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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
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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
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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 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
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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 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
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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 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
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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.
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
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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 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;
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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 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.
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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 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.
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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 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
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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 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
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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
(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
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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 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.
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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.
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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