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EXHIBIT 3.1
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CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
CERES GROUP, INC.
Ceres Group, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies as follows:
FIRST: Article IV of the Certificate of Incorporation of the
Corporation is hereby amended and restated in its entirety as follows:
"ARTICLE IV
CAPITAL STRUCTURE
4.1 Authorized Capital Stock. The aggregate number of shares of all
classes of stock that the Corporation is authorized to issue is 52,000,000
shares, consisting of:
(a) 100,000 Convertible Voting Preferred Shares, par value
$0.001 per share (the "Voting Preferred Shares");
(b) 1,900,000 Non-Voting Preferred Shares, par value $0.001 per
share (the "Non-Voting Preferred Shares" and, together with the Voting Preferred
Shares, the "Preferred Shares"); and
(c) 50,000,000 Common Shares, par value $0.001 per share (the
"Common Shares").
4.2 Voting Preferred Shares.
4.2.1 Effective Date. For purposes of this Section 4.2, the term
"Effective Date" shall mean July 26, 2000.
4.2.2 Voting Rights. Except as may otherwise be provided by the
Delaware General Corporation Law, each holder of Voting Preferred Shares shall
be entitled to vote on all matters presented for a vote of the stockholders of
the Corporation, including, without limitation, the election of directors. Each
holder of Voting Preferred Shares shall have the number of votes equal to the
largest number of whole Common Shares into which such Voting Preferred Shares
could then be converted pursuant to Section 4.2.4 hereof (such number to be
calculated as of the record date for the determination of holders of Common
Shares having the right to vote on such matters, or if no record date has been
established, on the date such vote is taken). The holders of the Voting
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Preferred Shares and the holders of the Common Shares shall vote together as one
class on all matters submitted to a vote of stockholders of the Corporation.
4.2.3 Dividends and Distributions.
(a) The holders of Voting Preferred Shares shall be
entitled to receive dividends, to the extent permitted by the
Delaware General Corporation Law, prior and in preference to any
declaration or payment of any dividend on the Common Shares, at the
rate of 10% per annum, based on a 365-day year. Such dividends
shall be cumulative and shall be paid annually on the last day of
June (except that if any such date is a Saturday, Sunday or legal
holiday, then such dividend shall be payable on the next day that
is not a Saturday, Sunday or legal holiday) in each year,
commencing on the Effective Date, for each full year and each
portion of a year that the share entitled to such dividend is
outstanding. Such dividends shall be paid in additional fully paid
and nonassessable Voting Preferred Shares. No formal declaration of
any such dividends by the Board of Directors shall be required.
(b) As long as any Voting Preferred Shares are
outstanding, the Corporation shall not declare or pay on any Common
Shares any dividend whatsoever, whether in cash, stock, property or
otherwise, nor shall the Corporation make any distribution on any
Common Shares, nor shall any Common Shares be purchased or redeemed
by the Corporation, nor shall any monies be paid or made available
for a purchase, retirement or sinking fund for the purchase or
redemption of any Common Shares, unless all dividends that the
holders of the Voting Preferred Shares are then entitled to receive
under Section 4.2.3(a) hereof for all previous dividend periods
have been paid.
4.2.4 Conversion Rights.
(a) The holders of Voting Preferred Shares shall have the
right to convert each such share into fully paid and nonassessable
Common Shares, at the Voting Preferred Conversion Rate (as defined
in Section 4.2.4(b) hereof) in effect on the date of conversion, at
any time after the Effective Date.
(b) The holders of Voting Preferred Shares shall be
obligated to convert each such share into fully paid and
nonassessable Common Shares, at the Voting Preferred Conversion
Rate in effect on the date of conversion, by no later than July 26,
2003. Any Voting Preferred Share that has not been converted into
Common Shares by July 26, 2003 shall automatically convert into
Common Shares at the Voting Preferred Conversion Rate then in
effect; provided, however, that if the Market Price on that date is
less than the Initial Voting Preferred Conversion Price, then the
Corporation shall promptly pay the aggregate amount of the
shortfall to the holders of the Voting Preferred Shares in cash
based on the number of shares held by each such holder.
Notwithstanding that the certificates evidencing any such converted
shares shall not have been surrendered, the shares shall no longer
be deemed outstanding and all rights whatsoever with respect to the
converted shares (except the right of the holders to convert such
shares upon surrender of their certificates therefor) shall
terminate. For purposes of this Section 4.2.4, the term:
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(i) "Initial Voting Preferred Conversion Price" means
the Market Price on the Effective Date.
(ii) "Market Price" means the thirty-day average
closing price per Common Share on the New York Stock Exchange
("NYSE") on the day immediately preceding the conversion if the
Common Shares are then traded on the NYSE, or the thirty-day
average closing bid price per Common Share on the day
immediately preceding the conversion if the Common Shares are
then traded on The Nasdaq Stock Market, Inc. ("Nasdaq") National
Market or any other national securities exchange; provided,
however, that if the Common Shares are not then listed on a
national securities exchange or Nasdaq, then the Market Price
shall be the current fair market value per Common Share on such
date as determined in good faith by the Board of Directors.
(iii) "Voting Preferred Conversion Rate" means, with
respect to each Voting Preferred Share, the result of dividing
(A) the sum of the Voting Preferred Liquidation Preference (as
defined in Section 4.2.7(a) hereof) plus any accrued and unpaid
dividends on such share by (B) the Initial Voting Preferred
Conversion Price.
(c) If, at any time after the Effective Date, the Common
Shares issuable on conversion of the Voting Preferred Shares are
changed into the same or a different number of shares of any other
class or classes of stock of the Corporation, whether by
reclassification, subdivision, combination, stock dividend, exchange
of shares or otherwise, then the holders of the Voting Preferred
Shares shall, upon such conversion, be entitled to receive, in lieu
of the Common Shares that the holders would have become entitled to
receive but for such change, a number of shares of such other class
or classes of stock that would have been subject to receipt by the
holders if they had exercised their rights of conversion of the
Voting Preferred Shares immediately before such change.
(d) If, at any time after the Effective Date, there shall
be a capital reorganization of the Common Shares (including any
subdivision or combination of the Common Shares but excluding any
reclassification, subdivision, combination, dividend or exchange
provided for in Section 4.2.4(c) hereof), or a merger or
consolidation of the Corporation with another corporation or entity,
or a statutory stock exchange, or a sale of all or substantially all
of the Corporation's assets or securities to any other person, then,
as a part of such reorganization, merger, consolidation, exchange or
sale, lawful provision shall be made so that the holders of the
Voting Preferred Shares shall thereafter be entitled to receive upon
conversion of their Voting Preferred Shares the number of shares of
stock or other securities or property of the Corporation, or of the
successor corporation resulting from such merger or consolidation,
to which holders of the Common Shares deliverable upon conversion of
the Voting Preferred Shares would have been entitled on such capital
reorganization, merger, consolidation, exchange or sale if the
Voting Preferred Shares had been converted immediately before that
capital reorganization, merger, consolidation, exchange or sale to
the end that the provisions of this Section 4.2.4(d) (including but
not
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limited to adjustment of the Voting Preferred Conversion Rate then
in effect) shall be applicable after that event as nearly
equivalently as may be practicable.
(e) In order to convert the Voting Preferred Shares into
Common Shares, the holder thereof shall deliver to the Corporation,
at its principal office or such other office or agency maintained by
the Corporation for such purpose: (i) a complete and executed
conversion certificate in the form attached hereto as EXHIBIT A (a
"Notice of Voting Preferred Conversion"); and (ii) the certificate
or certificates representing the Voting Preferred Shares being
converted (collectively, the "Converted Voting Preferred
Certificate"). The Notice of Voting Preferred Conversion shall be
effective and in full force and effect if delivered to the Secretary
of the Corporation by facsimile transmission at (440) 572-4500.
Provided that a copy of the Notice of Voting Preferred Conversion is
delivered to the Corporation by the close of business on such date
by facsimile transmission or otherwise, and provided that the
original Notice of Voting Preferred Conversion and the Converted
Voting Preferred Certificate are delivered to the Corporation within
three business days thereafter at 17800 Royalton Road, Strongsville,
Ohio 44136-5197, Attention: Secretary, the date on which the Notice
of Voting Preferred Conversion is given shall be deemed to be the
date set forth therefor in the Notice of Voting Preferred Conversion
(the "Voting Preferred Conversion Date"), and the person or persons
entitled to receive the Common Shares issuable upon conversion shall
be treated for all purposes as the record holder or holders of such
Common Shares as of the Voting Preferred Conversion Date. If the
original Notice of Voting Preferred Conversion and the Converted
Voting Preferred Certificate are not delivered to the Corporation
within three business days after the Voting Preferred Conversion
Date, then the Notice of Voting Preferred Conversion shall become
null and void as if it were never given and the Corporation shall,
within two business days thereafter, return to the holder by
overnight courier any Converted Voting Preferred Certificate that
may have been submitted in connection with such conversion. In the
event that any Converted Voting Preferred Certificate submitted
represents a number of Voting Preferred Shares that is greater than
the number of such shares that is being converted pursuant to the
Notice of Voting Preferred Conversion delivered in connection
therewith, the Corporation shall deliver, together with the
certificates for the Common Shares issuable upon such conversion as
provided herein, a certificate representing the remaining number of
Voting Preferred Shares not converted.
(f) Upon receipt of a Notice of Voting Preferred
Conversion, the Corporation shall absolutely and unconditionally be
obligated to cause a certificate or certificates representing the
number of Common Shares to which a converting holder of Voting
Preferred Shares shall be entitled to receive as provided herein to
be issued to, delivered by overnight courier to and received by such
converting holder within ten business days after the Voting
Preferred Conversion Date. Such delivery shall be made at such
address as such converting holder may designate therefor in the
Notice of Voting Preferred Conversion or in its written instructions
submitted together therewith.
(g) The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of Voting Preferred Shares
pursuant hereto; provided, however, that the Corporation shall not
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be obligated to pay any transfer taxes resulting from any transfer
requested by any holder in connection with any such conversion.
(h) No less than 500 Voting Preferred Shares may be
converted at any one time, unless the holder then holds less than
500 shares and converts all such shares at that time.
(i) No fractional Common Shares shall be issued upon
conversion of the Voting Preferred Shares. Instead, the number of
Common Shares to be issued shall be rounded down to the nearest
whole share and the Corporation shall promptly pay in lieu of a
fractional Common Share a cash adjustment equal to the corresponding
fraction of the Market Price on the Voting Preferred Conversion
Date.
(j) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Shares, solely
for the purpose of effecting the conversion of the Voting Preferred
Shares into Common Shares as provided herein, the full number of
Common Shares deliverable from time to time upon the conversion of
all outstanding Voting Preferred Shares.
4.2.5 Repurchase Obligation.
(a) If at any time after the Effective Date the
Corporation issues or sells any of its equity securities, in a
single or continuous offering, for an aggregate purchase price in
excess of $20,000,000 (other than an offering for the purpose of
financing the acquisition of The Pyramid Life Insurance Company, a
Kansas stock insurance company), then the Corporation shall
repurchase all outstanding Voting Preferred Shares, at a price equal
to the aggregate Voting Preferred Liquidation Preference of such
shares plus any accrued and unpaid dividends thereon, within ninety
days after the date of issuance or sale of such equity securities.
(b) The Corporation shall provide written notice of any
repurchase required by this Section 4.2.5 specifying the repurchase
date and the procedure for the repurchase, by first class or
certified mail, postage prepaid, to each holder of Voting Preferred
Shares at the address for such holder last shown on the records of
the Corporation or its transfer agent, not more than sixty nor less
than thirty days before the repurchase date.
(c) Notwithstanding Section 4.2.5(a) hereof, the holders
of the Voting Preferred Shares shall have the right to convert any
of their shares into Common Shares, in accordance with the
provisions of Section 4.2.4 hereof, at any time up to twenty days
prior to the repurchase date specified in the notice of repurchase
from the Corporation.
(d) No holder of redeemed Voting Preferred Shares shall be
entitled to any dividends with respect to such shares after the
repurchase date, and on such date all rights of such holder as a
stockholder of the Corporation by reason of the ownership of such
shares shall cease, except the right to receive the price of such
shares without interest, upon
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presentation and surrender of the certificate representing such
shares, and such shares will not after the repurchase date be deemed
to be outstanding.
(e) On or before the repurchase date, the Corporation
shall deposit an amount equal to the aggregate repurchase price for
all outstanding Voting Preferred Shares with a bank or trust company
in a trust fund for the benefit of the respective holders of such
shares together with instructions and authority to the bank or trust
company to pay such price for such shares to the respective holders,
after the repurchase date and upon receipt of notification from the
Corporation that such holder has surrendered to the Corporation all
of the certificates representing the Voting Preferred Shares of such
holder. The Corporation shall have the right to request the return
of the balance of any monies deposited by the Corporation remaining
unclaimed at the expiration of sixty days following the repurchase
date.
4.2.6 Redemption Rights.
(a) The Corporation may, on any of the dates specified
below and as may be determined by the Board of Directors, redeem all
or any part of the Voting Preferred Shares for an amount equal to
the following percentage of the sum of the aggregate Voting
Preferred Liquidation Preference of the shares to be redeemed on
such date and any accrued and unpaid dividends thereon:
REDEMPTION DATE APPLICABLE PERCENTAGE
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July 26, 2001 120%
July 26, 2002 115%
July 26, 2003 110%
(b) The Corporation shall provide written notice of any
redemption pursuant to this Section 4.2.6 specifying the applicable
redemption date, the number or percentage of shares to be redeemed
and the procedure for redemption, by first class or certified mail,
postage prepaid, to each holder of Voting Preferred Shares at the
address for such holder last shown on the records of the Corporation
or its transfer agent, not more than sixty nor less than thirty days
before the applicable redemption date. Upon mailing of any such
notice of redemption, the Corporation shall become obligated to
redeem Voting Preferred Shares specified in such notice.
(c) Notwithstanding Section 4.2.6(a) hereof, the holders
of the Voting Preferred Shares shall have the right to convert any
of their shares into Common Shares, in accordance with the
provisions of Section 5 hereof, at any time up to twenty days prior
to the repurchase date specified in any notice of redemption from
the Corporation.
(d) No holder of redeemed Voting Preferred Shares shall be
entitled to any dividends with respect to such shares after the
applicable redemption date, and on such date all rights of such
holder as a stockholder of the Corporation by reason of the
ownership
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of such shares shall cease, except the right to receive the price of
such shares without interest, upon presentation and surrender of the
certificate representing such shares, and such shares will not after
such redemption date be deemed to be outstanding. In the event that
the Corporation redeems less than all of the outstanding Voting
Preferred Shares, the Corporation shall issue to each holder a
replacement certificate representing the Voting Preferred Shares
that were not so redeemed.
(e) On or before the applicable redemption date, the
Corporation shall deposit an amount equal to the applicable
redemption price for all Voting Preferred Shares to be redeemed on
such date with a bank or trust company in a trust fund for the
benefit of the respective holders of the Voting Preferred Shares
designated for redemption together with instructions and authority
to the bank or trust company to pay such price for such shares to
the respective holders, after the redemption date and upon receipt
of notification from the Corporation that such holder has
surrendered to the Corporation all of the certificates representing
the Voting Preferred Shares of such holder that are being redeemed.
The Corporation shall have the right to request the return of the
balance of any monies deposited by the Corporation remaining
unclaimed at the expiration of sixty days following the redemption
date.
4.2.7 Liquidation Rights.
(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, before any payment or distribution shall be made to the
holders of Common Shares and any class or series of Non-Voting
Preferred Shares ranking on liquidation junior or subordinate to the
Voting Preferred Shares, but after and subject to the payment in
full of all amounts required to be distributed to the holders of any
other class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Voting Preferred Shares,
the holders of each Voting Preferred Share shall be entitled to
receive an amount of cash, out of funds legally available therefor,
equal to the sum of (i) the original purchase price of $100 per
Voting Preferred Share, as appropriately adjusted for any
combinations, subdivisions or similar recapitalizations affecting
the Voting Preferred Shares after the Effective Date (the "Voting
Preferred Liquidation Preference"), plus (ii) an amount equal to any
accrued and unpaid dividends thereon. After the full preferential
liquidation amount has been paid to, or determined and set apart
for, the Voting Preferred Shares and any class or series of
Preferred Shares ranking on liquidation on a parity with the Voting
Preferred Shares, the remaining assets of the Corporation available
for distribution to its stockholders shall be distributed ratably to
the holders of any class or series of Non-Voting Preferred Shares
ranking on liquidation junior or subordinate to the Voting Preferred
Shares and the holders of the Common Shares, as their interests may
appear.
(b) If the assets and surplus funds of the Corporation
legally available to be distributed to the holders of the Voting
Preferred Shares on liquidation are insufficient to permit the
payment to such holders of the full preferential amounts to which
they are entitled pursuant to Section 4.2.7(a) hereof, then the
holders of the Voting Preferred Shares and any class or series of
Preferred Shares ranking on liquidation on a parity with the Voting
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Preferred Shares shall share ratably in any remaining assets and
surplus funds of the Corporation legally available for distribution
in proportion to the respective amounts which would otherwise be
payable in respect of the shares held by them upon such distribution
if all amounts payable on or with respect to such shares were paid
in full.
(c) A merger or consolidation of the Corporation with or
into any other company, a share exchange or the sale or conveyance
of all or any part of the assets of the Corporation (that does not
in fact result in a liquidation, dissolution or winding up of the
affairs of the Corporation and the distribution of assets to its
stockholders) shall not be deemed a voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation within the
meaning of this Section 4.2.7.
(d) If, upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, payment shall have
been made to the holders of Voting Preferred Shares of the full
amount to which they shall be entitled hereunder, then such holders
shall not be entitled to any further participation in the
distribution of the remaining assets of the Corporation available
for distribution to its stockholders.
4.2.8 No Sinking Fund. The Voting Preferred Shares shall not be
subject to the operation of any purchase, retirement or sinking fund.
4.2.9 Preemptive Rights. The holders of the Voting Preferred
Shares are not entitled to any preemptive or subscription rights in respect of
any securities of the Corporation.
4.2.10 Reacquired Shares. Any Voting Preferred Shares that are
converted into Common Shares, or are redeemed, purchased or otherwise acquired
by the Corporation in any manner whatsoever, shall be promptly retired and
cancelled and shall not subject to reissuance.
4.2.11 Ranking. Notwithstanding any provision of this Section
4.2 to the contrary, the Voting Preferred Shares shall rank senior to or on a
parity with all other classes or series of Preferred Shares hereafter designated
as to the payment of dividends and the distribution of assets, unless otherwise
consented to or agreed in writing by the holders of a majority of the
outstanding Voting Preferred Shares.
4.2.12 Subordination. Notwithstanding any provision of this
Section 4.2 to the contrary, the Corporation shall not be required to declare or
pay, or set aside for payment, any dividends or distributions with respect to
the Voting Preferred Shares, or to repurchase or redeem any Voting Preferred
Shares, if such action would constitute a default pursuant to the Corporation's
agreements with its senior lenders; provided that the holders of the Voting
Preferred Shares shall always be entitled to convert their Voting Preferred
Shares into Common Shares in accordance with the provisions of this Section 4.2.
4.2.13 Severability. In the event any term, provision, sentence
or paragraph of this Section 4.2 is declared by a court of competent
jurisdiction to be invalid or unenforceable, such term, provision, sentence or
paragraph shall be deemed severed from the remainder of this Section 4.2, and
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the balance of this Section 4.2 shall remain in effect and be enforced to the
fullest extent permitted by law and shall be construed to preserve the intent
and purposes of this Section 4.2. Any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such term, provision,
sentence or paragraph of this Section 4.2 in any other jurisdiction.
4.3 Non-Voting Preferred Shares.
(a) Designations by Board of Directors. The Non-Voting Preferred
Shares may be issued from time to time in one or more classes or series without
voting rights, and with such designations, preferences and relative,
participating, optional or special rights and qualifications, limitations or
restrictions as are stated herein and as shall be stated and expressed in the
resolution or resolutions providing for the issue of such stock adopted by the
Board of Directors as hereinafter prescribed.
(b) Voting Rights. Except as may otherwise be required by the
Delaware General Corporation Law, the holders of Non-Voting Preferred Shares
shall not be entitled to vote on any matters to be voted on by the stockholders
of the Corporation.
(c) Terms of the Non-Voting Preferred Shares. Authority is
hereby expressly granted to and vested in the Board of Directors or any
designated committee thereof to authorize the issuance of the Non-Voting
Preferred Shares from time to time in one or more classes or series, to
determine and take necessary proceedings to fully effectuate the issuance and
redemption of any such Non-Voting Preferred Shares and, with respect to each
class or series of Non-Voting Preferred Shares, to fix and state from time to
time, by resolution or resolutions providing for the issuance thereof, the
following:
(i) the number of shares to constitute the class or series
and the designations thereof;
(ii) the preferences and relative, participating, optional
or special rights, if any, and qualifications, limitations or
restrictions thereof, if any, of the class or series;
(iii) whether the shares of the class or series will be
redeemable and, if redeemable, the redemption price or prices and
the time or times at which, and the terms and conditions upon which,
such shares will be redeemable and the manner of redemption;
(iv) whether the shares of the class or series will be
subject to the operation of retirement or sinking funds to be
applied to the purchase or redemption of such shares for retirement
and, if such retirement or sinking funds are to be established, the
annual amount thereof and the terms and conditions relative to the
operation thereof;
(v) the dividend rate, whether dividends are payable in
cash, stock or otherwise, the conditions upon which and the times
when such dividends are payable, the preference or relation to the
payment of dividends on any other class or series of stock, whether
or not such dividends will be cumulative or noncumulative and, if
cumulative, the
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date or dates from which such dividends will accumulate;
(vi) the preferences, if any, and the amounts thereof that
the holders of the class or series will be entitled to receive upon
the voluntary or involuntary dissolution, liquidation or winding up
of, or upon any distribution of the assets of, the Corporation;
(vii) whether the shares of the class or series will be
convertible into, or exchangeable for, the shares of any other class
or classes, or of any other series of the same or any other class or
classes, of stock of the Corporation and the conversion price or
prices, or ratio or ratios, or rate or rates, at which such
conversion or exchange may be made, with such adjustments, if any,
as shall be expressed or provided for in such resolution or
resolutions; and
(viii) such other special rights and protective provisions
with respect to the class or series as the Board of Directors or any
designated committee thereof may deem advisable.
The shares of each class or series of Non-Voting Preferred
Shares may vary from the shares of any other class or series thereof in any or
all of the foregoing respects. The Board of Directors or any designated
committee thereof may from time to time increase the number of shares of
Non-Voting Preferred Shares designated for any existing class or series by a
resolution adding to such class or series authorized but unissued shares of
Non-Voting Preferred Shares not designated for any other class or series
thereof. The Board of Directors or any designated committee thereof may from
time to time decrease the number of shares of Non-Voting Preferred Shares
designated for any existing class or series by a resolution subtracting from
such class or series any unissued shares of Non-Voting Preferred Shares
designated for such class or series, and the shares so subtracted shall become
authorized, unissued and undesignated shares of Non-Voting Preferred Shares.
4.4 Common Shares.
(a) Powers, Preferences and Rights. Except as may otherwise be
provided by the Delaware General Corporation Law, the powers, preferences and
rights of the Common Shares, and the qualifications, limitations or restrictions
thereof, shall be in all respects identical.
(b) Voting Rights. Except as may otherwise be provided by the
Delaware General Corporation Law, each holder of Common Shares shall be entitled
to one vote for each share held of record on the applicable record date on all
matters presented for a vote of the stockholders of the Corporation, including,
without limitation, the election of directors.
(c) Dividends. Except as may otherwise be provided in this
Certificate of Incorporation or by the Delaware General Corporation Law, if, as
and when dividends on the Common Shares are declared payable from time to time
by the Board of Directors as provided in this Section 4.4(c), whether payable in
cash, property, stock or other securities, the holders of Common Shares shall be
entitled to share equally, on a per share basis, in such dividends.
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(d) Liquidating Distributions. Upon any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, or upon any
sale or conveyance of all or substantially all of the assets of the Corporation,
after payment or provision for payment of all the liabilities of the Corporation
and the expenses of liquidation, and after the holders of the Preferred Shares
shall have been paid in full the amounts, if any, to which they are entitled or
a sum sufficient for such payment in full shall have been set aside, the
remaining assets of the Corporation available for distribution shall be
distributed ratably to the holders of the Common Shares. For the purpose of this
Section 4.4(d), a merger, consolidation, sale or conveyance shall not be deemed
to be a liquidation or winding up of the Corporation unless the transaction
provides for the cessation of the business of the Corporation."
SECOND: The amendment to the Certificate of Incorporation
effected hereby has been proposed by the Board of Directors of the Corporation
and adopted by the stockholders of the Corporation in the manner and by the vote
prescribed by the applicable provisions of Sections 228 and 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to
be signed by the undersigned duly authorized officer as of the 25th day of July,
2000.
/s/ Linda S. Standish
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Linda S. Standish, Secretary
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EXHIBIT A
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NOTICE OF CONVERSION
OF
CONVERTIBLE VOTING PREFERRED STOCK
OF
CERES GROUP, INC.
The undersigned holder ("Holder") hereby surrenders to Ceres Group,
Inc., a Delaware corporation (the "Corporation"), one or more certificates
representing Convertible Voting Preferred Shares, par value $0.001 per share, of
the Corporation (the "Voting Preferred Shares") in connection with the
conversion of all or part of the Voting Preferred Shares into Common Shares, par
value $0.001 per share, of the Corporation (the "Common Shares") as set forth
below.
1. Holder acknowledges that the Corporation issued the Voting
Preferred Shares pursuant to an exemption from registration under the Securities
Act of 1933, as amended (the "Securities Act").
2. Holder represents and warrants that all offers and sales of the
Common Shares to be issued to Holder upon such conversion of the Voting
Preferred Shares were made (a) pursuant to an effective registration statement
under the Securities Act (in which case Holder represents that a prospectus has
been delivered), (b) in compliance with Rule 144, or (c) pursuant to some other
applicable exemption from registration.
Number of Voting Preferred Shares to be converted:
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Delivery instructions for certificates of Common Shares and for new certificates
representing any remaining Voting Preferred Shares:
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Signature of Holder:
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Printed Name of Holder:
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Social Security or Tax Identification Number of Holder:
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Dated:
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