<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997
Commission file number: 0-22629
UNIFIED HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 35-1797759
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
429 North Pennsylvania Street
Indianapolis, Indiana 46204-1873
(Address of principal executive offices) (Zip code)
Issuer's telephone number, including area code: (317) 634-3301
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [ X ] No [ ]
On November 13, 1997, the registrant had 622,768 outstanding shares of Common
Stock, $.01 par value.
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<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations:
Overview 14
Results of Operations 15
Liquidity and Capital Resources 16
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securityholders 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURE PAGE 18
EXHIBIT INDEX 19
</TABLE>
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<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS:
UNIFIED HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(unaudited)
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 603,689 $ 426,215
Investments in affiliated mutual funds 643,232 203,040
Investments in non-affiliated mutual funds 188,234 177,915
Note receivable - affiliated company 50,000 50,000
Note receivable - non-affiliated company 5,361 30,113
Accounts receivable:
Accounts receivable, gross 1,227,296 922,253
Less: doubtful accounts 2,041 2,041
----------- -----------
Net receivable 1,225,255 920,212
----------- -----------
Prepaid and sundry assets 124,605 127,430
----------- -----------
Total current assets 2,840,376 1,934,925
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NON-CURRENT ASSETS
Equity in and advances to affiliate 500,015 445,293
Notes receivable, net of current maturity 8,090 11,262
FIXED ASSETS, at cost:
Property, equipment and furniture, net 258,223 411,390
Capitalized leased equipment, net 148,538 99,876
----------- -----------
Total fixed assets 406,761 511,266
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Total assets $ 3,755,242 $ 2,902,746
=========== ===========
See notes to consolidated financial statements.
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<CAPTION>
September 30, December 31,
1997 1996
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Current portion of capitalized leases $ 86,320 $ 38,651
Accounts payable and accrued liabilities 359,626 358,371
Accrued compensation and benefits 238,690 139,730
Payable to broker/dealers 247,998 124,489
Other liabilities 724,435 308,172
----------- -----------
Total current liabilities 1,657,069 969,413
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LONG-TERM LIABILITIES:
Long-term capitalized leases, net of current portion 41,581 32,695
----------- -----------
Total liabilities 1,698,650 1,002,108
----------- -----------
Commitments and contingencies
Stockholders' equity:
Common Stock, $.01 par value - shares
outstanding, 622,768 and 25,179,
respectively 10,728 1,599
Preferred Stock Series A - shares
outstanding, 8,486 8,486 8,486
Preferred Stock Series B - shares
outstanding, 8,583 8,583 8,583
Subscribed shares to be issued in
connection with acquisition of Health
Financial, Inc. 3,250 3,250
Additional paid-in capital 1,148,588 1,076,598
Retained earnings 757,360 761,329
Net unrealized appreciation on securities
available-for-sale 119,597 40,793
----------- -----------
Total stockholders' equity 2,056,592 1,900,638
----------- -----------
Total liabilities and stockholders' equity $ 3,755,242 $ 2,902,746
=========== ===========
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
UNIFIED HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE:
Revenue from broker/dealer operations $ 402,111 $ 406,639 $ 1,136,368 $ 1,463,228
Investment advisors fees 609,935 369,637 1,510,491 1,207,793
Revenue from fund services operations 386,582 839,918 1,015,451 1,509,636
Trail commission 247,807 233,899 720,107 759,034
Custody and retirement fees 5,536 45,849 255,217 206,273
Software and program fees 31,879 48,008 126,687 143,178
Net investment and other income (5,404) (15,601) 107,097 23,095
----------- ----------- ----------- -----------
Total gross revenue 1,678,446 1,928,349 4,871,418 5,312,237
----------- ----------- ----------- -----------
COST OF SALES:
Brokerage revenue charges 256,630 261,723 724,449 916,776
Trail commission charges 169,193 155,041 502,909 491,977
Investment advisor fees 12,994 13,238 46,741 42,562
Administration fees 2,705 935 4,455 3,060
----------- ----------- ----------- -----------
Total cost of sales 441,522 430,937 1,278,554 1,454,375
----------- ----------- ----------- -----------
Gross profit 1,236,924 1,497,412 3,592,864 3,857,562
----------- ----------- ----------- -----------
EXPENSES:
Compensation and benefits 654,533 698,181 2,182,180 2,122,910
Brokerage operating charges 87,340 86,663 221,534 264,885
Fund services operating charges 57,275 50,988 189,403 185,803
Telephone 21,354 (9,787) 77,528 45,478
Mail and courier service 14,556 11,094 35,940 43,034
Equipment rental and maintenance 32,031 31,184 61,610 62,734
Professional fees 40,866 12,839 90,402 37,015
Occupancy 56,062 50,902 153,506 149,156
Depreciation and amortization 43,739 57,948 123,581 137,664
Office supplies 21,728 15,142 42,691 45,932
Travel and entertainment 23,065 14,212 68,115 38,516
Interest 2,274 521 6,232 3,364
Other operating expenses 18,840 47,456 145,664 147,135
----------- ----------- ----------- -----------
Total expenses 1,073,772 1,067,343 3,398,386 3,283,626
----------- ----------- ----------- -----------
Income from operations before gain on securities 163,152 430,068 194,478 574,236
Gain on securities 1,098 1,857 24,996 39,929
Results of affiliate (25,208) (52,801) 54,722 (69,399)
----------- ----------- ----------- -----------
Income before income taxes 139,042 408,063 274,196 544,765
Provision for income taxes 16,000 -- 16,000 --
----------- ----------- ----------- -----------
Net income 123,042 408,063 258,196 544,765
Dividend on preferred stock 34,324 34,324 101,854 102,309
----------- ----------- ----------- -----------
Results after preferred stock dividend $ 88,718 $ 373,739 $ 156,342 $ 442,456
=========== =========== =========== ===========
Per share data:
Basic: Weighted average primary
Common shares outstanding 536,550 528,747 511,729 511,729
Net income $ 0.17 $ 0.30 $ 0.73 $ 0.86
Fully diluted: Weighted average fully diluted
Common shares outstanding 947,768 947,768 947,768 947,768
Net income $ 0.09 $ 0.39 $ 0.16 $ 0.47
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
UNIFIED HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1997 1996
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
- --------------------
Net income $ 258,196 $ 544,765
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation and amortization 123,581 137,664
Results from affiliates (54,722) 69,399
Book value of fixed assets disposed 128,851 41,859
Changes in assets and liabilities:
Receivables (305,043) (488,912)
Prepaid and sundry assets 2,825 12,386
Accounts payable and accrued expenses 1,255 (29,820)
Accrued compensation and benefits 98,960 14,090
Payable to broker/dealers 123,509 (4,971)
Other liabilities 416,263 71,805
---------- ----------
Cash provided (used in) by operating activities 793,675 368,265
---------- ----------
INVESTING ACTIVITIES:
- --------------------
Additions to premises and equipment (147,927) (29,124)
Unrealized gain (loss) on securities 78,804 (4,592)
Notes receivable 27,924 (41,375)
Investment in non-affiliated mutual funds (10,319) 28,706
Investment in affiliated mutual funds (440,192) (219,988)
---------- ----------
Cash provided by (used in) investing activities (491,710) (266,373)
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FINANCING ACTIVITIES:
- --------------------
Dividends to preferred stockholders (101,854) (102,309)
Dividends to Health Financial, Inc.
common stockholder (157,007) --
Proceeds from issuance of common stock 77,815 8,448
Reclassification of note receivable
from affiliated company -- (65,888)
Payment received on note from affiliated company -- 15,888
Borrowings of capitalized leases 93,320 35,063
Repayment of capitalized lease obligations (36,765) (73,744)
---------- ----------
Cash provided by (used in) financing activities (124,491) (182,542)
---------- ----------
Net (decrease) increase in cash and cash equivalents 177,474 (80,650)
Cash and cash equivalents, beginning of period 426,215 423,986
---------- ----------
Cash and cash equivalents, end of period $ 603,689 $ 343,336
========== ==========
See notes to consolidated financial statements.
</TABLE>
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UNIFIED HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
accounts of Unified Holdings, Inc. and its subsidiaries: Unified
Management Corp., Unified Advisers, Inc and Health Financial Inc.
Unless the context otherwise indicates, references to the "Company"
include Unified Holdings, Inc. and its subsidiaries.
Unified Management Corp. ("Management"), an Indiana corporation,
is a registered broker dealer under the Securities Exchange Act of 1934,
as amended, and is a member of the National Association of Securities
Dealers, Inc.
Unified Advisers, Inc. ("Advisers"), an Indiana corporation, is a
registered investment adviser under the Investment Advisers Act of 1940,
as amended, and provides investment advisory, transfer agent, dividend
disbursing, transfer agency system software licensing and fund
accounting services to investment companies.
Health Financial, Inc. ("Health"), a Kentucky corporation, is an
investment advisory business providing services to trusts, retirement
plans, business and individuals located primarily in Kentucky.
The unaudited interim financial statements of the Company have
been prepared in accordance with generally accepted accounting
principles and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation of the
unaudited interim consolidated financial statements have been included
herein and are of a normal recurring nature. The consolidated financial
statements of the Company have been restated to give effect to the
acquisition by the Company of Health on June 1, 1997, which transaction
was accounted for under the pooling-of-interests method of accounting.
The shares to be issued in connection with the Health acquisition have
been reported on the financial statements of the Company as "Subscribed
shares to be issued in connection with acquisition of Health Financial,
Inc.," pending completion of corporate due diligence. The results of
operations for the nine months ended September 30, 1997 are not
necessarily indicative of the results that may be obtained for the full
year ending December 31, 1997.
2. PROPOSED ACQUISITIONS
On April 25, 1997, the Company entered into an agreement to
acquire First Lexington Trust Company ("Lexington") located in
Lexington, Kentucky. Lexington is a non-bank-affiliated trust company
that is regulated by the Kentucky Department of Financial Institutions,
which has approved the proposed merger. This acquisition will be
accounted for under the pooling-of-interests method of accounting. In
connection with the acquisition, the Company will issue 80,008 shares of
common stock, $0.01 par value, of the Company ("Common Stock"), based
upon an exchange ratio of 9.644 shares of Common Stock for each
outstanding share of Lexington common stock. The acquisition is
anticipated to be completed during the fourth quarter of 1997 and is
subject to, among other things, regulatory approval and the approval of
the stockholders of Lexington. As of September 30, 1997, Lexington
reported total assets of $1,125,358 and stockholders' equity of
$1,059,526.
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On May 8, 1997, the Company entered into an agreement to acquire
Vintage Advisors, Inc. ("VAI"). VAI was incorporated in Delaware on
December 12, 1994 and is registered to do business in Indiana for the
purpose of being the advisor to the Vintage Mutual Funds. VAI is a
registered advisor under the Investment Advisers Act of 1940, as
amended. This acquisition will be accounted for under the
pooling-of-interests method of accounting. In connection with the
acquisition, the Company will issue up to 120,000 shares of Common
Stock, based upon an exchange ratio of 1.2 shares of Common Stock for
each outstanding share of VAI common stock. The acquisition is
anticipated to be completed during the first quarter of 1998 and is
subject to, among other things, regulatory approval and the approval of
the stockholders of VAI and the shareholders of the Vintage Mutual
Funds. As of September 30, 1997, VAI reported total assets of $549,237
and stockholders' equity of ($379,849).
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the
Company, Advisers, Management and Health. All intercompany transactions
and balances between the Company and its subsidiaries have been
eliminated.
Fees and Commissions
The mutual funds and trust administration services operations
provide administrative and investment services to investment companies
and separate accounts. The Company records revenue on the accrual basis
of accounting.
For the brokerage line of business, commissions and clearing
revenue are recorded on the settlement date of the related security
transactions. This does not materially differ from recording
commissions based upon the trade date.
The investment advisory business revenue as well as the investment
advisory fees earned by third party advisors is recorded on the accrual
basis. The fees earned by the operation and paid to the sub-advisors
are based on established fee schedules and contracts. Generally, fees
may be collected from the invested assets. Thus, collection of the fees
is reasonably certain.
Property and Equipment
The property and equipment is stated at cost. Depreciation,
including the depreciation of capital leased equipment, is computed on
the straight-line or using accelerated methods over the estimated useful
lives of the assets for financial statement purposes.
Income Taxes
The Company files consolidated federal and state income tax
returns with its subsidiaries. Health, prior to its acquisition by the
Company, filed as an S-corporation. Therefore, federal and state
taxable income and losses were passed through to its stockholder.
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Subsequent to its acquisition by the Company, Health will be included in
the consolidated tax returns of the Company, which uses the accrual
method of tax and accounting reporting.
The Company has adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes ("SFAS 109"). The
Statement requires use of the liability method of accounting for
deferred income taxes.
The Company has recorded a $16,000 tax liability related to
alternate minimum tax because of the pooling-of-interests acquisition of
Health. Health elected accelerated tax depreciation methods on fixed
assets prior to the pooling-of-interests. The Company may not have
sufficient net operating loss related to alternative minimum tax
depreciation carryforward. This liability was recorded based upon
management's estimate and could be modified based upon future operations
of the Company.
Use of Estimates
The presentation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers
all liquid investments with an original maturity of three months or less
to be cash equivalents. Cash and cash equivalents included money market
investments at September 30, 1997 of $547,293 that are not insured by
the Federal Deposit Insurance Corporation.
4. OPTIONS
The Company applies APB Opinion No. 25 and related interpretations
in accounting for the Unified Holdings, Inc. Management and Employee
Retention Plan (the "M.E.R.P."). Effective as of July 25, 1997, the
Company terminated the M.E.R.P. and the Unified Holdings, Inc.
Restricted Stock Option Plan (the "Stock Option Plan"). Prior to the
termination of the M.E.R.P., the Company and each participant who held
an option granted pursuant to the M.E.R.P. executed an amendment to
their respective agreement to provide for immediate vesting, waive
certain anti-dilution protection and clarify certain other terms. All
such options were exercised as of July 25, 1997 and, in connection
therewith, the Company issued 572,768 shares of Common Stock. Also
effective as of July 25, 1997, the Company and each participant who held
an award issued pursuant to the Stock Option Plan executed a Release and
Surrender Agreement whereby such participants surrendered their awards
to the Company.
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In connection with the exercise of the outstanding M.E.R.P.
options, each optionee executed a demand promissory note payable to the
Company in an amount equal to such optionee's aggregate exercise price
for the shares subject to the option. The aggregate amount of the
promissory notes was approximately $75,300 and such notes did not bear
interest. On July 25, 1997, the Company paid to each optionee a bonus
in an amount sufficient to extinguish the debt represented by their
promissory note. Such bonuses also were adjusted upward to reflect the
income tax effect of the bonus payment to the participant. The exercise
of the options had no material financial impact on the Company; however,
the payment of the bonuses had an after-tax cost to the Company of
approximately $50,200.
5. TRANSACTIONS WITH RELATED PARTIES
The Company provides administrative services to VAI, an affiliated
company, for the use of supplies, equipment, employees' costs and
benefits, space and other services. The revenue for these services was
$254,372 for the nine months ended September 30, 1997. The receivable
from VAI to the Company was $304,819 at September 30, 1997.
In 1995, the Company loaned VAI $65,888 to reimburse the Vintage
Mutual Funds for an outstanding obligation. The promissory note is due
on demand with interest payable at prime plus two percent per annum.
The note receivable at September 30, 1997 was $50,000.
6. COMMITMENTS AND CONTINGENCY
The Company entered into a line of credit agreement with a bank
during August of 1997. The maximum borrowing capacity is Five Hundred
Thousand Dollars ($500,000) for the purpose of purchasing various
communication and computer hardware and software equipment to support
future operating needs. As of September 30, 1997, the amount
outstanding under this credit facility was $69,481.
The Company, through its subsidiary, Management, leases its
corporate headquarters and administrative office facilities located at
429 North Pennsylvania Street, Indianapolis, Indiana, which facility has
approximately 11,086 square feet, and is leased pursuant to an operating
lease expiring in 2001. During August 1997, Health signed a lease for
office and administrative office facilities located 2353 Alexandria
Drive, Lexington, Kentucky. The operating lease expires in 2002 and the
facility has approximately 2,554 square feet. The Company's current
administrative offices are considered adequate to serve the Company's
foreseeable needs. Other than the administrative office leases and the
equipment and capital leases listed herein, the Company has no other
significant property holdings.
Lease obligations are allocated between the Company and its
subsidiaries based upon estimated usage. The leases include clauses
for adjustment of operating costs and real estate taxes that are not
reflected as part of the minimum obligations. The aggregate minimum
rental commitments required under operating leases and noncancelable
subleases for office space and equipment at September 30, 1997 were as
follows:
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<TABLE>
<CAPTION>
FOR THE TWELVE MONTHS
ENDED SEPTEMBER 30, LEASE COMMITMENTS
--------------------- -----------------
<S> <C>
1998 $ 258,935
1999 254,649
2000 229,444
2001 224,508
Thereafter 60,088
-----------
Total $ 1,027,624
===========
</TABLE>
The total rental expense was $153,506 and $149,156 for the nine
months ended September 30, 1997 and 1996, respectively.
7. CAPITALIZED LEASE OBLIGATIONS
The Company's capitalized lease obligations are payable over a
36-month period. The following is a summary of future minimum lease
payments under capitalized lease obligations as of September 30, 1997:
<TABLE>
<CAPTION>
FOR THE TWELVE MONTHS
ENDED SEPTEMBER 30, AMOUNT
--------------------- ------
<S> <C>
1998 $ 52,410
1999 41,018
2000 22,661
2001 17,749
2002 1,478
----------
Total 135,316
Less amount representing interest 7,415
----------
Net present value $ 127,901
==========
</TABLE>
The Company acquired equipment through a capital lease obligation
in the amount of $93,320 and $35,063 during the nine-month period ended
September 30, 1997 and 1996, respectively.
8. CASH SEGREGATED UNDER FEDERAL REGULATION
Pursuant to Rule 15c3-3 as promulgated by the Securities and
Exchange Commission (the "SEC"), the Company calculates its reserve
requirement and segregates cash and/or securities for the exclusive
benefit of the customers on a periodic basis. The reserve requirement
calculated by the Company was $0 at September 30, 1997. Balances
segregated in excess of reserve requirements are not restricted.
9. NET CAPITAL REQUIREMENTS
The Company is subject to the SEC's Uniform Net Capital Rule
("Rule 15c3-1"), which requires the maintenance of minimum net capital,
as defined, of 6-2/3% of aggregate indebtedness or $250,000, whichever
is greater, and a ratio of aggregate indebtedness to net capital of not
more than 15 to 1. At September 30, 1997, the Company had net capital
of $404,168, which was in excess of its required net capital of
$250,000, and a net capital ratio of 0.40 to 1 at September 30, 1997.
10. EMPLOYEE BENEFIT PLANS
The Company sponsors a profit-sharing and Section 401(k) defined
contribution retirement plan that covers substantially all employees.
The Board of Directors of the Company
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determines contributions to the plan. The plan covers the Company,
Advisers, Management and Health. During the nine months ended September
30, 1997, an expense of $1,096 was incurred.
In 1996, the Company amended its Section 401(k) plan to include
matching of funds contributed into the Vintage Mutual Funds or used to
purchase Class B Preferred Stock of the Company in the Section 401(k)
Plan. The Company will match an employee's contribution up to fifty
percent of the first six percent of the employee's before-tax
contribution. The expense to the Company for such matching contribution
was $18,643 and $7,359 for the nine-month period ended September 30, 1997
and 1996, respectively.
11. COMMON AND PREFERRED STOCK
Common Stock:
At a meeting of the stockholders of the Company on February 6,
1997, the Company's stockholders approved an amendment to its
Certificate of Incorporation, as amended, which increased the par value
of the Company's Common Stock from no par value per share to $0.01 per
share and increased the authorized number of shares to 25,000,000.
On July 15, 1997, the Company declared and paid a stock dividend
with respect to the Common Stock such that each issued share of Common
Stock on such date was divided into a greater number of shares of Common
Stock immediately prior to such division of shares. Upon payment of
such stock dividend, the Company had 50,000 shares of its Common Stock
outstanding.
By a unanimous written consent of the stockholders of the Company
dated August 1, 1997, the Company's stockholders approved an Amended and
Restated Certificate of Incorporation of the Company, which decreased
the number of authorized shares of Common Stock to 10,000,000.
In connection with the acquisition of Health on June 1, 1997, the
Company will issue 325,000 shares of its Common Stock as reflected in
Note 2 of the notes to the financial statements.
Preferred Stock:
The total preferred shares authorized for the Company is 1,000,000
with a par value of $0.01 per share of which 22,100 shares have been
designated as follows:
<TABLE>
<CAPTION>
Shares
Shares issued and Stated Par
Designated outstanding value value
---------- ----------- ----- -----
<S> <C> <C> <C> <C>
Preferred Stock Series A 10,000 8,486 $100 $0.01
Preferred Stock Series B 10,000 8,583 100 0.01
Preferred Stock Series C 2,100 -- 100 0.01
</TABLE>
Required dividend payments on the Series A and Series B Preferred
Stock are cumulative at 8% per annum of the stated value. The Company
may not create any additional class or series of stock ranking or having
a parity as to payment of dividends or as to liquidation preference,
over or with the Series A or Series B Preferred Stock. In the event of
non-payment of the cumulative preferred dividends, the preferred
stockholders shall be entitled to vote on all
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<PAGE> 13
matters presented to the stockholders of the Company, as provided in the
Amended and Restated Certificate of Incorporation of the Company.
On August 1, 1997, the Board designated 2,100 shares of the
Preferred Stock of the Company as Series C 6.75% Cumulative Convertible
Preferred Stock.
12. SUBSEQUENT EVENT
By unanimous written consent of the Board of Directors of the
Company dated November 7, 1997, the Board approved the payment of a
dividend with respect to Series A and Series B Preferred Stock of the
Company, payable to stockholders of record of the Company on October 31,
1997. The dividend payments aggregated approximately $34,700 and were
paid on November 11, 1997.
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<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company has three wholly owned subsidiaries through which it
conducts its operations: Advisers, a registered investment advisor and
transfer agent that was organized on February 1, 1990; Management, a National
Association of Securities Dealers ("NASD") and a SIPC member broker-dealer
that was organized on November 20, 1952 as Unified Underwriters and commenced
operations as Unified Management Corporation effective February 25, 1976; and
Health, a registered investment adviser that was organized on October 3, 1986
and acquired by the Company on June 1, 1997.
Advisers primary services include: mutual fund transfer agency and
shareholder recordkeeping; shareholder services plan support; mutual fund
start-up services; administration; fund accounting; compliance; asset
allocation services; statement processing; tax-free reorganization; retirement
plan services, including support and constructs; fulfillment; and investment
advisory services. Advisers is a complete mutual fund financial services
company specializing in the development, support, maintenance, shareholder
servicing, management and investment advisory of mutual funds.
Advisers is a highly automated, registered stock transfer agent that
presently provides transfer agency, fund accounting, administrative and/or
compliance services for ten mutual fund families consisting of nearly $650
million in mutual fund assets, 36 portfolios and approximately 29,000
accounts. Additionally, as a registered investment adviser, Advisers has
approximately $117.5 million of assets under management, all of which are
investments in mutual funds, with approximately $57 million of the $117.5
million invested in the Vintage Mutual Funds.
Through its systems group and its link to a brokerage affiliate,
Advisers has the capability of converting assets on a tax-free basis
from existing funds into the Company's affiliated mutual fund family,
the Vintage Mutual Funds.
Management, a fund distributor and broker-dealer of record, links
brokerage accounts with funds and provides a proprietary brokerage sweep
relationship through the Vintage money market funds. Management's arrangement
with its brokerage clearing firm allows Management to sweep monies from the
brokerage clearing firm to the Vintage Mutual Funds as part of the transaction
instead of leaving the money at the brokerage clearing firm.
Management founded the first mutual fund based in the state of Indiana
in 1963 and specializes in mutual fund distribution and shareholder servicing
liaison providing such services as: mutual fund distribution, distribution
services and support; mutual fund conversion support; mutual fund trades;
individual retirement ("IRA") custodial services; 12b-1 maintenance,
accounting and marketing support; securities (stock and bond) brokerage;
brokerage clearing and execution services; consolidated brokerage statement
processing; mutual fund and brokerage software development; asset allocation
and performance measurement services and statement processing; and retirement
account recordkeeping. Management clears through Pershing and provides a
full range of brokerage products.
Health is a registered investment adviser that was formed in 1986 and
registered with the SEC since 1987. As of September 30, 1997, Health managed
over $340 million in assets for both individual and institutions. The main
management style of Health is a balance portfolio of no-load index funds in
multi asset classes consisting of the S&P 500 large cap US stock, small cap US
stocks, US bonds, real estate, cash and international stocks.
- 14 -
<PAGE> 15
The following presents management's discussion and analysis of the
Company's consolidated financial condition and results of operations as of the
dates and for the periods indicated. This discussion should be read in
conjunction with the Company's audited and unaudited consolidated financial
statements and the accompanying notes thereto.
COMPARISON OF RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND 1996
Year-to-date net income at September 30, 1997 of $258,196 compares to a
net profit of $544,765 for the same period last year. Net profit for the nine
months ended September 30, 1997 includes an after-tax loss of approximately
$387,000 related to the acquisition of Health, coupled with a special bonus to
the employees of the Company of approximately $125,000, higher legal,
accounting and counsel fees related to the filing by the Company of the
Company's Registration Statement on Form 10-SB (the "Form 10-SB") with the
SEC during 1997 and a provision for income taxes related to alternative
minimum tax depreciation carryforwards, which could be modified based upon
future operations of the Company. Fund services operating charges included a
one-time conversion cost related to a change of the Company's fund system
service provider.
Gross revenues of $4,871,418 in the nine-month period ended September 30,
1997 compare to $5,312,237 for the same period in 1996. For the current year,
assets under management increased significantly. This increase accounted for the
$302,698 increase in investment advisors revenues. Reduced brokerage charges
significantly reduced revenue from broker/dealer operations. Mutual fund
service and trailing commissions were partially offset by an increase in
retirement and other income.
The gross profit of $3,592,864 for the nine months ended September 30,
1997 compares to $3,857,562 for the same period in 1996. The percentage of
gross profit to total revenue increased to 73.8% during the nine-month period
ended September 30, 1997 from 72.6% from the same prior year period. This
improvement reflects better investment advisor margins.
Operating expenses increased by $114,760 over the same prior year period
from $3,283,626 to $3,398,386 primarily due to increased employee compensation
and benefits and professional fees. Employee compensation was higher due to a
one-time bonus paid during July 1997 and higher legal, accounting and
counsel fees related on the filing of the Form 10-SB. In addition, travel
costs increased related to the completed and pending acquisitions and a
one-time charge related to a change of the Company's fund system service
provider.
COMPARISON OF RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 1997 AND
1996
For the quarter ended September 30, 1997, net profit of $139,042
compares to a net profit of $408,063 for the same period last year. The
third quarter of 1997 includes a special bonus to employees of the Company
aggregating approximately $125,000 and higher legal, accounting and counsel
fees related on the filing of Form 10-SB with the SEC during 1997. The current
year quarter also includes a one-time expense related to conversion of the
Company's fund service system provider, and increased travel costs related to
acquisition activities. The quarter ended September 30, 1996 included a credit
from the Company's communication service provider. Increased assets under
management accounted for the increase in investment advisor revenues, which
partially offset the decline in fund services revenues. The adjustment for the
Company's investment in an affiliate resulted in a lower charge as compared to a
1996 third quarter loss of $52,801. The quarter ended September 30, 1997 also
includes a provision for income taxes related to alternate minimum tax, which
could be modified based upon future operations of the Company.
For the three months ended September 30, 1997, gross revenues of
$1,678,446 compared to $1,928,349 during the same quarter last year. Increased
assets under management accounted for the increase in investment advisor
revenues, which partially offset the decline in fund services revenues. Cost
of sales increased $10,585 to $441,522 in the quarter ended September 30,
1997 from $430,937 for the quarter ended September 30, 1996. The lower
brokerage cost of sales partially offset higher trail commission charges
and administration fees.
- 15 -
<PAGE> 16
Quarterly operating expenses increased by $6,429 over last year of
$1,067,343 to $1,073,772, due to a one-time special bonus to employees of
the Company aggregating approximately $125,000, a one-time expense for
conversion of our fund service system provider, increased travel costs
reated to completed and pending acquisitions and higher legal, accounting
and counsel fees related to the filing of the Form 10-SB. In addition,
operating expenses for the quarter ended September 30, 1996 included a credit
from the Company's communication service provider.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity historically have been and
continues to be cash flow from operating activities and available borrowing
capacity for capitalized leases. At September 30, 1997 and September 30,
1996, the Company reported working capital of $1,108,045 and $965,512,
respectively, or a working capital ratio of 1.64 and 2.00 to 1, respectively.
Significant portions of the Company's computer and communication
equipment and software are purchased through capitalized leases. The Company
expects to be able to repay its borrowings for such capitalized leases over
the respective lease periods.
Capital expenditures for 1997 include the purchase of telephone and
computer equipment and software to further support the Company's mutual fund
and brokerage services businesses. Such expenditures are not expected to
exceed $400,000. The Company currently believes that it can provide its own
sources of funds or lending to sufficiently absorb such expenditures so as to
not endanger the liquidity or financial condition of the Company.
The Company does not expect to need to raise additional capital to
satisfy its cash requirements but will attempt to raise working capital to
expand its business and products, equipment and software purchases, and to
retire its outstanding shares of Class A and Class B Preferred Stock. Except
with respect to the proposed acquisitions of Lexington and Advisers, there are
no expected purchases or sales of plant during the next twelve months.
Historically, cash expended in investing activities has supported the
Company's affiliated mutual funds and brokerage services business through
investments in Advisers, of which the Company owns 10% of the outstanding
capital stock, and the Vintage Mutual Funds, the Company's affiliated mutual
fund family. There can be no assurances that such investments in the future
will continue to produce positive effects on the Company's liquidity or
working capital, and, such investments, or unexpected increases in capitalized
leases, could have a negative affect on the Company's liquidity and working
capital.
- 16 -
<PAGE> 17
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securityholders
As of August 1, 1997, the stockholders of the Company, by unanimous
written consent, adopted resolutions that: (i) nullified certain purported
issuances of Common Stock by the Company; (ii) approved and adopted a stock
dividend paid by the Company on July 15, 1997 such that, upon payment of such
stock dividend, the Company had 50,000 shares of Common Stock issued and
outstanding; (iii) amended and restated the Certificate of Incorporation of
the Company; and (iv) approved and ratified the termination of the Unified
Holdings, Inc. Management Retention Plan and the Unified Holdings, Inc.
Restricted Stock Option Plan.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: See Exhibit Index on page 19 hereof.
--------
(b) Reports on Form 8-K: No reports on Form 8-K were filed by the
-------------------
Company during the third quarter of 1997.
- 17 -
<PAGE> 18
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNIFIED HOLDINGS, INC
(Registrant)
Dated: November 14, 1997 By: /s/ Timothy L. Ashburn
---------------------------------------
Timothy L. Ashburn
Chairman and Chief Executive Officer
Dated: November 14, 1997 By: /s/ Thomas G. Napurano
---------------------------------------
Thomas G. Napurano
Executive Vice President
And Chief Financial Officer
(Principal Financial and Accounting
Officer)
- 18 -
<PAGE> 19
<TABLE>
EXHIBIT INDEX
-------------
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
4.1(a) Amended and Restated Certificate of Incorporation
of the Company.
4.1(b) Certificate of Designations, Preferences, and
Relative Rights, Qualifications and Restrictions of
the Series A 8% Cumulative Preferred Stock of the
Company.
4.1(c) Certificate of Designations, Preferences, and
Relative Rights, Qualifications and Restrictions of
the Series B 8% Cumulative Preferred Stock of the
Company.
4.1(d) Certificate of Designations, Preferences, and
Relative Rights, Qualifications and Restrictions of
the Series C 6.75% Cumulative Convertible Preferred
Stock of the Company.
4.2 By-Laws of the Company.
11.1 Computation of Net Income Per Common Share.
27.1 Financial Data Schedule.
27.2 Financial Data Schedule.
</TABLE>
- 19 -
<PAGE> 1
AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION
OF
UNIFIED HOLDINGS, INC.
Pursuant to Section 245 of the Delaware General Corporation Law, the
Board of Directors of Unified Holdings, Inc., a Delaware corporation
incorporated on the 7th day of December 1989 under the name Unified Holdings,
Inc., proposed and submitted this Amended and Restated Certificate of
Incorporation which correctly states and integrates and further amends the
Corporation's Certificate of Incorporation as theretofore amended or
supplemented to the stockholders of the Corporation. This Amended and
Restated Certificate of Incorporation was duly adopted by the stockholders in
the manner and by the vote prescribed by Section 242 of the Delaware General
Corporation Law and supersedes the original Certificate of Incorporation and
all prior amendments thereto.
ARTICLE 1
---------
The name of this Corporation is Unified Holdings, Inc.
ARTICLE 2
---------
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.
The name of the registered agent at such address is The Corporation Trust
Company.
ARTICLE 3
---------
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE 4
---------
The total number of shares of stock that the Corporation shall have the
authority to issue is one million (1,000,000) shares of Preferred Stock with
a par value of $0.01 per share; and ten million (10,000,000) shares of Common
Stock, par value $0.01 per share. The Board of Directors, by adoption of an
authorizing resolution, may cause Preferred Stock to be issued from time to
time in one or more series. The Board of Directors, by adoption of an
authorizing resolution, may with regard to the shares of any series of
Preferred Stock:
(1) Fix the distinctive serial designation of the shares;
(2) Fix the dividend rate, if any;
(3) Fix the date from which dividends on shares issued before
the date for payment of the first dividend shall be cumulative, if any;
(4) Fix the redemption price and terms of redemption, if any;
<PAGE> 2
(5) Fix the amounts payable per share in the event of
dissolution or liquidation of the corporation, if any;
(6) Fix the terms and amounts of any sinking fund to be used
for the purchase or redemption of shares, if any;
(7) Fix the terms and conditions under which the shares may be
converted, if any;
(8) Provide whether such shares shall be non-voting, or shall
have full or limited voting rights, and the rights, if any, of such
shares to vote as a class on some or all matters on which such shares
may be entitled to vote; and
(9) Fix such other preferences, qualifications, limitations,
restrictions and special or relative rights not required by law.
ARTICLE 5
---------
The Corporation is to have perpetual existence.
ARTICLE 6
---------
A. The Board of Directors shall have the power to make, amend,
alter, change or repeal the by-laws (except in so far as the by-laws adopted
by the stockholders shall otherwise provide). Any by-laws made by the
directors under the powers conferred hereby may be amended, altered, changed
or repealed by the directors or by the stockholders. Notwithstanding the
foregoing or anything contained in this Amended and Restated Certificate of
Incorporation to the contrary, Sections 2.7 and 2.8 of Article II, Sections
3.2, 3.9 and 3.11 of Article III and Article VIII of the by-laws shall not be
amended, altered, changed or repealed and no provision inconsistent therewith
shall be adopted without the affirmative vote of the holders of at least
eighty percent (80%) of the voting power of all shares of the Corporation's
outstanding capital stock, voting together as a single class (it being
understood that for purposes of this Article 6, each share of voting stock
shall be entitled to the number of votes granted to it by law or pursuant to
Article 4 of this Amended and Restated Certificate of Incorporation), unless
such amendment, alteration, change or repeal has previously been expressly
approved by the Board of Directors by the affirmative vote or consent of at
least sixty-six and two-thirds percent (66-2/3%) of the number of Directors
then in office.
B. In addition to any affirmative vote required by law or otherwise,
any amendment, alteration, change or repeal of the provision of this Article
6 shall require the affirmative vote of at least eighty percent (80%) of the
voting power of all shares of the Corporation's outstanding capital stock,
voting together as a single class (it being understood that for purposes of
this Article 6, each share of voting stock shall be entitled to the number of
votes granted to it by law or pursuant to Article 4 of this Amended and
Restated Certificate of Incorporation), unless such amendment, alteration,
change or repeal has previously been expressly approved by the Board of
Directors by the affirmative vote or consent of at least sixty-six and
two-thirds percent (66-2/3%) of the number of directors then in office, in which
case the stockholder vote required by this Section B of Article 6 shall not
apply.
-2-
<PAGE> 3
ARTICLE 7
---------
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the by-laws of the Corporation. Elections of
directors need not be by written ballot unless the by-laws of the Corporation
shall so provide.
ARTICLE 8
---------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
ARTICLE 9
---------
A. The number of directors to constitute the Board of Directors
shall be fixed, from time to time, at not less than one (1) nor more than
fifteen (15), by resolution of the Board of Directors adopted by the vote or
consent of at least sixty-six and two-thirds percent (66-2/3%) of the number
of directors then in office. The directors shall be divided into three
classes: Class I, Class II and Class III; and the number of directors in
such classes shall be as nearly equal as possible. The term of office of the
initial Class I directors shall expire at the annual meeting of stockholders
of the Corporation in 1998; the term of office of the initial Class II
directors shall expire at the annual meeting of stockholders of the
Corporation in 1999; and the term of office of the initial Class III
directors shall expire at the annual meeting of stockholders of the
Corporation in 2000; or in each case until their respective successors were
duly elected and qualified. At each annual election held after 2000 the
directors chosen to succeed those whose terms then expire shall be identified
as being of the same class as the directors they succeed and shall be elected
for a term of three (3) years expiring at the third succeeding annual meeting
or thereafter until their respective successors are duly elected and
qualified. If the number of directors is changed, any increase or decrease
in the number of directors shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible.
B. Any vacancy on the Board (whether such vacancy is caused by
death, resignation or removal for cause, or is the result of a newly created
directorship) shall be filled by a majority of the directors then in office.
Any director elected to fill a vacancy in any class (whether such vacancy is
caused by death, resignation or removal for cause, or is the result of an
increase in the number of directors in such class) shall hold office for a
term which shall expire with the term of the directors in such class.
C. No director may be removed without cause from office during such
director's term of office. At a meeting called expressly for that purpose,
any director may be removed by the stockholders for cause by the affirmative
vote of the holders of a majority of the shares entitled to vote at an
election of directors.
-3-
<PAGE> 4
D. Any action required or permitted to be taken by the stockholders
of the Corporation shall be effected at a duly called annual or special
meeting of stockholders.
E. In addition to any affirmative vote required by law or otherwise,
any amendment, alteration, change or repeal of the provisions of this Article
9 shall require the affirmative vote of the holders of not less than eighty
percent (80%) of the voting power of the shares then entitled to vote at an
election of directors, unless such amendment, alteration, change or repeal
has previously been expressly approved by the Board of Directors of the
Corporation by the affirmative vote or consent of at least sixty-six and
two-thirds percent (66-2/3%) of the number of directors then in office, in which
case the stockholder vote required by this Section E of Article 9 shall not
apply.
ARTICLE 10
----------
A. In addition to any affirmative vote required by law, and except
as otherwise expressly provided in Section B of this Article 10, a Business
Combination (as hereinafter defined) may not be consummated or effected
unless such transaction shall first have received the affirmative vote of the
holders of at least eighty percent (80%) of the voting power of the then
outstanding shares of capital stock of the Corporation, voting together as a
single class ("Voting Stock") (it being understood that for the purposes of
this Article 10, each share of the Voting Stock shall be entitled to the
number of votes granted to it by law or pursuant to Article 4 of this Amended
and Restated Certificate of Incorporation). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that a
lesser percentage may be specified, by or pursuant to law, this Amended and
Restated Certificate of Incorporation or any agreement.
B. Section A of this Article 10 shall not be applicable to a
Business Combination, and such Business Combination shall require only the
affirmative vote (if any) as required by law or otherwise, if the Business
Combination shall have been expressly approved by the Board of Directors of
the Corporation by the affirmative vote or consent of at least sixty-six and
two-thirds percent (66-2/3%) of the number of directors of the Corporation
then in office (the "Whole Board"). In determining whether or not to approve
any such Business Combination, the Board of Directors shall give due
consideration to all factors the Board may consider relevant, including,
without limitation:
(1) the legal and economic effects on the customers of the
Corporation and its subsidiaries, on the communities and geographic areas
in which the Corporation and its subsidiaries operate or are located, and
on any of the businesses and properties of the Corporation and its
subsidiaries; and
(2) the adequacy of the consideration offered in relation not
only to the current market price of the outstanding securities of the
Corporation, but also to the current value of the Corporation in a freely
negotiated transaction and the Board of Directors' estimate of the future
value of the Corporation (including the unrealized value of its properties
and assets) as an independent going concern.
-4-
<PAGE> 5
C. For the purposes of this Article 10 of this Amended and Restated
Certificate of Incorporation:
(1) A "Business Combination" shall mean:
(a) any merger, consolidation or exchange of shares
of capital stock of the Corporation or any Subsidiary (as
hereinafter defined) with or into any Interested Person (as
hereinafter defined) or any other corporation or entity
(whether or not it is an Interested Person) which is, or
after such merger, consolidation or exchange of shares
would be, an Interested Person or an Affiliate (as
hereinafter defined) of an Interested Person, regardless of
the surviving entity;
(b) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition to or with an Interested Person
or any Affiliate of any Interested Person (in a single
transaction of a series of related transactions) other than
in the ordinary course of business, of all or a substantial
part of the assets of the Corporation or of any Subsidiary,
or both;
(c) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition to or with the Corporation
or any Subsidiary (in a single transaction of a series of
related transactions) other than in the ordinary course of
business, of all or a substantial part of the assets of an
Interested Person or any Affiliate of an Interested Person,
or both;
(d) any issuance or transfer by the Corporation or
any Subsidiary of any securities of the Corporation or any
Subsidiary to an Interested Person or any Affiliate of an
Interested Person (other than an issuance or transfer of
securities which is effected on a pro rata basis to all
stockholders of the Corporation);
(e) any acquisition by the Corporation or any Subsidiary,
other than in the ordinary course of business, of any securities
of an Interested Person or any Affiliate of an Interested Person;
(f) any recapitalization or reclassification of
shares of any class of capital stock of the Corporation
or any Subsidiary, or any merger or consolidation of the
Corporation with any Subsidiary (whether or not involving
an Interested Person), which transaction would have the
effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class
of capital stock of the Corporation (or any securities
convertible into any class of such capital stock) with
respect to which an Interested Person or an Affiliate of an
Interested Person is the "Beneficial Owner" (as hereinafter
defined);
-5-
<PAGE> 6
(g) any merger or consolidation of the Corporation
with any Subsidiary, if the provisions of this Article 10
shall not be contained in the certificate of incorporation
of the surviving entity;
(h) any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of
an Interested Person or an Affiliate of an Interested
Person; or
(i) any agreement, contract, plan, proposal or other
arrangement providing for any of the foregoing.
(2) An "Interested Person" shall mean any individual,
partnership, firm, corporation or other entity (other than
the Corporation or any Subsidiary) who or which, directly or
indirectly, together with any of his or its Affiliates and
Associates (as hereinafter defined), is, or at any time within
the one-year period immediately prior to the date in question
was, the Beneficial Owner of five percent (5%) or more of the
voting power of the outstanding Voting Stock (it being
understood that for purposes of this Article 10, each share of
the Voting Stock shall be entitled to the number of votes
granted to it by law or pursuant to Article 4 of this Amended
and Restated Certificate of Incorporation).
(3) A "Subsidiary" shall mean any corporation, of which a
majority of its capital stock is directly or indirectly owned
by the Corporation.
(4) The term "Beneficial Owner" shall have the meaning
ascribed to such term by Rule 13d-3 promulgated by the Securities
and Exchange Commission pursuant to the Securities Exchange Act
of 1934.
(5) The terms "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2
promulgated by the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934.
D. Any amendment, alteration, change or repeal of the provisions of
this Article 10 shall, in addition to any affirmative vote required by law or
otherwise, require the affirmative vote of the holders of at least eighty
percent (80%) of the voting power of the Voting Stock (it being understood
that for purposes of this Article 10, each share of the Voting Stock shall be
entitled to the number of votes granted to it by law or pursuant to Article 4
of this Amended and Restated Certificate of Incorporation), unless such
amendment, alteration, change or repeal has previously been expressly
approved by the Board of Directors of the Corporation by the affirmative vote
or consent of at least sixty-six and two-thirds percent (66-2/3%) of the
Whole Board, in which case the stockholder vote required by this Section D of
Article 10 shall not apply.
-6-
<PAGE> 7
ARTICLE 11
----------
A. Elimination of Certain Liability of Directors. A director of the
---------------------------------------------
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law or (iv) for
any transaction from which the director derived an improper personal benefit.
B. Indemnification and Insurance.
-----------------------------
(1) Right to Indemnification. Each person who was or is made a
------------------------
party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation or of a banking association, partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis for such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment),
against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such person in
connection herewith and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of his or her heirs, executors and administrators; provided,
however, that, except as provided in paragraph (2) hereof, the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Section shall be a contract
right and shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the Delaware General Corporation Law
requires, the payment of such expense incurred by a director or officer in
his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan)
in advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately
be determined that such director or officer is not entitled to be indemnified
under this Section or otherwise. The Corporation may, by action of its Board
of Directors, make payments of expenses incurred in defending a proceeding in
advance of its final disposition to employees and agents of the Corporation
and persons who serve as directors, officers, employees or agents of another
corporation, or of a banking association, partnership, joint venture, trust
or other enterprise, including service with respect
-7-
<PAGE> 8
to an employee benefit plan, subject to the requirements set forth in this
Section and upon such terms and conditions as the Board of Directors deems
appropriate.
(2) Right of Claimant to Bring Suit. If a claim under
-------------------------------
paragraph (1) of this Section is not paid in full by the Corporation within
thirty days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required
undertaking, if any, is required, has been tendered to the Corporation) that
the claimant has not met the standards of conduct which make it permissible
under the Delaware General Corporation Law for the Corporation to indemnify
the claimant for the amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel or the
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel or
the stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(3) Non-Exclusivity of Rights. The right to indemnification
-------------------------
and the payment of expenses incurred in defending a proceeding in advance of
its final disposition conferred in this Section shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of this Amended and Restated Certificate of Incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
(4) Insurance. The Corporation may maintain insurance, at its
---------
expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, banking association, partnership,
joint venture, trust or other enterprise against any such expense, liability
or loss, whether or not the Corporation would have the power to indemnify
such person against such expense, liability or loss under the Delaware
General Corporation Law.
-8-
<PAGE> 9
IN WITNESS WHEREOF, Unified Holdings, Inc. has cause this Amended and
Restated Certificate of Incorporation to be signed by Timothy L. Ashburn, its
Chairman of the Board and Chief Executive Officer, and attested by Carol J.
Highsmith its Secretary, this 22nd day of September, 1997.
UNIFIED HOLDINGS, INC.
By: /s/ Timothy L. Ashburn
-----------------------------------------
Timothy L. Ashburn, Chairman
of the Board and Chief Executive Officer
Attest:
/s/ Carol J. Highsmith
- ------------------------------------
Carol J. Highsmith, Secretary
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<PAGE> 1
CERTIFICATE OF DESIGNATIONS, PREFERENCES,
AND RELATIVE RIGHTS,
QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS
OF THE
SERIES A 8% CUMULATIVE PREFERRED STOCK
OF
UNIFIED HOLDINGS, INC.
-----------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
-----------------------
Unified Holdings, Inc. (the "Corporation"), a corporation organized
and existing under and by virtue of the provisions of the General Corporation
Law of the State of Delaware, certifies as follows:
FIRST: The Certificate of Incorporation of the Corporation
authorizes the issuance of 1,000,000 shares of Preferred Stock, par value $0.01
per share (the "Preferred Stock"), and, further, authorizes the Board of
Directors of the Corporation, by resolution or resolutions, at any time and from
time to time, to divide and establish any or all of the unissued shares of
Preferred Stock not then allocated to any series of Preferred Stock into one or
more series and, without limiting the generality of the foregoing, to fix and
determine the designation of each such share, the number of shares which shall
constitute such series and certain powers, preferences and relative
participating, optional or other special rights and qualifications, limitations
and restrictions of the shares of each series so established.
SECOND: By unanimous written consent of the Board of Directors of
the Corporation dated December 29, 1993, the following resolution was adopted
setting forth the designations, powers, preferences and rights, and the
qualifications, limitations or restrictions of a certain series of said
Preferred Stock:
RESOLVED: Pursuant to Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors designates 10,000 shares of the
Preferred Stock as Series A 8% Cumulative Preferred Stock (the "Series A
Preferred Stock"). The designations, powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, in respect of the Series A
Preferred Stock of the Corporation shall be as follows:
1. Definitions.
-----------
As used herein, the following terms shall have the respective
meanings ascribed to them:
"Board" shall mean the Board of Directors of the Corporation.
<PAGE> 2
"Business Day" shall mean any day which is not a Saturday or a
Sunday or a day on which banks are permitted to close in St. Louis, Missouri.
If any action otherwise required hereunder is scheduled for a day other than a
Business Day, then such action may be taken on the next successive Business Day.
"Common Stock" shall mean the Common Stock of the Corporation,
without par value.
"Corporation" shall mean Unified Holdings, Inc., a Delaware
corporation.
"Dividend Reference Date" shall mean the 25th day of January, April,
July and October of each year commencing April 25, 1994, and continuing through
and including January 25, 2014.
"GCL" shall mean the General Corporation Law of the State of
Delaware, as amended.
"Junior Security" shall mean any equity security of any kind which
the Corporation shall at any time issue or be authorized to issue other than the
Series A Preferred Stock, including but not limited to the Series B Preferred
Stock.
"Liquidation Value" of any share of Series A Preferred Stock as of
any particular date shall be equal to the sum of (i) the Stated Value plus
-----
(ii) an amount equal to any accrued and unpaid dividends on such share.
"Payment Default" shall mean (i) any time at which the aggregate
unpaid dividends on both the Series A Preferred Stock and the Series B Preferred
Stock equal or exceed two (2) times the amount of the then regular quarterly
dividend payment with respect to all then outstanding shares of each of such
series of Preferred Stock, and (ii) any time after January 25, 2014, until the
Corporation has redeemed all shares of Series A Preferred Stock as required by
paragraph 4(c) hereof.
"Person" shall mean any individual, partnership, limited
partnership, corporation, trust, joint venture, unincorporated organization and
a government or any department or agency thereof.
"Preferred Stock" shall mean the Preferred Stock, par value $0.01
per share, authorized to be issued by the Corporation pursuant to its
Certificate of Incorporation.
"Redemption Date" shall mean (i) the Dividend Reference Date
specified in a Redemption Notice for a redemption of shares of Series A
Preferred Stock pursuant to paragraph 4(b) hereof, and (ii) January 25, 2014 for
a redemption of shares of Series A Preferred Stock pursuant to paragraph 4(c)
hereof.
"Redemption Notice" shall mean the notice specified in paragraph
4(d) below.
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<PAGE> 3
"Series A Preferred Stock" shall mean the Series A 8% Cumulative
Preferred Stock established pursuant to this resolution of the Board.
"Series B Preferred Stock" shall mean the Series B 8% Cumulative
Preferred Stock established pursuant to a resolution of the Board adopted
concurrently herewith.
"Sinking Fund" shall mean the sinking fund established by the
Corporation pursuant to paragraph 4(a) below.
"Sinking Fund Payment" shall mean an amount, calculated with respect
to each fiscal quarter of the Corporation, equal to the lesser of (a) Applicable
Percentage of the aggregate stated value of Series A Preferred Stock and Series
B Preferred Stock issued and outstanding as of the end of the fiscal quarter for
which such Sinking Fund Payment is being determined, and (b) the Net Account
Income determined with respect to such fiscal quarter. The Applicable
Percentage shall be 0.04375 (4.375%) with regard to the first and second Sinking
Fund Payments, which are due April 25, 1994 and July 25, 1994, respectively;
0.0425 (4.25%) with regard to the third and fourth Sinking Fund Payments, which
are due October 25, 1994 and January 25, 1995, respectively; and shall continue
to decline by one-eighth of one percentage point (.125%) with regard to each
subsequent pair of successive Sinking Fund Payments until it shall become 0.0375
(3.75%) with regard to the Sinking Fund Payments that are due on October 25,
1996 and January 25, 1997. The Applicable Percentage shall be 0.0375 (3.75%)
with regard to all Sinking Fund Payments due on or after January 25, 1997. "Net
Account Income" shall mean the excess of (i) Gross Account Income, over (ii)
Account Expenses. "Gross Account Income" shall mean the sum of (i) the Service
Income attributable to Accounts invested from the four Unified Family of Funds
and the three Liquid Green Funds into the Quest for Value/Oppenheimer Capital
Funds pursuant to certain transactions closing on or about January 23, 1993, and
(ii) forty percent (40%) of the Service Income attributable to any other
Accounts (including zero balance Accounts). "Account" or "Accounts" shall mean
any customer accounts documented on the records of Management at any time on or
between January 1, 1990 and January 31, 1993. "Service Income" shall mean
Distribution Assistance Fees (including 12(b)-(1) fees, as may from time to time
be amended or recodified by the Securities Exchange Commission) received by
Management for services and expenses incurred in connection with the assets
transferred pursuant to acquisition agreements executed among the various
Unified Funds and Liquid Green Trusts and comparable funds managed by Quest for
Value Advisors. Notwithstanding anything to the contrary, Service Income shall
not mean or include transfer agency fees, fund accounting fees, administration
and compliance fees, brokerage fees, or commissions associated with servicing
the Accounts. "Account Expenses" shall mean any commissions or fees due to
introducing broker/dealers in connection with any Account.
"Stated Value" of any share of Series A Preferred Stock shall mean
One Hundred Dollars ($100.00).
2. Dividends.
---------
(a) General Dividend Obligation. To the extent funds of the
---------------------------
Corporation are legally available therefor, the Board shall declare that the
Corporation shall pay to the holders
- 3 -
<PAGE> 4
of the Series A Preferred Stock, out of the assets of the Corporation available
for the payment of dividends under the GCL, preferential dividends at the times
and in the amounts provided for in this paragraph 2 and no more. Dividends
shall be paid by mailing the Corporation's good check in the proper amount to
each holder of the Series A Preferred Stock to such holder (or the designee of
such holder) at such holder's address (or designee's address) as it appears on
the Corporation's register on or prior to the due date of each dividend or by
transferring funds to such holder (or designee) by wire transfer or otherwise so
as to be received by such holder (or designee) on the due date of such dividend.
(b) Calculation of Dividends. Dividends on each share of Series
------------------------
A Preferred Stock shall be calculated cumulatively on a daily basis at the rate
and in the manner prescribed herein from (but not including) the date of
issuance of such share to and including the date on which the Liquidation Value
of such share is paid pursuant to the provisions hereof, whether or not such
dividends shall have been declared and whether or not there shall be (at the
time such dividends are calculated or become payable or at any other time)
profits, surplus or other funds of the Corporation legally available for the
payment of dividends. For purposes of this paragraph 2(b), the date on which
the Corporation shall initially issue any share of Series A Preferred Stock
shall be deemed to be its "date of issuance" regardless of the number of times
transfer of such share shall be made on the stock records maintained by or for
the Corporation and regardless of the number of certificates which may be
originally issued to evidence such share (whether by reason of transfer of such
share or for any other reason).
(c) Dividend Rate and Payment. Dividends shall be calculated
-------------------------
cumulatively (but shall not compound) on a daily basis on each share of Series A
Preferred Stock at the rate of eight percent (8.0%) per annum (based on a
365/366-day year) of the Stated Value thereof. Dividends shall be paid to the
holders of the shares of Series A Preferred Stock on each Dividend Reference
Date commencing March 31, 1994. Each of such dividend payments on each such
Dividend Reference Date shall be in an amount equal to the dividends calculated
from (but not including) the preceding Dividend Reference Date (or from, but not
including, the original date of issuance of the Series A Preferred Stock in the
case of the initial Dividend Reference Date). Notwithstanding the foregoing, in
no event shall the Corporation be required to pay any such dividend to the
extent the payment of such dividend would violate any provision of the GCL. Any
dividends not paid on their respective Dividend Reference Dates shall continue
to accumulate (and shall not compound) until paid.
(d) Distribution of Partial Dividend Payments. If on any
-----------------------------------------
Dividend Reference Date the Corporation shall pay less than the total amount of
dividends then calculated on the Series A Preferred Stock, such payment shall be
distributed among the holders of the Series A Preferred Stock so that an equal
amount shall be paid with respect to each outstanding share.
3. Liquidation. Upon any liquidation, dissolution or winding
-----------
up of the Corporation, whether voluntary or involuntary, the holders of the
Series A Preferred Stock shall be entitled, before any distribution or payment
is made upon any Junior Securities of the Corporation, to be paid out of the
assets of the Corporation available for distribution to its stockholders
(whether from capital, surplus or earnings) an amount in cash equal to the
aggregate Liquidation Value of all shares of Series A Preferred Stock
outstanding, and the
- 4 -
<PAGE> 5
holders of the Series A Preferred Stock shall not be entitled to any further
payment. If upon such liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the assets of the Corporation to
be distributed among the holders of the Series A Preferred Stock shall be
insufficient to permit payment to the holders of Series A Preferred Stock of the
amount which they are entitled to be paid as aforesaid, then the entire
remaining assets of the Corporation shall be distributed to the holders of the
Series A Preferred Stock ratably based upon the aggregate Liquidation Value of
the shares of Series A Preferred Stock held by them. Upon any such liquidation,
dissolution or winding up of the Corporation, after the holders of the Series A
Preferred Stock shall have been paid in full the amounts to which they shall be
entitled, the remaining assets of the Corporation may be distributed to the
holders of Junior Securities of the Corporation. Written notice of such
liquidation, dissolution or winding up, stating a payment date, the amount of
the payment and the place where the amounts distributable shall be payable,
shall be mailed by the Corporation by certified or registered mail, return
receipt requested, not less than thirty (30) days prior to the payment date
stated therein, to each record holder of any share of Series A Preferred Stock
at the address of such record holder shown on the Corporation's records.
Neither the consolidation or merger of the Corporation into or with any other
corporation or corporations, nor the sale, exchange or transfer by the
Corporation of less than substantially all of its assets, nor any reduction of
the capital of the Corporation, shall of itself be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of any of the
provisions of this paragraph 3.
4. Sinking Fund; Redemption by Corporation.
---------------------------------------
(a) No later than the 20th day of each January, April, July and
October, the Corporation shall transfer and set aside into a separate fund (the
"Sinking Fund") an amount of cash equal to the Sinking Fund Payment computed for
the fiscal quarter ending on the immediately preceding Dividend Reference Date.
The amounts held from time to time in the Sinking Fund shall be used solely for
the payment of dividends and the cost of redemption of the Series A Preferred
Stock and the Series B Preferred Stock.
(b) The Corporation may, at its sole option and discretion, redeem
on any Dividend Reference Date any whole number of shares of Series A Preferred
Stock, provided that (i) all accrued dividends on the Series A Preferred Stock
then have been paid, (ii) the balance of the Sinking Fund is sufficient to
effect such redemption, and (iii) the Corporation has funds (including the
amounts held in the Sinking Fund) legally available to effect such redemption.
The price at which such shares of Series A Preferred Stock may be redeemed shall
be an amount per share equal to the Liquidation Value. The shares of Series A
Preferred Stock which the Corporation elects to redeem pursuant to this
paragraph 4(b) shall be redeemed from the holders of such shares on a pro rata
basis, based on the number of shares of Series A Preferred Stock owned by each
such holder as a proportion of the total number of shares of Series A Preferred
Stock then outstanding.
(c) Subject to paragraph 5 below, the Corporation shall redeem all
of the issued and outstanding shares of Series A Preferred Stock on January 25,
2014, at an amount per share equal to the Liquidation Value.
- 5 -
<PAGE> 6
(d) Not more than sixty (60) days and not less than thirty (30)
days prior to any Dividend Reference Date on which the Corporation desires to
redeem any shares of Series A Preferred Stock pursuant to paragraph 4(b), the
Corporation shall mail to each holder of shares of Series A Preferred Stock a
written notice of redemption (the "Redemption Notice") at his post office
address last shown on the stock register of the Corporation. The Redemption
Notice shall:
(i) Identify the number of shares of Series A Preferred Stock
which are outstanding and the total number of such shares to be redeemed;
(ii) State the date on which such shares are to be redeemed
and the Liquidation Value as of such date; and
(iii) State that any holder of shares of Series A Preferred
Stock to be redeemed shall surrender to the Corporation, in the manner
and at the place designated, the certificate or certificates
representing the shares of Series A Preferred Stock to be redeemed.
(e) In connection with a redemption pursuant to paragraph 4(b) or
4(c), the Corporation shall give irrevocable instructions and authority to the
appropriate officers of the Corporation to set apart and pay from the Sinking
Fund (or any other funds legally available therefor, in the event of a
redemption under paragraph 4(c) hereof), on or after the Redemption Date, the
Liquidation Value to the respective record holders upon the surrender of their
share certificates. In the event less than all of the shares represented by any
such certificate are redeemed, the Corporation shall issue a new certificate
representing the unredeemed shares. From and after the Redemption Date, the
shares of Series A Preferred Stock so redeemed shall no longer be outstanding
and dividends shall cease to accrue (except as provided in the last sentence of
paragraph 5 below), and the holders thereof shall cease to be stockholders with
respect thereto and shall have no further rights regarding the shares so
redeemed except the right to receive payment of the Liquidation Value of such
shares, without interest, upon surrender of their certificates therefor. Any
monies so set apart and unclaimed at the end of two years (or any longer period
required by law) from the Redemption Date shall no longer be set aside and shall
become unallocated assets of the Corporation, and thereafter the holders of
shares who were entitled to such monies shall, subject to applicable laws, look
to the Corporation for payment of the Liquidation Value thereof.
5. Insufficient Funds. If on January 25, 2014, the funds of
------------------
the Corporation legally available for a redemption shall be insufficient to
redeem all shares of Series A Preferred Stock required to be redeemed under
paragraph 4(c) hereof, (whether due to the provisions of the GCL or otherwise),
funds to the maximum extent legally available for such purpose shall be utilized
by the Corporation to redeem the maximum number of shares of Series A Preferred
Stock on such date which may be redeemed from such funds. Such redemption shall
be made on a pro rata basis to the holders of shares of Series A Preferred
Stock. If, because sufficient funds are not legally available, the Corporation
shall fail to redeem all of the issued and outstanding shares of Series A
Preferred Stock at such time, the Corporation shall redeem such
- 6 -
<PAGE> 7
shares as promptly as practicable after funds are legally available therefor as
shown by the Corporation's quarterly or annual financial statements.
6. Status of Shares. Shares of Series A Preferred Stock
----------------
redeemed, purchased or otherwise acquired for value by the Corporation,
including by redemption in accordance with paragraph 4, shall, after such
acquisition, have the status of authorized and unissued shares of Preferred
Stock and may be reissued by the Corporation at any time as shares of any series
of Preferred Stock.
7. Restrictions.
------------
(a) So long as any Series A Preferred Stock shall be outstanding,
the Corporation shall not, except with the written consent of the holders of not
less than a majority of the then outstanding shares of Series A Preferred Stock,
create any class or series of stock ranking as to payment of dividends or as to
liquidation preference, having a priority over or on a parity with the Series A
Preferred Stock.
(b) So long as any Series A Preferred Stock shall remain
outstanding, the Corporation shall not, except with the written consent of the
holders of not less than a majority of then outstanding shares of Series A
Preferred Stock, amend, alter or repeal the Corporation's Certificate of
Incorporation (or any certificate amendatory or supplementary thereto) or
by-laws in a manner adversely affecting any of the powers, preferences and
rights set forth herein.
(c) So long as any Series A Preferred Stock shall remain
outstanding, no dividend shall be declared or paid, nor shall any other
distribution (including but not limited to a distribution in redemption) be
made, upon any Junior Securities by the Corporation, except (i) distributions
pursuant to the written consent of the holders of not less than a majority of
all then outstanding shares of Series A Preferred Stock, and (ii) distributions
in redemption of outstanding shares of Series B Preferred Stock, provided that
immediately following such redemption of shares of Series B Preferred Stock, the
ratio of the number of shares of Series B Preferred Stock outstanding after such
redemption to the maximum number of shares of Series B Preferred Stock that were
outstanding at any time will be equal to or greater than the ratio of the number
of shares of Series A Preferred Stock then outstanding to the maximum number of
shares of Series A Preferred Stock that were outstanding at any time.
Notwithstanding the immediately preceding sentence, in no event shall the
Corporation pay any dividend or make any other distribution upon any Junior
Securities unless all dividends and other payments (including but not limited to
redemption payments) theretofore required to be paid by the Corporation with
respect to the Series A Preferred Stock have been paid in full.
8. Voting Rights.
-------------
(a) Except as otherwise expressly provided herein or as required
under Delaware law, the holders of shares of Series A Preferred Stock shall not
be entitled to vote on matters coming before the stockholders of the
Corporation.
- 7 -
<PAGE> 8
(b) At such time as there occurs a Payment Default, and thereafter
at each annual and special meeting (or action by written consent in lieu of a
meeting) of stockholders of the Corporation during which a Payment Default
continues to exist, the holders of Series A Preferred Stock shall be entitled to
vote on all matters coming to the attention of the stockholders of the
Corporation, such shares to be voted together with the holders of the Common
Stock, and not as a class. Such voting right shall continue until no dividend
arrearages exist with respect to the Series A Preferred Stock or the Series B
Preferred Stock and dividends on both the Series A Preferred Stock and the
Series B Preferred Stock have been timely paid in full for two consecutive
quarters (or if such voting right occurs as a result of the Corporation's
failure to redeem the Series A Preferred Stock on January 25, 2014 then until
all shares of Series A Preferred Stock have been redeemed). The number of votes
per share of Series A Preferred Stock which the holder thereof shall be entitled
to cast at any time during the continuance of a Payment Default shall be equal
to (i) two (2) times the number of votes represented by all then outstanding
-----
Junior Securities having voting rights, divided by (ii) the sum of the number
----------
of outstanding shares of Series A Preferred Stock and the number of outstanding
shares of Series B Preferred Stock.
(c) No vote or consent of the holders of the Series A Preferred
Stock shall be required for the authorization (including an increase in the
authorized number of shares of any Junior Securities) or issuance of any Junior
Securities of the Corporation; provided, however, that the Corporation shall not
issue any Junior Securities which have class voting rights beyond those required
by law, except upon the prior written consent of the holders of a majority of
the then outstanding shares of Series A Preferred Stock.
9. Closing of Books. The Corporation will not close its books
----------------
against the transfer of any share of Series A Preferred Stock.
10. Registration of Transfer. The Corporation shall keep at its
------------------------
principal office in the State of Indiana (or at such other place as the
Corporation reasonably designates) a register for the registration of shares of
Series A Preferred Stock. Upon the surrender of any certificate representing
shares of Series A Preferred Stock at such place, the Corporation shall, at the
request of the registered holder of such certificate, execute and deliver a new
certificate or certificates in exchange therefor representing in the aggregate
the number of Shares of Series A Preferred Stock represented by the surrendered
certificate (and the Corporation forthwith shall cancel such surrendered
certificate), subject to the requirements of applicable securities laws. Each
such new certificate shall be registered in such name and shall represent such
number of shares of Series A Preferred Stock as shall be requested by the holder
of the surrendered certificate and shall be substantially identical in form to
the surrendered certificate; and dividends shall be calculated cumulatively on a
daily basis on the shares of Series A Preferred Stock represented by such new
certificate from the date to which dividends have been fully paid on the shares
represented by the surrendered certificate at the rate and in the manner
applicable to such surrendered certificate. The issuance of new certificates
shall be made without charge to the holders of the surrendered certificates for
any issuance tax in respect thereof or other cost incurred by the Corporation in
connection with such issuance; provided that the Corporation shall not be
required to pay any tax which may be payable in respect of any transfer involved
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<PAGE> 9
in the issuance and delivery of any certificate in a name other than that of the
holder of the surrendered certificate.
11. Replacement.
-----------
(a) Upon receipt of evidence reasonably satisfactory to the
Corporation of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of Series A Preferred Stock and,
in the case of any such loss, theft or destruction, upon receipt of indemnity
and/or a bond reasonably satisfactory to the Corporation, or, in the case of any
such mutilation, upon surrender of such certificate, the Corporation shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the number of shares of Series A Preferred Stock
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate, on which
dividends shall be calculated cumulatively on a daily basis from the date to
which dividends have been fully paid on such lost, stolen, destroyed or
mutilated certificate at the rate and in the manner applicable to such
certificate.
(b) The term "outstanding" when used herein with reference to
shares of Series A Preferred Stock as of any particular time shall not include
any such shares represented by any certificate in lieu of which a new
certificate has been executed and delivered by the Corporation in accordance
with paragraph 10 or this paragraph 11, but shall include only those shares
represented by such new certificate.
12. Amendment and Waiver. No amendment, modification or waiver
--------------------
of any provision hereof shall extend to or affect any obligation not expressly
amended, modified or waived or impair any right consequent thereon. No course
of dealing, and no failure to exercise or delay in exercising any right, remedy,
power of privilege granted hereby shall operate as a waiver, amendment or
modification of any provision hereof.
IN WITNESS WHEREOF, Unified Holdings, Inc. has caused this
Certificate to be signed by its President this 31 day of December, 1993.
UNIFIED HOLDINGS, INC.
By: /s/ Lynn E. Wood
------------------------
President
Attest: /s/ Janice Hayles
------------------------
Janice Hayles, Secretary
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<PAGE> 1
CERTIFICATE OF DESIGNATIONS, PREFERENCES,
AND RELATIVE RIGHTS,
QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS
OF THE
SERIES B 8% CUMULATIVE PREFERRED STOCK
OF
UNIFIED HOLDINGS, INC.
-----------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
-----------------------
Unified Holdings, Inc. (the "Corporation"), a corporation organized
and existing under and by virtue of the provisions of the General Corporation
Law of the State of Delaware, certifies as follows:
FIRST: The Certificate of Incorporation of the Corporation
authorizes the issuance of 1,000,000 shares of Preferred Stock, par value $0.01
per share (the "Preferred Stock"), and, further, authorizes the Board of
Directors of the Corporation, by resolution or resolutions, at any time and from
time to time, to divide and establish any or all of the unissued shares of
Preferred Stock not then allocated to any series of Preferred Stock into one or
more series and, without limiting the generality of the foregoing, to fix and
determine the designation of each such share, the number of shares which shall
constitute such series and certain powers, preferences and relative
participating, optional or other special rights and qualifications, limitations
and restrictions of the shares of each series so established.
SECOND: By unanimous written consent of the Board of Directors of
the Corporation dated December 29, 1993, the following resolution was adopted
setting forth the designations, powers, preferences and rights, and the
qualifications, limitations or restrictions of a certain series of said
Preferred Stock:
RESOLVED: Pursuant to Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors designates 10,000 shares of the
Preferred Stock as Series B 8% Cumulative Preferred Stock (the "Series B
Preferred Stock"). The designations, powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, in respect of the Series B
Preferred Stock of the Corporation shall be as follows:
1. Definitions.
-----------
As used herein, the following terms shall have the respective
meanings ascribed to them:
"Board" shall mean the Board of Directors of the Corporation.
<PAGE> 2
"Business Day" shall mean any day which is not a Saturday or a
Sunday or a day on which banks are permitted to close in St. Louis, Missouri.
If any action otherwise required hereunder is scheduled for a day other than a
Business Day, then such action may be taken on the next successive Business Day.
"Common Stock" shall mean the Common Stock of the Corporation,
without par value.
"Corporation" shall mean Unified Holdings, Inc., a Delaware
corporation.
"Dividend Reference Date" shall mean the last day of January, April,
July and October of each year commencing April 25, 1994, and continuing through
and including January 25, 2014.
"GCL" shall mean the General Corporation Law of the State of
Delaware, as amended.
"Junior Security" shall mean any equity security of any kind which
the Corporation shall at any time issue or be authorized to issue other than the
Series A Preferred Stock and the Series B Preferred Stock.
"Liquidation Value" of any share of Series B Preferred Stock as of
any particular date shall be equal to the sum of (i) the Stated Value plus
----
(ii) an amount equal to any accrued and unpaid dividends on such share.
"Payment Default" shall mean (i) any time at which the aggregate
unpaid dividends on both the Series A Preferred Stock and the Series B Preferred
Stock equal or exceed two (2) times the amount of the then regular quarterly
dividend payment with respect to all then outstanding shares of each of such
series of Preferred Stock, and (ii) any time after January 25, 2014, until such
time as the Corporation has redeemed all shares of Series B Preferred Stock as
required by paragraph 4(c) hereof.
"Person" shall mean any individual, partnership, limited
partnership, corporation, trust, joint venture, unincorporated organization and
a government or any department or agency thereof.
"Preferred Stock" shall mean the Preferred Stock, par value $0.01
per share, authorized to be issued by the Corporation pursuant to its
Certificate of Incorporation.
"Redemption Date" shall mean (i) the Dividend Reference Date
specified in a Redemption Notice for a redemption of shares of Series B
Preferred Stock pursuant to paragraph 4(b) hereof, and (ii) January 25, 2014 for
a redemption of shares of Series B Preferred Stock pursuant to paragraph 4(c)
hereof.
"Redemption Notice" shall mean the notice specified in paragraph
4(d) below.
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<PAGE> 3
"Series A Preferred Stock" shall mean the Series A 8% Cumulative
Preferred Stock established pursuant to a resolution of the Board adopted
concurrently herewith.
"Series B Preferred Stock" shall mean the Series B 8% Cumulative
Preferred Stock established pursuant to this resolution of the Board.
"Sinking Fund" shall mean the sinking fund established by the
Corporation pursuant to paragraph 4(a) below.
"Sinking Fund Payment" shall mean an amount, calculated with respect
to each fiscal quarter of the Corporation, equal to the lesser of (a) Applicable
Percentage of the aggregate stated value of Series A Preferred Stock and Series
B Preferred Stock issued and outstanding as of the end of the fiscal quarter for
which such Sinking Fund Payment is being determined, and (b) the Net Account
Income determined with respect to such fiscal quarter. The Applicable
Percentage shall be 0.04375 (4.375%) with regard to the first and second Sinking
Fund Payments, which are due April 25, 1994 and July 25, 1994, respectively;
0.0425 (4.25%) with regard to the third and fourth Sinking Fund Payments, which
are due October 25, 1995 and January 25, 1995, respectively; and shall continue
to decline by one-eighth of one percentage point (.125%) with regard to each
subsequent pair of successive Sinking Fund Payments until it shall become 0.0375
(3.75%) with regard to the Sinking Fund Payments that are due on October 25,
1996 and January 25, 1997. The Applicable Percentage shall be 0.0375 (3.75%)
with regard to all Sinking Fund Payments due on or after January 25, 1997. "Net
Account Income" shall mean the excess of (i) Gross Account Income, over (ii)
Account Expenses. "Gross Account Income" shall mean the sum of (i) the Service
Income attributable to Accounts invested from the four Unified Family of Funds
and the three Liquid Green Funds into the Quest for Value/Oppenheimer Capital
Funds pursuant to certain transactions closing on or about January 23, 1993, and
(ii) forty percent (40%) of the Service Income attributable to any other
Accounts (including zero balance Accounts). "Account" or "Accounts" shall mean
any customer accounts documented on the records of Management at any time on or
between January 1, 1990 and January 31, 1993. "Service Income" shall mean
Distribution Assistance Fees (including 12(b)-(1) fees, as may from time to time
be amended or recodified by the Securities Exchange Commission) received by
Management for services and expenses incurred in connection with the assets
transferred pursuant to acquisition agreements executed among the various
Unified Funds and Liquid Green Trusts and comparable funds managed by Quest for
Value Advisors. Notwithstanding anything to the contrary, Service Income shall
not mean or include transfer agency fees, fund accounting fees, administration
and compliance fees, brokerage fees, or commissions associated with servicing
the Accounts. "Account Expenses" shall mean any commissions or fees due to
introducing broker/dealers in connection with any Account.
"Stated Value" of any share of Series B Preferred Stock shall mean
One Hundred Dollars ($100.00).
2. Dividends.
---------
(a) General Dividend Obligation. To the extent funds of the
---------------------------
Corporation are legally available therefor, the Board shall declare that the
Corporation shall pay to the holders
- 3 -
<PAGE> 4
of the Series B Preferred Stock, out of the assets of the Corporation available
for the payment of dividends under the GCL, preferential dividends at the times
and in the amounts provided for in this paragraph 2 and no more. Dividends
shall be paid by mailing the Corporation's good check in the proper amount to
each holder of the Series B Preferred Stock to such holder (or the designee of
such holder) at such holder's address (or designee's address) as it appears on
the Corporation's register on or prior to the due date of each dividend or by
transferring funds to such holder (or designee) by wire transfer or otherwise so
as to be received by such holder (or designee) on the due date of such dividend.
(b) Calculation of Dividends. Dividends on each share of Series
------------------------
B Preferred Stock shall be calculated cumulatively on a daily basis at the rate
and in the manner prescribed herein from (but not including) the date of
issuance of such share to and including the date on which the Liquidation Value
of such share is paid pursuant to the provisions hereof, whether or not such
dividends shall have been declared and whether or not there shall be (at the
time such dividends are calculated or become payable or at any other time)
profits, surplus or other funds of the Corporation legally available for the
payment of dividends. For purposes of this paragraph 2(b), the date on which
the Corporation shall initially issue any share of Series B Preferred Stock
shall be deemed to be its "date of issuance" regardless of the number of times
transfer of such share shall be made on the stock records maintained by or for
the Corporation and regardless of the number of certificates which may be
originally issued to evidence such share (whether by reason of transfer of such
share or for any other reason).
(c) Dividend Rate and Payment. Dividends shall be calculated
-------------------------
cumulatively (but shall not compound) on a daily basis on each share of Series B
Preferred Stock at the rate of eight percent (8.0%) per annum (based on a
365/366-day year) of the Stated Value thereof. Dividends shall be paid to the
holders of the shares of Series B Preferred Stock on each Dividend Reference
Date commencing April 25, 1994. Each of such dividend payments on each such
Dividend Reference Date shall be in an amount equal to the dividends calculated
from (but not including) the preceding Dividend Reference Date (or from, but not
including, the original date of issuance of the Series B Preferred Stock in the
case of the initial Dividend Reference Date). Notwithstanding the foregoing, in
no event shall the Corporation be required to pay any such dividend to the
extent the payment of such dividend would violate any provision of the GCL. Any
dividends not paid on their respective Dividend Reference Dates shall continue
to accumulate (and shall not compound) until paid.
(d) Distribution of Partial Dividend Payments. If on any
-----------------------------------------
Dividend Reference Date the Corporation shall pay less than the total amount of
dividends then calculated on the Series B Preferred Stock, such payment shall be
distributed among the holders of the Series B Preferred Stock so that an equal
amount shall be paid with respect to each outstanding share.
3. Liquidation. Upon any liquidation, dissolution or winding
-----------
up of the Corporation, whether voluntary or involuntary, the holders of the
Series B Preferred Stock shall be entitled, after all liquidating distributions
have been made with respect to the then outstanding shares of Series A Preferred
Stock and before any distribution or payment is made upon any Junior Securities
of the Corporation, to be paid out of the assets of the Corporation remaining
available for distribution to its stockholders (whether from capital, surplus or
earnings) an
- 4 -
<PAGE> 5
amount in cash equal to the aggregate Liquidation Value of all shares of Series
B Preferred Stock outstanding, and the holders of the Series B Preferred Stock
shall not be entitled to any further payment. If upon such liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the assets of the Corporation to be distributed among the holders of the Series
B Preferred Stock, after all liquidating distributions have been made with
respect to the then outstanding shares of Series A Preferred Stock, shall be
insufficient to permit payment to the holders of Series B Preferred Stock of the
amount which they are entitled to be paid as aforesaid, then the entire
remaining assets of the Corporation shall be distributed to the holders of the
Series B Preferred Stock ratably based upon the aggregate Liquidation Value of
the shares of Series B Preferred Stock held by them. Upon any such liquidation,
dissolution or winding up of the Corporation, after the holders of the Series B
Preferred Stock shall have been paid in full the amounts to which they shall be
entitled, the remaining assets of the Corporation may be distributed to the
holders of Junior Securities of the Corporation. Written notice of such
liquidation, dissolution or winding up, stating a payment date, the amount of
the payment and the place where the amounts distributable shall be payable,
shall be mailed by the Corporation by certified or registered mail, return
receipt requested, not less than thirty (30) days prior to the payment date
stated therein, to each record holder of any share of Series B Preferred Stock
at the address of such record holder shown on the Corporation's records.
Neither the consolidation or merger of the Corporation into or with any other
corporation or corporations, nor the sale, exchange or transfer by the
Corporation of less than substantially all of its assets, nor any reduction of
the capital of the Corporation, shall of itself be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of any of the
provisions of this paragraph 3.
4. Sinking Fund; Redemption by Corporation.
---------------------------------------
(a) No later than the 20th day of each January, April, July and
October, the Corporation shall transfer and set aside into a separate fund (the
"Sinking Fund") an amount of cash equal to the Sinking Fund Payment computed for
the fiscal quarter ending on the immediately preceding Dividend Reference Date.
The amounts held from time to time in the Sinking Fund shall be used solely for
the payment of dividends and the cost of redemption of the Series A Preferred
Stock and the Series B Preferred Stock.
(b) The Corporation may, at its sole option and discretion, redeem
on any Dividend Reference Date any whole number of shares of Series B Preferred
Stock, provided that (i) all accrued dividends on the Series A Preferred Stock
and Series B Preferred Stock then have been paid, (ii) the balance of the
Sinking Fund is sufficient to effect such redemption, (iii) immediately
following such redemption of shares of Series B Preferred Stock, the ratio of
the number of shares of Series B Preferred Stock outstanding after such
redemption to the maximum number of shares of Series B Preferred Stock that were
outstanding at any time will be equal to or greater than the ratio of the number
of shares of Series A Preferred Stock then outstanding to the maximum number of
shares of Series A Preferred Stock that were outstanding at any time, and (iv)
the Corporation has funds (including the amounts held in the Sinking Fund)
legally available to effect such redemption. The price at which such shares of
Series B Preferred Stock may be redeemed shall be an amount per share equal to
the Liquidation Value. The shares of Series B Preferred Stock which the
Corporation elects to redeem pursuant to this paragraph 4(b)
- 5 -
<PAGE> 6
shall be redeemed from the holders of such shares on a pro rata basis, based on
the number of shares of Series B Preferred Stock owned by each such holder as a
proportion of the total number of shares of Series B Preferred Stock then
outstanding.
(c) Subject to paragraph 5 below, the Corporation shall redeem all
of the issued and outstanding shares of Series B Preferred Stock on January 25,
2014, at an amount per share equal to the Liquidation Value.
(d) Not more than sixty (60) days and not less than thirty (30)
days prior to any Dividend Reference Date on which the Corporation desires to
redeem any shares of Series B Preferred Stock pursuant to paragraph 4(b), the
Corporation shall mail to each holder of shares of Series B Preferred Stock a
written notice of redemption (the "Redemption Notice") at his post office
address last shown on the stock register of the Corporation. The Redemption
Notice shall:
(i) Identify the number of shares of Series B Preferred Stock
which are outstanding and the total number of such shares to be redeemed;
(ii) State the date on which such shares are to be redeemed
and the Liquidation Value as of such date; and
(iii) State that any holder of shares of Series B Preferred
Stock to be redeemed shall surrender to the Corporation, in the manner
and at the place designated, the certificate or certificates
representing the shares of Series B Preferred Stock to be redeemed.
(e) In connection with a redemption pursuant to paragraph 4(b) or
4(c), the Corporation shall give irrevocable instructions and authority to the
appropriate officers of the Corporation to set apart and pay from the Sinking
Fund (or any other funds legally available therefor, in the event of a
redemption under paragraph 4(c) hereof), on or after the Redemption Date, the
Liquidation Value to the respective record holders upon the surrender of their
share certificates. In the event less than all of the shares represented by any
such certificate are redeemed, the Corporation shall issue a new certificate
representing the unredeemed shares. From and after the Redemption Date, the
shares of Series B Preferred Stock so redeemed shall no longer be outstanding
and dividends shall cease to accrue (except as provided in the last sentence of
paragraph 5 below), and the holders thereof shall cease to be stockholders with
respect thereto and shall have no further rights regarding the shares so
redeemed except the right to receive payment of the Liquidation Value of such
shares, without interest, upon surrender of their certificates therefor. Any
monies so set apart and unclaimed at the end of two years (or any longer period
required by law) from the Redemption Date shall no longer be set aside and shall
become unallocated assets of the Corporation, and thereafter the holders of
shares who were entitled to such monies shall, subject to applicable laws, look
to the Corporation for payment of the Liquidation Value thereof.
5. Insufficient Funds. If on January 25, 2014, the funds of
------------------
the Corporation legally available for a redemption shall be insufficient to
redeem all shares of Series B Preferred
- 6 -
<PAGE> 7
Stock required to be redeemed under paragraph 4(c) hereof (whether due to the
provisions of the GCL or otherwise), funds to the maximum extent legally
available for such purpose shall be utilized by the Corporation, first, to
redeem the maximum number of shares of Series A Preferred Stock on such date
which may be redeemed from such funds, and second, to redeem the maximum number
of shares of Series B Preferred Stock on such date which may be redeemed from
such funds. Such redemption shall be made following the redemption of
outstanding shares of Series A Preferred Stock and on a pro rata basis to the
holders of shares of Series B Preferred Stock. If, because sufficient funds are
not legally available, the Corporation shall fail to redeem all of the issued
and outstanding shares of Series B Preferred Stock at such time, the Corporation
shall redeem such shares as promptly as practicable following the redemption of
all outstanding shares of Series A Preferred Stock and after funds are legally
available therefor as shown by the Corporation's quarterly or annual financial
statements.
6. Status of Shares. Shares of Series B Preferred Stock
----------------
redeemed, purchased or otherwise acquired for value by the Corporation,
including by redemption in accordance with paragraph 4, shall, after such
acquisition, have the status of authorized and unissued shares of Preferred
Stock and may be reissued by the Corporation at any time as shares of any series
of Preferred Stock.
7. Restrictions.
------------
(a) So long as any Series B Preferred Stock shall be outstanding,
the Corporation shall not, except with the written consent of the holders of not
less than a majority of the then outstanding shares of Series B Preferred Stock,
create any class or series of stock ranking as to payment of dividends or as to
liquidation preference, having a priority over or on a parity with the Series B
Preferred Stock, except only (i) shares of Series A Preferred Stock, and (ii)
shares of any series of Preferred Stock issued in replacement or exchange for
outstanding shares of Series A Preferred Stock, provided that the aggregate
liquidation preference and the dividend rate of such series is not more than the
aggregate liquidation preference and dividend rate of the Series A Preferred
Stock immediately prior to such exchange or replacement.
(b) So long as any Series B Preferred Stock shall remain
outstanding, the Corporation shall not, except with the written consent of the
holders of not less than a majority of then outstanding shares of Series B
Preferred Stock, amend, alter or repeal the Corporation's Certificate of
Incorporation (or any certificate amendatory or supplementary thereto) or
by-laws in a manner adversely affecting any of the powers, preferences and
rights set forth herein.
(c) So long as any Series B Preferred Stock shall remain
outstanding, no dividend shall be declared or paid, nor shall any other
distribution (including but not limited to a distribution in redemption) be
made, upon any Junior Securities by the Corporation, except distributions
pursuant to the written consent of the holders of not less than a majority of
all then outstanding shares of Series B Preferred Stock. Notwithstanding the
immediately preceding sentence, in no event shall the Corporation pay any
dividend or make any other distribution upon any Junior Securities unless all
dividends and other payments (including but not limited to
- 7 -
<PAGE> 8
redemption payments) theretofore required to be paid by the Corporation with
respect to the Series A Preferred Stock and Series B Preferred Stock have been
paid in full.
8. Voting Rights.
-------------
(a) Except as otherwise expressly provided herein or as required
under Delaware law, the holders of shares of Series B Preferred Stock shall not
be entitled to vote on matters coming before the stockholders of the
Corporation.
(b) At such time as there occurs a Payment Default, and thereafter
at each annual and special meeting (or action by written consent in lieu of a
meeting) of stockholders of the Corporation during which a Payment Default
continues to exist, the holders of Series B Preferred Stock shall be entitled to
vote on all matters coming to the attention of the stockholders of the
Corporation, such shares to be voted together with the holders of the Common
Stock, and not as a class. Such voting right shall continue until no dividend
arrearages exist with respect to the Series A Preferred stock or the Series B
Preferred Stock and the dividends on both the Series A Preferred Stock and the
Series B Preferred stock have been timely paid in full for two consecutive
quarters (or if such voting right occurs as a result of the Corporation's
failure to redeem the Series B Preferred stock on January 25, 2014, then until
all shares of Series B Preferred Stock have been redeemed). The number of votes
per share of Series B Preferred Stock which the holder thereof shall be entitled
to cast at any time during the continuance of a Payment Default shall be equal
to (i) two (2) times the number of votes represented by all then outstanding
-----
Junior Securities having voting rights, divided by (ii) the sum of the number
----------
of outstanding shares of Series A Preferred Stock and the number of outstanding
shares of Series B Preferred Stock.
(c) No vote or consent of the holders of the Series B Preferred
Stock shall be required for the authorization (including an increase in the
authorized number of shares of any Junior Securities) or issuance of any Junior
Securities of the Corporation; provided, however, that the Corporation shall not
issue any Junior Securities which have class voting rights beyond those required
by law, except upon the prior written consent of the holders of a majority of
the then outstanding shares of Series B Preferred Stock.
9. Closing of Books. The Corporation will not close its books
----------------
against the transfer of any share of Series B Preferred Stock.
10. Registration of Transfer. The Corporation shall keep at its
------------------------
principal office in the State of Indiana (or at such other place as the
Corporation reasonably designates) a register for the registration of shares of
Series B Preferred Stock. Upon the surrender of any certificate representing
shares of Series B Preferred Stock at such place, the Corporation shall, at the
request of the registered holder of such certificate, execute and deliver a new
certificate or certificates in exchange therefor representing in the aggregate
the number of Shares of Series B Preferred Stock represented by the surrendered
certificate (and the Corporation forthwith shall cancel such surrendered
certificate), subject to the requirements of applicable securities laws. Each
such new certificate shall be registered in such name and shall represent such
number of shares of Series B Preferred Stock as shall be requested by the holder
of the surrendered
- 8 -
<PAGE> 9
certificate and shall be substantially identical in form to the surrendered
certificate; and dividends shall be calculated cumulatively on a daily basis on
the shares of Series B Preferred Stock represented by such new certificate from
the date to which dividends have been fully paid on the shares represented by
the surrendered certificate at the rate and in the manner applicable to such
surrendered certificate. The issuance of new certificates shall be made without
charge to the holders of the surrendered certificates for any issuance tax in
respect thereof or other cost incurred by the Corporation in connection with
such issuance; provided that the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder of the
surrendered certificate.
11. Replacement.
-----------
(a) Upon receipt of evidence reasonably satisfactory to the
Corporation of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of Series B Preferred Stock and,
in the case of any such loss, theft or destruction, upon receipt of indemnity
and/or a bond reasonably satisfactory to the Corporation, or, in the case of any
such mutilation, upon surrender of such certificate, the Corporation shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the number of shares of Series B Preferred Stock
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate, on which
dividends shall be calculated cumulatively on a daily basis from the date to
which dividends have been fully paid on such lost, stolen, destroyed or
mutilated certificate at the rate and in the manner applicable to such
certificate.
(b) The term "outstanding" when used herein with reference to
shares of Series B Preferred Stock as of any particular time shall not include
any such shares represented by any certificate in lieu of which a new
certificate has been executed and delivered by the Corporation in accordance
with paragraph 10 or this paragraph 11, but shall include only those shares
represented by such new certificate.
12. Amendment and Waiver. No amendment, modification or waiver
--------------------
of any provision hereof shall extend to or affect any obligation not expressly
amended, modified or waived or impair any right consequent thereon. No course
of dealing, and no failure to exercise or delay in exercising any right, remedy,
power of privilege granted hereby shall operate as a waiver, amendment or
modification of any provision hereof.
- 9 -
<PAGE> 10
IN WITNESS WHEREOF, Unified Holdings, Inc. has caused this
Certificate to be signed by its President this 31 day of December, 1993.
UNIFIED HOLDINGS, INC.
By: /s/ Lynn E. Wood
---------------------------------
President
Attest: /s/ Janice Hayles
---------------------------------
Janice Hayles, Secretary
- 10 -
<PAGE> 1
CERTIFICATE OF DESIGNATIONS, PREFERENCES,
AND RELATIVE RIGHTS,
QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS
OF THE
SERIES C 6.75% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
UNIFIED HOLDINGS, INC.
-----------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
-----------------------
Unified Holdings, Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the provisions of the General Corporation Law
of the State of Delaware, certifies as follows:
FIRST: The Certificate of Incorporation of the Corporation authorizes
the issuance of 1,000,000 shares of Preferred Stock, par value $0.01 per
share (the "Preferred Stock"), and, further, authorizes the Board of
Directors of the Corporation, by resolution or resolutions, at any time and
from time to time, to divide and establish any or all of the unissued shares
of Preferred Stock not then allocated to any series of Preferred Stock into
one or more series and, without limiting the generality of the foregoing, to
fix and determine the designation of each such share, the number of shares
which shall constitute such series and certain powers, preferences and
relative participating, optional or other special rights and qualifications,
limitations and restrictions of the shares of each series so established.
SECOND: By unanimous written consent of the Board of Directors of the
Corporation dated August 1, 1997, the following resolution was adopted
setting forth the designations, powers, preferences and rights, and the
qualifications, limitations or restrictions of a certain series of said
Preferred Stock:
RESOLVED, pursuant to Section 151 of the General Corporation Law of the
State of Delaware, the Board of Directors designates Two Thousand One Hundred
(2,100) shares of the Preferred Stock as Series C 6.75% Cumulative
Convertible Preferred Stock (the "Series C Preferred Stock"). The
designations, powers, preferences and rights, and the qualifications,
limitations or restrictions thereof, in respect of the Series C Preferred
Stock shall be as follows:
1. Definitions.
-----------
As used herein, the following terms shall have the respective meanings
ascribed to them:
"Board" shall mean the Board of Directors of the Corporation.
"Business Day" shall mean any day which is not a Saturday or a Sunday or
a day on which banks are permitted to close in Indianapolis, Indiana. If any
action otherwise required hereunder is scheduled for a day other than a
Business Day, then such action may be taken on the next successive Business
Day.
<PAGE> 2
"Common Stock" shall mean the common stock of the Corporation, $0.01
par value.
"Corporation" shall mean Unified Holdings, Inc., a Delaware
corporation.
"Dividend Reference Date" shall mean the 25th day of January, April,
July and October of each year commencing October 25, 1997, and continuing
through and including January 25, 2014.
"GCL" shall mean the General Corporation Law of the State of Delaware,
as amended.
"Junior Security" shall mean any equity security of any kind which the
Corporation shall at any time issue or be authorized to issue other than the
Series A, Series B and Series C Preferred Stock.
"Liquidation Value" of any share of Series C Preferred Stock as of any
particular date shall be equal to the sum of (i) the Stated Value plus (ii)
----
an amount equal to any accrued and unpaid dividends on such share.
"Person" shall mean any individual, partnership, limited partnership,
corporation, trust, joint venture, unincorporated organization and a
government or any department or agency thereof.
"Preferred Stock" shall mean the Preferred Stock, par value $0.01 per
share, authorized to be issued by the Corporation pursuant to its Amended and
Restated Certificate of Incorporation.
"Redemption Date" shall mean (i) the Dividend Reference Date specified
in a Redemption Notice for a redemption of shares of Series C Preferred Stock
pursuant to paragraph 4(a) hereof, and (ii) January 25, 2014 for a redemption
of shares of Series C Preferred Stock pursuant to paragraph 4(b) hereof.
"Redemption Notice" shall mean the notice specified in paragraph 4(d)
below.
"Series A Preferred Stock" shall mean the Series A 8% Cumulative
Preferred Stock established pursuant to a resolution of the Board and
effective as of December 31, 1993.
"Series B Preferred Stock" shall mean the Series B 8% Cumulative
Preferred Stock established pursuant to a resolution of the Board and
effective as of December 31, 1993.
"Series C Preferred Stock" shall mean the Series C 6.75% Cumulative
Convertible Preferred Stock established pursuant to this resolution of the
Board.
"Stated Value" of any share of Series C Preferred Stock shall mean One
Hundred Dollars ($100.00).
2. Dividends.
---------
(a) General Dividend Obligation. To the extent funds of the
---------------------------
Corporation are legally available therefor, the Board shall declare that the
Corporation shall pay to the holders of the Series C Preferred Stock, out of
the assets of the Corporation available for the payment of dividends under
the GCL, preferential dividends at the times and in the amounts provided for
in this paragraph 2 and no more. Dividends shall be paid by mailing the
Corporation's good check in the proper amount to each holder of the Series C
Preferred Stock to such holder (or the designee of such holder) at such
holder's address (or designee's address) as it appears on the Corporation's
register on or prior to the due date of
-2-
<PAGE> 3
each dividend or by transferring funds to such holder (or designee) by wire
transfer or otherwise so as to be received by such holder (or designee) on
the due date of such dividend.
(b) Calculation of Dividends. Dividends on each share of Series C
------------------------
Preferred Stock shall be calculated cumulatively on a daily basis at the rate
and in the manner prescribed herein from (but not including) the date of
issuance of such share to and including the date on which the Liquidation
Value of such share is paid pursuant to the provisions hereof, whether or not
such dividends shall have been declared and whether or not there shall be (at
the time such dividends are calculated or become payable or at any other
time) profits, surplus or other funds of the Corporation legally available
for the payment of dividends. For purposes of this paragraph 2(b), the date
on which the Corporation shall initially issue any share of Series C
Preferred Stock shall be deemed to be its "date of issuance" regardless of
the number of times transfer of such share shall be made on the stock records
maintained by or for the Corporation and regardless of the number of
certificates which may be originally issued to evidence such share (whether
by reason of transfer of such share or for any other reason).
(c) Dividend Rate and Payment. Dividends shall be calculated
-------------------------
cumulatively (but shall not compound) on a daily basis on each share of
Series C Preferred Stock at the rate of six and three-fourths percent (6.75%)
per annum (based on a 365/366-day year) of the Stated Value thereof.
Dividends shall be paid to the holders of the shares of Series C Preferred
Stock on each Dividend Reference Date commencing October 25, 1997. Each of
such dividend payments on each such Dividend Reference Date shall be in an
amount equal to the dividends calculated from (but not including) the
preceding Dividend Reference Date (or from, but not including, the original
date of issuance of the Series C Preferred Stock in the case of the initial
Dividend Reference Date). Notwithstanding the foregoing, in no event shall
the Corporation be required to pay any such dividend to the extent the
payment of such dividend would violate any provision of the GCL. Any
dividends not paid on their respective Dividend Reference Dates shall
continue to accumulate (and shall not compound) until paid.
(d) Distribution of Partial Dividend Payments. If on any Dividend
-----------------------------------------
Reference Date the Corporation shall pay less than the total amount of
dividends then calculated on the Series C Preferred Stock, such payment shall
be distributed among the holders of the Series C Preferred Stock so that an
equal amount shall be paid with respect to each outstanding share.
3. Liquidation. Upon any liquidation, dissolution or winding up of
-----------
the Corporation, whether voluntary or involuntary, the holders of the Series
C Preferred Stock shall be entitled, before any distribution or payment is
made upon any Junior Securities of the Corporation, to be paid out of the
assets of the Corporation available for distribution to its stockholders
(whether from capital, surplus or earnings) an amount in cash equal to the
aggregate Liquidation Value of all shares of Series C Preferred Stock
outstanding, and the holders of the Series C Preferred Stock shall not be
entitled to any further payment. If upon such liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the assets
of the Corporation to be distributed among the holders of the Series C
Preferred Stock shall be insufficient to permit payment to the holders of
Series C Preferred Stock of the amount that they are entitled to be paid as
aforesaid, then the entire remaining assets of the Corporation shall be
distributed to the holders of the Series C Preferred Stock ratably based upon
the aggregate Liquidation Value of the shares of Series C Preferred Stock
held by them. Upon any such liquidation, dissolution or winding up of the
Corporation, after the holders of the Series C Preferred Stock shall have
been paid in full the amounts to which they shall be entitled, the remaining
assets of the Corporation may be distributed to the holders of Junior
Securities of the Corporation. Written notice of such liquidation,
dissolution or winding up, stating a payment date, the amount of the payment
and the place where the amounts distributable shall be payable, shall be
mailed by the Corporation by certified or registered mail, return receipt
requested, not less than thirty (30) days prior to the payment date stated
therein, to each
-3-
<PAGE> 4
record holder of any share of Series C Preferred Stock at the address of such
record holder shown on the Corporation's records. Neither the consolidation
or merger of the Corporation into or with any other corporation or
corporations, nor the sale, exchange or transfer by the Corporation of less
than substantially all of its assets, nor any reduction of the capital of the
Corporation, shall of itself be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of any of the provisions of
this paragraph 3.
4. Redemptions.
-----------
(a) Redemption at Option of Corporation. The Corporation may, at its
-----------------------------------
sole option and discretion, redeem on any Dividend Reference Date any whole
number of shares of Series C Preferred Stock, provided that (i) no shares of
the Series A Preferred Stock or Series B Preferred Stock then are
outstanding, (ii) all accrued dividends on the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock then have been paid,
and (iii) the Corporation has funds legally available to effect such
redemption. The price at which such shares of Series C Preferred Stock may
be redeemed shall be an amount per share equal to the Liquidation Value. The
shares of Series C Preferred Stock that the Corporation elects to redeem
pursuant to this paragraph 4(a) shall be redeemed from the holders of such
shares on a pro rata basis, based on the number of shares of Series C
Preferred Stock owned by each such holder as a proportion of the total number
of shares of Series C Preferred Stock then outstanding.
(b) Mandatory Redemption. Subject to paragraph 5 below, the
--------------------
Corporation shall redeem all of the issued and outstanding shares of Series C
Preferred Stock on January 25, 2014, at an amount per share equal to the
Liquidation Value.
(c) Notice of Redemption. Not more than sixty (60) days and not less
--------------------
than thirty (30) days prior to any Dividend Reference Date on which the
Corporation desires to redeem any shares of Series C Preferred Stock pursuant
to paragraph 4(a), the Corporation shall mail to each holder of shares of
Series C Preferred Stock a written notice of redemption (the "Redemption
Notice") at his post office address last shown on the stock register of the
Corporation. The Redemption Notice shall:
(i) Identify the number of shares of Series C Preferred Stock
that are outstanding and the total number of such shares to be redeemed;
(ii) State the date on which such shares are to be redeemed and
the Liquidation Value as of such date; and
(iii) State that any holder of shares of Series C Preferred Stock
to be redeemed shall surrender to the Corporation, in the manner and at the
place designated, the certificate or certificates representing the shares of
Series C Preferred Stock to be redeemed.
(d) Redemption Procedures. In connection with a redemption pursuant
---------------------
to paragraph 4(a) or 4(b), the Corporation shall give irrevocable
instructions and authority to the appropriate officers of the Corporation to
set apart and pay, from funds legally available for such redemption, on or
after the Redemption Date, the Liquidation Value to the respective record
holders upon the surrender of their share certificates. In the event less
than all of the shares represented by any such certificate are redeemed, the
Corporation shall issue a new certificate representing the unredeemed shares.
From and after the Redemption Date (except as provided in the last sentence
of paragraph 5 below) the shares of Series C Preferred Stock so redeemed
shall no longer be outstanding and dividends shall cease to accrue, and the
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<PAGE> 5
holders thereof shall cease to be stockholders with respect thereto and shall
have no further rights regarding the shares so redeemed except the right to
receive payment of the Liquidation Value of such shares, without interest,
upon surrender of their certificates therefor. Any monies so set apart and
unclaimed at the end of two years (or any longer period required by law) from
the Redemption Date shall no longer be set aside and shall become unallocated
assets of the Corporation, and thereafter the holders of shares who were
entitled to such monies shall, subject to applicable laws, look to the
Corporation for payment of the Liquidation Value thereof.
5. Insufficient Funds. If on January 25, 2014, the funds of the
------------------
Corporation legally available for a redemption shall be insufficient to
redeem all shares of Series C Preferred Stock required to be redeemed under
paragraph 4(b) hereof, (whether due to the provisions of the GCL or
otherwise), funds to the maximum extent legally available for such purpose
shall be utilized by the Corporation to redeem the maximum number of shares
of Series C Preferred Stock on such date which may be redeemed from such
funds. Such redemption shall be made on a pro rata basis to the holders of
shares of Series C Preferred Stock. If, because sufficient funds are not
legally available, the Corporation shall fail to redeem all of the issued and
outstanding shares of Series C Preferred Stock at such time, the Corporation
shall redeem such shares as promptly as practicable after funds are legally
available therefor as shown by the Corporation's quarterly or annual
financial statements.
6. Status of Shares. Shares of Series C Preferred Stock redeemed,
----------------
purchased or otherwise acquired for value by the Corporation, including by
redemption in accordance with paragraph 4, shall, after such acquisition,
have the status of authorized and unissued shares of Preferred Stock and may
be reissued by the Corporation at any time as shares of any series of
Preferred Stock.
7. Convertibility Rights.
---------------------
(a) Conversion by Holder. Each share of Series C Preferred Stock
--------------------
shall be convertible, at any time at the option of the holder thereof, into
one hundred thirty-five (135) shares of Common Stock of the Corporation,
taking into account any appropriate adjustments under paragraph 7(b) below.
Such right of conversion shall be exercisable by such holder's delivery of
written notice of conversion to the Corporation specifying the number of
shares of Series C Preferred Stock to be converted, and such holder's
compliance with the other terms of conversion set forth in paragraph 7(b)
below.
(b) Mechanics of Conversion. Concurrently with a holder's notice of
-----------------------
conversion of Series C Preferred Stock, such holder shall (i) surrender his
or her certificates representing the aggregate shares of Series C Preferred
Stock being converted by such holder, duly endorsed and with signature
guaranteed, at the principal office of the Corporation in the State of
Indiana (or at such other place as the Corporation reasonably designates),
and (ii) pay any transfer tax if the shares of Common Stock are to be issued
in any name other than the name of the holder of the Series C Preferred Stock
being converted. The Corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of Series C Preferred Stock
(or his or her nominee) one or more certificates for the number of shares of
Common Stock to which such holder is entitled. Such conversion shall be
deemed effective immediately prior to the close of business on the date of
the surrender of the last of the certificates representing the Series C
Preferred Stock being converted, and the person(s) entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder(s) of such shares of Common Stock on such date.
(c) Adjustments for Changes in Capitalization. In the event of any
-----------------------------------------
increase or decrease in the number of the issued shares of the Common Stock
by reason of a stock dividend, stock
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<PAGE> 6
split, reverse stock split or consolidation or combination of shares and the
like at any time or from time to time after the date hereof such that the
holders of Common Stock shall have had an adjustment made, without payment
therefor, in the number of shares of Common Stock owned by them or, on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled or required to have had an adjustment made in the
number of shares of Common Stock owned by them, without payment therefor,
there shall be a corresponding adjustment as to the number of shares of
Common Stock receivable upon conversion of each share of Series C Preferred
Stock with the result that the holder's proportionate interest in the Common
Stock shall be maintained as before the occurrence of such event. If the
Corporation shall effect a plan of recapitalization, reclassification,
reorganization or other like capital transaction or shall merge or
consolidate with or into another corporation or convey all or substantially
all of its assets to another corporation at any time or from time to time on
or after the date hereof, then in each such case the holder, upon the
conversion of Series C Preferred Stock at any time after the consummation of
such recapitalization, reclassification, reorganization or other like capital
transaction or of such merger, consolidation or conveyance, shall be entitled
to receive (in lieu of the securities or other property to which such holder
would have been entitled to receive upon conversion prior to such
consummation), the securities or other property to which such holder would
have been entitled to have received upon consummation of the subject
transaction if the holder hereof had converted the Series C Preferred Stock
immediately prior to such consummation, but subject to further adjustment
pursuant to the immediately preceding sentence.
(d) Reservation of Shares. At all times while the Series C Preferred
---------------------
Stock remains outstanding, the Corporation shall take or cause to be taken
all actions appropriate to ensure that the Corporation at all times has
reserved sufficient authorized and unissued shares of Common Stock (or other
equity securities) to enable the Corporation to fulfill its obligations under
this paragraph 7 in the event of conversion of Series C Preferred Stock.
(e) Liquidation Value and Unpaid Dividends. Upon the conversion of
--------------------------------------
any share of Series C Preferred Stock, the holder thereof shall forfeit his
right to receive the Liquidation Value or Redemption Price of such share, and
the Corporation thereafter shall not be required to pay at any time, nor
shall the holder of such converted share of Series C Preferred Stock have any
claim to, the Liquidation Value or Redemption Price of such share. At the
time the Corporation delivers the certificate(s) evidencing the Common Stock
acquired by the holder upon conversion, the Corporation shall deliver to such
holder the accrued and unpaid dividends on the Preferred Shares so converted,
through the effective date of conversion.
8. Restrictions.
------------
(a) So long as any Series C Preferred Stock shall be outstanding, the
Corporation shall not, except with the written consent of the holders of not
less than a majority of the then outstanding shares of Series C Preferred
Stock, create any class or series of stock ranking as to payment of dividends
or as to liquidation preference, having a priority over or on a parity with
the Series C Preferred Stock, except only (i) shares of Series A Preferred
Stock, (ii) shares of Series B Preferred Stock, and (iii) shares of any
series of Preferred Stock issued in replacement or exchange for outstanding
shares of Series A and/or Series B Preferred Stock, provided that the
-------- ----
aggregate liquidation preference and dividend rate of any such replacement or
new series are not more than the aggregate liquidation preference and
dividend rate of the replaced or exchanged Series A and/or Series B Preferred
Stock immediately prior to such replacement or exchange.
(b) So long as any Series C Preferred Stock shall remain outstanding,
the Corporation shall not, except with the written consent of the holders of
not less than a majority of then outstanding
-6-
<PAGE> 7
shares of Series C Preferred Stock, amend, alter or repeal the Corporation's
Certificate of Incorporation (or any certificate amendatory or supplementary
thereto) or by-laws in a manner adversely affecting any of the powers,
preferences and rights set forth herein.
(c) So long as any Series C Preferred Stock shall remain outstanding,
the Corporation shall not pay any dividend or make any other distribution
upon any Junior Securities unless all dividends and other payments (including
but not limited to redemption payments) theretofore required to be paid by
the Corporation with respect to the Series A, Series B and Series C Preferred
Stock have been paid in full.
9. Voting Rights.
-------------
(a) The holders of shares of Series C Preferred Stock shall be entitled
to vote on matters coming before the stockholders of the Corporation, with
each share of Series C Preferred Stock having a number of votes from time to
time equal to the number of shares of Common Stock into which such share of
Series C Preferred Stock them is convertible (i.e., initially each share of
----
Series C Preferred Stock shall be entitled to one hundred thirty-five (135)
votes). Voting by holders of Series C Preferred Stock shall be together with
the holders of the Common Stock (and the Series A Preferred Stock and Series
B Preferred Stock, if then having voting rights), and the holders of Series C
Preferred Stock shall have no right to vote as a class except to the extent a
class vote is required under the GCL.
(b) No vote or consent of the holders of the Series C Preferred Stock
shall be required for the authorization (including an increase in the
authorized number of shares of any Junior Securities) or issuance of any
Junior Securities of the Corporation (including, by way of example and not by
way of limitation, any issuance of Junior Securities by means of a dividend);
provided, however, that the Corporation shall not issue any Junior Securities
- -------- --------
that have class voting rights beyond those required by law, except upon the
prior written consent of the holders of a majority of the then outstanding
shares of Series C Preferred Stock.
10. Closing of Books. The Corporation will not close its books
----------------
against the transfer of any share of Series C Preferred Stock.
11. Registration of Transfer. The Corporation shall keep at its
------------------------
principal office in the State of Indiana (or at such other place as the
Corporation reasonably designates) a register for the registration of shares
of Series C Preferred Stock. Upon the surrender of any certificate
representing shares of Series C Preferred Stock at such place, the
Corporation shall, at the request of the registered holder of such
certificate, execute and deliver a new certificate or certificates in
exchange therefor representing in the aggregate the number of Shares of
Series C Preferred Stock represented by the surrendered certificate (and the
Corporation forthwith shall cancel such surrendered certificate), subject to
the requirements of applicable securities laws. Each such new certificate
shall be registered in such name and shall represent such number of shares of
Series C Preferred Stock as shall be requested by the holder of the
surrendered certificate and shall be substantially identical in form to the
surrendered certificate; and dividends shall be calculated cumulatively on a
daily basis on the shares of Series C Preferred Stock represented by such new
certificate from the date to which dividends have been fully paid on the
shares represented by the surrendered certificate at the rate and in the
manner applicable to such surrendered certificate. The issuance of new
certificates shall be made without charge to the holders of the surrendered
certificates for any issuance tax in respect thereof or other cost incurred
by the Corporation in connection with such issuance; provided that the
--------
Corporation shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the surrendered
certificate.
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<PAGE> 8
12. Replacement.
-----------
(a) Upon receipt of evidence reasonably satisfactory to the
Corporation of the ownership and the loss, theft, destruction or mutilation
of any certificate evidencing one or more shares of Series C Preferred Stock
and, in the case of any such loss, theft or destruction, upon receipt of
indemnity and/or a bond reasonably satisfactory to the Corporation, or, in
the case of any such mutilation, upon surrender of such certificate, the
Corporation shall (at its expense) execute and deliver in lieu of such
certificate a new certificate of like kind representing the number of shares
of Series C Preferred Stock represented by such lost, stolen, destroyed or
mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate, on which dividends shall be calculated cumulatively on
a daily basis from the date to which dividends have been fully paid on such
lost, stolen, destroyed or mutilated certificate at the rate and in the
manner applicable to such certificate.
(b) The term "outstanding" when used herein with reference to
shares of Series C Preferred Stock as of any particular time shall not
include any such shares represented by any certificate in lieu of which a new
certificate has been executed and delivered by the Corporation in accordance
with paragraph 11 or this paragraph 12, but shall include only those shares
represented by such new certificate.
13. Amendment and Waiver. No amendment, modification or waiver of any
--------------------
provision hereof shall extend to or affect any obligation not expressly
amended, modified or waived or impair any right consequent thereon. No
course of dealing, and no failure to exercise or delay in exercising any
right, remedy, power or privilege granted hereby shall operate as a waiver,
amendment or modification of any provision hereof.
IN WITNESS WHEREOF, Unified Holdings, Inc. has caused this Certificate
to be signed by its President this 15th day of October, 1997.
UNIFIED HOLDINGS, INC.
By: /s/ Lynn E. Wood
---------------------------------
Lynn E. Wood, President
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<PAGE> 1
BY-LAWS
OF
UNIFIED HOLDINGS, INC.
ARTICLE I
OFFICES AND RECORDS
-------------------
Section 1.1. Delaware Office. The principal office of the Corporation
---------------
in the State of Delaware shall be located in the City of Wilmington, County
of New Castle, and the name and address of its registered agent is The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
Section 1.2. Other Offices. The Corporation may have such other
-------------
offices, either within or without the State of Delaware, as the Board of
Directors may designate or as the business of the Corporation may from time
to time require.
Section 1.3. Books and Records. The books and records of the
-----------------
Corporation may be kept outside the State of Delaware at such place or places
as may from time to time be designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
------------
Section 2.1. Annual Meeting. The annual meeting of the stockholders of
--------------
the Corporation shall be held at the time and place designated by the Board
of Directors of the Corporation in the month of May, in each year, or at such
other date or time as shall be determined by the Chairman of the Board, for
the purpose of electing directors and for the transaction of such other
business as may come before the meeting.
Section 2.2. Special Meeting. Subject to the rights of the holders of
---------------
any series of stock having a preference over the Common Stock of the
Corporation as to dividends or upon liquidation ("Preferred Stock") with
respect to such series of Preferred Stock, special meetings of the
stockholders may be called only by the Chairman of the Board or by the Board
of Directors pursuant to a resolution adopted by a majority of the total
number of directors which the Corporation would have if there were no
vacancies (the "Whole Board").
Section 2.3. Place of Meeting. The Board of Directors or the Chairman
----------------
of the Board, as the case may be, may designate the place of meeting for any
annual meeting or for any special meeting of the stockholders called by the
Board of Directors or the Chairman of the Board. If no designation is so
made, or if a special meeting be otherwise called, the place of meeting shall
be the principal office of the Corporation.
<PAGE> 2
Section 2.4. Notice of Meeting. Written or printed notice, stating the
-----------------
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered by the Corporation not less than ten
(10) days nor more than sixty (60) days before the date of the meeting,
either personally or by mail, to each stockholder of record entitled to vote
at such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail with postage thereon prepaid, addressed
to each stockholder at his address as it appears on the stock transfer books
of the Corporation. Such further notice shall be given as may be required by
law. Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Meetings may be held without notice if all
stockholders entitled to vote are present, or if notice is waived by those
not present in accordance with Section 6.4 of these By-Laws. Any previously
scheduled meeting of the stockholders may be postponed by resolution of the
Board of Directors upon public notice given prior to the date previously
scheduled for such meeting of stockholders.
Section 2.5. Quorum and Adjournment. Except as otherwise provided by
----------------------
law or by the Certificate in Incorporation, the holders of a majority of the
outstanding shares of the Corporation entitled to vote generally in the
election of directors (the "Voting Stock"), represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders, except that
when specified business is to be voted on by a class or series voting as a
class, the holders of a majority of the shares of such class or series shall
constitute a quorum of such class or series for the transaction of such
business. The Chairman of the meeting or a majority of the shares so
represented may adjourn the meeting from time to time, whether or not there
is such a quorum. No notice of the time and place of adjourned meetings need
be given except as required by law. The stockholders present at a duly
called meeting at which a quorum is presented may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 2.6. Proxies. At all meetings of stockholders, a stockholder
-------
may vote by proxy executed in writing by the stockholder, or by his duly
authorized attorney-in-fact. Such proxy must be filed with the Secretary of
the Corporation or his representative at or before the time of the meeting.
Section 2.7. Notice of Stockholder Business and Nominations.
----------------------------------------------
(A) Annual Meetings of Stockholders. (1) Nominations of persons for
-------------------------------
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual
meeting of stockholders (a) pursuant to the Corporation's notice of meeting,
(b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of notice provided for in this By-Law, who is entitled to vote at the
meeting and who has complied with the notice procedures set forth in this
By-Law.
(2) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1)
of this By-Law, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices
of the Corporation not less than 60 days nor more than 90 days prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is advanced by more
than 30 days or delayed by more than 60 days from such anniversary date,
notice by the stockholder to be timely must be so delivered not earlier than
the 90th day prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual meeting or the
10th day following the day on which public
-2-
<PAGE> 3
announcement of the date of such meeting is first made by the Corporation. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (including such person's written consent to being named in
the proxy statement as a nominee and to serving as a director if elected); (b)
as to any other business that the stockholder proposes to bring before the
meeting, a brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; and (c) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address of such stockholder,
as they appear on the Corporation's books, and of such beneficial owner and
(ii) the class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this By-Law to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board of Directors made by
the Corporation at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this
By-Law shall also be considered timely, but only with respect to nominees for
any new positions created by such increase, if it shall be delivered to the
Secretary at the principal executive offices of the Corporation not later
than the close of business on the 10th day following the day on which such
public announcement is made by the Corporation.
(B) Special Meetings of Stockholders. Only such business shall be
--------------------------------
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board of Directors may be made at
a special meeting of stockholders at which directors are to be elected
pursuant to the Corporation's notice of meeting (a) by or at the direction of
the Board of Directors or (b) by any stockholder of the Corporation who is a
stockholder of record at the time of giving of notice provided for in this
By-Law, who shall be entitled to vote at the meeting and who complies with
the notice procedures set forth in this By-Law. Nominations by stockholders
of persons for election to the Board of Directors may be made at such a
special meeting of stockholders if the stockholder's notice required by
paragraph (A)(2) of this By-Law shall be delivered to the Secretary at the
principal executive offices of the Corporation not earlier than the 90th day
prior to such special meeting and not later than the close of business on the
later of the 60th day prior to such special meeting or the 10th day following
the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be elected
at such meeting.
(C) General. (1) Only such persons who are nominated in accordance
-------
with the procedures set forth in this By-Law shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this By-Law. Except as otherwise provided by
law, the Certificate of Incorporation or these By-Laws, the Chairman of the
meeting shall have the power and duty to determine whether a nomination or
any business proposed to be brought before the meeting was made in accordance
with the procedures set forth in this By-Law and, if any proposed nomination
or business is not in compliance with this By-Law, to declare that such
defective proposal or nomination shall be disregarded.
-3-
<PAGE> 4
(2) For purposes of this By-Law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this By-Law, a
stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this By-Law. Nothing in this By-Law shall be deemed to
affect any rights (i) of stockholders to request inclusion of proposals in
the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange
Act or (ii) of the holders of any series of Preferred Stock to elect
directors under specified circumstances.
Section 2.8. Procedure for Election of Directors. Election of
-----------------------------------
directors at all meetings of the stockholders at which directors are to be
elected shall be by ballot, and, subject to the rights of the holders of any
class or series of Preferred Stock to elect additional directors under
specified circumstances, a plurality of the votes cast thereat shall elect
directors. Except as otherwise provided by law, the Certificate of
Incorporation, or these By-Laws, in all matters other than the election of
directors, the affirmative vote of the majority of shares present in person
or represented by proxy at the meeting and entitled to vote on the matter
shall be the act of the stockholders.
Section 2.9. Inspectors of Elections: Opening and Closing the Polls.
-------------------------------------------------------
The Board of Directors by resolution shall appoint one or more inspectors,
which inspector or inspectors may include individuals who serve the
Corporation in other capacities, including, without limitation, as officers,
employees, agents or representatives of the Corporation, to act at the
meetings of stockholders and make a written report thereof. One or more
persons may be designated as alternate inspectors to replace any inspector
who fails to act. If no inspector or alternate has been appointed to act or
is able to act at a meeting of stockholders, the Chairman of the meeting
shall appoint one or more inspectors to act at the meeting. Each inspector,
before discharging his or her duties, shall take and sign an oath faithfully
to execute the duties of inspectors with strict impartiality and according to
the best of his or her ability. The inspectors shall have the duties
prescribed by law.
The Chairman of the meeting shall fix and announce at the meeting the
date and time of the opening and the closing of the polls for each matter
upon which the stockholders will vote at a meeting.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 3.1. General Powers. The business and affairs of the
--------------
Corporation shall be managed by or under the direction of its Board of
Directors. In addition to the powers and authorities by these By-Laws
expressly conferred upon it, the Board of Directors may exercise all such
powers of the Corporation and do all such acts and things as are not by
statute or by the Certificate of Incorporation or by these By-Laws required
to be exercised or done by the stockholders.
Section 3.2. Number, Tenure and Qualifications. Subject to the rights
---------------------------------
of the holders of any series of Preferred Stock to elect directors under
specified circumstances, the number of directors shall be fixed from time to
time exclusively pursuant to a resolution adopted by at least sixty-six and
two-thirds
-4-
<PAGE> 5
percent (66 2/3%) of the Whole Board. The directors, other than those who
may be elected by the holders of any series of Preferred Stock under
specified circumstances, shall be divided, with respect to the time for which
they severally hold office, into three classes, as nearly equal in size as
possible, with the term of office of the first class to expire at the 1998
annual meeting of stockholders, the term of office of the second class to
expire at the 1999 annual meeting of stockholders and the term of office of
the third class to expire at the 2000 annual meeting of stockholders, with
each director to hold office until his or her successor shall have been duly
elected and qualified. At each meeting of stockholders, commencing with the
1998 annual meeting, (i) directors elected to succeed those directors whose
terms then expire shall be elected for a term of office to expire at the
first succeeding annual meeting of stockholders after their election, with
each director to hold office until his or her successor shall have been duly
elected and qualified, and (ii) if authorized by a resolution of the Board of
Directors, directors may be elected to fill any vacancy on the Board of
Directors, regardless of how such vacancy shall have been created.
Notwithstanding the foregoing, the term of office of each director shall
expire on the day of the annual meeting of stockholders that first occurs
following the day on which a director shall have attained seventy years of
age.
Section 3.3. Regular Meetings. A regular meeting of the Board of
----------------
Directors shall be held without other notice than this By-Law immediately
after, and at the same place as, the annual meeting of stockholders. The
Board of Directors may, by resolution, provide the time and place for the
holding of additional regular meetings without other notice than such
resolution.
Section 3.4. Special Meetings. Special meetings of the Board of
----------------
Directors shall be called at the request of the Chairman of the Board, the
Vice Chairman of the Board, the President (if any) or a majority of the
directors then in office. The person or persons authorized to call special
meetings of the Board of Directors may fix the place and time of the
meetings.
Section 3.5. Notice. Notice of any special meeting of directors shall
------
be given to each director at his business or residence in writing by mail,
private delivery service, telegram, facsimile transmission or by telephone.
If mailed, such notice shall be deemed adequately delivered when deposited in
the United States mail so addressed, with postage thereon prepaid, at least
five (5) days before such meeting. If by private delivery service, such
notice shall be deemed adequately delivered when delivered to the private
delivery service at least two (2) days before such meeting. If by telegram,
such notice shall be deemed adequately delivered when the telegram is
delivered to the telegraph company at least twenty-four (24) hours before
such meeting. If by facsimile transmission, such notice shall be deemed
adequately delivered when the notice is transmitted at least twenty-four (24)
hours before such meeting. If by telephone, the notice shall be given at
least twelve (12) hours prior to the time set for the meeting. Any one or
more or any combination of such methods of delivery may be used. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice of (or in
any waiver of notice of) such meeting, except for amendments to these
By-Laws, as provided under Section 8.1. A meeting may be held at any time
without notice if all the directors are present of if those not present waive
notice of the meeting in accordance with Section 6.4 of these By-Laws.
Section 3.6. Action by Consent of Board of Directors. Any action
---------------------------------------
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting if all members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
-5-
<PAGE> 6
Section 3.7. Conference Telephone Meetings. Members of the Board of
-----------------------------
Directors, or any committee thereof, may participate in a meeting of the
Board of Directors or such committee by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
Section 3.8. Quorum. Subject to Section 3.9, a whole number of
------
directors equal to at least a majority of the Whole Board shall constitute a
quorum for the transaction of business, but if at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of the
directors present may adjourn the meeting from time to time without further
notice. The act of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors. The
directors present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
directors to leave less than a quorum.
Section 3.9. Vacancies. Subject to the rights of the holders of any
---------
series of Preferred Stock with respect to such series of Preferred Stock, and
unless the Board of Directors otherwise determines, vacancies resulting from
death, resignation, retirement, disqualification, removal from office or
other cause, and newly created directorships resulting from any increase in
the authorized number of directors, may be filled only by the affirmative
vote of a majority of the remaining directors, though less than a quorum of
the Board of Directors, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of
the class to which they have been elected expires and until such director's
successor shall have been duly elected and qualified. No decrease in the
number of authorized directors constituting the Whole Board shall shorten the
term of any incumbent director.
Section 3.10. Executive and Other Committees. The Board of Directors
------------------------------
may designate one (1) or more committees, each committee to consist of one
(1) or more of the directors of the Corporation. The Board of Directors may
designate one (1) or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee,
the member or members present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the corporation to be affixed to
all papers that may require it; but no such committee shall have the power or
authority in reference to the following matters: (i) approving or adopting,
or recommending to the stockholders, any action or matter expressly required
by the Delaware General Corporation Law to be submitted to stockholders for
approval; or (ii) adopting, amending or repealing this By-Law.
Section 3.11. Removal. Subject to the rights of the holders of any
-------
series of Preferred Stock with respect to such series of Preferred Stock, any
director, or the entire Board of Directors, may be removed from office at any
time, but only for cause and only by the affirmative vote of the holders of
at least 80 percent of the voting power of all of the then outstanding shares
of Voting Stock, voting together as a single class.
Section 3.12. Records. The Board of Directors shall cause to be kept a
-------
record containing the minutes of the proceedings of the meetings of the Board
of Directors and of the stockholders,
-6-
<PAGE> 7
appropriate stock books and registers and such books of records and accounts
as may be necessary for the proper conduct of the business of the
Corporation.
Section 3.13 Compensation. Unless otherwise restricted by the
------------
Certificate of Incorporation or these By-laws, the Board of Directors shall
have the authority to fix the compensation of Directors. The Directors may
be paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
ARTICLE IV
OFFICERS
--------
Section 4.1. Elected Officers. The elected officers of the Corporation
----------------
shall be a Chairman of the Board, a Vice Chairman of the Board (if one shall
have been elected by the Board of Directors), a Secretary, a Treasurer, and
such other officers (including, without limitation, a President) as the Board
of Directors from time to time may deem proper. The Chairman of the Board
shall be chosen from among the directors. All officers chosen by the Board
of Directors shall each have such powers and duties as generally pertain to
their respective offices, subject to the specific provisions of this ARTICLE
IV. Such officers shall also have such powers and duties as from time to
time may be conferred by the Board of Directors or by any Committee thereof.
The Board of Directors may from time to time elect, or the Chairman of the
Board may appoint, such other officers (including one or more Assistant Vice
President, Assistant Secretaries and Assistant Treasurers) and such agents,
as may be necessary or desirable for the conduct of the business of the
Corporation. Such other officers and agents shall have such duties and shall
hold their offices for such terms as shall be provided in these By-Laws or as
may be prescribed by the Board of Directors or by the Chairman of the Board.
Section 4.2. Election and Term of Office. The elected officers of the
---------------------------
Corporation shall be elected annually by the Board of Directors at the
regular meeting of the Board of Directors held after each annual meeting of
the stockholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as convenient. Each
officer shall hold office until his successor shall have been duly elected
and shall have qualified or until his death or until he shall resign, but any
officer may be removed from office at any time by the affirmative vote of a
majority of the Whole Board or, except in the case of an officer or agent
elected by the Board of Directors, by the Chairman of the Board. Such
removal shall be without prejudice to the contractual rights, if any, of the
person so removed.
Section 4.3. Chairman of the Board. The Chairman of the Board shall
---------------------
provide overall direction and guidance to the Corporation. He or she shall
preside at all meetings of the stockholders and of the Board of Directors.
The Chairman shall in general perform all duties incident to the office of
Chairman of the Board and such other duties as may be prescribed by the Board
of Directors from time to time.
Section 4.4. Vice Chairman of the Board. The Vice Chairman of the
--------------------------
Board (if one shall have been elected by the Board of Directors), in the
absence of the Chairman of the Board, shall preside at meetings of the
stockholders and of the directors.
-7-
<PAGE> 8
Section 4.5. Chief Executive Officer. The Chief Executive Officer
-----------------------
shall have the primary responsibility for and the general control and
management of all of the business and affairs of the Corporation, under the
direction of the Board of Directors. He shall have power to select and
appoint all necessary officers and employees of the Corporation except such
officers as under these By-Laws are to be elected by the Board of Directors,
to remove all appointed officers or employees whenever he shall deem
necessary, and to make new appointments to fill the vacancies. He shall have
the power of suspension from office for cause of any elected officer, which
shall be forthwith declared in writing to the Board of Directors. Whenever
in his opinion it may be necessary, he shall define the duties of any officer
or employee of the Corporation which are not prescribed in these By-Laws or
by resolution of the Board of Directors. He also shall be an Assistant
Secretary and shall have such other authority and shall perform such other
duties as may be assigned to him by the Board of Directors.
Section 4.6. President. The President (if one shall have been elected
---------
by the Board of Directors) shall have such powers and discharge such duties
as may be assigned to him from time to time by the Board of Directors, the
Chairman of the Board or the senior officer to whom he reports. If the
office of Chairman of the Board and Chief Executive Officer is held by
another person, the President shall be the chief operating officer of the
Corporation. He also shall be an Assistant Secretary and shall have such
other authority and shall perform such other duties as may be assigned to him
by the Board of Directors.
Section 4.7. Vice President. Each Vice President (including each
--------------
Assistant Vice President, Executive Vice President or Senior Vice President,
if any) shall have such powers and discharge such duties as may be assigned
to him from time to time by the Board of Directors, the Chairman of the
Board, the President or the senior officer to whom he reports.
Section 4.8. Secretary. The Secretary shall keep or cause to be kept
---------
in one or more books provided for that purpose, the minutes of all meetings
of the Board of Directors, the committees of the Board of Directors and the
stockholders; he shall see that all notices are duly given in accordance with
the provisions of these By-Laws and as required by law; he shall be custodian
of the records and the seal of the Corporation and affix and attest the seal
to all stock certificates of the Corporation (unless the seal of the
Corporation on such certificates shall be a facsimile, as hereinafter
provided) and affix and attest the seal to all other documents to be executed
on behalf of the Corporation under its seal; he shall see that the books,
reports, statements, certificates and other documents and records required by
law to be kept and filed are properly kept and filed; and in general, he
shall perform all the duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him by the Board of
Directors or the Chairman of the Board and Chief Executive Officer. The
Board of Directors or the Chairman of the Board may appoint one or more
Assistant Secretaries.
Section 4.9. Chief Financial Officer. The Chief Financial Officer (if
-----------------------
one shall have been elected by the Board of Directors) shall be a Vice
President and act in an executive financial capacity. He shall assist the
Chairman of the Board, the Vice Chairman of the Board and the President in
the general supervision of the Corporation's financial policies and affairs.
Section 4.10. Treasurer. The Treasurer shall exercise general
---------
supervision over the receipt, custody and disbursement of corporate funds.
The Treasurer shall cause the funds of the Corporation to be deposited in
such banks as may be authorized by the Board of Directors, or in such banks
as may be designated as depositaries in the manner provided by resolution of
the Board of Directors. He shall have such further powers and duties and
shall be subject to such directions as may be granted or imposed upon
-8-
<PAGE> 9
him from time to time by the Board of Directors or the Chairman of the Board.
The Board of Directors or the Chairman of the Board may appoint one or more
Assistant Treasurers.
Section 4.11. Controller. The Controller (if one shall have been
----------
elected by the Board of Directors) shall be the chief accounting officer of
the Corporation and shall establish and maintain an integrated accounting
plan for the control of operations of the Corporation. He shall maintain the
accounting systems and records and prepare such reports to government
agencies, to the Board of Directors or to the Chairman of the Board as may be
required. The Controller shall also perform such other functions as may from
time to time be assigned to him by the Board of Directors or the Chairman of
the Board. The Board of Directors or the Chairman of the Board may appoint
one or more Assistant Controllers.
Section 4.12. Removal. Any officer elected by the Board of Directors
-------
may be removed by a majority of the members of the Whole Board whenever, in
their judgment, the best interests of the Corporation would be served
thereby. No elected officer shall have any contractual rights against the
Corporation for compensation by virtue of such election beyond the date of
the election of his successor, his death, his resignation or his removal,
whichever event shall first occur, except as otherwise provided in an
employment contract or under an employee deferred compensation plan.
Section 4.13. Vacancies. A newly created office and a vacancy in any
---------
office because of death, resignation or removal may be filled by the Board of
Directors for the unexpired portion of the term at any meeting of the Board
of Directors.
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
--------------------------------
Section 5.1. Stock Certificates and Transfers. The interest of each
--------------------------------
stockholder of the Corporation shall be evidenced by certificates for shares
of stock in such form as the appropriate officers of the Corporation may from
time to time prescribe. The shares of the stock of the Corporation shall be
transferred on the books of the Corporation by the holder thereof in person
or by his attorney, upon surrender for cancellation of certificates for at
least the same number of shares, with an assignment and power of transfer
endorsed thereon or attached thereto, duly executed, with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require.
The certificates of stock shall be signed, counter-signed and registered
in such manner as the Board of Directors may by resolution prescribe, which
resolution may permit all or any of the signatures on such certificates to be
in facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
Section 5.2. Lost, Stolen or Destroyed Certificates. No certificate
--------------------------------------
for shares of stock in the Corporation shall be issued in place of any
certificate alleged to have been lost, destroyed or stolen, except on
production of such evidence of such loss, destruction or theft and on
delivery to the Corporation of a bond of indemnity in such amount, upon such
terms and secured by such surety, as the Board of Directors or any financial
officer may in its or his discretion require.
-9-
<PAGE> 10
Section 5.3 Record Date. In order that the Corporation may determine
-----------
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior
to any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
Section 5.4. Registered Stockholders. The Corporation shall be
-----------------------
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and
to hold liable for calls and assessments a person registered on its books as
the owner of shares, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except
as otherwise provided by the laws of Delaware.
ARTICLE VI
MISCELLANEOUS PROVISIONS
------------------------
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall
-----------
begin on the first day of January and end of the thirty-first day of December
of each year.
Section 6.2. Dividends. The Board of Directors may from time to time
---------
declare, and the Corporation may pay, dividends on its outstanding shares in
the manner and upon the terms and conditions provided by law and the
Certificate of Incorporation.
Section 6.3. Seal. The corporate seal shall have inscribed thereon the
----
words "Corporate Seal" and around the margin thereof the words "Unified
Holdings, Inc."
Section 6.4. Waiver of Notice. Whenever any notice is required to be
----------------
given to any stockholder or director of the Corporation under the provisions
of the General Corporation Law of the State of Delaware or these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be
transacted at, nor the purpose of, any annual or special meeting of the
stockholders need be specified in any waiver of notice of such meeting.
Section 6.5. Audits. The accounts, books and records of the
------
Corporation shall be audited upon the conclusion of each fiscal year by an
independent certified public accountant selected by the Board of Directors,
and it shall be the duty of the Board of Directors to cause such audit to be
made annually.
Section 6.6. Resignations. Any director or any officer, whether
------------
elected or appointed, may resign at any time by giving written notice of such
resignation to the Chairman of the Board, the President (if any) or the
Secretary, and such resignation shall be deemed to be effective as of the
close of business on the date said notice is received by the Chairman of the
Board, the President (if any) or the Secretary, or at such later time as is
specified therein. No formal action shall be required of the Board of
Directors or the
-10-
<PAGE> 11
stockholders to make any such resignation effective.
Section 6.7. Gender. Whenever the personal pronoun he, she or its is
------
used herein, it shall mean an appropriate gender.
ARTICLE VII
CONTRACTS, PROXIES, ETC.
------------------------
Section 7.1. Contracts. Except as otherwise required by law, the
---------
Certificate of Incorporation or these By-Laws, any contracts or other
instrument may be executed and delivered in the name and on the behalf of the
Corporation by such officer or officers (including any assistant officer) of
the Corporation as the Board of Directors may from time to time direct. Such
authority may be general or confined to specific instances as the Board of
Directors may determine. The Chairman of the Board, the Vice Chairman of the
Board (if any), the President (if any) or any Vice President may execute
bonds, contracts, deeds, leases and other instruments to be made or executed
for or on behalf of the Corporation. Subject to any restrictions imposed by
the Board of Directors or the Chairman of the Board, the Vice Chairman of the
Board (if any), the President (if any) or any Vice President of the
Corporation may delegate contractual power to others under his jurisdiction,
it being understood, however, that any such delegation of power shall not
relieve such officer of responsibility with respect to the exercise of such
delegated power.
Section 7.2. Proxies. Unless otherwise provided by resolution adopted
-------
by the Board of Directors, the Chairman of the Board, the Vice Chairman of
the Board (if any), the President (if any) or any Vice President may from
time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the votes
which the Corporation may be entitled to cast as the holder of stock or other
securities in any other corporation, any of whose stock or other securities
may be held by the Corporation, at meetings of the holders of the stock or
other securities of such other corporation, or to consent in writing, in the
name of the Corporation as such holder, to any action by such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause
to be executed in the name and on behalf of the Corporation and under its
corporate seal or otherwise, all such written proxies or other instruments as
he may deem necessary or proper in the premises.
ARTICLE VIII
AMENDMENTS
----------
Section 8.1. Amendments. The Board of Directors shall have the power
----------
to make, amend, alter, change or repeal the By-laws (except in so far as the
By-laws adopted by the stockholders shall otherwise provide). Any By-law
made by the Board of Directors under the powers conferred hereby may be
amended, altered, changed or repealed by the Board of Directors or by the
stockholders. Notwithstanding the foregoing or anything contained in the
Certificate of Incorporation to the contrary, Sections 2.7 and 2.8 of Article
II, Sections 3.2, 3.9 and 3.11 of Article III and Article VIII of the By-laws
shall not be amended, altered, changed or repealed and no provision
inconsistent therewith shall be adopted without the affirmative vote of the
holders of at least eighty percent (80%) of the voting power of all shares of
the Corporation's outstanding capital stock, voting together as a single
class, unless such amendment,
-11-
<PAGE> 12
alteration, change or repeal has previously been expressly approved by the
Board of Directors by the affirmative vote or consent of at least sixty-six
and two-thirds percent (66-2/3%) of the number of Directors then in office.
These By-laws may be altered, amended or repealed or new By-laws may be
adopted by the stockholders or by the Board of Directors, when such power is
conferred upon the Board of Directors by the Certificate of Incorporation, at
any regular meeting of the stockholders or of the Board of Directors or at
any special meeting of the stockholders or of the Board of Directors if
notice of such alteration, amendment, repeal or adoption of new By-laws be
contained in the notice of such special meeting. If the power to adopt,
amend or repeal By-laws is conferred upon the Board of Directors by the
Certificate of Incorporation, it shall not divest or limit the power of the
stockholders to adopt, amend or repeal By-laws.
As adopted by the Board of Directors of the Corporation, effective as
of November 4, 1997.
/s/ Timothy L. Ashburn
-------------------------------------
Timothy L. Ashburn, Chairman
and Chief Executive Officer
ATTEST
/s/ Carol J. Highsmith
- ------------------------------------------
Carol J. Highsmith, Secretary
<PAGE> 1
<TABLE>
EXHIBIT 11.1
<CAPTION>
Three months Ended Nine months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Results after preferred stock dividend $ 88,718 $ 373,739 $ 156,342 $ 442,456
Shares<F*>
Basic:
Weighted-average number of common shares outstanding 50,000 25,179 42,197 25,179
Common stock equivalent shares related to option plans 161,550 161,550 161,550 161,550
Common stock equivalent shares related to acquisition 325,000 325,000 325,000 325,000
of Health Financial, Inc.
Weighted-average number of common and common
equivalent shares outstanding 536,550 511,729 528,747 511,729
Basic Earnings Per Share<F*> $ 0.17 $ 0.73 $ 0.30 $ 0.86
Fully Diluted:
Weighted-average number of common shares outstanding 50,000 50,000 50,000 50,000
Common stock equivalent shares related to option plans 572,768 572,768 572,768 572,768
Common stock equivalent shares related to acquisition 325,000 325,000 325,000 325,000
of Health Financial, Inc.
Weighted-average number of common and common
equivalent shares outstanding 947,768 947,768 947,768 947,768
Fully Diluted Earnings Per Share<F*> $ 0.09 $ 0.39 $ 0.16 $ 0.47
<FN>
<F*>Reflects common stock splits and dividends issued
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statements of financial condition and the consolidated statements
of operation of Unified Holdings, Inc. filed as a part of the Company's
quarterly report on Form 10-QSB and is qualified in its entirety by reference
to such report.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 426,215
<SECURITIES> 380,955
<RECEIVABLES> 1,002,366
<ALLOWANCES> 2,041
<INVENTORY> 0
<CURRENT-ASSETS> 1,934,925
<PP&E> 1,390,849
<DEPRECIATION> 879,583
<TOTAL-ASSETS> 2,902,746
<CURRENT-LIABILITIES> 969,413
<BONDS> 0
<COMMON> 1,599
17,069
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,902,746
<SALES> 0
<TOTAL-REVENUES> 7,035,722
<CGS> 0
<TOTAL-COSTS> 1,856,444
<OTHER-EXPENSES> 4,324,406
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,993
<INCOME-PRETAX> 748,455
<INCOME-TAX> 0
<INCOME-CONTINUING> 748,455
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 748,455
<EPS-PRIMARY> 0.99
<EPS-DILUTED> 0.65
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statements of financial condition and the consolidated statements
of operation of Unified Holdings, Inc. filed as a part of the Company's
quarterly report on Form 10-QSB and is qualified in its entirety by reference
to such report.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 603,689
<SECURITIES> 662,056
<RECEIVABLES> 1,282,657
<ALLOWANCES> 2,041
<INVENTORY> 0
<CURRENT-ASSETS> 2,840,376
<PP&E> 1,397,222
<DEPRECIATION> 990,461
<TOTAL-ASSETS> 3,755,242
<CURRENT-LIABILITIES> 1,657,069
<BONDS> 0
<COMMON> 10,728
17,069
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,755,242
<SALES> 0
<TOTAL-REVENUES> 4,871,418
<CGS> 0
<TOTAL-COSTS> 1,278,554
<OTHER-EXPENSES> 3,392,154
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,232
<INCOME-PRETAX> 274,196
<INCOME-TAX> 16,000
<INCOME-CONTINUING> 258,196
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 258,196
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.16
</TABLE>
