EXHIBIT 3.1
SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
OGLEBAY NORTON COMPANY
(EFFECTIVE AS OF JANUARY 31, 2005)
FIRST: The name of the Corporation shall be Oglebay Norton Company.
SECOND: The location of the principal office of the Corporation in the
State of Ohio shall be in Cleveland, Cuyahoga County, Ohio.
THIRD: The purpose for which the Corporation is formed is to engage in any
lawful act or activity for which corporations may be formed under Sections
1701.01 through 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The maximum number of shares the Corporation is authorized to have
outstanding is One Hundred Twenty Million (120,000,000) shares, consisting of
the following:
(a) Thirty Million (30,000,000) shares of serial preferred stock,
par value $0.01 per share ("PREFERRED STOCK"); and
(b) Ninety Million (90,000,000) shares of common stock, par value
$0.01 per share ("COMMON STOCK").
The Board shall be authorized hereby to exercise all powers now or hereafter
permitted by law providing rights to the Board to adopt amendments to these
Second Amended and Restated Articles of Incorporation to fix or change the
express terms of any unissued or treasury shares of any class, including,
without limiting the generality of the foregoing: division of such shares into
series and the designation and authorized number of shares of each series;
voting rights of such shares; dividend or distribution rate; dates of payment of
dividends or distributions and the dates from which they are cumulative;
liquidation price; redemption rights and price; sinking fund requirements;
conversion rights; and restrictions on the issuance of shares of the same series
or any other class or series; all as may be established by resolution of the
Board from time to time (collectively, including the terms of the Series A
Convertible Preferred Stock set forth in Division A to this Article FOURTH, a
"PREFERRED STOCK DESIGNATION").
DIVISION A
SERIES A CONVERTIBLE PREFERRED STOCK,
$0.01 PAR VALUE
1. DEFINITIONS. For purposes of this Division, the following definitions shall
apply:
"ACTUAL LIQUIDATION" shall mean an actual liquidation or other winding-up
of the Corporation yielding a dissolution thereof of the nature effected under
Section 1701.86 of the Ohio General Corporation Law; provided, however, that an
Actual Liquidation shall not be deemed to result solely from (i) any merger,
consolidation, business combination, reorganization, recapitalization or similar
action with respect to the Corporation or (ii) any sale, lease or other
disposition of the assets of the Corporation.
"AFFIDAVIT OF LOSS" has the meaning set forth in Section 6(a)(ii) of this
Division.
"ARTICLES" shall mean these Second Amended and Restated Articles of
Incorporation of the Corporation.
"BOARD" shall mean the Board of Directors of the Corporation; where any
consent, approval or action is required by the Board hereunder and the authority
of the Board with respect to such consent, approval or action has been delegated
to a committee of the Board, in accordance with applicable law, the consent,
approval or action by such committee shall satisfy such requirement for purposes
hereof.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day
on which banking institutions in the State of Ohio are authorized or obligated
by law or executive order to close.
"CAPITAL STOCK" shall mean (i) with respect to any Person that is a
corporation or company, any and all shares, interests, participations or other
equivalents (however designated) of capital or capital stock of such Person and
(ii) with respect to any Person that is not a corporation or company, any and
all partnership or other equity interests of such Person.
"CLOSING SALE PRICE," when used with reference to shares of the Common
Stock or other securities on any date, shall mean: (i) the last sale price on
such day on the principal stock exchange or The NASDAQ National Market on which
such Common Stock is then listed or admitted to trading; or (ii) if no sale
takes place on such day on any such exchange or market or if the Common Stock is
not listed or admitted to trading on a principal stock exchange or The NASDAQ
National Market, the average of the bid and asked prices for the Common Stock as
furnished for such day by NASDAQ, or, if not furnished by NASDAQ, by any New
York Stock Exchange, Inc. member firm regularly making a market in the Common
Stock and selected for such purpose by the Corporation. If the Common Stock or
other securities are not listed and traded in a manner that the quotations
referred to above are available for the period required hereunder, the Closing
Sale Price shall be deemed to be the Fair Market Value of such Common Stock or
other security.
"COMMON STOCK" shall mean the common stock, $.01 par value per share, of
the Corporation and any shares or capital stock for or into which such common
stock hereafter is exchanged, converted, reclassified or recapitalized by the
Corporation or pursuant to an agreement to which the Corporation is a party.
"COMMON STOCK DERIVATIVE" shall mean any option, right, obligation,
instrument or security of the Corporation which is convertible into or
exercisable or exchangeable for Common Stock of the Corporation.
"CONSTITUENT PERSON" has the meaning set forth in Section 6(d) of this
Division.
"CONVERSION DATE" has the meaning set forth in Section 6(a)(v) of this
Division.
"CONVERSION PRICE" shall mean the conversion price per share of Common
Stock for which the shares of Series A Convertible Preferred Stock are
convertible, as such Conversion Price may be adjusted pursuant to Section 6. The
initial conversion price shall be $10.00.
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"CONVERSION SHARES" has the meaning set forth in Section 6(c)(iv) of this
Division.
"CONVERTIBLE PREFERRED STOCK DIRECTOR NUMBER" has the meaning set forth in
Section 7(d)(i) of this Division.
"CORPORATION" shall mean Oglebay Norton Company, an Ohio corporation.
"CREDIT FACILITY" has the meaning set forth in Section 7(b)(vii) of this
Division.
"CURRENT MARKET PRICE," when used with reference to shares of Common Stock
or other securities on any date, shall mean the average of the Closing Sale
Price for the 30 consecutive Trading Days preceding such date (subject to
equitable adjustment in the event of any stock dividends, splits, reverse
splits, combinations, reclassifications and similar actions).
"DEPOSITARY" shall mean DTC or any successor depositary.
"DERIVATIVE SECURITY" shall mean any option, right, obligation, instrument
or security of the Corporation which is convertible into or exercisable or
exchangeable for Capital Stock of the Corporation.
"DISTRIBUTED PROPERTY" has the meaning set forth in Section 6(c)(v) of
this Division.
"DISTRIBUTION DATE" has the meaning set forth in Section 6(c)(iv) of this
Division.
"DIVIDEND PAYMENT DATE" shall mean the last day of March, June, September
and December; provided, however, that if any Dividend Payment Date falls on any
day other than a Business Day, the dividend payment due on such Dividend Payment
Date shall be paid on the Business Day immediately following such Dividend
Payment Date.
"DIVIDEND PERIODS" shall mean the quarterly dividend periods commencing on
and including the last day of March, June, September and December of each year
and ending on and including the date before the next Dividend Payment Date of
such year, respectively (other than the initial Dividend Period, which shall
commence on the Original Issue Date and end on and include March 31, 2005).
"DIVIDEND RATE" shall mean 14.8275% per annum.
"DIVIDEND RECORD DATE" shall mean, with respect to a Dividend Payment
Date, the close of business on the 15th calendar day prior thereto.
"DIVISION" means this Division of Article FOURTH of these Articles.
"DTC" shall mean The Depository Trust Company.
"EX-DIVIDEND DATE" has the meaning set forth in Section 6(c)(v) of this
Division.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
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"FAIR MARKET VALUE" shall mean, with respect to any security or asset, the
amount that a willing buyer would pay an unaffiliated willing seller in an
arm's-length transaction to acquire ownership of such asset, with neither being
under any compulsion to buy or sell, and both having reasonable knowledge of all
relevant facts and taking into account all relevant circumstances and
information, including market treatment of similar businesses, historical
operating results and projections for future periods, as determined in good
faith by the Board.
"ISSUE DATE" shall mean, with respect to a share of Series A Convertible
Preferred Stock, the date on which such share of the Series A Convertible
Preferred Stock is issued and sold.
"JUNIOR STOCK" shall mean all shares of Capital Stock of the Corporation
in respect of which the rights of the holders thereof both as to payment of
dividends and as to distributions in the event of a voluntary or involuntary
liquidation, dissolution of winding up of the Corporation are junior and
subordinate to the rights of the holders of Series A Convertible Preferred
Stock.
"LIQUIDATION PREFERENCE" shall mean $10.00 per share, as adjusted in
accordance with the provisions herein.
"NON-ELECTING SHARE" has the meaning set forth in Section 6(d) of this
Division.
"ORIGINAL ISSUE DATE" shall mean the date of the original issuance of
shares of Series A Convertible Preferred Stock.
"PARITY STOCK" shall mean all shares of Capital Stock of the Corporation
in respect of which the rights of the holders thereof (i) are not given
preference over the rights of the holders of Series A Convertible Preferred
Stock either as to the payment of dividends or as to distributions in the event
of a voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and (ii) either as to the payment of dividends or as to
distributions in the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, or as to both, rank on parity
(except as to the amounts fixed therefor) with the rights of the holders of
Series A Convertible Preferred Stock.
"PERSON" shall mean any individual, firm, corporation, partnership,
limited partnership, limited liability company or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"PLAN" shall mean the second amended joint plan of reorganization filed as
modified by the Corporation and all of its direct and indirect wholly-owned
subsidiaries with the United States Bankruptcy Court for the District of
Delaware on July 30, 2004, as may be amended.
"REDEMPTION DATE" shall mean a date that is fixed for redemption of the
Series A Convertible Preferred Stock by the Corporation in accordance with
Section 8 of this Division.
"REDEMPTION NOTICE" has the meaning set forth in Section 8(b)(i) of this
Division.
"REDEMPTION PRICE" shall mean the following applicable redemption price,
plus, without duplication, accrued and unpaid dividends, if any, up to, but
excluding, the date fixed for redemption:
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(1) on or after the first anniversary of the effective date of the
Plan until, but excluding, the second anniversary of the
effective date of the Plan, 110% of the then effective
Liquidation Preference per share;
(2) on or after the second anniversary of the effective date of
the Plan, until, but excluding, the third anniversary of the
effective date of the Plan, 108% of the then effective
Liquidation Preference per share;
(3) on or after the third anniversary of the effective date of the
Plan, until, but excluding, the fourth anniversary of the
effective date of the Plan, 106% of the then effective
Liquidation Preference per share; and
(4) on or after the fourth anniversary of the effective date of
the Plan, 104% of the then effective Liquidation Preference
per share;
provided, however, that if the Redemption Date shall occur after a Dividend
Record Date and on or before the related Dividend Payment Date, the Redemption
Price shall not include the dividend payment to be made on that Dividend Payment
Date.
"REFINANCING INDEBTEDNESS" has the meaning set forth in Section 7(b)(vii)
of this Division.
"REQUIRED HOLDERS" shall mean the holders of at least a majority of the
outstanding shares of Series A Convertible Preferred Stock.
"SENIOR STOCK" shall mean all shares of Capital Stock of the Corporation
in respect of which the rights of the holders thereof either as to the payment
of dividends or as to distributions in the event of a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, or as to both, are
given preference over the rights of the holders of Series A Convertible
Preferred Stock.
"SERIES A CONVERTIBLE PREFERRED STOCK" shall mean the 14.8275% Series A
Convertible Preferred Stock, $0.01 par value per share, of the Corporation.
"SET APART FOR PAYMENT" shall be deemed to include, without any action by
the Corporation other than the following, the recording by the Corporation in
its accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to an authorization of dividends or other distribution by the Board,
the allocation of funds or Capital Stock of the Corporation to be so paid on any
series or class of Capital Stock of the Corporation.
"TRADING DAY" shall mean a Business Day or, if the Common Stock is listed
or admitted to trading on any national securities exchange or NASDAQ market, a
day on which such exchange or market is open for the transaction of business.
"TRANSACTION" has the meaning set forth in Section 6(d) of this Division.
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"TRANSFER AGENT" shall mean National City Bank, N.A. or such other agent
or agents of the Corporation as may be designated by the Board or its designee
as the transfer agent for the Series A Convertible Preferred Stock.
2. DESIGNATION; NUMBER OF SHARES. Of the 30,000,000 shares of Preferred Stock
authorized, 8,500,000 shares shall be designated as a series entitled "Series A
Convertible Preferred Stock."
3. RANKING. The Series A Convertible Preferred Stock shall, with respect to the
payment of dividends and distributions in the event of the Corporation's
voluntary or involuntary liquidation, winding up or dissolution, rank senior to
the Junior Stock, on parity with all Parity Stock and junior to all Senior
Stock.
4. DIVIDENDS.
(a) So long as any shares of Series A Convertible Preferred Stock shall be
outstanding, the holders of such Series A Convertible Preferred Stock shall be
entitled to receive out of the Corporation's assets legally available therefor,
when, as and if declared by the Board, preferential dividends at a rate per
annum equal to the Dividend Rate on the then effective Liquidation Preference
per share hereunder, payable for each Dividend Period. Subject to Section
6(a)(iv) of this Division, such dividends with respect to each share of Series A
Convertible Preferred Stock shall begin to accumulate and be fully cumulative on
a daily basis from the Issue Date of such share, whether or not authorized or
declared by the Board and whether or not in any Dividend Period or Dividend
Periods there shall be assets of the Corporation legally available for the
payment of such dividends, and shall be payable quarterly as set forth in
paragraph (b) below in arrears on Dividend Payment Dates or such other dates as
contained herein, commencing on the first Dividend Payment Date after the Issue
Date of such share of Series A Convertible Preferred Stock.
(b) Until the third anniversary of the Issue Date, the amount payable as
dividends on each Dividend Payment Date, whether or not authorized and declared
by the Board, automatically shall be deemed paid by accreting and adding the
amount of the per share dividend to the Liquidation Preference of each share of
Series A Convertible Preferred Stock as of the end of the Dividend Period to
which such dividend relates and thereafter remain a part thereof. From and after
the third anniversary of the Issue Date, the amount payable as dividends on such
Dividend Payment Date shall be payable in cash, unless the Corporation is
prohibited under statutory law or by the terms of the Credit Facility or
Refinancing Indebtedness from paying cash dividends. After the third anniversary
of the Issue Date, if any dividend on any Dividend Payment Date is not delivered
or authorized and paid in full in cash on such Dividend Payment Date, the amount
payable on such Dividend Payment Date automatically shall be deemed paid as set
forth in the first sentence of this paragraph (b).
(c) Each dividend shall be payable in arrears to the holders of record of
Series A Convertible Preferred Stock, as they appear on the stock books of the
Corporation at the close of business on the applicable Dividend Record Date. All
dividends paid with respect to shares of Series A Convertible Preferred Stock
pursuant to Section 4(a), and, if applicable, Section 4(f)
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hereof shall be paid pro rata to the holders thereof. Dividend payments shall be
aggregated per holder and shall be made to the nearest cent (with $.005 being
rounded upward).
(d) The amount of dividends payable per share of Series A Convertible
Preferred Stock for each full Dividend Period shall be computed by dividing the
annual dividend amount by four. The amount of dividends payable for the initial
Dividend Period, or any other period shorter or longer than a full Dividend
Period, on the Series A Convertible Preferred Stock shall be computed on the
basis of twelve 30-day months and a 360-day year.
(e) So long as any shares of Series A Convertible Preferred Stock shall be
outstanding: (i) no dividend whatsoever shall be paid or declared, no
distribution shall be made and no funds or Capital Stock of the Corporation
therefor shall be set apart for payment on account of any class or series of
Junior Stock (other than (A) dividends payable solely in shares of Junior Stock
paid to the holders of Junior Stock and (B) dividends paid or distributions made
on any preferred Junior Stock by accreting and adding the amount of the per
share dividend to the liquidation preference of each share of Junior Stock, in
each case in accordance with the designated terms of such Junior Stock); and
(ii) no shares of Junior Stock shall be purchased, redeemed, retired or
otherwise acquired by the Corporation or any subsidiary of the Corporation and
no funds or Capital Stock of the Corporation shall be set apart for payment or
paid into or made available for a sinking fund for the purchase, redemption,
retirement or acquisition thereof; provided, however, that the restrictions set
forth in this sentence shall not apply to the purchase or other acquisition of
Junior Stock either (A) pursuant to any employee or director incentive or
benefit plan or arrangement (including any employment, severance or consulting
agreement) of the Corporation or any subsidiary of the Corporation heretofore or
hereafter adopted by the Board, (B) in exchange solely for Junior Stock or (C)
any purchase or redemption consented to by the Required Holders in accordance
with Section 7(b)(vi) of this Division.
(f) In addition to all dividends provided above, the holders of Series A
Convertible Preferred Stock shall be entitled to receive an additional dividend
in an amount equal to the amount by which (i) the aggregate amount of dividends
that would have been received by the holders of Series A Convertible Preferred
Stock in any Dividend Period if the holders' Series A Convertible Preferred
Stock had been converted at the beginning of such Dividend Period into shares of
Common Stock at the Conversion Price exceeds (ii) the aggregate Series A
Convertible Preferred Stock dividend amount accrued or received in such Dividend
Period pursuant to Section 4(a) and Section 4(b); provided, however, that any
dividend for which an adjustment to the Conversion Price is made pursuant to
Section 6(c) hereof shall not be deemed a dividend for purposes of this Section
4(f) or otherwise give rise to any rights under this Section 4(f). Any such
excess shall be payable to the holders of Series A Convertible Preferred Stock
in the form of cash.
(g) Any reference to "distribution" in this Section 4 shall not be deemed
to include any distribution made in connection with any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary.
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5. LIQUIDATION RIGHTS.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of Series A
Convertible Preferred Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to its shareholders,
whether such assets are capital, surplus, earnings or otherwise, before any
payment or declaration and setting apart for payment of any amount shall be made
in respect of any shares of Junior Stock, an amount with respect to each share
of Series A Convertible Preferred Stock outstanding equal to the then effective
Liquidation Preference per share for such shares plus all declared or accrued
and unpaid dividends in respect thereof to the date of final distribution.
(b) If upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the assets to be distributed among the holders
of Series A Convertible Preferred Stock shall be insufficient to permit the
payment to such shareholders of the full preferential amounts thereof, then the
entire assets of the Corporation to be distributed shall be distributed ratably
among the holders of Series A Convertible Preferred Stock, based on the full
preferential amounts for the number of shares of Series A Convertible Preferred
Stock held by each holder.
(c) After payment to the holders of Series A Convertible Preferred Stock
of the amounts set forth in Section 5(a) hereof, the entire remaining assets and
funds of the Corporation legally available for distribution, if any, shall be
distributed among the holders of any Capital Stock entitled to a preference over
the Common Stock in accordance with the terms thereof and, thereafter, to the
holders of Common Stock.
(d) Notwithstanding this Section 5, the holders of shares of Series A
Convertible Preferred Stock shall participate in distributions to holders of
Common Stock upon any liquidation, dissolution or winding up of the Corporation
but only to the extent that the holders of shares of Series A Convertible
Preferred Stock receive aggregate distributions equal to the greater of (i) the
then effective Liquidation Preference plus all declared or accrued and unpaid
dividends in respect thereof to the date of final distribution and (ii) the
amounts that such holders would have received if all of the then outstanding
shares of Series A Convertible Preferred Stock had been converted into Common
Stock immediately prior to such liquidation, dissolution or winding up of the
Corporation at the Conversion Price.
(e) After payment of the full preferential amount to which the holders of
the Series A Convertible Preferred Stock are entitled pursuant to this Section
5, such holders shall not be entitled to any additional distribution of assets
of the Corporation.
(f) For purposes of this Section 5, any merger, consolidation, business
combination, reorganization or recapitalization of the Corporation that results
in the transfer of 50% or more of the outstanding voting power of the
Corporation, any sale, lease or other disposition of all or substantially all of
the assets of the Corporation, or any other form of corporate reorganization in
which 50% or more of the outstanding shares of any class or series of Capital
Stock of the Corporation are exchanged for or converted into cash, securities of
another business organization or property shall not be deemed a liquidation,
dissolution or winding up of the Corporation;
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provided, however, if the aggregate amount of cash receivable in exchange for or
upon conversion of the Series A Convertible Preferred Stock in connection with a
cash merger or other cash transaction would be less than the then effective
Liquidation Preference, then the cash merger or other cash transaction shall be
considered a liquidation, dissolution or winding up subject to this Section 5.
6. CONVERSION. Series A Convertible Preferred Stock shall be subject to
conversion, at the option of the holder, into shares of Common Stock, as
follows:
(a) Optional Conversion Right. (i) Subject to and upon compliance with the
provisions of this Section 6, a holder of Series A Convertible Preferred Stock
shall have the right, at his, her or its option, at any time prior to the close
of business on the fifth Business Day prior to the Redemption Date, to convert
all or any part of such shares into the number of fully paid and non-assessable
shares of Common Stock obtained by dividing the then effective Liquidation
Preference of such shares by the Conversion Price (as in effect at the time and
on the date provided for in paragraph (v) of this Section 6(a)).
(ii) In order to exercise such conversion right, the holder of each
share of Series A Convertible Preferred Stock to be converted (A) shall
surrender the certificate representing such share, duly endorsed or assigned to
the Corporation or in blank, at the office of the Transfer Agent, or (B) shall
deliver written notice to the Corporation or the Transfer Agent that such
certificate has been lost, stolen or destroyed and executes an agreement (an
"AFFIDAVIT OF LOSS") satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such certificates,
and, in either case, accompanied by written notice to the Corporation that the
holder thereof elects to convert such Series A Convertible Preferred Stock and,
in either case, if required by Section 6(a)(iv), funds equal to the dividend
payable on the Dividend Payment Date. Unless the shares of Common Stock issuable
on conversion are to be issued in the same name as the name in which such Series
A Convertible Preferred Stock is registered, each share surrendered for
conversion shall be accompanied by instruments of transfer, in form reasonably
satisfactory to the Corporation, duly executed by the holder or such holder's
duly authorized attorney and an amount sufficient to pay any transfer or similar
tax (or evidence reasonably satisfactory to the Corporation demonstrating that
such taxes have been paid). The conversion of shares of the Series A Convertible
Preferred Stock not represented by physical certificates will be effected
through the facilities of the Depositary.
(iii) As promptly as practicable, but in any event within five
Business Days following the Conversion Date, the Corporation shall issue and
shall deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares in accordance with provisions of
this Section 6, and any fractional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as provided in Section 6(b)
hereof. Upon conversion of only a portion of the number of shares covered by a
certificate representing shares of Series A Convertible Preferred Stock
surrendered for conversion, the Corporation shall 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 A Convertible Preferred Stock representing the
unconverted portion of the certificate so surrendered, which new certificate
shall entitle the holder thereof to the rights of the shares of
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Series A Convertible Preferred Stock represented thereby to the same extent as
if the certificate theretofore covering such unconverted shares had not been
surrendered for conversion.
(iv) (A) If a holder of shares of Series A Convertible Preferred
Stock exercises conversion rights, upon delivery of the shares for conversion,
such shares will cease to accumulate dividends as of the end of the day
immediately preceding the Conversion Date. On conversion of the Series A
Convertible Preferred Stock, except for conversion during the period beginning
after the close of business on any Dividend Record Date corresponding to a
Dividend Payment Date to before the opening of business on such Dividend Payment
Date, in which case the holder on such Dividend Record Date shall receive the
dividends payable on such Dividend Payment Date, accumulated and unpaid
dividends on the converted share of Series A Convertible Preferred Stock shall
be cancelled and the Conversion Price will not be adjusted for any dividends so
cancelled. Shares of the Series A Convertible Preferred Stock surrendered for
conversion after the close of business on any Dividend Record Date for the
payment of dividends declared and before the opening of business on the Dividend
Payment Date corresponding to that Dividend Record Date must be accompanied by a
payment to the Corporation in cash of an amount equal to the dividend payable in
respect of those shares on such Dividend Payment Date, whether such dividend is
paid in cash or by accretion of the Liquidation Preference. A holder of shares
of the Series A Convertible Preferred Stock on a Dividend Record Date who
converts such shares into Common Stock on the corresponding Dividend Payment
Date shall be entitled to receive the dividend payable on such shares of the
Series A Convertible Preferred Stock on such Dividend Payment Date, and such
holder need not include payment to the Corporation of the amount of such
dividend upon surrender of shares of the Series A Convertible Preferred Stock
for conversion.
(B) Notwithstanding the foregoing, if shares of the Series A
Convertible Preferred Stock are converted during the period beginning after the
close of business on any Dividend Record Date and ending before the opening of
business on the corresponding Dividend Payment Date and the Corporation has
called such shares of the Series A Convertible Preferred Stock for redemption
during such period, then, the holder who tenders such shares for conversion
shall receive the dividend payable on such Dividend Payment Date and need not
include payment of the amount of such dividend upon surrender of shares of the
Series A Convertible Preferred Stock for conversion.
(v) Each conversion shall be deemed to have been effected
immediately following the close of business on the date on which the
certificates for Series A Convertible Preferred Stock shall have been
surrendered or Affidavits of Loss delivered and such notice and payment of all
required transfer taxes and dividends received by the Corporation as aforesaid
(the "CONVERSION DATE"), and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby at such time on the Conversion Date and such
conversion shall be at the Conversion Price in effect on the Conversion Date
unless the stock books of the Corporation shall be closed for transfer on that
date, in which event such person or persons shall be deemed to have become such
holder or holders of record at the close of business on the next succeeding day
on which such register of shareholders is open, but such conversion shall be at
the Conversion Price in effect on the Conversion Date. On the Conversion Date,
all rights with respect to the shares of the Series A
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Convertible Preferred Stock so converted, including the rights, if any, to
receive notices, will terminate except only the rights of holders thereof to
receive physical certificates (if applicable) for the number of whole shares of
Common Stock into which such shares of the Series A Convertible Preferred Stock
have been converted and cash in lieu of any fractional share as provided in
Section 6(b), and exercise the rights to which they are entitled as holders of
Common Stock.
(b) No Fractional Shares. No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon conversion of shares of
Series A Convertible Preferred Stock. Instead of any fractional interest in a
share of Common Stock that would otherwise be deliverable upon the conversion of
a share of Series A Convertible Preferred Stock, the Corporation shall pay to
the holder of such share an amount in cash based upon the Current Market Price
of Common Stock on the Trading Day immediately preceding the Conversion Date. If
more than one share shall be surrendered for conversion pursuant to Section 6(a)
at one time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares of Series A Convertible Preferred Stock so surrendered.
(c) Conversion Price Adjustments. The Conversion Price shall be adjusted
from time to time as follows:
(i) (A) If at any time after the Original Issue Date, the
Corporation shall issue or sell shares of Common Stock or any Common Stock
Derivative without consideration or at a consideration per share of Common
Stock, calculated by including the aggregate proceeds to the Corporation upon
issuance and any additional consideration payable to the Corporation upon any
such conversion, exchange or exercise (in each case before deduction of any
discounts, commissions, fees and other expenses of issuance and marketing), that
is less than either the Conversion Price in effect on the day immediately
preceding such issuance or the Current Market Price of Common Stock as of the
opening of business on the date of issuance, then, and thereafter, successively
upon each such issuance or sale, the Conversion Price in effect at the close of
business on the day immediately preceding such issuance shall be adjusted,
effective as of the time of such issuance, to equal the price determined by
multiplying (A) the Conversion Price in effect at the close of business on the
day immediately preceding such issuance by (B) a fraction, the numerator of
which shall be the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issuance and (2) the number of shares that the
aggregate proceeds to the Corporation from such issuance (including any
additional consideration per share of Common Stock payable to the Corporation
upon any such conversion, exchange or exercise (before deduction of any
discounts, commissions, fees and other expenses of issuance and marketing))
would purchase at such Conversion Price or Current Market Price, as the case may
be, and the denominator of which shall be the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such issuance and (2) the number
of additional shares of Common Stock issued or subject to issuance upon the
conversion, exchange or exercise of such securities issued.
(B) For the purposes of any computation to be made in
accordance with the provisions of this Section 6(c)(i), the following shall be
applicable:
11
(1) For the purposes of this Section 6(c)(i), the
issuance by the Corporation of Common Stock Derivatives shall be deemed to
involve the immediate issuance of the maximum number of shares of Common Stock
issuable upon the conversion, exchange or exercise of such securities for a
consideration equal to the minimum aggregate consideration receivable by the
Corporation upon such conversion, exchange or exercise. In the event that
securities are issued by the Corporation that result in an adjustment to the
Conversion Price pursuant to this Section 6(c)(i) and such securities are not
converted, exchanged or exercised prior to the expiration of the right of the
holders of such securities to effect any such action, then immediately upon such
expiration the Conversion Price shall be recomputed (but such redetermination
shall not affect the Conversion Price of any shares of Series A Convertible
Preferred Stock that have been converted prior to such expiration) and effective
immediately upon such expiration shall be increased to the price which it would
have been (but reflecting any other adjustments in the Conversion Price made
pursuant to the other provisions of this Section 6(c) after the issuance of such
securities) had such adjustment to the Conversion Price not been made. For
purposes of this Section 6(c)(i), if shares are issued for consideration all or
part of which is other than cash, the value of such non-cash consideration shall
be deemed to be (A) if such non-cash consideration consists of securities, the
Current Market Price of such securities or (B) if such non-cash consideration is
other than securities, the Fair Market Value thereof. The reclassification of
securities other than Common Stock into Common Stock shall be deemed to involve
the issuance for a consideration other than cash of such Common Stock
immediately prior to the close of business on the date fixed for the
determination of security holders entitled to receive such Common Stock.
(2) The provisions of this Section 6(c)(i) shall not be
applicable to: (i) any issuance for which an adjustment to the Conversion Price
is provided under any other subclause of this Section 6(c), (ii) any issuance of
shares of Common Stock upon actual exercise, exchange or conversion of any
Common Stock Derivative if the Conversion Price was fully and properly adjusted
at the time such securities were issued or if no such adjustment was required
hereunder at the time such securities were issued, (iii) the issuance of
additional Series A Convertible Preferred Stock at a per share price equal to or
greater than the Liquidation Preference or the issuance of shares of Common
Stock upon conversion of outstanding Series A Convertible Preferred Stock, (iv)
the issuance of Common Stock Derivatives or restricted shares of Common Stock to
employees, directors or consultants of the Corporation or its subsidiaries
pursuant to management or director incentive plans or stock compensation plans
as in effect on or prior to the Original Issue Date or approved by the
affirmative vote of a majority of the Board after the Original Issue Date,
including any employment, severance or consulting agreements, or the issuance of
shares of Common Stock upon the exercise of such Common Stock Derivative, (v)
the issuance of shares of Common Stock as consideration for an arm's-length
acquisition of a business or assets from unaffiliated third parties, (vi) the
issuance of shares of Common Stock to unaffiliated third parties in a firmly
committed underwritten public offering, or (vii) the issuance of shares of
Common Stock pursuant to a dividend reinvestment plan.
(3) All shares of Common Stock issued and all shares of
Common Stock reserved for issuance pursuant to any outstanding Common Stock
Derivatives (including the Series A Convertible Preferred Stock but not
including any shares reserved for issuance for purposes of accreting dividends
not yet accumulated) deemed not to constitute an issuance pursuant to Section
6(c)(i)(B)(2) shall nevertheless be deemed to be outstanding for all
12
computations pursuant to this Section 6(c)(i) until such shares and Common Stock
Derivatives are no longer outstanding or such Common Stock Derivative shall
expire, as applicable, while the number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account of
the Corporation, and the disposition of such shares shall be considered an issue
or sale of Common Stock, for the purposes of this Section 6(c)(i).
(ii) If the Corporation shall after the Original Issue Date pay a
dividend or make a distribution on the Common Stock or any other Junior Stock in
the form of an issue of Capital Stock or any security convertible into or
exercisable or exchangeable for Capital Stock, then the Conversion Price in
effect at the opening of business on the Business Day next following the date
fixed for the determination of shareholders entitled to receive such dividend or
distribution shall be adjusted to equal the price determined by multiplying (A)
the Conversion Price in effect immediately prior to the opening of business on
the Business Day next following the date fixed for such determination by (B) a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding on the close of business on the date fixed for such determination
and the denominator of which shall be the sum of (1) the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and (2) the number of shares of Common Stock constituting such
dividend or distribution, including the number of additional shares of Common
Stock issuable pursuant to such convertible, exercisable or exchangeable
securities. Such adjustment shall become effective immediately after the opening
of business on the day next following such record date (except as provided in
Section 6(f) hereof). If any dividend or distribution of the type described in
this Section 6(c)(ii) of this Division is declared but not so paid or made, the
Conversion Price shall again be adjusted to the Conversion Price that would then
be in effect if such dividend or distribution had not been declared.
(iii) If the Corporation shall after the Original Issue Date (A)
subdivide its outstanding shares of Common Stock into a greater number of
shares, (B) combine its outstanding shares of Common Stock into a smaller number
of shares or (C) issue any Capital Stock by reclassification of its Common
Stock, the Conversion Price in effect at the opening of business on the Business
Day next following the day on which such subdivision, combination or
reclassification becomes effective shall be adjusted so that the holder of any
Series A Convertible Preferred Stock thereafter surrendered for conversion shall
be entitled to receive the number of such securities that such holder would have
owned or have been entitled to receive after the happening of any of the events
described above as if such Series A Convertible Preferred Stock had been
converted immediately prior to the effective date of such subdivision,
combination or reclassification. An adjustment made pursuant to this Section
6(c)(iii) shall become effective immediately prior to the opening of business on
the Business Day next following the effective date.
(iv) If the Corporation shall after the Original Issue Date issue
Derivative Securities to all holders of Common Stock or any other class or
series of Capital Stock of the Corporation entitling them to subscribe for or
purchase shares of Common Stock or Derivative Securities at a price per share of
Common Stock, calculated by including the aggregate proceeds to the Corporation
upon issuance and any additional consideration payable to the Corporation upon
any such conversion, exchange or exercise (in each case before deduction of any
discounts, commissions, fees and other expenses of issuance and marketing), that
is less than either the
13
Conversion Price in effect on the day immediate preceding such issuance or the
Current Market Price per share of Common Stock on the date fixed for the
determination of shareholders entitled to receive such Derivative Securities,
other than issuances of such Derivative Securities if the holder of Series A
Convertible Preferred Stock would be entitled to receive such Derivative
Securities upon conversion at any time of shares of the Series A Convertible
Preferred Stock into Common Stock and issuances that are subject to certain
triggering events (until such time as such triggering events occur), then the
Conversion Price in effect at the opening of business on the Business Day next
following such record date shall be adjusted to equal the price determined by
multiplying (A) the Conversion Price in effect immediately prior to the opening
of business on the Business Day next following the date fixed for such
determination by (B) a fraction, the numerator of which shall be the sum of (1)
the number of shares of Common Stock outstanding on the close of business on the
date fixed for such determination and (2) the number of shares that the
aggregate proceeds to the Corporation from the exercise of such Derivative
Securities for shares of Common Stock or Derivative Securities would purchase at
such Conversion Price or Current Market Price, as the case may be, and the
denominator of which shall be the sum of (1) the number of shares of Common
Stock outstanding on the close of business on the date fixed for such
determination and (2) the number of additional shares of Common Stock or
Derivative Securities offered for subscription or purchase pursuant to such
Derivative Securities; provided, however, that if the Corporation distributes
Derivative Securities (other than those referred to above in this Section
6(c)(iv)) pro rata to the holders of Common Stock, the Conversion Price shall
not be subject to adjustment on account of any declaration, distribution or
exercise of such Derivative Securities so long as (x) such Derivative Securities
have not expired or been redeemed by the Corporation, and (y) the holder of any
shares of the Series A Convertible Preferred Stock surrendered for conversion
shall be entitled to receive upon such conversion, in addition to the shares of
Common Stock then issuable upon such conversion (the "CONVERSION SHARES"), a
number of Derivative Securities to be determined as follows: if such conversion
occurs on or prior to the date for the distribution to the holders of Derivative
Securities of separate certificates evidencing such Derivative Securities (the
"DISTRIBUTION DATE"), the same number of Derivative Securities to which a holder
of a number of shares of Common Stock equal to the number of Conversion Shares
is entitled at the time of such conversion in accordance with the terms and
provisions applicable to the Derivative Securities and if such conversion occurs
after the Distribution Date, the same number of Derivative Securities to which a
holder of the number of shares of Common Stock into which such shares of the
Series A Convertible Preferred Stock was convertible immediately prior to such
Distribution Date would have been entitled on such Distribution Date had such
shares of the Series A Convertible Preferred Stock been converted immediately
prior to such Distribution Date in accordance with the terms and provisions
applicable to the Derivative Securities. Such adjustment shall become effective
immediately after the opening of business on the day next following such record
date (except as provided in Section 6(f) hereof). In determining whether any
Derivative Securities entitle the holders of Common Stock to subscribe for or
purchase Common Stock or Derivative Securities at such Conversion Price or
Current Market Price, there shall be taken into account any consideration
received by the Corporation upon issuance and upon exercise of such Derivative
Securities, the value of such consideration, if other than cash, shall be deemed
to be (A) if such non-cash consideration consists of securities, the Current
Market of such securities or (B) if such non-cash consideration is other than
securities, the Fair Market Value thereof. In case any Derivative Securities
referred to in this Section 6(c)(iv) in respect of which an adjustment shall
14
have been made shall expire unexercised after the same shall have been
distributed or issued by the Corporation, the Conversion Price shall be
readjusted at the time of such expiration to the Conversion Price that would
have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants (but such
redetermination shall not affect the Conversion Price of any Series A
Convertible Preferred Stock that have been converted prior to such expiration).
(v) If the Corporation shall after the Original Issue Date
distribute to all holders of its shares of Common Stock any class of Capital
Stock of the Corporation or evidences of its indebtedness or assets (including
securities, but excluding any Derivative Securities referred to in Section
6(c)(iv) of this Division, and excluding any dividend or distribution (x) paid
exclusively in cash or (y) referred to in Section 6(c)(ii) of this Division)
(any of the foregoing hereinafter in this Section 6(c)(v), called the
"DISTRIBUTED PROPERTY"), then, in each such case (unless the Corporation elects
to reserve such Distributed Property for distribution to the holders of Series A
Convertible Preferred Stock upon the conversion of the Series A Convertible
Preferred Stock so that any such holder converting Series A Convertible
Preferred Stock will receive upon such conversion, in addition to the Common
Stock to which such holder is entitled, the amount and kind of such Distributed
Property that such holder would have received if such holder had converted its
Series A Convertible Preferred Stock into Common Stock immediately prior to the
record date for such distribution of the Distributed Property) the Conversion
Price shall be adjusted so that it shall equal the price determined by
multiplying (A) the Conversion Price in effect immediately prior to the close of
business on the record date with respect to such distribution by (B) a fraction,
(1) the numerator of which shall be the Current Market
Price per share of Common Stock on such record date less the Fair Market Value
on the record date of the portion of the Distributed Property so distributed
applicable to one share of Common Stock; and
(2) the denominator of which shall be the Current Market
Price per share of Common Stock on such record date, such adjustment to become
effective immediately prior to the opening of business on the Business Day next
following such record date (except as provided in Section 6(f) hereof); provided
that if the then Fair Market Value (as so determined) of the portion of the
Distributed Property so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price on the record date, in lieu of
the foregoing adjustment, adequate provision shall be made so that each holder
of Series A Convertible Preferred Stock shall have the right to receive on the
date of such dividend or distribution the amount of Distributed Property such
holder would have received had such holder converted each share of Series A
Convertible Preferred Stock on the record date. If such dividend or distribution
is not so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price that would then be in effect if such dividend or distribution
had not been declared.
Notwithstanding the foregoing, if the Distributed Property
distributed by the Corporation to all holders of its Common Stock consists of
Capital Stock of a subsidiary or other business unit (unless such Capital Stock
is distributed to the holders of Series A Convertible Preferred Stock in such
distribution as if such holders had converted their shares of Series A
Convertible Preferred Stock into Common Stock), the Conversion Price shall be
adjusted so that
15
it shall equal the price determined by multiplying (A) the Conversion Price in
effect immediately prior to the close of business on the record date with
respect to such distribution by (B) a fraction,
(1) the numerator of which shall be the average of the
Closing Sale Prices of the Common Stock for the ten (10) consecutive Trading
Days commencing on and including the fifth Trading Day after the first date on
which the Common Stock trades, regular way, without the right to receive such
distribution, on the New York Stock Exchange, Nasdaq or such other national or
regional exchange or market on which such securities are then listed or quoted
(the "EX-DIVIDEND DATE"); and
(2) the denominator of which shall be the sum of (A) the
average of the Closing Sale Prices of the Common Stock for the ten (10)
consecutive Trading Days commencing on and including the fifth Trading Day after
the Ex-Dividend Date plus (B) the average of the Closing Sale Prices of the
securities distributed in respect of each share of Common Stock for the ten (10)
consecutive Trading Days commencing on and including the fifth Trading Day after
the Ex-Dividend Date, such adjustment to become effective ten (10) Trading Days
after the effective date of such distribution of Capital Stock of a subsidiary
or other business unit; provided that the Corporation may in lieu of the
foregoing adjustment make adequate provision so that each holder of Series A
Convertible Preferred Stock shall have the right to receive on the date of such
dividend or distribution the amount of Distributed Property such holder would
have received had such holder converted each share of Series A Convertible
Preferred Stock on the record date with respect to such distribution; and
provided further that if (x) the average of the Closing Sale Prices of the
Common Stock for the ten (10) consecutive Trading Days commencing on and
including the fifth Trading Day after the Ex-Dividend Date minus (y) the average
of the Closing Sale Prices of the securities distributed in respect of each
share of Common Stock for the ten (10) consecutive Trading Days commencing on
and including the fifth Trading Day after the Ex-Dividend Date is less than
$1.00, then the adjustment provided by for by this paragraph shall not be made
and in lieu thereof the provisions of the first paragraph of this Section
6(c)(v) shall apply to such distribution. In any case in which this paragraph is
applicable, Section 6(c)(ii), Section 6(c)(iv) and the first paragraph of this
Section 6(c)(v) shall not be applicable.
For purposes of this Section 6(c)(v), Section 6(c)(ii) and Section
6(c)(iv) of this Division, any dividend or distribution to which this Section
6(c)(v) is applicable that also includes Common Stock, or Derivative Securities
to subscribe for or purchase Common Stock (or both), shall be deemed instead to
be (1) a dividend or distribution of the evidences of indebtedness, assets or
shares of Capital Stock other than such Common Stock or Derivative Securities
(and any Conversion Price adjustment required by this Section 6(c)(v) with
respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such Common Stock or such
Derivative Securities (and any further Conversion Price adjustment required by
Section 6(c)(ii) of this Division with respect to such dividend or distribution
shall then be made), except (A) the record date of such dividend or distribution
shall be substituted as "the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution", "the date fixed for
the determination of shareholders entitled to receive such Derivative
Securities" and "the date fixed for such determination" within the meaning of
Section 6(c)(ii) of this Division and (B) any Common Stock included in such
16
dividend or distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the meaning of Section
6(c)(ii) of this Division.
(vi) No adjustment in the Conversion Price pursuant to any provision
of this Section 6 shall be required unless such adjustment would require a
cumulative increase or decrease of at least 1% in such price; provided, however,
that any adjustments that by reason of this Section 6(c)(vi) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment until made; and provided, further, that any adjustment shall be
required and made in accordance with the provisions of this Section 6 (other
than this Section 6(c)(vi)) not later than such time as may be required in order
to preserve the tax-free nature of a distribution to the holders of Common
Stock. Notwithstanding any other provisions of this Section 6, the Corporation
shall not be required to make any adjustment of the Conversion Price for the
issuance of any shares of Common Stock pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of the Corporation
and the investment of additional optional amounts in Common Stock under such
plan. All calculations under this Section 6 shall be made to the nearest cent
(with $.005 being rounded upward) or to the nearest whole share (with 0.5 of a
share being rounded upward), as the case may be. Anything in this Section 6(c)
to the contrary notwithstanding, the Corporation will, to the extent permitted
by law, make such reductions in the Conversion Price, in addition to those
required by this Section 6(c), as the Board in its good faith discretion shall
determine to be necessary in order that any subdivision of shares,
reclassification or combination of shares, distribution of Derivative
Securities, or a distribution of other assets (other than cash dividends)
hereafter made by the Corporation to its shareholders shall not be taxable.
(vii) Any direct or indirect reduction in the exercise or conversion
price of any outstanding Derivative Securities entitling the holder thereof to
subscribe for or purchase, by exercise, exchange, conversion or otherwise, any
Common Stock shall be deemed a new issuance of such Derivative Security to the
extent of such reduction; provided, however, that any adjustment to the exercise
or conversion price of (A) Derivative Securities outstanding as of the Original
Issue Date as a result of the exercise or conversion adjustment provisions
contained in the instruments governing the terms of such securities as in effect
as of the Original Issue Date or (B) Derivative Securities issued after the
Original Issue Date (x) as a result of the exercise or conversion adjustment
provisions contained in the instruments governing the terms of such securities
or (y) in the case of any Derivative Securities described in clause (iv) of
Section 6(c)(i)(B)(2), upon approval of a majority of the Board, in any case
shall not be deemed a new issuance of such securities and shall not require an
adjustment to the Conversion Price pursuant to this Section 6.
(viii) In the event that, at any time after the Original Issue Date,
any adjustment is made to the Conversion Price of the Series A Convertible
Preferred Stock pursuant to this Section 6, such adjustment to the Conversion
Price shall be applicable with respect to all then outstanding Series A
Convertible Preferred Stock and all shares of Series A Convertible Preferred
Stock issued after the date of the event causing such adjustment to the
Conversion Price.
(d) Extraordinary Transactions. If the Corporation shall be a party to any
transaction (including without limitation a merger, consolidation, share
exchange or self tender offer for or
17
involving or relating to all or substantially all shares of Common Stock, a
sale, transfer or other disposition of all or substantially all of the
Corporation's assets, property or business or a recapitalization or
reclassification of the Common Stock and excluding any transaction as to which
Section 6(c)(ii) hereof applies) (each of the foregoing being referred to herein
as a "TRANSACTION"), in each case as a result of which all or substantially all
shares of Common Stock are converted into the right to receive shares,
securities or other property (including cash or any combination thereof), each
share of Series A Convertible Preferred Stock, which is not converted into the
right to receive shares, securities or other property prior to such Transaction,
shall thereafter be convertible into the kind and amount of shares, securities
and other property (including cash or any combination thereof) receivable upon
the consummation of such Transaction by a holder of that number of shares of
Common Stock into which one share of Series A Convertible Preferred Stock was
convertible immediately prior to such Transaction, assuming such holder of
Common Stock (i) is not a Person with which the Corporation consolidated or into
which the Corporation merged or which merged into the Corporation or to which
such sale or transfer was made, as the case may be ("CONSTITUENT PERSON"), or an
affiliate of a Constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of shares, securities and other
property (including cash) receivable upon such Transaction (provided if the kind
or amount of shares, securities and other property (including cash) receivable
upon such Transaction is not the same for each share of Common Stock held
immediately prior to such Transaction by other than a Constituent Person or an
affiliate thereof and in respect of which such rights of election shall not have
been exercised ("NON-ELECTING SHARE"), then for the purpose of this Section 6(d)
the kind and amount of shares, securities and other property (including cash)
receivable upon such Transaction by each holder of a Non-Electing Share shall be
deemed to be the kind and amount so receivable per share by holders of a
plurality of the Non-Electing Shares). The Corporation shall not be a party to
any Transaction unless the terms of such Transaction are consistent with the
provisions of this Section 6(d), and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Series A Convertible Preferred Stock that will
contain provisions enabling the holders of the Series A Convertible Preferred
Stock that remain outstanding after such Transaction to convert into the
consideration (determined as provided in this Section 6(d)) received by holders
of Common Stock at the Conversion Price in effect immediately prior to such
Transaction. The provisions of this Section 6(d) shall similarly apply to
successive Transactions. No adjustment to the Conversion Price shall be made
pursuant to this Section 6(d) in respect of any Transaction to which Section
6(c) also applies.
(e) Notice of Certain Events. If, subject to the limitations set forth in
Section 4 hereof:
(i) the Corporation shall declare (A) any dividend (or any other
distribution) on Common Stock, other than a dividend payable in shares of Common
Stock or (B) any extraordinary dividend or distribution on any Junior Stock
(excluding any regularly scheduled dividends paid in accordance with the terms
thereof); or
(ii) the Corporation shall authorize the granting to the holders of
Common Stock generally of rights to subscribe for or purchase any shares of
Capital Stock of the Corporation or of any Derivative Securities; or
18
(iii) there shall be any recapitalization or reclassification of the
Common Stock (other than an event to which Section 6(c) hereof applies) or any
consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of the Corporation is required, or a share exchange
or self-tender offer by the Corporation for all or substantially all of its
outstanding Common Stock or the sale or transfer of all or substantially all of
the assets of the Corporation as an entirety or any compulsory share exchange
affecting the Common Stock; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, then the Corporation shall cause
to be filed with the Transfer Agent and shall cause to be mailed to the holders
of the Series A Convertible Preferred Stock at the addresses of such holders as
shown on the stock books of the Corporation, as promptly as possible, but at
least ten Business Days prior to the applicable date hereinafter specified and
no later than when notice is first mailed or sent to the holders of Common
Stock, a notice stating (A) the date on which a record is to be taken for the
purpose of such dividend, distribution or granting of Derivative Securities, or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution or Derivative Securities
are to be determined or (B) the date on which such reclassification,
consolidation, merger, share exchange, self-tender offer, sale, transfer,
liquidation, dissolution or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
share exchange, self-tender offer, sale, transfer, liquidation, dissolution or
winding up. Failure to give or receive such notice or any defect therein shall
not affect the legality of validity of the proceedings described in this Section
6.
(f) Adjustment Deferral. In any case in which Section 6(c) provides that
an adjustment shall become effective on the day next following the record date
for an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any Series A Convertible Preferred Stock converted
after such record date and before the occurrence of such event the additional
shares of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the shares of 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 any fraction pursuant to Section 6(b).
(g) Limits on Adjustment. There shall be no adjustment of the Conversion
Price in case of the issuance of any shares of the Corporation in a
reorganization, acquisition or other similar transaction, except as specifically
set forth in this Section 6. If any action or transaction would require
adjustment of the Conversion Price pursuant to more than one paragraph of this
Section 6, only one adjustment shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute value.
(h) Sufficient Shares of Common Stock. The Corporation covenants that it
will at all times reserve and keep available, free from preemptive rights, out
of the aggregate of its authorized but unissued shares of Common Stock, solely
for the purpose of effecting conversion of the Series A Convertible Preferred
Stock, the full number of shares of Common Stock deliverable upon the conversion
of all outstanding shares of Series A Convertible Preferred
19
Stock not theretofore converted. For purposes of this Section 6(h), the number
of shares of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of Series A Convertible Preferred Stock shall be computed as
if at the time of computation all such outstanding shares were held by a single
holder.
(i) Compliance with Laws. Prior to the delivery of any securities that the
Corporation shall be obligated to deliver upon conversion of the Series A
Convertible Preferred Stock, the Corporation shall use its best efforts to
comply with all federal and state laws and regulations thereunder requiring the
registration of such securities with, or any approval of or consent to the
delivery thereof by, any governmental authority.
(j) Officer's Certificate. Whenever the applicable Conversion Price shall
be adjusted pursuant to this Section 6, the Corporation shall forthwith obtain,
and cause to be delivered to each holder of Series A Convertible Preferred
Stock, a certificate signed by the principal financial or accounting officer of
the Corporation, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated (including a
description of the basis of the determination of the Current Market Price and/or
Fair Market Value, as applicable) and specifying the new applicable Conversion
Price. In the event of a Transaction pursuant to Section 6(d), such a
certificate shall be issued describing the amount and kind of stock, securities,
property or assets or cash which shall be receivable upon conversion of the
Series A Convertible Preferred Stock after giving effect to the provisions of
such Section 6(d).
(k) Protection of Intent. If a state of facts shall occur which, without
being specifically controlled by the provisions of this Section 6, would not
fairly protect the conversion rights of the Series A Convertible Preferred Stock
in accordance with the essential intent and principles of such provisions, then
the Board shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
conversion rights.
7. VOTING RIGHTS. (a) Holders of Series A Convertible Preferred Stock shall have
one vote for each share of Common Stock into which such Series A Convertible
Preferred Stock could be converted into at the Conversion Price at the record
date for determination of the shareholders entitled to vote, or, if no such
record date is established, at the date such vote is taken or any written
consent of shareholders is solicited. Except as required by law or as otherwise
set forth in this Section 7, such holder shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common Stock, and
shall be entitled to vote, together with holders of Common Stock and not by
classes, with respect to any matters upon which holders of Common Stock have the
right to vote. Fractional votes by the holders of Series A Convertible Preferred
Stock will not be permitted, and any fractional voting rights (after aggregating
all shares into which shares of Series A Convertible Preferred Stock held by
each holder could be converted) will be disregarded.
(b) In addition, for so long as shares of Series A Convertible Preferred
Stock are outstanding, the affirmative vote of the Required Holders, in person
or by proxy, at a special or annual meeting of the holders of Series A
Convertible Preferred Stock called for the purpose, or pursuant to a written
consent of the Required Holders, shall be necessary for the Corporation to:
20
(i) authorize, adopt or approve an amendment to, or repeal any
provision of, the Articles (including by way of merger, consolidation or
otherwise) that would increase or decrease the par value of the Series A
Convertible Preferred Stock, or otherwise alter or change in any manner the
terms, powers, preferences or rights of the Series A Convertible Preferred Stock
or grant waivers thereof, or that would otherwise adversely affect the rights,
preferences, powers or privileges of the Series A Convertible Preferred Stock;
provided that no such modification or amendment may, without the consent of each
holder of Series A Convertible Preferred Stock affected thereby, decrease the
Liquidation Preference or Dividend Rate of the Series A Convertible Preferred
Stock; provided, further, that notwithstanding the foregoing, the affirmative
vote or written consent of the Required Holders will not be necessary for the
Corporation to authorize, adopt or approve an amendment to these Articles in
order to authorize, create, amend or issue, or increase the authorized amount
of, Parity Stock or Senior Stock (including, without limitation, additional
shares of Series A Convertible Preferred Stock) or to authorize or issue any
Derivative Securities evidencing the right to acquire such shares if either (a)
all of the proceeds of such issuance will be used to redeem the Series A
Convertible Preferred Stock, in whole or in part, or (b) a portion of the
proceeds will be used to redeem all of the Series A Convertible Preferred Stock;
(ii) authorize, create, amend or issue, or increase the authorized
amount of, Parity Stock or Senior Stock (including, without limitation,
additional shares of Series A Convertible Preferred Stock), or authorize or
issue any Derivative Securities evidencing the right to acquire such shares;
provided, however, that the affirmative vote or written consent of the Required
Holders will not be necessary for the Corporation to authorize, create, amend or
issue, or increase the authorized amount of, Parity Stock or Senior Stock
(including, without limitation, additional shares of Series A Convertible
Preferred Stock) or to authorize or issue any Derivative Securities evidencing
the right to acquire such shares if either (a) all of the proceeds of such
issuance will be used to redeem the Series A Convertible Preferred Stock, in
whole or in part, or (b) a portion of the proceeds will be used to redeem all of
the Series A Convertible Preferred Stock;
(iii) increase the authorized amount of, or issue any additional
shares of, Series A Convertible Preferred Stock; provided, however, that the
affirmative vote or written consent of the Required Holders will not be
necessary for the Corporation to authorize, create, amend or issue, or increase
the authorized amount of, Parity Stock or Senior Stock (including, without
limitation, additional shares of Series A Convertible Preferred Stock) or to
authorize or issue any Derivative Securities evidencing the right to acquire
such shares if either (a) all of the proceeds of such issuance will be used to
redeem the Series A Convertible Preferred Stock, in whole or in part, or (b) a
portion of the proceeds will be used to redeem all of the Series A Convertible
Preferred Stock;
(iv) directly or indirectly recapitalize or reclassify any shares of
Capital Stock of the Corporation into Series A Convertible Preferred Stock,
Senior Stock or Parity Stock;
(v) pay or declare any dividend on any shares of Junior Stock (other
than a dividend payable solely in shares of Junior Stock paid to the holders of
Junior Stock);
21
(vi) take any action that results in the purchase or redemption by
the Corporation or any subsidiary of the Corporation of any Parity Stock or
Junior Stock;
(vii) create, incur, assume, guarantee or suffer to exist, or
otherwise become or remain liable with respect to any indebtedness other than
(1) the maximum borrowing capacity provided for under the Corporation's senior
secured credit facility, dated as of January 31, 2005, by and among the
Corporation, certain of its subsidiaries, the credit facility agent and the
other financial institutions party thereto (as the same may be amended, the
"CREDIT FACILITY") or any indebtedness to refinance, extend, renew, refund,
repay, prepay, redeem, defease or retire, or to exchange or replace, the Credit
Facility ("REFINANCING INDEBTEDNESS"), (2) any "permitted indebtedness" as such
term is defined in the Credit Facility or any Refinancing Indebtedness, and (3)
any other indebtedness in an aggregate principal amount outstanding at any time
not exceeding $30 million, provided, that the amount referred to in clause (3)
will be increased to the extent that the borrowing capacity under the Credit
Facility is permanently reduced; provided, however, that this entire provision
will cease to be effective as of the third anniversary of the effective date of
the Plan; or
(viii) effect an Actual Liquidation.
(c) Each holder of Series A Convertible Preferred Stock shall be deemed to
have voted or, in the case where the affirmative vote of the holders of Series A
Convertible Preferred Stock is required by any law, statute or regulation
applicable to the Corporation, shall vote all of the shares of Series A
Convertible Preferred Stock held by such holder to approve:
(i) any authorization, creation, amendment or issuance, or increase
in the authorized amount of, Parity Stock or Senior Stock (including, without
limitation, additional shares of Series A Convertible Preferred Stock) or any
authorization or issuance of Derivative Securities evidencing the right to
acquire such shares, or the authorization, adoption or approval of an amendment
to these Articles in order to so authorize, create, amend, issue or increase the
authorized amount of Parity Stock or Senior Stock requiring the approval of the
holders of shares of Series A Convertible Preferred Stock if either (a) all of
the proceeds of such issuance will be used to redeem the Series A Convertible
Preferred Stock, in whole or in part, or (b) the proceeds will be used to redeem
all of the Series A Convertible Preferred Stock; and
(ii) any authorization, creation, amendment or issuance of Junior
Stock requiring the approval of holders of shares of Series A Convertible
Preferred Stock.
(d) The Board will consist of seven members, elected as follows:
(i) The holders of shares of the Series A Convertible Preferred
Stock will be entitled, voting as a separate class, to elect the "convertible
preferred stock director number" of directors at each meeting of shareholders
held for the purpose of electing directors, which will be a maximum of four. For
purposes of this subsection (d), the "CONVERTIBLE PREFERRED STOCK DIRECTOR
NUMBER" means, at any given time, for so long as (i) at least 75% of the shares
of Series A Convertible Preferred Stock outstanding as of the effective date of
the Plan remain
22
outstanding, a maximum of four Directors, (ii) less than 75%, but more than 50%,
of the shares of Series A Convertible Preferred Stock outstanding as of the
effective date of the Plan remain outstanding, a maximum of three Directors,
(iii) the percentage of the shares of Series A Convertible Preferred Stock
outstanding as of the effective date of the Plan that remain outstanding is
equal to or between 25% and 50%, a maximum of two Directors, and (iv) less than
25% of the shares of Series A Convertible Preferred Stock outstanding as of the
effective date of the Plan remain outstanding, a maximum of one Director.
(A) In case of any removal, either with or without cause, of a
director elected by the holders of the shares of Series A Convertible Preferred
Stock, the holders of the shares of Series A Convertible Preferred Stock will be
entitled, voting as a separate class either by written consent or at a special
meeting or next regular meeting, to elect a successor to hold office for the
unexpired term of the director who has been removed.
(B) (1) In case of such removal, an officer of the Corporation
may call, and, upon written request of the holders of at least twenty-five
percent (25%) of the outstanding shares of the Series A Convertible Preferred
Stock, addressed to the Secretary of the Corporation, shall call a special
meeting of the holders of Series A Convertible Preferred Stock. Such meeting
shall be held at the earliest practicable date upon the notice required for
annual meetings of shareholders at the place for holding annual meetings of
shareholders of the Corporation, or, if none, at a place designated by the
Board. Notwithstanding the provisions of this Section 7(d)(i)(B)(1), no such
special meeting shall be called during a period within the 120 days immediately
preceding the date fixed for the next annual meeting of shareholders in which
such case, the election of directors pursuant to Section 7(d)(i) shall be held
at such annual meeting of shareholders.
(2) At any meeting held for the purpose of electing
directors at which the holders of Series A Convertible Preferred Stock voting
separately as one class shall have the right to elect directors as provided
herein, the presence in person or by proxy of the holders of more than fifty
percent (50%) of the then outstanding shares of the Series A Convertible
Preferred Stock shall be required and shall be sufficient to constitute a quorum
of such class for the election of directors by such class.
(C) In case of any vacancy (other than by removal) in the
office of a director elected by the holders of the shares of Series A
Convertible Preferred Stock, the vacancy will be filled by the remaining
directors elected to the Board by the holders of the shares of Series A
Convertible Preferred Stock.
(ii) The remaining directors will be elected by holders of shares of
Common Stock voting separately as a single class at each meeting of shareholders
held for the purpose of electing directors.
(A) In case of any removal, either with or without cause, of a
director elected by the holders of the shares of Common Stock, the holders of
the shares of Common Stock will be entitled, voting as a separate class either
by written consent or at a special meeting or next regular meeting, to elect a
successor to hold office for the unexpired term of the director who has been
removed.
23
(B) (1) In case of such removal, an officer of the Corporation
may call, and, upon written request of the holders of at least twenty-five
percent (25%) of the outstanding shares of Common Stock, addressed to the
Secretary of the Corporation, shall call a special meeting of the holders of
Common Stock. Such meeting shall be held at the earliest practicable date upon
the notice required for annual meetings of shareholders at the place for holding
annual meetings of shareholders of the Corporation, or, if none, at a place
designated by the Board. Notwithstanding the provisions of this Section
7(d)(ii)(B)(1), no such special meeting shall be called during a period within
the 120 days immediately preceding the date fixed for the next annual meeting of
shareholders in which such case, the election of directors pursuant to Section
7(d)(ii) shall be held at such annual meeting of shareholders.
(2) At any meeting held for the purpose of electing
directors at which the holders of Common Stock voting separately as one class
shall have the right to elect directors as provided herein, the presence in
person or by proxy of the holders of more than fifty percent (50%) of the then
outstanding shares of Common Stock shall be required and shall be sufficient to
constitute a quorum of such class for the election of directors by such class.
(C) In case of any vacancy (other than by removal) in the
office of a director elected by the holders of the shares of Common Stock, the
vacancy will be filled by the remaining directors elected to the Board by the
holders of the shares of Common Stock.
8. OPTIONAL REDEMPTION.
(a) The Corporation may not redeem any shares of Series A Convertible
Preferred Stock before the first anniversary of the effective date of the Plan.
On or after the first anniversary of the effective date of the Plan, the
Corporation may at any time or from time to time redeem some or all of the
shares of Series A Convertible Preferred Stock at the applicable Redemption
Price, but only if at any time prior to the date the Corporation provides the
Redemption Notice, the Closing Sale Price of the Common Stock equals or exceeds
130% of the average of the Conversion Price(s) in effect for 30 consecutive
Trading Days at any time prior to the date the Corporation provides such notice.
(b) (i) In the event the Corporation elects to redeem shares of Series A
Convertible Preferred Stock, the Corporation shall, at least 30 days and not
more than 60 days prior to the Redemption Date, provide written notice (the
"REDEMPTION NOTICE") by first class mail, postage prepaid, to each holder of
record of Series A Convertible Preferred Stock at such holder's address as the
same appears on the stock books of the Corporation; provided, that no failure to
give such notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Series A Convertible Preferred
Stock to be redeemed except as to the holder or holders to whom the Corporation
has failed to give said notice or except as to the holder or holders whose
notice was defective. The Redemption Notice shall state:
(A) the Redemption Price;
(B) the Redemption Date;
(C) the Conversion Price;
24
(D) the name and address of the Transfer Agent;
(E) that shares of Series A Convertible Preferred Stock called
for redemption may be converted at any time before 5:00 p.m., Cleveland time on
the fifth Business Day prior to the Redemption Date;
(F) that holders who want to convert shares of the Series A
Convertible Preferred Stock must satisfy the requirements set forth in this
Section 8;
(G) that the holder is to surrender to the Transfer Agent the
certificate or certificates representing the shares of Series A Convertible
Preferred Stock to be redeemed in order to collect the Redemption Price;
(H) if fewer than all the outstanding shares of the Series A
Convertible Preferred Stock are to be redeemed by the Corporation, the number of
shares to be redeemed;
(I) that, unless the Corporation defaults in making payment of
the applicable Redemption Price, dividends in respect of the shares of Series A
Convertible Preferred Stock called for redemption will cease to accumulate on
and after the Redemption Date;
(J) the CUSIP number of the Series A Convertible Preferred
Stock; and
(K) any other information the Corporation wishes to present.
(ii) If the Corporation gives notice of redemption, then the
Corporation shall, on the Redemption Date, before 12:00 p.m., Cleveland time, to
the extent funds are legally available, with respect to:
(A) shares of the Series A Convertible Preferred Stock held by
DTC or its nominees, deposit or cause to be deposited, irrevocably with DTC cash
sufficient to pay the Redemption Price and shall give DTC irrevocable
instructions and authority to pay the Redemption Price to holders of such shares
of the Series A Convertible Preferred Stock; and
(B) shares of the Series A Convertible Preferred Stock held in
certificated form, deposit or cause to be deposited, irrevocably with the
Transfer Agent cash sufficient to pay the Redemption Price and shall give the
Transfer Agent irrevocable instructions and authority to pay the Redemption
Price to holders of such shares of the Series A Convertible Preferred Stock upon
surrender of the certificates evidencing the shares of the Series A Convertible
Preferred Stock.
(iii) If on the Redemption Date, DTC and the Transfer Agent hold
money sufficient to pay the Redemption Price for the shares of Series A
Convertible Preferred Stock delivered for redemption as set forth herein,
dividends shall cease to accumulate as of the Redemption Date on those shares of
the Series A Convertible Preferred Stock called for redemption and all rights of
holders of such shares shall terminate, except for the right to receive the
Redemption Price pursuant to this Section 8.
25
(iv) Payment of the Redemption Price for shares of the Series A
Convertible Preferred Stock is conditioned upon book-entry transfer or physical
delivery of certificates representing the Series A Convertible Preferred Stock,
together with necessary endorsements, to the Transfer Agent, or to the Transfer
Agent's account at DTC, at any time after delivery of the notice of redemption.
The Corporation shall be entitled to retain any interest, yield or gain on funds
deposited with the Transfer Agent pursuant to this Section 8 in excess of the
amounts required to pay the Redemption Price. Payment of the Redemption Price
for the Series A Convertible Preferred Stock will be made (i) if book-entry
transfer of or physical delivery of the Series A Convertible Preferred Stock has
been made by or on the Redemption Date, on the Redemption Date, or (ii) if
book-entry transfer of or physical delivery of the Series A Convertible
Preferred Stock has not been made by or on such date, at the time of book-entry
transfer of or physical delivery of the Series A Convertible Preferred Stock. If
any shares of Series A Convertible Preferred Stock selected for partial
redemption are submitted for conversion in part after such selection, such
shares submitted for conversion shall be deemed (so far as may be possible) to
be the portion to be selected for redemption. If any shares of Series A
Convertible Preferred Stock called for redemption are converted pursuant to
Section 6 of this Division prior to the Redemption Date and in accordance with
this Section 8, any money deposited with the Transfer Agent or so segregated and
held in trust for the redemption of such shares of Series A Convertible
Preferred Stock shall be paid or delivered to the Corporation upon its written
request, or, if then held by the Corporation, shall be discharged from such
trust.
(v) If the Redemption Date falls after a Dividend Record Date and before
the related Dividend Payment Date, holders of the shares of Series A Convertible
Preferred Stock at the close of business on that Dividend Record Date shall be
entitled to receive the full dividend payable on those shares on the
corresponding Dividend Payment Date. The Redemption Price payable on such
Redemption Date will include only the effective Liquidation Preference per share
but will not include any amount in respect of dividends declared and payable on
such corresponding Dividend Payment Date.
(vi) If fewer than all the outstanding shares of Series A Convertible
Preferred Stock are to be redeemed, the Corporation shall select, pro rata or by
lot, the shares to be redeemed or in any other manner as shall be prescribed by
the Board.
(vii) Upon surrender of a certificate or certificates representing shares
of the Series A Convertible Preferred Stock that is or are redeemed in part, the
Corporation shall execute and the Transfer Agent shall authenticate and deliver
to the holder, a new certificate or certificates representing shares of the
Series A Convertible Preferred Stock in an amount equal to the unredeemed
portion of the shares of Series A Convertible Preferred Stock surrendered for
partial redemption.
9. NO REISSUANCE OF SERIES A CONVERTIBLE PREFERRED STOCK. No Series A
Convertible Preferred Stock acquired by the Corporation by reason of purchase or
otherwise shall be reissued, and all such shares shall be cancelled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.
10. NO PREEMPTIVE RIGHTS. Except as otherwise expressly provided in this
Division, no holder of any shares of Series A Convertible Preferred Stock shall
have any preemptive right to
26
acquire any shares of unissued Capital Stock of the Corporation, now or
hereafter authorized, or any treasury shares or securities convertible into such
shares or carrying a right to subscribe to or acquire such shares of capital
stock.
11. TRANSFER AGENT. The duly appointed Transfer Agent for the Series A
Convertible Preferred Stock shall be National City Bank, N.A. The Corporation
may, in its sole discretion, remove the Transfer Agent in accordance with the
agreement between the Corporation and the Transfer Agent; provided that the
Corporation shall appoint a successor transfer agent who shall accept such
appointment prior to the effectiveness of such removal.
12. CURRENCY. All shares of Series A Convertible Preferred Stock shall be
denominated in U.S. currency, and all payments and distributions thereon or with
respect thereto shall be made in U.S. currency. All references herein to "$"
refer to the U.S. currency.
DIVISION B:
EXPRESS TERMS OF THE COMMON STOCK
The Common Stock shall be subject to the express terms of the Preferred
Stock and any series thereof. Each share of Common Stock shall be equal to every
other share of Common Stock. The holders of shares of Common Stock shall be
entitled to one vote for each share of such stock upon all matters presented to
the shareholders.
FIFTH: The Board shall be authorized hereby to exercise all powers now or
hereafter permitted by law providing rights to the Board to adopt amendments to
these Second Amended and Restated Articles of Incorporation to include within
these Second Amended and Restated Articles of Incorporation such additional
provisions, or amendments to any existing provisions, as may hereafter be
authorized by law; subject, however, to such limitation or restriction, if any,
as is contained in any Preferred Stock Designation at the time of such purchase
or acquisition.
SIXTH: The Corporation may from time to time, pursuant to authorization by
the Board and without action by the shareholders, purchase or otherwise acquire
capital stock of the Corporation of any class or classes in such manner, upon
such terms and in such amounts as the Board shall determine; subject, however,
to such limitation or restriction, if any, as is contained in any Preferred
Stock Designation at the time of such purchase or acquisition.
SEVENTH: Subject to any Preferred Stock Designation, and notwithstanding
any provision of the Ohio Revised Code now or hereafter in force requiring for
any purpose the vote, consent, waiver or release of the holders of shares
entitling them to exercise two-thirds, or any other proportion, of the voting
power of the Corporation or of any class or classes of shares thereof, such
action, unless otherwise expressly required by statute or by these Second
Amended and Restated Articles of Incorporation, may be taken by the vote,
consent, waiver or release of the holders of shares entitling them to exercise a
majority of the voting power of the Corporation or of such classes. For purposes
of these Second Amended and Restated Articles of Incorporation, "VOTING POWER OF
THE CORPORATION" means the aggregate voting power of (a) all the outstanding
shares of Common Stock of the Corporation and all outstanding shares of Series A
Convertible Preferred Stock of the Corporation and (b) all the outstanding
shares of any class or series of capital stock of the Corporation that has (i)
rights to distributions senior to those of
27
the Common Stock including, without limitation, any relative, participating,
optional, or other special rights and privileges of, and any qualifications or
restrictions on, such shares and (ii) voting rights entitling such shares to
vote generally in the election of directors.
EIGHTH: 1. Foreign Ownership of Shares, etc.
(a) Notwithstanding anything to the contrary in these Second Amended and
Restated Articles of Incorporation, it is the policy of the Corporation that,
consistent with law, Foreigners shall not own or control more than the Permitted
Percentage (as defined below) of the shares of any class of the Corporation at
any time outstanding, and, if Foreigners nevertheless at any time do own more
than the Permitted Percentage of such shares, the voting rights of shares in
excess of the Permitted Percentage owned by the Foreigners shall be suspended,
and shares in excess of the Permitted Percentage owned by Foreigners may be
purchased by the Corporation, or the dividend and other distribution rights of
shares owned by Foreigners in excess of the Permitted Percentage may be
suspended, and the issuance of stock certificates and the transfer of share
ownership on the books of register of the Corporation to Foreigners may be
denied, all in accordance with subparagraph 3 below and all to the extent
necessary to prevent the loss by the Corporation (or any Subsidiary or
Controlled Person) of, or to reinstate, its right to be a United States Maritime
Company or to have any license or franchise from a governmental agency that is
conditioned upon some or all of the holders of shares of the Corporation
possessing prescribed qualifications.
(b) The Board is generally authorized to adopt all such rules and
resolutions and to take any and all other lawful measures reasonably necessary,
appropriate, or desirable to carry out the policy set forth in subparagraph (a).
(c) Without in any way limiting the general powers and authority set forth
in subparagraph (b), the Board is specifically authorized to take any or all of
the actions specified below and, in that regard, is authorized to take all such
action and make all such determinations as it deems necessary, appropriate, or
desirable and as are in accordance with law and not inconsistent with this
Article EIGHTH, including making changes in any of the definitions contained in
subparagraph 9 to accord with changes in applicable law or the rules,
regulations, and practices of any relevant governmental agency.
(d) The Chairman of the Board and the Chief Executive Officer of the
Corporation shall at all times be citizens of the United States of America. In
addition, the Board shall consist of citizens of the United States of America
numbering no less than the amount necessary to constitute a quorum.
2. Restrictions on Transfer. Any transfer, or attempted or purported transfer,
of any shares issued by the Corporation that would result in the ownership by
one or more Foreigners of an aggregate percentage of the shares of any class of
the Corporation in excess of the Permitted Percentage shall, to the full extent
permitted by law and for so long as such excess exists, be ineffective as
against the Corporation, and the Corporation shall not recognize the purported
transferee as a shareholder of the Corporation for any purpose whatsoever except
for the purpose of making a further transfer to a person not a Foreigner and for
purposes of the purchase or
28
redemption of such shares by the Corporation, effecting any other remedy
available to the Corporation, or otherwise carrying out the provisions of this
Article EIGHTH.
3. No Voting Rights; Temporarily Withholding Payments of Dividends and Other
Distributions. If at any time (including the time of any record date) ownership
by Foreigners of the outstanding shares of any class of the Corporation is in
excess of the Permitted Percentage, the Corporation may, to the full extent
permitted by law, determine which shares owned by Foreigners are deemed to be
included in such excess (to be selected in a manner consistent with the
provisions of Subsection 4(c) below), and the shares deemed to be included in
such excess shall (so long as such excess exists) not have any voting rights,
and the Corporation may (so long as such excess exists) temporarily withhold the
payment of dividends and the sharing in any other distribution (upon liquidation
or otherwise) in respect of the shares deemed to be included in such excess;
provided, however, that any such dividend or distribution shall be set aside for
payment to the owners of such shares (or their transferees) when, as, and if
such excess no longer exists or such shares are no longer owned by Foreigners.
4. Redemption of Shares. Notwithstanding any other provision of these Second
Amended and Restated Articles of Incorporation and without limiting the power of
the Board to purchase shares pursuant to subparagraph 6, outstanding shares of
any class of the Corporation shall be subject to redemption by the Corporation
(by action of the Board, if in the judgment of the Board such action should be
taken) pursuant to Section 1701.23 of the Ohio General Corporation Law (or any
other provision of law) to the extent necessary to reduce the percentage of
shares owned by Foreigners to the Permitted Percentage. The terms and conditions
of such redemption shall be as follows:
(a) the redemption price shall be the Current Market Price of such shares;
(b) the redemption price for shares owned by Foreigners in excess of the
Permitted Percentage may be paid in cash or in Redemption Securities, as
determined by the Board;
(c) the shares owned by Foreigners to be redeemed shall be selected in
such manner as shall be prescribed by the Board, including selection first of
the shares most recently purchased, selection by lot or on a pro rata basis, or
selection in any other manner that is consistent with the policy set forth in
this Article EIGHTH;
(d) the number of shares to be redeemed shall not exceed the number
necessary to reduce the percentage of shares owned by Foreigners to the
Permitted Percentage;
(e) written notice of the date of redemption shall be given to the record
holders of the selected shares (unless waived in writing by any such holder);
(f) the date of redemption shall be the later of (i) the date on which
written notice is given to record holders and (ii) the date on which the funds
or Redemption Securities necessary to effect the redemption have been deposited
in trust for the benefit of such record holders and are subject to immediate
withdrawal by them upon surrender of their stock certificates;
(g) from and after the date of redemption, any and all rights in respect
of the shares selected for redemption shall cease and terminate, and the owners
of such shares shall
29
thenceforth be entitled only to receive the cash or Redemption Securities
payable upon redemption; and
(h) such other terms and conditions as the Board may reasonably determine.
5. Dual Stock Certificate System and other Actions. The Board is authorized to
adopt rules and to take such other action as it may deem necessary or desirable
in order to carry out the policy set forth in subparagraph 1(a), to impose
restrictions on the transfer or the registration of transfer of shares of any
class of the Corporation, in accordance with law, and to determine whether
outstanding shares of any class of the Corporation are owned by Foreigners or by
citizens of the United States. Such restrictions may include a Dual Stock
Certificate System (as defined below).
6. Purchase of Shares by the Corporation. Without limiting the power of the
Board to redeem shares owned by Foreigners in accordance with subparagraph 4 or
generally to purchase outstanding shares or other securities of the Corporation,
the Board is authorized, in carrying out the policy set forth in subparagraph
1(a), to cause the Corporation to purchase shares of any class of the
Corporation that are owned by Foreigners. Any such purchase may be carried out
at such price and under such other terms as the Board deems appropriate and fair
to the Corporation under the circumstances.
7. Ownership. Whether outstanding shares are owned by Foreigners for the
purposes of this Article EIGHTH shall be determined under such rules and
resolutions, consistent with definitions of ownership under any applicable law
and the rules, regulations, and practices of any governmental agency and not
inconsistent with this Article EIGHTH, as may be adopted from time to time by
the Board. The Corporation may, in its discretion, rely on the records of the
Corporation maintained in accordance with a Dual Stock Certificate System and
the certificates of transferees or with holders to prove that shares are or are
not owned by a Foreigner. Whether shares are or are not owned by Foreigners may
also be subject to proof in such other way or ways as the Corporation may deem
reasonable. The Corporation at any time may require proof, in addition to the
certification, that shares are or are not owned or are or are not applied for by
a Foreigner, and the payment of dividends may be withheld, and any application
for transfer of ownership on the books of register of the Corporation may be
rejected, until such additional proof is submitted.
8. Effectiveness. This Article EIGHTH shall be effective only so long as (a) the
Corporation or any Subsidiary or Controlled Person (1) is a United States
Maritime Company or has a license or franchise from a governmental agency that
is conditioned upon one or all of the holders of shares of the Corporation
possessing prescribed qualifications or (2) intends to reinstate itself as a
United States Maritime Company, or to reinstate any such license or franchise,
within a reasonable time, after ceasing to be or hold the same, or (b) these
Second Amended and Restated Articles of Incorporation are effective.
9. Definitions. For the purposes of this Article EIGHTH, the following terms
have the following definitions:
30
(a) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of Ohio are authorized or
obligated by law or executive order to close.
(b) "CLOSING SALE PRICE," when used with reference to shares of the Common
Stock or other securities on any date, shall mean: (i) the last sale price on
such day on the principal stock exchange or The NASDAQ National Market on which
such Common Stock is then listed or admitted to trading; or (ii) if no sale
takes place on such day on any such exchange or market or if the Common Stock is
not listed or admitted to trading on a principal stock exchange or The NASDAQ
National Market, the average of the bid and asked prices for the Common Stock as
furnished for such day by NASDAQ, or, if not furnished by NASDAQ, by any New
York Stock Exchange, Inc. member firm regularly making a market in the Common
Stock and selected for such purpose by the Corporation. If the Common Stock or
other securities are not listed and traded in a manner that the quotations
referred to above are available for the period required hereunder, the Closing
Sale Price shall be deemed to be the Fair Market Value of such Common Stock or
other security.
(c) "CONTROLLED PERSON" means any corporation or partnership of which the
Corporation or any subsidiary owns or controls an interest in excess of 25%.
(d) "CURRENT MARKET PRICE," when used with reference to shares of Common
Stock or other securities on any date, shall mean the average of the Closing
Sale Price for the 30 consecutive Trading Days preceding such date (subject to
equitable adjustment in the event of any stock dividends, splits, reverse
splits, combinations, reclassifications and similar actions).
(e) "DUAL STOCK CERTIFICATE SYSTEM" means a system under which (i) one of
two different forms of stock certificate, representing outstanding shares of any
class of the Corporation, is issued to the holders of record dependent on
whether the shares are or are not owned by a Foreigner; (ii) the forms of stock
certificate for any class of the Corporation are marked "Foreign" for shares
owned by Foreigners or "Domestic" for shares not owned by Foreigners but are
identical in all other respects and comply with all provisions of the Ohio
General Corporation Law (including Section 1701.25 thereof with respect to
restrictions on transfer or registration of transfer); (iii) when, as, and if
the Permitted Percentage is reached or exceeded for any class of shares and
until the percentage of the class owned by Foreigners has been reduced to or
below the Permitted Percentage, no additional "Foreign" stock certificates may
be issued for the class to any transferee of the holder of a "Domestic" stock
certificate and the Corporation will not recognize any such transferee as an
owner of shares of the Corporation for any purpose whatsoever; (iv) a
certification is required from any transferee (and from any recipient upon
original issuance) of shares of the Corporation as to whether such transferee
(or recipient), and if such transferee (or recipient) is acting as nominee or in
any other capacity for an owner, such owner, is or is not a Foreigner and
registration of transfer (or original issuance) is denied upon refusal to
furnish such certification; (v) to the extent necessary to enable the
Corporation to determine the percentage of any class of outstanding shares of
the Corporation that is owned by Foreigners for the purpose of submitting any
proof of citizenship required by law or by contract with the United States
government (or any agency thereof), the record holders and the owners of such
shares may be required from time to time to confirm their citizenship status,
and dividends payable to any such record holder and owner may, in the discretion
of the
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Board, be temporarily withheld until confirmation of such citizenship status is
received; and (vi) the records of the Corporation are maintained in such manner
as to enable determination at any time, as to each class of outstanding shares
of the Corporation, of the percentage that is owned by Foreigners and the
percentage that is owned by United States citizens.
(f) "FAIR MARKET VALUE" shall mean, with respect to any security or asset,
the amount that a willing buyer would pay an unaffiliated willing seller in an
arm's-length transaction to acquire ownership of such asset, with neither being
under any compulsion to buy or sell, and both having reasonable knowledge of all
relevant facts and taking into account all relevant circumstances and
information, including market treatment of similar businesses, historical
operating results and projections for future periods, as determined in good
faith by the Board.
(g) "FOREIGNER" shall mean (i) any person (including for purposes of this
subparagraph (i) an individual, a partnership, a corporation, or an association)
that is not a United States citizen or is the representative of or fiduciary for
any person that is not a United States citizen; (ii) any foreign government or
the representative thereof; (iii) any corporation the president, chief executive
officer, or chairman of the Board of which is a Foreigner, or of which more than
a minority of its Directors necessary to constitute a quorum are Foreigners;
(iv) any corporation organized under the laws of any foreign government; (v) any
corporation of which a majority of its shares are owned beneficially or of
record, or may be voted by, Foreigners, or which by any other means whatsoever
is controlled by or in which control is permitted to be exercised by Foreigners;
(vi) any partnership or association which is controlled by Foreigners; (vii) any
corporation of which a 25% or greater interest is owned beneficially or of
record by Foreigners and which may be deemed to "control" the Corporation (the
Board being authorized to determine reasonably the meaning of "control" for this
purpose); (viii) any other person deemed by the Board to be a Foreigner as to
the United States or the Corporation (or any Subsidiary) or otherwise not
possessing prescribed qualifications to be a holder of outstanding shares of the
Corporation in accordance with the policy set forth in subparagraph 1(a); or
(ix) any person who acts as representative of or fiduciary for any person
described in clauses (i) through (viii) above.
(h) "PERMITTED PERCENTAGE" shall mean the lesser of the following
percentages of the outstanding shares of any class of the Corporation: (i) so
long as the Corporation (or any Subsidiary or Controlled Person) operates
vessels in the United States coastwise, intercoastal, or noncontiguous domestic
trade, 25%; and (ii) so long as the Corporation (or any Subsidiary or Controlled
Person) shall have a license or franchise from a governmental agency to conduct
its business which is conditioned upon some of the holders of shares of the
Corporation possessing prescribed qualifications, the percentage prescribed by
law to possess or operate under such license or franchise; except that the Board
may reduce the lesser of the foregoing percentages by not more than 2-1/2% in
the event that the Board determines that a reasonable margin in the amount of
such reduction is desirable, in which case Permitted Percentage shall mean the
lesser of such percentages reduced by such margin.
(i) "REDEMPTION SECURITIES" shall mean interest bearing promissory notes
of the Corporation with a maturity of not more than 10 years from the date of
issue and bearing interest
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at a rate, and having other terms, designed to ensure that the value of the
promissory note at the date of issue is equivalent to the redemption price.
(j) "SUBSIDIARY" shall mean any corporation more than 50% of the
outstanding shares of which are owned by the Corporation or by any Subsidiary of
the Corporation.
(k) "TRADING DAY" shall mean a Business Day or, if the Common Stock is
listed or admitted to trading on any national securities exchange or NASDAQ, a
day on which such exchange or market is open for the transaction of business.
(l) "UNITED STATES MARITIME COMPANY" means any corporation or other entity
which, directly or indirectly, (i) owns or operates vessels in the United States
coastwise trade, intercoastal trade, or non-contiguous domestic trade, (ii)
owns, charters, sub-charters, or leases any vessel the costs of construction,
renovation, or reconstruction of which have been financed, in whole or in part,
by obligations insured or guaranteed under Title XI of the Merchant Marine Act
of 1936, as amended, (iii) conducts any activity, takes any action, or receives
any benefit that would be adversely affected under any provision of the United
States maritime, shipping, or vessel documentation laws because of the ownership
by Foreigners of its shares, or (iv) maintains a Capital Construction Fund under
the provisions of Section 807 of the Merchant Marine Act of 1936, as amended.
NINTH: The Corporation reserves the right to amend, alter, change, or
repeal any provision contained in these Second Amended and Restated Articles of
Incorporation of the Corporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon shareholders, directors and officers are
granted subject to this reservation. These Second Amended and Restated Articles
of Incorporation take the place of and supersede the existing Amended and
Restated Articles of Incorporation as heretofore amended.
TENTH: Section 1701.831 of the Ohio Revised Code, which relates to control
share acquisitions, shall not apply to control share acquisitions of the
Corporation. Additionally, Chapter 1704 of the Ohio Revised Code, which relates
to interested shareholder transactions, shall not apply to the Corporation.
ELEVENTH: Except as may be expressly provided in any series of Preferred
Stock, no holder of any shares of Capital Stock shall have any preemptive right
to acquire any shares of unissued Capital Stock of any class or series, now or
hereafter authorized, or any treasury shares or securities convertible into such
shares or carrying a right to subscribe to or acquire such shares of Capital
Stock.
TWELFTH: Any and every statute of the State of Ohio hereafter enacted, (1)
whereby the rights, powers or privileges of corporations or of the shareholders
of corporations organized under the laws of the State of Ohio are increased or
diminished or in any way affected, or (2) whereby effect is given to the action
taken by any number, less than all, of the shareholders of any such corporation,
or (3) whereby the authority of the Directors to adopt amendments to the
articles of incorporation without shareholder approval shall be expanded, will
apply to the Corporation and will be binding not only upon the corporation but
upon every shareholder of the Corporation to the same extent as if such statute
had been in force at the date of filing these
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Second Amended and Restated Articles of Incorporation in the office of the
Secretary of State of Ohio.
THIRTEENTH: Indemnification
1. The Corporation shall indemnify, to the full extent then permitted by law,
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, by reason of the fact the he or she
is or was a Director or officer of the Corporation, or is or was serving at the
request of the Corporation as a Director, trustee, officer, employee, or agent
of another corporation, partnership, limited liability company, joint venture,
trust, or other enterprise. The Corporation shall pay, to the full extent then
required by law, expenses, including attorney's fees, judgments, fines and
amounts paid in settlement incurred by a Director in defending any such action,
suit, or proceeding as they are incurred, in advance of the disposition thereof,
upon receipt of any undertaking then required by law. The Corporation may, in
its discretion, indemnify any other person, or advance expenses to any other
person, in the same manner and to the full extent then permitted by law.
Notwithstanding the foregoing, except as provided in Section 1 hereof, the
Corporation shall indemnify or advance expenses to any person in connection with
a proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
2. If a claim under Section 1 is not paid in full by the Corporation within
thirty days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Ohio General Corporation Law for the
Corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Ohio General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
shareholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
3. The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article THIRTEENTH shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, provision of the Articles,
Regulations, agreement, vote of shareholders or disinterested Directors, or
otherwise.
4. The Corporation may purchase and maintain insurance on behalf of any person
who is or was a Director, officer, or employee of the Corporation, or is or was
serving at the request of the
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Corporation as a Director, trustee, officer, employee, or agent of another
corporation, partnership, limited liability company, joint venture, trust, or
other enterprise against any liability asserted against him or her and incurred
by him or her 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 Section 4 or of the Ohio
General Corporation Law.
FOURTEENTH: The Corporation shall be prohibited from issuing nonvoting
equity securities to the extent, and only to the extent, required by Section
1123(a)(6) of the United States Bankruptcy Reform Act of 1978, as codified in
Title 11 of the United States Code, 11 U.S.C. Sections 101-1330, as in effect on
the date hereof.
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