Initial Public Offering (IPO): Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1 Registration Statement (General Form) 146 767K
2: EX-3.1 Restated Certificate of Incorporation 29 135K
3: EX-3.3 By-Laws of the Registrant 16 79K
4: EX-10.1 1997 Stock Option Plan 13 55K
13: EX-10.10 Form of Option Stockholders Agreement 9 48K
14: EX-10.11 Stock Purchase Agreement Dated March 9, 1998 39 183K
15: EX-10.12 Stock Purchase Agreement Dated September 9, 1998 24 114K
16: EX-10.13 Stock and Warrant Purchase Agreement 31 143K
17: EX-10.14 Stock Purchase Agreement Dated May 17, 2000 22 118K
18: EX-10.15 Stock Purchase Agreement Dated May 17, 2000 29 161K
19: EX-10.16 Form of Warrant Delivered to the Purchasers 18 80K
20: EX-10.17 Shareholder Agreement 27 65K
21: EX-10.18 Amendment to Shareholders Agreement 4 30K
22: EX-10.19 Amended and Restated Shareholders Agreement 13 69K
5: EX-10.2 1999 Stock Option Plan 12 55K
23: EX-10.20 Walker and Jaeckle Shareholder Agreement 15 43K
24: EX-10.21 Stock Option Agreement 5 38K
25: EX-10.22 Amended and Restated Stockholders Agreement 46 188K
26: EX-10.23 Amend. #1 to Amended & Restated Stockholders Agmt 5 27K
27: EX-10.24 Amend #2 Waiver of Amended & Restated Stockholders 5 28K
28: EX-10.25 2nd Amended & Restated Stockholders Agmt 43 211K
29: EX-10.26 Amended & Restated Registration Rights Agmt 38 137K
30: EX-10.27 Amend #1 to Amended & Restated Registration Rights 4 28K
31: EX-10.28 2nd Amended & Restated Registration Rights 29 130K
32: EX-10.29 Indemnification Agreement 11 43K
6: EX-10.3 2000 Stock Incentive Plan 7 45K
33: EX-10.31 Guarantee Signed by Time, Inc. 1 17K
34: EX-10.32 Letter Agreement 3 24K
35: EX-10.33 Consulting Agreement 9 45K
36: EX-10.34 Employment Agreement 4 27K
37: EX-10.35 Letter Agreement 3 25K
38: EX-10.36 Employment Agreement 2 23K
39: EX-10.37 Subordinated Promissory Note 3 25K
40: EX-10.38 Subordinated Promissory Note 3 25K
41: EX-10.39 Subordinated Promissory Note 3 25K
7: EX-10.4 Form of Non-Qualified Stock Option Agreement 3 26K
42: EX-10.40 Subordinated Promissory Note 3 25K
43: EX-10.41 Promissory Note 2 20K
44: EX-10.42 Promissory Note 2 20K
45: EX-10.43 Promissory Note 2 20K
46: EX-10.44 Promissory Note 2 20K
47: EX-10.45 Promissory Note 2 20K
48: EX-10.46 Promissory Note 2 20K
49: EX-10.47 Loan Exchange Agreement 5 28K
50: EX-10.48 Revolving Promissory Note 3 25K
51: EX-10.49 Credit Agreement 47 170K
8: EX-10.5 Form of Option Shareholders Agreement 15 46K
52: EX-10.50 Promissory Note 3 21K
53: EX-10.51 Promissory Note 3 22K
54: EX-10.52 Lease 80 323K
55: EX-10.53 Lease 64 277K
56: EX-10.54 Settlement Agreement 8 51K
57: EX-10.55 Sales Representative Agreement 18 59K
58: EX-10.56 Limited Liability Company Agreement 25 102K
59: EX-10.59 Letter Agreement 2 20K
9: EX-10.6 Form of Non-Qualified Stock Option Agreement 3 26K
60: EX-10.60 Master Agreement 13 69K
61: EX-10.61 Revolving Promissory Note 4 25K
10: EX-10.7 Form of Option Shareholders Agreement 10 43K
11: EX-10.8 Form of Nonstatutory Stock Option Agreement 6 35K
12: EX-10.9 Form of Incentive Stock Option Agreement 6 35K
62: EX-16.1 Letter Regarding Change in Certifying Accountant 1 16K
63: EX-21.1 Subsidiaries of the Registrant 1 15K
64: EX-23.1 Consent of Arthur Andersen LLP 1 15K
65: EX-27.1 Financial Data Schedule 2 18K
EX-3.1 — Restated Certificate of Incorporation
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Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
SYNAPSE GROUP, INC.
(Pursuant to Section 245 of the General Corporation Law of the State of
Delaware)
The undersigned President and Chief Executive Officer of Synapse Group, Inc., a
Delaware corporation (the "Corporation"), hereby certifies as follows:
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1. The present name of the Corporation is Synapse Group, Inc., which is the
name under which the Corporation was originally incorporated in Delaware;
and the date of filing the original Certificate of Incorporation of the
Corporation with the Secretary of State of the State of Delaware is
December 22, 1999.
2. This Restated Certificate of Incorporation further amends and restates the
Certificate of Incorporation of the Corporation now in effect.
3. This Restated Certificate of Incorporation of the Corporation was duly
adopted pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware to read as follows:
FIRST. The name of the Corporation is:
Synapse Group, Inc.
SECOND. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or promoted
by the Corporation is as follows:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware (the
"DGCL").
----
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 107,000,000 shares, consisting of
(i) 95,000,000 shares of Common Stock, $0.001 par value per share, comprised of
58,000,000 shares of Class A Common Stock, $0.001 par value per share (the
"Voting Stock"), and 37,000,000 shares of Class B Common Stock, $ 0.001 par
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value per share (the "Nonvoting Stock" and, together with the Voting Stock, the
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"Common Stock"), and (ii) 12,000,000 shares of Preferred Stock, of which
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2,600,000 are shares of Series A Convertible Preferred Stock, $0.001 par value
per share (the "Series A Preferred Stock"), 5,000,000 are shares of Series B
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Convertible Preferred Stock, $0.001 par value per share (the "Series B Preferred
------------------
Stock"), and 3,125,000 are shares of Series C Convertible Preferred Stock,
-----
$0.001 par value per share (the "Series C Preferred Stock" and
------------------------
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together with the Series A Preferred Stock and the Series B Preferred Stock, the
"Preferred Stock").
---------------
The following is a statement of the designations and the powers, privileges
and rights, and the qualifications, limitations or restrictions thereof in
respect of each class of capital stock of the Corporation.
A. COMMON STOCK.
------------
1. Class A Common Stock and Class B Common Stock shall have identical
rights and preferences except that the holders of the Class B Common Stock shall
not be entitled to vote, other than as required in Section 242 of the DGCL, and
this provision restricting Class B Common Stock right to vote shall prevail in
all elections and in all proceedings over the provisions of any statute that
authorizes any action by a vote or written consent of the holders of all of the
shares or a specific portion of the shares of the Corporation, all rights to
vote being vested solely and exclusively in the Class A Common Stock.
2. Upon the earlier of (i) the closing date of the Initial Public
Offering, or (ii) June 30, 2001, Article FOURTH, Section A.1 shall be deleted
from this Restated Certificate of Incorporation and each outstanding share of
the Class B Common Stock shall be automatically converted into one share of
Voting Stock.
3. The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote.
4. Dividends may be declared and paid on the Common Stock from funds
lawfully available therefor as and when determined by the Board of Directors and
subject to any preferential dividend rights of any then outstanding Preferred
Stock.
5. Upon the dissolution or liquidation of the Corporation, whether
voluntary or involuntary, holders of Common Stock will be entitled to receive
all assets of the Corporation available for distribution to its stockholders,
subject to any preferential rights of any then outstanding Preferred Stock.
B. PREFERRED STOCK
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1. Capitalized Terms. Capitalized terms used in this Article FOURTH,
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Section B and not otherwise defined shall have the meanings set forth in Article
FOURTH, Section B.11 below. All references in this Article FOURTH, Section B to
"Sections" or "Section" are references to Sections or a Section of this Article
FOURTH, Section B.
2. Rank.
----
(a) The Preferred Stock shall, with respect to distributions of
assets and rights upon the occurrence of a Liquidation rank (i) pari passu with
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each other and any other series or class of Capital Stock hereafter created
which expressly ranks pari passu with the Preferred Stock (the "Parity Stock")
---- ----- ------------
and (ii) senior to (x) all classes of Common Stock and (y) each other
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class or series of Capital Stock of the Corporation hereafter created which does
not expressly rank pari passu with or senior to the Preferred Stock
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(collectively with the Common Stock, the "Junior Stock").
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(b) The Series A Preferred Stock shall, with respect to payment of
the Series A Automatic Conversion Payment upon the occurrence of a Sale or a
Merger, rank pari passu with the Series B Preferred Stock and Series C Preferred
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Stock and senior to the Junior Stock. The Series B Preferred Stock shall, with
respect to payment of the Series B Automatic Conversion Payment upon the
occurrence of a Sale or a Merger, rank pari passu with the Series A Preferred
---- -----
Stock and the Series C Preferred Stock and senior to the Junior Stock. The
Series C Preferred Stock shall, with respect to payment of the Series C
Automatic Conversion Payment upon the occurrence of a Sale or a Merger, rank
pari passu with the Series A Preferred Stock and the Series B Preferred Stock
---- -----
and senior to the Junior Stock.
3. Dividends. The holders of shares of Preferred Stock shall not be
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entitled to receive dividends except in accordance with this Section 3. If the
Corporation declares a dividend (or makes any other distribution (including,
without limitation, in cash or other assets)) to the holders of shares of Common
Stock, then, the holders of each share of Preferred Stock shall be entitled to
receive out of funds legally available therefor, a dividend or distribution in
an amount equal to the amount of such dividend or distribution received by a
holder of the number of shares of Voting Stock for which such share of Preferred
Stock, as the case may be, is convertible pursuant to Section 7(a) on the record
date for determining the stockholders of the Corporation eligible to receive
such dividends or distribution.
4. Liquidation Preference.
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(a) Priority Payment. Upon the occurrence of a Liquidation:
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(i) the holders of shares of Series A Preferred Stock shall be
entitled to be paid for each share of Series A Preferred Stock held thereby,
pari passu with any payments due to the holders of the Series B Preferred Stock,
---- -----
the Series C Preferred Stock and any other Parity Stock, if any, out of the
assets of the Corporation legally available for distribution to its
stockholders, an amount in cash equal to $7.72 (the "Series A Liquidation
--------------------
Preference") plus all declared and unpaid dividends thereon to the date fixed
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for such Liquidation, before any payment or distribution is made to any Junior
Stock;
(ii) the holders of shares of Series B Preferred Stock shall be
entitled to be paid for each share of Series B Preferred Stock held thereby,
pari passu with any payments due to the holders of the Series A Preferred Stock,
---- -----
Series C Preferred Stock and any other Parity Stock, if any, out of the assets
of the Corporation legally available for distribution to its stockholders, an
amount in cash equal to $8.00 (the "Series B Liquidation Preference") plus all
-------------------------------
declared and unpaid dividends thereon to the date fixed for such Liquidation,
before any payment or distribution is made to any Junior Stock; and
(iii) the holders of shares of Series C Preferred Stock shall be
entitled to be paid for each share of Series C Preferred Stock held thereby,
pari passu with any payments due to the holders of the Series A Preferred Stock,
---- -----
Series B Preferred Stock and any other Parity
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Stock, if any, out of the assets of the Corporation legally available for
distribution to its stockholders, an amount in cash equal to $8.00 (the "Series
------
C Liquidation Preference") plus all declared and unpaid dividends thereon to the
------------------------
date fixed for such Liquidation, before any payment or distribution is made to
any Junior Stock.
If the assets of the Corporation available for distribution to
the holders of Preferred Stock and any Parity Stock shall be insufficient to pay
in full to such holders the amounts such holders are entitled to receive, then
all of the assets available for distribution shall be distributed among and paid
to the holders of the Preferred Stock and the holders of Parity Stock ratably in
proportion to the amounts that would be payable to such holders if such assets
were sufficient to permit payment in full.
(b) No Additional Payment. After the holders of all shares of
---------------------
Preferred Stock and any Parity Stock shall have been paid in full the amounts to
which they are entitled pursuant to Section 4(a) above, the remaining assets of
the Corporation shall be distributed to the holders of Junior Stock.
(c) Notice. Written notice of a Liquidation stating a payment or
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payments and the place where such payment or payments shall be payable, shall be
delivered in person, mailed by certified mail, return receipt requested, mailed
by overnight mail or sent by telecopier, not less than ten (10) days prior to
the earliest payment date stated therein, to the holders of record of the
Preferred Stock, such notice to be addressed to each such holder at its address
as shown by the records of the Corporation.
5. Redemption. The Preferred Stock shall not be redeemed or subject to
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redemption, whether at the option of the Corporation or any holder thereof, or
otherwise.
6. Voting Rights; Election of Directors.
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(a) Holders of the Preferred Stock shall be entitled to vote on any
matter required or permitted to be voted upon by the stockholders of the
Corporation.
(b) Each outstanding share of Preferred Stock shall entitle the
holder thereof to vote, in person or by proxy, at a special or annual meeting of
stockholders, on all matters entitled to be voted on by holders of Common Stock
voting together as a single class with the Common Stock (and with other shares
entitled to vote thereon, if any). With respect to any such vote, each share of
Preferred Stock shall entitle the holder thereof to cast that number of votes
per share as is equal to the number of votes that such holder would be entitled
to cast had such holder converted its shares of Preferred Stock, as the case may
be, into shares of Voting Stock pursuant to Section 7(a) on the record date for
determining the stockholders of the Corporation eligible to vote on any such
matters.
7. Conversion.
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(a) Optional Conversion.
-------------------
(i) Any holder of Series A Preferred Stock shall have the right,
at its option, at any time and from time to time, to convert, subject to the
terms and provisions of this
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Section 7, any or all of such holder's shares of Series A Preferred Stock into
such number of fully paid and non-assessable shares of Voting Stock as is equal
to the product of the number of shares of Series A Preferred Stock being so
converted multiplied by the quotient of (i) the Series A Liquidation Preference
divided by (ii) the conversion price of $7.72 per share, subject to adjustment
as provided in Section 7(f) (such price, the "Series A Conversion Price");
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(ii) Any holder of Series B Preferred Stock shall have the
right, at its option, at any time and from time to time, to convert, subject to
the terms and provisions of this Section 7, any or all of such holder's shares
of Series B Preferred Stock into such number of fully paid and non-assessable
shares of Voting Stock as is equal to the product of the number of shares of
Series B Preferred Stock being so converted multiplied by the quotient of (i)
the Series B Liquidation Preference divided by (ii) the conversion price of
$8.00 per share, subject to adjustment as provided in Section 7(g) (such price,
the "Series B Conversion Price"); and
-------------------------
(iii) Any holder of Series C Preferred Stock shall have the
right, at its option, at any time and from time to time, to convert, subject to
the terms and provisions of this Section 7, any or all of such holder's shares
of Series C Preferred Stock into such number of fully paid and non-assessable
shares of Voting Stock as is equal to the product of the number of shares of
Series C Preferred Stock being so converted multiplied by the quotient of (i)
the Series C Liquidation Preference divided by (ii) the conversion price of
$8.00 per share, subject to adjustment as provided in Section 7(h) (such price,
the "Series C Conversion Price").
-------------------------
Such conversion right shall be exercised by the surrender of
certificate(s) representing the shares of Preferred Stock, as the case may be,
to be converted to the Corporation at any time during usual business hours at
its principal place of business to be maintained by it (or such other office or
agency of the Corporation as the Corporation may designate by notice in writing
to the holders of Preferred Stock), accompanied by written notice that the
holder elects to convert such shares of Preferred Stock, as the case may be, and
specifying the name or names (with address) in which a certificate or
certificates for shares of Voting Stock are to be issued and (if so required by
the Corporation) by a written instrument or instruments of transfer in form
reasonably satisfactory to the Corporation duly executed by the holder or its
duly authorized legal representative and transfer tax stamps or funds therefor,
if required pursuant to Section 7(n). All certificates representing shares of
Preferred Stock, as the case may be, surrendered for conversion shall be
delivered to the Corporation for cancellation and canceled by it. As promptly
as practicable after the surrender of any share of Preferred Stock, as the case
may be, the Corporation shall (subject to compliance with the applicable
provisions of federal and state securities laws) deliver to the holder of such
shares so surrendered certificate(s) representing the number of fully paid and
nonassessable shares of Voting Stock into which such shares are entitled to be
converted and, to the extent funds are legally available therefor, an amount
equal to the accrued and unpaid dividends payable with respect to such shares in
accordance with Section 3 above. At the time of the surrender of such
certificate(s), the Person in whose name any certificate(s) for shares of Voting
Stock shall be issuable upon such conversion shall be deemed to be the holder of
record of such shares of Voting Stock on such date, notwithstanding that the
share register of the Corporation shall then be closed or that the certificates
representing such Voting Stock shall not then be actually delivered to such
Person.
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(b) Automatic Conversion Payment. If, at any time prior to the
----------------------------
closing of a Merger or Sale:
(A) a holder of Series A Preferred Stock has not elected to
convert its shares of Series A Preferred Stock into Voting Stock in accordance
with Section 7(a) above, then upon the closing of such Merger or Sale, at the
election of the holders of a majority of the Series A Preferred Stock, each
outstanding share of Series A Preferred Stock shall be automatically converted,
with no further action required to be taken by the Corporation or the holder
thereof, into the Series A Automatic Conversion Payment;
(B) a holder of Series B Preferred Stock has not elected to
convert its shares of Series B Preferred Stock into Voting Stock in accordance
with Section 7(a) above, then upon the closing of such Merger or Sale, at the
election of the holders of a majority of the outstanding Series B Preferred
Stock, each outstanding share of Series B Preferred Stock shall be automatically
converted, with no further action required to be taken by the Corporation or the
holder thereof, into the Series B Automatic Conversion Payment; and
(C) a holder of Series C Preferred Stock has not elected to
convert its shares of Series C Preferred Stock into Voting Stock in accordance
with Section 7(a) above, then upon the closing of such Merger or Sale, at the
election of the holders of a majority of the outstanding Series C Preferred
Stock, each outstanding share of Series C Preferred Stock shall be automatically
converted, with no further action required to be taken by the Corporation or the
holder thereof, into the Series C Automatic Conversion Payment.
Upon completion of the payment of the Series A Automatic Conversion
Payment to the holders of the Series A Preferred Stock, the shares of Series A
Preferred Stock shall not be entitled to any further participation, payment or
distribution in such Merger or Sale. Upon completion of the payment of the
Series B Automatic Conversion Payment to the holders of the Series B Preferred
Stock, the shares of Series B Preferred Stock shall not be entitled to any
further participation, payment or distribution in such Merger or Sale. Upon
completion of the payment of the Series C Automatic Conversion Payment to the
holders of the Series C Preferred Stock, the shares of Series C Preferred Stock
shall not be entitled to any further participation, payment or distribution in
such Merger or Sale.
Such Series A Automatic Conversion Payment, Series B Automatic
Conversion Payment and Series C Automatic Conversion Payment shall be payable,
to the extent funds are legally available therefor, in the form of consideration
received by the holders of shares of the Common Stock in such Merger or Sale.
If the Series A Automatic Conversion Payment, the Series B Automatic Conversion
Payment and the Series C Automatic Conversion Payment are to be paid in shares
of Common Stock, the value of such Common Stock shall be determined (A) in the
case of a Merger (other than as set forth in clause (B) below) or Sale, by the
Net Per Share Price paid for shares of Common Stock in such Merger or Sale or
(B) in the case of a Merger in which no per share price is paid for shares of
Common Stock:
(x) with respect to the Series A Automatic Conversion
Payment, mutually by the Board of Directors and the holders of a majority of the
shares of Series A Preferred Stock or, if the Board of Directors and the holders
of a majority of the shares of
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Series A Preferred Stock shall fail to agree, at the Corporation's expense by an
appraiser chosen by the Board of Directors and reasonably acceptable to the
holders of a majority of the shares of Series A Preferred Stock;
(y) with respect to the Series B Automatic Conversion Payment,
mutually by the Board of Directors and the holders of a majority of the shares
of Series B Preferred Stock or, if the Board of Directors and the holders of a
majority of the shares of Series B Preferred Stock shall fail to agree, at the
Corporation's expense by an appraiser chosen by the Board of Directors and
reasonably acceptable to the holders of a majority of the shares of Series B
Preferred Stock; and
(z) with respect to the Series C Automatic Conversion Payment,
mutually by the Board of Directors and the holders of a majority of the shares
of Series C Preferred Stock or, if the Board of Directors and the holders of a
majority of the shares of Series C Preferred Stock shall fail to agree, at the
Corporation's expense by an appraiser chosen by the Board of Directors and
reasonably acceptable to the holders of a majority of the shares of Series C
Preferred Stock.
Any securities of the surviving Person or securities of the
Corporation other than Common Stock otherwise to be delivered to the holders of
Preferred Stock in such Merger or Sale pursuant to this Section 7(b) shall be
valued as follows:
(i) With respect to securities that do not constitute
"restricted securities," as such term is defined in Rule 144(a)(3) promulgated
under the Securities Act, the value shall be deemed to be the Current Market
Price of such securities as of three days prior to the date of distribution.
(ii) With respect to securities that constitute "restricted
securities," as such term is defined in Rule 144(a)(3) promulgated under the
Securities Act, and that are of the same class or series as securities that are
publicly traded, the value shall be adjusted to make an appropriate discount
from the value as set forth above in clause (i) to reflect the appropriate fair
market value thereof, as mutually determined by the Board of Directors and (x)
in the case of the Series A Preferred Stock, the holders of a majority of the
shares of Series A Preferred Stock, (y) in the case of the Series B Preferred
Stock, the holders of a majority of the shares of Series B Preferred Stock, or
(z) in the case of the Series C Preferred Stock, the holders of a majority of
the shares of Series C Preferred Stock, or if there is no active public market
with respect to such class or series of securities, such securities shall be
valued in accordance with clause (i) above, giving appropriate weight, if any,
to such restriction as mutually determined by the Board of Directors and (x) in
the case of the Series A Preferred Stock, the holders of a majority of the
shares of Series A Preferred Stock, (y) in the case of the Series B Preferred
Stock, the holders of a majority of the shares of Series B Preferred Stock, or
(z) in the case of the Series C Preferred Stock, the holders of a majority of
the shares of Series C Preferred Stock, or if the Board of Directors and (x) in
the case of the Series A Preferred Stock, the holders of a majority of the
shares of Series A Preferred Stock shall fail to agree, (y) in the case of the
Series B Preferred Stock, the holders of a majority of the shares of Series B
Preferred Stock, or (z) in the case of the Series C Preferred Stock, the holders
of a majority of the shares of Series C Preferred Stock, shall fail to agree, at
the Corporation's expense by an appraiser chosen by the Board of Directors
-7-
and reasonably acceptable to (x) in the case of the Series A Preferred Stock,
the holders of a majority of the shares of Series A Preferred Stock or (y) in
the case of the Series B Preferred Stock, the holders of a majority of the
shares of Series B Preferred Stock, or (z) in the case of the Series C Preferred
Stock, the holders of a majority of the shares of Series C Preferred Stock.
If the Series A Automatic Conversion Payment is to be paid in
other consideration received by holders of shares of the Common Stock, the value
of such other consideration shall be mutually determined by the Board of
Directors and the holders of a majority of the shares of Series A Preferred
Stock or, if the Board of Directors and the holders of a majority of the shares
of Series A Preferred Stock shall fail to agree, at the Corporation's expense by
an appraiser chosen by the Board of Directors and reasonably acceptable to the
holders of a majority of the shares of Series A Preferred Stock.
If the Series B Automatic Conversion Payment is to be paid in
other consideration received by holders of shares of the Common Stock, the value
of such other consideration shall be mutually determined by the Board of
Directors and the holders of a majority of the shares of Series B Preferred
Stock or, if the Board of Directors and the holders of a majority of the shares
of Series B Preferred Stock shall fail to agree, at the Corporation's expense by
an appraiser chosen by the Board of Directors and reasonably acceptable to the
holders of a majority of the shares of Series B Preferred Stock.
If the Series C Automatic Conversion Payment is to be paid in
other consideration received by holders of shares of the Common Stock, the value
of such other consideration shall be mutually determined by the Board of
Directors and the holders of a majority of the shares of Series C Preferred
Stock or, if the Board of Directors and the holders of a majority of the shares
of Series C Preferred Stock shall fail to agree, at the Corporation's expense by
an appraiser chosen by the Board of Directors and reasonably acceptable to the
holders of a majority of the shares of Series C Preferred Stock.
Immediately upon conversion as provided herein, each holder of
Preferred Stock shall be deemed to be the holder of record of the Common Stock
or other applicable consideration issuable upon conversion of such holder's
Preferred Stock, as the case may be, notwithstanding that the share register of
the Corporation shall then be closed or that certificates representing the
Common Stock shall not then actually be delivered to such Person. Upon notice
from the Corporation, each holder of Preferred Stock so converted shall promptly
surrender to the Corporation at its principal place of business to be maintained
by it (or at such other office or agency of the Corporation as the Corporation
may designate by such notice to the holders of Preferred Stock) certificates
representing the shares so converted.
(c) Termination of Rights. On the date of any optional conversion
---------------------
pursuant to Section 7(a) above or of such automatic conversion pursuant to
Section 7(b) above, all rights with respect to the shares of Preferred Stock, as
the case may be, so converted, including the rights, if any, to receive notices
and vote, shall terminate, except only the rights of holders thereof to (i)
receive certificates for the number of shares of Voting Stock into which such
shares of Preferred Stock, as the case may be, have been converted in the case
of a conversion pursuant to Section 7(a) above, (ii) receive the Series A
Automatic Conversion Payment, the Series B Automatic Conversion Payment, or the
Series C Automatic Conversion Payment, as the case
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may be, in the case of an automatic conversion pursuant to Section 7(b) above,
and (iii) exercise the rights to which they are entitled as holders of Voting
Stock in the case of a conversion pursuant to Section 7(a) above.
(d) Certificates. As promptly as practicable after the surrender of
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any shares of Preferred Stock, as the case may be, pursuant to Section 7(a)
above, the Corporation shall deliver to the holder of such shares so surrendered
certificate(s) representing the number of fully paid and nonassessable shares of
Voting Stock into which such shares have been converted in accordance with the
provisions of this subsection. At the time of the surrender of such
certificate(s), the Person in whose name any certificate(s) for shares of Voting
Stock shall be issuable upon such conversion shall be deemed to be the holder of
record of such shares of Voting Stock on such date, notwithstanding that the
share register of the Corporation shall then be closed or that the certificates
representing such Voting Stock shall not then be actually delivered to such
Person.
(e) To the extent permitted by law, when shares of Preferred Stock
are converted, all dividends declared and unpaid on the shares of Preferred
Stock so converted to the date of conversion shall be immediately due and
payable and must accompany the shares of Voting Stock issued upon such
conversion.
(f) Anti-dilution Adjustments of the Series A Preferred Stock. The
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Series A Conversion Price, and the number and type of securities to be received
upon conversion of the Series A Preferred Stock, shall be subject to adjustment
as follows:
(i) Dividend, Subdivision, Combination or Reclassification of
---------------------------------------------------------
Common Stock. In the event that the Corporation shall at any time or from time
------------
to time, prior to conversion of the Series A Preferred Stock (w) pay a dividend
or make a distribution (other than a dividend or distribution paid or made to
holders of shares of Series A Preferred Stock, or in which holders of such
shares participate, in the manner provided in Section 3) on the outstanding
shares of Common Stock payable in Capital Stock, (x) subdivide the outstanding
shares of Common Stock into a larger number of shares, (y) combine the
outstanding shares of Common Stock into a smaller number of shares or (z) issue
any shares of its Capital Stock in a reclassification of the Common Stock (other
than any such event for which an adjustment is made pursuant to another clause
of this Section 7(f)), then, and in each such case, the Series A Conversion
Price in effect immediately prior to such event shall be adjusted (and any other
appropriate actions shall be taken by the Corporation) so that the holder of any
share of Series A Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock or other securities of
the Corporation that such holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had such share
of Series A Preferred Stock been converted immediately prior to the occurrence
of such event. An adjustment made pursuant to this Section 7(f)(i) shall become
effective retroactively (x) in the case of any such dividend or distribution, to
a date immediately following the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend or
distribution or (y) in the case of any such subdivision, combination or
reclassification, to the close of business on the day upon which such corporate
action becomes effective.
-9-
(ii) Issuance of Rights to Purchase Common Stock below Series A
----------------------------------------------------------
Conversion Price. If the Corporation shall at any time or from time to time
----------------
prior to conversion of the Series A Preferred Stock, issue or sell any shares of
Common Stock or Common Stock Equivalents at a price per share of Common Stock
that is less than the Series A Conversion Price then in effect as of the record
date or Issue Date referred to in the following sentence, as the case may be
(the "Relevant Date") (treating the price per share of Common Stock, in the case
-------------
of the issuance of any Common Stock Equivalent, as equal to (x) the sum of the
price for such Common Stock Equivalent plus any additional consideration payable
(without regard to any anti-dilution adjustments) upon the conversion, exchange
or exercise of such Common Stock Equivalent divided by (y) the number of shares
of Common Stock initially underlying such Common Stock Equivalent), other than
issuances or sales (A) for which an adjustment is made pursuant to another
paragraph of this Section 7(f), and (B) in connection with an Excluded
Transaction, then, and in each such case, the Series A Conversion Price then in
----
effect shall be adjusted by multiplying the Series A Conversion Price in effect
-----------
on the day immediately prior to the Relevant Date by a fraction (I) the
numerator of which shall be the sum of the number of shares of Common Stock
outstanding on the Relevant Date plus the number of shares of Common Stock which
----
the aggregate consideration received by the Corporation for the total number of
such additional shares of Common Stock so issued would purchase at the Series A
Conversion Price on the Relevant Date (or, in the case of Common Stock
Equivalents, the number of shares of Common Stock which the aggregate
consideration received by the Corporation for the total number of such Common
Stock Equivalents, plus the aggregate amount of any additional consideration
----
initially payable upon conversion, exchange or exercise of such Common Stock
Equivalents would purchase at the Series A Conversion Price on the Relevant
Date) and (II) the denominator of which shall be the sum of the number of shares
of Common Stock outstanding on the Relevant Date plus the number of additional
----
shares of Common Stock issued or to be issued (or, in the case of Common Stock
Equivalents, the maximum number of shares of Common Stock into which such Common
Stock Equivalents initially may convert, exchange or be exercised). Such
adjustment shall be made whenever such shares of Common Stock or Common Stock
Equivalents are issued, and shall become effective retroactively (x) in the case
of an issuance to the stockholders of the Corporation, as such, to a date
immediately following the close of business on the record date for the
determination of stockholders entitled to receive such shares of Common Stock or
Common Stock Equivalents and (y) in all other cases, on the date (the "Issue
-----
Date") of such issuance; provided, however, that the determination as to whether
---- -------- -------
an adjustment is required to be made pursuant to this Section 7(f)(ii) shall
only be made upon the issuance of such shares of Common Stock or Common Stock
Equivalents, and not upon the issuance of any security into which the Common
Stock Equivalents convert, exchange or may be exercised; and provided further,
-------- -------
that if any Common Stock Equivalents (or any portions thereof) which shall have
given rise to an adjustment pursuant to this Section 7(f)(ii) shall have expired
or terminated without the exercise thereof and/or if by reason of the terms of
such Common Stock Equivalents there shall have been an increase or increases,
with the passage of time or otherwise, in the price payable upon the exercise or
conversion thereof, then the Series A Conversion Price hereunder shall be
readjusted (but to no greater extent than originally adjusted) in order to (A)
eliminate from the computation any additional shares of Common Stock
corresponding to such Common Stock Equivalents as shall have expired or
terminated, (B) treat the additional shares of Common Stock, if any, actually
issued or issuable pursuant to the previous exercise of such Common Stock
Equivalents as having been
-10-
issued for the consideration actually received and receivable therefor and (C)
treat any of such Common Stock Equivalents which remain outstanding as being
subject to exercise or conversion on the basis of such exercise or conversion
price as shall be in effect at the time.
(iii) Certain Distributions. In case the Corporation shall at any
---------------------
time or from time to time prior to conversion of the Series A Preferred Stock,
distribute to all holders of shares of the Common Stock (including any such
distribution made in connection with a merger or consolidation in which the
Corporation is the resulting or surviving Person and the Common Stock is not
changed or exchanged) cash, evidences of indebtedness of the Corporation or
another issuer, securities of the Corporation or another issuer or other assets
(excluding dividends or distributions paid or made to holders of shares of
Series A Preferred Stock, or in which holders of such shares participate, in the
manner provided in Section 3, and dividends payable in shares of Common Stock
for which adjustment is made under another paragraph of this Section 7(f) and
any distribution in connection with an Excluded Transaction) or rights or
warrants to subscribe for or purchase securities of the Corporation (excluding
those distributions in respect of which an adjustment in the Series A Conversion
Price is made pursuant to another paragraph of this Section 7(f) and any
distribution in connection with an Excluded Transaction), then, and in each such
case, the Series A Conversion Price then in effect shall be adjusted (and any
other appropriate actions shall be taken by the Corporation) by multiplying the
Series A Conversion Price in effect immediately prior to the date of such
distribution by a fraction (x) the numerator of which shall be the Current
Market Price of the Common Stock immediately prior to the date of distribution
less the then fair market value (as determined by the Board of Directors in the
exercise of their fiduciary duties) of the portion of the cash, evidences of
indebtedness, securities or other assets so distributed or of such rights or
warrants applicable to one share of Common Stock and (y) the denominator of
which shall be the Current Market Price of the Common Stock immediately prior to
the date of distribution (but such fraction shall not be greater than one);
provided, however, that no adjustment shall be made with respect to any
-------- -------
distribution of rights or warrants to subscribe for or purchase securities of
the Corporation if the holder of shares of Series A Preferred Stock would
otherwise be entitled to receive such rights or warrants upon conversion at any
time of shares of Series A Preferred Stock into Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
retroactively to a date immediately following the close of business on the
record date for the determination of stockholders entitled to receive such
distribution.
(iv) Other Changes. In case the Corporation at any time or from time
-------------
to time, prior to the conversion of the Series A Preferred Stock, shall take any
action affecting its Common Stock similar to or having an effect similar to any
of the actions described in any of Sections 7(f)(i) through (iii) or Section
7(k) (but not including any action described in any such Section) and the Board
of Directors in good faith determines that it would be equitable in the
circumstances to adjust the Series A Conversion Price as a result of such
action, then, and in each such case, the Series A Conversion Price shall be
adjusted in such manner and at such time as the Board of Directors in good faith
determines would be equitable in the circumstances (such determination to be
evidenced in a resolution, a certified copy of which shall be mailed to the
holders of the shares of Series A Preferred Stock).
(v) De Minimis Adjustments. Notwithstanding anything herein to the
----------------------
contrary, no adjustment under this Section 7(f) need be made to the Series A
Conversion Price if
-11-
the Corporation receives written notice from holders of all of the outstanding
Series A Preferred Stock that no such adjustment is required.
(g) Anti-dilution Adjustments of the Series B Preferred Stock. The
---------------------------------------------------------
Series B Conversion Price, and the number and type of securities to be received
upon conversion of the Series B Preferred Stock, shall be subject to adjustment
as follows:
(i) Dividend, Subdivision, Combination or Reclassification of
---------------------------------------------------------
Common Stock. In the event that the Corporation shall at any time or from time
------------
to time, prior to conversion of the Series B Preferred Stock (w) pay a dividend
or make a distribution (other than a dividend or distribution paid or made to
holders of shares of Series B Preferred Stock, or in which holders of such
shares participate, in the manner provided in Section 3) on the outstanding
shares of Common Stock payable in Capital Stock, (x) subdivide the outstanding
shares of Common Stock into a larger number of shares, (y) combine the
outstanding shares of Common Stock into a smaller number of shares or (z) issue
any shares of its Capital Stock in a reclassification of the Common Stock (other
than any such event for which an adjustment is made pursuant to another clause
of this Section 7(g)), then, and in each such case, the Series B Conversion
Price in effect immediately prior to such event shall be adjusted (and any other
appropriate actions shall be taken by the Corporation) so that the holder of any
share of Series B Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock or other securities of
the Corporation that such holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had such share
of Series B Preferred Stock been converted immediately prior to the occurrence
of such event. An adjustment made pursuant to this Section 7(g)(i) shall become
effective retroactively (x) in the case of any such dividend or distribution, to
a date immediately following the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend or
distribution or (y) in the case of any such subdivision, combination or
reclassification, to the close of business on the day upon which such corporate
action becomes effective.
(ii) Issuance of Rights to Purchase Common Stock below Series B
----------------------------------------------------------
Conversion Price. If the Corporation shall at any time or from time to time
----------------
prior to conversion of the Series B Preferred Stock, issue or sell any shares of
Common Stock or Common Stock Equivalents at a price per share of Common Stock
(the "New Issue Price") that is less than the Series B Conversion Price then in
---------------
effect as of the Relevant Date, other than issuances and sales in connection
with an Excluded Transaction, then, and in each such case, the Series B
----
Conversion Price then in effect shall be adjusted to equal the New Issue Price.
Such adjustment shall be made whenever such shares of Common Stock or Common
Stock Equivalents are issued, and shall become effective retroactively (x) in
the case of an issuance to the stockholders of the Corporation, as such, to a
date immediately following the close of business on the record date for the
determination of stockholders entitled to receive such shares of Common Stock or
Common Stock Equivalents and (y) in all other cases, on the Issue Date of such
issuance; provided, however, that the determination as to whether an adjustment
-------- -------
is required to be made pursuant to this Section 7(g)(ii) shall only be made upon
the issuance of such shares of Common Stock or Common Stock Equivalents, and not
upon the issuance of any security into which the Common Stock Equivalents
convert, exchange or may be exercised.
-12-
(iii) Revenue Adjustment. In the event that the sum (such sum, the
------------------
"Deferred Revenue Amount") of (1) the difference of (A) the Corporation's
------------------------
deferred revenue from its magazine business for the fiscal year ending December
31, 1999, stated on its audited balance sheet for the fiscal year ending
December 31, 1999, and (B) the Corporation's deferred revenue from its magazine
---
business at December 31, 1998, stated on its audited balance sheet for the
fiscal year ending December 31, 1998, plus (2) the Corporation's net revenue
----
from its magazine business at December 31, 1999, as stated on its audited income
statement for the fiscal year ending December 31, 1999, is (x) less than $206.1
million, but greater than or equal to $198.1 million, then the Series B
Conversion Price then in effect shall be immediately reduced to $7.00 (subject
to anti-dilution adjustment for the events described in Section 7(g)(i) above);
provided, however that no such reduction shall be made if the Series B
-------- -------
Conversion Price then in effect is less than or equal to $7.00 (subject to anti-
dilution adjustment for the events described in Section 7(g)(i) above); (y) less
than $198.1 million, then the Series B Conversion Price then in effect shall be
immediately reduced to $6.00 (subject to anti-dilution adjustment for the events
described in Section 7(g)(i) above); provided, however that no such reduction
-------- -------
shall be made if the Series B Conversion Price then in effect is less than or
equal to $6.00 (subject to anti-dilution adjustment for the events described in
Section 7(g)(i) above); or (z) greater than or equal to $206.1 million, then
there shall be no adjustment under this Section 7(g)(iii).
(iv) Initial Public Offering Adjustment. If on or prior to January
----------------------------------
12, 2001, the Corporation shall not have either closed its Initial Public
Offering at a Company Valuation of at least $425 million or shall not have
closed a Sale or Merger at a Company Valuation of at least $425 million, then
the Series B Conversion Price then in effect shall be immediately reduced to
$6.50 (subject to anti-dilution adjustment for the events described in Section
7(g)(i) above); provided, however that no such reduction shall be made if the
-------- -------
Series B Conversion Price then in effect is less than or equal to $6.50 (subject
to anti-dilution adjustment for the events described in Section 7(g)(i) above).
(v) Certain Distributions. In case the Corporation shall at any time
---------------------
or from time to time, prior to conversion of the Series B Preferred Stock,
distribute to all holders of shares of the Common Stock (including any such
distribution made in connection with a merger or consolidation in which the
Corporation is the resulting or surviving Person and the Common Stock is not
changed or exchanged) cash, evidences of indebtedness of the Corporation or
another issuer, securities of the Corporation or another issuer or other assets
(excluding dividends or distributions paid or made to holders of shares of
Series B Preferred Stock, or in which holders of such shares participate, in the
manner provided in Section 3, and dividends payable in shares of Common Stock
for which adjustment is made under another paragraph of this Section 7(g) and
any distribution in connection with an Excluded Transaction) or rights or
warrants to subscribe for or purchase securities of the Corporation (excluding
those distributions in respect of which an adjustment in the Series B Conversion
Price is made pursuant to another paragraph of this Section 7(g) and any
distribution in connection with an Excluded Transaction), then, and in each such
case, the Series B Conversion Price then in effect shall be adjusted (and any
other appropriate actions shall be taken by the Corporation) by multiplying the
Series B Conversion Price in effect immediately prior to the date of such
distribution by a fraction (x) the numerator of which shall be the Current
Market Price of the Common Stock immediately prior to the date of distribution
less the then fair market value (as determined by the Board of Directors in the
exercise of their fiduciary duties) of the portion of the cash, evidences of
indebtedness,
-13-
securities or other assets so distributed or of such rights or warrants
applicable to one share of Common Stock and (y) the denominator of which shall
be the Current Market Price of the Common Stock immediately prior to the date of
distribution (but such fraction shall not be greater than one); provided,
--------
however, that no adjustment shall be made with respect to any distribution
-------
of rights or warrants to subscribe for or purchase securities of the Corporation
if the holder of shares of Series B Preferred Stock would otherwise be entitled
to receive such rights or warrants upon conversion at any time of shares of
Series B Preferred Stock into Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective retroactively
to a date immediately following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.
(vi) Other Changes. In case the Corporation at any time or from time
-------------
to time, prior to the conversion of the Series B Preferred Stock, shall take any
action affecting its Common Stock similar to or having an effect similar to any
of the actions described in any of Sections 7(g)(i) through (v) or Section 7(k)
(but not including any action described in any such Section) and the Board of
Directors in good faith determines that it would be equitable in the
circumstances to adjust the Series B Conversion Price as a result of such
action, then, and in each such case, the Series B Conversion Price shall be
adjusted in such manner and at such time as the Board of Directors in good faith
determines would be equitable in the circumstances (such determination to be
evidenced in a resolution, a certified copy of which shall be mailed to the
holders of the shares of Series B Preferred Stock).
(vii) De Minimis Adjustments. Notwithstanding anything herein to the
----------------------
contrary, no adjustment under this Section 7(g) need be made to the Series B
Conversion Price if the Corporation receives written notice from holders of all
of the outstanding Series B Preferred Stock that no such adjustment is required.
(h) Anti-dilution Adjustments of the Series C Preferred Stock. The
---------------------------------------------------------
Series C Conversion Price, and the number and type of securities to be received
upon conversion of the Series C Preferred Stock, shall be subject to adjustment
as follows:
(i) Dividend, Subdivision, Combination or Reclassification of Common
----------------------------------------------------------------
Stock. In the event that the Corporation shall at any time or from time to
-----
time, prior to conversion of the Series C Preferred Stock (w) pay a dividend or
make a distribution (other than a dividend or distribution paid or made to
holders of shares of Series C Preferred Stock, or in which holders of such
shares participate, in the manner provided in Section 3) on the outstanding
shares of Common Stock payable in Capital Stock, (x) subdivide the outstanding
shares of Common Stock into a larger number of shares, (y) combine the
outstanding shares of Common Stock into a smaller number of shares or (z) issue
any shares of its Capital Stock in a reclassification of the Common Stock (other
than any such event for which an adjustment is made pursuant to another clause
of this Section 7(h)), then, and in each such case, the Series C Conversion
Price in effect immediately prior to such event shall be adjusted (and any other
appropriate actions shall be taken by the Corporation) so that the holder of any
share of Series C Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock or other securities of
the Corporation that such holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had such share
of Series C Preferred Stock been converted immediately prior to the
-14-
occurrence of such event. An adjustment made pursuant to this Section 7(h)(i)
shall become effective retroactively (x) in the case of any such dividend or
distribution, to a date immediately following the close of business on the
record date for the determination of holders of Common Stock entitled to receive
such dividend or distribution or (y) in the case of any such subdivision,
combination or reclassification, to the close of business on the day upon which
such corporate action becomes effective.
(ii) Issuance of Rights to Purchase Common Stock below Series C
----------------------------------------------------------
Conversion Price. If the Corporation shall at any time or from time to time
----------------
prior to conversion of the Series C Preferred Stock, issue or sell any shares of
Common Stock or Common Stock Equivalents at a New Issue Price that is less than
the Series C Conversion Price then in effect as of the Relevant Date, other than
issuances and sales in connection with an Excluded Transaction, then, and in
----
each such case, the Series C Conversion Price then in effect shall be adjusted
to equal the New Issue Price. Such adjustment shall be made whenever such
shares of Common Stock or Common Stock Equivalents are issued, and shall become
effective retroactively (x) in the case of an issuance to the stockholders of
the Corporation, as such, to a date immediately following the close of business
on the record date for the determination of stockholders entitled to receive
such shares of Common Stock or Common Stock Equivalents and (y) in all other
cases, on the Issue Date of such issuance; provided, however, that the
-------- -------
determination as to whether an adjustment is required to be made pursuant to
this Section 7(h)(ii) shall only be made upon the issuance of such shares of
Common Stock or Common Stock Equivalents, and not upon the issuance of any
security into which the Common Stock Equivalents convert, exchange or may be
exercised.
(iii) Initial Public Offering Adjustment. If on or prior to January
----------------------------------
12, 2001, the Corporation shall not have either closed its Initial Public
Offering at a Company Valuation of at least $425 million or shall not have
closed a Sale or Merger at a Company Valuation of at least $425 million, then
the Series C Conversion Price then in effect shall be immediately reduced to
$6.50 (subject to anti-dilution adjustment for the events described in Section
7(h)(i) above); provided, however that no such reduction shall be made if the
-------- -------
Series C Conversion Price then in effect is less than or equal to $6.50 (subject
to anti-dilution adjustment for the events described in Section 7(h)(i) above).
(iv) Certain Distributions. In case the Corporation shall at any
---------------------
time or from time to time prior to conversion of the Series C Preferred Stock,
distribute to all holders of shares of the Common Stock (including any such
distribution made in connection with a merger or consolidation in which the
Corporation is the resulting or surviving Person and the Common Stock is not
changed or exchanged) cash, evidences of indebtedness of the Corporation or
another issuer, securities of the Corporation or another issuer or other assets
(excluding dividends or distributions paid or made to holders of shares of
Series C Preferred Stock, or in which holders of such shares participate, in the
manner provided in Section 3, and dividends payable in shares of Common Stock
for which adjustment is made under another paragraph of this Section 7(h) and
any distribution in connection with an Excluded Transaction) or rights or
warrants to subscribe for or purchase securities of the Corporation (excluding
those distributions in respect of which an adjustment in the Series C Conversion
Price is made pursuant to another paragraph of this Section 7(h) and any
distribution in connection with an Excluded Transaction), then, and in each such
case, the Series C Conversion Price then in effect shall be adjusted (and
-15-
any other appropriate actions shall be taken by the Corporation) by multiplying
the Series C Conversion Price in effect immediately prior to the date of such
distribution by a fraction (x) the numerator of which shall be the Current
Market Price of the Common Stock immediately prior to the date of distribution
less the then fair market value (as determined by the Board of Directors in the
exercise of their fiduciary duties) of the portion of the cash, evidences of
indebtedness, securities or other assets so distributed or of such rights or
warrants applicable to one share of Common Stock and (y) the denominator of
which shall be the Current Market Price of the Common Stock immediately prior to
the date of distribution (but such fraction shall not be greater than one);
provided, however, that no adjustment shall be made with respect to any
-------- -------
distribution of rights or warrants to subscribe for or purchase securities of
the Corporation if the holder of shares of Series C Preferred Stock would
otherwise be entitled to receive such rights or warrants upon conversion at any
time of shares of Series C Preferred Stock into Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
retroactively to a date immediately following the close of business on the
record date for the determination of stockholders entitled to receive such
distribution.
(v) Other Changes. In case the Corporation at any time or from time
-------------
to time, prior to the conversion of the Series C Preferred Stock, shall take any
action affecting its Common Stock similar to or having an effect similar to any
of the actions described in any of Sections 7(h)(i) through (iii) or Section
7(k) (but not including any action described in any such Section) and the Board
of Directors in good faith determines that it would be equitable in the
circumstances to adjust the Series C Conversion Price as a result of such
action, then, and in each such case, the Series C Conversion Price shall be
adjusted in such manner and at such time as the Board of Directors in good faith
determines would be equitable in the circumstances (such determination to be
evidenced in a resolution, a certified copy of which shall be mailed to the
holders of the shares of Series C Preferred Stock).
(vi) De Minimis Adjustments. Notwithstanding anything herein to the
----------------------
contrary, no adjustment under this Section 7(h) need be made to the Series C
Conversion Price if the Corporation receives written notice from holders of all
of the outstanding Series C Preferred Stock that no such adjustment is required.
(i) Abandonment. If the Corporation shall take a record of the holders of
-----------
its Common Stock for the purpose of entitling them to receive a dividend or
other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such dividend or
distribution, then no adjustment in the Series A Conversion Price, Series C
Conversion Price or the Series C Conversion Price shall be required by reason of
the taking of such record.
(j) Certificate as to Adjustments. Upon any increase or decrease in
-----------------------------
the Series A Conversion Price, the Series B Conversion Price or the Series C
Conversion Price, as the case may be, the Corporation shall within a reasonable
period (not to exceed 10 days) following any of the foregoing transactions
deliver (x) in the case of an increase or decrease in the Series A Conversion
Price to each registered holder of Series A Preferred Stock, (y) in the case of
an increase or decrease in the Series B Conversion Price to each registered
holder of Series B Preferred Stock and (z) in the case of an increase or
decrease in the Series C Conversion Price, to each registered holder of Series C
Preferred Stock a certificate, signed by (i) the
-16-
President or a Vice President of the Corporation and (ii) the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated and specifying
the increased or decreased Series A Conversion Price, the Series B Conversion
Price or Series C Conversion Price then in effect following such adjustment.
(k) Reorganization, Reclassification. In case of any merger or
--------------------------------
consolidation of the Corporation (other than a Merger) or any capital
reorganization, reclassification or other change of outstanding shares of Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value) (each, a "Transaction"), the Corporation shall
-----------
execute and deliver to each holder of Preferred Stock at least ten (10) Business
Days prior to effecting such Transaction a certificate stating that the holder
of each share of Preferred Stock shall have the right to receive in such
Transaction, in exchange for each share of Preferred Stock, as the case may be,
a security substantially similar to (and not less favorable than), including,
without limitation, with respect to rank, anti-dilution protection and
conversion rights, the Preferred Stock, as the case may be, and provision shall
be made therefor in the agreement, if any, relating to such Transaction.
(i) In case of any Merger or Sale in which the holders of a
majority of the Series A Preferred Stock waive in writing their right to the
Series A Automatic Conversion Payment pursuant to Section 7(b) above, the
Corporation shall execute and deliver to each holder of Series A Preferred Stock
at least ten (10) Business Days prior to effecting such transaction a
certificate stating that the holder of each share of Series A Preferred Stock
shall have the right thereafter to convert such shares of Series A Preferred
Stock into the kind and amount of shares of stock or other securities, property
or cash receivable upon such Merger or Sale by a holder of the number of shares
of Common Stock into which such share of Series A Preferred Stock could have
been converted immediately prior to such Merger or Sale, and provision shall be
made therefor in the agreement, if any, relating to such Merger or Sale.
(ii) In case of any Merger or Sale in which the holders of a
majority of the Series B Preferred Stock waive in writing their right to the
Series B Automatic Conversion Payment pursuant to Section 7(b) above, the
Corporation shall execute and deliver to each holder of Series B Preferred Stock
at least ten (10) Business Days prior to effecting such transaction a
certificate stating that the holder of each share of Series B Preferred Stock
shall have the right thereafter to convert such shares of Series B Preferred
Stock into the kind and amount of shares of stock or other securities, property
or cash receivable upon such Merger or Sale by a holder of the number of shares
of Common Stock into which such share of Series B Preferred Stock could have
been converted immediately prior to such Merger or Sale, and provision shall be
made therefor in the agreement, if any, relating to such Merger or Sale.
(iii) In case of any Merger or Sale in which the holders of a
majority of the Series C Preferred Stock waive in writing their right to the
Series C Automatic Conversion Payment pursuant to Section 7(b) above, the
Corporation shall execute and deliver to each holder of Series C Preferred Stock
at least ten (10) Business Days prior to effecting such transaction a
certificate stating that the holder of each share of Series C Preferred Stock
shall have the right thereafter to convert such shares of Series C Preferred
Stock into the kind and amount of shares of stock or other securities, property
or cash receivable upon such Merger or Sale by a holder of
-17-
the number of shares of Common Stock into which such share of Series C Preferred
Stock could have been converted immediately prior to such Merger or Sale, and
provision shall be made therefor in the agreement, if any, relating to such
Merger or Sale.
Each such certificate shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for this
Section 7. The provisions of this Section 7(k) and any equivalent thereof in
any such certificate similarly shall apply to successive transactions.
(l) Notices. In case at any time or from time to time:
-------
(w) the Corporation shall declare a dividend (or any other
distribution) on its shares of Common Stock;
(x) the Corporation shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any shares
of stock of any class or of any other rights or warrants (other than in
connection with an Excluded Transaction);
(y) there shall be any Transaction; or
(z) there shall occur the Initial Public Offering, a Merger or a
Sale;
then the Corporation shall mail to each holder of Preferred Stock
at such holder's address as it appears on the transfer books of the Corporation,
as promptly as possible but in any event at least ten (10) days prior to the
applicable date hereinafter specified, a notice stating (A) the date on which a
record is to be taken for the purpose of such dividend, distribution or granting
of rights or warrants or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution or granting of rights or warrants are to be determined, or (B) the
date on which such Transaction, Initial Public Offering, Merger or Sale is
expected to become effective and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their Common
Stock for shares of stock or other securities or property or cash deliverable
upon such Transaction, Initial Public Offering, Merger or Sale. Notwithstanding
the foregoing, in the case of any event to which Section 7(k) is applicable, the
Corporation shall also deliver the certificate described in such Section 7(k) to
each holder of Preferred Stock at least 10 Business Days' prior to effecting
such reorganization or reclassification as aforesaid.
(m) Reservation of Voting Stock. The Corporation shall at all times
---------------------------
reserve and keep available for issuance upon the conversion of the Preferred
Stock, such number of its authorized but unissued shares of Voting Stock as will
from time to time be sufficient to permit the conversion of all outstanding
shares of Preferred Stock, and shall take all action to increase the authorized
number of shares of Voting Stock if at any time there shall be insufficient
authorized but unissued shares of Voting Stock to permit such reservation or to
permit the conversion of all outstanding shares of Preferred Stock.
(n) No Conversion Tax or Charge. The issuance or delivery of
---------------------------
certificates for Common Stock upon the conversion of shares of Preferred Stock
shall be made without charge to the converting holder thereof for such
certificates or for any tax in respect of the issuance or
-18-
delivery of such certificates or the securities represented thereby, and such
certificates shall be issued or delivered in the respective names of, or
(subject to compliance with the applicable provisions of federal and state
securities laws) in such names as may be directed by, the holder of the shares
of Preferred Stock, as the case may be, converted; provided, however, that the
-------- -------
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate in
a name other than that of the holder of the shares of Preferred Stock, as the
case may be, converted, and the Corporation shall not be required to issue or
deliver such certificate unless or until the Person or Persons requesting the
issuance or delivery thereof shall have paid to the Corporation the amount of
such tax or shall have established to the reasonable satisfaction of the
Corporation that such tax has been paid.
8. Automatic Conversion. Each share of Preferred Stock shall
--------------------
automatically be converted into fully paid and nonassessable shares of Voting
Stock at the then applicable Series A Conversion Price, Series B Conversion
Price and Series C Conversion Price, as the case may be, in accordance with
Section 7 hereof simultaneously with the closing of the Initial Public Offering
at a price per share of Common Stock that is not less than 150% of the then
applicable (x) Series A Conversion Price in the case of the Series A Preferred
Stock, (y) Series B Conversion Price in the case of the Series B Preferred Stock
and (z) Series C Conversion Price in the case of the Series C Preferred Stock,
and in each case resulting in aggregate gross proceeds to the Corporation of at
least $20,000,000. In the event of an Initial Public Offering, the Person(s)
entitled to receive the shares of Voting Stock issuable upon such conversion of
the Preferred Stock shall not be deemed to have converted its Preferred Stock,
as the case may be, until the closing of such offering, except that any such
Person may convert its shares of Preferred Stock at an earlier time in
accordance with paragraph 7.
9. Certain Remedies. Any registered holder of Preferred Stock shall be
----------------
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Article FOURTH, Section B and to enforce specifically the terms and
provisions of this Article FOURTH, Section B in any court of the United States
or any state thereof having jurisdiction, this being in addition to any other
remedy to which such holder may be entitled at law or in equity.
10. Business Day. If any payment shall be required by the terms hereof to
------------
be made on a day that is not a Business Day, such payment shall be made on the
immediately succeeding Business Day.
11. Definitions. As used in this Restated Certificate of Incorporation,
-----------
the following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
---- -----
unless the context otherwise requires:
"Board of Directors" means the Board of Directors of the Corporation.
------------------
"Business Day" means any day except a Saturday, a Sunday, or other day
------------
on which commercial banks in the State of New York are authorized or required by
law or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
-------------
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-
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voting) of, such Person's capital stock and any and all rights, warrants or
options exchangeable for or convertible into such capital stock (but excluding
any debt security whether or not it is exchangeable for or convertible into such
capital stock).
"Common Stock" means the Voting Stock and the Nonvoting Stock.
------------
"Common Stock Equivalent" shall mean any security or obligation which
-----------------------
is by its terms convertible into shares of Common Stock or another Common Stock
Equivalent, including, without limitation, any option, warrant or other
subscription or purchase right with respect to Common Stock.
"Company Valuation" means (i) in the case of the Initial Public
-----------------
Offering, the product of (x) the mid-point of the anticipated price range per
share of Voting Stock offered in the Initial Public Offering as set forth in the
then most recently circulated "red-herring" prospectus of the Corporation in
which such mid-point is stated multiplied by (y) the total number of shares of
Common Stock outstanding on a Fully-Diluted Basis prior to the Initial Public
Offering, (ii) in the case of a Merger, the product of (x) the Net Per Share
Price paid for each share of Common Stock by the surviving Person in such
transaction multiplied by (y) the total number of shares of Common Stock
outstanding on a Fully-Diluted Basis immediately prior to such transaction and
(iii) in the case of a Sale, the aggregate proceeds received by the holders of
Common Stock of the Corporation in such transaction.
"Conversion Price" shall have the meaning ascribed to it in Section
----------------
7(a) hereof.
"Current Market Price" per share shall mean, as of the date of
--------------------
determination, (a) the average of the daily Market Price under clause (a), (b)
or (c) of the definition thereof of the Common Stock during the immediately
preceding thirty (30) trading days ending on such date, and (b) if the Common
Stock is not then listed or admitted to trading on any national securities
exchange or quoted in the over-the-counter market, then the Market Price under
clause (d) of the definition thereof on such date.
"Deferred Revenue Amount" shall have the meaning ascribed to it in
-----------------------
Section 7(g)(iii) hereof.
"Excluded Transaction" means: (a) any issuance by the Corporation to
--------------------
employees, consultants or directors of the Corporation of Common Stock
Equivalents pursuant to a stock option plan or other employee benefit
arrangement approved by the Board of Directors (and the issuance of Common Stock
upon the exercise of such Common Stock Equivalents); (b) any issuance of Common
Stock (i) upon the conversion of shares of Preferred Stock (including, but not
limited to, any adjustment of the Series B Conversion Price pursuant to Section
7(g)(iii) and (iv) hereof), or (ii) as a dividend on shares of Preferred Stock;
(c) the issuance and sale by the Corporation of the Investor Warrants and the
Lender Warrants (and the issuance of Common Stock upon the exercise of the
Investor Warrants and the Lender Warrants); and (d) the issuance of 350,000
shares of Nonvoting Stock to Stuart Bell pursuant to the terms of that
Consulting Agreement, dated as of December 31, 1999, between the Company,
Campana Limited Partnership and Stuart Bell, as amended by that First Amendment
to Consulting Agreement,
-20-
dated as of January 19, 2000, between the Company, Campana Limited Partnership
and Stuart Bell.
"Fully-Diluted Basis" means, on the date of determination, the total
-------------------
number of shares of Voting Stock issued and outstanding on such date plus the
total number of shares of Voting Stock that are issuable upon exercise or
conversion of all outstanding Common Stock Equivalents that are "in the money"
on such date.
"Initial Public Offering" shall mean the first underwritten public
-----------------------
offering of Common Stock pursuant to an effective registration statement under
the Securities Act.
"Investor Warrants" means those warrants to purchase Common Stock
-----------------
issued by the Corporation pursuant to that Stock and Warrant Purchase Agreement
dated as of January 12, 2000 between the Corporation and the Purchasers named
therein.
"Issue Date" shall have the meaning ascribed to it in Section 7(f)(ii)
----------
hereof.
"Junior Stock" shall have the meaning ascribed to it in Section 2
------------
hereof.
"Lender Warrants" means those warrants to purchase Common Stock to be
---------------
issued by the Corporation to Jay Walker pursuant to that Credit Agreement dated
as of January 12, 2000 between the Company and Jay Walker, as assigned by Jay
Walker to Arena Capital Investment Fund, L.P. pursuant to that Assignment
Agreement dated as of February 1, 2000.
"Liquidation" shall mean the voluntary or involuntary liquidation
-----------
under applicable bankruptcy or reorganization legislation, or the dissolution or
winding up of the Corporation.
"Market Price" shall mean, as of the date of determination, (a) the
------------
closing price per share of Common Stock on such date published in The Wall
--------
Street Journal or, if no such closing price on such date is published in The
-------------- ---
Wall Street Journal, the average of the closing bid and asked prices on such
-------------------
date, as officially reported on the principal national securities exchange
(including, without limitation, The Nasdaq Stock Market, Inc.) on which the
Common Stock is then listed or admitted to trading; or (b) if the Common Stock
is not then listed or admitted to trading on any national securities exchange
but is designated as a national market system security by the National
Association of Securities Dealers, Inc., the last trading price of the Common
Stock on such date; or (c) if there shall have been no trading on such date or
if the Common Stock is not so designated, the average of the reported closing
bid and asked prices of the Common Stock on such date as shown by the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotations System and reported by any member firm of the New York Stock Exchange
selected by the Corporation; or (d) if none of (a), (b) or (c) is applicable, a
market price per share determined at the Corporation's expense by an appraiser
chosen by the Corporation and, (x) in the case of the Series A Preferred Stock,
reasonably satisfactory to the holders of a majority of the Series A Preferred
Stock, (y) in the case of the Series B Preferred Stock, reasonably satisfactory
to the holders of a majority of the Series B Preferred Stock and (z) in the case
of the Series C Preferred Stock, reasonably satisfactory to the holders of a
majority of the Series C Preferred Stock. Any determination of
-21-
the Market Price by an appraiser shall be based on a valuation of the
Corporation as an entirety without regard to any discount for minority interests
or disparate voting rights among classes of Capital Stock. In the event that
there is continuous trading of the Common Stock on any securities exchange, then
the closing price per share shall be deemed to be the price quoted for such day
in The Wall Street Journal, or if no such price is published therein, the
closing price shall be the price quoted at 4:00 p.m., New York time.
"Merger" shall mean (x) the merger or consolidation of the Corporation
------
into or with one or more Persons, (y) the merger or consolidation of one or more
Persons into or with the Corporation or (z) a tender offer or other business
combination transaction, if, in the case of (x), (y), or (z) the stockholders of
the Corporation prior to such merger, consolidation, tender offer or other
transaction do not retain at least a majority of the voting power of the
surviving Person.
"Net Per Share Price" shall mean an amount equal to a quotient
-------------------
expressed as a fraction (a) the numerator of which shall be the aggregate dollar
amount paid to the stockholders of the Corporation as consideration in a Merger
or Sale and (b) the denominator of which shall be the number of shares of Common
Stock outstanding on a Fully-Diluted Basis.
"New Issue Price" shall have the meaning ascribed to it in Section
---------------
7(g)(ii) hereof.
"Nonvoting Stock" means the Class B Common Stock.
---------------
"Parity Stock" shall have the meaning ascribed to it in Section 2(a)
------------
hereof.
"Person" means any individual, firm, corporation, partnership, limited
------
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental body or other entity of any kind.
"Preferred Stock" means the Series A Preferred Stock, the Series B
---------------
Preferred Stock and the Series C Preferred Stock.
"Relevant Date" shall have the meaning ascribed to it in Section
-------------
7(f)(ii) hereof.
"Sale" shall mean the voluntary sale, conveyance, exchange or transfer
----
to another Person of all or substantially all of the assets of the Corporation.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
"Series A Automatic Conversion Payment" means, with respect to each
-------------------------------------
share of Series A Preferred Stock, a payment equal to the Series A Liquidation
Preference.
"Series A Conversion Price" shall have the meaning ascribed to it in
-------------------------
Section 7(a) hereof.
"Series A Liquidation Preference" shall have the meaning ascribed to
-------------------------------
it in Section 4(a) hereof.
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"Series A Preferred Stock" shall have the meaning ascribed to it in
------------------------
Section 1 hereof.
"Series B Automatic Conversion Payment" means, with respect to each
-------------------------------------
share of Series B Preferred Stock, a payment equal to the Series B Liquidation
Preference.
"Series B Conversion Price" shall have the meaning ascribed to it in
-------------------------
Section 7(a) hereof.
"Series B Liquidation Preference" shall have the meaning ascribed to
-------------------------------
it in Section 4(a) hereof.
"Series B Preferred Stock" shall have the meaning ascribed to it in
------------------------
Section 1 hereof.
"Series C Automatic Conversion Payment" means, with respect to each
-------------------------------------
share of Series C Preferred Stock, a payment equal to the Series C Liquidation
Preference.
"Series C Conversion Price" shall have the meaning ascribed to it in
-------------------------
Section 7(a) hereof.
"Series C Liquidation Preference" shall have the meaning ascribed to
-------------------------------
it in Section 4(a) hereof.
"Series C Preferred Stock" shall have the meaning ascribed to it in
------------------------
Section 1 hereof.
"Transaction" shall have the meaning ascribed to it in Section 7(k)
-----------
hereof.
"Voting Stock" means the Class A Common Stock.
------------
FIFTH. In furtherance of and not in limitation of powers conferred by
statute, it is further provided:
1. Election of directors need not be by written ballot.
2. The Board of Directors is expressly authorized to adopt, amend or
repeal the By-Laws of the Corporation.
SIXTH. Except to the extent that the General Corporation Law of Delaware
prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty, no director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, notwithstanding any provision of law imposing such
liability. No amendment to or repeal of this provision shall apply to or have
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
SEVENTH.
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1. Actions, Suits and Proceedings Other than by or in the Right of
---------------------------------------------------------------
the Corporation. All references in this Article SEVENTH to "Sections" or
---------------
"Section" are references to Sections or a Section of this Article SEVENTH. The
Corporation shall indemnify each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation), by reason of the fact that he
is or was, or has agreed to become, a director or officer of the Corporation, or
is or was serving, or has agreed to serve, at the request of the Corporation, as
a director, officer or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other enterprise (including
any employee benefit plan) (all such persons being referred to hereafter as an
"Indemnitee"), or by reason of any action alleged to have been taken or omitted
-----------
in such capacity, against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or
on his behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
---------------
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in, or not
opposed to, the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful. Notwithstanding anything to the contrary in this Article, except
as set forth in Section 7 below, the Corporation shall not indemnify an
Indemnitee seeking indemnification in connection with a proceeding (or part
thereof) initiated by the Indemnitee unless the initiation thereof was approved
by the Board of Directors of the Corporation. Notwithstanding anything to the
contrary in this Article, the Corporation shall not indemnify an Indemnitee to
the extent such Indemnitee is reimbursed from the proceeds of insurance, and in
the event the Corporation makes any indemnification payments to an Indemnitee
and such Indemnitee is subsequently reimbursed from the proceeds of insurance,
such Indemnitee shall promptly refund such indemnification payments to the
Corporation to the extent of such insurance reimbursement.
2. Actions or Suits by or in the Right of the Corporation. The
------------------------------------------------------
Corporation shall indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan), or by reason of any
action alleged to have been taken or omitted in such capacity, against all
expenses (including attorneys' fees) and, to the extent permitted by law,
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware shall
determine upon application that, despite the adjudication of
-24-
such liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses (including
attorneys' fees) which the Court of Chancery of Delaware shall deem proper.
3. Indemnification for Expenses of Successful Party. Notwithstanding
------------------------------------------------
the other provisions of this Article, to the extent that an Indemnitee has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article, or in defense of any
claim, issue or matter therein, or on appeal from any such action, suit or
proceeding, he shall be indemnified against all expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
therewith. Without limiting the foregoing, if any action, suit or proceeding is
disposed of, on the merits or otherwise (including a disposition without
prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an
adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of
guilty or nolo contendere by the Indemnitee, (iv) an adjudication that the
---------------
Indemnitee did not act in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and (v) with
respect to any criminal proceeding, an adjudication that the Indemnitee had
reasonable cause to believe his conduct was unlawful, the Indemnitee shall be
considered for the purposes hereof to have been wholly successful with respect
thereto.
4. Notification and Defense of Claim. As a condition precedent to
---------------------------------
his right to be indemnified, the Indemnitee must notify the Corporation in
writing as soon as practicable of any action, suit, proceeding or investigation
involving him for which indemnity will or could be sought. With respect to any
action, suit, proceeding or investigation of which the Corporation is so
notified, the Corporation will be entitled to participate therein at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee. After notice from the
Corporation to the Indemnitee of its election so to assume such defense, the
Corporation shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with such claim,
other than as provided below in this Section 4. The Indemnitee shall have the
right to employ his own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded
that there may be a conflict of interest or position on any significant issue
between the Corporation and the Indemnitee in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel for the Indemnitee shall be at the expense of the Corporation, except
as otherwise expressly provided by this Article. The Corporation shall not be
entitled, without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which counsel for
the Indemnitee shall have reasonably made the conclusion provided for in clause
(ii) above.
5. Advance of Expenses. Subject to the provisions of Section 6
-------------------
below, in the event that the Corporation does not assume the defense pursuant to
Section 4 of this Article of any action, suit, proceeding or investigation of
which the Corporation receives notice under this Article, any expenses
(including attorneys' fees) incurred by an Indemnitee in defending a civil or
criminal action, suit, proceeding or investigation or any appeal therefrom shall
be paid by the
-25-
Corporation in advance of the final disposition of such matter; provided,
--------
however, that the payment of such expenses incurred by an Indemnitee in advance
-------
of the final disposition of such matter shall be made only upon receipt of an
undertaking by or on behalf of the Indemnitee to repay all amounts so advanced
in the event that it shall ultimately be determined that the Indemnitee is not
entitled to be indemnified by the Corporation as authorized in this Article.
Such undertaking shall be accepted without reference to the financial ability of
the Indemnitee to make such repayment.
6. Procedure for Indemnification. In order to obtain indemnification
-----------------------------
or advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the
Indemnitee shall submit to the Corporation a written request, including in such
request such documentation and information as is reasonably available to the
Indemnitee and is reasonably necessary to determine whether and to what extent
the Indemnitee is entitled to indemnification or advancement of expenses. Any
such indemnification or advancement of expenses shall be made promptly, and in
any event within 60 days after receipt by the Corporation of the written request
of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the
Corporation determines within such 60-day period that the Indemnitee did not
meet the applicable standard of conduct set forth in Section 1 or 2, as the case
may be. Such determination shall be made in each instance by (a) a majority
vote of the directors of the Corporation consisting of persons who are not at
that time parties to the action, suit or proceeding in question ("disinterested
-------------
directors"), whether or not a quorum, (b) a majority vote of a quorum of the
---------
outstanding shares of stock of all classes entitled to vote for directors,
voting as a single class, which quorum shall consist of stockholders who are not
at that time parties to the action, suit or proceeding in question, (c)
independent legal counsel (who may, to the extent permitted by law, be regular
legal counsel to the Corporation), or (d) a court of competent jurisdiction.
7. Remedies. The right to indemnification or advances as granted by
--------
this Article shall be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within the 60-day period referred to above in
Section 6. Unless otherwise required by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Article shall be on the Corporation. Neither the failure of the
Corporation to have made a determination prior to the commencement of such
action that indemnification is proper in the circumstances because the
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Corporation pursuant to Section 6 that the Indemnitee has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the Indemnitee has not met the applicable standard of
conduct. The Indemnitee's expenses (including attorneys' fees) incurred in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such proceeding shall also be indemnified by the Corporation.
8. Subsequent Amendment. No amendment, termination or repeal of this
--------------------
Article or of the relevant provisions of the General Corporation Law of Delaware
or any other applicable laws shall affect or diminish in any way the rights of
any Indemnitee to indemnification under the provisions hereof with respect to
any action, suit, proceeding or investigation arising out of or relating to any
actions, transactions or facts occurring prior to the final adoption of such
amendment, termination or repeal.
-26-
9. Other Rights. The indemnification and advancement of expenses
------------
provided by this Article shall not be deemed exclusive of any other rights to
which an Indemnitee seeking indemnification or advancement of expenses may be
entitled under any law (common or statutory), agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in his official
capacity and as to action in any other capacity while holding office for the
Corporation, and shall continue as to an Indemnitee who has ceased to be a
director or officer, and shall inure to the benefit of the estate, heirs,
executors and administrators of the Indemnitee. Nothing contained in this
Article shall be deemed to prohibit, and the Corporation is specifically
authorized to enter into, agreements with officers and directors providing
indemnification rights and procedures different from those set forth in this
Article. In addition, the Corporation may, to the extent authorized from time
to time by its Board of Directors, grant indemnification rights to other
employees or agents of the Corporation or other persons serving the Corporation
and such rights may be equivalent to, or greater or less than, those set forth
in this Article.
10. Partial Indemnification. If an Indemnitee is entitled under any
-----------------------
provision of this Article to indemnification by the Corporation for some or a
portion of the expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with any action, suit, proceeding or investigation and any appeal
therefrom but not, however, for the total amount thereof, the Corporation shall
nevertheless indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement to
which the Indemnitee is entitled.
11. Insurance. The Corporation may purchase and maintain insurance,
---------
at its expense, to protect itself and any director, officer, employee or agent
of the Corporation or another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) against any expense,
liability or loss incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
such person against such expense, liability or loss under the General
Corporation Law of Delaware.
12. Merger or Consolidation. If the Corporation is merged into or
-----------------------
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Article with respect to any action, suit, proceeding or
investigation arising out of or relating to any actions, transactions or facts
occurring prior to the date of such merger or consolidation.
13. Savings Clause. If this Article or any portion hereof shall be
--------------
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated and to the fullest extent permitted
by applicable law.
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14. Definitions. Terms used herein and defined in Section 145(h) and
-----------
Section 145(i) of the General Corporation Law of Delaware shall have the
respective meanings assigned to such terms in such Section 145(h) and Section
145(i).
15. Subsequent Legislation. If the General Corporation Law of
----------------------
Delaware is amended after adoption of this Article to expand further the
indemnification permitted to Indemnitees, then the Corporation shall indemnify
such persons to the fullest extent permitted by the General Corporation Law of
Delaware, as so amended.
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation, in
the manner now or hereafter prescribed by statute and this Restated Certificate
of Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
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EXECUTED at Stamford, Connecticut, on May 31, 2000.
/s/ Michael R. Loeb
--------------------------------
Michael Loeb, President
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Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘S-1’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 6/30/01 | | 2 | | | | | None on these Dates |
| Filed on: | | 7/26/00 |
| | 5/31/00 | | 29 |
| | 2/1/00 | | 21 |
| | 1/19/00 | | 21 |
| | 1/12/00 | | 21 |
| | 12/31/99 | | 13 | | 20 |
| | 12/22/99 | | 1 |
| | 12/31/98 | | 13 |
| List all Filings |
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