SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 14, 1998
CREATIVE RECYCLING TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 0-28704 84-1122431
(State or other jurisdic (Commission File (IRS Employer
tion of incorporation) Number) Identification No.)
3500 PARKWAY LANE, SUITE 435, NORCROSS, GEORGIA 30092
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770)729-9010
CLASSIC RESTAURANTS INTERNATIONAL, INC.
(Former name or former address, if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not Applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not Applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING
ACCOUNTANTS.
Not Applicable.
ITEM 5. OTHER EVENTS.
On April 13, 1998, Classic Restaurants International, Inc.
("Classic") held a special meeting of shareholders for the purpose of
voting on a proposal to change Classic's state of incorporation by
merging Classic with and into Creative Recycling Technologies, Inc.
("CRT"), a Georgia corporation, pursuant to an Agreement and Plan of
Merger dated March 13, 1998. At the special meeting, the shareholders of
Classic approved the merger. The effective date of the merger was April
14, 1998 when Articles of Merger were filed with the Secretaries of State
of the States of Colorado and Georgia. As of the effective date of the
merger, Classic ceased to exist as a separate legal entity, and CRT
assumed, and became the owner of, all of the liabilities and assets of
Classic by operation of law. Under the Agreement and Plan of Merger,
common and preferred shareholders of Classic are entitled to receive, for
each share of common or preferred stock which they own in Classic, one
share of common or preferred stock in CRT which has the same rights,
preferences and limitations as the shares which they owned in Classic
immediately before the effective date of the merger. Pursuant to Rule
12g-3(a) promulgated under the Securities Exchange Act of 1934, the Class
A Common Shares of CRT issued in the merger to holders of Class A Common
Stock in Classic are deemed registered under Section 12 of the Securities
Exchange Act. Pursuant to Rule 145(a)(2) promulgated under the
Securities Act of 1933, the issuance of shares of CRT to shareholders of
Classic was exempt from registration under Section 5 of the Securities
Act of 1934 because the sole purpose of the transaction was to change
Classic's state of incorporation solely within the United States.
On April 13, 1998, the board of directors of CRT approved a 1 for
20 reverse split of its Class A Common Stock and Class B Common Stock,
which split became effective as of the close of business on April 13,
1998.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not Applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired: Not Applicable.
(b) Pro forma financial information: Not Applicable.
(c) Exhibits:
2.1 Agreement and Plan of Merger by and between
Classic Restaurants International, Inc. and Creative
Recycling Technologies, Inc.
2.2 Plan of Recapitalization of Creative Recycling
Technologies, Inc.
3.1 Articles of Incorporation of Creative Recycling
Technologies, Inc.
3.2 Bylaws of Creative Recycling Technologies, Inc.
ITEM 8. CHANGE IN FISCAL YEAR.
Not Applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CLASSIC RESTAURANTS
INTERNATIONAL, INC.
Date: April 17, 1998 By:/s/James Robert Shaw
James Robert Shaw
co-President
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement") dated this 13th day
of March 1998, by and between CLASSIC RESTAURANTS INTERNATIONAL, INC., a
Colorado corporation ("Classic") and CREATIVE RECYCLING TECHNOLOGIES,
INC., a Georgia corporation ("Creative").
WHEREAS, the Boards of Directors of Creative and Classic deem it
advisable and in the best interests of Creative and Classic that Classic
merger with and into Creative (the "Merger"); and
WHEREAS, the Boards of Directors of Creative and Classic have
approved and adopted this Agreement as a "plan of reorganization" within
the meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions, and conditions contained herein, and for other
good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the parties hereto agree that Classic shall be
merged with and into Creative, the latter of which shall continue its
corporate existence and be the corporation surviving the Merger, upon
and subject to the following terms and conditions:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a)"Classic Stock" shall collectively mean the Classic Class A Common
Stock, the Classic Class B Common Stock, the Classic Series A Preferred
Stock, the Classic Series B Preferred Stock, the Classic Series C
Preferred Stock and the Classic Series D Preferred Stock.
(b)"Classic Class A Common Stock" shall mean the Class A Common Stock, no
par value, of Classic, as more fully described in the Articles of
Incorporation of Classic.
(c)"Classic Class B Common Stock" shall mean the Class B Common Stock, no
par value, of Classic, as more fully described in the Articles of
Incorporation of Classic.
(d)"Classic Series A Preferred Stock" shall mean the Series A Convertible
Preferred Stock of Classic, as more fully described in the Articles of
Incorporation of Classic.
(e)"Classic Series B Preferred Stock" shall mean the Series B Convertible
Preferred Stock of Classic, as more fully described in the Articles of
Incorporation of Classic.
(f)"Classic Series C Preferred Stock" shall mean the Series C Convertible
Preferred Stock of Classic, as more fully described in the Articles of
Incorporation of Classic.
(g)"Classic Series D Preferred Stock" shall mean the Series D Convertible
Preferred Stock of Classic, as more fully described in the Articles of
Incorporation of Classic.
(h)"Creative Stock" shall collectively mean the Creative Class A Common
Stock, the Creative Class B Common Stock, the Creative Series A Preferred
Stock, the Creative Series B Preferred Stock, the Creative Series C
Preferred Stock and the Creative Series D Preferred Stock.
(i)"Creative Class A Common Stock" shall mean the Class A Common Stock,
no par value, of Creative, as more fully described in the Articles of
Incorporation of Creative.
(j)"Creative Class B Common Stock" shall mean the Class B Common Stock,
no par value, of Creative, as more fully described in the Articles of
Incorporation of Creative.
(k)"Creative Series A Preferred Stock" shall mean the Series A
Convertible Preferred Stock of Creative, as more fully described in the
Articles of Incorporation of Creative.
(l)"Creative Series B Preferred Stock" shall mean the Series B
Convertible Preferred Stock of Creative, as more fully described in the
Articles of Incorporation of Creative.
(m)"Creative Series C Preferred Stock" shall mean the Series C
Convertible Preferred Stock of Creative, as more fully described in the
Articles of Incorporation of Creative.
(n)"Creative Series D Preferred Stock" shall mean the Series D
Convertible Preferred Stock of Creative, as more fully described in the
Articles of Incorporation of Creative.
(o)"Effective Date" shall mean the date on which Articles of Merger are
filed with the Secretaries of State of the States of Georgia and
Colorado, or such other date as is designated therein.
(p)"Record Date" shall mean the date(s) fixed by the Board of Directors
of Classic for determination of the shares entitled to notice of and to
vote at the Shareholder Meeting.
ARTICLE II
GENERAL TERMS AND PROVISIONS
Section 2.01 Effectiveness. At the Effective Date, Classic shall be
merged with and into Creative, which shall be the surviving corporation.
Creative shall issue new Creative Stock in exchange for all of the
outstanding Classic Stock on the terms provided herein.
Section 2.02 Directors and Officers of Creative. At the Effective
Date, the Board of Directors of Creative shall be five members, and shall
be composed of the existing members of the Board of Directors of Classic,
being James Robert Shaw, June Cuba, Ronald Lambert, Frank Pringle, and
Benjamin Silber, who shall hold such positions until the next annual
meeting of the Board of Directors of Creative.
Section 2.03 Taking of Necessary Action. Creative and Classic shall
take all such actions as may be necessary or appropriate in order to
effectuate the transactions contemplated by this Agreement. If, at any
time after the Effective Date, any further action is necessary or
desirable to carry out the purposes of this Agreement or to vest Creative
with title to any or all of the properties, assets, rights, approvals,
immunities, and franchises of Classic, the officers and directors of
Classic and its subsidiaries, at the expense of Creative, shall take such
necessary or desirable action.
ARTICLE III
EXCHANGE OF SHARES
Section 3.01 Exchange Ratio. On the Effective Date, Creative shall
issue shares of its Creative Stock to all of the nondissenting holders of
Classic Stock in exchange for all of the issued and outstanding Classic
Stock at an exchange rate of:
one (1) share of the Creative Class A Common Stock for each one (1)
share of the Classic Class A Common Stock outstanding on the Effective
Date surrendered in exchange therefor;
one (1) share of the Creative Class B Common Stock for each one (1)
share of the Classic Class B Common Stock outstanding on the Effective
Date surrendered in exchange therefor;
one (1) share of the Creative Series A Preferred Stock for each one
(1) share of the Classic Series A Preferred Stock outstanding on the
Effective Date surrendered in exchange therefor;
one (1) share of the Creative Series B Preferred Stock for each one
(1) share of the Classic Series B Preferred Stock outstanding on the
Effective Date surrendered in exchange therefor;
one (1) share of the Creative Series C Preferred Stock for each one
(1) share of the Classic Series C Preferred Stock outstanding on the
Effective Date surrendered in exchange therefor;
one (1) share of the Creative Series D Preferred Stock for each one
(1) share of the Classic Series D Preferred Stock outstanding on the
Effective Date surrendered in exchange therefor.
Any debt securities of Classic which are convertible into shares of
Classic Stock shall be convertible into the type and number of shares of
Creative Stock equal to the number and type of Creative Stock which the
holder of the debt securities would receive if it converted its debt
securities into shares of Classic Stock immediately prior to the
Effective Date. There shall be no fractional shares issued. The number
of shares of Creative Stock to be issued in the merger shall be rounded
up to the nearest whole. The shares of Classic Stock, if any, held in the
treasury of Classic ("Treasury Shares") shall be cancelled and shall not
be exchanged or combined in accordance with the provisions of this
Section 3.01.
Section 3.02 Exchange of Certificates. As soon as practicable after
the Effective Date, each holder of a certificate for shares of Classic
Stock, upon surrender of same to United Stock Transfer, Inc., Denver,
Colorado (the "Transfer Agent"), shall be entitled to receive, in
exchange therefor, a certificate or certificates representing the number
of full shares of Creative Stock for and into which the shares of Classic
Stock, represented by the certificate or certificates so surrendered,
shall have been exchanged, as provided in Section 3.01 hereinabove. As
soon as practicable after the Effective Date, the Transfer Agent shall
send a notice and transmittal form to each holder of record of an
outstanding certificate which, immediately prior to the Effective Date,
evidenced shares of Classic Stock, advising such shareholder of the terms
of merger and combination effected by the Merger and the procedure for
surrendering to the Transfer Agent such certificate or certificates in
exchange for one or more certificates representing the full number of
shares of Creative Stock, as determined by Section 3.01 hereinabove.
Section 3.03 Unexchanged Certificates. Until surrendered in
accordance with Section 3.02 hereinabove, each outstanding certificate
which, prior to the Effective Date of the Merger, evidenced shares of
Classic Stock (except shares held by dissenting shareholders of Classic,
whose rights are discussed in Section 3.06 hereinbelow), for all
corporate purposes of Creative shall be deemed to evidence ownership of
the number of shares of Creative Stock for and into which shares of
Classic Stock represented thereby will have been exchanged and combined;
provided, however, that until each such outstanding certificate is
surrendered and exchanged, no dividend payable to the holders of record
of Creative Stock as of any date subsequent to the Effective Date of the
Merger shall be paid to the holder of such outstanding certificate which
shall not have been surrendered with respect thereto. After the Effective
Date of the Merger, there shall be no further registry of transfers of
Classic Stock on the books of Classic and, if a certificate representing
such shares or warrants is presented for transfer to Creative, it shall
be cancelled and exchanged for a certificate representing shares of
Creative Stock, as provided for herein.
Section 3.04 Certificates in Other Names. If any certificate
representing shares of Creative Stock is to be issued in a name other
than that in which the certificate surrendered in exchange therefor is
registered, it shall be a condition precedent to the issuance thereof
that the certificate so surrendered be properly endorsed and otherwise in
proper form for transfer, that the person requesting the exchange pay to
the Transfer Agent any transfer or other taxes required by reason of such
issuance, and that counsel to Creative approve such transfer.
Section 3.05 Stock Legends. Certificates representing shares of
Creative Stock shall bear a substantially identical legend to any legend
which is on the Classic Stock exchanged therefor under this Agreement.
Section 3.06 Dissenting Shareholders.
(a)Shareholders of Classic shall have the right to dissent from the
Merger provided in this Agreement and to obtain payment for their shares
of common stock in the event the Merger occurs, as permitted under
Section 7-113-101, et seq. of the Colorado Business Corporation Act.
(b)In accordance with the provisions of Colorado law and its Articles of
Incorporation, Classic shall call and hold a special meeting of
shareholders (the "Shareholder Meeting") for the purpose, in part, of
obtaining the approvals set forth in Section 4.01(a). The notice of the
Shareholder Meeting shall notify all shareholders of that they have or
may have a right to dissent and obtain payment for their shares by
complying with the terms of the applicable provisions of the Colorado
Business Corporation Act.
(c)Immediately upon the Effective Date or upon receipt of demand for
payment, if the Merger has occurred, Creative shall comply with the
requirements of Section 7-113-101, et seq. of the Colorado Business
Corporation Act.
ARTICLE IV
CONDITIONS PRECEDENT TO THE MERGER
Section 4.01 The obligations of the parties under this Agreement are
subject to the satisfaction of the following express conditions precedent
at or before the Effective Date:
(a)Shareholder Approvals. This Agreement and the transactions
contemplated hereby shall have received the requisite approval and
authorization of shareholders of Classic holding in the aggregate a
majority of the outstanding shares of Classic Class A Common Stock and
Classic Class B Common Stock.
(b)Compliance with Laws. All statutory requirements for the valid
consummation by it of the transactions contemplated by this Agreement
shall have been fulfilled.
(c)Blue Sky Filings. All Blue Sky filings and permits or orders required
to carry out the transactions contemplated by this Agreement shall have
been made and received containing no term or condition reasonably
unacceptable to it.
(d)Adequate Proceedings. All corporate and other proceedings in
connection with the transactions contemplated herein and all documents
incident thereto shall be reasonably satisfactory in form and substance
to it and its counsel.
(e)Limit on Dissenting Shares. Holders of not more than 10% of the
outstanding shares of Classic shall dissent from the Merger, with the
holders of such shares demanding, in connection therewith, their
respective dissenters' rights.
Section 4.02 Termination and Postponement. This Agreement and the
Merger contemplated hereby may be terminated, and the transactions
provided for herein abandoned, at any time prior to but not after the
Effective Date, sole discretion of Classic.
ARTICLE V
MISCELLANEOUS
Section 5.01 Survival. All agreements, representations, and
warranties made hereunder or in connection with the transactions
contemplated hereby shall survive the Effective Date and remain effective
in accordance with the terms hereof regardless of any investigation at
any time made by or on behalf of Creative or Classic.
Section 5.02 Assignment. This Agreement may not be assigned nor any
of the performances hereunder delegated by operation of law or otherwise
by any party hereto, and any purported assignment or delegation shall be
void.
Section 5.03 Headings. The article and section headings of this
Agreement are inserted for convenience of reference only and do not
constitute a part of this Agreement.
Section 5.04 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
heirs, successors, legal representatives, assigns, and transferors.
Section 5.05 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof. There are no representations, warranties, conditions, or other
obligations except as herein specifically provided. Any waiver,
amendment, or modification hereof must be in writing. A waiver in one
instance shall not be deemed to be a continuing waiver or waiver in any
other instance.
Section 5.06 Counterparts. This Agreement may be executed in
counterparts and each counterpart hereof shall be deemed to be an
original, but all such counterparts together shall constitute but one
agreement an original, but all such counterparts together shall
constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement
on the day and year first above written.
CLASSIC RESTAURANTS INTERNATIONAL,
INC.
(SEAL) By: James Robert Shaw
Its: Pres./CEO
CREATIVE RECYCLING TECHNOLOGIES,
INC.
(SEAL) By: F G Pringle
Its: Pres/CEO
PLAN OF RECAPITALIZATION
Creative Recycling Technologies, Inc. (the "Company"), by and
through its Board of Directors, hereby adopts the following
recapitalization plan (the "Plan").
1. Conversion of Issued Class A Common Stock. The shares of
Class A Common Stock presently issued and outstanding (the "Old Class A
Common Stock") shall be automatically reclassified and converted into
"New Class A Common Stock" in a ratio of 20 shares of shares of Old
Class A Common Stock for each 1 share of New Class A Common Stock. The
Company will not issue fractional shares of New Class A Common Stock,
and any fractional share of New Class A Common Stock otherwise issuable
shall be rounded up to the nearest whole share of New Class A Common
Stock. In order to minimize the number of shares to be issued, the
Company reserves the right to require that a holder present all shares
of Old Class A Common Stock owned by him at one time.
2. Conversion of Issued Class B Common Stock. The shares of
Class B Common Stock presently issued and outstanding (the "Old Class B
Common Stock") shall be automatically reclassified and converted into
"New Class B Common Stock" in a ratio of 20 shares of shares of Old
Class B Common Stock for each 1 share of New Class B Common Stock. The
Company will not issue fractional shares of New Class B Common Stock,
and any fractional share of New Class B Common Stock otherwise issuable
shall be rounded up to the nearest whole share of New Class B Common
Stock. In order to minimize the number of shares to be issued, the
Company reserves the right to require that a holder present all shares
of Old Class B Common Stock owned by him at one time.
3. Effect on Outstanding Series of Preferred Stock
a) Description of Certain Existing Provisions of the Preferred
Stock. The Company has outstanding shares of Series A, B and C
Preferred Stock, and has issued into escrow shares of its Series D
Preferred Stock. Each series of Preferred Stock is convertible into
shares of Old Class A Common Stock, and has provisions which require
that the number of shares issuable upon the conversion of the
Preferred Stock must be adjusted to reflect, among other things, the
effect of any reverse stock split applicable to the Old Class A
Common Stock.
b) Effects of this Plan on the Preferred Stock. In
accordance with the provisions of the provisions of the Articles of
Incorporation for the Company concerning each series of Preferred
Stock, after the Effective Time each series of Preferred Stock shall
be convertible into that number of shares of New Class A Common
Stock equal to the number of shares of Old Class B Common Stock into
which said shares were convertible immediately prior to the
Effective Time divided by twenty (20).
4. Effective Time of Changes. As of the close of trading
on April 13, 1998, (the "Effective Time"), the shares of Old Class A
Common Stock and Old Class B Common Stock issued and outstanding or
held in treasury immediately prior to the Effective Time shall be
reclassified and changed, without any action on the part of the
respective holders therefor, as described in Paragraphs 1 and 2 above.
5. Authority of Board of Directors to Terminate Plan. The
Board of Directors reserves the right to terminate this Plan at any
time prior to the Effective Time. Upon such a termination, this Plan
shall be of no further force or effect.
ARTICLES OF INCORPORATION OF
CREATIVE RECYCLING TECHNOLOGIES, INC.
ARTICLE ONE
The name of the corporation is Creative Recycling Technologies, Inc.
ARTICLE TWO
The corporation is organized for profit pursuant to the provisions
of the Georgia Business Corporation Code, and may engage in all business
permitted by applicable law.
ARTICLE THREE
3.1 The corporation has the authority to issue not more than:
(a) Fifty Million (50,000,000) shares of Class A common voting stock of
no par value per share;
(b) Two Million (2,000,000) shares of Class B common voting stock of no
par value per share;
(c) Ten Million (10,000,000) shares of preferred stock no par value
("Preferred Stock") which may be issued in series by the Board of
Directors as hereinafter provided.
3.2 The shares of all classes of common stock shall be equally
entitled to receive the net assets of the corporation upon dissolution
and shall have unlimited voting rights, provided, however that each share
of Class A common stock shall only be entitled to one (1) vote on each
matter voted upon by the shareholders and each share of Class B common
stock shall be entitled to forty (40) votes on each matter voted upon by
the shareholders; and further provided, however, that in the event there
is outstanding any Class B common stock, the holders thereof shall have
the exclusive right to elect the following number of total directors: (a)
if there are an even number of total directors, one-half of the total
number of directors plus one; (b) if there are an odd number of
directors, one-half of the total number of directors plus one-half. Each
class of common stock shall be entitled to receive distributions from
time to time, from legally available funds, as determined by the Board of
Directors.
3.3 Shares of Preferred Stock may be issued from time to time in
one or more series. Preferred Stock shall have voting rights, no voting
rights, or such special voting rights as the Board of Directors may fix
and determine in issuing such stock, and shall have rights to receive
cumulative, non-cumulative, or partially cumulative dividends as the
Board of Directors may fix and determine in issuing such stock. Before
any shares of Preferred Stock of any particular series shall be issued,
the Board of Directors shall fix and determine and is hereby expressly
empowered to fix and determine, in the manner provided by law, the
following provisions of the shares of such series:
(a) the distinctive designation of such series and the number of shares
which shall constitute such series, which number may be increased (except
where otherwise provided by the Board of Directors in creating such
series) or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of Directors;
(b) the rate of dividend payable on shares of such series, the times of
payment of the dividends, whether dividends shall be cumulative,
conditions upon which and the date from which such dividends shall be
accumulated on all shares of such series, and whether arrearages on the
payment of dividends will bear interest;
(c) the time or times when and the price or prices at which shares of
such series shall be redeemable and the purchase, retirement or sinking
fund provisions, if any, for the purchase or the redemption of such
shares;
(d) the amount payable on shares of such series in the event of any
voluntary or involuntary liquidation, which shall not be deemed to
include the merger or consolidation of the corporation or a sale, lease,
or conveyance of all or part of the assets of the corporation;
(e) the rights, if any, of the holders of shares of such series to
convert such shares into, or exchange such series for, shares of common
stock or shares of any other series of Preferred Stock and the terms and
conditions of such conversion or exchange; and
(f) the voting rights of shares of such series or absence thereof and
the extent of such voting rights, if any.
3.4 The Corporation designates twenty (20) shares of its Preferred
Stock as Series A Convertible Preferred Stock (the "Series A Preferred
Stock"), stated value $25,000 per share, with the following rights,
preferences, and limitations:
(a) Number. The number of shares constituting the Series A Preferred
Stock shall be twenty (20).
(b) Dividends. Holders of the Series A Preferred Stock shall not be
entitled to receive dividends.
(c) Redemption. The Series A Preferred Stock shall be redeemable by the
Corporation twelve (12) months after issuance (the "Redemption Date") for
$25,000 per share.
(d) Liquidation Rights. In the event of any voluntary or involuntary
liquidations, dissolution, or winding up of the Corporation, the holders
of Series A Preferred Stock shall be entitled to receive from the assets
of the Corporation $25,000 per share, which shall be paid or set apart
for payment before the payment or setting apart for payment of any amount
for, or the distribution of any assets of the Corporation to, the holders
of common stock or any other class of equity securities in connection
with such liquidation, dissolution, or winding up. Each share of Series A
Preferred Stock shall rank on a parity with each other share of Series A
Preferred Stock, with respect to the respective preferential amounts
fixed for such series payable upon any distribution of assets by way of
liquidation, dissolution, or winding up of the Corporation. After the
payment or the setting apart of payment to the holders of Series A
Preferred Stock of the preferential amount so payable to them, the
holders of common shares shall be entitled to receive all remaining
assets of the Corporation. The Corporation covenants and agrees that so
long as the Series A Preferred Stock is outstanding, the Corporation
shall not issue any equity securities with a liquidation preference
senior to the Series A Preferred Stock.
(e) Voting Rights. The holders of the Series A Preferred Stock shall be
entitled to vote with the holders of the Class A Common Stock. The holder
of each share of Series A Preferred Stock shall be entitled to the number
of votes equal to the number of shares of Class A Common Stock into which
such share of Series A Preferred Stock could be converted at the record
date for determination of the shareholders entitled to vote on such
matters, or, if no such record date is established, at the date such vote
is taken or any written consent of shareholders is solicited, such votes
to be counted together with all other shares of the Corporation having
general voting power and not separately as a class. Except as otherwise
provided by law or provided herein, the holders of the Series A Preferred
Stock shall not be entitled to vote separately as a class.
(f) Conversion Rights. The holders of the Series A Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
i) Right to Convert. Each share of Series A Preferred Stock shall be
convertible without the payment of any additional consideration by the
holder thereof and, at the option of the holder thereof, at any time
following the expiration of the Restrictive Period, as herein defined
below. The Restrictive Period shall be a period of forty-five (45) days
following the date of issuance of the Series A Preferred Stock, which
date shall be the same as the Closing Date as that term is defined in the
Subscription Agreement by and between the Corporation and the holder
thereof (the "Subscription Agreement"). Each share of Series A Preferred
Stock shall be convertible into such number of fully paid and
nonassessable shares of Class A Common Stock as will be determined by
dividing the amount of $25,000 by the Conversion Price. The Conversion
Price is defined as the lesser of (i) the closing bid price of the
Corporation's Class A Common Stock on the date of signing of the
Subscription Agreement (the "Signing Date," as defined in the
Subscription Agreement) or (ii) sixty percent (60%) of the average
closing bid price for a period of three (3) trading days immediately
preceding the date of conversion. The Conversion Price of the Series A
Preferred Stock shall be subject to adjustment from time to time as
provided below.
ii) Mechanics of Conversion. Before any holder of the Series A
Preferred Stock shall be entitled to convert the same into shares of
Class A Common Stock, he shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series A Preferred Stock and shall give written
notice (the "Notice of Conversion") to the Corporation at such office
that he elects to convert the same. The Corporation shall, as soon as
practicable thereafter, but not later than 5 days, issue and deliver at
such office to such holder of the Series A Preferred Stock a certificate
or certificates for the number of shares of Class A Common Stock to which
he shall be entitled. The conversion date on the Notice of Conversion
submitted to the Corporation shall be the date of conversion; however, if
the Corporation does not receive the Notice of Conversion from the holder
within five (5) business days of the conversion date on the Notice of
Conversion, the date of conversion shall be deemed to have been the date
on which the Corporation received the Notice of Conversion. The person or
persons entitled to receive the shares of Class A Common Stock issuable
upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Class A Common Stock on such date.
iii) Fractional Shares. In lieu of any fractional shares to which the
holder of Series A Preferred Stock would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair
value of one share of Class A Common Stock as determined by the board of
directors of the Corporation. The number of whole shares issuable to each
holder upon such conversion shall be determined on the basis of the
number of shares of Class A Common Stock issuable upon conversion of the
total number of shares of Series A Preferred Stock of each holder at the
time of converting into Class A Common Stock.
iv) Adjustment of Conversion Price. The Conversion Price of the Series
A Preferred Stock shall be subject to adjustment from time to time as
follows:
(1) If the Corporation shall issue any Class A Common Stock other than
"Excluded Stock," as defined below, for a consideration per share less
than the Conversion Price in effect immediately prior to the issuance of
such Class A Common Stock (excluding stock dividends, subdivisions,
split-ups, combinations, dividends, or recapitalizations which are
covered by subsections (f)(iv)(3), (4), (5) and (6) below), then, and in
each such case, the Conversion Price in effect immediately after each
such issuance shall forthwith (except as provided in this subparagraph
(f)(iv) be adjusted to a price equal to the quotient obtained by
dividing: (AA) an amount equal to the sum of (xx) the total number of
shares of Class A Common Stock outstanding (including any shares of
Class A Common Stock issuable upon conversion of the Series A Preferred
Stock, or deemed to have been issued pursuant to subdivision (c)(ii),
(iii) and (iv) of this clause (1) but excluding shares issuable upon the
exercise of outstanding options or warrants otherwise deemed to be
outstanding pursuant to subdivision (c)(i) of this clause (1) )
immediately prior to such issuance multiplied by the Conversion Price
in effect immediately prior to such issuance, plus (yy) the
consideration received by the Corporation upon such issuance, by (BB)
the total number of shares of Class A Common Stock outstanding
(including any shares of Class A Common Stock issuable upon conversion
of the Series A Preferred Stock or deemed to have been issued pursuant
to subdivision (c)(ii), (iii), and (iv) of this clause (1) but excluding
shares issuable upon the exercise of outstanding options or warrants
otherwise deemed to be outstanding pursuant to subdivision (c)(i) of
this clause (1) ) immediately after the issuance of such Class A
Common Stock. Except to the limited extent provided for in clauses
(c)(iii) and (c)(iv) below, no adjustment of any Conversion Price
pursuant to this subsection (f)(iv)(1) shall have the effect of
increasing such Conversion Price above the Conversion Price in effect
immediately prior to such adjustment. For the purposes of this subsection
(f)(iv)(1), 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 any discounts or commissions paid or incurred by the
Corporation 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 value thereof as
determined by the board of directors of the Corporation, in accordance
with generally accepted accounting treatment; PROVIDED, HOWEVER, that if,
at the time of such determination, the Corporation's Class A Common Stock
is traded in the over-the-counter market or on a national or regional
securities exchange, such fair market value as determined by the board of
directors of the Corporation shall not exceed the aggregate "Current
Market Price" (as defined below) 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 (other than Excluded Stock), (ii)
securities by their terms convertible into or exchangeable for Class A
Common Stock (other than Excluded Stock), or (iii) options to purchase or
rights to subscribe for such convertible or exchangeable securities
(other than Excluded Stock):
(i) 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 clauses (a)
and (b) above), 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;
(ii) 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 clauses (a) and (b) above);
(iii) upon any change in the number of shares of Class A Common Stock
deliverable upon exercise of any such options or rights or conversion of
or exchange for such convertible or exchangeable securities, or upon any
change in the minimum purchase price of such options, rights, or
securities, other than a change resulting from the anti-dilution
provisions of such options, rights, or securities, the Conversion Price
shall forthwith be recomputed to reflect such change; and
(iv) on the expiration date of any such options or rights, the
termination of any such rights to convert or exchange or the expiration
of any options or right related to such convertible or exchangeable
securities, the 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, convertible or exchangeable securities
or options or rights related to such convertible or exchangeable
securities, as the case may be, been made upon the basis of the issuance
of only the number of shares of Class A Common Stock (and convertible or
exchangeable securities which remain in effect) actually issued upon the
exercise of such options or rights, upon the conversion or exchange of
such convertible or exchangeable securities or upon the exercise of the
options or rights related to such convertible or exchangeable securities,
as the case may be.
(2) "Excluded Stock" shall mean:
(a) all shares of Class A Common Stock issued and outstanding on the
date this document is filed with the Georgia Secretary of State;
(b) all shares of Series A Preferred Stock and the Class A Common Stock
into which such shares are convertible;
(c) any shares reissued after repurchase by the Corporation from
officers, employees, directors, or consultants upon termination of
services as provided by the terms of stock repurchase agreements approved
by the board of directors provided such shares are reissued to officers,
employees, directors, or consultants pursuant to approval by the board of
directors of the Corporation; and
(d) all shares of Class A Common Stock issued or issuable in connection
with capital asset leases or borrowings for the acquisition of capital
assets pursuant to approval by the board of directors of the Corporation.
(3) If the number of shares of Class A Common Stock outstanding at any
time after the date hereof 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, on the date such payment is made or such
change is effective, the Conversion Price of the Series A Preferred Stock
shall be appropriately decreased so that the number of shares of Class A
Common Stock issuable on conversion of any shares of the Series A
Preferred Stock shall be increased in proportion to such increase of
outstanding shares.
(4) If the number of shares of Class A Common Stock outstanding at any
time after the date hereof is decreased by a combination of the
outstanding shares of Class A Common Stock, then, on the effective date
of such combination, the Conversion Price of the Series A Preferred Stock
shall be appropriately increased so that the number of shares of Class A
Common Stock issuable on conversion of any shares of the Series A
Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares.
(5) In case the Corporation shall declare a cash dividend upon its
Class A Common Stock payable otherwise than out of retained 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, assets (excluding cash dividends) 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, the holders of shares of the Series A Preferred Stock shall
concurrent with the distribution to holders of Class A Common Stock,
receive a like distribution based upon the number of shares of Class A
Common Stock into which such Series A Preferred Stock is then
convertible.
(6) In case, at any time after the date hereof, of any capital
reorganization or any reclassification of the stock of the Corporation
(other than 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 entity 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, the shares of Series A Preferred Stock shall, after such
reorganization, reclassification, consolidation, merger, sale, or other
disposition, be convertible into the kind and number of shares of stock
or other securities or property of the Corporation or otherwise to which
such holder would have been entitled if immediately prior to such
reorganization, reclassification, consolidation, merger, sale, or other
disposition he had converted his shares of such Series A Preferred Stock
into Class A Common stock. The provisions of this clause (6) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, or other dispositions.
(7) All calculations under this subparagraph (f) shall be made to the
nearest whole cent or to the nearest one hundredth (1/100) of a share, as
the case may be.
(8) For the purpose of any computation pursuant to this subparagraph
(f)(iv), the "Current Market Price" at any date of one share of Class A
Common Stock shall be deemed to be the average of the highest reported
bid and the lowest reported offer prices on the preceding business day as
furnished by the National Quotation Bureau, Incorporated (or equivalent
recognized source of quotations); PROVIDED, HOWEVER, that if the Class A
Common Stock is not traded in such manner that the quotations referred to
in this clause (viii) are available for the period required hereunder,
Current Market Price shall be determined in good faith by the board of
directors of the Corporation, but if challenged by the holders of more
than 50% of the outstanding Series A Preferred Stock, then as determined
by an independent appraiser selected by the board of directors of the
Corporation, the cost of such appraisal to be borne equally by the
Corporation and the challenging parties.
v) Minimal Adjustments. No adjustment in the Conversion Price need be
made if such adjustment would result in a change in the Conversion Price
of less than $0.01. Any adjustment of less than $0.01 which is not made
shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, on a cumulative basis, amounts to
an adjustment of $0.01 or more in the Conversion Price.
vi) No Impairment. The Corporation will not through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution,
issue, or sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good
faith assist in the carrying out of all the provisions of this
subparagraph (f) and in the taking of all such action as may be necessary
or appropriate in order to protect the Conversion Rights of the holders
of Series A Preferred Stock against impairment.
vii) Certificate as to Adjustment. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this
subparagraph (f), the Corporation at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Series A Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in
detail the acts upon which such adjustment or readjustment is based. The
Corporation shall, upon written request at any time of any holder of
Series A Preferred Stock, furnish or cause to be furnished to such holder
a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Rate of such series at the time in effect, and (iii)
the number of shares of Class A Common Stock and the amount, if any, of
other property which at the time would be received upon the conversion of
such holder's shares of Series A Preferred Stock.
viii) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Class A Common Stock solely for the purpose of
effecting the conversion of the shares of Series A Preferred Stock such
number of its shares of Class A Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of
Series A Preferred Stock; and if at any time the number of authorized but
unissued shares of Class A Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series A Preferred
Stock, the Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but
unissued shares of Class A Common Stock to such number of shares as shall
be sufficient for such purpose.
ix) No Reissuance of Converted Shares. No shares of Series A Preferred
Stock which have been converted into Class A Common Stock after the
original issuance thereof shall ever again be reissued and all such
shares so converted shall upon such conversion cease to be a part of the
authorized shares of the Corporation.
x) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive
any dividend (other than a cash dividend) or other distribution, any
rights to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property or to receive any
other right, the Corporation shall mail to each holder of Series A
Preferred Stock at least twenty (20) days prior to such record date, a
notice specifying the date on which any such record is to be taken for
the purpose of such dividend or distribution or right, and the amount and
character of such dividend, distribution, or right.
xi) Notices. Any notice required by the provisions of this subparagraph
(f) to be given to holders of shares of Series A Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books
of the Corporation.
(g) Reacquired Shares. Any shares of Series A Preferred Stock acquired
by the Corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof and may not be reissued.
(h) Rank. The Series A Preferred Stock shall rank, with respect to the
distribution of assets, senior to any and all other series of any other
class of Preferred Stock.
(i) Amendment. The Articles of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or change the
powers, preferences, or special rights of the Series A Preferred Stock so
as to affect them adversely without the affirmative vote of the holders
of at least two-thirds (2/3) of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
(j) Protective Provisions. In addition to any other rights provided by
law, so long as shares of Series A Preferred Stock shall be outstanding,
the Corporation shall not, without obtaining the vote or written consent
of the holders of a majority of the outstanding shares of Series A
Preferred Stock:
i) amend or repeal any provision of, or add any provision to, the
Corporation's Articles of Incorporation or bylaws if such action would
materially alter or change the rights, preferences, privileges, or powers
of, or the restrictions provided for the benefit of, the Series A
Preferred Stock;
ii) authorize or issue any class or series of equity securities having
any preference or priority as to voting or distribution of assets upon
liquidation, merger or otherwise which is superior to or on a parity with
any such preference or priority of the Series A Preferred Stock; or
iii) apply any of its assets to the redemption, retirement, purchase,
or acquisition, directly or indirectly, of any shares of any class or
series of common stock, except pursuant to subparagraph (d) and except
from employees, advisors, officers, directors, and consultants of, and
persons performing services for, this Corporation or its subsidiaries on
terms approved by the board of directors upon termination of employment
or association.
(k) Equity Securities. "Equity Securities" shall mean securities of
any class of stock, whether preferred or common, and any debt securities
which are convertible into security of any class of stock, whether
preferred or common.
3.5 The Corporation designates twelve thousand (12,000) shares of its
Preferred Stock as Series C Preferred Stock (the "Series B Preferred
Stock"), stated value $15.00 per share, with the following rights,
preferences, and limitations:
(a) Number. The number of shares constituting the Series B Preferred
Stock shall be twelve thousand (12,000).
(b) Dividends. The holders of Series B Preferred Stock will be entitled
to receive, out of assets legally available for such purpose, before any
distributions shall be declared, paid, or set aside, or any other
distribution shall be declared or made, upon any other shares of capital
stock of the Corporation, distributions in shares of the Series B
Preferred Stock of the Corporation at the rate of 11.5% per annum on the
stated value of $15.00 per share, or $1.725 per share per annum. Such
dividend shall be paid on or before the 30th day after the last day of
the fiscal year with respect to which such distribution shall be payable
commencing with the fiscal year ending June 30, 1997, such dividends to
accrue from the date of first issuance. If any distributions payable on
any share of Series B Preferred Stock shall not be paid for any reason,
the right of the holders of such shares of Series B Preferred Stock to
receive payment of such distribution shall not accumulate. Holders of
shares of Series B Preferred Stock are not entitled to any dividend,
whether payable in cash, property, or stock, in excess of these
dividends.
(c) Redemption. The Series B Preferred Stock shall not be redeemable by
the Corporation.
(d) Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation, the holders
of Series B Preferred Stock shall be entitled to from the assets of the
Corporation $15.00 per share, which shall be paid or set apart for
payment after the payment or setting apart for payment of any amount for,
or the distribution of any assets of the Corporation to, the holders of
the Series A Preferred Stock, but before the payment or setting apart for
payment of any amount for, or the distribution of any assets of the
Corporation to, the holders of common stock or any other class of equity
securities in connection with such liquidation, dissolution, or winding
up. Each share of Series B Preferred Stock shall rank on a parity with
each other share of Series B Preferred Stock, with respect to the
respective preferential amounts fixed for such series payable upon any
distribution of assets by way of liquidation, dissolution, or winding up
of the Corporation. After the payment or the setting apart of payment to
the holders of Series B Preferred Stock of the preferential amount so
payable to them, the holders of common shares shall be entitled to
receive all remaining assets of the Corporation. The Corporation
covenants and agrees that so long as the Series B Preferred Stock is
outstanding, the Corporation shall not issue any equity securities with a
liquidation preference senior to the Series B Preferred Stock.
(e) Voting Rights. The holders of the Series B Preferred Stock shall be
entitled to vote with the holders of the Class A Common Stock. The holder
of each share of Series B Preferred Stock shall be entitled to the number
of votes equal to the number of shares of Class A Common Stock into which
such share of Series B Preferred Stock could be converted at the record
date for determination of the shareholders entitled to vote on such
matters, or, if no such record date is established, at the date such vote
is taken or any written consent of shareholders is solicited, such votes
to be counted together with all other shares of the Corporation having
general voting power and not separately as a class. Except as otherwise
provided by law or provided herein, the holders of the Series B Preferred
Stock shall not be entitled to vote separately as a class.
(f) Conversion Rights. The holders of the Series B Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
i) Right to Convert. Each share of Series B Preferred Stock shall be
convertible without the payment of any additional consideration by the
holder thereof and, at the option of the holder thereof, at any time into
such number of fully paid and nonassessable shares of Class A Common
Stock as will be determined by dividing the amount of $15.00 by the
Conversion Price of $1.50 per share. The Conversion Price of the Series B
Preferred Stock shall be subject to adjustment from time to time as
provided below.
ii) Mechanics of Conversion. Before any holder of the Series B
Preferred Stock shall be entitled to convert the same into shares of
Class A Common Stock, he shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series B Preferred Stock and shall give written
notice (the "Notice of Conversion") to the Corporation at such office
that he elects to convert the same. The Corporation shall, as soon as
practicable thereafter, but not later than 5 days, issue and deliver at
such office to such holder of the Series B Preferred Stock a certificate
or certificates for the number of shares of Class A Common Stock to which
he shall be entitled. The conversion date on the Notice of Conversion
submitted to the Corporation shall be the date of conversion; however, if
the Corporation does not receive the Notice of Conversion from the holder
within five (5) business days of the conversion date on the Notice of
Conversion, the date of conversion shall be deemed to have been the date
on which the Corporation received the Notice of Conversion. The person or
persons entitled to receive the shares of Class A Common Stock issuable
upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Class A Common Stock on such date.
iii) Fractional Shares. In lieu of any fractional shares to which the
holder of Series B Preferred Stock would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair
value of one share of Class A Common Stock as determined by the board of
directors of the Corporation. The number of whole shares issuable to each
holder upon such conversion shall be determined on the basis of the
number of shares of Class A Common Stock issuable upon conversion of the
total number of shares of Series B Preferred Stock of each holder at the
time of converting into Class A Common Stock.
iv) Adjustment of Conversion Price. The Conversion Price of the Series
B Preferred Stock shall be subject to adjustment from time to time as
follows:
(1) If the number of shares of Class A Common Stock outstanding at any
time after the date hereof 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, on the date such payment is made or such
change is effective, the Conversion Price of the Series B Preferred Stock
shall be appropriately decreased so that the number of shares of Class A
Common Stock issuable on conversion of any shares of the Series B
Preferred Stock shall be increased in proportion to such increase of
outstanding shares.
(2) If the number of shares of Class A Common Stock outstanding at any
time after the date hereof is decreased by a combination of the
outstanding shares of Class A Common Stock, then, on the effective date
of such combination, the Conversion Price of the Series B Preferred Stock
shall be appropriately increased so that the number of shares of Class A
Common Stock issuable on conversion of any shares of the Series B
Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares.
(3) In case, at any time after the date hereof, of any capital
reorganization or any reclassification of the stock of the Corporation
(other than 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 entity 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, the shares of Series B Preferred Stock shall, after such
reorganization, reclassification, consolidation, merger, sale, or other
disposition, be convertible into the kind and number of shares of stock
or other securities or property of the Corporation or otherwise to which
such holder would have been entitled if immediately prior to such
reorganization, reclassification, consolidation, merger, sale, or other
disposition he had converted his shares of such Series B Preferred Stock
into Class A Common stock. The provisions of this clause (3) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, or other dispositions.
(4) All calculations under this subparagraph (f) shall be made to the
nearest whole cent or to the nearest one hundredth ( 1/100) of a share,
as the case may be.
v) Minimal Adjustments. No adjustment in the Conversion Price need be
made if such adjustment would result in a change in the Conversion Price
of less than $0.01. Any adjustment of less than $0.01 which is not made
shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, on a cumulative basis, amounts to
an adjustment of $0.01 or more in the Conversion Price.
vi) No Impairment. The Corporation will not through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution,
issue, or sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good
faith assist in the carrying out of all the provisions of this
subparagraph (f) and in the taking of all such action as may be necessary
or appropriate in order to protect the Conversion Rights of the holders
of Series B Preferred Stock against impairment.
vii) Certificate as to Adjustment. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this
subparagraph (f), the Corporation at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Series B Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in
detail the acts upon which such adjustment or readjustment is based. The
Corporation shall, upon written request at any time of any holder of
Series B Preferred Stock, furnish or cause to be furnished to such holder
a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Rate of such series at the time in effect, and (iii)
the number of shares of Class A Common Stock and the amount, if any, of
other property which at the time would be received upon the conversion of
such holder's shares of Series B Preferred Stock.
viii) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Class A Common Stock solely for the purpose of
effecting the conversion of the shares of Series B Preferred Stock such
number of its shares of Class A Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of
Series B Preferred Stock; and if at any time the number of authorized but
unissued shares of Class A Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series B Preferred
Stock, the Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but
unissued shares of Class A Common Stock to such number of shares as shall
be sufficient for such purpose.
ix) No Reissuance of Converted Shares. No shares of Series B Preferred
Stock which have been converted into Class A Common Stock after the
original issuance thereof shall ever again be reissued and all such
shares so converted shall upon such conversion cease to be a part of the
authorized shares of the Corporation.
x) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive
any dividend (other than a cash dividend) or other distribution, any
rights to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property or to receive any
other right, the Corporation shall mail to each holder of Series B
Preferred Stock at least twenty (20) days prior to such record date, a
notice specifying the date on which any such record is to be taken for
the purpose of such dividend or distribution or right, and the amount and
character of such dividend, distribution, or right.
xi) Notices. Any notice required by the provisions of this subparagraph
(f) to be given to holders of shares of Series B Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books
of the Corporation.
(g) Registration Rights. If the Corporation shall at any time propose
the registration under the Securities Act of 1933 of an offering of its
equity securities, the Corporation shall give written notice of its
intention as promptly as practicable of such proposed registration to
each and every holder of Series B Preferred Stock. The Corporation shall
use its best effort to cause the registration of the shares of Class A
Common Stock issued or issuable upon conversion of the Series B Preferred
Stock (the "Conversion Shares") owned by the holder as the holder shall
request to be included, upon the same terms (including the method of
distribution), in any such offering; provided, however, that:
i) the Corporation shall not be required to give notice or include such
Conversion Shares in any registration if the proposed registration is (A)
a registration of a stock option or compensation plan or of securities
issued or issuable pursuant to any such plan or (B) a registration of
securities proposed to be issued in exchange for securities or assets of,
or in connection with a merger or consolidation with another corporation;
ii) the Corporation may, without the consent of the holders of the
Series B Preferred Stock, withdraw such registration statement and
abandon the proposed offering in which the holder had requested to
participate; and
iii) the registration rights set forth in this subparagraph (g) shall
be applicable to all Conversion Shares owned by the holder; and
iv) notwithstanding the foregoing, if the offering of the securities
pursuant to such registration statement is to be made by or through
underwriters, the Corporation shall not be required to include Conversion
Shares therein if and to the extent that the underwriter managing the
offering reasonably believes in good faith that such inclusion would
materially adversely affect such offering. The number of Conversion
Shares to be included in the registration statement shall be reduced as
follows: the number of shares of Class A Common Stock held by holders and
by other shareholders of the Corporation pursuant to other piggyback
registration rights ("Additional Holders") shall be reduced pro rata
among the holders and the Additional Holders in accordance with the
number of shares of Class A Common Stock entitled to be registered
pursuant to piggyback registration rights by such holders and Additional
Holders.
v) Terms and Conditions of Registration Rights. The registration rights
of the holder pursuant to this subparagraph (g) are subject to the
following additional terms and conditions:
(1) The holder shall provide the Corporation with such information with
respect to the Conversion Shares to be sold, the plans for the proposed
disposition thereof and such other information as shall, in the opinion
of counsel for the Corporation, be necessary to enable the Corporation to
include in such registration statement all material facts required to be
disclosed with respect to the holder.
(2) All expenses incurred by the Corporation in connection with any
registration requested under this subparagraph (g) will be paid by the
Corporation. Such expenses include, but are not limited to, printing
expenses (including for such number of registration statements,
prospectuses, and other filed material as the holder shall reasonably
request), "blue sky" fees and expenses, and fees and disbursements of
counsel and accountants for the Corporation, except that in any such
requested registration, the holder shall pay the fees and disbursements
of its counsel and any underwriting discounts and commissions with
respect to such holder's Conversion Shares.
(3) The Corporation will take all necessary action that may be required
in qualifying or registering the Conversion Shares included in a
registration statement, for offering and sale under the securities or
blue sky laws of such states as are requested by the holders of such
securities.
(h) Reacquired Shares. Any shares of Series B Preferred Stock acquired
by the Corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof and may not be reissued.
(i) Rank. The Series B Preferred Stock shall rank, with respect to the
distribution of assets, junior to the Series A Preferred Stock, but
senior to any and all other series of any other class of Preferred Stock.
(j) Amendment. The Articles of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or change the
powers, preferences, or special rights of the Series B Preferred Stock so
as to affect them adversely without the affirmative vote of the holders
of at least two-thirds (2/3) of the outstanding shares of Series B
Preferred Stock, voting together as a single class.
(k) Protective Provisions. In addition to any other rights provided by
law, so long as shares of Series B Preferred Stock shall be outstanding,
the Corporation shall not, without obtaining the vote or written consent
of the holders of a majority of the outstanding shares of Series B
Preferred Stock:
i) amend or repeal any provision of, or add any provision to, the
Corporation's Articles of Incorporation bylaws if such action would
materially alter or change the rights, preferences, privileges, or powers
of, or the restrictions provided for the benefit of, the Series B
Preferred Stock;
ii) authorize or issue any class or series of equity securities having
any preference or priority as to voting or distribution of assets upon
liquidation, merger or otherwise which is superior to or on a parity with
any such preference or priority of the Series B Preferred Stock; or
iii) apply any of its assets to the redemption, retirement, purchase,
or acquisition, directly or indirectly, of any shares of any class or
series of common stock, except pursuant to subparagraph (d) and except
from employees, advisors, officers, directors, and consultants of, and
persons performing services for, this Corporation or its subsidiaries on
terms approved by the board of directors upon termination of employment
or association.
(l) Equity Securities. "Equity Securities" shall mean securities of any
class of stock, whether preferred or common, and any debt securities
which are convertible into security of any class of stock, whether
preferred or common.
3.6 The Corporation designates twelve (12) shares of its Preferred
Stock as Series C Convertible Preferred Stock (the "Series C Preferred
Stock"), stated value $50,000 per share, with the following rights,
preferences, and limitations:
(a) Number. The number of shares constituting the Series C Preferred
Stock shall be 12.
(b) Dividend. Holders of the Series C Preferred Stock shall not be
entitled to receive dividends.
(c) Redemption. The Series C Preferred Stock shall be redeemable by the
Company any time after issuance (the "Redemption Date") for $50,000 per
share.
(d) Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of
Series C Convertible Preferred Stock shall be entitled to receive from
the assets of the Corporation $50,000 per share, all of which shall be
paid or set apart for payment after the payment or setting apart for
payment of any amount for, or the distribution of any assets of the
Corporation to, the holders of the Series A Preferred Stock or Series B
Convertible Preferred Stock, but before the payment or setting apart for
payment of any amount for, or the distribution of any assets of the
Corporation to, the holders of common stock or any other class of equity
security in connection with such liquidation, dissolution or winding up.
Each share of Series C Convertible Preferred Stock shall rank on a parity
with each other share of Series C Convertible Preferred Stock, with
respect to the respective preferential amounts fixed for such series
payable upon any distribution of assets by way of liquidation,
dissolution, or winding up of the Corporation. After the payment or
setting apart of payment to the holders of Series C Convertible Preferred
Stock of the preferential amount so payable to them, the holders of
common shares shall be entitled to receive all remaining assets of the
Corporation, except as qualified in Article Three of the Articles of
Incorporation of the Corporation. The Corporation covenants and agrees
that so long as the Series C Convertible Preferred Stock is outstanding,
the Corporation shall not issue any equity security with a liquidation
preference senior to the Series C Convertible Preferred Stock.
(e) Voting Rights. The holders of Series C Preferred Stock shad not be
entitled to vote with the holders of common stock or separately as a
class.
(f) Conversion Rights. The holders of the Series B Preferred Stock
shall have conversion rights as follows (the "Conversion Rights):
i) Right to Convert. Each share of Series B Preferred Stock shall be
convertible without the payment of any additional consideration by the
holder thereof and, at the option of the holder thereof, at any time
following 45 days from the date of issuance of Preferred Stock, which
date shall be the same as the Closing Date as that term is deemed in the
Securities Purchase Agreement by and between the Company and the holder
hereof (the "Agreements"). Each share of Preferred Stock shall be
convertible into such number of fu1ly paid and nonassessable shares of
Common Stock as will be determined by dividing the amount of $50,000 by
the Conversion Price. The Conversion Price is equal to the closing bid
price on the conversion date. For the purposes of this paragraph, the
closing bid price of common stock shall be the closing bid price as
reported by the National Association of Securities Dealers, Inc. Small
Cap or National Markets, or the closing bid price in the over-the-counter
market or, in the event the common stock is listed on a stock exchange,
the closing bid price on such exchange as reported in The Wall Street
Joumal. The Conversion Price of the Series C Preferred Stock shall be
subject to adjustment from time to time as provided below.
ii) Mechanics of Conversion. Before any holder of Preferred Stock shall
be entitled to convert the same into shares of Common Stock, he shall
surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any transfer agent for the Preferred
Stock and shall give written notice (the "Notice of Conversions") to the
Corporation at such office that he elects to convert the same. The
Corporation shall, as soon as practicable thereafter, but not later than
5 days, issue and deliver at such office to such holder of Preferred
Stock a certificate or certificates for the number of shares of Common
Stock to which he shall be entitled. The conversion date on the Notice of
Conversion submitted to the Company shall be the date of conversion,
however, if the Company does not receive the Notice of Conversion from
the holder hereof within 5 business days of the conversion date on the
Notice of Conversion, the date of conversion shall be deemed to have been
the date on which the Company received the Notice of Conversion. The
person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date.
iii) Fractional Shares. In lieu of any fractional shares to which the
holder of Preferred Stock would otherwise be entitled, the Corporation
shall pay cash equal to such fraction multiplied by the fair market value
of one share of Common Stock as determined by the board of directors of
the Corporation. The number of whole shares issuable to each holder upon
such conversion shall be determined on the basis of the number of shares
of Common Stock issuable upon conversion of the total number of shares of
Preferred Stock of each holder at the time converting into Common Stock.
iv) Adjustment of Conversion Price. The Conversion Price of each series
of Preferred Stock shall be subject to adjustment from time to time as
follows:
(1) If the Corporation shall issue any Common Stock other than
"Excluded Stock," as defined below, for a consideration per share less
than the Conversion Price in effect immediately prior to the issuance of
such Common Stock (excluding stock dividends, subdivisions, split-ups,
combinations, dividends or recapitalizations which are covered by
subparagraphs (f)(iv)(3), (4), (5) and (6) ), then, and in each such
case, the Conversion Price in effect immediately after each such issuance
shall forthwith (except as provided in this subparagraph (f)(iv) ) be
adjusted to a price equal to the quotient obtained by dividing
(a) an amount equal to the sum of
(i) the total number of shares of Common Stock By (including any shares
of Common Stock issuable upon conversion of the Preferred Stock, or
deemed to have been issued pursuant to subdivision (c)(i)(ii), (iii) and
(iv) of subdivision (2) below but excluding shares issuable upon the
exercise of outstanding options or warrants otherwise deemed to be
outstanding pursuant to subdivision (c)(i) of clause (2) below)
immediately prior to such issuance multiplied by the Conversion Price in
effect immediately prior to such issuance, plus
(ii) 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 issuable upon conversion of the Preferred
Stock or deemed to have been issued pursuant to subdivision (c)(ii),
(iii) and (iv) of clause (2) below but excluding shares issuable upon the
exercise of outstanding options or warrants otherwise deemed to be
outstanding pursuant to subdivision (c)(i) of clause (2) below) immediate
after the issuance of such Common Stock.
(2) Except to the limited extent provided for in clauses (c)(iii) and
(c)(iv) below, no adjustment of any Conversion Price pursuant to
subparagraph (f)(iv)(1) shall have the effect of increasing such
Conversion Price above the Conversion Price in effect immediately prior
to such adjustment. For the purposes of subparagraph (f)(iv)(1), 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 any discounts or commissions paid or incurred by the
Corporation in connection with the issuance and sale thereof.
(b) In the case of the issuance of 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 value thereof as determined by the board of
directors of the Corporation, in accordance with generally accepted
accounting treatment: provided, however, that if, at the time of such
determination, the Corporation's Common Stock is traded in the over-the-
counter market or on a national or regional securities exchange, such
fair market value as determined by the board of directors of the
Corporation shall not exceed the aggregate "Current Market Price" (as
defined below) 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 (other than Excluded Stock), (ii) securities
by their terms convertible into or exchangeable for Common Stock (other
than Excluded Stock), or (iii) options to purchase or rights to subscribe
for such convertible or exchangeable securities (other than Excluded
Stock):
(i) 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 clauses (a) and (b) above), 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;
(ii) the aggregate maximum number of shares of Common Stock deliverable
upon conversion of or in exchange for any such convertible or
exchangeable securities, or upon the exercise of options to purchase or
rights to subscribe for 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 clauses (a) and (b) above);
(iii) upon any change in the number of shares of Common Stock
deliverable upon exercise of a. such options or rights or conversion of
or exchange for such convertible or exchangeable securities, or upon any
change in the minimum purchase price of such options, rights or
securities, other than a change resulting from the antidilution
provisions of such options, rights or securities, the Conversion Price
shall forthwith be recomputed to reflect such change; and
(iv) 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 the adjustment made upon the issuance of
such options, rights, convertible or exchangeable securities or options
or rights related to such convertible or exchangeable securities, as the
case may be, been made upon the basis of the issuance of only the number
of shares of Common Stock (and convertible or exchangeable sock which
remain in effect) actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such convertible or
exchangeable securities or upon the exercise of the options or rights
related to such convertible or exchangeable securities, as the case may
be.
(3) "Excluded Stock" shall mean:
(a) all shares of Common Stock issued and outstanding on the date
document is filed with the Colorado Secretary of State;
(b) all shares of Series B Preferred Stock and the Common Stock into
which such shares are convertible;
(c) any shares reissued after repurchase by the Corporation from
officers. Employees,. Directors, or consultants upon termination of
services as provided by the terms of stock repurchase agreements approved
by the Board of Directors provided such shares are reissued to officers,
employees, directors or consultants pursuant to approval by the Board of
Directors of the Corporation; and
(d) all shares of Common Stock issued or issuable in connection with
capital asset leases or borrowings for the acquisition of capital assets
pursuant to approval by the Board of Directors of the Corporation.
(4) If the number of shares of Common Stock outstanding at any time
after the date hereof 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, on the date such payment is made or such change is
effective, the Conversion Price of a series of Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock
issuable on conversion of any shares of such series of Preferred Stock
shall be increased in proportion to such increase of outstanding shares.
(5) If the number of shares of Common Stock outstanding at any time
after the date hereof is decreased by a combination of the outstanding
shares of Common Stock, them on the effective date of such combination,
the Conversion Price of a series of Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock
issuable on conversion of any shares of a series of Preferred Stock shall
be decreased in proportion to such decrease in outstanding shares.
(6) In case the Corporation shall declare a cash dividend upon its
Common Stock payable otherwise than out of retained earnings or shall
distribute to holders of its Common Stock shares of its capital stocks
(other than Common Stock), stock or other securities of other persons,
evidences of indebtedness issued by the Corporation or other persons,
assets (excluding cash dividends) 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, the holders of shares of a series of Preferred
Stock shall, concurrent with the distribution to bolder of Common Stock,
receive a like distribution based upon the number of shares of Common
Stock into which such shares of Preferred Stock is then convertible.
(7) In case any time after the date hereof, of any capital
reorganization, or any reclassification of the stock of the Corporation
(other than 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 entity 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
the shares of a series of Preferred Stock shall after such
reorganization, reclassification, consolidation, merger, sale or other
disposition be convertible into the kind and number of shares of stock or
other securities or property of the Corporation or otherwise to which
such holder would have been entitled if immediately prior to such
reorganization, reclassification, consolidation, merger, sale or other
disposition he had converted his shares of such series of Preferred Stock
into Common Stock. The provisions of this clause shall similarly apply to
successive reorganizations, reclassifications, consolidations, merges,
sales or other dispositions.
(8) All calculations under this subparagraph (f) shall be made to the
nearest cent or to the nearest one hundredth (1/100) of a share, as the
case may be.
(9) For the purpose of any computation pursuant to this subparagraph
(f)(iv), the "Current Market Price" at any date of one share of Common
Stock, shall be deemed to be the average of the highest reported bid and
the lowest reported offer prices on the preceding business day as
furnished by the National Quotation Bureau. Incorporated (or equivalent
recognized source of quotations); provided, however, that if the Common
Stock is not traded in such manner that the quotations referred to in
this clause (9) are available for the period required hereunder, Current
Market Price shall be determined in good faith by the board of directors
of the Corporation, but if challenged by the holders of more than 50% of
the outstanding Preferred Stock then as determined by an independent
appraiser selected by the board of directors of the Corporation, the cost
of such appraisal to be borne equally by the Corporation and the
challenging parties.
ii) Minimal Adjustments. No adjustment in the Conversion Price need be
made if such adjustment would result in a change in the Conversion Price
of less than $0.01 Any adjustment of less than $0.01 which is not made
shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, on a cumlative basis, amounts to an
adjustment of $0.01 or more in the Conversion Price.
iii) No Impairment. The Corporation will not through any reorganization
recapitalization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good
faith assist in the carrying out of all the provisions of this
subparagraph (f) and in the taking of all such action as may be necessary
or appropriate in order to protect the Conversion Rights of the holders
of Preferred Stock against impairment.
iv) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this
subparagraph (f), the Corporation at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in detail the
facts upon which such adjustment or readjustment is based. The
Corporation shall, upon written request at any time of any holder of
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii)
the Conversion Rate of such series at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of such
holder's shares of Preferred Stock.
v) Reservation of Stock Issuable Upon Conversion. The Corporation shall
at all times eserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting he conversion
of the shares of Preferred Stock such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of
Preferred Stock, the Corporation will take such corporate action as may,
in the opinion of its consul, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
vi) No Reissuance of Converted Shares. No shares of Preferred Stock
which have been converted into Common Stock after the original issuance
thereof shall ever again be reissued and all such shares so converted
shall upon such conversion cease to be a part of the authorized shares of
the Corporation
vii) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive
any dividend (other than a cash dividend) or other distribution, any
right to subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities or property or to receive any other
right, the Corporation shall mail to each holder of Preferred Stock: at
least twenty (20) days prior to such record date, a notice specifying the
date on which any such record is to be taken for the purpose of such
dividend or distribution or right, and the amount ant character of such
divided, distribution or right.
viii) Notices. Any notice required by provisions of this subparagraph
(f) to be given to holders of shares of Preferred Stock shall be deemed
given if deposited in United States mail, postage prepaid, and addressed
to each holder of record at his address appearing on the books of the
Corporation.
(g) Reacquired Shares. Any shares of Series C Preferred Stock acquired
by the Corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof and may not be reissued.
(h) Rank. The Series C Preferred Stock shall rank, with respect to the
distribution of assets, junior to the Series A Preferred Stock and the
Series B Preferred Stock, but senior to any and all other series of any
other class of Preferred Stock;
(i) Protective Provisions. In addition to any other rights provided by
law, so long as shares of Series B Preferred Stock shall be outstanding,
the Corporation shall not, without obtaining the vote or written consent
of the holders of a majority of the outstanding shares of Preferred
Stock:
i) amend or repeal any provision of, or add any provision to, the
Corporation's Articles of InCorporation or bylaws if such action would
materially altar or change the rights, preferences, privileges or powers
of, or the restrictions provided for the benefit of, the Preferred Stock:
ii) authorize or issue any class or series of equity securities having
any preference or priority as to voting, dividends or distribution of
assets upon liquidation, merger or otherwise which is superior to or on a
parity with any such preference or priority of the Preferred Stock;
iii) declare or pay a dividend on any shares of Common Stock or other
shares of capital stock of the Corporation which are junior to the
Preferred Stock in liquidation preference if any Preferred dividends for
the then current fiscal year remains unpaid; or
iv) apply any of its assets to the redemption, retirement, purchase or
acquisition, directly or indirectly, of any shares of any class or series
of Common Stock, except pursuant to subparagraph (d) and except from
employees, advisors, officers, directors and consultants of, and persons
performing services for, this Corporation or its subsidiaries on terms
approved by the board of directors upon termination of employment or
association.
(j) Equity Security. "Equity Security" shall mean a security of any
class of stock, whether preferred or common, and any debt security which
is convertible into a security of any class of stock, whether preferred
or common.
3.7 The Corporation designates five hundred thousand (500,000) shares
of its Preferred Stock as Series D Convertible Preferred Stock (the
"Series D Preferred Stock"), stated value $2.50 per share, with the
following rights, preferences, and limitations:
(a) Number. The corporation shall have the authority to issue not more
than 500,000 shares of Series D Preferred Stock at the discretion of the
Board of Directors.
(b) Dividends. Shares of Series D Preferred Stock shall not be
entitled to receive any dividends.
(c) Liquidation Rights. The Series D Preferred Stock shall be entitled
to $2.50 per share upon the liquidation, dissolution, or winding-up of
the affairs of the Company in preference to all classes of Class A Common
Stock and any junior class of preferred stock, but is not entitled to
participate in the assets or profits of the Company beyond its
liquidation preference. The Company may not create a class of Preferred
Stock which has a preference in liquidation which is senior in priority
to the Series D Preferred Stock without the prior consent of the holders
of the Series D Preferred Stock.
(d) Optional Redemption. The Company may redeem the Series D Preferred
Stock at any time, in whole or in part, at the option of the Company for
cash at the redemption price of $2.50 per share. In the event the
Company shall redeem shares of Series D Preferred Stock for cash, notice
of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the redemption
date, to each holder of record of the shares to be redeemed, at such
holder's address as the same appears on the stock register of the
Company. Each such notice shall state: (1) the redemption date; (2) the
number of shares of Series D Preferred Stock to be redeemed and, if less
than all the shares held by such holder are to be redeemed, the number of
such shares to be redeemed from such holder; (3) the redemption price;
and (4) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price. Notice having been
mailed as aforesaid, from and after the redemption date (unless default
shall be made by the Company in providing money for the payment of the
redemption price) said shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as stockholders of the
Company (except the right to receive from the Company the redemption
price, as the case may be) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state), such shares
shall be redeemed by the Company at the redemption price as aforesaid. If
less than all the outstanding shares of the Series D Preferred Stock are
to be redeemed, shares to be redeemed shall be selected by the Company
from outstanding shares of Series D Preferred Stock not previously called
for redemption by lot or pro rata or in such other manner as the Board of
Directors of the Company may determine. A new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
No failure to mail such notice or any defect therein or in the mailing
thereof shall affect the validity of the proceedings for such redemption
except as to the holder to whom the Company has failed to mail such
notice or except as to the holder whose notice was defective.
(e) Mandatory Redemption. The Company will not consolidate or merge
into or transfer all or substantially all of its assets to any person
unless all outstanding shares of Series D Preferred Stock shall have
been called for redemption for cash in accordance with the provisions
hereof or unless: (i) the person is a corporation organized under the
laws of the United States of America, any State or the District of
Columbia, and (ii) the successor corporation assumes all of the Company's
obligations in respect of the Series D Preferred Stock.
(f) Conversion. The shares of Series D Preferred Stock shall be
convertible at the principle office of the Company, and at such other
place or places, if any, as the Board of Directors of the Company may
designate, into fully paid and non-assessable shares (calculated as to
each conversion to the nearest l/100th of a share) of Class A Common
Stock. The number of shares of common stock issuable upon conversion of
each share of the Series D Preferred Stock shall be equal to $2.50
divided by the conversion price in effect at the time of conversion
determined as hereinafter provided. The price at which shares of Common
Stock shall be delivered upon conversion (the "Conversion Price") shall
be initially $0.0125 per share of Common Stock; provided, however, that
such Conversion Price shall be subject to adjustment from time to time in
certain instances as hereinafter provided. No payment or adjustment shall
be made in respect of dividends on the Class A Common Stock upon
conversion of shares of the Series D Preferred Stock. If the Company
calls any shares of the Series D Preferred Stock for redemption, such
right of conversion shall cease and terminate, as to the shares
designated for redemption, at the close of business on the redemption
date, unless the Company defaults in the payment of the redemption price.
No fractional shares of Class A Common Stock will be issued, and instead
the number of shares of Class A Common Stock to be issued on conversion
of Series D Preferred Stock will, to the extent necessary, be rounded up
to the nearest whole number of shares.
i) Before any holder of shares of the Series D Preferred Stock shall be
entitled to convert the same into Class A Common Stock, the holder shall
surrender the certificate or certificates therefor, duly endorsed to the
Company or in blank, at the principle office of the Company or at such
other place or places, if any, as the Board of Directors of the Company
has designated, and shall give written notice to the Company at said
office or place that it elects to convey the same and shall state in
writing therein the name or names (with addresses) in which it wishes the
certificate or certificates for Class A Common Stock to be issued. The
Company will, as soon as practicable thereafter, issue and deliver at
said office or place to such holder of shares of the Series D Preferred
Stock, or to its nominee or nominees, certificates for the number of full
shares of Class A Common Stock to which it shall be entitled as
aforesaid. Shares of the Series D Preferred Stock shall be deemed to have
been converted as of the close of business on the date of the surrender
of such shares for conversion as provided above, and the person or
persons entitled to receive the Class A Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or
holders of such Class A Common Stock as of the close of business on such
date.
ii) The Conversion Price in effect at any time shall be subject to
adjustment as follows:
(1) In case the Company shall (A) declare a dividend on its Class A
Common Stock in shares of Class A Common Stock, (B) subdivide its
outstanding shares of Class A Common Stock, (C) combine its outstanding
shares of Class A Common Stock into a smaller number of shares, or (D)
issue by reclassification of its Class A Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation) any shares of its capital
stock, the Conversion Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination
or reclassification shall be proportionately adjusted so that the holder
of any share of the Series D Preferred Stock surrendered for conversion
after such time shall be entitled to receive the kind and amount of
shares which it would have owned or have been entitled to receive had
such share of the Series D Preferred Stock been converted immediately
prior to such time. Such adjustment shall be made successively whenever
any event listed above shall occur.
(2) In case the Company shall distribute to all holders of its Class A
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
corporation) evidences of its indebtedness or assets (excluding dividends
or other distributions paid out of earned surplus), the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close
of business on the date fixed for the determination of stockholders
entitled to receive such distribution by a fraction of which the
numerator shall be the Current Market Price per share of the Class A
Common Stock on the date fixed for such determination less the fair
market value (as determined by the Board of Directors of the Company,
whose determination shall be conclusive and described in a Board
Resolution of the Company filed with the Company) of the portion of the
assets or evidences of indebtedness so distributed applicable to one
share of Class A Common Stock and the denominator shall be such Current
Market Price per share of the Class A Common Stock on the date fixed for
such determination, such adjustment to become effective immediately prior
to the opening of business of the day following the date fixed for the
determination of stockholders entitled to receive such distribution.
(3) For the purpose of any computation under clause (2) above, the
"Current Market Price" on any date shall be deemed to be the average of
the daily closing prices per share of Class A Common Stock for 20
consecutive business days selected by the Company commencing 35 business
days before such date. The closing price for each day shall be the last
sale price or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, in either case on the New York Stock
Exchange, or, if the Class A Common Stock is not listed or admitted to
trading on such Exchange, on the principal national securities exchange
on which the Class A Common Stock is listed or admitted to trading or, if
it is not listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices as furnished by
any member of the National Association of Securities Sealers, Inc.,
selected from time to time by the Company for that purpose.
(4) All calculations under this subparagraph (ii) shall be made to the
nearest cent or the nearest l/100th of a share, as the case may be.
iii) In case of any consolidation or merger of the Company with or into
any other corporation (other than a consolidation or merger in which the
Company is the continuing corporation), or in case of any sale or
transfer of all or substantially all of the assets of the Company, the
holder of each share of Series D Preferred Stock shall after such
consolidation, merger, sale or transfer have the right to convert such
share of the Series D Preferred Stock into the kind and amount of shares
of stock and other securities and property which such holder would have
been entitled to receive upon such consolidation, merger, sale or
transfer if he had held the Class A Common Stock issuable upon the
conversion of such share of the Series D Preferred Stock immediately
prior to such consolidation, merger, sale or transfer.
iv) In the event that at any time, as a result of an adjustment made
pursuant to subparagraph (ii) above, the holder of any share of Series D
Preferred Stock surrendered for conversion shall become entitled to
receive any securities other than shares of Class A Common Stock,
thereafter the amount of such other securities so receivable upon
conversion of any share of the Series D Preferred Stock 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 Class A
Common Stock contained in paragraphs (i) to (iii), inclusive, above, and
the provisions of this subparagraph (f) with respect to the Class A
Common Stock shall apply on like terms to any such other securities.
v) No adjustment in the Conversion Price shall be required unless such
adjustment would require a change of at least l % in such price;
provided, however, that any adjustments which by reason of this
subparagraph (v) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
vi) Whenever the Conversion Price is adjustable as herein provided:
(1) the Company shall promptly file with corporate books of the Company
a certificate of the treasurer of the Company setting forth the adjusted
Conversion Price and showing in reasonable detail the facts upon which
such adjustment is based, including a statement of the consideration
received or to be received by the Company for any shares of Class A
Common Stock issued or deemed to have been issued; and
(2) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price, and within ten (10) business
days after it is required, said notice shall be mailed to all holders of
Series D Preferred Stock determined as of the date the notice was first
required, and upon the mailing of such notice no other notice need be
given of that adjustment in the Conversion Price.
vii) The Company will at all times reserve, keep available and be
prepared to issue, free from any preemptive rights, out of its authorized
but unissued Class A Common Stock, solely for the purpose of effecting
conversion of the Series D Preferred Stock, the full number of shares of
Class A Common Stock then issuable upon the conversion of all outstanding
Series D Preferred Stock. The Company shall from time to time, in
accordance with the laws of the State of Georgia, endeavor to amend its
Articles of Incorporation to increase the authorized amount of its Class
A Common Stock if at any time the authorized amount of its Class A Common
Stock remaining unissued shall be not sufficient to permit the conversion
of all Series D Preferred Stock. The Company shall, if any shares of
Class A Common Stock required to be reserved for issuance upon conversion
of Series D Preferred Stock pursuant to this subparagraph (f) require
registration with or approval of any governmental authority under any
Federal or state law before such shares may be issued upon such
conversion, endeavor to cause such shares to be so registered or approved
as expeditiously as possible.
viii) The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Class A Common Stock on
conversion of shares of the Series D Preferred Stock pursuant hereto. The
Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue or transfer and
delivery of shares of Class A Common Stock in a name other than that in
which the shares of the Series D Preferred Stock so converted were
registered, and no such issue or delivery shall be made unless and until
the person requesting such issue has paid to the Company the amount of
any such tax or has established to the satisfaction of the Company that
such tax has been paid.
(g) Voting Rights. The holders of Series D Preferred Stock shall be
entitled to elect two directors at all annual meetings of the
shareholders of the Company.
ARTICLE FOUR
The initial registered office of the corporation is located at 2300
Northlake Centre Drive, Suite 200, Tucker, Georgia 30084. The initial
registered agent of the corporation at its registered office is Robert J.
Mottern.
ARTICLE FIVE
The name and address of the incorporator is: Robert J. Mottern, Mottern,
Fisher & Rosenthal, P.C., 2300 Northlake Centre Drive, Suite 200, Tucker,
Georgia 30084.
ARTICLE SIX
The mailing address of the initial principal office of the
corporation is 3500 Parkway Lane, Suite 435, Norcross, Georgia 30092.
ARTICLE SEVEN
7.1 A director of the corporation shall not be personally liable
to the corporation or its shareholders for monetary damages for breach of
duty of care or other duty as a director, except for liability (i) for
any appropriation, in violation of his duties, of any business
opportunity of the corporation, (ii) for acts or omissions which involve
intentional misconduct of a knowing violation of law, (iii) of the types
set forth in O.C.G.A. 14-2-832, or (iv) for any transaction from which
the director derived an improper personal benefit.
7.2 Any repeal or modification of the provisions of this Article
by the shareholders of the corporation shall be prospective only, and
shall not adversely affect any limitation on the personal liability of a
director of the corporation with respect to any act or omission occuring
prior to the effective date of such repeal or modification.
7.3 If the Georgia Business Corporation Code is hereafter
amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of the
corporation, in additona to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended
Georgia Business Corporation Code.
7.4 In the event that any of the provisions of this Article
(including within a single sentence) is held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, the
remaining provisions are severable and shall remain enforceable to the
fullest extent permitted by law.
IN WITNESS WHEREOF, the undersigned executes these Articles of
Incorporation this 8th day of April, 1998.
/s/ Robert J. Mottern
Robert J. Mottern, Incorporator
BYLAWS
ARTICLE ONE
Offices and Agent
Section 1.1 Registered Office and Agent. The corporation shall maintain a
registered office in the State of Georgia and shall have a registered
agent whose business office is identical to the registered office
Section 1.2 Other Offices. In addition to its registered office, the
corporation may have offices at any other place or places, within or
without the State of Georgia, as the Board of Directors may from time to
time select or as the business of the corporation may require or make
desirable.
ARTICLE TWO
Shareholders' Meetings
Section 2.1 Place of Meetings. Meetings of shareholders may be held at
any place within or without the State of Georgia as set forth in the
notice thereof or in the event of a meeting held pursuant to waiver of
notice, as set forth in the waiver, or if no place is so specified, at
the principal office of the corporation.
Section 2.2 Annual Meetings. The annual meeting of shareholders shall be
held at a date and time set by the Board of Directors within 120 days
after the end of the corporation's fiscal year, unless that day is a
legal holiday, and in that event on the next succeeding business day, for
the purpose of electing directors and transacting any and all business
that may properly come before the meeting. If the annual meeting of
shareholders is not held on the day designated in this Section 2.2, any
business, including the election of directors, that might properly have
been acted upon at that meeting may be acted upon at a special meeting in
lieu of the annual meeting held pursuant to these bylaws or held pursuant
to a court order.
Section 2.3 Special Meetings. Special meetings of shareholders or a
special meeting in lieu of the annual meeting of shareholders may be
called at any time by the Board of Directors or the President. Special
meetings of shareholders or a special meeting in lieu of the annual
meeting of shareholders shall be called by the corporation upon the
written request of the holders of Fifty percent (50%) of all the votes
entitled to be cast on the issue or issues proposed to be considered at
the proposed special meeting.
Section 2.4 Notice of meetings. Unless waived as contemplated in Section
5.2, a notice of each meeting of shareholders stating the date, time and
place of the meeting shall be given not less than ten (10) days nor more
than sixty (60) days before the date thereof, by or at the direction of
the President, the Secretary, or the officer or persons calling the
meeting, to each shareholder entitled to vote at that meeting. In the
case of an annual meeting, the notice need not state the purpose or
purposes of the meeting unless the articles of incorporation or the
Georgia Business Corporation Code (the "Code") requires the purpose or
purposes to be stated in the notice of the meeting. In the case of a
special meeting, including a special meeting in lieu of an annual
meeting, the notice of meeting shall state the purpose or purposes for
which the meeting is called.
Section 2.5 Voting Group. Voting group means all shares of one or more
classes or series that are entitled to vote and be counted together
collectively on a matter at a meeting of shareholders. All shares
entitled to vote generally on the matter are for that purpose a single
voting group.
Section 2.6 Quorum. With respect to shares entitled to vote as a separate
voting group on a matter at a meeting of shareholders, the presence, in
person or by proxy, of a majority of the votes entitled to be cast on the
matter by the voting group shall constitute a quorum of that voting group
for action on that matter unless the articles of incorporation or the
Code provides otherwise. Once a share is represented for any purpose at a
meeting, other than solely to object to holding the meeting or to
transacting business at the meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of the
meeting unless a new record date is or must be set for the adjourned
meeting pursuant to Section 8.7 of these bylaws.
Section 2.7 Vote Required for Action. If a quorum exists, action on a
matter (other than the election of directors) by a voting group is
approved if the votes cast within the voting group favoring the action
exceed the votes cast opposing the action, unless the articles of
incorporation, provisions of these bylaws validly adopted by the
shareholders, or the Code requires a greater number of affirmative votes.
If the articles of incorporation or the Code provide for voting by two or
more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately. Action may
be taken by one voting group on a matter even though no action is taken
by another voting group entitled to vote on the matter. With regard to
the election of directors, unless otherwise provided in the articles of
incorporation, if a quorum exists, action on the election of directors is
taken by a plurality of the votes cast by the shares entitled to vote in
the election.
Section 2.8 Voting of Shares. Unless the articles of incorporation or the
Code provides otherwise, each outstanding share having voting rights
shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders. Voting on all matters shall be by voice vote or
by show of hands unless any qualified voter, prior to the voting on any
matter, demands vote by ballot, in which case each ballot shall state the
name of the shareholder voting and the number of shares voted by him, and
if the ballot be cast by proxy, it shall also state the name of the
proxy.
Section 2.9 Proxies. A shareholder entitled to vote pursuant to Section
2.8 may vote in person or by proxy pursuant to an appointment of proxy
executed in writing by the shareholder or by his attorney in fact. An
appointment of proxy shall be valid for only one meeting to be specified
therein, and any adjournments of such meeting, but shall not be valid for
more than eleven months unless expressly provided therein. Appointments
of proxy shall be dated and filed with the records of the meeting to
which they relate. If the validity of any appointment of proxy is
questioned, it must be submitted to the secretary of the meeting of
shareholders for examination or to a proxy officer or committee appointed
by the person presiding at the meeting. The secretary of the meeting or,
if appointed, the proxy officer or committee, shall determine the
validity or invalidity of any appointment of proxy submitted and
reference by the secretary in the minutes of the meeting to the
regularity of an appointment of proxy shall be received as prima facie
evidence of the facts stated for the purpose of establishing the presence
of a quorum at the meeting and for all other purposes.
Section 2.10 Presiding Officer. The President shall serve as the chairman
of every meeting of shareholders unless another person is elected by
shareholders to serve as chairman at the meeting. The chairman shall
appoint any persons he deems required to assist with the meeting.
Section 2.11 Adjournments. Whether or not a quorum is present to organize
a meeting, any meeting of shareholders (including an adjourned meeting)
may be adjourned by the holders of a majority of the voting shares
represented at the meeting to reconvene at a specific time and place, but
no later than 120 days after the date fixed for the original meeting
unless the requirements of the Code concerning the selection of a new
record date have been met. At any reconvened meeting within that time
period, any business may be transacted that could have been transacted at
the meeting that was adjourned. If notice of the adjourned meeting was
properly given, it shall not be necessary to give any notice of the
reconvened meeting or of the business to be transacted, if the date, time
and place of the reconvened meeting are announced at the meeting that was
adjourned and before adjournment; provided, however, that if a new record
date is or must be fixed, notice of the reconvened meeting must be given
to persons who are shareholders as of the new record date.
Section 2.12 Action of Shareholders Without a Meeting. Action required or
permitted to be taken at a meeting of shareholders may be taken without a
meeting if the action is taken by all shareholders entitled to vote on
the action or, if so provided in the articles of incorporation, by
persons who would be entitled to vote at a meeting shares having voting
power to cast not less than the minimum number (or numbers, in the case
of voting by groups) of votes that would be necessary to authorize or
take the action at a meeting at which all shareholders entitled to vote
were present and voted. The action must be evidenced by one or more
written consents describing the action taken, signed by shareholders
entitled to take action without a meeting and delivered to the
corporation for inclusion in the minutes or filing with the corporate
records. The corporation shall give written notice of actions taken as
required by the Code.
ARTICLE THREE
The Board of Directors
Section 3.1 General Powers. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation
shall be managed under the direction of, the Board of Directors. In
addition to the powers and authority expressly conferred upon it by these
bylaws, the Board of Directors may exercise all powers of the corporation
and do all lawful acts and things that are not by law, by any legal
agreement among shareholders, by the articles of incorporation or by
these bylaws directed or required to be exercised or done by the
shareholders.
Section 3.2 Number, Election and Term of Office. The number of directors
of the corporation shall not be less than one nor more than seven, the
precise number to be fixed by resolution of shareholders or of the Board
of Directors from time to time. Except as provided in Section 3.4, the
directors shall be elected by the vote of shareholders as set forth in
Section 2.7 at each annual meeting of shareholders or special meeting in
lieu of the annual meeting. Except in case of death, written resignation,
retirement, disqualification, or removal, each director shall serve until
the next succeeding annual meeting and thereafter until his successor is
elected and qualifies or until the number of directors is decreased.
Section 3.3 Removal One or more directors may be removed from office with
or without cause by shareholders by a majority of the votes entitled to
be cast. If the director was elected by a voting group, only shareholders
of that voting group may participate in the vote to remove him. Removal
action may be taken at any meeting of shareholders with respect to which
the notice stated that the purpose, or one of the purposes, of the
meeting is removal of the director, and a removed director's successor
may be elected at the same meeting.
Section 3.4 Vacancies. A vacancy occurring in the Board of Directors,
other than by reason of an increase in the number of directors, shall be
filled for the unexpired term by the first to take action of (a)
shareholders or (b) the Board of Directors, and if the directors
remaining in office constitute fewer than a quorum of the Board of
Directors, they may fill the vacancy by the affirmative vote of a
majority of all directors remaining in office. If the vacant office was
held by a director elected by a voting group, only the holders of shares
of that voting group or the remaining directors elected by that voting
group are entitled to vote to fill the vacancy. A vacancy occurring in
the Board of Directors by reason of an increase in the number of
directors shall be filled in like manner as any other vacancy, but if
filled by action of the Board of Directors shall only be for a term of
office continuing until the next election of directors by shareholders
and until the election and qualification of a successor.
Section 3.5 Compensation. Unless the articles of incorporation provide
otherwise, the Board of Directors may determine from time to time the
compensation, if any, directors may receive for their services as
directors. A director may also serve the corporation in a capacity other
than that of director and receive compensation, as determined by the
Board of Directors, for services rendered in any other capacity.
ARTICLE FOUR
Meetings of the Board of Directors
Section 4.1 Regular Meetings. Regular meetings of the Board of Directors
shall be held immediately after the annual meeting of shareholders or a
special meeting in lieu of the annual meeting. In addition, the Board of
Directors may schedule other meetings to occur at regular intervals
throughout the year.
Section 4.2 Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the President or by any two
directors in office at that time.
Section 4.3 Place of Meetings. Directors may hold their meetings at any
place within or without the State of Georgia as the Board of Directors
may from time to time establish for regular meetings or as set forth in
the notice of special meetings or, in the event of a meeting held
pursuant to waiver of notice, as set forth in the waiver.
Section 4.4 Notice of Meetings. No notice shall be required for any
regularly scheduled meeting of the directors. Unless waived as
contemplated in Section 5.2, each director shall be given at least one
day's notice (as set forth in Section 5.1) of each special meeting
stating the date, time, and place of the meeting.
Section 4.5 Quorum. Unless a greater number is required by the articles
of incorporation, these bylaws, or the Code, a quorum of the Board of
Directors consists of a majority of the total number of directors that
has been prescribed by resolution of shareholders or of the Board of
Directors pursuant to Section 3.2.
Section 4.6 Vote Required for Action. (a) If a quorum is present when a
vote is taken, the affirmative vote of a majority of directors present is
the act of the Board of Directors unless the Code, the articles of
incorporation, or these bylaws require the vote of a greater number of
directors.
(b) A director who is present at a meeting of the Board of Directors or a
committee of the Board of Directors when corporate action is taken is
deemed to have assented to the action taken unless:
(1) He objects at the beginning of the meeting (or promptly upon his
arrival) to holding it or transacting business at the meeting;
(2) His dissent or abstention from the action taken is entered in the
minutes of the meeting; or
(3) He delivers written notice of his dissent or abstention to the
presiding officer of the meeting before its adjournment or to the
corporation immediately after adjournment of the meeting.
The right of dissent or abstention is not available to a director who
votes in favor of the action taken.
Section 4.7 Participation by Conference Telephone. Any or all directors
may participate in a meeting of the Board of Directors or of a committee
of the Board of Directors through the use of any means of communication
by which all directors participating may simultaneously hear each other
during the meeting.
Section 4.8 Action by Directors Without a Meeting. Unless the articles of
incorporation or these bylaws provide otherwise, any action required or
permitted to be taken at any meeting of the Board of Directors or any
action that may be taken at a meeting of a committee of Board of
Directors may be taken without a meeting if the action is taken by all
the members of the Board of Directors (or of the committee as the case
may be). The action must be evidenced by one or more written consents
describing the action taken, signed by each director (or each director
serving on the committee, as the case may be), and delivered to the
corporation for inclusion in the minutes or filing with the corporate
records.
Section 4.9 Adjournments. Whether or not a quorum is present to organize
a meeting, any meeting of directors (including an adjourned meeting) may
be adjourned by a majority of the directors present, to reconvene at a
specific time and place. At any reconvened meeting any business may be
transacted that could have been transacted at the meeting that was
adjourned. If notice of the adjourned meeting was properly given, it
shall not be necessary to give any notice of the reconvened meeting or of
the business to be transacted, if the date, time and place of the
reconvened meeting are announced at the meeting that was adjourned.
Section 4.10 Committees of the Board of Directors. The Board of Directors
by resolution may designate from among its members an executive committee
and one or more other committees, each consisting of one or more
directors all of whom serve at the pleasure of the Board of Directors.
Except as limited by the Code, each committee shall have the authority
set forth in the resolution establishing the committee. The provisions of
this Article Four as to the Board of Directors and its deliberations
shall be applicable to any committee of the Board of Directors.
ARTICLE FIVE
Manner of Notice and Waiver as to Shareholders and Directors
Section 5.l Procedure. Whenever these bylaws require notice to be giver
to any shareholder or director, the notice shall be given in accordance
with this Section 5.1. Notice under these bylaws shall be in writing
unless oral notice is reasonable under the circumstances. Any notice to
directors may be written or oral. Notice may be communicated in person;
by telephone, telegraph, teletype, or other form of wire or wireless
Communication; or by mail or private carrier. If these forms of personal
notice are impracticable, notice may be communicated by a newspaper of
general circulation in the area where published, or by radio, television,
or other form of public broadcast communication. Written notice to the
shareholders, if in a comprehensible form, is effective when mailed, if
mailed with first-class postage prepaid and correctly addressed to the
shareholder's address shown in the corporation's current record of
shareholders. Except as provided above, written notice, if in a
comprehensible form, is effective at the earliest of the following:
(1) When received or when delivered, properly addressed, to the
addressee's last known principal place of business or residence;
(2) Five days after its deposit in the mail, as evidenced by the
postmark, if mailed with first-class postage prepaid and correctly
addressed; or
(3) on the date shown on the return receipt, if sent by registered or
certified mail, return receipt requested, and the receipt is signed by or
on behalf of the addressee.
Oral notice is effective when communicated if communicated in a
comprehensible manner.
In calculating time periods for notice, when a period of time measured in
days, weeks, months, years, or other measurement of time is prescribed
for the exercise of any privilege or the discharge of any duty, the first
day shall not be counted but the last day shall be counted.
Section 5.2 Waiver.
(a) A shareholder may waive any notice before or after the date and time
stated in the notice. Except as provided below in (b), the waiver must be
in writing, be signed by the shareholder entitled to the notice, and be
delivered to the corporation for inclusion in the minutes or filing with
the corporate records.
(b) A shareholder's attendance at a meeting (i) waives objection to lack
of notice or defective notice of the meeting, unless the shareholder at
the beginning of the meeting objects to holding the meeting or
transacting business at the meeting; and (ii) waives objection to
consideration of a particular matter at the meeting that is not within
the purpose or purposes described in the meeting notice, unless the
shareholder objects to considering the matter when it is presented.
(c) Unless required by the Code, neither the business transacted nor the
purpose of the meeting need be specified in the waiver.
(d) A director may waive any notice before or after the date and time
stated in the notice. Except as provided below in (e), the waiver must be
in writing, signed by the director entitled to the notice, and delivered
to the corporation for inclusion in the minutes or filing with the
corporate records.
(e) A director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless the director at the
beginning of the meeting (or promptly upon his arrival) objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
ARTICLE SIX
Officers
Section 6.1 Number. The officers of the corporation shall consist of a
President, a Secretary and a Treasurer and any other officers as may be
appointed by the Board of Directors or appointed by a duly appointed
officer pursuant to this Article Six. The Board of Directors shall from
time to time create and establish the duties of the other officers. Any
two or more offices may be held by the same person. Section 6.2 Election
and Term. All officers shall be appointed by the Board of Directors or by
a duly appointed officer pursuant to this Article Six and shall serve at
the pleasure of the Board of Directors or the appointing officers as the
case may be. All officers, however appointed, may be removed with or
without cause by the Board of Directors and any officer appointed by
another officer may also be removed by the appointing officer with or
without cause.
Section 6.3 Compensation. The compensation of all officers of the
corporation appointed by the Board of Directors shall be fixed by the
Board of Directors.
Section 6.4 President. The President shall be the chief executive officer
of the corporation and shall have general supervision of the business of
the corporation. He shall see that all orders and resolutions of the
Board of Directors are carried into effect. The President shall perform
such other duties as may from time to time be delegated to him by the
Board of Directors.
Section 6.5 Vice Presidents. In the absence or disability of the
President, or at the direction of the President, the Vice President, if
any, shall perform the duties and exercise the powers of the President.
If the corporation has more than one Vice President the one designated by
the Board of Directors shall act in lieu of the President. Vice
Presidents shall perform whatever duties and have whatever powers the
Board of Directors may from time to time assign.
Section 6.6 Secretary. The Secretary shall be responsible for preparing
minutes of the acts and proceedings of all meetings of shareholders and
of the Board of Directors and any committees thereof. He shall have
authority to give all notices required by law or these bylaws. He shall
be responsible for the custody of the corporate books, records, contracts
and other documents. The Secretary may affix the corporate seal to any
lawfully executed documents and shall sign any instruments as may require
his signature. The Secretary shall authenticate records of the
corporation. The Secretary shall perform whatever additional duties and
have whatever additional powers the Board of Directors may from time to
time assign him. In the absence or disability of the Secretary or at the
direction of the President, any assistant secretary may perform the
duties and exercise the powers of the Secretary.
Section 6.7 Treasurer. The Treasurer shall be responsible for the custody
of all funds and securities belonging to the corporation and for the
receipt, deposit or disbursement of funds and securities under the
direction of the Board of Directors. The Treasurer shall cause to be
maintained full and true accounts of all receipts and disbursements and
shall make reports of the same to the Board of Directors and the
President upon request. The Treasurer shall perform all duties as may be
assigned to him from time to time by the Board of Directors.
Section 6.8 Bonds. The Board of Directors by resolution may require any
or all of the officers, agents or employees of the corporation to give
bonds to the corporation, with sufficient surety or sureties, conditioned
on the faithful performance of the duties of their respective offices or
positions, and to comply with any other conditions as from time to time
may be required by the Board of Directors.
ARTICLE SEVEN
Distributions and Share Dividends
Section 7.1 Authorization or Declaration. Unless the articles of
incorporation provide otherwise, the Board of Directors from time to time
in its discretion may authorize or declare distributions or share
dividends in accordance with the Code.
Section 7.2 Record Date With Regard to Distributions and Share Dividends.
For the purpose of determining shareholders entitled to a distribution
(other than one involving a purchase, redemption, or other reacquisition
of the corporation's shares) or a share dividend the Board of Directors
may fix a date as the record date. If no record date is fixed by the
Board of Directors, the record date shall be determined in accordance
with the provisions of the Code.
ARTICLE EIGHT
Shares
Section 8.1 Authorization and Issuance of Shares. In accordance with the
Code, the Board of Directors may authorize shares of any class or series
provided for in the articles of incorporation to be issued for any
consideration valid under the provisions of the Code. To the extent
provided in the articles of incorporation, the Board of Directors shall
determine the preferences, limitations, and relative rights of the
shares. Section 8.2 Share Certificates The interest of each shareholder
in the corporation shall be evidenced by a certificate or certificates
representing shares of the corporation which shall be in such form as the
Board of Directors from time to time may adopt. Share certificates shall
be numbered consecutively, shall be in registered form, shall indicate
the date of issuance, the name of the corporation and that it is
organized under the laws of the State of Georgia, the name of the
shareholder, and the number and class of shares and the designation of
the series, if any, represented by the certificate. Each certificate
shall be signed by any one of the President, a Vice President, the
Secretary, or the Treasurer. The corporate seal need not be affixed.
Section 8.3 Rights of Corporation with Respect to Registered Owners.
Prior to due presentation for transfer of registration of its shares, the
corporation may treat the registered owner of the shares as the person
exclusively entitled to vote the shares, to receive any share dividend or
distribution with respect to the shares, and for all other purposes; and
the corporation shall not be bound to recognize any equitable or other
claim to or interest in the shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
Section 8.4 Transfers of Shares. Transfers of shares shall be made upon
the transfer books of the corporation, kept at the office of the transfer
agent designated to transfer the shares, only upon direction of the
person named in the certificate, or by an attorney lawfully constituted
in writing; and before a new certificate is issued, the old certificate
shall be surrendered for cancellation or, in the case of a certificate
alleged to have been lost, stolen, or destroyed, the requirements of
Section 8.6 of these bylaws shall have been met.
Section 8.5 Duty of Corporation to Requester Transfer. Notwithstanding
any of the provisions of Section 8.4 of these bylaws, the corporation is
under a duty to register the transfer of its shares only if:
(a) the certificate is endorsed by the appropriate person or persons; and
(b) reasonable assurance is given that the endorsement or affidavit is
genuine and effective; and
(c) the corporation either has no duty to inquire into adverse claims or
has discharged that duty; and
(d) the requirements of any applicable law relating to the collection of
taxes have been met; and
(e) the transfer in fact is rightful or is to a bona fide purchaser.
Section 8.6 Lost, Stolen or Destroyed Certificates. Any person claiming a
share certificate to be lost, stolen or destroyed shall make an affidavit
or affirmation of the fact in the manner required by the Board of
Directors and, if the Board of Directors requires, shall give the
corporation a bond of indemnity in form and amount, and with one or more
sureties satisfactory to the Board of Directors, as the Board of
Directors may require, whereupon an appropriate new certificate may be
issued in lieu of the one alleged to have been lost, stolen or destroyed.
Section 8.7 Fixing of Record Date with regard to Shareholder Action. For
the purpose of determining shareholders entitled to notice of a
shareholders' meeting, to demand a special meeting, to vote, or to take
any other action, the Board of Directors may fix a future date as the
record date, which date shall be not more than seventy (70) days prior to
the date on which the particular action, requiring a determination of
shareholders, is to be taken. A determination of shareholders entitled to
notice of or to vote at a shareholders' meeting is effective for any
adjournment of the meeting unless the Board of Directors fixes a new
record date, which it must do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting. If no record
date is fixed by the Board of Directors, the record date shall be
determined in accordance with the provisions of the Code.
ARTICLE NINE
Indemnification
Section 9.1 Definitions. As used in this Article, the term:
(a) "Corporation" includes any domestic or foreign predecessor entity of
this corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(b) "Director" means an individual who is or was a director of the
corporation or an individual who, while a director of the corporation, is
or was serving at the corporation's request as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan, or
other enterprise. A director is considered to be serving an employee
benefit plan at the corporation's request if his duties to the
corporation also impose duties on, or otherwise involve services by, him
to the plan or to participants in or beneficiaries of the plan.
"Director" includes, unless the context requires otherwise, the estate or
personal representative of a director.
(c) "Expenses" includes attorneys' fees.
(d) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable expenses incurred with respect to a
proceeding.
(e) "Officer" means an individual who is or was an officer of the
corporation or an individual who, while an officer of the corporation, is
or was serving at the corporation's request as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan, or
other enterprise. An officer is considered to be serving an employee
benefit plan at the corporation's request if his duties to the
corporation also impose duties on, or otherwise involve services by, him
to the plan or to participants in or beneficiaries of the plan. "Officer"
includes, unless the context requires otherwise, the estate or personal
representative of an officer.
(f) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
Section 9.2 Basic Indemnification Arrangement.
(a) Except as provided in subsections 9.2(d) and 9.2(e) below, the
corporation shall indemnify an individual who is made a party to a
proceeding because he is or was a director or officer against liability
incurred by him in the proceeding if he acted in a manner he believed in
good faith to be in or not opposed to the best interests of the
corporation and, in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
(b) A person's conduct with respect to an employee benefit plan for a
purpose he believed in good faith to be in the interests of the
participants in and beneficiaries of the plan is conduct that satisfies
the requirement of subsection 9.2(a).
(c) The termination of a proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent shall
not, of itself, be determinative that the proposed indemnitee did not
meet the standard of conduct set forth in subsection 9.2(a).
(d) The corporation shall not indemnify a person under this Article in
connection with (i) a proceeding by or in the right of the corporation in
which such person was adjudged liable to the corporation, or (ii) any
proceeding in which such person was adjudged liable on the basis that he
improperly received a personal benefit unless, and then only to the
extent that, a court of competent jurisdiction determines pursuant to
Section 14-2-854 of the Code that in view of the circumstances of the
case, such person is fairly and reasonably entitled to indemnification.
(e) Indemnification permitted under this Article in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
Section 9.3 Advances for Expenses.
(a) The corporation shall pay for or reimburse the reasonable expenses
incurred by a director or officer as a party to a proceeding in advance
of final disposition of the proceeding if:
(i) such person furnishes the corporation a written affirmation of his
good faith belief that he has met the standard of conduct set forth in
subsection 9.2(a) above; and
(ii) such person furnishes the corporation a written undertaking (meeting
the qualifications set forth below in subsection 9.3(b)), executed
personally or on his behalf, to repay any advances if it is ultimately
determined that he is not entitled to indemnification under this Article
or otherwise.
(b) The undertaking required by subsection 9.3(a)(ii) above must be an
unlimited general obligation of the proposed indemnitee but need not be
secured and may be accepted without reference to financial ability to
make repayment.
Section 9.4 Authorization of and Determination of Entitlement to
Indemnification.
(a) The corporation acknowledges that indemnification of a director or
officer under Section 9.2 has been pre-authorized by the corporation in
the manner described in subsection 9.4(b) below. Nevertheless, the
corporation shall not indemnify a director or officer under Section 9.2
unless a separate determination has been made in the specific case that
indemnification of such person is permissible in the circumstances
because he has met the standard of conduct set forth in subsection
9.2(a); provided, however, that regardless of the result or absence of
any such determination, and unless limited by the articles of
incorporation of the corporation, to the extent that a director or
officer has been successful, on the merits or otherwise, in the defense
of any proceeding to which he was a party, or in defense of any claim,
issue or matter therein, because he is or was a director or officer, the
corporation shall indemnify such person against reasonable expenses
incurred by him in connection therewith.
(b) The determination referred to in subsection 9.4(a) above shall be
made, at the election of the board of directors:
(i) by the board of directors of the corporation by majority vote of a -
quorum consisting of directors not at the time parties to the proceeding;
(ii) if a quorum cannot be obtained under subdivision (i), by majority
vote of a committee duly designated by the board of directors (in which
designation directors who are parties may participate), consisting solely
of two or more directors not at the time parties to the proceeding;
(iii) by special legal counsel:
(1) selected by the board of directors or its committee in the manner
prescribed in subdivision (i) or (ii); or
(2) if a quorum of the board of directors cannot be obtained under
Subdivision (i) and a committee cannot be designated under subdivision
(ii), selected by a majority vote of the full board of directors (in
which selection directors who are parties may participate); or
(iv) by the shareholders; provided that shares owned by or voted under
the control of directors or officers who are at the time parties to the
proceeding may not be voted on the determination.
(c) As acknowledged above, the corporation has pre-authorized the
indemnification of directors and officers hereunder, subject to a case-
by-case determination that the proposed indemnitee met the applicable
standard of conduct under subsection 9.2(a). Consequently, no further
decision need or shall be made on a case-by-case basis as to the
authorization of the corporation's indemnification of directors or
officers hereunder. Nevertheless, evaluation as to reasonableness of
expenses of a director or officer in the specific case shall be made in
the same manner as the determination that indemnification is permissible,
as described in subsection 9.4(b) above, except that if the determination
is made by special legal counsel, evaluation as to reasonableness of
expenses shall be made by those entitled under subsection 9.4(b)(iii) to
select counsel.
Section 9.5 Court-Ordered Indemnification and Advances for Expenses.
Unless this corporation's articles of incorporation provide otherwise, a
director or officer who is a party to a proceeding may apply for
indemnification or advances for expenses to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of
an application, the court, after giving any notice the court considers
necessary, may order indemnification or advances for expenses if it
determines that:
(i) The applicant is entitled to mandatory indemnification under the
final clause of subsection 9.4(a) above (in which case the corporation
shall pay the indemnitee's reasonable expenses incurred to obtain court-
ordered indemnification);
(ii) The applicant is fairly and reasonably entitled to indemnification
in view of all the relevant circumstances, whether or not he met the
standard of conduct set forth in subsection 9.2(a) above or was adjudged
liable as described in subsection 9.2(d) above (but if he was adjudged so
liable, any court-ordered indemnification shall be limited to reasonable
expenses incurred by the indemnitee unless the articles of incorporation
of this corporation or a bylaw, contract or resolution approved or
ratified by shareholders pursuant to Section 9.7 provides otherwise); or
(iii) In the case of advances for expenses, the applicant is entitled
pursuant to the articles of incorporation, bylaws or any applicable
resolution or agreement, to payment for or reimbursement of his
reasonable expenses incurred as a party to a proceeding in advance of
final disposition of the proceeding.
Section 9.6 Indemnification of Employees and Agents. Unless this
corporation's articles of incorporation provide otherwise, the
corporation may indemnify and advance expenses under this Article to an
employee or agent of the corporation who is not a director or officer to
the same extent as to a director or officer.
Section 9.7 Shareholder Approved Indemnification.
(a) If authorized by the articles of incorporation or a bylaw, contract
or resolution approved or ratified by shareholders of the corporation by
a majority of the votes entitled to be cast, the corporation may
indemnify or obligate itself to indemnify a person made a party to a
proceeding, including a proceeding brought by or in the right of the
corporation, without regard to the limitations in other sections of this
Article. The corporation shall not indemnify a person under this Section
9.7 for any liability incurred in a proceeding in which the person is
adjudged liable to the corporation or is subjected to injunctive relief
in favor of the corporation:
(i) for any appropriation, in violation of his duties, of any business
opportunity of the corporation;
(ii) for acts or omissions which involve intentional misconduct or a
knowing violation of law;
(iii) for the types of liability set forth in Section 14-2-832 of the
Code; or
(iv) for any transaction from which he received an improper personal
benefit.
(b) Where approved or authorized in the manner described in subsection
9.7(a) above, the corporation may advance or reimburse expenses incurred
in advance of final disposition of the proceeding only if:
(i) the proposed indemnitee furnishes the corporation a written
affirmation of his good faith belief that his conduct does not constitute
behavior of the kind described in subsection 9.7(a)(i) - (iv) above; and
(ii) the proposed indemnitee furnishes the corporation a written
undertaking, executed personally, or on his behalf, to repay any advances
if it is ultimately - determined that he is not entitled to
indemnification.
Section 9.8 Liability Insurance. The corporation may purchase and
maintain insurance on behalf of a director or officer or an individual
who is or was an employee or agent of the corporation or who, while an
employee or agent of the corporation, is or was serving at the request of
the corporation as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise against
liability asserted against or incurred by him in that capacity or arising
from his status as a director, officer, employee, or agent, whether or
not the corporation would have power to indemnify him against the same
liability under Section 9.2, Section 9.3 or Section 9.4 above.
Section 9.9 Witness Fees. Nothing in this Article shall limit the
corporation's power to pay or reimburse expenses incurred by a person in
connection with his appearance as a witness in a proceeding at a time
when he has not been made a named defendant or respondent in the
proceeding.
Section 9.10 Report to Shareholders. If the corporation indemnifies or
advances expenses to a director in connection with a proceeding by or in
the right of the corporation, the corporation shall report the
indemnification or advance, in writing, to the shareholders with or
before the notice of the next shareholders' meeting.
Section 9.11 Amendments; severability. No amendment, modification or
rescission of this Article Nine, or any provision hereof, the effect of
which would diminish the rights to indemnification or advancement of
expenses as set forth herein shall be effective as to any person with
respect to any action taken or omitted by such person prior to such
amendment, modification or rescission. In the event that any of the
provisions of this Article (including any provision within a single
section, subsection, division or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable,
the remaining provisions of this Article shall remain enforceable to the
fullest extent permitted bylaw.
ARTICLE TEN
Miscellaneous
Section 10.1 Inspection of Books and Records. The Board of Directors
shall have power to determine which accounts, books and records of the
corporation shall be opened to the inspection of shareholders, except
those as may by law specifically be made open to inspection, and shall
have power to fix reasonable rules and regulations not in conflict with
the applicable law for the inspection of accounts, books and records
which by law or by determination of the Board of Directors shall be open
to inspection. Without the prior approval of the Board of Directors in
their discretion, the right of inspection set forth in Section 14-2-
1602(c) of the Code shall not be available to any shareholder owning two
(2%) percent or less of the shares outstanding.
Section 10.2 Fiscal Year. The Board of Directors is authorized to fix the
fiscal year of the corporation and to change the same from time to time
as it deems appropriate.
Section 10.3 Corporate Seal. If the Board of Directors determines that
there should be a corporate seal for the corporation, it shall be in the
form as the Board of Directors may from time to time determine.
Section 10.4 Annual Financial Statements. In accordance with the Code,
the corporation shall prepare and provide to shareholders such financial
statements as may be required by the Code.
Section 10.5 Conflict with Articles of Incorporation. In the event that
any provision of these bylaws conflicts with any provision of the
articles of incorporation, the articles of incorporation shall govern.
ARTICLE ELEVEN
Amendments
Section 11.1 Power to Amend Bylaws The Board of Directors shall have
power to alter, amend or repeal these bylaws or adopt new bylaws, but any
bylaws adopted by the Board of Directors may be altered, amended or
repealed, and new bylaws adopted, by the shareholders. The shareholders
may prescribe by expressing in the action they take in adopting or
amending any bylaw or bylaws that the bylaw or bylaws so adopted or
amended shall not be altered, amended or repealed by the Board of
Directors.
