1
CERTIFICATE OF INCORPORATION OF
JB'S RESTAURANTS, INC.
FIRST: The name of this corporation is:
JB'S RESTAURANTS, INC.
SECOND: The name and address of the registered agent of the
corporation in the State of Delaware is:
The Corporation Trust Company
1209 Orange Street
Wilmington, County of New Castle, Delaware 19801
THIRD: The purpose of the corporation is to engage in the business of
owning and operating restaurants and to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The total amount of capital stock which this corporation has
the authority to issue is as follows:
Section 1. 10,000,000 shares of common stock, $.10 par value per
share.
Section 2. 1,000,000 shares of preferred stock, $1.00 par value per
share.
2
The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Article Fourth, to provide for the
issuance of the shares of preferred stock in series, and to establish from time
to time the number of shares to be included in each series, and to fix the
designation, powers, preferences and relative, participating, optional or other
special rights of the shares of each series and the qualifications, limitations
or restrictions thereof.
The authority of the Board with respect to each series of preferred
stock shall include, but not be limited to, determination of the following:
A. The number of shares constituting the series and the
distinctive designation of the series;
B. The dividend rate on the shares of the series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of the
series;
C. Whether the series will have voting rights, and, if so, the
terms of the voting rights.
D. Whether the series will have conversion privileges, and, if
so, the terms and conditions of the conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors
determines;
E. Whether or not the shares of the series will be redeemable,
and, if so, the terms and conditions of redemption, including the date o dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
F. Whether the series shall have a sinking fund for the
redemption or purchase of shares of the series, and, if so, the terms and
amount of the sinking fund;
G. The rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of shares
of the series;
2
3
H. Any other relative terms, rights, preferences and limitations,
if any, of the series as the Board of Directors may lawfully fix under the laws
of the State of Delaware as in effect at the time of the creation of such
series.
Dividends on outstanding shares of preferred stock shall be paid or
declared and set apart for payment, before any dividends shall be paid or
declared and set apart for payment, on the common stock with respect to the
same dividend period.
Section 3. 500,00 shares of junior common stock, $.01 par value
per share.
Shares of junior common stock will have no voting rights associated
with them. No dividends will be paid on outstanding shares of junior common
stock and holders of junior common stock will not participate in any
distribution of the corporation's assets upon liquidation or dissolution.
Except as so provided, and subject to the limitations imposed by law, the Board
of Directors is authorized to determine the relative rights, preferences,
privileges and restrictions granted to or imposed upon shares of junior common
stock, including redemption or conversion rights.
By consent resolution dated February 25, 1985, the corporation's Board
of Directors authorized the issuance of a class of Junior Common Stock,
designated Junior Common Stock "Series A," (hereinafter referred to as Junior
Common Stock), having the following rights and preferences:
RESOLVED, that the 30,000 shares of Junior Common Stock to be
issued to Mr. Jones by the Company be and hereby is declared to have the
following rights, privileges and preferences, including the conversion and
redemption rights set out:
Terms of Conversion. Shares of the Junior Common Stock issued
to Mr. Jones shall be automatically converted into shares of the Company's
Common Stock on a one-for-one basis in accordance with either of the
following methods, on a fiscal year basis:
(a) Mr. Jones may convert shares of the Company's
Junior Common Stock based on the yearly percentage improvement in Return on
Total
3
4
Average Capital of the Company, rounded to the nearest tenth of one percent.
For purposes of computing the yearly percentage improvement in Return on Total
Average Capital, the current fiscal year's Return shall be divided by the
immediately preceding fiscal year's Return. The percentage thus obtained shall
determine the number of shares Mr. Jones shall convert that fiscal year, based
on the following table:
Number of Shares
Percentage Convertible
---------- ----------------
Less than 105% -0-
105% to 106.9% 2,000
107% to 108.9% 3,000
109% to 110.9% 4,000
111% to 112.9% 5,000
113% and above 6,000
(b) Mr. Jones may convert shares of the Junior
Common Stock based on a comparison, rounded to the nearest tenth of one
percent, of the Company's Return on Total Average Capital with the average of
the Returns on Total Average Capital, for their latest fiscal years, of the
following restaurants:
Frisch's Restaurants
Shoney's
Marcus Corporation
Collins Foods
Mr. Steak, Inc.
Shoney's South
VICORP Restaurants, Inc.
The percentage thus obtained shall determine the number of
shares Mr. Jones shall convert that fiscal year, based on the following table:
Number of Shares
Percentage Convertible
---------- ----------------
Less than 100% -0-
100% to 100.9% 1,000
101% to 103.9% 2,000
4
5
104% to 106.9% 3,000
107% to 109.9% 4,000
110% to 112.9% 5,000
113% and above 6,000
Method of Conversion. Mr. Jones shall, within 120 days of
the end of the Company's fiscal year, notify the Company in writing of:
(a) which method Mr. Jones elects to use in computing the
number of shares of Junior Common Stock to be converted for that
fiscal year;
(b) the computation by which the number of shares
eligible for conversion was determined;
(c) the number of shares of Junior Common Stock to be
converted; and
(d) any investment representations requested by the
Company or its legal counsel.
Included with the notice shall be the certificates of Junior Common
Stock representing the number of shares to be converted.
Redemption. Mr. Jones may, upon 30 days advance written
notice to the Company, require the Company to redeem any number of shares of
Junior Common Stock then held by him. Upon such notice and surrender to the
Company of certificates representing the number of shares of Junior Common
Stock Mr. Jones wishes to have redeemed, the Company shall, within 15 days of
its receipt of the notice and certificates, pay Mr. Jones an amount per share
for each share of Junior Common Stock so redeemed computed as follows: the
Junior Common Stock's price per share shall be computed as 1/10th of the price
per share of the Company's Common Stock as quoted by NASDAQ 3 full business
days prior to payment to Mr. Jones of the redemption amount. The shares so
redeemed shall be canceled by the Company.
Definitions. 'Return on Total Average Capital' is defined
as the ratio of i) total net income after taxes plus total interest expense
less an
5
6
allowance for taxes on the interest expense computed at the actual tax rate
paid by the company, all for the latest fiscal year to ii) total stockholders'
equity plus total long-term debt, including current maturities of long-term
debt, and plus deferred income taxes, all for the fiscal year previous to the
latest fiscal year. The numbers used in determining the Return on Total
Average Capital shall be the fiscal-year figures provided by the company's
annual report to its shareholders or by its audited annual financial
statements. The following example illustrates the computation of the Return on
Total Average Capital for fiscal 1983 for the Company.
Net Income (after-taxes) $2,185,000
Interest Expense 1,263,000
Tax on Interest Expense (38.7%) (388,781)
----------
$2,959,219
Stockholder's Equity $9,836,000
Long-Term Debt 10,656,000
Current Maturities 1,378,000
Deferred taxes 264,000
----------
22,104,000
$2,959,219 / $22,104,000 = 13.4% Return on Total Average Capital.
FIFTH: The name and mailing address of the incorporator of the
corporation is as follows:
Name: Mailing Address:
Clark D. Jones 1010 West 2610 South
Salt Lake City, Utah 84119
6
7
SIXTH: Bylaws may be adopted, amended or repealed by a vote of 80% of
the outstanding stock of the corporation entitled to vote thereon. Bylaws may
also be adopted, amended or repealed by the Board of Directors as permitted by
law. Notwithstanding the foregoing, any bylaw amendment adopted by the Board
of Directors increasing or reducing the authorized number of directors shall
require a resolution adopted by the affirmative vote of not less than 80% of
the directors.
SEVENTH: The number of directors of the Board of Directors of the
corporation will be as specified in the bylaws. The board is divided into three
classes; Class I, Class II and Class III. Each class will be as nearly equal in
number of directors as possible. Each director will serve for a term ending on
the third annual shareholders meeting following the annual meeting at which the
director was elected; provided, however, that the directors first designated
Class I will serve for a term ending on the annual shareholders meeting next
following the end of calendar year 1985. Directors first designated Class II
will serve for a term ending on the second annual shareholders meeting next
following the end of calendar year 1985. Each director will serve until his
successor shall have been duly elected and qualified, unless he resigns, becomes
disqualified, disabled or is otherwise removed.
At each annual election, directors chosen to succeed those whose terms
expire will be of the same class as the directors they succeed, unless, by
reason of any intervening changes in the authorized number of directors, the
Board shall designate one or more directorships whose term expires as
directorships of another class in order more nearly to achieve equality of
number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly
equal in number of directors as possible, in the event of any change in the
authorized number of directors, each director continuing to serve as such will
continue in the class of which he is a member until the expiration of his
current term, or his prior death, resignation or removal. If any newly created
directorship may, consistent with the rule that the three classes be as nearly
equal in number of directors as possible, be allocated to two or more classes,
the Board shall allocate it to the class whose term of office is due to expire
at the next earliest date.
7
8
EIGHTH: The affirmative vote of the holders of not less than 80% of
the outstanding stock of the corporation entitled to vote shall be required for
approval if (1) this corporation merges or consolidates with any other
corporation if such other corporation and its affiliates are directly or
indirectly the beneficial owners of more than 10% of the total voting power of
all outstanding shares of the voting stock of the corporation (a "Related
Corporation"), or if (2) this corporation sells to or exchanges with a Related
Corporation all or a substantial part of its assets, or if (3) this corporation
issues or delivers any stock or other securities of its issue in exchange or
payment for any properties or assets of a Related Corporation or securities
issued by a Related Corporation, or in a merger of any affiliate of this
corporation with or into a Related Corporation or any of its affiliates;
provided, however, that the foregoing shall not apply to any such merger,
consolidation, sale or exchange, or issuance or delivery of stock or other
securities which was (I) approved by resolution of the Board of Directors
adopted by the affirmative vote of not less than a majority of the directors who
were directors prior to the acquisition of beneficial ownership of more than 10%
of all outstanding shares of the voting stock of the corporation by the Related
Corporation and its affiliates, nor shall it apply to any such transaction
solely between this corporation and another corporation 50% or more of the
voting stock of which is owned by this corporation. "Affiliate" shall have the
definition noted in Article Eleventh. "Control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting securities, by
contract, or otherwise; and in computing the percentage of outstanding voting
stock beneficially owned by any person the shares outstanding and the shares
owned shall be determined as of the record date fixed to determine the
shareholders entitled to vote or express consent with respect to such proposal.
The shareholder vote, if any, required for mergers, consolidations, sales or
exchanges of assets or issuances of stock or other securities not expressly
provided for in this Article Eighth, shall be such as may be required by
applicable law. A "substantial part" of the corporation's assets shall mean
assets comprising more than 10% of the book value or fair market value of the
total assets of the corporation and its subsidiaries taken as a whole.
NINTH: No action may be taken by shareholders except at an annual or
special meeting of shareholders. No action may be taken by shareholders by
written consent.
8
9
TENTH: Special meetings of the shareholders of the corporation for any
purpose may be called at any time by a majority of the members of the Board of
Directors or by a committee of the Board of Directors which has been duly
empowered by the Board of Directors to call special meetings. Special meetings
may not be called by any other person.
ELEVENTH: It is the declared intent and policy of this corporation and
its shareholders that all shareholders are entitled (I) to participate, through
an election to sell or otherwise dispose of their shares, in any proposed
acquisition of control of this corporation, and (ii) to be offered a price for
their shares which is fair and equitable under the circumstances.
Section 1. For the purposes of this Article Eleventh:
(a) An "Affiliate" of a specified Person is a
Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified.
(b) The term "Associate", when used to indicate
a relationship with any Person, means (1) any corporation or organization
(other than this corporation or a Subsidiary) of which the Person is an officer
or partner or is, directly or indirectly, the Beneficial Owner of 10% or more
of any class of equity securities, (ii) any trust or other estate in which the
Person has a substantial beneficial interest or as to which the Person serves
in a fiduciary capacity, and (iii) any relative or spouse of the Person, or any
relative of the spouse, who has the same home as the Person, or is an officer
or director of any corporation controlling or controlled by the Person.
(c) "Beneficial Ownership" shall be determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934 or any successor rule or, if Rule 13d-3 is
rescinded and there is no successor rule, pursuant to Rule 13d-3 as in effect
on June 15, 1985. In any event, a Person shall also be deemed the "Beneficial
Owner" of any Voting Shares which:
(1) The Person or any of its Affiliates or
Associates beneficially owns, directly or indirectly, or
9
10
(2) The Person or any of its Affiliates or
Associates (I) has the right to acquire immediately or in the future pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants options or otherwise, or (ii) has sole, or
shares, voting or investment power with respect to pursuant to any agreement,
arrangement, understanding, relationship or otherwise (other than solely by
reason of a revocable proxy granted to the Person for a particular meeting of
shareholders, pursuant to a public solicitation of proxies for the meeting, with
respect to shares of which neither the Person nor any of its Affiliates or
Associates is otherwise deemed the Beneficial Owner), or
(3) Are Beneficially Owned, directly or
indirectly, by any other Person with which the Person or any of its Affiliates
or Associates acts as a partnership, limited partnership, syndicate or other
group pursuant to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of capital stock of this
corporation.
For purposes of computing the percentage Beneficial Ownership of Voting
Shares of a Person in order to determine whether the Person is a Substantial
Shareholder, the outstanding Voting Shares shall include shares deemed owned by
the person through application of this subparagraph (c), but shall not include
any other Voting Shares which may be issuable by this corporation pursuant to
any agreement, arrangement or understanding, or upon exercise of conversion
rights, exchange rights, warrants, options or otherwise. For all other purposes,
the outstanding Voting Shares shall include only Voting Shares then outstanding.
(d) "Common Stock" means not only this
corporation's common stock, as authorized by the corporation's Certificate of
Incorporation, but also any capital stock or other security convertible into or
exchangeable for, and any warrant, option or other right to acquire the common
stock of this corporation. If there is at any time more than one class or
series of Common Stock or any warrants, options or other securities convertible
into or exchangeable for Common Stock, all references of this Article Eleventh
to Common Stock or to any Tender Offer, Offer Price or Market Price shall be
deemed to refer to and apply to each class or series of Common Stock and any
securities convertible into or exchangeable for, and any warrants, options or
other rights to purchase Common Stock individually, and the provisions of this
Article
10
11
Eleventh shall be deemed to apply separately to each class or series of Common
Stock and securities, warrants, options or other rights to purchase Common
Stock, and, in addition, the Offer Price with respect to each series or class of
Common Stock, or securities, warrants, options or other rights to purchase
Common Stock, shall be equivalent to the Offer Prices for the others.
(e) A "Majority of the Board" means a majority of
the total number of the directors which this corporation would have if there
were no vacancies, but only if a majority of the number of directors at the time
of the relevant determination consists of Unrelated Directors. If the majority
does not then consist of Unrelated Directors, a Majority of the Board shall mean
a majority of the then Unrelated Directors.
(f) A "Person" means any individual, firm,
corporation, partnership, association or other entity.
(g) "Subsidiary" means any corporation of which a
majority of each class of equity security (as defined in Rule 3a-11-1 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as in
effect on June 15, 1985) is owned, directly or indirectly, by this corporation.
(h) "Substantial Shareholder" means any Person,
other than this corporation or any Subsidiary, that is the Beneficial Owner,
directly or indirectly, or more than 10% of the outstanding Voting Shares,
determined solely on the basis of the total number of Voting Shares Beneficially
Owned (and without giving effect to the number or percentage of votes entitled
to be cast in respect of the shares pursuant to this Article Eleventh) in
relation to the total number of Voting Shares issued and outstanding. A Person
shall not be deemed to be a Substantial Shareholder if the Person, prior to the
time the Person becomes the Beneficial Owner, directly or indirectly, of more
than 10% of the outstanding Voting Shares, commences and thereafter consummates
a Tender Offer for all shares of Common Stock then issued and outstanding, the
terms of which shall be approved as in the best interests of the corporation and
its shareholders by a Majority of the Board.
Anything to the contrary notwithstanding, (i) no director or
officer of this corporation, no Affiliate or Associate of the director or
officer, and no group or member of a group of which the officer or director or
any of his
11
12
Affiliates or Associates is a member shall, solely by reason of their acting in
their capacities, for any purposes hereof, be deemed to be a Substantial
Shareholder, (ii) no employee stock ownership or similar plan or trust of this
corporation or any Subsidiary shall, for any purposes hereof, be deemed to be a
Substantial Shareholder, nor shall any trustee, Affiliate or Associate of the
trustee nor any group of the same, solely by reason of their acting in their
capacities, be deemed to be a Substantial Shareholder, and (iii) no director or
officer of this corporation nor any Affiliate or Associate of the director or
officer shall, by virtue of their acting or agreeing to act in concert with one
another or with any group in opposition to any Tender Offer, accumulation of
shares of Common Stock or other attempt to gain control of this corporation
determined not to be in the best interests of this corporation and its
shareholders by a Majority of the Board, for any purposes hereof, be deemed to
be a Substantial Shareholder.
(i) "Tender Offer" shall mean an offer to acquire
equity securities pursuant to a request or invitation for tenders.
(j) "Unrelated Director" shall mean a Person who
was a member of the Board of Directors as of June 15, 1985 or thereafter
elected by the shareholders or appointed by the Board of Directors of this
corporation prior to the date the Substantial Shareholder became a Substantial
Shareholder, or a Person designated, before his initial election or appointment
as a director, as an Unrelated Director by a Majority of the Board.
(k) "Voting Shares" shall mean any share of the
capital stock of this corporation entitled to vote generally in the election of
directors.
Section 2. Notwithstanding anything in this
Certificate of Incorporation to the contrary, after the date any Person becomes
a Substantial Shareholder and until the Person ceases to be a Substantial
Shareholder, Persons entitled to vote issued and outstanding Voting Share of any
class or series beneficially owned by the Substantial Shareholder in excess of
10% of the then issued and outstanding shares of the class or series shall,
subject to the provisions of the last sentence of this Section 2, be entitled to
cast 1/10 of one vote per share for each share in excess of 10% of the then
issued and outstanding shares of the class or series. If the Substantial
Shareholder consummates a Tender Offer conforming with the provisions of
Sections 4 and 5 of this Article Eleventh, Persons entitled to vote voting
Shares Beneficially Owned by the Substantial
12
13
Shareholder shall thereafter be entitled to cast the number of votes the Persons
would be entitled to cast in the absence of this Article Eleventh. For purposes
of this Article Eleventh, casting of votes includes voting at any meeting of
shareholders in person or by proxy.
Section 3. Until a Substantial Shareholder
consummates a Tender Offer conforming with the provisions of Sections 4 and 5 of
this Article Eleventh, the Substantial Shareholder and all Persons entitled to
vote Voting Shares of any class or series Beneficially Owned by the Substantial
Shareholder collectively shall not be entitled or permitted to cast in excess of
15% of the total number of votes which the holders of all then outstanding
Voting Shares of the class or series would (after giving effect to the
provisions of Section 2 of this Article Eleventh) be entitled to cast.
Section 4. The Tender Offer referred to in
Sections 2 and 3 of this Article Eleventh means a tender offer to acquire, at
not less than the applicable Offer Prices, all shares of Common Stock then
outstanding and not Beneficially Owned by the Substantial Shareholder and which
provides that if the Substantial Shareholder obtains control of this corporation
it will use its best efforts to promptly consummate a merger in which holders of
all Common Stock not purchased in the Tender Offer will receive the respective
Offer Prices in cash. Any Tender Offer shall be directly regulated by and
conducted in conformance with the provisions of Section 14 (d) of the Securities
Exchange Act of 1934 and the General Rules and Regulations thereunder applicable
to tender offers for equity securities registered under Section 12 of such Act
or any succeeding statutes. The consideration to be received by holders of
common Stock in any Tender Offer shall be in the form of cash exclusively, and
the Tender Offer shall be deemed consummated only when payment in full shall be
made for all duly tendered shares. A Tender Offer shall not be deemed to have
conformed or complied with the provisions of this Section 4 unless (I) the
Substantial Shareholder or its Affiliate requests a certificate of an officer of
this corporation specifying the Offer Prices as contemplated by Section 5(b) of
this Article Eleventh, (ii) the first public announcement thereof setting forth
the Offer Prices (the "Announcement") occurs within forty-five days of receipt
of the certificate specifying the Offer Prices as contemplated in Section 5 (b),
(iii) the Tender Offer is commenced with 30 days after the Announcement, (iv)
the Tender Offer remains upon for at least 20 business days and (v) payment for
shares tendered is made within 30 days after the shares are tendered.
13
14
Section 5. (a) The "Offer Price" for the
Common Stock in any Tender Offer shall be an amount per share of Common Stock
not less than the greater of:
(1) the Market Price of the Common Stock
immediately prior to the Announcement multiplied by a fraction, the numerator of
which is the highest per share price (including brokerage commissions, transfer
taxes and soliciting dealers' fees) which the Substantial Shareholder paid or
agreed or offered to pay for any shares of Common Stock acquired by it within
two years prior to the Announcement, and the denominator of which is the Market
Price of the Common Stock immediately prior to the initial acquisition by the
Substantial Shareholder of any Common Stock during the two-year period;
(2) the highest price per share of Common Stock
(including brokerage commissions, transfer taxes and soliciting dealers' fees)
paid or agreed or offered to be paid by the Substantial Shareholder to acquire
any shares of Common Stock;
(3) the highest sale price or the average of the
highest bid and asked prices for the Common Stock reported during the 12 months
prior to the Announcement;
(4) the aggregate earnings per share of Common
Stock for the four full consecutive fiscal quarters immediately preceding the
one in which the Announcement is made as to which financial results have been
published by this corporation, multiplied by the price/earnings multiple
determined by a Majority of the Board; or
(5) the book value of the corporation as of a
recent date preceding the Announcement of the Tender Offer, multiplied by the
book value multiple determined by a Majority of the Board.
In making the determinations referred to under "(4)" and "(5)" above, the
Majority of the Board shall act reasonably and may consider all financial and
other data they deem relevant, including but not limited to current and historic
price earnings multiples of this corporation, current and historic price
earnings multiples of other corporations engaged in business similar to
14
15
this corporation whose shares are publicly traded, current and historic price
earnings multiples of the Substantial Shareholder or any of its Affiliates, and
this corporation's historic and projected financial position, results of
operations, return on investment and other financial criteria, and its business
plans and future prospects.
Notwithstanding the foregoing, a Majority of the
Board, in its discretion, may determine, that, in lieu of an amount per share of
Common Stock not less than the greater of the amounts determined in accordance
with Section 5 (a) (1), (2), (3), (4) or (5) above, the Offer Price shall be an
amount per share of Common Stock which shall not be less than a price per share
of Common Stock established and determined in writing by an independent,
nationally recognized investment banking firm selected by a Majority of the
Board as a fair and appropriate price (considering this corporation as a going
concern or on the basis of its value in liquidation, whichever circumstance
would result in the higher price) for the sale of this corporation in a
privately negotiated, arm's-length transaction with a Person other than a
Substantial Shareholder or an Affiliate or Associate of a Substantial
Shareholder, in light of then prevailing economic conditions, the business and
assets of and future prospects for this corporation, the benefits expected to be
derived by the acquiring Person (s) from an acquisition of or combination with
this corporation, recent examples of similar transactions and other factors
deemed relevant by the investment banking firm in making determinations or
recommendations as to price in arm's-length acquisition transctions in which a
reasonable amount of time is available to secure a purchaser.
(b) This corporation shall furnish to any
Substantial Shareholder requesting in writing (such request to be addressed to
the president at the principal executive offices of this corporation), within 90
days after receipt of the request, a certificate of an officer of this
corporation specifying the Offer Prices for the Common Stock determined pursuant
to Section 5(a). Each request by a Substantial Shareholder shall specify the
prices paid or agreed or offered to be paid for shares of Common Stock referred
to in Section 5(a) (1) and (2) above and shall contain an agreement to pay the
reasonable fees and expenses of the investment banking firm engaged by the
corporation pursuant to Section 5(a) above if the Substantial Shareholder does
not make a Tender Offer complying with the provisions of Section 3 and 4 of this
Article Eleventh.
15
16
Section 6. For purposes of Section 5 of this
Article Eleventh, the "Market Price" of a share of Common Stock on any
particular date shall mean the average of the latest bid and asked prices, as
published by the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or, if the Common Stock is then listed or admitted to trading
on a national securities exchange, the last sale price regular way therefor as
reported in the consolidated transaction reporting system for securities listed
or traded on such exchange, or, in case no such reported sale takes place, the
average of the latest bid and asked prices regular way therefor as reported in
the consolidated transaction reporting system for securities listed or traded on
such exchange, for each of the 45 trading days in which shares of Common Stock
shall have been traded immediately preceding the date. If no sales or bid and
asked prices are available, "Market Price" shall be determined by a Majority of
the Board on a basis they deem reasonable.
Section 7. A Majority of the Board shall
determine for the purposes of this Article Eleventh, on the basis of information
known to them, (i) the number of Voting Shares Beneficially Owned by any Person,
(ii) whether a Person is an Affiliate or Associate of another, (iii) whether a
Person has an agreement, arrangement or understanding with another as to the
matters referred to in Section 1 (c) of this Article Eleventh, (iv) whether the
purchase price offered pursuant to any Tender Offer conforms to the requirements
as to minimum Offer Prices set forth in Section 5 of this Article Eleventh,
and/or (v) any other factual matter relating to the applicability,
interpretation or effect of this Article Eleventh.
Section 8. A Majority of the Board may demand
that any Person it reasonably believes is a Substantial Shareholder (or holds of
record Voting Shares Beneficially Owned by any Substantial Shareholder) supply
this corporation with complete information as to (i) the record owner(s) of all
shares Beneficially Owned by the Person that it is reasonably believed is a
Substantial Shareholder, (ii) the number of, and class or series of, shares
Beneficially Owned by the Person who it is reasonably believed is a Substantial
Shareholder and held of record by each record owner and the number(s) of the
stock certificate(s) evidencing such shares, and (iii) any other factual matter
relating to the applicability or effect of this Article Eleventh, as may
reasonably be requested of the Person, and the Person shall furnish such
information within 10 days after receipt of the demand.
16
17
Section 9. Except as otherwise provided by law,
the presence, in person or by proxy, of the holders of record of shares of
capital stock of this corporation entitling the holders thereof to cast a
majority of the votes (after giving effect, if required, to the provisions of
this Article Eleventh) entitled to be cast by the holders of shares of capital
stock of this corporation entitled to vote shall constitute a quorum at all
meetings of the shareholders, and every reference in his Certificate of
Incorporation to a majority or other proportion of stock or voting stock (or the
holders thereof) for purposes of determining any quorum requirement or any
requirement for shareholder consent or approval shall be deemed to refer to such
majority or other proportion of the votes (or the holders thereof then entitled
to be cast in respect of the capital stock of this corporation (after giving
effect, if required, to the provisions of this Article Eleventh).
Section 10. Any determinations made by a Majority
of the Board or by a majority of the Board of Directors pursuant to this Article
Eleventh in good faith and on the basis of such information as was then
reasonably available shall be conclusive and binding upon this corporation and
its shareholders, including any Substantial Shareholder.
Section 11. Anything to the contrary contained in
this Article Eleventh notwithstanding and without limiting the powers, rights
and obligations of the Board of Directors, the Board of Directors is entitled
and authorized, consistent with its duties as such and its obligations to this
corporation and its shareholders, to consider the terms of any proposed Tender
Offer or acquisition proposed by any Person, and to determine if and whether to
recommend acceptance or rejection thereof, notwithstanding compliance thereof
with the other provisions of this Article Eleventh, and in connection therewith,
to take or authorize any and all appropriate and proper action deemed in the
judgment of the Board of Directors in the best interests of this corporation and
the shareholders in the event the Board of Directors shall determine to
recommend rejection thereof.
Section 12. Nothing contained in this Article
Eleventh shall be construed to relieve any Substantial Shareholder from any
fiduciary obligation imposed by law.
Section 13. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary, the affirmative vote of the
holders of
17
18
80% or more of the votes entitled to be cast in respect of the capital stock of
the corporation shall be required to amend or repeal, or to adopt any provision
inconsistent with this Article Eleventh.
TWELFTH: (a) A director of the corporation, or the entire
Board of Directors of the corporation, may be removed by the shareholders
without cause only upon the affirmative vote of the holders of not less than 80%
of the stock entitled to vote upon the election of directors.
(b) A director may be removed for cause only by
the affirmative vote of the holders of a majority of the stock entitled to vote
upon his election.
(c) As used herein, "cause" for the removal of a
director shall be deemed to exist if (i) there has been a finding by not less
than 80% of the entire Board of Directors that cause exists and the directors
have recommended removal to the shareholders, or (ii) any other cause defined by
law.
THIRTEENTH: The corporation reserves the right to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on shareholders herein are granted subject to this reservation.
Notwithstanding the foregoing, the provisions set forth in Articles Sixth,
Seventh, Eight, Ninth, Tenth, Eleventh, Twelfth and this Article Thirteenth, may
not be repealed or amended in any respect unless such repeal or amendment is
approved by the affirmative vote of the holders of not less than 80% of the
total voting power of all outstanding shares of voting stock of this
corporation.
FOURTEENTH:
Section 1. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he 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, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines
18
19
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 2. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he 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, partnership, joint venture, trust or other
enterprise against expenses (including attorney's fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable for misconduct in the
performance of his duty to the corporation unless and only to the extent that
the Court of Chancery of the State of Delaware or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery of the State of Delaware or such other court shall deem
proper.
Section 3. To the extent that any person
referred to in Sections 1 and 2 of this Article Fourteenth has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred
to therein or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
19
20
Section 4. Any indemnification under Sections 1
and 2 of 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 director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Sections 1 and 2. Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum of disinterested directors, or (b) by
the shareholders.
Section 5. Expenses incurred in defending a
civil or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the manner provided in section 4 of
this Article Fourteenth upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as provided in this Article Fourteenth.
Section 6. The indemnification provided by this
Article Fourteenth shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any statute, by-law, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding office, 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 heirs, executors and
administrators of such person.
Section 7. The corporation shall have power to
purchase and maintain insurance on behalf of any person who 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, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against liability under the provisions of
this Article Fourteenth.
THE UNDERSIGNED, being the incorporator hereinbefore
named, for the purpose of forming a corporation to do business both within and
20
21
without the State of Delaware and in pursuance of the Delaware General
Corporation Law, does hereby make and file this certificate.
/s/ Clark D. Jones
------------------
Clark D. Jones
Acknowledgment
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE
The foregoing Certificate of Incorporation of JB's Restaurants, Inc.,
was acknowledged before me this 21st day of February, 1985, by Clark D. Jones,
the person signing the Certificate, who further acknowledged that it is his deed
and act that the facts stated therein are true.
/s/ Debra J. Buckley
--------------------
NOTARY PUBLIC
Residing at Salt Lake
My Commission Expires:
4/11/87
- -------------
21