**Exhibit 3.1**

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**CERTIFICATE OF INCORPORATIONOF UNOVA, INC.**

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# **ARTICLE I**

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The name of the corporation (which is hereinafterreferred to as the “Corporation”) is:

 

UNOVA, Inc.

 

# **ARTICLE II**

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The address of the Corporation’s registered office inthe State of Delaware is Corporation Service Company, 1013 Centre Road, in theCity of Wilmington, County of New Castle. The name of the Corporation’sregistered agent at such address is Corporation Service Company.

 

# **ARTICLE III**

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The purpose of the Corporation shall be to engage inany lawful act or activity for which corporations may be organized andincorporated under the General Corporation Law of the State of Delaware.

 

# **ARTICLE IV**

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The total number of shares of stock which theCorporation shall have authority to issue is 300,000,000, consisting of50,000,000 shares of Preferred Stock, par value $.01 per share (hereinafterreferred to as “Preferred Stock”), and 250,000,000 shares of Common Stock, parvalue $.01 per share (hereinafter referred to as “Common Stock”).

 

A.                                   *Preferred Stock.*The Preferred Stock may be issued fromtime to time in one or more series. In addition to a series of PreferredStock designated as “Series A Junior Participating Preferred Stock”, theterms of which are set forth herein, the Board of Directors is herebyauthorized to provide for the issuance of shares of Preferred Stock in series and,by filing a certificate pursuant to the applicable law of the State of Delaware(hereinafter referred to as a “Preferred Stock

 

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Designation”), toestablish from time to time the number of shares to be included in each suchseries, and to fix the designation, power, preferences and rights of the sharesof each such series and the qualifications, limitations and restrictionsthereof. The authority of the Board of Directors with respect to each series shallinclude, but not be limited to, determination of the following:

 

(i)                           Thedesignation of the series, which may be by distinguishing number, letteror title.

 

(ii)                        Thenumber of shares of the series, which number the Board of Directors may thereafter(except where otherwise provided in the Preferred Stock Designation) increaseor decrease (but not below the number of shares thereof then outstanding).

 

(iii)                     Whether dividends, if any, shallbe cumulative or noncumulative and the dividend rate of the series.

 

(iv)                    Thedates at which dividends, if any, shall be payable.

 

(v)                       Theredemption rights and price or prices, if any, for shares of the series.

 

(vi)                    Theterms and amount of any sinking fund provided for the purchase or redemption ofshares of the series.

 

(vii)                 The amounts payable on shares of the series inthe event of any voluntary or involuntary liquidation, dissolution or windingup of the affairs of the Corporation.

 

(viii)              Whether the shares of the series shallbe convertible into shares of any other class or series, or any othersecurity, of the Corporation or any other corporation, and, if so, thespecification of such other class or series or such other security,the conversion price or prices or rate or rates, any adjustments thereof, thedate or dates as of which such shares shall be convertible and all other termsand conditions upon which such conversion may be made.

 

(ix)                      Restrictionson the issuance of shares of the same series or of any other class orseries.

 

(x)                         Thevoting rights, if any, of the holders of shares of the series.

 

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B.                                     *Series A Junior Participating Preferred Stock*. Thequalifications, limitations or restrictions of the Series A JuniorParticipating Preferred Stock shall be as follows:

 

## Section 1.                                            *Designation and Amount*. The shares of such series shallbe designated as “Series A Junior Participating Preferred Stock” (the “Series APreferred Stock”) and the number of shares constituting the Series APreferred Stock shall be 3,000,000. Such number of shares may be increasedor decreased by resolution of the Board of Directors; *provided*,that no decrease shall reduce the number of shares of Series A PreferredStock to a number less than the number of shares then outstanding plus thenumber of shares reserved for issuance upon the exercise of outstandingoptions, rights or warrants or upon the conversion of any outstandingsecurities issued by the Corporation convertible into Series A PreferredStock.

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## Section 2.                                            *Dividends and Distributions*.

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#### (A)                              Subjectto the rights of the holders of any shares of any series of PreferredStock (or any similar stock) ranking prior and superior to the Series APreferred Stock with respect to dividends, the holders of shares of Series APreferred Stock, in preference to the holders of Common Stock of theCorporation, and of any other junior stock, shall be entitled to receive, when,as and if declared by the Board of Directors out of funds legally available forthe purpose, quarterly dividends payable in cash on the first day of March,June, September and December in each year (each such date beingreferred to herein as a “Quarterly Dividend Payment Date”), commencing on thefirst Quarterly Dividend Payment Date after the first issuance of a share orfraction of a share of Series A Preferred Stock, in an amount per share(rounded to the nearest cent) equal to the greater of (a) $1 or (b) subjectto the provision for adjustment hereinafter set forth, 100 times the aggregateper share amount of all cash dividends, and 100 times the aggregate per shareamount (payable in kind) of all non-cash dividends or other distributions,other than a dividend payable in shares of Common Stock or a subdivision of theoutstanding shares of Common Stock (by reclassification or otherwise), declaredon the Common Stock since the immediately preceding Quarterly Dividend PaymentDate or, with respect to the first Quarterly Dividend Payment Date, since thefirst issuance of any share or fraction of a share of Series A PreferredStock. In the event the Corporation shall at any time declare or pay anydividend on the Common Stock payable in shares of Common

 

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#### Stock, or effect a subdivisionor combination or consolidation of the outstanding shares of Common Stock (byreclassification or otherwise than by payment of a dividend in shares of CommonStock) into a greater or lesser number of shares of Common Stock, then in eachsuch case the amount to which holders of shares of Series A PreferredStock were entitled immediately prior to such event under clause (b) ofthe preceding sentence shall be adjusted by multiplying such amount by afraction, the numerator of which is the number of shares of Common Stockoutstanding immediately after such event and the denominator of which is thenumber of shares of Common Stock that were outstanding immediately prior tosuch event.

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#### (B)                                TheCorporation shall declare a dividend or distribution on the Series APreferred Stock as provided in paragraph (A) of this Section immediatelyafter it declares a dividend or distribution on the Common Stock (other than adividend payable in shares of Common Stock); provided that, in the event nodividend or distribution shall have been declared on the Common Stock duringthe period between any Quarterly Dividend Payment Date and the next subsequentQuarterly Dividend Payment Date, a dividend of $1 per share on the Series APreferred Stock shall nevertheless be payable on such subsequent QuarterlyDividend Payment Date.

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#### (C)                                Dividendsshall begin to accrue and be cumulative on outstanding shares of Series APreferred Stock from the Quarterly Dividend Payment Date next preceding thedate of issue of such shares, unless the date of issue of such shares is priorto the record date for the first Quarterly Dividend Payment Date, in which casedividends on such shares shall begin to accrue from the date of issue of suchshares, or unless the date of issue is a Quarterly Dividend Payment Date or isa date after the record date for the determination of holders of shares of Series APreferred Stock entitled to receive a quarterly dividend and before suchQuarterly Dividend Payment Date, in either of which events such dividends shallbegin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accruedbut unpaid dividends shall not bear interest. Dividends paid on the shares of Series APreferred Stock in an amount less than the total amount of such dividends atthe time accrued and payable on such shares shall be allocated pro rata on ashare-by-share basis among all such shares at the time outstanding. The Boardof Directors may fix a record date for the determination of holders ofshares of Series A

 

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#### Preferred Stock entitledto receive payment of a dividend or distribution declared thereon, which recorddate shall be not more than 60 days prior to the date fixed for the paymentthereof.

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## Section 3.                                            *Voting Rights*. The holders of shares of Series APreferred Stock shall have the following voting rights:

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#### (A)                              Subjectto the provision for adjustment hereinafter set forth, each share of Series APreferred Stock shall entitle the holder thereof to 100 votes on all matterssubmitted to a vote of the stockholders of the Corporation. In the event theCorporation shall at any time declare or pay any dividend on the Common Stockpayable in shares of Common Stock, or effect a subdivision or combination orconsolidation of the outstanding shares of Common Stock (by reclassification orotherwise than by payment of a dividend in shares of Common Stock) into agreater or lesser number of shares of Common Stock, then in each such case thenumber of votes per share to which holders of shares of Series A PreferredStock were entitled immediately prior to such event shall be adjusted bymultiplying such number by a fraction, the numerator of which is the number ofshares of Common Stock outstanding immediately after such event and the denominatorof which is the number of shares of Common Stock that were outstanding immediatelyprior to such event.

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#### (B)                                Exceptas otherwise provided herein, in any other Certificate of Designations creatinga series of Preferred Stock or any similar stock, or by law, the holdersof shares of Series A Preferred Stock and the holders of shares of CommonStock and any other capital stock of the Corporation having general votingrights shall vote together as one class on all matters submitted to a voteof stockholders of the Corporation.

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#### (C)                                Exceptas set forth herein, or as otherwise provided by law, holders of Series APreferred Stock shall have no special voting rights and their consent shall notbe required (except to the extent they are entitled to vote with holders ofCommon Stock as set forth herein) for taking any corporate action.

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## Section 4.                                            *Certain Restrictions*.

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#### (A)                              Wheneverquarterly dividends or other dividends or distributions payable on the Series APreferred Stock as

 

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#### provided in Section 2are in arrears, thereafter and until all accrued and unpaid dividends anddistributions, whether or not declared, on shares of Series A PreferredStock outstanding shall have been paid in full, the Corporation shall not:

 

###### (i)             declare or paydividends, or make any other distributions, on any shares of stock rankingjunior (either as to dividends or upon liquidation, dissolution or winding up)to the Series A Preferred Stock;

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###### (ii)          declare or paydividends, or make any other distributions, on any shares of stock ranking on aparity (either as to dividends or upon liquidation, dissolution or winding up)with the Series A Preferred Stock, except dividends paid ratably on the Series APreferred Stock and all such parity stock on which dividends are payable or inarrears in proportion to the total amounts to which the holders of all suchshares are then entitled;

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###### (iii)       redeem or purchase orotherwise acquire for consideration shares of any stock ranking junior (eitheras to dividends or upon liquidation, dissolution or winding up) to the Series APreferred Stock, provided that the Corporation may at any time redeem,purchase or otherwise acquire shares of any such junior stock in exchange forshares of any stock of the Corporation ranking junior (either as to dividendsor upon dissolution, liquidation or winding up) to the Series A PreferredStock; or

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###### (iv)      redeem or purchase orotherwise acquire for consideration any shares of Series A PreferredStock, or any shares of stock ranking on a parity with the Series APreferred Stock, except in accordance with a purchase offer made in writing orby publication (as determined by the Board of Directors) to all holders of suchshares upon such terms as the Board of Directors, after consideration of therespective annual dividend rates and other relative rights and preferences ofthe respective series and classes, shall determine in good faith willresult in fair and equitable treatment among the respective series orclasses.

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#### (B)                                TheCorporation shall not permit any subsidiary of the Corporation to purchase orotherwise acquire for consideration any shares of stock of the Corporationunless

 

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#### the Corporation could,under paragraph (A) of this Section 4, purchase or otherwise acquiresuch shares at such time and in such manner.

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## Section 5.                                            *Reacquired Shares*. Any shares of Series A PreferredStock purchased or otherwise acquired by the Corporation in any mannerwhatsoever shall be retired and canceled promptly after the acquisition thereof.All such shares shall upon their cancellation become authorized but unissuedshares of Preferred Stock and may be reissued as part of a new series ofPreferred Stock subject to the conditions and restrictions on issuance setforth herein or in any Certificate of Designations creating a series ofPreferred Stock or any similar stock or as otherwise required by law.

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## Section 6.                                            *Liquidation, Dissolution or Winding Up*. Upon anyliquidation, dissolution or winding up of the Corporation, no distributionshall be made (1) to the holders of shares of stock ranking junior (eitheras to dividends or upon liquidation, dissolution or winding up) to the Series APreferred Stock unless, prior thereto, the holders of shares of Series APreferred Stock shall have received $100 per share, plus an amount equal toaccrued and unpaid dividends and distributions thereon, whether or notdeclared, to the date of such payment, provided that the holders of shares of Series APreferred Stock shall be entitled to receive an aggregate amount per share,subject to the provision for adjustment hereinafter set forth, equal to 100times the aggregate amount to be distributed per share to holders of shares ofCommon Stock, or (2) to the holders of shares of stock ranking on a parity(either as to dividends or upon liquidation, dissolution or winding up) withthe Series A Preferred Stock, except distributions made ratably on the Series APreferred Stock and all such parity stock in proportion to the total amounts towhich the holders of all such shares are entitled upon such liquidation,dissolution or winding up. In the event the Corporation shall at any timedeclare or pay any dividend on the Common Stock payable in shares of Common Stock,or effect a subdivision or combination or consolidation of the outstandingshares of Common Stock (by reclassification or otherwise than by payment of adividend in shares of Common Stock) into a greater or lesser number of sharesof Common Stock, then in each such case the aggregate amount to which holdersof shares of Series A Preferred Stock were entitled immediately prior tosuch event under the proviso in clause (1) of the preceding sentence shallbe adjusted by multiplying such amount by a fraction the numerator of which isthe number of shares of Common Stock outstanding immediately after such event

 

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## and the denominator of which is the number of shares of Common Stockthat were outstanding immediately prior to such event.

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## Section 7.                                            *Consolidation, Merger, etc.*In case the Corporation shallenter into any consolidation, merger, combination or other transaction in whichthe shares of Common Stock are exchanged for or changed into other stock or securities,cash and/or any other property, then in any such case each share of Series APreferred Stock shall at the same time be similarly exchanged or changed intoan amount per share, subject to the provision for adjustment hereinafter setforth, equal to 100 times the aggregate amount of stock, securities, cashand/or any other property (payable in kind), as the case may be, intowhich or for which each share of Common Stock is changed or exchanged. In theevent the Corporation shall at any time declare or pay any dividend on theCommon Stock payable in shares of Common Stock, or effect a subdivision orcombination or consolidation of the outstanding shares of Common Stock (byreclassification or otherwise than by payment of a dividend in shares of CommonStock) into a greater or lesser number of shares of Common Stock, then in eachsuch case the amount set forth in the preceding sentence with respect to theexchange or change of shares of Series A Preferred Stock shall be adjustedby multiplying such amount by a fraction, the numerator of which is the numberof shares of Common Stock outstanding immediately after such event and thedenominator of which is the number of shares of Common Stock that wereoutstanding immediately prior to such event.

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## Section 8.                                            *No Redemption*. The shares of Series A Preferred Stockshall not be redeemable.

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## Section 9.                                            *Rank*. The Series A Preferred Stock shall rank, withrespect to the payment of dividends and the distribution of assets, junior toall other series and classes of the Corporation’s Preferred Stock.

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## Section 10.                                      *Amendment*. The Certificate of Incorporation of theCorporation shall not be amended in any manner which would materially alter orchange the powers, preferences or special rights of the Series A PreferredStock so as to affect them adversely without the affirmative vote of theholders of at least two-thirds of the outstanding shares of Series APreferred Stock, voting together as a single class.

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C.                                     *Common Stock*. The Common Stock shall be subject to the expressterms of the Preferred Stock and any series thereof. Each share of CommonStock shall be equal to each other share of

 

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Common Stock. The holdersof shares of Common Stock shall be entitled to one vote for each such shareupon all questions presented to the stockholders.

 

Except as may be provided in this Certificate ofIncorporation or in a Preferred Stock Designation, the Common Stock shall havethe exclusive right to vote for the election of directors and for all otherpurposes, and holders of Preferred Stock shall not be entitled to receivenotice of any meeting of stockholders at which they are not entitled to vote.

 

The Corporation shall be entitled to treat the personin whose name any share of its stock is registered as the owner thereof for allpurposes and shall not be bound to recognize any equitable or other claim to,or interest in, such share on the part of any other person, whether or notthe Corporation shall have notice thereof, except as expressly provided byapplicable law.

 

# **ARTICLE V**

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The name and the mailing address of the incorporatoris as follows:

 

| **Name**      | ** ** | **Mailing Address**  |
|---------------|------------|---------------------------|
|          |       |                      |
| Leonie S. Pan |       | 360 North  Crescent Drive |
|          |       | Beverly Hills,  CA 90210  |

 

# **ARTICLE VI**

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The Corporation is to have perpetual existence.

 

# **ARTICLE VII**

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The Board of Directors is hereby authorized to createand issue, whether or not in connection with the issuance and sale of any ofits stock or other securities or property, rights entitling the holders thereofto purchase from the Corporation shares of stock or other securities of theCorporation or any other corporation. The times at which and the terms uponwhich such rights are to be issued will be determined by the Board of Directorsand set forth in the contracts or instruments that evidence such rights. Theauthority of the Board of Directors with respect to such rights shall include,but not be limited to, determination of the following:

 

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(a)                                  Theinitial purchase price per share or other unit of the stock or other securitiesor property to be purchased upon exercise of such rights.

 

(b)                                 Provisionsrelating to the times at which and the circumstances under which such rights may beexercised or sold or otherwise transferred, either together with or separatelyfrom, any other stock or other securities of the Corporation.

 

(c)                                  Provisionswhich adjust the number or exercise price of such rights or amount or nature ofthe stock or other securities or property receivable upon exercise of suchrights in the event of a combination, split or recapitalization of any stock ofthe Corporation, a change in ownership of the Corporation’s stock or othersecurities or a reorganization, merger, consolidation, sale of assets or otheroccurrence relating to the Corporation or any stock of the Corporation, andprovisions restricting the ability of the Corporation to enter into any suchtransaction absent an assumption by the other party or parties thereto of theobligations of the Corporation under such rights.

 

(d)                                 Provisionswhich deny the holder of a specified percentage of the outstanding stock orother securities of the Corporation the right to exercise such rights and/orcause the rights held by such holder to become void.

 

(e)                                  Provisionswhich permit the Corporation to redeem such rights.

 

(f)                                    Theappointment of a rights agent with respect to such rights.

 

# **ARTICLE VIII**

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In furtherance of, and not in limitation of, thepowers conferred by law, the Board of Directors is expressly authorized andempowered:

 

(a)                                  toadopt, amend or repeal the By-Laws of the Corporation; provided, however, thatthe By-Laws adopted by the Board of Directors under the powers hereby conferredmay be amended or repealed by the Board of Directors or by the stockholdershaving voting power with respect thereto; provided further that in the case ofamendments by stockholders, the affirmative vote of the holders of at least 80

 

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percent of thevoting power of the then outstanding Voting Stock, voting together as a singleclass, shall be required to alter, amend or repeal any provision of theBy-Laws; and

 

(b)                                 fromtime to time to determine whether and to what extent, and at what times andplaces, and under what conditions and regulations, the accounts and books ofthe Corporation, or any of them, shall be open to inspection of stockholders;and, except as so determined or as so provided in any Preferred StockDesignation, no stockholder shall have any right to inspect any account, bookor document of the Corporation other than such rights as may be conferredby applicable law.

 

The Corporation may in its By-Laws confer powersupon the Board of Directors in addition to the foregoing and in addition to thepowers and authorities expressly conferred upon the Board of Directors byapplicable law. Notwithstanding anything contained in this Certificate ofIncorporation to the contrary, the affirmative vote of the holders of at least80 percent of the then outstanding Voting Stock, voting together as a singleclass, shall be required to amend, repeal or adopt any provision inconsistentwith paragraph (a) of this Article VIII. For the purposes of thisCertificate of Incorporation, “Voting Stock” shall mean the outstanding sharesof capital stock of the Corporation entitled to vote generally in the electionof directors.

 

# **ARTICLE IX**

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Subject to the rights of the holders of any series ofPreferred Stock as set forth in a Preferred Stock Designation to electadditional directors under specific circumstances, any action required orpermitted to be taken by the stockholders of the Corporation must be effectedat a duly called annual or special meeting of stockholders of the Corporationand may not be effected by any consent in writing of such stockholders. Notwithstandinganything contained in this Certificate of Incorporation to the contrary, theaffirmative vote of at least 80 percent of the then outstanding Voting Stock,voting together as a single class, shall be required to amend, repeal, or adoptany provision inconsistent with this Article IX.

 

# **ARTICLE X**

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## Section 1.   *Number,Election and Terms of Directors*. Subject to the rights of any series ofPreferred Stock as set forth

 

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## in a Preferred Stock Designation to elect additional directors underspecified circumstances, the number of directors of the Corporation shall befixed by the By-Laws of the Corporation and may be increased or decreasedfrom time to time in such a manner as may be prescribed by the By-Laws.

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Unless and except to the extent that the By-Laws ofthe Corporation shall so require, the election of directors of the Corporationneed not be by written ballot.

 

The directors, other than those who may beelected by the holders of any series of Preferred Stock, shall be dividedinto three classes, as nearly equal in number as possible. One class ofdirectors shall be initially elected for a term expiring at the annual meetingof stockholders to be held in 1999, another class shall be initiallyelected for a term expiring at the annual meeting of stockholders to be held in2000, and another class shall be initially elected for a term expiring atthe annual meeting of stockholders to be held in 2001. Members of each class shallhold office until their successors are elected and qualified. At eachsucceeding annual meeting of the stockholders of the Corporation, thesuccessors of the class of directors whose term expires at that meetingshall be elected by a majority vote of all votes cast at such meeting to holdoffice for a term expiring at the annual meeting of stockholders held in thethird year following the year of their election.

 

## Section 2.  *Removal ofDirectors; Vacancies*. Subject to the rights of the holders of any series ofPreferred Stock to elect additional directors under specified circumstances,any director may be removed from office at any time, but only for causeand only by the affirmative vote of the holders of at least 80 percent of thethen outstanding Voting Stock, voting together as a single class.

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## Section 3.  *Amendment*.Notwithstanding anything contained in this Certificate of Incorporation to thecontrary, the affirmative vote of the holders of at least 80 percent of thethen outstanding Voting Stock, voting together as a single class, shall berequired to amend, repeal or adopt any provision inconsistent with this Article X.

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# **ARTICLE XI**

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### A.                             (1)   Inaddition to any affirmative vote required by law, by this Certificate ofIncorporation or by any Preferred

 

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### Stock Designation, and except as otherwise expressly provided in Section Bof this Article XI:

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###### (i)             any merger orconsolidation of the Corporation or any Subsidiary (as hereinafter defined)with (a) any Interested Stockholder (as hereinafter defined) or (b) anyother corporation (whether or not itself an Interested Stockholder) which is,or after such merger or consolidation would be, an Affiliate (as hereinafterdefined) of an Interested Stockholder; or

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###### (ii)          any sale, lease,exchange, mortgage, pledge, transfer or other disposition (in one transactionor a series of transactions) to or with any Interested Stockholder or anyAffiliate of any Interested Stockholder of any assets of the Corporation or anySubsidiary having an aggregate Fair Market Value (as hereinafter defined) of$10 million or more; or

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###### (iii)       the issuance or transfer bythe Corporation or any Subsidiary (in one transaction or a series oftransactions) of any securities of the Corporation or any Subsidiary to anyInterested Stockholder or any Affiliate of any Interested Stockholder inexchange for cash, securities or other property (or a combination thereof)having an aggregate Fair Market Value of $10 million or more; or

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###### (iv)      the adoption of any plan orproposal for the liquidation or dissolution of the Corporation proposed by oron behalf of any Interested Stockholder or any Affiliate of any InterestedStockholder; or

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###### (v)         any reclassification ofsecurities (including any reverse stock split), or recapitalization of theCorporation, or any merger or consolidation of the Corporation with any of itsSubsidiaries or any other transaction (whether or not with or into or otherwiseinvolving any Interested Stockholder) which has the effect, directly or indirectly,of increasing the proportionate share of the outstanding shares of any class ofequity or convertible securities of the Corporation or any Subsidiary which isBeneficially Owned (as hereinafter defined) by any Interested Stockholder orany Affiliate of any Interested Stockholder;

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shall require theaffirmative vote of the holders of at least 80 percent of the voting power ofall of the then outstanding shares of the Voting Stock, voting together as asingle class. Such

 

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affirmative vote shall berequired notwithstanding any other provisions of this Certificate ofIncorporation or any provision of law or of any agreement with any nationalsecurities exchange or otherwise which might otherwise permit a lesser vote orno vote.

 

##### (2)                                  Theterm “Business Combination” as used in this Article XI shall mean anytransaction which is referred to in any one or more of subparagraphs (i) through(v) of paragraph (1) of this Section A.

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### B.                               Theprovisions of Section A of this Article XI shall not be applicable toany particular Business Combination, and such Business Combination shallrequire only such affirmative vote as is required by law, any other provisionof this Certificate of Incorporation and any Preferred Stock Designation, if,in the case of a Business Combination that does not involve any cash or otherconsideration being received by the stockholders of the Corporation, solely intheir respective capacities as stockholders of the Corporation, the conditionspecified in the following paragraph (1) is met or, in the case of anyother Business Combination, the conditions specified in either of the followingparagraph (1) or paragraph (2) are met:

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##### (1)                                  TheBusiness Combination shall have been approved by a majority of the ContinuingDirectors (as hereinafter defined); provided however, that this condition shallnot be capable of satisfaction unless there are at least three ContinuingDirectors.

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##### (2)                                  Allof the following conditions shall have been met:

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###### (i)                                     Theconsideration to be received by holders of shares of a particular class (orseries) of outstanding capital stock (including Common Stock and other thanExcluded Preferred Stock (as hereinafter defined)) shall be in cash or in thesame form as the Interested Stockholder or any of its Affiliates haspreviously paid for shares of such class (or series) of capital stock. Ifthe Interested Stockholder or any of its Affiliates have paid for shares of anyclass (or series) of capital stock with varying forms of consideration,the form of consideration to be received per share by holders of shares ofsuch class (or series) of capital stock shall be either cash or the form usedto acquire the largest number of shares of such class (or series) of capitalstock previously acquired by the Interested Stockholder or any of itsAffiliates.

 

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###### (ii)                                  Theaggregate amount of (x) the cash and (y) the Fair Market Value, as of the date(the “Consummation Date”) of the consummation of the Business Combination, ofthe consideration other than cash to be received per share by holders of CommonStock in such Business Combination shall be at least equal to the higher of thefollowing (in each case appropriately adjusted in the event of any stock dividend,stock split, combination of shares or similar event):

 

(a)                                  (ifapplicable) the highest per share price (including any brokerage commissions,transfer taxes and soliciting dealers’ fees) paid by the Interested Stockholderor any of its Affiliates for any shares of Common Stock acquired by them withinthe two-year period immediately prior to the date of the first publicannouncement of the proposal of the Business Combination (the “AnnouncementDate”) or in any transaction in which the Interested Stockholder became anInterested Stockholder, whichever is higher, plus interest compounded annuallyfrom the first date on which the Interested Stockholder became an InterestedStockholder (the “Determination Date”) through the Consummation Date at thepublicly announced base rate of interest of Morgan Guaranty Trust Company ofNew York (or such other major bank headquartered in New York, New York as may beselected by the Continuing Directors) from time to time in effect in New York,New York, less the aggregate amount of any cash dividends paid or declared (ifultimately paid), and the Fair Market Value of any dividends paid in other thancash, on each share of Common Stock from the Determination Date through theConsummation Date in an amount up to but not exceeding the amount of interestso payable per share of Common Stock; and

 

(b)                                 theFair Market Value per share of Common Stock on the Announcement Date or theDetermination Date, whichever is higher.

 

###### (iii)                               Theaggregate amount of (x) the cash and (y) the Fair Market Value, as of theConsummation Date, of the consideration other than cash to be received pershare by holders of shares of any class (or series), other than CommonStock or Excluded Preferred Stock, of outstanding capital stock shall be atleast equal to the highest of the following (in each case appropriatelyadjusted in the event of any stock dividend, stock split, combination of sharesor similar event), it being intended that the requirements

 

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###### of this paragraph (2)(iii) shallbe required to be met with respect to every such class (or series) ofoutstanding capital stock whether or not the Interested Stockholder or any ofits Affiliates has previously acquired any shares of a particular class (orseries) of capital stock:

 

(a)                                  (ifapplicable) the highest per share price (including any brokerage commissions,transfer taxes and soliciting dealers’ fees) paid by the Interested Stockholderor any of its Affiliates for any shares of such class (or series) ofcapital stock acquired by them within the two-year period immediately prior tothe Announcement Date or in any transaction in which it became an InterestedStockholder, whichever is higher, plus interest compounded annually from theDetermination Date through the Consummation Date at the publicly announced baserate of interest of Morgan Guaranty Trust Company of New York (or such othermajor bank headquartered in New York, New York as may be selected by theContinuing Directors) from time to time in effect in New York, New York lessthe aggregate amount of any cash dividends paid, and the Fair Market Value ofany dividends paid in other than cash, on each share of such class (orseries) of capital stock from the Determination Date through the ConsummationDate in an amount up to but not exceeding the amount of interest so payable pershare of such class (or series) of capital stock;

 

(b)                                 theFair Market Value per share of such class (or series) of capital stock onthe Announcement Date or on the Determination Date, whichever is higher; and

 

(c)                                  thehighest preferential amount per share, if any, to which the holders of sharesof such class (or series) of capital stock would be entitled in the eventof any voluntary or involuntary liquidation, dissolution or winding up of theCorporation.

 

###### (iv)                              Aftersuch Interested Stockholder has become an Interested Stockholder and prior tothe consummation of such Business Combination: (a) except as approved by a majority of the Continuing Directors,there shall have been no failure to declare and pay at the regular datetherefor any full quarterly dividends (whether or not cumulative) on anyoutstanding Preferred Stock; (b) there shall have been (I) no reduction inthe annual rate of dividends paid on

 

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###### the Common Stock (exceptas necessary to reflect any subdivision of the Common Stock), except asapproved by a majority of the Continuing Directors, and (II) an increase insuch annual rate of dividends as is necessary to reflect any reclassification(including any reverse stock split), recapitalization, reorganization or anysimilar transaction which has the effect of reducing the number of outstandingshares of the Common Stock, except as approved by a majority of the ContinuingDirectors; and (c) neither such Interested Stockholder nor any of itsAffiliates shall have become the beneficial owner of any additional shares ofVoting Stock except as part of the transaction which results in suchInterested Stockholder becoming an Interested Stockholder; provided, however,that no approval by Continuing Directors shall satisfy the requirements of thissubparagraph (iv) unless at the time of such approval there are at leastthree Continuing Directors.

######  

###### (v)                                 Aftersuch Interested Stockholder has become an Interested Stockholder, suchInterested Stockholder and any of its Affiliates shall not have received thebenefit, directly or indirectly (except proportionately, solely in suchInterested Stockholder’s or Affiliate’s capacity as a stockholder of theCorporation), of any loans, advances, guarantees, pledges or other financialassistance or any tax credits or other tax advantages provided by the Corporation,whether in anticipation of or in connection with such Business Combination orotherwise.

######  

###### (vi)                              Aproxy or information statement describing the proposed Business Combination andcomplying with the requirements of the Securities Exchange Act of 1934, asamended, and the rules and regulations thereunder (or any subsequentprovisions replacing such Act, rules or regulations) shall be mailed toall stockholders of the Corporation at least 30 days prior to the consummationof such Business Combination (whether or not such proxy or information statementis required to be mailed pursuant to such Act or subsequent provisions).

######  

###### (vii)                           SuchInterested Stockholder shall have supplied the Corporation with suchinformation as shall have been requested pursuant to Section E of this Article XIwithin the time period set forth therein.

 

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### C.                               Forthe purposes of this Article XI:

###  

##### (1)                                  A“person” means any individual, limited partnership, general partnership,corporation or other firm or entity.

#####  

##### (2)                                  “InterestedStockholder” means any person (other than the Corporation or any Subsidiary)who or which:

#####  

###### (i)                                     isthe beneficial owner (as hereinafter defined), directly or indirectly, of tenpercent or more of the voting power of the outstanding Voting Stock; or

######  

###### (ii)                                  isan Affiliate or an Associate (as hereinafter defined) of the Corporation and atany time within the two-year period immediately prior to the date in questionwas the beneficial owner, directly or indirectly, of ten percent or more of thevoting power of the then-outstanding Voting Stock; or

######  

###### (iii)                               isan assignee of or has otherwise succeeded to any shares of Voting Stock whichwere at any time within the two-year period immediately prior to the date inquestion beneficially owned by any Interested Stockholder, if such assignmentor succession shall have occurred in the course of a transaction or series oftransactions not involving a public offering within the meaning of theSecurities Act of 1933, as amended.

######  

Notwithstanding the foregoing, neither Unitrin, Inc.,a Delaware corporation, nor any of its subsidiaries shall be an InterestedStockholder as long as such entities in the aggregate Beneficially Own lessthan 12,658,000 shares of Common Stock.

 

##### (3)                                  Aperson shall be a “beneficial owner” of or shall “Beneficially Own”, any VotingStock:

#####  

###### (i)                                     whichsuch person or any of its Affiliates or Associates beneficially owns, directlyor indirectly within the meaning of Rule 13d-3 under the SecuritiesExchange Act of 1934, as in effect on August 13, 1997; or

######  

###### (ii)                                  whichsuch person or any of its Affiliates or Associates has (a) the right toacquire (whether such right is exercisable immediately or only after thepassage of time) pursuant to any agreement, arrangement

 

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###### or understanding or uponthe exercise of conversion rights, exchange rights, warrants or options, orotherwise, or (b) the right to vote pursuant to any agreement, arrangementor understanding (but neither such person nor any such Affiliate or Associateshall be deemed to be the beneficial owner of any shares of Voting Stock solelyby reason of having a revocable proxy granted for a particular meeting ofstockholders, pursuant to a public solicitation of proxies for such meeting,and with respect to which shares neither such person nor any such Affiliate orAssociate is otherwise deemed the beneficial owner); or

######  

###### (iii)                               whichare beneficially owned, directly or indirectly, within the meaning of Rule 13d-3under the Securities Exchange Act of 1934, as in effect on August 13,1997, by any other person with whom such person or any of its Affiliates orAssociates has any agreement, arrangement or understanding for the purpose ofacquiring, holding, voting (other than solely by reason of a revocable proxy asdescribed in subparagraph (ii) of this paragraph (3)) or disposing of anyshares of Voting Stock;

######  

*provided,however,* that in the case of any employee stock ownership orsimilar plan of the Corporation or of any Subsidiary in which the beneficiariesthereof possess the right to vote any shares of Voting Stock held by such plan,no such plan nor any trustee with respect thereto (nor any Affiliate of suchtrustee), solely by reason of such capacity of such trustee, shall be deemed,for any purposes hereof to beneficially own any shares of Voting Stock heldunder any such plan.

 

##### (4)                                  Forthe purposes of determining whether a person is an Interested Stockholderpursuant to paragraph (2) of this Section C, the number of shares ofVoting Stock deemed to be outstanding shall include shares deemed owned throughapplication of paragraph (3) of this Section C but shall not includeany other unissued shares of Voting Stock which may be issuable pursuantto any agreement, arrangement or understanding, or upon exercise of conversionrights, warrants or options, or otherwise.

#####  

##### (5)                                  “Affiliate”or “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2of the

 

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##### General Rules andRegulations under the Securities Exchange Act of 1934, as in effect on August 13,1997.

#####  

##### (6)                                  “Subsidiary”means any corporation of which a majority of any class of equity securityis owned, directly or indirectly, by the Corporation; *provided*,*however*, that for the purposes of thedefinition of Interested Stockholder set forth in paragraph (2) of this Section C,the term “Subsidiary” shall mean only a corporation of which a majority of eachclass of equity security is owned, directly or indirectly, by theCorporation.

#####  

##### (7)                                  “ContinuingDirector” means any member of the Board of Directors of the Corporation who isunaffiliated with the Interested Stockholder and was a member of the Boardprior to the time that the Interested Stockholder became an InterestedStockholder, and any director who is thereafter chosen to fill any vacancy onthe Board of Directors or who is elected and who, in either event, isunaffiliated with the Interested Stockholder and in connection with his or herinitial assumption of office is recommended for appointment or election by amajority of Continuing Directors then on the Board.

#####  

##### (8)                                  “FairMarket Value” means:  (i) in thecase of stock, the highest closing sale price during the 30-day periodimmediately preceding the date in question of a share of such stock on theComposite Tape for New York Stock Exchange Listed Stocks, or, if such stock isnot listed on the Composite Tape, on the New York Stock Exchange, or, if suchstock is not listed on such Exchange, on the principal United States securitiesexchange registered under the Securities Exchange Act of 1934 on which suchstock is listed, or, if such stock is not listed on any such exchange, thehighest closing bid quotation with respect to a share of such stock during the30-day period preceding the date in question on the National Association ofSecurities Dealers, Inc. Automated Quotations System or any system then inuse, or if no such quotations are available, the fair market value on the datein question of a share of such stock as determined by the Board in accordancewith Section D of this Article XI; and (ii) in the case ofproperty other than cash or stock, the fair market value of such property onthe date in question as determined by the Board in accordance with Section Dof this Article XI.

#####  

##### (9)                                  Inthe event of any Business Combination in which the Corporation survives, thephrase “consideration other

 

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##### than cash to be received”as used in paragraphs (2)(ii) and (2)(iii) of Section B of this Article XIshall include the shares of Common Stock and/or the shares of any other class (orseries) of outstanding capital stock retained by the holders of such shares.

#####  

##### (10)                            “WholeBoard” means the total number of directors which the Corporation would have ifthere were no vacancies.

#####  

##### (11)                            “ExcludedPreferred Stock” means any series of Preferred Stock with respect to whichthe Preferred Stock Designation creating such series expressly providesthat the provisions of this Article XI shall not apply.

#####  

##### (12)                            “VotingStock” means capital stock of the Corporation entitled to vote generally in theelection of directors.

#####  

### D.                              Amajority of the Whole Board, but only if a majority of the Whole Board shallthen consist of Continuing Directors or, if a majority of the Whole Board shallnot then consist of Continuing Directors, a majority of the then ContinuingDirectors, shall have the power and duty to determine, on the basis ofinformation known to them after reasonable inquiry, all facts necessary todetermine compliance with this Article XI, including, without limitation, (i) whethera person is an Interested Stockholder, (ii) the number of shares of VotingStock beneficially owned by any person, (iii) whether a person is an Affiliateor Associate of another, (iv) whether the applicable conditions set forthin paragraph (2) of Section B have been met with respect to anyBusiness Combination, (v) the Fair Market Value of stock or other propertyin accordance with paragraph (8) of Section C of this Article XI,and (vi) whether the assets which are the subject of any BusinessCombination referred to in paragraph (1)(ii) of Section A have, orthe consideration to be received for the issuance or transfer of securities bythe Corporation or any Subsidiary in any Business Combination referred to inparagraph (1)(iii) of Section A has, an aggregate Fair Market Valueof $10 million or more.

###  

### E.                                Amajority of the Whole Board shall have the right to demand, but only if amajority of the Whole Board shall then consist of Continuing Directors, or, ifa majority of the Whole Board shall not then consist of Continuing Directors amajority or the then Continuing Directors shall have the right to demand, thatany person who it is reasonably believed is an Interested Stockholder (or holdsof record shares of Voting Stock Beneficially

 

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### Owned by any Interested Stockholder) supply the Corporation withcomplete information as to (i) the record owner(s) of all sharesBeneficially Owned by such person who it is reasonably believed is anInterested Stockholder, (ii) the number of and class or series ofshares Beneficially Owned by such person who it is reasonably believed is anInterested Stockholder and held of record by each such record owner and thenumber(s) of the stock certificate(s) evidencing such shares, and (iii) anyother factual matter relating to the applicability or effect of this Article XI,as may be reasonably requested of such person, and such person shallfurnish such information within 10 days after receipt of such demand.

###  

### F.                                Nothingcontained in this Article XI shall be construed to relieve any InterestedStockholder from any fiduciary obligation imposed by law.

###  

### G.                               Notwithstandingany other provisions of this Restated Certificate of Incorporation or anyprovision of law which might otherwise permit a lesser vote or no vote, but inaddition to any affirmative vote of the holders of any particular class orseries of the Voting Stock required by law, this Certificate of Incorporationor any Preferred Stock Designation, the affirmative vote of the holders of atleast 80 percent of the voting power of all of the then-outstanding shares ofthe Voting Stock, voting together as a single class, shall be required toalter, amend, repeal or adopt any provision inconsistent with this Article XI.

###  

# **ARTICLE XII**

# ** **

Each person who is or was or had agreed to become adirector or officer of the Corporation, or each such person who is or wasserving or who had agreed to serve at the request of the Board of Directors oran officer of the Corporation as a director, officer or employee of anothercorporation, partnership, joint venture, trust or other enterprise (includingthe heirs, executor, administrators or estate of such person), shall be indemnifiedby the Corporation, in accordance with the By-Laws of the Corporation, to thefull extent permitted from time to time by the General Corporation Law of theState of Delaware as the same exists or may hereafter be amended (but, inthe case of any such amendment, only to the extent that such amendment permitsthe Corporation to provide broader indemnification rights than said lawpermitted the Corporation to provide prior to such amendment) or any otherapplicable laws as presently or hereafter in effect. Without limiting thegenerality or the effect of the foregoing, the Corporation may indemnifyother

 

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persons as provided inthe By-Laws, and the Corporation may enter into one or more agreements withany person which provide for indemnification greater or different than thatprovided in this Article XII. Any amendment or repeal of this Article XIIshall not adversely affect any right or protection existing hereunderimmediately prior to such amendment or repeal.

 

# **ARTICLE XIII**

# ** **

A director of the Corporation shall not be personallyliable to the Corporation or its stockholders for monetary damages for breachof fiduciary duty as a director, except for liability (i) for any breachof the director’s duty of loyalty to either the Corporation or itsstockholders, (ii) for acts or omissions not in good faith or whichinvolve intentional misconduct or a knowing violation of law, (iii) under Section 174of the General Corporation Law of the State of Delaware, or (iv) for anytransaction from which the director derived an improper personal benefit. Anyamendment or repeal of this Article XIII shall not adversely affect anyright or protection of a director of the Corporation existing immediately priorto such amendment or repeal.

 

# **ARTICLE XIV**

# ** **

The Corporation reserves the right at any time andfrom time to time to amend, alter, change or repeal any provision contained inthis Certificate of Incorporation or a Preferred Stock Designation, and anyother provisions authorized by the laws of the State of Delaware at the time inforce may be added or inserted, in the manner now or hereafter prescribedherein or by applicable law, and all rights, preferences and privileges ofwhatsoever nature conferred upon stockholders, directors or any other personswhomsoever by and pursuant to this Certificate of Incorporation in its present form oras hereafter amended are granted subject to the right reserved in this Article XIV;*provided*, *however*,that any amendment or repeal of Article XII or Article XIII of thisCertificate of Incorporation shall not adversely affect any right or protectionexisting hereunder immediately prior to such amendment or repeal; and providedfurther that no Preferred Stock Designation shall be amended after the issuanceof any shares of the series of Preferred Stock created thereby, except inaccordance with the terms of such Preferred Stock Designation and therequirements of applicable law.

 

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| Executed on August 13,  1997 |   |
|-----------------------------------|--------|
|                              |   |
|                              | By:    | /s/Leonie S. Pan |   |
|                              |   | Leonie S. Pan |
|                              |   | Incorporator |

 

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