Document:

EX-10.3

 

Exhibit 10.3

Guaranty

     GUARANTY (this agreement, together with all amendments and restatements and all Guaranty
Supplements, this “Guaranty”), dated as of August 23, 2007, made by each of the parties listed on
the signature pages hereof and each other Person which may from time to time become a party to this
Guaranty pursuant to Section 23 (collectively, the “Additional Guarantors,” and each, an
“Additional Guarantor,” and together with each of the signatories party hereto, collectively the
“Guarantors,” and each, a “Guarantor”), in favor of Administrative Agent, for the benefit of
Guaranteed Parties.

BACKGROUND.

     Citibank, N.A., as Administrative Agent, the Lenders party thereto, and PowerSecure
International, Inc., a Delaware corporation (“Borrower”), entered into the Credit Agreement dated
as of August 23, 2007 (such agreement, together with all amendments and restatements, the “Credit
Agreement”).

     Borrower and each of Guarantors are members of the same consolidated group of companies and
are engaged in operations which require financing on a basis in which credit can be made available
from time to time to Borrower, and Guarantors will derive direct and indirect economic benefit from
the Loans under the Credit Agreement and Swap Contracts and Cash Management Documents.

     It is a condition precedent to the obligation of Lenders to make Loans under the Credit
Agreement and to extend other financial accommodations under the Loan Documents and of Lenders and
their Affiliates to provide financial accommodations pursuant to Guarantied Swap Contracts and Cash
Management Documents that Guarantors shall have executed and delivered this Guaranty.

     Lenders, Administrative Agent, any Lender or Affiliate of any Lender that is a party to any
Swap Contract (provided that such Lender was a Lender at the time such Swap Contract was entered
into) with Borrower or any Affiliate of Borrower, any Lender or Affiliate of any Lender that is
owed any Cash Management Obligation (provided that such Lender was a Lender at the time such Cash
Management Obligation arose), and the beneficiaries of each indemnification obligation undertaken
by any Loan Party under any Loan Document are herein referred to as the “Guaranteed Parties.”

AGREEMENT.

     NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration
and to induce Guaranteed Parties to make (a) Loans under the Credit Agreement and extend other
credit and financial accommodations under the Loan Documents and (b) make financial accommodations
under Swap Contracts and Cash Management Documents, each Guarantor hereby agrees as follows:

     SECTION 1. Guaranty. Guarantors hereby jointly and severally unconditionally and irrevocably
guarantee the full and prompt payment when due, whether at stated maturity, by acceleration or
otherwise, of, and the performance of, (a) the Obligations, whether now or hereafter existing and
whether for principal, interest, fees, expenses or otherwise, (b) all Swap

 

 

Obligations owed to any Lender or any Affiliate of a Lender (provided at the time of execution
of the Swap Contract related to such Swap Obligations such Lender is a party to the Credit
Agreement, herein called a “Guarantied Swap Contract”), (c) all Cash Management Obligations owed to
any Lender or any Affiliate of a Lender (provided that during the effectiveness of a Cash
Management Document related to such Cash Management Obligations such Lender is a party to the
Credit Agreement), (d) any and all out-of-pocket expenses (including, without limitation, expenses
and counsel fees and expenses of Administrative Agent and Lenders) incurred by any of Guaranteed
Parties in enforcing any rights under this Guaranty, and (e) all present and future amounts that
would become due but for the operation of any provision of Debtor Relief Laws, and all present and
future accrued and unpaid interest, including, without limitation, all post-petition interest if
Borrower, any Guarantor or any other Loan Party voluntarily or involuntarily becomes subject to any
Debtor Relief Laws (the items set forth in clauses (a), (b), (c),
(d) and (e) being herein referred to as the “Guarantied Obligations”). Upon
failure of Borrower to pay any of the Guarantied Obligations when due after the giving by
Administrative Agent and/or Guaranteed Parties of any notice and the expiration of any applicable
cure period in each case provided for in the Credit Agreement and other Loan Documents, any
Guarantied Swap Contract or any Cash Management Document (whether at stated maturity, by
acceleration or otherwise), Guarantors hereby further jointly and severally agree to promptly pay
the same to Administrative Agent for the benefit of Guaranteed Parties, without any other demand or
notice whatsoever, including without limitation, any notice having been given to any Guarantor of
either the acceptance by Guaranteed Parties of this Guaranty or the creation or incurrence of any
of the Guarantied Obligations. This Guaranty is an absolute guaranty of payment and performance of
the Guarantied Obligations and not a guaranty of collection, meaning that it is not necessary for
Guaranteed Parties, in order to enforce payment by Guarantors, first or contemporaneously to
accelerate payment of any of the Guarantied Obligations, to institute suit or exhaust any rights
against any Loan Party, or to enforce any rights against any Collateral. Notwithstanding anything
herein or in any other Loan Document, Guarantied Swap Contract of Cash Management Document to the
contrary, in any action or proceeding involving any state corporate Law, or any state or federal
bankruptcy, insolvency, reorganization or other Law affecting the rights of creditors generally,
if, as a result of applicable Law relating to fraudulent conveyance or fraudulent transfer,
including Section 548 of Bankruptcy Code or any applicable provisions of comparable state Law
(collectively, “Fraudulent Transfer Laws”), the obligations of any Guarantor (other than Holdings)
under this Section 1 would otherwise, after giving effect to (a) all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under such Fraudulent Transfer Laws
(specifically excluding, however, any liabilities of such Guarantor in respect of intercompany
Indebtedness to Borrower to the extent that such Indebtedness would be discharged in an amount
equal to the amount paid by such Guarantor hereunder) and (b) to the value as assets of such
Guarantor (as determined under the applicable provisions of such Fraudulent Transfer Laws) of any
rights of subrogation, contribution, reimbursement, indemnity or similar rights held by such
Guarantor pursuant to (i) applicable requirements of Law, (ii) Section 10 hereof or (iii)
any other contractual obligations providing for an equitable allocation among such Guarantor and
other Loan Parties or Subsidiaries or Affiliates of Borrower of obligations arising under this
Guaranty or other guaranties of the Guarantied Obligations by such parties, be held or determined
to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on
account of the amount of its liability under this Section 1, then the amount of such
liability shall, without any further action by such Guarantor, any Guaranteed Party, Administrative
Agent or any other Person, be automatically

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limited and reduced to the highest amount that is valid and enforceable and not subordinated
to the claims of other creditors as determined in such action or proceeding.

     SECTION 2. Guaranty Absolute. Each Guarantor guarantees that the Guarantied Obligations will
be paid strictly in accordance with the terms of the Credit Agreement, the Notes, the other Loan
Documents, the Guarantied Swap Contracts and the Cash Management Documents, without set-off or
counterclaim, and regardless of any Applicable Law now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of Guaranteed Parties with respect thereto. The
liability of each Guarantor under this Guaranty shall be absolute and unconditional irrespective
of:

     (a) any lack of validity or enforceability of any provision of any other Loan Document,
any Guarantied Swap Contract or any Cash Management Document, any other agreement or
instrument relating to any of the foregoing or avoidance or subordination of any of the
Guarantied Obligations;

     (b) any change in the time, manner or place of payment of, or in any other term of, or
any increase in the amount of, all or any of the Guarantied Obligations, or any other
amendment or waiver of any term of, or any consent to departure from any requirement of, the
Credit Agreement, the Notes or any of the other Loan Documents, the Guarantied Swap
Contracts or Cash Management Document;

     (c) any exchange, release or non-perfection of any Lien on any Collateral for, or any
release of any other Loan Party or amendment or waiver of any term of any other guaranty of,
or any consent to departure from any requirement of any other guaranty of, all or any of the
Guarantied Obligations;

     (d) the absence of any attempt to collect any of the Guarantied Obligations from
Borrower or from any other Loan Party or any other action to enforce the same or the
election of any remedy by any of Guaranteed Parties;

     (e) any waiver, consent, extension, forbearance or granting of any indulgence by any of
Guaranteed Parties with respect to any provision of any other Loan Document, any Guarantied
Swap Contract or any Cash Management Document (except to the extent any written waiver,
consent, forbearance or indulgence executed in accordance with the Credit Agreement, such
Swap Contract or such Cash Management Document, as applicable, expressly modifies or
terminates the obligations of such Guarantor);

     (f) the election by any of Guaranteed Parties in any proceeding under any Debtor Relief
Law;

     (g) any borrowing or grant of a security interest by Borrower, as debtor-in-possession,
under any Debtor Relief Law; or

     (h) any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of Borrower, any Guarantor or any other Loan Party other than payment
or performance of the Guarantied Obligations.

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     SECTION 3. Waiver.

     (a) Each Guarantor hereby (i) waives (A) promptness, diligence, and, except as otherwise
provided herein, notice of acceptance and any and all other notices, including, without limitation,
notice of intent to accelerate and notice of acceleration, with respect to any of the Guarantied
Obligations or this Guaranty, (B) any requirement that any of Guaranteed Parties protect, secure,
perfect or insure any security interest in or other Lien on any property subject thereto or exhaust
any right or take any action against Borrower or any other Person or any Collateral, (C) the filing
of any claim with a court in the event of receivership or bankruptcy of Borrower or any other
Person, (D) except as otherwise provided herein, protest or notice with respect to nonpayment of
all or any of the Guarantied Obligations, (E) except as otherwise provided herein, all demands
whatsoever (and any requirement that demand be made on Borrower or any other Person as a condition
precedent to such Guarantor’s obligations hereunder), (F) all rights by which any Guarantor might
be entitled to require suit on an accrued right of action in respect of any of the Guarantied
Obligations or require suit against Borrower or any other Guarantor or Person, (G) any defense
based upon an election of remedies by any Guaranteed Party, or (H) notice of any events or
circumstances set forth in clauses (a) through (h) of Section 2; and (ii)
covenants and agrees that, except as otherwise agreed by the parties, this Guaranty will not be
discharged except by complete payment and performance of the Guarantied Obligations and any other
obligations of such Guarantor contained herein.

     (b) If, in the exercise of any of its rights and remedies in accordance with the provisions of
Applicable Law, any of Guaranteed Parties shall forfeit any of its rights or remedies, including,
without limitation, its right to enter a deficiency judgment against Borrower or any other Person,
whether because of any Applicable Law pertaining to “election of remedies” or the like, each
Guarantor hereby consents to such action by such Guaranteed Party and waives any claim based upon
such action. Any election of remedies which, by reason of such election, results in the denial or
impairment of the right of such Guaranteed Party to seek a deficiency judgment against Borrower or
any other Person shall not impair the obligation of such Guarantor to pay the full amount of the
Guarantied Obligations or any other obligation of such Guarantor contained herein.

     (c) In the event any of Guaranteed Parties shall bid at any foreclosure or trustee’s sale or
at any private sale permitted by Law or under any of the Loan Documents, Guarantied Swap Contracts
of Cash Management Document, to the extent not prohibited by Applicable Law, such Guaranteed Party
may bid all or less than the amount of the Guarantied Obligations and the amount of such bid, if
successful, need not be paid by such Guaranteed Party but shall be credited against the Guarantied
Obligations.

     (d) Each Guarantor agrees that notwithstanding the foregoing and without limiting the
generality of the foregoing if, after the occurrence and during the continuance of an Event of
Default, Guaranteed Parties are prevented by Applicable Law from exercising their respective rights
to accelerate the maturity of the Guarantied Obligations, to collect interest on the Guarantied
Obligations, or to enforce or exercise any other right or remedy with respect to the Guarantied
Obligations, or Administrative Agent is prevented from taking any action to realize on any
Collateral, such Guarantor agrees to pay to Administrative Agent for the account of Guaranteed
Parties, upon demand therefor, for application to the Guarantied Obligations, the

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amount that would otherwise have been due and payable had such rights and remedies been
permitted to be exercised by Guaranteed Parties.

     (e) Each Guarantor hereby assumes responsibility for keeping itself informed of the financial
condition of Borrower and of each other Loan Party, and of all other circumstances bearing upon the
risk of nonpayment of the Guarantied Obligations or any part thereof, that diligent inquiry would
reveal. Each Guarantor hereby agrees that Guaranteed Parties shall have no duty to advise any
Guarantor or any other Loan Party of information known to any of Guaranteed Parties regarding such
condition or any such circumstance. In the event that any of Guaranteed Parties in its sole
discretion undertakes at any time or from time to time to provide any such information to any
Guarantor or other Loan Party, such Guaranteed Party shall be under no obligation (i) to undertake
any investigation not a part of its regular business routine, (ii) to disclose any information
which, pursuant to accepted or reasonable banking or commercial finance practices, such Guaranteed
Party wishes to maintain as confidential, or (iii) to make any other or future disclosures of such
information or any other information to such Guarantor or other Loan Party.

     (f) Each Guarantor consents and agrees that Guaranteed Parties shall be under no obligation to
marshal any assets in favor of any Guarantor or any other Loan Party or otherwise in connection
with obtaining payment of any or all of the Guarantied Obligations from any Person or source.

     SECTION 4. Representations and Warranties.

     (a) Each Guarantor hereby represents and warrants to Guaranteed Parties that the
representations and warranties set forth in Article V of the Credit Agreement as
they relate to such Guarantor or to the Loan Documents to which such Guarantor is a party
are true and correct in all material respects in the manner specified in the Credit
Agreement and Guaranteed Parties shall be entitled to rely on each of them as if they were
fully set forth herein.

     (b) All representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such representations and
warranties have been or will be relied upon by the Administrative Agent and each Lender,
regardless of any investigation made by the Administrative Agent or any Lender or on their
behalf and notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid
or unsatisfied.

     SECTION 5. Amendments, Etc. No amendment or waiver of any provision of this Guaranty, and no
consent to any departure by any Guarantor therefrom, shall be effective unless in writing signed by
Required Lenders and the applicable Loan Party, as the case may be, and acknowledged by
Administrative Agent, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

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     SECTION 6. Addresses for Notices. All notices and other communications provided for herein
shall be effectuated in the manner provided for in Section 10.02 of the Credit Agreement;
provided, that if a notice or communication hereunder is sent to a Guarantor, said notice shall be
addressed to such Guarantor, in care of Borrower at Borrower’s then current address (or facsimile
number) for notice under the Credit Agreement.

     SECTION 7. No Waiver; Remedies.

     (a) No failure on the part of any Guaranteed Party to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any remedies provided by
Applicable Law or any of the other Loan Documents, Guarantied Swap Contracts of Cash Management
Documents.

     (b) No waiver by Guaranteed Parties of any default shall operate as a waiver of any other
default or the same default on a future occasion, and no action by any of Guaranteed Parties
permitted hereunder shall in way affect or impair any of the rights of Guaranteed Parties or the
obligations of any Guarantor under this Guaranty, under any of the other Loan Documents, under any
Guarantied Swap Contract or under any Cash Management Document, except as specifically set forth in
any such waiver. Any determination by a court of competent jurisdiction of the amount of any
principal and/or interest or other amount constituting any of the Guarantied Obligations shall be
conclusive and binding on each Guarantor irrespective of whether such Guarantor was a party to the
suit or action in which such determination was made.

     SECTION 8. Right of Set-off. If an Event of Default exists, each of Guaranteed Parties is
hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable
Law, to set-off and apply any and all deposits (general or special (except trust and escrow
accounts), time or demand, provisional or final) at any time held and other Indebtedness at any
time owing by such Guaranteed Party to or for the credit or the account of each Guarantor against
any and all of the obligations of such Guarantor now or hereafter existing under this Guaranty,
irrespective of whether or not such Guaranteed Party shall have made any demand under this Guaranty
and although such obligations may be contingent and unmatured; provided, however, such Guaranteed
Party shall promptly notify such Guarantor and Borrower after such set-off and the application made
by such Guaranteed Party; provided, further, any failure to deliver such notice shall not
invalidate any such action. The rights of each Guaranteed Party under this Section 8 are
in addition to other rights and remedies (including, without limitation, other rights of set-off)
which such Guaranteed Party may have.

     SECTION 9. Continuing Guaranty; Transfer of Notes. This Guaranty (a)(i) is a continuing
guaranty and shall remain in full force and effect until the date upon which all of the Guarantied
Obligations are finally paid in full, the Revolving Commitments and the Term Commitments are
terminated and all Guarantied Swap Contracts have expired or terminated (the “Release Date”) and
(ii) binding upon each Guarantor, its permitted successors and assigns, and (b) inures to the
benefit of and be enforceable by Guaranteed Parties and their respective successors, permitted
transferees, and permitted assigns. Without limiting the generality of the foregoing clause
(b), each of Guaranteed Parties may assign or otherwise transfer any Note held by it or the
Guarantied Obligations owed to it to any other Person, and such other Person shall

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thereupon become vested with all the rights in respect thereof granted to such Guaranteed
Party herein or otherwise with respect to such of the Notes and the Guarantied Obligations so
transferred or assigned, subject, however, to compliance with the provisions of Section
10.06 of the Credit Agreement in respect of assignments. Except as the result of the
consummation of a transaction permitted under Section 7.04 of the Credit Agreement, no
Guarantor may assign any of its obligations under this Guaranty without first obtaining the written
consent of Lenders as set forth in the Credit Agreement.

     SECTION 10. Reimbursement. To the extent that any Guarantor shall be required hereunder to
pay a portion of the Guarantied Obligations exceeding the greater of (a) the amount of the economic
benefit actually received by such Guarantor from the Loans, Guarantied Swap Contracts and Cash
Management Documents and (b) the amount such Guarantor would otherwise have paid if such Guarantor
had paid the aggregate amount of the Guarantied Obligations (excluding the amount thereof repaid by
Borrower) in the same proportion as such Guarantor’s net worth at the date enforcement is sought
hereunder bears to the aggregate net worth of all Guarantors at the date enforcement is sought
hereunder, then such Guarantor shall be reimbursed by such other Guarantors for the amount of such
excess, pro rata, based on the respective net worths of such other Guarantors at the date
enforcement hereunder is sought. Notwithstanding anything to the contrary, each Guarantor agrees
that the Guarantied Obligations may at any time and from time to time exceed the amount of the
liability of such Guarantor hereunder without impairing its guaranty herein or effecting the rights
and remedies of Guaranteed Parties hereunder. This Section 10 is intended only to define
the relative rights of Guarantors, and nothing set forth in this Section 10 is intended to
or shall impair the obligations of Guarantors, jointly and severally, to pay to Guaranteed Parties
the Guarantied Obligations as and when the same shall become due and payable in accordance with the
terms hereof.

     SECTION 11. Application of Payments. All amounts and property received by Administrative
Agent and Guaranteed Parties pursuant to this Guaranty (including amounts and property received or
applied pursuant to Section 8 or application of other rights of set-off) shall be applied
as provided in Section 8.03 of the Credit Agreement.

     SECTION 12. Reinstatement; Termination. This Guaranty shall remain in full force and effect
and continue to be effective should any petition be filed by or against any Loan Party for
liquidation or reorganization, should any Loan Party become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or any significant part
of any Loan Party’s assets, and shall, to the fullest extent permitted by Applicable Law, continue
to be effective or be reinstated, as the case may be, if at any time payment and performance of the
Guarantied Obligations, or any part thereof, is, pursuant to Applicable Law, rescinded or reduced
in amount, or must otherwise be restored or returned by any obligees of the Guarantied Obligations
or such part thereof, whether as a “voidable preference,” “fraudulent transfer,” or otherwise, all
as though such payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Guarantied Obligations shall, to the
fullest extent permitted by Law, be reinstated and deemed reduced only by such amount paid and not
so rescinded, reduced, restored or returned. Subject to the reinstatement provisions of this
Section 12, this Guaranty shall remain in full force and effect until the date upon which
(a) all of the Guaranteed Obligations are fully, indefeasibly, absolutely and unconditionally paid
and performed, (b) the Revolving Commitments and Term Commitments are terminated, and (c) all Swap
Contracts with respect to all Swap Obligations

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have expired, been terminated or secured on terms that are reasonably acceptable to the
parties to such Swap Contract.

     SECTION 13. Governing Law; Waiver of Jury Trial; Submission to Jurisdiction and Service of
Process.

     (a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED
THAT ADMINISTRATIVE AGENT AND EACH OTHER GUARANTEED PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.

     (b) EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH GUARANTEED PARTY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK AND OF THE UNITED STATES DISTRICT
COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH
GUARANTEED PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH GUARANTOR, ADMINISTRATIVE AGENT
AND EACH GUARANTEED PARTY HERETO, AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT
ANY RIGHT THAT ADMINISTRATIVE AGENT OR ANY GUARANTEED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION
OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST ANY GUARANTOR OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

     (c) EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH GUARANTEED PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH
(b) OF THIS SECTION. EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH GUARANTEED PARTY
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

     SECTION 14. Waiver of Right to Trial by Jury. EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH
GUARANTEED PARTY HEREBY EXPRESSLY

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WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT,
OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH GUARANTOR, ADMINISTRATIVE AGENT AND EACH
GUARANTEED PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     SECTION 15. Section Titles. The Section titles contained in this Guaranty are and shall be
without substantive meaning or content of any kind whatsoever and are not to be used in any
interpretation of this Guaranty.

     SECTION 16. Definitions. Capitalized terms not otherwise defined herein have the meaning
specified in the Credit Agreement.

     SECTION 17. Execution in Counterparts. This Guaranty may be executed in counterparts (and by
different parties hereto in different counterparts), each of which shall constitute an original,
all of which when taken together shall constitute a single contract.

     SECTION 18. Miscellaneous. All references herein to Borrower or to any Guarantor shall
include their respective successors and assigns, including, without limitation, a receiver, trustee
or debtor-in-possession of or for Borrower or such Guarantor. All references to the singular shall
be deemed to include the plural where the context so requires.

     SECTION 19. Subrogation and Subordination.

     (a) Subrogation. Notwithstanding any reference to subrogation contained herein to the
contrary, until the Release Date, each Guarantor hereby irrevocably waives any claim or other
rights which it may have or hereafter acquire against Borrower that arise from the existence,
payment, performance or enforcement of such Guarantor’s obligations under this Guaranty, including,
without limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of any Guaranteed Party against
Borrower or any Collateral which any Guaranteed Party now has or hereafter acquires, whether or not
such claim, remedy or right arises in equity, or under contract, statutes or common law, including
without limitation, the right to take or receive from Borrower, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on account of such claim
or other rights. If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Guarantied Obligations shall not have been paid in full, such amount shall be
deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit
of, Guaranteed Parties, and shall forthwith be paid to Administrative Agent to be credited and
applied upon the Guarantied Obligations, whether matured or unmatured, in accordance with the terms
of the Credit Agreement or other Loan Document,

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Guarantied Swap Contracts or Cash Management Documents. Each Guarantor acknowledges that it
will receive direct and indirect benefits from the financing arrangements contemplated by the
Credit Agreement and that the waiver set forth in this Section 18 is knowingly made in
contemplation of such benefits.

     (b) Subordination. With respect to each Guarantor, all debt and other liabilities of each
Borrower or any other Loan Party to such Guarantor (“Loan Party Debt”) are expressly subordinate
and junior to the Guarantied Obligations and any instruments evidencing the Guarantied Obligations
to the extent provided below.

     (i) Until the Release Date, each Guarantor agrees that it will not request, demand,
accept, or receive (by set-off or other manner) any payment amount, credit or reduction of
all or any part of the amounts owing under the Loan Party Debt or any security therefor,
except as specifically allowed pursuant to clause (ii);

     (ii) Notwithstanding the provisions of clause (i), Borrower and each other Loan
Party may pay to such Guarantor and such Guarantor may request, demand, accept and receive
and retain from Borrower payments, credits or reductions of all or any part of the amounts
owing under the Loan Party Debt or any security therefor on the Loan Party Debt; provided,
that each Borrower’s and other Loan Party’s right to pay and such Guarantor’s right to
receive any such amount shall automatically and be immediately suspended and cease (A) upon
the occurrence and during the continuance of an Event of Default or (B) if, after taking
into account the effect of such payment, an Event of Default would occur and be continuing.
Such Guarantor’s right to receive amounts under this clause (ii) (including any
amounts which theretofore may have been suspended) shall automatically be reinstated at such
time as the Event of Default which was the basis of such suspension has been cured or waived
(provided that no subsequent Event of Default has occurred) or such earlier date, if any, as
Administrative Agent gives notice to Guarantors of reinstatement by Required Lenders, in
Required Lenders’ sole discretion;

     (iii) If any Guarantor receives any payment on the Loan Party Debt in violation of this
Guaranty, such Guarantor will hold such payment in trust for Guaranteed Parties and will
promptly deliver such payment to Administrative Agent; and

     (iv) In the event of the commencement or joinder of any suit, action or proceeding of
any type (judicial or otherwise) or proceeding under any Debtor Relief Law against Borrower
or any other Loan Party (an “Insolvency Proceeding”) and subject to court orders issued
pursuant to the applicable Debtor Relief Law, the Guarantied Obligations shall first be
paid, discharged and performed in full before any payment or performance is made upon the
Loan Party Debt notwithstanding any other provisions which may be made in such Insolvency
Proceeding. In the event of any Insolvency Proceeding, each Guarantor will at any time
prior to the Release Date (A) file, at the request of any Guaranteed Party, any claim, proof
of claim or similar instrument necessary to enforce Borrower’s or such other Loan Party’s
obligation to pay the Loan Party Debt, and (B) hold in trust for and pay to Administrative
Agent, for the benefit of Guaranteed Parties, any and all monies, obligations, property,
stock dividends or other assets received in any such proceeding on account of the Loan Party
Debt in order that

10

 

Guaranteed Parties may apply such monies or the cash proceeds of such other assets to
the Guarantied Obligations.

     SECTION 20. Guarantor Insolvency. Should any Guarantor voluntarily seek, consent to, or
acquiesce in the benefits of any Debtor Relief Law or become a party to or be made the subject of
any proceeding provided for by any Debtor Relief Law (other than as a creditor or claimant) that
could suspend or otherwise adversely affect the rights of any Guaranteed Party granted hereunder,
then, the obligations of such Guarantor under this Guaranty shall be, as between such Guarantor and
such Guaranteed Party, a fully-matured, due, and payable obligation of such Guarantor to such
Guaranteed Party (without regard to whether there is an Event of Default under the Credit Agreement
or whether any part of the Guarantied Obligations is then due and owing by Borrower to such
Guaranteed Party), payable in full by such Guarantor to Administrative Agent, for the benefit of
such Guaranteed Party, upon demand, which shall be the estimated amount owing in respect of the
contingent claim created hereunder.

     SECTION 21. Rate Provision. It is not the intention of any Guaranteed Party to make an
agreement violative of the Laws of any applicable jurisdiction relating to usury. Regardless of
any provision in this Guaranty, no Guaranteed Party shall ever be entitled to contract, charge,
receive, collect or apply, as interest on the Guarantied Obligations, any amount in excess of the
Highest Lawful Rate. In no event shall any Guarantor be obligated to pay any amount in excess of
the Highest Lawful Rate. If from any circumstance Administrative Agent or any Guaranteed Party
shall ever receive, collect or apply anything of value deemed excess interest under Applicable Law,
an amount equal to such excess shall be applied first to the reduction of the principal amount of
outstanding Revolving Loans and Term Loans and then to the principal of any other Guarantied
Obligations, and any remainder shall be promptly refunded to the payor. In determining whether or
not interest paid or payable with respect to the Guarantied Obligations, under any specified
contingency, exceeds the Highest Lawful Rate, Guarantors and Guaranteed Parties shall, to the
maximum extent permitted by Applicable Law, (a) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (b) amortize, prorate, allocate and spread the
total amount of interest throughout the full term of such Guarantied Obligations so that the
interest paid on account of such Guarantied Obligations does not exceed the Highest Lawful Rate
and/or (c) allocate interest between portions of such Guarantied Obligations; provided, that if the
Guarantied Obligations are paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received for the actual period of existence thereof exceeds the
Highest Lawful Rate, Guaranteed Parties shall refund to the payor the amount of such excess or
credit the amount of such excess against the total principal amount owing, and, in such event, no
Guaranteed Party shall be subject to any penalties provided by any laws for contracting for,
charging or receiving interest in excess of the Highest Lawful Rate.

     SECTION 22. Severability. If any provision of this Guaranty is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this
Guaranty shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

11

 

     SECTION 23. No Setoff or Deductions; Taxes. Each Guarantor represents and warrants that it is
incorporated or formed, and resides in, the United States of America. All payments by each
Guarantor hereunder shall be paid in full, without setoff or counterclaim (other than mandatory) or
any deduction or withholding whatsoever, including, without limitation, for any and all present and
future taxes other than Excluded Taxes. If each Guarantor must make a payment under this Guaranty,
each Guarantor represents and warrants that it will make the payment from one of its U.S. resident
offices to Administrative Agent or each other Guaranteed Party so that no withholding tax is
imposed on the payment. If notwithstanding the foregoing, each Guarantor makes a payment under
this Guaranty to which withholding tax applies, or any taxes (other than taxes on income (a)
imposed by the country or any subdivision of the country in which the principal office or actual
lending office of Administrative Agent or any other Guaranteed Party is located and (b) measured by
the United States taxable income of Administrative Agent or any other Guaranteed Party would have
received is all payments under or in respect of this Guaranty were exempt from taxes levied by such
Guarantor’s country) are at any time imposed on any payments under or in respect of this Guaranty
including, but not limited to, payments made pursuant to this Section 23, each Guarantor
shall pay all such taxes to the relevant authority in accordance with Applicable Law such that
Administrative Agent or any other Guaranteed Party receives the sum it would have received had no
such deduction or withholding been made and shall also pay to Administrative Agent or any other
Guaranteed Party, on demand, all additional amounts which Administrative Agent or any other
Guaranteed Party specifies as necessary to preserve the after-tax yield Administrative Agent or
such other Guaranteed Party would have received if such taxes had not been imposed. Each Guarantor
shall promptly provide Administrative Agent or any other Guaranteed Party with an original receipt
or certified copy issued by the relevant authority evidencing the payment of ay such amount
required to be deducted or withheld.

     SECTION 24. Additional Guarantors. Upon the execution and delivery by any other Person of a
Guaranty Supplement in substantially the form of Exhibit A (each, a “Guaranty Supplement”),
such Person shall become a “Guarantor” hereunder with the same force and effect as if originally
named as a Guarantor herein. The execution and delivery of any Guaranty Supplement shall not
require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor
as a party to this Guaranty.

     SECTION 25. ENTIRE AGREEMENT. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS. OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.

The Remainder of This Page is Intentionally Left Blank.

12

 

     IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed and delivered
by its duly authorized officer on the date first above written.

	 	 	 	 	 
	 	POWERSECURE, INC.

POWERSERVICES, INC.

ENERGYLITE, INC.

UTILITYENGINEERING, INC.

UTILITYDESIGN, INC.

MARCUM GAS TRANSMISSION, INC.

REID’S TRAILER, INC.

 	 
	 	By:  	 	 
	 	 	Sidney Hinton 	 
	 	 	Chief Executive Officer for all 	 
	 
	 	SOUTHERN FLOW COMPANIES, INC.

METRETEK, INCORPORATED

 	 
	 	By:  	 	 
	 	 	Gary J. Zuiderveen 	 
	 	 	Chief Financial Officer for each 	 
	 

Signature Page - Guaranty

 

 

EXHIBIT A to Guaranty

Guaranty Supplement No. ___

     THIS GUARANTY SUPPLEMENT NO. ___(this “Guaranty Supplement”) is made as of
                                        , to the Guaranty dated as of August 23, 2007 (such agreement, together with all
amendments and restatements, the “Guaranty”), among the initial signatories thereto and each other
Person which from time to time thereafter became a party thereto pursuant to Section 24
thereof (each, individually, a “Guarantor” and, collectively, the “Guarantors”), in favor of
Administrative Agent for the benefit of Guaranteed Parties (as defined in the Guaranty).

BACKGROUND.

     Capitalized terms not otherwise defined herein have the meaning specified in the Guaranty.
The Guaranty provides that additional parties may become Guarantors under the Guaranty by execution
and delivery of this form of Guaranty Supplement. Pursuant to the provisions of Paragraph
24 of the Guaranty, the undersigned is becoming an Additional Guarantor under the Guaranty.
The undersigned desires to become a Guarantor under the Guaranty in order to induce Guaranteed
Parties to continue to make credit extensions and accommodations under the Loan Documents,
Guarantied Swap Contracts and Cash Management Documents.

AGREEMENT.

     NOW, THEREFORE, the undersigned agrees with Administrative Agent and each other Guaranteed
Party as follows:

     SECTION 1. In accordance with the Guaranty, the undersigned hereby becomes a Guarantor under
the Guaranty with the same force and effect as if it were an original signatory thereto as a
Guarantor and the undersigned hereby (a) agrees to all the terms and provisions of the Guaranty
applicable to it as a Guarantor thereunder and (b) represents and warrants that the representations
and warranties made by it as a Guarantor thereunder are true and correct on and as of the date
hereof. Each reference to a “Guarantor” or an “Additional Guarantor” in the Guaranty shall be
deemed to include the undersigned.

     SECTION 2. Except as expressly supplemented hereby, the Guaranty shall remain in full force
and effect in accordance with its terms.

     SECTION 3. THIS GUARANTY SUPPLEMENT AND THE GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED, THAT ADMINISTRATIVE AGENT AND EACH OTHER GUARANTEED PARTY
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

     SECTION 4. This Guaranty Supplement hereby incorporates by reference the provisions of the
Guaranty, which provisions are deemed to be a part hereof, and this Guaranty Supplement shall be
deemed to be a part of the Guaranty.

 

 

     SECTION 5. This Guaranty Supplement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.

The Remainder of This Page Is Intentionally Left Blank.

2

 

     EXECUTED as of the date above first written.

	 	 	 	 	 	 	 
	ADDRESS:	 	[ADDITIONAL GUARANTOR]
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 	 	 	 	 
	 

	 	 	 	Print Name:	 	 
	 	 	 	 	 
	Attention:

	 	 	 	Print Title:	 	 
	 

	 	 
	 	 	 	 

ACCEPTED BY:

CITIBANK, N.A.,

as Administrative Agent

	 	 	 	 	 
	By:
	 	 	 	 
	Print Name:

	 	 

	 	 
	Print Title:EX-4.1

 

Exhibit 4.1

ARTICLES OF AMENDMENT

of

H. J. HEINZ COMPANY,

a Pennsylvania corporation.

     In compliance with the requirements of 15 Pa. C.S. § 1915 (relating to articles of amendment),
the undersigned business corporation, H. J. HEINZ COMPANY, desiring to amend its Articles, hereby
certifies under its corporate seal that:

	1.	 	The name of the corporation is H. J. HEINZ COMPANY (the “Corporation”), and its current
registered office in the Commonwealth of Pennsylvania is located in Allegheny County
at 600 Grant Street, Pittsburgh, Pennsylvania 15219.

	2.	 	The corporation was formed under the Act of the General Assembly of the Commonwealth of
Pennsylvania, approved April 29, 1874, as supplemented and amended, as shown by its
Certificate of Incorporation dated July 27, 1900, and recorded in the office of the
Secretary of the Commonwealth in Charter Book Volume No. 61, page 212, and in the office of
the Recorder of Deeds in and for the County of Allegheny on February 23, 1905, in
Charter Book Volume No. 37, page 250.

	3.	 	A First Restated Articles of Incorporation was filed in the office of the Secretary of the
Commonwealth on July 25, 1994.

	4.	 	Amendments to the First Restated Articles of Incorporation were properly adopted by the
Corporation’s shareholders and approved by the directors pursuant to 15 Pa. C.S. §§ 1914(a),
and shall be effective upon the filing of these Articles of Amendment in the Department of
State.

	5.	 	The amendment adopted by the corporation, set forth in full, is as follows:

 

 

	 	1.	 	The name of the corporation is H. J. HEINZ COMPANY.
	 
	 	2.	 	The location and post office address of the current registered office of the
corporation is 600 Grant Street, City of Pittsburgh, County of Allegheny,
Commonwealth of Pennsylvania 15219.
	 
	 	3.	 	The business of the corporation shall be to manufacture, produce, buy, sell and
generally deal in food and grocery products and goods, wares, merchandise and personal
property of every kind and description and, without limitation, to engage in, and do
any and all lawful act concerning any or all lawful business for which corporations may
be incorporated under the Business Corporation Law of the Commonwealth of Pennsylvania.
	 
	 	4.	 	The term of its existence is perpetual. The corporation was formed
under the Act of the General Assembly of the Commonwealth of Pennsylvania, approved
April 29, 1874, as supplemented and amended.
	 
	 	5.	 	The aggregate number of shares which the corporation shall have authority to
issue as of July 13, 1994 shall be 602,238,876 shares, of which 2,238,876
shares shall be Third Cumulative Preferred Stock of the par value of $10.00 per share,
issuable in one or more series, and 600,000,000 shares shall be Common Stock of the par
value of $0.25 per share.
	 
	 	 	 	A description of each class of shares which the corporation shall have authority to
issue and a statement of the preferences, qualifications, limitations, restrictions
and the special or relative rights granted to or imposed upon the shares of each class
are as follows:

SECTION I. THIRD CUMULATIVE PREFERRED STOCK

     This Section I sets forth a description of the Third Cumulative Preferred Stock
(hereinafter called the “Third Preferred Stock”) and a statement of certain of the
voting rights, designations, preferences, privileges, qualifications, limitations,
options and common rights, and of certain of the special or relative rights granted to
or imposed upon the shares of the Third Preferred Stock, together with a statement of
the authority vested in the Board of Directors of the corporation to establish series
and to fix and determine the variations in the relative rights and preferences as
between series, insofar as they are not fixed by this Section I, and a statement of
the rights and preferences of a series of the Third Preferred Stock designated as the
“Third Cumulative Preferred Stock, $1.70 First Series” established by the Board of
Directors of the corporation pursuant to the aforesaid authority, viz.:

2

 

Subsection A. Issuance in Series.

Subparagraph (1). The Third Preferred Stock shall be divided into and from
time to time may be issued in series, and the Board of Directors is hereby
expressly vested with the authority, in the resolution or resolutions providing
for the issue of shares of particular series, before issuance, to fix and
determine the:

	 	(a)	 	distinctive serial designation of such series;
	 
	 	(b)	 	annual dividend rate for such series, and the date from
which such dividends shall commence to accrue;
	 
	 	(c)	 	full, limited, multiple, fractional or no voting rights of
such series;
	 
	 	(d)	 	redemption price or prices for such series, which may consist
of a redemption price or scale of redemption prices applicable only to
redemption for a sinking fund (which term as used herein shall include any
fund or requirement for the periodic retirement of shares) and a different
redemption price or scale of redemption prices applicable to any other
redemption, and the terms and conditions on which shares of such series may be
redeemed;
	 
	 	(e)	 	sinking fund provisions, if any, for the redemption or
purchase of shares of such series;
	 
	 	(f)	 	amounts payable upon shares of such series in the event of
the voluntary or involuntary liquidation of the corporation; and
	 
	 	(g)	 	terms and conditions, if any, upon which shares of such
series may be converted and the class or classes or series of shares of the
corporation into which such shares may be converted.

Subparagraph (2). All shares of the Third Preferred Stock shall be of
equal rank with each other, regardless of series, and shall be identical with each
other in all respects except as provided in Subparagraph (1) of this Subsection A.

Subparagraph (3). In case the stated dividends and the amounts payable on
liquidation are not paid in full, the shares of all series of the Third Preferred
Stock shall share ratably in the payment of dividends, including accruals, if any,
in proportion to the sums which would be payable on said shares if all dividends
were declared and paid in full, and in any distribution of assets other than by
way of dividends in accordance with the sums which would be payable on such
distribution if all sums payable were discharged in full.

3

 

Subsection B. Dividends on Third Preferred Stock and Junior Stock.

The holders of the Third Preferred Stock shall be entitled to receive, when and as
declared by the Board of Directors, but only out of funds legally available for
the payment of dividends, cumulative cash dividends at the annual rate for each
particular series theretofore fixed by the Board of Directors as hereinbefore
authorized, and no more, payable quarter-yearly, on the first days of January,
April, July and October in each year, to shareholders of record on the respective
dates, not exceeding 40 days preceding such dividend payment dates, fixed for the
purpose by the Board of Directors in advance of payment of each particular
dividend. Such dividends on the Third Preferred Stock shall be payable before any
dividend on any junior stock (which term as used in this Section I shall mean the
Common Stock and any other class of stock of the corporation hereafter authorized
ranking junior to the Third Preferred Stock as to dividends or assets) shall be
paid or set apart for payment. Dividends on each series of the Third Preferred
Stock shall be cumulative from such date as may be fixed by the Board of Directors
prior to the issue thereof. Arrearages in the payment of dividends shall not bear
interest.

So long as any of the Third Preferred Stock remains outstanding, no dividend
whatever shall be paid or declared on any junior stock nor shall any distribution
be made on any junior stock, other than a dividend payable in junior stock, nor
shall any shares of any junior stock be acquired for a consideration by the
corporation:

	 	(1)	 	unless all dividends on the Third Preferred Stock of all
series for all past quarter-yearly dividend periods shall have been paid and
the full dividends thereon for the then current quarter-yearly dividend
period shall have been paid or shall have been declared and a sum sufficient
for the payment thereof set apart; and
	 
	 	(2)	 	unless, if at any time the corporation is obligated to
retire shares of any series of the Third Preferred Stock pursuant to a
sinking fund, all arrears in respect of each sinking fund for the Third
Preferred Stock of all series shall have been made good.

Subject to the foregoing provisions, and not otherwise, such dividends (payable in
cash, stock or otherwise) as may be determined by the Board of Directors may be
declared and paid on any junior stock from time to time out of the remaining funds
of the corporation legally available for the payment of dividends, and the Third
Preferred Stock shall not be entitled to participate in any such dividends,
whether payable in cash, stock or otherwise.

4

 

Subsection C. Redemption.

Subject to the provisions of Subparagraph (3) of Subsection E of this Section I
and subject to the provisions of the resolution or resolutions of the Board of
Directors providing for the issue of shares of any particular series, the
corporation, at the option of the Board of Directors, may redeem the whole or any
part of the Third Preferred Stock at any time outstanding, or the whole or any
part of any series thereof, at any time or from time to time, upon notice duly
given as hereinafter specified, at the applicable redemption price or prices fixed
by the Board of Directors as hereinbefore authorized, together with a sum, in the
case of each share so to be redeemed, computed at the annual dividend rate for the
series of which the particular share is a part from and after the date on which
dividends on such share became cumulative to and including the date fixed for such
redemption, less the aggregate of the dividends theretofore paid thereon, but
computed without interest.

Notice of every such redemption of the Third Preferred Stock shall be published at
least once in a newspaper printed in the English language and customarily
published on each business day and of general circulation in the Borough of
Manhattan, the City of New York, New York, and in a similar newspaper similarly
published and of general circulation in the City of Pittsburgh, Pennsylvania, and
in a similar newspaper similarly published and of general circulation in such
other city or cities as may be specified in the resolution or resolutions of the
Board of Directors providing for the issue of shares of any particular series,
such publications to be at least thirty days prior to the date fixed for such
redemption. Notice of every such redemption shall also be mailed at least thirty
days prior to the date fixed for such redemption to the holders of record of the
shares so to be redeemed at their respective addresses as the same shall appear on
the books of the corporation; but no failure to mail such notice nor any defect
therein or in the mailing thereof shall affect the validity of the proceeding for
the redemption of any shares so to be redeemed.

In case of redemption of a part only of any series of the Third Preferred Stock at
the time outstanding, the redemption may be either pro rata or by lot. The Board
of Directors shall have full power and authority to prescribe the manner in which
the drawings by lot or the pro rata redemption shall be conducted and, subject to
the provisions herein contained, the terms and conditions upon which the Third
Preferred Stock shall be redeemed from time to time.

5

 

On or at any time before any redemption date, the corporation may deposit in
trust, for the account of the holders of the shares to be redeemed, the moneys
necessary for such redemption with a bank or trust company, to be designated in
the notice of such redemption, in good standing, having capital, surplus and
undivided profits aggregating at least $5,000,000.00, organized under the laws of
the United States of America or of the State of New York, doing business in the
Borough of Manhattan, the City of New York, New York, or organized under the laws
of the United States of America or of the Commonwealth of Pennsylvania and doing
business in the City of Pittsburgh, Pennsylvania. In the event such deposit is so
made, then, upon the publication, as hereinabove provided, of the notice of such
redemption, or upon the earlier delivery to said bank or trust company of
irrevocable authorization and direction to publish such notice, all shares with
respect to the redemption of which such deposit shall have been made and such
publication effected or authorization therefor given shall, whether or not the
certificates for such shares shall have been surrendered for cancellation, be
deemed to be no longer outstanding for any purpose, and all rights with respect to
such shares shall thereupon cease and terminate except the right of the holders of
the certificates for such shares to receive, from and after the time of such
deposit, the amount payable upon the redemption thereof, without interest, and the
right to exercise, on or before the date fixed for redemption, any unexpired
privileges of conversion.

Any funds so deposited by the corporation which shall not be required for such
redemption because of the exercise of any right of conversion or exchange
subsequent to the time of such deposit shall be released or repaid to the
corporation forthwith. Any funds so deposited which are unclaimed at the end of
six years from such redemption date shall be repaid to the corporation, after
which the holders of the shares so called for redemption shall look only to the
corporation for payment thereof, provided, however, that if any unclaimed funds so
repaid to the corporation shall have been paid by it to the Commonwealth of
Pennsylvania under or in lieu of escheat, the holders of the shares so called for
redemption shall thenceforth look only to the said Commonwealth for the payment
thereof.

Subsection D. Amounts Payable on Liquidation or Dissolution.

In the event of any liquidation, dissolution or winding up of the corporation,
whether voluntary or involuntary, the holders of the Third Preferred Stock of each
series then outstanding shall be entitled to receive in cash out of the assets of
the corporation, before any distribution or payment shall be made to the holders
of any junior stock, the full preferential amount or amounts fixed by the Board of
Directors

6

 

for such series as herein authorized, plus in respect of each such share a sum
computed at the annual dividend rate applicable thereto from and after the date on
which dividends on such share became cumulative to and including the date fixed
for such payment, less the aggregate of dividends theretofore paid thereon, but
computed without interest; provided that if such assets available for the holders
of the Third Preferred Stock of each series then outstanding shall be less than
the total amount all such holders would be so entitled to receive if all such
preferential amount or amounts and dividends were paid in full then the
corporation shall, in lieu of making such payments in full to the holders of the
Third Preferred Stock of each series then outstanding, make payments to the
holders of the Third Preferred Stock of each series then outstanding (in
proportion to the respective amounts which would be payable on account of such
liquidation, dissolution or winding up if all such payments were paid in full) of
an aggregate amount equal to such assets so available. If such payment shall have
been made in full to the holders of the Third Preferred Stock on voluntary or
involuntary liquidation, dissolution or winding up, the remaining assets of the
corporation shall be distributed among the holders of junior stock according to
their respective rights and preferences and in accordance with their respective
holdings. For the purposes of this Subsection D, a consolidation or merger of the
corporation with any other corporation shall not be deemed, as such, to constitute
a liquidation, dissolution or winding up of the corporation, but any
reorganization of the corporation required by any court or administrative body in
order to comply with any provision of law shall be deemed to be an involuntary
liquidation, dissolution or winding up of the corporation unless the preferences,
qualifications, limitations, restrictions and special or relative rights granted
to or imposed upon the Third Preferred Stock are not adversely affected by such
reorganization.

Subsection E. Restrictions on Corporate Action.

The consent of the holders of at least two-thirds of the Third Preferred Stock
(subject to the provisions of Subparagraph (2) hereof) at the time outstanding,
given in person or by proxy, either in writing or at a special meeting called for
the purpose, at which the Third Preferred Stock entitled to vote shall vote
separately as a class, regardless of series, shall be necessary to effect or
validate any one or more of the following:

Subparagraph (1). The authorization of, or any increase in the authorized
amount of, any class of stock of the corporation ranking prior to or on a parity
with the Third Preferred Stock, either as to dividends or upon liquidation, or any
increase in the authorized amount of the Third Preferred Stock;

7

 

Subparagraph (2). The amendment, alteration or repeal of any of the
provisions of the Restated Articles of Incorporation, as now or hereafter amended,
of the corporation, or any of the provisions of the resolution or resolutions of
the Board of Directors providing for the issue of shares of any series of the
Third Preferred Stock, so as to affect adversely the rights, preferences or powers
of the Third Preferred Stock or of any series of the Third Preferred Stock;
provided, however, that if any such amendment, alteration or repeal shall affect
adversely the rights, preferences or powers of one or more, but not all, of the
series of Third Preferred Stock at the time outstanding, the consent of the
holders of at least two-thirds in interest of the shares then outstanding of each
series so affected entitled to vote, similarly given, shall be required in lieu of
the consent of the holders of two-thirds of the Third Preferred Stock entitled to
vote voting as a class; or

Subparagraph (3). The redemption of less than all of the Third Preferred
Stock at the time outstanding or the purchase of any of the Third Preferred Stock
except in accordance with a purchase offer made to all holders thereof, unless the
full dividend on the Third Preferred Stock for all past quarter-yearly dividend
periods shall have been paid or declared and a sum sufficient for the payment
thereof set apart; provided that no consent of the holders of the Third Preferred
Stock entitled to vote or of the holders of a particular series of the Third
Preferred Stock entitled to vote shall be required under the provisions of this
Subsection E if, at or prior to the time of the act with respect to which such
vote would otherwise be required, provision is made in accordance with the
provisions of the fourth paragraph of Subsection C of this Section I for the
redemption of all shares of Third Preferred Stock or of all shares of the
particular series of the Third Preferred Stock at the time outstanding.

If in any case the amounts payable with respect to any requirements to retire
shares of the Third Preferred Stock are not paid in full in the case of all series
with respect to which such requirements exist, the number of shares to be retired
in each series shall be in proportion to the respective amounts which would be
payable on account of such requirements if all amounts payable were met in full.

Subsection F. Voting Rights.

Holders of the Third Preferred Stock entitled to vote shall be entitled to vote
together with the Common Stock and not as a separate class on all matters at every
meeting of the holders of Common Stock of the corporation, and, in addition,
holders of the Third Preferred Stock entitled to vote shall be entitled to vote,
separately as a class, to the extent provided in Subsection E above, and as
hereinafter in this Subsection F

8

 

set forth. If and when six quarter-yearly
dividends payable on the Third
Preferred Stock of any series shall be in default, in whole or in part, the
holders of the outstanding Third Preferred Stock entitled to vote, voting
separately as a class regardless of series, shall, in addition to the voting
rights provided in Subsection E of this Section I and hereinabove provided in this
Subsection F, become entitled to elect two Directors, who shall be additional
Directors to the then existing Board, and the holders of the Third Preferred Stock
entitled to vote and the Common Stock, voting together, shall be entitled to elect
the remaining Directors of the corporation. When all dividends then in default on
the Third Preferred Stock then outstanding shall thereafter be paid, the Third
Preferred Stock shall then be divested of such additional voting power, but always
subject to the same provisions for the vesting of such additional voting power in
the Third Preferred Stock entitled to vote in case of any similar future default
or defaults. A meeting of the holders of the Third Preferred Stock for the
election of such Directors, at which the holders of the Third Preferred Stock
entitled to vote shall vote as a class, shall be held at any time after the
accrual of such additional voting power, upon notice similar to that provided in
the By-Laws for a special meeting of shareholders, upon call by the Secretary of
the corporation, who shall call such meeting at the written request of the holders
of record of not less than 5% of the Third Preferred Stock entitled to vote then
outstanding, addressed to him at the principal business office of the corporation.
The holders of a majority of the Third Preferred Stock entitled to vote present in
person or by proxy shall be entitled to elect the additional Directors above
provided for. Upon termination of the additional voting power of the Third
Preferred Stock at any time by reason of the payment of all accumulated and
defaulted dividends on such stock, the terms of office of all persons who may have
been elected Directors of the corporation by vote of the holders of the Third
Preferred Stock shall forthwith terminate.

At all times each holder of a share of the Third Preferred Stock of any series who
at the time possessed voting power for any purpose shall, for such purpose, be
entitled to such vote, or no vote, for each share of the Third Preferred Stock
standing in such holder’s name on the books of the corporation as shall have been
theretofore fixed by the Board of Directors as hereinbefore authorized.

9

 

Subsection G. Status of Redeemed and Purchased Shares.

Except as otherwise required by law, all shares of the Third Preferred Stock
redeemed, purchased or otherwise acquired by the corporation shall be cancelled
and shall have the status of authorized but unissued shares, and the Board of
Directors of the corporation shall have authority, by resolution, to change shares
of any particular series redeemed or purchased into shares of another series of
the Third Preferred Stock, subject to such limitations, if any, as are stated in
the Restated Articles of Incorporation, as now or hereafter amended, of the
corporation. However, no shares of the Third Preferred Stock of any series
redeemed or purchased (whether or not so changed into shares of another series)
shall be re-issued as a part of such series or any other series of the Third
Preferred Stock so long as any shares of the Third Preferred Stock of such series
shall remain outstanding. Any such cancellation of shares of any series of the
Third Preferred Stock redeemed pursuant to Subsection C of this Section I shall
not prevent the corporation from subsequently using such shares in satisfaction of
sinking fund requirements with respect to the same series if and to the extent
permitted by the terms of such series.

Subsection H. Status of Converted Shares.

Upon conversion of any shares of any series of the Third Preferred Stock into
another class or classes or series of shares of the corporation pursuant to the
provisions of the resolution or resolutions of the Board of Directors providing
for the issue of such series, the number of shares which the corporation is
authorized to issue shall be thereby so reduced.

Subsection I. Relative Rights and Preferences of the First Series of Third Cumulative
Preferred Stock.

Pursuant to a resolution duly adopted by the Board of Directors of the corporation
on December 10, 1975, the first series of the Third Cumulative Preferred
Stock was established, such series having originally consisted of 1,800,000 shares
but having been thereafter reduced to 38,876 shares through conversion and
cancellation, the designation and the relative rights and preferences thereof, in
addition to those set forth in Subsections A through H of this Section I, being as
follows:

10

 

	 	(1)	 	The designation is “Third Cumulative Preferred
Stock, $1.70 First Series” (hereinafter called the “First Series”).
	 
	 	(2)	 	The amount of $1.70 per share of the First Series per year,
and no more, is hereby fixed as the rate per annum at which the holders of shares of the First Series shall be entitled to receive dividends; and the
date of issue of the First Series is hereby fixed as the date from and after
which such dividends shall accumulate.
	 
	 	(3)	 	Each holder of a share of the First Series shall have
voting rights and shall be entitled to one-half vote for each share of the
First Series standing in such holder’s name on the books of the corporation.
	 
	 	(4)	 	The shares of the First Series are redeemable in whole or
in part at any time. The redemption price payable upon the exercise of the
right to redeem the shares of the First Series is fixed at $28.50, plus
dividends accrued and unpaid thereon to the date fixed for redemption. In
addition to the publication of notice of redemption in the newspapers
specified in Subsection C of this Section I, such notice shall also be
published in the City of Keokuk, Iowa.
	 
	 	(5)	 	Upon any voluntary or involuntary liquidation, dissolution
or winding up of the corporation the holders of shares of the First Series
shall be entitled to receive at the time thereof in cash out of the assets of
the corporation, before any distribution or payment shall be made to the
holders of any junior stock, an amount equal to the redemption price of
$28.50, plus dividends accrued and unpaid thereon to such time.
	 
	 	(6)	 	At the option of the holder thereof and upon surrender to
the corporation at the office of a Transfer Agent of the Common Stock, either
in the Borough of Manhattan, the City of New York, New York or in the City of
Pittsburgh, Pennsylvania, each share of the First Series shall be convertible
(or if such share is called for redemption, then in respect of such share to
and including but not after the date fixed for such redemption), into fully
paid non-assessable shares of Common Stock of the corporation (as such Common
Stock shall then be constituted) at the conversion rate of 9.0 shares of
Common Stock per share of stock of the First Series, the conversion rate
having been previously adjusted from the initial conversion rate through the
date of these Amended and Restated Articles of Incorporation pursuant to
Subparagraph (d) of this Paragraph (6) being subject to further adjustment as
hereinafter provided:

11

 

	 	(a)	 	If and whenever the corporation shall at any
time after the date of issue of the First Series make any distribution
described in Subparagraph (b) below or issue any shares of Common Stock
(excluding shares of Common Stock or other securities issued upon the
conversion of shares of the First Series, and excluding shares of
Common Stock or other securities issued on the exercise of options and
warrants outstanding on the date of issue of the First Series, and
excluding shares of Common Stock or other securities issued on the
exercise of options granted at any time after the date of issue of the
First Series pursuant to any option plan for employees of the
corporation or its subsidiaries, all of which are hereinafter in this
Paragraph (6) referred to as “Excluded Shares”), then successively upon
each such distribution or issuance the conversion rate shall be
immediately (except as provided in Subparagraph (g) below) adjusted in
accordance with the following formula:
	 
	 	 	 	$28.50 shall be multiplied by the number of shares of Common Stock
outstanding after any such issuance (other than Excluded Shares)
and the resulting product shall be divided by the aggregate
consideration, determined in accordance with Subparagraph (b) of
this Paragraph (6), received by the corporation for shares of
Common Stock then outstanding (other than Excluded Shares). The
resulting quotient, adjusted to the nearest one-thousandth, shall
thereafter be the conversion rate until further adjusted as herein
provided, except that if by any such computation the current
conversion rate would be decreased to less than the basic
conversion rate as defined in Subparagraph (d) of this Paragraph
(6), then the conversion rate shall nevertheless be the basic
conversion rate.
	 
	 	(b)	 	For the purpose of this Paragraph (6), the
corporation shall be deemed to have received as consideration for the shares of its Common Stock outstanding at the time of making any
computation hereunder $862,332,309, minus the aggregate of the amount
(as valued by the Board of Directors) of all distributions (other than
dividends payable in cash and/or in equity or other securities of the
corporation) which have been made payable to holders of Common Stock as
of a record date occurring after the date of issue of the First Series,
plus any additional consideration received by the corporation after the
date of issue of the First Series (other than the consideration
received by the corporation in

12

 

	 	 	 	connection with the issue of shares of the First Series), which additional
consideration shall be determined as follows:

	 	(i)	 	In the case of the issuance of shares
for cash, the consideration shall be the amount of such cash,
provided that in no case under this Subparagraph (b) shall any
deduction be made for any underwriting discounts or commissions or
any expenses incurred by the corporation for any underwriting of
the issue or otherwise in connection therewith;
	 
	 	(ii)	 	In the case of the issuance of shares
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair value
thereof as determined by the Board of Directors;
	 
	 	(iii)	 	In the case of shares issued as a
stock dividend, no consideration shall be deemed to have been
received therefor and such securities shall be deemed to have been
issued at the close of business on the record date for the
determination of shareholders entitled to receive the same; and
	 
	 	(iv)	 	In case the corporation shall at any
time after the date of issue of the First Series issue any new
securities, other than the shares of the First Series, convertible
into Common Stock, or any options (other than options granted
pursuant to any option plan for employees of the corporation or
its subsidiaries) or rights (including warrants) to subscribe to
Common Stock, the shares of Common Stock issuable on the
conversion of any such securities or upon the exercise of any such
options or rights shall (A) if inclusion thereof would result in a
current conversion rate greater than if excluded be deemed (so
long as such conversion or purchase privilege is outstanding), for
the purpose of the computation made pursuant to Subparagraph (a)
of this Paragraph (6), to have been forthwith issued; and (B) in
every other case shall be deemed to be issued at the close of
business on the date of conversion of such convertible securities
or exercise of such options or rights. The corporation for the
purpose of any computation under this Subdivision (iv) shall be
deemed to have received a consideration for such

13

 

	 	 	 	Common Stock equal to the consideration received by the
corporation for the convertible securities, options or rights
so issued, plus the consideration, if any, to be received by
the corporation upon their conversion or the exercise of any
such options or rights, as the case may be.

	 	(c)	 	For the purpose of this Paragraph (6), a sale
or other disposition by the corporation of its securities which had
been issued and outstanding and were acquired by the corporation and
which have not been retired, or an issuance of Common Stock to the
corporation upon conversion of shares of the First Series held by it,
or a sale or other disposition by it of such Common Stock, or a
purchase or other acquisition by it of its securities, shall not
effect, result in or require any adjustment in the conversion rate or
be taken into account in computing any future adjustment in the
conversion rate.
	 
	 	(d)	 	In case shares of Common Stock at any time
outstanding shall be subdivided into a greater or consolidated into a
lesser number of shares, either with or without par value, then the
current conversion rate and the basic conversion rate shall be
proportionately increased or decreased, as the case may be, and in the
case of a stock dividend, the basic conversion rate shall be
proportionately increased. The basic conversion rate as used in this
Paragraph (6) shall mean the conversion rate hereinbefore stated, as
such conversion rate may be adjusted from time to time pursuant to this
Subparagraph (d); provided that if any such adjustment of the basic
conversion rate has once been made, then each subsequent adjustment
thereof shall be made with respect to the last previously established
basic conversion rate.
	 
	 	(e)	 	In case of any reclassification or change of
outstanding shares of Common Stock of the class issuable upon
conversion of the shares of the First Series (other than a change from
no par value to par value, or from par value to no par value, or a
change in par value, or as a result of a subdivision or consolidation
of shares), or in case of any consolidation or merger of the
corporation with or into another corporation (other than a merger with
a subsidiary in which merger the corporation is the continuing
corporation and which does not result in any reclassification or change
of outstanding shares of Common Stock of the class issuable upon
conversion of the shares of the First Series), or in case of any sale or

14

 

	 	 	 	conveyance to another corporation of the property of the
corporation as an entirety or substantially as an entirety, the holder
of each share of the First Series then outstanding shall have the right
thereafter (or if such share is called for redemption, then in respect
of such share to and including but not after the date fixed for such
redemption), to convert such share into the kind and amount of shares
of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by
a holder of the number of shares of Common Stock of the corporation
into which such share might have been converted immediately prior to
such reclassification, change, consolidation, merger, sale or
conveyance.

	 	(f)	 	In case at any time conditions shall arise by
reason of action taken by the corporation which, in the opinion of the
Board of Directors of the corporation, are not adequately covered by
the other provisions of this Paragraph (6) and which might materially
and adversely affect the conversion rights pertaining to the shares of
the First Series, or in case at any time any such conditions are
expected to arise by reason of any action contemplated by the
corporation, the Board of Directors of the corporation shall appoint a
firm of independent public accountants of recognized standing (which
may be the firm that regularly examines the financial statements of the
corporation) who shall give their opinion as to the adjustment, if any
(not inconsistent with the standards established in this Paragraph
(6)), of the conversion rate (including, if necessary, any adjustment
as to the securities into which the shares of the First Series may
thereafter be converted) which is, or would be, required to preserve
without dilution the conversion rights pertaining to the shares of the
First Series. The Board of Directors shall make the adjustment
recommended forthwith upon the receipt of such opinion or the taking of
any such action contemplated, as the case may be; provided, however,
that no adjustment of the conversion rate shall be made which in the
opinion of the accountant or firm of accountants giving the aforesaid
opinion would result in a decrease of the conversion rate to less than
the then basic conversion rate, except as otherwise provided in
Subparagraph (d) of this Paragraph (6).

15

 

	 	(g)	 	Anything in this Paragraph (6) to the contrary
notwithstanding, the corporation shall not be required to make any
adjustment of the conversion rate in any case in which the amount by
which such conversion rate would be increased or decreased in
accordance with the foregoing provisions of this Paragraph (6) would be
less than one one-hundredth of a share of Common Stock but in such case
any adjustment that would otherwise be required then to be made shall
be carried forward and made at the time and together with the next
subsequent adjustment which, together with any and all such adjustments
so carried forward, shall amount to one one-hundredth of a share of
Common Stock.
	 
	 	(h)	 	The corporation shall give written notice of
each adjustment in the conversion rate to each holder of record of the
First Series at the address of each such holder as shown on the books
of the corporation at the time of payment of the regular cash dividend
on the First Series occurring next after such adjustment.

	 	 	 	Whenever the corporation shall make any adjustment in the conversion rate as
herein provided, the corporation shall forthwith file with the Transfer
Agents of the Common Stock in the Borough of Manhattan, the City of New
York, New York and in the City of Pittsburgh, Pennsylvania, a statement,
signed by the President or a Vice President of the corporation and by its
Treasurer or an Assistant Treasurer, showing in detail the facts requiring
such adjustment and the conversion rate that will be effective after such
adjustment.
	 
	 	 	 	In case at any time:

	 	(1)	 	the corporation shall pay any dividend payable
in shares of its Common Stock upon its Common Stock or make any
distribution (other than a quarterly cash dividend in an amount per
share not in excess of the amount per share of the last preceding
quarterly cash dividend) to the holders of its Common Stock;
	 
	 	(2)	 	the corporation shall offer for subscription
pro rata to the holders of its Common Stock any additional shares of
stock of any class or other rights;

16

 

	 	(3)	 	there shall be any capital reorganization or
reclassification of the capital stock of the corporation or
consolidation or merger of the corporation with, or sale of all or
substantially all of its assets to, another corporation; or
	 
	 	(4)	 	there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the corporation;

	 	 	 	then, in any one or more of said cases, the corporation shall give written
notice, by first class mail, postage prepaid, addressed to each holder of
record of the First Series at the address of each such holder as shown on
the books of the corporation, of the date on which (a) the books of the
corporation shall close or a record shall be taken for such dividend,
distribution or subscription rights or (b) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also
specify the date as of which the holders of Common Stock of record shall
participate in such dividend, distribution or subscription rights, or shall
be entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding up, as the case may be.
Such written notice shall be given at least 21 days prior to the action in
question and not less than 21 days prior to the record date or the date on
which the corporation’s transfer books are closed with respect thereto.
	 
	 	 	 	No fraction of share of Common Stock shall be issued upon conversion of shares of the First Series but, in lieu thereof the corporation shall pay to
the holder of such shares so converted who would otherwise be entitled to a
fractional share, a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the market value of a full share of Common
Stock on the date immediately preceding the date upon which any such shares
are surrendered for conversion. The market value of a share of Common Stock
shall be computed on the basis of the average of the bid and asked
quotations in the over-the-counter market on the last business day before
the conversion date or, if the Common Stock shall at the time be dealt in on
a securities exchange, shall be the last recorded sale price of a share of
Common Stock on such exchange on the last business day preceding the
conversion date or, if there be no such last recorded sale price, the last
quoted bid price on such exchange at the close of trading on such day.

17

 

	 	 	 	The corporation shall at all times reserve and keep available out of its
authorized but unissued Common Stock the full number of shares of Common Stock deliverable upon the conversion of all shares of the
First Series from time to time outstanding.
	 
	 	 	 	The corporation will pay any and all taxes that may be payable in respect of
the issue or delivery of shares of Common Stock on conversion of shares of
the First Series pursuant hereto. The corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock in a name other
than that in which the shares of the First Series so converted were
registered, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the corporation the amount of any
such tax or has established, to the satisfaction of the corporation, that
such tax has been paid.

	 	 	 	Subsection J. Relative Rights and Preferences of the Second Series of Third Cumulative
Preferred Stock.

	 	 	 	Pursuant to a resolution duly-adopted by the Board of Directors of the corporation
on October 9, 2002, the second series of the Third Cumulative Preferred
Stock was established consisting of 1,000 shares, the designation and the relative
rights and preferences thereof, in addition to those set forth in Subsections A
through H of this Section I, being as follows:

	 	(1)	 	The designation is “Third Cumulative Preferred Stock,
6.5% Second Series” (hereinafter called the “Second Series”).
	 
	 	(2)	 	The rate of 6.5% per share of the Second Series per year is
hereby fixed as the rate per annum at which the holders of shares of the
Second Series shall be entitled to receive dividends, when, as and if
declared by the Board of Directors, out of funds legally available for the
payment of dividends, cash dividends at the annual rate of $123,190.93 per
share (being 6.5% of the liquidation value of $1,894,245.00 per share as
stated below), and no more, payable quarterly in arrears on the dividend
payment dates specified hereunder. Such dividends shall be cumulative from
December 10, 2002. The amount of dividends payable for the initial
dividend period, or any other period shorter or longer than a full calendar
quarter, on the Second Series shall be computed on the basis of twelve 30-day
months and a 360-day year.

18

 

	 	(3)	 	Each holder of a share of the Second Series shall not be
entitled to any voting rights except as provided by law and except as
provided in Subsection E above. Without limitation, the holders of the
Second Series shall not be entitled to participate in any vote of the holders
of the Third Preferred Stock referred to in Subsection F above.
	 
	 	 	 	In exercising the voting rights set forth in this Subsection, each share of
the Second Series shall have one vote per share, except that when any other
series of shall have the right to vote with the Second Series as a single
class on any matter, then the Second Series shall have with respect to such
matters such number of votes per share as shall be necessary so that the
voting rights of the shares of the Second Series and the voting rights of
the shares of such other series of preferred stock are in proportion to
their respective liquidation values per share. Except as otherwise required
by applicable law or as set forth herein, the shares of the Second Series
shall not have any relative, participating, optional, or other special
voting rights and powers, and the consent of the holders thereof shall not
be required for the taking of any corporate action.
	 
	 	(4)	 	The shares of the Second Series are not redeemable by the
corporation.
	 
	 	(5)	 	Upon any voluntary or involuntary liquidation, dissolution
or winding up of the corporation, the holders of shares of the Second Series
shall be entitled to receive at the time thereof in a cash out of the assets
of the corporation, before any distribution or payment shall be made to the
holders of any junior stock, the amount of $1,894.245.00 per share, plus
dividends accrued and unpaid thereon to such time.

	 	 	 	Subsection K. Relative Rights and Preferences of the Third Series of Third Cumulative
Preferred Stock.

	 	 	 	Pursuant to a resolution duly-adopted by the Board of Directors of the
corporation on October 9, 2002, and by action by written consent of a
duly-authorized Pricing Committee of the Board of Directors on November 8,
2002, the third series of the Third Cumulative Preferred Stock was established
consisting of 1,000 shares, the designation and the relative rights and
preferences thereof, in addition to those set forth in Subsections A through H of
this Section I, being as follows:

19

 

	 	(1)	 	The designation is “Third Cumulative Preferred Stock, 6.60%
Third Series” (hereinafter called the “Third Series”).
	 
	 	(2)	 	The rate of 6.60% per share of the Third Series per year is
hereby fixed as the rate per annum at which the holders of shares of the
Third Series shall be entitled to receive dividends, when, as and if declared
by the Board of Directors, out of funds legally available for the payment of
dividends, cash dividends at the annual rate of $11,258.68 per share (being
6.60% of the liquidation value of $170,586.00 per share as stated below), and
no more, payable quarterly in arrears on the dividend payment dates specified
hereunder. Such dividends shall be cumulative from the date of issue of the
Third Series. The amount of dividends payable for the initial dividend
period, or any other period shorter or longer than a full calendar quarter,
on the Third Series shall be computed on the basis of twelve 30-day months
and a 360-day year.
	 
	 	(3)	 	Each holder of a share of the Third Series shall not be
entitled to any voting rights except as provided by law and except as
provided in Subsection E above. Without limitation, the holders of the Third
Series shall not be entitled to participate in any vote of the holders of the
Third Preferred Stock referred to in Subsection F above.
	 
	 	 	 	In exercising the voting rights set forth in this Subsection, each share of
the Third Series shall have one vote per share, except that when any other
series of shall have the right to vote with the Third Series as a single
class on any matter, then the Third Series shall have with respect to such
matters such number of votes per share as shall be necessary so that the voting rights of the shares of the Third Series and the voting rights of the
shares of such other series of preferred stock are in proportion to their
respective liquidation values per share. Except as otherwise required by
applicable law or as set forth herein, the shares of the Third Series hall
not have any relative, participating, optional, or other special voting
rights and powers, and the consent of the holders thereof shall not be
required for the taking of any corporate action.
	 
	 	(4)	 	The shares of the Third Series shall be redeemable in whole
or in part at any time on or after the 25th anniversary of the
date of first issuance of shares of the series. The Third Series shall not
be redeemable by the corporation prior to that date. The redemption price
payable upon exercise of the right to redeem shares of the Third Series is
fixed at the liquidation value of $170,586.00 per share, plus dividends
accrued and unpaid thereon to such time.

20

 

	 	(5)	 	Upon any voluntary or involuntary liquidation,
dissolution or winding up of the corporation, the holders of shares of the
Third Series shall be entitled to receive at the time thereof in a cash out
of the assets of the corporation, before any distribution or payment shall
be made to the holders of any junior stock, the amount of $170,586.00 per
share, plus dividends accrued and unpaid thereon to such time.

Subsection L. Relative Rights and Preferences of the Fourth Series of Third
Cumulative Preferred Stock.

Pursuant to a resolution duly-adopted by the Board of Directors of the corporation
on March 14, 2007, the fourth series of the Third Cumulative Preferred
Stock was established consisting of 1,000 shares, the designation and the relative
rights and preferences thereof, in addition to those set forth in Subsections A
through H of this Section I, being as follows:

	 	(1)	 	The designation is “Third Cumulative Preferred Stock, 7.65%
Fourth Series” (hereinafter called the “Fourth Series”).
	 
	 	(2)	 	The rate of 7.65% per share of the Fourth Series per year
is hereby fixed as the rate per annum at which the holders of shares of the
Fourth Series shall be entitled to receive dividends, when, as and if
declared by the Board of Directors, out of funds legally available for the
payment of dividends, cash dividends at the annual rate of $130,050.00 per
share (being 7.65% of the liquidation value of $1,700,000.00 per share as
stated below), and no more, payable quarterly in arrears on the dividend
payment dates specified hereunder. Such dividends shall be cumulative from
May 2, 2007, the date of issue of the Fourth Series. The amount of
dividends payable for the initial dividend period, or any other period
shorter or longer than a full calendar quarter, on the Fourth Series shall be
computed on the basis of twelve 30-day months and a 360-day year.
	 
	 	(3)	 	Each holder of a share of the Fourth Series shall not be
entitled to any voting rights except as provided by law and except as
provided in this Subsection. Without limitation, except as required by
law, the holders of the Fourth Series shall not be entitled to participate in
any vote of the holders of the Third Preferred Stock referred to in
Subsections E or F above.

Without the affirmative vote or written consent of the holders of a majority
of the outstanding shares of the Fourth Series, voting separately as a
class, the corporation will not amend, alter or repeal (by merger or
otherwise) any provision of these Restated Articles

21

 

so as to materially adversely affect the preferences, rights, or powers of
the Fourth Series; provided that any such amendment that changes the
dividend payable on or the liquidation preference of the Fourth Series shall
require the affirmative vote at a meeting of holders of the Fourth Series
called for the purposes or the written consent of the holders of each
outstanding share of the Fourth Series adversely affected thereby.

Without the affirmative vote or written consent of the holders of a majority
of the outstanding shares of the Fourth Series, voting separately as a class,
the corporation will not (i) issue any shares of the Fourth Series in
addition to the shares designated thereby; (ii) authorize, or increase the
authorized amount of, any class of stock of the corporation ranking prior to
or on a parity with the Third Preferred Stock, either as to dividends or upon
liquidation; or (iii) increase the authorized amount of the Third Preferred
Stock; provided that clauses (ii) and (iii) shall not limit the right of the
corporation to issue preferred stock ranking pari passu with the Fourth
Series in connection with any merger in which the corporation is the
surviving entity.

In exercising the voting rights set forth in this Subsection, each share of
the Fourth Series shall have one vote per share, except that when any other
series of preferred stock shall have the right to vote with the Fourth
Series as a single class on any matter, then the Fourth Series shall have
with respect to such matters such number of votes per share as shall be
necessary so that the voting rights of the shares of the Fourth Series and
the voting rights of the shares of such other series of preferred stock are
in proportion to their respective liquidation values per share. Except as
otherwise required by applicable law or as set forth above, the shares of
the Fourth Series shall not have any relative, participating, optional or
other special voting rights and powers, and the consent of the holders
thereof shall not be required for the taking of any corporate action.

	 	(4)	 	The shares of the Fourth Series shall be redeemable on the
15th anniversary of the date of first issuance of shares of the
Series, subject to the restrictions provided above and the final paragraph of
Subsection E above. The Fourth Series shall be redeemable in whole or in part
by the corporation beginning on the 10th anniversary of the date of
first issuance of the shares of the series, subject to the restrictions
provided above and the final paragraph of Subsection E above. The redemption
price payable upon exercise of the right to redeem shares of the Fourth Series
is fixed at the liquidation value of

22

 

$1,700,000.00 per share, plus dividends accrued and unpaid thereon to the
date fixed for redemption.

	 	(5)	 	Upon any voluntary or involuntary liquidation, dissolution
or winding up of the corporation, the holders of shares of the Fourth Series
shall be entitled to receive at the time thereof in a cash out of the assets
of the corporation, before any distribution or payment shall be made to the
holders of any junior stock, the amount of $1,700,000.00 per share, plus
dividends accrued and unpaid thereon to such time.

SECTION II. COMMON STOCK

     This Section II sets forth the powers, preferences and rights and the
qualifications, limitations or restrictions in respect to the Common Stock of the
corporation.

Subsection A. Equal Rights.

Each share of Common Stock issued or to be issued under the provisions of this
Article Fifth shall be equal in all respects one with the other, and no dividend
shall be paid on any shares of Common Stock unless the same dividend is paid on all
shares of Common Stock outstanding at the time of such payment, and there shall be
no distinction or difference between any share of Common Stock, or any rights
appertaining thereto, and any other share of Common Stock.

Subsection B. Other Rights.

Except for and subject to those rights expressly granted in Section I of this
Article Fifth to the holders of the Third Cumulative Preferred Stock, or except as
may be provided by the laws of the Commonwealth of Pennsylvania, the holders of
the Common Stock shall have exclusively all other rights of stockholders including
but not by way of limitation: (a) exclusive voting power for all purposes and
exclusive rights to all notices of meetings or of any action to be taken by the
corporation or by its stockholders, (b) the right to receive dividends, when and
as declared by the Board of Directors out of assets lawfully available therefor,
and (c) in the event of any distribution of assets upon liquidation, dissolution
or winding up of the corporation or otherwise, the right to receive ratably and
equally all of the assets and funds of the corporation remaining after the payment
to the holders of other classes of stock of the corporation of the specific
amounts which they are entitled to receive upon such liquidation, dissolution or
winding up of the corporation as hereinbefore provided in Section I of this
Article Fifth.

23

 

Subsection C. Issuance of Common Stock.

The Common Stock shall be issued from time to time and at such time and in such
manner and for such consideration, whether in cash or property or otherwise, as
the Board of Directors shall in their absolute discretion by a duly adopted
resolution provide.

SECTION III. PREEMPTIVE RIGHTS

     No holder of stock of the corporation of any class, whether now or hereafter
outstanding, shall be entitled or have any right, as such holder, to subscribe for or
to purchase any part of (i) any shares of any class whatsoever which the corporation
may hereafter issue or sell or (ii) any obligations or securities which the
corporation may hereafter issue or sell convertible into or exchangeable for any
shares of the corporation of any class or (iii) any warrants which the corporation may
hereafter issue or sell that shall confer upon the holder or owner thereof the right
to subscribe for or purchase from the corporation any of its shares of any class. The
provisions of this Section III shall be effective to eliminate and deny any preemptive
right which may exist or may have existed in respect of any outstanding shares.

SECTION IV. CUMULATIVE VOTING RIGHTS

     No shareholder shall in any election of directors have any right to cumulate his
votes and cast them for one candidate or distribute them among two or more candidates.

SECTION V. MAJORITY VOTING

     Each director shall be elected by the vote of the majority of the votes cast with
respect to the director at any meeting for the election of directors at which a quorum
is present, provided that if the number of nominees exceeds the number of directors to
be elected, then the nominees receiving the highest number of votes up to the number
of directors to be elected shall be elected. For purposes of this Section, a majority
of the votes cast means that the number of shares voted “for” a director must exceed
the number of votes cast “against” that director. If an incumbent director is not
elected, the director shall offer to tender his or her resignation to the Board. The
Corporate Governance Committee of the Board will make a recommendation to the Board on
whether to accept or reject the resignation, or whether other action should be taken.
The Board will act on the Committee’s recommendation and publicly disclose its
decision and the rationale behind it within 90 days from the date of the certification
of the election results. The director who tenders his or her resignation will not

24

 

participate in the decisions of the Corporate Governance Committee or of the
Board with respect to his or her own resignation.

6. Section I. Limitation of Director Liability.

To the fullest extent that laws of the Commonwealth of Pennsylvania, as in effect on
January 27, 1987 or as thereafter amended, permit elimination of limitation of the
liability of directors, no Director of the corporation shall be personally liable for
monetary damages as such for any action taken, or any failure to take any action, as a
Director. This Section A shall not apply to any action filed prior to January 27,
1987, nor to any breach of performance of duty or any failure of performance of duty by
any Director occurring prior to January 27, 1987. The provisions of this Section A
shall be deemed to be a contract with each Director of the corporation who serves as such at
any time while such provisions are in effect, and each such Director shall be deemed to be
serving as such in reliance on the provisions of this Section A. This Section A shall not be
amended, altered or repealed without the affirmative vote of the holders of at least 60% of
the voting power (without consideration of the rights of any class of stock to elect
directors by a separate class vote) of the then outstanding shares of capital stock of the
corporation entitled to vote in an annual election of Directors, voting together and not as
separate classes, unless such amendment, alteration or repeal is first recommended and
approved by a majority of the entire Board of Directors in which case only a majority
shareholder vote shall be required. Such affirmative vote shall be required notwithstanding
the fact that no vote is required, or that a lesser percentage may be specified, by law or
in any agreement with any national securities exchange or otherwise. Any amendment to,
alteration or repeal of this Section A which has the effect of increasing Director liability
shall operate prospectively only and shall not have any effect with respect to any action
taken, or any failure to act, by a Director prior thereto.

Section II. Indemnification of Directors, Officers and Others.

Except as prohibited by law, the corporation may indemnify any person who is or was a
director, officer, employee or agent of the corporation or is or was serving at the request
of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise (including, without limitation, any
employee benefit plan) and may take such steps as may be deemed appropriate by the Board of
Directors, including purchasing and maintaining insurance, entering into contracts
(including, without limitation, contracts or indemnification between the corporation and its
directors, officers or employees), creating a trust fund, granting security interests or
using other means (including, without limitation, a letter of credit) to ensure the payment
of such amount as may be necessary to effect such indemnification. This Section II shall
apply to any action taken, or any failure to take any action, on or after January 27,
1987. This Section II shall not be amended, altered or repealed without the affirmative
vote of the holders of at least 60% of the voting

25

 

power (without consideration of the rights of any class of stock to elect directors by a
separate class) of the then outstanding shares of capital stock of the corporation entitled
to vote in an annual election of Directors, voting together and not as separate classes,
unless such amendment, alteration or repeal is first recommended and approved by a majority
of the entire Board of Directors in which case only a majority shareholder vote shall be
required. Such affirmative vote shall be required notwithstanding the fact that no vote is
required, or that a lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise. Any amendment to, alteration or repeal of this
Section II which has the effect of limiting the authority of the corporation to indemnify
persons under this Section II shall operate prospectively only and shall not limit in any
way any indemnification provided pursuant to this Section II with respect to any action
taken, or failure to act, occurring prior thereto.

	7.1	 	A higher than majority shareholder vote for certain Business Combinations shall be required
as follows (all capitalized terms being used as subsequently defined herein):

	 	(a)	 	In addition to any affirmative vote required by law or the Articles of
Incorporation, and except as otherwise expressly provided in Section 7.2 of this
Article Seventh:

	 	(1)	 	any merger or consolidation of the corporation or any
Subsidiary with (A) any Interested Shareholder or with
(B) any other corporation (whether or not itself an Interested Shareholder)
which is, or after such merger or consolidation
would be, an Affiliate or Associate of an Interested Shareholder;
	 
	 	(2)	 	any sale, lease, exchange, loan, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to or with
any Interested Shareholder or any Affiliate or Associate of any Interested
Shareholder of any assets of the corporation or any Subsidiary having an
aggregate Fair Market Value of $15,000,000.00 or more;
	 
	 	(3)	 	the issuance or sale by the corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
corporation or any Subsidiary to any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder in exchange for cash, securities or
other consideration (or a combination thereof) having an aggregate Fair Market
Value of $15,000,000.00 or more;

26

 

	 	(4)	 	the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by or on behalf of any Interested
Shareholder or any Affiliate or Associate of any Interested Shareholder; or
	 
	 	(5)	 	any reclassification of securities (including any reverse stock
split), or recapitalization of the corporation, or any merger or consolidation
of the corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving any Interested Shareholder
or any Affiliate or Associate of any Interested Shareholder) which has the
effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity securities or securities convertible
into equity securities of the corporation or any Subsidiary which is directly
or indirectly owned by any Interested Shareholder or any Affiliate or Associate
of any Interested Shareholder;

shall require the affirmative vote of the holders of at least 80% of the voting
power (without consideration of the rights of any class of stock to elect directors
by a separate class vote) of the then outstanding shares of capital stock of the
corporation entitled to vote in an annual election of directors (the “Voting
Stock”), voting together and not as separate classes. Such affirmative vote shall be
required notwithstanding the fact that no vote is required, or that a lesser
percentage may be specified, by law or in any agreement with any national securities
exchange or otherwise.

	 	(b)	 	the term “Business Combination” as used in this Article Seventh shall mean any
transaction which is referred to in any one or more of clauses (1) through (5) of
Subparagraph (a) of Section 7.1 of this Article Seventh.

	7.2	 	The provisions of Section 7.1 of this Article Seventh shall not be applicable to any Business
Combination, and such Business Combination shall require only such affirmative vote (if any)
as is required by law or any other provision of the Articles of Incorporation if the
conditions specified in either of the following Subparagraphs (a) or (b) are met:

	 	(a)	 	The Business Combination shall have been approved by a majority of the
Continuing Directors; or
	 
	 	(b)	 	All of the following six conditions shall have been met:

27

 

	 	(1)	 	The transaction constituting the Business Combination shall
provide for a consideration to be received by holders of Common Stock in
exchange for their stock, and the aggregate amount of the cash and the Fair
Market Value as of the date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders of Common
Stock in such Business Combination shall be at least equal to the highest of
the following:

	 	(A)	 	(if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers’ fees) paid in order to acquire any shares of Common Stock
beneficially owned by the Interested Shareholder which were acquired
(i) within the two-year period immediately prior to the first public
announcement of the proposed Business Combination (the “Announcement
Date”) or (ii) in the transaction in which it became an Interested
Shareholder, whichever is higher;
	 
	 	(B)	 	the Fair Market Value per share of Common Stock
on the Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (the “Determination
Date”), whichever is higher; and
	 
	 	(C)	 	(if applicable) the price per share equal to
the Fair Market Value per share of Common Stock determined pursuant to
clause (B) immediately preceding, multiplied by the ratio of (i) the
highest per share price (including any brokerage commissions, transfer
taxes and soliciting dealers’ fees) paid in order to acquire any shares
of Common Stock beneficially owned by the Interested Shareholder which
were acquired within the two-year period immediately prior to the
Announcement Date to (ii) the Fair Market Value per share of Common
Stock on the first day in such two-year period on which the Interested
Shareholder beneficially owned any shares of Common Stock.

All per share prices shall be adjusted to reflect any intervening
stock splits, stock dividends and reverse stock splits.

	 	(2)	 	If the transaction constituting the Business Combination shall
also provide for a consideration to be received by holders of any class of
outstanding Voting Stock (other than Common Stock and other than Institutional
Voting Stock) in exchange for their stock, the aggregate amount of the cash and
the Fair Market Value as of the date of the consummation of the Business
Combination of

28

 

	 	 	 	consideration other than cash to be received per share by holders of Shares
of such Voting Stock shall be at least equal to the highest of the following
(it being intended that the requirements of this clause (b) (2) shall be
required to be met with respect to every class of outstanding Voting Stock
(other than Institutional Voting Stock), whether or not the Interested
Shareholder beneficially owns any shares of a particular class of Voting
Stock):

	 	(A)	 	(if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers’ fees) paid in order to acquire any shares of such class of
Voting Stock beneficially owned by the Interested Shareholder which
were acquired (i) within the two-year period immediately prior to the
Announcement Date, or
(ii) in the transaction in which it became an Interested Shareholder,
whichever is higher;
	 
	 	(B)	 	(if applicable) the highest preferential amount
per share to which the holders of shares of such class of Voting Stock
are entitled in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the corporation;
	 
	 	(C)	 	the Fair Market Value per share of such class
of Voting Stock on the Announcement Date or on the Determination Date,
whichever is higher; and
	 
	 	(D)	 	(if applicable) the price per share equal to
the Fair Market Value per share of such class of Voting Stock
determined pursuant to clause (C) immediately preceding, multiplied by
the ratio of (i) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers’ fees) paid in order
to acquire any shares of such class of Voting Stock beneficially owned
by the Interested Shareholder which were acquired within the two-year
period immediately prior to the Announcement Date to (ii) the Fair
Market Value per share of such class of Voting Stock on the first day
in such two-year period on which the Interested Shareholder
beneficially owned any shares of such class of Voting Stock.

All per share prices shall be adjusted for intervening stock splits,
stock dividends and reverse stock splits.

29

 

	 	(3)	 	The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Common Stock) shall be
in cash or in the same form as was previously paid in order to acquire shares
of such class of Voting Stock which are beneficially owned by the Interested
Shareholder. If the Interested Shareholder beneficially owns shares of any
class of Voting Stock which were acquired with varying forms of consideration,
the form of consideration to be received by holders of such class of Voting
Stock shall be either cash or the form used to acquire the largest number of
shares of such class of Voting Stock beneficially owned by it.
	 
	 	(4)	 	After such Interested Shareholder has become an Interested
Shareholder and prior to the 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 date therefor any full
quarterly dividends (whether or not cumulative) on any outstanding preferred
stock; (B) there shall have been (i) no reduction in the annual rate of
dividends paid on the Common Stock (except as necessary to reflect any
subdivision of the Common Stock) except as approved by a majority of the
Continuing Directors, and (ii) an increase in such annual rate of dividends (as
necessary to prevent any such reduction) in the event of any reclassification
(including any reverse stock split), recapitalization, reorganization or any
similar transaction which has the effect of reducing the number of outstanding
shares of the common Stock, unless the failure so to increase such annual rate
is approved by a majority of the Continuing Directors; and (C) such Interested
Shareholder shall not have become the beneficial owner of any shares of Voting
Stock except as part of the transaction in which it became an Interested
Shareholder.
	 
	 	(5)	 	After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received the benefit,
directly or indirectly (except proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax credits
or other tax advantages provided by the corporation, whether in anticipation of
or in connection with such Business Combination or otherwise.

30

 

	 	(6)	 	A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or regulations) shall be mailed
to all shareholders of the corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such Act or
subsequent provisions).

	7.3	 	For the purposes of this Article Seventh:

	 	(a)	 	A “person” shall mean any individual, firm, corporation or other entity;
	 
	 	(b)	 	“Interested Shareholder” at any particular time shall mean any person (other
than the corporation or any Subsidiary) who or which:

	 	(1)	 	is at such time the beneficial owner, directly or indirectly,
of shares of the corporation having more than 10% of the voting power of the
then outstanding Voting Stock; or
	 
	 	(2)	 	at any time within the two-year period immediately prior to
such time was the beneficial owner, directly or indirectly, of shares of the
corporation having more than 10% of the voting power of the then outstanding
Voting Stock; or
	 
	 	(3)	 	is at such time an assignee of or has otherwise succeeded to
the beneficial ownership of any shares of Voting Stock which were at any time
within the two-year period immediately prior to such time beneficially owned by
any Interested Shareholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not involving
a public offering within the meaning of the Securities Act of 1933.

	 	(c)	 	A person shall be a “beneficial owner” of any shares of Voting Stock which:

	 	(1)	 	are beneficially owned, directly or indirectly, by such person
or any of its Affiliates or Associates;
	 
	 	(2)	 	such person or any of its Affiliates or Associates has (A) the
right to acquire (whether or not such right is exercisable immediately)
pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise, or (B)
the right to vote pursuant to any agreement, arrangement or understanding; or

31

 

	 	(3)	 	are beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares of Voting Stock.

	 	(d)	 	For the purposes of determining whether a person is an Interested Shareholder
pursuant to Subparagraph (b) of this Section 7.3, the number of shares of Voting Stock
deemed to be outstanding shall include shares deemed owned by an Interested Shareholder
through application of Subparagraph (c) of this Section 7.3 but shall not include any
other shares of Voting Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise.
	 
	 	(e)	 	“Affiliate” and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as in effect on September 14, 1983 (the term “registrant” in said
Rule 12b-2 meaning, in this case, the corporation).
	 
	 	(f)	 	“Beneficially owned” shall have the meaning ascribed to such term in Rule 13d-3
of the General Rules and Regulations under the Securities Exchange Act of 1934, as in
effect on September 14, 1983.
	 
	 	(g)	 	“Subsidiary” means any corporation of which a majority of any class of equity
security is owned, directly or indirectly, by the corporation; provided, however, that
for the purposes of the definition of Interested Shareholder set forth in Subparagraph
(b) of this Section 7.3, the term “Subsidiary” shall mean only a corporation of which a
majority of each class of equity security is owned, directly or indirectly, by the
corporation.
	 
	 	(h)	 	“Continuing Director” means any member of the Board of Directors of the
corporation who is unaffiliated with, and not a representative of, the Interested
Shareholder and was a member of the Board of Directors on September 14, 1983 or
prior to the time that the Interested Shareholder became an Interested Shareholder, and
any successor of a Continuing Director who is unaffiliated with, and not a
representative of, the Interested Shareholder and is recommended to succeed a
Continuing Director by a majority of the Continuing Directors then on the Board of
Directors.
	 
	 	(i)	 	“Fair Market Value” means: (1) in the case of stock, the highest closing sale
price during the 30-day period immediately preceding the date in question of a share of
such stock on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such
stock is not quoted on the Composite Tape, on the New York Stock Exchange, or if such
stock is not 

32

 

	 	 	 	listed on such exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any such exchange, the highest closing
bid quotation with respect to a share of such stock during the 30-day period
preceding the date in question on the National Association of Securities Dealers,
Inc. Automated Quotations System or any system then in use, or if no such
quotations are available, the fair market value on the date in question of a share
of such stock as determined by a majority of the Continuing Directors in good faith;
and (2) in the case of property other than cash or stock, the fair market value of
such property on the date in question as determined by the Board of Directors in
good faith.

	 	(j)	 	“Institutional Voting Stock” shall mean any class of Voting Stock which was
issued directly to and continues to be held solely by one or more insurance companies,
pension funds, commercial banks, savings banks or similar financial institutions or
institutional investors.
	 
	 	(k)	 	In the event of any Business Combination in which the corporation survives, the
phrase “consideration other than cash to be received” as used in Subparagraph (b) of
Section 7.2 of this Article Seventh shall include the shares of Common Stock and/or the
shares of any other class of outstanding Voting Stock retained by the holders of such
shares.

	7.4	 	The Board of Directors shall have the power and duty to determine for the purposes of this
Article Seventh, on the basis of information known to them after reasonable inquiry, (a)
whether a person is an Interested Shareholder, (b) the number of shares of Voting Stock
beneficially owned by any person, (c) whether a person is an Affiliate or Associate of
another, (d) whether a class of Voting Stock is Institutional Voting Stock and (e) whether the
assets which are the subject of any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the corporation or any Subsidiary in
any Business Combination has, an aggregate Fair Market Value of $15,000,000.00 or more. Any
such determination made in good faith shall be binding and conclusive.

	7.5	 	Nothing contained in this Article Seventh shall be construed to relieve any Interested
Shareholder from any fiduciary obligation imposed by law.

	7.6	 	Notwithstanding any other provisions of law, the Articles of Incorporation or the By-Laws of
the corporation, the affirmative vote of the holders of at least 80% of the voting power of
the then outstanding shares of Voting Stock, voting together as a single class, shall be
required to amend or repeal, or to adopt any provision inconsistent with, this Article
Seventh.

33

 

	8.	 	The Articles of Incorporation, as amended and restated herein, supersede the Articles of
Incorporation and all amendments thereto.

     IN WITNESS WHEREOF, H. J. Heinz Company has caused these ARTICLES OF INCORPORATION to be
signed by its Executive Vice President and General Counsel and its corporate seal, duly attested by
its Secretary, to be hereunto affixed this 24th day of August, 2007.

	 	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	H. J. HEINZ COMPANY	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Rene D. Biedzinski
	 	 
	 	By:
	 	/s/ Theodore N. Bobby
	 	 
	 

	 	 

RENE D. BIEDZINSKI,
	 	 
	 	 
	 	 

THEODORE N. BOBBY,
	 	 
	 

	 	Corporate Secretary
	 	 	 	 	 	Executive Vice President and
General Counsel	 	 
	 

	 	
(Corporate Seal)
	 	 	 	 	 	 	 	 

FILED in the Department of State for the Commonwealth of Pennsylvania

on                                         , 2007

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Secretary of the Commonwealth 	 
	 	 	 
	 

(HJH Doc. 37370.3 and 37188.3)

34

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