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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 and Chief
Executive Officer, and Mark E. Brody, 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 August 5, 1999, 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
August 5, 1999, 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.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Thirty Million (30,000,000), all
without par value, divided into two classes as follows: 1,000,000 serial
preferred shares (hereinafter called the "Serial Shares"); and 29,000,000 common
shares (hereinafter called the "Common Shares").
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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;
(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
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(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 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.
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(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
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
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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 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
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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 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
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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 issuance of a series of Serial Shares may
otherwise provide with respect to such series, the holder (or holders) of each
outstanding
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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.
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
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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.
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
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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 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
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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 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
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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 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
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(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.
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
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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 August,
1999.
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Stuart D. Neidus, Chairman of the Board
and Chief Executive Officer
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Mark E. Brody, Secretary
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