock (if applicable) or its authorized
but unissued shares of Class B Common Stock, or both, solely for the purpose of
effecting the conversion of the shares of Series C Preferred Stock, sufficient
shares of Class B Common Stock to provide for the conversion of all outstanding
shares of Series C Preferred Stock.
(k) Valid Issuance. All shares of Class B Common Stock or any other
security which may be issued upon conversion of the shares of Series C Preferred
Stock will, upon issuance by the Corporation in accordance with the terms
hereof, be duly and validly issued, fully paid and nonassessable and free from
all liens and charges with respect to the issuance thereof, and the Corporation
will take no action which will cause a contrary result (including, without
limitation, any action which would cause the Conversion Price to be less than
the par value, if any, of the Class B Common Stock or any such other security).
Section 7. No Sinking Fund. The shares of Series C Preferred Stock
shall not be subject to the operation of a purchase, retirement, or sinking
fund.
Section 8. Voting Rights. The holders of Series C Preferred Stock will
not have any voting rights except as set forth below or as otherwise from time
to time required by law.
(a) Whenever dividends on the Series C Preferred Stock shall be in
arrears in an amount equal to at least six quarterly dividends (whether or not
consecutive), the holders of the Series C Preferred Stock (voting separately as
a class) will be entitled to vote for and elect two
additional directors. Such right of the holders of Series C Preferred Stock to
vote for the election of such two directors may be exercised at an annual
meeting or at any special meeting called for such purpose as hereinafter
provided or at any adjournment thereof, until dividends in default on such
outstanding shares of Series C Preferred Stock shall have been paid in full, at
which time the term of office of the two directors so elected shall terminate
automatically (subject to revesting in the event of each and every subsequent
default of the character specified in the preceding sentence). So long as such
right to vote continues, the Secretary of the Corporation may call, and upon the
written request of the holders of record of 10% of the outstanding shares of
Series C Preferred Stock addressed to him at the principal office of the
Corporation shall call, a special meeting of the holders of such shares for the
election of such two directors, as provided herein. Such meeting shall be held
not less than 45 nor more than 90 days after the accrual of such right, at the
place and upon the notice provided by law and in the By-laws of the Corporation
for the holding of meetings of shareholders. No such special meeting or
adjournment thereof shall be held on a date less than 30 days before an annual
meeting of shareholders or any special meeting in lieu thereof, provided that at
such annual meeting or special meeting appropriate provisions are made to allow
the holders of the Series C Preferred Stock to exercise such right at such
meeting. If at any such annual or special meeting or any adjournment thereof the
holders of a majority of the then outstanding shares of Series C Preferred Stock
entitled to vote in such election shall be present or represented by proxy, then
the authorized number of directors of the Corporation shall be increased by two,
and the holders of Series C Preferred Stock shall be entitled to elect such two
additional directors. Directors so elected shall serve until the next annual
meeting or until their successors shall be elected and shall qualify, unless the
term of office of the persons so elected as directors shall have terminated
by virtue of the payment in full of all dividends in arrears. In case of any
vacancy occurring among the directors so elected by the holders of Series C
Preferred Stock, the remaining director who shall have been so elected may
appoint a successor to hold office for the unexpired term of the director whose
place shall be vacant, and such successor shall be deemed to have been elected
by the holders of Series C Preferred Stock. If both directors so elected by the
holders of Series C Preferred Stock shall cease to serve as directors before
their terms shall expire, the holders of Series C Preferred Stock then
outstanding and entitled to vote for such directors may, at a special meeting of
such holders called as provided above, elect successors to hold office for the
unexpired terms of the directors whose places shall be vacant.
(b) Without the consent or affirmative vote of the holders of at least
a majority of the outstanding shares of Series C Preferred Stock, voting
separately as a class, the Corporation shall not (i) authorize, create, or issue
any shares of Senior Stock, (ii) reclassify any Junior Stock into shares of
Senior Stock, (iii) reclassify any Parity Stock into shares of Senior Stock, or
(iv) increase the number of authorized shares of Series C Preferred Stock
(except as contemplated by Section 1 hereof) or issue any shares of Series C
Preferred Stock in addition to the 4,000 shares issued on the date hereof
(except pursuant to Section 3 hereof).
(c) The affirmative vote or consent of the holders of at least a
majority of the outstanding shares of the Series C Preferred Stock, voting
separately as a class, will be required for any amendment, alteration, or
repeal, whether by merger or consolidation or otherwise, of the Corporation's
Restated Articles of Incorporation if the amendment, alteration, or repeal
adversely affects the powers, preferences, or special rights of the Series C
Preferred Stock (for the avoidance of doubt, it being stipulated that the
matters covered by paragraph (b), which are
subject to the requirements set forth in such paragraph (b), shall not be deemed
to adversely affect the powers, preferences, or special rights of the Series C
Preferred Stock).
Section 9. Outstanding Shares. For purposes hereof all shares of Series
C Preferred Stock shall be deemed outstanding except that, from the date fixed
for redemption pursuant to Section 5 hereof, all shares of Series C Preferred
Stock which have been so called for redemption under Section 5, if funds or
shares necessary for the redemption of such shares are set aside as provided
herein, shall not be deemed to be outstanding.