ARTICLES OF INCORPORATION
OF
NORTH SHORE CAPITAL III, INC.
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned incorporator, being a natural person of the age of
eighteen (18) years or more, and desiring to form a corporation under the laws
of the State of Colorado, does hereby sign, verify and deliver in duplicate
to the Secretary of State of the State of Colorado these Articles of
Incorporation.
ARTICLE I
NAME
The name of the corporation shall be NORTH SHORE CAPITAL III, INC.
The principal office and address is 5627 BELLINGTON AVENUE, SPRINGFIELD,
VA 22151.
ARTICLE II
PERIOD OF DURATION
This corporation shall exist perpetually unless dissolved according to
law.
ARTICLE III
PURPOSE
The purpose for which this corporation is organized is to transact any
lawful business or businesses for which corporations may be incorporated
pursuant to the Colorado Business Corporation Act.
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ARTICLE IV
POWERS
In furtherance of the foregoing purposes the corporation shall have and
may exercise all of the rights, powers and privileges now or hereafter
conferred upon corporations organized under the Colorado Business Corporation
Act, as amended, or by law. In addition, it may do everything necessary,
suitable or proper for the accomplishment of any corporate purpose.
ARTICLE V
CAPITAL
The aggregate number of common shares which this corporation shall have
the authority to issue is fifty million (50,000,000), each without par value
which shares shall be designated common stock. No share shall be issued
without consideration being exchanged, and it shall thereafter be
nonassessable. The Board of Directors may determine by a majority vote if
gifts of shares will be allowed under certain circumstances.
Shares of the corporation not having a par value shall be issued for such
consideration expressed in dollars as may be fixed from time to time by the
vote of the director(s).
The following is a description of each class of stock of the Corporation
with the preferences, conversion and other rights, restrictions, voting
powers, limitations as to distributions, qualifications, and terms and
conditions of redemption of each class:
FIRST: In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation, the holders of any Preferred
Stock then outstanding shall be paid out of the assets of the Corporation
available for distribution to its stockholders an amount equal to One Dollar
($1.00) per share plus an amount equal to all unpaid declared distributions
thereon, without interest, and no more, before any amount shall be paid or any
assets of the Corporation shall be distributed among the holders of the Common
Stock and, if the assets of the Corporation available for distribution to its
stockholders shall be insufficient to permit the payment in full to the
holders of the Preferred Stock, as aforesaid, then the entire assets of the
Corporation available for distribution to its stockholders shall be
distributed ratably among the holders of the Preferred Stock; then and
thereafter, the remaining assets of the Corporation available for distribution
to its stockholders shall be distributed among and paid to the holders of the
Preferred Stock and the Common Stock, share and share alike and without any
distinction as to class, in proportion to their respective stockholdings.
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A merger of the Corporation with or into any other corporation, a share
exchange involving the Corporation, or a sale, lease, exchange, or transfer of
all or any part of the assets of the Corporation which shall not in fact
result in the liquidation of the Corporation and the distribution of its
assets to its stockholders shall not be deemed to be a voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation within
the meaning of this Article SIXTH, paragraph 1.
SECOND: Except as hereinabove provided in paragraph 1 of this Article
SIXTH, the Preferred Stock and the Common Stock of the Corporation shall be
identical in all respects and for all purposes and the holders of the
Preferred Stock and the holders of the Common Stock voting together and
without distinction as to class shall be entitled to one vote per share in all
proceedings in which actions shall be taken by the stockholders of the
Corporation.
THIRD: The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
(1) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of its stock of any class,
whether now or hereafter authorized, or securities convertible into shares of
its stock of any class or classes, whether now or hereafter authorized.
(2) The Board of Directors of the Corporation may classify or reclassify
any unissued stock by setting or changing in any one or more respects, from
time to time before issuance of such stock, the preferences, conversion or
other rights, voting powers, restrictions, limitations as to distributions,
qualifications, and terms or conditions of redemption of such stock.
(3) The Board of Directors shall have power, if authorized by the Bylaws,
to designate by resolution or resolutions adopted by a majority of the whole
Board of Directors, one or more committees, each committee to consist of two
or more of the directors of the Corporation, which, to the extent provided in
said resolutions or in the Bylaws of the Corporation and permitted by the
Colorado Business Corporation Act, shall have and may exercise any or all of
the powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of the
Corporation to be affixed to all instruments and documents which may require
it.
(4) If the Bylaws so provide, the Board of Directors of the Corporation
shall have power to hold its meetings, to have an office or offices and,
subject to the provisions of the Colorado Business Corporation Act, to keep
the books of the Corporation, outside of said State at such place or places
as may from time to time be designated by it.
(5) The Board of Directors shall have power to borrow or raise money,
from time to time and without limit, and upon any terms, for any corporate
purposes; and, subject to the Colorado Business
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Corporation Act, to authorize the creation, issue, assumption or guaranty of
bonds, notes or other evidences of indebtedness for moneys so borrowed, to
include therein such provisions as to redeemability, convertibility or
otherwise, as the Board of Directors, in its sole discretion, may determine
and to secure the payment of principal, interest or sinking fund in respect
thereof by mortgage upon, or the pledge of, or the conveyance or assignment in
trust of, the whole or any part of the properties, assets and goodwill of the
Corporation then owned or thereafter acquired.
The enumeration and definition of a particular power of the Board of
Directors included in the foregoing shall in no way be limited or restricted
by reference to or inference from the terms of any other clause of this or any
other article of these Articles of Incorporation, or construed as or deemed by
inference or otherwise in any manner to exclude or limit any powers conferred
upon the Board of Directors under the laws of the State of Colorado now or
hereafter in force.
FOURTH: Notwithstanding any provision of law to the contrary, the
affirmative vote of a majority of all the votes entitled to be cast on the
matter shall be sufficient, valid and effective, after due authorization,
approval or advice of such action by the Board of Directors, as required by
law, to approve and authorize the following acts of the Corporation:
(i) the amendment of these Articles of Incorporation;
(ii) the merger of the Corporation into another corporation or the merger
of one or more other corporations into the Corporation;
(iii) the sale, lease, exchange or other transfer of all, or
substantially all, of the property and assets of the Corporation, including
its goodwill and franchises;
(iv) the participation by the Corporation in a share exchange (as defined
in the Colorado Business Corporation Act) as the corporation the stock of
which is to be acquired; and
(v) the voluntary or involuntary liquidation, dissolution or winding-up
of or the revocation of any such proceedings relating to the Corporation.
ARTICLE VI
AUTHORIZATION OF CONVERTIBLE PREFERRED STOCK
The total number of shares of the capital stock which the Corporation has
authority to issue is 60,000,000, divided into fifty million (50,000,000)
shares of common stock (the "Common Stock"), and ten million (10,000,000)
shares of Series A Convertible Preferred Stock with a par value of $100 per
share (hereinafter sometimes referred to as the "Series A Convertible
Preferred Stock" or the "Preferred Stock").
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A description of the "Series A Convertible Preferred Stock", including
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to distributions, qualifications, and terms and conditions for
redemption, all as set by the Board of Directors of the Corporation, is as
follows:
1. Designation and Initial Number. The class of shares of Preferred Stock
hereby classified shall be designated the "Series A Convertible Preferred
Stock." The initial number of authorized shares of the Preferred Stock shall
be ten million (10,000,000).
2. Distributions. Commencing on January 1, 2000, the holders of the
Preferred Stock shall be entitled to receive, out of funds at the time legally
available for payment of distributions in the State of Colorado, a
non-cumulative distribution at the rate of $100.00 per share per annum,
payable semi-annually in equal installments on the first days of January and
July in each year, if, as and when determined by the Board of Directors,
before any distribution shall be set apart or paid on any other capital stock
for such year.
3. Redemption. The Corporation, at the option of the Board of Directors,
may redeem the whole or any part of the Preferred Stock at any time
outstanding, at any time or from time to time after January 1, 2000, provided
that the Corporation, at any such time, shall have consummated a sale of its
securities pursuant to an effective registration statement (a "Public
Offering") filed with the Securities and Exchange Commission (the "SEC"), upon
at least 30 days' prior written notice to the holders of record of the
Preferred Stock to be redeemed, by paying a redemption price per share equal
to 150% of the par value thereof, plus all accrued and unpaid distributions
declared thereon, at the date fixed for redemption, without interest, in cash,
for each share of Preferred Stock so redeemed. The Board of Directors shall
have full power and authority, subject to the limitations and provisions
herein contained, to prescribe the manner in which and the terms and
conditions upon which the Preferred Stock shall be redeemed at any time and
from time to time. The notice of redemption to each stockholder whose shares
of Preferred Stock are to be redeemed shall specify the number of shares of
Preferred Stock of such stockholder to be redeemed, the date fixed for
redemption and the redemption price at which the shares of Preferred Stock are
to be redeemed, and shall specify where payment of the redemption price is to
be made upon surrender of such shares, shall state the conversion rate then in
effect, and that conversion rights of such shares shall terminate at the
closing of business on the date fixed for redemption. None of the Preferred
Stock acquired by the Corporation by redemption or otherwise shall be reissued
or disposed of but shall, from time to time, be retired in the manner
provided by law.
4. Liquidation or Dissolution. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the affairs of the
Corporation, the holders of the issued and outstanding Preferred Stock shall
be entitled to receive for each share of Preferred Stock, before any
distribution of the assets of the Corporation shall be made to the holders of
any other capital stock, a dollar amount equal to the par value thereof plus
all accrued and unpaid distributions declared thereon,
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without interest. After such payment shall have been made in full to the
holders of the issued and outstanding Preferred Stock, or funds necessary for
such payment shall have been set aside in trust for the account of the holders
of the issued and outstanding Preferred Stock so as to be and continue to be
available therefor, then, before any further distribution of the assets of the
Corporation shall be made, a dollar amount equal to that already distributed
to the holders of the Preferred Stock shall be distributed pro-rata to the
holders of the other issued and outstanding capital stock of the Corporation,
subject to the rights of any other class of capital stock set forth in the
Articles of Incorporation of the Corporation or Amendments to the Articles of
Incorporation to State Terms of Series Shares filed by the Corporation. After
such payment shall have been made in full to the holders of such other issued
and outstanding capital stock, or funds necessary for such payment shall have
been set aside in trust for the account of the holders of such other issued
and outstanding capital stock so as to be and continue to be available
therefor, the holders of the issued and outstanding Preferred Stock shall be
entitled to participate with the holders of all other classes of issued and
outstanding capital stock in the final distribution of the remaining assets of
the Corporation, and, subject to any rights of any other class of capital
stock set forth in the Articles of Incorporation of the Corporation or any
Amendments to the Articles of Incorporation to State Terms of Series Shares
filed by the Corporation, the remaining assets of the Corporation shall be
divided and distributed ratably among the holders of both the Preferred Stock
and the other capital stock then issued and outstanding according to the
proportion by which their respective record ownership of shares of the
Preferred Stock and such capital stock bears to the total number of shares of
the Preferred Stock and such capital stock then issued and outstanding. If,
upon such liquidation, dissolution, or winding up, the assets of the
Corporation distributable, as aforesaid, among the holders of the Preferred
Stock shall be insufficient to permit the payment to them of said amount, the
entire assets shall be distributed ratably among the holders of the Preferred
Stock. A consolidation or merger of the Corporation, a share exchange, a sale,
lease, exchange or transfer of all or substantially all of its assets as an
entirety, or any purchase or redemption of stock of the Corporation of any
class, shall not be regarded as a "liquidation, dissolution, or winding up of
the affairs of the Corporation" within the meaning of this paragraph 4.
5. Conversion Privilege. Preferred Stock shall be convertible into Common
Stock as hereinafter provided and, when so converted, shall be canceled and
retired and shall not be reissued as such:
(A) Any holder of the Preferred Stock may at any time or from time
to time convert such stock into the Common Stock of the Corporation, on
presentation and surrender to the Corporation, of the certificates of the
Preferred Stock to be so converted.
(B) Each holder of Preferred Stock shall have the right to convert
such Preferred Stock on and subject to the following terms and conditions:
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(i) The Preferred Stock shall be converted into Common Stock at
the conversion rate, determined as hereinafter provided, in effect at the time
of conversion. Unless such conversion rate shall be adjusted as hereinafter
provided, the conversion rate shall be one share of Common Stock for each
share of Preferred Stock so converted.
(ii) In order to convert Preferred Stock into Common Stock, the
holder thereof shall on any business day surrender at the executive offices of
the Company at 5627 Bellington Avenue, Springfield, VA 22151, the certificate
or certificates representing such shares, duly endorsed to the Corporation or
in blank, and give written notice to the Corporation at said office of the
number of said shares which such holder elects to convert. Preferred Stock
shall be deemed to have been converted immediately prior to the close of
business on the day of such surrender for conversion, and the person or
persons entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
Common Stock at such time. As promptly as practicable on or after the date of
any conversion, the Corporation shall issue and deliver a certificate or
certificates representing the number of shares of Common Stock issuable upon
such conversion, together with cash in lieu of any fraction of a share, as
provided in subparagraph (H) of this paragraph 5, to the person or persons
entitled to receive same. In case of the conversion of only a part of the
shares of any holder of Preferred Stock, the Corporation shall also issue and
deliver to such holder a new certificate of Preferred Stock representing the
number of shares of such Preferred Stock not converted by such holder.
(C) The conversion rate as hereinabove provided shall be subject to
adjustment as follows:
(i) In case the Corporation shall (a) pay a distribution in
shares of its capital stock, (b) subdivide its outstanding shares of Common
Stock into a greater number of shares, (c) combine its outstanding shares of
Common Stock into a smaller number of shares, or (d) issue by reclassification
of its shares of Common Stock any shares of its capital stock, the conversion
rate in effect immediately prior thereto shall be adjusted so that the holder
of a share of Preferred Stock surrendered for conversion after the record date
fixing stockholders to be affected by such event shall be entitled to receive,
upon conversion, the number of shares of Common Stock which such holder would
have owned or have been entitled to receive after the happening of such event
had such share of Preferred Stock been converted immediately prior to the
record date in the case of such dividend or the effective date in the case of
any such subdivision, combination or reclassification. An adjustment made
pursuant to this subparagraph 5(C)(i) shall be made whenever any of such
events shall happen, but shall become effective retroactively after such
record date or such effective date, as the case may be, as to shares of
Preferred Stock converted between such record date or effective date and the
date of happening of any such event.
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(ii) In case the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share, which, when added to the amount
of consideration received or receivable by the Corporation for such right or
warrant, is less than the current market price (as hereinafter defined) per
share of Common Stock at the record date mentioned below, the conversion rate
shall be adjusted so that thereafter, until further adjusted, each share of
Preferred Stock shall be convertible into that number of shares of Common
Stock determined by multiplying the number of shares of Common Stock into
which such share of Preferred Stock was theretofore convertible by a fraction,
the numerator of which shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of additional shares of Common Stock issuable upon the exercise of such rights
or warrants, and the denominator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants
plus the number of shares which an amount equal to the sum of (a) the
aggregate exercise price of the total number of shares of Common Stock
issuable upon the exercise of such rights or warrants, plus (b) the aggregate
amount of consideration, if any, received, or receivable by the Corporation
for any such rights or warrants, would purchase at such current market price.
Such adjustment shall be made whenever such rights or warrants are issued, but
shall also be effective retroactively as to shares of Preferred Stock
converted between the record date for the determination of stockholders
entitled to receive such rights or warrants and the date such rights or
warrants are exercised.
(iii) In case the Corporation shall distribute to all holders
of its Common Stock any one or more of the following: (a) evidence of its
indebtedness, (b) assets (excluding cash distributions, distributions made out
of current or retained earnings and distributions of the stock of any
subsidiary), or (c) rights or warrants to subscribe for or purchase securities
issued by, or property of, the Corporation (excluding those referred to in
subparagraph 5(C)(ii) above), then in each such case the conversion rate shall
be adjusted as provided below so that thereafter, until further adjusted, the
number of shares of Common Stock into which each share of Preferred Stock
shall be convertible shall be determined by multiplying the number of shares
of Common Stock into which such share of Preferred Stock was theretofore
convertible by a fraction, the numerator of which shall be the current market
price per share of Common Stock on the date of such distribution, and the
denominator of which shall be such current market price per share of the
Common Stock, less the then fair market value (as determined by the Board of
Directors of the Corporation, whose determination shall be conclusive) of the
portion of the assets or evidence of indebtedness so distributed or of such
rights or warrants applicable to one share of the Common Stock. Such
adjustment shall be made whenever any such distribution is made, but shall
also be effective retroactively as to shares of Preferred Stock converted
between the record date for the determination of stockholders entitled to
receive such distribution and the date such distribution is made.
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(iv) For the purpose of any computation under subparagraphs 5(C)(ii)
and (iii) above, the current market price per share of Common Stock at any
date shall be (a) if the Common Stock is listed on any national securities
exchange, the average of the daily closing prices for the 15 consecutive
business days commencing 20 business days before the day in question (the
"Trading Period"); (b) if the Common Stock is not listed on any national
securities exchange but is quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ"), the average of the high
and low bids as reported on NASDAQ for the Trading Period; and (c) if the
Common Stock is neither listed on any national securities exchange nor quoted
on NASDAQ, the higher of (x) the conversion price then in effect, or (y) the
tangible book value per share as of the end of the Corporation's immediately
preceding fiscal year.
(v) No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such rate; provided, however, that any adjustments which by reason of this
subparagraph 5(C)(v) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
subparagraph 5(C) shall be made to the nearest one-hundredth of a share.
(D) No adjustment of the conversion rate shall be made in any of
the following cases:
(i) upon the grant or exercise of stock options hereafter
granted, or under any employee stock option plan now or hereafter authorized,
to the extent that the aggregate of the number of shares which may be
purchased under such options and the number of shares issued under such
employee stock purchase plan is less than or equal to ten percent (10%) of the
number of shares of Common Stock outstanding on January 1 of the year of the
grant or exercise;
(ii) shares of Common Stock issued upon the conversion of
Preferred Stock;
(iii) shares issued in connection with the acquisition by the
Corporation or by any subsidiary of the Corporation of 80% or more of the
assets of another corporation, and shares issued in connection with the
acquisition by the Corporation or by any subsidiary of the Corporation of 80%
or more of the voting shares of another corporation (including shares issued
in connection with such acquisition of voting shares of such other corporation
subsequent to the acquisition of an aggregate of 80% of such voting shares),
shares issued in a merger of the Corporation or a subsidiary of the
Corporation with another corporation in which the Corporation or the
Corporation's subsidiary is the surviving corporation, and shares issued upon
the conversion of other securities issued in connection with any such
acquisition or in any such merger;
(iv) shares issued by way of dividend or other distribution on
Common Stock excluded from the calculation of the adjustment under this
subparagraph 5(D) or on Common Stock resulting from any subdivision or
combination of Common Stock so excluded; or
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(v) shares issued pursuant to all stock options and warrants
outstanding on the date of the filing of these Articles.
(E) Whenever the conversion rate is adjusted as herein provided, the
Corporation shall prepare a certificate signed by the Treasurer of the
Corporation setting forth the adjusted conversion rate and showing in
reasonable detail the facts upon which such adjustment is based. As promptly
as practicable, the Corporation shall cause a copy of the certificate referred
to in this subparagraph 5(E) to be mailed to each holder of record of issued
and outstanding Preferred Stock at the address of such holder appearing on
the Corporation's books.
(F) The Corporation shall pay all taxes that may be payable in
respect of the issue or delivery of Common Stock on conversion of Preferred
Stock pursuant hereto, but shall not pay any tax which may be payable with
respect to income or gains of the holder of any Preferred Stock or Common
Stock or any tax which may be payable in respect of any transfer involved in
the issue and delivery of the Common Stock in a name other than that in which
the Preferred Stock so converted was registered, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid to
the Corporation the amount of any such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(G) Upon conversion of any shares of Preferred Stock, the holders of
the shares of Preferred Stock so converted shall not be entitled to receive
any distributions declared with respect to such shares of Preferred Stock
unless such distributions shall have been declared by the Board of Directors
and the record date for such distributions shall have been on or before the
date such shares shall have been converted. No payment or adjustment shall be
made on account of distributions declared and payable to holders of Common
Stock of record on a date prior to the date of conversion.
(H) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of any shares of Preferred Stock. If more
than one share of Preferred Stock shall be surrendered for conversion at one
time by the same holder, the number of full shares issuable upon conversion
thereof shall be computed on the basis of the aggregate number of such shares
so surrendered. If the conversion of any share of Preferred Stock results in a
fraction, an amount equal to such fraction multiplied by the current market
price (determined as provided in subparagraph 5(C)(iv) above) of the Common
Stock on the day of conversion shall be paid to such holder in cash by the
Corporation.
(I) The Corporation shall at all times reserve and keep available,
free from preemptive rights, out of its authorized Common Stock, for the
purpose of effecting the conversion of the issued and outstanding Preferred
Stock, the full number of shares of Common Stock then deliverable in the event
and upon the conversion of all of the Preferred Stock then issued and
outstanding.
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6. Voting Rights. Except as otherwise provided in this paragraph 6, each
share of Preferred Stock is entitled to one vote, voting together with the
holders of shares of Common Stock and not as a class, on each matter submitted
to a vote at a meeting of stockholders of the Corporation. In the event that
at any time two consecutive semi-annual distributions payable on the Preferred
Stock shall be in default (a "Two Dividend Default"), then immediately upon
the happening of a Two Dividend Default and until the Two Dividend Default and
all defaults in the payment of semi-annual distributions subsequent to the Two
Dividend Default shall be cured, the holders of Preferred Stock shall have the
right, voting separately as a class, to elect one-third of the Directors of
the Corporation. In the event that at any time four consecutive semi-annual
distributions payable on the Preferred Stock shall be in default (a "Four
Dividend Default"), then immediately upon the happening of such Four Dividend
Default and until such Four Dividend Default and all defaults in the payment
of semi-annual distributions subsequent to the Four Dividend Default shall be
cured, the holders of Preferred Stock shall have the right, voting separately
as a class, to elect a majority of the Directors of the Corporation. The
foregoing voting rights are hereinafter collectively referred to as the
"Special Voting Rights." The Special Voting Rights shall be exercised only at
annual meetings of the stockholders of the Corporation, and only if the
holders of a majority of the outstanding shares of Preferred Stock entitled to
such Special Voting Rights are present in person or by proxy. Notwithstanding
the foregoing provisions of this paragraph 6, upon payment in full of all
defaults in the payment of semi-annual distributions subsequent to a Four
Dividend Default and of the distribution which resulted in the Four Dividend
Default, so that no more than three consecutive semi-annual distributions
remain in default, the Special Voting Rights of the holders of Preferred Stock
shall be reduced so that they shall have the right, voting separately as a
class, to elect one-third of the Directors of the Corporation. Notwithstanding
the foregoing provisions of this Paragraph 6, upon payment in full of (i) all
defaults in the payment of semi-annual distributions subsequent to a Two
Dividend Default and of the distribution which resulted in the Two Dividend
Default, or (ii) upon payment in full of all semi-annual distributions
subsequent to a Four Dividend Default and three of the distributions which
resulted in a Four Dividend Default, so that, in each such case, no more than
one semi-annual distribution remains in default, the Special Voting Rights
shall terminate, and the voting power in the election of Directors shall again
be vested equally in the holders of the Preferred Stock and the Common Stock,
who shall each be entitled to one vote per share. Each Director elected by the
holders of shares of Preferred Stock as a result of the Special Voting Rights
set forth above shall serve only until the next annual meeting of
stockholders, or until the date the Special Voting Rights shall have
terminated as provided in this paragraph 6, whichever event first occurs.
7. Registration Rights.
(A) "Piggy-Back" Registration Rights:
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(i) If, at any time and from time to time after the
Corporation's first Public Offering, the Corporation proposes to register any
of its securities on Forms S-1, S-2, S-3 or S-18, or any successor forms,
under the Securities Act of 1933 (the "Act") and applicable state securities
laws (the "State Acts"), the Corporation shall give prompt written notice to
each holder of Preferred Stock (or Common Stock into which it has been
converted) of its intention to do so, and, upon the written request of any
such stockholder made within 30 days after the receipt of any such notice,
which written request shall specify the number of shares such stockholder
desires to be registered, the Corporation shall use its reasonable efforts to
cause all such shares of such stockholder to be registered under the Act and
State Acts to permit the sale of such shares. Notwithstanding anything
contained herein to the contrary, the Corporation shall have the right to
discontinue any registration of such shares of such stockholder at any time
prior to the effective date of such registration if the registration of other
securities giving rise to such registration is discontinued.
(ii) If any stockholder shall request inclusion of any shares
held by such stockholder in the registration of other securities of the
Corporation and such proposed registration by the Corporation is, in whole or
in part, an underwritten Public Offering, and if the managing underwriter
determines and advises the Corporation in writing that inclusion in such
registration of all proposed securities (including securities being offered by
or on behalf of the Corporation and securities covered by requests for
registration) would adversely affect the marketability of the offering of the
securities proposed to be registered by the Corporation, then such stockholder
shall be entitled to participate pro-rata with the other stockholders having
similar incidental registration rights with respect to such registration to
the extent the managing underwriter determines that such shares may be
included without such adverse effect.
(iii) The rights of such stockholders to have their shares
included in such registration shall expire on the first to occur of January 1,
2011, or that date which is 10 years after the Corporation's first Public
Offering.
(B) Demand Registration Rights: At any time after the Corporation's
first Public Offering of its stock, the Corporation shall, upon receipt of a
written request from the holders of at least 25% of the aggregate issued and
outstanding Preferred Stock and the Common Stock into which it has been
converted, prepare and file under the Act a registration statement in respect
of such shares. In the event that not all of such shares have been registered
as herein set forth, the Corporation shall, upon receipt of a written request
from the holders of at least 25% of the aggregate remaining unregistered
Preferred Stock and the Common Stock into which it has been converted, prepare
and file under the Act no more than one additional registration statement to
register the remaining balance of the shares not so registered.
(C) Expenses: The Corporation shall pay all expenses incident to its
performance of or compliance with the provisions of subparagraphs 7(A) and
7(B) hereof, including, without limitation, all registration and filing fees,
fees and expenses of compliance with the Act and State
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Acts, printing expenses, messenger and delivery expenses, fees and
disbursements of counsel for the Corporation (but not the legal fees of any
such stockholder) and all independent public accountants and other persons
retained by the Corporation, and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (excluding underwriting
commissions and discounts).
(D) Obligations of the Corporation: If and whenever the Corporation
is required to use its reasonable efforts to effect or cause the registration
of any shares under the Act as provided in this paragraph 7, the Corporation
shall, as expeditiously as possible:
(i) prepare and file with the SEC a registration statement with
respect to such shares and use its reasonable efforts to cause such
registration statement to become effective;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and such prospectus current for a period not in excess of nine
months as may be necessary in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement;
(iii) furnish to each seller of such shares such number of
copies of such registration statement and each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus included in such registration statement (including each preliminary
prospectus), in conformity with the requirements of the Act, and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the shares owned by such seller;
(iv) use its reasonable efforts to register or qualify such
shares covered by such registration statement under such State Acts as each
seller reasonably requests, and do any and all other acts and things which may
be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the shares owned by such seller, except
that the Corporation shall not for any such purpose be required to qualify to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified, to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction; and
(v) notify each seller of any such securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Act or upon the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the request of any such seller prepare and furnish to such
seller a reasonable number of copies of a supplement to or an amendment of
such
<PAGE>
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing.
(E) Indemnification and Notification:
(i) The Corporation shall indemnify and hold harmless each
holder of any shares included in the Corporation's registration statement
pursuant to this paragraph 7, and each person, if any, who controls such
holder within the meaning of Section 15 of the Act, from and against any and
all losses, claims, damages, expenses and liabilities (including reasonable
attorneys' fees) caused by any untrue statement of a material fact contained
in any such registration statement, or contained in a prospectus furnished
thereunder, or in any amendment or supplement thereto or caused by any
omission to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading (provided, however, that the foregoing
indemnification and agreement to hold harmless shall not apply insofar as such
losses, claims, damages, expenses, and liabilities are caused by any such
untrue statement or omission is based upon information furnished in writing to
the Corporation by any such holder expressly for use in any registration
statement or prospectus).
(ii) Promptly after receipt by any holder of any shares
included in the Corporation's registration statement pursuant to this
paragraph 7 of notice of the commencement of any action, said holder shall, if
a claim in respect thereof is to be made against the Corporation under this
paragraph 7, notify the Corporation in writing of the commencement thereof,
but the omission so to notify the Corporation shall not relieve it from any
liability which it may have to them under this paragraph 7. In case any such
action is brought against any holder of any shares registered pursuant to this
paragraph 7 and the Corporation is notified of the commencement thereof as
provided herein, the Corporation shall be entitled to participate in, and, to
the extent that it may wish, to assume the defense thereof, with counsel
reasonably satisfactory to such holder, and after notice from the Corporation
to such holder of the Corporation's election so to assume the defense thereof,
the Corporation shall not be liable under this paragraph 7 for any legal or
other expense subsequently incurred by such holder in connection with the
defense thereof other than reasonable costs of investigation.
(iii) Each holder of any shares registered pursuant to this
paragraph 7 agrees to cooperate fully with the Corporation in effecting
registration and qualification of the Preferred Stock (or the Common Stock
into which it has been converted) and of such distribution, and shall
indemnify and hold harmless the Corporation and each person who may control
the Corporation within the meaning of Section 15 of the Act, each director of
the Corporation, and each officer who signed any registration statement from
and against any and all losses, claims, damages, expenses, and liabilities
(including reasonable attorneys' fees) caused by any untrue statement of a
material fact
<PAGE>
contained in any such registration statement, or contained in a prospectus
furnished thereunder, or any amendment or supplement thereto, or caused by any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, to the extent that such untrue statement
or omission was made in reliance upon information furnished to the Corporation
by any such holder for inclusion therein.
8. Changes In Terms of Preferred Stock. The terms of the Preferred Stock
may not be amended, altered or repealed, and no class of capital stock or
securities convertible into capital stock shall be authorized which has
superior rights to the Preferred Stock as to distributions, liquidation or
vote, without the consent of the holders of at least two-thirds of the
outstanding shares of Preferred Stock.
9. No Implied Limitations. Except as otherwise provided by express
provisions of these Articles of Incorporation, nothing herein shall limit, by
inference or otherwise, the discretionary right of the Board of Directors to
classify and reclassify and issue any shares of Preferred Stock and to fix or
alter all terms thereof to the full extent provided in the Articles of
Incorporation of the Corporation.
10. General Provisions. In addition to the above provisions with respect
to the Preferred Stock, such Preferred Stock shall be subject to, and entitled
to the benefits Of, the provisions set forth in the Corporation's Articles of
Incorporation with respect to Preferred Stock generally.
11. Notices. All notices required or permitted to be given by the
Corporation with respect to the Preferred Stock shall be in writing, and if
delivered by first class United States mail, postage prepaid, to the holders
of the Preferred Stock at their last addresses as they shall appear upon the
books of the Corporation, shall be conclusively presumed to have been duly
given, whether or not the stockholder actually receives such notice; provided,
however, that failure to duly give such notice by mail, or any defect in such
notice, to the holders of any stock designated for redemption, shall not
affect the validity of the proceedings for the redemption of any other shares
of Preferred Stock.
ARTICLE VII
"SHARK REPELLANT" PROVISIONS DILUTING THE VOTING POWER OF BENEFICIAL
OWNERS
OF MORE THAN 10 PERCENT OF OUTSTANDING SHARES
The total number of shares of all classes of common stock which the
Corporation has authority to issue is 50,000,000 shares, consisting of forty
million (40,000,000) shares of common stock ("Common Stock") and ten million
(10,000,000) shares of common stock nonvoting ("Common Stock Nonvoting").
<PAGE>
The following is a description of each class of stock of the
Corporation, including the preferences, conversion and other rights,
voting powers, qualifications, limitations as to distributions,
restrictions and terms and conditions of redemption, in respect to each
class:
(a) The Common Stock shall have exclusive voting rights and powers except
as set forth in Subparagraph (c) of this Article; and subject, however, to
the provisions set forth in Subparagraph (b) of this Article.
(b)(1) From and after the date any person first becomes a Substantial
Stockholder (as defined in clause (2)(H) of this Subparagraph) until such time
as such person shall cease to be a Substantial Stockholder, the shares of
Common Stock beneficially owned by the Substantial Stockholder shall have
limited voting rights on any matter requiring their vote or consent. The
voting rights shall be limited as follows:
(A) The Substantial Stockholder (or the record owner(s)
thereof) shall be entitled to one vote for each share beneficially owned by
the Substantial Stockholder not in excess of 10% of the then issued and
outstanding shares of Common Stock.
(B) For all shares of Common Stock beneficially owned by the
Substantial Stockholder in excess of 10% of the then issued and outstanding
shares of Common Stock, the Substantial Stockholder (or the record owner(s)
thereof) shall not be entitled to cast any votes in respect of such shares and
such shares shall be deducted from the total number of shares of Common Stock
outstanding for purposes of determining the proportion of Common Stock
required to approve a matter submitted for stockholder approval or to
constitute a quorum. To the extent that the Substantial Stockholder is
comprised of more than one record owner, the aggregate voting power of the
Substantial Stockholder (or such record owners) so limited for all shares of
Common Stock beneficially owned by the Substantial Stockholder shall be
allocated proportionately among such record owners. For each such record
owner, this allocation shall be accomplished by multiplying the aggregate
voting power of the then outstanding shares of Common Stock owned by the
Substantial Stockholder by a fraction whose numerator is the number of shares
of Common Stock owned of record by such record owner and whose denominator is
the total number of shares of Common Stock beneficially owned by the
Substantial Stockholder. A person who is record owner of shares of Common
Stock that are beneficially owned simultaneously by more than one person shall
have, with respect to such shares, the right to cast the least number of votes
that such person would be entitled to cast under this Subparagraph (b) by
virtue of such shares being so beneficially owned by any of such persons.
(2) For purposes of this Subparagraph (b), the following words have
the meanings indicated:
<PAGE>
(A) "Affiliate," including the term "Affiliated Person," means
a person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, a specified
person, and includes all Associates of such person.
(B) "Associate," when used to indicate a relationship with any
person, means:
(1) Any corporation or organization (other than the
Corporation or a Subsidiary of the Corporation) of which such person is an
officer, director, or partner or is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities;
(2) Any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee
or in a similar fiduciary capacity; and
(3) Any relative or spouse of such person, or any relative
of such spouse, who has the same home as such person or who is a director or
officer of any corporation controlling, under common control with or
controlled by such person or of any of its Affiliates.
(C) "Beneficial Owner," when used with respect to any Common
Stock, means a person:
(1) That, individually or with any of its Affiliates,
beneficially owns Common Stock, directly or indirectly; or
(2) That, individually or with any of its Affiliates, has:
(i) The right to acquire Common Stock (whether such
right is exercisable immediately or only after the passage of time), pursuant
to any agreement, arrangement, or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise; or
(ii) The right to vote Common Stock pursuant to any
agreement, arrangement, or understanding; or
(3) That has any agreement, arrangement, or understanding
for the purpose of acquiring, holding, voting, or disposing of Common Stock
with any other person that beneficially owns, or whose Affiliates beneficially
own, directly or indirectly, such shares of Common Stock; provided, however,
that for purposes of the definition of Beneficial Owner and beneficial
ownership, (i) no director, officer or employee of the Corporation or any
Subsidiary (nor any Affiliate of any such director, officer or employee) shall
solely by reason of any or all of such directors, officers or employees acting
in their capacities as such (including, without limitation, communicating with
a stockholder by reason of the Board of Directors) be deemed, for any purposes
<PAGE>
hereof, to beneficially own any shares of Common Stock beneficially owned by
any other such director, officer, employee or stockholder (or any Affiliate
thereof); (ii) in the case of any employee stock ownership of similar plan of
the Corporation or of any Subsidiary heretofore or hereafter adopted in which
the beneficiaries thereof possess the right to vote or to direct the voting of
shares of Common Stock held by such plan, no such plan, any entity organized,
appointed or established by the Corporation or any Subsidiary for or pursuant
to any plan, nor any trustee or any member of an administrative committee or
any other representative with respect thereto (nor any Affiliate of such
trustee, administrative committee member or other such representative), solely
by reason of such capacity of such trustee, administrative committee member or
other such representative, shall be deemed, for any purposes hereof, to
beneficially own any shares of Common Stock held under any such plan; (iii) a
person shall not be deemed a beneficial owner of Common Stock solely by reason
of a revocable proxy granted for a particular meeting of stockholders,
pursuant to a public solicitation of proxies for such meeting complying with
applicable rules of the Securities and Exchange Commission or any successor
administrative body, with respect to shares of which neither such person nor
any Affiliate of such person is otherwise deemed the beneficial owner; and
(iv) a person shall not be deemed a beneficial owner of Common Stock solely by
reason of Common Stock being tendered pursuant to a tender or exchange offer
made by such person or such person's Affiliates until such tendered Common
Stock is accepted for purchase or exchange.
(D) "Common Stock" means the 50,000,000 authorized shares of
capital stock of the Corporation entitled to vote generally in the election of
directors and does not mean the authorized shares of Common Stock Nonvoting.
(E) "Control," including the terms "Controlling," "controlled
by" and "under common control with," means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting securities,
by contract, or otherwise, and the beneficial ownership of 10% or more of the
votes entitled to be cast by a corporation's voting stock creates a
presumption of control.
(F) "Person" shall mean any individual, firm, partnership,
corporation or other entity.
(G) "Subsidiary" means any corporation of which voting stock
having a majority of the votes entitled to be cast is owned, directly or
indirectly, by the Corporation.
(H) "Substantial Stockholder" shall mean any person, other than
the Corporation or any Subsidiary, who or which is the Beneficial Owner,
directly or indirectly, of 10% or more of the outstanding shares of Common
Stock (determined solely on the basis of the total number of shares so
beneficially owned and without giving effect to the number of percentage of
votes entitled to be cast in respect of such shares) in relation to the total
number of shares of Common Stock issued and outstanding.
<PAGE>
(4) For purposes of computing the percentage beneficial
ownership of shares of Common Stock of a person in order to determine whether
such person is a Substantial Stockholder, the outstanding shares of Common
Stock shall be deemed to include shares of Common Stock which may be issuable
(except pursuant to clause (7) of this Subparagraph (b)) by the Corporation
pursuant to any agreement, or upon the exercise of conversion rights,
warrants, or options or otherwise and which are deemed owned by such person
through application of the definition of Beneficial Owner but shall not
include any other shares of Common Stock which may be issuable by the
Corporation to others pursuant to any agreement, or upon exercise of
conversion rights, warrants or options, or otherwise. For all other purposes,
the outstanding shares of Common Stock shall include such shares then
outstanding and shall not include any shares of Common Stock which may be
issuable by the Corporation pursuant to any agreement, or upon the exercise
of conversion rights, warrants or options, or otherwise.
(5) The Board of Directors shall have the power to
determine for the purposes of this Subparagraph (b) on the basis of
information known to them (i) the number of shares of Common Stock
beneficially owned by any person; (ii) whether a person is an Affiliate or
Associate of another; (iii) whether a person has an agreement, arrangement or
understanding with another; (iv) the redemption price as provided for in
clause (8) below; and (v) any other factual matter relating to the
applicability or effect of this Subparagraph (b).
(6) The Corporation shall have the right to demand that
any person who it reasonably believes is a Substantial Stockholder (or holds
record shares of Common Stock beneficially owned by a person reasonably
believed to be a Substantial Stockholder) supply the Corporation with complete
information as to: (i) the record owner(s) of all shares of Common Stock and
Common Stock Nonvoting beneficially owned by such persons; (ii) the number of,
and class of, shares beneficially owned by such person and held of record by
each such record owner and the number(s) of the stock certificate(s)
evidencing such shares; (iii) each date or dates on which such person or the
record owner(s) of such shares purchased the shares; and (iv) any other
factual matter relating to the applicability or effect of this Subparagraph
(b) as may reasonably be requested of such person, and such person shall
furnish such information within 10 days after the receipt of such demand.
(7) Except as otherwise provided by law or as expressly
provided in this clause (7), the presence, in person or by proxy, of the
holders of record of shares of capital stock of the Corporation entitling the
holders thereof to cast a majority of the votes (after giving effect, if any,
to the provisions of this Subparagraph (b)) entitled to be cast by the holders
of shares of capital stock of the Corporation entitled to vote shall
constitute a quorum at all meetings of the shareholders, and every reference
in these Articles of Incorporation to a majority or other proportion of
capital stock (or the holders thereof) for purposes of determining any quorum
requirement or any requirement for shareholders' consent or approval shall be
deemed to refer to such majority or other proportion of the votes (or the
holders thereof) then entitled to be cast in respect of such capital
<PAGE>
stock.
(8) All outstanding shares of Common Stock Nonvoting shall
automatically, without any further act or deed on the part of the Corporation
or any other person, be converted into shares of Common Stock on a
share-for-share basis at such time (the "Conversion Date") as any Substantial
Stockholder beneficially owns shares of Common Stock which entitle such
Substantial Stockholder (after giving effect to the provisions of this
Subparagraph (b) other than the conversion contemplated by this clause (7)) to
cast more than 50% of the votes entitled to be cast by the holders of the then
outstanding shares of Common Stock. In the event of an automatic conversion of
Common Stock Nonvoting pursuant to this clause (7), certificates formerly
representing shares of Common Stock Nonvoting will thereafter be deemed to
represent a like number of shares of Common Stock. Effective as of the
Conversion Date, the provisions of these Articles of Incorporation which
provide for the establishment and terms and rights of the Common Stock
Nonvoting shall, without any further action of the Board of Directors or
stockholders of the Corporation or any other person, be of no further force
or effect.
(9) At any time after the Board of Directors determines
that a person is a Substantial Stockholder (the "Determination Date") until
the date on which (i) such person is no longer a Substantial Stockholder; or
(ii) such person beneficially owns more than 90% of the then outstanding
shares of each class of Common Stock of the Corporation, the Corporation shall
have the right to redeem from the record owner or owners, at any time or from
time to time, all or a portion of the shares of Common Stock and Common Stock
Nonvoting beneficially owned by the Substantial Stockholder. The Corporation
shall exercise the right of redemption by written notice (the "Redemption
Notice") to the Substantial Stockholder, which notice shall be signed by the
Chairman of the Board, the President or any Vice President of the Corporation.
During the one-year period commencing on the Determination Date, the
redemption price shall be the lesser of: (i) the average "market price" of
shares of Common Stock Nonvoting for each of the 30 trading days in which
shares of Common Stock Nonvoting shall have been traded immediately preceding
the date of the Redemption Notice; and (ii) the average "market price" of
shares of Common Stock Nonvoting for each of the 30 trading days in which
shares of Common Stock Nonvoting shall have been traded immediately preceding
the date on which the Substantial Stockholder first beneficially owned 5% or
more of the outstanding shares of Common Stock, such price to be adjusted for
any stock splits, stock distributions, recapitalizations or the like which
occurred between such date and the date of the Redemption Notice. Subsequent
to the expiration of the one-year period commencing on the Determination Date,
the redemption price shall equal the price determined under clause (i) of the
immediately preceding sentence. The "market price" of shares of Common Stock
(whether Common Stock or Common Stock Nonvoting) shall mean the closing bid
price of the shares of Common Stock Nonvoting, as published by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), (or
such other quotation system of a national securities association then being
used), or if the shares are then traded on a national securities exchange, the
last sale price regular way thereafter as reported in the consolidated
transaction reporting system for
<PAGE>
the shares listed or traded on such exchange. All rights of the Substantial
Stockholder as the beneficial owner of shares of Common Stock (and all rights
of the record owners) shall cease as to the shares which are the subject of a
Redemption Notice. Closing for the purchase of the shares to be redeemed shall
be made within 45 days of the date of the Redemption Notice. If there is more
than one record owner of the shares of Common Stock beneficially owned by the
Substantial Stockholder, the Corporation shall, to the extent the Board of
Directors deems it practicable, redeem the shares of each such class to be
redeemed from each of the record owners on a pro rata basis based on the total
number of shares of the class to be redeemed owned by each such record owner.
(10) Any determinations made by the Board of Directors
pursuant to this Subparagraph (b), in good faith on the basis of such
information and assistance as was then reasonably available for such purpose,
shall be conclusive and binding upon the Corporation and its shareholders,
including any Substantial Stockholder.
(11) Nothing contained in this Subparagraph (b) shall be
construed to relieve any Substantial Stockholder from any fiduciary obligation
imposed by law.
(12) Any amendment, alteration, change or repeal of this
Subparagraph (b) shall, in addition to any other vote or approval required by
law or these Articles of Incorporation, require (i) the affirmative vote of
the holders of at least 80% of the total number of votes entitled to be cast
by the holders of all of the then outstanding shares of Common Stock (as
determined in accordance with the provisions of this Subparagraph (b)), voting
as a single class; and (ii) the affirmative vote of the holders of at least
80% of the then outstanding shares of Common Stock Nonvoting, voting as a
separate class.
(13) Notwithstanding anything to the contrary in these
Articles of Incorporation, in the event that, as a result of the enactment in
the future of any law, rule or regulation binding upon the Corporation, the
shares of Common Stock Nonvoting will become ineligible to be quoted and will
cease to be quoted by NASDAQ or any successor entity and upon such quote
cessation will not be listed or admitted to trading on any national securities
exchange solely due to the vote limitations contained in clause (1) of this
Subparagraph (b), such determination to be made by the Board of Directors of
the Corporation, the provisions of these Articles of Incorporation providing
for the vote limitation on the votes entitled to be cast by a Substantial
Stockholder shall, without further action or deed by the Corporation, its
directors or stockholders or any other person, be of no further force or
effect, effective as of the latest date on which such law, rule or regulation
permits or requires such a provision to become ineffective, to the extent
necessary in order for the Common Stock Nonvoting to remain eligible for
quotation on NASDAQ or any successor entity or be eligible for listing on any
national securities exchange.
<PAGE>
(c) Each share of the Common Stock Nonvoting shall have exactly the same
rights, terms and conditions as each share of Common Stock, except that the
shares of Common Stock Nonvoting shall have no voting rights, except the
Common Stock Nonvoting shall have the right to vote on: (1) a consolidation of
the Corporation with another corporation, (2) a merger of the Corporation into
another corporation, (3) a merger of the Corporation where the Corporation is
the surviving corporation but the capital stock of the Corporation is
converted into other securities or property, (4) a participation by the
Corporation in a statutory share exchange whereby the capital stock of the
Corporation is converted into other securities or property, (5) a dissolution
of the Corporation, (6) a sale of all or substantially all of the assets of
the Corporation not in the ordinary course of business, and (7) any amendment
of these Articles of Incorporation repealing the right of the Common Stock
Nonvoting to vote on any of the matters specified in this Subparagraph. As to
all matters on which the Common Stock Nonvoting is entitled to vote, the
Common Stock Nonvoting shall vote separately as one class, and the Common
Stock shall vote separately as another class. The right of the Common Stock
Nonvoting to vote cannot be repealed except by (a) the affirmative vote of the
holders of a majority of the outstanding shares of the Common Stock Nonvoting,
voting separately as one class; and (b) the affirmative vote of the holders of
a majority of the total number of votes entitled to be cast by the holders of
all the outstanding shares of the Common Stock (after taking into account the
provisions of Subparagraph (b) immediately preceding this Subparagraph(c)),
voting separately as another class. The provisions of this Subparagraph (c)
providing that the Common Stock and the Common Stock Nonvoting vote as
separate classes cannot be amended, altered, changed or repealed except by (i)
the affirmative vote of the holders of at least 80% of the total number of
votes entitled to be cast by the holders of all the then outstanding shares of
Common Stock (after taking into account the provisions of Subparagraph (b)
immediately preceding this Subparagraph (c)), voting separately as one class;
and (ii) the affirmative vote of the holders of at least 80% of the total
number of votes entitled to be cast by the holders of all of the then
outstanding shares of Common Stock Nonvoting, voting separately as another
class. The rights granted to Common Stock Nonvoting are not a limitation of
any kind upon the sole and exclusive voting rights and powers of the Common
Stock except in the limitations before set forth.
ARTICLE VIII
SPECIAL PROVISIONS WHEN TWO CLASSES OF COMMON STOCK ARE
AUTHORIZED IN THE ARTICLES OF INCORPORATION
Election and Filling of Vacancies. With respect to the election of the
Board of Directors of the Corporation:
<PAGE>
(1) the holders of Class A Common Stock (a) shall nominate and elect one
(1) director who shall be known as the Class A Director, and (b) in the event
of the death, disability, removal, resignation or refusal to act of the Class
A Director, the holders of Class A Common Stock, to the exclusion of the
holders of all other classes of stock of the Corporation, shall nominate and
elect a director to fill the vacancy so created by such death, disability,
removal, resignation or refusal to act; and
(2) the holders of Class B Common Stock (a) shall nominate and elect two
(2) directors who shall be known as the Class B Directors, and (b) in the
event of the death, disability, removal, resignation or refusal to act of any
or all of the Class B Directors, the holders of the Class B Common Stock, to
the exclusion of the holders of all other classes of stock of the Corporation,
shall nominate and elect one or more directors to fill the vacancy or
vacancies so created by such death, disability, removal, resignation or
refusal to act.
ARTICLE IX
HIGH QUORUM PROTECTIVE PROVISIONS
Quorum. The presence in person or by proxy of the holders of record of
all of the shares of the capital stock of the Corporation issued and
outstanding and entitled to vote thereat shall constitute a quorum at all
meetings of the stockholders, except as otherwise provided by the Colorado
Business Corporation Act, by the Articles of Incorporation or by these Bylaws.
If less than a quorum shall be in attendance at the time for which the meeting
shall have been called, the meeting may be adjourned from time to time by a
majority vote of the stockholders present or represented, without any notice
other than by announcement at the meeting, until a quorum shall attend. At any
adjourned meeting at which a quorum shall attend, any business may be
transacted which might have been transacted if the meeting had been held as
originally called.
ARTICLE X
PREEMPTIVE RIGHTS
A shareholder of the corporation shall not be entitled to a preemptive
or preferential right to purchase, subscribe for, or otherwise acquire any
unissued or treasury shares of stock of the corporation, or any options or
warrants to purchase, subscribe for or otherwise acquire any such unissued or
treasury shares, or any shares, bonds, notes, debentures, or other securities
convertible into or carrying options or warrants to purchase, subscribe for
or otherwise acquire any such unissued or treasury shares.
<PAGE>
ARTICLE XI
CUMULATIVE VOTING
The shareholders shall not be entitled to cumulative voting.
ARTICLE XII
SHARE TRANSFER RESTRICTIONS
The corporation shall have the right to impose restrictions upon the
transfer of any of its authorized shares or any interest therein. The board
of directors is hereby authorized on behalf of the corporation to exercise
the corporation's right to so impose such restrictions.
ARTICLE XIII
REGISTERED OFFICE AND AGENT
The address of the initial registered office of the corporation shall be
17 West Cheyenne Mountain Boulevard, Colorado Springs, CO 80906, and the name
of the initial registered agent at such address is Mark T. Thatcher, Esq.
Either the registered office or the registered agent may be changed in the
manner provided by law.
THE UNDERSIGNED CONSENTS TO THE APPOINTMENT AS THE
INITIAL REGISTERED AGENT
/s/ Mark T. Thatcher
______________________________
REGISTERED AGENT
ARTICLE XIV
INITIAL BOARD OF DIRECTORS
The initial board of directors of the corporation shall consist of one
(1) director, and the name and address of the person who shall serve as
director until the first annual meeting of shareholders or until his
successors are elected and shall qualify is as follows:
<PAGE>
Name Title Address
Gerard M. Werner President, 5627 Bellington Avenue
Director Springfield, VA 22151
The number of directors shall be fixed in accordance with the bylaws.
So long as the number of directors shall be less than one (1), no shares of
this corporation may be issued and held of record by more shareholders than
there are directors. Any shares issued in violation of this paragraph shall
be null and void. This provision shall also constitute a restriction on the
transfer of shares and a legend shall be conspicuously placed on each
certificate respecting shares preventing transfer of the shares to more
shareholders than there are directors.
ARTICLE XV
INDEMNIFICATION
The corporation may:
(A) Indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the corporation), by reason of the fact
that he is or was a director, officer, employee, fiduciary or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses
(including attorney fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit,
or proceeding, if he acted in good faith and in a manner he reasonably believed
to be in the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit, or proceeding by judgment,
order, settlement, or conviction or upon a plea of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in the
best interests of the corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe his conduct was unlawful.
<PAGE>
(B) The corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he 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, fiduciary or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorney fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in the best
interests of the corporation; but no indemnification shall be made in respect
of any claim, issue, or matter as to which such person has been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the court in which such action
or suit was brought determines upon application that, despite the adjudication
of liability, but in view of all circumstances of the case, such person is
fairly and reasonably entitled to indemnification for such expenses which
such court deems proper.
(C) To the extent that a director, officer, employee, fiduciary or
agent of a corporation has been successful on the merits in defense of any
action, suit, or proceeding referred to in (A) or (B) of this Article XI or in
defense of any claim, issue, or matter therein, he shall be indemnified
against expenses (including attorney fees) actually and reasonably incurred
by him in connection therewith.
(D) Any indemnification under (A) or (B) of this Article XI (unless
ordered by a court) and as distinguished from (C) of this Article shall be
made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee,
fiduciary or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in (A) or (B) above. Such
determination shall be made by the board of directors by a majority vote of a
quorum consisting of directors who were not parties to such action, suit, or
proceeding, or, if such a quorum is not obtainable or, even if obtainable, if
a quorum of disinterested directors so directs, by independent legal counsel
in a written opinion, or by the shareholders.
(E) Expenses (including attorney fees) incurred in defending a civil or
criminal action, suit, or proceeding may be paid by the corporation in advance
of the final disposition of such action, suit, or proceeding as authorized in
(C) or (D) of this Article XI upon receipt of an undertaking by or on behalf
of the director, officer, employee, fiduciary or agent to repay such amount
unless it is ultimately determined that he is entitled to be indemnified by
the corporation as authorized in this Article XI.
(F) The indemnification provided by this Article XI shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise, and any procedure provided for by any of the foregoing, both as to
action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee, fiduciary or agent and shall inure to the
benefit of heirs, executors, and administrators of such a person.
<PAGE>
(G) The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, fiduciary or agent of
the corporation or who is or was serving at the request of the corporation as
a director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liability under provisions of this Article XI.
ARTICLE XVI
TRANSACTIONS WITH INTERESTED DIRECTORS
No contract or other transaction between the corporation and one (1) or
more of its directors or any other corporation, firm, association, or entity
in which one (1) or more of its directors are directors or officers or are
financially interested shall be either void or voidable solely because of such
relationship or interest, or solely because such directors are present at the
meeting of the board of directors or a committee thereof which authorizes,
approves, or ratifies such contract or transaction, or solely because their
votes are counted for such purpose if:
(A) The fact of such relationship or interest is disclosed or known to
the board of directors or committee which authorizes, approves, or ratifies
the contract or transaction by a vote or consent sufficient for the purpose
without counting the votes or consents of such interested directors;
(B) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve, or ratify such
contract or transaction by vote or written consent; or
(C) The contract or transaction is fair and reasonable to the
corporation.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee
thereof which authorizes, approves, or ratifies such contract or
transaction.
ARTICLE XVII
VOTING OF SHAREHOLDERS
If a quorum is present, the affirmative vote of a majority of the
outstanding shares represented at the meeting and entitled to vote thereon,
or of any class or series, shall be the act of the shareholders.
<PAGE>
ARTICLE XVIII
INCORPORATOR
The name and address of the incorporator is as follows:
Name Address
Mark T. Thatcher, Esq. 360 Thames Street
Newport, RI 02840
IN WITNESS WHEREOF, the above named incorporator signed these Articles
of Incorporation on February 3, 1999.
/s/ Mark T. Thatcher
______________________________
MARK T. THATCHER,
Incorporator
