<PAGE>
As filed with the Securities and Exchange Commission on May 27, 1994
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
HALLMARK HEALTHCARE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 63-0817574
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
300 GALLERIA PARKWAY
SUITE 650
ATLANTA, GEORGIA 30339
(Address of Principal Executive Offices) (Zip Code)
1994 EMPLOYEE STOCK PURCHASE PLAN
(Full Title of the Plan)
ROBERT M. THORNTON, JR.
PRESIDENT, CHIEF OPERATING OFFICER AND
CHIEF FINANCIAL OFFICER
300 GALLERIA PARKWAY
SUITE 650
ATLANTA, GEORGIA 30339
(404) 933-5500
(Name and Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent for Service)
COPIES TO:
ROBERT W. MILLER, ESQ.
KING & SPALDING
191 PEACHTREE STREET
ATLANTA, GEORGIA 30303
(404) 572-4600
______________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Title of Each Proposed Proposed
Class of Amount Maximum Maximum Amount of
Securities to to be Offering Price Aggregate Registration
be Registered Registered Per Share(1) Offering Price(1) Fee
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock,
$.05 par value 200,000 $11.79 $2,358,750.00 $813.36
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<FN>
_____________________
(1) Estimated solely for purposes of calculating the registration fee. The
maximum offering price per share is estimated pursuant to Rule 457(c)
and Rule 457(h) to be eighty-five percent (85%) of the average of the
high and low sales prices of the Registrant's Class A Common Stock on
The Nasdaq Stock Market on May 23, 1994.
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Hallmark Healthcare Corporation (the
"Company") with the Securities and Exchange Commission are hereby incorporated
by reference into this Registration Statement:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1993;
(2) All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since June 30, 1993; and
(3) The description of the Company's Class A Common Stock, par value $.05
per share, contained in the Form 8-A Registration Statement filed
under the Exchange Act (File No. 0-13991), including any amendment or
report filed for the purposes of updating such description.
All documents filed by the Company subsequent to the date of this
Registration Statement pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act and prior to the filing of a post-effective amendment which
indicates that all securities offered hereunder have been sold or which
deregisters all such securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Inapplicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
Inapplicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article IX of the Company's Bylaws, as well as Section 145 of the
Delaware General Corporation Law, provide for the indemnification by the Company
of, and advancement by the Company of expenses to, its directors, officers,
employees and agents. The Company also maintains insurance coverage for its
directors and officers with respect to certain liabilities incurred in their
capacities as such.
<PAGE>
STATUTORY AUTHORITY
SECTION 145 OF THE DELAWARE GENERAL CORPORATION LAW PROVIDES:
SECTION 145. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS; INSURANCE
(a) A corporation shall have power to 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 or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' 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 or not opposed to 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, 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 or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(b) A corporation shall have power to 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
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' 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 or not opposed to the best interests of the corporation
and except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall
determine upon application that,
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<PAGE>
despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court shall deem
proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b), or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered
by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in subsections (a) and
(b). Such determination shall be made (1) 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 (2) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this Section. Such
expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation,
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<PAGE>
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 the provisions of this
Section.
(h) For purposes of this Section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, shall stand in the same position under the provisions
of this Section with respect to the resulting or surviving corporation as
he would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this Section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
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<PAGE>
BYLAW AUTHORITY
ARTICLE IX OF THE COMPANY'S BYLAWS PROVIDES:
ARTICLE IX
INDEMNIFICATION AND INSURANCE
SECTION 9.1. CONTINGENT RIGHT TO INDEMNIFICATION - THIRD PARTY
ACTIONS: AUTHORITY FOR PERMISSIVE INDEMNIFICATION. The Company shall indemnify
any director or officer of the Company, and may indemnify or obligate itself to
indemnify any other employee or agent of the Company, who was or is a party or
is or was 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 Company) by reason
of the fact that such director, officer, employee or agent is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another company,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or not taken by such director, officer,
employee or agent while acting in any such capacity, against expenses (including
attorneys' fees), judgment, fines and amounts paid in settlement (whether with
or without court approval) actually and reasonably incurred by such director,
officer, employee or agent in connection with such action, suit or proceeding if
he acted in good faith and in a manner such director, officer, employee or agent
reasonably believed to be in or not opposed to the best interests of the
Company, 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, conviction or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that such director, officer, employee or agent did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 9.2. CONTINGENT RIGHT TO INDEMNIFICATION -ACTIONS BY OR IN
THE RIGHT OF THE COMPANY; AUTHORITY FOR PERMISSIVE INDEMNIFICATION. The Company
shall indemnify any director or officer of the Company, and may indemnify or
obligate itself to indemnify any other employee or agent of the Company, who was
or is a party or is or was threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Company to procure
a judgment in its favor by reason of the fact that such director, officer,
employee or agent is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, or by reason of any
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<PAGE>
action alleged to have been taken or not taken by him while acting in any such
capacity, against expenses (including, without limitation, attorneys' 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 or not opposed to the best interest of the Company.
The termination of any such threatened or actual action or suit by a settlement
or by an adverse judgment or order shall not of itself, create a presumption
that such director, officer, employee or agent did not act in good faith and in
a manner which he reasonably believed to be in, or not opposed to, the best
interests of the Company. Nevertheless, there shall be no indemnification with
respect to expenses incurred in connection with any claim, issue or matter as to
which such director, officer, employee or agent shall have been adjudged to be
liable for gross negligence or willful misconduct in the performance of his duty
or duties to the Company unless, and only to the extent that, the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such director, officer, employee or agent is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
SECTION 9.3. ABSOLUTE RIGHT TO INDEMNIFICATION. To the extent that a
director, officer, employee or agent of the Company, or a director, officer,
employee or agent of the Company serving in any other enterprises at the request
of the Company, shall have been successful, on the merits or otherwise, (i) in
defending against any threatened or actual action, suit or proceeding to which
he was a party, or (ii) in defending against any claim, issue or matter therein,
then, regardless of whether such threatened or actual action, suit, proceeding,
claim, issue or matter shall have been asserted by or in the name of the Company
or a third party, he shall be indemnified by the Company against all expenses
(including, without limitation, attorneys' fees) actually and reasonably
incurred by him in connection therewith.
SECTION 9.4. COVERAGE OF ACTIONS RELATING TO EMPLOYEE BENEFIT PLANS.
If a director, officer, employee or agent is performing services for an employee
benefit plan at the Company's request then such director's, officer's,
employee's or agent's conduct with respect to such employee benefit plan will
constitute conduct within the meaning of the "good faith" and "best interest"
requirements of Sections 9.1 and 9.2 of this Article which shall or may entitle
such officer or director and may entitle such other person to indemnification
pursuant to the provisions of such sections provided that such person in
reasonably good faith believed that his conduct was in the best interests of the
participants and beneficiaries of the Plan. A director, officer, employee or
agent is considered to be serving an employee benefit plan at the Company's
request if his duties to the Company also impose duties on, or otherwise involve
services by, him to the plan or to participants in or beneficiaries of the plan.
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<PAGE>
SECTION 9.5. DETERMINATION OF CONDUCT. Any indemnification under
this Article IX, (unless ordered by court), shall be made by the Company only as
authorized in the specific cases upon a determination that indemnification is
proper in the circumstances because the director, officer, employee or agent of
the Company claiming indemnification has been successful, on the merits or
otherwise, in any final adjudication in defending against any threatened or
actual action, suit or proceeding or in defense of any claim, issue or matter
therein or has met the applicable standard of conduct set forth in Sections 9.1,
9.2 or 9.4, as the case may be. Such determination shall be made (1) by the
Board by a majority vote of a quorum consisting of Directors who were not
parties to such action, suit or proceeding, or (2) if such quorum is not
obtainable, or even if obtainable a quorum of disinterested directors of the
Company so directs, by independent legal counsel in a written opinion, or (3) by
the stockholders of the Company.
SECTION 9.6. ADVANCE OF EXPENSES. (a) The Company, as authorized by
the Board, may pay for or reimburse the expenses incurred by a director,
officer, employee or agent of the Company or a director, officer, employee or
agent of the Company serving in any other enterprise at the request of the
Company in defending a Proceeding may be paid by the Company in advance of the
final disposition of such Proceeding if: (i) the person seeking an advance for
expenses furnishes the Company a written affirmation of his good faith belief
that he has met the standard of conduct set forth in Sections 9.1, 9.2 or 9.4,
as the case may be, (ii) the person seeking an advance for expenses furnishes
the Company a written undertaking executed personally or on his behalf to repay
any advances if it shall ultimately be determined that he is not entitled to be
indemnified by the Company as authorized in this Article IX.
(b) In the case of any Proceeding involving a director or an officer
of the Company, the Company shall advance promptly as incurred reasonable fees
and disbursements of counsel for a director or officer for which the Company
might have to indemnify such director or officer -- whether pursuant to this
Section 9.6 or any employment agreement between the Company approved by a
majority of the Board or the Compensation and Audit Committee
thereof -- provided (i) the director or officer shall execute a promissory note
payable to the Company evidencing such advance if requested by the Company and
otherwise comply with such other requirements of Delaware law or the Certificate
of Incorporation or Bylaws of the Company as shall be reasonably requested by
the Company and (ii) the director or officer shall cause such counsel to
cooperate fully in good faith with such requests as the Company or its counsel
may reasonably make in order to endeavor to keep such legal fees and
disbursements at the minimum level consistent with an adequate defense of the
director or officer.
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(c) The Undertaking required by paragraphs (a)(ii) and (b)(i) of this
Section 9.6 must be the unlimited general obligation of the person seeking an
advance for expenses but need not be secured and may be accepted without
reference to such person's financial ability to make repayment.
SECTION 9.7. INSURANCE. The Company shall have power to and may
purchase and maintain insurance on behalf of any director, officer, employee or
agent of the Company who is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as a director, officer, employee or
agent, whether or not the Company would have the power to indemnify him against
such liability under the provisions of this Article IX or applicable law.
SECTION 9.8. INDEMNITY NOT EXCLUSIVE. The indemnification provided
hereunder shall not be deemed exclusive of any other rights to which a director,
officer, employee or agent of the Company seeking indemnification may be
entitled under any other bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, 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
director, officer, employee or agent of the Company who has ceased to be a
director, officer, employee or agent of the Company or engaged in any other
enterprise at the request of the Company and shall inure to the benefit of the
heirs, executors and administrators of such director, officer, employee or
agent.
ITEM 7. EXEMPTIONS FROM REGISTRATION CLAIMED.
Inapplicable.
ITEM 8. EXHIBITS.
EXHIBIT DESCRIPTION
------- -----------
4.1 Certificate of Incorporation of the Registrant
4.2 Bylaws of the Registrant (Filed as an exhibit to the
Registrant's Form 10-K for the year ended June 30, 1993,
filed September 10, 1993, and incorporated herein by this
reference)
5.1 Opinion of King & Spalding regarding legality of shares
being registered
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<PAGE>
23.1 Consent of Arthur Andersen & Co., independent auditors
23.2 Consent of King & Spalding (included in Exhibit 5.1)
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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<PAGE>
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the Registrant's Annual Report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's Annual Report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE
offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Cobb County, State of Georgia on this 27th day of May, 1994.
HALLMARK HEALTHCARE CORPORATION
By: /s/ James T. McAfee, Jr.
------------------------------------
James T. McAfee, Jr.
Chairman and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James T. McAfee, Jr., his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such persons and in his name, place and stead, in any and all capacities, to
sign any and all amendments to this Registration Statement, and to file the same
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and to perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully and to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities indicated on this 27th day of May, 1994.
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<PAGE>
SIGNATURE TITLE
- --------- -----
/s/ James T. McAfee, Jr. Chairman, Chief Executive Officer
- -------------------------------- and Director
James T. McAfee, Jr.
/s/ Robert M. Thornton, Jr. President, Chief Operating Officer and
- -------------------------------- Director (Chief Financial Officer,
Robert M. Thornton, Jr. Principal Accounting Officer)
/s/ Rolland A. Maxwell Director
- --------------------------------
Rolland A. Maxwell
/s/ Kay W. Slayden Director
- --------------------------------
Kay W. Slayden
/s/ James E. Martin Director
- --------------------------------
James E. Martin
/s/ J. Randolph Seckman Director
- --------------------------------
J. Randolph Seckman
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<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO.
4.1 Certificate of Incorporation of the
Registrant
4.2 Bylaws of the Registrant (Filed as
an exhibit to the Registrant's Form
10-K for the year ended June 30, 1993,
filed September 10, 1993, and
incorporated herein by this reference)
5.1 Opinion of King & Spalding, regarding
legality of shares being registered
23.1 Consent of Arthur Andersen & Co.,
independent auditors
23.2 Consent of King & Spalding (included
in Exhibit 5.1)
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<PAGE>
EXHIBIT 4.1
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF INCORPORATION OF "NATIONAL HEALTHCARE, INC." FILED IN THIS
OFFICE ON THE TWENTIETH DAY OF OCTOBER, A.D. 1981, AT 10 O'CLOCK A.M.
/s/ William T. Quillen
[Seal] -------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029427
4029427
DATE: 08/24/1993
932365191
<PAGE>
10 AM
FILED
OCT 20 1981
/s/ Glenn C. Kenton
Secretary of State
CERTIFICATE OF INCORPORATION
OF
NATIONAL HEALTHCARE, INC.
1. The name of the corporation is:
NATIONAL HEALTHCARE, INC.
2. The address of its registered office in the State of
Delaware is 100 West Tenth Street in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation
shall have authority to issue is one thousand (1,000) and the par value of
each of such shares is One Hundred Dollars ($100.00) amounting in the
aggregate to One Hundred Thousand Dollars ($100,000.00).
The holders of Common Stock shall, upon the issue or sale of
shares of stock of any class (whether now or hereafter authorized), or any
securities convertible into such stock, have the right, during such period of
time and on such conditions as the board of directors shall prescribe, to
subscribe to and purchase such shares or securities in proportion to their
respective holdings of Common Stock at such price or prices as the board of
directors may from time to time fix and as may be permitted by law.
5. The board of directors is authorized to make, alter or
repeal the by-laws of the corporation. Election of directors need not be by
ballot.
6. The name and mailing address of the incorporator is:
L. M. Custis
100 West Tenth Street
Wilmington, Delaware 19801
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law
of Delaware, do make this certificate,
<PAGE>
hereby declaring and certifying that this is my act and deed and the facts
herein stated are true and accordingly have hereunto set my hand this 20th day
of October, 1981.
/s/ L.M. Custis
------------------------
L. M. Custis
- 2 -
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "NATIONAL HEALTHCARE, INC." FILED IN THIS OFFICE ON THE
TWENTY-FIRST DAY OF APRIL, A.D. 1983, AT 9 O'CLOCK A.M.
/s/ William T. Quillen
[Seal] -------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029425
DATE: 08/24/1993
932365191
<PAGE>
9 AM
FILED
APR 21 1983
/s/ Glenn C. Kenton
Secretary of State
RESTATED
CERTIFICATE OF INCORPORATION
OF
NATIONAL HEALTHCARE, INC.
(The Date of Incorporation is October 20, 1981,
under the name of "NATIONAL HEALTHCARE, INC."
1. The name of the corporation is:
NATIONAL HEALTHCARE, INC.
2. The address of its registered office in the State of
Delaware is 100 West Tenth Street in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the Company shall
have authority to issue is seven hundred and six thousand, five hundred
(706,500) common shares, without par value. Each common share of the
Corporation, of the par value of $100 each, outstanding when this paragraph
becomes effective, shall be reclassified as and changed into four thousand,
forty-nine (4049) common shares without par value which shall be included in
the 706,500 common shares herein authorized. The stated capital applicable to
the 4049 shares resulting from such reclassification and change of each such
outstanding share shall, as of the date of adoption of this resolution by the
Shareholders, be the same as the stated capital then applicable to such
outstanding share.
The holders of Common Stock shall, upon the issue or sale of
shares of stock of any class (whether now or hereafter authorized), or any
securities convertible into such stock, have the right, during such period of
time and on such conditions as the board of directors shall prescribe, to
subscribe to and purchase such shares or securities in proportion to their
respective holdings of Common Stock at such price or prices as the board of
directors may from time to time fix and as may be permitted by law.
5. The board of directors is authorized to make, alter or
repeal the by-laws of the corporation. Election of directors need not be by
ballot.
6. The name and mailing address of the incorporator is:
L. M. Custis
100 West Tenth Street
Wilmington, Delaware 19801
We, THE UNDERSIGNED, Chairman of the Board and Secretary of National
Healthcare, Inc., for the purpose of re-stating the original Certificate of
Incorporation of said National Healthcare, Inc., do make this certificate,
hereby declaring and certifying that the foregoing Restated Certificate of
Incorporation was
<PAGE>
adopted by unanimous vote of the Shareholders of National Healthcare, Inc. on
April 11, 1983, at a duly called special meeting of said shareholders, and
further that this instrument is our act and deed and that the facts herein
stated are true. Accordingly, we have hereunto set our hands and seals this
19th day of April, 1983.
/s/ Stephen L. Phelps
-------------------------------------
Stephen L. Phelps, Chairman
/s/ William R. Wayland
[Seal] Attest: -------------------------------------
William R. Wayland, Jr., Secretary
- 2 -
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF CERTIFICATE OF CHANGE
OF ADDRESS OF REGISTERED AGENT AS IT APPLIES TO "NATIONAL HEALTHCARE, INC." AS
RECEIVED AND FILED IN THIS OFFICE ON THE TWENTY-SEVENTH DAY OF JULY, A.D. 1984,
AT 4:30 O'CLOCK P.M.
/s/ William T. Quillen
[Seal] -------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029422
DATE: 08/24/1993
932365191
<PAGE>
4:30 PM
FILED
JULY 27 1984
/s/ Glenn C. Kenton
Secretary of State
CERTIFICATE OF CHANGE OF ADDRESS OF
REGISTERED OFFICE AND OF REGISTERED AGENT
PURSUANT TO SECTION 134 OF TITLE 8 OF THE DELAWARE CODE
TO: DEPARTMENT OF STATE
Division of Corporations
Townsend Building
Federal Street
Dover, Delaware 19903
Pursuant to the provisions of Section 134 of Title 8 of the Delaware
Code, the undersigned Agent for service of process, in order to change the
address of the registered office of the corporations for which it is
registered agent, hereby certifies that:
1. The name of the corporation is: The Corporation Trust Company
2. The address of the old registered office was:
100 West Tenth Street
Wilmington, Delaware 19801
3. The address to which the registered office is to be changed
is:
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
The new address will be effective July 30, 1984.
4. The names of the corporation represented by said agent are
set forth on the list annexed to this certificate and made a
part hereof by reference.
<PAGE>
IN WITNESS WHEREOF, said agent has caused this
certificate to be signed on its behalf by its Vice-President
and Assistant Secretary this 25th day of July, 1984.
The Corporation Trust Company
-------------------------------
(Name of Registered Agent)
By: /s/ [Signature Illegible]
-------------------------------
(Vice President)
ATTEST:
/s/ [Signature Illegible]
- ------------------------------
(Assistant Secretary)
- 2 -
<PAGE>
STATE OF DELAWARE - DIVISION OF CORPORATIONS
CHANGE OF ADDRESS FILING FOR
CORPORATION TRUST AS OF JULY 27, 1984
DOMESTIC
0924579 PORCON, INC. 10/19/1981 D DE
0924590 MAUNDERS U.S.A. INCORPORATED 10/19/1981 D DE
0924594 CORSTA CORPORATION 10/19/1981 D DE
0924596 OSBORN SUPPLY, INC. 10/19/1981 D DE
0924597 JUNGO, INC. 10/19/1981 D DE
0924598 ENVIROSAFE, INC. 10/19/1981 D DE
0924601 VIRGINIA-CAROLINA CHEMICAL CORPORATION 10/19/1981 D DE
0924606 BARRINGTON SALES & SERVICE, INC. 10/19/1981 D DE
0924607 ALMET/LAWNLITE OF DELAWARE, INC. 10/19/1981 D DE
0924609 CILCO, INC. 10/19/1981 D DE
0924610 GROSSE POINTE MOTOR SALES, INC. 10/19/1981 D DE
0924613 TAR SANDS INTERNATIONAL, LTD. 10/19/1981 D DE
0924622 QTX SECURITIES, INC. 10/19/1981 D DE
0924630 PRECISION AMERICAN CORPORATION 10/19/1981 D DE
0924652 HELGE NAARSTAD HOLDING, INC. 10/19/1981 D DE
0924659 CORPORATE CONSULTANTS, INC. 10/19/1981 D DE
0924675 ALEXANDRA REALTY CORPORATION 10/19/1981 D DE
092476 BRYSON INSURANCE SERVICE COMPANY, INC. 10/19/1981 D DE
0924687 POUND-BRAE INCORPORATED 10/19/1981 D DE
0924689 RACQUET CLUB MANAGEMENT, INC. 10/19/1981 D DE
0924691 PAMLICO ENTERPRISES, INC. 10/19/1981 D DE
0924698 FIRESTONE STORES OF ALHAMBRA, INC. 10/20/1981 D DE
0924701 FIRESTONE STORES OF VALLEY PLAZA, INC. 10/20/1981 D DE
0924723 AMERICAN COLDSET HOLDINGS, INC. 10/20/1981 D DE
0924728 DYNATREK, INC. 10/20/1981 D DE
0924736 TUSENFRYD, INC. 10/20/1981 D DE
0924751 MARK'S WORK WEARHOUSE, LTD. 10/20/1981 D DE
0924752 TUCO INC. 10/20/1981 D DE
0924753 CENTRAL ZONE TRAPSHOOTING
ASSOCIATION, INC. 10/20/1981 D DE
0924755 WMA CORPORATION 10/20/1981 D DE
0924756 AMERICAN MARITIME COMPANY 10/20/1981 D DE
0924759 WEATHASHADE CORPORATION 10/20/1981 D DE
0924760 DEVELCON MANUFACTURING CORP. 10/20/1981 D DE
0924761 MOBILE COUNTY PUBLICATIONS, INC. 10/20/1981 D DE
0924762 MOBIL EXPLORATION MADAGASCAR INC. 10/20/1981 D DE
0924763 SEVENTH FLOOR CORPORATION 10/20/1981 D DE
0924764 NATIONAL HEALTHCARE, INC. 10/20/1981 D DE
0924775 FREEPORT RESEARCH AND DEVELOPMENT
COMPANY 10/20/1981 D DE
0924791 OGDEN-SARATOGA CORPORATION 10/20/1981 D DE
0924792 TELKO PROPERTIES, INC. 10/20/1981 D DE
0924794 HERSHON INVESTMENTS, INC. 10/20/1981 D DE
0924797 TMCI INC. 10/20/1981 D DE
0924798 AMERICAN EDUCATIONAL COMPUTER, INC. 10/20/1981 D DE
0924799 BOWEST CORPORATION 10/20/1981 D DE
0924803 LE AIRE, INC. 10/21/1981 D DE
0924811 TFJ OF FREDERICK, INC. 10/21/1981 D DE
0924829 CRI FUND MANAGEMENT, INC. 10/21/1981 D DE
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
RESTATED CERTIFICATE OF INCORPORATION OF "NATIONAL HEALTHCARE, INC." FILED IN
THIS OFFICE ON THE ELEVENTH DAY OF OCTOBER, A.D. 1984, AT 10 O'CLOCK A.M.
/s/ William T. Quillen
[Seal] -------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029421
DATE: 08/24/1993
932365191
<PAGE>
8402850093 10 AM
FILED
OCT 11 1984
/s/ Glenn C. Kenton
Secretary of State
RESTATED
CERTIFICATE OF INCORPORATION
OF
NATIONAL HEALTHCARE, INC.
Originally Incorporated On October 20, 1981
(PURSUANT TO SECTIONS 242 & 245)
ARTICLE I
The name of the corporation is: NATIONAL HEALTHCARE, INC.
ARTICLE II
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 1,773,750 shares, consisting of (a) 273,750
shares of Convertible Preferred Stock, $.01 par value (the "Preferred Stock"),
and (b) 1,500,000 shares of Common Stock, no par value (the "Common Stock").
The designations, powers, preferences and relative participating,
optional or other special rights, and the qualifications, limitations and
restrictions thereof in respect of the Preferred Stock and the Common Stock
are as follows:
A. PREFERRED STOCK
1. DIVIDENDS. (a) In each year occurring after the third
anniversary date of the Original Issuance Date (as defined in Section A.6 of
this Article) the holder of each share of Preferred Stock shall be entitled to
receive, before any dividends shall be declared and paid upon or set aside for
the Junior Stock
<PAGE>
(as defined in Section A.6 of this Article) in any such year, when and as
declared by the Board of Directors of the Corporation, out of funds legally
available for that purpose, dividends in cash at the rate of $1.80 per annum per
share (calculated on the basis of a year of 360 days comprised of 12 30 day
months), payable quarterly on January 1, April 1, July 1 and October 1 of each
year, or if such day shall not be a business day, on the next succeeding
business day, any such dividend payment date being hereinafter referred to as a
"Dividend Payment Date"). Dividends on shares of Preferred Stock shall be
cumulative from the third anniversary date of the Original Issuance Date
(whether or not there shall be net profits or net assets of the Corporation
legally available for the payment of such dividends), so that, if at any time
Full Cumulative Dividends (as defined in said Section A.6) upon the Preferred
Stock shall not have been paid or declared and a sum sufficient for payment
thereof set apart, the amount of the deficiency in such dividends shall be fully
paid (but without interest) or dividends in such amount shall have been declared
on the shares of the Preferred Stock and a sum sufficient for the payment
thereof shall have been set apart for such payment, before any dividend shall be
declared or paid or any other distribution ordered or made upon any Junior Stock
(other than a dividend payable in such Junior Stock) and before any sum or sums
shall be set aside for or applied to the purchase (except in accordance with the
Purchase Agreement (as defined in Section A.6 of this Article)) or redemption of
any shares of any Junior Stock. All dividends declared upon the Preferred Stock
and any other class of stock ranking on a parity as to dividends with such
Preferred Stock shall be declared PRO RATA per share. Holders of shares of
Preferred Stock shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of the Full Cumulative Dividends at the rate set
forth above. All payments due under this Section A.1(a) to any holder of shares
of Preferred Stock shall be made to the nearest cent.
(b) In the event that the Corporation shall fail to make a full
payment in cash of dividends as provided in Section A.1(a) above on any Dividend
Payment Date, then, at the option of any record holder of Preferred Stock on
such Dividend Payment Date, the Corporation shall pay such dividend by delivery
to such holder of that number of shares of Common Stock (rounded to the nearest
number of full shares) equal to the quotient obtained by dividing (i) the
product obtained by multiplying (A) the number of shares of Preferred Stock
owned by such holder on such Dividend Payment Date by (B) 1.8, by (ii) the Book
Value Per Common Share (as defined in Section A.6 of this Article). Such option
may be exercised upon written notice, sent by first-class certified mail, return
receipt requested, to the Corporation not more than 60 days after the Dividend
Payment Date with respect to which such dividend was not paid in full. Within
10 days after receipt of such notice, the Corporation shall issue and deliver to
such holder, to the place designated by such holder, a certificate or
certificates for the full number of shares of Common Stock to which such holder
is entitled.
- 2 -
<PAGE>
2. RIGHTS ON LIQUIDATION, DISSOLUTION, WINDING-UP. In the event of any
liquidation, dissolution or winding-up of the Corporation, the holders of shares
of Preferred Stock then outstanding shall be entitled to be paid out of the
assets of the Corporation available for distribution to its stockholders,
whether from capital, surplus or earnings, before any payment shall be made to
the holders of any Junior Stock, an amount equal to the Liquidation Preference
(as hereinafter defined), plus Accrued Dividends (as defined in Section A.6 of
this Article), if any, to the date of payment. If upon any liquidation,
dissolution or winding-up of the Corporation the assets of the Corporation
available for distribution to its stockholders shall be insufficient to pay the
holders of shares of Preferred Stock the full amounts to which they respectively
shall be entitled, the holders of shares of Preferred Stock shall share ratably
in any distribution of assets according to the respective amounts which would be
payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to said shares were paid in full. In the
event of any liquidation, dissolution or winding-up of the Corporation, after
payment shall have been made to the holders of shares of Preferred Stock of the
full amount to which they shall be entitled as aforesaid, the holders of any
Junior Stock shall be entitled, as to the exclusion of the holders of shares of
Preferred Stock, to share, according to their respective rights and preferences,
in all remaining assets of the Corporation available for distribution to its
stockholders. The merger or consolidation of the Corporation into or with
another corporation or the merger or consolidation of any other corporation into
or with the Corporation (in which consolidation or merger the stockholders of
the Corporation receive distributions of cash or securities as a result of such
consolidation or merger), or the sale of other disposition of all or
substantially all the assets of the Corporation shall be deemed to be a
liquidation, dissolution or winding-up of the Corporation (an "Event of
Liquidation"). The Liquidation Preference per share of Preferred Stock shall be
$26 from the Original Issuance Date to and including the first anniversary date
thereof, $34 thereafter to and including the second anniversary date of the
Original Issuance Date, $40 thereafter to and including the third anniversary
date of the Original Issuance Date, $41.52 thereafter to and including the
seventh anniversary date of the Original Issuance Date, $46.09 thereafter to
and including the eighth anniversary date and $51.16 at all times thereafter.
The Liquidation Preference shall be subject to equitable adjustment for a
split-up, subdivision, a combination of shares of Preferred Stock or similar
event. Anything contained in this Section A.2 to the contrary notwithstanding,
each holder of shares of Preferred Stock shall have the right to convert all or
any part of the share of Preferred Stock held by such holder as herein provided
into shares of Common Stock pursuant to Section A.5 of this Article in lieu of
receiving the Liquidation Preference in connection with any Event of
Liquidation.
- 3 -
<PAGE>
3. REDEMPTION
3.1 OPTIONAL REDEMPTION. (a) Subject to Section A.3(h) below, at
any time, or from time to time, and so long as any shares of Preferred Stock
shall be outstanding, the Corporation may, at the option of the Board of
Directors of the Corporation, redeem the whole or any part of such outstanding
shares of Preferred Stock at an amount per share (the "Optional Redemption
Price") determined as set forth below (plus Accrued Dividends, if any, to the
date fixed for redemption of the shares of Preferred Stock to be so redeemed
(each such date being hereinafter referred to as an "Optional Redemption
Date")):
OPTIONAL
REDEMPTION
PERIOD PRICE
------ -----------
From the Original Issuance Date to and $26.00
including the first anniversary date thereof
Thereafter to and including the second anni- $34.00
versary date of the Original Issuance Date
Thereafter to and including the third anni- $40.00
versary date of the Original Issuance Date
Thereafter to and including the seventh anni- $41.52
versary date of the Original Issuance Date
Thereafter to and including the eight anni- $46.05
versary date of the Original Issuance Date
At all times thereafter $51.16
(b) The total sum payable per share of Preferred Stock on any
Optional Redemption Date is hereinafter referred to as the "Redemption Price",
and any payment to be made on an Optional Redemption Date is hereinafter
referred to as a "Redemption Payment".
(c) On and after any Optional Redemption Date (unless default
shall be made by the Corporation in the payment of the applicable Redemption
Price as hereinafter provided, in which event such rights shall be exercisable
until such default is cured), all rights in respect of the shares of Preferred
Stock to be redeemed, except the right to receive the applicable Redemption
Price as hereinafter provided, shall cease and terminate; and such shares
shall no longer be deemed to be outstanding, whether or not the certificates
representing such shares have been received by the Corporation.
- 4 -
<PAGE>
(d) If less than all the shares of Preferred Stock at any time
outstanding are to be redeemed pursuant to Section A.3.1(a) hereof, such
redemption shall be made PRO RATA with respect to such shares in the manner
prescribed by the Board of Directors. Thirty days' notice by the Corporation
of every Optional Redemption Date shall be sent by first-class, certified
mail, return receipt requested, postage prepaid, by the Corporation to the
holders of shares of Preferred Stock to be so redeemed at their respective
addresses as the same shall appear on the books of the Corporation. At any
time on or after an Optional Redemption Date, each holder of shares of
Preferred Stock so to be redeemed shall be entitled to receive the Redemption
Price upon actual delivery to the Corporation or its agent of the certificates
representing the shares of Preferred Stock so to be redeemed.
(f) The Corporation will not, and will not permit any subsidiary
of the Corporation to, purchase or acquire any shares of Preferred Stock
otherwise than pursuant to the terms of this Section A.3.1, Section A.3.2 of
this Article, Section 8.9 of the Purchase Agreement (as defined in Section A.6
of this Article) or pursuant to an offer made on the same terms to all holders
of Preferred Stock at the time outstanding.
(g) Anything contained in this Section A.3.1 to the contrary
notwithstanding, each holder of shares of Preferred Stock to be redeemed in
accordance with this Section A.3.1 shall have the right, exercisable at any
time up to the close of business on the Optional Redemption Date (unless
default shall be made by the Corporation in the payment of the Redemption
Price as herein provided, in which event such right shall be exercisable until
such default is cured), to convert all or any part of the shares of Preferred
Stock held by such holder as herein provided into shares of Common Stock
pursuant to Section A.5 of this Article. If, and to the extent, any shares of
Preferred Stock so entitled to redemption are converted into shares of Common
Stock by the holders thereof prior to the close of business on the Optional
Redemption Date, the total number of shares of Preferred Stock otherwise to be
redeemed on such Optional Redemption Date shall be recalculated as if such
shares so converted had never been outstanding.
3.2 REQUESTED REDEMPTION. (a) Subject to Section A.3.2(d)
below, at any time there shall exist an Event of Redemption (as defined in
Section A.6 of this Article) and so long as any shares of Preferred Stock
shall be outstanding, the Corporation shall (unless otherwise prevented by
law) redeem, at the option of any holder or holders of Preferred Stock, all
(or such lesser number as specified by any such holder in the written noticed
referred to below) of such holder's shares of Preferred Stock then
outstanding. Such option shall be exercised upon 30 days' written notice (a
"Requested Redemption Notice") to the Corporation by any holder or holders of
Preferred Stock, which notice shall state such holder's intention to exercise
the
- 5 -
<PAGE>
redemption option set forth herein and the number of shares of Preferred Stock
sought to be redeemed (any such date being hereinafter referred to as a
"Requested Redemption Date"). Within five days after receipt of any Requested
Redemption Notice, the Corporation shall notify all other holders of Preferred
Stock of such Notice and each such holder shall have the right, exercisable by
written notice to the Corporation within 10 days after receipt of such notice
from the Corporation, to request that all of such holder's shares of Preferred
Stock (or such lesser number as specified in such written notice to the
Corporation) be redeemed by the Corporation on the Requested Redemption Date.
The amount per share of Preferred Stock at which the shares of Preferred Stock
are to be redeemed pursuant to this Section A.3.2(a) on any Requested Redemption
Date by the Corporation shall be an amount equal to the Optional Redemption
Price at the time in effect, plus Accrued Dividends, if any, to such Redemption
Date. The total sum payable per share of Preferred Stock on any Requested
Redemption Date is hereinafter referred to as the "Requested Redemption Price,"
and any payment to be made is hereinafter referred to as the "Requested
Redemption Payment," as to any holder of Preferred Stock.
(b) On and after any Requested Redemption Date (unless default
shall be made by the Corporation in the payment of the applicable Requested
Redemption Price as hereinafter provided, in which event such rights shall be
exercisable until such default is cured), all rights in respect of the shares
of Preferred Stock to be redeemed, except the right to receive the applicable
Requested Redemption Price as hereinafter provided, shall cease and terminate;
and such shares shall no longer be deemed to be outstanding, whether or not
the certificates representing such shares have been received by the
Corporation.
(c) Notice of any exercise of the redemption option pursuant to
this Section A.3.2 shall be sent by first-class certified mail, return receipt
requested, postage prepaid, to the Corporation. At any time on or after the
Requested Redemption Date, the holders of record of shares of Preferred Stock
requesting such Preferred Stock to be redeemed on such Requested Redemption
Date in accordance with this Section A.3.2 shall be entitled to receive the
applicable Requested Redemption Price upon actual delivery to the Corporation
or its agents of the certificates representing the shares to be redeemed. If
upon any redemption the assets of the Corporation available for redemption
shall be insufficient to pay the holders of the shares of Preferred Stock the
full amounts to which they shall be entitled, the holders of shares of
Preferred Stock requesting redemption shall share ratably in any such
redemption according to the respective amounts which would be payable in
respect of such shares requested to be redeemed by the holders thereof if all
amounts payable on or with respect to such shares were paid in full.
- 6 -
<PAGE>
(d) Anything contained in this Section A.3.2 to the contrary
notwithstanding, the holders of shares of Preferred Stock shall have the
right, exercisable at any time up to the close of business on the Preferred
Redemption Date (unless default shall be made by the Corporation in the
payment of the Preferred Redemption Price as herein provided, in which event
such right shall be exercisable until such default is cured), to convert all
or any part of such shares requested by such holder to be redeemed as herein
provided into shares of Common Stock pursuant to Section A.5 of this Article.
If, and to the extent, any shares of Preferred Stock so entitled to redemption
are converted into shares of Common Stock by the holders thereof prior to the
close of business on the Preferred Redemption Date, the total number of shares
of Preferred Stock otherwise to be redeemed on such Preferred Redemption Date
shall be reduced by the number of shares of Preferred Stock so converted.
4. VOTING. (a) In addition to the rights specified in Sections
A.4(b), (c) and (e) below and any other rights provided in the Corporation's
By-laws or by law, each share of Preferred Stock shall entitle the holder
thereof to such number of votes per share as shall equal the number of shares
of Common Stock (including any fraction to one decimal place) into which each
share of Preferred Stock is then convertible, entitled to vote on all matters
as to which holders of Common Stock shall be entitled to vote, in the same
manner and with the same effect as such holders of Common Stock, voting
together with the holders of Common Stock as one class.
(b) In addition to the rights specified in Section A.4(a) above,
the holders of a majority in voting power of the Preferred Stock, voting
separately as one class, shall have the exclusive and special right (i) at all
times to elect two directors to the Board of Directors of the Corporation, and
(ii) upon the occurrence of an Event of Election (as defined in Section A.6
below), to elect four directors to the Board of Directors of the Corporation.
The special and exclusive right of the holders of Preferred Stock, voting
separately as one class, set forth in clause (ii) of this Section A.4(b) to
elect four directors to the Board of Directors of the Corporation shall continue
until the Event of Election which gave rise to such right has been cured by the
Corporation, subject to the revesting thereof upon the occurrence of each and
every Event of Election subsequent thereto. In any election of directors
pursuant to this Section A.4(b), each holder of shares of Preferred Stock
shall be entitled to one vote for each share of Preferred Stock held and no
holder of Preferred Stock shall be entitled to cumulate his votes by giving
one candidate more than one vote per share. The special and exclusive voting
right of the holders of the Preferred Stock, voting separately as one class,
contained in this Section A.4(b) may be exercised either at a special meeting
of the holders of Preferred Stock called as provided below, or at any annual
or special meeting of the shareholders of the Corporation, or by written
consent of such holders in lieu of a meeting. The directors to be
- 7 -
<PAGE>
elected by the holders of the Preferred Stock, voting separately as one class,
pursuant to this Section A.4(b), shall serve for terms extending from the date
of their election and qualification until the time of the next succeeding annual
meeting of shareholders and until their successors have been elected and
qualified; PROVIDED, HOWEVER, that the term of the two additional directors
elected pursuant to Section A.4(b)(ii) shall terminate at such time as the Event
of Election which gave rise to such right of election shall have been cured by
the Corporation.
(c) If at any time any directorship to be filled by the holders
of Preferred Stock, voting separately as one class, pursuant to Section A.4(b)
above, has been vacant for a period of 10 days, the Secretary of the
Corporation shall, upon the written request of the holders of record of shares
representing at least 25% of the voting power of the Preferred Stock then
outstanding, call a special meeting of the holders of Preferred Stock for the
purpose of electing a director or directors to fill such vacancy or vacancies.
Such meeting shall be held at the earliest practicable date at such place as
is specified in or determined in accordance with the By-laws of the
Corporation. If such meeting shall not be called by the Secretary of the
Corporation within 10 days after personal service of said written request on
him, then the holders of record of shares representing at least 25% of the
voting power of the Preferred Stock then outstanding may designate in writing
one of their number to call such meeting at the expense of the Corporation,
and such meeting may be called by such person so designated upon the notice
required for annual meetings of shareholders and shall be held at such
specified place. Any holder of the Preferred Stock so designated shall have
access to the stock books of the Corporation for the purpose of calling a
meeting of the stockholders pursuant to these provisions.
(d) At any meeting held for the purpose of electing directors at
which the holders of Preferred Stock shall have the right, voting separately
as one class, to elect directors as provided in Section A.4(b) above, the
presence, in person or by proxy, of the holders of record of shares
representing at least 51% of the voting power of the Preferred Stock then
outstanding shall be required to constitute a quorum of the Preferred Stock
for such election. At any such meeting or adjournment thereof, the absence of
such a quorum of the Preferred Stock shall not prevent the election of
directors other than the director or directors to be elected by holders of
Preferred Stock, voting separately as one class, pursuant to Section A.4(b)
above, and the absence of a quorum for the election of such other directors
shall not prevent the election of the director or directors to be elected by
the holders of Preferred Stock, voting separately as one class, pursuant to
Section A.4(b) above, and in the absence of either or both of such quorums,
the holders of record of shares representing at least 51% of the voting power
present in person or by proxy of the class of stock which lacks a quorum shall
have power to adjourn the meeting for the election of directors which they are
entitled to elect from time to time without notice other
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than announcement at the meeting. A vacancy in the directorships to be elected
by the holders of the Preferred Stock, pursuant to Section A.4(b) above, may be
filled only by vote or written consent in lieu of a meeting of the holders of at
least 51% of the voting power of the Preferred Stock.
(e) The Corporation shall not, without the affirmative consent or
approval of the holders of shares representing at least 60% of the voting
power of the Preferred Stock then outstanding, acting separately as one class,
given by written consent in lieu of a meeting or by vote at a meeting called
for such purpose for which notice shall have been given to the holders of the
Preferred Stock, (i) sell, lease, transfer or otherwise dispose of any of the
properties or assets which, individually or in the aggregate as to all such
transactions occurring after the Original Issuance Date, represent in excess
of 33-1/3% of the total assets of the Corporation on the date of any such
transaction (determined in accordance with generally accepted accounting
principles), unless the proceeds thereof are applied, in order of priority,
FIRST, to the reduction of indebtedness of the Corporation for borrowed
money, and, SECOND, to a redemption, in whole or in part, of the Preferred Stock
pursuant to Section A.3.1(a) of this Article, (ii) declare or pay any dividends
on, or make any distribution of cash or other property or both with respect to
(whether by way of reduction of capital or otherwise), any shares of Junior
Stock (other than dividends payable solely in shares of Junior Stock or stock
splits), (iii) redeem, retire, purchase or otherwise acquire, directly or
indirectly, for value or set apart any sum therefor, any shares of Junior
Stock, (iv) except as permitted by clause (vii) below, merge or consolidate
with or into, or permit any subsidiary to merge or consolidate with or into,
any other corporation, corporations or other entity or entities, except when
the holders of Preferred Stock are entitled to receive payment as provided in
Section A.2 of this Article, (v) voluntarily dissolve, liquidate, or wind-up
or carry out any partial liquidation or distribution or transaction in the
nature of a partial liquidation or distribution, (vi) in any manner alter or
change the designations or the powers, preferences or rights, or the
qualifications, limitations or restrictions of the Preferred Stock, (vii)
except as permitted by Section 8.3.6 of the Purchase Agreement, purchase or
otherwise acquire (whether by purchase or lease of assets, capital stock or by
merger or consolidation), or permit any subsidiary to so purchase or otherwise
acquire, any material tangible or intangible assets which represent all or a
substantial part of the assets of any other person or entity or (viii) alter,
amend or repeal the By-laws of the Corporation as in effect on the Original
Issuance Date which in any manner affects the rights of the holders of the
Preferred Stock.
5. CONVERSION. (a) Except as to shares of Preferred Stock
to be redeemed in accordance with Section A.3 of this Article which may only
be converted up to the close of business on the respective Redemption Date
(unless default shall be made by the Corporation in the payment of the
respective Redemption Price
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so provided in said Section A.3, in which event such right to convert shall be
exercisable until such default is cured), the holder of any shares of Preferred
Stock shall have the right, at such holder's option, at any time or from time to
time to convert any or all of such holder's shares of Preferred Stock into such
whole number of fully paid and nonassessable shares of Common Stock as $20
multiplied by the number of shares of Preferred Stock being converted is a
multiple of the Preferred Conversion Price (as last adjusted and then in effect)
for the shares of Preferred Stock being converted by surrender of the
certificates representing the shares of Preferred Stock so to be converted in
the manner provided in Section A.5(b) below. The Preferred Conversion Price per
share at which shares of Common Stock shall be issuance upon conversion of
shares of Preferred Stock pursuant to this Section A.5(a) shall be $20;
PROVIDED, HOWEVER, that such Preferred Conversion Price shall be subject to
adjustment as set forth in Section A.5(3) below. The holder of any shares of
Preferred Stock exercising the aforesaid right to convert such shares into
shares of Common Stock shall be entitled to payment of Accrued Dividends.
(b) Upon the occurrence of an Event of Conversion (as defined in
Section A.6 of this Article), all shares of Preferred Stock then outstanding
shall, by virtue of, and simultaneously with, the occurrence of the Event of
Conversion and without any action on the part of the holders thereof, be
deemed automatically converted into such whole number of fully paid and
non-assessable shares of Common Stock as $20 multiplied by the number of
shares of Preferred Stock being converted is a multiple of the Preferred
Conversion Price (as last adjusted and then in effect) for the shares of
Preferred Stock being converted. The Preferred Conversion Price upon
conversion at which shares of Common Stock shall be issuable upon conversion
of shares of Preferred Stock pursuant to this Section A.5(b) shall be $20;
PROVIDED, HOWEVER, that such Preferred Conversion Price shall be subject
to adjustment as set forth in Section A.5(e) below and shall be further
adjusted by a reduction of $1.00 for each $1.50 that the Trigger Price (as
defined in Section A.6 of this Article) in connection with a Public Offering
(as defined in Section A.6 of this Article) is below (i) $40, in the event of
an Event of Conversion occurring prior to the 30 months after the Original
Issuance Date or (ii) $60, at any time thereafter. The holder of any shares
of Preferred Stock converted into shares of Common Stock pursuant to this
Section A.5(b) shall be entitled to payment of Accrued Dividends.
(c) The holder of any shares of Preferred Stock may
exercise the conversion right pursuant to Section A.5(a) above by delivering
to the Corporation during regular business hours, at the office of any
transfer agent of the Corporation for the Preferred Stock or at such other
place as may be designated by the Corporation, the certificate or certificates
for the shares to be converted, duly endorsed or assigned in blank or to the
Corporation (if required by it), accompanied by written notice
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<PAGE>
stating that such holder elects to convert such shares and stating the name or
names (with address) in which the certificate of certificates for the shares of
Common Stock are to be issued. Conversion shall be deemed to have been effected
with respect to conversion under Section A.5(a) above, on the date when the
aforesaid delivery is made, and such date is referred to herein as the
"Conversion Date". As promptly as practicable thereafter the Corporation shall
issue and deliver to or upon the written order of such holder, to the place
designated by such holder, a certificate or certificates for the number of full
shares of Common Stock to which such holder is entitled and a check or cash in
respect of any fractional interest in a share of Common Stock, as provided in
Section A.5(d) below, payable with respect to the shares of Preferred Stock so
converted up to and including the Conversion Date. The person in whose names the
certificate or certificates for Common Stock are to be issued shall be deemed to
have become a stockholder of record on the applicable Conversion Date unless the
transfer books of the Corporation are closed on that date, in which event such
holder shall be deemed to have become a stockholder of record on the next
succeeding date on which the transfer books are open, but the Preferred
Conversion Price shall be that in effect on the Conversion Date. Upon conversion
of only a portion of the number of shares covered by a certificate representing
shares of Preferred Stock surrendered for conversion, the Corporation shall
issue and deliver to or upon the written order of the holder of the certificate
so surrendered for conversion, at the expense of the Corporation, a new
certificate covering the number of shares of Preferred Stock representing the
unconverted portion of the certificate so surrendered, which new certificate
shall entitle the holder thereof to dividends on the shares of the Preferred
Stock represented thereby to the same extent as if the certificate theretofore
covering such unconverted shares had not been surrendered for conversion.
(d) No fractional shares of Common Stock or scrip shall be
issued upon conversion of shares of Preferred Stock. If more than one share of
Preferred Stock shall be surrendered for conversion at any one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Preferred Stock so surrendered. Instead of any fractional shares of Common Stock
which would otherwise be issuable upon conversion of any shares of Preferred
Stock the Corporation shall pay a cash adjustment in respect of such fractional
interest in an amount equal to the then Current Market Place (as hereinafter
defined) of a share of Common Stock multiplied by such fractional interest.
Fractional interest shall not be entitled to dividends, and the holders of
fractional interests shall not be entitled to any rights as stockholders of the
Corporation in respect of such fractional interest.
(e) The Preferred Conversion Price shall be subject to
adjustment from time to time as follows:
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<PAGE>
(i) If the Corporation shall at any time or from time to
time after the Original Issuance Date, issue any shares of Common Stock
other than Excluded Stock (as hereinafter defined) without consideration
or for a consideration per share less than the Preferred Conversion
Price in effect immediately prior to the issuance of such Common Stock,
the Preferred Conversion Price in effect immediately prior to each such
issuance shall forthwith (except as provided in this clause (i)) be
lowered to a price equal to the quotient obtained by dividing
(A) an amount equal to the sum of
(x) the total number of shares of Common Stock
outstanding (including any shares of Common Stock deemed to
have been issued pursuant to subdivision (C) of this clause
(i) and to clause (ii) below (it being understood that the
shares of Common Stock issuable upon conversion of the
Preferred Stock shall be deemed to be outstanding for all
purposes of the computation required in this clause (i)))
immediately prior to such issuance multiplied by the
Preferred Conversion Price in effect immediately prior to
such issuance, plus
(y) the consideration received by the
Corporation upon such issuance,
by
(B) the total number of shares of Common Stock
outstanding (including any shares of Common Stock deemed to
have been issued pursuant to subdivision (C) of this clause
(i) and to clause (ii) below (it being understood that the
shares of Common Stock issuable upon conversion of the
Preferred Stock shall be deemed to be outstanding for all
purposes of the computation required in this clause (i)))
immediately after the issuance of such Common Stock.
For the purposes of any adjustment of the Preferred Conversion Price pursuant
to this clause (i), the following provisions shall be applicable:
(A) In the case of the issuance of Common Stock for cash,
the consideration shall be deemed to be the amount of cash paid
therefor after deducting therefrom any discounts, commissions or
other expenses allowed, paid or incurred by the Corporation for
any underwriting or otherwise in connection with the issuance and
sale thereof.
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<PAGE>
(B) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash shall be deemed
to be the fair market value thereof as determined in good faith by
the Board of Directors of the Corporation, irrespective of any
accounting treatment; PROVIDED, HOWEVER, that the aggregate
fair market value of such non-cash and cash consideration shall
not exceed the Current Market Price (as hereinafter defined) of
the shares of Common Stock being issued.
(C) In the case of the issuance of (i) options to purchase
or rights to subscribe for Common Stock, (ii) securities by their
terms convertible into or exchangeable for Common Stock or (iii)
options to purchase or rights to subscribe for such convertible or
exchangeable securities:
(1) the aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options to purchase
or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were
issued and for a consideration equal to the consideration
(determined in the manner provided in subdivisions (A) and
(B) above with the proviso to subdivision (A) being applied
to the number of shares of Common Stock deliverable upon
such exercise), if any, received by the Corporation upon the
issuance of such options or rights plus the minimum purchase
price provided in such options or rights for the Common
Stock covered thereby;
(2) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities or upon the
exercise of options to purchase or right to subscribe for
such convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been
issued at the time such securities were issued or such
options or rights were issued and for a consideration equal
to the consideration received by the Corporation for any
such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued
dividends), plus the additional consideration, if any, to be
received by the Corporation upon the conversion or exchange
of such securities or the exercise of any related options or
rights (the consideration in each case to be determined in
the manner provided in subdivisions (A) and (B) above with
the proviso to subdivision (A) being applied
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<PAGE>
to the number of shares of Common Stock deliverable upon such
exercise);
(3) on any change in the number of shares or
exercise price of Common Stock deliverable upon exercise of
any such options or rights or conversions of or exchange for
such convertible or exchangeable securities, other than a
change resulting from the antidilution provisions thereof,
the Preferred Conversion Price shall forthwith be readjusted
to such Preferred Conversion Price as would have obtained
had the adjustment made upon the issuance of such options,
rights or securities not converted prior to such change or
options or rights related to such securities not converted
prior to such change been made upon the basis of such
change; and
(4) on the expiration of any such options or rights,
the termination of any such rights to convert or exchange or
the expiration of any options or rights related to such
convertible or exchangeable securities, the Preferred
Conversion Price shall forthwith be readjusted to such
Preferred Conversion Price as would have obtained had such
options, rights, securities or options or
rights related to such securities not been issued.
(ii) "Excluded Stock" shall mean shares of Common Stock
issued by the Corporation: (1) as a stock dividend or upon any stock
split or other subdivision or combination of the outstanding shares of
Common Stock; (2) upon conversion of the Preferred Stock at any time
outstanding; (3) relating to an aggregate of up to 32,500 shares (as
constituted on the Original Issuance Date) of Common Stock (or options
exercisable therefor) which subsequent to the Original Issuance Date
may be issued or granted by the Corporation to officers, employees or
directors of, or consultants to, the Corporation; (4) upon exercise
stock subscription warrants issued pursuant to the Purchase Agreement;
(5) upon exercise of stock subscription warrants dated the Original
Issuance Date issued to Healthtech Investors II relating to an aggregate
of up to 26,250 shares of Common Stock (as constituted on the Original
Issuance Date); and (6) upon exercise stock subscription warrants issued
to Citibank, N.A. relating to an aggregate of up to 8,000 shares of
Common Stock (as constituted on the Original Issuance Date).
(iii) If, at any time after the Original Issuance Date, the
number of shares of Common Stock outstanding is increased by a stock
dividend payable in shares of Common Stock or by a subdivision or
split-up of shares of Common Stock, then, following the record date
fixed for the determination of holders of Common Stock entitled to
receive
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<PAGE>
such stock dividend, subdivision or split-up, the Preferred
Conversion Price shall be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of each share of Preferred
Stock shall be increased in proportion to such increase in outstanding
shares.
(iv) If, at any time after the Original Issuance Date, the
number of shares of Common Stock outstanding is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date for such combination, the Preferred Conversion Price shall be
appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of Preferred Stock shall be decreased
in proportion to such decrease in outstanding shares.
(v) In case, at any time after the Original Issuance Date,
the Corporation shall declare a cash dividend upon its Common Stock
payable otherwise than out of earnings or shall distribute to holders of
its Common Stock shares of its capital stock (other than Common Stock),
stock or other securities of other persons, evidences of indebtedness
issued by the Corporation or other persons, other assets or options or
rights (excluding options to purchase and rights to subscribe for Common
Stock or other securities of the Corporation convertible into or
exchangeable for Common Stock), then, in each such case, immediately
following the record date fixed for the determination of the holders of
Common Stock entitled to receive such dividend or distribution, the
Preferred Conversion Price in effect thereafter shall be determined by
multiplying the Preferred Conversion Price in effect immediately prior
to such record date by a fraction of which the numerator shall be an
amount equal to the remainder of (x) the Current Market Price of one
share of Common Stock less (y) the fair market value as determined by a
nationally recognized independent investment banking firm selected
mutually by the holders of a majority of the voting power of the
Preferred Stock then outstanding and the Corporation (or, if such
selection cannot be made, by a nationally recognized independent
investment banking firm selected by the American Arbitration Association
in accordance with its rules), of the stock, securities, evidences of
indebtedness, assets, options or rights so distributed in respect of one
share of Common Stock, and of which the denominator shall be such
Current Market Price. Such adjustment shall be made on the date such
dividend or distribution is made, and shall become effective at the
opening of business on the business day next following the record date
for the determination of stockholders entitled to such dividend or
distribution.
(vi) In case, at any time after the Original Issuance Date,
of any capital reorganization, or any reclassification of the stock of
the Corporation (other than
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<PAGE>
a change in par value or from par value to no par value or from no par
value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), or the consolidation or merger of the
Corporation with or into another person (other than a consolidated or
merger in which the Corporation is the continuing corporation and which
does not result in any change in the Common Stock) or of the sale or other
disposition of all or substantially all the properties and assets of the
Corporation as an entirety to any other person, each share of Preferred
Stock shall after such reorganization, reclassification, consolidation,
merger, sale or other disposition be (unless, in the case of a
consolidation, merger, sale or other disposition, payment shall have been
made to the holders of all shares of Preferred Stock of the full amount to
which they shall have been entitled pursuant to Section A.2.) convertible
into the kind and number of shares of stock or other securities or
property of the Corporation or of the corporation resulting from such
consolidation or surviving such merger or to which such properties and
assets shall have been sold or otherwise disposed to which the holder of
the number of shares of Common stock deliverable (immediately prior to the
time of such reorganization, reclassification, consolidation, merger, sale
or other disposition) upon conversion of such share would have been
entitled upon such reorganization, reclassification, consolidation,
merger, sale or other disposition. The provisions of this Section A.5.
shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales or other dispositions.
(vii) All calculations under this paragraph (e) shall be made
to the nearest cent ($.01) or to the nearest one-tenth of a share, as the
case may be.
(viii) For the purpose of any computation pursuant to this
Section A.5(e) or Section A.5(d) above, the Current Market Price at any
date of one share of Common Stock shall be deemed to be the average of
the daily closing prices for the 30 consecutive business days ending no
more than 15 days before the day in question (as adjusted for any stock
dividend, split-up, combination or reclassification that took effect
during such 30 business day period). The closing price for each day
shall be the last reported sales price regular way or, in case no such
reported sales took place on such day, the average of the last reported
bid and asked prices regular way, in either case on the principal
national securities exchange on which the Common Stock is listed or
admitted to trading (or if the Common Stock is not at the time listed or
admitted for trading on any such exchange, then such price as shall be
equal to the average of the last reported bid and asked prices, as
reported by the National Association of Securities Dealers Automated
Quotations System ("NASDAQ") on such day, or if, on any day in question,
the security shall not be quoted on the NASDAQ, then such price shall be
equal to the last reported bid and asked prices on such day as reported
by the National Quotation Bureau, Inc. or any similar reputable
quotation and reporting service, if
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<PAGE>
such question is not reported by the National Quotation Bureau, Inc.);
PROVIDED, HOWEVER, that if the Common Stock is not traded in such manner
that the quotations referred in this clause (ix) are available for the
period required hereunder, the Current Market Price shall be determined by
a nationally recognized independent investment banking firm selected
mutually by the holders of a majority of the voting power of the Preferred
Stock then outstanding and the Corporation (or, if such selection cannot
be made, by a nationally recognized independent investment banking firm
selected by the American Arbitration Association in accordance with its
rules).
(ix) In any case in which the provisions of this Section
A.5(e) shall require that an adjustment shall become effective
immediately after a record date for an event, the Corporation may defer
until the occurrence of such event (i) issuing to the holder of any
share of Preferred Stock converted after such record date and before the
occurrence of such event the additional shares of capital stock issuable
upon such conversion by reason of the adjustment required by such event
over and above the shares of capital stock issuable upon such conversion
before giving effect to such adjustment and (ii) paying to such holder
any amount in cash in lieu of a fractional share of capital stock
pursuant to Section A.5(d) above; PROVIDED, HOWEVER, that the
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional
shares, and such cash, upon the occurrence of the event requiring such
adjustment.
(f) Whenever the Preferred Conversion Price shall be
adjusted as provided in Section A.5(e) above, the Corporation shall forthwith
file, at the office of the transfer agent for the Preferred Stock or at such
other place as may be designated by the Corporation, a statement, signed by
its independent certified public accountants, showing in detail the facts
requiring such adjustment and the Preferred Conversion Price that shall be in
effect after such adjustment. The Corporation shall also cause a copy of such
statement to be sent by first-class, certified mail, return receipt requested,
postage prepaid, to each holder of shares of Preferred Stock at such holder's
address appearing on the Corporation's records. Where appropriate, such copy
may be given in advance and may be included as part of a notice required to be
mailed under the provisions of Section A.5(g) below.
(g) In the event the Corporation shall propose to take any
action of the types described in clauses (i), (iii), (iv), (v) or (vi) of
Section A.5(e) above, the Corporation shall give notice to each holder of shares
of Preferred Stock in the manner set forth in Section A.5(f) above, which notice
shall specify the record date, if any, with respect to any such action and the
date on which such action is to take place. Such notice shall also set forth
such facts with respect thereto as shall be
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reasonably necessary to indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Preferred Conversion
Price and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action
or deliverable upon conversion of shares of Preferred Stock. In the case of
any action which would require the fixing of a record date, such notice shall
be given at least 20 days prior to the date so fixed, and in case of all other
action, such notice shall be given at least 30 days prior to the taking of
such proposal action. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of any such action.
(h) The Corporation shall pay all documentary, stamp or
other transactional taxes attributable to the issuance or delivery of shares
of capital stock of the Corporation upon conversion of any shares of Preferred
Stock; PROVIDED, HOWEVER, that the Corporation shall not be required to
pay any taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any certificate for such shares in a name other than
that of the holder of the shares of Preferred Stock in respect of which such
shares are being issued.
(i) The Corporation shall reserve, free from preemptive
rights, out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the shares of Preferred Stock
sufficient shares to provide for the conversion of all outstanding shares of
Preferred Stock.
(j) All shares of Common Stock which may be issued in
connection with the conversion provisions set forth herein will, upon issuance
by the Corporation, be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, and free from all taxes,
liens or charges with respect thereto.
6. DEFINITIONS. (a) The term "Accrued Dividends" shall mean
Full Cumulative Dividends to the date of determination, less the amount of all
dividends paid pursuant to Sections A.1(a) or (b) of this Article upon the
relevant share of Preferred Stock.
(b) The term "Book Value Per Common Share" shall mean, as
of the date of calculation, the quotient obtained by dividing (i) total
stockholder's equity of the Corporation and its consolidated subsidiaries
attributable to the Common Stock as of such date (as determined in accordance
with generally accepted accounting principles consistently applied) by (ii)
the average number of shares of Common Stock outstanding during the
three-month period immediately preceding such date (assuming in each of (i)
and (ii) that holders of all securities convertible into or exercisable or
exchangeable for Common Stock had been converted at the beginning of such
three-month period).
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<PAGE>
(c) The term "Event of Conversion" shall mean (i) the
consummation of a firm commitment underwritten public offering (a "Public
Offering") of shares of Common Stock of the Corporation pursuant to the
Securities Act of 1933, as amended, (A) at a selling price per share of Common
Stock (as constituted on the date hereof) of not less than $30 (the "Trigger
Price") and (B) which results in aggregate net cash proceeds to the
Corporation of not less than $5,000,000, or (ii) at any time after the Common
Stock is listed or admitted for trading on any national securities exchange or
is reported by NASDAQ, the daily closing price on any such exchange or the
last reported bid price as reported by NASDAQ, as the case may be, shall be
not less than $60 per share of Common Stock for any 20 consecutive trading
days.
(d) The term "Event of Election" shall mean the
occurrence, so long as any shares of Preferred Stock are outstanding, of a
default in a payment pursuant to Section 8.8 of the Purchase Agreement, a
default in any Requested Redemption Payment or a default of any four payments
when payable of dividends on the Preferred Stock pursuant to Section A.1(a) of
this Article.
(e) The term "Event of Redemption" shall mean such time as
either Joseph D. Bohr, Stephen L. Phelps or William H. Cassels is no longer
functioning as the President of the Corporation in accordance with the duties
of such office as set forth in the By-laws of the Corporation in effect on the
Original Issuance Date, any such determination to be made in good faith by the
holders of 50% of the Preferred Stock at the time outstanding.
(f) The term "Full Cumulative Dividends" shall
mean (whether or not in respect of which such term is used there shall have
been net profits or net assets of the Corporation legally available for the
payment of such dividends) that amount which shall be equal to dividends at
the full rate fixed for the Preferred Stock as provided herein for the period
of time elapsed from the Original Issuance Date to the date as of which Full
Cumulative Dividends are to be computed.
(g) The term "Junior Stock" shall mean the Common Stock
and any other class of capital stock of the Corporation ranking as to payment
of dividends and distributions of assets and upon liquidation junior to the
Preferred Stock.
(h) The term "Original Issuance Date" shall mean the date
of original issuance of the first share of Preferred Stock.
(i) The term "Purchase Agreement" shall mean the Purchase
Agreement dated on or about October 12, 1984, among the Corporation and the
investors named therein relating to the issue and sale of the Preferred Stock.
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<PAGE>
B. COMMON STOCK
1. VOTING. Each holder of shares of Common Stock shall be
entitled to one vote for each share of Common Stock held on all matters as to
which holders of Common Stock shall be entitled to vote. In any election of
directors, no holder of Common Stock shall be entitled to cumulate his votes
by giving one candidate more than one vote per share.
2. OTHER RIGHTS. Each share of Common Stock issued and
outstanding shall be identical in all respects one with the other, and no
dividends shall be paid on any shares of Common Stock unless the same dividend
is paid on all shares of Common Stock outstanding at the time of such payment;
PROVIDED, HOWEVER, no dividends shall be paid on shares of Common Stock so
long as any shares of Preferred Stock are outstanding. Except for and subject
to those rights expressly granted to the holders of the Preferred Stock, or
except as may be provided by the laws of the State of Delaware, the holders of
Common Stock shall have exclusively all other rights of stockholders including,
but not by way of limitation, (i) the right to receive dividends, when and as
declared by the Board of Directors of the Corporation out of assets lawfully
available therefor, and (ii) in the event of any distribution of assets upon
liquidation, dissolution or winding-up of the Corporation or otherwise, the
right to receive ratably and equally all the assets and funds of the Corporation
remaining after the payment to the holders of the Preferred Stock of the
specific amounts which they are entitled to receive upon such liquidation,
dissolution or winding-up of the Corporation as herein provided.
ARTICLE V
Subject to Section A.4(e)(viii) of Article IV, the Board of
Directors is authorized to make, alter or repeal the By-laws of the
Corporation. Election of directors need not be by ballot.
ARTICLE VI
The name and mailing address of the incorporator is:
L. M. Curtis
100 West Tenth Street
Wilmington, Delaware 19801
We, THE UNDERSIGNED, Chairman of the Board and Secretary of
National Healthcare, Inc., for the purpose of restating the Restated
Certificate of Incorporation of said National Healthcare, Inc., do make this
certificate, hereby declaring and certifying that this Restated Certificate of
Incorporation was adopted by the written consent of a majority of the
stockholders of National Healthcare, Inc. in accordance with the provisions of
Section 228 of the General Corporation Law of Delaware and written notice has
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<PAGE>
been given to those stockholders of National Healthcare, Inc. who have not
consented in writing in accordance with said Section 228, and further that
this instrument is our act and deed and that the facts herein stated are true.
Accordingly, we have hereunto set our hands and seals this 11th day of
October, 1984.
/s/ Stephen L. Phelps
-------------------------------------
Stephen L. Phelps, Chairman
[Seal]
/s/ William R. Wayland, Jr.
Attest: -------------------------------------
William R. Wayland, Jr., Secretary
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<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
RESTATED CERTIFICATE OF INCORPORATION OF "NATIONAL HEALTHCARE, INC." FILED IN
THIS OFFICE ON THE THIRD DAY OF APRIL, A.D. 1985, AT 1 O'CLOCK P.M.
/s/ William T. Quillen
[Seal] -------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029419
DATE: 08/24/1993
932365191
<PAGE>
735093034 1 PM
FILED
APR 3 1985
/s/ Michael Harkin
Secretary of State
SECOND RESTATED
CERTIFICATE OF INCORPORATION
OF
NATIONAL HEALTHCARE, INC.
ORIGINALLY INCORPORATED ON OCTOBER 20, 1981
(PURSUANT TO SECTION 242-245)
ARTICLE I
The name of the corporation is: NATIONAL HEALTHCARE, INC.
ARTICLE II
The address of its registered office in the State of Delaware is
1209 Orange Street in the City of Wilmington, County of New Castle 19301. The
name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
ARTICLE IV
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 1,916,606 shares, consisting of
(a) 273,750 shares of Convertible Preferred Stock, $.01 par value (the
"Preferred Stock"), (b) 1,500,000 shares of Class A Common Stock, no par value
(the "Class A Common Stock"), and (c) 142,856 shares of Class B Common Stock,
$.01 par value (the "Class B Common Stock", and the Class A Common Stock and the
Class B Common Stock being sometimes hereinafter collectively referred to as the
"Common Stock).
The designations, powers, preferences, and relative, participating,
optional or other special rights, and the qualifications, limitations and
restrictions thereof in respect of the Preferred Stock and the Common Stock
are as follows:
<PAGE>
A. PREFERRED STOCK
1. DIVIDENDS. (a) In each year occurring after the third
anniversary date of the Preferred Original Issuance Date (as defined in
Section A.6 of this Article) the holder of each share of Preferred Stock shall
be entitled to receive, before any dividends shall be declared and paid upon
or set aside for the Junior Stock (as defined in Section A.6 of this Article)
in any such year, when and as declared by the Board of Directors of the
Corporation, out of funds legally available for that purpose, dividends in
cash at the rate of $1.80 per annum per share (calculated on the basis of a
year of 360 days comprised of 12 30 day months), payable quarterly on January 1,
April 1, July 1 and October 1 of each year, or if such day shall not be a
business day, on the next succeeding business day, any such dividend payment
date being hereinafter referred to as a "Dividend Payment Date"). Dividends
on shares of Preferred Stock shall be cumulative from the third anniversary
date of the Preferred Original Issuance Date (whether or not there shall be
net profits or net assets of the Corporation legally available for the payment
of such dividends), so that, if at any time Full Cumulative Dividends (as
defined in said Section A.6.) upon the Preferred Stock shall not have been
paid or declared and a sum sufficient for payment thereof set apart, the
amount of the deficiency in such dividends shall be fully paid (but without
interest) or dividends in such amount shall have been declared on the shares
of the Preferred Stock and a sum sufficient for the payment thereof shall have
been set apart for such payment, before any dividend shall be declared or paid
or any other distribution ordered or made upon any Junior Stock (other than a
dividend payable in such Junior Stock) and before any sum or sums shall be set
aside for or applied to the purchase (except in accordance with the 1984
Purchase Agreement (as defined in Section A.6 of this Article)) or redemption
of any shares of any Junior Stock. All dividends declared upon the Preferred
Stock and any other class of stock ranking on a parity as to dividends with
such Preferred Stock (with respect to dividends the Preferred Stock shall rank
on a parity with the Class B Common Stock and senior to the Junior Stock)
shall be declared PRO RATA per share. Holders of shares of Preferred Stock
shall not be entitled to any dividends, whether payable in cash, property or
stock, in excess of the Full Cumulative Dividends at the rate set forth above.
All payments due under this Section A.1(a) to any holder of shares of
Preferred Stock shall be made to the nearest cent.
(b) In the event that the Corporation shall fail to make a
full payment in cash of dividends as provided in Section A.1(a) above on any
Dividend Payment Date, then, at the option of any record holder of Preferred
Stock on such Dividend Payment Date, the Corporation shall pay such dividend
by delivery to such holder of that number of shares of Class A Common Stock
(rounded to the nearest number of full shares) equal to the quotient obtained
by dividing (i) the product obtained by multiplying (A) the number of shares
of Preferred Stock owned by
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such holder on such Dividend Payment Date by (B) 1.8, by (ii) the Book Value Per
Common Share (as defined in Section A.6 of this Article). Such option may be
exercised upon written notice, sent by first-class certified mail, return
receipt requested, to the Corporation not more than 60 days after the Dividend
Payment Date with respect to which such dividend was not paid in full. Within
10 days after receipt of such notice, the Corporation shall issue and deliver to
such holder, to the place designated by such holder, a certificate or
certificates for the full number of shares of Class A Common Stock to which such
holder is entitled.
2. RIGHTS ON LIQUIDATION, DISSOLUTION, WINDING-UP. In the
event of any liquidation, dissolution or winding-up of the Corporation, the
holders of shares of Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders, whether from capital, surplus or earnings, before any payment
shall be made to the holders of any Junior Stock (with respect to rights on
liquidation, dissolution or winding up of the Corporation, the Preferred Stock
shall rank on a parity with the Class B Common Stock and senior to the Junior
Stock), an amount equal to the Liquidation Preference (as hereinafter
defined), plus Accrued Dividends (as defined in Section A.6. of this Article),
if any, to the date of payment. If upon any liquidation, dissolution or
winding-up of the Corporation the assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
shares of Preferred Stock the full amounts to which they respectively shall be
entitled, the holders of shares of Preferred Stock shall share ratably in any
distribution of assets according to the respective amounts which would be
payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to said shares were paid in full. In the
event of any liquidation, dissolution or winding-up of the Corporation, after
payment shall have been made to the holders of shares of Preferred Stock and
shares of capital stock ranking on a par with the Preferred Stock of the full
amount to which they shall be entitled as aforesaid, the holders of capital
stock of the Corporation shall be entitled, to the exclusion of the holders of
shares of Preferred Stock, to share, according to their respective rights and
preferences, in all remaining assets of the Corporation available for
distribution to its stockholders. The merger or consolidation of the
Corporation into or with another corporation or the merger or consolidation of
any other corporation into or with the Corporation (in which consolidation or
merger the stockholders of the Corporation receive distributions of cash or
securities as a result of such consolidation or merger), or the sale or other
disposition of all or substantially all the assets of the Corporation shall be
deemed to be a liquidation, dissolution or winding-up of the Corporation (an
"Event of Liquidation"). The Liquidation Preference per share of Preferred
Stock shall be $26 from the Preferred Original Issuance Date to and including
the first anniversary date thereof, $34 thereafter to and including the second
anniversary date of the Preferred Original Issuance Date, $40 thereafter to and
including the third anniversary date of the
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<PAGE>
Preferred Original Issuance Date, $41.52 thereafter to and including the
seventh anniversary date of the Preferred Original Issuance Date, $46.09
thereafter to and including the eighth anniversary date of the Preferred
Original Issuance Date and $51.16 at all times thereafter. The Liquidation
Preference shall be subject to equitable adjustment for a split-up, subdivision,
a combination of shares of Preferred Stock or similar event. Anything contained
in this Section A.2. to the contrary notwithstanding, each holder of shares of
Preferred Stock shall have the right to convert all or any part of the shares
of Preferred Stock held by such holder as herein provided into shares of Class A
Common Stock pursuant to Section A.5. of this Article in lieu of receiving the
Liquidation Preference in connection with any Event of Liquidation.
3. REDEMPTION.
3.1. OPTIONAL REDEMPTION. (a) Subject to Section A.3.1(f)
below, at any time, or from time to time, and so long as any shares of
Preferred Stock shall be outstanding, the Corporation may, at the option of
the Board of Directors of the Corporation, redeem the whole or any part of
such outstanding shares of Preferred Stock at an amount per share (the
"Optional Redemption Price") determined as set forth below (plus Accrued
Dividends, if any, to the date fixed for redemption of the shares of Preferred
Stock to be so redeemed (each such date being hereinafter referred to as an
"Optional Redemption Date")):
Optional
Redemption
Period Price
------ -----------
From the Preferred Original Issuance Date $26.00
to and including the first
anniversary date thereof
Thereafter to and including the second $34.00
anniversary date of such Original
Issuance Date
Thereafter to and including the third $40.00
anniversary date of such Original
Issuance Date
Thereafter to and including the seventh $41.52
anniversary date of such Original
Issuance Date
Thereafter to and including the eighth $46.05
anniversary date of such Original
Issuance Date
At all times thereafter $51.16
(b) The total sum payable per share of Preferred Stock on
any Optional Redemption Date is hereinafter referred to as the "Redemption
Price", and any payment to be made on an Optional Redemption Date is
hereinafter referred to as a "Redemption Payment".
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<PAGE>
(c) On or after any Optional Redemption Date (unless
default shall be made by the Corporation in the payment of the applicable
Redemption Price as hereinafter provided, in which event such rights shall be
exercisable until such default is cured), all rights in respect of the shares
of Preferred Stock to be redeemed, except the right to receive the applicable
Redemption Price as hereinafter provided, shall cease and terminate; and such
shares shall not longer be deemed to be outstanding, whether or not the
certificates representing such shares have been received by the Corporation.
(d) If less than all the shares of Preferred Stock at any
time outstanding are to be redeemed pursuant to Section A.3.1(a) hereof, such
redemption shall be made PRO RATA with respect to such shares in the manner
prescribed by the Board of Directors. Thirty days' notice by the Corporation
of every Optional Redemption Date shall be sent by first-class, certified
mail, return receipt requested, postage prepaid, by the Corporation to the
holders of shares of Preferred Stock to be so redeemed at their respective
addresses as the same shall appear on the books of the Corporation. At any
time on or after an Optional Redemption Date, each holder of shares of
Preferred Stock so to be redeemed shall be entitled to receive the Redemption
Price upon actual delivery to the Corporation or its agent of the certificates
representing the shares of Preferred Stock so to be redeemed.
(e) The Corporation will not, and will not permit any
subsidiary of the Corporation to, purchase or acquire any shares of Preferred
Stock otherwise than pursuant to the terms of this Section A.3.1, Section
A.3.2 of this Article, Section 8.8 of the 1984 Purchase Agreement (as defined
in Section A.6 of this Article) or pursuant to an offer made on the same terms
to all holders of Preferred Stock at the time outstanding.
(f) Anything contained in this Section A.3.1 to the
contrary notwithstanding, each holder of shares of Preferred Stock to be
redeemed in accordance with this Section A.3.1 shall have the right,
exercisable at any time up to the close of business on the Optional Redemption
Date (unless default shall be made by the Corporation in the payment of the
Redemption Price as herein provided, in which event such right shall be
exercisable until such default is cured), to convert all or any part of the
shares of Preferred Stock held by such holder as herein provided into shares
of Class A Common Stock pursuant to Section A.5 of this Article. If, and to
the extent, any shares of Preferred Stock so entitled to redemption are
converted into shares of Class A Common Stock by the holders thereof prior to
the close of business on the Optional Redemption Date, the total number of
shares of Preferred Stock otherwise to be redeemed on such Optional Redemption
Date shall be recalculated as if such shares so converted had never been
outstanding.
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<PAGE>
3.2 REQUESTED REDEMPTION. (a) Subject to Section
A.3.2(d) below, at any time there shall exist an Event of Redemption (as
defined in Section A.6 of this Article), and so long as any shares of
Preferred Stock shall be outstanding, the Corporation shall (unless otherwise
prevented by law) redeem, at the option of any holder or holders or Preferred
Stock, all (or such lesser number as specified by any such holder in the
written notice referred to below) of such holder's shares of Preferred Stock
then outstanding. Such option shall be exercised upon 30 days' written notice
(a "Requested Redemption Notice") to the Corporation by any holder or holders
of Preferred Stock, which notice shall state such holder's intention to
exercise the redemption option set forth herein and the number of shares of
Preferred Stock sought to be redeemed (any such date being hereinafter referred
to as a "Requested Redemption Date"). Within five days after receipt of any
Requested Redemption Notice, the Corporation shall notify all other holders of
Preferred Stock and/or Class B Common Stock of such Notice and each such holder
shall have the right, exercisable by written notice to the Corporation within 10
days after receipt of such notice from the Corporation, to request that all of
such holder's shares of Preferred Stock and/or Class B Common Stock, as the case
may be (or such lesser number as specified in such written notice to the
Corporation) be redeemed by the Corporation on the Requested Redemption Date.
The amount per share of Preferred Stock at which the shares of Preferred Stock
are to be redeemed pursuant to this Section A.3.2(a) on any Requested Redemption
Date by the Corporation shall be an amount equal to the Optional Redemption
Price at the time in effect, plus Accrued Dividends, if any, to such Redemption
Date. The total sum payable per share of Preferred Stock on any Requested
Redemption Date is hereinafter referred to as the "Requested Redemption Price,"
and any payment to be made is hereinafter referred to as the "Requested
Redemption Payment", as to any holder of Preferred Stock.
(b) On and after any Requested Redemption Date (unless
default shall be made by the Corporation in the payment of the applicable
Requested Redemption Price as hereinafter provided, in which event such rights
shall be exercisable until such default is cured), all rights in respect of
the shares of Preferred Stock to be redeemed, except the right to receive the
applicable Requested Redemption Price as hereinafter provided, shall cease and
terminate; and such shares shall not longer be deemed to be outstanding,
whether or not the certificates representing such shares have been received by
the Corporation.
(c) Notice of any exercise of the redemption option
pursuant to this Section A.3.2 shall be sent by first-class certified mail,
return receipt requested, postage prepaid, to the Corporation. At any time on
or after the Requested Redemption Date, the holders of record of shares of
Preferred Stock requesting such Preferred Stock to be redeemed on such
Requested Redemption Date in accordance with this Section A.3.2 shall be
entitled to receive the applicable Requested Redemption Price upon
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<PAGE>
actual delivery to the Corporation or its agents of the certificates
representing the shares to be redeemed. If upon any redemption the assets of
the Corporation available for redemption shall be insufficient to pay the
holders of the shares of Preferred Stock and/or Class B Common Stock, as the
case may be, the full amounts to which they shall be entitled, the holders of
shares of Preferred Stock and/or Class B Common Stock, as the case may be,
requesting redemption shall share ratably in any such redemption according to
the respective amounts which would be payable in respect of such shares
requested to be redeemed by the holders thereof if all amounts payable on or
with respect to such shares were paid in full (the respective amounts for the
Class B Common Stock being set forth in Section B.3 of this Article).
(d) Anything contained in this Section A.3.2. to the
contrary notwithstanding, the holders of shares of Preferred Stock shall have
the right, exercisable at any time up to the close of business on the
Preferred Redemption Date (unless default shall be made by the Corporation in
the payment of the Preferred Redemption Price as herein provided, in which
event such right shall be exercisable until such default is cured), to convert
all or any part of such shares requested by such holder to be redeemed as
herein provided into share of Common Stock pursuant to Section A.5 of this
Article. If, and to the extent, any shares of Preferred Stock so entitled to
redemption are converted into shares of Class A Common Stock by the holders
thereof prior to the close of business on the Preferred Redemption Date, the
total number of shares of Preferred Stock otherwise to be redeemed on such
Preferred Redemption Date shall be reduced by the number of shares of
Preferred Stock so converted.
4. VOTING. (a) In addition to the rights specified in
Section A.4(b), (c) and (e) below and any other rights provided in the
Corporation's By-laws or by law, each share of Preferred Stock shall entitle
the holder thereof to such number of votes per share as shall equal the number
of shares of Class A Common Stock (including any fraction to one decimal
place) into which each share of Preferred Stock is then convertible, entitled
to vote on all matters as to which holders of Class A Common Stock shall be
entitled to vote, in the same manner and with the same effect as such holders
of Class A Common Stock, voting together with the holders of Class A Common
Stock as one class.
(b) In addition to the rights specified in Section A.4(a)
above, (i) the holders of a majority in voting power of the Preferred Stock,
voting separately as one class, shall have the exclusive and special right at
all times to elect two directors to the Board of Directors of the Corporation,
and (ii) the holders of a majority in voting power of the Preferred Stock and
the Class B Common Stock, voting separately together as a single class, upon the
occurrence of an Event of Election (as defined in Section A.6. below), to elect
four directors to the Board of Directors of the Corporation. The special and
exclusive right of the holders of Preferred Stock and Class B Common Stock,
voting separately as one
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<PAGE>
class, set forth in clause (ii) of this Section A.4(b) to elect four directors
to the Board of Directors of the Corporation shall continue until the Event of
Election which gave rise to such right has been cured by the Corporation,
subject to the revesting thereof upon the occurrence of each and every Event of
Election subsequent thereto. In any election of directors pursuant to this
Section A.4(b), each holder of shares of Preferred Stock shall be entitled to
one vote for each share of Preferred Stock shall be entitled to one vote for
each share of Preferred Stock held and no holder of Preferred Stock shall be
entitled to cumulate his votes by giving one candidate more than one vote per
share. The special and exclusive voting right of the holders of the Preferred
Stock and/or the Class B Common Stock, as the case may be, voting separately as
one class, contained in this Section A.4(b) may be exercised either at a special
meeting of the holders of Preferred Stock and/or Class B Common Stock, as the
case may be, called as provided below, or at any annual or special meeting of
the shareholders of the Corporation, or by written consent of such holders in
lieu of a meeting. The directors to be elected by the holders of the Preferred
Stock and/or Class B Common Stock, as the case may be, voting separately as one
class, pursuant to this Section A.4(b), shall serve for terms extending from the
date of their election and qualification until the time of the next succeeding
annual meeting of shareholders and until their successors have been elected and
qualified; PROVIDED, HOWEVER, that the term of additional directors elected
pursuant to Section A.4(b)(ii) shall terminate at such time as the Event of
Election which gave rise to such right of election shall have been cured by the
Corporation.
(c) If at any time any directorship to be filled by the
holders of Preferred Stock and/or Class B. Common Stock, as the case may be,
voting separately as one class, pursuant to Section A.4(b) above, has been
vacant for a period of 10 days, the Secretary of the Corporation shall, upon
the written request of the holders of record of shares representing at least
25% of the voting power of the Preferred Stock and/or Class B Common Stock, as
the case may be, then outstanding, call a special meeting of the holders of
Preferred Stock and/or Class B Common Stock, as the case may be, for the
purpose of electing a director or directors to fill such vacancy or vacancies.
Such meeting shall be held at the earliest practicable date at such place as is
specified in or determined in accordance with the By-laws of the Corporation.
If such meeting shall not be called by the Secretary of the Corporation within
10 days after personal service of said written request on him, then the holders
of record of shares representing at least 25% of the voting power of the
Preferred Stock and/or Class B Common Stock, as the case may be, then
outstanding may designate in writing one of their number to call such meeting
at the expense of the Corporation, and such meeting may be called by such
person so designated upon the notice required for annual meetings of
shareholders and shall be held at such specified place. Any holder of the
Preferred Stock and/or Class B Common Stock, as the case may be, so designated
shall have access to the stock books of the Corporation for the purpose of
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<PAGE>
calling a meeting of the stockholders pursuant to these provisions.
(d) At any meeting held for the purpose of electing directors
at which the holders of Preferred Stock and/or Class B Common Stock, as the case
may be, shall have the right, voting separately as one class, to elect directors
as provided in Section A.4(b) above, the presence, in person or by proxy, of the
holders of record of shares representing at least 51% of the voting power of the
Preferred Stock and/or Class B Common Stock, as the case may be, then
outstanding shall be required to constitute a quorum of the Preferred Stock
and/or Class B Common Stock, as the case may be, for such election. At any such
meeting or adjournment thereof, the absence of such a quorum of the Preferred
Stock and/or Class B Common Stock, as the case may be, shall not prevent the
election of directors other than the director or directors to be elected by
holders of Preferred Stock and/or Class B Common Stock, as the case may be,
voting separately as one class, pursuant to Section A.4(b) above, and the
absence of a quorum for the election of such other directors shall not prevent
the election of the director or directors to be elected by the holders of
Preferred Stock and/or Class B Common Stock, as the case may be, voting
separately as one class, pursuant to Section A.4(b) above, and in the absence
of either or both of such quorums, the holders of record of shares representing
at least 51% of the voting power present in person or by proxy of the class of
stock which lacks a quorum shall have power to adjourn the meeting for the
election of directors which they are entitled to elect from time to time
without notice other than announcement at the meeting. A vacancy in the
directorships to be elected by the holders of the Preferred Stock and/or Class B
Common Stock, as the case may be, pursuant to Section A.4(b) above, may be
filled only by vote or written consent in lieu of a meeting of the holders of at
least 51% of the voting power of the Preferred Stock and/or Class B Common
Stock, as the case may be.
(e) the Corporation shall not, without the affirmative
consent or approval of the holders of shares representing at least 60% of the
voting power of the Preferred Stock then outstanding, acting separately as one
class, given by written consent in lieu of a meeting or by vote at a meeting
called for such purpose for which notice shall have been given to the holders of
the Preferred Stock, (i) sell, lease, transfer or otherwise dispose of any of
the properties or assets which, individually or in the aggregate as to all such
transactions occurring after the Original Issuance Date, represent in excess of
33-1/3% of the total assets of the Corporation on the date of any such
transaction (determined in accordance with generally accepted accounting
principles), unless the proceeds thereof are applied, in order of priority,
FIRST, to the reduction of indebtedness of the Corporation for borrowed money,
and, SECOND, to a redemption, in whole or in part, of the Preferred Stock
pursuant to Section A.3.1(a) of this Article, (ii) declare or pay any dividends
on, or make any distribution of cash or other property or both with respect to
(whether by way of reduction of capital or otherwise),
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<PAGE>
any shares of Junior Stock (other than dividends payable solely in shares of
Junior Stock or stock splits), (iii) redeem, retires, purchase or otherwise
acquire, directly or indirectly, for value or set apart any sum therefor, any
shares of Junior Stock, (iv) except as permitted by clause (vii) below, merge or
consolidate with or into, or permit any subsidiary to merge or consolidate with
or into, any other corporation, corporations or other entity or entities, except
when the holders of Preferred Stock are entitled to receive payment as provided
in Section A.2 of this Article, (v) voluntarily dissolve, liquidate, or wind-up
or carry out any partial liquidation or distribution or transaction in the
nature of a partial liquidation or distribution, (vi) in any manner alter or
change the designations or the powers, preferences or rights, or the
qualifications, limitations or restrictions of the Preferred Stock, (vii) except
as permitted by Section 8.3.6 of the Purchase Agreement, purchase or otherwise
acquire (whether by purchase or lease of assets, capital stock or by merger or
consolidation), or permit any subsidiary to so purchase or otherwise acquire,
any material tangible or intangible assets which represent all or a substantial
part of the assets of any other person or entity or (viii) alter, amend or
repeal the By-laws of the Corporation as in effect on the original Issuance Date
which in any manner affects the rights of the holders of the Preferred Stock.
5. CONVERSION. (a) Except as to shares of Preferred Stock to
be redeemed in accordance with Section A.3 of this Article which may only be
converted up to the close of business on the respective Redemption Date
(unless default shall be made by the Corporation in the payment of the
respective Redemption Price so provided in said Section A.3, in which event
such right to convert shall be exercisable until such default is cured), the
holder of any shares of Preferred Stock shall have the right, at such holder's
option, at any time or from time to time convert any or all of such holder's
shares of Preferred Stock into such whole number of fully paid and
nonassessable shares of Class A Common Stock as $20 multiplied by the number
of shares of Preferred Stock being converted is a multiple of the Preferred
Conversion Price (as last adjusted and then in effect) for the shares of
Preferred Stock being converted by surrender of the certificates representing
the shares of Preferred Stock so to be converted in the manner provided in
Section A.5(b) below. The Preferred Conversion Price per share at which
shares of Class A Common Stock shall be issuable upon conversion of shares of
Preferred Stock pursuant to this Section A.5(a) shall be $20; PROVIDED,
HOWEVER, that such Preferred Conversion Price shall be subject to adjustment
as set forth in Section A.5(e) below. The holder of any shares of Preferred
Stock exercising the aforesaid right to convert such shares into shares of
Class A Common Stock shall be entitled to payment of Accrued Dividends.
(b) Upon the occurrence of an Event of Conversion (as
defined in Section A.6 of this Article), all shares of Preferred Stock then
outstanding shall, by virtue of, and
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<PAGE>
simultaneously with, the occurrence of the Event of Conversion and without any
action on the part of the holders thereof, be deemed automatically converted
into such whole number of fully paid and non-assessable shares of Class A Common
Stock as $20 multiplied by the number of shares of Preferred Stock being
converted is a multiple of the Preferred Conversion Price (as last adjusted and
then in effect) for the shares of Preferred Stock being converted. The
Preferred Conversion Price upon conversion at which shares of Class A Common
Stock shall be issuable upon conversion of shares of Preferred Stock pursuant to
this Section A.5(b) shall be $20; PROVIDED, HOWEVER, that such Preferred
Conversion Price shall be subject to adjustment as set forth in Section A.5(e)
below and shall be further adjusted by a reduction of $1.00 for each $1.50 that
the Trigger Price (as defined in Section A.6 of this Article) in connection with
a Public Offering (as defined in Section A.6 of this Article) is below (i) $40,
in the event of an Event of Conversion occurring prior to the 30 months after
the Original Issuance Date or (ii) $60, at any time thereafter. The holder of
any shares of Preferred Stock converted into shares of Class A Common Stock
pursuant to this Section A.5(b) shall be entitled to payment of Accrued
Dividends.
(c) The holder of any shares of Preferred Stock may
exercise the conversion right pursuant to Section A.5(a) above by delivering
to the Corporation during regular business hours, at the office of any
transfer agent of the Corporation for the Preferred Stock or at such other
place as may be designated by the Corporation, the certificate or certificates
for the shares to be converted, duly endorsed or assigned in blank or to the
Corporation (if required by it), accompanied by written notice stating that
such holder elects to convert such shares and stating the name or names (with
address) in which the certificate or certificates for the shares of Class A
Common Stock are to be issued. Conversion shall be deemed to have been
effected with respect to conversion under Section A.5(a) above, on the date
when the aforesaid delivery is made, and such date is referred to herein as
the "Conversion Date". As promptly as practicable thereafter the Corporation
shall issue and deliver to or upon the written order of such holder, to the
place designated by such holder, a certificate or certificates for the number
of full shares of Class A Common Stock to which such holder is entitled and a
check or cash in respect of any fractional interest in a share of Class A
Common Stock, as provided in Section A.5(d) below, payable with respect to the
shares of Preferred Stock so converted up to and including the Conversion
Date. The person in whose names the certificate or certificates for Class A
Common Stock are to be issued shall be deemed to have become a stockholder of
record on the applicable Conversion Date unless the transfer books of the
Corporation are closed on that date, in which event such holder shall be deemed
to have become a stockholder of record on the next succeeding date on which
the transfer books are open, but the Preferred Conversion Price shall be that
in effect on the Conversion Date. Upon conversion of only a portion of the
number of shares covered by a certificate representing shares of Preferred
Stock surrendered for conversion, the Corporation shall issue and deliver to or
upon the written order of the holder of the certificate so surrendered for
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conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Preferred Stock representing the unconverted portion of
the certificate so surrendered, which new certificate shall entitle the holder
thereof to dividends on the shares of Preferred Stock represented thereby to
the same extent as if the certificates theretofore covering such unconverted
shares had not been surrendered for conversion.
(d) No fractional shares of Class A Common Stock or scrip
shall be issued upon conversion of shares of Preferred Stock. If more than
one share of Preferred Stock shall be surrendered for conversion at any one
time by the same holder, the number of full shares of Class A Common Stock
issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Preferred Stock so surrendered. Instead of any
fractional shares of Class A Common Stock which would otherwise be issuable
upon conversion of any shares of Preferred Stock the Corporation shall pay a
cash adjustment in respect of such fractional interest in an amount equal to
the then Current Market Price (as hereinafter defined) of a share of Class A
Common Stock multiplied by such fractional interest. Fractional interests
shall not be entitled to dividends, and the holders of fractional interests
shall not be entitled to any rights as stockholders of the Corporation in
respect of such fractional interest.
(e) The Preferred Conversion Price shall be subject to
adjustment from time to time as follows:
(i) If the Corporation shall at any time or from time
to time after the Original Issuance Date, issue any shares of Class A
Common Stock other than Excluded Stock (as hereinafter defined) without
consideration or for a consideration per share less than the Preferred
Conversion Price in effect immediately prior to the issuance of such
Class A Common Stock, the Preferred Conversion Price in effect
immediately prior to each such issuance shall forthwith (except as
provided in this clause (i)) be lowered to a price equal to the quotient
obtained by dividing
(A) an amount equal to the sum of
(1) the total number of shares of Class A Common
Stock outstanding (including any shares of Class A Common Stock
deemed to have been issued pursuant to subdivision (C) of this
clause (i) and to clause (ii) below (it being understood that the
shares of Class A Common Stock issuable upon conversion of the
Preferred Stock and Class B Common Stock shall be deemed to be
outstanding for all purposes of the computation required in this
clause (i)) immediately prior to such issuance multiplied by the
Preferred Conversion Price in effect immediately prior to such
issuance, plus
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(2) the consideration received by the Corporation
upon such issuance,
by
(B) the total number of shares of Class A Common Stock
outstanding (including any shares of Class A Common Stock deemed
to have been issued pursuant to subdivision (C) of this clause (i)
and to clause (ii) below (it being understood that the shares of
Class A Common Stock and the Class B Common Stock issuable upon
conversion of the Preferred Stock shall be deemed to be outstanding
for all purposes of the computation required in this clause (i))
immediately after the issuance of such Class A Common Stock.
For the purposes of any adjustment of the Preferred Conversion Price pursuant
to this clause (i), the following provisions shall be applicable:
(A) In the case of the issuance of Class A Common Stock for
cash, the consideration shall be deemed to be the amount of cash
paid therefor after deducting therefrom any discounts, commissions
or other expenses allowed, paid or incurred by the Corporation for
any underwriting or otherwise in connection with the issuance and
sale thereof.
(B) In the case of the issuance of Class A Common Stock for
a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of
Directors of the Corporation, irrespective of any accounting
treatment; PROVIDED, HOWEVER, that the aggregate fair market
value of such non-cash and cash consideration shall not exceed the
Current Market Price (as hereinafter defined) of the shares of
Class A Common Stock being issued.
(C) In the case of the issuance of (i) options to purchase
or rights to subscribe for Class A Common Stock, (ii) securities
by their terms convertible into or exchangeable for Class A Common
Stock or (iii) options to purchase or rights to subscribe for such
convertible or exchangeable securities:
(1) the aggregate maximum number of shares of Class A
Common Stock deliverable upon exercise of such options to purchase
or rights to subscribe for Class A Common Stock shall be deemed to
have been issued at the time such options or rights were issued and
for a consideration equal to the consideration (determined in the
manner provided in subdivisions (A) and (B) above with the proviso
to subdivision (A) being applied to the
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number of shares of Class A Common Stock deliverable upon such
exercise), if any, received by the Corporation upon the issuance of
such options or rights plus the minimum purchase price provided in
such options or rights for the Class A Common Stock covered thereby;
(2) the aggregate maximum number of shares of Class A
Common Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities or upon the exercise
of options to purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such
securities were issued or such options or rights were issued and
for a consideration equal to the consideration received by the
Corporation for any such securities and related options or rights
(excluding any cash received on account of accrued interest or
accrued dividends), plus the additional consideration, if any, to
be received by the Corporation upon the conversion or exchange of
such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the manner
provided in subdivisions (A) and (B) above with the proviso to
subdivision (A) being applied to the number of shares of Class A
Common Stock deliverable upon such exercise);
(3) on any change in the number of shares or exercise
price of Class A Common Stock deliverable upon exercise of any
such options or rights or conversions of or exchange for such
convertible or exchangeable securities, other than a change
resulting from the antidilution provisions thereof, the Preferred
Conversion Price shall forthwith be readjusted to such Preferred
Conversion Price as would have obtained had the adjustment made
upon the issuance of such options, rights or securities not
converted prior to such change or options or rights related to
such securities not converted prior to such change been made upon
the basis of such change; and
(4) on the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or
exchangeable securities, the Preferred Conversion Price shall
forthwith be readjusted to such Preferred Conversion Price as would
have obtained had such options, rights, securities or options or
rights related to such securities not been issued.
(ii) "Excluded Stock" shall mean shares of Class A Common
Stock issued by the Corporation: (1) as a stock dividend or upon any stock
split or other subdivision or combination of the
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<PAGE>
outstanding shares of Class A Common Stock; (2) upon conversion of the Preferred
Stock or Class B Common Stock at any time outstanding; (3) relating to an
aggregate of up to 32,500 shares (as constituted on the Preferred Original
Issuance Date) of Class A Common Stock (or options exercisable therefor) which
subsequent to the Original Issuance Date may be issued or granted by the
Corporation to officers, employees or directors of, or consultants to, the
Corporation; (4) upon exercise stock subscription warrants issued pursuant to
the 1984 Purchase Agreement; (5) upon exercise of stock subscription warrants
dated the Preferred Original Issuance Date issued to Healthtech Investors II
relating to an aggregate of up to 26,250 shares of Class A Common Stock (as
constituted on the Preferred Original Issuance Date); and (6) upon exercise
stock subscription warrants issued to Citibank, N.A. relating to an aggregate of
up to 8,000 shares of Class A Common Stock (as constituted on the Preferred
Original Issuance Date).
(iii) If, at any time after the Preferred Original Issuance
Date, the number of shares of Class A Common Stock outstanding is increased by
a stock dividend payable in shares of Class A Common Stock or by a subdivision
or split-up of shares of Class A Common Stock, then, following the record date
fixed for the determination of holders of Class A Common Stock entitled to
receive such stock dividend, subdivision or split-up, the Preferred Conversion
Price shall be appropriately decreased so that the number of shares of Class A
Common Stock issuable on conversion of each share of Preferred Stock shall be
increased in proportion to such increase in outstanding shares.
(iv) If, at any time after the Preferred Original Issuance
Date, the number of shares of Class A Common Stock outstanding is decreased by
a combination of the outstanding shares of Class A Common Stock, then, following
the record date for such combination, the Preferred Conversion price shall be
appropriately increased so that the number of shares of Class A Common Stock
issuable on conversion of each share of Preferred Stock shall be decreased in
proportion to such decrease in outstanding shares.
(v) In case, at any time after the Preferred Original
Issuance Date, the Corporation shall declare a cash dividend upon its Class A
Common Stock payable otherwise than out of earnings or shall distribute to
holders of its Class A Common Stock shares of its capital stock (other than
Class A Common Stock), stock or other securities of other persons, evidences
of indebtedness issued by the Corporation or other persons, other assets or
options or rights (excluding options to purchase and rights to subscribe for
Class A Common Stock or other securities of the Corporation convertible into
or exchangeable for Class A Common Stock), then, in each such case,
immediately following the record date fixed for the determination of the
holders of Class A Common Stock entitled to receive such dividend or
distribution, the Preferred Conversion Price in effect thereafter shall be
determined by multiplying the Preferred Conversion Price in effect
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<PAGE>
immediately prior to such record date by a fraction of which the numerator
shall be an amount equal to the remainder of (x) the Current Market Price of
one share of Class A Common Stock less (y) the fair market value as determined
by a nationally recognized independent investment banking firm selected
mutually by the holders of a majority of the voting power of the Preferred
Stock then outstanding and the Corporation (or, if such election cannot be
made, by a nationally recognized independent investment banking firm selected
by the American Arbitration Association in accordance with its rules), of the
stock, securities, evidences of indebtedness, assets, options or rights so
distributed in respect of one share of Class A Common Stock, and of which the
denominator shall be such Current Market Price. Such adjustment shall be made
on the date such dividend or distribution is made, and shall become effective
at the opening of business on the business day next following the record date
for the determination of stockholders entitled to such dividend or
distribution.
(vi) In case, at any time after the Original Issuance Date,
of any capital reorganization, or any reclassification of the stock of the
Corporation (other than a change in par value or from par value to no par
value or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or
merger of the Corporation with or into another person (other than a
consolidation or merger in which the Corporation is the continuing corporation
and which does not result in any change in the Class A Common Stock) or of the
sale or other disposition of all or substantially all the properties and
assets of the Corporation as an entirety to any other person, each share of
Preferred Stock shall after such reorganization, reclassification,
consolidation, merger, sale or other disposition be (unless, in the case of
consolidation, merger, sale or other disposition, payment shall have been made
to the holders of all shares of Preferred Stock of the full amount to which they
shall have been entitled pursuant to Section A.2.) convertible into the kind and
number of shares of stock or other securities or property of the Corporation or
of the corporation resulting from such consolidation or surviving such merger or
to which such properties and assets shall have been sold or otherwise disposed
to which the holder of the number of shares of Class A Common Stock deliverable
(immediately prior to the time of such reorganization, reclassification,
consolidation, merger, sale or other disposition) upon conversion of such share
would have been entitled upon such reorganization, reclassification,
consolidation, merger, sale or other disposition. The provisions of this
Section A.5. shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales or other dispositions.
(vii) All calculations under this paragraph (e) shall be made to
the nearest cent ($.01) or to the nearest one-tenth of a share, as the
case may be.
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<PAGE>
(viii) For the purpose of any computation pursuant to this Section
A.5(e) or Section A.5(d) above, the Current Market Price at any date of
one share of Class A Common Stock shall be deemed to be the average of
the daily closing prices for the 30 consecutive business days ending no
more than 15 days before the day in question (as adjusted for any stock
dividend, split-up, combination or reclassification that took effect
during such 30 business day period). The closing price for each day
shall be the last reported sales price regular way or, in case no such
reported sales took place on such day, the average of the last reported
bid and asked prices regular way, in either case on the principal
national securities exchange on which the Class A Common Stock is listed
or admitted to trading (or if the Class A Common Stock is not at the
time listed or admitted for trading on any such exchange, then such
price as shall be equal to the average of the last reported bid and
asked prices, as reported by the National Association of Securities
Dealers Automated Quotations System ("NASDAQ") on such day, or if, on any
day in question, the security shall not be quoted on the NASDAQ, then such
price shall be equal to the last reported bid and asked prices on such day
as reported by the National Quotation Bureau, Inc. or any similar
reputable quotation and reporting service, if such quotation is not
reported by the National Quotation Bureau, Inc.); PROVIDED, HOWEVER, that
if the Class A Common Stock is not traded in such manner that the
quotations referred to in this clause (ix) are available for the period
required hereunder, the Current Market Price shall be determined by a
nationally recognized independent investment banking firm selected
mutually by the holders of a majority of the voting power of the Preferred
Stock then outstanding and the Corporation (of, if such selection cannot
be made, by a nationally recognized independent investment banking firm
selected by the American Arbitration Association in accordance with its
rules).
(ix) In any case in which the provisions of this Section A.5(e)
shall require that an adjustment shall become effective immediately
after a record date for an event, the Corporation may defer until the
occurrence of such event (i) issuing to the holder of any share of
Preferred Stock converted after such record date and before the
occurrence of such event the additional shares of capital stock issuable
upon such conversion by reason of the adjustment required by such event
over and above the shares of capital stock issuable upon such conversion
before giving effect to such adjustment and (ii) paying to such holder
any amount in cash in lieu of a fractional share of capital stock
pursuant to Section A.5(d) above; PROVIDED, HOWEVER, that the
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional
shares, and such cash, upon the occurrence of the event requiring such
adjustment.
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<PAGE>
(f) Whenever the Preferred Conversion Price shall be adjusted
as provided in Section A.5(e) above, the Corporation shall forthwith file, at
the office of the transfer agent for the Preferred Stock or at such other
place as may be designated by the Corporation, a statement, signed by its
independent certified public accountants, showing in detail the facts
requiring such adjustment and the Preferred Conversion Price that shall be in
effect after such adjustment. The Corporation shall also cause a copy of such
statement to be sent by first-class, certified mail, return receipt requested,
postage prepaid, to each holder of shares of Preferred Stock at such holder's
address appearing on the Corporation's records. Where appropriate, such copy
may be given in advance and may be included as part of a notice required to be
mailed under the provisions of Section A.5(g) below.
(g) In the event the Corporation shall propose to take any
action of the types described in clauses (i), (iii), (iv), (v) or (vi) of
Section A.5(e) above, the Corporation shall give notice to each holder of shares
of Preferred Stock, in the manner set forth in Section A.5(f) above, which
notice shall specify the record date, if any, with respect to any such action
and the date on which such action is to take place. Such notice shall also set
forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action (to the extent such effect may be known at
the date of such notice) on the Preferred Conversion Price and the number, kind
or class of shares or other securities or property which shall be deliverable or
purchasable upon the occurrence of such action or deliverable upon conversion of
shares of Preferred Stock. In the case of any action which would require the
fixing of a record date, such notice shall be given at least 20 days prior to
the date so fixed, and in case of all other action, such notice shall be given
at least 30 days prior to the taking of such proposed action. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
any such action.
(h) The Corporation shall pay all documentary, stamp or other
transactional taxes attributable to the issuance or delivery of shares of
capital stock of the Corporation upon conversion of any shares of Preferred
Stock; PROVIDED, HOWEVER, that the Corporation shall not be required to
pay any taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any certificate for such shares in a name other than
that of the holder of the shares of Preferred Stock in respect of which such
shares are being issued.
(i) The Corporation shall reserve, free from preemptive rights,
out of its authorized but unissued shares of Class A Common Stock, solely for
the purpose of effecting the conversion of the shares of Preferred Stock
sufficient shares to provide for the conversion of all outstanding shares of
Preferred Stock.
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<PAGE>
(j) All shares of Class A Common Stock which may be issued in
connection with the conversion provisions set forth herein will, upon issuance
by the Corporation, be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, and free from all
taxes, liens or charges with respect thereto.
6. DEFINITIONS. (a) The term "Accrued Dividends" shall
mean Full Cumulative Dividends to the date of determination, less the amount
of all dividends paid pursuant to Sections A.1(a) or (b) of this Article upon
the relevant share of Preferred Stock.
(b) The term "Book Value Per Common Share" shall mean, as of
the date of calculation, the quotient obtained by dividing (i) total
stockholder's equity of the Corporation and its consolidated subsidiaries
attributable to the Class A Common Stock as of such date (as determined in
accordance with generally accepted accounting principles consistently applied)
by (ii) the average number of shares of Class A Common Stock outstanding
during the three-month period immediately preceding such date (assuming in
each of (i) and (ii) that holders of all securities convertible into or
exercisable or exchangeable for Class A Common Stock had been converted or
exercised at the beginning of such three-month period).
(c) The term "Event of Conversion" shall mean (i) the
consummation of a firm commitment underwritten public offering (a "Public
Offering") of shares of Class A Common Stock of the Corporation pursuant to
the Securities Act of 1933, as amended, (A) at a selling price per share of
Class A Common Stock (as constituted on the Preferred Original Issuance Date)
of not less than $30 (the "Trigger Price") and (B) which results in aggregate
net cash proceeds to the Corporation of not less than $5,000,000, or (ii) at
any time after the Class A Common Stock is listed or admitted for trading on
any national securities exchange or is reported by NASDAQ, the daily closing
price on any such exchange or the last reported bid price as reported by
NASDAQ, as the case may be, shall be not less than $60 per share of Class A
Common Stock for any 20 consecutive trading days.
(d) The term "Event of Election" shall mean the occurrence, so
long as any shares of Preferred Stock are outstanding, of a default in a
payment pursuant to Section 8.8 of the 1984 Purchase Agreement, a default in
any Requested Redemption Payment, such Section A.3 of this Article, a default
of any four payments when payable of dividends on the Preferred Stock pursuant
to Section A.1(a) of this Article or the occurrence of an "Event of Election"
under Section B.6 of this Article.
(e) The term "Event of Redemption" shall mean such time as
either Joseph D. Bohr, Stephen L. Phelps or William H. Cassels is no longer
functioning as the President of the Corporation in accordance with the duties
of such office as set forth in the By-laws of the Corporation in effect on the
Preferred
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<PAGE>
Original Issuance Date, any such determination to be made in good
faith by the holders of 60% of each of the Preferred Stock and Class B Common
Stock at the time outstanding.
(f) The term "Full Cumulative Dividends" shall mean (whether or
not in respect of which such term is sued there shall have been net profits or
net assets of the Corporation legally available for the payment of such
dividends) that amount which shall be equal to dividends at the full rate fixed
for the Preferred Stock as provided herein for the period of time elapsed from
the Preferred Original Issuance Date to the date as of which Full Cumulative
Dividends are to be computed.
(g) The term "Junior Stock" shall mean the Class A Common Stock
and any other class of capital stock of the Corporation ranking as to payment
of dividends and distributions of assets and upon liquidation junior to the
Preferred Stock.
(h) The term "Preferred Original Issuance Date" shall mean the
date of original issuance of the first share of Preferred Stock.
(i) The term "1984 Purchase Agreement" shall mean the Purchase
Agreement dated on or about October 12, 1984, as such Purchase Agreement may
be amended in accordance with the terms and provisions thereof, among the
Corporation and the investors named therein relating to the issue and sale of
the Preferred Stock.
B. CLASS B COMMON STOCK
1. DIVIDENDS. (a) In each year occurring after the third
anniversary date of the Class B Original Issuance Date (as defined in Section
B.6 of this Article) the holder of each share of Class B Common Stock shall be
entitled to receive, before any dividends shall be declared and paid upon or
set aside for the Junior Stock (as defined in Section B.6 of this Article) in
any such year, when and as declared by the Board of Directors of the
Corporation, out of funds legally available for that purpose, dividends in
cash at the rate of $3.15 per annum per share (calculated on the basis of a
year of 360 days comprised of 12 30 day months), payable quarterly on January
1, April 1, July 1 and October 1 of each year, of if such day shall not be a
business day, on the next succeeding business day, any such dividend payment
date being hereinafter referred to as a "Dividend Payment Date"). Dividends on
shares of Class B Common Stock shall be cumulative from the third anniversary
date of the Original Issuance Date (whether or not there shall be net profits or
net assets of the Corporation legally available for the payment of such
dividends), so that, if at any time Full Cumulative Dividends (as defined in
said Section B.6.) upon the Class B Common Stock shall not have been paid or
declared and a sum sufficient for payment thereof set apart, the amount of the
deficiency in such dividends shall be fully paid (but without interest) or
dividends
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in such amount shall have been declared on such shares of Class B Common Stock
and a sum sufficient for the payment thereof shall have been set apart for such
payment, before any dividend shall be declared or paid or any other distribution
ordered or made upon any Junior Stock (other than a dividend payable in such
Junior Stock) and before any sum or sums shall be set aside for or applied to
the purchase (except in accordance with the 1985 Purchase Agreement (in each
case as defined in Section B.6 of this Article), or redemption of any shares of
any Junior Stock. All dividends declared upon the Class B Common Stock and any
other class of stock ranking on a parity as to dividends with the Class B Common
Stock (with respect to dividends the Class B Common Stock and Preferred Stock
shall rank on a parity with each other) shall be declared PRO RATA per share.
The holders of Class B Common Stock shall be entitled to participate with the
Class A Common Stock with respect to any dividends, whether payable in cash,
property or stock, after holders of Class A Common Stock receive dividends in an
amount equal to Full Cumulative Dividends, PRO RATA per share (based upon the
number of shares of Class A Common Stock into which shares of Class B Common
Stock are then convertible). All payments due under this Section B.1(a) to any
holder of shares of Class B Common Stock shall be made to the nearest cent.
(b) In the event that the Corporation shall fail to make a full
payment in cash of dividends as provided in Section B.1(a) above on any
Dividend Payment Date, then, at the option of any record holder of Class B
Common Stock on such Dividend Payment Date, the Corporation shall pay such
dividend by delivery to such holder of that number of shares of Class A Common
Stock (rounded to the nearest number of full shares) equal to the quotient
obtained by dividing (i) the product obtained by multiplying (A) the number of
shares of Class B Common Stock owned by such holder on such Dividend Payment
Date by (B) 3.15, by (ii) the Book Value Per Common Share (as defined in
Section B.6 of this Article). Such option may be exercised upon written
notice, sent by first-class certified mail, return receipt requested, to the
Corporation not more than 60 days after the Dividend Payment Date with respect
to which such dividend was not paid in full. Within 10 days after receipt of
such notice, the Corporation shall issue and deliver to such holder, to the
place designated by such holder, a certificate or certificates for the full
number of shares of Class A Common Stock to which such holder is entitled.
2. RIGHTS ON LIQUIDATION, DISSOLUTION, WINDING-UP. In the
event of any liquidation, dissolution or winding-up of the Corporation, the
holders of shares of Class B Common Stock then outstanding shall be entitled
to be paid out of the assets of the Corporation available for distribution to
its stockholders, whether from capital, surplus or earnings, before any
payment shall be made to the holders of any Junior Stock, an amount equal to
the respective Liquidation Amount (as hereinafter defined), plus Accrued
Dividends (as defined in Section B.6. of this Article), if any, to the date of
payment (with respect to rights
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on liquidation, dissolution or winding-up, the Class B Common Stock shall rank
on a parity with the Preferred Stock and senior to the Class A Common Stock).
If upon any liquidation, dissolution or winding-up of the Corporation the assets
of the Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Class B Common Stock and shares of
capital stock ranking on a parity with the Class B Common Stock the full amounts
to which they and shares of capital stock ranking on a parity with the Class B
Common Stock shall be entitled, the holders of shares of Class B Common Stock
and such other shares shall share ratably in any distribution of assets
according to the respective amounts which would be payable in respect of the
shares held by them upon such distribution if all amounts payable on or with
respect to said shares were paid in full. In the event of any liquidation,
dissolution or winding-up of the Corporation, after payment shall have been made
to the holders of shares of Class B Common Stock of the full amount to which
they shall be entitled as aforesaid, and to holders of Class A Common Stock of
an amount per share of Class A Common Stock equal to the Liquidation Amount, the
holders of shares of Class B Common Stock shall participate PRO RATA with the
Class A Common Stock in all remaining assets of the Corporation available for
distribution to its stockholders (based upon the number of shares of Class A
Common Stock into which shares of Class B Common Stock are then convertible).
The merger or consolidation of the Corporation into or with another corporation
or the merger or consolidation of any other corporation into or with the
Corporation (in which consolidation or merger the stockholders of the
Corporation receive distributions of cash or securities as a result of such
consolidation or merger), or the sale or other disposition of all or
substantially all the assets of the Corporation shall be deemed to be a
liquidation, dissolution or winding-up of the Corporation (an "Event of
Liquidation"). The Liquidation Amount per share of Class B Common Stock shall
be $45.50 from the Class B Original Issuance Date to and including the first
anniversary date thereof, $59.50 thereafter to and including the second
anniversary date of such Original Issuance Date, $70.00 to and including the
third anniversary date of such Original Issuance Date, $72.66 thereafter to and
including the seventh anniversary date of such Original Issuance Date, $80.66
thereafter to and including the eight anniversary date of such Original Issuance
Date and $89.53 at all times thereafter. The Liquidation Amount shall be
subject to equitable adjustment for a split-up, subdivision, a combination of
shares of the Class B Common Stock or similar event. Anything contained in this
Section B.2 to the contrary notwithstanding, each holder of shares of Class B
Common Stock shall have the right to convert all or any part of the shares of
Class B Common Stock held by such holder as herein provided into shares of Class
A Common Stock pursuant to Section A.5 of this Article in lieu of receiving the
Liquidation Amount in connection with any Event of Liquidation.
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3. REDEMPTION.
3.1 OPTIONAL REDEMPTION. (a) Subject to Section B.3(h)
below, at any time, or from time to time, and so long as any shares of Class B
Common Stock shall be outstanding, the Corporation may, at the option of the
Board of Directors of the Corporation, redeem the whole or any part of such
outstanding shares of such Class B Common Stock at an amount per share (the
"Optional Redemption Price") determined as set forth below (plus Accrued
Dividends, if any, to the date fixed for redemption of the shares of such
Class B Common Stock to be so redeemed (each such date being hereinafter
referred to as an "Optional Redemption Date")):
Optional
Redemption
Period Price
------ -----
From the respective Original Issuance $45.50
Date to and including the first anniversary
date thereof
Thereafter to and including the second anni- $59.50
versary date of the Original Issuance Date
Thereafter to and including the third anni- $70.00
versary date of the Original Issuance Date
Thereafter to and including the seventh anni- $72.66
versary date of the Original Issuance Date
Thereafter to and including the eighth anni- $80.66
versary date of the Original Issuance Date
At all times thereafter $89.53
(b) The total sum payable per share of Class B Common Stock, as
the case may be, on any Optional Redemption Date is hereinafter referred to as
the "Redemption Price," and any payment to be made on an Optional Redemption
Date is hereinafter referred to as a "Redemption Payment."
(c) On and after any Optional Redemption Date (unless default
shall be made by the Corporation in the payment of the applicable Redemption
Price as hereinafter provided, in which event such rights shall be exercisable
until such default is cured), all rights in respect of the shares of Class B
Common Stock to be redeemed, except the right to receive the applicable
Redemption Price as hereinafter provided, shall cease and terminate; and such
shares shall no longer be deemed to be outstanding, whether or not the
certificates representing such shares have been received by the Corporation.
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<PAGE>
(d) If less than all the shares of Class B Common Stock at any
time outstanding are to be redeemed pursuant to Section B.3.1(a) hereof, such
redemption shall be made PRO RATA with respect to such shares in the manner
prescribed by the Board of Directors. Thirty days' notice by the Corporation
of every Optional Redemption Date shall be sent by first-class, certified
mail, return receipt requested, postage prepaid, by the Corporation to the
holders of shares of Class B Common Stock to be so redeemed at their
respective addresses as the same shall appear on the books of the Corporation.
At any time on or after an Optional Redemption Date, each holder of shares of
Class B Common Stock so to be redeemed shall be entitled to receive the
Redemption Price upon actual delivery to the Corporation or its agent of the
certificates representing the shares of Class B Common Stock so to be redeemed.
(f) The Corporation will not, and will not permit any
subsidiary of the Corporation to, purchase or acquire any shares of Class B
Common Stock otherwise than pursuant to the terms of this Section B.3.1,
Section B.3.2 of this Article, Section 8.7 of the 1985 Purchase Agreement (as
defined in Section B.6 of this Article) or pursuant to an offer made on the same
terms to all holders of Class B Common Stock at the time outstanding.
(g) Anything contained in this Section B.3.1 to the contrary
notwithstanding, each holder of shares of Class B Common Stock to be redeemed
in accordance with this Section B.3.1 shall have the right, exercisable at any
time up to the close of business on the Optional Redemption Date (unless
default shall be made by the Corporation in the payment of the Redemption
Price as herein provided, in which event such right shall be exercisable until
such default is cured), to convert all or any part of the shares of Class B
Common Stock held by such holder as herein provided into shares of Class A
Common Stock pursuant to Section B.5 of this Article. If, and to the extent,
any shares of Class B Common Stock so entitled to redemption are converted
into shares of Class A Common Stock by the holders thereof prior to the close
of business on the Optional Redemption Date, the total number of shares of
Class B Common Stock otherwise to be redeemed on such Optional Redemption Date
shall be recalculated as if such shares so converted had never been
outstanding.
3.2 REQUESTED REDEMPTION. (a) Subject to Section B.3.2(d)
below, at any time there shall exist an Event of Redemption (as defined in
Section B.6 of this Article) and so long as any shares of Class B Common Stock
shall be outstanding, the Corporation shall (unless otherwise prevented by
law) redeem, at the option of any holder or holders of Class B Common Stock,
all (or such lesser number as specified by any such holder in the written
notice referred to below) of such holder's shares of Class B Common Stock
then outstanding. Such option shall be exercised upon 30 days' written notice
(a "Requested Redemption Notice") to the Corporation by any holder or holders
of Class B Common Stock, which notice shall state such holder's intention to
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<PAGE>
exercise the redemption option set forth herein and the number of shares of
Class B Common Stock sought to be redeemed (any such date being hereinafter
referred to as a "Requested Redemption Date"). Within five days after receipt
of any Requested Redemption Notice, the Corporation shall notify all other
holders of Class B Common Stock and/or Preferred Stock of such Notice and each
such holder shall have the right, exercisable by written notice to the
Corporation within 10 days after receipt of such notice from the Corporation,
to request that all of such holder's shares of Class B Common Stock and/or
Preferred Stock (or such lesser number as specified in such written notice to
the Corporation) be redeemed by the Corporation on the Requested Redemption
Date. The amount per share of Class B Common Stock at which the shares of
Class B Common Stock are to be redeemed pursuant to this Section B.3.2(a) on
any Requested Redemption Date by the Corporation shall be an amount equal to
the Optional Redemption Price at the time in effect, plus Accrued Dividends, if
any, to such Redemption Date. The total sum payable per share of Class B
Common Stock on any Requested Redemption Date is hereinafter referred to as the
"Requested Redemption Price," and any payment to be made is hereinafter
referred to as the "Requested Redemption Payment," as to any holder of Class B
Common Stock.
(b) On and after any Requested Redemption Date (unless default
shall be made by the Corporation in the payment of the applicable Requested
Redemption Price as hereinafter provided, in which event such rights shall be
exercisable until such default is cured), all rights in respect of the shares
of Class B Common Stock to be redeemed, except the right to receive the
applicable Requested Redemption Price as hereinafter provided, shall cease and
terminate; and such shares shall no longer be deemed to be outstanding,
whether or not the certificates representing such shares have been received by
the Corporation.
(c) Notice of any exercise of the redemption option pursuant to
this Section B.3.2 shall be sent by first-class certified mail, return receipt
requested, postage prepaid, to the Corporation. At any time on or after the
Requested Redemption Date, the holders of record of shares of Class B Common
Stock requesting such Class B Common Stock to be redeemed on such Requested
Redemption Date in accordance with this Section B.3.2 shall be entitled to
receive the applicable Requested Redemption Price upon actual delivery to the
Corporation or its agents of the certificates representing the shares to be
redeemed. If upon any redemption the assets of the Corporation available for
redemption shall be insufficient to pay the holders of the shares of Class B
Common Stock and/or Preferred Stock the full amounts to which they shall be
entitled, the holders of shares of Class B Common Stock and/or Preferred Stock
requesting redemption shall share ratably in any such redemption according to
the respective amounts which would be payable in respect of such shares
requested to be redeemed by the holders thereof if all amounts payable on or
with respect to such shares were paid in full (the respective amounts
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<PAGE>
for the Preferred Stock being set forth in Section A.3 of this Article).
(d) Anything contained in this Section B.3.2 to the contrary
notwithstanding, the holders of shares of Class B Common Stock shall have the
right, exercisable at any time up to the close of business on the Redemption
Date (unless default shall be made by the Corporation in the payment of the
Redemption Price as herein provided, in which event such right shall be
exercisable until such default is cured), to convert all or any part of such
shares requested by such holder to be redeemed as herein provided into shares of
Class A Common Stock pursuant to Section B.5 of this Article. If, and to the
extent, any shares of Class B Common Stock so entitled to redemption are
converted into shares of Class A Common Stock by the holders thereof prior to
the close of business on the Redemption Date, the total number of shares of
Class B Common Stock otherwise to be redeemed on such Redemption Date shall be
reduced by the number of shares of Class B Common Stock so converted.
4. VOTING. (a) In addition to the rights specified in
Sections B.4(b), (c), (e) and (f) below and any other rights provided in the
Corporation's By-laws or by law, each share of Class B Common Stock shall
entitle the holder thereof to such number of votes per share as shall equal
the number of shares of Class A Common Stock (including any fraction to one
decimal place) into which each share of Class B Common Stock is then
convertible, entitled to vote on all matters as to which holders of Class A
Common Stock shall be entitled to vote, in the same manner and with the same
effect as such holders of Class A Common Stock, voting together with the
holders of Class A Common Stock as one class.
(b) In addition to the rights specified in Section B.4(a)
above, (i) the holders of a majority in voting power of the Class B Common
Stock, voting separately as one class, shall have the exclusive and special
right (A) at all times to elect one director to the Board of Directors of the
Corporation, and (B) upon the occurrence of an Earnings Event (as defined in
Section B.6 of this Article), to elect two directors to the Board of Directors
of the Corporation, and (ii) the holders of a majority in voting power of the
Class B Common Stock and the Preferred Stock, voting separately together as a
separate class, shall have the exclusive and special right, upon the
occurrence of an Event of Election (as defined in Section B.6. of this
Article), to elect four directors to the Board of Directors of the
Corporation. The special and exclusive right of the holders of Class B Common
Stock, and voting separately as one class, set forth in clause (ii) of this
Section B.4(b) to elect four directors to the Board of Directors of the
Corporation shall continue until the Event of Election which gave rise to such
right has been cured by the Corporation, subject to the revesting thereof upon
the occurrence of each and every Event of Election subsequent thereto. In any
election of directors pursuant to this Section B.4(b), each holder of shares
of Class B Common Stock shall be entitled to one vote
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<PAGE>
for each share of Class B Common Stock held and no holder of Class B Common
Stock shall be entitled to cumulate his votes by giving one candidate more than
one vote per share. The special and exclusive right of the holders of the Class
B Common Stock and/or Preferred Stock, as the case may be, voting separately as
one class, contained in this Section B.4(b) may be exercised either at a special
meeting of the holders of Class B Common Stock and/or Preferred Stock, as the
case may be, called as provided below, or at any annual or special meeting of
the shareholders of the Corporation, or by written consent of such holders in
lieu of a meeting. The directors to be elected by the holders of the Class B
Common Stock and/or Preferred Stock, as the case may be, voting separately as
one class, pursuant to this Section B.4(b) and/or Section A.4(b) of this
Article, shall serve for terms extending from the date of their election and
qualification until the time of the next succeeding annual meeting of
shareholders and until their successors have been elected and qualified;
PROVIDED, HOWEVER, that the term of the additional directors (if any) elected
pursuant to Section B.4(b)(ii) shall terminate at such time as the Event of
Election which gave rise to such right of election shall have been cured by the
Corporation.
(c) If at any time any directorship to be filled by the holders
of Class B Common Stock and/or Preferred Stock, as the case may be, voting
separately as one class, pursuant to Section B.4(b) above and/or Section
A.4(b) of this Article, has been vacant for a period of 10 days, the Secretary
of the Corporation shall, upon the written request of the holders of record of
shares representing at least 25% of the voting power of the Class B Common
Stock and/or Preferred Stock, as the case may be, then outstanding, call a
special meeting of the holders of Class B Common Stock and/or Preferred Stock,
as the case may be, for the purpose of electing a director or directors to
fill such vacancy or vacancies. Such meeting shall be held at the earliest
practicable date at such place as is specified in or determined in accordance
with the By-laws of the Corporation. If such meeting shall not be called by
the Secretary of the Corporation within 10 days after personal service of said
written request on him, then the holders of record of shares representing at
least 25% of the voting power of the Class B Common Stock and/or Preferred
Stock, as the case may be, then outstanding may designate in writing one of
their number to call such meeting at the expense of the Corporation, and such
meeting may be called by such person so designated upon the notice required
for annual meetings of shareholders and shall be held at such specified place.
Any holder of the Class B Common Stock and/or Preferred Stock, as the case may
be, so designated shall have access to the stock books of the Corporation for
the purpose of calling a meeting of the stockholders pursuant to these
provisions.
(d) At any meeting held for the purpose of electing directors
at which the holders of Class B Common Stock and/or Preferred Stock, as the
case may be, shall have the right, voting separately as one class, to elect
directors as provided in Section
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<PAGE>
B.4(b) above and/or Section A.4(b) of this Article, the presence, in person or
by proxy, of the holders of record of shares representing at least 51% of the
voting power of the Class B Common Stock and/or Preferred Stock, as the case may
be, then outstanding shall be required to constitute a quorum of the Class B
Common Stock and/or Preferred Stock, as the case may be, for such election. At
any such meeting or adjournment thereof, the absence of such a quorum of the
Class B Common Stock and/or Preferred Stock, as the case may be, shall not
prevent the election of directors other than the director or directors to be
elected by holders of Class B Common Stock and/or Preferred Stock, as the case
may be, voting separately as one class, pursuant to Section B.4(b) and/or
Section A.4(b) of this Article, above, and the absence of a quorum for the
election of such other directors shall not prevent the election of the director
or directors to be elected by the holders of Class B Common Stock and/or
Preferred Stock, as the case may be, voting separately as one class, pursuant to
Section B.4(b) and/or Section A.4(b) of this Article, and in the absence of
either or both of such quorums, the holders of record of shares representing at
least 51% of the voting power present in person or by proxy of the class of
stock which lacks a quorum shall have power to adjourn the meeting for the
election of directors which they are entitled to elect from time to time without
notice other than announcement at the meeting. A vacancy in the directorships
to be elected by the holders of the Class B Common Stock and/or Preferred Stock,
as the case may be, pursuant to Section A.4(b) above, may be filled only by vote
or written consent in lieu of a meeting of the holders of at least 51% of the
voting power of the Preferred Stock or a Series of Preferred Stock, as the case
may be.
(e) The Corporation shall not, without the affirmative consent
or approval of the holders of shares representing at least 60% of the voting
power of the Class B Common Stock then outstanding, acting separately as one
class, given by written consent in lieu of a meeting or by vote at a meeting
called for such purpose for which notice shall have been given to the holders
of the Class B Common Stock, (i) sell, lease, transfer or otherwise dispose of
any of the properties or assets which, individually or in the aggregate as to
all such transactions occurring after the Original Issuance Date, represent in
excess of 33-1/3% of the total assets of the Corporation on the date of any
such transaction (determined in accordance with generally accepted accounting
principles), unless the proceeds thereof are applied, in order of priority,
FIRST, to the reduction of indebtedness of the Corporation for borrowed
money, and, SECOND, to a redemption, in whole or in part, of the
Class B Common Stock pursuant to Section B.3.1(a) of this Article, (ii) prior
to March 15, 1990, sell, lease or transfer or otherwise dispose of all or
substantially all of its properties or assets in any single transaction or
series of related transactions, unless, as a result of any such transaction or
transactions (a "Qualifying Transaction"), the holders of Class A Common Stock
(assuming that holders of all securities convertible into or exercisable or
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<PAGE>
exchangeable for Class A Common Stock had been converted, exercised or
exchanged) will receive in cash not less than $105 per share (as constituted
on the Class B Original Issuance Date) if such transaction occurs prior to
March 15, 1988 or $175 per share (as constituted on the Class B Original
Issuance Date) thereafter to and including March 15, 1990, (iii) declare or
pay any dividends on, or make any distribution of cash or other property or
both with respect to (whether by way of reduction of capital or otherwise),
any shares of Junior Stock (other than dividends payable solely in shares of
Junior Stock or stock splits), (iv) redeem, retire, purchase or otherwise
acquire, directly or indirectly, for value or set apart any sum therefor, any
shares of Junior Stock, (v) except as permitted by clause (vi) below, merge or
consolidate with or into, or permit any subsidiary to merge or consolidate
with or into, any other corporation, corporations or other entity or entities,
except (A) if prior to March 15, 1990, as a result of such transaction, the
holders of Class A Common Stock (assuming that holders of all securities
convertible into or exercisable or exchangeable for Class A Common Stock had
been converted, exercised or exchanged), not less than $105 per share (as
constituted on the Class B Original Issuance Date) if such transaction occurs
prior to March 15, 1988 or $175 per share (as constituted on the Class B
Original Issuance Date) if such transaction occurs thereafter and prior to
March 15, 1990, or (B) at any time thereafter when the holders of Class B
Common Stock are entitled to receive payment in cash as provided in Section
B.2 of this Article, (vi) voluntarily dissolve, liquidate, or wind-up or carry
out any partial liquidation or distribution or transaction in the nature of a
partial liquidation or distribution, (vii) in any manner alter or change the
designations or the powers, preferences or rights, or the qualifications,
limitations or restrictions of the Class B Common Stock, (viii) except as
permitted by Section 8.3.6 of the 1985 Purchase Agreement, purchase or otherwise
acquire (whether by purchase or lease of assets, capital stock or by merger or
consolidation), or permit any subsidiary to so purchase or otherwise acquire,
any material tangible or intangible assets which represent all or a substantial
part of the assets of any other person or entity or (ix) alter, amend or repeal
the By-laws of the Corporation as in effect on the Class B Original Issuance
Date which in any manner affects the rights of the holders of the Class B Common
Stock.
5. CONVERSION. (a) Except as to shares of Class B Common
Stock to be redeemed in accordance with Section B.3 of this Article which may
only be converted up to the close of business on the respective Redemption
Date (unless default shall be made by the Corporation in the payment of the
Redemption Price so provided in said Section B.3, in which event such right to
convert shall be exercisable until such default is cured), the holder of any
shares of Class B Common Stock shall have the right, at such holder's option,
at any time or from time to time to convert any or all of such holder's shares
of Class B Common Stock into such whole number of fully paid and nonassessable
shares of Class A Common Stock as $35 multiplied by the number of shares of
Class B Common
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<PAGE>
Stock being converted is a multiple of the Class B Conversion Price (as last
adjusted and then in effect) for the shares of Class B Common Stock being
converted by surrender of the certificates representing the shares of Class B
Common Stock so to be converted in the manner provided in Section B.5(b) below.
The Class B Conversion Price per share at which shares of Class A Common Stock
shall be issuance upon conversion of shares of Class B Common Stock pursuant to
this Section A.5(a) shall be $35; PROVIDED, HOWEVER, that such Conversion Price
shall be subject to adjustment as set forth in Section B.5(e) below. The holder
of any shares of Class B Common Stock exercising the aforesaid right to convert
such shares into shares of Class A Common Stock shall be entitled to payment of
Accrued Dividends.
(b) Upon the occurrence of an Event of Conversion (as defined
in Section B.6 of this Article), all shares of Class B Common Stock then
outstanding shall, by virtue of, and simultaneously with, the occurrence of
the Event of Conversion and without any action on the part of the holders
thereof, be deemed automatically converted into such whole number of fully
paid and non-assessable shares of Class A Common Stock as $35, multiplied by
the number of shares of Preferred Stock being converted is a multiple of the
Class B Conversion Price (as last adjusted and then in effect) for the shares
of Class B Common Stock being converted. The Class B Common Conversion Price
upon conversion at which shares of Class A Common Stock shall be issuable upon
conversion of shares of Class B Common Stock pursuant to this Section B.5(b)
shall be $35; PROVIDED, HOWEVER, the such Class B Conversion Price shall
be subject to adjustment as set forth in Section B.5(e) below. The holder of
any shares of Preferred Stock converted into shares of Class A Common Stock
pursuant to this Section B.5(b) shall be entitled to payment of Accrued
Dividends.
(c) The holder of any shares of Class B Common Stock may
exercise the conversion right pursuant to Section B.5(a) above by delivering
to the Corporation during regular business hours, at the office of any
transfer agent of the Corporation for the Class B Common Stock or at such
other place as may be designated by the Corporation, the certificate or
certificates for the shares to be converted, duly endorsed or assigned in
blank or to the Corporation (if required by it), accompanied by written notice
stating that such holder elects to convert such shares and stating the name or
names (with address) in which the certificate or certificates for the shares
of Class A Common Stock are to be issued. Conversion shall be deemed to have
been effected with respect to conversion under Section B.5(a) above, on the
date when the aforesaid delivery is made, and such date is referred to herein
as the "Conversion Date". As promptly as practicable thereafter the
Corporation shall issue and deliver to or upon the written order of such
holder, to the place designated by such holder, a certificate or certificates
for the number of full shares of Class A Common Stock to which such holder is
entitled and a check or cash in respect of any fractional interest in a share
of Class A Common Stock, as provided in Section B.5(d)
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<PAGE>
below, payable with respect to the shares of Class B Common Stock so converted
up to and including the Conversion Date. The person in whose names the
certificate or certificates for Class A Common Stock are to be issued shall be
deemed to have become a stockholder of record on the applicable Conversion Date
unless the transfer books of the Corporation are closed on that date, in which
event such holder shall be deemed to have become a stockholder of record on the
next succeeding date on which the transfer books are open, but the Class B
Conversion Price shall be that in effect on the Conversion Date. Upon
conversion of only a portion of the number of shares covered by a certificate
representing shares of Class B Common Stock surrendered for conversion, the
Corporation shall issue and deliver to or upon the written order of the holder
of the certificate so surrendered for conversion, at the expense of the
Corporation, a new certificate covering the number of shares of Class B Common
Stock representing the unconverted portion of the certificate so surrendered,
which new certificate shall entitle the holder thereof to dividends on the
shares of the Class B Common Stock represented thereby to the same extent as if
the certificate theretofore covering such unconverted shares had not been
surrendered for conversion.
(d) No fractional shares of Class A Common Stock or scrip
shall be issued upon conversion of shares of Class B Common Stock. If more
than one share of Class B Common Stock shall be surrendered for conversion at
any one time by the same holder, the number of full shares of Class A Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Class B Common Stock so surrendered. Instead of
any fractional shares of Class A Common Stock which would otherwise be
issuable upon conversion of any shares of Class B Common Stock the Corporation
shall pay a cash adjustment in respect of such fractional interest in an
amount equal to the then Current Market Place (as hereinafter defined) of a
share of Class A Common Stock multiplied by such fractional interest.
Fractional interest shall not be entitled to dividends, and the holders of
fractional interests shall not be entitled to any rights as stockholders of
the Corporation in respect of such fractional interest.
(e) The Class B Conversion Prices shall be subject to
adjustment from time to time as follows:
(i) If the Corporation shall at any time or from time to
time after the Class B Original Issuance Date, issue any shares of Class
A Common Stock other than Excluded Stock (as hereinafter defined)
without consideration or for a consideration per share less than the
Class B Conversion Price in effect immediately prior to the issuance of
such Class A Common Stock, such Conversion Price in effect immediately
prior to each such issuance shall forthwith (except as provided in this
clause (i)) be lowered to a price equal to the quotient obtained by
dividing
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<PAGE>
(A) an amount equal to the sum of
(1) the total number of shares of Class A
Common Stock outstanding (including any shares of Class A
Common Stock deemed to have been issued pursuant to
subdivision (C) of this clause (i) and to clause (ii) below
(it being understood that the shares of Class A Common
Stock issuable upon conversion of the Class B Common Stock
and the Preferred Stock shall be deemed to be outstanding
for all purposes of the computation required in this clause
(i))) immediately prior to such issuance multiplied by the
Class B Conversion Price in effect immediately prior to
such issuance, plus
(2) the consideration received by the
Corporation upon such issuance,
by
(B) the total number of shares of Class A Common
Stock outstanding (including any shares of Class A Common
Stock deemed to have been issued pursuant to subdivision
(C) of this clause (i) and to clause (ii) below (it being
understood that the shares of Class A Common Stock issuable
upon conversion of the Class B Common Stock and the
Preferred Stock shall be deemed to be outstanding for all
purposes of the computation required in this clause (i)))
immediately after the issuance of such Class A Common
Stock.
For the purposes of any adjustment of the Class B Conversion Price pursuant to
this clause (i), the following provisions shall be applicable:
(A) In the case of the issuance of Class A Common Stock
for cash, the consideration shall be deemed to be the amount of
cash paid therefor after deducting therefrom any discounts,
commissions or other expenses allowed, paid or incurred by the
Corporation for any underwriting or otherwise in connection with
the issuance and sale thereof.
(B) In the case of the issuance of Class A Common Stock
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of
Directors of the Corporation, irrespective of any accounting
treatment; PROVIDED, HOWEVER, that the aggregate fair market
value of such non-cash and cash consideration shall not exceed
the Current Market Price (as
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hereinafter defined) of the shares of Class A Common Stock being
issued.
(C) In the case of the issuance of (i) options to purchase
or rights to subscribe for Class A Common Stock, (ii) securities
by their terms convertible into or exchangeable for Class A Common
Stock or (iii) options to purchase or rights to subscribe for such
convertible or exchangeable securities:
(1) the aggregate maximum number of shares of Class
A Common Stock deliverable upon exercise of such options to
purchase or rights to subscribe for Class A Common Stock
shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal
to the consideration (determined in the manner provided in
subdivisions (A) and (B) above with the proviso to
subdivision (A) being applied to the number of shares of
Class A Common Stock deliverable upon such exercise), if
any, received by the Corporation upon the issuance of such
options or rights plus the minimum purchase price provided
in such options or rights for the Class A Common Stock
covered thereby;
(2) the aggregate maximum number of shares of Class
A Common Stock deliverable upon conversion of or in
exchange for any such convertible or exchangeable
securities or upon the exercise of options to purchase or
rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof
shall be deemed to have been issued at the time such
securities were issued or such options or rights were
issued and for a consideration equal to the consideration
received by the Corporation for any such securities and
related options or rights (excluding any cash received on
account of accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of such
securities or the exercise of any related options or rights
(the consideration in each case to be determined in the
manner provided in subdivisions (A) and (B) above with the
proviso to subdivision (A) being applied to the number of
shares of Class A Common Stock deliverable upon such
exercise);
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<PAGE>
(3) on any change in the number of shares or
exercise price of Class A Common Stock deliverable upon
exercise of any such options or rights or conversions of or
exchange for such convertible or exchangeable securities,
other than a change resulting from the antidilution
provisions thereof, such Conversion Price shall forthwith be
readjusted to such Conversion Price as would have obtained
had the adjustment made upon the issuance of such options,
rights or securities not converted prior to such change or
options or rights related to such securities not converted
prior to such change been made upon the basis of such
change; and
(4) on the expiration of any such options or rights,
the termination of any such rights to convert or exchange
or the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion
Price shall forthwith be readjusted to such Conversion
Price as would have obtained had such options, rights,
securities or options or rights related to such securities
not been issued.
(ii) "Excluded Stock" shall mean shares of Class A Common
Stock issues by the Corporation: (1) as a stock dividend or upon any
stock split or other subdivision or combination of the outstanding
shares of Class A Common Stock; (2) upon conversion of the Preferred
Stock or Class B Common Stock at any time outstanding; (3) relating to
an aggregate of up to [32,500] shares (as constituted on the Class B
Original Issuance Date) of Class A Common Stock (or options exercisable
therefore) which subsequent to the Class B Original Issuance Date may be
issued or granted by the Corporation to officers, employees or directors
of, or consultants to, the Corporation; (4) upon exercise stock
subscription warrants issued pursuant to the 1984 Purchase Agreement;
(5) upon exercise of stock subscription warrants dated the Preferred
Original Issuance Date issued to Healthtech Investors II relating to an
aggregate of up to 26,250 shares of Class A Common Stock (as constituted
on the Preferred Original Issuance Date); and (6) upon exercise stock
subscription warrants issued to Citibank, N.A. relating to an aggregate
of up to 8,000 shares of Class A Common Stock (as constituted on the
Preferred Original Issuance Date).
(iii) If the Net Earnings of the Corporation (as defined
in Section B.6 of this Article) for the fiscal year ending June 30,
1985, or June 30, 1986 are less than $1,897,600 or $4,800,000,
respectively (the "Projected Amounts"), the Class B Conversion Price
shall be reduced by an amount equal to $.50 for each $23,720 or $60,000,
respectively, that such Net Earnings are less than the
- 34 -
<PAGE>
respective Projected Amount; PROVIDED, HOWEVER, that the Conversion Price
shall not be reduced by more than $5.00 pursuant to the provisions of this
clause (iii). In connection with the foregoing, the Corporation shall
deliver to each holder of Class B Common Stock a Notice of Earnings (as
defined in Section B.6 of this Article) not later than September 30, 1985
and September 30, 1986, with respect to the immediately preceding fiscal
year ended June 30.
(iv) If, at any time after the Class B Original Issuance
Date, the number of shares of Class A Common Stock outstanding is
increased by a stock dividend payable in shares of Class A Common Stock
or by a subdivision or split-up of shares of Class A Common Stock, then,
following the record date fixed for the determination of holders of
Class A Common Stock entitled to receive such stock dividend,
subdivision or split-up, such Conversion Price shall be appropriately
decreased so that the number of shares of Class A Common Stock issuable
on conversion of each share of Class B Common Stock shall be increased
in proportion to such increase in outstanding shares.
(v) If, at any time after the Class B Original Issuance
Date, the number of shares of Class A Common Stock outstanding is
decreased by a combination of the outstanding shares of Class A Common
Stock, then, following the record date for such combination, such
Conversion Price shall be appropriately increased so that the number of
shares of Class A Common Stock issuable on conversion of each share of
Class B Common Stock shall be decreased in proportion to such decrease
in outstanding shares.
(vi) In case, at any time after the Class B Original
Issuance Date, the Corporation shall declare a cash dividend upon its
Class A Common Stock payable otherwise than out of earnings or shall
distribute to holders of its Class A Common Stock shares of its capital
stock (other than Class A Common Stock), stock or other securities of
other persons, evidences of indebtedness issued by the Corporation or
other persons, other assets or options or rights (excluding options to
purchase and rights to subscribe for Class A Common Stock or other
securities of the Corporation convertible into or exchangeable for Class
A Common Stock), then, in each such case, immediately following the
record date fixed for the determination of the holders of Class A Common
Stock entitled to receive such dividend or distribution, such Conversion
Price in effect thereafter shall be determined by multiplying such
Conversion Price in effect immediately prior to such record date by a
fraction of which the numerator shall be an amount equal to the remainder
of (x) the Current Market Price of one share of Class A Common Stock less
(y) the fair market value as determined by a nationally recognized
independent investment banking firm selected mutually by the holders of a
majority of the voting power of the Class B Common Stock then
- 35 -
<PAGE>
outstanding and the Corporation (or, if such selection cannot be made, by
a nationally recognized independent investment banking firm selected by
the American Arbitration Association in accordance with its rules), of the
stock, securities, evidences of indebtedness, assets, options or rights so
distributed in respect of one share of Class A Common Stock, and of which
the denominator shall be such Current Market Price. Such adjustment shall
be made on the date such dividend or distribution is made, and shall
become effective at the opening of business on the business day next
following the record date for the determination of stockholders entitled
to such dividend or distribution.
(vii) In case, at any time after the Class B Original
Issuance Date, of any capital reorganization, or any reclassification of
the stock of the Corporation (other than a change in par value or from
par value to no par value or from no par value to par value or as a
result of a stock dividend or subdivision, split-up or combination of
shares), or the consolidation or merger of the Corporation with or into
another person (other than a consolidated or merger in which the
Corporation is the continuing corporation and which does not result in
any change in the Class A Common Stock) or of the sale or other
disposition of all or substantially all the properties and assets of the
Corporation as an entirety to any other person, each share of Class B
Common Stock shall after such reorganization, reclassification,
consolidation, merger, sale or other disposition be (unless, in the case
of a consolidation, merger, sale or other disposition, payment shall
have been made to the holders of all shares of Class B Common Stock of
the full amount to which they shall have been entitled pursuant to
Section B.2.) convertible into the kind and number of shares of stock or
other securities or property of the Corporation or of the corporation
resulting from such consolidation or surviving such merger or to which
such properties and assets shall have been sold or otherwise disposed to
which the holder of the number of shares of Class A Common Stock
deliverable (immediately prior to the time of such reorganization,
reclassification, consolidation, merger, sale or other disposition) upon
conversion of such share would have been entitled upon such
reorganization, reclassification, consolidation, merger, sale or other
disposition. The provisions of this Section B.5. shall similarly apply
to successive reorganizations, reclassifications, consolidations,
mergers, sales or other dispositions.
(viii) All calculations under this paragraph (e) shall be
made to the nearest cent ($.01) or to the nearest one-tenth of a share,
as the case may be.
- 36 -
<PAGE>
(ix) For the purpose of any computation pursuant to this
Section B.5(e) or Section B.5(d) above, the Current Market Price at any
date of one share of Class A Common Stock shall be deemed to be the
average of the daily closing prices for the 30 consecutive business days
ending nor more than 15 days before the day in question (as adjusted for
any stock dividend, split-up, combination or reclassification that took
effect during such 30 business day period). The closing price for each
day shall be the last reported sales price regular way or, in case no
such reported sales took place on such day, the average of the last
reported bid and asked prices regular way, in either case on the
principal national securities exchange on which the Class A Common Stock
is listed or admitted to trading (or if the Class A Common Stock is not
at the time listed or admitted for trading on any such exchange, then
such price as shall be equal to the average of the last reported bid and
asked prices, as reported by the National Association of Securities
Dealers Automated Quotations System ("NASDAQ") on such day, or if, on
any day in question, the security shall not be quoted on the NASDAQ,
then such price shall be equal to the last reported bid and asked prices
on such day as reported by the National Quotation Bureau, Inc. or any
similar reputable quotation and reporting service, if such quotation is
not reported by the National Quotation Bureau, Inc.); PROVIDED HOWEVER,
that if the Class A Common Stock is not traded in such manner that the
quotations referred in this clause (ix) are available for the period
required hereunder, the Current Market Price shall be determined by a
nationally recognized independent investment banking firm selected
mutually by the holders of a majority of the voting power of the Class B
Common Stock then outstanding and the Corporation (or, if such selection
cannot be made, by a nationally recognized independent investment
banking firm selected by the American Arbitration Association in
accordance with its rules).
(x) In any case in which the provisions of this Section
B.5(e) shall require that an adjustment shall become effective
immediately after a record date for an event, the Corporation may defer
until the occurrence of such event (i) issuing to the holder of any
share of Class B Common Stock converted after such record date and
before the occurrence of such event the additional shares of capital
stock issuable upon such conversion by reason of the adjustment required
by such event over and above the shares of capital stock issuable upon
such conversion before giving effect to such adjustment and (ii) paying
to such holder any amount in cash in lieu of a fractional share of
capital stock pursuant to Section B.5(d) above; PROVIDED, HOWEVER,
that the Corporation shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares, and such cash, upon the occurrence of the event
requiring such adjustment.
- 37 -
<PAGE>
(f) Whenever the Conversion Price shall be adjusted as provided
in Section B.5(e) above, the Corporation shall forthwith file, at the office
of the transfer agent for the respective Series of Class B Common Stock or at
such other place as may be designated by the Corporation, a statement, signed
by its independent certified public accountants, showing in detail the facts
requiring such adjustment and the Conversion Price that shall be in effect
after such adjustment. The Corporation shall also cause a copy of such
statement to be sent by first-class, certified mail, return receipt requested,
postage prepaid, to each holder of shares of Class B Common Stock at such
holder's address appearing on the Corporation's records. Where appropriate,
such copy may be given in advance and may be included as part of a notice
required to be mailed under the provisions of Section B.5(g) below.
(g) In the event the Corporation shall propose to take any
action of the types described in clauses (i), (iv), (v), (vi) or (vii) of
Section B.5(e) above, the Corporation shall give notice to each holder of
shares of Class B Common Stock in the manner set forth in Section B.5(f)
above, which notice shall specify the record date, if any, with respect to any
such action and the date on which such action is to take place. Such notice
shall also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action (to the extent such effect may
be known at the date of such notice) on the Conversion Price and the number,
kind or class of shares or other securities or property which shall be
deliverable or purchasable upon the occurrence of such action or deliverable
upon conversion of shares of Class B Common Stock. In the case of any action
which would require the fixing of a record date, such notice shall be given at
least 20 days prior to the date so fixed, and in case of all other action,
such notice shall be given at least 30 days prior to the taking of such
proposal action. Failure to give such notice, or any defect therein, shall
not affect the legality or validity of any such action.
(h) The Corporation shall pay all documentary, stamp or other
transactional taxes attributable to the issuance or delivery of shares of
capital stock of the Corporation upon conversion of any shares of Class B
Common Stock; PROVIDED, HOWEVER, that the Corporation shall not be
required to pay any taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificate for such shares in a
name other than that of the holder of the shares of Class B Common Stock in
respect of which such shares are being issued.
(i) The Corporation shall reserve, free from preemptive rights,
out of its authorized but unissued shares of Class A Common Stock, solely for
the purpose of effecting the conversion of the shares of Class B Common Stock
sufficient shares to provide for the conversion of all outstanding shares of
Class B Common Stock.
- 38 -
<PAGE>
(j) All shares of Class A Common Stock which may be issued in
connection with the conversion provisions set forth herein will, upon issuance
by the Corporation, be validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, and free from all
taxes, liens or charges with respect thereto.
6. DEFINITIONS. (a) The term "Accrued Dividends" shall
mean Full Cumulative Dividends to the date of determination, less the amount of
all dividends paid pursuant to Sections B.1(a) or (b) of this Article upon the
relevant share of Class B Common Stock.
(b) The term "Book Value Per Class A Common Share" shall
mean, as of the date of calculation, the quotient obtained by dividing (i)
total stockholder's equity of the Corporation and its consolidated
subsidiaries attributable to the Class A Common Stock as of such date (as
determined in accordance with generally accepted accounting principles
consistently applied) by (ii) the average number of shares of Class A Common
Stock outstanding during the three-month period immediately preceding such
date (assuming in each of (i) and (ii) that holders of all securities
convertible into or exercisable or exchangeable for Class A Common Stock had
been converted at the beginning of such three-month period).
(c) The term "Event of Conversion" shall mean (i) the
consummation of a firm commitment underwritten public offering of shares of
Common Stock of the Corporation pursuant to the Securities Act of 1933, as
amended (a "Public Offering") (A) at a selling price per share of Class A
Common Stock (as constituted on the Class B Original Issuance Date) of not
less than $60 and (B) which results in aggregate net cash proceeds to the
Corporation of not less than $10,000,000, or (ii) at any time after the Class
A Common Stock is listed or admitted for trading on any national securities
exchange or is reported by NASDAQ, the daily closing price on any such
exchange or the last reported bid price as reported by NASDAQ, as the case may
be, shall be not less than $60 per share of Class A Common Stock for any 20
consecutive trading days.
(d) The term "Event of Election" shall mean the
occurrence, so long as any shares of Preferred Stock are outstanding, of a
default in a payment pursuant to Section 8.7 of the 1985 Purchase Agreement, a
default in any Requested Redemption Payment, a default of any four payments
when payable of dividends on the Preferred Stock pursuant to Section B.1(a) of
this Article or the occurrence of an "Event of Election" as defined in Section
A.6 of this Article.
(e) The term "Event of Earnings" shall mean the occurrence
of Net Earnings of less than $1,779,000 for the fiscal year ending June 30,
1985, or $3,600,000 for the fiscal year ending June 30, 1986.
- 39 -
<PAGE>
(f) The term "Event of Redemption" shall mean such time as
either Joseph D. Bohr, Stephen L. Phelps or William H. Cassels is no longer
functioning as the President of the Corporation in accordance with the duties
of such office as set forth in the By-laws of the Corporation in effect on the
Original Issuance Date, any such determination to be made in good faith by the
holders of 60% of the Class B Common Stock and Preferred Stock at the time
outstanding.
(g) The term "Full Cumulative Dividends" shall mean
(whether or not in respect of which such term is used there shall have been
net profits or net assets of the Corporation legally available for the payment
of such dividends) that amount which shall be equal to dividends at the full
rate fixed for the Class B Common Stock as provided herein for the period of
time elapsed from the Original Issuance Date to the date as of which Full
Cumulative Dividends are to be computed.
(h) The term "Junior Stock" shall mean the Class A Common
Stock and any other class of capital stock of the Corporation ranking as to
payment of dividends and distributions of assets and upon liquidation junior
to the Preferred Stock.
(i) The term "Net Earnings of the Corporation" shall mean
the net earnings from continuing operations of the Corporation and its
consolidated subsidiaries, AFTER deducting all operating expenses, interest
charges, rental charges, reserves and all other proper deductions, BUT BEFORE
appropriate provision for Federal, state or local income taxes, all determined
by and reflected in the Prescribed Financial Statements.
(j) The term "Notice of Earnings" shall mean a notice
delivered by the Corporation to each of the holders of Class B Common Stock
then outstanding, which notice shall include (i) the Prescribed Financial
Statements, (ii) a statement, signed by the chief executive officer and chief
financial officer of the Corporation, to the effect that (A) such notice is
being delivered pursuant to the provisions of Article IV of the Restated
Certificate of Incorporation of the Corporation and (B) the Prescribed
Financial Statements are true, correct and complete and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (including a basis consistent with the audited financial
statements of the Corporation and its consolidated subsidiaries as of and for
the fiscal year ended June 30, 1984), and (iii) the Adjustment, if any, in the
Class B Conversion Price, in accordance with Section B.5(e)(ii) of this
Article.
(k) The term "Class B Original Issuance Date" shall mean
the date of original issuance of the first share of Class B Common Stock.
- 40 -
<PAGE>
(l) The term "Prescribed Financial Statements" shall mean,
with respect to the fiscal years ending June 30, 1985 and June 30, 1986,
respectively, the balance sheet of the Corporation and its consolidated
subsidiaries as of such date and the related statements of income (loss),
stockholders' equity and changes in financial position for the fiscal year
then ended, which financial statements shall (i) have attached thereto the
unqualified opinion of Arthur Young & Company, independent certified public
accountants, (ii) be prepared in accordance with generally accepted accounting
principles applied on a consistent basis (including a basis consistent with the
audited financial statements of the Corporation and its consolidated
subsidiaries as of and for the fiscal year ended June 30, 1984) and (iii) be
included in the Notice of Earnings which shall be delivered by the Corporation
to each of the holders of Class B Common Stock.
(m) The term "1984 Purchase Agreement" shall mean the
Purchase Agreement dated on or about October 12, 1984, as such Purchase
Agreement may be amended in accordance with the terms and provisions thereof,
among the Corporation and the investors named therein relating to the issue
and sale of the Preferred Stock.
(n) The term "1985 Purchase Agreement" shall mean the
Purchase Agreement dated on or about April 2, 1985, as such Purchase Agreement
may be amended in accordance with the terms and provisions thereof, among the
Corporation and the investors named therein.
B. CLASS A STOCK
1. VOTING. Each holder of shares of Class A Common Stock
shall be entitled to one vote for each share of Class A Common Stock held on
all matters as to which holders of Class A Common Stock shall be entitled to
vote. In any election of directors, no holder of Class A Common Stock shall
be entitled to cumulate his votes by giving one candidate more than one vote
per share.
2. OTHER RIGHTS. Each share of Class A Common Stock issued
and outstanding shall be identical in all respects one with the other, and no
dividends shall be paid on any shares of Class A Common Stock unless the same
dividend is paid on all shares of Class A Common Stock outstanding at the time
of such payment; PROVIDED, HOWEVER, no dividends shall be paid on shares
of Class A Common Stock so long as any shares of Preferred Stock are
outstanding. Except for and subject to those rights expressly granted to the
holders of the Preferred Stock and/or Class B Common Stock, or except as may
be provided by the laws of the State of Delaware, the holders of Class A
Common Stock shall have exclusively all other rights of stockholders including,
but not by way of limitation, (i) the right to receive dividends, when and as
declared by the Board of Directors of the Corporation out of assets lawfully
available therefor, and (ii) in the event of any
- 41 -
<PAGE>
distribution of assets upon liquidation, dissolution or winding-up of the
Corporation or otherwise, the right to receive, together with the Class B Common
Stock as provided in Section B.2 of this Article, ratably and equally all the
assets and funds of the Corporation remaining after the payment to the holders
of the Preferred Stock and the Class B Common Stock of the specific amounts
which they are entitled to receive upon such liquidation, dissolution or
winding-up of the Corporation as herein provided.
ARTICLE V
Subject to Section A.4(e)(viii) and B.4(e)(ix), of Article IV,
the Board of Directors is authorized to make, alter or repeal the By-laws of
the Corporation. Election of directors need not be by ballot.
ARTICLE VI
The name and mailing address of the incorporator is:
L. M. Curtis
100 West Tenth Street
Wilmington, Delaware 19801
ARTICLE VII
Upon the effectiveness of the filing of this Restated
Certificate of Incorporation in accordance with the provisions of the General
Corporation Law of Delaware, each share of the Corporation's previously
authorized class of Common Stock, no par value (and each certificate
representing shares of such Common Stock), shall, immediately upon such
effectiveness and without any action on the part of the holders thereof be
deemed automatically to represent one issued and outstanding share of Class A
Common Stock.
We, THE UNDERSIGNED, Chairman of the Board and Secretary of
National Healthcare, Inc., for the purpose of restating the Restated
Certificate of Incorporation of said National Healthcare, Inc., do make this
certificate, hereby declaring and certifying that this Restated Certificate of
Incorporation was adopted by the written consent of a majority of the
stockholders of National Healthcare, Inc. in accordance with the provisions of
Section 228 of the General Corporation Law of Delaware and written notice has
been given to those stockholders of National Healthcare, Inc. who have not
consented in writing in accordance with said Section 228, and further that
this instrument
- 42 -
<PAGE>
is our act and deed and that the facts herein stated are true. Accordingly, we
have hereunto set our hands and seals this 3rd day of April, 1985.
/s/ Stephen L. Phelps
-------------------------------------
Stephen L. Phelps, Chairman
/s/ William R. Wayland, Jr.
[Seal] Attest: -------------------------------------
William R. Wayland, Jr., Secretary
- 43 -
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "NATIONAL HEALTHCARE, INC." FILED IN THIS OFFICE ON THE
THIRTY-FIRST DAY OF OCTOBER, A.D. 1985, AT 3 O'CLOCK P.M.
* * * * * * * * * * * * *
/s/ William T. Quillen
[Seal] -------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029417
DATE: 08/24/1993
932365191
<PAGE>
3 PM
FILED
OCT 31 1985
/s/ Michael Harkin
Secretary of State
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
NATIONAL HEALTHCARE, INC.
National Healthcare, Inc. a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, does hereby
certify:
FIRST: That the Board of Directors of said corporation at a meeting
duly held, adopted a resolution proposing and declaring advisable the
following amendments to the Certificate of Incorporation of said corporation.
The resolutions setting forth the proposed amendments are as follows:
NOW, THEREFORE, BE IT RESOLVED that the first paragraph of Article IV of
the Second Restated Certificate of Incorporation of National Healthcare, Inc.,
be amended to read as follows:
"The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 25,000,000 shares,
consisting of (a) 273,750 shares of Convertible Preferred Stock, $.01
par value (the "Preferred Stock"), (b) 142,856 shares of Class B Common
Stock, $.01 par value (the "Class B Common Stock"), and (c) 24,583,394
shares of Class A Common Stock, $.01 par value (the "Class A Common
Stock"). The Class A Common Stock and the Class B Common Stock are
sometimes hereinafter collectively referred to as the "Common Stock"."
FURTHER RESOLVED that Article IV, Section B.6(c)(i)(A) of the Second
Restated Certificate of Incorporation of the Company be amended to read in its
entirety as follows:
"(A) at a selling price per share of Class A Common Stock (as
constituted on the Class B Original Issuance Date) of not less than
$54.00, and"
SECOND: That thereafter, pursuant to a resolution of its Board of
Directors, a Consent of Stockholders in Lieu of a Special Meeting was obtained
pursuant to Section 228 of the General Corporation law of the State of
Delaware, in which consent the necessary number of shares, and each class of
shares, as required by statute were voted in favor of the amendments contained
above. Prompt notice of the taking of such action by consent was given to
<PAGE>
all stockholders who had not consented in writing to such action, in accordance
with Section 228.
THIRD: That upon the effectiveness of the filing of this Certificate of
Amendment to the Certificate of Incorporation of said corporation, each issued
and outstanding share of Class A Common Stock is split up and converted into
six shares of Class A Common Stock.
FOURTH: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FIFTH: That the capital of said Corporation will not be reduced under
or by reason of said amendments.
IN WITNESS WHEREOF, said National Healthcare, Inc., has caused its
corporate seal to be hereunto affixed and this certificate to be signed by its
President and Assistant Secretary. The signature of the President and
Assistant Secretary constitute the affirmation and acknowledgment of such
persons, under penalties of perjury, that the instrument is the act and deed
of the said corporation and that the facts stated therein are true.
NATIONAL HEALTHCARE, INC.
By: /s/ Stephen L. Phelps
-------------------------------------
Stephen L. Phelps,
President
Attest:
/s/ John S. Schwartz
- -------------------------------------
John S. Schwartz,
Assistant Secretary
(CORPORATE SEAL)
- 2 -
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
RESTATED CERTIFICATE OF INCORPORATION OF "NATIONAL HEALTHCARE, INC." FILED IN
THIS OFFICE ON THE FIFTH DAY OF NOVEMBER, A.D. 1985, AT 10 O'CLOCK A.M.
/s/ William T. Quillen
[Seal] -------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029415
DATE: 08/24/1993
932365191
<PAGE>
735309015 10 AM
FILED
NOV 5 1985
/s/ Michael Harkin
Secretary of State
THIRD RESTATED
CERTIFICATE OF INCORPORATION
OF
NATIONAL HEALTHCARE, INC.
ORIGINALLY INCORPORATED ON OCTOBER 20, 1981
(PURSUANT TO SECTION 242-245)
ARTICLE I
The name of the corporation is: NATIONAL HEALTHCARE, INC.
ARTICLE II
The address of its registered office in the State of Delaware is
1209 Orange Street in the City of Wilmington, County of New Castle 19801. The
name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
ARTICLE IV
The total number of shares of stock which the Corporation shall
have authority to issue is Twenty-Five Million (25,000,000) shares of Common
Stock, and the par value of each of such shares shall be $.01.
ARTICLE V
The Board of Directors is authorized to make, alter or repeal the By-law
of the Corporation. Election of directors need not be by ballot.
We, THE UNDERSIGNED, President and Assistant Secretary of National
Healthcare, Inc., for the purpose of restating the Second Restated Certificate
of Incorporation of said National Healthcare, Inc., do make this certificate,
hereby declaring and certifying that this Third Restated Certificate of
Incorporation as duly adopted in accordance with Section 245 of the General
Corporation Law of the State of Delaware and that this Certificate was adopted
by the written consent of a majority of the stockholders of National
<PAGE>
Healthcare, Inc. in accordance with the provisions of Section 228 of the
General Corporation Law of Delaware and written notice has been given to those
stockholders of National Healthcare, Inc. who have not consented in writing in
accordance with said Section 228, and further that this instrument is our act
and deed and that the facts herein stated are true. Accordingly, we have
hereunto set our hands and seals this 4th day of November, 1985.
/s/ Stephen L. Phelps
-------------------------------------
Stephen L. Phelps, President
/s/ John S. Schwartz
-------------------------------------
John S. Schwartz,
Assistant Secretary
ATTEST:
[Seal]
- 2 -
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "NATIONAL HEALTHCARE, INC." FILED IN THIS OFFICE ON THE SEVENTH
DAY OF JANUARY, A.D. 1987, AT 9 O'CLOCK A.M.
/s/ William T. Quillen
[Seal] -------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029411
DATE: 08/24/1993
932365191
<PAGE>
8700070015 9 AM
FILED
JAN 7 1987
/s/ Michael Harkin
Secretary of State
CERTIFICATE OF AMENDMENT
TO
THIRD RESTATED
CERTIFICATE OF INCORPORATION
OF
NATIONAL HEALTHCARE, INC.
National Healthcare, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, does
hereby certify:
FIRST: That the Board of Directors of said Corporation, at a meeting
duly held, adopted a resolution proposing and declaring advisable the
following amendment to the Third Restated Certificate of Incorporation of said
Corporation. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the Board of Directors proposes that the Company's
Third Restated Certificate of Incorporation be amended by adding the
following new Article VI thereto, to wit:
Article VI
No director of the Corporation shall be liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper
personal benefit.
SECOND: That thereafter, pursuant to a resolution of its Board of
Directors, the holders of a majority of the issued and outstanding shares of
the capital stock of said Corporation voted in favor of the amendment set
forth above.
THIRD: That the said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said Corporation will not be reduced under
or by reason of said amendments.
<PAGE>
IN WITNESS WHEREOF, said National Healthcare, Inc., has caused its
corporate seal to be hereunto affixed and this certificate to be signed by its
Chairman and Secretary as of the 17th day of December, 1986. The signature of
the Chairman and Secretary constitute the affirmation and acknowledgment of
such persons, under penalties of perjury, that this instrument is the act and
deed of the said corporation and that the facts stated herein are true.
NATIONAL HEALTHCARE, INC.
By: /s/ Stephen L. Phelps
-------------------------------
Stephen L. Phelps, Chairman
and Chief Executive Officer
ATTEST:
/s/ Charles E. Baxter
- ------------------------------
Charles E. Baxter,
Secretary
[CORPORATE SEAL]
--------------------------
|Sab|DCD40|dw3|CERTOFAM.3RD|
--------------------------
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<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "NATIONAL HEALTHCARE, INC." FILED IN THIS OFFICE ON THE
THIRTY-FIRST DAY OF JANUARY, A.D. 1990, AT 10 O'CLOCK A.M.
/s/ William T. Quillen
[Seal] --------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029409
DATE: 08/24/1993
932365191
<PAGE>
10 AM
FILED
JAN 31 1990
/s/ Michael Harkin
Secretary of State
CERTIFICATE OF AMENDMENT
TO
RESTATED
CERTIFICATE OF INCORPORATION
OF
NATIONAL HEALTHCARE, INC.
National Healthcare, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
FIRST: That the Board of Directors of said Corporation, at a meeting
duly held, adopted a resolution proposing and declaring advisable the
amendments to the Restated Certificate of Incorporation of said Corporation set
forth below.
SECOND: That thereafter, pursuant to a resolution of its Board of
Directors, the holders of a majority of the issued and outstanding shares of
the capital stock of said Corporation entitled to vote thereon and voting at
the Annual Meeting of the Stockholders of Company held on November 30, 1989
voted in favor of the amendments set forth below.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said Corporation will not be reduced under
or by reason of said amendments.
RESOLVED, that Article IV of the Corporation's Restated Certificate of
Incorporation be amended by deleting the text therein and adding the following
in lieu thereof:
Article IV
The Restated Certificate of Incorporation of National Healthcare, Inc.
shall be amended by deleting the text of Article IV and adding the following
in lieu thereof:
The total number of shares of capital stock which the Corporation shall
have authority to issue is Twenty-Seven Million Five Hundred Thousand
(27,500,000), of these shares 25,000,000 shares shall be Common Stock with a
par value of $.01 per share and $2,500,000 shares shall be Preferred Stock
with a par value of $1.00 per share. The aggregate par value of all the
shares of all the classes of Stock which the Corporation has authority to
issue is $2,750,000.
<PAGE>
COMMON STOCK
Initially, there shall be two classes of Common Stock: (i) Voting Common
Stock ("Class A Common Stock") with full voting powers and all rights and
privileges of Common Stock and (ii) Non-Voting Common Stock ("Class B Common
Stock") with all rights and privileges of Class A Common Stock except the
right to vote.
Such Classes of Common Stock may be issued in such amount as may be
fixed by the Board of Directors provided that the amount of such Class B
Common Stock when issued shall not exceed twenty percent (20%) of the issued
and outstanding common equity of the Company on a fully diluted basis. Shares
of Class B Common Stock shall be non-voting for so long as such shares are
held by or for the benefit of an initial holder of such stock (including any
permitted assignees or transferees of such initial holder. Otherwise, shares
of such Class B Common Stock shall automatically convert into Class A Common
Stock upon the sale or disposition of such shares of Class B Common Stock.
PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or more
series, each such series to have such distinctive designation or title as may
be fixed by the Board of Directors prior to the issuance of any shares
thereof. Each such series of Preferred Stock shall have such voting powers,
full or limited, or no voting powers, and such preferences and such relative,
participating, optional or other special rights (including, without
limitation, the right to convert shares of such Preferred Stock into shares of
the Corporation's Preferred Stock at such rate and upon such terms and
conditions as may be fixed by the Corporation's Board of Directors), with such
qualifications, limitations, or restrictions of such preferences or rights as
shall be stated in the resolution or resolutions providing for the issue of
such series of Preferred Stock, as may be adopted from time to time by the
Board of Directors prior to the issuance of any shares thereof, in accordance
with the laws of the State of Delaware.
FURTHER RESOLVED, that the Corporation's Restated Certificate of
Incorporation be amended by adding the following Articles thereto:
ARTICLE VII
The following provisions are inserted for the regulation and conduct of
the affairs of the Corporation, and it is hereby expressly provided that the
same are intended in furtherance and not in limitation or exclusion of the
powers conferred by statute:
(1) The Board of Directors is expressly authorized to adopt, repeal,
alter or amend the By-laws of the Corporation by the vote of a majority of the
entire Board of Directors. Alternatively, in
- 2 -
<PAGE>
addition to any requirements of law and any other provision of this Certificate
of Incorporation or any resolution or resolutions of the Board of Directors
adopted pursuant to Article IV of this Certificate of Incorporation (and
notwithstanding the fact that a lesser percentage may be specified by law, this
Certificate of Incorporation or any such resolution or resolutions), the
affirmative vote of the holders of eighty percent (80%) or more of the combined
voting power of the then outstanding shares of Voting Stock, voting together as
a single class, shall be required to adopt, amend, alter or repeal any provision
of the By-laws. For purposes of this paragraph (1), "Voting Stock" shall have
the meeting set forth in paragraph 2(e) of this Article VII.
(2) (a) Subject to the provisions of Article IV hereof relating to
the rights of the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation, the number of the
directors of the Corporation shall be fixed from time to time by or pursuant
to the By-laws of the Corporation; the number of directors fixed therein shall
not exceed 12. Beginning with the election of directors at the Meeting on or
about November 30, 1989 of stockholders, the directors, other than those who
may be elected by the holders of Preferred Stock or any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation pursuant to the terms of this Certificate of Incorporation or any
resolution or resolutions providing for the issue of such class or series of
stock adopted by the Board of Directors, shall be classified, with respect to
the time for which they severally hold office, into three classes, as nearly
equal in number as possible, as shall be provided in the By-laws of the
Corporation, one class to be originally elected for a term expiring at the
annual meeting of stockholders to be held in 1990, another class to be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 1991, and another class to be originally elected for a term expiring
at the annual meeting of stockholders to be held in 1992, with each class to
hold office until its successors are elected and qualified. At each annual
meeting of the stockholders of the Corporation, the date of which shall be fixed
by or pursuant to the By-laws of the Corporation, the successors of the class of
directors whose term expires at that meeting shall be elected to hold officer
for a term expiring at the annual meeting of stockholders held in the third year
following the year of their election. The election of directors need not be by
written ballot. No decrease in the number of directors constituting the Board
of Directors shall shorten the term of any incumbent director.
(b) Advance notice of nominations for the election of directors
shall be given in the manner and to the extent provided in the By-laws of the
Corporation.
(c) Except as otherwise provided for or fixed by or pursuant to
the provisions of Article IV hereof relating to the rights of the holders of
any class or series of stock having a
- 3 -
<PAGE>
preference over the Common Stock as to dividends or upon liquidation, newly
created directorships resulting from any increase in the number of directors may
be filled by the Board of Directors, or as otherwise provided in the By-laws,
and any vacancies on the Board of Directors resulting from death, resignation,
removal of other cause shall only be filled by the affirmative vote of a
majority of the remaining directors then in office, even though less than a
quorum of the Board of Directors, or by a sole remaining director, or as
otherwise provided in the By-laws. Any director elected in accordance with the
preceding sentence of this subparagraph (c) shall hold office for the remainder
of the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified.
(d) Subject to the rights of the holders of Preferred Stock or
any other class or series of stock having a preference over the Common Stock
as to dividends or upon liquidation, any director may be removed from office
only for cause and only by the affirmative vote of the holders of a majority
of the combined voting power of the then outstanding shares of Voting Stock
(as defined in paragraph 3(b) of this Article VII), voting together as a
single class. For purposes of this subparagraph (d), "cause" shall mean the
willful and continuous failure of a director to substantially perform such
director's duties to the Corporation (other than any such failure resulting
from incapacity due to physical or mental illness) or the willful engaging by a
director in gross misconduct materially and demonstrably injurious to the
Corporation.
(e) For the purposes of this Article VII:
"Voting Stock" shall mean the outstanding shares of all classes and
series of the Corporation entitled to vote generally in the election of
directors of the Corporation or of a Subsidiary as the context may require,
and shall not include any series of the preferred stock of the Corporation
unless the certificate of designation of rights and preferences for such
series shall specifically state that such series shall be deemed "Voting
Stock" for purposes of this Article VII.
ARTICLE VIII
Subject to the rights of the holders of Preferred Stock or any other
class of series of stock having a preference over the Common Stock as to
dividends or upon liquidation, any action required or permitted to be taken by
the stockholders of the Corporation must be effected at a duly called annual
or special meeting of stockholders of the Corporation and may not be effected
by an consent in writing by such stockholders. Except as otherwise required
by law and subject to the rights of the holders of Preferred Stock or any other
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, special meetings of stockholders of the
Corporation
- 4 -
<PAGE>
may be called only by the Board of Directors pursuant to a
resolution approved by a majority of the entire Board of Directors or as
otherwise provided in the By-laws of the Corporation.
IN WITNESS WHEREOF, National Healthcare, Inc., has caused its corporate
seal to be hereunto affixed and this Certificate of Amendment to be signed,
certified and attested to by its Chief Executive Officer and one of its
Assistant Secretary, duly authorized officers of the Corporation, as of the
26th day of January 1990. The signature of the Chief Executive Officer and
the Assistant Secretary constitute the affirmation and acknowledgment of such
persons, under penalties of perjury, that the instrument is the act and deed of
the said Corporation and that the facts stated therein are true.
NATIONAL HEALTHCARE, INC.
/s/ James T. McAfee, Jr.
-------------------------------------
James T. McAfee, Jr.,
Chief Executive Officer and
Chairman of the Board
ATTEST:
/s/ Kenneth D. Hawkins
- -------------------------------------
Kenneth D. Hawkins
Assistant Secretary
[CORPORATE SEAL]
- 5 -
<PAGE>
STATE OF GEORGIA )
) SS.
COUNTY OF COBB )
The undersigned, a Notary Public in and for the aforesaid County and
State, certifies that on this 26th day of January, 1990, James T. McAfee,
the Chief Executive Officer and Chairman of the Board of National Healthcare,
Inc. (the "Corporation") and Kenneth D. Hawkins, an Assistant Secretary of the
Corporation, known to me personally to be such, duly executed the foregoing
Certificate before me and acknowledged said Certificate to be their act and
deed made on behalf of the Corporation, and acknowledged that the facts stated
therein are true. The signatures on the attached Certificate of said Chief
Executive Officer and said Assistant Secretary of the Corporation are in the
handwriting of said Chief Executive Officer and said Assistant Secretary,
respectively, and the seal affixed to the Certificate is the corporate seal of
the Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office this
26th day of January, 1990.
/s/ Starry W. Hornsby
---------------------------------
Notary Public
(Notarial Seal)
Notary Public, Cobb County, Georgia
My Commission Expires May 2, 1992
- 6 -
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
STOCK DESIGNATION OF "NATIONAL HEALTHCARE, INC." FILED IN THIS OFFICE ON THE
THIRTY-FIRST DAY OF JANUARY, A.D. 1990, AT 10:01 O'CLOCK A.M.
/s/ William T. Quillen
[Seal] --------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029408
DATE: 08/24/1993
932365191
<PAGE>
10:01 AM
FILED
JAN 31 1990
/s/ Michael Harkin
Secretary of State
CERTIFICATE OF DESIGNATION
OF
NATIONAL HEALTHCARE, INC.
25% PARTICIPATING CUMULATIVE
CONVERTIBLE REDEEMABLE PREFERRED STOCK
National Healthcare, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
FIRST: That the Board of Directors of said Corporation, at a meeting
duly held, adopted a resolution proposing, declaring advisable and adopting
the Certificate of Designation under the Restated Certificate of Incorporation
of said Corporation, as amended, said Certificate of Designation as set forth
below.
SECOND: That said Certificate was duly adopted in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware.
THIRD: That the capital of said Corporation will not be reduced under
or by reasons of said Certificate.
RESOLVED: that Corporation's Restated Certificate of Incorporation, as
amended be further amended by adding the following Certificate of Designation
thereto.
(1) DESIGNATION OF THE SERIES.
(a) There shall be a series of preferred stock of National
Healthcare, Inc. (the "Corporation") to be known as 25% Participating
Cumulative Convertible Redeemable Preferable Stock (hereinafter, "this
Series") consisting of three hundred thousand (300,000) shares of the $1 per
share par value preferred stock of the Corporation.
(b) All shares of this Series shall be identical with each other
in all respects.
(c) All of the shares of this Series shall be of such rank as to
any other series, if any, of preferred stock of the Corporation as to
dividends and as to distributions upon liquidation, dissolution, or winding
up, as shall be provided in the resolutions of the Board of Directors creating
such other series, subject in each case to the conditions contained herein.
(2) DIVIDENDS.
(a) The holders of outstanding shares of this Series shall be
entitled to receive, when, as and if declared by the Board of Directors of the
Corporation, out of funds of the Corporation
<PAGE>
that are legally available for such payment, dividends in cash at the rate set
forth in subparagraph (b) of this paragraph 2, and no more, payable on each
31st day of December commencing as of December 31, 1988, so long as any shares
of this Series are outstanding (hereinafter a "Dividend Payment Date"), to
holders of record on the respective dates fixed for that purpose by the Board
of Directors in advance of payment of each dividend ("Record Date"); PROVIDED,
HOWEVER, that dividends may be declared only to the extent then permitted by
any of the Corporation's applicable loan agreements and indentures, the
provisions of the Certificate of Incorporation of the Corporation, as amended
from time to time (the "Certificate of Incorporation"), and the provisions of
subparagraph (b) of this paragraph (2). An annual dividend period shall begin
on the day following each Dividend Payment Date and end on the next succeeding
Dividend Payment Date.
(b) The 300,000 shares of this Series shall be entitled to
aggregate dividends, when, as and if declared by the Board of Directors of the
Corporation, in an amount equal to twenty-five percent (25%) of the Net Income
of the Corporation, as defined below, for the fiscal year next preceding such
Dividend Payment Date; PROVIDED, (i) that such funds are legally available
for such payment; (ii) that on any Dividend Payment Date for shares of this
Series, all regular and accumulated dividends have been declared and paid or
set apart for payment on any other series of preferred stock of the
Corporation which ranks senior or on a parity with the shares of the Series;
(iii) that payment thereof would not otherwise be prohibited by the
Corporation's Certificate of Incorporation, the Certificate of Designation of
any other series of capital stock of the Corporation outstanding on such
Dividend Payment Date, or any of the loan agreements or indentures of the
Corporation; and (iv) if fewer than 300,000 shares of this Series
shall be outstanding, the aggregate amount of dividends to which this Series
would otherwise be entitled shall automatically be reduced pro rata.
(c) The Dividends on the shares of this Series for the fiscal
year ending June 30, 1988 shall be non-cumulative. With respect to fiscal
years ending on or after June 30, 1989, if dividends shall not have been paid,
or declared and set apart for payment, upon all outstanding shares of this
Series at the aforesaid rate, such deficiency shall be cumulative in the
aggregate at the rate of (i) with respect to the fiscal year ended June 30,
1989, one percent (1%) of the aggregate liquidation
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<PAGE>
preference on the shares of this Series outstanding on December 31, 1989, such
accumulation not to exceed twenty-five percent (25%) of defined Net Income for
such fiscal year, if any, (ii) with respect to the fiscal year ending June 30,
1990, two percent (2%) of the aggregate liquidation preference of the shares of
this Series outstanding on December 31, 1990, such accumulation not to exceed
twenty-five percent 25%) of defined Net Income for such fiscal year, if any, and
(iii) with respect to the fiscal year ending June 30, 1991 and thereafter, five
percent (5%) of the aggregate liquidation preference of the shares of this
Series outstanding respectively on the last day of the calendar year in which
such fiscal year ends until all of the shares of this Series have been redeemed.
A maximum aggregate dividend of $750,000 is payable with respect to any one year
and aggregate dividends will be reduced pro-rata for any previously converted or
redeemed shares. "Net Income" means net income, after tax and after payment of
dividends on any other securities which may be senior to this Series, determined
in accordance with generally accepted accounting principles.
(d) Before any dividends on, or any distribution in respect of,
any class or classes of stock of the Corporation ranking junior to this Series
as to dividends shall be declared or paid or set apart for payment, and before
any purchase, redemption or other acquisition for value of any such stock, all
dividends accumulated and unpaid on all outstanding shares of this Series up
to the end of the annual dividend period coinciding with or next preceding
such date shall have been paid or declared and set apart for payment; PROVIDED
that the foregoing provisions of this sentence shall not prohibit (i) a dividend
payable in shares of any class or series of stock of the Corporation ranking
junior to this Series both as to dividends and as to distributions upon
liquidation, dissolution or winding up, (ii) the acquisition of any shares of
any class or series of stock ranking junior to this Series either as to
dividends or as to distributions upon liquidation, dissolution or winding up, or
both, (A) upon the conversion or exchange of such junior shares into or for any
shares of any other class or series of stock or (B) from the proceeds of a
substantially contemporaneous sale of shares of any other such class or series
of stock or (iii) the acquisition of any class of stock of the Corporation for
use in any employee stock purchase or ownership plan.
(e) If, on a Dividend Payment Date of this Series there are any
dividends on any other series of preferred stock ranking on a parity with this
Series as to dividends which are not being paid on such Dividend Payment Date
and which shall have accumulated and remain unpaid as of the end of the
dividend period for such other series ending on or prior to such Dividend
Payment Date for this Series, or if, on the date of payment of any dividends
on any other series of preferred stock ranking on a parity with this Series as
to dividends, there are any dividends which are not being paid on such date on
this Series and which shall have accumulated and remain unpaid, as of the end
of the dividend period for this Series
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<PAGE>
ending on or prior to such Dividend Payment Date for such other series of
preferred stock, the dividends being paid on such date shall be divided among
this Series and such other series of preferred stock in proportion to the
aggregate amounts of dividends accumulated and unpaid, up to the end of the most
recent dividend period for each such series ending on or prior to the date of
such payment, on outstanding shares of this Series and such other series,
respectively, and no dividend shall be declared on this Series or any other
series of preferred stock if the payment thereof would be contrary to this
requirement.
(f) If the fiscal year of the Corporation is changed, the Dividend
Payment Date will be the March 31, June 30 or September 30, which is the
second to occur in the succeeding fiscal year, and the maximum annual dividend
shall be proportionately adjusted for any fiscal years of less or more than
twelve months which results from such change of the Corporation's fiscal year.
(3) REDEMPTION.
(a) OPTIONAL REDEMPTION. The outstanding shares of this
Series shall be redeemable at the option of the Corporation by a vote of the
Board of Directors, in whole at any time, or in part at any time and from time
to time, in each case upon not less than thirty days' notice; provided that
such redemption shall only be out of funds legally available for that purpose
and to the extent then permitted by applicable restrictions in any of the
Corporation's loan agreements and indentures and the provisions of the
Certificate of Incorporation of the Corporation (including without limitation
the provisions of any series or class of stock ranking senior to or prior to
this Series as to dividends or upon liquidation);
(b) MANDATORY REDEMPTION. As and for sinking fund for the
retirement of this Series, the Corporation shall redeem, but only out of funds
legally available for that purpose and to the extent then permitted by
applicable restrictions in any of its loan agreements and indentures and the
provisions of the Certificate of Incorporation of the Corporation (including
without limitation the provisions of any series or class of stock ranking
senior to or prior to this Series as to dividends or upon liquidation) (i) on
the fifth and ninth anniversaries of the day on which the shares of this
Series are first issued (so long as any shares of this Series are
outstanding), the respective number of shares of this Series outstanding on
such anniversary (rounded down to the nearest one hundredth of a share)
representing the aggregate dollar amount of liquidation preference indicated
below (provided that if fewer than 300,000 shares of this Series are
outstanding on the date indicated each such aggregate dollar amount shall be
reduced proportionately):
- 4 -
<PAGE>
ANNIVERSARY DOLLAR AMOUNT
----------- -------------
5th $1,000,000
9th $4,000,000
and (ii) on the tenth anniversary of such day all such shares of this Series
then remaining outstanding. In the event that the Corporation shall not have
funds legally available for, or the Corporation is not then permitted (as
contemplated by the preceding sentence) to make, any or all sinking funds
retirements, the obligation to make such payment or to pay such portion
remaining unpaid shall be carried forward and fulfilled as soon as practicable
after such funds are legally available and the Corporation is permitted to do
so.
(c) REDEMPTION PRICE. The redemption price of shares
of this Series shall be $25 per share reduced by the amount, if any, by which
any previously paid dividends exceed a Cumulative Return, as defined below, of
one percent (1%) per annum of liquidation preference for the fiscal year ended
June 30, 1989, two percent (2%) per annum of liquidation preference for the
fiscal year ending June 30, 1990 and five percent (5%) per annum of
liquidation preference of each fiscal year thereafter. If the fiscal year of
the Corporation is changed, the dates referred to above in this subparagraph
(c) of paragraph (3) shall be changed accordingly. "Cumulative Return", with
respect to any share of this Series with respect to any redemption date, means
the sum of all dividends paid with respect to such share expressed as simple
interest per annum on the amount of liquidation preference of such share for
the period from the date of original issuance thereof on the date of
computation.
(d) REDEMPTION IN PART. If less than all shares of this
Series are to be redeemed, their shares to be redeemed shall be determined by
lot or in such other manner as the Corporation's Board of Directors may deem
to be equitable.
(e) NOTICE. Notice of any proposed redemption of any shares
of this Series shall be given by mailing a copy of such notice, postage
prepaid, at least thirty (30) days in advance of the date designated for such of
redemption to the holders or record of the shares of this Series to be
redeemed at their respective addresses then appearing on the record books of
the Corporation, but no failure to mail such notice nor any defect therein or
in the mailing thereof shall affect the validity of the proceeding for the
redemption of any shares of this Series to be redeemed. If a notice of
redemption is given pursuant to this paragraph (3) (or if the Corporation has
this irrevocably authorized the Depositary (as defined below) to give such
notice pursuant to subparagraph (g) of this paragraph (3)), the Corporation
shall make, on or prior to the date fixed for redemption, provision for the
payment of the aggregate redemption price of the shares of this Series to
- 5 -
<PAGE>
be redeemed in either manner set forth in subparagraph (f) or (g) of this
paragraph (3).
(f) PROVISION FOR REDEMPTION PAYMENT ON THE REDEMPTION DATE. If, on
the redemption date specified in such notice, the funds necessary for such
redemption shall have been set aside by the Corporation, separate and apart
from its other funds, in trust for payment to the holders of the shares of
this Series so called for redemption (except that no funds shall be required
to be set apart with respect to any shares to be redeemed which prior to the
date of such setting apart shall have been converted pursuant to the exercise
of the conversion right provided in paragraph (4) hereof), then,
notwithstanding that any certificates for shares of this Series so called for
redemption shall not have been surrendered for cancellation: (i) the shares
of this Series so called for redemption shall be deemed to be no longer
outstanding for any purpose; (ii) the right to receive dividends shall cease
to accrue from and after the redemption date so designated; and (iii) all rights
of holders with respect to such shares (including, but not limited to any rights
to registration of transfer or exchange) shall forthwith from and after such
redemption date, cease and terminate, except the right of the holders of such
shares, on the date affixed for redemption, to receive the redemption price to
which they are entitled plus dividends unpaid and accrued thereon to such
redemption date minus the amount by which any previously paid dividends exceed a
Cumulative Return as specified above, but without interest. Nothing herein
shall prevent the reissue of redeemed shares in accordance with paragraph (5)
hereof. Any monies so set aside by the Corporation and unclaimed at the end of
two years from such redemption date shall revert to the general funds of the
Corporation. After any such reversion, the holders of shares to which the
unclaimed moneys are attributable shall look only to the Corporation for
payment of the redemption price of such shares plus dividends unpaid and
accrued thereon to such redemption date minus the amount by which any
previously paid dividends exceed the respective Cumulative Return as specified
above and such shares shall continue to be deemed to be no longer outstanding
for any purpose.
(g) PROVISION FOR REDEMPTION PAYMENT PRIOR TO REDEMPTION DATE.
If, after the giving of the notice required to be given pursuant to
subparagraph (e) of this paragraph (3) or after irrevocably authorizing the
Depositary (as defined below) to give said notice, and before the redemption
date specified in such notice, the Corporation shall deposit the aggregate
redemption price of the shares of this Series to be redeemed (except that no
such deposit shall be required with respect to any shares of this Series to be
redeemed which prior to the date of such deposit shall have been converted
pursuant to the exercise of the conversion right provided in paragraph (4)
hereof) with a bank or trust company (the "Depositary") having a combined
capital and surplus of at least $50,000,000 in trust for the payment to the
holders of the shares of this Series so called for redemption,
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then, whether or not the date fixed for redemption shall have occurred or the
certificates for shares of this Series so called for redemption shall have been
surrendered for cancellation: (i) the shares of this Series so called for
redemption shall be deemed to be no longer outstanding for any purpose; (ii) the
right to receive dividends on such shares shall cease to accrue from and after
the redemption date so designated; and (iii) all rights of holders of such
shares shall forthwith, from and after the date of such deposit of such
aggregate redemption price, cease and terminate, excepting only the right of the
holders of such shares to convert such shares on or before the close of business
on the fifth business day prior to the date fixed for redemption and the right
of the holders of such shares to receive the redemption price therefor plus
dividends unpaid and accrued thereon to such date reduced by the amount by which
any previously paid dividends exceed a Cumulative Return as specified above.
Nothing herein shall prevent the reissue of redeemed shares in accordance with
paragraph (5) hereof. Any moneys so deposited by the Corporation and unclaimed
at the end of two years from such redemption date shall be paid by such
Depositary upon demand by the Corporation to the Corporation and thereupon such
Depositary shall be relieved of all responsibility in respect thereof to any
holder of shares to which the unclaimed moneys are attributable and such holder
shall look only to the Corporation for the payment of the redemption price of
such shares plus dividends unpaid and accrued thereon minus the amount by which
any previously paid dividends exceed a Cumulative Return as specified above and
such shares shall continue being deemed to be no longer outstanding for any
purpose, except for the right of the holders of such shares to convert such
shares on or before the close of business on the fifth business day prior to the
date fixed for redemption. The term "business day" shall mean any day other
than a Saturday, Sunday or day on which commercial banking institutions in
Atlanta, Georgia are authorized by law to be closed. Any interest accrued on
funds so deposited shall be paid to the Corporation from time to time.
(h) PROPORTIONATE REDEMPTION. If, in any case, the amounts
payable with respect to any obligations to redeem shares of this Series or
other series ranking on a parity with this Series are not paid in full as to
all such series with respect to which such obligations exist, the number of
shares of such series to be redeemed (assuming any redemption is at the time
permitted hereby) shall be in proportion to the respective amounts which would
be payable on account of such obligations if all amounts payable were
discharged in full.
(4) CONVERSION. The holder of each outstanding share of this Series
shall have the right at any time, or from time to time (except as otherwise
herein provided if such share shall be called for redemption), at his option
to convert such share into five (5) shares of the fully paid and
non-assessable voting Class A Common Stock of the Corporation (or such lesser
or greater number of shares of voting Class A Common Stock or other securities
or assets as may result from adjustments to the rate of conversion as
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provided herein (hereinafter as from time to time so adjusted, a "Conversion
Unit")) on and subject to the terms and conditions hereinafter set forth.
(a) Subject to the provisions for adjustment hereinafter set
forth, the shares of this Series shall be convertible, into Conversion Units
at the rate of one Conversion Unit for each share of this Series surrendered
for conversion pursuant to subparagraph (b) of this paragraph (4); PROVIDED,
that in the event a split or subdivision of any shares of this Series into a
larger number of shares or a combination of any shares of this Series into a
smaller number of shares is effected, the number of Conversion Units into
which each such split or combined share shall be convertible shall be equal to
the product of (i) the number of shares of this Series outstanding immediately
before such split, subdivision or combination divided by the number of such
split, subdivided or combined shares outstanding immediately thereafter and
(ii) the number of Conversion Units into which each such share was convertible
immediately prior to such split or subdivision. In the event a Conversion
Unit shall consist of more than one class or type of security of the
Corporation or any other entity, each of such securities shall be immediately
transferable separately and apart from any other security comprising the
Conversion Unit as of the Conversion Date, unless the terms and conditions of
issuance of two or more of such securities provide that such are not
separately transferable.
(b) In order to exercise such conversion privilege, the holder
of any shares of this Series to be converted shall present and surrender the
certificate representing such shares, duly endorsed to the Corporation or in
blank, during usual business hours at an office or agency of the Corporation
maintained for the transfer of this Series and shall deliver to the
Corporation at such office or agency a written notice of the election of the
holder to convert the shares of this Series represented by such certificate of
any portion thereof specified in such notice. Such notice shall also state
the name or names (with address) in which the certificate or certificates for
shares of voting Class A Common Stock which shall be issuable on such
conversion shall be issued. If so required by the Corporation, any
certificate for shares of this Series surrendered for conversion shall be
accompanied by a conversion notice and, unless the shares issuable on
conversion are to be issued in the same name as that in which such shares of
this Series being converted is registered, by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the holder of such shares of
his duly authorized representative. Each conversion of shares of this Series
shall be deemed to have been effected on the date (the "Conversion Date") on
which the certificate of certificates representing such shares shall have been
surrendered and such notice and any required instruments of transfer and
payment if required received as aforesaid. The person or persons in whose
name or names any certificate or certificates for shares of voting Class A
Common Stock shall be issuable as a result of such conversion shall be
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deemed to have become, immediately prior to the close of business on the
Conversion Date, the holder or holders of record of the shares of voting Class A
Common Stock represented thereby unless the transfer books of the Corporation
are closed on that date, in which event such person or persons shall be deemed
to have become such holder or holders of record on the next succeeding day on
which the transfer books are open, but the conversion shall be made into
Conversion Units as constituted on the date on which such shares of this Series
shall have been so surrendered and such notice received by the Corporation.
(c) As promptly as practicable after the presentation and
surrender for conversion, as herein provided, of any certificate for shares of
this Series, the Corporation shall issue and deliver at such office or agency,
to or upon the written order of the holder thereof, a certificate or
certificates for the number of full shares of voting Class A Common Stock or
other capital stock comprising a Conversion Unit on the Conversion Date and a
certificate or certificates for other securities, if any, comprising a
Conversion Unit on the Conversion Date. Any fractional interest in a share of
voting Class A Common Stock or other capital stock issuable upon such
conversion shall be settled as provided in subparagraph (o) hereof. In case
any certificate for shares of this Series shall be surrendered for conversion
of a part only of the shares of this Series represented thereby, the
Corporation shall deliver at such office or agency, to or upon the written
order of the holder thereof, a certificate or certificates for the number of
shares of this Series represented by such surrendered certificates which are
not being converted. The issuance of certificates for shares of voting Class
A Common Stock issuable upon the conversion of shares of this Series shall be
made without charge to the converting holder for any tax imposed on the
Corporation in respect of the issue thereof. The Corporation shall not,
however, be required to pay any tax which may be payable with respect to any
transfer involved in the issue and delivery of any certificate in a name other
than that of the holder of the shares of this Series being converted, and the
Corporation shall not be required to issue or deliver any such certificate
unless and until the person requesting the issue thereof shall have paid to
the Corporation the amount of such tax or has established to the satisfaction
of the Corporation that such tax has been paid.
(d) Upon any conversion pursuant hereto of shares of this Series
into Conversion Units which are partially or wholly comprised of shares of
voting Class A Common Stock, no adjustment with respect to the per share
dividend rate payable on this Series shall be made; dividends shall be payable
on shares of this Series so converted only if such were declared and were
payable to holders of record of shares of this Series on a date prior to the
Conversion Date with respect to the shares so converted; however, each share
of this Series surrendered for conversion during the period from the close of
business on the Record Date (or the next preceding business day if such day is
not a business day) next
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preceding any Dividend Payment Date to the opening of business on such Dividend
Payment Date (excluding shares of this Series called for redemption and payable
on a redemption date during such period) shall also be accompanied by payment in
New York Clearing House funds or other funds acceptable to the Corporation of an
amount equal to the dividend payable on such Dividend Payment Date on the number
of shares of this Series then being converted; however, if the Corporation shall
default in the payment of said dividend, said funds shall be returned to the
payor thereof and only those dividends shall be payable on shares of voting
Class A Common Stock issued upon such conversion as may be declared and made
payable to holders of record of shares of voting Class A Common Stock on or
after such Conversion Date and only such interest shall be payable on debt
securities, if any, comprising a Conversion Unit as constituted on the
Conversion Date, as may be payable to holders of record of any such debt
securities on or after such Conversion Date.
(e) In the event any shares of this Series shall be called for
redemption, the right to convert such shares of this Series pursuant hereto
shall terminate on the fifth Business Day prior to the last business day
preceding the date fixed for redemption of such shares, unless payment of the
redemption price of such shares is not duly provided for by the date fixed for
redemption. Notwithstanding anything to the contrary contained in this
paragraph (4), the Corporation may, at its option, purchase any shares of this
Series presented and surrendered for redemption prior to the close of business
on the fifth business day prior to the date fixed for redemption at a purchase
price equal to the price that would have been paid had such shares been
redeemed and immediately sell such shares to any registered broker-dealer who
has agreed to purchase such shares at a price at least equal to the price paid
by the Corporation for such shares and to convert each of such shares into the
securities then comprising a Conversion Unit.
(f) The number of shares of voting Class A Common Stock
comprising a Conversion Unit or a portion of a Conversion Unit shall be
subject to adjustment from time to time as follows:
(i) In case the Corporation shall (A) pay a dividend or
make a distribution to all holders of outstanding shares of its
voting Class A Common Stock as a class in shares of its voting
Class A Common Stock, (B) subdivide or split the outstanding
shares of its voting Class A Common Stock into a larger number of
shares, (C) combine the outstanding shares of its voting Class A
Common Stock into a smaller number of its voting Class A Common
Stock (subject to such further adjustments as may be required
pursuant to clause (ii) of this subparagraph (f), or to either of
said clauses) a Conversion Unit shall consist of the number of
shares of voting Class A Common Stock of the Corporation which at
the date of such conversion the holder of a share of
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this Series would have owned and been entitled to receive had such
share of this Series been converted immediately prior to the
happening of the first of such events to occur after the initial
issue of shares of this Series and prior to such conversion. An
adjustment made pursuant to this clause (i) shall become effective
immediately after such record date in the case of a dividend or
distribution and immediately after the effective date in the case
of a subdivision, split, combination or reclassification.
(ii) In case the Corporation shall issue to all holders of
its voting Class A Common Stock as a class any rights or warrants
enabling them (for a period expiring within forty-five (45) days
after the record date for determination of stockholders entitled
to receive such rights or warrants) to subscribe for or purchase
shares of voting Class A Common stock at a price per share less
than the average market price per share of voting Class A Common
Stock (as defined below in subparagraph (g) of this paragraph (4))
at such record date, the number of shares of voting Class A Common
Stock comprising or partially comprising a Conversion Unit shall
be determined by multiplying the number of shares of voting Class
A Common Stock then included in a Conversion Unit immediately
prior to such record date by a fraction, of which the numerator
shall be the sum of the number of shares of voting Class A Common
Stock outstanding at such record date and the
number of additional shares of voting Class A Common Stock so
offered for subscription or purchase, and of which the denominator
shall be the sum of the number of shares of voting Class A Common
Stock outstanding at such record date and the number of shares of
voting Class A Common Stock which the aggregate offering price
(before deduction of underwriting discounts or commissions and
other expenses) of the total number of shares so offered for
subscription or purchase would purchase at such average market
price per share. An adjustment made pursuant to this clause (ii)
shall become effective immediately after the record date for
determination of stockholders entitled to receive such rights or
warrants.
(g) For the purposes of computation under this paragraph (4),
the average market price per share of voting Class A Common Stock at any date
shall be the average of the per share daily closing prices for the thirty (30)
consecutive Business Days commencing forty-five (45) Business Days before the
date in question. The closing price (the "Closing Price") for each day shall
be as follows:
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<PAGE>
(i) If the primary market for the security in question is a
National Securities Exchange, the NASDAQ National Market System,
or other market or quotation system in which last sale
transactions are reported on a contemporaneous basis, the last
reported sales price, regular way, of such security on such
exchange or in such quotation system for such day, or, if there
shall not have been a sale on such exchange or reported through
such system on such trading day, the highest closing or last bid
quotations therefor on such exchange or quotation system on such
trading day, or
(ii) If the primary market for such security is not such an
exchange or quotation market in which last sale transactions are
contemporaneously reported, the last bid quotation in the
over-the-counter market on such trading day as reported by the
National Association of Securities Dealers through NASDAQ, its
automated system for reporting quotations, or its successor or
such other generally accepted source of publicly reported bid
quotations as the Company may reasonably designate, or
(iii) If such security is not required on any of the above,
the Closing Price shall be determined by resolution of the Board
of Directors of the Corporation which determination shall be
final.
(h) In any case in which subparagraph (f) of this paragraph (4)
shall require that an adjustment be made immediately following a record date,
the Company may elect to defer (but only until five business days following
the filing by the Company of a certificate described in subparagraph (j) of
this paragraph (4) with each office or agency maintained by the Corporation
for the transfer of shares of this Series (the "Transfer Agent")) issuing to
the holder of any share of this Series converted after such record date the
shares of voting Class A Common Stock and other securities comprising a
Conversion Unit immediately prior to such adjustment; and, in lieu of the
securities, the issuance of which is so deferred, the Company shall issue or
cause the conversion agent to issue due bills for other appropriate evidence
of the right to receive such shares.
(i) No adjustment in the number of shares of voting Class A
Common Stock or other stock or principal amount of debt securities, if any,
comprising a Conversion Unit shall be required unless such adjustment would
require an increase or decrease in such number of shares of voting Class A
Common Stock or other securities of at least one and one half percent (1.5%)
of such number of shares or principal amount, as the case may be; PROVIDED,
however, that any adjustments which by reason of this subparagraph (i) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All
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<PAGE>
calculations under this paragraph (4) shall be made to the nearest 1/100th of a
share or nearest cent, as the case may be.
(j) Whenever any adjustment is required in the number of shares
comprising a Conversion Unit or the number of Conversion Units into which
shares of this Series is convertible, the Corporation shall forthwith (i) file
with each Transfer Agent a statement describing in reasonable detail the
adjustment and the method of calculation used, and (ii) cause a notice of such
adjustment, setting forth the adjusted conversion rate, to be mailed to the
holders of record of shares of this Series at their addresses as shown on the
books of the Corporation.
(k) All shares of this Series which shall have been surrendered
for conversion as herein provided shall no longer be deemed to be outstanding
and all rights with respect to such shares, including the rights, if any, to
receive notices and to vote, shall forthwith cease and terminate, except only
the right of the holders thereof, subject to the provisions of
subparagraph (c) of this paragraph (4), to receive shares in exchange
therefor.
(l) In case of any consolidation of the Corporation with, or
merger of the Corporation into, any other corporation (other than a merger in
which the Corporation is the surviving corporation), or in case of any
conveyance or transfer of the property and assets of the Corporation as an
entirety or substantially as an entirety, each share of this Series shall
thereafter be convertible into (a) the number and kind of shares of stock and
other securities and cash, property and rights which would be receivable upon
such consolidation, merger, conveyance or transfer by a holder of the number
and kind of securities of the Corporation then comprising or partially
comprising a Conversion Unit immediately prior to such consolidation, merger,
conveyance or transfer plus (b) any cash or property other than securities of
the Corporation which may comprise a Conversion Unit immediately prior to such
consolidation, merger, conveyance or transfer. The above provisions of this
subparagraph (l) shall similarly apply to successive consolidations, mergers,
conveyances or transfers.
(m) In the event that:
(i) the Corporation shall take action to offer for
subscription PRO RATA to the holders of its voting Class A
Common Stock, any securities of any kind;
(ii) the Corporation shall take action to accomplish any
capital reorganization or reclassification of the capital stock of
the Corporation (other than a subdivision, split or combination of
its Voting Common Stock), or consolidation or merger to which the
Corporation is a party and for which approval of any stockholders
of the Corporation is required; or
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<PAGE>
(iii) the Corporation shall take action looking to a
voluntary or involuntary dissolution, liquidation or winding up of
the Corporation;
then the Corporation shall (A) in case of any such subscription rights, at
least fifteen (15) days prior to the date or expected date on which the books
of the Corporation shall close or a record shall be taken for the
determination of holders entitled to such subscription rights, and (B) in the
case of any such reorganization, reclassification, consolidation, merger,
dissolution, liquidation or winding up, at least twenty (20) days prior to the
date or expected date when the same shall take place, cause written notice
thereof to be mailed to each holder of shares of this Series at his address as
shown on the books of the Corporation. Such notice in accordance with the
foregoing clause (A) shall also specify, in the case of any such subscription
rights, the date or expected date on which the holders of voting Class A
Common Stock shall be entitled thereto, and such notice in accordance with the
foregoing clause (B) shall also specify the date or expected date on which the
holders of voting Class A Common Stock shall be entitled to exchange their
voting Class A Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, dissolution,
liquidation or winding up, as the case may be.
(n) For the purposes of this paragraph (4), the term "Class A
Common Stock" shall mean (i) the class of stock designated as the voting Class
A Common Stock of the Corporation on the date of this Certificate of
Designation of 25% Participating Convertible Preferred Stock, or (ii) any
other class of stock resulting from successive changes or reclassifications of
such voting Class A Common Stock consisting solely of changes in par value or
from no par value to par value, or from par value to no par value. In the
event that at any time as a result of an adjustment made pursuant to the
provisions of this subparagraph (f) of this paragraph (4), the holder of any
share of this Series thereafter surrendered for conversion shall become
entitled to receive any shares of the Corporation other than shares of voting
Class A Common Stock, thereafter the number of such other shares so receivable
upon conversion of any share of this Series shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the voting Class A Common Stock contained in
subparagraph (f) of this paragraph (4), and the other provisions of this
paragraph (4) with respect to the voting Class A Common Stock shall apply on
like terms to any such other shares.
(o) Whenever any conversion would result in the issuance of a
fractional share of voting Class A Common Stock, the following procedures
shall apply:
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(i) No fractional share of voting Class A Common Stock, or
scrip representing a fractional share, shall be issued upon the
conversion of any shares of this Series. If more than one share
of this Series shall be surrendered for conversion at one time by
the same holder, the number of full shares of voting Class A Common
Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares so surrendered. Instead of
any fractional interest in a share of voting Class A Common Stock
which otherwise would be issuable upon the conversion of any
shares of this Series, the Corporation may, at its option, elect
to pay, in lieu thereof, in cash the market value thereof as of
the Conversion Date. For such purpose, the market value of a
share of voting Class A Common Stock shall be the closing price of
such share to be determined as follows:
(A) If the primary market for the security in
question is a National Securities Exchange, the NASDAQ
National Market System, or other market or quotation system
in which last sale transactions are reported on a
contemporaneous basis, the last reported sales price,
regular way, of such security on such exchange or in such
quotation system for such day, or, if there shall not have
been a sale on such exchange or reported through such system
on such trading day, the highest closing or last bid
quotations therefor on such exchange or quotation system on
such trading day, or
(B) If the primary market for such security is not
such an exchange or quotation market in which last sale
transactions are contemporaneously reported, the last bid
quotation in the over-the-counter market on such trading day
as reported by the National Association of Securities
Dealers through NASDAQ, its automated system for reporting
quotations, or its successor or such other generally
accepted source of publicly reported bid quotations as the
Company may reasonably designate, or
(C) If such security is not reported on any of the
above, the closing price shall be determined by resolution of
the Board of Directors of the Corporation which determination
shall be final.
(ii) If the Corporation shall elect not to pay the cash
adjustment provided in clause (i) above of this subparagraph (o),
the provisions of this clause (ii) shall be applicable to such
fractional interest. The person entitled to such fractional
interest may elect either to purchase the additional fractional
interest
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<PAGE>
required to make up a full share of voting Class A
Common Stock or to sell the fractional interest to which such
person is entitled. Such election shall be made at the time the
shares of this Series are surrendered for conversion and shall be
made on the form of notice of conversion appearing on the share
certificate or on a form provided for such purpose by the
Corporation or the conversion agent. If such election is not made
at such time, the fractional interest to which such person was
entitled shall be sold by the Corporation. Such purchase or sale
shall be effected by the conversion agent acting as agent for the
person entitled to such fractional interest. The conversion agent
shall bill such person for the purchase price of any such
fractional interest purchased by it as such agent or shall remit
to such person the proceeds from the sale of any such fractional
interest sold by it as such agent. In the case of a purchase, the
conversion agent may sell the share to which such person is
entitled if payment is not received by such conversion agent
within thirty (30) days after the mailing of such bill and, after
deducting the amount of such bill and any other charges, shall
remit the balance, if any, to such person. The Corporation shall
be under no obligation to make shares of voting Class A Common
Stock available to the conversion agent for such purchases.
Fractional interests shall be non-transferable except by or to the
conversion agent acting as herein authorized. The conversion
agent may purchase or sell fractional interests on the basis of
market prices of the voting Class A Common Stock as determined by
such agent and is expressly authorized to value fractional
interests without actual purchase or sale on the basis of market
price of the voting Class A Common Stock as determined by it.
Purchases and sales of fractional interests by the conversion
agent may, in its sole discretion, be set off one against the
other on the basis of market prices of the voting Class A Common
Stock as determined by it. Fractional interests will not be
entitled to dividends and the holders thereof shall not be
entitled to any rights as shareholders of the Corporation in
respect of such fractional interests. The Corporation will
reimburse the conversion agent for its expenses in
connection with the purchase and sale of voting Class A Common
Stock hereunder.
(p) Such number of shares of voting Class A Common Stock as may
from time to time be required for such purpose shall be reserved for issuance
upon conversion of outstanding shares of this Series.
(5) REISSUE OF REACQUIRED SHARES. Shares of this Series which have
been issued and reacquired in any manner by the Corporation (exclusive of any
affiliate of the Corporation) shall
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<PAGE>
have the status of authorized and unissued shares of preferred stock of the
Corporation. Any such shares of this Series so acquired by the Corporation may
be reissued as part of a new series (or as additional shares of an existing
services, if permitted by the certificate of designation of such existing
series) of preferred stock of the Corporation to be created by resolution or
resolutions of the Board of Directors, subject to the conditions or restrictions
on issuance set forth herein or in any resolution or resolutions adopted by the
Board of Directors providing for the issue of any series of preferred stock, but
such reacquired shares may not be reissued as a part of this Series.
(6) LIQUIDATION. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, after payment of any
obligations of the Corporation ranking senior to the shares of this Series,
including, without limitation, any accrued and unpaid dividends and any
preferences due with respect to any series of preferred stock of the
Corporation which may rank senior to the shares of this Series, or as to
distributions upon liquidation, dissolution or winding up, whether or not the
Corporation shall have a surplus or earnings available for the payment of
dividends, the holders of outstanding shares of this Series shall be entitled
to receive for each such share payment in cash equal to $25.00 per share, less
an amount equal to the amount by which the dividends which have been paid
thereon to the date fixed for such payment exceed five percent (5%) of the
liquidation preference of such share times the number of fiscal year ends
which have occurred since the original issuance of such share, and no more,
before any payment or other distribution of assets shall be made to the holders
of shares of Common Stock or other class of stock of the Corporation ranking
junior to this Series as to distribution upon liquidation, dissolution or
winding up. In the event the assets of the Corporation available for
distribution to the holders of this Series upon any liquidation, dissolution
or winding up of the corporation shall be insufficient to pay in full the
amounts to which the holders of this Series shall be entitled, no distribution
shall be made to or on behalf of the holders of any shares of any other class
or series of stock ranking on a parity with this Series as to distributions
upon liquidation, dissolution or winding up unless the remaining assets shall
be paid to or on behalf of the holders of this Series, ratably, in proportion
(i) first, to the amounts attributable to dividends accrued and unpaid if any,
to which the holders of all such shares are entitled upon liquidation,
dissolution or winding up and (ii) second, to the amount attributable to
liquidation preferences to which the holders of all such shares are entitled
upon liquidation, dissolution or winding up. If upon any liquidation,
dissolution or winding up of the Corporation there shall be outstanding any
series of preferred stock of the Corporation ranking on a parity with this
Series as to dividends, but ranking junior to this Series as to distributions
upon liquidation, dissolution or winding up, any dividends on such other
series as shall have accumulated and remain unpaid (unless payment therefor
has been irrevocably provided), shall be deemed
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to rank junior to this Series. If upon any liquidation, dissolution or winding
up of the Corporation there shall be outstanding any series of preferred stock
of the Corporation ranking on a parity with this Series as to distributions upon
liquidation, dissolution or winding up, but such other series as shall have
accumulated and remain unpaid (unless payment therefore has been irrevocably
provided), shall be deemed to rank on a parity which this Series as to
distributions upon liquidation, dissolutions or winding up, and shall be
distributed (whether or not such dividends have been declared) pursuant to
clause (i) of the second preceding sentence of this paragraph (6). The voluntary
sale, conveyance, lease, exchange or transfer of all or substantially all the
property or assets of the Corporation (unless in connection therewith the
dissolution, liquidation or winding up of the Corporation is specifically
approved), or the merger of the Corporation into, or consolidation of the
Corporation with, any other corporation, or the merger of any other corporation
into it, or any purchase or redemption of shares of stock of the Corporation of
any class or series, shall not be deemed to be a dissolution, liquidation or
winding up of the Corporation for the purpose of this paragraph (6).
(7) VOTING. Each holder of any outstanding shares of this Series
shall be entitled to vote, one vote per share, (i) voting with the voting
Class A Common Stock as a single class on all matters in which holders of
voting Class A Common stock are entitled to vote (other than the election of
directors) including, without limitation, on any sale, lease or disposition of
all or substantially all of the assets of the Corporation or a consolidation of
the Corporation with, or the merger of the Corporation into, another corporation
and (ii) voting as a separate class on any amendments to this Certificate of
Designation. The affirmative vote of a majority of the shares entitled to
vote is required for approval of any of the actions described in (i) or (ii)
above.
(8) PREEMPTIVE RIGHTS. Holders of shares of this Series shall not
have preemptive rights.
(9) INCREASE OR DECREASE IN SHARES OF THIS SERIES. The Board of
Directors is expressly authorized to adopt, from time to time, a resolution or
resolutions, providing for an increase or decrease in the number of shares
constituting this Series, but no such decrease shall reduce at any time the
number of shares of this Series at the time outstanding, or the per share
percentage of net income of the Corporation to be paid as dividends on shares
of this Series.
(10) TRANSFER AGENT, CONVERSION AGENT AND REGISTRAR. The Corporation
will, so long as any shares of this Series are outstanding, maintain an office
or agency where such shares may be presented for registration of transfer and
exchange and where such shares may be presented for conversion.
- 18 -
<PAGE>
(11) SHAREHOLDER REPORTS. The Corporation will, or will cause the
registrar to, transmit to the registered holders of this Series all reports
and communications from the Corporation that are generally mailed to holders
of its Common Stock.
(12) DEFINITIONS. For the purposes hereof:
(a) the term "outstanding", when used in reference to shares of
stock, shall mean issued shares, excluding (i) shares held by the Corporation
or a subsidiary and (ii) shares called for redemption, funds for the
redemption of which shall have been segregated or deposited in trust and
irrevocably committed to the payment of any amounts owing to holders of this
Series, as provided in paragraph (3);
(b) (i) the amount of dividends "accrued" or "accumulated" with
respect to any share of this Series shall be deemed to be the amount of any
unpaid dividends with respect to any fiscal year for which the Corporation has
received the final report of its independent auditors or with respect to any
fiscal year which ended more than 180 days prior to the date of calculation
regardless of whether such report of the Corporation's independent auditors
has been received and no dividend shall be deemed to have accrued or
accumulated with respect to any share of this Series until the first of such
two events shall have occurred. (ii) the amount of dividends "accrued" or
"accumulated" on any share of preferred stock of any other series (unless a
different amount shall be specified in the Certificate of Designation of such
series) at any dividend payment date shall be deemed to be the amount of any
unpaid dividends prescribed in the Certificate of Designation therefor to and
including such dividend date, whether or not earned or declared, and the
amount of dividends "accrued" or "accumulated" on any share of preferred stock
of any other series as at any date other than a dividend payment date shall be
calculated as the amount of any unpaid dividends accumulated thereon to and
including the last preceding dividend payment date, whether or not earned or
declared, plus an amount calculated on the basis of the annual dividend rate
fixed for the shares of such series for the period after such last preceding
dividend date to and including the date as of which the calculation is made,
based on a 360-day year of twelve 30-day months;
(c) any series or class of stock of the Corporation shall be
deemed to rank
(i) "prior to" this Series or any other series of
preferred stock of the Corporation, either as to dividends or upon
liquidation, if the holders of such class or classes of stock
shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, in
preference or priority to the holders of this Series or any other
- 19 -
<PAGE>
series of preferred stock of the Corporation, as the case may be;
(ii) "on a parity with" this Series or any other series of
preferred stock of the Corporation, either as to dividends or upon
liquidation, whether or not the dividend entitlements, dividend
payment dates, or redemption or liquidation prices per share
thereof be different from those of this Series or any other series
of preferred stock of the Corporation, if as between the holders
of such one or more series or class, each shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, in proportion to their respective
dividend entitlements or liquidation prices, without preference or
priority one over the other; and
(iii) "junior to" this Series or any other series of
preferred stock of the Corporation, either as to dividends or upon
liquidation, if the rights of the holders of such class or classes
of stock shall be subject or subordinate to the rights of the
holders of this Series in respect of the receipt of dividends or
of amounts distributable upon liquidation, dissolution or winding
up, respectively.
- 20 -
<PAGE>
IN WITNESS WHEREOF, National Healthcare, Inc., has caused its corporate
seal to be hereunto affixed and this Certificate of Designation to be signed,
certified and attested to by its Chief Executive officer and one of its
Assistant Secretaries, duly authorized officers of the Corporation, as of the
26th day of January, 1990. The signature of the Chief Executive Officer and
the Assistant Secretary constitute the affirmation and acknowledgment of such
persons, under penalties of perjury, that this instrument is the act and deed
of the said Corporation and that the facts stated herein are true.
NATIONAL HEALTHCARE, INC.
By: /s/ James T. McAfee, Jr.
---------------------------------
James T. McAfee, Jr.
Chief Executive Officer and
Chairman of the Board
ATTEST:
/s/ Kenneth D. Hawkins
- --------------------------
Kenneth D. Hawkins
Assistant Secretary
[CORPORATE SEAL]
- 21 -
<PAGE>
STATE OF GEORGIA )
) SS.
COUNTY OF COBB )
The undersigned, a Notary Public in and for the aforesaid County and
State, certifies that on this 26th day of January, 1990, James T. McAfee, the
Chief Executive Officer and Chairman of the Board of National Healthcare, Inc.
(the "Corporation') and Kenneth D. Hawkins, an Assistant Secretary of the
Corporation, known to me personally to be such, duly executed the foregoing
Certificate before me and acknowledged said Certificate to be their act and
deed made on behalf of the Corporation, and acknowledged that the facts stated
therein are true. The signatures on the attached Certificate of said Chief
Executive officer and said Assistant Secretary of the Corporation are in the
handwriting of said Chief Executive Officer and said Assistant Secretary,
respectively, and the seal affixed to the Certificate is the corporate seal of
the Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office this
26th day of January, 1990.
/s/ Starry W. Hornsby
-----------------------------------
Notary Public
(Notarial Seal) Notary Public, Cobb County, Georgia
My Commission Expires May 2, 1992
- 22 -
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "NATIONAL HEALTHCARE, INC." FILED IN THIS OFFICE ON THE
TWENTY-THIRD DAY OF DECEMBER, A.D. 1991, AT 1:30 O'CLOCK P.M.
/s/ William T. Quillen
[Seal] --------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029396
DATE: 08/24/1993
932365191
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:30 PM 12/23/1991
913615296-924764
CERTIFICATE OF NAME CHANGE/AMENDMENT TO AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
National Healthcare, Inc. duly organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
FIRST, that the Board of Directors of said Corporation, at a meeting
duly held, adopted a resolution proposing and declaring advisable the
amendment of the Corporation's Amended and Restated Certificate of
Incorporation as set forth below.
SECOND, that thereafter, pursuant to a resolution of the Board of
Directors, the holders of a majority of the issued and outstanding shares of
the voting capital stock of said Corporation entitled to vote thereon and
voting at the Annual Meeting of Stockholders of the Corporation held on
December 5, 1991 voted in favor of the amendment to change the name of the
Corporation as set forth below.
THIRD, that said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH, that the capital of said Corporation will not be reduced under
or by reason of said amendment.
RESOLVED, that ARTICLE I of the Corporation's Amended and Restated
Certificate of Incorporation be amended by deleting the text therein and
adding the following in lieu thereof.
ARTICLE I.
The name of the Corporation is: Hallmark Healthcare Corporation.
IN WITNESS WHEREOF, National Healthcare, Inc. has caused its corporate
seal to be hereunto affixed and the Certificate of Name Change/Certificate of
Amendment to be signed, certified and attested to by its Chief Executive
Officer and one of its Assistant Secretaries, duly authorized officers of the
Corporation, as of the 5th day of December, 1991. The signature of the Chief
Executive Officer and the Assistant Secretary constitute the affirmation and
acknowledgment of such persons, under penalties of perjury, that this instrument
is the act and deed of said Corporation and the facts stated herein are true.
NATIONAL HEALTHCARE, INC.
By: /s/ James T. McAfee, Jr.
-------------------------------
James T. McAfee, Jr.
<PAGE>
Chief Executive Officer and
Chairman of the Board
ATTEST:
/s/ James E. Clements
- ----------------------------
James E. Clements
Assistant Secretary
[CORPORATE SEAL]
- 2 -
<PAGE>
STATE OF GEORGIA )
) ss.
COUNTY OF COBB )
The undersigned, a Notary Public in and for the aforesaid County and
State, certifies that on this 16th day of December, 1991, James T. McAfee,
Jr., Chief Executive Officer and Chairman of the Board of Directors of
National Healthcare, Inc. (the "Corporation"), and James E. Clements, Assistant
Secretary of the Corporation, known to me personally to be such, duly executed
the foregoing Certificate before me and acknowledged such Certificate to be
their act and deed made on behalf of the Corporation, and acknowledge that the
facts stated therein are true. The signatures on the attached Certificate of
said Chief Executive Officer and said Assistant Secretary of the Corporation
are and the handwriting of said Chief Executive Officer and said Assistant
Secretary, respectively, and the seal affixed to the Certificate is the
corporate seal of the Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th day
of December, 1991.
/s/ Maria E. Robinson
-----------------------------------
Notary Public
[NOTARIAL SEAL]
- 3 -
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "HALLMARK HEALTHCARE CORPORATION" FILED IN THIS OFFICE ON THE
TENTH DAY OF NOVEMBER, A.D. 1992, AT 4:29 O'CLOCK P.M.
/s/ William T. Quillen
[Seal] --------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029394
DATE: 08/24/1993
932365191
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:29 PM 11/10/1992
722315176-924764
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
HALLMARK HEALTHCARE CORPORATION
Hallmark Healthcare Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), does hereby certify:
FIRST: That the Board of Directors of said Corporation, at a meeting
duly held, adopted a resolution proposing and declaring advisable the
amendments to the Amended and Restated Certificate of Incorporation of said
Corporation set forth below.
SECOND: That thereafter, pursuant to a resolution of its Board of
Directors, the holders of a majority of the issued and outstanding shares of
the capital stock of said Corporation entitled to vote thereon present at the
meeting in person or by proxy and voting at the Annual Meeting of the
Stockholders of Corporation held on November 5, 1992 voted in favor of the
amendment set forth below.
THIRD: That thereafter, pursuant to the same resolution of its Board of
Directors, the holders of a majority of the issued and outstanding shares of
the 25% Participating Cumulative Convertible Redeemable Preferred Stock of
said Corporation entitled to vote thereon present at the meeting in person or
by proxy and voting at the Annual Meeting of Stockholders held on November 5,
1992 vote in favor of the amendments set forth below.
FOURTH: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FIFTH: That the capital of said Corporation will not be reduced under
or by reason of said amendments.
RESOLVED, that the Corporation's Amended and Restated Certificate of
Incorporation be amended as set forth below.
The Amended and Restated Certificate of Incorporation of Hallmark
Healthcare Corporation shall be amended by deleting the text of the first
paragraph of Article IV and adding the following in lieu thereof:
<PAGE>
1.
The total number of shares of capital stock which the Corporation shall
have authority to issue is Twenty-Seven Million Five Hundred Thousand
(27,500,000), of these shares 25,000,000 shares shall be Common Stock with a
par value of $.05 per share and 2,500,000 shares shall be Preferred Stock.
Two Million Four Hundred and Forty Thousand (2,440,000) shares of the
Preferred Stock shall be authorized with a par value of $1.00 per share and
Sixty Thousand (60,000) shares of Preferred Stock constituting the Company's
25% Participating Cumulative Convertible Preferred Stock (the "25% Preferred
Stock") shall be authorized with a par value of $5.00 per share.
2.
That as of the Effective Date (as hereinafter defined) each five (5)
issued and outstanding shares of the Corporation's Common Stock par value $.01
per share (the "Existing Shares") shall be combined into and shall thereafter
represent for all corporate purposes, one (1) issued and outstanding share of
the same class of Common Stock par value $.05 per share (a "New Common Share")
without any action on the part of the holder thereof.
3.
That as of the Effective Date (as hereinafter defined) each five (5)
issued and outstanding shares of the Corporation's 25% Preferred Stock shall
be combined into and shall thereafter represent, for all corporate purposes,
one (1) issued and outstanding share of 25% Preferred Stock (a "New 25%
Preferred Share") without any action on the part of the holder thereof.
4.
That the number of authorized shares of Common Stock and Preferred Stock
authorized above shall not be altered hereby.
5.
No fractional New Common Shares and no fractional New 25% Preferred
Shares (collectively the "New Shares") shall be outstanding. To avoid the
existence of fractional New Shares, stockholders entitled to receive fractional
New Shares shall receive, in lieu of fractional New Shares, a cash distribution
in an amount determined by the Board of Directors, and shall not be entitled to
receive any other dividend or other distribution in the event of liquidation, or
to exercise any voting privileges, with respect to such fractional New Shares.
As used herein, "Effective Date" shall mean the date that the Certificate of
Amendment to the Company's Amended and Restated Certificate of Incorporation is
filed with the Secretary of State of Delaware to effect this amendment.
- 2 -
<PAGE>
IN WITNESS WHEREOF, Hallmark Healthcare Corporation, has caused its
corporate seal to be hereunto affixed and this Certificate of Amendment to be
signed, certified and attested to by its Chief Executive Officer and its
Secretary, duly authorized officers of the Corporation, as of the 10th day of
November, 1992. The signature of the Chief Executive Officer and the
Secretary constitute the affirmation and acknowledgment of such persons, under
penalties or perjury, that this instrument is the act and deed of the said
Corporation and that the facts stated herein are true.
HALLMARK HEALTHCARE CORPORATION
By: /s/ James T. McAfee, Jr.
-------------------------------
James T. McAfee, Jr.
Chief Executive Officer and
Chairman of the Board
ATTEST:
/s/ Robert M. Thornton, Jr.
- ------------------------------
Robert M. Thornton, Jr.
Secretary
(CORPORATE SEAL)
- 3 -
<PAGE>
STATE OF GEORGIA )
) SS.
COUNTY OF FULTON )
The undersigned, a Notary Public in and for the aforesaid County and
State, certifies that on this 10th day of November, 1992, James T. McAfee,
Jr., the Chief Executive Officer and Chairman of the Board of Hallmark
Healthcare Corporation (the "Corporation") and Robert M. Thornton, Jr.,
Secretary of the Corporation, known to me personally to be such, duly executed
the foregoing Certificate before me and acknowledged said Certificate to be
their act and deed made on behalf of the Corporation, and acknowledged that
the facts stated therein are true. The signatures on the attached Certificate
of said Chief Executive Officer and said Secretary of the Corporation are in
the handwriting of said Chief Executive Officer and said Secretary,
respectively, and the seal affixed to the Certificate is the corporate seal of
the Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office this
10th day of November 1992.
/s/ M. Timothy Elder
---------------------------------
Notary Public
(Notarial Seal) Notary Public, Fulton County, Georgia
My Commission Expires July 22, 1995
[Seal]
- 4 -
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
_________________________________
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "HALLMARK HEALTHCARE CORPORATION" FILED IN THIS OFFICE ON THE
TENTH DAY OF NOVEMBER, A.D. 1992, AT 4:30 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ William T. Quillen
[Seal] -------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4029393
DATE: 08/24/1993
932365191
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:30 PM 11/10/1992
722315177-924764
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF DESIGNATION
OF
HALLMARK HEALTHCARE CORPORATION
for its 25% Participating Cumulative
Convertible Redeemable Preferred Stock
Hallmark Healthcare Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), does hereby certify:
FIRST: That the Board of Directors of said Corporation, at a meeting
duly held, adopted a resolution proposing and declaring advisable the
amendments to the Certificate of Designation of said Corporation, for its 25%
Participating Cumulative Convertible Redeemable Preferred Stock (the "25%
Preferred Stock") set forth below.
SECOND: That thereafter, pursuant to a resolution of its Board of
Directors, the holders of a majority of the issued and outstanding shares of
the capital stock of said Corporation entitled to vote thereon present at the
meeting in person or by proxy and voting at the Annual Meeting of the
Stockholders of Corporation held on November 5, 1992 voted in favor of the
amendments set forth below.
THIRD: That thereafter, pursuant to the same resolution of its Board of
Directors, the holders of a majority of the issued and outstanding shares of
the 25% Preferred Stock of said Corporation entitled to vote thereon present
at the meeting in person or by proxy and voting at the Annual Meeting of the
Stockholders of Corporation held on November 5, 1992 vote in favor of the
amendments set forth below.
FOURTH: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FIFTH: That the capital of said Corporation will not be reduced under
or by reason of said amendments.
RESOLVED, that the Corporation's Certificate of Designation for the 25%
Preferred Stock be amended as set forth below:
<PAGE>
1.
That every reference therein to "three hundred thousand (300,000)
shares" be deleted and "sixty thousand (60,000) shares" substituted therefor
and that every reference therein to "300,000 shares" be deleted and "60,000
shares" substituted therefor.
2.
That every reference to "$1 per share par value" be deleted and "$5 per
share par value" be substituted therefor.
3.
That the price of "$25" per share in Section 3(C) therein be deleted and
the price "$125" per share substituted therefor.
4.
That the price of "$25" per share in Section 6 therein be deleted and
the price "$125" per share substituted therefore.
5.
That as of the Effective Date (as hereinafter defined) each five (5)
issued and outstanding shares of the Corporation's 25% Preferred Stock shall
be combined into and shall thereafter represent for all corporate purposes,
one (1) issued and outstanding share of the 25% Preferred Stock (a "New 25%
Preferred Share") without any action on the part of the holder thereof.
6.
No fractional New 25% Preferred Shares shall be outstanding. To avoid
the existence of fractional New 25% Preferred Shares, stockholders entitled to
receive fractional New 25% Preferred Shares shall receive, in lieu of
fractional New 25% Preferred Shares, a cash distribution in an amount
determined by the Board of Directors, and shall not be entitled to receive any
other dividend or other distribution in the event of liquidation, or to
exercise any voting privileges, with respect to such fractional New 25%
Preferred Shares. As used herein, "Effective Date" shall mean the date that
the Certificate of Amendment to the Company's Certificate of Designation for
the 25% Preferred Stock is filed with the Secretary of State of Delaware to
effect this amendment.
IN WITNESS WHEREOF, Hallmark Healthcare Corporation, has caused its
corporate seal to be hereunto affixed and this Certificate of Amendment to be
signed, certified and attested to by its Chief Executive Officer and its
Secretary, duly authorized officers of the Corporation, as of the 10th day of
November, 1992. The signature of the Chief Executive Officer and the
Secretary constitute the affirmation and acknowledgment of such persons,
- 2 -
<PAGE>
under penalties of perjury, that this instrument is the act and deed of the
said Corporation and that the facts stated herein are true.
HALLMARK HEALTHCARE CORPORATION
By: /s/ James T. McAfee, Jr.
-------------------------------
James T. McAfee, Jr.
Chief Executive Officer and
Chairman of the Board
ATTEST:
/s/ Robert M. Thornton, Jr.
- ------------------------------
Robert M. Thornton, Jr.
Secretary
(CORPORATE SEAL)
- 3 -
<PAGE>
STATE OF GEORGIA )
) SS.
COUNTY OF FULTON )
The undersigned, a Notary Public in and for the aforesaid County and
State, certifies that on this 10th day of November, 1992, James T. McAfee,
Jr., the Chief Executive Officer and Chairman of the Board of Hallmark
Healthcare Corporation (the "Corporation") and Robert M. Thornton, Jr.,
Secretary of the Corporation, known to me personally to be such, duly executed
the foregoing Certificate before me and acknowledged said Certificate to be
their act and deed made on behalf of the Corporation, and acknowledged that
the facts stated therein are true. The signatures on the attached Certificate
of said Chief Executive Officer and said Secretary of the Corporation are in
the handwriting of said Chief Executive Officer and said Secretary,
respectively, and the seal affixed to the Certificate is the corporate seal of
the Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office this
10th day of November, 1992.
/s/ M. Timothy Elder
---------------------------------
Notary Public
(Notarial Seal) Notary Public, Fulton County, Georgia
My Commission Expires July 22, 1995
- 4 -
<PAGE>
EXHIBIT 5.1
- 5 -
<PAGE>
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
May 27, 1994
Hallmark Healthcare Corporation
Suite 650
300 Galleria Parkway
Atlanta, Georgia 30339
Ladies and Gentlemen:
We have acted as counsel to Hallmark Healthcare Corporation, a
Delaware corporation (the "Company"), in connection with the filing of a
Registration Statement on Form S-8 that will be filed by the Company on or
about May 27, 1994 with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Registration Statement"), relating to
shares of the Company's Class A Common Stock to be issued under the Company's
1994 Employee Stock Purchase Plan (the "Plan").
You have requested our opinion with respect to the legality of the
shares of Class A Common Stock to be issued under the Plan. We understand
that our opinion will be attached as an Exhibit to the Registration Statement
and that our opinion will be referred to in the Registration Statement. We
consent to such use of our opinion.
In rendering the opinion expressed in this letter, we have
examined such documents as we have deemed appropriate, including the Plan, the
Amended and Restated Certificate of Incorporation of the Company, the Bylaws
of the Company, and actions taken by the Board of Directors and stockholders
of the Company in approving the Plan and the Registration Statement. In our
examination of documents we have assumed, with your consent, that all
documents submitted to us are authentic originals or, if submitted as
photocopies, that they faithfully reproduce the originals, that all such
documents have been or will be duly executed to the extent required and that
representations and statements set forth in such documents are true and
correct.
Based upon the foregoing, we are of the opinion that the Plan has
been duly adopted by all necessary corporate action on the part of the
Company. We are also of the opinion that the
<PAGE>
shares of the Company's Class A Common Stock to be issued under the Plan will be
duly and validly issued shares of Class A Common Stock of the Company and will
be fully paid and nonassessable.
Sincerely,
KING & SPALDING
- 2 -
<PAGE>
EXHIBIT 23.1
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated August 25, 1993,
included in Hallmark Healthcare Corporation's report on Form 10-K for the year
ended June 30, 1993.
/s/ ARTHUR ANDERSEN & CO.
Atlanta, Georgia
May 27, 1994
