Filed by the
registrant ☒ Filed by a party other than the
registrant ☐
DIRECTOR COMPENSATION AND BENEFITS
Overview
In
December 2013, the Board approved a new arrangement to compensate non-employee directors for their service as Board members. Each director received 14,382 shares of restricted stock, vesting in three tranches of 4,794 shares on the first, second and
third anniversary of the grant, as compensation for a three year period. In addition, in fiscal 2016, Dr. Frank and Mr. Bethune each received fees for committee participation and each of Mr. Bethune and Ms. Felch received fees
for providing special assistance to management in connection with designated projects.
As described below, two of the Companys
directors, William R. Gargiulo, Jr. and Sharon Meckes, received consulting fees during fiscal 2016.
Director Summary
Compensation Table
The following table provides information concerning the compensation paid by the Company in fiscal 2016 to each
person who served as a director during fiscal 2016 who was not an executive officer of the Company on September 30, 2016.
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Name
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Fees Earned
or Paid in
Cash (1)
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Stock
Awards
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All Other
Compensation (2)
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Total
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William R. Gargiulo, Jr.
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$
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64,000
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$
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64,000
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David R. Bethune
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$
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120,391
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$
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120,391
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Mary Margaret Frank, Ph.D.
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$
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8,000
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$
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8,000
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Donna Felch
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$
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150,000
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$
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150,000
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Andrew S. Love
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Sharon Meckes
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$
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30,000
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$
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11,431
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$
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41,431
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(1)
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The amount for Dr. Frank represents fees paid for committee participation. The amount for Mr. Bethune represents $3,000 of fees paid for committee participation and $117,391 of fees paid for providing special
assistance to management in connection with designated projects. The amount for Ms. Felch represents fees paid for providing special assistance to management in connection with designated projects. The amount for Ms. Meckes represents fees
paid pursuant to her election to receive board compensation in fiscal 2016 in the form of cash.
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(2)
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Through October 31, 2016, Mr. Gargiulo was a consultant to the Company and served as the Corporate Secretary. In this role, he was responsible for scheduling all board and board committee meetings and
distribution of material and preparation and approval of minutes for each meeting. In addition, he was responsible for the Companys relationship with its transfer agent and the issuance of shares. Mr. Gargiulo also assisted
Ms. Greco with investor relations. Mr. Gargiulos compensation for the execution of these responsibilities consisted of a consulting fee of $64,000. He did not receive compensation for being a director of the Company.
Ms. Meckes was a consultant to the Company during fiscal 2016. Ms. Meckes compensation for consulting services during fiscal 2016 was $11,431.
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As of September 30, 2016, the directors listed on the Director Summary Compensation Table
who are not named executive officers held the following number of stock options and shares of unvested restricted stock:
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Option Awards
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Unvested
Stock
Awards
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Name
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Vested
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Unvested
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William R. Gargiulo, Jr.
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David R. Bethune
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54,794
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(1)
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Mary Margaret Frank, Ph.D.
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60,000
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4,794
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(2)
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Donna Felch
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54,794
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(1)
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Andrew S. Love
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Sharon Meckes
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(1)
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Represents (a) 4,794 shares that vest on December 12, 2016, and (b) 16,666 shares that vest on August 27, 2017, 16,667 shares that vest on August 27, 2018, and the right to receive an additional
8,333 shares on August 27, 2017 and an additional 8,334 shares on August 27, 2018 or, at the option of the director, the right to elect cash based on the fair market value of such additional shares on each applicable vesting date.
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(2)
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Represents 4,794 shares that vest on December 12, 2016.
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EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes share information, as of September 30, 2016, for the Companys equity compensation plans and
arrangements. The plans and arrangements dated prior to July 2007 were not required to be approved by the Companys stockholders, and, accordingly, none of these plans or arrangements have been approved by the Companys stockholders. In
March 2008, the Companys stockholders approved the 2008 Stock Incentive Plan and authorized 2 million shares (subject to adjustment in the event of stock splits and other similar events) for issuance under the plan.
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Equity Plan Category
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Number of Shares To Be
Issued Upon Exercise Of
Outstanding Options
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Weighted-Average
Exercise Price Of
Outstanding Options
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Shares Remaining
Available For
Future Issuance
Under Equity
Compensation
Plans
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Equity compensation plans approved by stockholders
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191,999
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(1)
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$
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2.54
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528,698
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Equity compensation plans not approved by stockholders
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90,000
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$
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1.27
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Total
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281,999
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$
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2.14
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528,698
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(1)
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Includes a right to receive a total of 84,499 shares, or at a holders election cash based on the fair market value of the shares, contingent on continued employment or service.
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The Companys equity compensation plans not approved by stockholders consist of the 1997 Stock Option Plan. Options granted under the
1997 Stock Option Plan are non-qualified stock options under the Internal Revenue Code. Options expire at such time as the Board of Directors determines, provided that no stock option may be exercised later than the tenth anniversary of the date of
its grant. Options cannot be exercised until the vesting period, if any, specified by the Board of Directors. Options are not transferable other than by will or the laws of descent and distribution, and may be exercised during the life of the
participant only by him or her. The option price per share is determined by the Board of Directors, but cannot be less than 100 percent of the fair market value of the common stock on the date such option is granted. The 1997 Stock Option Plan
expired as of December 31, 2006, thus no further shares can be issued under this plan.
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FUTURE STOCKHOLDER PROPOSALS
To be considered for inclusion in next years annual proxy materials, stockholder proposals must be submitted in writing by
September 30, 2017 (120 days prior to the anniversary of the mailing date of the proxy statement for the 2017 Annual Meeting) to the Secretary of the Company at 4400 Biscayne Boulevard, Suite 888, Miami, FL 33137.
A stockholder nomination for director or a proposal that will not be included in next years annual proxy materials, but that a
stockholder intends to present in person at next years annual meeting, must comply with the notice, information and consent provisions contained in the Companys Bylaws. In part, the Companys Bylaws provide that to timely submit a
proposal or nominate a director you must do so by submitting the proposal or nomination in writing, to the Companys Secretary at the Companys principal executive offices no later than the close of business on December 16, 2017
(90 days prior to the first anniversary of the meeting date for the 2017 Annual Meeting) nor earlier than the close of business on November 16, 2017 (120 days prior to the first anniversary of meeting date for the 2017 Annual
Meeting). If the Reincorporation Merger is completed, Veru Delawares Bylaws will take effect such that such proposal or nomination must be provided to Veru Delawares Secretary at Veru Delawares principal executive offices no later
than the close of business on January 15, 2018 (60 days prior to the first anniversary of the meeting date for the 2017 Annual Meeting) nor earlier than the close of business on December 16, 2017 (90 days prior to the first
anniversary of meeting date for the 2017 Annual Meeting). In the event that the Company sets an annual meeting date for 2018 that is not within 30 days before or after the anniversary of the 2017 Annual Meeting date, notice by the stockholder
must be received no earlier than the close of business on the 120th day prior to the 2018 Annual Meeting and not later than the close of business on the later of the 90th day prior to the 2018 Annual Meeting or the 10th day following
the day on which public announcement of the date of the 2018 Annual Meeting is first made. If the Reincorporation Merger is completed, Veru Delawares Bylaws will take effect such that in the event that Veru Delaware sets an annual meeting date
for 2018 that is not more than 30 days before or more than 70 days after the anniversary of the 2017 Annual Meeting date, notice by the stockholder must be received no earlier than the close of business on the 90th day prior to the 2018
Annual Meeting and not later than the close of business on the later of the 60th day prior to the 2018 Annual Meeting or the 10th day following the day on which public announcement of the date of the 2018 Annual Meeting is first made. The
Companys Bylaws contain additional requirements to properly submit a proposal or nominate a director. If you plan to submit a proposal or nominate a director, please review the Companys Bylaws carefully. You may obtain a copy of the
Companys Bylaws by mailing a request in writing to the Secretary of the Company at 4400 Biscayne Boulevard, Suite 888, Miami, FL 33137.
This document is a proxy statement of the Company for the Special Meeting. The Company has not authorized anyone to give any information or
make any representation about the Proposals or the Company that is different from, or in addition to, the information or representations contained in this proxy statement or in any of the annexes. Therefore, if anyone does give you information or
representations of this sort, you should not rely on it or them. The information contained in this proxy statement speaks only as of the date of this document unless the information specifically indicates that another date applies.
70
Annex A
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this Agreement), dated as of [●], 2017, is entered into between The Female Health
Company, a Wisconsin corporation (FHC Wisconsin), and Badger Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary of FHC Wisconsin (Veru Delaware).
RECITALS
A. The board of
directors of each of FHC Wisconsin and Veru Delaware deems it advisable and in the best interests of FHC Wisconsin and its stockholders that, upon the terms and subject to the conditions herein stated, the corporate domicile of FHC Wisconsin be
changed from the State of Wisconsin to the State of Delaware through the merger of FHC Wisconsin with and into Veru Delaware (the Reincorporation Merger), with Veru Delaware surviving the Reincorporation Merger.
B. FHC Wisconsin will submit this Agreement for approval by the holders of shares of Common Stock, par value $0.01 per share, of FHC Wisconsin
(the FHC Wisconsin Common Stock) and the holders of shares of Class A Convertible Preferred StockSeries 4, par value $0.01 per share, of FHC Wisconsin (FHC Wisconsin Series 4 Preferred Stock), voting
together as a single voting group as provided by the Wisconsin Business Corporation Law (the WBCL) and the Articles of Incorporation of FHC Wisconsin.
AGREEMENTS
In consideration of
the recitals and of the agreements of the parties hereto contained herein, the parties hereto agree as follows:
ARTICLE I
THE REINCORPORATION MERGER; EFFECTIVE TIME
1.1.
The Reincorporation Merger
. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the
Delaware General Corporation Law (the DGCL) and the WBCL, at the Effective Time (as defined in Section 1.2), FHC Wisconsin shall be merged with and into Veru Delaware. Following the Effective Time, the separate corporate existence
of FHC Wisconsin shall cease, and Veru Delaware shall continue as the surviving corporation in the Reincorporation Merger (sometimes hereinafter referred to as the Surviving Corporation). The Reincorporation Merger shall have the effects
specified in the DGCL and in the WBCL and the Surviving Corporation shall succeed, without other transfer, to all of the assets and property (whether real, personal or mixed), rights, privileges, franchises, immunities and powers of FHC Wisconsin,
and shall assume and be subject to all of the duties, liabilities, obligations and restrictions of every kind and description of FHC Wisconsin, including, without limitation, all outstanding indebtedness of FHC Wisconsin.
1.2.
Effective Time
. Provided that the conditions set forth in Section 3.1 have been fulfilled or waived in accordance with
this Agreement and that this Agreement has not been terminated or abandoned pursuant to Section 4.1, on the date of the closing of the Reincorporation Merger, FHC Wisconsin and Veru Delaware shall cause Articles of Merger to be executed and
filed with the Department of Financial Institutions of the State of Wisconsin (the Wisconsin Articles of Merger) and a Certificate of Merger to be executed and filed with the Secretary of State of the State of Delaware (the
Delaware Certificate of Merger). The Reincorporation Merger shall become effective upon the date and time specified in the Wisconsin Articles of Merger and the Delaware Certificate of Merger (the Effective Time).
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1.3
Name and Ticker Symbol
. If FHC Wisconsins stockholders approve the change of its
name to Veru Inc., the parties shall cause (a) the name of Veru Delaware as of the Effective Time to be Veru Inc. and (b) the ticker symbol of Veru Delaware as of the Effective Time to be VERU. If FHC
Wisconsins stockholders do not approve the change of its name to Veru Inc., the name of Veru Delaware as of the Effective Time shall be The Female Health Company and its ticker symbol as of the Effective Time shall be
FHCO.
1.4
Board of Directors; Officers
. The directors and the members of the various committees of the board of
directors of FHC Wisconsin at the Effective Time shall, from and after the Effective Time, be the directors and members of such committees of the Surviving Corporation, until their respective successors have been duly elected or appointed and
qualified or until their respective earlier death, resignation or removal. The officers of FHC Wisconsin at the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation, until their respective successors
have been duly elected or appointed and qualified or until their respective earlier death, resignation or removal.
1.5.
Certificate of
Incorporation
. The certificate of incorporation of Veru Delaware in effect as of the Effective Time shall be the certificate of incorporation of the Surviving Corporation, until amended in accordance with the provisions provided therein or
applicable law.
1.6.
Bylaws
. The Bylaws of Veru Delaware in effect as of the Effective Time shall be the Bylaws of the
Surviving Corporation, until amended in accordance with the provisions provided therein or applicable law.
ARTICLE II
EFFECT OF REINCORPORATION MERGER ON CAPITAL STOCK
2.1.
Effect of Reincorporation Merger on Capital Stock
. At the Effective Time, as a result of the Reincorporation Merger and
without any action on the part of FHC Wisconsin, Veru Delaware or the stockholders of FHC Wisconsin:
(a) Each share of FHC Wisconsin
Common Stock issued and outstanding immediately prior to the Effective Time shall be converted (without the surrender of stock certificates or any other action) into one fully paid and non-assessable share of Common Stock, par value $0.01 per share,
of Veru Delaware (the Veru Delaware Common Stock), and all shares of FHC Wisconsin Common Stock shall be cancelled and retired and shall cease to exist.
(b) Each share of FHC Wisconsin Series 4 Preferred Stock (other than shares (Dissenting Shares) of FHC Wisconsin
Series 4 Preferred Stock that are owned by stockholders (Dissenting Stockholders) exercising dissenters rights pursuant to the applicable provisions of the WBCL) issued and outstanding immediately prior to the Effective Time
shall be converted (without the surrender of stock certificates or any other action) into one fully paid and non-assessable share of Series A Convertible Preferred Stock, par value $0.01, of Veru Delaware (the Veru Delaware Preferred
Stock), and all shares of FHC Wisconsin Series 4 Preferred Stock shall be cancelled and retired and shall cease to exist. If the shares of FHC Wisconsin Series 4 Preferred Stock have converted into shares of FHC Wisconsin Common
Stock in accordance with the terms of the FHC Wisconsin Series 4 Preferred Stock prior to the Effective Time, the shares of Series 4 Preferred Stock will not convert into shares of Veru Delaware Preferred Stock pursuant to this
Section 2.1(b) and instead the shares of FHC Wisconsin Common Stock into which such shares of Series 4 Preferred Stock have converted will convert into shares of Veru Delaware Common Stock pursuant to Section 2.1(a) (other than any
such shares of FHC Wisconsin Common Stock that were issued upon conversion of shares of FHC Wisconsin Series 4 Preferred Stock that were Dissenting Shares prior to their conversion into FHC Wisconsin Common Stock).
(c) Each option, warrant or other right to acquire shares of FHC Wisconsin Common Stock issued and outstanding immediately prior to the
Effective Time shall be converted into an option, warrant or other right to
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acquire the same number of shares of Veru Delaware Common Stock as the number of shares of FHC Wisconsin Common Stock that were acquirable pursuant to such option, warrant or other right and with
the same terms and conditions (including, if applicable, any continuing vesting requirements and per share exercise price) in effect immediately prior to the Effective Time. The same number of shares of Veru Delaware Common Stock shall be reserved
for purposes of the exercise of such options, warrants or other rights as is equal to the number of shares of the FHC Wisconsin Common Stock so reserved as of the Effective Time.
(d) Each share of Veru Delaware Common Stock owned by FHC Wisconsin shall no longer be outstanding and shall be cancelled and retired and
shall cease to exist.
(e) Effective as of the Effective Time, Veru Delaware shall assume sponsorship of the FHC Wisconsin 2008 Stock
Incentive Plan and all outstanding awards thereunder, provided that references to FHC Wisconsin therein shall thereupon be deemed references to Veru Delaware and references to FHC Wisconsin Common Stock therein shall be deemed references to Veru
Delaware Common Stock with appropriate equitable adjustments to reflect the transactions contemplated by this Agreement.
2.2.
Certificates
. At and after the Effective Time, all of the outstanding certificates which immediately prior thereto represented shares of FHC Wisconsin Common Stock or FHC Wisconsin Series 4 Preferred Stock (in each case, other than
Dissenting Shares) shall be deemed for all purposes to evidence ownership of and to represent the shares of the respective Veru Delaware Common Stock or Veru Delaware Preferred Stock, as the case may be, into which the shares of FHC Wisconsin Common
Stock or FHC Wisconsin Series 4 Preferred Stock represented by such certificates have been converted as herein provided and shall be so registered on the books and records of the Surviving Corporation or its transfer agent. The registered owner
of any such outstanding certificate shall, until such certificate shall have been surrendered for transfer or otherwise accounted for to the Surviving Corporation or its transfer agent, have and be entitled to exercise any voting and other rights
with respect to, and to receive any dividends and other distributions upon, the shares of Veru Delaware Common Stock or Veru Delaware Preferred Stock, as the case may be, evidenced by such outstanding certificate, as above provided.
2.3.
Dissenters Rights
. No Dissenting Stockholder shall be entitled to shares of Veru Delaware Common Stock or Veru Delaware
Preferred Stock under this Article II unless and until the holder thereof shall have failed to perfect or shall have effectively withdrawn or lost such holders right to dissent from the Reincorporation Merger under the WBCL, and any
Dissenting Stockholder shall be entitled to receive only the payment provided by the WBCL with respect to Dissenting Shares owned by such Dissenting Stockholder. If any person or entity who otherwise would be deemed a Dissenting Stockholder shall
have failed to properly perfect or shall have effectively withdrawn or lost the right to dissent with respect to any shares which would be Dissenting Shares but for that failure to perfect or withdrawal or loss of the right to dissent, such
Dissenting Shares shall thereupon be treated as though such Dissenting Shares had been converted into shares of Veru Delaware Common Stock or Veru Delaware Preferred Stock, as applicable, pursuant to Section 2.1 hereof.
ARTICLE III
CONDITIONS
3.1.
Conditions to Each Partys Obligation to Effect the Reincorporation Merger
. The respective obligation of each party
hereto to effect the Reincorporation Merger is subject to the satisfaction at or prior to the Effective Time of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have received the requisite approval of the holders of FHC Wisconsin Common
Stock and FHC Wisconsin Series 4 Preferred Stock pursuant to the WBCL and the Articles of Incorporation of FHC Wisconsin.
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(b) No statute, rule, regulation, executive order, decree, ruling, injunction or other order
(whether temporary, preliminary or permanent) shall have been enacted, entered, promulgated or enforced by any court or governmental authority of competent jurisdiction which prohibits, restrains, enjoins or restricts the consummation of the
Reincorporation Merger; provided, however that FHC Wisconsin and Veru Delaware shall use their reasonable best efforts to cause any such decree, ruling, injunction or other order to be vacated or lifted.
ARTICLE IV
TERMINATION
4.1.
Termination
. This Agreement may be terminated, and the Reincorporation Merger may be abandoned, at any time prior to the
Effective Time, whether before or after approval of this Agreement by the stockholders of FHC Wisconsin, if the board of directors of FHC Wisconsin determines for any reason, in its sole judgment and discretion, that the consummation of the
Reincorporation Merger would be inadvisable or not in the best interests of FHC Wisconsin and its stockholders. In the event of the termination and abandonment of this Agreement, this Agreement shall become null and void and have no effect, without
any liability on the part of either FHC Wisconsin or Veru Delaware, or any of their respective stockholders, directors or officers.
ARTICLE V
MISCELLANEOUS AND
GENERAL
5.1.
Modification or Amendment
. Subject to the provisions of applicable law, at any time prior to the Effective Time,
the parties hereto may modify or amend this Agreement; provided, however, that an amendment made subsequent to the approval of this Agreement by the holders of FHC Wisconsin Common Stock and FHC Wisconsin Series 4 Preferred Stock shall not
(a) alter or change the amount or kind of shares and/or rights to be received in exchange for or on conversion of all or any of the shares or any class or series thereof of such corporation, (b) alter or change any provision of the
certificate of incorporation of the Surviving Corporation to be effected by the Reincorporation Merger, or (c) alter or change any of the terms or conditions of this Agreement it such alteration or change would adversely affect the holders of
any class or series of capital stock of any of the parties hereto.
5.2.
Counterparts
. This Agreement may be executed in any
number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement.
5.3.
GOVERNING LAW
. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED
BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
5.4.
Entire
Agreement
. This Agreement constitutes the entire agreement and supersedes all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof.
5.5.
No Third Party Beneficiaries
. This Agreement is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
5.6.
Severability
. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If
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any provision of this Agreement, or the application thereof to any person or any circumstance, is determined by any court or other authority of competent jurisdiction to be invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of
this Agreement and the application of such provision to other persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
5.7.
Headings
. The headings therein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized
officers of the parties hereto as of the date first written above.
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THE FEMALE HEALTH COMPANY, a
Wisconsin corporation
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By:
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Name:
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Title:
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BADGER ACQUISITION SUB, INC., a
Delaware corporation
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By:
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Name:
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Title:
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Annex B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BADGER ACQUISITION
SUB, INC.
Badger Acquisition Sub, Inc., a corporation organized and existing under the laws of the State of Delaware (the
Corporation
), certifies that:
A. The name of the Corporation is Badger Acquisition Sub, Inc. The
Corporations original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on April 1, 2016.
B. This Amended and Restated Certificate of Incorporation was duly adopted in accordance with Sections 242 and 245 of the General Corporation
Law of the State of Delaware, and has been duly approved by the written consent of the sole stockholder of the Corporation in accordance with Section 228 of the General Corporation Law of the State of Delaware.
C. The Certificate of Incorporation of the Corporation is amended and restated to read as follows:
FIRST. The name of the Corporation is Veru Inc.
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SECOND. The address of the Corporations registered office in the State of Delaware is 2711 Centerville Road, Suite 400, Wilmington,
County of New Castle, State of Delaware, 19808. The name of its registered agent at such address is Corporation Service Company.
THIRD.
The purpose of the Corporation 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. The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is Eighty Two Million
Fifteen Thousand (82,015,000) shares, divided into: (i) Seventy Seven Million (77,000,000) shares, par value $0.01 per share, of common stock (the
Common
Stock
)
2
; and (ii) Five Million Fifteen Thousand (5,015,000) shares, par value $0.01 per share, of preferred stock (the
Preferred Stock
).
The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation.
(a)
Common Stock
.
1.
Dividends
. Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred
Stock as provided for or fixed pursuant to the provisions of Article FOURTH hereof, dividends may be declared and paid on the Common Stock at such times and in such amounts as the Board of Directors of the Corporation (the
Board of
Directors
) in its discretion shall determine.
2.
Voting Rights
. Except as may otherwise be provided
in the certificate of incorporation of the Corporation (including any certificate of designations setting forth a copy of the resolutions or resolutions of the Board of Directors providing for a series of Preferred Stock pursuant to the provisions
of Article
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References to Veru Inc. will change to The Female Health Company if the Name Change Proposal is not approved by stockholders at the Special Meeting.
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The number of authorized shares of Common Stock will be 38,500,000 if the Share Increase Proposal is not approved by stockholders at the Special Meeting.
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B-1
FOURTH hereof) or by applicable law, each holder of Common Stock, as such, shall be entitled to one (1) vote for each share of Common Stock held of record by such holder on all matters on
which stockholders generally are entitled to vote;
provided
,
however
, that except as otherwise required by law, the holders of Common Stock, as such, shall not be entitled to vote on any amendment to the certificate of incorporation of
the Corporation (including any certificate of designations setting forth a copy of the resolutions or resolutions of the Board of Directors providing for a series of Preferred Stock pursuant to the provisions of Article FOURTH hereof) that relates
solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other series or Preferred Stock, to vote thereon pursuant to
the certificate of incorporation of the Corporation (including any certificate of designations setting forth a copy of the resolutions or resolutions of the Board of Directors providing for a series of Preferred Stock pursuant to the provisions of
Article FOURTH hereof) or pursuant to the General Corporation Law of the State of Delaware.
3.
Liquidation Rights
.
Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock as provided for or fixed pursuant to the provisions of Article FOURTH hereof, in the event of any liquidation, dissolution or winding up of
the Corporation, the holders of the Common Stock shall be entitled to receive the assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares of Common Stock held by them. A merger or
consolidation of the Corporation with or into any other corporation or other entity, or a sale or conveyance of all or any part of the assets of the Corporation (which shall not in fact result in the liquidation, dissolution or winding up of the
Corporation and the distribution of assets to its stockholders) shall not be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this
Section 3
.
(b)
Preferred Stock
. The Board of Directors is hereby expressly authorized, by resolution or resolutions thereof, to provide from time
to time out of the unissued shares of Preferred Stock for one or more series of Preferred Stock, and, with respect to each such series, to fix the number of shares constituting such series and the designation of such series, the powers (including
voting powers), if any, of the shares of such series and the preferences and relative, participating, optional, special or other rights, if any, and the qualifications, limitations or restrictions, if any, of the shares of such series. The
designations, powers, preferences and relative, participating, optional, special and other rights of each series of Preferred Stock, if any, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all
other series of Preferred Stock at any time outstanding. Except as may otherwise be provided in the certificate of incorporation of the Corporation (including any certificate of designations setting forth a copy of the resolutions or resolutions of
the Board of Directors providing for a series of Preferred Stock pursuant to the provisions of Article FOURTH hereof) or by applicable law, no holder of any series of Preferred Stock, as such, shall be entitled to any voting powers in respect
thereof.
1.
Designation and Number of Shares
.
3
There shall
hereby be created and established a series of Preferred Stock of the Corporation designated as Series A Convertible Preferred Stock (the
Series A Preferred Stock
). The authorized number of shares of Series A
Preferred Stock shall be 548,000 shares. Each share of Series A Preferred Stock shall have a par value of $0.01.
2.
Ranking
. Except to the extent that the Holders of at least a majority of the outstanding shares of Series A Preferred Stock (the
Required Holders
) expressly consent to the creation of Parity Stock or Senior Preferred
Stock, all shares of capital stock of the Corporation shall be junior in rank to all shares of Series A Preferred Stock with respect to preferences upon a Liquidation Event (such junior stock is referred to herein collectively as
Junior
Stock
). Without limiting any other provision of the certificate of incorporation of the Corporation, without the prior express consent of the Required Holders, voting separately as a single class, the Corporation shall not hereafter
authorize or issue (a) any additional or other shares of capital stock that are of senior rank to the shares of Series A Preferred Stock in respect of
3
|
Sections 1-15 of Article FOURTH will not be included if both the Share Increase Proposal and Share Issuance Proposal are approved by stockholders at the Special Meeting.
|
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preferences as to the distribution of assets upon a Liquidation Event (collectively, the
Senior Preferred Stock
), (ii) any additional or other shares of capital
stock that are of
pari passu
rank to the shares of Series A Preferred Stock in respect of the preferences as to the distribution of assets upon a Liquidation Event (collectively, the
Parity Stock
) or (iii) any
Junior Stock having a maturity date (or any other date requiring redemption or repayment of such shares of Junior Stock) that is prior to the Maturity Date.
3.
Dividends
. Subject to the preferences of the holders of any Senior Stock, the Corporation shall not declare, pay or
set aside any dividends on shares of Common Stock (other than dividends on shares of Common Stock payable in shares of Common Stock) unless the Holders shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A
Preferred Stock in an amount equal to the product of (a) the dividend payable on each share of Common Stock and (b) the number of shares of Common Stock issuable upon conversion of a share of Series A Preferred Stock, in each case
calculated on the record date for determination of Holders entitled to receive such dividend.
4.
Conversion
.
(a)
Mandatory Conversion Upon Stockholder Approval
. Each share of Series A Preferred Stock outstanding upon the
occurrence of the Stockholder Approval (the
Conversion Date
), automatically shall be converted into shares of Common Stock, with each share of Series A Preferred Stock convertible into 40 fully paid and nonassessable shares
of Common Stock (the
Conversion Ratio
), subject to adjustment as provided in Section 5.
(b)
Mechanics of Conversion
. The Corporation shall provide each Holder with written notice of the Conversion Date. As soon as practicable following the Conversion Date, each Holder shall surrender or cause to be surrendered to the Corporation
such Holders certificate(s) representing the Series A Preferred Stock being converted (the
Preferred Stock Certificates
) (or, if such Holder alleges that such Preferred Stock Certificate(s) has been lost, stolen or
destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such
Preferred Stock Certificate(s)). If so required by the Corporation, any Preferred Stock Certificate(s) surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the Holder or by such Holders attorney duly authorized in writing. All rights with respect to the Series A Preferred Stock converted pursuant to this Section 4, including the rights, if any, to receive
notices and vote (other than as a holder of Common Stock), will terminate on the Conversion Date (notwithstanding the failure of the Holder thereof to surrender any Preferred Stock Certificate(s) at or prior to such time), except only the rights of
the Holders thereof, upon surrender of any Preferred Stock Certificate(s) of such Holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Section 4(b). As soon as
practicable after the Conversion Date and, if applicable, the surrender of any Preferred Stock Certificate(s) (or lost certificate affidavit and agreement) for Series A Preferred Stock, the Corporation shall (a) issue and deliver to such
Holder, or to such Holders nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and (b) pay cash as provided in Section 4(c) in
lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Series A Preferred Stock converted. Such converted Series A Preferred Stock shall be
retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Series
A Preferred Stock accordingly.
(c)
No Fractional Shares
. No fractional shares of Common Stock are to be issued upon
the conversion of Series A Preferred Stock, but in lieu thereof the Corporation shall make a cash payment, without interest, in respect of any fractional share which would otherwise be issuable, determined by multiplying such fractional share by the
Fair Market Value as of the Conversion Date; provided that in
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the event that sufficient funds are not legally available for such cash payment, any fractional shares of Common Stock shall be rounded up to the next whole number.
(d)
Electronic Transmission
. In lieu of delivering physical certificates representing the Common Stock issuable upon
conversion, provided the Corporations transfer agent is participating in the Depository Trust Company (
DTC
) Fast Automated Securities Transfer program, upon request of a Holder who shall have previously instructed
such Holders prime broker to confirm such request to the Corporations transfer agent and upon the Holders compliance with Section 4(b), the Corporation shall use its commercially reasonable efforts to cause its transfer agent
to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holders prime broker with DTC through its Deposit Withdrawal Agent Commission system.
5.
Adjustments
.
(a)
Adjustment upon Subdivision or Combination of Common Stock
. If the Corporation at any time on or after the Initial
Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Ratio in effect immediately prior to such
subdivision will be proportionately reduced. If the Corporation at any time on or after the Initial Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Conversion Ratio in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 5 shall become effective immediately after the effective date of such
subdivision or combination.
(b)
Adjustment for Merger or Reorganization, etc
. Subject to the provisions of
Section 7, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Series A Preferred Stock) is converted into or exchanged for
securities, cash or other property (other than a transaction covered by Section 5(a) or a Fundamental Change), then, following any such reorganization, recapitalization, reclassification, consolidation, merger or share exchange, each share of
Series A Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common
Stock of the Corporation issuable upon conversion of one share of Series A Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation, merger or share exchange would have been entitled to receive
pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Corporation) shall be made in the application of the provisions in this Section 5(b) with respect to the
rights and interests thereafter of the Holders, to the end that the provisions set forth in this Section 5 (including provisions with respect to changes in and other adjustments of the Conversion Ratio) shall thereafter be applicable, as nearly
as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series A Preferred Stock.
6.
Voting Rights
. Except as otherwise expressly provided in the certificate of incorporation of the Corporation and
except as otherwise provided by the laws of the State of Delaware, every Holder shall be entitled at every meeting of the stockholders to one vote for each share of Series A Preferred Stock standing in such Holders name on the books of the
Corporation, subject to the right of the Board of Directors to fix a record date for the determination of stockholders entitled to notice of and to vote at such meeting and to any provision of the bylaws of the Corporation fixing any such record
date. The Holders shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock and shall vote with the holders of Common Stock together as a single class upon any question affecting the management and
affairs of the Corporation. Notwithstanding anything contained herein, the Corporation shall not, either directly or indirectly, by amendment, merger, consolidation or otherwise, amend, alter or repeal any provision of the certificate of
incorporation of the Corporation in a manner that adversely affects the powers, preferences or rights of the Series A Preferred Stock without first obtaining the written consent or
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affirmative vote of the Required Holders given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into
without such consent or vote shall be null and void ab initio, and of no force or effect.
7.
Liquidation, Dissolution,
Winding-Up
.
(a)
Liquidation Events
. In the event of a Liquidation Event, each Holder of a share of Series A
Preferred Stock shall be entitled to receive in cash out of the assets of the Corporation legally available for distribution to its stockholders, whether from capital or from earnings available for distribution to its stockholders (the
Liquidation Funds
), before any amount shall be paid to the holders of any shares of Junior Stock, an amount (such amount, the
Series A Liquidation Amount
) with respect to each share of Series A
Preferred Stock then held by such Holder equal to the greater of (i) the Stated Value of such share of Series A Preferred Stock as of the date of the applicable Liquidation Event and (ii) the amount per share such Holder would receive if
such Holder converted such share of Series A Preferred Stock into Common Stock immediately prior to such Liquidation Event, provided that if the Liquidation Funds are insufficient to pay the full amount due to the Holders and holders of shares of
Parity Stock, then each Holder and each holder of Parity Stock shall receive a percentage of the Liquidation Funds equal to the full amount of Liquidation Funds payable to such Holder and such holder of Parity Stock as a liquidation preference, in
accordance with their respective statement of terms (or equivalent), as a percentage of the full amount of Liquidation Funds payable to all holders of shares of Series A Preferred Stock and all holders of shares of Parity Stock. To the extent
necessary, the Corporation shall cause such actions to be taken by each of its subsidiaries so as to enable, to the maximum extent permitted by law, the proceeds of a Liquidation Event to be distributed to the Holders in accordance with this
Section 7(a). All the preferential amounts to be paid to the Holders under this Section 7(a) shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any Liquidation
Funds of the Corporation to the holders of shares of Junior Stock in connection with a Liquidation Event as to which this Section 7(a) applies.
(b)
Effecting a Fundamental Change
.
(i) The Corporation shall not have the power to effect a Fundamental Change unless the agreement or plan of merger,
consolidation or share exchange for such transaction (the
Merger Agreement
) provides that the consideration payable to the stockholders of the Corporation shall be allocated among the holders of capital stock of the
Corporation in accordance with Section 7(a).
(ii) In the event of a Fundamental Change referred to in
Section 15(e)(i)[b] or 15(e)(ii), if the Corporation does not effect a dissolution of the Corporation under the DGCL within 90 days after such Fundamental Change, then [a] the Corporation shall send a written notice to the Holders no later than
the 90th day after the Fundamental Change advising such Holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause [b] to require the redemption of such shares of Series A Preferred
Stock, and [b] if the Required Holders so request in a written instrument delivered to the Corporation not later than 120 days after such Fundamental Change, the Corporation shall use the consideration received by the Corporation for such
Fundamental Change (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Corporation), together with any other assets of the Corporation available for
distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the
Available Proceeds
), on the 150th day after such Fundamental Change, to redeem all outstanding
shares of Series A Preferred Stock at a price per share equal to the Series A Liquidation Amount. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem
all outstanding shares of Series A Preferred Stock, the Corporation shall ratably redeem each Holders shares of Series A Preferred Stock to the fullest extent of such Available Proceeds, and shall redeem the remaining shares as soon as it may
lawfully do so under Delaware law governing distributions to stockholders. The provisions of
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Section 7(a) shall apply, with such necessary changes in the details thereof as are necessitated by the context, to the redemption of the Series A Preferred Stock pursuant to this
Section 7(b)(ii). Prior to the distribution or redemption provided for in this Section 7(b)(ii), the Corporation shall not expend or dissipate the consideration received for such Fundamental Change, except to discharge expenses incurred in
connection with such Fundamental Change or in the ordinary course of business.
(c)
Amount Deemed Paid or
Distributed
. The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any Liquidation Event shall be the cash or the value of the property, rights or securities paid or distributed to such holders by the
Corporation or the acquiring person, firm or other entity. The value of such property, rights or securities shall be determined in good faith by the Board of Directors of the Corporation.
8.
Lost or Stolen Certificates
. Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation
of the loss, theft, destruction or mutilation of any Preferred Stock Certificates (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of an
indemnification undertaking by the applicable Holder to the Corporation in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of the Preferred Stock Certificate(s), the Corporation shall execute and deliver
new Preferred Stock Certificate(s) of like tenor and date.
9.
Failure or Indulgence Not Waiver
. No failure or delay
on the part of a Holder or the Corporation in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. The certificate of incorporation of the Corporation shall be deemed to
be jointly drafted by the Corporation and all Holders and shall not be construed against any Person as the drafter hereof.
10.
Notices
. Any notices, consents, waivers or other communications required or permitted to be given under the terms of
the certificate of incorporation of the Corporation must be in writing and will be deemed to have been delivered: (a) upon receipt, if delivered personally; (b) when sent, if sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party); and (c) if sent by overnight courier service, one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each
case, properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Corporation:
Veru Inc.
4400 Biscayne Boulevard, Suite 888
Miami, FL 33137
Facsimile: 312-595-9122
Attention: Chief Executive Officer
If to a Holder, to its address or facsimile number (as the case may be) set forth in the books and records of the Corporation,
or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the senders facsimile machine containing the time, date and recipient
facsimile number or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (a), (b) or (c) above,
respectively.
B-6
11.
Transfer of Series A Preferred Stock
. A Holder may transfer some or
all of its shares of Series A Preferred Stock without the consent of the Corporation so long as such transfer complies with all applicable securities laws and any agreement to which such Holder is a party that restricts the transfer of such shares.
12.
Series A Preferred Stock Register
. The Corporation shall maintain at its principal executive offices (or such
other office or agency of the Corporation as it may designate by notice to the Holders), a register for the Series A Preferred Stock, in which the Corporation shall record the name, address, facsimile number and e-mail address of the Persons in
whose name the shares of Series A Preferred Stock have been issued, as well as the name and address of each transferee. The Corporation may treat the Person in whose name any Series A Preferred Stock is registered on the register as the owner and
holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any properly made transfers.
13.
Stockholder Matters; Amendment
.
(a)
Stockholder Matters
. Any stockholder action, approval or consent required, desired or otherwise sought by the
Corporation pursuant to the DGCL, the certificate of incorporation of the Corporation or otherwise with respect to the issuance of Series A Preferred Stock may be effected by written consent of the Corporations stockholders or at a duly called
meeting of the Corporations stockholders, all in accordance with the applicable rules and regulations of the DGCL. This provision is intended to comply with the applicable sections of the DGCL permitting stockholder action, approval and
consent affected by written consent in lieu of a meeting.
(b)
Amendment
. The certificate of incorporation of the
Corporation or any provision thereof may be amended by obtaining the affirmative vote at a meeting duly called for such purpose, or written consent without a meeting in accordance with the DGCL, of (i) the Required Holders, voting separately as
a single class, and (ii) the holders of at least two-thirds of the outstanding shares of Common Stock, voting separately as a single class, along with such other stockholder approval, if any, as may then be required pursuant to the DGCL and the
certificate of incorporation.
14.
Non-Redeemable; Required Redemption by the Corporation
.
(a)
Non-Redeemable
. Except as set forth in Section 7(b) and Section 14(b), the shares of Series A Preferred
Stock shall not be redeemable either at the Corporations option or at the option of any of the Holders at any time.
(b)
Required Redemption by the Corporation
.
(i) The Corporation shall redeem all outstanding shares of Series A Preferred Stock on the tenth Business Day immediately
following the first to occur of [a] the Maturity Date or [b] a Fundamental Change, as set forth in this Section 14(b) (such tenth Business Day is referred to herein as the
Required Redemption Date
), unless the Series A
Preferred Stock has been converted into Common Stock pursuant to Section 4 prior to the Required Redemption Date. The redemption price for each share of Series A Preferred Stock shall be determined on the Required Redemption Date and shall be
equal to the Stated Value thereof as of the Required Redemption Date (such price is referred to herein as the
Redemption Price
) and shall be payable in cash.
(ii) From and after the Required Redemption Date, the Holders of Series A Preferred Stock shall solely have the right to
receive payment of the Redemption Price therefor (and shall have no rights as a Holder of shares of Series A Preferred Stock other than the right to receive payment of the Redemption Price) and the Redemption Price therefor shall be paid to a Holder
only upon surrender by such Holder at the principal office of the Corporation of the certificates representing all of such Holders shares of Series A Preferred Stock (or, if such Holder alleges that such certificates have been lost, stolen or
destroyed, a lost certificate affidavit and indemnification undertaking as contemplated by Section 8).
(iii)
Notwithstanding anything to the contrary in this Section 14(b), the Corporation shall have no obligation to comply with this Section 14(b) at any time that the redemption of all shares of Series A Preferred Stock is prohibited by Delaware
law governing distributions to stockholders.
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15. Certain Defined Terms. For purposes of this Statement of Terms, the following
terms shall have the following meanings:
(a)
Business Day
means
any day other than
Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.
(b)
Common Stock
means
(i) shares of the Corporations common stock, $0.01
par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(c)
DGCL
means the Delaware General Corporation Law, as amended.
(d)
Fair Market Value
means, as of any date, the value of the Common Stock determined as follows:
(i) if the Common Stock is listed on any stock exchange, including, without limitation, NASDAQ, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the day of determination, as reported in The Wall Street Journal or such other source as the Corporation deems
reliable;
(ii) if the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not
reported, the Fair Market Value of a share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock for the day of determination, as reported in The Wall Street Journal or such other source as the Corporation
deems reliable; or
(iii) in the absence of an established market for the Common Stock, the Fair Market Value shall be
determined in good faith by the Board of Directors of the Corporation.
(e)
Fundamental Change
means any of the following events:
(i) a merger, consolidation or share exchange in which [a] the Corporation is a
constituent party or [b] a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger, consolidation or share exchange, except any such merger, consolidation or share exchange
described in clause [a] or [b] involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger, consolidation or share exchange continue to represent, or are converted
into or exchanged for shares of capital stock that represent, immediately following such merger, consolidation or share exchange, at least a majority, by voting power, of the capital stock of (A) the surviving or resulting corporation; or
(B) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger, consolidation or share exchange, the parent corporation of such surviving or resulting corporation; or
(ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related
transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger, consolidation, share exchange or
otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive
license or other disposition is to a wholly owned subsidiary of the Corporation.
(f)
Holder
means any holder of shares of Series A Preferred Stock.
(g)
Initial Issuance Date
means the
first date of issuance of any shares of Series A Preferred Stock.
(h)
Liquidation Event
means
(i) whether in a single transaction or series of transactions, the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and (ii) any Fundamental Change.
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(i)
Maturity Date
means the 20th anniversary of the
Initial Issuance Date.
(j)
NASDAQ
means the NASDAQ Stock Market.
(k)
NASDAQ Rule
means NASDAQ Listing Rule 5635(a), as amended, and any successor thereto, or any
similar rule of any other stock exchange on which the Common Stock may be listed.
(l)
Person
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(m)
Stockholder Approval
means the affirmative vote of the holders of the Corporations capital
stock by the required vote under the DGCL and the NASDAQ Rule, as applicable, to approve (i) an amendment to the certificate of incorporation of the Corporation to increase the total number of authorized shares of Common Stock to an amount
equal to or greater than the sum of (A) the total number of shares of Common Stock into which the Series A Preferred Stock is then convertible pursuant hereto plus (B) the number of shares of Common Stock then outstanding assuming the full
conversion, exercise and/or exchange of all securities or rights then convertible into, or exercisable or exchangeable for, shares of Common Stock (other than the Series A Preferred Stock) and (ii) the conversion of Series A Preferred Stock
described herein pursuant to the NASDAQ Rule.
(n)
Stated Value
means $1.00 per share of Series A
Preferred Stock, subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions or other similar events occurring after the Initial Issuance Date with respect to the Series
A Preferred Stock.
FIFTH. The incorporator of the corporation is John K. Tokarz, Esq., whose mailing address is 1000 North Water Street,
Suite 1700, Milwaukee, Wisconsin 53202.
SIXTH.
Board of Directors
.
(a)
Management
. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
(b)
Removal of Directors
. Except for any other than those directors elected by the holders of any outstanding series of Preferred Stock
as provided for or fixed pursuant to the provisions of Article FOURTH hereof (each, a
Preferred Director
,
and more than one, the
Preferred Directors
)), any director or the entire Board of
Directors may be removed, but only by the affirmative vote of the holders of at least a majority in voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting
together as a single class.
(c)
Vacancies
. Subject to the rights, if any, of the holders of any outstanding series of Preferred
Stock as provided for or fixed pursuant to the provisions of Article FOURTH hereof, newly created directorships resulting from an increase in the authorized number of directors or any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be filled by a majority of the directors then in office, although less than a quorum, or by the sole remaining director, or by the affirmative vote of the holders of at least a majority in
voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Any director so elected shall hold office until the expiration of the term of
office of the director whom he or she has replaced and until his or her successor shall be elected and qualified, subject to such directors earlier death, resignation, disqualification or removal. No decrease in the number of directors shall
shorten the term of any incumbent director.
(d)
Automatic Increase/Decrease in Authorized Directors
. During any period when the
holders of any outstanding series of Preferred Stock as provided for or fixed pursuant to the provisions of Article FOURTH
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hereof have the right to elect one or more Preferred Directors, then upon commencement of, and for the duration of, the period during which such right continues: (i) the then otherwise total
authorized number of directors of the Corporation shall automatically be increased by such specified number of Preferred Directors, and the holders of such outstanding series of Preferred Stock shall be entitled to elect the Preferred Director or
Preferred Directors as so provided or fixed pursuant to said provisions of Article FOURTH hereof; and (ii) each such Preferred Director shall serve until such Preferred Directors successor shall have been duly elected and qualified, or
until such Preferred Directors right to hold such office terminates pursuant to said provisions of Article FOURTH hereof, whichever occurs earlier, subject to such Preferred Directors earlier death, resignation, disqualification or
removal. Except as otherwise provided by the Board of Directors in the resolution or resolutions providing for such series of Preferred Stock pursuant to the provisions of Article FOURTH hereof, whenever the holders of any outstanding series of
Preferred Stock having the right to elect one or more Preferred Directors are divested of such right pursuant to the provisions of such capital stock, the term of office of each such Preferred Director elected by the holders of such series of
Preferred Stock, or elected to fill any vacancy resulting from the death, resignation, disqualification or removal of each such Preferred Director, shall forthwith terminate and the total authorized number of directors of the Corporation shall
automatically be decreased by such specified number of directors.
(e)
No Written Ballot
. Unless and except to the extent that the
bylaws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.
(f)
Amendment
of Bylaws
. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized to make, alter, amend and repeal the bylaws of the Corporation. Any bylaw that is to be
made, altered, amended or repealed by the stockholders of the Corporation shall receive the affirmative vote of the holders of at least a majority in voting power of the then outstanding shares of capital stock of the Corporation entitled to vote
generally, voting together as a single class.
(g)
Special Meetings of Stockholders
. Except as may otherwise be provided for or
fixed pursuant to the provisions of Article FOURTH hereof relating to the rights of the holders of any outstanding series of Preferred Stock, special meetings of stockholders for any purpose or purposes may be called at any time, but only by
(i) the Chairman of the Board, (ii) the Chief Executive Officer, (iii) the Board of Directors or (iv) holders of record of shares representing not less than 10% of all votes entitled to be case on any issue proposed to be
considered at the special meeting of stockholders. Except as provided in the foregoing sentence, special meetings of stockholders may not be called by any other person or persons. Any meeting of stockholders may be postponed by action of the Board
of Directors or by the Chairman of the Board or by the Chief Executive Officer at any time in advance of such meeting.
SEVENTH. 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 the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted.
EIGHTH. A director of the Corporation shall not be liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to
the time of such amendment, modification or repeal.
NINTH. The Corporation reserves the right at any time, and from time to time, to
amend, alter, change or repeal any provision contained in this certificate of incorporation, and other provisions authorized by the laws of
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the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred
upon stockholders, directors or any other persons whomsoever by and pursuant to this certificate of incorporation in its present form or as hereafter amended are granted subject to the rights reserved in this Article NINTH. In addition to any
affirmative vote required by law and/or the certificate of incorporation of the Corporation (including any certificate of designations setting forth a copy of the resolutions or resolutions of the Board of Directors providing for a series of
Preferred Stock pursuant to the provisions of Article FOURTH hereof), the affirmative vote of at least a majority in voting power of the then outstanding shares of the capital stock of the Corporation entitled to vote generally, voting together as a
single class, shall be required to amend, alter, repeal or adopt any provision inconsistent with Articles SIXTH, SEVENTH, EIGHTH or this Article NINTH.
TENTH. The affirmative vote of the holders of (i) at least two-thirds of the shares of the capital stock of the Corporation entitled to
vote on the proposal (voting together as a single class) and (ii) at least two-thirds of the shares of each class or series of the capital stock of the Corporation that is entitled to vote on the proposal as a separate class or series, shall be
required to approve a proposal to do any of the following:
(a) amend the Corporations certificate of incorporation to the extent
such amendment requires the approval of the stockholders of the Corporation pursuant to the General Corporation Law of the State of Delaware;
(b) approve or adopt any agreement of merger or consolidation to the extent such agreement of merger or consolidation requires the approval of
the stockholders of the Corporation pursuant to the General Corporation Law of the State of Delaware;
(c) approve any sale, lease or
exchange of the assets and property of the Corporation to the extent such sale, lease or exchange requires the approval of the stockholders of the Corporation pursuant to the General Corporation Law of the State of Delaware; or
(d) approve any dissolution of the Corporation to the extent such dissolution requires the approval of the stockholders of the Corporation
pursuant to the General Corporation Law of the State of Delaware.
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[Signature Page
Follows]
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Article TENTH will not be included if the Majority Vote Proposal is adopted by the stockholders at the Special Meeting.
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IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of
Incorporation to be signed by Mitchell S. Steiner, its President and Chief Executive Officer, this [●] day of [●], 2017.
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Mitchell S. Steiner, President and Chief
Executive Officer
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Annex C
BYLAWS
OF
VERU INC.
1
ARTICLE I
Meetings of
Stockholders
Section 1.1
Annual Meetings.
If required by applicable law, an annual meeting of stockholders
shall be held for the election of directors at such date, time and place, if any, either within or without the State of Delaware, as may be designated by resolution of the Board of Directors of the Corporation (the
Board of
Directors
) from time to time. Any other proper business may be transacted at the annual meeting.
Section 1.2
Special Meetings
. Except as may otherwise be provided for or fixed pursuant to the provisions of Article
FOURTH of the Certificate of Incorporation of the Corporation (as the same may be amended or amended and restated, the
Certificate of Incorporation
) relating to the rights of the holders of any outstanding series of
preferred stock of the Corporation (the
Preferred Stock
), special meetings of stockholders for any purpose or purposes may be called at any time, but only by (i) the Chairman of the Board, (ii) the Chief Executive
Officer, (iii) the Board of Directors or (iv) holders of record of shares representing not less than 10% of all votes entitled to be case on any issue proposed to be considered at the special meeting of stockholders. Except as provided in
the foregoing sentence, special meetings of stockholders may not be called by any other person or persons. Any meeting of stockholders may be postponed by action of the Board of Directors or by the Chairman of the Board or by the Chief Executive
Officer at any time in advance of such meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
Section 1.3
Notice of Meetings
. Whenever stockholders are required or permitted to take any action at a meeting, a written notice
of the meeting shall be given that shall state the place, if any, date and hour of the meeting, the record date for determining stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders
entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the Certificate of Incorporation or these Amended and Restated Bylaws (as the same
may be amended, these
Bylaws
), the notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting, as
of the record date for determining the stockholders entitled to notice of the meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such
stockholders address as it appears on the records of the Corporation.
Section 1.4
Adjournments
. Any meeting of
stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix a new record date for notice of
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References to Veru Inc. will change to The Female Health Company if the Name Change Proposal is not approved by stockholders at the Special Meeting.
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such adjourned meeting in accordance with
Section 1.8
of these Bylaws, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned
meeting as of the record date fixed for notice of such adjourned meeting.
Section 1.5
Quorum
. Except as otherwise provided by
law, the Certificate of Incorporation or these Bylaws, at each meeting of stockholders the presence in person or by proxy of the holders of a majority in voting power of the then outstanding shares of stock entitled to vote at the meeting shall be
necessary and sufficient to constitute a quorum. In the absence of a quorum, the stockholders so present may, by a majority in voting power thereof, adjourn the meeting from time to time in the manner provided in
Section 1.4
of these
Bylaws until a quorum shall attend. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes;
provided
,
however
, that the foregoing shall not limit the right of the Corporation or any subsidiary of the Corporation to vote stock, including
but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6
Organization
. Meetings of stockholders
shall be presided over by the Chairman of the Board, if any, or in his or her absence by the Vice Chairman of the Board, if any, or in his or her absence by the Chief Executive Officer, if any, or in his or her absence by the President, or in his or
her absence by a Vice President, or in the absence of the foregoing persons by a presiding person designated by the Board of Directors, or in the absence of such designation by a presiding person chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his or her absence the person presiding at the meeting may appoint any person to act as secretary of the meeting.
Section 1.7
Voting; Proxies
. Except as otherwise provided by or pursuant to the provisions of the Certificate of Incorporation,
each stockholder entitled to vote at any meeting of stockholders shall be entitled to one (1) vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a
meeting of stockholders or to express consent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by delivering to the Secretary a revocation of the proxy or a new proxy bearing a later date. Voting at meetings of stockholders need not be
by written ballot. At all meetings of stockholders for the election of directors at which a quorum is present a plurality of the votes cast shall be sufficient to elect. All other elections, questions or matters presented to the stockholders at a
meeting at which a quorum is present shall, unless otherwise provided by the Certificate of Incorporation, these Bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation
applicable to the Corporation or its securities, be decided by the affirmative vote of the holders of a majority of the votes cast with respect to such election, question or matter. For purposes of this
Section 1.7
, a majority of
the votes cast means that the number of votes cast for a nominee, question or matter exceeds the number of votes cast against such nominee, question or matter.
Section 1.8
Fixing Date for Determination of Stockholders of Record
. In order that the Corporation may determine the stockholders
entitled to notice of any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or
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 a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and which record date: (1) in the case of determination of stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, shall, unless
otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting and, unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the
date of the meeting
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shall be the date for determining the stockholders entitled to vote at such meeting, the record date for determining the stockholders entitled to notice of such meeting shall also be the record
date for determining the stockholders entitled to vote at such meeting; (2) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten (10) days
from the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed:
(1) the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close
of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action of the Board of
Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, or, if prior action by the Board of
Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (3) the record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors adopts the resolution relating thereto. 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 determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for the stockholders
entitled to notice of such adjourned meeting the same or an earlier date as that fixed for the determination of stockholders entitled to vote in accordance with the foregoing provisions of this
Section 1.8
at the adjourned meeting.
Section 1.9
List of Stockholders Entitled to Vote
. The officer who has charge of the stock ledger shall prepare and make, at least
ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting;
provided
,
however
, if the record date for determining the stockholders entitled to vote is less than ten
(10) days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date, 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 for a period of at least ten (10) days prior to the meeting (i) on a reasonably
accessible electronic network,
provided
that the information required to gain access to such list is provided with the notice of meeting, or (ii) during ordinary business hours at the principal place of business of the Corporation. The
list of stockholders must also be open to examination at the meeting as required by applicable law. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of
stockholders required by this
Section 1.9
or to vote in person or by proxy at any meeting of stockholders.
Section 1.10
Action By Written Consent of Stockholders
. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which minutes of proceedings of stockholders are recorded. Delivery made to the Corporations registered office shall be by hand or by certified or registered mail, return
receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall, to the extent required by law, be given to those stockholders who have not consented in writing and who, if the
action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to
the Corporation.
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Section 1.11
Inspectors of Election
. The Corporation may, and shall if required by
law, in advance of any meeting of stockholders, appoint one or more inspectors of election, who may be employees of the Corporation, to act at the meeting or any adjournment thereof and to make a written report thereof. The Corporation may designate
one or more persons as alternate inspectors to replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or
more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or
her ability. The inspector or inspectors so appointed or designated shall (i) ascertain the number of shares of capital stock of the Corporation outstanding and the voting power of each such share, (ii) determine the shares of capital
stock of the Corporation represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any
determination by the inspectors, and (v) certify their determination of the number of shares of capital stock of the Corporation represented at the meeting and such inspectors count of all votes and ballots. Such certification and report
shall specify such other information as may be required by applicable law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the Corporation, the inspectors may consider such information as is
permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.
Section 1.12
Conduct of Meetings
. The date and time of the opening and the closing of the polls for each election, question or
matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding at the meeting. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of
stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the person presiding at any meeting of stockholders shall have the right and authority to convene and
to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of the person presiding at the meeting, are appropriate for the proper conduct of the meeting. Such rules, regulations or
procedures, whether adopted by the Board of Directors or prescribed by the person presiding at the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules
and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies
or such other persons as the person presiding at the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by
participants. Except as otherwise provided by law, the person presiding at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall have the power and the duty to
determine whether (a) a Nomination (as defined below) or any Business (as defined below) proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in
Section 1.13
of these Bylaws, and (b) any proposed Nomination or Business shall be disregarded or shall not be considered or transacted. Unless and to the extent determined by the Board of Directors or the person presiding at the meeting, meetings of
stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 1.13
Notice of
Stockholder Business and Nominations.
(A)
Annual Meetings of Stockholders
. (1) Nominations of one or more individuals for
election to the Board of Directors (each, a
Nomination
,
and more than one,
Nominations
) and the proposal of business other than Nominations to be considered by the stockholders
(
Business
) may be made at an annual meeting of stockholders only (a) pursuant to the Corporations notice of meeting (or any supplement thereto),
provided
,
however,
that reference in the
Corporations notice of meeting to the election of directors or the election of members of the Board of Directors shall not include or be deemed to include Nominations, (b) by or at the direction of the Board of Directors, or (c) by
any stockholder of the Corporation who was a stockholder of record
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of the Corporation at the time the notice provided for in this
Section 1.13
is delivered to the Secretary, who is entitled to vote at the meeting, and who complies with the notice
procedures set forth in this
Section 1.13
.
(2) For Nominations or Business to be properly brought before an annual meeting by
a stockholder pursuant to clause (c) of paragraph (A)(1) of this
Section 1.13
, the stockholder must have given timely notice thereof in writing to the Secretary and any proposed Business must constitute a proper matter for
stockholder action. To be timely, a stockholders notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the sixtieth (60th) day nor earlier than the close
of business on the ninetieth (90th) day prior to the first anniversary of the preceding years annual meeting (
provided
,
however
, that in the event that the date of the annual meeting is more than thirty (30) days before
or more than seventy (70) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the ninetieth (90th) day prior to such annual meeting and not later than the close of
business on the later of the sixtieth (60th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement (as defined below) of the date of such meeting is first made by the Corporation). In no
event shall the public announcement of an adjournment or postponement of an annual meeting of stockholders of the Corporation commence a new time period (or extend any time period) for the giving of a stockholders notice as described above.
Such stockholders notice shall set forth: (a) as to each Nomination to be made by such stockholder, (i) the name, age and address (business and residence) of the individual subject to such Nomination and the principal occupation or
employment of the individual subject to such Nomination (at the time of the notice and for the last three years), (ii) all other information relating to the individual subject to such Nomination that is required to be disclosed in solicitations
of proxies for election of directors in an election contest, or is otherwise required, in each case, pursuant to and in accordance with Regulation 14A under the Securities Exchange Act of 1934, as amended (the
Exchange
Act
), without regard to the application of the Exchange Act to either the Nomination or the Corporation, and (iii) such individuals written consent to being named in a proxy statement as a nominee and to serving as a
director if elected; (b) as to the Business proposed by such stockholder, a brief description of the Business, the text of the proposed Business (including the text of any resolutions proposed for consideration and, in the event that such
Business includes a proposal to amend these Bylaws, the language of the proposed amendment), the reasons for conducting such Business at the meeting and any material interest in such Business of such stockholder and of the beneficial owner, if any,
on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the Nomination or Business is made (i) the name and address of such stockholder, as they appear on the
Corporations books, and such beneficial owner, (ii) the class, series and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (iii) a
representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and such stockholder (or a qualified representative of such stockholder) intends to appear in person or by proxy at the meeting to
propose such Nomination or Business, and (iv) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver by proxy statement and/or form of proxy to holders of at
least the percentage of the Corporations outstanding capital stock required to approve or adopt the Business or elect the nominee subject to the Nomination and/or (y) otherwise to solicit proxies from stockholders of the Corporation in
support of such Nomination or Business;
provided
,
however
, that if the Business is otherwise subject to Rule 14a-8 (or any successor thereto) promulgated under the Exchange Act (
Rule 14a-8
), the foregoing
notice requirements shall be deemed satisfied by a stockholder if the stockholder has notified the Corporation of his, her or its intention to present such Business at an annual meeting of stockholders of the Corporation in compliance with Rule
14a-8, and such Business has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting of stockholders. The Corporation may require any individual subject to such Nomination to furnish
such other information as it may reasonably require to determine the eligibility of such individual subject to such Nomination to serve as a director of the Corporation.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this
Section 1.13
to the contrary, in the event that
the number of directors to be elected to the Board of Directors at an annual meeting is increased and there is no public announcement by the Corporation naming the nominees for election to the
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additional directorships at least one hundred (100) days prior to the first anniversary of the preceding years annual meeting, a stockholders notice required by this
Section 1.13
shall also be considered timely, but only with respect to nominees for election to the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than
the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
(B)
Special Meetings of Stockholders.
Only such Business shall be conducted at a special meeting of stockholders of the Corporation as
shall have been brought before the meeting pursuant to the Corporations notice of meeting (or any supplement thereto);
provided
,
however
, that reference therein to the election of directors or the election of members of the Board
of Directors shall not include or be deemed to include Nominations. Nominations may be made at a special meeting of stockholders of the Corporation at which directors are to be elected only (1) pursuant to the Corporations notice of
meeting (or any supplement thereto);
provided
,
however
, that reference therein to the election of directors or the election of members of the Board of Directors shall not include or be deemed to include Nominations, (2) by or at
the direction of the Board of Directors, or (3) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice
provided for in this
Section 1.13
is delivered to the Secretary, who is entitled to vote at the meeting and upon such election, and who complies with the notice procedures set forth in this
Section 1.13
. In the event the
Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may make Nominations of one or more individuals (as
the case may be) for election to such position(s) as specified in the Corporations notice of meeting, if the stockholders notice required by paragraph (A)(2) of this
Section 1.13
shall be delivered to the Secretary at the
principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90
th
) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of such special meeting and of the nominees proposed by
the Board of Directors to be elected at such special meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting of stockholders of the Corporation commence a new time period (or extend any time period)
for the giving of a stockholders notice as described above.
(C)
General.
(1) Only individuals subject to a Nomination
made in compliance with the procedures set forth in this
Section 1.13
shall be eligible for election at an annual or special meeting of stockholders of the Corporation, and only such Business shall be conducted at an annual or special
meeting of stockholders of the Corporation as shall have been brought before such meeting in accordance with the procedures set forth in this
Section 1.13
. Except as otherwise provided by law, the person presiding at the meeting shall
have the power and the duty to determine whether (a) a Nomination or any Business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this
Section 1.13
,
and (b) any proposed Nomination or Business shall be disregarded or shall not be considered or transacted. Notwithstanding the foregoing provisions of this
Section 1.13
, if the stockholder (or a qualified representative of the
stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a Nomination or Business, such Nomination or Business shall be disregarded and such Nomination or Business shall not be considered or
transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.
(2) For purposes of this
Section 1.13
,
public announcement
shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13, 14, and 15(d) (or any successor thereto) of the Exchange Act.
(3) Nothing in this
Section 1.13
shall be deemed to affect any (a) rights or obligations, if any, of stockholders with
respect to inclusion of proposals in the Corporations proxy statement pursuant to Rule 14a-8 (to the extent the Corporation or such proposals are subject to Rule 14a-8), or (b) rights, if any, of the holders of
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any outstanding series of Preferred Stock as provided for or fixed pursuant to Article FOURTH of the Certificate of Incorporation to elect directors.
ARTICLE II
Board of
Directors
Section 2.1
Number; Qualifications
. The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors. Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock as provided for or fixed pursuant to the provisions of Article FOURTH of the Certificate of
Incorporation, the total number of directors constituting the entire Board of Directors shall be fixed from time to time by resolution of the Board of Directors. Directors need not be stockholders. During any period when the holders of any
outstanding series of Preferred Stock as provided for or fixed pursuant to the provisions of Article FOURTH of the Certificate of Incorporation have the right to elect one or more Preferred Directors (as defined below), then upon commencement of,
and for the duration of, the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of Preferred Directors, and the
holders of such outstanding series of Preferred Stock shall be entitled to elect the Preferred Director or Preferred Directors so provided or fixed pursuant to said provisions of Article FOURTH of the Certificate of Incorporation; and (ii) each
such Preferred Director shall serve until such Preferred Directors successor shall have been duly elected and qualified, or until such Preferred Directors right to hold such office terminates pursuant to said provisions of Article FOURTH
of the Certificate of Incorporation, whichever occurs earlier, subject to such Preferred Directors earlier death, resignation, disqualification or removal. Except as otherwise provided by the Board of Directors in the resolution or resolutions
providing for such series of Preferred Stock pursuant to the provisions of Article FOURTH of the Certificate of Incorporation, whenever the holders of any outstanding series of Preferred Stock having the right to elect one or more Preferred
Directors are divested of such right pursuant to the provisions of such capital stock, the term of office of each such Preferred Director elected by the holders of such series of Preferred Stock, or elected to fill any vacancy resulting from the
death, resignation, disqualification or removal of each such Preferred Director, shall forthwith terminate and the total authorized number of directors of the Corporation shall automatically be decreased by such specified number of directors.
Section 2.2
Election
. The Board of Directors shall initially consist of the persons named as directors in the
Certificate of Incorporation or elected by the incorporator of the Corporation, and each director so elected shall hold office until the first annual meeting of stockholders and until his or her successor is duly elected and qualified. At the first
annual meeting of stockholders and at each annual meeting thereafter, the stockholders shall elect the members of the Board of Directors (other than those directors elected by the holders of any outstanding series of Preferred Stock as provided for
or fixed pursuant to the provisions of Article FOURTH of the Certificate of Incorporation (each, a
Preferred Director
,
and more than one, the
Preferred Directors
)), each of
whom shall hold office for a term of one (1) year or until his or her successor is duly elected and qualified, subject to such directors earlier death, resignation, disqualification or removal.
Section 2.3
Resignation; Vacancies
. Any director may resign at any time upon notice to the Corporation. Subject to the rights, if
any, of the holders of any outstanding series of Preferred Stock as provided for or fixed pursuant to the provisions of Article FOURTH of the Certificate of Incorporation, newly created directorships resulting from an increase in the authorized
number of directors or any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification, removal or other cause shall be filled by a majority of the directors then in office, although less than a quorum, or by
the sole remaining director, or by the affirmative vote of the holders of at least a majority in voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together
as a single class. Any director so elected shall hold office until the expiration of the term of office of the director whom he or she has replaced and until his or her successor shall be elected and qualified, subject to such directors
earlier death,
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resignation, disqualification or removal. No decrease in the number of directors shall shorten the term of any incumbent director.
Section 2.4
Removal of Directors
. Except for any Preferred Directors, any director or the entire Board of Directors may be
removed, but only by the affirmative vote of the holders of at least a majority in voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single
class.
Section 2.5
Regular Meetings
. Regular meetings of the Board of Directors may be held at such places within or without
the State of Delaware and at such times as the Board of Directors may from time to time determine.
Section 2.6
Special
Meetings
. Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the Chairman of the Board, the Chief Executive Officer, the Secretary, or by any two
(2) members of the Board of Directors. Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting at least twenty-four (24) hours before the special meeting.
Section 2.7
Telephonic Meetings Permitted
. Members of the Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this
Section 2.7
shall constitute presence in person at such meeting.
Section 2.8
Quorum; Vote Required for Action
. At
all meetings of the Board of Directors the directors entitled to cast a majority of the votes of the whole Board of Directors shall constitute a quorum for the transaction of business. Except in cases in which the Certificate of Incorporation, these
Bylaws or applicable law otherwise provides, a majority of the votes entitled to be cast by the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.
Section 2.9
Organization
. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in
his or her absence by the Vice Chairman of the Board, if any, or in his or her absence by the Chief Executive Officer, if any, or in his or her absence by the President, or in their absence by a presiding person chosen at the meeting. The Secretary
shall act as secretary of the meeting, but in his or her absence the person presiding at the meeting may appoint any person to act as secretary of the meeting.
Section 2.10
Action by Unanimous Consent of Directors
. Unless otherwise restricted by the Certificate of Incorporation or these
Bylaws, 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 such committee, as the case may be, consent
thereto in writing or by electronic transmission and the writing or writings or electronic transmissions are filed with the minutes of proceedings of the Board of Directors or committee in accordance with applicable law.
ARTICLE III
Committees
Section 3.1
Committees
. The Board of Directors may designate one or more committees, each committee to consist of one or
more of the directors of the Corporation. The Board of Directors 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 the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in
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place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors or these Bylaws, 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.
Section 3.2
Committee Rules
. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors
may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to
Article II
of these
Bylaws.
ARTICLE IV
Officers
Section 4.1
Executive Officers; Election; Qualifications; Term of Office, Resignation; Removal; Vacancies
. The Board of Directors
shall elect a Chief Executive Officer, President and Secretary, and it may, if it so determines, choose a Chairman of the Board and a Vice Chairman of the Board from among its members. The Board of Directors may also choose one or more Vice
Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and such other officers as it shall from time to time deem necessary or desirable. Each such officer shall hold office until the first meeting of the
Board of Directors after the annual meeting of stockholders next succeeding his or her election, and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. Any officer may resign at any time
upon written notice to the Corporation. The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation. Any number
of offices may be held by the same person. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors at any regular or special
meeting.
Section 4.2
Powers and Duties of Executive Officers
. The officers of the Corporation shall have such powers and
duties in the management of the Corporation as may be prescribed in a resolution by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors. The
Board of Directors may require any officer, agent or employee to give security for the faithful performance of his or her duties.
Section 4.3
Appointing Attorneys and Agents; Voting Securities of Other Entities
. Unless otherwise provided by resolution adopted
by the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or any Vice President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, for, in the name and on behalf of
the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation or other entity, any of whose stock or other securities may be held by the Corporation, at meetings
of the holders of the stock or other securities of such other corporation or other entity, or to consent in writing, for, in the name of and on behalf of the Corporation as such holder, to any action by such other corporation or other entity, and
may instruct the person or persons so appointed as to the manner of casting such votes or giving such consents, and may execute or cause to be executed for, in the name and on behalf of the Corporation and under its corporate seal or otherwise, all
such written proxies or other instruments as he or she may deem necessary or proper. Any of the rights set forth in this
Section 4.3
which may be delegated to an attorney or agent may also be exercised directly by the Chairman of the
Board, the Chief Executive Officer, the President or any Vice President.
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ARTICLE V
Stock
Section 5.1
Certificates
. Every holder of stock represented by certificates shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman or Vice Chairman of the Board, if any, or the President or a Vice President,
and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, certifying the number of shares owned by such holder in the Corporation. Any of or all the signatures on the certificate may be a 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 such person were such officer, transfer agent, or registrar at the date of issue. The Corporation shall not have the power to issue a certificate in bearer form.
Section 5.2
Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates
. The Corporation may issue a new
certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owners legal
representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.
ARTICLE VI
Indemnification
Section 6.1
Right to Indemnification
. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter be amended, any person (a
Covered Person
) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a
proceeding
), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while
a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans, its participants or beneficiaries, against all liability and loss suffered and expenses (including attorneys fees) reasonably incurred by such Covered Person. Notwithstanding the preceding
sentence, except as otherwise provided in
Section 6.3
of these Bylaws, the Corporation shall be required to indemnify a Covered Person in connection with a proceeding (or part thereof) commenced by such Covered Person only if the
commencement of such proceeding (or part thereof) by the Covered Person was authorized in the specific case by the Board of Directors.
Section 6.2
Prepayment of Expenses
. The Corporation shall to the fullest extent not prohibited by applicable law as it presently
exists or may hereafter be amended, pay the expenses (including attorneys fees) incurred by a Covered Person in defending any proceeding in advance of its final disposition,
provided
,
however
, that, to the extent required by law,
such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not
entitled to be indemnified under this
Article VI
or otherwise.
Section 6.3
Claims
. If a claim for indemnification
(following the final disposition of such action, suit or proceeding) or advancement of expenses under this
Article VI
is not paid in full within thirty (30) days after a written claim therefor by the Covered Person has been received by
the Corporation, the Covered Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid
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the expense (including attorneys fees) of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Covered Person is not entitled to the
requested indemnification or advancement of expenses under applicable law.
Section 6.4
Nonexclusivity of Rights
. The rights
conferred on any Covered Person by this
Article VI
shall not be exclusive of any other rights which such Covered Person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these Bylaws, agreement,
vote of stockholders or disinterested directors or otherwise.
Section 6.5
Other Sources
. The Corporations obligation,
if any, to indemnify or to advance expenses to any Covered Person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such Covered Person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit entity.
Section 6.6
Amendment or Repeal
. Any amendment, repeal or modification of the foregoing provisions of this
Article VI
shall
not adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to the time of such amendment, repeal or modification.
Section 6.7
Other Indemnification and Prepayment of Expenses
. This
Article VI
shall not limit the right of the Corporation,
to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action.
ARTICLE VII
Miscellaneous
Section 7.1
Fiscal Year
. The fiscal year of the Corporation shall be determined by resolution of the Board of Directors.
Section 7.2
Seal
. The corporate seal shall have the name of the Corporation inscribed thereon and shall be in such form as may be
approved from time to time by resolution of the Board of Directors.
Section 7.3
Manner of Notice
. Except as otherwise
provided herein or permitted by applicable law, notices to directors and stockholders shall be in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the Corporation. Notice to
directors may be given by telecopier, telephone or other means of electronic transmission.
Section 7.4
Waiver of Notice of
Meetings of Stockholders, Directors and Committees
. Any written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any regular or special meeting of the stockholders, directors, or members of a committee of directors need be
specified in a waiver of notice.
Section 7.5
Form of Records
. Any records maintained by the Corporation in the regular course
of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device or method,
provided
that the records so kept can be converted into clearly
legible paper form within a reasonable time.
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Section 7.6
Amendment of Bylaws
. These Bylaws may be altered, amended or repealed,
and new bylaws made, by the Board of Directors, but the stockholders may make additional bylaws and may alter and repeal any bylaws whether adopted by them or otherwise. Any bylaw that is to be made, altered, amended or repealed by the stockholders
of the Corporation shall receive the affirmative vote of the holders of at least a majority in voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally, voting together as a single class.
Section 7.7
Forum for Adjudication of Disputes
. Unless the Corporation consents in writing to the selection of an alternative
forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the
Corporation to the Corporation or the Corporations stockholders, (iii) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, (iv) any civil action to interpret, apply,
enforce or determine the validity of the provisions of the Certificate of Incorporation or these Bylaws, or (v) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the State of
Delaware, in all cases subject to such court having personal jurisdiction over the indispensable parties named as defendants. Any person or persons purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be
deemed to have notice of and consented to the provisions of this
Section 7.7
.
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Annex D
ARTICLES OF AMENDMENT TO THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
THE FEMALE HEALTH COMPANY
1. The
name of the Corporation is The Female Health Company.
2. The first amendment
1
adopted relates to Article I of the Amended and Restated Articles of Incorporation. Article I is amended to read in its entirety as follows:
ARTICLE I
The name of the
corporation is Veru Inc.
3. The second amendment
2
adopted relates to Article
V of the Amended and Restated Articles of Incorporation. The first portion of Article V is amended to read as follows:
ARTICLE V
The aggregate number of shares which the Corporation shall have the authority to issue is 82,015,000 shares consisting of:
(a) 77,000,000 shares designated as Common Stock with a par value of $0.01 per share;
(b) 5,000,000 shares designated as Class A Preferred Stock with a par value of $0.01 per share; and
(c) 15,000 shares designated as Class B Preferred Stock with a par value of $0.50 per share and the relative
rights, preferences and privileges of each class shall be as follows:
The remainder of Article V, as previously amended, remains
unchanged.
4. The third amendment
3
to the Amended and Restated Articles of
Incorporation adds a new Article IX as follows:
ARTICLE IX
The voting requirements of sections 180.1003(3), 180.1103(3), 180.1202(3), 180.1402(3) and 180.1404(2) of the
Wisconsin Business Corporation Law shall apply to shareholder voting.
5. The foregoing amendments to the Amended and Restated Articles of
Incorporation of the Corporation, were approved and adopted by the Board of Directors and shareholders of the Corporation in accordance with Section 180.1003 of the Wisconsin Business Corporation Law.
1
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The first amendment will not be included if the Name Change Proposal is not approved by stockholders at the Special Meeting.
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2
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The second amendment will not be included if the Share Increase Proposal is not approved by stockholders at the Special Meeting.
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3
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The third amendment will not be included if the Majority Vote Proposal is not approved by the stockholders at the Special Meeting.
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Dated this [●] day of [●], 2017.
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THE FEMALE HEALTH COMPANY
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BY
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Mitchell S. Steiner, Chief Executive Officer
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This document was drafted by John K. Tokarz, Esq.
Please return this document to:
Tanya R. Braga, Paralegal
Reinhart Boerner Van Deuren s.c.
Suite 1700
1000 North Water Street
Milwaukee, WI 53202
(414) 298-8354
D-2
Annex E
VERU INC.
1
2017 EQUITY INCENTIVE PLAN
1
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References to Veru Inc. will change to The Female Health Company if the Name Change Proposal is not approved by stockholders at the Special Meeting.
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VERU INC.
2017 EQUITY INCENTIVE PLAN
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1.
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Purpose
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2.
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Definitions
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3.
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Administration
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4.
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Shares Subject to Plan
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5.
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Eligibility;
Per-Participant
Limitations
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6.
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Specific Terms of Awards
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7.
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Certain Provisions Applicable to Awards
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8.
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Code Section 162(m) Provisions
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9.
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Change of Control
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10.
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General Provisions
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VERU INC.
2017 EQUITY INCENTIVE PLAN
1.
Purpose.
The purpose of this VERU INC. 2017 EQUITY INCENTIVE PLAN (the Plan) is to assist Veru Inc. (the
Company) and its Related Entities (as hereinafter defined) in attracting, motivating, retaining and rewarding high-quality executives and other employees, officers, directors, consultants and other persons who provide services to the
Company or its Related Entities by enabling such persons to acquire or increase a proprietary interest in the Company in order to strengthen the mutuality of interests between such persons and the Companys stockholders, and providing such
persons with performance incentives to expend their maximum efforts in the creation of stockholder value.
2.
Definitions.
For purposes of the Plan, the following terms shall be defined as set forth below, in addition to such terms defined in Section 1 hereof and elsewhere herein.
(a)
Award
means any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Share
granted as a bonus or in lieu of another Award, Dividend Equivalent, Other
Stock-Based
Award or Performance Award, together with any other right or interest relating to Shares or other property (including
cash), granted to a Participant under the Plan.
(b)
Award Agreement
means any written agreement, contract or
other instrument or document evidencing any Award granted by the Committee hereunder.
(c)
Beneficiary
means the
person, persons, trust or trusts that have been designated by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefits specified under the Plan upon such Participants death or to
which Awards or other rights are transferred if and to the extent permitted under Section 10(b) hereof. If, upon a Participants death, there is no designated Beneficiary or surviving designated Beneficiary, then the term Beneficiary means
the person, persons, trust or trusts entitled by will or the laws of descent and distribution to receive such benefits.
(d)
Beneficial Owner and Beneficial Ownership
shall have the meaning ascribed to such term in
Rule 13d-3
under the Exchange Act and any successor to such Rule.
(e)
Board
means the Companys Board of Directors.
(f)
Cause
shall, with respect to any Participant, have the meaning specified in the Award Agreement. In the absence
of any definition in the Award Agreement, Cause shall have the equivalent meaning or the same meaning as cause or for cause set forth in any employment, consulting, or other agreement for the performance of
services between the Participant and the Company or a Related Entity or, in the absence of any such agreement or any such definition in such agreement, such term shall mean (i) the failure by the Participant to perform, in a reasonable manner,
his or her duties as assigned by the Company or a Related Entity, (ii) any violation or breach by the Participant of his or her employment, consulting or other similar agreement with the Company or a Related Entity, if any, (iii) any
violation or breach by the Participant of any
non-competition,
non-solicitation,
non-disclosure
and/or other similar agreement
with the Company or a Related Entity, (iv) any act by the Participant of dishonesty or bad faith with respect to the Company or a Related Entity, (v) use of alcohol, drugs or other similar substances in a manner that adversely affects the
Participants work performance, or (vi) the commission by the Participant of any act, misdemeanor or crime reflecting unfavorably upon the Participant or the Company or any Related Entity. The good faith determination by the Committee of
whether the Participants Continuous Service was terminated by the Company for Cause shall be final and binding for all purposes hereunder.
(g)
Change of Control
means a Change of Control as defined in Section 9(b) of the Plan.
(h)
Code
means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and
successor provisions and regulations thereto.
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(i)
Committee
means a committee designated by the Board to administer
the Plan; provided, however, that if the Board fails to designate a committee or if there are no longer any members on the committee so designated by the Board, or for any other reason determined by the Board, then the Board shall serve as the
Committee. The Committee shall consist of at least two directors, each of whom shall be (i) a
non-employee
director within the meaning of
Rule 16b-3
(or any successor rule) under the Exchange Act, unless administration of the Plan by
non-employee
directors is not then required in order for
exemptions under
Rule l6b-3
to apply to transactions under the Plan, (ii) an outside director within the meaning of Section 162(m) of the Code and (iii) Independent.
(j)
Consultant
means any consultant or advisor who is a natural person and who provides services to the Company
or any Subsidiary, so long as such person (i) renders bona fide services that are not in connection with the offer and sale of the Companys securities in a
capital-raising
transaction,
(ii) does not directly or indirectly promote or maintain a market for the Companys securities and (iii) otherwise qualifies as a de facto employee or consultant under the applicable rules of the Securities and Exchange
Commission for registration of shares of stock on a
Form S-8
registration statement.
(k)
Continuous Service
means the uninterrupted provision of services to the Company or any Related Entity in any capacity of Employee, Director, Consultant or other service provider. Continuous Service shall not be considered
to be interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entities or any successor entities, in any capacity of Employee, Director, Consultant or other service provider, or
(iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director, Consultant or other service provider (except as otherwise provided in the Award Agreement). An
approved leave of absence shall include sick leave, military leave or any other authorized personal leave.
(l)
Covered
Employee
has the same meaning as set forth in Section 162(m)(3) of the Code, as interpreted by Internal Revenue Service guidance promulgated thereunder, including IRS Notice 2007-49.
(m)
Director
means a member of the Board or the board of directors of any Related Entity.
(n)
Disability
means a permanent and total disability, (within the meaning of Section 22(e) of the Code), as
determined by a medical doctor satisfactory to the Committee.
(o)
Dividend Equivalent
means a right, granted to
a Participant under Section 6(g) hereof, to receive cash, Shares, other Awards or other property equal in value to dividends paid with respect to a specified number of Shares.
(p)
Effective Date
means the effective date of the Plan, which shall be [●], 2017.
(q)
Eligible Person
means each officer, Director, Employee, Consultant and other person who provides services to the
Company or any Related Entity. The foregoing notwithstanding, only Employees of the Company, or any parent corporation or subsidiary corporation of the Company (as those terms are defined in Sections 424(e) and (f) of the Code,
respectively), shall be Eligible Persons for purposes of receiving any Incentive Stock Options. An Employee on leave of absence may, in the discretion of the Committee, be considered as still in the employ of the Company or a Related Entity for
purposes of eligibility for participation in the Plan.
(r)
Employee
means any person, including an officer or
Director, who is an employee of the Company or any Subsidiary, or is a prospective employee of the Company or any Subsidiary (conditioned upon, and effective not earlier than, such person becoming an employee of the Company or any Subsidiary). The
payment of a directors fee by the Company or a Subsidiary shall not be sufficient to constitute employment by the Company.
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(s)
Exchange Act
means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor provisions and rules thereto.
(t)
Fair Market Value
means, as of any date, the value of a Share determined as follows:
(i) if a Share is listed on any national securities exchange,
including, without limitation, the NASDAQ Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange for the day of determination, as reported in
The Wall Street Journal
or such other source as the Committee deems reliable;
(ii) if a Share is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for such Share for the day of determination, as reported in
The Wall Street Journal
or such
other source as the Committee deems reliable; or
(iii) in the absence of an established market for a Share, the Fair Market Value
shall be determined in good faith by the Committee.
(u)
Incentive Stock
Option
means any Option intended to be designated as an incentive stock option within the meaning of Section 422 of the Code or any successor provision thereto.
(v)
Independent
, when referring to either the Board or
members of the Committee, shall have the same meaning as used in the rules of the Listing Market.
(w)
Incumbent
Board
means the Incumbent Board as defined in Section 9(b)(ii) hereof.
(x)
Listing Market
means the national securities exchange on which any securities of the Company are listed for trading, and if not listed for trading, by the rules of the Nasdaq Stock
Market.
(y)
Option
means a right granted
to a Participant under Section 6(b) hereof, to purchase Shares or other Awards at a specified price during specified time periods.
(z)
Optionee
means a person to whom an Option is granted
under this Plan or any person who succeeds to the rights of such person under this Plan.
(aa)
Other Stock-Based
Awards
means Awards granted to a Participant under Section 6(i) hereof.
(bb)
Participant
means a person who has been granted an Award under the Plan which remains outstanding, including a person who is no longer an Eligible Person.
(cc)
Performance Award
means any Award of Performance Shares
or Performance Units granted pursuant to Section 6(h) hereof.
(dd)
Performance Period
means that period established by the Committee at the time any Award is granted or at any time thereafter during which any performance goals specified by the
Committee with respect to such Award are to be measured.
(ee)
Performance
Share
means any grant pursuant to Section 6(h) hereof of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee
shall determine, including cash, Shares, other property or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
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(ff)
Performance
Unit
means any grant pursuant to Section 6(h) hereof of a unit valued by reference to a designated amount of property (including cash) other than Shares, which value may be paid to the Participant by delivery
of such property as the Committee shall determine, including cash, Shares, other property or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant
or thereafter.
(gg)
Person
shall have the
meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall include a group as defined in Section 43(d) thereof.
(hh)
Pre-Effective Awards
means any Awards made before the Effective Date that will be subject to the
Plan if the Plan becomes effective.
(ii)
Related
Entity
means any Subsidiary, and any business, corporation, partnership, limited liability company or other entity designated by the Board, in which the Company or a Subsidiary holds a substantial ownership
interest, directly or indirectly.
(jj)
Restricted
Stock
means any Share issued with such risks of forfeiture and other restrictions as the Committee, in its sole discretion, may impose (including any restriction on the right to vote such Share and the right to
receive any dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.
(kk)
Restricted Stock Award
means an Award granted to a Participant under Section 6(d) hereof.
(ll)
Restricted Stock Unit
means a right to receive Shares,
including Restricted Stock, cash measured based upon the value of Shares or a combination thereof, at the end of a specified deferral period.
(mm)
Restricted Stock Unit Award
means an Award of
Restricted Stock Unit granted to a Participant under Section 6(e) hereof.
(nn)
Restriction Period
means the period of time specified by the Committee that Restricted Stock Awards shall be subject to such restrictions on transferability, risk of forfeiture and
other restrictions, if any, as the Committee may impose.
(oo)
Rule
16b-3
means
Rule 16b-3,
as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(pp)
Shares
means the shares of common stock of the Company and such other securities as may be substituted (or resubstituted) for Shares pursuant to Section 10(c) hereof.
(qq)
Stock Appreciation Right
means a right granted to a Participant under Section 6(c) hereof.
(rr)
Subsidiary
means any corporation or other entity
in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of
directors or in which the company has the right to receive 50% or more of the distribution of profits or 50% or more of the assets, as that term is defined in Rule 405 of under the Securities Act of 1933, controlled by the Company directly, or
indirectly, through one or more intermediaries.
(ss)
Substitute Awards
means Awards granted or
Shares issued by the Company in assumption of, or in substitution or exchange for, Awards previously granted, or the right or obligation to make future Awards, by a company (i) acquired by the Company or any Related Entity; (ii) which
becomes a Related Entity after the date hereof or (iii) with which the Company or any Related Entity combines.
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3.
Administration
.
(a)
Authority of the Committee
. The Plan shall be administered by the Committee; provided, however, that except as
otherwise expressly provided in this Plan, the Board may exercise any power or authority granted to the Committee under this Plan and, in that case, references herein shall be deemed to include references to the Board. The Committee shall have full
and final authority, subject to and consistent with the provisions of the Plan, to select Eligible Persons to become Participants; grant Awards; determine the type, number and other terms and conditions of, and all other matters relating to, Awards;
prescribe Award Agreements (which need not be identical for each Participant) and rules and regulations for the administration of the Plan; construe and interpret the Plan and Award Agreements and correct defects, supply omissions or reconcile
inconsistencies therein; and to make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan. In exercising any discretion granted to the Committee under the Plan or pursuant to any
Award, the Committee shall not be required to follow past practices, act in a manner consistent with past practices, or treat any Eligible Person or Participant in a manner consistent with the treatment of any other Eligible Persons or Participants.
Decisions of the Committee shall be final, conclusive and binding on all persons or entities, including the Company, any Subsidiary or any Participant or Beneficiary, or any transferee under Section 10(b) hereof or any other person or entity
claiming rights from or through any of the foregoing persons or entities.
(b)
Manner of Exercise of Committee
Authority.
(i) The Committee, and not the Board, shall exercise sole and exclusive discretion (A) on any matter relating
to a Participant then subject to Section 16 of the Exchange Act with respect to the Company to the extent necessary in order that transactions by such Participant shall be exempt under Rule 16b-3 under the Exchange Act and (B) with
respect to any Award that is intended to qualify as
performance-based
compensation under Section 162(m) of the Code, to the extent necessary in order for such Award to so qualify.
(ii) Any action of the Committee shall be final, conclusive and binding on all Persons, including the Company, its Related Entities, Eligible
Persons, Participants, Beneficiaries, transferees under Section 10(b) hereof or other persons claiming rights from or through a Participant, and stockholders. The express grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to members of the Board, or officers or managers of the Company or any Related Entity, or committee thereof, the
authority subject to such terms and conditions as the Committee shall determine, to perform such functions, including administrative functions, as the Committee may determine to the extent that such delegation will not result in the loss of an
exemption under
Rule 16b-3(d)(1)
of the Exchange Act for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Company and will not cause Awards intended to
qualify as
performance-based
compensation under Code Section 162(m) to fail to so qualify. The Committee may appoint agents to assist it in administering the Plan.
(c)
Limitation of Liability
. The Committee and the Board and each member thereof shall be entitled to, in good
faith, rely or act upon any report or other information furnished to him or her by any officer or Employee, the Companys independent auditors, Consultants or any other agents assisting in the administration of the Plan. Members of the
Committee and the Board, and any officer or Employee acting at the direction or on behalf of the Committee or the Board, shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall,
to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.
4.
Shares Subject to Plan
.
(a)
Limitation on Overall Number of Shares Available for Delivery under the Plan
. Subject to adjustment as
provided in Section 10(c) hereof, the total number of Shares reserved and available for delivery
under the Plan shall be 4,700,000. Any Shares delivered under the Plan may consist, in whole or in part, of authorized and unissued
shares or treasury shares.
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(b)
Application of Limitation to Grants of Awards
. No Award may be
granted if the number of Shares to be delivered in connection with such an Award exceeds the number of Shares remaining available for delivery under the Plan, minus the number of Shares deliverable in settlement of or relating to then outstanding
Awards. The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of Shares actually delivered
differs from the number of Shares previously counted in connection with an Award.
(c)
Availability of Shares Not
Delivered under Awards and Adjustments to Limits.
(i) If any Shares subject to an Award, on or after the Effective Date, are
forfeited, expire or otherwise terminate without issuance of such Shares, or any Award, on or after the Effective Date, is settled for cash, or otherwise does not result in the issuance of all or a portion of the Shares subject to such Award, the
Shares to which those Awards were subject shall, to the extent of such forfeiture, expiration, termination,
non-issuance
or cash settlement, again be available for delivery with respect to Awards under the
Plan, subject to Section 4(c)(iv) below.
(ii) Substitute Awards shall not reduce the Shares authorized for delivery under the Plan
or authorized for delivery to a Participant in any period.
(iii) Any Share that again becomes available for delivery pursuant to this
Section 4(c) shall be added back as one Share.
(iv) Notwithstanding anything to the contrary contained herein, Shares subject to an
Award under the Plan shall not again be made available for issuance or delivery under the Plan if such Shares are (A) Shares tendered in payment of an Option, (B) Shares delivered or withheld by the Company to satisfy any tax withholding
obligation or (C) Shares covered by a stock-settled Stock Appreciation Right or other Awards that were not issued upon the settlement of the Award.
(v) Notwithstanding anything in this Section 4(c) to the contrary, but subject to adjustment as provided in Section 10(c) hereof,
the maximum aggregate number of Shares that may be delivered under the Plan as a result of the exercise of the Incentive Stock Options shall be 4,700,000 Shares. In no event shall any Incentive Stock Options be granted under the Plan after the
tenth anniversary of the date on which the Board adopts the Plan.
5.
Eligibility;
Per-Participant
Limitations.
Awards may be granted under the Plan only to Eligible Persons. Subject to adjustment as provided in Section 10(c) of this Plan, in any fiscal year of the Company
during any part of which the Plan is in effect, no Participant may be granted Awards with respect to more than 350,000 Shares and any Director who is not an Employee may not be granted Awards with respect to more than 55,000 Shares. In addition, the
maximum dollar value payable to any one Participant with respect to Performance Units that are subject to Section 8 hereof, is (x) $1,000,000 with respect to any 12 month Performance Period
(pro-rated
for any Performance Period that is less than 12 months based upon the ratio of the number of days in the Performance Period as compared to 365), and (y) with respect to any Performance
Period that is more than 12 months, $2,000,000. The limitations in this Section 5 shall not apply to any Pre-Effective Awards.
6.
Specific Terms of Awards
.
(a)
General
. Awards may be granted on the terms and conditions set forth in this Section 6. In addition, the
Committee may impose on any Award, or the exercise thereof, at the date of grant or thereafter (subject to Section 10(e)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the
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Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of the Participants Continuous Service and terms permitting a Participant to
make elections relating to his or her Award. Except as otherwise expressly provided herein, the Committee shall retain full power and discretion to accelerate, waive or modify, at any time, any term or condition of an Award that is not mandatory
under the Plan. Except in cases in which the Committee is authorized to require other forms of consideration under the Plan, or to the extent other forms of consideration must be paid to satisfy the requirements of applicable law, no consideration
other than services may be required for the grant (as opposed to the exercise) of any Award.
(b)
Options.
The
Committee is authorized to grant Options to any Eligible Person on the following terms and conditions:
(i)
Exercise Price.
Other than in connection with Substitute Awards, the exercise price per Share purchasable under an Option shall be determined by the Committee, provided that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the
date of grant of the Option and shall not, in any event, be less than the par value of a Share on the date of grant of the Option. If an Employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of
the Code) more than 10% of the combined voting power of all classes of stock of the Company (or any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code,
respectively) and an Incentive Stock Option is granted to such Employee, the exercise price of such Incentive Stock Option (to the extent required by the Code at the time of grant) shall be no less than 110% of the Fair Market Value of a Share on
the date such Incentive Stock Option is granted. The Committee shall not be permitted to (A) lower the exercise price per Share of an Option after it is granted, (B) cancel an Option when the exercise price per Share exceeds the Fair
Market Value of the underlying Shares in exchange for cash or another Award (other than in connection with Substitute Awards), (C) cancel an outstanding Option in exchange for an Option with an exercise price that is less than the exercise
price of the original Options or (D) take any other action with respect to an Option that may be treated as a repricing pursuant to the applicable rules of the Listing Market, without approval of the Companys stockholders.
(ii)
Time and Method of Exercise
. The Committee shall determine the time or times at which or the circumstances
under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the method by which notice of exercise is to be given and the form of exercise notice to be used,
the time or times at which Options shall cease to be or become exercisable following termination of Continuous Service or upon other conditions, the methods by which the exercise price may be paid or deemed to be paid (including in the discretion of
the Committee a cashless exercise procedure), the form of such payment, including, without limitation, cash, Shares (including without limitation the withholding of Shares otherwise deliverable pursuant to the Award), other Awards or awards granted
under other plans of the Company or a Related Entity, or other property (including notes, or other contractual obligations of Participants to make payment on a deferred basis provided that such deferred payments are not in violation of
Section 13(k) of the Exchange Act, any rule or regulation adopted thereunder or any other applicable law), and the methods by or forms in which Shares will be delivered or deemed to be delivered to Participants.
(iii)
Form of Settlement
. The Committee may, in its sole discretion, provide that the Shares to be issued upon
exercise of an Option shall be in the form of Restricted Stock, or other similar securities.
(iv)
Incentive Stock Options
. The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code. Anything in the Plan to the contrary notwithstanding, no term of
the Plan relating to Incentive Stock Options (including any Stock Appreciation Right issued in tandem therewith) shall be interpreted, amended or altered, nor shall any discretionary authority granted under the Plan be exercised, so as to disqualify
either the Plan or any Incentive Stock Option under Section 422 of the Code, unless the Participant has first requested, or consents to, the change that will result in such
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disqualification. Thus, if and to the extent required to comply with Section 422 of the Code, Options granted as Incentive Stock Options shall be subject to the following special
terms and conditions:
(A) the Option shall not be exercisable for more than ten years after the date such Incentive
Stock Option is granted; provided, however, that if a Participant owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company (or
any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) and the Incentive Stock Option is granted to such Participant, the term of the Incentive Stock
Option shall be (to the extent required by the Code at the time of the grant) for no more than five years from the date of grant;
(B)
the aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the Shares with respect to which Incentive Stock Options granted under the Plan and all other option plans of the Company (and any parent
corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) that become exercisable for the first time by the Participant during any calendar year shall not (to the
extent required by the Code at the time of the grant) exceed $100,000; and
(C) if Shares acquired by exercise of an Incentive Stock
Option are disposed of within two years following the date the Incentive Stock Option is granted or one year following the transfer of such Shares to the Participant upon exercise, the Participant shall, promptly following such disposition,
notify the Company in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Committee may reasonably require.
(c)
Stock Appreciation Rights.
The Committee may grant Stock Appreciation Rights to any Eligible Person in conjunction with all
or part of any Option granted under the Plan or at any subsequent time during the term of such Option (a
Tandem Stock Appreciation Right
), or without regard to any Option (a
Freestanding Stock Appreciation
Right
), in each case upon such terms and conditions as the Committee may establish in its sole discretion, not inconsistent with the provisions of the Plan, including the following:
(i)
Right to Payment
. A Stock Appreciation Right shall confer on the Participant to whom it is granted a right to
receive, upon exercise thereof, the excess of (A) the Fair Market Value of one Share on the date of exercise over (B) the grant price of the Stock Appreciation Right as determined by the Committee. The grant price of a Stock Appreciation
Right shall not be less than 100% of the Fair Market Value of a Share on the date of grant. The Committee shall not be permitted to (A) lower the grant price per Share of a Stock Appreciation Right after it is granted, (B) cancel a Stock
Appreciation Right when the grant price per Share exceeds the Fair Market Value of the underlying Shares in exchange for another Award (other than in connection with Substitute Awards), (C) cancel an outstanding Stock Appreciation Right in
exchange for a Stock Appreciation Right with a grant price that is less than the grant price of the original Stock Appreciation Right or (D) take any other action with respect to a Stock Appreciation Right that may be treated as a repricing
pursuant to the applicable rules of the Listing Market, without stockholder approval.
(ii)
Other Terms.
The
Committee shall determine the date of grant or thereafter the time or times at which and the circumstances under which a Stock Appreciation Right may be exercised in whole or in part (including based on achievement of performance goals and/or future
service requirements), the time or times at which Stock Appreciation Rights shall cease to be or become exercisable following termination of Continuous Service or upon other conditions, the method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in which Shares will be delivered or deemed to be delivered to Participants, whether or not a Stock Appreciation Right shall be in tandem or in combination with any other Award and any other
terms and conditions of any Stock Appreciation Right.
(iii)
Tandem Stock Appreciation Rights
. Any Tandem
Stock Appreciation Right may be granted at the same time as the related Option is granted or, for Options that are not Incentive Stock Options, at any time
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thereafter before exercise or expiration of such Option. Any Tandem Stock Appreciation Right related to an Option may be exercised only when the related Option would be exercisable and
the Fair Market Value of the Shares subject to the related Option exceeds the exercise price at which Shares can be acquired pursuant to the Option. In addition, if a Tandem Stock Appreciation Right exists with respect to less than the full number
of Shares covered by a related Option, then an exercise or termination of such Option shall not reduce the number of Shares to which the Tandem Stock Appreciation Right applies until the number of Shares then exercisable under such Option equals the
number of Shares to which the Tandem Stock Appreciation Right applies. Any Option related to a Tandem Stock Appreciation Right shall no longer be exercisable to the extent the Tandem Stock Appreciation Right has been exercised, and any Tandem Stock
Appreciation Right shall no longer be exercisable to the extent the related Option has been exercised.
(d)
Restricted Stock Awards
. The Committee is authorized to grant Restricted Stock Awards to any Eligible Person on the following terms and conditions:
(i)
Grant and Restrictions
. Restricted Stock Awards shall be subject to such restrictions on transferability,
risk of forfeiture and other restrictions, if any, as the Committee may impose, or as otherwise provided in this Plan during the Restriction Period. The terms of any Restricted Stock Award granted under the Plan shall be set forth in a written Award
Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan. The restriction may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance
goals and/or future service requirements), in such installments or otherwise, as the Committee may determine at the date of grant or thereafter. Except to the extent restricted under the terms of the Plan and any Award Agreement relating to a
Restricted Stock Award, a Participant granted Restricted Stock shall have all of the rights of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends thereon, provided that any dividends with respect to a
Restricted Stock Award shall be withheld by the Company for the account of the Participant holding such Restricted Stock Award, and interest may be credited on the amount of the dividends withheld at a rate and subject to such terms as determined by
the Committee. The dividends so withheld by the Company and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be subject to the restrictions and a risk of forfeiture to the same extent as the share
of Restricted Stock, shall be distributed to the Participant upon the release of restrictions on such share and, if such share is forfeited, the Participant shall have no right to such dividends. During the period that the Restricted Stock Award is
subject to a risk of forfeiture, subject to Section 10(b) below and except as otherwise provided in the Award Agreement, the Restricted Stock may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the
Participant or Beneficiary.
(ii)
Forfeiture
. Except as otherwise determined by the Committee,
upon termination of a Participants Continuous Service during the applicable Restriction Period, the Participants Restricted Stock that is at that time subject to a risk of forfeiture that has not lapsed or otherwise been satisfied shall
be forfeited and reacquired by the Company; provided that the Committee may provide, by resolution or other action or in any Award Agreement, or may determine in any individual case, that forfeiture conditions relating to Restricted Stock Awards
shall be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Restricted Stock.
(iii)
Certificates for Stock
. Restricted Stock granted under the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical possession of the certificates and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.
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(e)
Restricted Stock Unit Award
. The Committee is authorized to grant
Restricted Stock Unit Awards to any Eligible Person on the following terms and conditions:
(i)
Award
and Restrictions
. Satisfaction of a Restricted Stock Unit Award shall occur upon expiration of the deferral period specified for such Restricted Stock Unit Award by the Committee (or, if permitted by the Committee, as elected by the
participant in a manner that does not violate the requirements of Section 409A of the Code). In addition, a Restricted Stock Unit Award shall be subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose,
if any, which restrictions may lapse at the expiration of the deferral period or at other specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination, in installments or
otherwise as the Committee may determine. A Restricted Stock Unit Award may be satisfied by delivery of Shares, cash equal to the Fair Market Value of the specified number of Shares covered by the Restricted Stock Units, or a combination thereof, as
determined by the Committee at the date of grant or thereafter. Prior to satisfaction of a Restricted Stock Unit Award, a Restricted Stock Unit Award carries no voting or dividend or other rights associated with Share ownership. Prior to
satisfaction of a Restricted Stock Unit Award, except as otherwise provided in an Award Agreement and as permitted under Section 409A of the Code, a Restricted Stock Unit Award may not be sold, transferred, pledged, hypothecated, margined or
otherwise encumbered by the Participant or any Beneficiary.
(ii)
Forfeiture.
Except as otherwise determined
by the Committee, upon termination of a Participants Continuous Service during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Restricted Stock Unit
Award), the Participants Restricted Stock Unit Award that is at that time subject to a risk of forfeiture that has not lapsed or otherwise been satisfied shall be forfeited; provided that the Committee may provide, by resolution or other
action or in any Award Agreement, or may determine in any individual case, that forfeiture conditions relating to a Restricted Stock Unit Award shall be waived in whole or in part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of any Restricted Stock Unit Award.
(f)
Bonus
Stock and Awards in Lieu of Obligations
. The Committee is authorized to grant Shares to any Eligible Persons as a bonus, or to grant Shares or other Awards in lieu of obligations to pay cash or deliver other property under the Plan or under
other plans or compensatory arrangements, provided that, in the case of Eligible Persons subject to Section 16 of the Exchange Act, the amount of such grants remains within the discretion of the Committee to the extent necessary to ensure that
acquisitions of Shares or other Awards are exempt from liability under Section 16(b) of the Exchange Act. Shares or Awards granted hereunder shall be subject to such other terms as shall be determined by the Committee.
(g)
Dividend Equivalents
. The Committee is authorized to grant Dividend Equivalents to any Eligible Person
entitling the Eligible Person to receive cash, Shares, other Awards or other property equal in value to the dividends paid with respect to a specified number of Shares. Dividend Equivalents may be awarded on a free-standing basis or in connection
with another Award. Notwithstanding anything in the Plan to the contrary, any cash, Shares, other Awards or other property otherwise payable with respect to Dividend Equivalents as to any Award to the extent such Award has not vested shall be
withheld by the Company for the account of the Participant holding such Award, and interest may be credited on the amount withheld at a rate and subject to such terms as determined by the Committee. The cash, Shares, other Awards or other property
so withheld by the Company and attributable to any particular Award, and any interest thereon, shall be subject to the restrictions and a risk of forfeiture to the same extent as such Award, shall be distributed to the Participant upon the vesting
of such Award and, if such Award is forfeited prior to its vesting, the Participant shall have no right to such cash, Shares, other Awards or other property or any interest thereon.
(h)
Performance Awards
. The Committee is authorized to grant Performance Awards to any Eligible Person payable in
cash, Shares or other Awards, on terms and conditions established by the Committee, subject
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to the provisions of Section 8 if and to the extent that the Committee shall, in its sole discretion, determine that an Award shall be subject to those provisions. The performance
criteria to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award; provided, however, that a Performance Period shall not be shorter than
twelve (12) months nor longer than five (5) years. Except as provided in Section 9 or as may be provided in an Award Agreement, Performance Awards will be distributed only after the end of the relevant Performance Period. The
performance goals to be achieved for each Performance Period shall be conclusively determined by the Committee and may be based upon the criteria set forth in Section 8(b), or in the case of an Award that the Committee determines shall not be
subject to Section 8 hereof, any other criteria that the Committee, in its sole discretion, shall determine should be used for that purpose. The amount of the Award to be distributed shall be conclusively determined by the Committee.
Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis in a manner that does not violate the requirements of
Section 409A of the Code.
(i)
Other Stock-Based Awards
. The Committee is authorized, subject to
limitations under applicable law, to grant to any Eligible Person such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be
consistent with the purposes of the Plan. Other Stock-Based Awards may be granted to Participants either alone or in addition to other Awards granted under the Plan, and such Other Stock-Based Awards shall also be available as a form of payment in
the settlement of other Awards granted under the Plan. The Committee shall determine the terms and conditions of such Awards. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 6(i) shall be
purchased for such consideration, (including without limitation loans from the Company or a Related Entity provided that such loans are not in violation of the Sarbanes Oxley Act of 2002, as amended, or any rule or regulation adopted thereunder or
any other applicable law) paid for at such times, by such methods, and in such forms, including, without limitation, cash, Shares, other Awards or other property, as the Committee shall determine.
7.
Certain Provisions Applicable to Awards
.
(a)
Stand-Alone, Additional, Tandem and Substitute Awards
. Awards granted under the Plan may, in the discretion of
the Committee, be granted either alone or in addition to, in tandem with or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any Related Entity or any business entity to be acquired by the
Company or a Related Entity, or any other right of a Participant to receive payment from the Company or any Related Entity. Subject to compliance with the Code, such additional, tandem and substitute or exchange Awards may be granted at any time. If
an Award is granted in substitution or exchange for another Award or award, the Committee shall require the surrender of such other Award or award in consideration for the grant of the new Award. In addition, Awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of the Company or any Related Entity, in which the value of Shares subject to the Award is equivalent in value to the cash compensation (for example, Restricted Stock or
Restricted Stock Units), or in which the exercise price, grant price or purchase price of the Award in the nature of a right that may be exercised is equal to the Fair Market Value of the underlying Shares minus the value of the cash compensation
surrendered (for example, Options or Stock Appreciation Right granted with an exercise price or grant price discounted by the amount of the cash compensation surrendered), provided that any such determination to grant an Award in lieu of
cash compensation must be made in a manner intended to be exempt from or comply with Section 409A of the Code.
(b)
Term of Awards
. The term of each Award shall be for such period as may be determined by the Committee provided
that in no event shall the term of any Option or Stock Appreciation Right exceed a period of ten years (or in the case of an Incentive Stock Option such shorter term as maybe required under Section 422 of the Code).
(c)
Form and Timing of Payment Under Awards; Deferrals.
Subject to the terms of the Plan and any applicable Award Agreement,
payments to be made by the Company or a Related Entity upon the exercise of an
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Option or other Award or settlement of an Award may be made in such form as the Committee shall determine, including, without limitation, cash, Shares, other Awards or other property, and may be
made in a single payment or transfer, in installments or on a deferred basis, provided that any determination to pay in installments or on a deferred basis shall be made by the Committee at the date of grant. Any installment or deferral provided for
in the preceding sentence shall, however, subject to the terms of the Plan, be subject to the Companys compliance with the provisions of the Sarbanes Oxley Act of 2002, as amended, the rules and regulations adopted by the Securities and
Exchange Commission thereunder, all applicable rules of the Listing Market, and in a manner intended to be exempt from or otherwise satisfy the requirements of Section 409A of the Code. Subject to Section 7(e) of this Plan, any such
settlement shall be at a value determined by the Committee in its sole discretion, which, without limitation, may in the case of an Option or Stock Appreciation Right be limited to the amount if any by which the Fair Market Value of a Share on the
settlement date exceeds the exercise or grant price. Installment or deferred payments may be required by the Committee (subject to Section 7(e) of this Plan, including the consent provisions thereof in the case of any deferral of an outstanding
Award not provided for in the original Award Agreement) or permitted at the election of the Participant on terms and conditions established by the Committee. The acceleration of the settlement of any Award, and the payment of any Award in
installments or on an deferred basis, shall be done all in a manner that is intended to be exempt from or otherwise satisfy the requirements of Section 409A of the Code. The Committee may, without limitation, make provision for the payment or
crediting of a reasonable interest rate on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Shares.
(d)
Minimum Vesting Requirements
. No Award will vest until at least 12 months following the date of grant of
the Award; provided, however, that up to 5% of the Shares reserved and available for issuance under the Plan may be subject to Awards that do not meet such minimum vesting requirements. The vesting of an Award may be accelerated, or the vesting
requirements of an Award waived, only in connection with a Change of Control pursuant to Section 9 or, as determined by the Committee in its sole discretion, in connection with the death or disability of the Participant holding such
Award.
(e)
Exemptions from Section 16(b) Liability
. It is the intent of the Company that
the grant of any Awards to, or other transaction by, a Participant who is subject to Section 16 of the Exchange Act shall be exempt from Section 16 pursuant to an applicable exemption (except for transactions acknowledged in writing to be
non-exempt by such Participant). Accordingly, if any provision of this Plan or any Award Agreement does not comply with the requirements of
Rule 16b-3
then applicable to any such transaction, such
provision shall be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under Section 16(b).
(f)
Code Section 409A.
(i) The Award Agreement for any Award that the Committee reasonably determines to constitute a nonqualified deferred compensation
plan under Section 409A of the Code (a
Section 409A Plan
), and the provisions of the Section 409A Plan applicable to that Award, shall be construed in a manner consistent with the applicable
requirements of Section 409A of the Code, and the Committee, in its sole discretion and without the consent of any Participant, may amend any Award Agreement (and the provisions of the Plan applicable thereto) if and to the extent that the
Committee determines that such amendment is necessary or appropriate to comply with the requirements of Section 409A of the Code.
(ii) If any Award constitutes a Section 409A Plan, then the Award shall be subject to the following additional requirements if, and to
the extent, required to comply with Section 409A of the Code.
(A) Payments under the Section 409A Plan may be made only upon
[i] the Participants separation from service, [ii] the date the Participant becomes disabled, [iii] the Participants death, [iv] a specified time (or pursuant to a fixed schedule) specified in
the Award Agreement at the date of the deferral of
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such compensation, [v] a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the Company or
[vi] the occurrence of an unforeseeable emergency;
(B) The time or schedule for any payment of the deferred
compensation may not be accelerated, except to the extent provided in applicable Treasury Regulations or other applicable guidance issued by the Internal Revenue Service;
(C) Any elections, with respect to the deferral of such compensation or the time and form of distribution of such deferred compensation shall
comply with the requirements of Section 409A(a)(4) of the Code; and
(D) In the case of any Participant who is specified
employee, a distribution on account of a separation from service may not be made before the date which is six months after the date of the Participants separation from service (or, if earlier, the date of the
Participants death).
For purposes of the foregoing, the terms in quotations shall have the same meanings as those terms have for purposes of
Section 409A of the Code and the Treasury Regulations promulgated thereunder, and the limitations set forth herein shall, be applied in such manner (and only to the extent) as shall be necessary to comply with any requirements of
Section 409A of the Code that are applicable to the Award.
(iii) Notwithstanding the foregoing, or any provision of this Plan or
any Award Agreement, the Company does not make any representation to any Participant or Beneficiary that any Awards made pursuant to this Plan are exempt from, or satisfy the requirements of, Section 409A of the Code, and the Company shall have
no liability or other obligation to indemnify or hold harmless the Participant or any Beneficiary for any tax, additional tax, interest or penalties that the Participant or any Beneficiary may incur in the event that any provision of this Plan, or
any Award Agreement, or any amendment or modification thereof, or any other action taken with respect thereto, is deemed to violate any of the requirements of Section 409A of the Code.
8.
Code Section 162(m) Provisions
.
(a)
Covered Employees.
The provisions of this Section 8 shall be applicable to any Restricted Stock Award, Restricted Stock
Unit Award, Performance Award or Other
Stock-Based
Award if it is granted to an Eligible Person who is, or is likely to be, as of the end of the tax year in which the Company would claim a tax deduction in
connection with such Award, a Covered Employee, and is intended to qualify as
performance-based
compensation that is exempt from the deduction limitations imposed under Section 162(m) of the
Code.
(b)
Performance Criteria.
If a Performance Award is subject to this Section 8, then the payment or
distribution thereof or the lapsing of restrictions thereon, and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be contingent upon achievement of one or more objective performance goals. Performance goals
shall be objective and shall otherwise meet the requirements of Section 162(m) of the Code and regulations thereunder including the requirement that the level or levels of performance targeted by the Committee result in the achievement of
performance goals being substantially uncertain. One or more of the following business criteria for the Company, on a consolidated basis, and/or for Related Entities, or for business or geographical units of the Company and/or a Related
Entity (except with respect to the total stockholder return and earnings per share criteria), shall be used by the Committee in establishing performance goals for such Awards: (1) earnings per share; (2) revenues or margins; (3) cash
flow; (4) operating margin; (5) return on net assets, investment, capital or equity; (6) economic value added; (7) direct contribution; (8) net income; pretax earnings; earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; earnings after interest expense and before extraordinary or special items; operating income or income from operations; income before interest income or expense, unusual items and income taxes, local,
state or federal and excluding budgeted and actual bonuses which might be paid under any ongoing bonus plans of the Company;
(9) working capital; (10) management of fixed costs or variable costs; (11) identification or
consummation of
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investment opportunities or completion of specified projects in accordance with corporate business plans, including strategic mergers, acquisitions or divestitures; (12) total
stockholder return; (13) debt reduction; (14) market share; (15) entry into new markets, either geographically or by business unit; (16) customer retention and satisfaction; (17) strategic plan development and
implementation, including turnaround plans; and/or (18) the Fair Market Value of a Share. Any of the above goals may be determined on an absolute or relative basis or as compared to the performance of a published or special index deemed
applicable by the Committee including, but not limited to, the Standard & Poors 500 Stock Index or a group of companies that are comparable to the Company. In determining the achievement of the performance goals, the Committee may, at
the time the performance goals are set, require that those goals be determined by excluding the impact of (i) restructurings, discontinued operations and extraordinary items (as defined pursuant to generally accepted accounting principles), and
other unusual or
non-recurring
charges; (ii) change in accounting standards required by generally accepted accounting principles; or (iii) such exclusions or adjustments as the Committee specifies at
the time the Award is granted.
(c)
Performance Period; Timing For Establishing Performance
Goals.
Achievement of performance goals in respect of Awards subject to this Section 8 shall be measured over a Performance Period no shorter than twelve (12) months and no longer than five (5) years, as specified by the
Committee. Performance goals shall be established no later than 90 days after the beginning of any Period applicable to Awards, subject to this Section 8, or at such other date as may be required or permitted for
performance-based
compensation under Section 162(m) of the Code.
(d)
Adjustments.
The Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in
connection with Awards subject to this Section 8, but may not exercise discretion to increase any such amount payable to a Covered Employee in respect of an Award subject to this Section 8. The Committee shall specify the circumstances in
which such Awards shall be paid or forfeited in the event of termination of Continuous Service by the Participant prior to the end of a Performance Period or settlement of Awards.
(e)
Committee Certification
. No Participant shall receive any payment under the Plan that is subject to this
Section 8 unless the Committee has certified, by resolution or other appropriate action in writing, that the performance criteria and any other material terms previously established by the Committee or set forth in the Plan, have been satisfied
to the extent necessary to qualify as performance based compensation under Section 162(m) of the Code.
9.
Change of Control
.
(a)
Effect of Change of Control.
If, and only to the extent,
determined by the Committee in its sole discretion and without any requirement that each Participant be treated consistently upon the occurrence of a Change of Control, as defined in Section 9(b):
(i) Any Option or Stock Appreciation Right that was not previously vested and exercisable as of the time of the Change of Control, shall
become immediately vested and exercisable, subject to applicable restrictions set forth in Section 10(a) hereof.
(ii) Any
restrictions, deferral of settlement and forfeiture conditions applicable to a Restricted Stock Award, Restricted Stock Unit Award or an Other
Stock-Based
Award subject only to future service requirements
granted under the Plan shall lapse and such Awards shall be deemed fully vested as of the time of the Change of Control, except to the extent of any waiver by the Participant and subject to applicable restrictions set forth in Section 10(a)
hereof.
(iii) With respect to any outstanding Award subject to achievement of performance goals and conditions under the Plan, the
Committee may, in its discretion, consider such Awards to have been earned and payable based on achievement of performance goals or based upon target performance (either in full or
pro-rata
based on the
portion of the Performance Period completed as of the Change of Control).
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Notwithstanding the foregoing or any provision in any Award Agreement to the contrary, and
unless the Committee otherwise determines in a specific instance, or as is provided in any employment or other agreement between the Participant and the Company any Subsidiary, and unless the Committee otherwise determines, in a specific instance,
each outstanding Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Award or Other
Stock-Based
Award shall not be accelerated as described in
Sections 9(a)(i), (ii) and (iii), if either (A) the Company is the surviving entity in the Change of Control and the Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Award or Other
Stock-Based
Award continues to be outstanding after the Change of Control on substantially the same terms and conditions as were applicable immediately prior to the Change of Control or (B) the successor
company or its parent company assumes or substitutes for the applicable Award, as determined in accordance with Section 10(c)(ii) hereof. For the purposes of this Agreement, an Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit Award or Other
Stock-Based
Award shall be considered assumed or substituted for if, following the Change of Control, the Award confers the right to purchase or receive for each Share
subject to the Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other
Stock-Based
Award immediately prior to the Change of Control, on substantially the same vesting and
other terms and conditions as were applicable to the Award immediately prior to the Change of Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change of Control by holders of
Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such
consideration received in the transaction constituting a Change of Control is not solely common stock of the successor company or its parent or subsidiary, the Committee may, with the consent of the successor company or its parent or subsidiary,
provide that the consideration to be received upon the exercise or vesting of an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other
Stock-Based
Award, for each Share
subject thereto, will be solely common stock of the successor company or its parent or subsidiary substantially equal in fair market value to the per share consideration received by holders of Shares in the transaction constituting a Change of
Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding.
(b)
Definition of Change of Control.
Unless otherwise specified in any employment or other agreement
for services between the Participant and the Company or any Subsidiary, or in an Award Agreement, a Change of Control shall mean the occurrence of any of the following:
(i) The acquisition by any Person of Beneficial Ownership (within the meaning of
Rule 13d-3
promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the value of then outstanding equity securities of the Company (the
Outstanding Company Stock
) or (B) the combined voting
power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the
Outstanding Company Voting Securities
) (the foregoing Beneficial Ownership hereinafter being
referred to as a
Controlling Interest
); provided, however, that for purposes of this Section 9(b), the following acquisitions shall not constitute or result in a Change of Control: (v) any acquisition
directly from the Company; (w) any acquisition by the Company; (x) any acquisition by any Person that as of the Effective Date owns Beneficial Ownership of a Controlling Interest; (y) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any Related Entity; or (z) any acquisition by any entity pursuant to a transaction which complies with clauses (A) or (B) of subsection (iii) below; or
(ii) During any period of two (2) consecutive years (not including any period prior to the Effective Date) individuals who constitute
the Board on the Effective Date (the
Incumbent Board
) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Companys stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election
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contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(iii) Consummation of (A) a reorganization, merger, statutory share exchange or consolidation or similar transaction
involving (x) the Company or (y) any of its Subsidiaries, but in the case of this clause (y) only if equity securities of the Company are issued or issuable in connection with the transaction (each of the events referred to in this
clause (A) being hereinafter referred to as a
Business Reorganization
), or (B) a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or equity of
another entity by the Company or any of its Subsidiaries (each an
Asset Sale
), in each case, unless, following such Business Reorganization or Asset Sale, (1) all or substantially all of the individuals and entities
who were the Beneficial Owners, respectively, of the Outstanding Company Stock and Outstanding Company Voting Securities immediately prior to such Business Reorganization or Asset Sale beneficially own, directly or indirectly, more than
fifty percent (50%) of the value of the then outstanding equity securities and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of members of the board of directors (or
comparable governing body of an entity that does not have such a board), as the case may be, of the entity resulting from such Business Reorganization or Asset Sale (including, without limitation, an entity which as a result of such transaction owns
the Company or all or substantially all of the Companys assets either directly or through one or more subsidiaries) (the
Continuing Entity
) in substantially the same proportions as their ownership, immediately prior
to such Business Reorganization or Asset Sale, of the Outstanding Company Stock and Outstanding Company Voting Securities, as the case may be (excluding any outstanding equity or voting securities of the Continuing Entity that such Beneficial Owners
hold immediately following the consummation of the Business Reorganization or Asset Sale as a result of their ownership, prior to such consummation, of equity or voting securities of any company or other entity involved in or forming part of such
Business Reorganization or Asset Sale other than the Company); (2) no Person (excluding any employee benefit plan (or related trust) of the Company or any Continuing Entity, or any entity controlled by the Continuing Corporation or any Person
that as of the Effective Date owns Beneficial Ownership of a Controlling Interest) beneficially owns, directly or indirectly, fifty percent (50%) or more of the value of the then outstanding equity securities of the Continuing Entity or the
combined voting power of the then outstanding voting Securities of the Continuing Entity except to the extent that such ownership existed prior to the Business Reorganization or Asset Sale and (3) at least a majority of the members of the Board
of Directors or other governing body of the Continuing Entity were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Reorganization or Asset Sale;
or
(iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
10.
General Provisions
.
(a)
Compliance With Legal and Other Requirements.
The Company may, to the extent deemed necessary or advisable by
the Committee, postpone the issuance or delivery of Shares or payment of other benefits under any Award until completion of such registration or qualification of such Shares or other required action under any federal or state law, rule or
regulation, listing or other required action with respect to the Listing Market, or compliance with any other obligation of the Company, as the Committee may consider appropriate, and may require any Participant to make such representations, furnish
such information and comply with or be subject to such other conditions as it may consider appropriate in connection with the issuance or delivery of Shares or payment of other benefits in compliance with applicable laws, rules, regulations, listing
requirements or other obligations.
(b)
Limits on Transferability; Beneficiaries.
No Award or
other right or interest granted under the Plan shall be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of such Participant to any party, or assigned or transferred by such Participant other than by will
or the laws of descent and distribution or to a Beneficiary upon the death of a Participant, and such Awards or rights that may
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be exercisable shall be exercised during the lifetime of the Participant only by the Participant or his or her guardian or legal representative, except that Awards and other rights (other
than Incentive Stock Options and Stock Appreciation Rights in tandem therewith) may be transferred to one or more Beneficiaries or other transferees during the lifetime of the Participant, and may be exercised by such transferees in accordance with
the terms of such Award, but only if and to the extent such transfers are permitted by the Committee pursuant to the express terms of an Award Agreement (subject to any terms and conditions which the Committee may impose thereon), are by gift or
pursuant to a domestic relations order, and are to a Permitted Assignee that is a permissible transferee under the applicable rules of the Securities and Exchange Commission for registration of shares of stock on a
Form S-8
registration statement. For this purpose, a Permitted Assignee shall mean (i) the Participants spouse, children or grandchildren (including any adopted and step children or grandchildren),
parents, grandparents or siblings, (ii) a trust for the benefit of one or more of the Participant or the persons referred to in clause (i), (iii) a partnership, limited liability company or corporation in which the Participant or the
persons referred to in clause (i) are the only partners, members or stockholders or (iv) a foundation in which any person or entity designated in clauses (i), (ii) or (iii) above control the management of assets. A
Beneficiary, transferee or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional terms and Conditions deemed necessary or appropriate by the Committee.
(c)
Adjustments.
(i)
Adjustments to Awards.
In the event that any extraordinary dividend or other distribution (whether in the form of cash,
Shares or other property), recapitalization, forward or reverse split, reorganization, merger, consolidation,
spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other similar
corporate transaction or event affects the Shares and/or such other securities of the Company or any other issuer, then the Committee shall, in such manner as it may deem appropriate and equitable (and subject to compliance with Section 409A of
the Code), substitute, exchange or adjust any or all of (A) the number and kind of Shares which may be delivered in connection with Awards granted thereafter, (B) the number and kind of Shares by which annual per person Award limitations
are measured under Section 4 hereof, (C) the number and kind of Shares subject to or deliverable in respect of outstanding Awards, (D) the exercise price, grant price or purchase price relating to any Award and/or make provision for
payment of cash or other property in respect of any outstanding Award and (E) any other aspect of any Award that the Committee determines to be appropriate.
(ii)
Adjustments in Case of Certain Transactions.
In the event of any merger, consolidation or other
reorganization which the Company does not survive, or in the event of any Change of Control (and subject to the provisions of Section 9 of this Plan relating to the vesting of Awards in the event of any Change of Control), any outstanding
Awards may be dealt with in accordance with any of the following approaches, without the requirement of obtaining any consent or agreement of a Participant as such, as determined by the agreement effectuating the transaction or, if and to the extent
not so determined, as determined by the Committee: (A) the continuation of the outstanding Awards by the Company, if the Company is a surviving entity, (B) the assumption or substitution for, as those terms are defined below, the
outstanding Awards by the surviving entity or its parent or subsidiary, (C) full exercisability or vesting and accelerated expiration of the outstanding Awards or (D) settlement of the value of the outstanding Awards in cash or cash
equivalents or other property followed by cancellation of such Awards (which value, in the case of Options or Stock Appreciation Rights, shall be measured by the amount, if any, by which the Fair Market Value of a Share exceeds the exercise or grant
price of the Option or Stock Appreciation Right as of the effective date of the transaction). For the purposes of this Plan, an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Other
Stock-Based
Award shall be considered assumed or substituted for if, following the applicable transaction, the Award confers the right to purchase or receive, for each Share subject to the Option, Stock Appreciation
Right, Restricted Stock Award, Restricted Stock Unit Award or Other
Stock-Based
Award immediately prior to the applicable transaction, or substantially the same vesting and other terms and conditions as were
applicable to the Award immediately prior to the applicable transaction, the consideration (whether stock, cash or other securities
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or property) received in the applicable transaction by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the applicable transaction is not solely common stock of the successor company or its
parent or subsidiary, the Committee may, with the consent of the successor company or its parent or subsidiary, provide that the consideration to be received upon the exercise or vesting an Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit Award or Other
Stock-Based
Award, for each Share thereto, will be solely common stock of the successor company or its parent or subsidiary substantially equal in fair market value to the
per share consideration received by holders of Shares in the applicable transaction. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be
conclusive and binding. The Committee shall give written notice of any proposed transaction referred to in this Section 10(c)(ii) a reasonable period of time prior to the closing date for such transaction (which notice may be given either
before or after the approval of such transaction), in order that Participants may have a reasonable period of
time prior to the closing date of such transaction within which to exercise any Awards that are then exercisable (including
any Awards that may become exercisable upon the closing date of such transaction). A Participant may condition his or her exercise of any Awards upon the consummation of the transaction.
(iii)
Other Adjustments.
Subject to compliance with the Code, the Committee (and the Board if and only to the
extent such authority is not required to be by the Committee to comply with Section 162(m) of the Code) is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including Awards subject to
satisfaction of performance goals, or performance goals and conditions relating thereto) in recognition of unusual or nonrecurring events (including, without limitation, acquisitions and dispositions of businesses and assets) affecting the Company,
any Related Entity or any business unit, or the financial statements of the Company or any Related Entity, or in response to changes in applicable laws, regulations, accounting principles, tax rates and regulations or business conditions or in view
of the Committees assessment of the business strategy of the Company, any Related Entity or business unit thereof, performance of comparable organizations, economic and business conditions, personal performance of a Participant and any other
circumstances deemed relevant; provided that no such adjustment shall be authorized or made if and to the extent that such authority or the making of such adjustment would cause Options, Stock Appreciation Rights or Performance Awards granted
pursuant to Section 8(b) hereof to Participants designated by the Committee as Covered Employees and intended to qualify as
performance-based
compensation under Code Section 162(m) and
the regulations thereunder to otherwise fail to qualify as
performance-based
compensation under Code Section 162(m) and regulations thereunder. Adjustments permitted hereby may include,
without limitation, increasing the exercise price of Options and Stock Appreciation Rights, increasing performance goals or other adjustments that may be adverse to the Participant. Notwithstanding the foregoing, no adjustments may be made with
respect to any Performance Awards subject to Section 8 if and to the extent that such adjustment would cause the Award to fail to qualify as
performance-based
compensation under
Section 162(m) of the Code.
(d)
Award Agreements.
Each Award Agreement shall either be
(i) in writing in a form approved by the Committee and executed by the Company by an officer duly authorized to act on its behalf or (ii) an electronic notice in a form approved by the Committee and recorded by the Company (or its
designee) in an electronic recordkeeping system used for the purpose of tracking one or more types of Awards as the Committee may provide; in each case and if required by the Committee, the Award Agreement shall be executed or otherwise
electronically accepted by the recipient of the Award in such form and manner as the Committee may require. The Committee may authorize any officer of the Company to execute any or all Award Agreements on behalf of the Company. The Award Agreement
shall set forth the material terms and conditions of the Award as established by the Committee consistent with the provisions of the Plan.
(e)
Taxes.
The Company and any Related Entity are authorized to withhold from any Award granted, any payment relating to an
Award under the Plan, including from a distribution of Shares, or any payroll or other payment to a Participant, amounts of withholding and other taxes due or potentially payable in connection with
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any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company or any Related Entity and Participants to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of a Participants
tax obligations, either on a mandatory or elective basis in the discretion of the Committee. The amount of withholding tax paid with respect to an Award by the withholding of Shares otherwise deliverable pursuant to the Award or by delivering Shares
already owned shall not exceed the minimum statutory withholding required with respect to that Award.
(f)
Changes to
the Plan and Awards.
The Board may amend, alter, suspend, discontinue or terminate the Plan, or the Committees authority to grant Awards under the Plan, without the consent of stockholders or Participants, except that any amendment or
alteration to the Plan shall be subject to the approval of the Companys stockholders not later than the annual meeting next following such Board action if such stockholder approval is required by any federal or state law or regulation
(including, without limitation,
Rule 16b-3
or Code Section 162(m)) or the rules of the Listing Market, and the Board may otherwise, in its discretion, determine to submit other such changes to the
Plan to stockholders for approval; provided that, except as otherwise permitted by the Plan or Award Agreement, without the consent of an affected Participant, no such Board action may materially and adversely affect the rights of such Participant
under the terms of any previously granted and outstanding Award. The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue or terminate any Award theretofore granted and any Award Agreement relating thereto,
except as otherwise provided in the Plan; provided that, except as otherwise permitted by the Plan or Award Agreement, without the consent of an affected Participant, no such Committee or the Board action may materially and adversely affect the
rights of such Participant under terms of such Award.
(g)
Clawback of Benefits.
(i) The Company may (A) cause the cancellation of any Award, (B) require reimbursement of any Award by a Participant or Beneficiary
and (C) effect any other right of recoupment of equity or other compensation provided under this Plan or otherwise in accordance with any Company policies that currently exist or that may from time to time be adopted or modified in the future
by the Company and/or applicable law (each, a
Clawback Policy
), provided that the following conditions are satisfied: (1) there is an accounting restatement of the Companys financial statements or results and
(2) the restatement results from a noncompliance by the Company with any requirements under or related to the federal securities laws. In such an event, the clawback will be in an amount of up to the total economic gain from any
stock-based
grants within the
five-year
period preceding the restatement. By accepting an Award, a Participant is also agreeing to be bound by any existing or future Clawback
Policy adopted by the Company, or any amendments that may from time to time be made to the Clawback Policy in the future by the Company in its discretion (including without limitation any Clawback Policy adopted or amended to comply with applicable
laws or stock exchange requirements) and is further agreeing that all of the Participants Award Agreements may be unilaterally amended by the Company, without the Participants consent, to the extent that the Company, in its discretion,
determines to be necessary or appropriate to comply with any Clawback Policy.
(ii) If the Participant, without the consent of the
Company, while employed by or providing services to the Company or any Subsidiary or after termination of such employment or service, violates a
non-competition,
non-solicitation
or
non-disclosure
covenant or agreement or otherwise engages in activity that is in conflict with Companys Corporate Governance Guidelines, Code
of Business Ethics or any other corporate governance materials specified by the SEC or exchange on which common stock of the Company is listed, then (i) any outstanding, vested or unvested, earned or unearned portion of the Award may, at the
Committees discretion, be canceled and (ii) the Committee, in its discretion, may require the Participant or other person to whom any payment has been made or Shares or other property have been transferred in connection with the Award to
forfeit and pay over to the Company, on demand, all or any portion of the gain (whether or not taxable) realized upon the exercise of any Option or Stock Appreciation Right and the value realized (whether or not
E-21
taxable) on the vesting or payment of any other Award during the time period specified in the Award Agreement or otherwise specified by the Committee.
(h)
Limitation on Rights Conferred Under Plan.
Neither the Plan nor any action taken hereunder or under any Award
shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or a Related Entity, (ii) interfering in any way with the right of
the Company or a Related Entity to terminate any Eligible Persons or Participants Continuous Service at any time, (iii) giving an Eligible Person or Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and Employees or (iv) conferring on a Participant any of the rights of a stockholder of the Company or any Related Entity including, without limitation, any right to receive dividends or distributions, any
right to vote or act by written consent, any right to attend meetings of stockholders or any right to receive any information concerning the Companys or any Related Entitys business, financial condition, results of operation or
prospects, unless and until such time as the Participant is duly issued Shares on the stock books of the Company or any Related Entity in accordance with the terms of an Award. None of the Company, its officers or its directors shall have any
fiduciary obligation to the Participant with respect to any Awards unless and until the Participant is duly issued Shares pursuant to the Award on the stock books of the Company in accordance with the terms of an Award. Neither the Company, nor any
Related Entity, nor any of the their respective officers, directors, representatives or agents is granting any rights under the Plan to the Participant whatsoever, oral or written, express or implied, other than those rights expressly set forth in
this Plan or the Award Agreement.
(i)
Unfunded Status of Awards; Creation of Trusts.
The Plan is intended to
constitute an unfunded plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant or obligation to deliver Shares pursuant to an Award, nothing contained in the Plan or any Award Agreement
shall give any such Participant any rights that are greater than those of a general creditor of the Company or Related Entity that issues the Award; provided that the Committee may authorize the creation of trusts and deposit therein cash, Shares,
other Awards or other property, or make other arrangements to meet the obligations of the Company or Related Entity under the Plan. Such trusts or other arrangements shall be consistent with the unfunded status of the Plan unless the
Committee otherwise determines with the consent of each affected Participant. The trustee of such trusts may be authorized to dispose of trust assets and reinvest the proceeds in alternative investments, subject to such terms and conditions as the
Committee may specify and in accordance with applicable law.
(j)
Nonexclusivity of the Plan.
Neither the
adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may
deem desirable including incentive arrangements and awards which do not qualify under Section 162(m) of the Code.
(k)
Payments in the Event of Forfeitures; Fractional Shares.
Unless otherwise determined by the Committee, in the
event of a forfeiture of an Award with respect to which a Participant paid cash or other consideration, the Participant shall be repaid the amount of such cash or other consideration. No fractional Shares shall be issued or delivered pursuant to the
Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
(l)
Governing Law.
Except as otherwise provided in any Award Agreement, the validity,
construction and effect of the Plan, any rules and regulations under the Plan and any Award Agreement shall be determined in accordance with the laws of the State of Delaware
2
without giving
effect to principles of conflict of laws, and applicable federal law.
2
|
Will change to Wisconsin law if the Reincorporation Merger is not completed.
|
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(m)
Non-U.S. Laws.
The Committee shall have the authority to adopt
such modifications, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its Related Entities may operate to assure the viability of the benefits from Awards
granted to Participants performing services in such countries and to meet the objectives of the Plan.
(n)
Construction and Interpretation.
Whenever used herein, nouns in the singular shall include the plural and the masculine pronoun shall include the feminine gender. Headings of Articles and Sections hereof are inserted for convenience
and reference and constitute no part of the Plan.
(o)
Severability.
If any provision of the
Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.
(p)
Plan Effective Date and Stockholder Approval; Termination of
Plan.
The Plan shall become effective on the Effective Date, subject to subsequent approval, within 12 months of its adoption by the Board, by stockholders of the Company eligible to vote in the election of directors, by a vote
sufficient to meet the requirements of Code Sections 162(m) (if applicable) and 422,
Rule 16b-3
under the Exchange Act (if applicable), applicable requirements under the rules of any stock
exchange or automated quotation system on which the Shares may be listed or quoted and other laws, regulations and obligations of the Company applicable to the Plan. Awards may be granted subject to stockholder approval, but may not be exercised or
otherwise settled in the event the stockholder approval is not obtained. The Plan shall terminate at the earliest of (i) such time as no Shares remain available for issuance under the Plan, (ii) termination of this Plan by the Board or
(iii) the tenth anniversary of the Effective Date. Awards outstanding upon expiration of the Plan shall remain in effect until they have been exercised or terminated, or have expired.
E-23
Annex F
STATEMENT OF THE TERMS OF THE
CLASS A PREFERRED STOCKSERIES 4
1.
Designation and Number of Shares
. There shall hereby be created and established a series of Class A Convertible Preferred Stock
of the Corporation designated as Class A Convertible Preferred Stock-Series 4 (the
Series 4 Preferred Stock
). The authorized number of shares of Series 4 Preferred Stock shall be 548,000 shares. Each share of Series 4
Preferred Stock shall have a par value of $0.01.
2.
Ranking
. Except to the extent that the Holders of at least a majority of the
outstanding shares of Series 4 Preferred Stock (the
Required Holders
) expressly consent to the creation of Parity Stock or Senior Preferred Stock, all shares of capital stock of the Corporation shall be junior in rank to all
shares of Series 4 Preferred Stock with respect to preferences upon a Liquidation Event (such junior stock is referred to herein collectively as
Junior Stock
). Without limiting any other provision of this Statement of Terms,
without the prior express consent of the Required Holders, voting separately as a single class, the Corporation shall not hereafter authorize or issue (i) any additional or other shares of capital stock that are of senior rank to the shares of
Series 4 Preferred Stock in respect of preferences as to the distribution of assets upon a Liquidation Event (collectively, the
Senior Preferred Stock
), (ii) any additional or other shares of capital stock that are of
pari passu rank to the shares of Series 4 Preferred Stock in respect of the preferences as to the distribution of assets upon a Liquidation Event (collectively, the
Parity Stock
) or (iii) any Junior Stock having a
maturity date (or any other date requiring redemption or repayment of such shares of Junior Stock) that is prior to the Maturity Date.
3.
Dividends
. Subject to the preferences of the holders of any Senior Stock, the Corporation shall not declare, pay or set aside any dividends on shares of Common Stock (other than dividends on shares of Common Stock payable in shares of Common
Stock) unless the Holders shall first receive, or simultaneously receive, a dividend on each outstanding share of Series 4 Preferred Stock in an amount equal to the product of (a) the dividend payable on each share of Common Stock and
(b) the number of shares of Common Stock issuable upon conversion of a share of Series 4 Preferred Stock, in each case calculated on the record date for determination of Holders entitled to receive such dividend.
4.
Conversion
.
(a)
Mandatory Conversion Upon Shareholder Approval
. Each share of Series 4 Preferred Stock outstanding upon the occurrence of the Shareholder Approval (the
Conversion Date
), automatically shall be converted into shares of
Common Stock, with each share of Series 4 Preferred Stock convertible into 40 fully paid and nonassessable shares of Common Stock (the
Conversion Ratio
), subject to adjustment as provided in
Section 5
.
(b)
Mechanics of Conversion
. The Corporation shall provide each Holder with written notice of the Conversion Date. As soon as
practicable following the Conversion Date, each Holder shall surrender or cause to be surrendered to the Corporation such Holders certificate(s) representing the Series 4 Preferred Stock being converted (the
Preferred Stock
Certificates
) (or, if such Holder alleges that such Preferred Stock Certificate(s) has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against
any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such Preferred Stock Certificate(s)). If so required by the Corporation, any Preferred Stock Certificate(s) surrendered for conversion shall
be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the Holder or by such Holders attorney duly authorized in writing. All rights with respect to the Series 4
Preferred Stock converted pursuant to this
Section 4
, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate on the Conversion Date (notwithstanding the failure of the Holder
thereof to surrender any Preferred Stock Certificate(s) at or prior to such time), except only the rights of the
F-1
Holders thereof, upon surrender of any Preferred Stock Certificate(s) of such Holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next
sentence of this
Section 4(b)
. As soon as practicable after the Conversion Date and, if applicable, the surrender of any Preferred Stock Certificate(s) (or lost certificate affidavit and agreement) for Series 4 Preferred Stock, the
Corporation shall (a) issue and deliver to such Holder, or to such Holders nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and
(b) pay cash as provided in
Section 4(c)
in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Series 4 Preferred Stock
converted. Such converted Series 4 Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for shareholder action) as may be
necessary to reduce the authorized number of shares of Series 4 Preferred Stock accordingly.
(c)
No Fractional Shares
. No
fractional shares of Common Stock are to be issued upon the conversion of Series 4 Preferred Stock, but in lieu thereof the Corporation shall make a cash payment, without interest, in respect of any fractional share which would otherwise be
issuable, determined by multiplying such fractional share by the Fair Market Value as of the Conversion Date; provided that in the event that sufficient funds are not legally available for such cash payment, any fractional shares of Common Stock
shall be rounded up to the next whole number.
(d)
Electronic Transmission
. In lieu of delivering physical certificates
representing the Common Stock issuable upon conversion, provided the Corporations transfer agent is participating in the Depository Trust Company (
DTC
) Fast Automated Securities Transfer program, upon request of a Holder who
shall have previously instructed such Holders prime broker to confirm such request to the Corporations transfer agent and upon the Holders compliance with
Section 4(b)
, the Corporation shall use its commercially
reasonable efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holders prime broker with DTC through its Deposit Withdrawal Agent Commission system.
5.
Adjustments
.
(a)
Adjustment upon Subdivision or Combination of Common Stock
. If the Corporation at any time on or after the Initial Issuance Date
subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Ratio in effect immediately prior to such subdivision will
be proportionately reduced. If the Corporation at any time on or after the Initial Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Ratio in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this
Section 5
shall become effective immediately after the effective date of such subdivision or
combination.
(b)
Adjustment for Merger or Reorganization, etc
. Subject to the provisions of
Section 7
, if there shall
occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Series 4 Preferred Stock) is converted into or exchanged for securities, cash or other property
(other than a transaction covered by
Section 5(a)
or a Fundamental Change), then, following any such reorganization, recapitalization, reclassification, consolidation, merger or share exchange, each share of Series 4 Preferred Stock
shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation
issuable upon conversion of one share of Series 4 Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation, merger or share exchange would have been entitled to receive pursuant to such transaction;
and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Corporation) shall be made in the application of the provisions in this
Section 5(b)
with respect to the rights and interests
thereafter of the Holders, to the end that the provisions set forth in this
Section 5
(including provisions with respect to changes in and other
F-2
adjustments of the Conversion Ratio) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of
the Series 4 Preferred Stock.
6.
Voting Rights
. Except as otherwise expressly provided in these Articles of Incorporation and
except as otherwise provided by the laws of the State of Wisconsin, every Holder shall be entitled at every meeting of the shareholders to one vote for each share of Series 4 Preferred Stock standing in such Holders name on the books of the
Corporation, subject to the right of the Board of Directors to fix a record date for the determination of shareholders entitled to notice of and to vote at such meeting and to any provision of the By-Laws of the Corporation fixing any such record
date. The Holders shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock and shall vote with the holders of Common Stock together as a single class upon any question affecting the management and
affairs of the Corporation. Notwithstanding anything contained herein, the Corporation shall not, either directly or indirectly, by amendment, merger, consolidation or otherwise, amend, alter or repeal any provision of the Articles of Incorporation
of the Corporation in a manner that adversely affects the powers, preferences or rights of the Series 4 Preferred Stock without first obtaining the written consent or affirmative vote of the Required Holders given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void
ab initio
, and of no force or effect.
7.
Liquidation, Dissolution, Winding-Up
.
(a)
Liquidation Events
. In the event of a Liquidation Event, each Holder of a share of Series 4 Preferred Stock shall be entitled to
receive in cash out of the assets of the Corporation legally available for distribution to its shareholders, whether from capital or from earnings available for distribution to its shareholders (the
Liquidation Funds
), before any
amount shall be paid to the holders of any shares of Junior Stock, an amount (such amount, the
Series 4 Liquidation Amount
) with respect to each share of Series 4 Preferred Stock then held by such Holder equal to the greater of
(i) the Stated Value of such share of Series 4 Preferred Stock as of the date of the applicable Liquidation Event and (ii) the amount per share such Holder would receive if such Holder converted such share of Series 4 Preferred Stock into
Common Stock immediately prior to such Liquidation Event, provided that if the Liquidation Funds are insufficient to pay the full amount due to the Holders and holders of shares of Parity Stock, then each Holder and each holder of Parity Stock shall
receive a percentage of the Liquidation Funds equal to the full amount of Liquidation Funds payable to such Holder and such holder of Parity Stock as a liquidation preference, in accordance with their respective statement of terms (or equivalent),
as a percentage of the full amount of Liquidation Funds payable to all holders of shares of Series 4 Preferred Stock and all holders of shares of Parity Stock. To the extent necessary, the Corporation shall cause such actions to be taken by each of
its subsidiaries so as to enable, to the maximum extent permitted by law, the proceeds of a Liquidation Event to be distributed to the Holders in accordance with this
Section 7(a)
. All the preferential amounts to be paid to the Holders
under this
Section 7(a)
shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any Liquidation Funds of the Corporation to the holders of shares of Junior Stock in
connection with a Liquidation Event as to which this
Section 7(a)
applies.
(b)
Effecting a Fundamental Change
.
(i) The Corporation shall not have the power to effect a Fundamental Change unless the agreement or plan of merger, consolidation or share
exchange for such transaction (the
Merger Agreement
) provides that the consideration payable to the shareholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with
Section 7(a)
.
(ii) In the event of a Fundamental Change referred to in
Section 15(d)(i)[b]
or
15(d)(ii)
,
if the Corporation does not effect a dissolution of the Corporation under the WBCL within 90 days after such Fundamental Change, then [a] the Corporation shall send a written notice to the Holders no later than the 90th day after the Fundamental
Change advising such Holders of their right (and the requirements to be met to secure such
F-3
right) pursuant to the terms of the following clause [b] to require the redemption of such shares of Series 4 Preferred Stock, and [b] if the Required Holders so request in a written instrument
delivered to the Corporation not later than 120 days after such Fundamental Change, the Corporation shall use the consideration received by the Corporation for such Fundamental Change (net of any retained liabilities associated with the assets sold
or technology licensed, as determined in good faith by the Board of Directors of the Corporation), together with any other assets of the Corporation available for distribution to its shareholders, all to the extent permitted by Wisconsin law
governing distributions to shareholders (the
Available Proceeds
), on the 150th day after such Fundamental Change, to redeem all outstanding shares of Series 4 Preferred Stock at a price per share equal to the Series 4 Liquidation
Amount. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Series 4 Preferred Stock, the Corporation shall ratably redeem
each Holders shares of Series 4 Preferred Stock to the fullest extent of such Available Proceeds, and shall redeem the remaining shares as soon as it may lawfully do so under Wisconsin law governing distributions to shareholders. The
provisions of
Section 7(a)
shall apply, with such necessary changes in the details thereof as are necessitated by the context, to the redemption of the Series 4 Preferred Stock pursuant to this
Section 7(b)(ii)
. Prior to the
distribution or redemption provided for in this
Section 7(b)(ii)
, the Corporation shall not expend or dissipate the consideration received for such Fundamental Change, except to discharge expenses incurred in connection with such
Fundamental Change or in the ordinary course of business.
(c)
Amount Deemed Paid or Distributed
. The amount deemed paid or
distributed to the holders of capital stock of the Corporation upon any Liquidation Event shall be the cash or the value of the property, rights or securities paid or distributed to such holders by the Corporation or the acquiring person, firm or
other entity. The value of such property, rights or securities shall be determined in good faith by the Board of Directors of the Corporation.
8.
Lost or Stolen Certificates
. Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation of the loss,
theft, destruction or mutilation of any Preferred Stock Certificates (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of an
indemnification undertaking by the applicable Holder to the Corporation in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of the Preferred Stock Certificate(s), the Corporation shall execute and deliver
new Preferred Stock Certificate(s) of like tenor and date.
9.
Failure or Indulgence Not Waiver
. No failure or delay on the part of
a Holder or the Corporation in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. This Statement of Terms shall be deemed to be jointly drafted by the Corporation and all
Holders and shall not be construed against any Person as the drafter hereof.
10.
Notices
. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this Statement of Terms must be in writing and will be deemed to have been delivered: (a) upon receipt, if delivered personally; (b) when sent, if sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); and (c) if sent by overnight courier service, one (1) Business Day after deposit with an overnight courier service
with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Corporation:
The
Female Health Company
150 North Michigan Ave., Suite 1580
Chicago, IL 60601
Facsimile:
312-595-9122
Attention: Chief Executive Officer
F-4
If to a Holder, to its address or facsimile number (as the case may be) set forth in the books
and records of the Corporation, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the senders facsimile machine containing
the time, date and recipient facsimile number or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (a),
(b) or (c) above, respectively.
11.
Transfer of Series 4 Preferred Stock
. A Holder may transfer some or all of its
shares of Series 4 Preferred Stock without the consent of the Corporation so long as such transfer complies with all applicable securities laws and any agreement to which such Holder is a party that restricts the transfer of such shares.
12.
Series 4 Preferred Stock Register
. The Corporation shall maintain at its principal executive offices (or such other office or
agency of the Corporation as it may designate by notice to the Holders), a register for the Series 4 Preferred Stock, in which the Corporation shall record the name, address, facsimile number and e-mail address of the Persons in whose name the
shares of Series 4 Preferred Stock have been issued, as well as the name and address of each transferee. The Corporation may treat the Person in whose name any Series 4 Preferred Stock is registered on the register as the owner and holder thereof
for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any properly made transfers.
13.
Shareholder Matters; Amendment
.
(a)
Shareholder Matters
. Any shareholder action, approval or consent required, desired or
otherwise sought by the Corporation pursuant to the WBCL, these Articles of Incorporation, this Statement of Terms or otherwise with respect to the issuance of Series 4 Preferred Stock may be effected by written consent of the Corporations
shareholders or at a duly called meeting of the Corporations shareholders, all in accordance with the applicable rules and regulations of the WBCL. This provision is intended to comply with the applicable sections of the WBCL permitting
shareholder action, approval and consent affected by written consent in lieu of a meeting.
(b)
Amendment
. This Statement of Terms
or any provision hereof may be amended by obtaining the affirmative vote at a meeting duly called for such purpose, or written consent without a meeting in accordance with the WBCL, of (i) the Required Holders, voting separately as a single
class, and (ii) the holders of at least two-thirds of the outstanding shares of Common Stock, voting separately as a single class, along with such other shareholder approval, if any, as may then be required pursuant to the WBCL and the Articles
of Incorporation.
14.
Non-Redeemable; Required Redemption by the Corporation
.
(a)
Non-Redeemable
. Except as set forth in
Section 7(b)
and
Section 14(b)
, the shares of Series 4 Preferred
Stock shall not be redeemable either at the Corporations option or at the option of any of the Holders at any time.
(b)
Required
Redemption by the Corporation
.
(i) The Corporation shall redeem all outstanding shares of Series 4 Preferred Stock on the tenth
Business Day immediately following the first to occur of (a) the Maturity Date or (ii) a Fundamental Change, as set forth in this
Section 14(b)
(such tenth Business Day is referred to herein as the
Required Redemption
Date
), unless the Series 4 Preferred Stock has been converted into Common Stock pursuant to
Section 4
prior to the Required Redemption Date. The redemption price for each share of Series A Preferred Stock shall be
determined on the Required Redemption Date and shall be equal to the Stated Value thereof as of the Required Redemption Date (such price is referred to herein as the
Redemption Price
) and shall be payable in cash.
F-5
(ii) From and after the Required Redemption Date, the Holders of Series 4 Preferred Stock
shall solely have the right to receive payment of the Redemption Price therefor (and shall have no rights as a Holder of shares of Series 4 Preferred Stock other than the right to receive payment of the Redemption Price) and the Redemption
Price therefor shall be paid to a Holder only upon surrender by such Holder at the principal office of the Corporation of the certificates representing all of such Holders shares of Series 4 Preferred Stock (or, if such Holder alleges
that such certificates have been lost, stolen or destroyed, a lost certificate affidavit and indemnification undertaking as contemplated by
Section 8
).
(iii) Notwithstanding anything to the contrary in this
Section 14(b)
, the Corporation shall have no obligation to comply with
this
Section 14(b)
at any time that the redemption of all shares of Series 4 Preferred Stock is prohibited by Wisconsin law governing distributions to shareholders.
15.
Certain Defined Terms
. For purposes of this Statement of Terms, the following terms shall have the following meanings:
(a)
Business Day
means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York
are authorized or required by law to remain closed.
(b)
Common Stock
means (i) shares of the Corporations
common stock, $0.01 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(c)
Fair Market Value
means, as of any date, the value of the Common Stock determined as follows:
(i) if the Common Stock is listed on any stock exchange, including, without limitation, NASDAQ, its Fair Market Value shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the day of determination, as reported in
The Wall Street Journal
or such other source as the Corporation deems reliable;
(ii) if the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of
a share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock for the day of determination, as reported in
The Wall Street Journal
or such other source as the Corporation deems reliable; or
(iii) in the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Board of
Directors of the Corporation.
(d)
Fundamental Change
means any of the following events:
(i) a merger, consolidation or share exchange in which [a] the Corporation is a constituent party or [b] a subsidiary of the Corporation is a
constituent party and the Corporation issues shares of its capital stock pursuant to such merger, consolidation or share exchange, except any such merger, consolidation or share exchange described in clause [a] or [b] involving the Corporation or a
subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger, consolidation or share exchange continue to represent, or are converted into or exchanged for shares of capital stock that represent,
immediately following such merger, consolidation or share exchange, at least a majority, by voting power, of the capital stock of (A) the surviving or resulting corporation; or (B) if the surviving or resulting corporation is a wholly
owned subsidiary of another corporation immediately following such merger, consolidation or share exchange, the parent corporation of such surviving or resulting corporation; or
(ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the
Corporation or any subsidiary of the Corporation of all or substantially all the
F-6
assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger, consolidation, share exchange or otherwise) of one or more subsidiaries of the
Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned
subsidiary of the Corporation.
(e)
Holder
means any holder of shares of Series 4 Preferred Stock.
(f)
Initial Issuance Date
means the first date of issuance of any shares of Series 4 Preferred Stock.
(g)
Liquidation Event
means (i) whether in a single transaction or series of transactions, the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and (ii) any Fundamental Change.
(h)
Maturity
Date
means the 20th anniversary of the Initial Issuance Date.
(i)
NASDAQ
means the NASDAQ Stock Market.
(j)
NASDAQ Rule
means NASDAQ Listing Rule 5635(a), as amended, and any successor thereto, or any similar rule of any other
stock exchange on which the Common Stock may be listed.
(k)
Person
means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(l)
Shareholder Approval
means the affirmative vote of the holders of the Corporations capital stock by the required
vote under the WBCL and the NASDAQ Rule, as applicable, to approve (i) an amendment to these Articles of Incorporation to increase the total number of authorized shares of Common Stock to an amount equal to or greater than the sum of
(A) the total number of shares of Common Stock into which the Series 4 Preferred Stock is then convertible pursuant hereto plus (B) the number of shares of Common Stock then outstanding assuming the full conversion, exercise and/or
exchange of all securities or rights then convertible into, or exercisable or exchangeable for, shares of Common Stock (other than the Series 4 Preferred Stock) and (ii) the conversion of Series 4 Preferred Stock described herein pursuant to
the NASDAQ Rule.
(m)
Stated Value
means $1.00 per share of Series 4 Preferred Stock, subject to adjustment for stock
splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions or other similar events occurring after the Initial Issuance Date with respect to the Series 4 Preferred Stock.
(n)
WBCL
means the Wisconsin Business Corporation Law, as amended.
F-7
Annex G
SUBCHAPTER XIII
DISSENTERS RIGHTS
180.1301
Definitions.
In Sections 180.1301 to 180.1331:
(1)
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Beneficial shareholder means a person who is a beneficial owner of shares held by a nominee as the shareholder.
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(1m)
|
Business combination has the meaning given in Section 180.1130 (3).
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(2)
|
Corporation means the issuer corporation or, if the corporate action giving rise to dissenters rights under Section 180.1302 is a merger or share exchange that has been effectuated, the surviving
domestic corporation or foreign corporation of the merger or the acquiring domestic corporation or foreign corporation of the share exchange.
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(3)
|
Dissenter means a shareholder or beneficial shareholder who is entitled to dissent from corporate action under Section 180.1302 and who exercises that right when and in the manner required by Sections
180.1320 to 180.1328.
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(4)
|
Fair value, with respect to a dissenters shares other than in a business combination, means the value of the shares immediately before the effectuation of the corporate action to which the dissenter
objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable. Fair value, with respect to a dissenters shares in a business combination, means market value, as
defined in Section 180.1130 (9) (a) 1. to 4.
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(5)
|
Interest means interest from the effectuation date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans or, if none, at a rate
that is fair and equitable under all of the circumstances.
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(6)
|
Issuer corporation means a domestic corporation that is the issuer of the shares held by a dissenter before the corporate action.
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180.1302 Right to dissent.
(1)
|
Except as provided in sub. (4) and Section 180.1008 (3), a shareholder or beneficial shareholder may dissent from, and obtain payment of the fair value of his or her shares in the event of, any of the
following corporate actions:
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(a)
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Consummation of a plan of merger to which the issuer corporation is a party if any of the following applies:
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1.
|
Shareholder approval is required for the merger by Section 180.1103 or by the articles of incorporation.
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2.
|
The issuer corporation is a subsidiary that is merged with its parent under Section 180.1104.
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3.
|
The issuer corporation is a parent that is merged with its subsidiary under Section 180.1104. This subdivision does not apply if all of the following are true:
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a.
|
The articles of incorporation of the surviving corporation do not differ from the articles of incorporation of the parent before the merger, except for amendments specified in Section 180.1002 (1) to (9).
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b.
|
Each shareholder of the parent whose shares were outstanding immediately before the effective time of the merger holds the same number of shares with identical designations, preferences, limitations, and relative
rights, immediately after the merger.
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G-1
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c.
|
The number of voting shares, as defined in Section 180.1103 (5) (a) 2., outstanding immediately after the merger, plus the number of voting shares issuable as a result of the merger, either by the
conversion of securities issued pursuant to the merger or the exercise of rights or warrants issued pursuant to the merger, do not exceed by more than 20% the total number of voting shares of the parent outstanding immediately before the merger.
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d.
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The number of participating shares, as defined in Section 180.1103 (5) (a) 1., outstanding immediately after the merger, plus the number of participating shares issuable as a result of the merger, either
by the conversion of securities issued pursuant to the merger or the exercise of rights or warrants issued pursuant to the merger, do not exceed by more than 20% the total number of participating shares of the parent outstanding immediately before
the merger.
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(b)
|
Consummation of a plan of share exchange if the issuer corporations shares will be acquired, and the shareholder or the shareholder holding shares on behalf of the beneficial shareholder is entitled to vote on the
plan.
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(c)
|
Consummation of a sale or exchange of all, or substantially all, of the property of the issuer corporation other than in the usual and regular course of business, including a sale in dissolution, but not including any
of the following:
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1.
|
A sale pursuant to court order.
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2.
|
A sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within one year after the date of sale.
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(cm)
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Consummation of a plan of conversion.
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(d)
|
Except as provided in sub. (2), any other corporate action taken pursuant to a shareholder vote to the extent that the articles of incorporation, bylaws or a resolution of the board of directors provides that the voting
or nonvoting shareholder or beneficial shareholder may dissent and obtain payment for his or her shares.
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(2)
|
Except as provided in sub. (4) and Section 180.1008 (3), the articles of incorporation may allow a shareholder or beneficial shareholder to dissent from an amendment of the articles of incorporation and obtain
payment of the fair value of his or her shares if the amendment materially and adversely affects rights in respect of a dissenters shares because it does any of the following:
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(a)
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Alters or abolishes a preferential right of the shares.
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(b)
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Creates, alters or abolishes a right in respect of redemption, including a provision respecting a sinking fund for The redemption or repurchase, of the shares.
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(c)
|
Alters or abolishes a preemptive right of the holder of shares to acquire shares or other securities.
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(d)
|
Excludes or limits the right of the shares to vote on any matter or to cumulate votes, other than a limitation by dilution through issuance of shares or other securities with similar voting rights.
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(e)
|
Reduces the number of shares owned by the shareholder or beneficial shareholder to a fraction of a share if the fractional share so created is to be acquired for cash under Section 180.0604.
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(3)
|
Notwithstanding sub. (1) (a) to (c), if the issuer corporation is a statutory close corporation under Sections 180.1801 to 180.1837, a shareholder of the statutory close corporation may dissent from a
corporate action and obtain payment of the fair value of his or her shares, to the extent permitted under sub. (1) (d) or (2) or Section 180.1803, 180.1813 (1) (d) or (2) (b), 180.1815 (3) or 180.1829
(1) (c).
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(4)
|
Unless the articles of incorporation provide otherwise, subs. (1) and (2) do not apply to the holders
of shares of any class or series if the shares of the class or series are registered on a national securities exchange or quoted on the National Association of Securities Dealers, Inc., automated quotations system on the record
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G-2
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date fixed to determine the shareholders entitled to notice of a shareholders meeting at which shareholders are to vote on the proposed corporate action.
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(5)
|
Except as provided in Section 180.1833, a shareholder or beneficial shareholder entitled to dissent and obtain payment for his or her shares under Sections 180.1301 to 180.1331 may not challenge the corporate
action creating his or her entitlement unless the action is unlawful or fraudulent with respect to the shareholder, beneficial shareholder or issuer corporation.
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180.1303 Dissent by shareholders and beneficial shareholders.
(1)
|
A shareholder may assert dissenters rights as to fewer than all of the shares registered in his or her name only if the shareholder dissents with respect to all shares beneficially owned by any one person and
notifies the corporation in writing of the name and address of each person on whose behalf he or she asserts dissenters rights. The rights of a shareholder who under this subsection asserts dissenters rights as to fewer than all of the
shares registered in his or her name are determined as if the shares as to which he or she dissents and his or her other shares were registered in the names of different shareholders.
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(2)
|
A beneficial shareholder may assert dissenters rights as to shares held on his or her behalf only if the beneficial shareholder does all of the following:
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(a)
|
Submits to the corporation the shareholders written consent to the dissent not later than the time that the beneficial shareholder asserts dissenters rights.
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(b)
|
Submits the consent under par. (a) with respect to all shares of which he or she is the beneficial shareholder.
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180.1320 Notice of dissenters rights.
(1)
|
If proposed corporate action creating dissenters rights under Section 180.1302 is submitted to a vote at a shareholders meeting, the meeting notice shall state that shareholders and beneficial
shareholders are or may be entitled to assert dissenters rights under Sections 180.1301 to 180.1331 and shall be accompanied by a copy of those sections.
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(2)
|
If corporate action creating dissenters rights under Section 180.1302 is authorized without a vote of shareholders, the corporation shall notify, in writing and in accordance with Section 180.0141, all
shareholders entitled to assert dissenters rights that the action was authorized and send them the dissenters notice described in Section 180.1322.
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180.1321 Notice of intent to demand payment.
(1)
|
If proposed corporate action creating dissenters rights under Section 180.1302 is submitted to a vote at a shareholders meeting, a shareholder or beneficial shareholder who wishes to assert
dissenters rights shall do all of the following:
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(a)
|
Deliver to the issuer corporation before the vote is taken written notice that complies with Section 180.0141 of the shareholders or beneficial shareholders intent to demand payment for his or her
shares if the proposed action is effectuated.
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(b)
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Not vote his or her shares in favor of the proposed action.
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(2)
|
A shareholder or beneficial shareholder who fails to satisfy sub. (1) is not entitled to payment for his or her shares under Sections 180.1301 to 180.1331.
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G-3
180.1322 Dissenters notice.
(1)
|
If proposed corporate action creating dissenters rights under Section 180.1302 is authorized at a shareholders meeting, the corporation shall deliver a written dissenters notice to all
shareholders and beneficial shareholders who satisfied Section 180.1321.
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(2)
|
The dissenters notice shall be sent no later than 10 days after the corporate action is authorized at a shareholders meeting or without a vote of shareholders, whichever is applicable. The dissenters
notice shall comply with Section 180.0141 and shall include or have attached all of the following:
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(a)
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A statement indicating where the shareholder or beneficial shareholder must send the payment demand and where and when certificates for certificated shares must be deposited.
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(b)
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For holders of uncertificated shares, an explanation of the extent to which transfer of the shares will be restricted after the payment demand is received.
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(c)
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A form for demanding payment that includes the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action and that requires the shareholder or beneficial shareholder
asserting dissenters rights to certify whether he or she acquired beneficial ownership of the shares before that date.
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(d)
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A date by which the corporation must receive the payment demand, which may not be fewer than 30 days nor more than 60 days after the date on which the dissenters notice is delivered.
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(e)
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A copy of Sections 180.1301 to 180.1331.
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180.1323 Duty to demand payment.
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(1)
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shareholder or beneficial shareholder who is sent a dissenters notice described in Section 180.1322, or a beneficial shareholder whose shares are held by a nominee who is sent a dissenters notice
described in Section 180.1322, must demand payment in writing and certify whether he or she acquired beneficial ownership of the shares before the date specified in the dissenters notice under Section 180.1322 (2) (c). A
shareholder or beneficial shareholder with certificated shares must also deposit his or her certificates in accordance with the terms of the notice.
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(2)
|
shareholder or beneficial shareholder with certificated shares who demands payment and deposits his or her share certificates under sub. (1) retains all other rights of a shareholder or beneficial shareholder until
these rights are canceled or modified by the effectuation of the corporate action.
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(3)
|
shareholder or beneficial shareholder with certificated or uncertificated shares who does not demand payment by the date set in the dissenters notice, or a shareholder or beneficial shareholder with certificated
shares who does not deposit his or her share certificates where required and by the date set in the dissenters notice, is not entitled to payment for his or her shares under Sections 180.1301 to 180.1331.
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180.1324 Restrictions on uncertificated shares.
(1)
|
The issuer corporation may restrict the transfer of uncertificated shares from the date that the demand for payment for those shares is received until the corporate action is effectuated or the restrictions released
under Section 180.1326.
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(2)
|
The shareholder or beneficial shareholder who asserts dissenters rights as to uncertificated shares retains all of the rights of a shareholder or beneficial shareholder, other than those restricted under sub. (1),
until these rights are canceled or modified by the effectuation of the corporate action.
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G-4
180.1325 Payment.
(1)
|
payment demand, whichever is later, the corporation shall pay each shareholder or beneficial shareholder who has complied with Section 180.1323 the amount that the corporation estimates to be the fair value of his
or her shares, plus accrued interest.
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(2)
|
The payment shall be accompanied by all of the following:
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(a)
|
The corporations latest available financial statements, audited and including footnote disclosure if available, but including not less than a balance sheet as of the end of a fiscal year ending not more than 16
months before the date of payment, an income statement for that year, a statement of changes in shareholders equity for that year and the latest available interim financial statements, if any.
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(b)
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A statement of the corporations estimate of the fair value of the shares.
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(c)
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An explanation of how the interest was calculated.
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(d)
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A statement of the dissenters right to demand payment under Section 180.1328 if the dissenter is dissatisfied with the payment.
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(e)
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A copy of Sections 180.1301 to 180.1331.
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180.1326 Failure to take action.
(1)
|
If an issuer corporation does not effectuate the corporate action within 60 days after the date set under Section 180.1322 for demanding payment, the issuer corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.
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(2)
|
If after returning deposited certificates and releasing transfer restrictions, the issuer corporation effectuates the corporate action, the corporation shall deliver a new dissenters notice under
Section 180.1322 and repeat the payment demand procedure.
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180.1327 After-acquired shares.
(1)
|
A corporation may elect to withhold payment required by Section 180.1325 from a dissenter unless the dissenter was the beneficial owner of the shares before the date specified in the dissenters notice under
Section 180.1322 (2) (c) as the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action.
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(2)
|
To the extent that the corporation elects to withhold payment under sub. (1) after effectuating the corporate action, it shall estimate the fair value of the shares, plus accrued interest, and shall pay this amount
to each dissenter who agrees to accept it in full satisfaction of his or her demand. The corporation shall send with its offer a statement of its estimate of the fair value of the shares, an explanation of how the interest was calculated, and a
statement of the dissenters right to demand payment under Section 180.1328 if the dissenter is dissatisfied with the offer.
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180.1328 Procedure if dissenter dissatisfied with payment or offer.
(1)
|
A dissenter may, in the manner provided in sub. (2), notify the corporation of the dissenters estimate of the fair value of his or her shares and amount of interest due, and demand payment of his or her estimate,
less any payment received under Section 180.1325, or reject the offer under Section 180.1327 and demand payment of the fair value of his or her shares and interest due, if any of the following applies:
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(a)
|
The dissenter believes that the amount paid under Section 180.1325 or offered under Section 180.1327 is less than the fair value of his or her shares or that the interest due is incorrectly calculated.
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(b)
|
The corporation fails to make payment under Section 180.1325 within 60 days after the date set under Section 180.1322 for demanding payment.
|
G-5
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(c)
|
The issuer corporation, having failed to effectuate the corporate action, does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares within 60 days after the date
set under Section 180.1322 for demanding payment.
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(2)
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A dissenter waives his or her right to demand payment under this section unless the dissenter notifies the corporation of his or her demand under sub. (1) in writing within 30 days after the corporation made or
offered payment for his or her shares. The notice shall comply with Section 180.0141.
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180.1330 Court action.
(1)
|
If a demand for payment under Section 180.1328 remains unsettled, the corporation shall bring a special proceeding within 60 days after receiving the payment demand under Section 180.1328 and petition the
court to determine the fair value of the shares and accrued interest. If the corporation does not bring the special proceeding within the 60-day period, it shall pay each dissenter whose demand remains unsettled the amount demanded.
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(2)
|
The corporation shall bring the special proceeding in the circuit court for the county where its principal office or, if none in this state, its registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall bring the special proceeding in the county in this state in which was located the registered office of the issuer corporation that merged with or whose shares were acquired by the foreign
corporation.
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(3)
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The corporation shall make all dissenters, whether or not residents of this state, whose demands remain unsettled parties to the special proceeding. Each party to the special proceeding shall be served with a copy of
the petition as provided in Section 801.14.
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(4)
|
The jurisdiction of the court in which the special proceeding is brought under sub. (2) is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend decision
on the question of fair value. An appraiser has the power described in the order appointing him or her or in any amendment to the order. The dissenters are entitled to the same discovery rights as parties in other civil proceedings.
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(5)
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Each dissenter made a party to the special proceeding is entitled to judgment for any of the following:
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(a)
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The amount, if any, by which the court finds the fair value of his or her shares, plus interest, exceeds the amount paid by the corporation.
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(b)
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The fair value, plus accrued interest, of his or her shares acquired on or after the date specified in the dissenters notice under Section 180.1322 (2) (c), for which the corporation elected to withhold
payment under Section 180.1327.
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180.1331 Court costs and counsel fees.
(1)
|
(a)
|
Notwithstanding Sections 814.01 to 814.04, the court in a special proceeding brought under Section 180.1330 shall determine all costs of the proceeding, including the reasonable compensation and expenses of
appraisers appointed by the court and shall assess the costs against the corporation, except as provided in par. (b).
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(b)
|
Notwithstanding Sections 814.01 and 814.04, the court may assess costs against all or some of the dissenters, in amounts that the court finds to be equitable, to the extent that the court finds the dissenters acted
arbitrarily, vexatiously or not in good faith in demanding payment under Section 180.1328.
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G-6
(2)
|
The parties shall bear their own expenses of the proceeding, except that, notwithstanding Sections 814.01 to 814.04, the court may also assess the fees and expenses of counsel and experts for the respective parties, in
amounts that the court finds to be equitable, as follows:
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(a)
|
Against the corporation and in favor of any dissenter if the court finds that the corporation did not substantially comply with Sections 180.1320 to 180.1328.
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(b)
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Against the corporation or against a dissenter, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by this chapter.
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(3)
|
Notwithstanding Sections 814.01 to 814.04, if the court finds that the services of counsel and experts for any dissenter were of substantial benefit to other dissenters similarly situated, the court may award to these
counsel and experts reasonable fees to be paid out of the amounts awarded the dissenters who were benefited.
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G-7
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS: ☒
KEEP THIS
PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY