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EXHIBIT 3.1
CERTIFICATE
OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
ANTHONY & SYLVAN POOLS CORPORATION
Stuart D. Neidus, who is Chairman of the Board of Directors,
Chief Executive Officer and Chief Financial Officer, and Kevan Langner, who is
Secretary, of the above-named Ohio corporation for profit with its principal
location at Chardon, Ohio (the "Corporation") do hereby certify that the
following Amended and Restated Articles of Incorporation were adopted by the
Board of Directors of the Corporation to supersede and take the place of the
existing Articles of Incorporation at a meeting duly called on September __,
1998, and further that such Amended and Restated Articles of Incorporation were
approved by the sole shareholder of the Corporation in a writing signed by such
shareholder and dated September __, 1998, all in accordance with the applicable
provisions of the Ohio Revised Code, including Section 1701.69 thereof.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
ANTHONY & SYLVAN POOLS CORPORATION
The undersigned, desiring to form a corporation for profit
under Chapter 1701 of the Ohio Revised Code, does hereby certify:
FIRST: The name of the Corporation shall be "Anthony & Sylvan
Pools Corporation."
SECOND: The place in the State of Ohio where the principal
office of the Corporation will be located is Chardon, Ohio, in Geauga County, or
such other location as the Board of Directors may from time to time determine.
THIRD: The purposes for which the Corporation is formed are
(i) to engage in any lawful act or activity for which corporations may be formed
under Chapter 1701 of the Ohio Revised Code, as now in effect or hereinafter
amended, in furtherance of such long-term plans and strategies as the Board of
Directors may from time to time establish for the Corporation and (ii) to
preserve for the Corporation, its shareholders and such other constituencies as
the Board of Directors may from time to time identify, the benefits expected to
be derived from such long-term plans and strategies.
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FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is Fifty Million
(50,000,000), all without par value, divided into two classes as follows:
1,000,000 serial preferred shares (hereinafter called the "Serial Shares"); and
49,000,000 common shares (hereinafter called the "Common Shares").
The voting powers and such designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions of each class of shares which are
fixed by these Articles of Incorporation, and the express grant of authority to
the Board of Directors to fix by resolutions the voting powers, designations,
preferences and relative, participating, optional or other rights, if any, or
the qualifications, limitations or restrictions, if any, of the Serial Shares
which are not fixed by these Articles of Incorporation, are as follows:
SECTION 1. PROVISIONS APPLICABLE ONLY TO THE SERIAL SHARES
A. The Serial Shares may be issued from time to time in any
amount, not exceeding in the aggregate (including all shares of any and all
series thereof theretofore issued and not theretofore retired) the total number
of Serial Shares hereinabove authorized, as Serial Shares of one or more series,
as hereinafter provided. All shares of any one series of the Serial Shares shall
be identical in all respects, each series thereof shall be distinctively
designated by letter or descriptive words, and, except as permitted by the
provisions of this Article FOURTH, all series of the Serial Shares shall rank
equally and be identical in all respects.
B. Authority is hereby expressly granted to the Board of
Directors from time to time to issue the Serial Shares in any series and in
connection with the creation of such series to fix by the resolution or
resolutions providing for the issue of shares thereof the voting powers and
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions of such series, to the
fullest extent now or hereafter permitted by the laws of the State of Ohio, in
respect of the matters set forth in the following subdivisions (1) to (7),
inclusive:
(1) The designation of such series;
(2) The voting powers, if any, of the holders of such
series;
(3) The rate and the times and conditions upon which
the holders of such series shall be entitled to receive dividends, and whether
such dividends shall be cumulative or non-cumulative;
(4) The price or prices and the time or times and the
manner in which such series shall be redeemable, if such Serial Shares are made
redeemable;
(5) Whether the shares of such series shall be
entitled to the benefit of a sinking fund or purchase fund to be applied to the
redemption or purchase of such series and, if so entitled, the amount of such
fund and the manner of its application;
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(6) Whether the shares of such series shall be
convertible into, or exchangeable for, shares of any other class or classes or
of any other series of the same or any other class of the Corporation or any
other security, and, if so convertible or exchangeable, the conversion price or
prices or rate or rates, or the rate or rates of exchange, and the adjustments,
if any, in the price or prices or rate or rates at which such conversion or
exchange may be made; and
(7) Any other designations, preferences and relative
participating, or other special rights, and qualifications, limitations or
restrictions thereof, so far as they are not inconsistent with the provisions of
these Articles of Incorporation, as from time to time amended.
C. Shares of any such series which have been issued and
reacquired in any manner by the Corporation (excluding, until the Corporation
elects to retire them, shares which are held as treasury shares but including
shares redeemed, shares purchased and retired, whether through the operation of
a retirement or purchase fund or otherwise, and shares which, if convertible or
exchangeable, have been converted into or exchanged for shares of any other
class or classes) shall have the status of authorized and unissued shares and
may be reissued as a part of the series of which they were originally a part or
may be reissued as part of a new series to be created by resolution or
resolutions of the Board of Directors or as part of any other series, all
subject to the conditions or restrictions on issuance set forth herein or in any
resolution or resolutions adopted by the Board of Directors providing for the
issue of any series of Serial Shares.
SECTION 2. PROVISIONS APPLICABLE TO ALL CLASSES OF SHARES
A. Except to the extent that the resolution or resolutions
providing for the issuance of a series of Serial Shares may otherwise provide
with respect to such series, the preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions of the Serial Shares of all series are as follows:
(1) Out of the unreserved and unrestricted surplus
of the Corporation legally available for dividends, the holders of Serial Shares
shall be entitled to receive, when and as declared by the Board of Directors,
dividends at the rate per annum determined as in this Article FOURTH, provided
therefor, and no more, payable quarterly in each year on such dates as may be
fixed as in this Article FOURTH provided therefor to holders of record on the
respective dates not exceeding forty days preceding such dividend payment dates
as may be determined by the Board of Directors in advance of the payment of each
such dividend (each such payment day being hereinafter called a dividend date
and each quarterly period ending with a dividend date being hereinafter called a
dividend period), before any dividends (other than dividends payable in shares
ranking junior to Serial Shares) on any class or classes of shares of the
Corporation ranking junior to Serial Shares as to dividends or on liquidation
shall be declared or paid or set apart for payment. With respect to each issue
on which dividends are cumulative, such dividends shall accrue and be cumulative
from the "Date of Cumulation." The term "Date of Cumulation" as used in this
Section 2A.(1) with reference to the Serial Shares shall be deemed to mean the
date on which shares of such series are first issued. In the event of the issue
of additional shares of any then existing series, all dividends paid on the
shares of such series prior to the issue of such additional shares, and all
dividends declared and payable to holders of record of shares of such series on
any date prior to the
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issue of such additional shares, shall be deemed to have been paid on such
additional shares. No dividends shall be declared in respect of any dividend
period unless there shall likewise be or have been declared on all shares of
each other issue at the time outstanding like dividends for all dividend periods
coinciding with or ending before such dividend period, ratably in proportion to
the respective annual dividend rates per annum fixed therefor as hereinbefore
provided. Accruals of dividends shall not bear interest.
(2) The Serial Shares of all issues shall be
preferred over the Common Shares as to assets in the event of any liquidation or
dissolution or winding up of the Corporation, and in that event the holders of
each series shall be entitled to receive, out of the assets of the Corporation
available for distribution to its shareholders the amount payable upon such
liquidation or dissolution or winding up as fixed by the Board of Directors,
plus an amount equal to all dividends accrued and unpaid thereon to the date of
final distribution to such holders, before any distribution of the assets shall
be made to the holders of the Common Shares; and, if in the event of any such
liquidation or dissolution or winding up of the Corporation, the holders of all
issues of the Serial Shares shall have received all the amounts to which they
shall be entitled as aforesaid, the holders of the Common Shares shall be
entitled, to the exclusion of the holders of the Serial Shares, to share ratably
in all the assets of the Corporation available for distribution to the
shareholders then remaining according to the number of shares of the Common
Shares held by them respectively. If, upon any liquidation or dissolution or
winding up of the Corporation, the amounts payable on or with respect to the
Serial Shares are not paid in full, the holders of shares of the Serial Shares
of all issues shall share ratably in any distribution of assets according to the
respective amounts which would be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to the Serial
Shares of all series were paid in full. For the purposes of this Section 2A.(2),
the voluntary sale, lease, exchange or transfer (for cash, shares, securities,
or other consideration) of all or substantially all of its property or assets
to, or a consolidation or merger of the Corporation with, one or more
corporations shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary.
(3) The Serial Shares, or any series or issue
thereof, or any part of any series or issue thereof, which are outstanding and
which are by resolution or resolutions of the Board of Directors creating any
such series, then redeemable, may be redeemed by the Corporation at its election
expressed by resolution of the Board of Directors, upon not less than thirty
(30) nor more than sixty (60) days' previous notice to the holders of record of
the Serial Shares to be redeemed, given by mail or by publication in such manner
as may be prescribed by resolution of the Board of Directors, at the applicable
redemption price, determined as provided in this Article FOURTH, of the Serial
Shares to be redeemed. If less than all the outstanding Serial Shares of any
issue or series is to be redeemed, the redemption may be made either by lot or
pro rata as may be prescribed by resolution of the Board of Directors. From and
after the date fixed in any such notice as the date of redemption (unless
default shall be made by the Corporation in providing moneys for the payment of
the redemption price pursuant to such notice), or, if the Corporation shall so
elect, from and after a date, prior to the date fixed as the date of redemption,
on which the Corporation shall provide moneys for the payment of the redemption
price by depositing the amount thereof for the account of the holders of the
Serial Shares entitled thereto with a bank or trust company and having a capital
and surplus of at least fifty million dollars ($50,000,000), pursuant to notice
of such election included in the notice of redemption specifying the date on
which such deposit will be
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made, all dividends on the Serial Shares called for redemption shall cease to
accrue and all rights of the holders thereof as shareholders of the Corporation,
except the right to receive the redemption price as hereinafter provided and, in
the case of such deposit, any conversion rights not theretofore expired, shall
cease and terminate. After the deposit of such amount with such bank or trust
company, the respective holders of record of the Serial Shares to be redeemed
shall be entitled to receive the redemption price at any time upon actual
delivery to such bank or trust company of certificates for the number of shares
to be redeemed, duly endorsed in blank or accompanied by proper instruments of
assignment and transfer thereof duly endorsed in blank. Any moneys so deposited
which shall remain unclaimed by the holders of such Serial Shares at the end of
six (6) years after the redemption date, together with any interest thereon
which shall be allowed by the bank or trust company with which the deposit shall
have been made, shall be repaid by such bank or trust company to the Corporation
upon its request expressed in a resolution of its Board of Directors, free of
any trust theretofore impressed upon them by the Corporation.
(4) If at the time of any annual meeting of
shareholders of the Corporation for the election of directors a default in
preference dividends, as the term "default in preference dividends" is
hereinafter defined, shall exist, the holders of the Serial Shares voting
separately as a class and without regard to series, shall have the right to
elect two members of the Board of Directors; and the holders of the Common
Shares shall not be entitled to vote in the election of the directors of the
Corporation to be elected by the holders of Serial Shares, as provided above.
Whenever a default in preference dividends shall commence to exist, the
Corporation, upon the written request of the holders of five percent (5%) or
more of the outstanding Serial Shares, shall call a special meeting of the
holders of the Serial Shares, such special meeting or meetings to be held within
one hundred twenty (120) days after the date on which such request is received
by the Corporation, for the purpose of enabling such holders to elect members of
the Board of Directors as provided above; provided, however, that such special
meeting or meetings need not be called if an annual meeting of shareholders of
the Corporation for the election of directors shall be scheduled to be held
within such 120 days. Prior to any such special or annual meeting or meetings,
the number of directors of the Corporation shall be increased to the extent
necessary to provide as additional places on the Board of Directors the
directorships to be filled by the directors to be elected thereat. Any director
elected as aforesaid by the holders of Serial Shares shall cease to serve as
such director whenever a default in preference dividends shall cease to exist.
If, prior to the end of the term of any director elected as aforesaid by the
holders of Serial Shares, or elected by the holders of Serial Shares and Common
Shares, a vacancy in the office of such director shall occur by reason of death,
resignation, removal or disability, or for any other cause, such vacancy shall
be filled for the unexpired term in the manner provided in these Articles of
Incorporation and the Regulations of the Corporation; provided, however, that if
such vacancy shall be filled by election by the shareholders at a meeting
thereof, the right to fill such vacancy shall be vested in the holders of that
class of shares or series thereof which elected the director the vacancy in the
office of whom is so to be filled, unless, in any such case, no default in
preference dividends shall exist at the time of such meeting. For the purposes
of this Section 2A.(4), a "default in preference dividends" shall be deemed to
have occurred whenever the amount of cumulative dividends accrued and unpaid
upon any series of the Serial Shares and the amount of non-cumulative dividends
unpaid upon any series of the Serial Shares shall be equivalent to six (6) full
quarter-yearly dividends or more, and, having so occurred, such default in
preference dividends shall be deemed to exist thereafter until, but only until,
all cumulative dividends accrued and unpaid
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on all Serial Shares then outstanding, of each and every class and series, shall
have been paid in full, or declared and funds set aside for their payment, and
until non-cumulative dividends on all Serial Shares then outstanding, of each
and every series, shall have been paid regularly for at least one year. Nothing
herein contained shall be deemed to prevent an increase in the number of
directors of the Corporation pursuant to its Regulations so as to provide as
additional places on the Board of Directors the directorships to be filled by
the directors so to be elected by the holders of the Serial Shares or of any
class or series thereof, or to prevent any other change in the number of
directors of the Corporation. At any meeting held for the purpose of electing
directors at which the holders of the Serial Shares shall have the special
right, voting separately as a group, to elect directors as provided in this
Section 2A.(4), the presence, in person or by proxy, of the holders of one-third
of the aggregate number of Serial Shares of all series at the time outstanding
shall be required to constitute a quorum of such group for the election of any
director by the holders of the Serial Shares as a group. At any such meeting or
adjournment thereof, (a) the absence of a quorum of the holders of the Serial
Shares shall not prevent the election of directors other than those to be
elected by the holders of the Serial Shares voting as a group and the absence of
a quorum for the election of such other directors shall not prevent the election
of the directors to be elected by the holders of the Serial Shares voting as a
group, and (b) in the absence of either or both such quorums, a majority of the
holders present in person or by proxy of the shares which lack a quorum shall
have power to adjourn the meeting for the election of directors which they are
entitled to elect from time to time without notice other than announcement at
the meeting until a quorum shall be present.
(5) So long as any shares of any series shall be
outstanding, (a) the Corporation shall not, without the affirmative vote or
written consent of the holders of at least two-thirds of the aggregate number of
shares of all series at the time outstanding, considered as a single class
without regard to series,
(i) alter or change the voting powers,
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions of the Serial Shares as
provided in these Articles of Incorporation or by the resolution or resolutions
so fixing the same, so as to affect the Serial Shares adversely, or
(ii) authorize or create any class of shares
ranking, either as to dividends or upon liquidation, prior to the Serial Shares;
or
(b) the Corporation shall not, without the
affirmative vote or written consent of the holders of a majority of the
aggregate number of shares of all series at the time outstanding, considered as
a single class, increase the authorized amount of Serial Shares or authorize or
create any class ranking, either as to dividends or upon liquidation, on a
parity with Serial Shares; or (c) the Corporation shall not, without the
affirmative vote or written consent of the holders of at least two-thirds of the
aggregate number of shares of any series at the time outstanding, the holders of
such series consenting or voting separately as a series, alter or change the
voting powers, designations, preferences and relative, participating, optional
or other special rights and qualifications, limitations or restrictions
specifically applicable to such series, as provided in these Articles of
Incorporation or in the resolution or resolutions adopted by the Board of
Directors providing for the issue of such series, so as to affect such series
adversely; or (d) the
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Corporation shall not (i) declare, or pay, or set apart for payment, any
dividends (other than dividends payable in shares ranking junior to the Serial
Shares) or make any distribution, on any class or classes of shares of the
Corporation ranking junior to the Serial Shares in any respect, or (ii) redeem,
purchase or otherwise acquire, or permit any subsidiary to purchase or otherwise
acquire, any shares of any such junior class, if at the time of making such
declaration, payment, distribution, redemption, purchase or acquisition, the
Corporation shall be in default with respect to any dividend payable on, or any
obligation to retire, shares of Serial Shares, provided that, notwithstanding
the foregoing, the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior class in exchange for, or out of the net cash
proceeds from the sale of, other shares of any junior class; provided, however,
that any vote or consent required by Section 2A.(5)(a)(i) above may be given and
made effective by the filing of an appropriate amendment of these Articles of
Incorporation without obtaining the vote or consent of the holders of the Common
Shares, the right to give such vote or consent being expressly waived by all
holders of such Common Shares unless the action to be taken would substantially
adversely affect the rights or powers of the Common Shares; and provided,
further, that any vote or consent required by Section 2A.(5)(c) above may be
given and made effective by the filing of an appropriate amendment of these
Articles of Incorporation without obtaining the vote or consent of the holders
of any other series of the Serial Shares or of the holders of the Common Shares,
the right to give such vote or consent being expressly waived by all holders of
such other series of Serial Shares and Common Shares, unless the action to be
taken would substantially adversely affect the rights or powers of such other
series of Serial Shares or Common Shares, as the case may be.
(6) If at any time the Corporation shall have failed
to pay dividends in full on the Serial Shares, thereafter and until dividends in
full, including all accrued and unpaid dividends on the Serial Shares
outstanding, shall have been declared and set apart for payment or paid (a) the
Corporation shall not, without the affirmative vote or written consent of the
holders of at least two-thirds of the aggregate number of shares of all series
at the time outstanding, redeem less than all of the Serial Shares at such time
outstanding other than in accordance with Section 2A.(7), and (b) neither the
Corporation nor any subsidiary shall purchase any Serial Shares except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of Serial Shares of all
series upon such terms as the Board of Directors, in its sole discretion after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series, shall determine (which determination
shall be final and conclusive) will result in fair and equitable treatment among
the respective series; provided, that (i) unless prohibited by the provisions
applicable to any series, the Corporation, to meet the requirements of any
retirement or sinking fund provisions with respect to any series, may use shares
of such series acquired by it prior to such failure and then held by it as
treasury shares and (ii) nothing shall prevent the Corporation from completing
the purchase or redemption of Serial Shares for which a purchase contract was
entered into for any retirement or sinking fund purposes, or the notice of
redemption of which was initially published, prior to such failure.
(7) If in any case the amounts payable with respect
to any obligations to retire shares of the Serial Shares are not paid in full in
the case of all series as to which such obligations exist, the number of shares
of the various series to be retired shall be in proportion to the respective
amounts which would be payable on account of such obligations if all amounts
which would be payable on account of such obligations were discharged in full.
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B. For the purposes of this Article FOURTH and of any
resolution or resolutions of the Board of Directors adopted pursuant to this
Article FOURTH or of any certificate filed with the Secretary of State of Ohio
(unless otherwise provided in any such resolution or certificate):
(1) The term "outstanding," when used in reference to
shares, shall mean issued shares, excluding shares held by the Corporation or a
subsidiary and shares called for redemption, funds for the redemption of which
shall have been deposited in trust;
(2) The amount of dividends "accrued and unpaid" on
any Serial Shares of any series as at any quarterly dividend date shall be
deemed (whether or not in any dividend period in respect of which such term is
used there shall have been unreserved and unrestricted surplus legally available
for the payment of dividends) to be the amount of any unpaid dividends
accumulated thereon to and including such quarterly dividend date, whether or
not earned or declared, and the amount of dividends "accrued and unpaid" on any
shares of any series as at any date other than a quarterly dividend date shall
be calculated as the amount of any unpaid dividends accumulated thereon to and
including the last preceding quarterly dividend date, whether or not earned or
declared, plus an amount calculated on the basis of the annual dividend rate
fixed for the shares of such series for the period after such last preceding
quarterly dividend date to, and including, the date as of which the calculation
is made, based on a 360-day year of twelve 30-day months;
(3) Any class or classes of shares of the Corporation
shall be deemed to rank:
(a) prior to the Serial Shares either as to
dividends or upon liquidation, if the holders of such class or classes shall be
entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of any Serial Shares;
(b) on a parity with the Serial Shares either
as to dividends or upon liquidation, whether or not the dividend rates, dividend
payment dates, or redemption or liquidation prices per share thereof be
different from those of any Serial Shares, if the holders of such class or
classes shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority one over the other as between the holders of such class
or classes of shares and the holders of any Serial Shares; and
(c) junior to the Serial Shares if the rights
of the holders of such class or classes shall be subject or subordinate to the
rights of the holders of the Serial Shares in respect of either the receipt of
dividends or the amounts distributable upon liquidation, dissolution or winding
up.
C. Except as otherwise provided by law or by these Articles of
Incorporation and except to the extent that the resolution or resolutions of the
Board of Directors providing for the
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issuance of a series of Serial Shares may otherwise provide with respect to such
series, the holder (or holders) of each outstanding share of the Corporation,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of shareholders or submitted to shareholders for their consent
without a meeting.
D. No shareholder of the Corporation shall by reason of his
holding shares of any class have any preemptive or preferential right to
purchase or subscribe to any shares of any class of the Corporation now or
hereafter to be authorized, or any notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase shares of any
class, now or hereafter to be authorized, whether or not the issuance of any
such shares, or such notes, debentures, bonds or other securities, would
adversely affect the dividend or voting rights of such shareholder, other than
such rights, if any, as the Board of Directors, in its discretion from time to
time may grant and at such price as the Board of Directors in its discretion may
fix; and the Board of Directors may issue shares of any class of the
Corporation, or any notes, debentures, bonds, or other securities convertible
into or carrying options or warrants to purchase shares of any class, without
offering any such shares of any class, either in whole or in part, to the
existing shareholders of any class.
FIFTH: The provisions of Section 1701.831 of the Ohio Revised
Code, as in effect on August 31, 1998, shall not apply to this Corporation.
SIXTH: No Person shall make a Control Share Acquisition
without the prior authorization of the Corporation's shareholders.
SECTION 1. PROCEDURE. In order to obtain authorization of a
Control Share Acquisition by the Corporation's shareholders, a Person shall
deliver a notice (the "Notice") to the Corporation at its principal place of
business that sets forth all of the following information:
A. The identity of the Person who is giving the Notice;
B. A statement that the Notice is given pursuant to this
Article SIXTH;
C. The number and class of shares of the Corporation owned,
directly or indirectly, by the Person who gives the Notice;
D. The range of voting power under which the proposed Control
Share Acquisition would, if consummated, fall;
E. A description in reasonable detail of the terms of the
proposed Control Share Acquisition; and
F. Reasonable evidence that the proposed Control Share
Acquisition, if consummated, would not be contrary to law and that the Person
who is giving the Notice has the financial capacity to make the proposed Control
Share Acquisition.
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SECTION 2. CALL OF SPECIAL MEETING OF SHAREHOLDERS. The Board
of Directors of the Corporation shall, within ten days after receipt of such
Notice by the Corporation, call a special meeting of shareholders to be held not
later than fifty (50) days after receipt of the Notice by the Corporation,
unless the Person who delivered the Notice agrees to a later date, to consider
the proposed Control Share Acquisition; provided that the Board of Directors
shall have no obligation to call such meeting if they make a determination
within ten days after receipt of the Notice (i) that the Notice was not given in
good faith, (ii) that the proposed Control Share Acquisition would not be in the
best interests of the Corporation or (iii) that the proposed Control Share
Acquisition could not be consummated for financial or legal reasons. The Board
of Directors may adjourn such meeting if, prior to such meeting, the Corporation
has received a Notice from any other Person and the Board of Directors has
determined that the Control Share Acquisition proposed by such other Person or a
merger, consolidation or sale of assets of the Corporation should be presented
to shareholders at an adjourned meeting or at a special meeting held at a later
date.
For purposes of this Section 2, a director, in determining
whether the proposed Control Share Acquisition would be in the best interests of
the Corporation, shall consider the interests of the Corporation's shareholders
and, in his discretion, may consider any of the following: the interests of the
Corporation's employees, suppliers, creditors and customers; the economy of the
state and nation; community and societal considerations; and the long term as
well as short term interests of the Corporation and its shareholders, including
the possibility that these interests may be best served by the continued
independence of the Corporation.
For purposes of making a determination that a special meeting
of shareholders should not be called pursuant to this Section 2, no such
determination shall be deemed void or voidable with respect to the Corporation
merely because one or more of its directors or officers who participated in
making such determination may be deemed to be other than disinterested, if in
any such case the material facts of the relationship giving rise to a basis for
self-interest are known to the directors and the directors, in good faith
reasonably justified by the facts, make such determination by the affirmative
vote of a majority of the disinterested directors, even though the disinterested
directors constitute less than a quorum. For purposes of this paragraph,
"disinterested directors" shall mean directors whose material contacts with the
Corporation are limited principally to activities as a director or shareholder.
Persons who have substantial, recurring business or professional contacts with
the Corporation shall not be deemed to be "disinterested directors" for purposes
of this provision. A director shall not be deemed to be other than a
"disinterested director" merely because he or she would no longer be a director
if the proposed Control Share Acquisition were approved and consummated.
SECTION 3. NOTICE OF SPECIAL MEETING. The Corporation shall
give notice of such special meeting to all shareholders of record as of the
record date set for such meeting as promptly as practicable. Such notice shall
include or be accompanied by a copy of the Notice and by a statement of the
Corporation, authorized by the Board of Directors, of its position or
recommendation, or that it is taking no position or making no recommendation,
with respect to the proposed Control Share Acquisition.
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SECTION 4. REQUIREMENTS FOR APPROVAL. The Person who delivered
the Notice may make the proposed Control Share Acquisition if both of the
following occur: (i) the shareholders of the Corporation authorize such
acquisition at the special meeting called by the Board of Directors at which a
quorum is present and held for that purpose by an affirmative vote of a majority
of the Voting Shares represented at such meeting in person or by proxy and by a
majority of the portion of such Voting Shares represented at such meeting in
person or by proxy excluding the votes of Interested Shares; and (ii) such
acquisition is consummated, in accordance with the terms so authorized, not
later than 360 days following shareholder authorization of the Control Share
Acquisition. For purposes of these Articles of Incorporation, "Voting Shares"
shall mean all outstanding shares of the Corporation entitled, at the time of
the meeting, to vote in the election of directors.
SECTION 5. VIOLATIONS OF RESTRICTION. Shares issued or
transferred to any Person in violation of this Article SIXTH shall be valid only
with respect to such number of shares as does not result in a violation of this
Article SIXTH, and such issuance or transfer shall be null and void with respect
to the remainder of such shares, any such remainder of shares being hereinafter
called "Excess Shares." If the last clause of the foregoing sentence is
determined to be invalid by virtue of any legal decision, statute, rule or
regulation, the Person who holds Excess Shares shall be conclusively deemed to
have acted as an agent on behalf of the Corporation in acquiring the Excess
Shares and to hold such Excess Shares on behalf of the Corporation. As the
equivalent of treasury securities for such purposes, the Excess Shares shall not
be entitled to any voting rights, shall not be considered to be outstanding for
quorum or voting purposes, and shall not be entitled to receive dividends,
interest or any other distribution with respect to the Excess Shares. Any person
who receives dividends, interest or any other distribution in respect to Excess
Shares shall hold the same as agent for the Corporation and, following a
permitted transfer, for the transferee thereof. Notwithstanding the foregoing,
any holder of Excess Shares may transfer the same (together with any
distributions thereon) to any person who, following such transfer, would not own
shares in violation of this Article SIXTH. Upon such permitted transfer, the
Corporation shall pay or distribute to the transferee any distributions on the
Excess Shares not previously paid or distributed.
SECTION 6. DEFINITIONS. As used in this Article SIXTH:
A. "Person" includes, without limitation, an individual, a
corporation (whether nonprofit or for profit), a partnership, a limited
liability company, an unincorporated society or association, and two or more
persons having a joint or common interest.
B. (1) "Control Share Acquisition" means the acquisition,
directly or indirectly, by any Person, of shares of the Corporation that, when
added to all other shares of the Corporation in respect of which such Person may
exercise or direct the exercise of voting power as provided in this Section
6B.(1), would entitle such Person, immediately after such acquisition, directly
or
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indirectly, to exercise or direct the exercise of the voting power of the
Corporation in the election of directors within any of the following ranges of
such voting power:
(a) One-fifth or more but less than one-third
of Voting Shares;
(b) One-third or more but less than a
majority of Voting Shares;
(c) A majority or more of Voting Shares.
A bank, broker, nominee, trustee, or other person who acquires
shares in the ordinary course of business for the benefit of others in good
faith and not for the purpose of circumventing this Article SIXTH shall,
however, be deemed to have voting power only of shares in respect of which such
person would be able to exercise or direct the exercise of votes without further
instruction from others at a meeting of shareholders called under this Article
SIXTH. For purposes of this Article SIXTH, the acquisition of securities
immediately convertible into shares of the Corporation with voting power in the
election of directors shall be treated as an acquisition of such shares.
(2) The acquisition by any Person of any shares of
the Corporation does not constitute a Control Share Acquisition for the purpose
of this Article SIXTH if the acquisition is consummated in any of the following
circumstances:
(a) Pursuant to a spin-off or other
distribution of all or any portion of Essef Corporation's ownership interest in
the Corporation or pursuant to the exercise of options obtained pursuant to
agreements in place prior to spin-off or distribution;
(b) By underwriters in good faith and not for
the purpose of circumventing this Article SIXTH in connection with an offering
of the securities of the Corporation to the public;
(c) By bequest or inheritance, by operation
of law upon the death of any individual, or by any other transfer without
valuable consideration, including a gift, that is made in good faith and not for
the purpose of circumventing this Article SIXTH;
(d) Pursuant to the satisfaction of a pledge
or other security interest created in good faith and not for the purpose of
circumventing this Article SIXTH;
(e) Pursuant to a merger or consolidation
adopted, or a combination or majority share acquisition authorized by
shareholder vote in compliance with Sections 1701.78 or 1701.83 or Chapter 1704
of the Ohio Revised Code if the Corporation is the surviving or new corporation
in the merger or consolidation or is the acquiring corporation in the
combination or majority share acquisition and if the vote of shareholders of the
surviving, new, or acquiring corporation is required by the provisions of
Sections 1701.78 or 1701.83 or Chapter 1704 of the Ohio Revised Code; or
(f) The Person's being entitled, immediately
thereafter, to exercise or direct the exercise of voting power of the
Corporation in the election of directors within
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the same range theretofore attained by that person either in compliance with
the provisions of this Article SIXTH or as a result solely of the Corporation's
purchase of shares issued by it. Any shareholder whose ownership of shares of
the Corporation as of the date of any spin-off of Essef Corporation's interest
in the Corporation would be in one of the ranges of voting power described under
Section 6B(1)(a), (b) or (c) shall not be required to obtain any shareholder
approval for ownership within such range but would be required to obtain
shareholder approval for acquisitions of shares that would cause such
shareholder's holdings to move to a greater range.
The acquisition by any Person of shares of the Corporation in
a manner described under this Section 6B.(2) shall be deemed to be a Control
Share Acquisition authorized pursuant to this Article SIXTH within the range of
voting power under Section 6B.(1)(a), (b) or (c) of this Article SIXTH that such
Person is entitled to exercise after such acquisition, provided that, in the
case of an acquisition in a manner described under Section 6B.(2)(c) or (d), the
transferor of shares to such Person had previously obtained any authorization of
shareholders required under this Article SIXTH in connection with such
transferor's acquisition of shares of the Corporation.
(3) The acquisition of shares of the Corporation in
good faith and not for the purpose of circumventing this Article SIXTH the
acquisition of which (a) had previously been authorized by shareholders in
compliance with this Article SIXTH or (b) would have constituted a Control Share
Acquisition but for Section 6B.(2), does not constitute a Control Share
Acquisition for the purpose of this Article SIXTH unless such acquisition
entitles any Person, directly or indirectly, to exercise or direct the exercise
of voting power of the Corporation in the election of directors in excess of the
range of such voting power authorized pursuant to this Article SIXTH, or deemed
to be so authorized under Section 6B.(2).
C. "Interested Shares" means Voting Shares with respect to
which any of the following persons may exercise or direct the exercise of the
voting power:
(1) any Person whose Notice prompted the calling of
the meeting of shareholders;
(2) any officer of the Corporation elected or
appointed by the directors of the Corporation; provided, however, that Voting
Shares which, as of the record date of any special meeting held pursuant to this
Article SIXTH, have been beneficially owned by such person for three or more
years (including, for this purpose, the holding period of shares of Essef
Corporation to the extent Voting Shares were obtained by such officer in a
spin-off by Essef of shares of the Corporation) shall not be deemed to be
"Interested Shares" for purposes of any vote at such meeting; and
(3) any employee of the Corporation who is also a
director of the Corporation; provided, however, that Voting Shares which, as of
the record date of any special meeting held pursuant to this Article SIXTH, have
been beneficially owned by such person for three or more years (including, for
this purpose, the holding period of shares of Essef Corporation to the extent
Voting Shares were obtained by such officer in a spin-off by Essef of shares of
the Corporation) shall not be deemed to be "Interested Shares" for purposes of
any vote at such meeting;
(4) any Person that acquires such Voting Shares for a
valuable consideration during the period beginning with the date of the first
public disclosure of a proposed Control Share Acquisition or any proposed
merger, consolidation or other transaction which would result in a change of
control of the Corporation or all or substantially all of its assets, and ending
on
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the record date of any special meeting held thereafter pursuant to this Article
SIXTH for the purpose of voting on a Control Share Acquisition proposed by any
Person who has delivered a Notice pursuant to Section 1 of this Article SIXTH if
either of the following applies:
(a) the aggregate consideration paid or given
by the Person who acquired the Voting Shares, and other persons acting in
concert with such Person, for all such Voting Shares exceeds Two Hundred Fifty
Thousand Dollars ($250,000.00); or
(b) the number of Voting Shares acquired by
the Person who acquired the Voting Shares, and other persons acting in concert
with such Person, for all such Voting Shares exceeds one half of one percent of
all Voting Shares; and
(5) any Person that transfers such Voting Shares for
valuable consideration after the record date of any special meeting described in
Section 6(C)(4) of this Article SIXTH as to shares so transferred, if
accompanied by the voting power in the form of a blank proxy, an agreement to
vote as instructed by the transferee, or otherwise.
SECTION 7. PROXIES. No proxy appointed for or in connection
with the shareholder authorization of a Control Share Acquisition pursuant to
this Article SIXTH is valid if it provides that it is irrevocable. No such proxy
is valid unless it is sought, appointed, and received both:
A. In accordance with all applicable requirements of law; and
B. Separate and apart from the sale or purchase, contract or
tender for sale or purchase, or request or invitation for tender for sale or
purchase, of shares of the Corporation.
SECTION 8. REVOCABILITY OF PROXIES. Proxies appointed for or
in connection with the shareholder authorization of a Control Share Acquisition
pursuant to this Article SIXTH shall be revocable at all times prior to the
obtaining of such shareholder authorization, whether or not coupled with an
interest.
SECTION 9. AMENDMENTS. Notwithstanding any other provisions of
these Articles of Incorporation or the Regulations of the Corporation, as the
same may be in effect from time to time, or any provision of law that might
otherwise permit a lesser vote of the directors or shareholders, but in addition
to any affirmative vote of the directors or the holders of any particular class
or series of shares required by law, the Articles of Incorporation or the
Regulations of the Corporation, as the same may be in effect from time to time,
the affirmative vote of at least eighty percent (80%) of the Voting Shares shall
be required to alter, amend or repeal this Article SIXTH or adopt any provisions
in the Articles of Incorporation or Regulations of the Corporation, as the same
may be in effect from time to time, which are inconsistent with the provisions
of this Article SIXTH.
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SECTION 10. LEGEND ON SHARE CERTIFICATES. Each certificate
representing shares of the Corporation shall contain the following legend:
"Transfer of the shares represented by this Certificate is subject to the
provisions of Article SIXTH of the Corporation's Articles of Incorporation as
the same may be in effect from time to time. Upon written request delivered to
the Secretary of the Corporation at its principal place of business, the
Corporation will mail to the holder of this Certificate a copy of such
provisions without charge within five (5) days after receipt of written request
therefor. By accepting this Certificate the holder hereof acknowledges that it
is accepting same subject to the provisions of said Article SIXTH as the same
may be in effect from time to time and covenants with the Corporation and each
shareholder thereof from time to time to comply with the provisions of said
Article SIXTH as the same may be in effect from time to time."
SEVENTH: Except as otherwise provided in these Articles of
Incorporation or in the Regulations of the Corporation, the holders of a
majority of the outstanding Voting Shares of the Corporation present in person
or by proxy at any meeting of the shareholders of the Corporation are authorized
to act on any matter which may properly come before such meeting.
EIGHTH: Except to the extent that Articles FOURTH and SIXTH
otherwise provide with respect to certain matters therein set forth, the
Corporation reserves the right to amend, alter, change or repeal any provision
contained in these Articles of Incorporation and to add new provisions, in the
manner now or hereafter prescribed by statute, upon the affirmative vote of a
majority of the outstanding shares of the Corporation, voting as a Class; and
all rights, privileges and preferences of whatsoever nature conferred upon
shareholders, directors and officers pursuant to these Articles of Incorporation
in their present form or as hereafter amended are granted subject to this
reservation. Notwithstanding the foregoing, the adoption of any amendment,
alteration, change or repeal to these Articles of Incorporation as the same may
be in effect from time to time which is inconsistent with or would have the
effect of amending, altering, changing or repealing the provisions of Sections
7, 9 or 10 of the Regulations of the Corporation as the same may be in effect
from time to time shall require the same affirmative vote of shareholders as
would be required under such Regulations to adopt any amendment, alteration,
change or repeal of said Sections 7, 9 or 10 or to adopt any provisions
inconsistent therewith.
NINTH: Without derogation from any other power to purchase
shares of the Corporation, the Corporation may, by action of its Board of
Directors and to the extent not prohibited by law, purchase outstanding shares
of any class.
TENTH: No holder of shares of any class shall have the right
to cumulate his voting power in the election of the Board of Directors, and the
right to cumulative voting described in Ohio Revised Code Section 1701.55 is
hereby specifically denied to the holders of any class of shares of the
Corporation.
ELEVENTH: Except where the law or the Articles of
Incorporation or Regulations of the Corporation require action to be authorized
or taken by shareholders, all of the authority of the Corporation shall be
exercised by or under the direction of the Board of Directors.
No contract or arrangement between the Corporation and Essef Corporation or
its successor ("Essef"), or between the Corporation and any director or
officer of the Corporation or Essef, will be void or voidable by the Corporation
solely because: (a) Essef or such officer or director is a party; or (b) such
officer or director participated in, or voted with respect to, the authorization
of such contract or arrangement. The Corporation and its shareholders shall have
no right to recover any amounts or seek any judgment against Essef or any
director or officer of Essef for breach of fiduciary duty or duty of loyalty,
failure to act in the best interests of the Corporation, or the derivation of
any improper personal benefit; provided, that such officer or director of Essef
acts in good faith in taking action or exercising rights in connection with any
contract or arrangement between the Corporation and Essef.
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IN WITNESS WHEREOF, the above-named officers, acting for and
on behalf of the Corporation, have subscribed their names this ___ day of
_________, 1998.
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Chairman of the Board, Chief Executive
Officer and Chief Financial Officer
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Secretary
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