ARTICLES
OF RESTATEMENT
OF
FRANKLIN
COVEY CO.
In accordance with
Section 16-10a-1007 of the Utah Revised Business Corporation Act (the
“Act”), Franklin Covey
Co., a Utah corporation (the “Company”), hereby
certifies as follows:
1. The name of the
corporation is Franklin Covey Co.
3. The Restated
Articles were adopted by the Company’s Board of Directors on November 12, 2004
and the shareholders at the annual meeting of the shareholders held March 4,
2005 (the “Shareholders’
Meeting”), in accordance
with the requirements of the Act.
4. As of January 7,
2005, the record date for the Shareholders’ Meeting (the “Record Date”), the
following voting groups were entitled to vote separately on the Restated
Articles:
· |
Common
Stock. With respect to the voting group comprised of the holders of the
common stock, par value $0.05 per share (the “Common Stock”), (i) the
number of outstanding shares of Common Stock was 20,654,403, (ii) the
number of votes entitled to be cast by the holders of Common Stock was
20,654,403 and (iii) the number of Common Stock votes indisputably
represented at the Shareholders’ Meeting was
20,011,056. |
· |
Series A
Preferred Stock. With respect to the voting group comprised of the holders
of the Series A Preferred Stock, no par value per share, (the “Series A
Preferred Stock”), (i) the number of outstanding shares of Series A
Preferred Stock was 873,457.404, (ii) the number of votes entitled to be
cast by the holders of Series A Preferred Stock was 873,457.404 and (iii)
the number of Series A Preferred Stock votes indisputably represented at
the Shareholders’ Meeting was 838,121.47. |
· |
Series B
Preferred Stock. No shares of Series B Preferred Stock, no par value per
share, were outstanding, and therefore no holders were entitled to vote at
the Shareholders’ Meeting as a voting
group. |
· |
Common
Equivalent Shares. With respect to the voting group comprised of the
holders of the Common Stock and the Series A Preferred Stock based upon
the Common Stock voting power attributable to the Series A Preferred Stock
as set forth in the Prior Articles (collectively, the “Common Equivalent
Group”), (i) the number of outstanding shares of Common Stock was
20,654,403 and the number of outstanding shares of Series A Preferred
Stock was 873,457.404, (ii) the number of votes entitled to be cast by the
Common Equivalent Group was 27,642,068 and (iii) the number of Common
Equivalent Group votes indisputably represented at the Shareholders’
Meeting was 26,716,026. |
5. For each voting
group, the following number of votes were cast in favor of approving the
following provisions in the Restated Articles:
(a) To modify the
rights, preferences and limitations of the Series A Preferred Stock and the
Series B Preferred Stock: (i) 15,279,881 Common Equivalent Group votes, (ii)
8,617,174 Common Stock votes and (iii) 832,838.6 Series A Preferred Stock votes.
For each voting group, the number of votes cast in favor of these provisions in
the Restated Articles was sufficient for approval by such voting
group.
(b) To effect a
one-to-four forward split of each outstanding share of Series A Preferred Stock:
(i) 15,280,572 Common Equivalent Group votes and (ii) 832,919.86 Series A
Preferred Stock votes. For each voting group, the number of votes cast in favor
of these provisions in the Restated Articles was sufficient for approval by such
voting group.
(c) To increase the
Company’s authorized Preferred Stock, no par value per share, from 4,000,000 to
14,000,000 shares: (i) 15,205,366 Common Equivalent Group votes, (ii) 8,541,984
Common Stock votes and (iii) 832,922.98 Series A Preferred Stock votes. For each
voting group, the number of votes cast in favor of this provision in the
Restated Articles was sufficient for approval by such voting group.
(d) To increase the
number of shares of Preferred Stock designated as Series A Preferred Stock from
1,500,000 to 4,000,000 shares: (i) 15,220,527 Common Equivalent Group votes and
(ii) 832,922.98 Series A Preferred Stock votes. For each voting group, the
number of votes cast in favor of this provision in the Restated Articles was
sufficient for approval by such voting group.
(e) To increase the
number of shares of Preferred Stock designated as Series B Preferred Stock from
400,000 to 4,000,000 shares: (i) 15,222,695 Common Equivalent Group votes and
(ii) 832,841.73 Series A Preferred Stock votes. For each voting group, the
number of votes cast in favor of this provision in the Restated Articles was
sufficient for approval by such voting group.
(f) To eliminate from
or modify in the Prior Articles certain miscellaneous provisions such as
simplifying the provision providing for a detailed list of the purposes of the
Company, eliminating the provision designating the Company’s registered office
and agent, eliminating the provision authorizing the Board of Directors to make
partial liquidating distributions or to encumber the Company’s assets and
eliminating the provision addressing interested director transactions, which is
substantially similar to a provision of the Act concerning interested director
transactions: (i) 15,195,105 Common Equivalent Group votes and (ii) 832,838.79
Series A Preferred Stock votes. For each voting group, the number of votes cast
in favor of this provision in the Restated Articles was sufficient for approval
by such voting group.
IN WITNESS
WHEREOF, these Articles of Restatement have been executed on behalf of the
Company as of this 4th day of March, 2005.
|
FRANKLIN
COVEY CO. |
|
|
|
|
By: |
/s/
ROBERT A. WHITMAN |
|
Name: |
Robert
A. Whitman |
|
Title: |
Chief
Executive Officer |
|
EXHIBIT
A
OF
FRANKLIN
COVEY CO.
The name of the
corporation is Franklin Covey Co. (the “Company”).
The purpose of the
Company is to engage in any lawful act or activity for which corporations may be
organized under the Utah Revised Business Corporation Act, as amended (the
“Act”).
The Company is
authorized to issue two classes of stock, which shall be designated,
respectively, as common stock, par value $0.05 per share (“Common
Stock”), and preferred
stock, no par value (“Preferred
Stock”). The total
number of shares of capital stock that the Company shall have authority to issue
is 54,000,000, consisting of 40,000,000 shares of Common Stock, and 14,000,000
shares of Preferred Stock.
The designation,
powers, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, of each class
of stock, and the express grant of authority to the Board of Directors to fix by
resolution the designation, powers, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, of each share of Preferred Stock which are not fixed by
these Amended and Restated Articles of Incorporation, are as
follows:
1. Dividends. Subject to the
rights of the holders of Preferred Stock, and subject to any other provisions of
the Articles of Incorporation, holders of Common Stock shall be entitled to
receive such dividends and other distributions in cash, stock or property of the
Company as may be declared thereon by the Board of Directors from time to time
out of assets or funds of the Company legally available therefor.
2. Liquidation;
Dissolution. In the event of
any liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or involuntary, after payment or provision for payment of the
debts and other liabilities of the Company and after payment or provision for
payment to the holders of each series of Preferred Stock of all amounts required
in accordance with Section B.3 of this Article IV, the remaining assets and
funds of the Company shall be divided among and paid to the holders of Common
Stock.
(a) At every meeting
of the stockholders every holder of Common Stock shall be entitled to one vote
in person or by proxy for each share of such Stock standing in his name on the
stock transfer records of the Company.
(b) No shareholder
shall have the right to cumulate votes in the election of
directors.
4. Preemptive
Rights. No holder of
shares of Common Stock of the Company shall, as such holder, be entitled as of
right to subscribe for, purchase or receive any part of any new or additional
issue of stock of any class, whether now or hereafter authorized, or of bonds,
debentures or other securities convertible into or exchangeable for stock, but
all such additional shares of stock of any class, or bonds, debentures or other
securities convertible into or exchangeable for stock, may be issued and
disposed of by the Board of Directors on such terms and for such consideration,
so far as may be permitted by law, and to such persons, as the Board of
Directors in its absolute discretion may deem advisable.
1. Number;
Series. The Preferred
Stock may be issued in one or more series, from time to time, with each such
series to have such designation, powers, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions thereof, as shall be stated and expressed in Section C of this
Article IV or in the resolution or resolutions providing for the issue of such
series adopted by the Board of Directors of the Company, subject to the
limitations prescribed by law and in accordance with the provisions hereof, the
Board of Directors being hereby expressly vested with authority to adopt any
such resolution or resolutions. The authority of the Board of Directors with
respect to each such series shall include, but not be limited to, the
determination or fixing of the following:
(a) The distinctive
designation and number of shares comprising such series, which number may
(except where otherwise provided by the Board of Directors in creating such
series) be increased or decreased (but not below the number of shares then
outstanding) from time to time by like action of the Board of
Directors;
(b) The dividend rate
of such series, the conditions and times upon which such dividends shall be
payable, the relation which such dividends shall bear to the dividends payable
on any other class or classes of stock or series thereof, or on the other series
of the same class, and whether dividends shall be cumulative or
noncumulative;
(c) The conditions
upon which the shares of such series shall be subject to redemption by the
Company and the times, prices and other terms and provisions upon which the
shares of the series may be redeemed;
(d) Whether or not the
shares of the series shall be subject to the operation of retirement or sinking
fund provisions to be applied to the purchase or redemption of such shares and,
if such retirement or sinking fund be established, the annual amount thereof and
the terms and provisions relative to the operation thereof;
(e) Whether or not the
shares of the series shall be convertible into or exchangeable for shares of any
other class or classes, with or without par value, or of any other series of the
same class and, if provision is made for conversion or exchange, the times,
prices, rates, adjustments, and other terms and conditions of such conversion or
exchange;
(f) Whether or not the
shares of the series shall have voting rights, in addition to the voting rights
provided by law, and, if so, subject to the limitations hereinafter set forth,
the terms of such voting rights;
(g) The rights of the
shares of the series in the event of voluntary or involuntary liquidation,
dissolution, or upon distribution of assets of the Company; and
(h) Any other powers,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, of the shares of such
series, as the Board of Directors may deem advisable and as shall not be
inconsistent with the provisions of these Articles of
Incorporation.
2. Dividends. The holders of
the shares of Preferred Stock of each series shall be entitled to receive, when
and as declared by the Board of Directors, out of the funds legally available
for the payment of dividends, dividends at the rate fixed by the Board of
Directors for such series for the current period and, if cumulative, for all
prior periods for which such dividends are cumulative, and no more, before any
dividends, other than dividends payable in Common Stock, shall be declared and
paid, or set apart for payment, on the Common Stock with respect to the same
dividend period.
Whenever, at any
time, dividends on the then outstanding Preferred Stock as may be required with
respect to any series outstanding shall have been paid or declared and set apart
for payment on the then outstanding Preferred Stock, and after complying with
respect to any retirement or sinking fund or funds for all applicable series of
Preferred Stock, the Board of Directors may, subject to the provisions of
Section C of this Article IV or the resolution or resolutions creating the
series of Preferred Stock, declare and pay dividends on the Common stock as
provided in Section A.1 of this Article IV, and the holders of shares of
Preferred Stock shall not be entitled to share therein, except as otherwise
provided in the resolution or resolutions creating any series.
3. Liquidation;
Dissolution. The holders of
the Preferred Stock of each series shall be entitled upon liquidation or
dissolution of the Company to such preferences as are provided in Section C of
this Article IV or the resolution or resolutions creating such series of
Preferred Stock, and no more, before any distribution of the assets of the
Company shall be made to the holders of shares of the Common Stock. Whenever the
holders of shares of the Preferred Stock shall have been paid the full amounts
to which they shall be entitled, the holders of shares of the Common Stock shall
be entitled to share in all assets of the Company remaining as provided in
Section A.2 of this Article IV. If, upon such liquidation, dissolution or
winding up, the assets of the Company distributable as aforesaid among the
holders of the Preferred Stock is insufficient to permit the payment to them of
said preferential amounts, then such assets shall be distributed ratably among
such holders in proportion to the respective total amounts which they shall be
entitled to receive as provided in this Section B.3.
4. Voting. Except as
otherwise provided by a resolution or resolutions of the Board of Directors
creating any series of Preferred Stock or by the Act, the Common Stock issued
and outstanding shall have and possess the exclusive power to vote for the
election of directors and for all other purposes as provided in Section A.3 of
this Article IV.
5. Preemptive
Rights. Except as may be
provided in the resolution or resolutions of the Board of Directors providing
for the issue of any series of Preferred Stock, no holder of shares of the
Preferred Stock of the Company shall, as such holder, be entitled as of right to
subscribe for, purchase or receive any part of any new or additional issue of
stock of any class, whether now or hereafter authorized, or of bonds, debentures
or other securities convertible into or exchangeable for stock, but all such
additional shares of stock of any class, or bonds, debentures or other
securities convertible into or exchangeable for stock, may be issued and
disposed of by the Board of Directors on such terms and for such consideration,
so far as may be permitted by laws, and to such persons, as the Board of
Directors in its absolute discretion may deem advisable.
C. Series A and
Series B Preferred Stock.
1. Certain Defined
Terms, Etc. In addition to the
terms defined elsewhere herein, certain terms used in this Article IV.C
with initial capital letters have the meanings given to them in Section 11.
References in this Article IV.C to Sections are, unless otherwise stated,
references to Sections of this Article IV.C.
(a) 4,000,000 shares of
Preferred Stock of the Company are designated as “Series A Preferred Stock”
having the powers, preferences and relative participating, optional and other
special rights and the qualifications, limitations or restrictions thereof as
set forth in this Article IV.C (the “Series A
Preferred”).
Effective as of
the date these Restated Articles are duly filed with the Utah Department of
Commerce, Division of Corporations and Commercial Code (the “Effective
Date”), each share of
Series A Preferred issued and outstanding immediately prior to the Effective
Date (the “Old Series A
Stock”) shall
automatically and without any action on the part of the holder thereof be split,
reclassified, changed and converted into four shares of Series A Preferred (the
“New Series A
Stock”). The foregoing
forward stock split shall be subject to the treatment of fractional share
interests as described below.
Each holder of a
certificate or certificates, which immediately prior to the Effective Date
represented outstanding shares of Old Series A Stock (the “Old Series A
Certificates”), shall be
entitled to receive, as soon as reasonably practicable following the surrender
of such Old Series A Certificates to the Company or the Company’s transfer agent
for cancellation, a new certificate or certificates (the “New Series A
Certificates”) representing
that number of whole shares of the New Series A Stock into which and for which
the shares of the Old Series A Stock, formerly represented by such Old Series A
Certificates so surrendered, are reclassified under the terms hereof. Each New
Series A Certificate issued by the Company shall bear the legend required by
Section 8(b)(iii).
From and after the
Effective Date, and until such certificates are surrendered, the Old Series A
Certificates shall be deemed for all corporate purposes to evidence ownership of
that number of whole shares of the New Series A Stock into which and for which
the shares of the Old Series A Stock have been reclassified under the terms
hereof. No certificates or scrip representing fractional share interests in New
Series A Stock will be issued, and no such fractional share interest will
entitle the holder thereof to vote, or to any rights of a stockholder of the
Company. A holder of Old Series A Certificates shall receive, as soon as
reasonably practicable following the surrender of such certificates, in lieu of
any fraction of a share of New Series A Stock to which the holder would
otherwise be entitled, a cash payment therefor. Such cash payment will
equal the fraction to which the stockholder would otherwise be entitled
multiplied by $25.00. If more than one Old Series A Certificate shall be
surrendered at one time for the account of the same stockholder, the number of
full shares of New Series A Stock for which New Series A Certificates shall be
issued shall be computed on the basis of the aggregate number of shares of New
Series A Stock represented by the Old Series A Certificates so
surrendered. In the event that the Company or the Company’s transfer agent
determines that a holder of Old Series A Certificates has not tendered all such
certificates for exchange, the Company or the Company’s transfer agent shall
carry forward any fractional share of New Series A Stock until all Old Series A
Certificates held by such holder have been presented for exchange such that
payment for fractional shares to any one person shall not exceed the value of
one share of New Series A Stock held by such person. All references
elsewhere in these Restated Articles to the “Series A Preferred” shall, after
the Effective Date, refer to the New Series A Stock.
(b) 4,000,000 shares
of Preferred Stock of the Company are designated as “Series B Preferred
Stock” having the powers, preferences and relative participating, optional and
other special rights and the qualifications, limitations or restrictions thereof
as set forth in this Article IV.C (the “Series B
Preferred”). The Series A
Preferred and the Series B Preferred are together referred to herein as the
“Senior
Preferred.”
3. Dividends and
Distributions.
(a) The holders of
shares of Senior Preferred, if any, and in preference to the holders of Common
Stock, and of any other class or series of Preferred Stock or other capital
stock of the Company (together with the Common Stock, “Junior
Stock”), will be
entitled to receive dividends at an annual rate of $2.50 per share (as adjusted
for any stock dividends, combinations or splits with respect to such shares)
(such dividends, “Regular
Dividends”), payable
quarterly in arrears on the 15th day of each of March, June, September and
December of each year or such other dates as are the 15th day of the month
following the end of each of the Company’s fiscal quarters (except that if any
such date is a Saturday, Sunday or legal holiday, then such dividend will be
payable on the next day that is not a legal holiday) (the “Dividend
Payment Date”), commencing,
with respect to each share of Senior Preferred, on the first date on which such
share of Senior Preferred is issued (the “Initial
Issuance Date”) to such
holders, prior and in preference to any declaration or payment of any dividend
on any Junior Stock; provided that dividends on
shares of Series B Preferred issued upon conversion of shares of Series A
Preferred will commence on the Initial Issuance Date of the shares of Series A
Preferred that are converted into such shares of Series B Preferred. Regular
Dividends will be cumulative and accrue with respect to each outstanding share
of Senior Preferred from the date dividends commence on such share (the
“Dividend
Commencement Date”), whether or not
declared by the Board and whether or not there are funds of the Company legally
available for payment of such dividends. No accrued or accumulated dividends on
the Senior Preferred will bear interest.
(b) Each Regular
Dividend will be payable to holders of record as they appear on the stock books
of the Company on the last day of each fiscal quarter of the
Company.
(a) In addition to the
rights provided in Sections 4(b), 4(c) and 4(d), holders of record of
Series A Preferred (the “Series A
Holders”) will have the
right to vote or consent in writing together with the Common Stock on all
matters presented to the holders of Common Stock as set forth in Section 4(e).
Apart from the rights provided in Sections 4(b), 4(c) and 4(d), holders of
record of Series B Preferred (the “Series B
Holders”) will have no
voting rights.
(b) In addition to the
voting rights provided by Sections 4(a), 4(c) and 4(d), as long as any
shares of Senior Preferred are outstanding, the affirmative vote or consent of
the holders of a majority of the then-outstanding shares of Senior Preferred,
voting as a separate voting group, will be required in order for the Company
to:
(i) amend, alter or
repeal, whether by merger, consolidation or otherwise, the terms of this
Article IV.C or any other provision of the Restated Articles, in any way
that adversely affects any of the powers, designations, preferences and
relative, participating, optional and other special rights of the Senior
Preferred, and the qualifications, limitations or restrictions
thereof;
(ii) issue any shares
of capital stock ranking prior or superior to, or on parity with, the Senior
Preferred with respect to dividends or other distributions or upon liquidation,
dissolution or winding up of the Company, or issue any Junior Stock other than
Common Stock;
(iii) subdivide or
otherwise change shares of Senior Preferred into a different number of shares
whether in a merger, consolidation, combination, recapitalization,
reorganization or otherwise; or
(iv) issue any shares
of Senior Preferred other than in accordance with this
Article IV.C.
(c) In addition to the
voting rights provided by Sections 4(a), 4(b) and 4(d), the affirmative
vote or consent of the holders of a majority of the then-outstanding shares of
Senior Preferred, voting as a separate voting group, will be required for the
Company to declare or pay any dividends or other distributions on or in respect
of Junior Stock (a “Junior Stock
Dividend”); provided, however, that such
affirmative vote or consent of the holder of Senior Preferred shall not be
required for any proposed Junior Stock Dividend if (i) the Company has paid all
Regular Dividends for all fiscal quarters preceding the fiscal quarter in which
the Company proposes to pay such Junior Stock Dividend and (ii) the Company has
reserved sufficient funds to pay the Regular Dividend that will become payable
for such fiscal quarter in which the Company proposes to pay a Junior Stock
Dividend in accordance with Section 3.
(d) In addition to the
voting rights provided by Sections 4(a), 4(b) and 4(c), whenever dividends
of the Senior Preferred shall be in arrears in an amount equal to at least six
quarterly dividends (whether or not consecutive), the number of members of the
Board shall be increased by two and the holders of the Senior Preferred (voting
as a voting group) will be entitled to vote for and elect such two additional
directors of the Company at any meeting of shareholders of the Company at which
directors are to be elected during the period such dividends remain in arrears.
Whenever the right to elect directors shall have accrued to the holders of the
Senior Preferred, the proper officers of the Company shall call a meeting for
the election of such directors, such meeting to be held not less than 45 nor
more than 90 days after the accrual of such right. The right of the holders of
the Senior Preferred to vote for such two additional directors shall terminate
when all accrued and unpaid dividends on the Senior Preferred have been paid or
set apart for payment. The term of office of all directors so elected shall
terminate immediately upon the termination of the right of the holders of the
Senior Preferred to vote for such two additional directors. In connection with
such right to vote, each holder of Senior Preferred will have one vote for each
share of Senior Preferred held.
(e) On all matters
presented before the holders of the Common Stock for their vote or consent, each
share of Series A Preferred will be entitled to the number of votes equal
to two shares of Common Stock (as adjusted for any stock dividends, combinations
or splits with respect to shares of Common Stock); provided, however, the aggregate
number of votes attributable to any Series A Holder’s shares of Series A
Preferred shall be reduced by the sum of (x) the number of shares of Common
Stock acquired by such Series A Holder upon the exercise of any warrant issued
to such Series A Holder pursuant to the Preferred Stock Amendment and Warrant
Issuance Agreement dated November 29, 2004 between the Company and the investor
identified therein (each, a “Warrant”) and (y) the
number of shares of Common Stock purchasable upon exercise of any Warrant that
has been sold or transferred by such Series A Holder to any other person or
entity.
(f) Notwithstanding
any other provision of the Restated Articles or Bylaws of the Company, the
holders of a majority of the then-outstanding Senior Preferred may consent in
writing to any matter about which a class vote is contemplated by
Section 4(b), 4(c) or 4(d), which written consent when so executed by the
holders of a majority of the then-outstanding Senior Preferred will be deemed,
subject to applicable Utah law, to satisfy the requirements of
Section 4(b), 4(c) or 4(d), as applicable.
5. Reacquired
Shares. Any shares of
Senior Preferred that are issued and thereafter cease to be issued and
outstanding for any reason, whether because shares of Series A Preferred are
converted into shares of Series B Preferred pursuant to Section 8 or shares of
Senior Preferred are purchased or otherwise acquired by the Company in any
manner whatsoever, will reduce the number of authorized shares of either
Series A Preferred or Series B Preferred, as applicable, will be restored
to the status of authorized but unissued shares of Preferred Stock of the
Company, and may be reissued as part of a new series of Preferred Stock of the
Company subject to the conditions and restrictions on issuance set forth herein
or in any other articles of amendment creating a series of Preferred Stock or
any other stock of the Company.
6. Liquidation,
Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution will be
made to the holders of shares of Junior Stock unless, prior thereto, the holders
of shares of Senior Preferred shall have received in cash $25.00 per share (the
“Liquidation Price”) plus accrued and unpaid dividends to the date of payment.
Neither a consolidation or merger of the Company with another corporation or
other legal entity, nor a sale or transfer of all or part of the Company’s
assets for cash, securities or other property will be considered a liquidation,
dissolution or winding up of the Company for purposes of this
Section 6.
(a) Redemption
Right. The shares of
Senior Preferred will not be redeemable, except as otherwise agreed between the
Company and any holder or holders of Senior Preferred and except that
(i) during the period beginning on March 8, 2005 and ending on
March 8, 2006 (the “Initial
Redemption Period”), the Company
may, upon 15 business days prior notice to the holders of Senior Preferred,
redeem all or any portion of the then-outstanding Senior Preferred at 100% of
the then-applicable Liquidation Price plus accrued and unpaid dividends to the
date of payment and (ii) beginning on the fifth anniversary of the
expiration of the Initial Redemption Period, the Company may, upon 15 business
days prior notice to the holders of Senior Preferred, redeem all or any portion
of the then-outstanding Senior Preferred at 101% of the then-applicable
Liquidation Price plus accrued and unpaid dividends to the date of payment. Any
partial redemption effected pursuant to this Section 7 shall be made on a
pro-rata basis among the holders of Senior Preferred in proportion to the shares
of Senior Preferred then held by them. Notwithstanding anything to the contrary,
the mandatory conversion of shares of Series A Preferred into shares of Series B
Preferred pursuant to Section 8 hereof may occur at any time during the
notice periods set forth in clauses (i) and (ii) of this
Section 7(a).
(b) Redemption
Notice. Any notice of
redemption given pursuant to Section 7(a) (“Redemption
Notice”) will be given
in writing by the Company by first class mail, postage prepaid, to each holder
of record of Senior Preferred on the record date fixed for such redemption by
the Board at such holder’s address as it appears on the stock books of the
Company, provided that no failure to give such notice nor any deficiency therein
will affect the validity of the procedure for redemption of any shares of Senior
Preferred except as to the holder or holders to whom the Company has failed to
give such notice or whose notice was defective. The Redemption Notice will
state:
(i) the redemption
price;
(ii) the total number
of shares of Senior Preferred being redeemed;
(iii) the date fixed for
redemption by the Board, which date will occur within the applicable redemption
period specified in Section 7(a) above (the “Redemption
Date”);
(iv) the place or
places and manner in which the holder is to surrender his or her certificate(s)
to the Company; and
(v) that dividends on
the shares of Senior Preferred to be redeemed will cease to accumulate on the
Redemption Date unless the Company defaults on the redemption
price.
Upon surrender of
the certificate(s) representing shares of Senior Preferred that are the subject
of redemption pursuant to Section 7(a), duly endorsed (or otherwise in
proper form for transfer, as determined by the Company), in the manner and at
the place designated in the Redemption Notice and on the Redemption Date, the
full redemption price for such shares will be paid in cash to the Person whose
name appears on such certificate(s) as the owner thereof, and each surrendered
certificate will be canceled and retired.
(c) Senior
Dividends. On and after the
Redemption Date or on or after the date of redemption otherwise agreed upon by
and between the Company and any holder or holders of shares of Senior Preferred,
unless the Company defaults in the payment in full of the applicable redemption
price, dividends on the Senior Preferred to be redeemed will cease to
accumulate, and all rights of the holders thereof will terminate with respect
thereto on the Redemption Date (or such other redemption date, if applicable),
other than the right to receive the applicable redemption price; provided, however, that if a
Redemption Notice has been given as provided in Section 7(b) and the funds
necessary for redemption (including an amount in cash in respect of all
dividends that will accumulate to the Redemption Date) have been irrevocably
deposited in trust with a bank having an aggregate shareholders’ equity of at
least $5.0 billion for the equal and ratable benefit of all holders of shares of
Senior Preferred that are to be redeemed, then, at the close of business on the
day on which such funds are deposited in trust, dividends on the Senior
Preferred to be redeemed will cease to accumulate and the holders thereof will
cease to be shareholders of the Company and be entitled only to receive the
redemption price.
(a) No Optional
Conversion. Neither the
Series A Preferred nor the Series B Preferred will be convertible into the
Common Stock or any other class or series of the Company’s capital stock except
as provided in Section 8(b).
(b) Mandatory
Conversion.
(i) If any Series A
Holder voluntarily or involuntarily transfers, sells, assigns, devises,
distributes or bequeaths any of such Series A Holder’s interest in any shares of
Series A Preferred (including, without limitation, the power to vote or provide
a consent with respect to any shares of Series A Preferred by proxy or
otherwise) (a “Transfer”) to any Person
(the “Transferee”) other than a
Permitted Transferee, then each share of Series A Preferred subject to such
Transfer automatically, without any action on the part of the Company or such
Series A Holder, will be deemed to be converted into one share of fully paid and
non-assessable Series B Preferred immediately before such transfer is completed.
In the event of such a transfer, the Company and the transfer agent for the
Series A Preferred, if any (the “Transfer
Agent”), shall not
register the transfer of such shares of Series A Preferred except to the Company
or a Permitted Transferee of such Series A Holder; provided, however, that such
restrictions on transfer shall not apply to a Business Combination of the
Company with or into another corporation or entity, if the Company is not the
Surviving Person.
(ii) Notwithstanding
anything to the contrary set forth herein, any Series A Holder may pledge such
Series A Holder’s shares to a financial institution pursuant to a bona fide
pledge of such shares as collateral security of indebtedness due to the pledgee;
provided, however, that such shares
shall remain subject to the provisions of this Section 8(b) and may not be voted
by the pledgee and, upon any transfer of such shares to the pledgee, such shares
shall convert into Series B shares in accordance with paragraph (i)
above.
(iii) Each certificate
representing shares of Series A Preferred shall be endorsed with a legend that
states that immediately prior to any Transfer of such shares of Series A
Preferred such shares automatically will be converted into shares of Series B
Preferred in accordance with the Restated Articles, and no such transfer will be
valid unless such transfer has been recorded in stock transfer records kept by
the Company or the Transfer Agent.
(iv) To effect any
Transfer of Series A Preferred (which shall be converted into shares of Series B
Preferred immediately prior to such Transfer as set forth in this Section 8(b)),
the Series A Holder proposing to transfer such converted shares of Series A
Preferred must surrender the certificate(s) representing such shares at the
office of the Company or the Transfer Agent for the Series A Preferred with
instructions identifying the Transferee proposed to receive converted shares of
Series B Preferred. Thereupon, there shall be issued and delivered to such
Transferee at such office in the name of the Transferee a certificate or
certificates for the number of shares of Series B Preferred into which the
Series A Preferred were converted.
(c) Reservation of
Stock Issuable Upon Conversion. The Company will
at all times reserve and keep available out of its authorized but unissued
shares of Series B Preferred solely for the purpose of effecting the conversion
of the shares of the Series A Preferred such number of its shares of Series
B Preferred as will from time to time be sufficient to effect the conversion of
all then-outstanding shares of the Series A Preferred; and if at any time
the number of authorized but unissued shares of Series B Preferred will not be
sufficient to effect the conversion of all then-outstanding shares of the
Series A Preferred, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Series B Preferred to such number of shares as will be sufficient for
such purpose.
9. Fractional
Shares. Following the
split of the Old Series A Stock into the New Series A Stock, the Senior
Preferred may not be issued in fractions of a share.
10. Rank. The
Series A Preferred and the Series B Preferred will have equal rank. The
Senior Preferred will rank senior as to all capital stock of the Company,
including all Junior Stock, in each case as to the payment of dividends or other
distributions or upon liquidation, dissolution or winding up.
11. Certain Defined
Terms. In addition to
the terms defined elsewhere in this Article IV.C, the following terms will
have the following meanings when used herein with initial capital
letters:
(a) “Affiliate” of any Person
means any other Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
such Person; and, for purposes of this definition only, “control” (including the
terms “controlling,” “controlled by,” and “under common control with”) means the
possession, direct or indirect, of the power to direct or cause the direction of
the management, policies or activities of a Person whether through the ownership
of securities, by contract or agency or otherwise;
(b) “Business
Combination” means any
merger, consolidation, combination, recapitalization, reorganization or other
transaction (whether or not the Company is the Surviving Person);
(c) “Permitted
Transferee” means, with
respect to any Series A Holder, any Person that is (i) an Affiliate of such
Series A Holder, (ii) a stockholder, partner or member or other equity owner
holding at least 5% of the outstanding equity of such Series A Holder
(calculated on a fully diluted basis), or (iii) such Series A Holder’s immediate
family member or a trust for the benefit of such Series A Holder;
(d) “Person” means any
individual, firm, corporation or other entity and included any successor
(whether by merger or otherwise) of such entity; and
(e) “Surviving
Person” means the
continuing, surviving or resulting Person in a Business Combination, the Person
receiving a transfer of all or a substantial part of the properties and assets
of the Company, or the Person consolidating with or merging into the Company in
a Business Combination in which the Company is the continuing or surviving
Person, but in connection with which the Senior Preferred is exchanged or
converted into the securities of any other Person or the right to receive cash
or any other property.
To the fullest
extent permitted by the Act or pursuant to any successor statute with similar
effect, no director shall be liable to the Company or its shareholders for
monetary damages. If the laws of the State of Utah are amended after the
adoption of these Amended and Restated Articles of Incorporation to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Company shall be eliminated
or limited to the fullest extent permitted by the laws of the State of Utah, as
so amended. The Company is authorized to indemnify directors and officers of the
Company to the fullest extent permitted under applicable laws. Any repeal or
modification of any applicable law or the foregoing provisions of this Article V
shall not adversely affect any right of indemnification or limitation of
liability of a director of the Company relating to acts or omissions occurring
prior to such repeal or modification.