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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: DECEMBER 22, 1997
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CHECKFREE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Delaware 0-26802 31-1013521
- ---------------- --------------------- ----------------------
(STATE OR OTHER (COMMISSION FILE NO.) (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
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4411 East Jones Bridge Road
Norcross, Georgia 30092
(770)441-3387
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
----------------------
Not Applicable
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
----------------------
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ITEM 5. OTHER EVENTS
Effective December 22, 1997, CheckFree Corporation (the "Company")
reorganized its corporate structure into a "holding company" structure,
consisting of a holding company conducting all of the business previously
conducted by the Company through the Company and other wholly owned direct and
indirect operating subsidiaries of the holding company. The name of the new
holding company is "CheckFree Holdings Corporation" and as with the Company, it
is a Delaware corporation. As described below, in connection with the
restructuring, holders of Common Stock of the Company became holders of an
identical number of shares of Common Stock of CheckFree Holdings Corporation
("Holdings"), and the Company became a wholly owned direct subsidiary of
Holdings.
The restructuring was effected by a merger conducted pursuant to
Section 251(g) of the Delaware General Corporation Law, which provides for the
formation of a holding company structure without a vote of the stockholders of
the Company. In the merger, the Company merged with CheckFree Merger
Corporation, a newly-formed, wholly-owned direct subsidiary of Holdings (the
"Merger"), with the Company as the surviving corporation of the Merger. In the
Merger, each outstanding share of Common Stock of the Company and each share of
Common Stock of the Company held in treasury was automatically converted into
one share of Common Stock of Holdings. Each share of CheckFree Merger
Corporation Common Stock was converted into a share of Company Common Stock.
Additionally, each outstanding option to purchase shares of the Company's Common
Stock was automatically converted into an option to purchase, upon the same
terms and conditions, an identical number of shares of Holdings Common Stock,
and the stock options were assumed by and continued as stock options of
Holdings. In addition, Holdings assumed sponsorship of all employee benefits
pursuant to the terms of the Merger. The Company will continue to operate as a
wholly owned subsidiary of Holdings under the name CheckFree Corporation.
Also in connection with the Merger, rights to purchase shares of the
Company's Series A Junior Participating Cumulative Preferred Stock (the
"Existing Rights") were cancelled, and Holdings distributed rights (the "New
Rights") to purchase, on identical terms, shares of Holding's Series A Junior
Participating Cumulative Preferred Stock carrying identical terms, rights, and
preferences as the Series A Junior Participating Cumulative Preferred Stock of
the Company. As with the Existing Rights, until the occurrence of certain events
specified in Holdings Rights Plan, the New Rights are represented by the
outstanding shares of Common Stock of Holdings in respect of which the New
Rights are issued, are not transferable separately from the associated shares of
Holdings Common Stock, and are automatically transferred upon transfer of the
associated Common Stock.
As a result of the restructuring, all the business and operations
previously conducted by the Company and its subsidiaries are now conducted by
Holdings and its subsidiaries, and the assets and
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liabilities of Holdings and its subsidiaries on a consolidated basis are the
same as the assets and liabilities of the Company and its subsidiaries
immediately before the Merger. The Certificate of Incorporation and the Bylaws
of Holdings are identical to the Certificate of Incorporation and Bylaws of the
Company as in effect immediately prior to the restructuring, and the capital
stock of Holdings has the same designations, rights, and preferences as the
capital stock of the Company prior to the restructuring. In addition, the
persons who were directors and executive officers of the Company prior to the
restructuring are directors and executive officers of Holdings after the Merger.
The Common Stock and New Rights of Holdings are listed for trading on the Nasdaq
National Market under the symbol "CKFR", as were the Common Stock and Existing
Rights of the Company. Stockholders of the Company do not recognize gain or loss
for U.S. Federal Income tax purposes as a result of the restructuring.
Certificates formerly representing shares of Common Stock of the
Company are deemed to represent shares of Common Stock of Holdings. The
Company's transfer agent will deliver to each former stockholder of the Company
a transmittal letter that must be returned to the transfer agent, along with the
original stock certificate of the Company, in order to receive a new certificate
for Holdings Common Stock representing the identical number of shares of Common
Stock of the Company previously owned by the stockholder.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
2 Agreement and Plan of Merger among CheckFree Corporation, CheckFree
Holdings Corporation and CheckFree Merger Corporation, dated as of
December 22, 1997.
3(a) Certificate of Incorporation of CheckFree Holdings Corporation.
3(b) Bylaws of CheckFree Holdings Corporation.
3(c) Rights Plan between CheckFree Holdings Corporation and Fifth Third
Bank, dated as of December 16, 1997.
3(d) Form of Specimen stock certificate.
4 Articles FOURTH, FIFTH, SEVENTH, EIGHTH, TENTH AND ELEVENTH of
CheckFree Holdings Corporation's Certificate of Incorporation
(contained in Exhibit 3(a) hereto) and Articles II, III, IV, VI, and
VIII of CheckFree Holdings Corporation's Bylaws (contained in
Exhibit 3(b) hereto).
99(a) News Release, dated December 23, 1997, issued by CheckFree Corporation
announcing the restructuring.
99(b) Letter to Stockholders dated December 31, 1997 describing the
restructuring.
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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.
CHECKFREE CORPORATION
Date: December 29, 1997 By: /s/ James S. Douglass
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James S. Douglass, Executive Vice
President and Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2 * Agreement and Plan of Merger among CheckFree Corporation,
CheckFree Holdings Corporation, and CheckFree Merger
Corporation, dated as of December 22, 1997.
3(a) * Restated Certificate of Incorporation of CheckFree Holdings
Corporation.
3(b) * Bylaws of CheckFree Holdings Corporation.
3(c) * Rights Plan between CheckFree Holdings Corporation and Fifth
Third Bank, dated as of December 16, 1997.
3(d) * Form of Specimen stock certificate.
4 Articles FOURTH, FIFTH, SEVENTH, EIGHTH, TENTH AND ELEVENTH of
CheckFree Holdings Corporation's Certificate of Incorporation
(contained in Exhibit 3(a) hereto) and Articles II, III, IV,
VI, and VIII of CheckFree Holdings Corporation's Bylaws
(contained in Exhibit 3(b) hereto).
99(a) * News Release, dated December 23, 1997, issued by CheckFree
Corporation announcing the restructuring.
99(b) * Letter to Stockholders dated December 31, 1997 describing the
restructuring.
</TABLE>
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* Filed with this report.
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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CHECKFREE CORPORATION
(A DELAWARE CORPORATION)
AND
CHECKFREE MERGER CORPORATION
(A DELAWARE CORPORATION)
AND
CHECKFREE HOLDINGS CORPORATION
(A DELAWARE CORPORATION)
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), is dated as of
December 22, 1997, by and among CHECKFREE CORPORATION, a Delaware corporation
("CheckFree"), CHECKFREE MERGER CORPORATION., a Delaware corporation, ("Merger
Sub"), and CHECKFREE HOLDINGS CORPORATION, a Delaware corporation ("CHC").
RECITALS
A. This Agreement provides for the merger of Merger Sub with and into
CheckFree (the "Merger"), which will be the surviving corporation, in accordance
with Section 251(g) of the General Corporation Laws of the State of Delaware
(the "DGCL"), upon the terms and conditions set forth herein and in accordance
with the applicable provisions of the DGCL. The purpose of the Merger is to
implement a holding company organizational structure under which CHC will be the
holding company for CheckFree's operating subsidiaries and CheckFree would
become a direct wholly-owned subsidiary of CHC.
B. The respective Boards of Directors of CheckFree, CHC, and Merger Sub
have approved the Merger upon the terms and subject to the conditions set forth
herein.
AGREEMENT
Accordingly, in consideration of the mutual promises and agreements set
forth herein, and in order to set forth the terms and conditions of the Merger
and the mode of carrying the same into effect, the parties hereby agree as
follows:
1. THE MERGER.
1.1 The Merger. At the Effective Time (as defined in Section 1.3
hereof), and subject to the terms and conditions of this Agreement and the DGCL,
Merger Sub shall be merged with and into CheckFree, the separate corporate
existence of Merger Sub shall thereupon cease, and CheckFree shall be the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Surviving Corporation. At the Effective Time, CheckFree shall
continue its corporate existence under the laws of the State of Delaware and
shall thereupon and thereafter possess all rights, privileges, powers and
franchises and all property of Merger Sub and shall be subject to all debts,
liabilities and duties of Merger Sub, all as provided under the DGCL.
1.3 Effective Time of the Merger. The Merger shall become effective and
be consummated when the Surviving Corporation shall have caused to be filed a
certified copy of this Agreement with the Secretary of State of the State of
Delaware (the "Delaware Secretary of State") in accordance with the DGCL (the
"Effective Time"), as set forth in Section 3.4 hereof.
1.4 Certificate of Incorporation of the Surviving Corporation.
Immediately following the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the
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Effective Time, shall be restated as set forth in Exhibit A and as so amended
and restated shall thereafter continue in full force and effect as the
Certificate of Incorporation of the Surviving Corporation until further amended
or restated as provided therein and under the DGCL.
1.5 By-Laws of the Surviving Corporation. The By-Laws of Merger Sub, as
in effect immediately prior to the Effective Time, shall be amended and restated
immediately after the Effective Time as provided in Exhibit B and thereafter
serve as the By-Laws of the Surviving Corporation until thereafter amended or
repealed as provided therein and under the DGCL.
1.6 Directors and Officers of the Surviving Corporation. At the
Effective Time, the directors and executive officers of the Surviving
Corporation shall be those persons listed on Exhibit C attached hereto, in the
case of directors, to serve until their successors are elected and qualified
and, in the case of officers, to serve at the pleasure of the Board of Directors
of the Surviving Corporation.
2. CONVERSION OF SECURITIES AND ASSUMPTION OF CERTAIN OBLIGATIONS.
2.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of CheckFree, CHC, Merger Sub or the
holders of any securities of the foregoing corporations:
2.1.1 Common Stock of Merger Sub. Each share of common stock, par
value $0.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time, shall be converted into one share of common stock, par value
$0.01 per share, of the Surviving Corporation.
2.1.2 Common Stock of CheckFree. Each share of common stock, par
value $0.01 per share, of CheckFree ("CheckFree Common Stock") issued and
outstanding or held in its treasury immediately prior to the Effective Time
shall be converted into one share of common stock, par value $0.01 per share, of
CHC ("CHC Common Stock"), and shall have the same designations, rights and
powers and preferences, and the qualifications, limitations and restrictions
thereof, as the CheckFree Common Stock being converted. Each certificate
representing shares of CheckFree Common Stock immediately prior to the Effective
Time shall be deemed to represent the same number of shares of CHC Common Stock.
In addition, the rights to purchase CheckFree preferred stock, previously
granted to holders of CheckFree Common Stock under a stockholder rights plan,
shall be deemed terminated as of the Effective Time.
2.1.3 Common Stock of CHC. Each share of CHC Common Stock issued
and outstanding immediately prior to the Effective Time shall automatically be
cancelled and retired and shall cease to exist.
2.1.4 CheckFree Stock Options and Other Awards. CHC shall assume
sponsorship and continue all the rights and obligations of CheckFree under the
1983 Incentive Stock Option Plan, the 1983 Non-Statutory Stock Option Plan, the
1993 Stock Option Plan, the 1995 Stock Option Plan,
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the Associate Stock Purchase Plan, the 401(k) Plan and all other stock option
and employee benefit plans and agreements of CheckFree (collectively, the
"Plans"). The outstanding options and other awards assumed by CHC shall be
exercisable upon the same terms and conditions as under the Plans immediately
prior to the Effective Time, except that, upon the exercise of each such option
or award, shares of CHC Common Stock shall be issuable in lieu of each share of
CheckFree Common Stock issuable upon the exercise thereof immediately prior to
the Effective Time.
2.1.5 Successor Issuer. It is the intent of the parties hereto that
CHC, as of the Effective Time, be deemed a "successor issuer" for purposes of
continuing offerings under the Securities Exchange Act of 1934, as amended.
2.2 Exchange of Certificates. Each holder of a certificate formerly
representing shares of CheckFree Common Stock shall be required to surrender
such certificate to CheckFree's transfer agent ("Transfer Agent"), along with a
properly completed transmittal letter in order to receive a certificate or
certificates of CHC representing the number of shares of CHC common stock into
which the shares of CheckFree Common Stock previously represented by such
CheckFree certificate have been converted pursuant to this Agreement. A letter
of transmittal will be mailed by the Transfer Agent to each former shareholder
of CheckFree as soon as reasonably practicable after the Effective Time. Until
surrendered and exchanged in accordance with this Section 2.2 or in the ordinary
course, each certificate representing CheckFree Common Stock shall be deemed and
treated for all corporate purposes at any time after the Effective Time to
evidence the ownership of the number of shares of CHC into which such shares of
CheckFree were converted pursuant to Section 2.1.2 herein.
2.3 CheckFree Stock Transfer Books. At the Effective Time, the stock
transfer books for the shares of CheckFree Common Stock which will be converted
to CHC Common Stock pursuant to Section 2.1 hereof shall be deemed closed, and
no transfer of such shares shall thereafter be made or consummated.
2.4 Other Agreements. At the Effective Time, CHC shall assume any
obligation of CheckFree to deliver or make available shares of CheckFree Common
Stock under any agreement, including but not limited to, all warrants and option
agreements, or employee benefit plan not specifically referred to in this
Section 2 to which CheckFree or any of its subsidiaries is a party. Any
reference to CheckFree Common Stock under any such agreement or employee benefit
plan shall be deemed to be a reference to CHC Common Stock and one share of CHC
Common Stock shall be issuable in lieu of each share of CheckFree Common Stock
required to be issued by any such agreement or employee benefit plan, subject to
subsequent adjustment as provided in any such agreement or employee benefit
plan.
3. COMPLIANCE WITH SECTION 251(G) OF THE DGCL
Prior to the Effective Time, the parties hereto will take all steps
necessary to comply with Section 251(g) of the DGCL, including without
limitation, the following:
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3.1 Certificate of Incorporation and By-Laws of CHC. At the Effective
Time, the Certificate of Incorporation and By-Laws of CHC shall be in the form
of the Certificate of Incorporation and By-Laws of CheckFree, as in effect
immediately prior to the Effective Time.
3.2 Directors and Officers of CHC. At the Effective Time, the directors
of CheckFree immediately prior to the Effective Time shall be the directors of
CHC until their successors are elected and qualified. The officers of CHC will
be substantially similar to the officers of CheckFree immediately prior to the
Effective Time, to serve at the pleasure of the Board of Directors of CHC.
3.3 Listing of CHC Common Stock. The CHC Common Stock to be issued and
initially reserved for issuance pursuant to the transactions contemplated herein
shall have been approved for quotation, upon official notice of issuance, by the
Nasdaq National Market.
3.4 Filings. At the Effective Time, the Surviving Corporation shall
cause a certified copy of this Agreement to be executed and filed with the
Delaware Secretary of State. At the Effective Time, to the extent necessary to
effectuate the amendments to the certificates of incorporation of the Surviving
Corporation and CHC contemplated by this Agreement, each of the Surviving
Corporation and CHC shall cause to be filed with the Delaware Secretary of State
such certificates or documents required to give effect thereto.
4. MISCELLANEOUS.
4.1 Amendment. At any time prior to the Effective Time, the parties
hereto may, to the extent permitted by the DGCL, by written agreement amend,
modify or supplement any provision of this Agreement.
4.2 Termination. This Agreement may be terminated and the Merger
abandoned by the Board of Directors or duly authorized committees thereof of
CheckFree at any time prior to the filing of the certified copy of this
Agreement with the Delaware Secretary of State.
4.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State.
4.4 Headings. The headings set forth herein are for convenience only
and shall not be used in interpreting the text of the section in which they
appear.
4.5 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
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IN WITNESS WHEREOF, CheckFree, CHC, and Merger Sub, pursuant to the
approval and authority duly given by resolutions adopted by their respective
Boards of Directors, have caused this Agreement to be executed as of the date
first above written by their respective officers thereunto duly authorized.
CHECKFREE CORPORATION
/s/ Peter J. Kight
--------------------------------------------
Name: Peter J. Kight
Title: President and Chief Executive Officer
CHECKFREE MERGER CORPORATION
/s/ Peter J. Kight
--------------------------------------------
Name: Peter J. Kight
Title: President and Chief Executive Officer
CHECKFREE HOLDINGS CORPORATION
/s/ Peter J. Kight
--------------------------------------------
Name: Peter J. Kight
Title: President and Chief Executive Officer
CERTIFICATE OF SECRETARY
The undersigned, Secretary of Checkfree Corporation , a corporation
organized and existing under the laws of the State of Delaware (the
"Corporation"), hereby certifies that the Agreement and Plan of Merger (the
"Agreement") to which this Certificate is attached has been executed on behalf
of the Corporation by Peter J. Kight, President and Chief Executive Officer, on
behalf of CheckFree Merger Corporation, a Delaware corporation by Peter J.
Kight, President and Chief Executive Officer, and on behalf of the CheckFree
Holdings Corporation, a Delaware corporation by Peter J. Kight, President and
Chief Executive Officer. The Agreement has been adopted by the Board of
Directors of the Corporation pursuant to Section 251(g) of the Delaware General
Corporation Law and the conditions specified in the first sentence of such
subsection have been satisfied.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
the of this 22nd day of December, 1997.
/s/ Curtis A. Loveland
--------------------------------------------
Curtis A. Loveland, Secretary
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EXHIBIT 3(a)
RESTATED CERTIFICATE OF INCORPORATION
OF
CHECKFREE HOLDINGS CORPORATION
* * * * * * * * * * * * * * * * * *
The above corporation, CheckFree Holdings Corporation (the
"Corporation"), existing pursuant to the General Corporation Law of the State of
Delaware, desiring to give notice of corporate action effectuating the
restatement and amendment of its Certificate of Incorporation, sets forth the
following facts:
(i) The date of filing of the Corporation's original Certificate of
Incorporation was December 15, 1997;
(ii) The Corporation's present name is CheckFree Holdings Corporation;
(iii) This Restated Certificate of Incorporation was duly adopted in
accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware; and
(iv) The exact text of the Restated Certificate of Incorporation is
amended to read as follows:
FIRST: The name of the Corporation is CheckFree Holdings Corporation.
SECOND: The address of its registered office in the State of Delaware is No.
1209 Orange Street, in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: (A) Aggregate Number of Shares. The aggregate number of shares of stock
which the Corporation shall have authority to issue is 165,000,000 shares,
consisting of 150,000,000 shares of common stock, $.01 par value (the "Common
Stock"), 13,500,000 shares of preferred stock, $.01 par value (the "Preferred
Stock"), and 1,500,000 shares of Series A Junior Participating Cumulative
Preferred Stock, $.01 par value ("Series A Preferred Stock").
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(B) Common Shares. Each holder of Common Stock shall be
entitled to one vote for each share of Common Stock held of record on all
matters presented for vote of the stockholders. Subject to the provisions of the
General Corporation Law of the State of Delaware, dividends may be paid on the
Common Stock at such times and in such amounts as the Board of Directors shall
determine. Upon the dissolution, liquidation, or winding up of the Corporation,
after any preferential amounts to be distributed to the holders of the Preferred
Stock then outstanding have been paid or declared set apart for payment, the
holders of Common Stock shall be entitled to receive all remaining assets of the
Corporation available for distribution to its stockholders ratably and
proportioned to the number of shares held by them.
(C) Preferred Stock. The shares of Preferred Stock may be
issued from time to time in one or more series. The Board of Directors of the
Corporation is hereby authorized to establish from time to time by resolution or
resolutions the number of shares to be included in each such series and to fix
the designation, powers, preferences, and relative participating, optional,
conversion, and other special rights of the shares of each such series and the
qualifications, limitations, or restrictions thereof, including but not limited
to the fixing of dividend rights, rates, preferences, and other terms;
redemption rights, prices, and other terms (including any sinking fund
provisions); conversion rights, prices or rates of exchange, and other terms;
liquidation preferences and other terms; and voting rights in addition to any
voting rights provided by law, and other terms, which may be general or limited;
all to the fullest extent now or hereafter permitted by the General Corporation
Law of the State of Delaware; and to increase or decrease the number of shares
of any series subsequent to the issue of shares of that series, but not below
the number of shares of such series then outstanding. In the event the number of
shares of any series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
(D) Series A Junior Participating Cumulative Preferred Stock.
Section 1. Designation and Amount. The shares of such series
shall be designated as Series A Junior Participating Cumulative Preferred Stock,
par value $.01 per share (the "Series A Preferred Stock"), and the number of
shares constituting such series shall be 1,500,000 (one million five hundred
thousand).
Section 2. Dividends and Distributions.
(a) The holders of shares of Series A Preferred Stock, in preference to
the holders of shares of Common Stock, par value $.01 per share, of the
Corporation (the "Common Stock") and of any other junior stock of the
Corporation that may be outstanding, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
tenth day of January, April, July and October in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or
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fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (i) $.25 per
share ($1.00 per annum), or (ii) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock,
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In the
event that the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then and in each such event,
the amount to which the holder of each share of Series A Preferred
Stock was entitled immediately prior to such event under clause (ii) of
the preceding sentence shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event, and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (a) of this Section 2
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock);
provided, however, that in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $.25 per share ($1.00 per annum)
on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to
the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which cases such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall cumulate but shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends
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at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(a) Each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes (and each one one-hundredth of a share of Series A
Preferred Stock shall entitle the holder thereof to one vote) on all
matters submitted to a vote of the stockholders of the Corporation. In
the event that the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then and in each such event, the number of
votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event, and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided in the Restated Certificate of
Incorporation of the Corporation or herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(c) In addition, the holders of shares of Series A Preferred Stock
shall have the following special voting rights:
(i) In the event that at any time dividends on Series A
Preferred Stock, whenever accrued and whether or not
consecutive, shall not have been paid or declared and a sum
sufficient for the payment thereof set aside, in an amount
equivalent to six quarterly dividends on all shares of Series
A Preferred Stock at the time outstanding, then and in each
such event, the holders of shares of Series A Preferred Stock
and each other series of preferred stock now or hereafter
issued that shall be accorded such class voting right by the
Board of Directors and that shall have the right to elect one
director (or, in the event any such other series is entitled
to a greater number of directors,
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such number of directors, which shall be cumulative with and
not in addition to the director provided for herein, such
director or directors being hereinafter referred to as
"Special Directors") as the result of a prior or subsequent
default in payment of dividends on such series (each such
other series being hereinafter called "Other Series of
Preferred Stock"), voting separately as a class without regard
to series, shall be entitled to elect the Special Director at
the next annual meeting of stockholders of the Corporation, in
addition to the directors to be elected by the holders of all
shares of the Corporation entitled to vote for the election of
directors, and the holders of all shares (including the Series
A Preferred Stock) otherwise entitled to vote for directors,
voting separately as a class, shall be entitled to elect the
remaining members of the Board of Directors, provided that the
Series A Preferred Stock and each Other Series of Preferred
Stock, voting as a class, shall not have the right to elect
more than one Special Director (in addition to any Special
Director to which the holders of any Other Series of Preferred
Stock are then entitled). Such special voting right of the
holders of shares of Series A Preferred Stock may be exercised
until all dividends in default on the Series A Preferred Stock
shall have been paid in full or declared and funds sufficient
therefor set aside, and when so paid or provided for, such
special voting right of the holders of shares of Series A
Preferred Stock shall cease, but subject always to the same
provisions for the vesting of such special voting rights in
the event of any such future dividend default or defaults.
(ii) At any time after such special voting rights shall have
so vested in the holders of shares of Series A Preferred
Stock, the President or the Secretary of the Corporation may,
and upon the written request of the holders of record of 10%
or more in number of the shares of Series A Preferred Stock
and each Other Series of Preferred Stock then outstanding
addressed to the Secretary at the principal executive office
of the Corporation shall, call a special meeting of the
holders of shares of Preferred Stock so entitled to vote, for
the election of the Special Directors to be elected by them as
herein provided, to be held within 60 days after such call and
at the place and upon the notice provided by law and in the
By-laws for the holding of meetings of stockholders; provided,
however, that the President or the Secretary shall not be
required to call such special meeting in the case of any such
request received less than 90 days before the date fixed for
any annual meeting of stockholders, and if in such case such
special meeting is not called or held, the holders of shares
of Preferred Stock so entitled to vote shall be entitled to
exercise the special voting
5
<PAGE> 6
rights provided in this paragraph at such annual meeting. If
any such special meeting required to be called as above
provided shall not be called by the President or the Secretary
within 30 days after receipt of any such request, then the
holders of record of 10% or more in number of the shares of
Series A Preferred Stock and each Other Series of Preferred
Stock then outstanding may designate in writing one of their
number to call such meeting, and the person so designated may,
at the expense of the Corporation, call such meeting to be
held at the place and upon the notice given by such person,
and for that sole purpose shall have access to the stock books
of the Corporation. No such special meeting and no adjournment
thereof shall be held on a date later than 60 days before the
annual meeting of stockholders. If, at any meeting so called
or at any annual meeting held while the holders of shares of
Series A Preferred Stock have the special voting rights
provided for in this paragraph, the holders of not less than
40% of the aggregate voting power of Series A Preferred Stock
and each Other Series of Preferred Stock then outstanding are
present in person or by proxy, which percentage shall be
sufficient to constitute a quorum for the election of
additional directors as herein provided, the then authorized
number of directors of the Corporation shall be increased by
the number of Special Directors to be elected, as of the time
of such special meeting or the time of the first such annual
meeting held while such holders have special voting rights and
such quorum is present, and the holders of shares of Series A
Preferred Stock and each Other Series of Preferred Stock,
voting as a class, shall be entitled to elect the Special
Director or Directors so provided for. If the directors of the
Corporation are then divided into classes under provisions of
the Restated Certificate of Incorporation of the Corporation
or the By-laws, the Special Director or Directors shall belong
to each class of directors in which a vacancy is created as a
result of such increase in the authorized number of directors.
If the foregoing expansion of the size of the Board of
Directors shall not be valid under applicable law, then the
holders of shares of Series A Preferred Stock and of each
Other Series of Preferred Stock, voting as a class, shall be
entitled, at the meeting of stockholders at which they would
otherwise have voted, to elect a Special Director or Directors
to fill any then existing vacancies on the Board of Directors,
and shall additionally be entitled, at such meeting and each
subsequent meeting of stockholders at which directors are
elected, to elect all of the directors then being elected
until by such class vote the appropriate number of Special
Directors has been so elected.
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<PAGE> 7
(iii) Upon the election at such meeting by the holders of
shares of Series A Preferred Stock and each Other Series of
Preferred Stock, voting as a class, of the Special Director or
Directors they are entitled so to elect, the persons so
elected, together with such persons as may be directors or as
may have been elected as directors by the holders of all
shares (including Series A Preferred Stock) otherwise entitled
to vote for directors, shall constitute the duly elected
directors of the Corporation. Each Special Director so elected
by holders of shares of Series A Preferred Stock and each
Other Series of Preferred Stock, voting as a class, shall
serve until the next annual meeting or until their respective
successors shall be elected and qualified, or if any such
Special Director is a member of a class of directors under
provisions dividing the directors into classes, each such
Special Director shall serve until the annual meeting at which
the term of office of such Special Director's class shall
expire or until such Special Director's successor shall be
elected and shall qualify, and at each subsequent meeting of
stockholders at which the directorship of any Special Director
is up for election, said special class voting rights shall
apply in the reelection of such Special Director or in the
election of such Special Director's successor; provided,
however, that whenever the holders of shares of Series A
Preferred Stock and each Other Series of Preferred Stock shall
be divested of the special rights to elect one or more Special
Directors as above provided, the terms of office of all
persons elected as Special Directors, or elected to fill any
vacancies resulting from the death, resignation, or removal of
Special Directors shall forthwith terminate (and the number of
directors shall be reduced accordingly).
(iv) If, at any time after a special meeting of stockholders
or an annual meeting of stockholders at which the holders of
shares of Series A Preferred Stock and each Other Series of
Preferred Stock, voting as a class, have elected one or more
Special Directors as provided above, and while the holders of
shares of Series A Preferred Stock and each Other Series of
Preferred Stock shall be entitled so to elect one or more
Special Directors, the number of Special Directors who have
been so elected (or who by reason of one or more resignations,
deaths or removals have succeeded any Special Directors so
elected) shall by reason of resignation, death or removal be
reduced the vacancy in the Special Directors may be filled by
any one or more remaining Special Director or Special
Directors. In the event that such election shall not occur
within 30 days after such vacancy arises, or in the event that
there shall not be incumbent at least one Special Director,
the President or the Secretary of the
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<PAGE> 8
Corporation may, and upon the written request of the holders
of record of 10% or more in number of the shares of Series A
Preferred Stock and each Other Series of Preferred Stock then
outstanding addressed to the Secretary at the principal office
of the Corporation shall, call a special meeting of the
holders of shares of Series A Preferred Stock and each Other
Series of Preferred Stock so entitled to vote, for an election
to fill such vacancy or vacancies, to be held within 60 days
after such call and at the place and upon the notice provided
by law and in the By-laws for the holding of meetings of
stockholders; provided, however, that the President or the
Secretary shall not be required to call such special meeting
in the case of any such request received less than 90 days
before the date fixed for any annual meeting of stockholders,
and if in such case such special meeting is not called, the
holders of shares of Preferred Stock so entitled to vote shall
be entitled to fill such vacancy or vacancies at such annual
meeting. If any such special meeting required to be called as
above provided shall not be called by the President or the
Secretary within 30 days after receipt of any such request,
then the holders of record of 10% or more in number of the
shares of Series A Preferred Stock and each Other Series of
Preferred Stock then outstanding may designate in writing one
of their number to call such meeting, and the person so
designated may, at the expense of the Corporation, call such
meeting to be held at the place and upon the notice above
provided, and for that purpose shall have access to the stock
books of the Corporation; no such special meeting and no
adjournment thereof shall be held on a date later than 60 days
before the annual meeting of stockholders.
(d) Nothing herein shall prevent the directors or stockholders from
taking any action to increase the number of authorized shares of Series
A Preferred Stock, or increasing the number of authorized shares of
Preferred Stock of the same class as the Series A Preferred Stock or
the number of authorized shares of Common Stock, or changing the par
value of the Common Stock or Preferred Stock, or issuing options,
warrants or rights to any class of stock of the Corporation as
authorized by the Restated Certificate of Incorporation of the
Corporation, as it may hereafter be amended.
(e) Except as set forth herein, holders of shares of Series A Preferred
Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote as set
forth in the Restated Certificate of Incorporation of the Corporation
or herein or by law) for taking any corporate action.
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<PAGE> 9
Section 4. Certain Restrictions.
(a) Whenever any dividends or other distributions payable on the Series
A Preferred Stock as provided in Section 2 hereof are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall
not, directly or indirectly:
(i) declare or pay dividends on, or make any other
distributions with respect to, any shares of stock ranking
junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions with respect to, any shares of stock ranking on
a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on shares of the Series A
Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except
in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration,
directly or indirectly, any shares of stock of the Corporation unless
the Corporation could, under paragraph (a) of this Section 4, purchase
or otherwise acquire such shares at such time and in such manner.
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<PAGE> 10
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of preferred stock, without designation as to series, and may be
reissued as part of any series of preferred stock created by resolution or
resolutions of the Board of Directors (including Series A Preferred Stock),
subject to the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made to:
(a) the holders of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares
of Series A Preferred Stock shall have received the greater of (i)
$1.00 per share ($.001 per one one-hundredth of a share), plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, or (ii) an
aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock; or
(b) the holders of shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all other such parity stock in proportion
to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up.
In the event that the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then and in each such event, the aggregate amount to
which the holder of each share of Series A Preferred Stock was entitled
immediately prior to such event under the proviso in clause (a) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event, and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In the event that the
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, or otherwise
changed, then and in each such event, the shares of Series A Preferred Stock
shall at the same time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of stock, securities,
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<PAGE> 11
cash and/or any other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged. In the event
that the Corporation shall at any time declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise) into a greater or lesser number of shares of Common Stock, then
and in each such event, the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event, and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable. Notwithstanding the foregoing, the Corporation
may acquire shares of Series A Preferred Stock in any other manner permitted by
law, the Restated Certificate of Incorporation of the Corporation or herein.
Section 9. Rank. Unless otherwise provided in the Restated
Certificate of Incorporation of the Corporation or a Certificate of Designations
relating to a subsequent series of preferred stock of the Corporation, the
Series A Preferred Stock shall rank junior to all other series of the
Corporation's preferred stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up, and senior to
the Common Stock of the Corporation.
Section 10. Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be amended in any manner that would
materially and adversely alter or change the powers, preferences or special
rights of the Series A Preferred Stock without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series A Preferred
Stock, voting together as a single series.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share (in one one-hundredths (1/100) of a share and
integral multiples thereof) that shall entitle the holder thereof, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and have the benefit of all other rights
of holders of shares of Series A Preferred Stock.
FIFTH: (A) Nominations for election of directors shall be made in the
manner provided by the By-Laws of the Corporation. The number of directors of
the Corporation shall be fixed by or pursuant to the By-Laws of the Corporation.
(B) The directors shall be divided into three classes, Class
I, Class II, and Class III. Each such class shall consist, as nearly as
possible, of one-third of the total number of directors and any remaining
directors shall be included within each such class or classes as the Board of
Directors shall designate. Class I directors shall hold office initially for a
term expiring at the 1999 annual meeting of stockholders, Class II directors
shall hold office initially for a term expiring at the
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<PAGE> 12
2000 annual meeting of stockholders; and Class III directors shall hold office
initially for a term expiring at the 1998 annual meeting of stockholders. At
each annual meeting of stockholders, successors to the class of directors whose
term expires at that annual meeting shall be elected to hold office for a
three-year term. If the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible. A director shall hold office, subject
to any removal, death, resignation, or retirement until the annual meeting for
the year in which his term expires and until his successor shall be elected and
qualify.
(C) Notwithstanding any other provision of this Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding the fact
that some lesser percentage may be specified by the General Corporation Law of
the State of Delaware, this Certificate of Incorporation or the By-Laws of the
Corporation), any director or the entire board of directors of the Corporation
may be removed from office at any time, but only for cause and only by the
affirmative vote of the holders of at least eighty (80%) of all of the
outstanding shares of capital stock of the Corporation entitled to vote on the
election of directors at a meeting of stockholders called for that purpose,
except that if the Board of Directors, by an affirmative vote of at least
sixty-six and two-thirds (66-2/3%) of the entire Board of Directors, recommends
removal of a director to the stockholders, such removal may be effected by the
affirmative vote of the holders of at least a majority of the outstanding shares
of capital stock of the Corporation present in person or represented by proxy
and entitled to vote on the election of directors at a meeting of stockholders
called for that purpose.
(D) Vacancies and newly-created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, although less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of the class to
which they have been elected expires and until their successors are duly elected
and qualified. If there are no directors in office, then an election of
directors may be held in the manner provided by the General Corporation Law of
the State of Delaware.
(E) Notwithstanding the foregoing, whenever the holders of any
one or more classes or series of Preferred Stock issued by this Corporation
shall have the right, voting separately by class or series, to elect directors
at an annual or special meeting of stockholders, the election, term of office,
filling of vacancies, terms of removal, and other features of such directorships
shall be governed by the terms of Article FOURTH and the resolution or
resolutions establishing such class or series adopted pursuant thereto and such
directors so elected shall not be divided into classes pursuant to this Article
FIFTH unless expressly provided by such terms.
(F) Elections of directors need not be by written ballot
unless the By-Laws of the Corporation shall so provide.
SIXTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, alter, or
repeal the By-Laws of the Corporation.
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SEVENTH: The Board of Directors shall base the response of the
Corporation to any "Acquisition Proposal" on the Board of Directors' evaluation
of what is in the best interest of the Corporation. In evaluating what is in the
best interest of the Corporation, the Board of Directors shall consider all
relevant factors including, without limitation:
(1) The best interest of the stockholders which, for this
purpose, requires the Board of Directors to consider, among other
factors, not only the consideration offered in the Acquisition Proposal
in relation to the then current market price of the Corporation's
stock, but also in relation to the current value of the Corporation in
a freely negotiated transaction and in relation to the Board of
Directors' then estimate of the future value of the Corporation as an
independent entity or as the subject of a future Acquisition Proposal;
(2) Such other factors as the Board of Directors determines to
be relevant, including, among other factors, the long-term and
short-term interests of the Corporation and its subsidiaries and their
businesses and properties and the social, legal, and economic effects
upon the employees, suppliers, customers, creditors, and other affected
persons, firms, and corporations and on the communities and
geographical areas in which the Corporation and its subsidiaries
operate or are located.
"Acquisition Proposal" means any proposal for the consolidation or
merger of the Corporation with another corporation, any share exchange involving
the Corporation's outstanding capital stock, any liquidation or dissolution of
the Corporation, any transfer of all or a material portion of the assets of the
Corporation, and any tender offer or exchange offer for any of the Corporation's
outstanding stock.
EIGHTH: No director of the Corporation shall be personally liable to
the Corporation or to its stockholders for monetary damages for breach of
fiduciary duty as a director; provided, however, that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or to its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) for the payment of a dividend or the payment for
the purchase or redemption of the Corporation's stock in violation of Section
174 of the General Corporation Law of the State of Delaware; or (iv) for any
transaction from which the director derived an improper personal benefit.
NINTH: The Corporation is to have perpetual existence.
TENTH: (A) Any action required to be taken at any annual or special
meeting of stockholders of the Corporation, or any action which may be taken at
any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by all of the holders of
outstanding stock who would be entitled to notice of such meeting.
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(B) Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the General Corporation Law of
the State of Delaware) outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the By-Laws
of the Corporation.
ELEVENTH: (A) The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by the General Corporation Law of the State
of Delaware, and all rights conferred upon stockholders herein are granted
subject to this reservation and subject to paragraph (B) below.
(B) The provisions set forth in this Article ELEVENTH and in
Article FIFTH, SIXTH, SEVENTH, EIGHTH, and TENTH (A) of this Certificate of
Incorporation may not be altered, amended or repealed in any respect, and new
provisions inconsistent therewith may not be adopted unless such action is
approved by the affirmative vote of the holders of at least eighty (80%) of all
of the outstanding shares of capital stock of the Corporation entitled to vote
on such matter at a meeting of stockholders called for that purpose, except that
if the Board of Directors, by an affirmative vote of at least sixty-six and
two-thirds (66-2/3%) of the entire Board of Directors, recommends approval of
such amendment to this Certificate of Incorporation to the stockholders, such
approval may be effected by the affirmative vote of the holders of at least a
majority of the outstanding shares of capital stock of the Corporation present
in person or represented by proxy and entitled to vote on such matter at a
meeting of stockholders called for that purpose.
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IN WITNESS WHEREOF, CheckFree Holdings Corporation has caused this
Restated Certificate of Incorporation to be signed by Peter J. Kight, its
President, and attested by Curtis A. Loveland, its Secretary, this 22nd day
of December, 1997.
/s/ Peter J. Kight
-----------------------------------
Peter J. Kight, President
Attest:
/s/ Curtis A. Loveland
- -------------------------------
Curtis A. Loveland, Secretary
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EXHIBIT 3(b)
BY-LAWS
OF
CHECKFREE HOLDINGS CORPORATION
A DELAWARE CORPORATION
AS OF DECEMBER 15, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I OFFICES..................................................................................... 1
Section 1. Registered Office.......................................................................... 1
Section 2. Other Offices.............................................................................. 1
ARTICLE II MEETINGS OF STOCKHOLDERS.................................................................... 1
Section 1. Place...................................................................................... 1
Section 2. Annual Meeting............................................................................. 1
Section 3. Notice of Annual Meeting................................................................... 1
Section 4. List of Stockholders....................................................................... 1
Section 5. Special Meetings........................................................................... 1
Section 6. Notice of Special Meetings................................................................. 2
Section 7. Business at Annual or Special Meetings..................................................... 2
Section 8. Quorum..................................................................................... 2
Section 9. Voting Power............................................................................... 3
Section 10. Votes; Proxies.............................................................................. 3
ARTICLE III DIRECTORS................................................................................... 3
Section 1. Nominations for Election of Directors...................................................... 3
Section 2. Number of Directors........................................................................ 4
Section 3. Powers of Board of Directors............................................................... 4
Section 4. Place of Meetings.......................................................................... 4
Section 5. Organizational Meetings.................................................................... 5
</TABLE>
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<TABLE>
<S> <C> <C>
Section 6. Regular Meetings........................................................................... 5
Section 7. Special Meetings........................................................................... 5
Section 8. Quorum..................................................................................... 5
Section 9. Actions by Unanimous Written Consent....................................................... 5
Section 10. Participation by Telephonic Communications.................................................. 5
Section 11. Designation of Committees................................................................... 6
Section 12. Minutes of Committee Meetings............................................................... 6
Section 13. Compensation and Expenses of Directors...................................................... 6
ARTICLE IV NOTICES..................................................................................... 6
Section 1. Manner of Notices.......................................................................... 6
Section 2. Waiver of Notices.......................................................................... 7
ARTICLE V OFFICERS.................................................................................... 7
Section 1. Designations of Officers................................................................... 7
Section 2. Election of Officers....................................................................... 7
Section 3. Other Officers............................................................................. 7
Section 4. Salaries of Officers....................................................................... 7
Section 5. Terms of Office............................................................................ 7
Section 6. Duties of Chairman of the Board............................................................ 7
Section 7. Authority of Chairman of the Board to Execute Documents.................................... 8
Section 8. Duties of the President.................................................................... 8
Section 9. Duties of the Vice-Presidents.............................................................. 8
</TABLE>
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<TABLE>
<S> <C> <C>
Section 10. Duties of the Secretary..................................................................... 8
Section 11. Duties of the Assistant Secretary........................................................... 8
Section 12. Duties of the Treasurer..................................................................... 9
Section 13. Further Duties of the Treasurer............................................................. 9
Section 14. Bond........................................................................................ 9
Section 15. Assistant Treasurer......................................................................... 9
ARTICLE VI CERTIFICATE OF STOCK........................................................................ 9
Section 1. Certificates............................................................................... 9
Section 2. Facsimile Signatures....................................................................... 9
Section 3. Lost Certificates.......................................................................... 10
Section 4. Transfer of Stock.......................................................................... 10
Section 5. Fixing Record Date......................................................................... 10
Section 6. Registered Stockholders.................................................................... 10
ARTICLE VII GENERAL PROVISIONS; DIVIDENDS............................................................... 11
Section 1. Dividend................................................................................... 11
Section 2. Reserves................................................................................... 11
Section 3. Annual Statement........................................................................... 11
Section 4. Checks..................................................................................... 11
Section 5. Fiscal Year................................................................................ 11
Section 6. Seal....................................................................................... 11
ARTICLE VIII AMENDMENTS.................................................................................. 11
Section 1. Amendments; Approval....................................................................... 11
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE IX INDEMNIFICATION OF DIRECTORS AND OFFICERS................................................... 12
Section 1. Grant of Indemnification................................................................... 12
Section 2. Non-Exclusivity............................................................................ 13
Section 3. Burden of Proof............................................................................ 13
Section 4. Advancement of Expenses.................................................................... 13
Section 5. Insurance, Contracts, and Funding.......................................................... 13
Section 6. Severability; Statutory Alternative.......................................................... 14
Section 7. Procedures; Presumptions, and Effect of Certain Proceedings; Remedies........................ 14
Section 8. Definitions.................................................................................. 17
Section 9. Acts of Disinterested Directors.............................................................. 18
</TABLE>
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ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place. All meetings of the stockholders shall be held at
such place either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting.
Section 2. Annual Meeting. Annual meetings of stockholders shall be
held on such date and time as shall be designated from time to time by the Board
of Directors and stated in the notice of the meeting, at which they shall elect
a Board of Directors, and transact such other business as may properly be
brought before the meeting.
Section 3. Notice of Annual Meeting. Written notice of the annual
meeting stating the place, date, and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting.
Section 4. List of Stockholders. The Corporation shall prepare and
make, at least ten days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
Corporation's principal office. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof and may be inspected
by any stockholder who is present.
Section 5. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the president and shall be called
by the president or secretary at the request in writing of two-thirds of the
Board of Directors. Such request shall state the purpose or purposes of the
proposed meeting.
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Section 6. Notice of Special Meetings. Written notice of a special
meeting stating the place, date, and hour of the meeting, and the purpose or
purposes for which the meeting is called, shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting.
Section 7. Business at Annual or Special Meetings. At an annual or
special meeting of stockholders, only such business shall be conducted, and only
such proposals shall be acted upon, as shall have been properly brought before
such meeting. To be properly brought before a meeting of stockholders, business
must be (i) in the case of an annual meeting, properly brought before the
meeting by or at the direction of the Board of Directors, (ii) in the case of a
special meeting, specified in the notice of the special meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, or
(iii) otherwise properly brought before the meeting by a stockholder and
specified in the notice of the special meeting (or any supplement thereto). For
business to be properly brought before a meeting of stockholders by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 70 days nor more than 90 days prior to the date of an
annual meeting of stockholders or, if a special meeting, not later than the
close of business on the 7th day following the earlier of (i) the day on which
such notice of the date of the meeting was mailed, or (ii) the day on which
public disclosure of the date of the special meeting was made.
A shareholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before a meeting of stockholders, (i) a
brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (ii) the name and
address, as they appear on the Corporation's books, of the stockholder proposing
such business and any stockholders known by such stockholder to be supporting
such proposal, (iii) the class and number of shares of the Corporation which are
beneficially owned by the stockholder on the date of such stockholder's notice
and by any other stockholders known by such stockholder to be supporting such
proposal on the date of such stockholder's notice, and (iv) any material
interest of the stockholder in such proposal.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be conducted at a meeting of stockholders except in accordance with the
procedures set forth in this Section 7. The chairman of the stockholder meeting
shall, if the facts warrant, determine and declare to the meeting that the
business was not properly brought before the meeting in accordance with the
procedures prescribed by these By-Laws, and if he should so determine, he shall
so declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.
Section 8. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or
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represented by proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified. If the adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 9. Voting Power. When a quorum is present at any meeting, the
vote of the holders of a majority of the stock having voting power, present in
person or represented by proxy, shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the Certificate of Incorporation or By-Laws a different vote is
required in which case such express provision shall govern and control the
decision of such question.
Section 10. Votes; Proxies. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted on after eleven months from its date, unless the proxy provides for a
longer period.
ARTICLE III
DIRECTORS
Section 1. Nominations for Election of Directors. (A) Only persons
nominated in accordance with the procedures set forth in this Section 1 shall be
eligible for election as directors. Nominations of persons for election to the
Board of Directors of the Corporation may be made at a meeting of stockholders
by or at the direction of the Board of Directors or by any stockholder of the
Corporation entitled to vote for the election of directors at such a meeting who
complies with the notice procedures set forth in this Section 1. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 70 days nor more than 90 days prior to the date of an annual meeting
of stockholders or, if the election of directors is to take place at a special
meeting of stockholders, not later than the close of business on the 7th day
following the earlier of (i) the day on which such notice of the date of the
meeting was mailed or (ii) the day on which public disclosure of the date of the
special meeting was made.
A stockholder's notice to the Secretary shall set forth (i) as to each
person whom the stockholder proposes to nominate for election as a director, (a)
the name, age, business address, and residence address of such person, (b) the
principal occupation or employment of such person, (c) the class and number of
shares of the Corporation which are beneficially owned by such person on the
date of such stockholder's notice, (d) a description of all arrangements or
understandings between
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the person being nominated and the stockholder giving the notice and all other
stockholders known by such stockholder to be supporting the person being
nominated, and (e) any other information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities and Exchange Act of 1934, as amended, or any successor act or
regulation (including without limitation such person's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected); and (ii) as to the stockholder giving the notice, (a) the name and
address, as they appear on the Corporation's books, of the stockholder and any
other stockholders known by such stockholder to be supporting such nominees, and
(b) the class and number of shares of the Corporation which are beneficially
owned by such stockholder on the date of such stockholder's notice and by any
other stockholders known by such stockholder to be supporting such nominees on
the date of such stockholder's notice. The Corporation may require any proposed
nominee to furnish such other information as may be reasonably required by the
Corporation to determine the qualifications of such proposed nominee to serve as
a director of the Corporation.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 1; provided, however, that the provisions of this Section 1 shall not
apply to the nomination of any person entitled to be separately elected as a
director by the holders of preferred stock, if any, of the Corporation. The
chairman of the stockholders meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by these By-Laws, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.
(B) At all elections of directors the candidates receiving the greatest
number of votes shall be elected.
Section 2. Number of Directors. The number of directors of the
Corporation shall be not less than three (3) nor more than fifteen (15). The
number of directors shall be as provided from time to time in these By-Laws and
is hereby fixed at seven (7), provided that no amendment to the By-Laws
decreasing the number of directors shall have the effect of shortening the term
of any incumbent director, and provided further that no action shall be taken by
the directors (whether through amendment of these By-Laws or otherwise) to
increase the number of directors as provided in the By-Laws from time to time
unless at least two-thirds (66 2/3%) of the directors then in office shall
concur in that action. Directors need not be stockholders.
Section 3. Powers of Board of Directors. The business of the
Corporation shall be managed by or under the direction of its Board of Directors
which may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of Incorporation or
by these By-Laws directed or required to be exercised or done by the
stockholders.
Section 4. Place of Meetings. The Board of Directors of the Corporation
may hold meetings, both regular and special, either within or without the State
of Delaware.
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Section 5. Organizational Meetings. The first meeting of each newly
elected Board of Directors shall be held immediately after the annual meeting of
stockholders at the same place as such annual meeting is held and no notice of
such meeting shall be necessary to the newly elected directors in order legally
to constitute the meeting, provided a quorum shall be present. In the event such
meeting is not held at the time and place provided herein, the meeting may be
held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors, or as shall
be specified in a written waiver signed by all of the directors.
Section 6. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors.
Section 7. Special Meetings. Special meetings of the Board of
Directors may be called by the chairman of the board or the president and shall
be called by the chairman of the board or the president or the secretary on the
written request of a majority of the directors. Notice of special meetings of
the Board of Directors shall be given to each director (i) in a writing mailed
not less than three days before such meeting addressed to the residence or usual
place of business of a director, (ii) by facsimile or telegram sent not less
than two days before such meeting to the residence or usual place of business of
a director, or (iii) delivered in person or by telephone not less than one day
before such meeting.
Section 8. Quorum. At all meetings of the Board of Directors a
majority of the directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the Certificate of
Incorporation. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 9. Actions by Unanimous Written Consent. Unless otherwise
restricted by the Certificate of Incorporation or these By-Laws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all members of the
Board of Directors or committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
Section 10. Participation by Telephonic Communications. Unless
otherwise restricted by the Certificate of Incorporation or these By-Laws,
members of the Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors, or any
committee, by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at the
meeting.
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Section 11. Designation of Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of not less than two directors of
the Corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease, or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution; and, unless the resolution or the Certificate of
Incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors.
Section 12. Minutes of Committee Meetings. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required.
Section 13. Compensation and Expenses of Directors. Unless otherwise
restricted by the Certificate of Incorporation or these By-Laws, the Board of
Directors shall have the authority to fix the compensation of directors. The
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
ARTICLE IV
NOTICES
Section 1. Manner of Notices. Whenever, under the provisions of the
statutes or of the Certificate of Incorporation or of these By-Laws, notice is
required to be given to any director or stockholder, it shall not be construed
to mean personal notice, but such notice may be given in
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writing, by mail, addressed to such director or stockholder, at his address as
it appears on the records of the Corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given by
telegram or telecopy.
Section 2. Waiver of Notices. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. Designations of Officers. The officers of the Corporation
shall be chosen by the Board of Directors and shall be a chairman of the board,
a president, a vice-president, a secretary, and a treasurer. The Board of
Directors may also choose additional vice-presidents (including senior,
executive, or assistant vice-presidents), and one or more assistant secretaries
and assistant treasurers. Any number of offices may be held by the same person,
unless the Certificate of Incorporation or these By-Laws otherwise provides.
Section 2. Election of Officers. The Board of Directors at its first
meeting after each annual meeting of stockholders shall choose a chairman, a
president, one or more vice-presidents, a secretary, and a treasurer.
Section 3. Other Officers. The Board of Directors may appoint such
other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
Section 4. Salaries of Officers. The salaries of all officers and
agents of the Corporation shall be fixed by the Board of Directors.
Section 5. Terms of Office. The officers of the Corporation shall hold
office until their successors are chosen and qualify. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. Any vacancy occurring
in any office of the Corporation shall be filled by the Board of Directors.
Section 6. Duties of Chairman of the Board. The chairman of the Board
of Directors shall be the chief executive officer of the Corporation and shall
have general control and management of the business affairs and policies of the
Corporation. He shall be generally responsible for the proper conduct of the
business of the Corporation. During the absence or disability of the president,
he shall exercise all the powers and discharge all the duties of the president.
He shall preside at all meetings of the stockholders and of the Board of
Directors at which he is present; and, in his
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absence, the president shall preside at such meetings. He shall have such other
powers and perform such other duties as from time to time may be conferred or
imposed upon him by the Board of Directors.
Section 7. Authority of Chairman of the Board to Execute Documents.
The chairman of the Board of Directors shall execute bonds, mortgages, and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation.
Section 8. Duties of the President. The president of the Corporation
shall be the principal operating and administrative officer of the Corporation.
If there is no chairman of the board or during the absence or disability of the
chairman of the board, he shall exercise all of the powers and discharge all of
the duties of the chairman of the board. He shall, in the absence of the
chairman of the board, possess power to sign all certificates, contracts, and
other instruments of the Corporation. He shall, in the absence of the chairman
of the board, preside at all meetings of the stockholders and of the Board of
Directors. He shall perform all such other duties as are incident to his office
or are properly required of him by the Board of Directors.
Section 9. Duties of the Vice-Presidents. In the absence of the
president or in the event of his inability or refusal to act, the vice-president
(or in the event there be more than one vice-president, the vice-presidents in
the order designated by the directors, or in the absence of any designation,
then in the order of their election) shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-presidents shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
Section 10. Duties of the Secretary. The secretary shall attend all
meetings of the Board of Directors and all meetings of the stockholders and
record all the proceedings of the meetings of the Corporation and of the Board
of Directors in a book to be kept for that purpose and shall perform like duties
for the standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or chief executive officer, under whose supervision he shall be. He
shall have custody of the corporate seal of the Corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest the affixing by his signature.
Section 11. Duties of the Assistant Secretary. The assistant secretary,
or if there be more than one, the assistant secretaries in the order determined
by the Board of Directors (or if there be no such determination, then in the
order of their election) shall, in the absence of the secretary or in the event
of his inability or refusal to act, perform the duties and exercise the powers
of the secretary
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and shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
Section 12. Duties of the Treasurer. The treasurer shall have the
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors.
Section 13. Further Duties of the Treasurer. The treasurer shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the chairman of the board, president, and the Board of Directors, at its regular
meetings or when the Board of Directors so requires, an account of all his
transactions as treasurer and of the financial condition of the Corporation.
Section 14. Bond. If required by the Board of Directors, the treasurer
shall give the Corporation a bond (which shall be renewed each year) in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation, retirement,
or removal from office, of all books, papers, vouchers, money, and other
property of whatever kind in his possession or under his control belonging to
the Corporation.
Section 15. Assistant Treasurer. The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election) shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate, signed by, or in the name of the
Corporation by, the chairman of the board or the president or a vice-president
and the treasurer or an assistant treasurer or the secretary or an assistant
secretary of the Corporation, certifying the number of shares owned by him in
the Corporation.
Section 2. Facsimile Signatures. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent, or registrar at the date of issue.
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Section 3. Lost Certificates. The Board of Directors (through the
Corporation's duly authorized officers) may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen, or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors (through the
Corporation's duly authorized officers) may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen, or destroyed certificate or certificates, or his legal representative,
to advertise the same in such manner as it shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, stolen, or destroyed.
Section 4. Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation, or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction upon its books.
Section 5. Fixing Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, entitled to express consent to
corporate action in writing without a meeting, entitled to receive payment of
any dividend or other distribution or allotment of any rights, entitled to
exercise any rights in respect of any change, conversion, or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and shall
not be more than sixty nor less than ten days before the date of any such
meeting, nor more than sixty days prior to any other action, provided that the
record date to determine stockholders entitled to consent in writing without a
meeting shall be not more than ten days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
Section 6. Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
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ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors to the extent permitted by
applicable law then in effect. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.
Section 2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, deem
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the directors shall deem conducive to the interest of
the Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 3. Annual Statement. The Board of Directors shall present at
each annual meeting, and at any special meeting of the stockholders when called
for by vote of the stockholders, a full and clear statement of the business and
condition of the Corporation.
Section 4. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the Corporation shall end on
June 30 of each year, unless otherwised fixed by resolution of the Board of
Directors.
Section 6. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
Section 1. Amendments; Approval. These By-Laws may be amended or
repealed or new provisions may be adopted by affirmative vote of the holders of
record of shares entitling them to exercise a majority of the voting power on
such proposal or by a majority vote of the Board of Directors when such power is
conferred upon the Board of Directors by the Certificate of Incorporation;
provided, however, that the provisions set forth in this Article VIII, in
Article II, Sections 5, 7, and 8, in Article III, Sections 1 and 2, and in
Article IX herein may not be altered, amended, or repealed in any respect, and
new provisions inconsistent therewith may not be adopted, unless such action is
approved by (i) the affirmative vote of the holders of at least eighty (80%) of
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all of the outstanding shares of capital stock of the Corporation entitled to
vote on such matter at a meeting of stockholders called for that purpose, except
that if the Board of Directors, by an affirmative vote of at least sixty-six and
two-thirds (66-2/3%) of the entire Board of Directors, recommends approval of
such amendment to these By-Laws to the stockholders, such approval may be
effected by the affirmative vote of the holders of at least a majority of the
outstanding shares of capital stock of the Corporation present in person or
represented by proxy and entitled to vote on such matter at a meeting of
stockholders called for that purpose or (ii) by an affirmative vote of at least
sixty-six and two-thirds (66-2/3%) of the entire Board of Directors when such
power is conferred upon the Board of Directors by the Certificate of
Incorporation.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Grant of Indemnification. The Corporation shall, to the
fullest extent permitted by applicable law as then in effect, indemnify any
person (the "indemnitee") who was or is involved in any manner (including,
without limitation, as a party or a witness) or was or is threatened to be made
so involved in any threatened, pending, or completed investigation, claim,
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, including, without limitation, any action or proceeding by or in
the right of the Corporation to procure a judgment in its favor (a
"Proceeding"), by reason of the fact that he is or was a director of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another Corporation, or of a partnership, joint venture,
trust, or other enterprise (including, without limitation, service with respect
to any employee benefit plan), whether the basis of any such Proceeding is
alleged action in an official capacity as director or officer or in any other
capacity while serving as a director or officer, against all expenses,
liability, and loss (including, without limitation attorneys' fees, judgments,
fines, ERISA excise taxes or penalties, and amounts paid or to be paid in
settlement) actually and reasonably incurred by him in connection with such
Proceeding. Such indemnification shall continue as to a person who has ceased to
be a director or officer and shall inure to the benefit of his heirs, executors,
administrators, and legal representatives. The right to indemnification
conferred in this Article shall include the right to receive payment of any
expenses incurred by the indemnitee in connection with such Proceeding in
advance of the final disposition of the Proceeding, consistent with applicable
law as then in effect. All rights to indemnification conferred in this Article,
including rights to the advancement of expenses and the evidentiary, procedural,
and other provisions of this Article, shall be contract rights. The Corporation
may, by action of its Board of Directors, provide indemnification for officers,
employees, agents, attorneys, and representatives of the Corporation with up to
the same scope and extent as hereinabove provided for directors. No amendment to
the Certificate of Incorporation or amendment or repeal of the By-Laws having
the effect of modifying or repealing any of the provisions of this Article in a
manner adverse to the indemnitee shall abridge or adversely affect any right to
indemnification or other similar rights and benefits with respect to any acts or
omissions occurring prior to such amendment or repeal. This Article shall be
applicable to all Proceedings, whether arising from acts or omissions occurring
before or after the adoption of this Article.
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<PAGE> 18
Section 2. Non-Exclusivity. The right of indemnification,
including the right to receive payment in advance of expenses, conferred in this
Article shall not be exclusive of any other rights to which any person seeking
indemnification may otherwise be entitled under any provision of the Certificate
of Incorporation, By-Laws, agreement, applicable corporate law and statute, vote
of Disinterested Directors (as hereinafter defined) or stockholders or
otherwise. The indemnitee is free to proceed under any of the rights or
procedures available to him.
Section 3. Burden of Proof. In any determination, review of a
determination, action, arbitration, or other proceeding relating to the right to
indemnification conferred in this Article, the Corporation shall have the burden
of proof that the indemnitee has not met any standard of conduct or belief which
may be required by applicable law to be applied in connection with a
determination that the indemnitee is not entitled to indemnification and also
the burden of proof on any of the issues which may be material to a
determination that the indemnitee is not entitled to indemnification. Neither a
failure to make such a determination of entitlement nor an adverse determination
of entitlement to indemnification shall be a defense of the Corporation in an
action or proceeding brought by the indemnitee or by or on behalf of the
Corporation relating to indemnification or create any presumption that the
indemnitee has not met any such standard of conduct or belief or is otherwise
not entitled to indemnification. If successful in whole or in part in such an
action or proceeding, the indemnitee shall be entitled to be further indemnified
by the Corporation for the expenses actually and reasonably incurred by him in
connection with such action or proceeding.
Section 4. Advancement of Expenses. All reasonable expenses
incurred by or on behalf of the indemnitee in connection with any Proceeding
shall be advanced from time to time to the indemnitee by the Corporation
promptly after the receipt by the Corporation of a statement from the indemnitee
requesting such advance, whether prior to or after final disposition of such
Proceeding.
Section 5. Insurance, Contracts, and Funding. The Corporation may
purchase and maintain insurance to protect itself and any person who is, or may
become an officer, director, employee, agent, attorney, trustee, or
representative (any of the foregoing being herein referred to as a
"Representative") of the Corporation or, at the request of the Corporation, a
Representative of another corporation or entity, against any expenses,
liability, or loss asserted against him or incurred by him in connection with
any Proceeding in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such expense, liability, or loss under the provisions of this Article or
otherwise. The Corporation may enter into contracts with any Representative of
the Corporation, or any person serving as such at the request of the Corporation
for another corporation or entity, in furtherance of the provisions of this
Article. Such contracts shall be deemed specifically approved and authorized by
the stockholders of the Corporation and not subject to invalidity by reason of
any interested directors. The Corporation may create a trust fund, grant a
security interest, or use other means (including, without limitation, a letter
of credit) to ensure the payment of such amounts as may be necessary to effect
indemnification of any person entitled thereto.
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<PAGE> 19
Section 6. Severability; Statutory Alternative. If any provision
or provisions of this Article shall be held to be invalid, illegal, or
unenforceable for any reason whatsoever, (a) the validity, legality, and
enforceability of all of the remaining provisions of this Article shall not in
any way be affected or impaired thereby; and (b), to the fullest extent
possible, the remaining provisions of this Article shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal, or
unenforceable. In the event that the indemnitee elects, as an alternative to the
procedures specified in this Article, to follow one of the procedures authorized
by applicable corporate law or statute to enforce his right to indemnification
and notifies the Corporation of his election, the Corporation agrees to follow
the procedure so elected by the indemnitee. If in accordance with the preceding
sentence, the procedure therefor contemplated herein, the procedure elected by
the indemnitee in any specific circumstances or such election by the indemnitee
shall be invalid or ineffective in bringing about a valid and binding
determination of the entitlement of the indemnitee to indemnification, the most
nearly comparable procedure authorized by applicable corporate law or statute
shall be followed by the Corporation and the indemnitee.
Section 7. Procedures; Presumptions, and Effect of Certain
Proceedings; Remedies. In furtherance, but not in limitation, of the foregoing
provisions of this Article, the following procedures, presumptions, and remedies
shall apply with respect to advancement of expenses and the right to
indemnification under this Article:
(a) Advancement of Expenses. The advancement or reimbursement of
expenses to an indemnitee shall be made within 20 days after the receipt by the
Corporation of a request therefor from the indemnitee. Such request shall
reasonably evidence the expenses incurred or about to be incurred by the
indemnitee and, if required by law at the time of such advance, shall include or
be accompanied by an undertaking by or on behalf of the indemnitee to repay the
amounts advanced if it should ultimately be determined that the indemnitee is
not entitled to be indemnified against such expenses.
(b) Procedure for Determination of Entitlement to Indemnification.
(i) To obtain indemnification (except with respect to the
advancement of expenses), an indemnitee shall submit to the President or
Secretary of the Corporation a written request, including such documentation and
information as is reasonably available to the indemnitee and reasonably
necessary to determine whether and to what extent the indemnitee is entitled to
indemnification (the "Supporting Documentation"). The Secretary of the
Corporation shall promptly advise the Board of Directors in writing that the
indemnitee has requested indemnification. The determination of the indemnitee's
entitlement to indemnification shall be made not later than 60 days after
receipt by the Corporation of the written request and Supporting Documentation.
(ii) The indemnitee's entitlement to indemnification shall be
determined in one of the following ways: (A) by a majority vote of the
Disinterested Directors (which term shall mean the Disinterested Director, if
there is only one); (B) by a written opinion of the Independent Counsel (as
hereinafter defined) if (I) a majority of the Disinterested Directors so
directs, (II) there
14
<PAGE> 20
is no Disinterested Director, or (III) a Change of Control (as hereinafter
defined) shall have occurred and the indemnitee so requests, in which case the
Disinterested Directors shall be deemed to have so directed, (C) by the
stockholders of the Corporation (but only if a majority of the Disinterested
Directors determines that the issue of entitlement to indemnification should be
submitted to the stockholders for their determination); or (D) as provided in
subsection 7(c) below.
(iii) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to subsection
7(b)(ii), a majority of the Disinterested Directors shall select the Independent
Counsel, but only an Independent Counsel to which the indemnitee does not
reasonably object; provided, however, that if a Change of Control shall have
occurred, the indemnitee shall select such Independent Counsel, but only an
Independent Counsel to which the Board of Directors does not reasonably object.
(c) Presumptions and Certain Proceedings. Except as otherwise
expressly provided in this Article, the indemnitee shall be presumed to be
entitled to indemnification upon submission of a request for indemnification
together with the Supporting Documentation, and thereafter in any determination
or review of any determination, and in any arbitration, proceeding, or
adjudication the Corporation shall have the burden of proof to overcome that
presumption in reaching a contrary determination. In any event, if the person or
persons empowered under subsection 7(b)(ii) of this Article to determine
entitlement to indemnification shall not have been appointed or shall not have
made a determination within 60 days after receipt by the Corporation of the
request therefor together with the Supporting Documentation, the indemnitee
shall be deemed to be entitled to indemnification. In either case, the
indemnitee shall be entitled to such indemnification, unless (i) the indemnitee
misrepresented or failed to disclose a material fact in making the request for
indemnification or in the Supporting Documentation or (ii) such indemnification
is prohibited by law, in either case as finally determined by adjudication or,
at the indemnitee's sole option, arbitration (as provided in Subsection 7(d) of
this Article). The termination of any Proceeding, or of any claim, issue, or
matter therein, by judgment, order, settlement, or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, adversely affect the
right of the indemnitee to indemnification or create any presumption with
respect to any standard of conduct or belief or any other matter which might
form a basis for a determination that the indemnitee is not entitled to
indemnification. With regard to the right to indemnification for expenses, (A)
if and to the extent that the indemnitee has been successful on the merits or
otherwise in any Proceeding, or (B) if a Proceeding was terminated without a
determination of liability on the part of the indemnitee with respect to any
claim, issue, or matter therein or without any payments in settlement or
compromise being made by the indemnitee with respect to a claim, issue, or
matter therein, or (C) if and to the extent that the indemnitee was not a party
to the Proceeding, the indemnitee shall be deemed to be entitled to
indemnification, which entitlement shall not be defeated or diminished by
any/determination which may be made pursuant to clauses (A), (B), or (C) of
subsection 7(b)(ii) of this Article.
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<PAGE> 21
(d) Remedies of Indemnitee.
(i) In the event that a determination is made pursuant to
subsection 7(b) of this Article that the indemnitee is not entitled to
indemnification under this Article, (A) the indemnitee shall be entitled to seek
an adjudication of his entitlement to such indemnification either, at the
indemnitee's sole option, in (I) an appropriate court of the State of Delaware
or any other court of competent jurisdiction or (II) to the extent consistent
with law, arbitration to be conducted by three arbitrators (or, if the dispute
involves less than $100,000, by a single arbitrator) pursuant to the rules of
the American Arbitration Association; (B) any such judicial Proceeding or
arbitration shall be de novo and the indemnitee shall not be prejudiced by
reason of such adverse determination; and (C) in any such judicial Proceeding or
arbitration the Corporation shall have the burden of proof that the indemnitee
is not entitled to indemnification under this Article.
(ii) If a determination shall have been made or deemed to
have been made, pursuant to subsection 7(b) or 7(c) of this Article, that the
indemnitee is entitled to indemnification, the Corporation shall be obligated to
pay the amounts constituting such indemnification within five days after such
determination has been made or deemed to have been made and shall be
conclusively bound by such determination, unless (A) the indemnitee
misrepresented or failed to disclose a material fact in making the request for
indemnification or in the Supporting Documentation or (B) such indemnification
is prohibited by law, in either case as finally determined by adjudication or,
at the indemnitee's sole option, arbitration (as provided in subsection 7(d)(i)
of this Article). In the event that (I) advancement of expenses is not timely
made by the Corporation pursuant to this Article or (II) payment of
indemnification is not made within five days after a determination of
entitlement to indemnification has been made or deemed to have been made
pursuant to subsection 7(b) or 7(c) of this Article, the indemnitee shall be
entitled to seek judicial enforcement of the Corporation's obligations to pay to
the indemnitee such advancement of expense of indemnification. Notwithstanding
the foregoing, the Corporation may bring an action, in an appropriate court in
the State of Delaware or any other court of competent jurisdiction, contesting
the right of the indemnitee to receive indemnification hereunder due to the
occurrence of a circumstance described in subclause (A) of this subsection
7(d)(ii) or a prohibition of law (both of which are herein referred to as a
"Disqualifying Circumstance"). In either instance, if the indemnitee shall
elect, at his sole option, that such dispute shall be determined by arbitration
(as provided in subsection 7(d)(i) of this Article), the indemnitee and the
Corporation shall submit the controversy to arbitration. In any such enforcement
action or other proceeding whether brought by the indemnitee or the Corporation,
the indemnitee shall be entitled to indemnification unless the Corporation can
satisfy the burden of proof that indemnification is prohibited by reason of a
Disqualifying Circumstance.
(iii) The Corporation shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this subsection 7(d)
that the procedures and presumptions of this Article are not valid, binding, and
enforceable and shall stipulate in any such court or before any such arbitrator
or arbitrators that the Corporation is bound by all of the provisions of this
Article.
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<PAGE> 22
(iv) In the event that the indemnitee, pursuant to this
Article, seeks a judicial adjudication of or an award in arbitration to enforce
his rights under, or to recover damages for breach of, this Article, or is
otherwise involved in any adjudication or arbitration with respect to his right
to indemnification, the indemnitee shall be entitled to recover from the
Corporation, and shall be indemnified by the Corporation against, any expenses
actually and reasonably incurred by him if the indemnitee prevails in such
adjudication or arbitration. If it shall be determined in such adjudication or
arbitration that the indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses sought, the expenses incurred by the
indemnitee in connection with such adjudication or arbitration shall be prorated
accordingly.
Section 8. Definitions. For purposes of indemnification under this
Article or otherwise the following terms shall have the respective meanings
ascribed to such terms:
"Change in Control" means a change in control of the Corporation of a
nature that would be required to be reported in response to Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934 (the
"Act"), whether or not the Corporation is then subject to such reporting
requirement; provided that, without limitation, such a change in control shall
be deemed to have occurred if (a) any "person" (as such term is used in Sections
13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Act), directly or indirectly, of securities of the
Corporation representing 20 percent or more of the combined voting power of the
Corporation's then outstanding securities without the prior approval of at least
two-thirds of the members of the Board of Directors in office immediately prior
to such acquisition; (b) the Corporation is a party to a merger, consolidation,
sale of assets, or other reorganization, or a proxy contest, as a consequence of
which members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter; or (c) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors (including
for this purpose any new director whose election or nomination for election by
the Corporation's stockholders was approved by a vote of at least two-thirds of
the directors then still in office who were Directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board of
Directors.
"Disinterested Director" means a director of the Corporation who is not
or was not a material party to the Proceeding in respect of which
indemnification is sought by the indemnitee.
"Independent Counsel" means a law firm or a member of a law firm that
neither presently is, nor in the past five years has been, retained to
represent: (a) the Corporation or the indemnitee in any matter or (b) any other
party to the Proceeding giving rise to a claim for indemnification under this
By-Law. Notwithstanding the foregoing, the term "Independent Counsel" shall not
include any person who, under the applicable standards of professional conduct
then prevailing under the law of the State of Delaware, would have a conflict of
interest in representing either the Corporation or the indemnitee in an action
to determine the indemnitee's rights under this Article.
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<PAGE> 23
Section 9. Acts of Disinterested Directors. Disinterested Directors
considering or acting on any indemnification matter under this Article or under
governing corporate law or otherwise may consider or take action as the Board of
Directors or may consider or take action as a committee or individually or
otherwise. In the event that Disinterested Directors consider or take action as
the Board of Directors, one-third of the total number of directors in office
shall constitute a quorum.
Dated: December 15, 1997 CHECKFREE HOLDINGS CORPORATION
By: /s/ Peter J. Kight
-----------------------------
Peter J. Kight, President and
Chief Executive Officer
18
<PAGE> 1
EXHIBIT 3(c)
RIGHTS AGREEMENT
DATED AS OF DECEMBER 16, 1997
BY AND BETWEEN
CHECKFREE HOLDINGS CORPORATION
AND
THE FIFTH THIRD BANK
AS RIGHTS AGENT
<PAGE> 2
\
EXHIBIT 4.1
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Certain Definitions............................................................................ 2
Section 2. Appointment of Rights Agent.................................................................... 7
Section 3. Issuance of Right Certificates................................................................. 7
Section 4. Form of Right Certificates..................................................................... 9
Section 5. Countersignature and Registration.............................................................. 9
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.......................... 10
Section 7. Exercise of Rights............................................................................. 10
Section 8. Cancellation and Destruction of Right Certificates............................................. 12
Section 9. Reservation and Availability of Capital Stock.................................................. 12
Section 10 Securities Record Date......................................................................... 13
Section 11. Adjustment of Exercise Price, Number of Shares Issuable
Upon Exercise of Rights or Number of Rights.................................................... 14
Section 12. Certificate of Adjusted Exercise Price or Number of Shares
Issuable Upon Exercise of Rights............................................................... 19
Section 13. Consolidation, Merger, or Sale or Transfer of
Assets or Earning Power........................................................................ 19
Section 14. Fractional Rights and Fractional Shares........................................................ 22
Section 15. Rights of Action............................................................................... 22
Section 16. Agreement of Right Holders..................................................................... 23
</TABLE>
-ii-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 17. Right Holder and Right Certificate Holder
Not Deemed a Stockholder....................................................................... 23
Section 18. Concerning the Rights Agent.................................................................... 23
Section 19. Merger or Consolidation or Change of Name of Rights Agent...................................... 24
Section 20. Duties of Rights Agent......................................................................... 24
Section 21. Change of Rights Agent......................................................................... 26
Section 22. Issuance of New Right Certificates............................................................. 27
Section 23. Redemption of Rights........................................................................... 27
Section 24. Exchange of Rights............................................................................. 28
Section 25. Notice of Certain Events....................................................................... 29
Section 26. Notices .................................................................................... 29
Section 27. Supplements and Amendments..................................................................... 30
Section 28. Certain Covenants.............................................................................. 31
Section 29. Successors..................................................................................... 31
Section 30. Benefits of this Agreement..................................................................... 31
Section 31. Severability................................................................................... 32
Section 32. Governing Law.................................................................................. 32
Section 33. Counterparts................................................................................... 32
Section 34. Descriptive Headings........................................................................... 32
</TABLE>
-iii-
<PAGE> 4
TABLE OF EXHIBITS
Exhibit A Form of Certificate of Incorporation
Exhibit B Form of Right Certificate
Exhibit C Form of Summary of the Rights
-iv-
<PAGE> 5
RIGHTS AGREEMENT
This Rights Agreement ("Agreement") is made and entered into as of
December 16, 1997, by and between CHECKFREE HOLDINGS CORPORATION, a Delaware
corporation (the "Company"), and THE FIFTH THIRD BANK (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized
and declared a dividend of one preferred stock purchase right
(a "Right") for each Common Share (as hereinafter defined) of
the Company, which dividend is payable on December 19, 1997
(the "Record Date"), to the holders of record of Common Shares
as of the Close of Business (as hereinafter defined) on such
date;
WHEREAS, the Board of Directors of the Company has further
authorized and directed the issuance of one (subject to
adjustment of such number as provided in this Agreement) Right
for (A) each Common Share that shall be issued by the Company
at any time after the Record Date and prior to the earliest of
the date of the first Section 11(a)(ii) Event, the date of the
first Section 13(a) Event, the Redemption Date or the
Expiration Date (as such terms are hereinafter defined), and
(B) each Common Share that shall be issued by the Company at
any time on or after the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a)
Event and prior to the earlier of the Redemption Date or the
Expiration Date pursuant to the exercise of conversion rights,
exchange rights, rights (other than Rights), warrants or
options that shall have been issued or granted prior to the
earlier of the date of the first Section 11(a)(ii) Event or
the date of the first Section 13(a) Event, unless the Board of
Directors shall provide otherwise at the time of the issuance
or grant of such conversion rights, exchange rights, rights
(other than Rights), warrants or options; and
WHEREAS, in connection with the matters referred to herein,
the Company desires to appoint the Rights Agent to act on
behalf of the Company for the benefit of the holders of
Rights, and the Rights Agent is willing so to act;
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual agreements set forth herein, and for the benefit of
the holders of Rights, the parties hereto hereby agree as
follows:
1
<PAGE> 6
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as in
effect on the date hereof.
(b) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "Beneficially Own":
(i) any securities that such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Rule 13d-3
promulgated under the Exchange Act, in each case as in effect on the
date hereof;
(ii) any securities that such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right
is exercisable immediately, or only after the passage of time,
compliance with regulatory requirements, the fulfillment of a
condition, or otherwise) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights), warrants or options, or
otherwise, provided that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a
tender offer or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange;
(iii) any securities that such Person or any of such Person's
Affiliates or Associates has the right to vote, alone or in concert
with others, pursuant to any agreement, arrangement or understanding,
provided that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own, any security if the agreement, arrangement or
understanding to vote such security (A) arises solely from a revocable
proxy given to such Person or any of such Person's Affiliates or
Associates in response to a public proxy solicitation made pursuant to
and in accordance with the applicable rules and regulations of the
Exchange Act, and (B) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report);
(iv) any securities that are Beneficially Owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (other than
voting pursuant to a revocable proxy as described in the proviso to
Section 1(b)(iii) hereof) or disposing of any securities of the
Company; and
2
<PAGE> 7
(v) on any day on or after the Distribution Date, all Rights
that prior to such date were represented by certificates for Common
Shares that such Person Beneficially Owns on such day.
Notwithstanding anything to the contrary in this Section 1(b), a Person engaged
in business as an underwriter of securities shall not be deemed to be the
Beneficial Owner of, or to Beneficially Own, any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition.
(c) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the States of Georgia or Ohio are
authorized or obligated by law or executive order to close.
(d) "Close of Business" on any given date shall mean 5:00 o'clock p.m.,
Cincinnati, Ohio time, on such date; provided, however, that if such date is not
a Business Day, it shall mean 5:00 o'clock p.m., Cincinnati, Ohio time, on the
next succeeding Business Day.
(e) "Closing Price" of a stock or other security on any day shall be
the last sale price, regular way, per share of such stock or unit of such other
security on such day or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if such stock or other security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such stock or other security is listed or admitted
to trading or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then
in use or, if on any such date such stock or other security is not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker that makes a market in such stock or other
security and that is selected by the Board of Directors of the Company.
(f) "Common Share" shall mean one share of the Common Stock, par value
$.01 per share, of the Company, unless used with reference to a Person other
than the Company, in which case it shall mean one share of the class of capital
stock (or equity interest) of such other Person having the greatest voting power
per share or, if such Person is a Subsidiary of another Person, of the Person
that ultimately controls such Person.
(g) "Common Share Equivalent" shall have the meaning ascribed to it in
Section 11(a)(iii) hereof.
3
<PAGE> 8
(h) "Current Market Price" per share of a stock or unit of any other
security on any date shall mean the average of the daily Closing Prices of such
stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question; provided,
however, that if any event shall have caused the Closing Price on any Trading
Day during such 30-day period not to be fully comparable with the Closing Price
on the date in question (or, if no Closing Price is available on the date in
question, on the Trading Day immediately preceding the date in question), then
each such noncomparable Closing Price so used shall be appropriately adjusted by
the Board of Directors of the Company in order to make the Closing Price on each
Trading Day during the period used for the determination of the Current Market
Price fully comparable with the Closing Price on such date in question (or, if
applicable, the immediately preceding Trading Day). "Current Market Price" per
share of any stock or unit of such other security that is not publicly held or
so listed or traded, and "Current Market Price" of any other property, shall
mean the fair value per share of such stock or unit of such other security, or
the fair value of such other property, respectively, as determined in good faith
by the Board of Directors of the Company based upon such appraisals or valuation
reports of such independent experts as the Board of Directors shall in good
faith determine appropriate, which determination shall be described in a
statement filed by the Company with the Rights Agent.
(i) "Distribution Date" shall have the meaning ascribed to it in
Section 3 hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Exchange Ratio" shall have the meaning ascribed to it in Section
24(a) hereof.
(l) "Exempt Person" shall mean the Company, any wholly-owned Subsidiary
of the Company, any employee benefit plan of the Company or of a Subsidiary of
the Company, and any Person holding Voting Shares for or pursuant to the terms
of any such employee benefit plan.
(m) "Exercise Price" shall have the meaning ascribed to it in Section
7(c) hereof.
(n) "Expiration Date" shall mean December 16, 2007, unless the
Distribution Date shall occur on or prior to such date and the Rights shall have
separated from the Common Shares pursuant to the terms of this Agreement, in
which case "Expiration Date" shall mean the date which is the tenth anniversary
of the Distribution Date.
(o) "Person" shall mean any individual, firm, partnership, corporation,
association, group (as such term is used in Rule 13d-5 promulgated under the
Exchange Act as in effect on the date hereof) or other entity, and shall include
any successor (by merger or otherwise) of such entity.
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(p) "Preferred Share" shall mean one share of the Series A Junior
Participating Cumulative Preferred Stock, par value $0.01 per share, of the
Company, which shall have the rights and preferences set forth in the form of
Certificate of Incorporation attached hereto as Exhibit A.
(q) "Preferred Share Equivalents" shall have the meaning ascribed to
it in Section 11(b) hereof.
(r) "Record Date" shall have the meaning ascribed to it in the
recitals hereto.
(s) "Redemption Date" shall mean the date of the action of the Board
of Directors of the Company authorizing and directing the redemption of the
Rights pursuant to Section 23(a) hereof or the exchange of the Rights pursuant
to Section 24(a) hereof.
(t) "Redemption Price" shall have the meaning ascribed to it in
Section 23(a) hereof.
(u) "Right" shall have the meaning ascribed to it in the recitals
hereto.
(v) "Rights Agent" shall have the meaning ascribed to it in the
recitals hereto.
(w) "Section 11(a)(ii) Event" shall have the meaning ascribed to it in
Section 11(a)(ii) hereof.
(x) "Section 13(a) Event" shall have the meaning ascribed to it in
Section 13(a) hereof.
(y) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(z) "Subsidiary" of any Person shall mean any corporation or other
Person of which equity securities or equity interests representing a majority of
the voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
(aa) "Surviving Person" shall have the meaning ascribed to it in
Section 13(a) hereof.
(bb) "Trading Day" shall mean, as to any stock or other security, a day
on which the principal national securities exchange on which such stock or other
security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(cc) "Unavailable Adjustment Shares" has the meaning ascribed to it in
Section 11(a)(iii) hereof.
(dd) "Voting Share" shall mean (i) a Common Share of the Company and
(ii) any other share of capital stock of the Company entitled to vote generally
in the election of directors or entitled to vote together with the Common Shares
in respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up. References in this
Agreement to a percentage or portion of the outstanding Voting Shares shall be
deemed a reference to the percentage or portion of the total votes entitled to
be cast by the holders of the outstanding Voting Shares.
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<PAGE> 10
(ee) "15% Ownership Date" shall mean the first date after the
declaration by the Board of Directors referred to in the first recital hereto of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or a 15% Stockholder containing the facts by virtue of which
a Person has become a 15% Stockholder.
(ff) "15% Stockholder" shall mean any Person that, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of such
number of Voting Shares of the Company as constitutes a percentage of the then
outstanding Voting Shares that is equal to or greater than 15%; provided,
however, that the term "15% Stockholder" shall not include: (i) an Exempt
Person; (ii) any Person that, together with all Affiliates and Associates of
such Person, became the Beneficial Owner of 15% or more of the Voting Shares of
the Company on or prior to December 24, 1997 ("Existing Owner"), unless and
until such Existing Owner, after December 24, 1997, becomes the Beneficial Owner
of additional Voting Shares representing 1% or more of the Voting Shares or,
after first becoming the Beneficial Owner of less than 15% of the Voting Shares,
again becomes the owner of 15% or more of the Voting Shares; or (iii) any Person
if such Person would not otherwise be a 15% Stockholder but for a reduction in
the number of outstanding Voting Shares resulting from a stock repurchase
program or other similar plan of the Company or from a self-tender offer of the
Company, which plan or tender offer commenced on or after the date hereof,
provided, however, that the term "15% Stockholder" shall include such Person
from and after the first date upon which (A) such Person, since the date of the
commencement of such plan or tender offer, shall have acquired Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares of the Company then outstanding and (B) such
Person, together with all Affiliates and Associates of such Person, shall
Beneficially Own 15% or more of the Voting Shares of the Company then
outstanding. In calculating the percentage of the outstanding Voting Shares that
are Beneficially Owned by a Person for purposes of this subsection (ff), Voting
Shares that are Beneficially Owned by such Person shall be deemed outstanding,
and Voting Shares that are not Beneficially Owned by such Person and that are
subject to issuance upon the exercise or conversion of outstanding conversion
rights, exchange rights, rights (other than Rights), warrants or options shall
not be deemed outstanding. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person that would
otherwise be a 15% Stockholder pursuant to the foregoing provisions of this
Section 1(ff) and Section 1(b) hereof has become such inadvertently, and such
Person (a) promptly notifies the Board of Directors of such status and (b) as
promptly as practicable thereafter, either divests of a sufficient number of
Voting Shares so that such Person would no longer be a 15% Stockholder, or
causes any other circumstance, such as the existence of an agreement respecting
Voting Shares, to be eliminated such that such Person would no longer be a 15%
Stockholder as defined pursuant to this Section 1(ff) and 1(b), then such Person
shall not be deemed to be a 15% stockholder for any purposes of this Agreement.
Any determination made by the Board of Directors of the Company as to whether
any Person is or is not a 15% Stockholder shall be conclusive and binding upon
all holders of Rights.
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SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of Rights in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable, upon ten days' prior written notice to the Rights Agent. The Rights
Agent shall have no duty to supervise, and shall in no event be liable for, the
acts or omissions of any such co-Rights Agent.
SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) "Distribution Date" shall mean the date, after the date hereof,
that is the earliest of (i) the tenth Business Day (or such later day as shall
be designated by the Board of Directors of the Company) following the date of
the commencement of, or the first public announcement of the intent of any
Person, other than an Exempt Person, to commence, a tender offer or exchange
offer, the consummation of which would cause any Person to become a 15%
Stockholder, (ii) the date of the first Section 11(a)(ii) Event or (iii) the
date of the first Section 13(a) Event.
(b) Until the Distribution Date, (i) the Rights shall be represented by
certificates for Common Shares (all of which certificates for Common Shares
shall be deemed to be Right Certificates) and not by separate Right
Certificates, (ii) the record holder of the Common Shares represented by each of
such certificates shall be the record holder of the Rights represented thereby
and (iii) the Rights shall be transferable only in connection with the transfer
of Common Shares. Until the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, the surrender for transfer of such certificates for
Common Shares shall also constitute the surrender for transfer of the Rights
represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send, at the Company's
expense, by first-class, postage-prepaid mail to each record holder of Common
Shares, as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate
substantially in the form of Exhibit B hereto representing one Right for each
Common Share so held. From and after the Distribution Date, the Rights shall be
represented solely by such Right Certificates and may only be transferred by the
transfer of such Right Certificates, and the holders of such Right Certificates,
as listed in the records of the Company or any transfer agent or registrar for
such Rights, shall be the record holders of such Rights.
(d) As soon as practicable after the Record Date, the Company shall
send a copy of a Summary of the Rights in substantially the form attached hereto
as Exhibit C by first-class, postage-prepaid mail to each record holder of
Common Shares as of the Close of Business on the Record Date at the address of
such holder shown on the records of the Company.
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<PAGE> 12
(e) Certificates for Common Shares issued at any time after the Record
Date and prior to the earliest of the Distribution Date, the Redemption Date or
the Expiration Date, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also represents Rights that entitle the holder hereof
to certain rights as set forth in a Rights Agreement dated as of December 16,
1997 by and between the Corporation and The Fifth Third Bank, as Rights Agent
(the "Rights Agreement"), the terms and conditions of which are hereby
incorporated herein by reference and a copy of which is on file at the principal
executive offices of the Corporation.
Under certain circumstances specified in the Rights Agreement, such
Rights will be represented by separate certificates and will no longer be
represented by this certificate. Under certain circumstances specified in the
Rights Agreement, Rights beneficially owned by certain persons may become null
and void. The Corporation will mail to the record holder of this certificate a
copy of the Rights Agreement without charge promptly following receipt of a
written request therefor.
(f) Certificates for Common Shares issued at any time on or after the
Distribution Date and prior to the earlier of the Redemption Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate does not represent any Right issued
pursuant to the terms of a Rights Agreement dated as of
December 16, 1997 by and between the Corporation and The Fifth
Third Bank, as Rights Agent.
(g) In the event that at any time on or after the earlier of the date
of the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event and prior to the earlier of the Redemption Date or the Expiration Date,
the Company shall issue any Common Shares pursuant to the exercise of conversion
rights, exchange rights, rights (other than Rights), warrants or options that
shall have been issued or granted prior to the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a) Event, then,
unless the Board of Directors of the Company shall have provided otherwise at
the time of the issuance or grant of such conversion rights, exchange rights,
rights (other than Rights), warrants or options, the Rights Agent shall, as soon
as practicable after the date of such event, send by first-class,
postage-prepaid mail to the record holder of such Common Shares, at the address
of such holder as shown on the records of the Company, a Right Certificate
substantially in the form of Exhibit B hereto representing one Right for each
Common Share so issued.
(h) Notwithstanding the foregoing provisions of this Section 3, the
Rights Agent shall not send any Right Certificate to any 15% Stockholder or any
of its Affiliates or Associates or to any Person if the Rights held by such
Person are Beneficially Owned by a 15% Stockholder or any of its Affiliates or
Associates. Any determination made by the Board of Directors of the Company as
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<PAGE> 13
to whether any Common Shares are or were Beneficially Owned at any time by a 15%
Stockholder or an Affiliate or Associate of a 15% Stockholder shall be
conclusive and binding upon all holders of Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES.
The Right Certificates and the form of assignment, including
certificate, and the form of election to purchase, including certificate,
printed on the reverse thereof, when, as and if issued, shall be substantially
the same as Exhibit B hereto, and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange upon which the Rights or the securities of the Company
issuable upon exercise of the Rights may from time to time be listed, or to
conform to usage. Subject to Section 22 hereof, Right Certificates, whenever
issued, that are issued in respect of Common Shares that were issued and
outstanding as of the Close of Business on the Distribution Date, shall be dated
as of the Distribution Date.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, its President or any
Vice President, either manually or by facsimile signature, and may have affixed
thereto the Company's seal or a facsimile thereof attested by its Secretary or
any Assistant Secretary, either manually or by facsimile signature. The Right
Certificates shall be countersigned by an authorized signatory of the Rights
Agent (which need not be the same authorized signatory for all of the Right
Certificates) and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may nevertheless be countersigned by an authorized
signatory of the Rights Agent and issued and delivered by the Company with the
same force and effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company. Any Right Certificate may be
signed on behalf of the Company by any person who at the actual date of such
execution shall be a proper officer of the Company to sign such Right
Certificate, even though such person was not such an officer at the date of the
execution of this Agreement.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept at its offices in Cincinnati, Ohio books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of Right Certificates, the number
of Rights represented on its face by each Right Certificate and the date of each
Right Certificate.
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<PAGE> 14
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES.
(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and so long as
the Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split up, combined or exchanged for one or more
Right Certificates representing the same aggregate number of Rights as the Right
Certificates surrendered. Any registered holder desiring to transfer, split up,
combine or exchange one or more Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent with the form of assignment, including certificate, on the
reverse side thereof completed and duly executed, with signature guaranteed and
such other and further documentation as the Rights Agent may reasonably request.
Thereupon, the Rights Agent shall countersign and deliver to the person entitled
thereto one or more Right Certificates, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
such Right Certificate, if mutilated, along with signature guarantees and such
other and further documentation as the Rights Agent may reasonably request, the
Company shall issue and deliver to the Rights Agent for delivery to the record
holder of such Right Certificate a new Right Certificate of like tenor in lieu
of such lost, stolen, destroyed or mutilated Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any Person
if the Rights Agent knows such Right Certificate represents, or would represent
when held by such Person, Rights that had become or would become null and void
pursuant to Section 7(d) hereof.
SECTION 7. EXERCISE OF RIGHTS.
(a) Until the Distribution Date, no Right may be exercised.
(b) Subject to Section 7(d) and (g) hereof and the other provisions of
this Agreement, at any time after the Close of Business on the Distribution Date
and prior to the Close of Business on the earlier of the Redemption Date or the
Expiration Date, the registered holder of any Right Certificate may exercise the
Rights represented thereby in whole or in part upon surrender of such Right
Certificate, with the form of election to purchase, including certificate, on
the reverse side thereof completed and duly executed, with signature guaranteed,
to the Rights Agent at the office or agency of the Rights Agent in Cincinnati,
Ohio, along with a signature guarantee and such other
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<PAGE> 15
and further documentation as the Rights Agent may reasonably request, together
with payment of the Exercise Price for each Right exercised. Upon the exercise
of an exercisable Right and payment of the Exercise Price in accordance with the
provisions of this Agreement, the holder of such Right shall be entitled to
receive, subject to adjustment as provided herein, one one-hundredth of a
Preferred Share (or, following the occurrence of a Section 11(a)(ii) Event or a
Section 13(a) Event, Common Shares, other securities, cash and/or other property
in accordance with the provisions of this Agreement).
(c) The Exercise Price for the exercise of each Right shall initially
be $95 (Ninety-five dollars) and shall be payable in lawful money of the United
States of America in accordance with Section 7(f) hereof. The Exercise Price and
the number of Preferred Shares (or, following the occurrence of a Section
11(a)(ii) Event or a Section 13(a) Event, Common Shares, cash and/or other
property in accordance with the provisions of this Agreement) to be acquired
upon exercise of a Right shall be subject to adjustment from time to time as
provided in Sections 7(e), 11 and 13 hereof and the other provisions of this
Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, from
and after the earlier of the date of the first Section 11(a)(ii) Event or the
date of the first Section 13(a) Event, any Rights that are or were Beneficially
Owned by a 15% Stockholder or any Affiliate or Associate of a 15% Stockholder at
any time on or after the Distribution Date shall be null and void, and for all
purposes of this Agreement such Rights shall thereafter be deemed not to be
outstanding, and any holder of such Rights (whether or not such holder is a 15%
Stockholder or an Affiliate or Associate of a 15% Stockholder) shall thereafter
have no right to exercise such Rights.
(e) Prior to the Distribution Date, if the Board of Directors of the
Company shall have determined that such action adequately protects the interests
of the holders of Rights, the Company may, in its discretion, substitute for all
or any portion of the Preferred Shares that would otherwise be issuable (after
the Close of Business on the Distribution Date) upon the exercise of each Right
and payment of the Exercise Price, (i) cash, (ii) other equity securities of the
Company, (iii) debt securities of the Company, (iv) other property or (v) any
combination of the foregoing, in each case having an aggregate Current Market
Price equal to the aggregate Current Market Price of the Preferred Shares for
which substitution is made. Subject to Section 7(d) hereof, in the event that
the Company takes any action pursuant to this Section 7(e), such action shall
apply uniformly to all outstanding Rights.
(f) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase, including certificate, completed
and duly executed, with signature guaranteed, accompanied by payment of the
Exercise Price for each Right to be exercised and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check or cashier's
check payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) requisition from the transfer agent of the Preferred Shares (or,
following the occurrence of a Section 11(a)(ii) Event or a Section 13(a) Event,
Common Shares, other securities, cash and/or other property in accordance with
the provisions of
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this Agreement), certificates for the number of Preferred Shares (or such other
securities) to be purchased, and the Company hereby irrevocably authorizes such
transfer agent to comply with all such requests, and/or, as provided in Section
14 hereof, requisition from the depositary agent described therein depositary
receipts representing such number of one-hundredths of a Preferred Share (or
such other securities) as are to be purchased (in which case certificates for
the Preferred Shares (or such other securities) represented by such receipts
shall be deposited by the transfer agent with such depositary agent) and the
Company hereby directs such depositary agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional Preferred Shares (or such other securities) in
accordance with Section 14 hereof, (iii) after receipt of such certificates,
depositary receipts or cash, cause the same to be delivered to or upon the order
of the registered holder of such Right Certificate, registered in such name or
names as may be designated by such holder and (iv) when appropriate, after
receipt thereof, deliver such cash to or upon the order of the registered holder
of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register under the Securities Act and
any applicable securities law of any jurisdiction the Preferred Shares to be
issued pursuant to the exercise of the Rights; provided, however, that nothing
contained in this Section 7 shall relieve the Company of its obligations under
Section 9(c) hereof.
(h) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights represented thereby, a new Right
Certificate representing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) Subject to Section 7(e) hereof, the Company shall cause to be
reserved and kept available out of its authorized and unissued equity securities
(or out of its authorized and issued
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equity securities held in its treasury), the number of such equity securities
that will from time to time be sufficient to permit the exercise in full of all
outstanding Rights.
(b) In the event that any securities issuable upon exercise of the
Rights are listed on any national securities exchange, the Company shall use its
best efforts, from and after such time as the Rights become exercisable, to
cause all such securities issued or reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon exercise of
the Rights, the Company shall use its best efforts, from and after the
Distribution Date, to register such securities under the Securities Act and any
applicable securities laws and to keep such registration effective until the
earlier of the Redemption Date or the Expiration Date.
(d) The Company shall take all such action as may be necessary to
ensure that all securities delivered upon exercise of the Rights shall, at the
time of delivery of the certificates for such securities (subject to payment of
the Exercise Price), be duly and validly authorized and issued and fully paid
and nonassessable securities.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the issuance
or delivery of the Right Certificates or of any securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax that
may be payable in respect of any transfer or delivery of a Right Certificate to
a Person other than, or the issuance or delivery of a certificate for securities
in respect of a name other than that of, the registered holder of the Right
Certificate representing Rights surrendered for exercise, or to issue or deliver
any certificate for securities upon the exercise of any Right until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
(f) With respect to the Common Shares and/or other securities issuable
pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants shall be
applicable only upon and following the occurrence of a Section 11(a)(ii) Event.
SECTION 10. SECURITIES RECORD DATE.
Each person in whose name any certificate for securities of the Company
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the securities represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
representing such Rights was duly surrendered and payment of the Exercise Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the securities transfer
books of the Company are closed, such person shall be deemed to have become the
record holder of such securities on, and such certificate shall
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be dated, the next succeeding Business Day on which the securities transfer
books of the Company are open.
SECTION 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER OF SHARES ISSUABLE UPON
EXERCISE OF RIGHTS OR NUMBER OF RIGHTS.
The Exercise Price, the number and kind of securities that may be
purchased upon exercise of a Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event that the Company shall at any time after the
Close of Business on the Record Date and prior to the Close of Business
on the earlier of the Redemption Date or the Expiration Date (A)
declare or pay any dividend on the Preferred Shares payable in
Preferred Shares or Voting Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into a
smaller number of Preferred Shares or (D) issue Preferred Shares or
Voting Shares in a reclassification of the Preferred Shares (including
any such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation), then,
and upon each such event, the number and kind of Preferred Shares or
other securities issuable upon the exercise of a Right on the date of
such event shall be proportionately adjusted so that the holder of any
Right exercised on or after such date shall be entitled to receive,
upon the exercise thereof and payment of the Exercise Price, the
aggregate number and kind of Preferred Shares or other securities or
other property, as the case may be, that, if such Right had been
exercised immediately prior to such date and at a time when such Right
was exercisable and the transfer books of the Company were open, such
holder would have owned upon such exercise and would have been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs that would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that a 15%
Ownership Date shall have occurred and neither the Redemption Date nor
the Expiration Date shall have occurred prior to the tenth Business Day
following such 15% Ownership Date, then, and effective as of the end of
such tenth Business Day, proper provision shall be made so that except
as provided in Section 7(d) hereof, each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement and payment of the then
current Exercise Price, in lieu of the securities or other property
otherwise purchasable upon such exercise, such number of Common Shares
of the Company as shall equal the result obtained by multiplying the
then current Exercise Price by the then number of one-hundredths of a
Preferred Share for which a Right was exercisable (or, if the
Distribution Date shall not have occurred prior to the date of such
Section 11(a)(ii) Event, the number of one-hundredths of a Preferred
Share for which a Right would have been
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exercisable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 11(a)(ii) Event)
immediately prior to such Section 11(a)(ii) Event, and dividing that
product by 50% of the Current Market Price (determined pursuant to
Section 11(d) hereof) of a Common Share on the date of occurrence of
the relevant Section 11(a)(ii) Event (such number of shares being
hereinafter referred to as the "Adjustment Shares"). Successive
adjustments shall be made pursuant to this paragraph each time a
Section 11(a)(ii) Event occurs.
(iii) In the event that on the date of a Section 11(a)(ii)
Event the aggregate number of Common Shares that are authorized by the
Company's Restated Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the
Rights is less than the aggregate number of Adjustment Shares
thereafter issuable upon the exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof (the excess of such number of
Adjustment Shares over and above such number of Common Shares being
hereinafter referred to as the "Unavailable Adjustment Shares"), then,
and upon each such event, the Company shall substitute for the pro rata
portion of the Unavailable Adjustment Shares that would otherwise be
issuable thereafter upon the exercise of each Right and payment of the
Exercise Price, (A) cash, (B) other equity securities of the Company
(including, without limitation, shares of preferred stock of the
Company or units of such shares having the same Current Market Price as
one Common Share (a "Common Share Equivalent")), (C) debt securities of
the Company, (D) other property or (E) any combination of the
foregoing, in each case having an aggregate Current Market Price equal
to the aggregate Current Market Price of the Unavailable Adjustment
Shares for which substitution is made. Subject to Section 7(d) hereof,
in the event that the Company takes any action pursuant to this Section
11(a)(iii), such action shall apply uniformly to all outstanding
Rights.
(b) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Expiration Date, fix a record date prior to the
earlier of the Redemption Date or the Expiration Date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
initially to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares ("Preferred
Share Equivalents")) or securities convertible into Preferred Shares or
Preferred Share Equivalents, at a price per Preferred Share or Preferred Share
Equivalent (or having a conversion price per share, if a security convertible
into Preferred Shares or Preferred Share Equivalents) less than the Current
Market Price per Preferred Share on such record date, then, and upon each such
event, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be equal to the sum of
the number of Preferred Shares outstanding on such record date plus the number
of Preferred Shares that the aggregate offering price of the total number of
Preferred Shares and/or Preferred Share Equivalents to be so offered (and/or the
aggregate initial conversion price of the convertible securities to be so
offered) would purchase at such Current Market Price, and the denominator of
which shall be equal to the
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<PAGE> 20
number of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or Preferred Share Equivalents to be offered for
subscription or purchase (or into which the convertible securities to be so
offered are initially convertible); provided, however, that if such rights,
options or warrants are not exercisable immediately upon issuance but become
exercisable only upon the occurrence of a specified event or the passage of a
specified period of time, then the adjustment to the Exercise Price shall be
made and become effective only upon the occurrence of such event or such passage
of time, and such adjustment shall be made as if the record date for the
issuance of such rights, options or warrants had been the business day
immediately preceding the date upon which such rights, options or warrants
became exercisable. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment to the Exercise Price shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price that would
then be in effect if such record date had not been fixed.
(c) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Expiration Date, fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of securities or assets (other than a
distribution of securities for which an adjustment is required under Section
11(a)(i) or (b) hereof or a regular quarterly cash dividend), then the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be equal to the excess of the Current
Market Price per Preferred Share on such record date over and above the fair
market value of the portion of the securities or assets to be so distributed
with respect to one Preferred Share, and the denominator of which shall be equal
to such Current Market Price per Preferred Share. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such a
distribution is not so made, the Exercise Price shall be adjusted to be the
Exercise Price that would then be in effect if such record date had not been
fixed.
(d) For the purpose of any computation under this Section 11, if the
Preferred Shares are not publicly held or traded, the "Current Market Price" per
Preferred Share shall be conclusively deemed to be the Current Market Price per
Common Share multiplied by 100.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Exercise
Price; provided, however, that any adjustments that by reason of this Section
11(e) are not required to be made shall be cumulated and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one-hundredth of a Common Share or other
share or one-ten thousandth of a Preferred Share, as the case may be.
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<PAGE> 21
(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any securities of the Company other than Preferred Shares, the number of
such other securities so receivable upon exercise of any Right 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 Preferred Shares contained in this
Section 11, and the other provisions of this Agreement with respect to Preferred
Shares shall apply on like terms to any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) below, upon each adjustment of the Exercise Price as a result of
the calculations made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter represent
the right to purchase, at the adjusted Exercise Price, that number of
one-hundredths of a Preferred Share (calculated to the nearest one-ten
thousandth of a Preferred Share) obtained by multiplying (i) the number of
one-hundredths of a Preferred Share purchasable upon the exercise of one Right
immediately prior to such adjustment of the Exercise Price by (ii) the Exercise
Price in effect immediately prior to such adjustment, and dividing the product
so obtained by the Exercise Price in effect immediately after such adjustment.
(i) The Company may elect, on or after the date of any adjustment of
the Exercise Price, to adjust the number of Rights instead of making any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one one-hundredth of a
Right) obtained by dividing the Exercise Price in effect immediately prior to
the adjustment of the Exercise Price by the Exercise Price in effect immediately
after such adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights pursuant to this
Section 11(i), indicating the record date for the adjustment and, if known at
the time, the amount of the adjustment to be made. Such record date may be the
date on which the Exercise Price is adjusted or any day thereafter, but, if
separate Right Certificates have been issued, it shall be at least 10 days after
the date of such public announcement. If separate Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
representing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment or, at the option of
the Company, cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the
date of such adjustment, and upon surrender thereof if required by the Company,
new Right Certificates
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<PAGE> 22
representing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Exercise Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or
the number of one-hundredths of a Preferred Share issuable upon the exercise of
one Right, the Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price per one one-hundredth of a Preferred Share and the
number of Preferred Shares issuable upon the exercise of one Right that were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Exercise Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action that may, in the advice or opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable one one-hundredths of a Preferred Share at such adjusted Exercise
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record date
of the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument representing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such further adjustments in the number of
one-hundredths of a Preferred Share that may be purchased upon exercise of one
Right, and such further adjustments in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that it
in its sole discretion shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Shares, (ii) issuance wholly for
cash of any Preferred Shares at less than the Current Market Price thereof,
(iii) issuance wholly for cash of Preferred Shares or securities that by their
terms are convertible into or exchangeable for Preferred Shares, (iv) dividends
on Preferred Shares payable in Preferred Shares or (v) issuance of rights,
options or warrants referred to Section 11(b) hereof, hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earliest
of the date of the first Section 11(a)(ii)
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<PAGE> 23
Event, the date of the first Section 13(a) Event, the Redemption Date or the
Expiration Date, (i) pay any dividend on the Common Shares payable in Common
Shares, (ii) subdivide the outstanding Common Shares, (iii) combine the
outstanding Common Shares into a smaller number of Common Shares or (iv) issue
Common Shares in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, and upon each such
event, the Exercise Price to be in effect after such event shall be determined
by multiplying the Exercise Price in effect immediately prior to such event by a
fraction, the numerator of which shall be equal to the number of Common Shares
outstanding immediately prior to such event and the denominator of which shall
be equal to the number of Common Shares outstanding immediately after such
event. Successive adjustments shall be made pursuant to this Section 11(n) each
time such a dividend is paid or such a subdivision, combination or
reclassification is effected. If an event occurs that would require an
adjustment under both this Section 11(n) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(n) shall be in addition to, and shall
be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
SECTION 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF SHARES
ISSUABLE UPON EXERCISE OF RIGHTS.
Whenever an adjustment is made as provided in Section 11 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts giving rise to such adjustment, (b) file with
the Rights Agent and with each transfer agent for the securities issuable upon
exercise of the Rights a copy of such certificate and (c) mail a brief summary
thereof to each holder of Rights in accordance with Section 25 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or to give such notice shall not affect the validity or the force
and effect of such adjustment. Any adjustment to be made pursuant to Sections 11
or 13 hereof shall be effective as of the date of the event giving rise to such
adjustment.
SECTION 13. CONSOLIDATION, MERGER, OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event (a "Section 13(a) Event") that, at any time on or
after the 15% Ownership Date and prior to the earlier of the Redemption Date or
the Expiration Date, (1) the Company shall, directly or indirectly, consolidate
with or merge with and into any other Person and the Company shall not be the
continuing or surviving corporation in such consolidation or merger, (2) any
Person shall, directly or indirectly, consolidate with or merge with and into
the Company and the Company shall be the continuing or surviving corporation in
such merger and, in connection with such merger, all or part of the Common
Shares shall be changed into or exchanged for stock or other securities of any
Person or cash or any other property, or (3) the Company and/or any one or more
of its Subsidiaries shall, directly or indirectly, sell or otherwise transfer,
in one or more transactions (other than transactions in the ordinary course of
business), assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons other than the Company or one or more of its wholly owned
Subsidiaries (such
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<PAGE> 24
Persons, together with the Persons described in clauses (1) and (2) above shall
be collectively referred to in this Section 13 as the "Surviving Person"), then,
and in each such case, proper provision shall be made so that:
(i) except as provided in Section 7(d) hereof, each holder
of a Right shall thereafter have the right to receive, upon the
exercise thereof in accordance with the terms of this Agreement and
payment of the then current Exercise Price, in lieu of the securities
or other property otherwise purchasable upon such exercise, such number
of validly authorized and issued, fully paid and nonassessable Common
Shares of the Surviving Person as shall be equal to a fraction, the
numerator of which is the product of the then current Exercise Price
multiplied by the number of one-hundredths of a Preferred Share
purchasable upon the exercise of one Right immediately prior to the
first Section 13(a) Event (or, if the Distribution Date shall not have
occurred prior to the date of such Section 13(a) Event, the number of
one-hundredths of a Preferred Share that would have been so purchasable
if the Distribution Date had occurred on the Business Day immediately
preceding the date of such Section 13(a) Event, or, if a Section
11(a)(ii) Event has occurred prior to such Section 13(a) Event, the
product of the number of one-hundredths of a Preferred Share
purchasable upon the exercise of a Right (or, if the Distribution Date
shall not have occurred prior to the date of such Section 11(a)(ii)
Event, the number of one-hundredths of a Preferred Share that would
have been so purchasable if the Distribution Date had occurred on the
Business Day immediately preceding the date of such Section 11(a)(ii)
Event) immediately prior to such Section 11(a)(ii) Event, multiplied by
the Exercise Price in effect immediately prior to such Section
11(a)(ii) Event), and the denominator of which is 50% of the Current
Market Price per Common Share of the Surviving Person on the date of
consummation of such Section 13(a) Event;
(ii) the Surviving Person shall thereafter be liable for and
shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to
this Agreement;
(iii) the term, "Company," shall thereafter be deemed to refer
to the Surviving Person; and
(iv) the Surviving Person shall take such steps (including,
but not limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with
such consummation as may be necessary to ensure that the provisions
hereof shall thereafter be applicable to its Common Shares thereafter
deliverable upon the exercise of Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event is the
sale or transfer in one or more transactions of assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole), but less than 100% thereof, then each Person
acquiring all or a portion thereof shall assume the obligations of the Company
as to a fraction
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<PAGE> 25
of each of the Rights equal to the fraction of the assets of the Company and its
Subsidiaries (taken as a whole) acquired by such Person, and the obligations of
the Company as to the remaining fraction of each of the Rights shall continue to
be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event unless prior
thereto the Company and the Surviving Person shall have executed and delivered
to the Rights Agent a supplemental agreement confirming that such Surviving
Person shall, upon consummation of such Section 13(a) Event, assume this
Agreement in accordance with Section 13 hereof, that all rights of first refusal
or preemptive rights in respect of the issuance of Common Shares of such
Surviving Person upon exercise of outstanding Rights have been waived and that
such Section 13(a) Event shall not result in a default by such Surviving Person
under this Agreement, and further providing that, as soon as practicable after
the date of consummation of such Section 13(a) Event, such Surviving Person
shall:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective
as soon as practicable after such filing, use its best efforts to cause
such registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the
Expiration Date, and similarly comply with all applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing
of) the Rights and the Common Shares of the Surviving Person
purchasable upon exercise of the Rights on a national securities
exchange, or use its best efforts to cause the Rights and such Common
Shares to meet the eligibility requirements for quotation on NASDAQ;
and
(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act.
(d) In the event that at any time after the occurrence of a Section
11(a)(ii) Event some or all of the Rights shall not have been exercised pursuant
to Section 11 hereof prior to the date of a Section 13(a) Event, such Rights
shall thereafter be exercisable only in the manner described in Section 13(a)
hereof. In the event that a Section 11(a)(ii) Event occurs on or after the date
of a Section 13(a) Event, Rights shall not be exercisable pursuant to Section 11
hereof but shall instead be exercisable pursuant to, and only pursuant to, this
Section 13.
(e) The provisions of this Section 13 shall apply to each successive
merger, consolidation, sale or other transfer constituting a Section 13(a)
Event.
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<PAGE> 26
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates that represent fractional Rights. If the
Company shall determine not to issue such fractional Rights, the Company shall
pay to the registered holders of the Right Certificates with respect to which
such fractional Rights would otherwise be issuable, at the time such fractional
Rights would otherwise have been issued as provided herein, an amount in cash
equal to the same fraction of the Current Market Price of a whole Right on the
Business Day immediately prior to the date upon which such fractional Rights
would otherwise have been issuable.
(b) The Company shall not be required to issue fractions of Common
Shares or Preferred Shares (other than fractions that are integral multiples of
one one-hundredth of a Preferred Share) upon exercise of Rights, or to
distribute certificates that represent fractional Common Shares or Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share). Fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share may, at the election of the Company, be
represented by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
Preferred Shares. If the Company shall determine not to issue fractional Common
Shares or Preferred Shares (or depositary receipts in lieu of Preferred Shares),
the Company shall pay to the registered holders of Right Certificates with
respect to which such fractional Common Shares or Preferred Shares would
otherwise be issuable, at the time such Rights are exercised as provided herein,
an amount in cash equal to the same fraction of the Current Market Price of a
whole Common Share or Preferred Share, as the case may be. For purposes of this
Section 14(b), the Current Market Price of a whole Common Share or Preferred
Share shall be the Closing Price per share for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right, by the acceptance of such Right, expressly
waives such holder's right to receive any fractional Rights or any fractional
Common Shares or Preferred Shares upon exercise of such Right, except as
permitted by this Section 14.
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, except the rights of
action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates and certificates for
Common Shares representing Rights, and any registered holder of any Right
Certificate or of such certificate for Common Shares, without the consent of the
Rights Agent or of the holder of any other Right Certificate or any other
certificate for Common Shares may, in such holder's own behalf and for such
holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
such holder's right to exercise the Rights represented by such Right Certificate
or by such certificate for Common Shares in the manner provided in such
Certificate and in this Agreement.
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<PAGE> 27
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance, and injunctive relief against actual or
threatened violations, of the obligations of any Person under this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS.
Every holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be represented by
certificates for Common Shares registered in the name of the holders of such
Common Shares (which certificates for Common Shares shall also constitute Right
Certificates), and each such Right shall be transferable only in connection with
the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall only be
transferable on the registry books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer along with a signature guarantee and such other and
further documentation as the Rights Agent may reasonably request; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate is registered as the absolute owner thereof and
of the Rights represented thereby (notwithstanding any notations of ownership or
writing on the Right Certificate by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
SECTION 17. RIGHT HOLDER AND RIGHT CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER.
No holder, as such, of any Right or Right Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the
securities of the Company that may at any time be issuable upon the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right or Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, to give or withhold consent to any
corporate action, to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, in each case until such Right or the
Rights represented by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent the compensation
agreed to in writing by the Company and the Rights Agent for all services
rendered by it hereunder, as well as
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<PAGE> 28
its reasonable out-of-pocket expenses. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including, without limitation, the costs and expenses of defending against any
claim of liability arising under this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right Certificate
or certificate for the Preferred Shares or Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed and executed by the proper person or persons, or otherwise upon the
advice of its counsel as set forth in Section 20 hereof.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, provided that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21
hereof. If, at the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and if at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in such Right Certificates, and
in this Agreement.
(b) If at any time the name of the Rights Agent shall be changed, and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in such Right Certificates and in this Agreement.
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<PAGE> 29
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations expressly
imposed by this Agreement (and no implied duties or obligations shall be read
into this Agreement against the Rights Agent) upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance of the Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement, or in the Right
Certificates (except its countersignature thereof), or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent is serving as an administrative agent and
accordingly, shall not be under any responsibility in respect of the legality or
validity of any of the provisions of this Agreement or the execution and
delivery hereof (except the due authorization, execution and delivery hereof by
the Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including any Rights becoming null
and void pursuant to Section 7(d) hereof) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in Sections
7, 11, 13 and 23 hereof, or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the exercise
of Rights represented by Right Certificates after actual notice that such change
or adjustment is required); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Preferred Shares or Common
25
<PAGE> 30
Shares or other securities to be issued pursuant to this Agreement or any Right
Certificate, or as to whether any Preferred Shares or Common Shares or other
securities will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Treasurer, the Secretary, or any Assistant Secretary of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer or for any delay in acting while awaiting instructions.
At any time the Rights Agent may apply to the Company for written
instructions with respect to any matter arising in connection with the Rights
Agent's duties and obligations arising under this Agreement. Such application by
the Rights Agent for written instructions from the Company may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent with respect to its duties or obligations under this
Agreement and the date on and/or after which such action shall be taken or
omitted in accordance with a proposal included in any such application on or
after the date specified therein (which date shall be not less than one Business
Day after the Company receives such application, without the Company's consent)
unless, prior to taking or initiating any such action (or the effective date in
the case of an omission), the Rights Agent has received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection thereof.
26
<PAGE> 31
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting as such, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit such holder's Right
Certificate for inspection by the Company), then the Company shall become the
Rights Agent and the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the States of Georgia or Ohio (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the States of Georgia or Ohio), in good standing, that is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
that has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose of this
Agreement and so that the successor Rights Agent may appropriately act as Rights
Agent hereunder. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Right
Certificates to the contrary, the Company may, at its option (subject to Section
4 hereof), issue new Right Certificates
27
<PAGE> 32
in such form as may be approved by the Board of Directors in order to reflect
any adjustment or change in the Exercise Price and the number or kind or class
of shares or other securities or property purchasable upon exercise of the
Rights in accordance with the provisions of this Agreement.
SECTION 23. REDEMPTION OF RIGHTS.
(a) Until the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event or (iii) the Expiration
Date, the Board of Directors of the Company may, at its option, authorize and
direct the redemption of all, but not less than all, of the then outstanding
Rights at a redemption price of $0.001 per Right, as such redemption price shall
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Redemption Price"), and the
Company shall so redeem the Rights; provided, however, that from and after the
first date upon which there shall exist a 15% Stockholder, any redemption of the
Rights shall require, in addition to the approval of the Board of Directors of
the Company, the approval of a majority of those directors of the Company who
were directors prior to such date.
(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the redemption of the Rights pursuant to
subsection (a) of this Section 23, or at such time and date thereafter as it may
specify, and without any further action and without any notice, the right to
exercise Rights shall terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price. Within 10 Business Days after
the date of such action, the Company shall give notice of such redemption to the
holders of Rights by mailing such notice to all holders of Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, if
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice that is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives such notice, but neither the
failure to give any such notice nor any defect therein shall affect the legality
or validity of such redemption. Each such notice of Redemption shall state the
method by which the payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may, directly or indirectly,
redeem, acquire or purchase for value any Rights in any manner other than that
specifically set forth in Section 24 hereof or in this Section 23, and other
than in connection with the purchase of Common Shares prior to the earlier of
the date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event.
(c) The Company may, at its option, pay the Redemption Price in cash,
Common Shares, Preferred Shares, other equity securities of the Company, debt
securities of the Company, other property or any combination of the foregoing,
in each case having an aggregate Current Market Price on the Redemption Date
equal to the Redemption Price.
SECTION 24. EXCHANGE OF RIGHTS.
(a) At any time after the 15% Ownership Date and prior to the first
date thereafter upon which a 15% Stockholder, together with all Affiliates and
Associates of such 15% Stockholder, shall be the Beneficial Owner of 50% or more
of the Voting Shares then outstanding, the Board of
28
<PAGE> 33
Directors of the Company may, at its option, except as provided in Section 7(d)
hereof, authorize and direct the exchange of all, but not less than all, of the
then outstanding Rights for Common Shares at an exchange ratio (the "Exchange
Ratio") equal to one Common Share per Right on such date.
(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the exchange of the Rights pursuant to
subsection (a) of this Section 24, or at such time and date thereafter as it may
specify, and without any further action and without any notice, the right to
exercise Rights shall terminate and the only right thereafter of the holders of
Rights shall be to receive a number of Common Shares equal to the Exchange
Ratio. Within 10 Business Days after the date of such action, the Company shall
give notice of such exchange to the holders of Rights by mailing such notice to
all holders of Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, if prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice that is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives such notice, but neither the failure to give any such notice nor any
defect therein shall affect the legality or validity of such exchange. Each such
notice of exchange shall state the method by which the Rights will be exchanged
for Common Shares. Neither the Company nor any of its Affiliates or Associates
may, directly or indirectly, redeem, acquire or purchase for value any Rights in
any manner other than (i) as specifically set forth in Section 23 hereof, (ii)
as specifically set forth in this Section 24 or (iii) in connection with the
purchase of Common Shares prior to the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute (i) cash, (ii) other equity securities of the Company
(including, but not limited to, Common Share Equivalents), (iii) debt securities
of the Company, (iv) other property or (v) any combination of the foregoing for
the Common Shares exchangeable for Rights, as appropriately adjusted. Subject to
Section 7(d) hereof, in the event that the Company takes any action pursuant to
this Section 24, such action shall apply uniformly to all outstanding Rights.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In the event that the Company shall propose (i) to declare or pay
any dividend payable on or make any distribution with respect to its Common
Shares or Preferred Shares (other than a regular quarterly cash dividend), (ii)
to offer to the holders of its Common Shares or Preferred Shares options, rights
or warrants to subscribe for or to purchase any additional shares thereof or
shares of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of its Common Shares or Preferred Shares (other
than a reclassification involving only the subdivision of outstanding shares),
(iv) to effect any consolidation or merger with or into, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person or Persons, or (v) to effect the liquidation, dissolution
or winding up of the Company, then and in each such case, the Company shall give
to
29
<PAGE> 34
each holder of a Right Certificate and to the Rights Agent, in accordance with
Section 26 hereof, a notice of such proposed action, that shall specify the
record date for the purpose of such dividend or distribution, or the date upon
which such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of record of the Common Shares or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the record date
for determining holders of the Common Shares or Preferred Shares for purposes of
such action, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares or Preferred Shares, whichever date
shall be the earlier. The failure to give the notice required by this Section 25
or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
(b) Upon the occurrence of each Section 11(a)(ii) Event and each
Section 13(a) Event, the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate and to the Rights Agent, in accordance with
Section 26 hereof, a notice of the occurrence of such event, specifying the
event and the consequences of the event to holders of Rights under Sections 11
and 13 hereof.
SECTION 26. NOTICES.
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
CheckFree Holdings Corporation
4411 East Jones Bridge Road
Norcross, Georgia 30092
Attention: President
with a copy to:
Curtis A. Loveland, Esq.
Secretary of CheckFree Holdings Corporation
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid,
30
<PAGE> 35
addressed (until another address is filed in writing with the Company) to the
principal office of the Rights Agent as follows:
The Fifth Third Bank
Number 1090D2
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Transfer Agent responsible for CheckFree Holdings
Corporation
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
(a) The Board of Directors of the Company may, from time to time,
before and after the Distribution Date, without the approval of any holders of
Rights, supplement or amend any provision of this Agreement in any manner,
whether or not such supplement or amendment is adverse to any holder of Rights,
and direct the Rights Agent so to supplement or amend such provision, and the
Rights Agent shall so supplement or amend such provision; provided, however,
that from and after the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event, (iii) the Redemption Date
or (iv) the Expiration Date, this Agreement shall not be supplemented or amended
in any manner that would materially and adversely affect any holder of
outstanding Rights other than a 15% Stockholder or a Surviving Person; and
provided further, however, that from and after the first date upon which there
shall exist a 15% Stockholder, this Agreement shall not be supplemented or
amended in any manner without the approval of a majority of those directors of
the Company who were directors prior to such date.
(b) From and after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
earlier of the Redemption Date or the Expiration Date, the Company shall not
effect any amendment to the Certificate of Designations for the Preferred Shares
that would materially and adversely affect the rights, privileges or preferences
of the Preferred Shares without the prior approval of the holders of two-thirds
or more of the then outstanding Rights.
SECTION 28. CERTAIN COVENANTS.
Subject to Section 27 hereof and the other provisions of this
Agreement, from and after the earlier of the date of the first Section 11(a)(ii)
Event or the date of the first Section 13(a) Event and prior to the earlier of
the Redemption Date or the Expiration Date, the Company shall not (a) issue or
sell, or permit any Subsidiary to issue or sell, to a 15% Stockholder or a
Surviving Person, or any Affiliate or Associate of a 15% Stockholder or a
Surviving Person, or any Person holding Voting
31
<PAGE> 36
Shares of the Company that are Beneficially Owned by a 15% Stockholder or a
Surviving Person, (i) any rights, options, warrants or convertible securities on
terms similar to, or that materially adversely affect the value of, the Rights
or (ii) Preferred Shares, Common Shares or shares of any other class of capital
stock, if such sale is intended to or would materially adversely affect the
value of the Rights, or (b) take any other action that is intended to or would
materially adversely affect the value of the Rights.
SECTION 29. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent, the registered holders of the Right
Certificates (other than those representing Rights that have become null and
void) and the certificates for Common Shares representing Rights (other than
those Rights that have become null and void) any legal or equitable right,
remedy or claim under this Agreement, and this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent, such registered holders
of Right Certificates and such certificates for Common Shares representing
Rights.
SECTION 31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
SECTION 32. GOVERNING LAW.
This Agreement and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such
state applicable to contracts made and performed entirely within such state;
provided, however that with respect solely to matters regarding the rights and
obligations of the Rights Agent hereunder, the laws of the State of Ohio shall
govern.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each
such counterpart shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same instrument.
32
<PAGE> 37
SECTION 34. DESCRIPTIVE HEADINGS.
Descriptive headings of the several sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CHECKFREE HOLDINGS CORPORATION
By: /s/ Peter J. Kight
--------------------------------
Peter J. Kight
Chairman of the Board, President
and Chief Executive Officer
THE FIFTH THIRD BANK
as Rights Agent
By: /s/ Dana S. Hushak
--------------------------------
Name: Dana S. Hushak
Title: Vice President
33
<PAGE> 1
Exhibit 3(d)
CHECKFREE
NUMBER SHARES
C-
INCORPORATED UNDER THE LAWS OF CUSIP 162816 1 02
THE STATE OF DELAWARE
COMMON SHARES
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE COMMON SHARES, $.01 PAR VALUE OF
------------------ CHECKFREE HOLDINGS CORPORATION ------------------
transferable on the books of the corporation by the holder of this certificate
in person or by duly authorized attorney upon surrender of this certificate
properly endorsed. This certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the corporation and the facsimile signatures of
its duly authorized officers.
Dated CHECKFREE HOLDINGS CORPORATION
Secretary Chairman of the Board
AUTHORIZED SIGNATURE
COUNTERSIGNED AND REGISTERED:
FIFTH THIRD BANK
(CINCINNATI, OHIO) TRANSFER AGENT
<PAGE> 2
CHECKFREE HOLDINGS CORPORATION
WILL MAIL TO ANY OF ITS STOCKHOLDERS, WITHOUT CHARGE WITHIN FIVE DAYS AFTER
RECEIPT OF WRITTEN REQUEST THEREFOR A COPY OF THE EXPRESS TERMS OF THE SHARES
REPRESENTED BY THIS CERTIFICATE AND OF SUCH OTHER CLASS OR CLASSES AND SERIES
OF SHARES, IF ANY, WHICH THE COMPANY MAY BE AUTHORIZED TO ISSUE AT ANY TIME
SUCH REQUEST IS MADE.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as if though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-__________________ Custodian _________________________
TEN ENT - as tenants by the entities (Cust) (Minor)
JT TEN - as joint tenants with
right of survivorship and under Uniform Gifts to Minors
not as tenants in common
Act _______ ________________________________________________
(State)
</TABLE>
Abbreviations in addition to those in the above list may also be used
For value received,______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE:
[______________________________________]________________________ _____________
________________________________________________________________ _____________
Please print or typewrite name and address of assignee
________________________________________________________________ _____________
________________________________________________________________ _____________
________________________________________________________________ _______Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint________________________________________________________________________
_____________________________________________ ________________________ Attorney
to transfer the said shares on the books of the within-named Corporation with
full power of substitution in the premises.
Dated, ____________________________
_____________________ __________________
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the certificate, in
every particular without alteration or
enlargement, or any change whatever.
______________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
This certificate also represents Rights that entitle the holder hereof to
certain rights as set forth in a Rights Agreement by and between the Corporation
and Fifth Third Bank, as Rights Agent (the "Rights Agreement"), the terms and
conditions of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of the Corporation.
Under certain circumstances specified in the Rights Agreement, such Rights
will be represented by separate certificates and will no longer be represented
by this certificate. Under certain circumstances specified in the Rights
Agreement, Rights beneficially owned by certain persons may become null and
void. The Corporation will mail to the record holder of this certificate a
copy of the Rights Agreement without charge promptly following receipt of
a written request therefor.
<PAGE> 1
Exhibit 99(a)
CheckFree Holdings Corporation Formed
CheckFree Corporation and Former Subsidiaries
Now Under Single Corporate Entity
ATLANTA, Dec. 23 /PRNewswire/ -- CheckFree Corporation, (Nasdaq: CKFR)
today announced formation of CheckFree Holdings Corporation, the centerpiece of
a corporate structure enacted by the Board of Directors on December 22, 1997.
It is anticipated that the new corporate structure will substantially
streamline administration and operation of the business of the company. Under
the new structure, CheckFree Corporation, along with its former operating
subsidiaries, become subsidiaries of CheckFree Holdings Corporation. CheckFree
Holdings Corporation has substantially the same certificate of incorporation,
bylaws, officers and directors that CheckFree Corporation had prior to the
reorganization.
The outstanding shares of common stock of CheckFree Corporation have
automatically exchanged on a share-for-share, tax-free basis into shares of
CheckFree Holdings Corporation. CheckFree Holdings Corporation shares have the
same rights and terms as the old CheckFree Corporation shares, including the
stockholder rights plan, and will continue to be traded on the Nasdaq Stock
Market under the symbol "CKFR".
About CheckFree
Founded in 1981, CheckFree Corporation (www.checkfree.com)is the leading
provider of electronic commerce services, software and related products for
more than 2 million consumers, 1,000 businesses and 850 financial institutions.
CheckFree designs, develops and markets services that enable its customers to
make electronic payments and collections, automate paperbased recurring
financial transactions and conduct secure transactions on the Internet.
SOURCE CheckFree Corporation
-0- 12/23/97
/CONTACT: Matt Lewis, CheckFree Corporation, 770-734-3404, email:
[email protected]/
/Web site: http://www.checkfree.com/
(CKFR)
<PAGE> 1
Exhibit 99(b)
December 31, 1997
To the Common Stockholders of
CheckFree Corporation
On December 15, 1997, the Board of Directors initiated a plan for
reorganizing the corporate structure of the CheckFree Corporation into a holding
company organizational structure (the "Reorganization"). The Reorganization was
accomplished on December 22, 1997.
It is anticipated that the Reorganization will substantially streamline
administration and operation of the business of the company. The name of the new
holding company is CheckFree Holdings Corporation. CheckFree Corporation, along
with its operating subsidiaries, are now subsidiaries of CheckFree Holdings
Corporation. CheckFree Holdings Corporation has substantially the same
certificate of incorporation, bylaws, officers and directors that CheckFree
Corporation had prior to the Reorganization.
The outstanding shares of common stock of CheckFree Corporation ("Old
Shares") have automatically converted on a share-for-share, tax free basis into
shares of CheckFree Holdings Corporation ("New Shares"). The New Shares have the
same rights and terms as the Old Shares, including the stockholder rights plan,
and will continue to be traded on the Nasdaq Stock Market under the symbol
"CKFR."
It is not necessary for you to do anything at this time since your
stock certificate(s) representing Old Shares are sufficient to represent your
ownership in CheckFree Holdings Corporation. If you desire, however, your may
exchange your Old Shares for certificates representing New Shares. To exchange
your Old Shares, your stock certificate(s), together with the enclosed Letter of
Transmittal, must be hand delivered or mailed to The Fifth Third Bank. It is
recommended that, if mailed, certificates be sent by registered mail, properly
insured, with return receipt requested.
Please read carefully all instructions contained in the Letter of
Transmittal and make certain that the Letter is completed, dated and signed.
Your stock certificate(s) need not be endorsed or accompanied by separate stock
powers unless a certificate is registered in a name other than that of the
person surrendering the certificate, or the person surrendering the certificate
completes the Special Exchange Instructions or Special Delivery Instructions in
the Letter of Transmittal. Should you have any questions as to how to complete
the Letter of Transmittal, you can contact Fifth Third at 800-837-2755.
Although it is not necessary for you to take any steps to exchange your
certificates now, this step will be required when you wish to transfer your
shares, and you may, therefore, want to complete the process now in order to
avoid any delay when you do wish to transfer.
Sincerely,
Peter J. Kight
Chairman, President, and
Chief Executive Officer
