EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE ARISTOTLE CORPORATION
ARTICLE 1
NAME
The name of the corporation (the "CORPORATION") is The Aristotle
Corporation.
ARTICLE 2
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE 3
DURATION
The Corporation is to have perpetual existence.
ARTICLE 4
CAPITAL STOCK
A. The total number of shares of capital stock that the Corporation has
authority to issue is 35,000,000 shares, consisting of 20,000,000 shares of
common stock, par value $.01 per share, and 15,000,000 shares of preferred
stock, par value $.01 per share, of which 2,400,000 shares are hereby designated
Series I preferred stock and 11,200,000 shares are hereby designated Series J
preferred stock.
B. The remaining shares of preferred stock may be issued from time to
time in one or more series. The board of directors of the Corporation is
expressly authorized to provide for the issuance of all or any of the remaining
shares of preferred stock in one or more series, to fix the number of shares,
and to determine or alter for each such series such voting powers, full or
limited, or no voting powers, and such designations, preferences, and relative,
participating, optional, or other rights and such qualifications, limitations,
or restrictions thereof, as stated in resolutions adopted by the board of
directors providing for the issuance of those shares and as may be permitted by
the General Corporation Law of the State of Delaware. The board of directors is
also expressly authorized to increase or decrease (but not below the number of
shares of that series then outstanding) the number of shares
of any series issued after shares of that series are issued. If the number of
shares of any such series is so decreased, the shares constituting that decrease
will resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of that series.
C. The powers, preferences, rights, restrictions, and other matters
relating to the Series I preferred stock are as follows:
1. STATED VALUE. The stated value of each share of Series I preferred
stock (the "SERIES I STATED VALUE") is $6.00, subject to adjustment for stock
dividends, combinations, splits, recapitalizations and the like with respect to
the Series I preferred stock.
2. DIVIDENDS. (a) Each holder of one or more shares of Series I preferred
stock is entitled to receive, if declared by the board of directors but only out
of funds that are legally available therefor, cash dividends at the rate of 11%
per annum of the Series I Stated Value on each share of Series I preferred
stock. These dividends accrue on each share of Series I preferred stock from the
date of issuance and accrue daily, whether or not earned or declared. Subject to
Section 4(h), these dividends are cumulative and are payable on March 31 and
September 30 of each year, if declared by the board of directors.
(b) Unless all cumulative dividends on shares of Series I preferred
stock (1) have been paid in cash or been declared in full and cash sums set
apart to pay those dividends or (2) are, pursuant to Section 4(h), no longer
required to be paid, the Corporation may not pay or declare any dividend,
whether in cash or property, or make any other distribution, to holders of
common stock or any other stock of the Corporation ranking junior to the Series
I preferred stock as to dividends or liquidation rights (any such stock, "SERIES
I JUNIOR STOCK"), nor may the Corporation purchase, redeem, or otherwise acquire
for value any shares of Series I Junior Stock (except for shares of common stock
that it acquires (1) under any agreement permitting or requiring the Corporation
to purchase shares of common stock held by any Person upon that Person ceasing
to provide services to the Corporation or (2) upon exercising a right of first
refusal upon proposed transfer by a holder of common stock).
(c) For purposes of Section 2(b), the Series I preferred stock
ranks on a parity with the Series J preferred stock. If the Corporation pays in
cash any dividends on the Series J preferred stock, or declares any dividends on
the Series J preferred stock and sets apart cash sums to pay those dividends, it
shall also pay in cash, or declare and set apart cash sums to pay, as
applicable, dividends on the Series I preferred stock representing a percentage
of cumulated Series I dividends that is equal to the percentage of cumulated
Series J dividends that is represented by the dividends paid or declared on the
Series J preferred stock.
3. LIQUIDATION. (a) Upon occurrence of a liquidation, dissolution, or
winding up of the Corporation, whether voluntary or involuntary (any such event,
a "LIQUIDATING EVENT"), each holder of shares of Series I preferred stock will
be entitled to receive out of the remaining assets of the Corporation available
for distribution to stockholders, before any distribution of assets is made to
holders of Series I Junior Stock, an amount per share of Series I preferred
stock (this amount, the "SERIES I LIQUIDATION AMOUNT") equal to the Series I
Stated Value plus an amount equal to all accumulated and unpaid dividends
(whether or not declared by the board of
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directors) on each share up to the date fixed for distribution. After payment of
the full Series I Liquidation Amount, holders of shares of Series I preferred
stock will not be entitled to participate any further in any distribution of
assets by the Corporation. If upon occurrence of a Liquidating Event the assets
of the Corporation available for distribution to its stockholders are
insufficient to pay the holders of the Series I preferred stock the full Series
I Liquidation Amount, holders of Series I preferred stock will share ratably in
any distribution of assets so that each such holder receives, per share, the
same percentage of the Series I Liquidation Amount.
(b) For purposes of Section 3(a), the Series I preferred stock
ranks on a parity with the Series J preferred stock. If the Corporation pays any
portion of the Series J Liquidation Amount (as defined below in Section 3(a) of
Section D), it shall at the same time also pay a percentage of the Series I
Liquidation Amount equal to the percentage of the Series J Liquidation Amount
paid by the Corporation.
(c) Subject to applicable law, any non-cash assets of the
Corporation that are legally available for distribution upon dissolution or
winding up of the Corporation must be promptly liquidated by a liquidating trust
or similar entity.
(d) A reorganization, consolidation or merger of the Corporation or
a sale or other disposition of all or substantially all the assets of the
Corporation will not constitute liquidation, dissolution, or winding up of the
Corporation for purposes of this Section 3.
4. OPTIONAL CONVERSION. (a) Any time during the 90-day period starting at
midnight at the beginning of the fifth anniversary of the effective date of the
merger of Nasco International, Inc. into the Corporation (the "FIFTH
ANNIVERSARY"; that period, the "CONVERSION PERIOD"), each share of Series I
preferred stock will be convertible at the option of the holder into such number
of fully paid and nonassessable shares of common stock as is determined by
dividing (x) an amount equal to (1) the Series I Stated Value plus (2) an amount
equal to the dividends that have accrued on each share of Series I preferred
stock through the Fifth Anniversary and not been paid by (y) the conversion
price for the Series I preferred stock (the "CONVERSION PRICE") in effect on the
date the certificate is surrendered for conversion as provided in Section 4(c).
The Conversion Price is initially $12.00, but is subject to adjustment as
provided in Section 5. Shares of Series I preferred stock may not be converted
into shares of common stock at any time other than during the Conversion Period.
(b) By notice sent by first-class certified mail, return receipt
requested, postage prepaid, to each holder of shares of Series I preferred stock
at its address appearing on the Corporation's records, the Corporation shall
give each holder of shares of Series I preferred stock at least 60 days' advance
notice, but no more than 90 days' advance notice, of the Fifth Anniversary. This
notice must also specify the date upon which the Conversion Period expires and
the number of shares of common stock into which shares of Series I preferred
stock are convertible.
(c) Any holder of one or more shares of Series I preferred stock
may exercise the conversion right under Section 4(a) as to any one or more of
those shares by delivering to the Corporation during regular business hours
during the Conversion Period, at the office of the Corporation or any transfer
agent of the Corporation for the Series I preferred stock as may be
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designated by the Corporation, the one or more certificates for the shares to be
converted, duly endorsed or assigned in blank or to the Corporation (if required
by it), accompanied by written notice stating that the holder is electing to
convert those shares and stating the name or names (with address) in which the
one or more certificates for shares of common stock are to be issued. Conversion
will be deemed to have been effected on the date when a holder delivers as
required by the previous sentence the one or more certificates for the shares to
be converted (that date, the "CONVERSION DATE"). As promptly as practicable
thereafter, but in any event not later than 10 business days following the
Conversion Date, the Corporation shall issue and deliver to or upon the written
order of the holder, to the place designated by the holder, the one or more
certificates representing the shares of common stock to which the holder is
entitled and a check or cash in respect of any fractional interest in a share of
common stock as provided in Section 4(d). The person in whose name one or more
certificates for common stock are to be issued will be deemed to have become a
common stock holder of record on the applicable Conversion Date unless the
transfer books of the Corporation are closed on that date, in which event that
person will be deemed to have become a holder of record on the next succeeding
date on which the transfer books are open, but the applicable Conversion Price
will be that in effect on the Conversion Date. Upon conversion of only a portion
of the number of shares covered by a certificate representing shares of Series I
preferred stock surrendered for conversion, the Corporation shall at its expense
issue and deliver to or upon the written order of the holder of the certificate
so surrendered for conversion, in addition to one or more certificates
representing the shares of common stock to which shares of Series I preferred
stock of the holder were converted, a new certificate (dated so as not to result
in any loss of dividends) covering the number of shares of the Series I
preferred stock representing the unconverted portion of the certificate so
surrendered.
(d) The Corporation will not issue any fractional shares of common
stock or scrip upon conversion of shares of Series I preferred stock. If more
than one share of Series I preferred stock is surrendered for conversion at any
one time by the same holder, the number of full shares of common stock issuable
upon conversion thereof must be computed on the basis of the aggregate number of
shares of Series I preferred stock so surrendered. Instead of any fractional
shares of common stock that would otherwise be issuable upon conversion of any
shares of Series I preferred stock, the Corporation shall pay a cash amount
equal to the then Current Market Price of a share of common stock on the trading
day immediately preceding the Conversion Date multiplied by the fractional
interest. Fractional interests are not entitled to dividends and holders of
fractional interests are not entitled to any rights as stockholders of the
Corporation in respect of those fractional interests. If the Corporation cannot
legally pay any such cash amount, the Corporation shall pay it as soon
thereafter as funds are legally available.
(e) The Corporation shall pay all documentary or stamp taxes
attributable to issuance or delivery of shares of common stock upon conversion
of any shares of Series I preferred stock, if issued in the name of the record
holder.
(f) The Corporation shall reserve, free from preemptive rights, out
of its authorized but unissued shares of common stock and solely for the purpose
of effecting conversion of the shares of Series I preferred stock sufficient
shares to provide for the conversion of all outstanding shares of Series I
preferred stock.
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(g) All shares of common stock issued upon conversion of shares of
Series I preferred stock will, upon issuance by the Corporation, be validly
issued, fully paid and nonassessable, with no personal liability attaching to
the ownership thereof, and free from all taxes, liens or charges with respect
thereto.
(h) Subsequent to conversion of any shares of Series I preferred
stock in accordance with this Section 4, the Corporation will not be required to
pay any dividends that have accumulated on those shares.
(i) As used in this Article 4, "CURRENT MARKET PRICE" means, with
respect to the common stock as of any date, the following:
(1) the mean between the highest and lowest quoted selling prices on the Nasdaq
SmallCap Market (or any other securities exchange or trading market where
the common stock is listed or traded) for that date or, if there are no
sales on that date, the nearest preceding date on which there were one or
more sales; or
(2) if the common stock is not listed or traded on any securities exchange or
trading market, the fair market value of a share of common stock as
determined in good faith by the board of directors of the Corporation.
5. ADJUSTMENT TO CONVERSION PRICE. The Conversion Price is subject to
adjustment from time to time as follows:
(a) If the Corporation issues, after the date upon which any shares
of Series I preferred stock were first issued (the "ORIGINAL ISSUE DATE"), any
shares of common stock other than Excluded Securities (as defined below)
("ADDITIONAL STOCK") without consideration or for a consideration per share less
than the Conversion Price (in the case of any such issuance to an Affiliate (as
that term is defined in Article 8) of the Corporation) or the Current Market
Price (in the case of any other such issuance) on the date of that issuance of
Additional Stock, the Conversion Price in effect immediately prior to each such
issuance will automatically be adjusted to a price determined by multiplying the
Conversion Price by a fraction, the numerator of which is the number of shares
of common stock deemed outstanding immediately prior to that issuance plus the
number of shares of common stock that the aggregate consideration received by
the Corporation for that issuance would purchase at the Conversion Price in
effect immediately prior to that issuance, and the denominator of which is the
number of shares of common stock deemed outstanding immediately prior to that
issuance plus the number of shares of that Additional Stock. For purposes of any
adjustment of the Conversion Price pursuant to this Section 5(a), the following
provisions apply:
(1) The number of shares of common stock deemed to be outstanding as of a given
date will be the sum of (A) the number of shares of common stock actually
outstanding (which number excludes shares held in treasury), (B) the number
of shares of common stock into which the then-outstanding shares of Series
I preferred stock would be converted if fully converted on the day
immediately preceding the given date, and (C) the number of shares of
common stock that would be obtained through the exercise or conversion of
all other
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rights, options and convertible securities exercisable or convertible on
the day immediately preceding the given date.
(2) The Conversion Price will not be adjusted in increments of less than one
cent per share, provided that any adjustments that as a result are not made
will be carried forward and taken into account upon the earlier to occur of
(A) conversion and (B) any subsequent adjustment that, together with any
one or more immediately preceding adjustments that have not been made,
would result in an adjustment of one cent per share or more. Except to the
limited extent provided for in Sections 5(a)(5)(C), 5(a)(5)(D) and 5(c), no
adjustment of the Conversion Price pursuant to this Section 5(a)(2) will
have the effect of increasing the Conversion Price above the Conversion
Price in effect immediately prior to that adjustment.
(3) In the case of issuance of Additional Stock for cash, the consideration
will be deemed to be the amount of cash paid therefor after deducting any
reasonable discounts, commissions or other expenses allowed, paid or
incurred by the Corporation for any underwriting or otherwise in connection
with the issuance.
(4) In the case of issuance of Additional Stock for a consideration in whole or
in part other than cash, the consideration other than cash will be deemed
to be the fair value of the Additional Stock issued, as determined in good
faith by the board of directors irrespective of any accounting treatment.
(5) In the case of issuance of options to purchase or rights to subscribe for
common stock, securities by their terms convertible into or exchangeable
for common stock, or options to purchase or rights to subscribe for such
convertible or exchangeable securities, the following provisions apply:
(A) the aggregate maximum number of shares of common stock deliverable
upon exercise of such options to purchase or rights to subscribe for
common stock will be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the
consideration (determined in the manner provided in Sections 5(a)(3)
and 5(a)(4)), if any, received by the Corporation upon the issuance of
such options or rights plus the minimum purchase price provided in
such options or rights for the common stock covered thereby;
(B) the aggregate maximum number of shares of common stock deliverable
upon conversion of or in exchange for any such convertible or
exchangeable securities or upon the exercise of options to purchase or
rights to subscribe for any such convertible or exchangeable
securities and subsequent conversion or exchange thereof will be
deemed to have been issued at the time those securities were issued or
those options or rights were issued and for a consideration equal to
the consideration received by the Corporation for those securities and
related options or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the
conversion or exchange of those securities or the exercise of
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any related options or rights (the consideration in each case to be
determined in the manner provided in Sections 5(a)(2) and 5(a)(3));
(C) on any change in the number of shares of common stock deliverable upon
exercise of any such options or rights or conversion of or exchange
for any such convertible or exchangeable securities or any change in
the consideration to be received by the Corporation upon the exercise
of any such options or rights or conversion of or exchange for any
such convertible or exchangeable securities, other than a change
resulting from the antidilution provisions thereof, the Conversion
Price will forthwith be readjusted to the Conversion Price as would
have obtained had the adjustment made upon the issuance of those
options, rights or securities not exercised, converted or exchanged
prior to that change or options or rights related to those securities
not exercised, converted or exchanged prior to such change been made
upon the basis of that change; and
(D) on expiration of any such options or rights, termination of any such
rights to convert or exchange, or expiration of any options or rights
related to such convertible or exchangeable securities, the Conversion
Price will forthwith be readjusted to the Conversion Price as would
have obtained had the adjustment made upon the issuance of such
options, rights, securities or options or rights related to such
securities been made upon the basis of the issuance of only the number
of shares of common stock actually issued upon exercise of those
options or rights, upon conversion or exchange of those securities or
upon the exercise of the options or rights related to those securities
and subsequent conversion or exchange thereof.
(b) If, at any time after the Original Issue Date, the number of
shares of common stock outstanding is increased by a stock dividend payable in
shares of common stock or by a subdivision or split-up of shares of common
stock, then, upon the record date fixed for determining holders of common stock
entitled to receive that stock dividend or upon the date of that subdivision or
split-up, as applicable, the Conversion Price will be appropriately decreased so
as to increase the number of shares of common stock issuable on conversion of
each share of Series I preferred stock in proportion to that increase in
outstanding shares of common stock.
(c) If, at any time after the Original Issue Date, the number of
shares of common stock outstanding is decreased by a combination or reverse
split of the outstanding shares of common stock, then, upon the date of that
combination or reverse split, the Conversion Price will be appropriately
increased so as to decrease the number of shares of common stock issuable on
conversion of each share of Series I preferred stock in proportion to that
decrease in outstanding shares of common stock.
(d) If, at any time from the Original Issue Date until expiration
of the Conversion Period, the Corporation declares or pays any dividend or makes
any other distribution to holders of shares of common stock other than a
dividend or distribution of shares of common stock and the aggregate value of
such dividends and distributions made during any fiscal year exceeds $3,000,000,
the Conversion Price will be decreased by the value, per share of outstanding
common stock, of the amount by which those dividends or distributions exceed
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$3,000,000 in that fiscal year. In the case of any such dividend or distribution
to holders of common stock that is not a cash payment, the value per share of
common stock of that dividend or distribution will be deemed to be the market
value per share of common stock of the property so dividended or distributed, as
determined in good faith by the board of directors irrespective of any
accounting treatment.
(e) In the event, at any time after the Original Issue Date, of any
capital reorganization or any reclassification of the stock of the Corporation
(other than a change in par value or from par value to no par value or from no
par value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), or consolidation or merger of the
Corporation with or into another person (other than a consolidation or merger in
which the Corporation is the continuing corporation and which does not result in
any change in or any change in ownership of the common stock) or of sale or
other disposition of all or substantially all the properties and assets of the
Corporation as an entirety to any other person, each share of Series I preferred
stock will after that reorganization, reclassification, consolidation, merger,
sale or other disposition be convertible into the kind and number of shares of
stock or other securities or property of the Corporation, or of the corporation
resulting from that consolidation or surviving that merger or to which those
properties and assets were sold or otherwise disposed, to which the holder of
the number of shares of common stock deliverable (immediately prior to the time
of that reorganization, reclassification, consolidation, merger, sale or other
disposition) upon conversion of those shares would have been entitled upon such
reorganization, reclassification, consolidation, merger, sale or other
disposition. The provisions of this Section 5 will similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, or other
dispositions.
(f) Whenever the Conversion Price is adjusted as provided in this
Section 5, the Corporation shall forthwith file, at the office of the
Corporation or any transfer agent designated by the Corporation for the Series I
preferred stock, a statement, signed by its chief financial officer, showing in
detail the facts requiring that adjustment, the Conversion Price then in effect,
and computations demonstrating how the adjusted Conversion Price was arrived at.
The Corporation shall also cause a copy of such statement to be sent by
first-class certified mail, return receipt requested, postage prepaid, to each
holder of shares of Series I preferred stock at its address appearing on the
Corporation's records. Where appropriate, this copy may be given in advance and
may be included as part of a notice required to be mailed under the provisions
of Section 5(g).
(g) If the Corporation proposes to take any action of the types
described in Section 5(e), the Corporation shall give notice to each holder of
shares of Series I preferred stock, in the manner set forth in Section 5(f),
specifying the record date, if any, with respect to that action and the date on
which that action is to take place and setting forth any facts reasonably
necessary to indicate the effect of that action (to the extent that effect may
be known at the date of that notice) on the Conversion Price and the number,
kind, or class of shares or other securities or property deliverable or
purchasable upon occurrence of that action or deliverable upon conversion of
shares of Series I preferred stock. In the event of any action that would
require the fixing of a record date, any notice required under this Section 5(g)
must be given at least 20 days prior to the date so fixed, and in case of all
other actions, any such notice
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must be given at least 30 days prior to the action is taken. Failure to give
such notice, or any defect therein, will not affect the legality or validity of
any such action.
(h) As used in this Section 5, "EXCLUDED SECURITIES" means as
follows:
(1) shares of common stock issued to officers, employees or directors of, or
consultants to, the Corporation pursuant to any agreement, plan or
arrangement approved by the board of directors, or shares of common stock
underlying (A) options to purchase or rights to subscribe for shares of
common stock, (B) securities by their terms convertible into or
exchangeable for shares of common stock, or (C) options to purchase or
rights to subscribe for such convertible or exchangeable securities, in
each case as approved by the board of directors; and
(2) common stock issued upon the conversion of the Series I preferred stock.
6. VOTING RIGHTS. Each holder of shares of Series I preferred stock is
entitled to one vote for each share of common stock into which each share of
Series I preferred stock could then be converted, but for the restrictions on
timing of conversion contained in Section 4(a) (with any fractional share
determined on an aggregate conversion basis being rounded to the nearest whole
share), and with respect to that vote, each holder has full voting rights and
powers equal to the voting rights and powers of the holders of common stock and
is entitled to vote, together with holders of common stock and not as a separate
class (except as required by law), with respect to any question upon which
holders of common stock have the right to vote.
D. The powers, preferences, rights, restrictions, and other matters
relating to the Series J preferred stock are as follows:
1. STATED VALUE. The stated value of each share of Series J preferred
stock (the "SERIES J STATED VALUE") is $6.00, subject to adjustment for stock
dividends, combinations, splits, recapitalizations and the like with respect to
the Series J preferred stock.
2. DIVIDENDS. (a) Each holder of one or more shares of Series J preferred
stock is entitled to receive, when and as declared by the board of directors,
but only out of funds that are legally available therefor, cash dividends at the
rate of 12% per annum of the Series J Stated Value on each share of Series J
preferred stock. These dividends accrue on each share of Series J preferred
stock from the date of issuance and accrue daily, whether or not earned or
declared. These dividends are cumulative and are payable on March 31 and
September 30 of each year, if declared by the board of directors.
(b) Unless all cumulative dividends on shares of Series J preferred
stock have been paid in cash or been declared in full and cash sums set apart to
pay those dividends, the Corporation may not pay or declare any dividend,
whether in cash or property, or make any other distribution, to holders of
common stock or any other stock of the Corporation ranking junior to the Series
J preferred stock as to dividends or liquidation rights (any such stock, "SERIES
J JUNIOR STOCK"), nor may the Corporation purchase, redeem, or otherwise acquire
for value any shares of Series J Junior Stock (except for shares of common stock
that it acquires (1) under any agreement permitting or requiring the Corporation
to purchase shares of common stock held by
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any Person upon that Person ceasing to provide services to the Corporation or
(2) upon exercising a right of first refusal upon proposed transfer by a holder
of common stock).
(c) For purposes of Section 2(b), the Series J preferred stock
ranks on a parity with the Series I preferred stock. If the Corporation pays in
cash any dividends on the Series I preferred stock, or declares any dividends on
the Series I preferred stock and sets apart cash sums to pay those dividends, it
shall also pay in cash, or declare and set apart cash sums to pay, as
applicable, dividends on the Series J preferred stock representing a percentage
of cumulated Series J dividends that is equal to the percentage of cumulated
Series I dividends that is represented by the dividends paid or declared on the
Series I preferred stock.
3. LIQUIDATION. (a) Upon occurrence of a Liquidating Event, each holder
of shares of Series J preferred stock will be entitled to receive out of the
remaining assets of the Corporation available for distribution to stockholders,
before any distribution of assets is made to holders of Series J Junior Stock,
an amount per share of Series J preferred stock (this amount, the "SERIES J
LIQUIDATION AMOUNT") equal to the Series J Stated Value plus an amount equal to
all accumulated and unpaid dividends (whether or not declared by the board of
directors) on each share up to the date fixed for distribution. After payment of
the full amount of the liquidating distribution to which they are entitled,
holders of shares of Series J preferred stock will not be entitled to
participate any further in any distribution of assets by the Corporation. If
upon occurrence of a Liquidating Event the assets of the Corporation available
for distribution to its stockholders are insufficient to pay the holders of the
Series J preferred stock the full Series J Liquidation Amount, holders of Series
J preferred stock will share ratably in any distribution of assets so that each
such holder receives, per share, the same percentage of the Series J Liquidation
Amount.
(b) For purposes of Section 3(a), the Series J preferred stock
ranks on a parity with the Series I preferred stock. If the Corporation pays any
portion of the Series I Liquidation Amount, it shall at the same time also pay a
percentage of the Series J Liquidation Amount equal to the percentage of the
Series I Liquidation Amount paid by the Corporation.
(c) Subject to applicable law, any non-cash assets of the
Corporation that are legally available for distribution upon dissolution or
winding up of the Corporation must be promptly liquidated by a liquidating trust
or similar entity.
(d) A reorganization, consolidation or merger of the Corporation or
a sale or other disposition of all or substantially all the assets of the
Corporation will not constitute liquidation, dissolution, or winding up of the
Corporation for purposes of this Section 3.
4. VOTING RIGHTS. Holders of shares of Series J preferred stock are not
entitled to a vote with respect to their shares of Series J preferred stock,
except as required by law.
E. The rights of the common stock are as follows:
1. DIVIDEND RIGHTS. Whenever the Corporation has paid, or declared and
set aside for payment, to the holders of outstanding shares of any class or
series of stock having preference over the common stock as to the payment of
dividends the full amount of any dividends to which those holders are entitled
in preference to the common stock, then the
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Corporation may pay dividends on the common stock, and on any class or series of
stock entitled to participate with the common stock as to dividends, out of any
assets legally available for the payment of dividends, but only when declared by
the board of directors of the Corporation.
2. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution, or
winding up of the Corporation, after payment or provision for payment of all
debts and liabilities of the Corporation and after the Corporation has paid, or
declared and set aside for payment, to the holders of the outstanding shares of
any class or series of stock having preference over the common stock in any such
event the full preferential amounts to which they are entitled, the Corporation
shall pay the holders of the common stock, and of any class or series of stock
entitled to participate with the common stock as to distribution of assets, the
remaining assets of the Corporation available for distribution, in cash or in
kind.
3. VOTING RIGHTS. Each holder of shares of common stock is entitled to
one vote for each share of common stock held by that voter.
ARTICLE 5
PREEMPTIVE RIGHTS
Holders of the capital stock of the Corporation are not entitled to
preemptive rights with respect to any shares or other securities that the
Corporation may issue.
ARTICLE 6
BYLAWS
The board of directors of the Corporation has the power to adopt, amend, or
repeal bylaws of the Corporation, subject to the power of the stockholders of
the Corporation to adopt by-laws and to amend or repeal bylaws adopted by the
board of directors.
ARTICLE 7
REGISTERED OFFICE
The street address of the Corporation's initial registered office in the
State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle, and the name of its initial registered agent at such address is The
Corporation Trust Company.
ARTICLE 8
CERTAIN BUSINESS COMBINATIONS.
The votes of shareholders and directors required to approve any Business
Combination shall be as set forth in this Article 8. The term "Business
Combination" is used as defined in subsection 1 of this Article 8. All other
capitalized terms not otherwise defined in this Article 8 or elsewhere in this
Certificate of Incorporation are used as defined in subsection 3 of this Article
8.
11
Subsection 1. VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS.
A. HIGHER VOTE FOR CERTAIN BUSINESS COMBINATIONS. In addition to any
affirmative vote required by law or this Certificate of Incorporation, and
except as otherwise expressly provided in subsection 2 of this Article 8:
(i) any merger, consolidation or share exchange of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested Shareholder (as
hereinafter defined) or (b) any other corporation (whether or not itself an
Interested Shareholder) which is, or after the merger, consolidation or
share exchange would be, an Affiliate or Associate (as the terms are
hereinafter defined) of such Interested Shareholder prior to the
transaction; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition
other than in the usual and regular course of business (in one transaction
or a series of transactions in any twelve-month period) to any Interested
Shareholder or any Affiliate or Associate of such Interested Shareholder,
other than the Corporation or any of its Subsidiaries, of any assets of the
Corporation or any Subsidiary having, measured at the time the transaction
or transactions are approved by the board of directors of the Corporation,
an aggregate book value as of the end of the Corporation's most recent
fiscal quarter of ten percent or more of the total Market Value (as
hereinafter defined) of the outstanding shares of the Corporation or of its
net worth as of the end of its most recent fiscal quarter; or
(iii) the issuance or transfer by the Corporation, or any Subsidiary (in one
transaction or a series of transactions) of any equity securities of the
Corporation or any Subsidiary having an aggregate Market Value of five
percent or more of the total Market Value of the outstanding shares of the
Corporation to any Interested Shareholder or any Affiliate or Associate of
any Interested Shareholder, other than the Corporation or any of its
Subsidiaries, except pursuant to the exercise of warrants, rights or
options to subscribe to or purchase securities offered, issued or granted
pro rata to all holders of the Voting Stock (as hereinafter defined) of the
Corporation or any other method affording substantially proportionate
treatment to the holders of Voting Stock; or
(iv) the adoption of any plan or proposal for the liquidation or dissolution of
the Corporation or any Subsidiary proposed by or on behalf of an Interested
Shareholder or any Affiliate or Associate of such Interested Shareholder,
other than the Corporation or any of its Subsidiaries; or
(v) any reclassification of securities (including any reverse stock split), or
recapitalization of the Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other transaction (whether
or not with or into or otherwise involving an Interested Shareholder) which
has the effect, directly or indirectly, in one transaction or a series of
transactions, of increasing the proportionate amount of the outstanding
shares of any class of equity or convertible securities of the Corporation
or any Subsidiary which is directly or indirectly owned by any Interested
Shareholder or any Affiliate or Associate of any Interested Shareholder,
other than the Corporation or any of its Subsidiaries;
12
shall be approved by affirmative vote of at least (a) the holders of two-thirds
of the total number of outstanding shares of Voting Stock and (b) the holders of
a majority of the voting power of the outstanding shares of Voting Stock,
excluding for purposes of calculating the affirmative vote and the total number
of outstanding shares of Voting Stock under this clause (b), all shares of
Voting Stock of which the beneficial owner is the Interested Shareholder
involved in the Business Combination or any Affiliate or Associate of such
Interested Shareholder. Such affirmative vote shall be required notwithstanding
the fact that no vote may be required, or that a lesser percentage may be
specified, by law.
B. DEFINITION OF "BUSINESS COMBINATION." The term "BUSINESS COMBINATION"
as used in this Article 8 shall mean any transaction which is referred to in any
one or more of clauses (i) through (v) of paragraph A of this subsection 1.
Subsection 2. WHEN HIGHER VOTE IS NOT REQUIRED.
The provisions of subsection 1 of this Article 8 shall not be applicable to
any particular Business Combination, and such Business Combination shall require
only such affirmative vote as is required by law and any other provision of this
Certificate of Incorporation, if all of the conditions specified in either
paragraph A, or paragraph B are met:
A. APPROVAL BY CONTINUING DIRECTORS. The Business Combination shall have
been approved by at least two-thirds of the Continuing Directors (as hereinafter
defined) then in office at a duly constituted meeting of the board of directors
of the Corporation called for such purpose.
B. PRICE AND PROCEDURE REQUIREMENTS. All of the following conditions
shall have been met:
(i) The aggregate amount of the cash and the Market Value as of the Valuation
Date (as hereinafter defined) of the Business Combination of consideration
other than cash to be received per share by holders of common stock in such
Business Combination shall be at least equal to the highest of the
following:
(a) (if applicable) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid by the
Interested Shareholder for any shares of common stock acquired by it
(1) within the two-year period immediately prior to the first public
announcement of the proposal of the Business Combination (the
"ANNOUNCEMENT DATE") or (2) in the transaction in which it became an
Interested Shareholder, whichever is higher; or
(b) the Market Value per share of common stock of the same class or series
on the Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (such latter date is
referred to in this Article 8 as the "DETERMINATION DATE"), whichever
is higher; or
(c) the price per share equal to the Market Value per share of common
stock of the same class or series determined pursuant to subdivision
(i)(b) hereof, multiplied by the fraction of (1) the highest per share
price (including brokerage commissions, transfer taxes and soliciting
dealer's fees) paid by the Interested
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Shareholder for any shares of common stock of the same class or series
acquired by it within the two-year period immediately prior to the
Announcement Date, over (2) the Market Value per share of common stock
of the same class or series on the first day in such two-year period
on which the Interested Shareholder acquired shares of common stock.
(ii) The aggregate amount of the cash and the Market Value as of the Valuation
Date of consideration other than cash to be received per share by holders
of shares of any class or series of outstanding Voting Stock, other than
common stock, shall be at least equal to the highest of the following (it
being intended that the requirements of this paragraph B(ii) shall be
required to be met with respect to every class of outstanding Voting Stock,
whether or not the Interested Shareholder has previously acquired any
shares of a particular class of Voting Stock):
(a) (if applicable) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid by the
Interested Shareholder for any shares of such class or series of
Voting Stock acquired by it: (1) within two-year period immediately
prior to the Announcement Date or (2) in the transaction in which it
became an Interested Shareholder, whichever is higher; or
(b) (if applicable) the highest preferential amount per share to which the
holders of shares of such class or series of Voting Stock are entitled
in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation; or
(c) the Market Value per share of such class or series of Voting Stock on
the Announcement Date or on the Determination Date, whichever is
higher; or
(d) the price per share equal to the Market Value per share of such class
or series of stock determined pursuant to subdivision (ii)(c) hereof
multiplied by the fraction of (1) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Shareholder for any shares of
any class or series of Voting Stock acquired by it within the two-year
period immediately prior to the Announcement Date over (2) the Market
Value per share of the same class or series of Voting Stock on the
first day in such two-year period on which the Interested Shareholder
acquired any shares of the same class or series of Voting Stock.
(iii) The consideration to be received by holders of a particular class or
series of outstanding Voting Stock shall be in cash or in the same form as
the Interested Shareholder has previously paid for shares of such class or
series of Voting Stock. If the Interested Shareholder has paid for shares
of any class or series of Voting Stock with varying forms of consideration,
the form of consideration for such class or series of Voting Stock shall be
either cash or the form used to acquire the largest number of shares of
such class or series of Voting Stock previously acquired by it.
(iv) After such Interested Shareholder has become an Interested Shareholder and
prior to the
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consummation of such Business Combination: (a) there shall have been no
failure to declare and pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) on any outstanding preferred stock of
the Corporation, unless the failure so to declare and pay such dividends is
approved by a majority of the Continuing Directors; (b) there shall have
been (1) no reduction in the annual rate of dividends paid on any class or
series of the capital stock of the Corporation (except as necessary to
reflect any subdivision of the capital stock), except as approved by a
majority of the Continuing Directors, and (2) an increase in such annual
rate of dividends as necessary to reflect any reclassification (including
any reverse stock split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of outstanding
shares of common stock, unless the failure so to increase such annual rate
is approved by a majority of the Continuing Directors; and (c) such
Interested Shareholder shall not have become the beneficial owner of any
additional shares of capital stock except as part of the transaction which
results in such Interested Shareholder becoming an Interested Shareholder
or by virtue of proportionate stock splits or stock dividend.
(v) After such Interested Shareholder has become an Interested Shareholder,
such Interested Shareholder shall not have received the benefit, directly
or indirectly (except proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation or any of its
Subsidiaries (whether in anticipation of or in connection with such
Business Combination or otherwise).
(vi) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange
Act of 1934 and the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall be mailed to
public shareholders of the Corporation at least 20 days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such Act or
subsequent provisions).
Subsection 3. CERTAIN DEFINITIONS.
For the purposes of this Article 8:
A. "INTERESTED SHAREHOLDER" shall mean any person (other than the
Corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly, of 10 percent or more of
the voting power of the then outstanding Voting Stock; or
(ii) is an Affiliate of the Corporation and at any time within the two-year
period immediately prior to the date in question was the beneficial owner,
directly or indirectly, of 10 percent or more of the voting power of the
then outstanding Voting Stock.
B. "BENEFICIAL OWNER," when used with respect to any Voting Stock, means
a person:
(i) that, individually or with any of its Affiliates or Associates,
beneficially owns Voting
15
Stock directly or indirectly; or
(ii) that, individually or with any of its Affiliates or Associates, has (a) the
right to acquire Voting Stock (whether such right is exercisable
immediately or only after passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise; (b) the right to vote
or direct the voting of Voting Stock pursuant to any agreement, arrangement
or understanding; or (c) the right to dispose of or to direct the
disposition of Voting Stock pursuant to any agreement, arrangement or
understanding; or
(iii) that, individually or with any of its Affiliates or Associates, has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of Voting Stock with any other person that
beneficially owns, or whose Affiliates or Associates beneficially own,
directly or indirectly, such shares of Voting Stock.
C. For the purposes of determining whether a person is an Interested
Shareholder pursuant to paragraph A of this subsection 3, the number of shares
of Voting Stock deemed to be outstanding shall include shares deemed owned
through application of paragraph B of this subsection 3 but shall not include
any other shares of Voting Stock which may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
D. "AFFILIATE" means a person that directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control,
with a specified person.
E. "ASSOCIATE," when used to indicate a relationship with any person,
means: (1) any domestic or foreign corporation or organization, other than the
Corporation or a subsidiary of the Corporation, of which such person is an
officer, director or partner or is, directly or indirectly, the beneficial owner
of ten percent or more of any class of equity securities; (2) any trust or other
estate in which such person has a substantial beneficial interest or as to which
such person serves as a trustee or in a similar fiduciary capacity; and (3) any
relative or spouse of such person, or any relative of such spouse who has the
same home as such person or who is a director or officer of the Corporation or
any of its Affiliates.
F. "SUBSIDIARY" means any corporation of which Voting Stock having a
majority of the votes entitled to be cast is owned, directly or indirectly, by
the Corporation.
G. "CONTINUING DIRECTOR" means any member of the board of directors of
the Corporation who is unaffiliated with the Interested Shareholder and was a
member of the board of directors of the Corporation prior to the time that the
Interested Shareholder (including any Affiliate or Associate of such Interested
Shareholder) became an Interested Shareholder, and any successor of a Continuing
Director who is unaffiliated with the Interested Shareholder and is recommended
to succeed a Continuing Director by a majority of Continuing Directors then on
the board of directors of the Corporation.
H. "MARKET VALUE" means:
(i) in the case of stock, the highest closing sale price during the 30-day
period immediately
16
preceding the date in question of a share of such stock on the composite
tape for New York Stock Exchange-listed stocks, or, if such stock is not
quoted on the composite tape, or the New York Stock Exchange, or, if such
stock is not listed on such exchange, the principal United States
securities exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing sales price or bid quotation with respect to
a share of such stock during the 30-day period preceding the date in
question on the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of such
stock as determined by the board of directors of the Corporation in good
faith; and
(ii) in the case of property other than cash or stock, the fair market value of
such property on the date in question as determined by a majority of the
board of directors of the Corporation in good faith.
I. "VALUATION DATE" means: (A) For a business combination voted on by
shareholders, the latter of the day prior to the date of the shareholders vote
or the date twenty days prior to the consummation of the Business Combination;
and (B) for a Business Combination not voted upon by the shareholders, the date
of the consummation of the Business Combination.
J. "VOTING STOCK" means the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors.
K. In the event of any Business Combination in which the Corporation is
the surviving corporation, the phrase "consideration other than cash to be
received" as used in paragraphs B(i) and B(ii) of Section 2 of this Article 8
shall include the shares of common stock and/or the shares of any other class or
series of outstanding Voting Stock retained by the holder of such shares.
Subsection 4. POWERS OF THE BOARD OF DIRECTORS.
A majority of the Corporation's directors then in office shall have the
power and duty to determine for the purpose of this Article 8, on the basis of
information known to them after reasonable inquiry, (A) whether a person is an
Interested Shareholder, (B) the number of shares of Voting Stock beneficially
owned by any person, (C) whether a person is an Affiliate or Associate of
another, and (D) whether the requirements of paragraph B of Section 2 have been
met with respect to any Business Combination; and the good faith determination
of a majority of the board of directors on such matters shall be conclusive and
binding for all the purposes of this Article 8.
Subsection 5. NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED
SHAREHOLDERS.
Nothing contained in this Article 8 shall be construed to relieve any
Interested Shareholder from any fiduciary obligation imposed by law.
17
ARTICLE 9
AMENDMENT OF CERTIFICATE OF INCORPORATION
Any repeal, alteration, amendment, or rescission of any provision contained
in this certificate of incorporation must be adopted by resolution of at least a
majority of the board of directors, and may only be effected by the affirmative
vote of the holders of at least a majority of the voting power of the
outstanding voting stock of the Corporation cast at a meeting called for that
purpose (provided that notice of such proposed adoption, repeal, alteration,
amendment or rescission is included in the notice of such meeting), except that
if any such amendment is to the provisions set forth in this clause of Article 9
or in Article 8, that amendment must be approved by the affirmative vote of the
holders of at least 80 percent of the shares entitled to vote thereon rather
than a majority.
ARTICLE 10
PERSONAL LIABILITY
A. The personal liability of the directors of the Corporation is hereby
eliminated to the fullest extent permitted by the provisions of paragraph (7) of
subsection (b) of Section 102 of the Delaware General Corporation Law. If the
Delaware General Corporation Law is hereafter amended to further eliminate or
limit the personal liability of directors, then the liability of a director of
the Corporation will be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
B. Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation will not adversely affect any right or
protection of a director of the Corporation existing at the time of that repeal
or modification.
ARTICLE 11
INDEMNIFICATION
A. To the fullest extent permitted by applicable law, the Corporation is
authorized to provide indemnification of (and advancement of expenses to)
directors, officers and agents (and any other person that Delaware law permits
this Corporation to provide indemnification to) through bylaw provisions,
agreements with those agents or other persons, vote of stockholders or
disinterested directors or otherwise, subject only to limits created by
applicable Delaware law (statutory or non-statutory) with respect to action for
breach of duty to the Corporation, its stockholders, and others.
B. The indemnification and other rights set forth in this Article 11 are
not exclusive of any provisions with respect thereto in the bylaws or any other
contract or agreement between the Corporation and any officer, director,
employee or agent of the Corporation.
C. The Corporation shall indemnify each person who was or is made a party
or is threatened to be made a party to or is in any way involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "PROCEEDING"),
including any appeal therefrom, by reason of the fact that he or she,
18
or a person of whom he or she is the legal representative, is or was a director
or officer of the Corporation or a direct or indirect subsidiary of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another entity or enterprise, or was a director or
officer of a foreign or domestic corporation which was a predecessor corporation
of the Corporation or of another entity or enterprise at the request of that
predecessor corporation, and the Corporation shall advance all expenses actually
or reasonably incurred by any such person in defense of any such proceeding
prior to its final determination, to the fullest extent authorized by the
General Corporation Law of the State of Delaware. In any proceeding against the
Corporation to enforce these rights, each such person will be presumed to be
entitled to indemnification and the Corporation will have the burden of proving
that that person has not met the standards of conduct for permissible
indemnification set forth in the General Corporation Law of the State of
Delaware, except that if the General Corporation Law of the State of Delaware
requires the payment of such expenses in advance of the final disposition of a
proceeding, the Corporation may only pay such expenses if that person undertakes
to repay the Corporation if it is ultimately determined that he or she was not
entitled to indemnification.
D. It will be presumed that the directors and officers of the Corporation
relied upon the rights to indemnification and advancement of expenses conferred
by this Article 11 in serving or continuing to serve the Corporation, and those
rights are enforceable as contract rights. Any rights to indemnification of any
such director or officer will only apply to any loss, liability or expenses
incurred by that director or officer in connection with proceedings brought
against that person in the capacities in which he or she serves the Corporation.
The Corporation may, upon written demand presented by a director or officer of
the Corporation or of a direct or indirect subsidiary of the Corporation, or by
a person serving at the request of the Corporation as a director or officer of
another entity or enterprise, enter into contracts to provide those persons with
specified rights to indemnification, which contracts may confer rights and
protections to the maximum extent permitted by the General Corporation Law of
the State of Delaware, as amended and in effect from time to time.
E. If a claim under this Article 11 is not paid in full by the
Corporation within 60 days after the Corporation has received a written claim,
the claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of claim and, if successful in whole or in part, the
claimant will be entitled also to be paid the expenses of prosecuting that
claim. It will be a defense to any such action (other than an action brought to
enforce the right to be advanced expenses incurred in defending any proceeding
prior to its final disposition where the required undertaking, if any, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct that make it permissible under the General Corporation Law of the State
of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the claimant will be presumed to be entitled to indemnification and
the Corporation will have the burden of proving that the claimant has not met
the standards of conduct for permissible indemnification set forth in the
General Corporation Law of the State of Delaware.
F. If the General Corporation Law of the State of Delaware is hereafter
amended to permit the Corporation to provided broader indemnification rights
than the Corporation was permitted by law to provide prior to that amendment,
the indemnification rights conferred by this Article 11 will be broadened to the
fullest extend permitted by the General Corporation Law of the State of
Delaware, as so amended. No amendment to or repeal of this Article 11 will
affect
19
or diminish in any way the rights of any indemnitee to indemnification under the
provisions of this Article 11 with respect to any action, suit, proceeding or
investigation arising out of or relating to any actions, transactions or facts
occurring prior to the final adoption of any such amendment or repeal.
G. Neither amendment nor repeal of this Article 11 nor adoption of any
provision of this amended and restated certificate of incorporation inconsistent
with this Article 11 will eliminate or reduce the effect of this Article 11 in
respect of any matter occurring before that amendment, repeal or adoption of an
inconsistent provision or in respect of any cause of action, suit or claim
relating to any such matter that would have given rise to a right of
indemnification or right to receive expenses pursuant to this Article 11 if that
provision had not been so amended or repealed or if a provision inconsistent
therewith had not been so adopted.
H. The Corporation is entitled to purchase and maintain indemnity
insurance to guard against future expenses.
ARTICLE 12
CERTAIN RESTRICTIONS ON THE TRANSFER OF STOCK
In order to preserve the net operating loss carryovers, net capital loss
carryovers, and certain other attributes (the "Tax Benefits") to which the
Corporation is entitled pursuant to the Internal Revenue Code of 1986, as
amended, or any successor statute (collectively the "Code") and the regulations
thereunder, the following restrictions shall apply until December 31, 2008,
unless the board of directors of the Corporation shall fix an earlier or later
date in accordance with subsection 8 of this Article 12 (such date is sometimes
referred to herein as the "Expiration Date"):
Subsection 1. RESTRICTIONS AND DEFINITIONS. From and after April 11, 1994,
no person other than the Corporation shall transfer any shares of stock of the
Corporation (other than stock described in Section 1504(a)(4) of the Code or any
successor statute, or stock that is not so described solely because it is
entitled to vote as a result of dividend arrearages) to any person to the extent
that such transfer, if effective, would cause the Ownership Interest Percentage
of the transferee or any other person to increase above 4.9 percent, whether or
not said transferee or other person held stock of the Corporation in excess of
such percentage before such transfer. For purposes of this Article 12, (a)
"person" refers to any individual, corporation, estate, trust, association,
company, partnership, joint venture, or similar organization; (b) a person's
Ownership Interest Percentage shall be the sum of (i) such person's direct
ownership interest in the Corporation as determined under Treasury Regulation
Section 1.382-2T(f)(8) or any successor regulation, (ii) such person's indirect
ownership interest in the Corporation as determined under Treasury Regulation
Section 1.382-2T(f)(15) or any successor regulation, and (iii) such person's
additional deemed ownership interest in the Corporation as determined under
Proposed Treasury Regulation Section 1.1502-92(c) or any successor regulation,
except that, for purposes of determining a person's direct ownership interest in
the corporation, any ownership interest held by such person in the Corporation
described in Treasury Regulation Section 1.382-2T(f)(18)(iii)(A) or any
successor regulation shall be treated as stock of the Corporation, and for
purposes of determining a person's indirect ownership interest in the
Corporation, Treasury
20
Regulations Sections 1.382-2T(g)(2), 1.382-2T(h)(2)(iii) and 1.382-2T(h)(6)(iii)
or any successor regulations shall not apply and any stock that would be
attributed to such person pursuant to the option attribution rules of Treasury
Regulation Section 1.382-2T(h)(4) and Treasury Regulation Section 1.382-4 or any
successor regulations, if to do so would result in an ownership change, shall be
attributed to such person without regard to whether such attribution results in
an ownership change; (c) "transfer" refers to any means of conveying legal or
beneficial ownership of shares of stock of the Corporation, whether such means
is direct or indirect, voluntary or involuntary, including, without limitation,
the transfer of ownership of any entity that owns shares of stock of the
Corporation, and "transferee" means any person to whom stock of the Corporation
is transferred.
Subsection 2. EXCEPTIONS. Any transfer of shares of stock of the
Corporation that would otherwise be prohibited pursuant to the preceding
subsection shall nonetheless be permitted if information relating to a specific
proposed transaction is presented to the board of directors of the Corporation
and the board determines (based, at its option, upon an opinion of legal counsel
selected by the board to that effect) that such transaction will not jeopardize
the Tax Benefits. Nothing in this subsection shall be construed to limit or
restrict the board of directors of the Corporation in the exercise of its
fiduciary duties under applicable law.
Subsection 3. ATTEMPTED TRANSFER IN VIOLATION OF TRANSFER RESTRICTIONS.
Unless approval of the board of directors of the Corporation is obtained as
provided in subsection 2 of this Article 12, any attempted transfer of shares of
stock of the Corporation in excess of the shares that could be transferred to
the transferee without restriction under subsection 1 of this Article 12 is not
effective to transfer ownership of such excess shares (the "Prohibited Shares")
to the purported acquiror thereof (the "Purported Acquiror"), who shall not be
entitled to any rights as a shareholder of the Corporation with respect to the
Prohibited Shares (including, without limitation, the right to vote or to
receive dividends with respect thereto). All rights with respect to the
Prohibited Shares shall remain the property of the person who initially
purported to transfer the Prohibited Shares to the Purported Acquiror (the
"Initial Transferor") until such time as the Prohibited Shares are resold as set
forth in subsection 3(A) or (B) of this Article 12. The Purported Acquiror, by
acquiring ownership of shares of stock of the Corporation that are not
Prohibited Shares, shall be deemed to have consented to all the provisions of
this Article 12 and to have agreed to act as provided in the following
subsection 3(A).
(A) Upon demand by the Corporation, the Purported Acquiror shall transfer any
certificate or other evidence of purported ownership of the Prohibited
Shares within the Purported Acquiror's possession or control, along with
any dividends or other distributions paid by the Corporation with respect
to the Prohibited Shares that were received by the Purported Acquiror (the
"Prohibited Distribution"), to an agent designated by the Corporation (the
"Agent"). If the Purported Acquiror has sold the Prohibited Shares to an
unrelated party in an arms-length transaction after purportedly acquiring
them, the Purported Acquiror shall be deemed to have sold the Prohibited
Shares as agent for the Initial Transferor, and in lieu of transferring the
Prohibited Shares and Prohibited Distributions to the Agent shall transfer
to the Agent the Prohibited Distributions and the proceeds of such sale
(the "Resale Proceeds") except to the extent that the Agent grants written
permission to the Purported Acquiror to retain a portion of the Resale
Proceeds not exceeding the amount that would have been payable by the Agent
to the Purported Acquiror pursuant to the
21
following subsection 3(B) if the Prohibited Shares had been sold by the
Agent rather than by the Purported Acquiror. Any purported transfer of the
Prohibited Shares by the Purported Acquiror other than a transfer described
in one of the two preceding sentences shall not be effective to transfer
any ownership of the Prohibited Shares.
(B) The Agent shall sell in an arms-length transaction (through the Nasdaq
Stock Market, if possible) any Prohibited Shares transferred to the Agent
by the Purported Acquiror, and the proceeds of such sale (the "Sales
Proceeds"), or the Resale Proceeds, if applicable, shall be allocated to
the Purported Acquiror up to the following amount: (i) where applicable,
the purported purchase price paid or value of consideration surrendered by
the Purported Acquiror for the Prohibited Shares, and (ii) where the
purported transfer of the Prohibited Shares to the Purported Acquiror was
by gift, inheritance, or any similar purported transfer, the fair market
value of the Prohibited Shares at the time of such purported transfer.
Subject to the succeeding provisions of this subsection, any Resale
Proceeds or Sales Proceeds in excess of the amount allocable to the
Purported Acquiror pursuant to the preceding sentence, together with any
Prohibited Distributions, shall be the property of the Initial Transferor.
If the identity of the Initial Transferor cannot be determined by the Agent
through inquiry made to the Purported Acquiror, the Agent shall publish
appropriate notice (in The Wall Street Journal, if possible) for seven (7)
consecutive business days in an attempt to identify the Initial Transferor
in order to transmit any Resale Proceeds or Sales Proceeds or Prohibited
Distributions due to the Initial Transferor pursuant to this subsection.
The Agent may also take, but is not required to take, other reasonable
actions to attempt to identify the Initial Transferor. If after ninety (90)
days following the final publication of such notice the Initial Transferor
has not been identified, any amounts due to the Initial Transferor pursuant
to this subsection may be paid over to a court or governmental agency, if
applicable law permits, or otherwise shall be transferred to an entity
designated by the Corporation that is described in Section 501(c)(3) of the
Code. In no event shall any such amounts due to the Initial Transferor
inure to the benefit of the Corporation or the Agent, but such amounts may
be used to cover expenses (including but not limited to the expenses of
publication) incurred by the Agent in attempting to identify the Initial
Transferor.
Subsection 4. PROMPT ENFORCEMENT AGAINST PURPORTED ACQUIROR. Within thirty
(30) business days of learning of a purported transfer of Prohibited Shares to a
Purported Acquiror, the Corporation through its Secretary shall demand that the
Purported Acquiror surrender to the Agent the certificates representing the
Prohibited Shares, or any Resale Proceeds, and any Prohibited Distributions, and
if such surrender is not made by the Purported Acquiror within thirty (30)
business days from the date of such demand, the Corporation shall institute
legal proceedings to compel such transfer, provided, however, that nothing in
this subsection 4 shall preclude the Corporation in its discretion from
immediately bringing legal proceedings without a prior demand, and also provided
that failure of the Corporation to act within the time periods set out in this
subsection 4 shall not constitute a waiver of any right of the Corporation to
compel any transfer required by subsection 3(A) of this Article 12.
Subsection 5. ADDITIONAL ACTIONS TO PREVENT VIOLATION OR ATTEMPTED
VIOLATION. Upon a determination by the board of directors of the Corporation
that there has been or is threatened a purported transfer of Prohibited Shares
to a Purported Acquiror, the board of directors may take
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such action in addition to any action required by the preceding subsection as it
deems advisable to give effect to the provisions of this Article 12, including,
without limitation, refusing to give effect on the books of this Corporation to
such purported transfer or instituting proceedings to enjoin such purported
transfer.
Subsection 6. OBLIGATION TO PROVIDE INFORMATION. The Corporation may
require as a condition to the registration of the transfer of any shares of its
stock that the proposed transferee furnish to the Corporation all information
reasonably requested by the Corporation with respect to all the proposed
transferee's direct or indirect ownership interests in, or options to acquire,
stock of the Corporation.
Subsection 7. LEGENDS. All certificates evidencing ownership of shares of
stock of this Corporation that are subject to the restrictions on transfer
contained in this Article 12 shall bear a conspicuous legend referencing the
restrictions set forth in this Article 12.
Subsection 8. FURTHER ACTIONS. Nothing contained in this Article 12 shall
limit the authority of the board of directors of the Corporation to take such
other action to the extent permitted by law as it deems necessary or advisable
to protect the Corporation and the interests of the holders of its securities in
preserving the Tax Benefits. Without limiting the generality of the foregoing,
in the event of a change in law making one or more of the following actions
necessary or desirable, the board of directors of the Corporation may (i)
accelerate or extend the Expiration Date, (ii) modify the Ownership Interest
Percentage in the Corporation specified in the first sentence of subsection 1,
(iii) modify the definitions of any terms set forth in this Article 12 as
reasonably necessary or desirable to preserve the Tax Benefits under the Code
and the regulations thereunder, or (iv) determine that the continuation of these
restrictions is no longer reasonably necessary for the preservation of the Tax
Benefits, which determination shall be based upon an opinion of legal counsel to
the Corporation and which determination shall be filed with the Secretary of the
Corporation and mailed by the Secretary to shareholders of this Corporation
within ten (10) days after the date of any such determination.
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