Registration of Securities Issued in a Business-Combination Transaction — Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4 Registration of Securities Issued in a 288 1.25M
Business-Combination Transaction
2: EX-3.1 Cerificate of Incorporation of Modtech Holding,Inc 5 21K
3: EX-3.2 Bylaws of Modtech Holdings, Inc 13 53K
4: EX-3.5 Articles of Incorporation of Spi Holdings, Inc 3 16K
5: EX-3.6 Bylaws of Spi Holdings, Inc. 17 70K
6: EX-3.7 Certificate of Designation of Modtech Holdings 6 27K
7: EX-3.8 Designation of Spi Holdings, Inc. 61 211K
8: EX-4 Registration Rights Agreement 12 49K
9: EX-10.1 Transaction Advisory Agreement 6 28K
11: EX-10.10 Lease Between Baron Homes, Inc. & David V. Homme 26 132K
12: EX-10.11 Lease Between Ronfran Incorporation 29 135K
13: EX-10.12 Lease Between Arizona Millwork, Inc. 35 152K
10: EX-10.9 Lease Between Office Master of Texas, Inc. 14 39K
14: EX-23.1 Consent of Kpmg Peat Marwick LLP 1 7K
15: EX-23.2 Consent of Arthur Andersen LLP 1 7K
17: EX-99.1 Form of Modtech, Inc Proxy 2± 10K
18: EX-99.2 Form of Spi, Holdings, Inc. Proxy 2± 10K
16: EX-27 Financial Data Schedule {Pre-XBRL/IDEA} 1 9K
EX-3.8 — Designation of Spi Holdings, Inc.
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EXHIBIT 3.8
EXHIBIT A
SERIES A-1 CONVERTIBLE PREFERRED STOCK
Section 1. Dividends.
When and as declared by the Corporation's board of directors
and to the extent permitted under the Colorado Business Corporation Act, the
holders of the Series A-1 Convertible Preferred Stock (the "Series A-1
Preferred") shall participate ratably with the holders of shares of the
Corporation's Common Stock (as hereinafter defined), Series A-2 Convertible
Preferred Stock (the "Series A-2 Preferred") and Series A-3 Convertible
Preferred Stock (the "Series A-3 Preferred") in any dividends on the Common
Stock based upon the number of shares of Common Stock into which each share of
Series A-1 Preferred (a "Share") is convertible at the time of such declaration.
Section 2. Liquidation.
Upon any liquidation, dissolution or winding up of the
Corporation, the holders of Series A-1 Preferred as a class shall vote to either
(A) convert all of the Series A-1 Preferred (including any fraction of a Share)
into Conversion Stock (as hereinafter defined) pursuant to the provisions of
Section 4 below and share ratably with the holders of Series A-2 Preferred and
the Series A-3 Preferred (collectively, the "Preferred Class"), if applicable,
and Junior Securities (as hereinafter defined) in any distribution or payment
upon such liquidation, dissolution or winding up of the Corporation, or (B) be
paid (i) before any distribution or payment is made upon any Junior Securities
and concurrently with the holders of the Preferred Class as set forth below, an
amount in cash equal to the Liquidation Value (as hereinafter defined) of the
Series A-1 Preferred (the "Liquidation Payment"), and (ii) after the payment of
the Liquidation Payment and before any distribution or payment is made upon any
Junior Securities, an amount equal to the Liquidation Premium (as hereinafter
defined) (collectively with the Liquidation Payment, the "Liquidation Amount").
For purposes of this Section 2, the vote of the holders of the majority of the
Series A-1 Preferred shall be deemed to be the election of all of the holders of
the Series A-1 Preferred. If the holders of the Series A-1 Preferred elect not
to convert the Series A-1 Preferred pursuant to clause (A) above and elect to
receive a cash payment pursuant to clause (B) above and the holders of the
Preferred Class elect not to convert their shares of the Preferred Class into
Conversion Stock, the holders of the Series A-1 Preferred and the holders of the
Preferred Class shall share the Liquidation Payment ratably based upon the
aggregate Liquidation Value of the Series A-1 Preferred and the aggregate
liquidation value of the Preferred Class held by each such holder pursuant to
clause (B)(i) above, after the payment of which the holders of the Series A-1
Preferred shall receive the Liquidation Premium, after the payment of which any
remaining assets shall be distributed to the holders of Junior Securities. If
the holders of the Series A-1 Preferred elect not to convert the Series A-1
Preferred pursuant to clause (A) above and elect to receive a cash payment
pursuant to clause (B) above and the holders of the Preferred Class elect to
convert their shares of the Preferred Class into Conversion Stock, the holders
of the Series A- 1 Preferred shall receive the Liquidation Amount before any
distribution or payment is made upon the Preferred Class or any Junior
Securities. If the holders of the Series A-1 Preferred elect
to convert the Series A-1 Preferred pursuant to clause (A) above and elect not
to receive a cash payment pursuant to clause (B) above and the holders of the
Preferred Class elect not to convert their shares of the Preferred Class into
Conversion Stock, the holders of the Preferred Class shall receive payment of
the Preferred Class liquidation value before any distribution or payment is made
upon the Series A-1 Preferred or any Junior Securities and, thereafter, the
holders of the Series A-1 Preferred shall share ratably with the holders of
Junior Securities in any distribution or payment upon such liquidation,
dissolution or winding up of the Corporation. If the holders of the Series A-1
Preferred elect to convert the Series A-1 Preferred pursuant to clause (A) above
and elect not to receive a cash payment pursuant to clause (B) above and the
holders of the Preferred Class elect to convert their shares of the Preferred
Class into Conversion Stock, the holders of the Series A-1 Preferred and the
Preferred Class shall share ratably with the holders of Junior Securities in any
distribution or payment upon such liquidation, dissolution or winding up of the
Corporation. The Corporation shall mail written notice of such liquidation,
dissolution or winding up, not less than sixty (60) days prior to the payment
date stated therein (the "Payment Date"), to each record holder of Series A-1
Preferred. Neither the consolidation or merger of the Corporation into or with
any other entity or entities, nor the sale or transfer by the Corporation of all
or any part of its assets, nor the reduction of the capital stock of the
Corporation, shall be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this Section 2.
Section 3. Voting Rights.
The holders of the Series A-1 Preferred shall be entitled to
notice of all stockholders meetings in accordance with the Corporation's bylaws,
and the holders of the Series A-1 Preferred shall be entitled to vote on all
matters submitted to the stockholders for a vote together with the holders of
the Common Stock and the Series A-2 Preferred voting together as a single class
with each share of Common Stock entitled to one vote per share, each Share of
Series A-I Preferred entitled to one vote for each share of Common Stock
issuable upon conversion of the Series A-1 Preferred at the time the vote is
taken, and each share of Series A-2 Preferred entitled to one vote for each
share of Common Stock issuable upon conversion of the Series A-2 Preferred at
the time the vote is taken.
Section 4. Conversion.
A. Conversion Procedure.
(i) At any time and from time to time, any holder of Series
A-1 Preferred may convert all or any portion of the Series A-1 Preferred
(including any fraction of a Share) held by such holder into a number of shares
of Conversion Stock computed by multiplying the number of Shares to be converted
by $2.7154 and dividing the result by the Conversion Price (as hereinafter
defined) then in effect.
(ii) Each conversion of Series A-1 Preferred shall be deemed
to have been effected as of the close of business on the date on which the
certificate or certificates representing the Series A-1 Preferred to be
converted have been surrendered at the principal office of the
Corporation. At such time as such conversion has been effected, the rights of
the holder of such Series A-1 Preferred as such holder shall cease and the
Person (as hereinafter defined) or Persons in whose name or names any
certificate or certificates for shares of Conversion Stock are to be issued upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of Conversion Stock represented thereby; provided, however, that
for purposes of Section 2(A) above the conversion of the Series A-1 Preferred
shall be deemed to have been effected as of the close of business on the day
prior to the Payment Date.
(iii) Notwithstanding any other provision hereof, if a
conversion of Series A-1 Preferred is to be made in connection with a Qualified
Public Offering (as hereinafter defined), the conversion of any Shares of Series
A-1 Preferred may, at the election of the holder of such Shares, be conditioned
upon the consummation of the Qualified Public Offering in which case such
conversion shall not be deemed to be effective until the consummation of the
Qualified Public Offering.
(iv) As soon as possible after a conversion has been effected
(but in any event within five business days in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the number of
shares of Conversion Stock issuable by reason of such conversion in such name or
names and such denomination or denominations as the converting holder has
specified;
(b) payment of the amount payable under subparagraph (vii)
below with respect to such conversion; and
(c) a certificate representing any Shares of Series A-1
Preferred which were represented by the certificate or certificates delivered to
the Corporation in connection with such conversion but which were not converted.
(v) The issuance of certificates for shares of Conversion
Stock upon conversion of Series A-1 Preferred shall be made without charge to
the holders of such Series A-1 Preferred for any issuance tax in respect thereof
or other cost incurred by the Corporation in connection with such conversion and
the related issuance of shares of Conversion Stock. Upon conversion of each
Share of Series A-1 Preferred, the Corporation shall take all such actions as
are necessary in order to insure that the Conversion Stock issuable with respect
to such conversion shall be validly issued, fully paid and non-assessable.
(vi) The Corporation shall not close its books against the
transfer of Series A-1 Preferred or of Conversion Stock issued or issuable upon
conversion of Series A-1 Preferred in any manner which interferes with the
timely conversion of Series A-1 Preferred. The Corporation shall assist and
cooperate with any holder of Shares required to make any governmental filings or
obtain any governmental approval prior to or in connection with any conversion
of Shares hereunder (including, without limitation, making any filings required
to be made by the Corporation).
(vii) If any fractional interest in a share of Conversion
Stock would, except for the provisions of this subparagraph, be deliverable upon
any conversion of the Series A-1 Preferred, the Corporation, in lieu of
delivering the fractional share therefor, may pay an amount to the holder
thereof equal to the fair market price of such fractional interest as of the
date of conversion as determined by the Corporation's board of directors.
(viii) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock, solely
for the purpose of issuance upon the conversion of the Series A- I Preferred,
such number of shares of Conversion Stock issuable upon the conversion of all
outstanding Shares of Series A-1 Preferred. All shares of Conversion Stock which
are so issuable shall when issued, be duly and validly issued, fully paid and
non-assessable and free from all taxes, liens and charges. The Corporation shall
'take. all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance).
B. Conversion Price. The initial "Conversion Price" shall be
$2.7154 per share. In order to prevent dilution of the conversion rights granted
under this subdivision, the Conversion Price shall be subject to adjustment from
time to time pursuant to this Section 4.
C. Anti-Dilution. If and whenever on or after the original
date of issuance of the Series A-1 Preferred the Corporation issues or sells, or
in accordance with Section 4(D) hereof is deemed to have issued or sold, any
shares of its Common Stock for a consideration per share less than the
Conversion Price in effect immediately prior to the time of such issue or sale,
then forthwith upon such issue or sale the Conversion Price shall be reduced to
the Conversion Price determined by dividing (i) the sum of (a) the product
derived by multiplying the Conversion Price in effect immediately prior to such
issue or sale times the number of shares of Common Stock Deemed Outstanding
immediately prior to such issue or sale, plus (b) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the number of
shares of Common Stock Deemed Outstanding immediately after such issue or sale;
provided that there shall be no adjustment in the Conversion Price as a result
of any issuance or sale (or deemed issuance or sale) of (x) options issued
pursuant to the Corporation's stock option plan and capital stock issued upon
the exercise thereof, (y) capital stock of the Corporation upon the exercise of
warrants held by each of Patrick Van Den Bossche and NationsCredit Commercial
Corporation and any conversion of such capital stock subsequent to its issuance
and (z) the issuance of capital stock of the Corporation upon the conversion of
Series A-1 Preferred or the Preferred Class.
D. Effect on Conversion Price of Certain Events. For purposes
of determining the adjusted Conversion Price under Section 6(C) hereof, the
following shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
manner grants any rights or options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for Common
Stock (such rights or Options being herein called "Options" and such convertible
or exchangeable stock or securities being herein called "Convertible
Securities") and the price per share for which Common Stock is issuable upon the
exercise of such Options or upon conversion or exchange of such Convertible
Securities is less than the Conversion Price in effect immediately prior to the
time of the granting of such Options then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Corporation at the time of the granting of such
Options for such price per share. For purposes of this Section 4(D)(i), the
"price per share for which Common Stock is issuable" shall be determined by
dividing (a) the total amount, if any, received or receivable by the
Corporation- as consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Corporation upon
exercise of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the issuance of sale or
such Convertible Securities and the conversion or exchange thereof, by (b) the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further adjustment of
the Conversion Price shall be made when Convertible Securities are actually
issued upon the exercise of such Options or when Common Stock is actually issued
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation in
any manner issues or sells any Convertible Securities and the price per share
for which Common Stock is issuable upon such conversion or exchange is less than
the Conversion Price in effect immediately prior to the time of such issue or
sale then the maximum number of shares of Common Stock issuable upon conversion
or exchange of such Convertible Securities shall be deemed to be outstanding and
to have been issued and sold by the Corporation at the time of the issuance or
sale of such Convertible Securities for such price per share. For the purposes
of this Section 4(D)(ii), the "price per share for which Common Stock is
issuable" shall be determined by dividing (a) the total amount received or
receivable by the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (b) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No
further adjustment of the Conversion Price shall be made when Common Stock is
actually issued upon the conversion or exchange of such Convertible Securities,
and if any such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustments of the Conversion Price had been
or are to be made pursuant to other provisions of this Section 4, no further
adjustment of the Conversion Price shall be made by reason of such issue or
sale.
(iii) Change in Option Price or Conversion Rate. If the
purchase price
provided for in any Options, the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities, or the rate at which
any Convertible Securities are convertible into or exchangeable for Common Stock
change at any time, the Conversion Price in effect at the time of such change
shall be readjusted to the Conversion Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold.
E. Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of.
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision shall be proportionately reduced, and if
the Corporation at any time combines (by reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
F. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Corporation's assets to another
Person or other transaction which is effected in such a manner that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series A-1 Preferred then outstanding) to insure that each of the holders of
Series A-1 Preferred shall thereafter have the right to acquire and receive, in
lieu of or in addition to (as the case may be) the shares of Conversion Stock
immediately theretofore acquirable and receivable upon the conversion of such
holder's Series A-1 Preferred, such shares of stock, securities or assets as
such holder would have received in connection with such Organic Change if such
holder had converted its Series A-1 Preferred immediately prior to such Organic
Change. In each such case, the Corporation shall also make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series A-1 Preferred then outstanding) to insure that the provisions of this
Section 4 and Section 5 hereof shall thereafter be applicable to the Series A-1
Preferred (including, in the case of any such consolidation, merger or sale in
which the successor entity or purchasing entity is other than the Corporation,
an immediate adjustment of the Conversion Price to the value for the Common
Stock reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of Conversion Stock
acquirable and receivable upon conversion of Series A-1 Preferred, if the value
so reflected is less than the Conversion Price in effect immediately prior to
such consolidation, merger or sale). The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Corporation) resulting from
consolidation or merger or the corporation purchasing such assets assumes by
written instrument (in form reasonably satisfactory to the holders of a majority
of the Series A-1 Preferred then outstanding), the obligation to deliver to each
such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to acquire.
G. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 4 but not expressly provided for
by such provisions, then the Corporation's board of directors shall make an
appropriate adjustment in the Conversion Price so as to protect the rights of
the holders of Series A-1 Preferred; provided that no such adjustment shall
increase the Conversion Price as otherwise determined pursuant to this Section 4
or decrease the number of shares of Conversion Stock issuable upon conversion of
each Share of Series A-1 Preferred.
H. Notices.
(i) Immediately upon any adjustment of the Conversion Price,
the Corporation shall give written notice thereof to all holders of Series A-1
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders
of Series A-1 Preferred at least 20 days prior to the date on which the
Corporation closes its books or takes a record (a) with respect to any dividend
or distribution upon Common Stock, (b) with respect to any pro rata subscription
offer to holders of Common Stock, or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(iii) The Corporation shall also give written notice to the
holders of Series A-1 Preferred at least 20 days prior to the date on which any
Organic Change shall take place.
I. Mandatory Conversion. The Corporation's board of directors
may at any time require the conversion of all of the outstanding Series A-1
Preferred upon the occurrence of a Conversion Event (as hereinafter defined).
Any such mandatory conversion shall only be effected at the time of and subject
to the closing of the transactions contemplated by the Conversion Event and upon
written notice of such mandatory conversion delivered to all holders of Series
A-1 Preferred at least seven (7) days prior to such closing.
Section 5. Purchase Rights.
If at any time the Corporation grants, issues or sells any
options, convertible securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then each holder of Series A-1 Preferred
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Conversion Stock acquirable upon
conversion of such holder's Series A-1 Preferred immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.
Section 6. Registration of Transfer.
The Corporation shall keep at its principal office a register
for the registration of Series A-1 Preferred. Upon the surrender of any
certificate representing Series A-I Preferred at such place, the Corporation
shall, at the request of the record holder of such certificate, execute and
deliver (at the Corporation's expense) a new certificate or certificates in
exchange therefor representing in the aggregate the number of Shares represented
by the surrendered certificate. Each such new certificate shall be registered in
such name and shall represent such number of Shares as is requested by the
holder of the surrendered certificate and shall be substantially identical in
form to the surrendered certificate.
Section 7. Replacement
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing Shares of any class of Series A-1 Preferred, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation (provided that if the holder is a financial
institution or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation, upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
Shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 8. Definitions.
"Common Stock" means, collectively, the Corporation's Common
Stock, no par value, and any capital stock of any class of the Corporation
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
"Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Section
4(D) hereof whether or not the Options or Convertible Securities are actually
exercisable at such time.
"Conversion Event" means (i) a Qualified Public Offering, (ii)
any sale of all the outstanding capital stock of the Corporation, or (iii) a
merger, consolidation, sale of substantially all of the assets of the
Corporation or similar transaction involving the Corporation.
"Conversion Stock" means shares of Common Stock; provided that
if there is a change such that the securities issuable upon conversion of the
Series A-1 Preferred are issued by an entity other than the Corporation or there
is a change in the class of securities so issuable, then the term "Conversion
Stock" shall mean one share of the security issuable upon conversion of the
Series A-1 Preferred if such security is issuable in shares, or shall mean the
smallest unit in
which such security is issuable if such security is not issuable in shares.
"Junior Securities" means any of the Corporation's equity
securities other than the Series A-1 Preferred and the Preferred Class.
"Liquidation Premium" means the amount determined pursuant to
the following equation:
Liquidation Premium = ((1.2)14 x CP) - DP - Liquidation Value
; where (i) N = the number of years, including any fractional
portion thereof, from the date of issuance of the Series A-1
Preferred to the date of payment of the Liquidation Premium
(the "Payment Date"), (ii) CP = the Conversion Price, and
(iii) DP = the sum of the future values of any distributions
or dividends paid per. share of Series A-1 Preferred prior to
the Payment Date, assuming such dividend or distribution was
reinvested by the holder thereof at an annually compounded
rate of 20% from the date of payment to the Payment Date.
"Liquidation Value" of any Share as of any particular date
shall be equal to $2,7154.
"Person" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Oualified Public Offering" means any underwritten offering by
the Corporation of its equity securities to the public pursuant to an effective
registration statement under the Securities Act of 1933, as then in effect, or
any comparable statement under any similar federal statute then in force
pursuant to which the value of the Corporation prior to receipt of the proceeds
of such offering is at least $25,000,000 and the minimum gross proceeds to the
Corporation is $15,000,000; provided that for purposes of Section 4(G) hereof, a
Qualified Public Offering shall not include an offering made in connection with
a business acquisition or combination or an employee benefit plan.
Section 9. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to, any provision of Sections 1 to 10 hereof without the
prior written consent of the holders of at least 75% of the Series A-1 Preferred
outstanding at the time such action is taken. No change in the terms hereof may
be accomplished by merger or consolidation of the Corporation with another
corporation or entity unless the Corporation has obtained the prior written
consent of the holders of 75% of the Series A-1 Preferred then outstanding.
Section 10. Notices.
Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be delivered by registered or
certified mail, return receipt requested and postage prepaid, or by reputable
overnight courier service, charges prepaid, and shall be deemed to have been
given when so mailed or sent (i) to the Corporation, at its principal executive
offices, and (ii) to any stockholder, at such holder's address as it appears in
the stock records of the Corporation (unless otherwise indicated by any such
holder).
EXHIBIT B
SERIES A-2 CONVERTIBLE PREFERRED STOCK
Section 1. Dividends.
When and as declared by the Corporation's board of directors
and to the extent permitted under the Colorado Business Corporation Act, the
holders of the Series A-2 Convertible Preferred Stock (the "Series A-2
Preferred") shall participate ratably with the holders of shares of the
Corporation's Common Stock (as hereinafter defined), Series A-1 Convertible
Preferred Stock (the "Series A-1 Preferred") and Series A-3 Convertible
Preferred Stock (the "Series A-3 Preferred Stock") in any dividends on the
Common Stock based upon the number of shares of Common Stock into which each
share of Series A-2 Preferred (a "Share") is convertible at the time of such
declaration.
Section 2. Liquidation.
Upon any liquidation, dissolution or winding up of the
Corporation, the holders of the Series A-2 Preferred and the Series A-3
Preferred as a class (the "Preferred Class") shall vote to either (A) (i)
convert all of the Series A-2 Preferred (including any fraction of a Share) into
Conversion Stock (as hereinafter defined) pursuant to the provisions of Section
4 below, (ii) convert all of the Series A-3 Preferred (including any fraction of
a share) into Series A-2 Preferred, (iii) convert the Series A-2 Preferred
referred to in clause (ii) above into Conversion Stock, and (iv) share ratably
with the holders of Series A-1 Preferred, if applicable, and Junior Securities
(as hereinafter defined) in any distribution or payment upon such liquidation,
dissolution or winding up of the Corporation, or (B) be paid, before any
distribution or payment is made upon any Junior Securities and concurrently with
the holders of Series A- 1 Preferred as set forth below, an amount in cash equal
to the Liquidation Value (as hereinafter defined) of the Series A-2 Preferred
and the liquidation value of the Series A-3 Preferred (the "Liquidation
Payment"). For purposes of this Section 2, the vote of the holders of the
majority of the Preferred Class as a group shall de deemed to be the election of
all of the holders of the Preferred Class.' If the holders of the Preferred
Class elect not to convert the Preferred Class pursuant to clause (A) above and
elect to receive a cash payment pursuant to clause (B) above and the holders of
the Series A-1 Preferred elect not to convert their shares of Series A-1
Preferred into Conversion Stock, the holders of the Preferred Class and the
holders of the Series A- 1 Preferred shall share the Liquidation Payment ratably
based upon the aggregate Liquidation Value of the Series A-2 Preferred and the
aggregate liquidation value of the Series A-1 Preferred -and the Series A-3
Preferred held by each such holder pursuant to clause (B) above, after the
payment of which the holders of the Series A-1 Preferred shall receive payment
of the Series A-1 Preferred liquidation premium, after the payment of which any
remaining assets shall be distributed to the holders of Junior Securities. If
the holders of the Preferred Class elect to convert the Preferred Class pursuant
to clause (A) above and elect not to receive a cash payment pursuant to clause
(B) above and the holders of the Series A- I Preferred elect not to convert
their shares of Series A-1 Preferred into Conversion Stock, the holders of the
Series A-1 Preferred shall receive payment of the Series A-1 Preferred
liquidation amount before any distribution or payment is made upon the
Preferred Class or any Junior Securities and, thereafter, the holders of the
Preferred Class shall share ratably with the holders of Junior Securities in any
distribution or payment upon such liquidation, dissolution or winding up of the
Corporation. If the holders of the Preferred Class elect not to convert the
Preferred Class pursuant to clause (A) above and elect to receive a cash payment
pursuant to clause (B) above and the holders of the Series A-1 Preferred elect
to convert their shares of Series A-1 Preferred into Conversion Stock, the
holders of the Preferred Class shall receive the Liquidation Payment before any
distribution or payment is made upon the Series A- I Preferred or any Junior
Securities and, thereafter, the holders of the Series A-1 Preferred shall share
ratably with the holders of Junior Securities in any distribution or payment
upon such liquidation, dissolution or winding up of the Corporation. If the
holders of the Preferred Class elect to convert the Preferred Class pursuant to
clause (A) above and elect not to receive a cash payment pursuant to clause (B)
above and the holders of the Series A-1 Preferred elect to convert their shares
of Series A- 1 Preferred into Conversion Stock, the holders of the Preferred
Class and the holders of the Series A-1 Preferred shall share ratably with the
holders of Junior Securities in any distribution or payment upon such
liquidation, dissolution or winding up of the Corporation. The Corporation shall
mail written notice of such liquidation, dissolution or winding up, not less
than sixty (60) days prior to the payment date stated therein (the "Payment
Date"), to each record holder of Series A-2 Preferred. Neither the consolidation
or merger of the Corporation into or with any other entity or entities, nor the
sale or transfer by the Corporation of all or any part of its assets, nor the
reduction of the capital stock of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 2.
Section 3. Voting Rights.
The holders of the Series A-2 Prefer-red shall be entitled to
notice of all stockholders meetings in accordance with the Corporation's bylaws,
and the holders of the Series A-2 Preferred shall be entitled to vote on all
matters submitted to the stockholders for a vote together with the holders of
the Common Stock and the Series A-1 Preferred voting together as a single class
with each share of Common Stock entitled to one vote per shake, each share of
Series A-1 Preferred entitled to one vote for each share of Common Stock
issuable upon conversion of the Series A- I Preferred at the time the vote is.
taken, and each Share of Series A-2 Preferred entitled to one vote for each
share of Common Stock issuable upon conversion of the Series A-2 Preferred at
the time the vote is taken.
Section 4. Conversion.
A. Conversion Procedure.
(i) At any time and from time to time, any holder of Series
A-2 Preferred may convert all or any portion of the Series A-2 Preferred
(including any fraction of a Share) held by such holder into a number of shares
of Conversion Stock computed by multiplying the number of Shares to be converted
by $2.8626 and dividing. the result by the Conversion Price (as hereinafter
defined) then in effect.
(ii) Each conversion of Series A-2 Preferred shall be deemed
to have been effected as of the close of business on the date on which the
certificate or certificates representing the Series A-2 Preferred to be
converted have been surrendered at the principal office of the Corporation. At
such time as such conversion has been effected, the rights of the holder of such
Series A-2 Preferred as such holder shall cease and the Person (as hereinafter
defined) or Persons in whose name or names any certificate or certificates for
shares of Conversion Stock are to be issued upon such conversion shall be deemed
to have become the holder or holders of record of the shares of Conversion Stock
represented thereby; provided, however, that for purposes of Section 2(A) above
the conversion of the Series A-2 Preferred shall be deemed to have been effected
as of the close of business on the day prior to the Payment Date.
(iii) Notwithstanding any other provision hereof, if a
conversion of Series A-2 Preferred is to be made in connection with a Qualified
Public Offering (as hereinafter defined), the conversion of any Shares of Series
A-2 Preferred may, at the election of the holder of such Shares, be conditioned
upon the consummation of the Qualified Public Offering in which case such
conversion shall not be deemed to be effective until the consummation of the
Qualified Public Offering.
(iv) As soon as possible after a conversion has been effected
(but in any event within five business days in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the
number of shares of Conversion Stock issuable by reason of such
conversion in such name or names and such denomination or denominations
as the converting holder has specified;
(b) payment of the amount payable under subparagraph
(vii) below with respect to such conversion; and
(c) a certificate representing any Shares of Series
A-2 Preferred which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion but
which were not converted.
(v) The issuance of certificates for shares of Conversion
Stock upon conversion of Series A-2 Preferred shall be made without charge to
the holders of such Series A-2 Preferred for any issuance tax in respect thereof
or other cost incurred by the Corporation in connection with such conversion and
the related issuance of shares of Conversion Stock. Upon conversion of each
Share of Series A-2 Preferred, the Corporation shall take all such actions as
are necessary in order to insure that the Conversion Stock issuable with respect
to such conversion shall be Validly issued, fully paid and nonassessable.
(vi) The Corporation shall not close its books against the
transfer of Series A-2 Preferred or of Conversion Stock issued or issuable upon
conversion of Series A-2 Preferred in any manner which interferes with the
timely conversion of Series A-2 Preferred. The Corporation shall assist and
cooperate with any holder of Shares required to make any governmental filings or
obtain any governmental approval prior to or in connection with any conversion
of Shares
hereunder (including, without limitation, making any filings required to be made
by the Corporation).
(vii) If any fractional interest in a share of Conversion
Stock would, except for the provisions of this subparagraph, be deliverable upon
any conversion of the Series A-2 Preferred, the Corporation, in lieu of
delivering the fractional share therefor, may pay an amount to the holder
thereof equal to the fair market price of such fractional interest as of the
date of conversion as determined by the Corporation's board of directors.
(viii) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock, solely
for the purpose of issuance upon the conversion of the Series A-2 Preferred,
such number of shares of Conversion Stock issuable upon the conversion of all
outstanding Shares of Series A-2 Preferred. All shares of Conversion Stock which
are so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance).
B. Conversion Price. The initial "Conversion Price" shall be
$2.8626 per share. In order to prevent dilution of the conversion right s
granted under this subdivision, the Conversion Price shall be subject to
adjustment from time to time pursuant to this Section 4.
C. Anti-Dilution. If and whenever on or after the original
date of issuance of the Series A-2 Preferred the Corporation issues or sells, or
in accordance with Section 4(D) hereof is deemed to have issued or sold, any
shares of its Common Stock for a consideration per share less than the
Conversion Price in effect immediately prior to the time of such issue or sale,
then forthwith upon such issue or sale the Conversion Price shall be reduced to
the Conversion Price determined by dividing (i) the sum of (a) the product
derived by multiplying the Conversion Price in effect immediately prior to such
issue or sale times the number of shares of Common Stock Deemed Outstanding
immediately prior to such issue or sale, plus (b) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the number of
shares of Common Stock Deemed Outstanding immediately after such issue or sale;
provided that there shall be no adjustment in the Conversion Price as a result
of any issuance or sale (or deemed issuance or sale) of (x) options issued
pursuant to the Corporation's stock option plan and capital stock issued upon
the exercise thereof, (y) capital stock of the Corporation upon the exercise of
warrants held by each of Patrick Van Den Bossche and NationsCredit Commercial
Corporation and any conversion of such capital stock subsequent to its issuance,
and (z) the issuance of capital stock of the Corporation upon the conversion of
the Series A-1 Preferred or the Preferred Class.
D. Effect on Conversion Price of Certain Events. For purposes
of determining the adjusted Conversion Price under Section 6(C) hereof, the
following shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
manner grants any rights or options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for Common
Stock (such rights or options being herein called "Options" and such convertible
or exchangeable stock or securities being herein called "Convertible
Securities") and the price per share for which Common Stock is issuable upon the
exercise of such Options or upon conversion or exchange of such Convertible
Securities. is less than the Conversion Price in effect immediately prior to the
time of the granting of such Options then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Corporation at the time of the granting of such
Options for such price per share. For purposes of this Section 4(D)(i), the
"price per share for which Common Stock is issuable" shall be determined by
dividing (a) the total amount, if any, received or receivable by the Corporation
as consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Corporation upon exercise of
all such Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the issuance of sale or such Convertible
Securities and the conversion or exchange thereof, by (b) the total maximum
number of shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No further adjustment of the Conversion Price
shall be made when Convertible Securities are. actually issued upon the exercise
of such Options or when Common Stock is actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation in
any manner issues or sells any Convertible Securities and the price per share
for which Common Stock is issuable upon such conversion or exchange is less than
the Conversion Price in effect immediately prior to the time of such issue or
sale then the maximum number of shares of Common Stock issuable upon conversion
or exchange of such Convertible Securities shall be deemed to be outstanding and
to have been issued and sold by the Corporation at the time of the issuance or
sale of such Convertible Securities for such price per share. For the purposes
of this Section 4(D)(ii), the "price per share for which Common Stock is
issuable" shall be determined by dividing (a) the total amount received or
receivable by the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (b) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No
further adjustment of the Conversion Price shall be made when Common Stock is
actually issued upon the conversion or exchange of such Convertible Securities,
and if any such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustments of the Conversion Price had been
or are to be made pursuant to other provisions of this Section 4, no further
adjustment of the Conversion Price shall be made by reason of such issue or
sale.
(iii) Change in Option Price or Conversion Rate. If the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities, or
the, rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock change at any time, the Conversion Price in effect
at the time of such change shall be readjusted to the Conversion Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold.
E. Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision shall be proportionately reduced, and if
the Corporation at any time combines (by reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
F. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Corporation's assets to another
Person or other transaction which is effected in such a manner that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series A-2 Preferred then outstanding) to insure that each of the holders of
Series A-2 Preferred shall thereafter have the right to acquire and receive, in
lieu of or in addition to (as the case may be), the shares of Conversion Stock
immediately theretofore acquirable and receivable upon the conversion of such
holder's Series A-2 Preferred, such shares of stock, securities or assets as
such holder would have received in connection with such Organic Change if such
holder had converted its Series A-2 Preferred immediately prior to such Organic
Change. In each such case, the Corporation shall also make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series A-2 Preferred then outstanding) to insure that the provisions of this
Section 4 and Section 5 hereof shall thereafter be applicable to the Series A-2
Preferred (including, in the case of any such consolidation, merger or sale in
which the successor entity or purchasing entity is other than the Corporation,
an immediate adjustment of the Conversion Price to the value for the Common
Stock reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of Conversion Stock
acquirable and receivable upon conversion of Series A-2 Preferred, if the value
so reflected is less than the Conversion Price in effect immediately prior to
such consolidation, merger or sale). The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Corporation) resulting from
consolidation or merger or the corporation purchasing such assets assumes by
written instrument (in form reasonably satisfactory to the holders of a majority
of the Series A-2 Preferred then outstanding), the obligation to deliver to each
such holder such shares
of stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to acquire.
G. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 4 but not expressly provided for
by such provisions, then the Corporation's board of directors shall make an
appropriate adjustment in the Conversion Price so as to protect the rights of
the holders of Series A-2 Preferred; provided that no such adjustment shall
increase the Conversion Price as otherwise determined pursuant to this Section 4
or decrease the number of shares of Conversion Stock issuable upon conversion of
each Share of Series A-2 Preferred.
H. Notices.
(i) Immediately upon any adjustment of the Conversion Price,
the Corporation shall give written notice thereof to all holders of Series A-2
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders
of Series A-2 Preferred at least 20 days prior to the date on which the
Corporation closes its books or takes a record (a) with respect to any dividend
or distribution upon Common Stock, (b) with respect to any pro rata subscription
offer to holders of Common Stock, or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(iii) The Corporation shall also give written notice to the
holders of Series A-2 Preferred at least 20 days prior to the date on which any
Organic Change shall take place.
I. Mandatory Conversion. The Corporation's board of directors
may at any time require the conversion of all of the outstanding Series A-2
Preferred upon the occurrence of a Conversion Event (as hereinafter defined).
Any such mandatory conversion shall only be effected at the time of and subject
to the closing of the transactions contemplated by the Conversion Event and upon
written notice of such mandatory conversion delivered to all holders of Series
A-2 Preferred at least seven (7) days prior to such closing.
Section 5. Purchase Rights.
If at any time the Corporation grants, issues or sells any
options, convertible securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then each holder of Series A-2 Preferred
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Conversion Stock acquirable upon
conversion of such holder's Series A-2 Preferred immediately before the date on
which a record is taken for the. grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
Section 6. Registration of Transfer.
The Corporation shall keep at its principal office a register
for the registration of Series A-2 Preferred. Upon the surrender of any
certificate representing Series A-2 Preferred at such place, the Corporation
shall, at the request of the record holder of such certificate, execute and
deliver (at the Corporation's expense) a new certificate or certificates in
exchange therefor representing in the aggregate the number of Shares represented
by the surrendered certificate. Each such new certificate shall be registered in
such name and shall represent such number of Shares as is requested by the
holder of the surrendered certificate and shall be substantially identical in
form to the surrendered certificate.
Section 7. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing Shares of any class of Series A-2 Preferred, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation (provided that if the holder is a financial
institution or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation, upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
Shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 8. Definitions.
"Common Stock" means, collectively, the Corporation's Common
Stock, no par value, and any capital stock of any class of the Corporation
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
"Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Section
4(D) hereof whether or not the Options or Convertible Securities are actually
exercisable at such time.
"Conversion Event" means (i) a Qualified Public Offering, (ii)
any sale of all the outstanding capital stock of the Corporation, or (iii) a
merger, consolidation, sale, of substantially all of the assets of the
Corporation or similar transaction involving the Corporation.
"Conversion Stock" means shares of Common Stock; provided that
if there is a change such that the securities issuable upon conversion of the
Series A-2 Preferred are issued by an entity other than the Corporation or there
is a change in the class of securities so issuable, then the term "Conversion
Stock" shall mean one share of the security issuable upon conversion of the
Series A-2 Preferred if such security is issuable in shares, or shall mean the
smallest unit in which such security is issuable if such security is not
issuable in shares.
"Junior Securities" means any of the Corporation's equity
securities other than the Series A-1 Preferred and the Preferred Class.
"Liquidation Value" of any Share as of any particular date
shall be equal to $2.8626.
"Person" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Qualified Public Offering" means any underwritten offering by
the Corporation of its equity securities to the public pursuant to an effective
registration statement under the Securities Act of 1933, as then in effect, or
any comparable statement under any similar federal statute then in force
pursuant to which the value of the Corporation prior to receipt of the proceeds
of such offering is at least $25,000,000 and the minimum gross proceeds to the
Corporation is $15,000,000; provided that for purposes of Section 4(G) hereof, a
Qualified Public Offering shall not include an offering made in connection with
a business acquisition or combination or an employee benefit plan.
Section 9. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to any provision of Sections 1 to 10 hereof without the
prior written consent of the holders of at least 75% of the Series A-2 Preferred
outstanding at the time such action is taken. No change in the terms hereof may
be accomplished by merger or consolidation of the Corporation with another
corporation or entity unless the Corporation has obtained the prior written
consent of the holders of 75% of the Series A-2 Preferred then outstanding.
Section 10. Notices.
Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be delivered by registered or
certified mail, return receipt requested and postage prepaid, or by reputable
overnight courier service, charges prepaid, and shall be deemed to have been
given when so mailed or sent (i) to the Corporation, at its principal executive
offices, and (ii) to any stockholder, at such holder's address as it appears in
the stock records of the Corporation (unless otherwise indicated by any such
holder).
EXHIBIT C
SERIES A-3 CONVERTIBLE PREFERRED STOCK
Section 1. Dividends.
When and as declared by the Corporation's board of directors
and to the extent permitted under the Colorado Business Corporation Act, the
holders of the Series A-3 Convertible Preferred Stock (the "Series A-3
Preferred") shall participate ratably with the holders of shares of the
Corporation's Common Stock (as hereinafter defined), Series A-1 Convertible
Preferred Stock (the "Series A-1 Preferred") and Series A-2 Convertible
Preferred Stock (the "Series A-2 Preferred") in any dividends on the Common
Stock based upon the number of shares of Common Stock into which each share of
Series A-2 Preferred issuable upon conversion of each share of the Series A-3
Preferred (a "Share") is convertible at the time of such declaration.
Section 2. Liquidation.
Upon any liquidation, dissolution or winding up of the
Corporation, the holders of Series A-2 Preferred and the Series A-3 Preferred as
a class (the "Preferred Class") shall vote to either (A) (i) convert all of the
Series A-2 Preferred (including any fraction of a share) into Common Stock, (ii)
convert all of the Series A-3 Preferred (including any fraction of a Share) into
Conversion Stock (as hereinafter defined) pursuant to the provisions of Section
4 below, (iii) convert the Conversion Stock into Common Stock, and (iv) share
ratably with the holders of Series A-1 Preferred, if applicable, and Junior
Securities (as hereinafter defined) in any distribution or payment upon such
liquidation, dissolution or winding up of the Corporation, or (B) be paid,
before any distribution or payment is made upon any Junior Securities and
concurrently with the holders of Series A-1 Preferred as set forth below, an
amount in cash equal to the Liquidation Value (as hereinafter defined) of the
Series A-3 Preferred and the liquidation value of the Series A-2 Preferred (the
"Liquidation Payment"). For purposes of this Section 2, the vote of the holders
of the majority of the Preferred Class as a group shall be deemed to be the
election of all of the holders of the Preferred Class. If the holders of the
Preferred Class elect not to convert the Preferred Class pursuant to clause (A)
above and elect to receive a cash payment pursuant to clause (B) above and the
holders-of the Series A-1 Preferred elect not to convert their shares of Series
A-1 Preferred into Common Stock, the holders of the Series A-1 Preferred and the
Preferred Class shall share the Liquidation Payment ratably based upon the
aggregate Liquidation Value of the Series A-3 Preferred and the aggregate
liquidation value of the Series A-1 Preferred and the Series A-2 Preferred held
by each such holder pursuant to clause (B) above, after the payment of which the
holders of the Series A-1 Preferred shall receive payment of the Series A-1
Preferred liquidation premium, after the payment of which any remaining assets
shall be distributed to the holders of Junior Securities. If the holders of the
Preferred Class elect to convert the Preferred Class pursuant to clause (A)
above and elect not to receive a cash payment pursuant to clause (B) above and
the holders of the Series A-1 Preferred elect not to convert their shares of
Series A-1 Preferred into Common Stock, the holders of the Series A-1 Preferred
shall receive payment of the Series A-1 Preferred liquidation amount before any
distribution or payment is made upon the Preferred Class or any Junior
Securities and, thereafter,
the holders of the Preferred Class shall share ratably with the holders of
Junior Securities in any distribution or payment upon such liquidation,
dissolution or winding up of the Corporation. If the holders of the Preferred
Class elect not to convert the Preferred Class pursuant to clause (A) above and
elect to receive a cash payment pursuant to clause (B) above and the holders of
the Series A-1 Preferred elect to convert their shares of Series A-1 Preferred
into Common Stock, the holders of the Preferred Class shall receive the
Liquidation Payment before any distribution or payment is made upon the Series
A-1 Preferred or any Junior Securities and, thereafter, the holders of the
Series A-1 Preferred shall share ratably with the holders of Junior Securities
in any distribution or payment upon such liquidation, dissolution or winding up
of the Corporation. If the holders of the Preferred Class elect to convert the
Preferred Class pursuant to clause (A) above and elect not to receive a cash
payment pursuant to clause (B) above and the holders of the Series A-1 Preferred
elect to convert their shares of Series A-1 Preferred into Common Stock, the
holders of the Series A-1 Preferred and the Preferred Class shall share ratably
with the holders of Junior Securities in any distribution or payment upon such
liquidation dissolution or winding up of the Corporation. The Corporation shall
mail written notice of such liquidation, dissolution or winding up not less than
sixty (60) days prior to the payment date stated therein (the "Payment Date"),
to each record holder of Series A-3 Preferred. Neither the consolidation or
merger of the Corporation into or with any other entity or entities, nor the
sale or transfer by the Corporation of all or any part of its assets, nor the
reduction of the capital stock of the Corporation, shall be deemed to be a
liquidation, dissolution, or winding up of the Corporation within the meaning of
this Section 2. Notwithstanding the foregoing, in no event shall a conversion of
the Series A-3 Preferred occur pursuant to this Section 2 if such conversion
would result in a violation of Regulation Y under the Bank Holding Company Act
of 1956, as amended.
Section 3. Voting Right.
The holders of the Series A-3 Preferred shall be entitled to
notice of all stockholders meetings in accordance with the Corporation's bylaws.
The holders of Series A-3 Preferred shall not have any voting rights, except as
otherwise required by applicable law, in which case holders of Series A-3
Preferred shall vote (at the rate of one vote per Share of Series A-3 Preferred
held) as a single class on such matter unless otherwise required by law.
Section 4. Conversion.
A. Conversion Procedure.
(i) At any time and from time to time, any holder of Series
A-3 Preferred may convert all or any portion of the Series A-3 Preferred
(including any fraction of a Share) held by such holder into a number of shares
of Conversion Stock computed by in multiplying the number of Shares to be
converted by $2.8626 and dividing the result by the Conversion Price (as
hereinafter defined) then in effect.
(ii) Each conversion of Series A-3 Preferred shall be deemed
to have been effected as of the close of business on the date on which the
certificate or certificates representing the Series A-3 Preferred to be
converted have been surrendered at the principal office of the
Corporation. At such time as such conversion has been effected, the rights of
the holder of such Series A-3 Preferred as such holder shall cease and the
Person (as hereinafter defined) or Persons in whose name or names any
certificate or certificates for shares of Conversion Stock are to be issued upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of Conversion Stock represented thereby; provided, however, that
for purposes of Section 2(A) above the conversion of the Series A-3 Preferred
and the conversion of the Conversion Stock issued in connection therewith shall
be deemed to have been effected as of the close of business on the day prior to
the Payment Date.
(iii) Notwithstanding any other provision hereof, if a
conversion of Series A-3 Preferred is to be made in connection with a Qualified
Public Offering (as hereinafter defined), the conversion of any Shares of Series
A-3 Preferred may, at the election of the holder of such Shares, be conditioned
upon the consummation of the Qualified Public Offering in which case such
conversion shall not be deemed to be effective until the consummation of the
Qualified Public Offering.
(iv) As soon as possible after a conversion has been effected
(but in any event within five business days in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the
number of shares of Conversion Stock issuable by reason of such
conversion in such name or names and such denomination or denominations
as the converting holder has specified;
(b) payment of the amount payable under subparagraph
(vii) below with respect to such conversion; and
(c) a certificate representing any Shares of Series
A-3 Preferred which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion but
which were not converted.
(v) The issuance of certificates for shares of Conversion
Stock upon conversion of Series A-3 Preferred shall be made without charge io
the holders of such Series A-3 Preferred for any issuance tax in respect thereof
or other cost incurred by the Corporation in connection with such conversion and
the related issuance of shares of Conversion Stock. Upon conversion of each
Share of Series A-3 Preferred, the Corporation shall take all such actions as
are necessary in order to insure that the Conversion Stock issuable with respect
to such conversion shall be validly issued, fully paid and nonassessable.
(vi) The Corporation shall not close its books against the
transfer of Series A-3 Preferred or of Conversion Stock issued or issuable upon
conversion of Series A-3 Preferred in any manner which interferes with the
timely conversion of Series A-3 Preferred. The Corporation shall assist and
cooperate with any holder of Shares required to make any governmental filings or
obtain any governmental approval prior to or in connection with any conversion
of Shares hereunder (including, without limitation, making any filings required
to be made by the
Corporation).
(vii) If any fractional interest in a share of Conversion
Stock would, except for the provisions of this subparagraph, be deliverable upon
any conversion of the Series A-3 Preferred, the Corporation, in lieu of
delivering the fractional share therefor, may pay an amount to the holder
thereof equal to the fair market price of such fractional interest as of the
date of conversion as. determined by the Corporation's board of directors.
(viii) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock, solely
for the purpose of issuance upon the conversion of the Series A-3 Preferred,
such number of shares of Conversion Stock issuable upon the conversion of all
outstanding Shares of Series A-3 Preferred. All shares of Conversion Stock which
are so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance).
B. Conversion Price. The initial "Conversion Price" shall be
$2.8626 per share. In order to prevent dilution of the conversion rights granted
under this subdivision, the Conversion Price shall be subject to adjustment from
time to time pursuant to this Section 4.
C. Anti-Dilution. If and whenever on or. after the original
date of issuance of the Series A-3 Preferred the Corporation issues or sells, or
in accordance with Section 4(D) hereof is deemed to have issued or sold, any
shares of its Common Stock for a consideration per share less than the
Conversion Price in effect immediately prior to the time of such issue or sale,
then forthwith upon such issue or sale the Conversion Price shall be reduced to
the Conversion Price determined by dividing (i) the sum of (a) the product
derived by multiplying the Conversion Price in effect immediately prior to such
issue or sale times the number of shares of Common Stock Deemed Outstanding
immediately prior to such issue or sale, plus (b) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the number of
shares of Common Stock Deemed Outstanding immediately after such issue or sale;
provided that there shall be no adjustment in the Conversion Price as a result
of any issuance or sale (or deemed issuance or sale) of (x) options issued
pursuant to the Corporation's stock option plan and capital stock issued upon
the exercise thereof, (y) capital stock of the Corporation issued upon the
exercise of warrants held by each of Patrick Van Den Bossche and NationsCredit
Commercial Corporation and any conversion of such capital stock subsequent to
its issuance, and (z) the issuance of capital stock of the Corporation upon the
conversion of Series A-1 Preferred or the Preferred Class.
D. Effect on Conversion Price of Certain Events. For purposes
of determining the adjusted Conversion Price under Section 6(C) hereof, the
following shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
manner grants any rights or options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for Common
Stock (such rights or options being herein called "Options" and such convertible
or exchangeable stock or securities being herein called "Convertible
Securities") and the price per share for which Common Stock is issuable upon the
exercise of such Options or upon conversion or exchange of such Convertible
Securities is less than the Conversion Price in effect immediately prior to the
time of the granting of such Options then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Corporation at the time of the granting of such
Options for such price per share. For purposes of this Section 4(D)(i), the
"price per share for which Common Stock is issuable" shall be determined by
dividing (a) the total amount, if any, received or receivable by the Corporation
as consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Corporation upon exercise of
all such Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the issuance of sale or such Convertible
Securities and the conversion or exchange thereof by (b) the, total maximum
number of shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No further adjustment of the Conversion Price
shall be made when Convertible Securities are actually issued upon the exercise
of such Options or when Common Stock is actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation in
any manner issues or sells any Convertible Securities and the price per share
for which Common Stock is issuable upon such conversion or exchange is less than
the Conversion Price in effect immediately prior to the time of such issue or
sale then the maximum number of shares of Common Stock issuable upon conversion
or exchange of such Convertible Securities shall be deemed to be outstanding and
to have been issued and sold by the Corporation at the time of the issuance or
sale of such Convertible Securities for such price per share. For the purposes
of this Section 4(D)(ii), the "price per share for which Common Stock is
issuable" shall be determined by dividing (a) the total amount received or
receivable by the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (b) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No
further adjustment of the Conversion Price shall be made when Common Stock is
actually issued upon the conversion or exchange of such Convertible Securities,
and if any such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustments of the Conversion Price had been
or are to be made pursuant to other provisions of this Section 4, no further
adjustment of the Conversion Price shall be made by reason of such issue or
sale.
(iii) Change in Option Price or Conversion Rate. If the
purchase price provided
for in any Options, the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities, or the rate at which any
Convertible Securities are convertible into or exchangeable for Common Stock
change at any time, the Conversion Price in effect at the time of such change
shall be readjusted to the Conversion Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold.
E. Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision shall be proportionately reduced, and if
the Corporation at any time combines (by reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
F. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Corporation's assets to another
Person or other transaction which is effected in such a manner that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series A-3 Preferred then outstanding) to insure that each of the holders of
Series A-3 Preferred shall thereafter have the right to acquire and receive, in
lieu of or in addition to (as the case may be), the shares of Conversion Stock
immediately theretofore acquirable and receivable upon the conversion of such
holder's Series A-3 Preferred, such shares of stock, securities or assets as
such holder would have received in connection with such Organic Change if such
holder had converted its Series A-3 Preferred into Conversion Stock and
converted the Conversion Stock immediately prior to such Organic Change. In each
such case, the Corporation shall also make appropriate provisions (in form and
substance satisfactory to the holders of a majority of the Series A-3 Preferred
then outstanding) to insure that the provisions of this Section 4 and Section 5
hereof shall thereafter be applicable to the Series A-3 Preferred (including, in
the case of any such consolidation, merger or sale in which the successor entity
or purchasing entity is other than the Corporation, an immediate adjustment of
the Conversion Price to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and a corresponding immediate adjustment in
the number of shares of Conversion Stock acquirable and receivable upon
conversion of Series A-3 Preferred, if the value so reflected is less than the
Conversion Price in effect immediately prior to such consolidation, merger or
sale). The Corporation shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor corporation (if other
than the Corporation) resulting from consolidation or merger or the corporation
purchasing such assets assumes by written instrument (in form reasonably
satisfactory to the holders of a majority of the Series A-3 Preferred then
outstanding), the obligation to deliver to each such holder such shares of
stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire.
G. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 4 but not expressly provided for
by such provisions, then the Corporation's board of directors shall make an
appropriate adjustment in the Conversion Price so as to protect the rights of
the holders of Series A-3 Preferred; provided that no such adjustment shall
increase the Conversion Price as otherwise determined pursuant to this Section
4 or decrease the number of shares of Conversion Stock issuable upon conversion
of each Share of Series A-3 Preferred.
H. Notices.
(i) Immediately upon any adjustment of the Conversion Price,
the Corporation shall give written notice thereof to all holders of Series A-3
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders
of Series A-3 Preferred at least 20 days prior to the date on which the
Corporation closes its books or takes a record (a) with respect to any dividend
or distribution upon Common Stock, (b) with respect to any pro rata subscription
offer to holders of Common Stock, or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(iii) The Corporation shall also give written notice to the
holders of Series A-3 Preferred at least 20 days prior to the date on which any
Organic Change shall take place.
I. Mandatory Conversion. The Corporation's board of directors
may at any time require the conversion of all of the outstanding Series A-3
Preferred and the conversion of the Conversion Stock received in connection
therewith upon the occurrence of a Conversion Event (as hereinafter defined);
provided, however, that the board of directors may not require such mandatory
conversions if any such conversion would result in a violation of Regulation Y
under the Bank Holding Company Act of 1956, as amended. Any such mandatory
conversion shall only be effected at the time of and subject to the closing of
the transactions contemplated by the Conversion Event and upon written notice of
such mandatory conversion delivered to all holders of Series A-3 Preferred at
least seven (7) days prior to such closing.
Section 5. Purchase Rights.
If at any time the Corporation grants, issues or sells any
options, convertible securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then each holder of Series A-3 Preferred
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Common Stock issuable upon conversion of
the Conversion Stock acquirable upon conversion of such holder's Series A-3
Preferred immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.
Section 6. Registration of Transfer.
The Corporation shall keep at its principal office a register
for the registration of Series A-3 Preferred. Upon the surrender of any
certificate representing Series A-3 Preferred at such place, the Corporation
shall, at the request of the record holder of such certificate, execute and
deliver (at the Corporation's expense) a new certificate or certificates in
exchange therefor representing in the aggregate the number of Shares represented
by the surrendered certificate. Each such new certificate shall be registered in
such name and shall represent such number of Shares as is requested by the
holder of the surrendered certificate and shall be substantially identical in
form to the surrendered certificate.
Section 7. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing Shares of any class of Series A-3 Preferred, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation (provided that if the holder is a financial
institution or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation, upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
Shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 8. Regulated Stockholders.
The Corporation will not convert or directly or indirectly
redeem, purchase, acquire or take any other action affecting outstanding shares
of capital stock of the Corporation if such action will increase the percentage
of outstanding voting securities owned or controlled by any Regulation Y Holder
and its Affiliates (other than a Regulation Y Holder which waives in writing its
rights under this Section 9), unless the Corporation gives written notice (the
"Deferral Notice") of such action to each Regulation Y Holder. The Corporation
will defer making any such conversion, redemption, purchase or other
acquisition, or taking any such other action, for a period of 20 days (the
"Deferral Period") after giving the Deferral Notice in order tp allow each
Regulation Y Holder to determine whether it wishes to convert or take any other
action with respect to the Series A-3 Preferred it owns, controls or has the
power to vote, and if any Regulation Y Holder then elects to convert any Shares
of Series A-3 Preferred, it shall notify the Corporation in writing within 10
days of the issuance of the Deferral Notice, in which case the Corporation shall
promptly notify from time to time prior to the end of such 20-day period each
other Regulation Y Holder of each proposed conversion and effect the conversions
requested by all Regulation Y Holders at the end of the Deferral Period. The
Corporation will not directly or indirectly redeem, purchase, acquire or take
any other action affecting outstanding shares of
Common Stock of the Corporation if such action will increase over 24.9% the
percentage of outstanding Common Stock owned or controlled by any Regulation Y
Holder and its Affiliates (other than a Regulation Y Holder which waives in
writing its rights under this Section 9).
Section 9. Definitions.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such Person. For the purpose of the above definition, the term "control"
(including with correlative meaning, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contact or otherwise.
"Common Stock" means, collectively, the Corporation's Common
Stock, no par value, and any capital stock of any class of the Corporation
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
"Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Section
4(D) hereof whether or not the Options or Convertible Securities are actually
exercisable at such time.
"Conversion Event" means (i) a Qualified Public Offering, (ii)
any sale of all the outstanding capital stock of the Corporation, or (iii) a
merger, consolidation, sale of substantially all of the assets of the
Corporation or similar transaction involving the Corporation.
"Conversion Stock" means shares of Series A-2 Preferred;
provided that if there is a change such that the securities issuable upon
conversion of the Series A-3 Preferred are issued by an entity other than the
Corporation or there is a change in the class of securities so issuable, then
the term "Conversion Stock" shall mean one share of the security issuable upon
conversion of the Series A-3 Preferred if such security is issuable in shares,
or shall mean the smallest unit in which such security is issuable if such
security is not issuable in shares.
"Junior Securities" means any of the Corporation's equity
securities Series A-1 Preferred and the Preferred Class.
"Liquidation Value" of any Share as of any particular date
shall be equal to $2.8626.
"Person" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department agency or political subdivision
thereof.
"Qualified Public Offering" means any underwritten offering by
the Corporation of its equity securities to the public pursuant to an effective
registration statement under the Securities Act of 1933, as then in effect, or
any comparable statement under any similar federal statute then in force
pursuant to which the value of the Corporation prior to receipt of the proceeds
of such offering is at least $25,000,000 and the minimum gross proceeds to the
Corporation is $15,000,000; provided that for purposes of Section 4(G) hereof,
a Qualified Public Offering shall not include an offering made in connection.
with a business acquisition or combination or an employee benefit plan.
"Regulation Y Holder" shall mean any stockholder of the
Corporation that is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended, or a subsidiary thereof subject to
Regulation Y under such Act.
Section 10. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to any provision of Sections 1 to 11 hereof without the
prior written consent of the holders of at least 75% of the Series A-3 Preferred
outstanding at the time such action is taken. No change in the terms hereof may
be accomplished by merger or consolidation of the Corporation with another
corporation or entity unless the Corporation has obtained the prior written
consent of the holders of 75% of the Series A-3 Preferred then outstanding.
Section 11. Notices.
Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be delivered by registered or
certified mail, return receipt requested and postage prepaid, or by reputable
overnight courier service, charges prepaid, and shall be deemed to have been
given when so mailed or sent (i) to the Corporation, at its principal executive
offices, and (ii) to any stockholder, at such holder's address as it appears in
the stock records of the Corporation (unless otherwise indicated by any such
holder).
SERIES A-4 CONVERTIBLE PREFERRED STOCK
Section 1. Dividends.
When and as declared by the Corporation's board of directors
and to the extent permitted under the Colorado Business Corporation Act, the
holders of the Series A-4 Convertible Preferred Stock (the "Series A-4
Preferred") shall participate ratably with the holders of shares of the
Corporation's Common Stock (as hereinafter defined), Series A-1 Convertible
Preferred Stock (the "Series A-1 Preferred"), Series A-2 Convertible Preferred
Stock (the "Series A-2 Preferred") and Series A-3 Convertible Preferred Stock
(the "Series A-3 Preferred") in any dividends on the Common Stock based upon the
number of shares of Common Stock into which each share of Series A-4 Preferred
(a "Share") is convertible at the time of such declaration.
Section 2. Liquidation.
Upon any liquidation, dissolution or winding up of the
Corporation, the holders of the Series A-2 Preferred, the Series A-3 Preferred
and the Series A-4 Preferred as a class (the "Preferred Class") shall vote to
either (A) (i) convert all of the Series A-4 Preferred (including any fraction
of a Share) into Conversion Stock (as hereinafter defined) pursuant to the
provisions of Section 4 below, (ii) convert all of the Series A-2 Preferred
(including any fraction of a share) into Conversion Stock, (iii) convert all of
the Series A-3 Preferred (including any fraction of a share) into Series A-2
Preferred, (iv) convert the Series A-2 Preferred referred to in clause (iii)
above into Conversion Stock, and (v) share ratably with the holders of Series
A-1 Preferred, if applicable, and Junior Securities (as hereinafter defined) in
any distribution or payment upon such liquidation, dissolution or winding up of
the Corporation, or (B) be paid, before any distribution or payment is made upon
any Junior Securities and concurrently with the holders of Series A-1 Preferred
as set forth below, an amount in cash equal to the Liquidation Value (as
hereinafter defined) of the Series A-4 Preferred and the liquidation value of
the Series A-2 Preferred and the liquidation value of the Series A-3 Preferred
(the "Liquidation Payment"). For purposes of this Section 2, the vote of the
holders of the majority of the Preferred Class as a group shall de deemed to be
the election of all of the holders of the Preferred Class. If the holders of the
Preferred Class elect not to convert the Preferred Class pursuant to clause (A)
above and elect to receive a cash payment pursuant to clause (B) above and the
holders of the Series A-1 Preferred elect not to convert their shares of Series
A-1 Preferred into Conversion Stock, the holders of the Preferred Class and the
holders of the Series A-1 Preferred shall share the Liquidation Payment ratably
based upon the aggregate Liquidation Value of the Series A-4 Preferred and the
aggregate liquidation value of the Series A-1 Preferred, the Series A-2
Preferred and the Series A-3 Preferred held by each such holder pursuant to
clause (B) above, after the payment of which the holders of the Series A-1
Preferred shall receive payment of the Series A-1 Preferred liquidation premium,
after the payment of which any remaining assets shall be distributed to the
holders of Junior Securities. If the holders of the Preferred Class elect to
convert the Preferred Class pursuant to clause (A) above and elect not to
receive a cash payment pursuant to clause (B) above and the holders of the
Series A-1 Preferred elect not to convert their
shares of Series A-1 Preferred into Conversion Stock, the holders of the Series
A-1 Preferred shall receive payment of the Series A-1 Preferred liquidation
amount before any distribution or payment is made upon the Preferred Class or
any Junior Securities and, thereafter, the holders of the Preferred Class shall
share ratably with the holders of Junior Securities in any distribution or
payment upon such liquidation, dissolution or winding up of the Corporation. If
the holders of the Preferred Class elect not to convert the Preferred Class
pursuant to clause (A) above and elect to receive a cash payment pursuant to
clause (B) above and the holders of the Series A-1 Preferred elect to convert
their shares of Series A-1 Preferred into Conversion Stock, the holders of the
Preferred Class shall receive the Liquidation Payment before any distribution or
payment is made upon the Series A-1 Preferred or any Junior Securities and,
thereafter, the holders of the Series A-1 Preferred shall share ratably with the
holders of Junior Securities in any distribution or payment upon such
liquidation, dissolution or winding up of the Corporation. If the holders of the
Preferred Class elect to convert the Preferred Class pursuant to clause (A)
above and elect not to receive a cash payment pursuant to clause (B) above and
the holders of the Series A-1 Preferred elect to convert their shares of Series
A-1 Preferred into Conversion Stock, the holders of the Preferred Class and the
holders of the Series A-1 Preferred shall share ratably with the holders of
Junior Securities in any distribution or payment upon such liquidation,
dissolution or winding up of the Corporation. The Corporation shall mail written
notice of such liquidation, dissolution or winding up, not less than sixty (60)
days prior to the payment date stated therein (the "Payment Date"), to each
record holder of Series A-4 Preferred. Neither the consolidation or merger of
the Corporation into or with any other entity or entities, nor the sale or
transfer by the Corporation of all or any part of its assets, nor the reduction
of the capital stock of the Corporation, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
2.
Section 3. Voting Rights.
The holders of the Series A-4 Preferred shall be entitled to
notice of all stock-holders meetings in accordance with the Corporation's
bylaws, and the holders of the Series A-4 Preferred shall be entitled to vote on
all matters submitted to the stockholders for a vote together with the holders
of the Common Stock, the Series A-1 Preferred and the Series A-2 Preferred
voting together as a single class with each share of Common Stock entitled to
one vote per share, each share of Series A-1 Preferred entitled to one vote for
each share of Common Stock issuable upon conversion of the Series A-1 Preferred
at the time the vote is taken, each Share of Series A-2 Preferred entitled to
one vote for each share of Common Stock issuable upon conversion of the Series
A-2 Preferred at the time the vote is taken, and each Share of Series A-4
Preferred entitled to one vote for each share of Common Stock issuable upon
conversion of the Series A-4 Preferred at the time the vote is taken
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Section 4. Conversion.
A. Conversion Procedure.
(i) At any time and from time to time, any holder of Series
A-4 Preferred may convert all or any portion of the Series A-4 Preferred
(including any fraction of a Share) held by such holder into a number of shares
of Conversion Stock computed by multiplying the number of Shares to be converted
by $4.50 and dividing the result by the Conversion Price (as hereinafter
defined) then in effect.
(ii) Each conversion of Series A-4 Preferred shall be deemed
to have been effected as of the close of business on the date on which the
certificate or certificates representing the Series A-4 Preferred to be
converted have been surrendered at the principal office of the Corporation. At
such time as such conversion has been effected, the rights of the holder of such
Series A-4 Preferred as such holder shall cease and the Person (as hereinafter
defined) or Persons in whose name or names any certificate or certificates for
shares of Conversion Stock are to be issued upon such conversion shall be deemed
to have become the holder or holders of record of the shares of Conversion Stock
represented thereby; provided, however, that for purposes of Section 2(A) above
the conversion of the Series A-4 Preferred shall be deemed to have been effected
as of the close of business on the day prior to the Payment Date.
(iii) Notwithstanding any other provision hereof, if a
conversion of Series A-4 Preferred is to be made in connection with a Qualified
Public Offering (as hereinafter defined), the conversion of any Shares of Series
A-4 Preferred may, at the election of the holder of such Shares, be conditioned
upon the consummation of the Qualified Public Offering in which case such
conversion shall not be deemed to be effective until the consummation of the
Qualified Public Offering.
(iv) As soon as possible after a conversion has been effected
(but in any event within five business days in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the
number of shares of Conversion Stock issuable by reason of such
conversion in such name or names and such denomination or denominations
as the converting holder has specified;
(b) payment of the amount payable under subparagraph
(vii) below with respect to such conversion; and
(c) a certificate representing any Shares of Series
A-4 Preferred which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion but
which were not converted.
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(v) The issuance of certificates for shares of Conversion
Stock upon conversion of Series A-4 Preferred shall be made without charge to
the holders of such Series A-4 Preferred for any issuance tax in respect thereof
or other cost incurred by the Corporation in connection with such conversion and
the related issuance of shares of Conversion Stock. Upon conversion of each
Share of Series A-4 Preferred, the Corporation shall take all such actions as
are necessary in order to insure that the Conversion Stock issuable with respect
to such conversion shall be validly issued, fully paid and nonassessable.
(vi) The Corporation shall not close its books against the
transfer of Series A-4 Preferred or of Conversion Stock issued or issuable upon
conversion of Series A-4 Preferred in any manner which interferes with the
timely conversion of Series A-4 Preferred. The Corporation shall assist and
cooperate with any holder of Shares required to make any governmental filings or
obtain any governmental approval prior to or in connection with any conversion
of Shares hereunder (including, without limitation, making any filings required
to be made by the Corporation).
(vii) If any fractional interest in a share of Conversion
Stock would, except for the provisions of this subparagraph, be deliverable upon
any conversion of the Series A-4 Preferred, the Corporation, in lieu of
delivering the fractional share therefor, may pay an amount to the holder
thereof equal to the fair market price of such fractional interest as of the
date of conversion as determined by the Corporation's board of directors.
(viii) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock, solely
for the purpose of issuance upon the conversion of the Series A-4 Preferred,
such number of shares of Conversion Stock issuable upon the conversion of all
outstanding Shares of Series A-4 Preferred. All shares of Conversion Stock which
are so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance).
B. Conversion Price. The initial "Conversion Price" shall be
$4.50 per share. In order to prevent dilution of the conversion rights granted
under this subdivision, the Conversion Price shall be subject to adjustment from
time to time pursuant to this Section 4.
C. Anti-Dilution. If and whenever on or after the original
date of issuance of the Series A-4 Preferred the Corporation issues or sells, or
in accordance with Section 4(D) hereof is deemed to have issued or sold, any
shares of its Common Stock for a consideration per share less than the
Conversion Price in effect immediately prior to the time of such issue or sale,
then forthwith upon such issue or sale the Conversion Price shall be reduced to
the Conversion
-4-
Price determined by dividing (i) the sum of (a) the product derived by
multiplying the Conversion Price in effect immediately prior to such issue or
sale times the number of shares of Common Stock Deemed Outstanding immediately
prior to such issue or sale, plus (b) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the number of shares of Common
Stock Deemed Outstanding immediately after such issue or sale; provided that
there shall be no adjustment in the Conversion Price as a result of any issuance
or sale (or deemed issuance or sale) of (x) options issued pursuant to the
Corporation's stock option plan and capital stock issued upon the exercise
thereof, (y) capital stock of the Corporation upon the exercise of warrants held
by each of Patrick Van Den Bossche and NationsCredit Commercial Corporation and
any conversion of such capital stock subsequent to its issuance, and (z) the
issuance of capital stock of the Corporation upon the conversion of the Series
A-1 Preferred or the Preferred Class.
D. Effect on Conversion Price of Certain Events. For purposes
of determining the adjusted Conversion Price under Section 6(C) hereof, the
following shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
manner grants any rights or options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for Common
Stock (such rights or options being herein called "Options" and such convertible
or exchangeable stock or securities being herein called "Convertible
Securities") and the price per share for which Common Stock is issuable upon the
exercise of such Options or upon conversion or exchange of such Convertible
Securities is less than the Conversion Price in effect immediately prior to the
time of the granting of such Options then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Corporation at the time of the granting of such
Options for such price per share. For purposes of this Section 4(D)(i), the
"price per share for which Common Stock is issuable" shall be determined by
dividing (a) the total amount, if any, received or receivable by the Corporation
as consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Corporation upon exercise of
all such Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the issuance of sale or such Convertible
Securities and the conversion or exchange thereof, by (b) the total maximum
number of shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No further adjustment of the Conversion Price
shall be made when Convertible Securities are actually issued upon the exercise
of such Options or when Common Stock is actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation in
any manner
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issues or sells any Convertible Securities and the price per share for which
Common Stock is issuable upon such conversion or exchange is less than the
Conversion Price in effect immediately prior to the time of such issue or sale
then the maximum number of shares of Common Stock issuable upon conversion or
exchange of such Convertible Securities shall be deemed to be outstanding and to
have been issued and sold by the Corporation at the time of the issuance or sale
of such Convertible Securities for such price per share. For the purposes of
this Section 4(D)(ii), the "price per share for which Common Stock is issuable"
shall be determined by dividing (a) the total amount received or receivable by
the Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange thereof, by (b)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities. No further adjustment of the
Conversion Price shall be made when Common Stock is actually issued upon the
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustments of the Conversion Price had been or are to be made pursuant to
other provisions of this Section 4, no further adjustment of the Conversion
Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock change at any time, the Conversion Price in effect
at the time of such change shall be readjusted to the Conversion Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold.
E. Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision shall be proportionately reduced, and if
the Corporation at any time combines (by reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
F. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Corporation's assets to another
Person or other transaction which is effected in such a manner that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance satisfactory to the
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holders of a majority of the Series A-4 Preferred then outstanding) to insure
that each of the holders of Series A-4 Preferred shall thereafter have the right
to acquire and receive, in lieu of or in addition to (as the case may be), the
shares of Conversion Stock immediately theretofore acquirable and receivable
upon the conversion of such holder's Series A-4 Preferred, such shares of stock,
securities or assets as such holder would have received in connection with such
Organic Change if such holder had converted its Series A-4 Preferred immediately
prior to such Organic Change. In each such case, the Corporation shall also make
appropriate provisions (in form and substance satisfactory to the holders of a
majority of the Series A-4 Preferred then outstanding) to insure that the
provisions of this Section 4 and Section 5 hereof shall thereafter be applicable
to the Series A-4 Preferred (including, in the case of any such consolidation,
merger or sale in which the successor entity or purchasing entity is other than
the Corporation, an immediate adjustment of the Conversion Price to the value
for the Common Stock reflected by the terms of such consolidation, merger or
sale, and a corresponding immediate adjustment in the number of shares of
Conversion Stock acquirable and receivable upon conversion of Series A-4
Preferred, if the value so reflected is less than the Conversion Price in effect
immediately prior to such consolidation, merger or sale). The Corporation shall
not effect any such consolidation, merger or sale, unless prior to the
consummation thereof, the successor corporation (if other than the Corporation)
resulting from consolidation or merger or the corporation purchasing such assets
assumes by written instrument (in form reasonably satisfactory to the holders of
a majority of the Series A-4 Preferred then outstanding), the obligation to
deliver to each such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire.
G. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 4 but not expressly provided for
by such provisions, then the Corporation's board of directors shall make an
appropriate adjustment in the Conversion Price so as to protect the rights of
the holders of Series A-4 Preferred; provided that no such adjustment shall
increase the Conversion Price as otherwise determined pursuant to this Section 4
or decrease the number of shares of Conversion Stock issuable upon conversion of
each Share of Series A-4 Preferred.
H. Notices.
(i) Immediately upon any adjustment of the Conversion Price,
the Corporation shall give written notice thereof to all holders of Series A-4
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders
of Series A-4 Preferred at least 20 days prior to the date on which the
Corporation closes its books or takes a record (a) with respect to any dividend
or distribution upon Common Stock, (b) with respect to any pro rata subscription
offer to holders of Common Stock, or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
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(iii) The Corporation shall also give written notice to the
holders of Series A-4 Preferred at least 20 days prior to the date on which any
Organic Change shall take place.
I. Mandatory Conversion. The Corporation's board of directors
may at any time require the conversion of all of the outstanding Series A-4
Preferred upon the occurrence of a Conversion Event (as hereinafter defined).
Any such mandatory conversion shall only be effected at the time of and subject
to the closing of the transactions contemplated by the Conversion Event and upon
written notice of such mandatory conversion delivered to all holders of Series
A-4 Preferred at least seven (7) days prior to such closing.
Section 5. Purchase Rights.
If at any time the Corporation grants, issues or sells any
options, convertible securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then each holder of Series A-4 Preferred
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Conversion Stock acquirable upon
conversion of such holder's Series A-4 Preferred immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.
Section 6. Registration of Transfer.
The Corporation shall keep at its principal office a register
for the registration of Series A-4 Preferred. Upon the surrender of any
certificate representing Series A-4 Preferred at such place, the Corporation
shall, at the request of the record holder of such certificate, execute and
deliver (at the Corporation's expense) a new certificate or certificates in
exchange therefor representing in the aggregate the number of Shares represented
by the surrendered certificate. Each such new certificate shall be registered in
such name and shall represent such number of Shares as is requested by the
holder of the surrendered certificate and shall be substantially identical in
form to the surrendered certificate.
Section 7. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing Shares of any class of Series A-4 Preferred, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation (provided that if the holder is a financial
institution or other institutional investor its oven agreement shall be
satisfactory), or, in the case of any such mutilation, upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
Shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost,
-8-
stolen, destroyed or mutilated certificate.
Section 8. Definitions.
"Common Stock" means, collectively, the Corporation's Common
Stock, no par value, and any capital stock of any class of the Corporation
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
"Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Section
4(D) hereof whether or not the Options or Convertible Securities are actually
exercisable at such time.
"Conversion Event" means (i) a Qualified Public Offering, (ii)
any sale of all the outstanding capital stock of the Corporation, or (iii) a
merger, consolidation, sale of substantially all of the assets of the
Corporation or similar transaction involving the Corporation.
"Conversion Stock" means shares of Common Stock; provided that
if there is a change such that the securities issuable upon conversion of the
Series A-4 Preferred are issued by an entity other than the Corporation or there
is a change in the class of securities so issuable, then the term "Conversion
Stock" shall mean one share of the security issuable upon conversion of the
Series A-4 Preferred if such security is issuable in shares, or shall mean the
smallest unit in which such security is issuable if such security is not
issuable in shares.
"Junior Securities" means any of the Corporation's equity
securities other than the Series A-l Preferred and the Preferred Class.
"Liquidation Value" of any Share as of any particular date
shall be equal to $4.50.
"Person" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Qualified Public Offering" means any underwritten offering by
the Corporation of its equity securities to the public pursuant to an effective
registration statement under the Securities Act of 1933, as then in effect, or
any comparable statement under any similar federal statute then in force
pursuant to which the value of the Corporation prior to receipt of the proceeds
of such offering is at least $25,000,000 and the minimum gross proceeds to the
Corporation is $15,000,000; provided that for purposes of Section 4(G) hereof, a
Qualified Public Offering shall not include an offering made in connection with
a business acquisition or combination or an employee benefit plan.
-9-
Section 9. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to any provision of Sections 1 to 10 hereof without the
prior written consent of the holders of at least 75% of the Series A-4 Preferred
outstanding at the time such action is taken. No change in the terms hereof may
be accomplished by merger or consolidation of the Corporation with another
corporation or entity unless the Corporation has obtained the prior written
consent of the holders of 75% of the Series A-4 Preferred then outstanding.
-10-
Section 10. Notices.
Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be delivered by registered or
certified mail, return receipt requested and postage prepaid, or by reputable
overnight courier service, charges prepaid, and shall be deemed to have been
given when so mailed or sent (i) to the Corporation, at its principal executive
offices, and (ii) to any stockholder, at such holder's address as it appears in
the stock records of the Corporation (unless otherwise indicated by any such
holder).
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SERIES A-5 CONVERTIBLE PREFERRED STOCK
Section 1. Dividends.
When and as declared by the Corporation's board of directors
and to the extent permitted under the Colorado Business Corporation Act, the
holders of the Series A-5 Convertible Preferred Stock (the "Series A-5
Preferred") shall participate ratably with the holders of shares of the
Corporation's Common Stock (as hereinafter defined), Series A-1 Convertible
Preferred Stock (the "Series A-1 Preferred"), Series A-2 Convertible Preferred
Stock (the "Series A-2 Preferred"), Series A-3 Convertible Preferred Stock (the
"Series A-3 Preferred") and Series A-4 Convertible Preferred Stock (the "Series
A-4 Preferred") in any dividends on the Common Stock based upon the number of
shares of Common Stock into which each share of Series A-5 Preferred (a "Share")
is convertible at the time of such declaration.
Section 2. Liquidation.
Upon any liquidation, dissolution or winding up of the
Corporation, the holders of the Series A-2 Preferred, the Series A-3 Preferred,
the Series A-4 Preferred and the Series A-5 Preferred as a class (the "Preferred
Class") shall vote to either (A) (i) convert all of the Series A-5 Preferred
(including any fraction of a Share) into Conversion Stock (as hereinafter
defined) pursuant to the provisions of Section 4 below, (ii) convert all of the
Series A-2 Preferred (including any fraction of a share) into Conversion Stock,
(iii) convert all of the Series A-3 Preferred (including any fraction of a
share) into Series A-2 Preferred, (iv) convert all of the Series A-2 Preferred
referred to in clause (iii) above into Conversion Stock, (v) convert all of the
Series A-4 Preferred (including any fraction of a share) into Conversion Stock,
and (vi) share ratably with the holders of Series A-1 Preferred, if applicable,
and Junior Securities (as hereinafter defined) in any distribution or payment
upon such liquidation, dissolution or winding up of the Corporation, or (B) be
paid, before any distribution or payment is made upon any Junior Securities and
concurrently with the holders of Series A-1 Preferred as set forth below, an
amount in cash equal to their prorata share of the aggregate amount of the
Liquidation Value (as hereinafter defined) of the Series A-5 Preferred and the
respective liquidation values of the Series A-2 Preferred, the Series A-3
Preferred and the Series A-4 Preferred (the "Liquidation Payment"). For purposes
of this Section 2, the vote of the holders of the majority of the Preferred
Class as a group shall be deemed to be the election of all of the holders of the
Preferred Class. If the holders of the Preferred Class elect not to convert the
Preferred Class pursuant to clause (A) above and elect to receive a cash payment
pursuant to clause (B) above and the holders of the Series A-1 Preferred elect
not to convert their shares of Series A-1 Preferred into Conversion Stock, the
holders of the Preferred Class and the holders of the Series A-1 Preferred shall
share the Liquidation Payment ratably based upon the aggregate Liquidation Value
of the Series A-5 Preferred and the aggregate liquidation value of the Series
A-1 Preferred, the Series A-2 Preferred, the Series A-3 and the Series A-4
Preferred held by each such holder pursuant to clause (B) above, after the
payment of which the holders of the Series A-1 Preferred shall receive payment
of the Series A-1 Preferred liquidation premium, after the payment of which any
remaining assets shall be distributed to the holders of Junior Securities. If
the holders of the Preferred Class elect to convert the Preferred Class pursuant
to clause (A) above and elect not to receive a cash payment pursuant to clause
(B) above and the holders of the Series A-1 Preferred elect not to convert their
shares of Series A-1 Preferred into Conversion Stock, the holders of the Series
A-1 Preferred shall receive payment of the Series A-1 Preferred liquidation
amount before any distribution or payment is made upon the Preferred Class or
any Junior Securities and, thereafter, the holders of the Preferred Class shall
share ratably with the holders of Junior Securities in any distribution or
payment upon such liquidation, dissolution or winding up of the Corporation. If
the holders of the Preferred Class elect not to convert the Preferred Class
pursuant to clause (A) above and elect to receive a cash payment pursuant to
clause (B) above and the holders of the Series A-1 Preferred elect to convert
their shares of Series A-1 Preferred into Conversion Stock, the holders of the
Preferred Class shall receive the Liquidation Payment before any distribution or
payment is made upon the Series A-1 Preferred or any Junior Securities and,
thereafter, the holders of the Series A-1 Preferred shall share ratably with the
holders of Junior Securities in any distribution or payment upon such
liquidation, dissolution or winding up of the Corporation. If the holders of the
Preferred Class elect to convert the Preferred Class pursuant to clause (A)
above and elect not to receive a cash payment pursuant to clause (B) above and
the holders of the Series A-1 Preferred elect to convert their shares of Series
A-1 Preferred into Conversion Stock, the holders of the Preferred Class and the
holders of the Series A-1 Preferred shall share ratably with the holders of
Junior Securities in any distribution or payment upon such liquidation,
dissolution or winding up of the Corporation. The Corporation shall mail written
notice of such liquidation, dissolution or winding up, not less than sixty (60)
days prior to the payment date stated therein (the "Payment Date"), to each
record holder of Series A-5 Preferred. Neither the consolidation or merger of
the Corporation into or with any other entity or entities, nor the sale or
transfer by the Corporation of all or any part of its assets, nor the reduction
of the capital stock of the Corporation, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
2.
Section 3. Voting Rights.
The holders of the Series A-5 Preferred shall be entitled to
notice of all stockholder meetings in accordance with the Corporation's bylaws,
and the holders of the Series A-5 Preferred shall be entitled to vote on all
matters submitted to the stockholders for a vote together with the holders of
the Common Stock, the Series A-1 Preferred, the Series A-2 Preferred and the
Series A-4 Preferred voting together as a single class with each share of Common
Stock entitled to one vote per share, each share of Series A-1 Preferred
entitled to one vote for each share of Common Stock issuable upon conversion of
the Series A-1 Preferred at the time the vote is taken, each share of Series A-2
Preferred entitled to one vote for each share of Common Stock issuable upon
conversion of the Series A-2 Preferred at the time the vote is taken, each share
of Series A-4 Preferred entitled to one vote for each share of Common Stock
issuable upon conversion of the Series A-4 Preferred at the time the vote is
taken, and each Share of Series A-5 Preferred entitled to one vote for each
share of Common Stock issuable upon conversion of the Series A-5 Preferred at
the time the vote is taken.
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Section 4. Conversion.
A. Conversion Procedure.
(i) At any time and from time to time, any holder of Series
A-5 Preferred may convert all or any portion of the Series A-5 Preferred
(including any fraction of a Share) held by such holder into a number of shares
of Conversion Stock computed by multiplying the number of Shares to be converted
by $8.00 and dividing the result by the Conversion Price (as hereinafter
defined) then in effect.
(ii) Each conversion of Series A-5 Preferred shall be deemed
to have been effected as of the close of business on the date on which the
certificate or certificates representing the Series A-5 Preferred to be
converted have been surrendered at the principal office of the Corporation. At
such time as such conversion has been effected, the rights of the holder of such
Series A-5 Preferred as such holder shall cease and the Person (as hereinafter
defined) or Persons in whose name or names any certificate or certificates for
shares of Conversion Stock are to be issued upon such conversion shall be deemed
to have become the holder or holders of record of the shares of Conversion Stock
represented thereby; provided, however, that for purposes of Section 2(A) above
the conversion of the Series A-5 Preferred shall be deemed to have been effected
as of the close of business on the day prior to the Payment Date.
(iii) Notwithstanding any other provision hereof, if a
conversion of Series A-5 Preferred is to be made in connection with a Qualified
Public Offering (as hereinafter defined), the conversion of any Shares of Series
A-5 Preferred may, at the election of the holder of such Shares, be conditioned
upon the consummation of the Qualified Public Offering in which case such
conversion shall not be deemed to be effective until the consummation of the
Qualified Public Offering.
(iv) As soon as possible after a conversion has been effected
(but in any event within five business days in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the
number of shares of Conversion Stock issuable by reason of such
conversion in such name or names and such denomination or denominations
as the converting holder has specified;
(b) payment of the amount payable under subparagraph
(vii) below with respect to such conversion; and
(c) a certificate representing any Shares of Series
A-5 Preferred which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion but
which were not converted.
-3-
(v) The issuance of certificates for shares of Conversion
Stock upon conversion of Series A-5 Preferred shall be made without charge to
the holders of such Series A-5 Preferred for any issuance tax in respect thereof
or other cost incurred by the Corporation in connection with such conversion and
the related issuance of shares of Conversion Stock. Upon conversion of each
Share of Series A-5 Preferred, the Corporation shall take all such actions as
are necessary in order to insure that the Conversion Stock issuable with respect
to such conversion shall be validly issued, fully paid and nonassessable.
(vi) The Corporation shall not close its books against the
transfer of Series A-5 Preferred or of Conversion Stock issued or issuable upon
conversion of Series A-5 Preferred in any manner which interferes with the
timely conversion of Series A-5 Preferred. The Corporation shall assist and
cooperate with any holder of Shares required to make any governmental filings or
obtain any governmental approval prior to or in connection with any conversion
of Shares hereunder (including, without limitation, making any filings required
to be made by the Corporation).
(vii) If any fractional interest in a share of Conversion
Stock would, except for the provisions of this subparagraph, be deliverable upon
any conversion of the Series A-5 Preferred, the Corporation, in lieu of
delivering the fractional share therefor, may pay an amount to the holder
thereof equal to the fair market price of such fractional interest as of the
date of conversion as determined by the Corporation's board of directors.
(viii) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock, solely
for the purpose of issuance upon the conversion of the Series A-5 Preferred,
such number of shares of Conversion Stock issuable upon the conversion of all
outstanding Shares of Series A-5 Preferred. All shares of Conversion Stock which
are so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance).
B. Conversion Price. The initial "Conversion Price" shall be
$8.00 per share. In order to prevent dilution of the conversion rights granted
under this subdivision, the Conversion Price shall be subject to adjustment from
time to time pursuant to this Section 4.
C. Anti-Dilution. If and whenever on or after the original
date of issuance of the Series A-5 Preferred the Corporation issues or sells, or
in accordance with Section 4(D) hereof is deemed to have issued or sold, any
shares of its Common Stock for a consideration per share less than the
Conversion Price in effect immediately prior to the time of such issue or sale,
then forthwith upon such issue or sale the Conversion Price shall be reduced to
the Conversion
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Price determined by dividing (i) the sum of (a) the product derived by
multiplying the Conversion Price in effect immediately prior to such issue or
sale times the number of shares of Common Stock Deemed Outstanding immediately
prior to such issue or sale, plus (b) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the number of shares of Common
Stock Deemed Outstanding immediately after such issue or sale; provided that
there shall be no adjustment in the Conversion Price as a result of any issuance
or sale (or deemed issuance or sale) of (x) options issued pursuant to the
Corporation's stock option plan and capital stock issued upon the exercise
thereof, (y) capital stock of the Corporation upon the exercise of warrants held
by each of Patrick Van Den Bossche and NationsCredit Commercial Corporation and
any conversion of such capital stock subsequent to its issuance, and (z) the
issuance of capital stock of the Corporation upon the conversion of the Series
A-1 Preferred or the Preferred Class.
D. Effect on Conversion Price of Certain Events. For purposes
of determining the adjusted Conversion Price under Section 6(C) hereof, the
following shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
manner grants any rights or options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for Common
Stock (such rights or options being herein called "Options" and such convertible
or exchangeable stock or securities being herein called "Convertible
Securities") and the price per share for which Common Stock is issuable upon the
exercise of such Options or upon conversion or exchange of such Convertible
Securities is less than the Conversion Price in effect immediately prior to the
time of the granting of such Options then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Corporation at the time of the granting of such
Options for such price per share. For purposes of this Section 4(D)(i), the
"price per share for which Common Stock is issuable" shall be determined by
dividing (a) the total amount, if any, received or receivable by the Corporation
as consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Corporation upon exercise of
all such Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the issuance of sale or such Convertible
Securities and the conversion or exchange thereof, by (b) the total maximum
number of shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No further adjustment of the Conversion Price
shall be made when Convertible Securities are actually issued upon the exercise
of such Options or when Common Stock is actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation in
any manner
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issues or sells any Convertible Securities and the price per share for which
Common Stock is issuable upon such conversion or exchange is less than the
Conversion Price in effect immediately prior to the time of such issue or sale
then the maximum number of shares of Common Stock issuable upon conversion or
exchange of such Convertible Securities shall be deemed to be outstanding and to
have been issued and sold by the Corporation at the time of the issuance or sale
of such Convertible Securities for such price per share. For the purposes of
this Section 4(D)(ii), the "price per share for which Common Stock is issuable"
shall be determined by dividing (a) the total amount received or receivable by
the Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange thereof, by (b)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities. No further adjustment of the
Conversion Price shall be made when Common Stock is actually issued upon the
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustments of the Conversion Price had been or are to be made pursuant to
other provisions of this Section 4, no further adjustment of the Conversion
Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock change at any time, the Conversion Price in effect
at the time of such change shall be readjusted to the Conversion Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold.
E. Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision shall be proportionately reduced, and if
the Corporation at any time combines (by reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
F. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Corporation's assets to another
Person or other transaction which is effected in such a manner that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance satisfactory to the
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holders of a majority of the Series A-5 Preferred then outstanding) to insure
that each of the holders of Series A-5 Preferred shall thereafter have the right
to acquire and receive, in lieu of or in addition to (as the case may be), the
shares of Conversion Stock immediately theretofore acquirable and receivable
upon the conversion of such holder's Series A-5 Preferred, such shares of stock,
securities or assets as such holder would have received in connection with such
Organic Change if such holder had converted its Series A-5 Preferred immediately
prior to such Organic Change. In each such case, the Corporation shall also make
appropriate provisions (in form and substance satisfactory to the holders of a
majority of the Series A-5 Preferred then outstanding) to insure that the
provisions of this Section 4 and Section 5 hereof shall thereafter be applicable
to the Series A-5 Preferred (including, in the case of any such consolidation,
merger or sale in which the successor entity or purchasing entity is other than
the Corporation, an immediate adjustment of the Conversion Price to the value
for the Common Stock reflected by the terms of such consolidation, merger or
sale, and a corresponding immediate adjustment in the number of shares of
Conversion Stock acquirable and receivable upon conversion of Series A-5
Preferred, if the value so reflected is less than the Conversion Price in effect
immediately prior to such consolidation, merger or sale). The Corporation shall
not effect any such consolidation, merger or sale, unless prior to the
consummation thereof, the successor corporation (if other than the Corporation)
resulting from consolidation or merger or the corporation purchasing such assets
assumes by written instrument (in form reasonably satisfactory to the holders of
a majority of the Series A-5 Preferred then outstanding), the obligation to
deliver to each such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire.
G. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 4 but not expressly provided for
by such provisions, then the Corporation's board of directors shall make an
appropriate adjustment in the Conversion Price so as to protect the rights of
the holders of Series A-5 Preferred; provided that no such adjustment shall
increase the Conversion Price as otherwise determined pursuant to this Section 4
or decrease the number of shares of Conversion Stock issuable upon conversion of
each Share of Series A-5 Preferred.
H. Notices.
(i) Immediately upon any adjustment of the Conversion Price,
the Corporation shall give written notice thereof to all holders of Series A-5
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders
of Series A-5 Preferred at least 20 days prior to the date on which the
Corporation closes its books or takes a record (a) with respect to any dividend
or distribution upon Common Stock, (b) with respect to any pro rata subscription
offer to holders of Common Stock, or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
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(iii) The Corporation shall also give written notice to the
holders of Series A-5 Preferred at least 20 days prior to the date on which any
Organic Change shall take place.
I. Mandatory Conversion. The Corporation's board of directors
may at any time require the conversion of all of the outstanding Series A-5
Preferred upon the occurrence of a Conversion Event (as hereinafter defined).
Any such mandatory conversion shall only be effected at the time of and subject
to the closing of the transactions contemplated by the Conversion Event and upon
written notice of such mandatory conversion delivered to all holders of Series
A-5 Preferred at least seven (7) days prior to such closing.
Section 5. Purchase Rights.
If at any time the Corporation grants, issues or sells any
options, convertible securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then each holder of Series A-5 Preferred
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Conversion Stock acquirable upon
conversion of such holder's Series A-5 Preferred immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.
Section 6. Registration of Transfer.
The Corporation shall keep at its principal office a register
for the registration of Series A-5 Preferred. Upon the surrender of any
certificate representing Series A-5 Preferred at such place, the Corporation
shall, at the request of the record holder of such certificate, execute and
deliver (at the Corporation's expense) a new certificate or certificates in
exchange therefor representing in the aggregate the number of Shares represented
by the surrendered certificate. Each such new certificate shall be registered in
such name and shall represent such number of Shares as is requested by the
holder of the surrendered certificate and shall be substantially identical in
form to the surrendered certificate.
Section 7. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing Shares of any class of Series A-5 Preferred, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation (provided that if the holder is a financial
institution or other institutional investor its oven agreement shall be
satisfactory), or, in the case of any such mutilation, upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
Shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost,
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stolen, destroyed or mutilated certificate.
Section 8. Definitions.
"Common Stock" means, collectively, the Corporation's Common
Stock, no par value, and any capital stock of any class of the Corporation
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
"Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Section
4(D) hereof whether or not the Options or Convertible Securities are actually
exercisable at such time.
"Conversion Event" means (i) a Qualified Public Offering, (ii)
any sale of all the outstanding capital stock of the Corporation, or (iii) a
merger, consolidation, sale of substantially all of the assets of the
Corporation or similar transaction involving the Corporation.
"Conversion Stock" means shares of Common Stock; provided that
if there is a change such that the securities issuable upon conversion of the
Series A-5 Preferred are issued by an entity other than the Corporation or there
is a change in the class of securities so issuable, then the term "Conversion
Stock" shall mean one share of the security issuable upon conversion of the
Series A-5 Preferred if such security is issuable in shares, or shall mean the
smallest unit in which such security is issuable if such security is not
issuable in shares.
"Junior Securities" means any of the Corporation's equity
securities other than the Series A-l Preferred and the Preferred Class.
"Liquidation Value" of any Share as of any particular date
shall be equal to $8.00.
"Person" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Qualified Public Offering" means any underwritten offering by
the Corporation of its equity securities to the public pursuant to an effective
registration statement under the Securities Act of 1933, as then in effect, or
any comparable statement under any similar federal statute then in force
pursuant to which the value of the Corporation prior to receipt of the proceeds
of such offering is at least $25,000,000 and the minimum gross proceeds to the
Corporation is $15,000,000; provided that for purposes of Section 4(G) hereof, a
Qualified Public Offering shall not include an offering made in connection with
a business acquisition or combination or an employee benefit plan.
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Section 9. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to any provision of Sections 1 to 10 hereof without the
prior written consent of the holders of at least 75% of the Series A-5 Preferred
outstanding at the time such action is taken. No change in the terms hereof may
be accomplished by merger or consolidation of the Corporation with another
corporation or entity unless the Corporation has obtained the prior written
consent of the holders of 75% of the Series A-5 Preferred then outstanding.
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Section 10. Notices.
Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be delivered by registered or
certified mail, return receipt requested and postage prepaid, or by reputable
overnight courier service, charges prepaid, and shall be deemed to have been
given when so mailed or sent (i) to the Corporation, at its principal executive
offices, and (ii) to any stockholder, at such holder's address as it appears in
the stock records of the Corporation (unless otherwise indicated by any such
holder).
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SERIES A-6 CONVERTIBLE PREFERRED STOCK
Section 1. Dividends.
When and as declared by the Corporation's board of directors
and to the extent permitted under the Colorado Business Corporation Act, the
holders of the Series A-6 Convertible Preferred Stock (the "Series A-6
Preferred") shall participate ratably with the holders of shares of the
Corporation's Common Stock (as hereinafter defined), Series A-1 Convertible
Preferred Stock (the "Series A-1 Preferred"), Series A-2 Convertible Preferred
Stock (the "Series A-2 Preferred"), Series A-3 Convertible Preferred Stock (the
"Series A-3 Preferred"), Series A-4 Convertible Preferred Stock (the "Series A-4
Preferred") and Series A-5 Convertible Preferred Stock (the "Series A-5
Preferred") in any dividends on the Common Stock based upon the number of shares
of Common Stock into which each share of Series A-5 Preferred (a "Share") is
convertible at the time of such declaration.
Section 2. Liquidation.
Upon any liquidation, dissolution or winding up of the
Corporation, the holders of the Series A-2 Preferred, the Series A-3 Preferred,
the Series A-4 Preferred, the Series A-5 Preferred and the Series A-6 Preferred
as a class (the "Preferred Class") shall vote to either: (A) (i) convert all of
the Series A-6 Preferred (including any fraction of a Share) into Conversion
Stock (as hereinafter defined) pursuant to the provisions of Section 4 below,
(ii) convert all of the Series A-2 Preferred (including any fraction of a share)
into Conversion Stock, (iii) convert all of A-3 Preferred (including any
fraction of a share) into Series A-2 Preferred, (iv) convert all of the Series
A-2 Preferred referred to in clause (iii) above into Conversion Stock, (v)
convert all of the Series A-4 Preferred (including any fraction of a share) into
Conversion Stock, (vi) convert all of the Series A-5 Preferred (including any
fraction of a share) into Conversion Stock, and (vii) share ratably with the
holders of Series A-1 Preferred, if applicable, and Junior Securities (as
hereinafter defined) in any distribution or payment upon such liquidation,
dissolution or winding up of the Corporation, or
(B) be paid, before any distribution or payment is made upon any Junior
Securities and concurrently with the holders of Series A-1 Preferred as set
forth below, an amount in cash equal to their prorata share of the aggregate
amount of the Liquidation Value (as hereinafter defined) of the Series A-6
Preferred and the respective liquidation values of the Series A-2 Preferred, the
Series A-3 Preferred, the Series A-4 Preferred and the Series A-5 Preferred (the
"Liquidation Payment"). For purposes of this Section 2, the vote of the holders
of the majority of the Preferred Class as a group shall be deemed to be the
election of all of the holders of the Preferred Class. If the holders of the
Preferred Class elect not to convert the Preferred Class pursuant to clause (A)
above and elect to receive a cash payment pursuant to clause (B) above and the
holders of the Series A-1 Preferred elect not to convert their shares of Series
A-1 Preferred into Conversion Stock, the holders of the Preferred Class and the
holders of the Series A-1 Preferred shall share the Liquidation Payment ratably
based upon the aggregate Liquidation Value of the Series A-6 Preferred and the
aggregate liquidation value of the Series A-1 Preferred, the Series
A-2 Preferred, the Series A-3 Preferred, the Series A-4 Preferred and the Series
A-5 Preferred held by each such holder pursuant to clause (B) above, after the
payment of which the holders of the Series A-1 Preferred shall receive payment
of the Series A-1 Preferred liquidation premium, after the payment of which any
remaining assets shall be distributed to the holders of Junior Securities. If
the holders of the Preferred Class elect to convert the Preferred Class pursuant
to clause (A) above and elect not to receive a cash payment pursuant to clause
(B) above and the holders of the Series A-1 Preferred elect not to convert their
shares of Series A-1 Preferred into Conversion Stock, the holders of the Series
A-1 Preferred shall receive payment of the Series A-1 Preferred liquidation
amount before any distribution or payment is made upon the Preferred Class or
any Junior Securities and, thereafter, the holders of the Preferred Class shall
share ratably with the holders of Junior Securities in any distribution or
payment upon such liquidation, dissolution or winding up of the Corporation. If
the holders of the Preferred Class elect not to convert the Preferred Class
pursuant to clause (A) above and elect to receive a cash payment pursuant to
clause (B) above and the holders of the Series A-1 Preferred elect to convert
their shares of Series A-1 Preferred into Conversion Stock, the holders of the
Preferred Class shall receive the Liquidation Payment before any distribution or
payment is made upon the Series A-1 Preferred or any Junior Securities and,
thereafter, the holders of the Series A-1 Preferred shall share ratably with the
holders of Junior Securities in any distribution or payment upon such
liquidation, dissolution or winding up of the Corporation. If the holders of the
Preferred Class elect to convert the Preferred Class pursuant to clause (A)
above and elect not to receive a cash payment pursuant to clause (B) above and
the holders of the Series A-1 Preferred elect to convert their shares of Series
A-1 Preferred into Conversion Stock, the holders of the Preferred Class and the
holders of the Series A-1 Preferred shall share ratably with the holders of
Junior Securities in any distribution or payment upon such liquidation,
dissolution or winding up of the Corporation. The Corporation shall mail written
notice of such liquidation, dissolution or winding up, not less than sixty (60)
days prior to the payment date stated therein (the "Payment Date"), to each
record holder of Series A-6 Preferred. Neither the consolidation or merger of
the Corporation into or with any other entity or entities, nor the sale or
transfer by the Corporation of all or any part of its assets, nor the reduction
of the capital stock of the Corporation, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
2.
Section 3. Voting Rights.
The holders of the Series A-6 Preferred shall be entitled to
notice of all stockholder meetings in accordance with the Corporation's bylaws,
and the holders of the Series A-6 Preferred shall be entitled to vote on all
matters submitted to the stockholders for a vote together with the holders of
the Common Stock, the Series A-1 Preferred, the Series A-2 Preferred, the Series
A-4 Preferred and the Series A-5 Preferred voting together as a single class
with each share of Common Stock entitled to one vote per share, each share of
Series A-1 Preferred entitled to one vote for each share of Common Stock
issuable upon conversion of the Series A-1 Preferred at the time the vote is
taken, each share of Series A-2 Preferred entitled to one vote for each share of
Common Stock issuable upon conversion of the Series A-2 Preferred
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at the time the vote is taken, each share of Series A-4 Preferred entitled to
one vote for each share of Common Stock issuable upon conversion of the Series
A-4 Preferred at the time the vote is taken, each share of Series A-5 Preferred
entitled to one vote for each share of Common Stock issuable upon conversion of
the Series A-5 Preferred at the time the vote is taken and each Share of Series
A-6 Preferred entitled to one vote for each share of Common Stock issuable upon
conversion of the Series A-6 Preferred at the time the vote is taken.
Section 4. Conversion.
A. Conversion Procedure.
(i) At any time and from time to time, any holder of Series
A-6 Preferred may convert all or any portion of the Series A-6 Preferred
(including any fraction of a Share) held by such holder into a number of shares
of Conversion Stock computed by multiplying the number of Shares to be converted
by $15.02 and dividing the result by the Conversion Price (as hereinafter
defined) then in effect.
(ii) Each conversion of Series A-6 Preferred shall be deemed
to have been effected as of the close of business on the date on which the
certificate or certificates representing the Series A-6 Preferred to be
converted have been surrendered at the principal office of the Corporation. At
such time as such conversion has been effected, the rights of the holder of such
Series A-6 Preferred as such holder shall cease and the Person (as hereinafter
defined) or Persons in whose name or names any certificate or certificates for
shares of Conversion Stock are to be issued upon such conversion shall be deemed
to have become the holder or holders of record of the shares of Conversion Stock
represented thereby; provided, however, that for purposes of Section 2(A) above
the conversion of the Series A-6 Preferred shall be deemed to have been effected
as of the close of business on the day prior to the Payment Date.
(iii) Notwithstanding any other provision hereof, if a
conversion of Series A-6 Preferred is to be made in connection with a Qualified
Public Offering (as hereinafter defined), the conversion of any Shares of Series
A-6 Preferred may, at the election of the holder of such Shares, be conditioned
upon the consummation of the Qualified Public Offering in which case such
conversion shall not be deemed to be effective until the consummation of the
Qualified Public Offering.
(iv) As soon as possible after a conversion has been effected
(but in any event within five business days in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the
number of shares of Conversion Stock issuable by reason of such
conversion in such name or names and such denomination or denominations
as the converting holder has specified;
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(b) payment of the amount payable under subparagraph
(vii) below with respect to such conversion; and
(c) a certificate representing any Shares of Series
A-6 Preferred which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion but
which were not converted.
(v) The issuance of certificates for shares of Conversion
Stock upon conversion of Series A-6 Preferred shall be made without charge to
the holders of such Series A-6 Preferred for any issuance tax in respect thereof
or other cost incurred by the Corporation in connection with such conversion and
the related issuance of shares of Conversion Stock. Upon conversion of each
Share of Series A-6 Preferred, the Corporation shall take all such actions as
are necessary in order to insure that the Conversion Stock issuable with respect
to such conversion shall be validly issued, fully paid and nonassessable.
(vi) The Corporation shall not close its books against the
transfer of Series A-6 Preferred or of Conversion Stock issued or issuable upon
conversion of Series A-6 Preferred in any manner which interferes with the
timely conversion of Series A-6 Preferred. The Corporation shall assist and
cooperate with any holder of Shares required to make any governmental filings or
obtain any governmental approval prior to or in connection with any conversion
of Shares hereunder (including, without limitation, making any filings required
to be made by the Corporation).
(vii) If any fractional interest in a share of Conversion
Stock would, except for the provisions of this subparagraph, be deliverable upon
any conversion of the Series A-6 Preferred, the Corporation, in lieu of
delivering the fractional share therefor, may pay an amount to the holder
thereof equal to the fair market price of such fractional interest as of the
date of conversion as determined by the Corporation's board of directors.
(viii) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock, solely
for the purpose of issuance upon the conversion of the Series A-6 Preferred,
such number of shares of Conversion Stock issuable upon the conversion of all
outstanding Shares of Series A-6 Preferred. All shares of Conversion Stock which
are so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance).
B. Conversion Price. The initial "Conversion Price" shall be
$15.02 per share. In order to prevent dilution of the conversion rights granted
under this subdivision, the Conversion Price shall be subject to adjustment from
time to time pursuant to this Section 4.
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C. Anti-Dilution. If and whenever on or after the original
date of issuance of the Series A-6 Preferred the Corporation issues or sells, or
in accordance with Section 4(D) hereof is deemed to have issued or sold, any
shares of its Common Stock for a consideration per share less than the
Conversion Price in effect immediately prior to the time of such issue or sale,
then forthwith upon such issue or sale the Conversion Price shall be reduced to
the Conversion Price determined by dividing (i) the sum of (a) the product
derived by multiplying the Conversion Price in effect immediately prior to such
issue or sale times the number of shares of Common Stock Deemed Outstanding
immediately prior to such issue or sale, plus (b) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the number of
shares of Common Stock Deemed Outstanding immediately after such issue or sale;
provided that there shall be no adjustment in the Conversion Price as a result
of any issuance or sale (or deemed issuance or sale) of (x) options issued
pursuant to the Corporation's stock option plan and capital stock issued upon
the exercise thereof, (y) capital stock of the Corporation upon the exercise of
warrants held by each of Patrick Van Den Bossche and NationsCredit Commercial
Corporation and any conversion of such capital stock subsequent to its issuance,
and (z) the issuance of capital stock of the Corporation upon the conversion of
the Series A-1 Preferred or the Preferred Class.
D. Effect on Conversion Price of Certain Events. For purposes
of determining the adjusted Conversion Price under Section 6(C) hereof, the
following shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
manner grants any rights or options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for Common
Stock (such rights or options being herein called "Options" and such convertible
or exchangeable stock or securities being herein called "Convertible
Securities") and the price per share for which Common Stock is issuable upon the
exercise of such Options or upon conversion or exchange of such Convertible
Securities is less than the Conversion Price in effect immediately prior to the
time of the granting of such Options then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Corporation at the time of the granting of such
Options for such price per share. For purposes of this Section 4(D)(i), the
"price per share for which Common Stock is issuable" shall be determined by
dividing (a) the total amount, if any, received or receivable by the Corporation
as consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Corporation upon exercise of
all such Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the issuance of sale or such Convertible
Securities and the conversion or exchange thereof, by (b) the total maximum
number of shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible
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Securities issuable upon the exercise of such Options. No further adjustment of
the Conversion Price shall be made when Convertible Securities are actually
issued upon the exercise of such Options or when Common Stock is actually issued
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation in
any manner issues or sells any Convertible Securities and the price per share
for which Common Stock is issuable upon such conversion or exchange is less than
the Conversion Price in effect immediately prior to the time of such issue or
sale then the maximum number of shares of Common Stock issuable upon conversion
or exchange of such Convertible Securities shall be deemed to be outstanding and
to have been issued and sold by the Corporation at the time of the issuance or
sale of such Convertible Securities for such price per share. For the purposes
of this Section 4(D)(ii), the "price per share for which Common Stock is
issuable" shall be determined by dividing (a) the total amount received or
receivable by the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (b) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No
further adjustment of the Conversion Price shall be made when Common Stock is
actually issued upon the conversion or exchange of such Convertible Securities,
and if any such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustments of the Conversion Price had been
or are to be made pursuant to other provisions of this Section 4, no further
adjustment of the Conversion Price shall be made by reason of such issue or
sale.
(iii) Change in Option Price or Conversion Rate. If the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock change at any time, the Conversion Price in effect
at the time of such change shall be readjusted to the Conversion Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold.
E. Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision shall be proportionately reduced, and if
the Corporation at any time combines (by reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
F. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any
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recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Corporation's assets to another Person or
other transaction which is effected in such a manner that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock is
referred to herein as an "Organic Change". Prior to the consummation of any
Organic Change, the Corporation shall make appropriate provisions (in form and
substance satisfactory to the holders of a majority of the Series A-6 Preferred
then outstanding) to insure that each of the holders of Series A-6 Preferred
shall thereafter have the right to acquire and receive, in lieu of or in
addition to (as the case may be), the shares of Conversion Stock immediately
theretofore acquirable and receivable upon the conversion of such holder's
Series A-6 Preferred, such shares of stock, securities or assets as such holder
would have received in connection with such Organic Change if such holder had
converted its Series A-6 Preferred immediately prior to such Organic Change. In
each such case, the Corporation shall also make appropriate provisions (in form
and substance satisfactory to the holders of a majority of the Series A-6
Preferred then outstanding) to insure that the provisions of this Section 4 and
Section 5 hereof shall thereafter be applicable to the Series A-6 Preferred
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Corporation, an
immediate adjustment of the Conversion Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of Conversion Stock
acquirable and receivable upon conversion of Series A-6 Preferred, if the value
so reflected is less than the Conversion Price in effect immediately prior to
such consolidation, merger or sale). The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Corporation) resulting from
consolidation or merger or the corporation purchasing such assets assumes by
written instrument (in form reasonably satisfactory to the holders of a majority
of the Series A-6 Preferred then outstanding), the obligation to deliver to each
such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to acquire.
G. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 4 but not expressly provided for
by such provisions, then the Corporation's board of directors shall make an
appropriate adjustment in the Conversion Price so as to protect the rights of
the holders of Series A-6 Preferred; provided that no such adjustment shall
increase the Conversion Price as otherwise determined pursuant to this Section 4
or decrease the number of shares of Conversion Stock issuable upon conversion of
each Share of Series A-6 Preferred.
H. Notices.
(i) Immediately upon any adjustment of the Conversion Price,
the Corporation shall give written notice thereof to all holders of Series A-6
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
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(ii) The Corporation shall give written notice to all holders
of Series A-6 Preferred at least 20 days prior to the date on which the
Corporation closes its books or takes a record (a) with respect to any dividend
or distribution upon Common Stock, (b) with respect to any pro rata subscription
offer to holders of Common Stock, or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(iii) The Corporation shall also give written notice to the
holders of Series A-6 Preferred at least 20 days prior to the date on which any
Organic Change shall take place.
I. Mandatory Conversion. The Corporation's board of directors
may at any time require the conversion of all of the outstanding Series A-6
Preferred upon the occurrence of a Conversion Event (as hereinafter defined).
Any such mandatory conversion shall only be effected at the time of and subject
to the closing of the transactions contemplated by the Conversion Event and upon
written notice of such mandatory conversion delivered to all holders of Series
A-6 Preferred at least seven (7) days prior to such closing.
Section 5. Purchase Rights.
If at any time the Corporation grants, issues or sells any
options, convertible securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then each holder of Series A-6 Preferred
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Conversion Stock acquirable upon
conversion of such holder's Series A-6 Preferred immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.
Section 6. Registration of Transfer.
The Corporation shall keep at its principal office a register
for the registration of Series A-6 Preferred. Upon the surrender of any
certificate representing Series A-6 Preferred at such place, the Corporation
shall, at the request of the record holder of such certificate, execute and
deliver (at the Corporation's expense) a new certificate or certificates in
exchange therefor representing in the aggregate the number of Shares represented
by the surrendered certificate. Each such new certificate shall be registered in
such name and shall represent such number of Shares as is requested by the
holder of the surrendered certificate and shall be substantially identical in
form to the surrendered certificate.
Section 7. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or
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mutilation of any certificate evidencing Shares of any class of Series A-6
Preferred, and in the case of any such loss, theft or destruction, upon receipt
of indemnity reasonably satisfactory to the Corporation (provided that if the
holder is a financial institution or other institutional investor its oven
agreement shall be satisfactory), or, in the case of any such mutilation, upon
surrender of such certificate, the Corporation shall (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the number of Shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.
Section 8. Definitions.
"Common Stock" means, collectively, the Corporation's Common
Stock, no par value, and any capital stock of any class of the Corporation
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
"Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Section
4(D) hereof whether or not the Options or Convertible Securities are actually
exercisable at such time.
"Conversion Event" means (i) a Qualified Public Offering, (ii)
any sale of all the outstanding capital stock of the Corporation, or (iii) a
merger, consolidation, sale of substantially all of the assets of the
Corporation or similar transaction involving the Corporation.
"Conversion Stock" means shares of Common Stock; provided that
if there is a change such that the securities issuable upon conversion of the
Series A-6 Preferred are issued by an entity other than the Corporation or there
is a change in the class of securities so issuable, then the term "Conversion
Stock" shall mean one share of the security issuable upon conversion of the
Series A-6 Preferred if such security is issuable in shares, or shall mean the
smallest unit in which such security is issuable if such security is not
issuable in shares.
"Junior Securities" means any of the Corporation's equity
securities other than the Series A-l Preferred and the Preferred Class.
"Liquidation Value" of any Share as of any particular date
shall be equal to $15.02.
"Person" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
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"Qualified Public Offering" means any underwritten offering by
the Corporation of its equity securities to the public pursuant to an effective
registration statement under the Securities Act of 1933, as then in effect, or
any comparable statement under any similar federal statute then in force
pursuant to which the value of the Corporation prior to receipt of the proceeds
of such offering is at least $25,000,000 and the minimum gross proceeds to the
Corporation is $15,000,000; provided that for purposes of Section 4(G) hereof, a
Qualified Public Offering shall not include an offering made in connection with
a business acquisition or combination or an employee benefit plan.
Section 9. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to any provision of Sections 1 to 10 hereof without the
prior written consent of the holders of at least 75% of the Series A-6 Preferred
outstanding at the time such action is taken. No change in the terms hereof may
be accomplished by merger or consolidation of the Corporation with another
corporation or entity unless the Corporation has obtained the prior written
consent of the holders of 75% of the Series A-6 Preferred then outstanding.
Section 10. Notices.
Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be delivered by registered or
certified mail, return receipt requested and postage prepaid, or by reputable
overnight courier service, charges prepaid, and shall be deemed to have been
given when so mailed or sent (i) to the Corporation, at its principal executive
offices, and (ii) to any stockholder, at such holder's address as it appears in
the stock records of the Corporation (unless otherwise indicated by any such
holder).
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