Initial Public Offering (IPO): Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1 Eprise Corporation 97 479K
2: EX-1.1 Form of Underwriting Agreement 25 117K
3: EX-3.1 Third Amended and Restated Certificate of Inc. 27 105K
4: EX-3.5 By-Laws of Eprise Corporation 12 51K
5: EX-4.3 Warrant to Purchase 8 38K
6: EX-4.4 Warrant to Purchase 10 39K
7: EX-4.5 Warrant to Purchase 7 36K
8: EX-4.6 Antidilution Agreement 3 22K
9: EX-4.7 Warrant to Purchase 14 62K
16: EX-10.11 Eprise Corporation Retirement Saving Plan 139 463K
17: EX-10.12 Second Amended and Restated Stockholders Agreement 13 52K
18: EX-10.13 Second Amended and Restated Registration Rights 14 59K
19: EX-10.14 Registration Rights Agreement Dated July 18, 1997 6 41K
20: EX-10.15 Registration Rights Agreement Dated Dec. 5, 1997 6 41K
21: EX-10.16 Loan and Security Agreement 31 128K
22: EX-10.17 Negative Pledge Agreement 4 18K
23: EX-10.18 First Loan Modification Agreement 13 43K
10: EX-10.2 Sublease Agreement 12 52K
11: EX-10.3 Sublease Agreement 21 56K
12: EX-10.4 Eprise 1997 Stock Option Plan 15 73K
13: EX-10.6 Inner Circle Technologies, Inc. 1994 Stock Plan 9 46K
14: EX-10.8 Employment Agreement 10 53K
15: EX-10.9 Employment Agreement 4 23K
24: EX-16 Letter Regarding Changes in Certifying 1 10K
25: EX-21.1 List of Subsidiaries 1 8K
26: EX-23.1 Consent of Deloitte & Touche LLP 1 10K
27: EX-23.2 Consent of Arthur Andersen LLP 1 10K
28: EX-27.1 Financial Data Schedule 1 13K
29: EX-27.2 Financial Data Schedule 1 13K
30: EX-27.3 Financial Data Schedule 1 12K
EX-3.1 — Third Amended and Restated Certificate of Inc.
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Ex - 3.1
THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EPRISE CORPORATION
The undersigned, Joseph A. Forgione, certifies that he is President of
Eprise Corporation, a corporation organized and existing under the laws of the
State of Delaware, and does hereby further certify as follows:
1. The name of the corporation is Eprise Corporation (the "Corporation").
The name of the Corporation at the time of its incorporation was Inner Circle
Technologies, Inc. The Certificate of Incorporation of the Corporation, as
amended, was filed in the office of the Secretary of State of the State of
Delaware on September 24, 1992.
2. This Third Amended and Restated Certificate of Incorporation of the
Corporation has been duly adopted in accordance with the provisions of Sections
242 and 245 of the General Corporation Law of the State of Delaware.
3. In accordance with Section 228 of the General Corporation Law of the
State of Delaware, this Third Amended and Restated Certificate of Incorporation
has been duly approved by written consent of the holders of not less than (i) a
majority of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote thereon and (ii) a majority of the issued and
outstanding shares of each series entitled to vote thereon as a class .
4. The text of the Certificate of Incorporation of the Corporation, as
heretofore amended, is hereby amended and restated to read in its entirety as
follows:
FIRST: The name of the Corporation is Eprise Corporation.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is the Corporation Trust Center, 1209 Orange Street, 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:
(a) To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware; and
(b) In general, to possess and exercise all the powers and privileges
granted by the General Corporation Law of Delaware or by any other law of
Delaware or by this Certificate of Incorporation, together with any powers
incidental thereto, so far as such powers and privileges are necessary or
convenient to the conduct, promotion or attainment of the business or purposes
of the Corporation.
The businesses and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in no way limited or restricted by
reference to, or inference from, the terms of any other clause in this
Certificate of Incorporation, but the businesses and purposes specified in each
of the foregoing clauses of this article shall be regarded as independent
businesses and purposes.
FOURTH: The Corporation shall have authority to issue 100,163,366 shares of
capital stock, consisting of (i) Fifty-Eight Million Five Hundred Thousand
(58,500,000) shares of Common Stock with a par value of $.001 per share, (ii)
Ten Million Eight Hundred Forty-Two Thousand Nine Hundred Twenty (10,842,920)
shares of Series A Convertible Preferred Stock with a par value of $.01 per
share (the "Series A Preferred Stock"), (iii) Fourteen Million Three Hundred
Twenty Thousand Four Hundred Forty-Six (14,320,446) shares of Series B
Convertible Preferred Stock with a par value of $.01 per share (the "Series B
Preferred Stock") and (iv) Sixteen Million Five Hundred Thousand (16,500,000)
shares of Series C Convertible Preferred Stock with a par value of $.01 per
share (the "Series C Preferred Stock," and, together with the Series A Preferred
Stock and the Series B Preferred Stock, the "Preferred Stock"), amounting to an
aggregate par value of $475,134.
The powers, preferences and rights, and qualifications, limitations and
restrictions thereof, in respect of each class or series of stock of the
Corporation shall be as follows:
SECTION 1. VOTING RIGHTS.
Except as otherwise required by law or hereinafter set forth, the holders
of Preferred Stock shall vote together with all other classes and series of
stock of the Corporation as one class upon any matter submitted to the
stockholders for a vote, including, but not limited to, actions amending the
Certificate of Incorporation to increase the number of authorized shares of
Common Stock.
Each share of Preferred Stock shall entitle the holder thereof to such
number of votes per share on each such action as shall equal the number of
shares of Common Stock into which each such share of Preferred Stock held by
such holder could be converted on the date for determination of stockholders
entitled to vote at the meeting or on the date of any written consent.
SECTION 2. DIVIDENDS.
When and as dividends are declared payable in cash, property or shares of
the Corporation's capital stock on shares of Common Stock, the Corporation shall
(except as
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otherwise provided in SUBSECTION 4.4) declare at the same time and pay, pari
passu to each holder of Preferred Stock, a dividend equal to the dividend which
would have been payable to such holder if the shares of Preferred Stock held by
such holder had been converted into Common Stock on the record date for the
determination of holders of Common Stock entitled to receive such dividend.
SECTION 3. LIQUIDATION.
3.1 LIQUIDATION PAYMENTS.
3.1.1 In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the holders of shares of
Series C Preferred Stock shall be entitled to be paid first out of the assets of
the Corporation available for distribution to holders of the Corporation's
capital stock of all classes an amount equal to $1.54 per share of Series C
Preferred Stock (which amount shall be subject to equitable adjustment whenever
there shall occur a stock dividend, stock split, combination of shares,
reclassification or other similar event with respect to the Series C Preferred
Stock), plus all dividends accrued or declared but unpaid thereon, to and
including the date on which full payment shall be tendered to the holders of the
Series C Preferred Stock with respect to such liquidation, dissolution or
winding up (such aggregate amount, the "Series C Liquidation Payments").
If the assets of the Corporation shall be insufficient to permit
the payment in full of the Series C Liquidation Payments, then the entire assets
of the Corporation available for such distribution shall be distributed ratably
among the holders of the Series C Preferred Stock in proportion to the full
preferential amount each such holder is otherwise entitled to receive under this
SUBSECTION 3.1.1.
3.1.2 In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, after payment in full of
the Series C Liquidation Payments, the holders of shares of Series A Preferred
Stock and Series B Preferred Stock shall be entitled to be paid out of the
assets of the Corporation available for distribution to holders of the
Corporation's capital stock of all classes the following amounts:
(a) in the case of the Series A Preferred Stock, an amount
equal to $.49695 per share of Series A Preferred Stock (which amount shall be
subject to equitable adjustment whenever there shall occur a stock dividend,
stock split, combination of shares, reclassification or other similar event with
respect to the Series A Preferred Stock), plus all dividends accrued or declared
but unpaid thereon, to and including the date on which full payment shall be
tendered to the holders of the Series A Preferred Stock with respect to such
liquidation, dissolution or winding up;
(b) in the case of the Series B Preferred Stock, an amount
equal to $0.60 per share of Series B Preferred Stock (which amount shall be
subject to equitable adjustment whenever there shall occur a stock dividend,
stock split, combination of shares, reclassification or other similar event with
respect to the Series B Preferred Stock), plus all
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dividends accrued or declared but unpaid thereon, to and including the date on
which full payment shall be tendered to the holders of the Series B Preferred
Stock with respect to such liquidation, dissolution or winding up.
If the assets of the Corporation remaining after payment in
full of the Series C Liquidation Payments shall be insufficient to permit the
payment in full to the holders of the Series A Preferred Stock and Series B
Preferred Stock of all amounts distributable to them under this SUBSECTION
3.1.2, then the entire remaining assets of the Corporation available for such
distribution shall be distributed ratably among the holders of the Series A
Preferred Stock and Series B Preferred Stock in proportion to the full
preferential amount each such holder is otherwise entitled to receive under this
SUBSECTION 3.1.2.
3.1.3 After the payments described in SUBSECTIONS 3.1.1 AND 3.1.2
shall have been made in full to the holders of the Preferred Stock, or funds
necessary for such payments shall have been set aside by the Corporation in
trust for the account of holders of Preferred Stock so as to be available for
such payments, the remaining assets available for distribution shall be
distributed among the holders of the Preferred Stock and the Common Stock
ratably in proportion to the number of shares of Common Stock then held by them
or issuable to them upon conversion of the Preferred Stock then held by them.
3.1.4 Upon conversion of shares of Preferred Stock into shares of
Common Stock pursuant to SECTION 4 below, the holders of such Common Stock shall
not be entitled to any preferential payment or distribution in case of any
liquidation, dissolution or winding up of the Corporation, but shall share
ratably in any distribution of the assets of the Corporation to all the holders
of Common Stock.
3.1.5 The amounts payable with respect to shares of Series A
Preferred Stock and Series B Preferred Stock under this SUBSECTION 3.1 are
sometimes hereinafter referred to as "Series A Liquidation Payments" and "Series
B Liquidation Payments," respectively, and together with the Series C
Liquidation Payments are sometimes hereinafter referred to as the "Liquidation
Payments."
3.2 DISTRIBUTIONS OTHER THAN CASH. Whenever the distributions
provided for in this SECTION 3 shall be payable in property other than cash, the
value of such distributions shall be the fair market value of such property as
determined in good faith by the Board of Directors of the Corporation.
3.3 MERGER AS LIQUIDATION, ETC. The merger or consolidation of the
Corporation into or with another corporation (except one in which the holders of
capital stock of the Corporation immediately prior to such merger or
consolidation continue to hold at least fifty percent (50%) in voting power
(assuming conversion of all convertible securities and exercise of all
outstanding options and warrants) of the capital stock of the surviving
corporation, in which case the provisions of SUBSECTION 4.6 shall apply), or the
sale of all or substantially all of the assets of the Corporation (other than to
a corporation in which holders of the capital stock of the Corporation hold at
least fifty percent (50%) in voting power (assuming conversion of all
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convertible securities and exercise of all outstanding options and warrants) of
the capital stock), shall be deemed to be a liquidation, dissolution or winding
up of the Corporation for purposes of this SECTION 3 with respect to (1) the
Series C Preferred Stock unless the holders of at least 51% of the then
outstanding shares of Series C Preferred Stock (voting as a separate class)
elect to the contrary and (2) the Series A Preferred Stock and Series B
Preferred Stock unless the holders of at least 51% of the then outstanding
shares of Series A Preferred Stock and Series B Preferred Stock (voting as a
single class) elect to the contrary, any such election to be made by giving
written notice thereof to the Corporation at least three days before the
effective date of such event. If such notice is given, the provisions of
SUBSECTION 4.6 shall apply to the series of Preferred Stock which have provided
such notice. Unless such election is made, any consideration received by the
holders of the Preferred Stock as a result of such merger or consolidation shall
be deemed to be applied toward, and all consideration received by the
Corporation in such asset sale together with all other available assets of the
Corporation shall be distributed toward, the Liquidation Payments attributable
to each such series of Preferred Stock, respectively, as set forth in SUBSECTION
3.1. If such consideration is in the form of property, rights, or other
securities, the value of such property, rights, or other securities shall be
determined in good faith by the Board of Directors of the Corporation.
3.4 NOTICE. Written notice of any proposed liquidation, dissolution
or winding up of the Corporation (including any merger, consolidation or sale of
assets which may be deemed to be a liquidation, dissolution or winding up of the
Corporation under SUBSECTION 3.3), stating a payment date, the amount of the
Liquidation Payments and the place where said Liquidation Payments shall be
payable, shall be given to the holders of record of the Preferred Stock by first
class mail, postage prepaid, or by fax or DHL, Federal Express or other
recognized express international courier service in the case of non-U.S.
stockholders, not less than twenty (20) days prior to the payment date stated
therein, such notice to be addressed to each such holder at its address as shown
by the records of the Corporation. Any holder of outstanding shares of Preferred
Stock may waive any notice required by this Subsection by a written document
specifically indicating such waiver.
SECTION 4. CONVERSION. The holders of the Preferred Stock shall have
conversion rights as follows (the "CONVERSION RIGHTS");
4.1 VOLUNTARY CONVERSION
4.1.1 RIGHT TO CONVERT; CONVERSION PRICE FOR SERIES A PREFERRED
STOCK. Each share of Series A Preferred Stock shall be convertible, without the
payment of any additional consideration by the holder thereof and at the option
of the holder thereof, at any time after the date of issuance of such share, at
the office of the Corporation or any transfer agent for the Series A Preferred
Stock, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing $.49695 by the "Series A Conversion Price,"
determined as hereinafter provided, in effect at the time of conversion. The
Series A Conversion Price at which shares of Common Stock shall be deliverable
upon conversion without the payment of any additional consideration by the
holders of Series A Preferred Stock shall initially be $.49695 per share (the
"SERIES A CONVERSION PRICE"). The initial Series A Conversion Price
5
shall be subject to adjustment, in order to adjust the number of shares of
Common Stock into which the Series A Preferred Stock is convertible, as provided
in Subsection 4.3.
4.1.2 RIGHT TO CONVERT; CONVERSION PRICE FOR SERIES B PREFERRED
STOCK. Each share of Series B Preferred Stock shall be convertible, without the
payment of any additional consideration by the holder thereof and at the option
of the holder thereof, at any time after the date of issuance of such share, at
the office of the Corporation or any transfer agent for the Series B Preferred
Stock, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing $.60 by the "Series B Conversion Price," determined
as hereinafter provided, in effect at the time of conversion. The Series B
Conversion Price at which shares of Common Stock shall be deliverable upon
conversion without the payment of any additional consideration by the holders of
Series A Preferred Stock shall initially be $.60 per share (the "SERIES B
CONVERSION PRICE"). The initial Series B Conversion Price shall be subject to
adjustment, in order to adjust the number of shares of Common Stock into which
the Series B Preferred Stock is convertible, as provided in Subsection 4.3.
4.1.3 RIGHT TO CONVERT; CONVERSION PRICE FOR SERIES C PREFERRED
STOCK. Each share of Series C Preferred Stock shall be convertible, without the
payment of any additional consideration by the holder thereof and at the option
of the holder thereof, at any time after the date of issuance of such share, at
the office of the Corporation or any transfer agent for the Series C Preferred
Stock, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing $1.54 by the "Series C Conversion Price," as
defined below, in effect at the time of conversion. The Series C Conversion
Price at which shares of Common Stock shall be deliverable upon conversion
without the payment of any additional consideration by the holders of Series C
Preferred Stock shall initially be $1.54 per share (the "SERIES C CONVERSION
PRICE"). The initial Series C Conversion Price shall be subject to adjustment,
in order to adjust the number of shares of Common Stock into which the Series C
Preferred Stock is convertible, as provided in Subsection 4.3.
4.1.4 MECHANICS OF VOLUNTARY CONVERSION. Before any holder of
Preferred Stock shall be entitled to convert the same into full shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed for transfer or with duly executed stock transfer powers
sufficient to permit transfer attached, at the office of the Corporation or of
any transfer agent for the Preferred Stock (or such holder shall notify the
Corporation or any transfer agent that such certificates have been lost, stolen
or destroyed and shall execute an agreement reasonably satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection therewith), and shall give written notice to the Corporation at such
office that such holder elects to convert the same and shall state therein such
holder's name or the name or names of such holder's nominees in which such
holder wishes the certificate or certificates for shares of Common Stock to be
issued. No fractional shares of Common Stock shall be issued upon conversion of
the Preferred Stock. In lieu of any fractional shares to which the holder would
otherwise be entitled, the Corporation shall pay cash equal to such fraction
multiplied by the then effective Conversion Price. The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder
of Preferred Stock, or to such holder's nominee or nominees, a certificate or
certificates for the number of
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shares of Common Stock to which such holder shall be entitled as aforesaid,
together with cash in lieu of any fraction of a share. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the certificates for the shares of Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date.
4.2 AUTOMATIC CONVERSION
4.2.1 CONVERSION BY TWO-THIRDS VOTE. Each share of Series A
Preferred Stock and Series B Preferred Stock shall automatically be converted
into shares of Common Stock at the then effective Series A Conversion Price or
Series B Conversion Price, respectively, if the holders of at least two-thirds
of the then outstanding Series A Preferred Stock and Series B Preferred Stock,
voting as a single class, shall so elect by giving written notice of such
election to the Corporation. Each share of Series C Preferred Stock shall
automatically be converted into shares of Common Stock at the then effective
Series C Conversion Price if the holders of at least two-thirds of the
then-outstanding Series C Preferred Stock, voting as a separate class, shall so
elect by giving written notice of such election to the Corporation. Any such
conversion shall be deemed to have occurred immediately after the close of
business on the later of the date specified in such notice or the date such
written notice is actually received by the Corporation.
4.2.2 CONVERSION UPON QUALIFYING PUBLIC OFFERING.
(a) Each share of Series A Preferred Stock and Series B
Preferred Stock shall automatically be converted into shares of Common Stock at
the then effective Series A Conversion Price or Series B Conversion Price,
respectively, upon the closing of an underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of Common Stock for the account of the Corporation
to the public at an initial public offering price per share of not less than
$2.50 (subject to equitable adjustment in the event of any stock split, stock
dividend, combination or reclassification of shares or other similar event) and
with net proceeds to the Corporation of not less than $15,000,000 (a "SERIES A
AND B QUALIFYING INITIAL PUBLIC OFFERING"). In the event of a Series A and B
Qualifying Initial Public Offering, the holders entitled to receive the Common
Stock issuable upon such conversion of the Series A Preferred Stock and Series B
Preferred Stock shall not be deemed to have converted such Preferred Stock until
the closing of the Series A and B Qualifying Initial Public Offering.
(b) Each share of Series C Preferred Stock shall
automatically be converted into shares of Common Stock at the then effective
Series C Conversion Price upon the closing of an underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and sale of Common Stock for the account of
the Corporation to the public at an initial public offering price per share of
not less than $3.08 (subject to equitable adjustment in the event of any stock
split, stock dividend, combination or reclassification of shares or other
similar event) and with net proceeds to the Corporation of not less than
$15,000,000 (a "SERIES C QUALIFYING INITIAL PUBLIC OFFERING"). In
7
the event of a Series C Qualifying Initial Public Offering, the holders entitled
to receive the Common Stock issuable upon such conversion of the Series C
Preferred Stock shall not be deemed to have converted their Series C Preferred
Stock until the closing of the Series C Qualifying Initial Public Offering.
4.2.3 CONVERSION UPON CONVERSION OF 90% OF PREFERRED STOCK.
(a) Each share of Series A Preferred Stock and Series B
Preferred Stock then outstanding shall automatically be converted into shares of
Common Stock at the then-effective Series A Conversion Price or Series B
Conversion Price, respectively, upon the conversion of ninety percent (90%) or
more of the authorized Series A Preferred Stock and Series B Preferred Stock
(measured as a single class). Such conversion shall be deemed to have occurred
on the date upon which the aggregate number of shares of Series A Preferred
Stock and Series B Preferred Stock which have been converted to Common Stock
equals or exceeds ninety percent (90%) of the aggregate authorized Series A
Preferred Stock and Series B Preferred Stock.
(b) Each share of Series C Preferred Stock then outstanding
shall automatically be converted into shares of Common Stock at the
then-effective Series C Conversion Price upon the conversion of ninety percent
(90%) or more of the authorized Series C Preferred Stock. Such conversion shall
be deemed to have occurred on the date upon which the number of shares of Series
C Preferred Stock which have been converted to Common Stock equals or exceeds
ninety percent (90%) of the aggregate authorized Series C Preferred Stock.
4.2.4 MECHANICS OF AUTOMATIC CONVERSION. Upon an automatic
conversion pursuant to this SUBSECTION 4.2, all shares of the applicable series
of Preferred Stock shall be converted automatically without any further action
by the holders of such shares and whether or not the certificates representing
such shares are surrendered to the Corporation or its transfer agent; PROVIDED,
HOWEVER, that the Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless
certificates evidencing such shares of the Preferred Stock being converted are
either delivered to the Corporation or its transfer agent, or the holder of such
shares notifies the Corporation or any transfer agent that such certificates
have been lost, stolen, or destroyed and executes an agreement reasonably
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection therewith. Upon the delivery of such certificates,
at the office of the Corporation or of its transfer agent, or upon the execution
and delivery to the Corporation of such agreement, there shall be issued and
delivered to such holder, promptly at such office and in the name as shown on
such surrendered certificate or certificates or specified in such agreement, a
certificate or certificates for the number of shares of Common Stock into which
the shares of the Preferred Stock surrendered were convertible on the date on
which such automatic conversion occurred. No fractional shares of Common Stock
shall be issued upon conversion of the Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.
4.3 ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUANCES
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4.3.1 SPECIAL DEFINITIONS. For purposes of this Subsection 4.3,
the following definitions shall apply:
(a) "OPTION" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire either Common Stock or Convertible
Securities.
(b) "ORIGINAL ISSUE DATE" shall mean the first date on which a share of
the applicable series of Preferred Stock was issued.
(c) "CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness,
shares (other than shares of Common Stock and Preferred Stock) or other
securities directly or indirectly convertible into or exchangeable for
Common Stock.
(d) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common
Stock issued (or, pursuant to SUBSECTION 4.3.3, deemed to be issued) by the
Corporation after the applicable Original Issue Date, other than:
(i) up to 10,842,940 shares of Common Stock issued or issuable upon
conversion of shares of Series A Preferred Stock, provided that the
number of shares referred to in this clause shall be appropriately
adjusted to give effect to any changes in the Series A Conversion
Price pursuant to the antidilution provisions of this SECTION 4;
(ii) up to 14,320,446 shares of Common Stock issued or issuable upon
conversion of shares of Series B Preferred Stock, provided that the
number of shares referred to in this clause shall be appropriately
adjusted to give effect to any changes in the Series B Conversion
Price pursuant to the antidilution provisions of this SECTION 4;
(iii) up to 16,500,000 shares of Common Stock issued or issuable upon
conversion of shares of Series C Preferred Stock, provided that the
number of shares referred to in this clause shall be appropriately
adjusted to give effect to any changes in the Series C Conversion
Price pursuant to the antidilution provisions of this SECTION 4; and
(iv) such number of shares of Common Stock as may be issued or
issuable to officers, employees or directors of the Corporation
pursuant to either a stock purchase or option plan or other employee
stock bonus arrangement approved by the directors of the Corporation
(appropriately adjusted to take account of any stock split, stock
dividend, combination of shares or the like); PROVIDED, HOWEVER, that
such options or purchases must be granted or made at fair market value
and approved by the Board of Directors, and the maximum number of
shares issuable under any such arrangement must be approved by the
holders of a majority in interest of the Preferred Stock, voting as a
single class; and PROVIDED, further, that
9
the issuance of up to 8,152,614 shares of Common Stock under option
plans in effect as of November 3, 1999 (less any issuances to date
under such plans) is deemed approved by the holders of Series C
Preferred Stock.
4.3.2 NO ADJUSTMENT OF CONVERSION PRICE. No adjustment in the
number of shares of Common Stock into which the Preferred Stock is convertible
shall be made, by adjustment in the Conversion Price for any series of Preferred
Stock (referred to generally as a "Series Conversion Price"), in respect of the
issuance of Additional Shares of Common Stock or otherwise, unless the
consideration per share for an Additional Share of Common Stock issued or deemed
to be issued by the Corporation is less than the applicable Series Conversion
Price in effect on the date of, and immediately prior to, the issue of such
Additional Share of Common Stock.
4.3.3 ISSUE OR SALE OF SECURITIES DEEMED ISSUE OF ADDITIONAL
SHARES OF COMMON STOCK.
(a) OPTIONS AND CONVERTIBLE SECURITIES. In the event the
Corporation at any time or from time to time after the applicable Original Issue
Date shall issue or sell any Options or Convertible Securities (other than those
excluded from the definition of Additional Shares of Common Stock in SUBSECTION
4.3.1(d) pursuant to clause (iv) thereof) or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or sale or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided that Additional
Shares of Common Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to SUBSECTION 4.3.5 hereof)
received for such Additional Shares of Common Stock would be less than any
Series Conversion Price in effect on the date of and immediately prior to such
issue or sale or such record date, as the case may be, and shall be deemed to be
Additional Shares of Common Stock only with respect to the series of Preferred
Stock as to which the consideration received is less than the Conversion Price
therefor, and provided further that in any such case in which Additional Shares
of Common Stock are deemed to be issued:
(i) no further adjustment in the applicable Series Conversion Price shall
be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of
such Convertible Securities;
(ii) if such Options or Convertible Securities by their terms provide, with
the passage of time or otherwise, for any change in the consideration
payable to the Corporation, or change in the number of shares of Common
Stock issuable, upon the exercise, conversion or exchange thereof, the
applicable Series Conversion Price computed upon the original
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issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any
such change becoming effective, be recomputed to reflect such change
insofar as it affects such Options or the rights of conversion or exchange
under such Convertible Securities;
(iii) upon the expiration of any such Options or any rights of conversion
or exchange under such Convertible Securities which shall not have been
exercised, the applicable Series Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
such expiration, be recomputed as if:
(A) in the case of Convertible Securities or Options for Common
Stock, the only Additional Shares of Common Stock issued were the
shares of Common Stock, if any, actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities, and the consideration received therefor was the
consideration actually received by the Corporation for the issue of
all such Options, whether or not exercised, plus the consideration
actually received by the Corporation upon such exercise, or for the
issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually
received by the Corporation upon such conversion or exchange; and
(B) in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued upon the exercise
thereof were issued at the time of issue of such Options, and the
consideration received by the Corporation for the Additional Shares of
Common Stock deemed to have been then issued was the consideration
actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration deemed to
have been received by the Corporation (determined pursuant to
SUBSECTION 4.3.5) upon the issue of the Convertible Securities with
respect to which such Options were actually exercised;
(iv) in the case of any Options which expire by their terms not more than
30 days after the date of issue thereof, no adjustment of the applicable
Conversion Price shall be made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in the same manner
provided in clause (iii) above; and
(v) if such record date shall have been fixed and such Options or
Convertible Securities are not issued on the date fixed therefor, the
adjustment previously made in the applicable Series Conversion Price which
became effective on such record date shall be canceled as of the close of
business on such record date, and thereafter the applicable Series
Conversion Price shall be adjusted pursuant to this SUBSECTION 4.3.3 as of
the actual date of their issuance.
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(b) STOCK DIVIDENDS, STOCK DISTRIBUTIONS AND SUBDIVISIONS.
In the event the Corporation at any time or from time to time after the Original
Issue Date shall declare or pay any dividend or make any other distribution on
the Common Stock payable in Common Stock or effect a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise) then and
in any such event Additional Shares of Common Stock shall be deemed to have been
issued:
(i) in the case of any such dividend or distribution, immediately after
the close of business on the record date for the determination of
holders of any class of securities entitled to receive such dividend or
distribution, or
(ii) in the case of any such subdivision, at the close of business on
the date immediately prior to the date upon which such corporate action
becomes effective.
If such record date shall have been fixed and no part of such dividend shall
have been paid on the date fixed therefor, the adjustment previously made in the
Conversion Price which became effective on such record date shall be canceled as
of the close of business on such record date, and thereafter the Conversion
Price shall be adjusted pursuant to this SUBSECTION 4.3.3 as of the time of
actual payment of such dividend. If such record date shall have been fixed and
part but not all of such dividend shall have been paid on the date fixed
therefor, the adjustment previously made in the Conversion Price which became
effective on such record date shall be revised as of the close of business on
such record date to reflect the amount of such dividend actually paid.
4.3.4 ADJUSTMENT OF SERIES CONVERSION PRICE UPON ISSUANCE, SALE
OR DEEMED ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event that at
any time or from time to time after the applicable Original Issue Date, the
Corporation shall issue or sell Additional Shares of Common Stock (including,
without limitation, Additional Shares of Common Stock deemed to be issued
pursuant to SUBSECTION 4.3.3(a) but not including Additional Shares of Common
Stock deemed to be issued pursuant to SUBSECTION 4.3.3(b) as a result of a
dividend or other distribution on the Common Stock payable in Common Stock or a
subdivision of outstanding shares of Common Stock), without consideration or for
a consideration per share less than the applicable Series Conversion Price in
effect on the date of and immediately prior to such issue or sale, then and in
such event, the applicable Series Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined in accordance with the following formula:
P1 Ql + P2 Q2
Conversion Price = ------------------------
Ql + Q2
where:
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Conversion Price = New Conversion Price.
P1 = Conversion Price of the applicable series of Preferred Stock in
effect immediately prior to such new issue or sale.
Q1 = Number of shares of Common Stock deemed outstanding immediately
prior to such new issue or sale.
P2 = Weighted average price per share received by the Corporation upon
such new issue or sale.
Q2 = Number of shares of Common Stock issued or sold or deemed to have
been issued in the subject transaction.
For the purpose of this SUBSECTION 4.3.4, (a) the number of shares of Common
Stock outstanding at any given time shall exclude shares in the treasury of the
Corporation or shares of Common Stock held for the account of the Corporation or
any of its subsidiaries and (b) all shares of Common Stock issuable upon
exercise or conversion of Options, Convertible Securities and shares of
Preferred Stock outstanding immediately prior to the issue or sale of Additional
Shares of Common Stock triggering the adjustment provided for by this SUBSECTION
4.3.4 shall be deemed to be outstanding. Anything contained in this SUBSECTION
4.3.4 to the contrary notwithstanding, the applicable Series Conversion Price
shall not be reduced at any time if the amount of such reduction would be an
amount less than $.01, but any such amount shall be carried forward and
reduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $.01 or more.
4.3.5 DETERMINATION OF CONSIDERATION. For purposes of this
Subsection 4.3, the consideration received by the Corporation for the issue of
any Additional Shares of Common Stock shall be computed as follows:
(a) CASH AND PROPERTY. Such consideration shall:
(i) insofar as it consists of cash, be computed at the aggregate amounts of
cash received by the Corporation excluding amounts paid or payable for
accrued interest or accrued dividends;
(ii) insofar as it consists of property other than cash, be computed at the
fair market value thereof at the time of such issue or sale, as determined
in good faith by the Board of Directors; and
(iii) in the event Additional Shares of Common Stock are issued together
with other shares or securities or other assets of the Corporation for
consideration which covers
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both, be the proportion of such consideration so received, computed as
provided in clauses (i) and (ii) above, as determined in good faith by the
Board of Directors.
(b) OPTIONS AND CONVERTIBLE SECURITIES. The consideration
per share received by the Corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to SUBSECTION 4.3.3(a) relating to Options
and Convertible Securities shall be determined by dividing (x) the total amount,
if any, received or receivable as consideration for the issue of such Options or
Convertible Securities plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities by (y)
the maximum number of shares of Common Stock (as set forth in the instruments
relating thereto, without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the exercise of such Options
or the conversion or exchange of such Convertible Securities.
4.3.6 ADJUSTMENT FOR DIVIDENDS, DISTRIBUTIONS, OR SUBDIVISIONS,
COMBINATIONS OR CONSOLIDATIONS OF COMMON STOCK.
(a) STOCK DIVIDENDS, DISTRIBUTIONS OR SUBDIVISIONS. In the
event Additional Shares of Common Stock shall be deemed to have been issued in a
dividend or other distribution on the Common Stock payable in Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise) described in SUBSECTION 4.3.3(b), the applicable Series Conversion
Price in effect immediately prior to the record date or effectiveness, as the
case may be, of such dividend, distribution or subdivision shall, concurrently
with such record date or effectiveness, be proportionately decreased.
(b) COMBINATIONS OR CONSOLIDATIONS. In the event the
outstanding shares of Common Stock shall be combined or consolidated (by
reclassification or otherwise) into a lesser number of shares of Common Stock,
the applicable Series Conversion Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
4.4 ADJUSTMENTS FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event
that at any time or from time to time after the applicable Original Issue Date
the Corporation shall make or issue, or fix a record date for the determination
of holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation other than shares of Common Stock, then
and in each such event provision shall be made so that the holders of Preferred
Stock shall receive upon conversion thereof in addition to the number of shares
of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Preferred Stock been
converted into Common Stock on the date of and immediately prior to such event
and had they thereafter, during the period from the date of such event to and
including the conversion date, retained such securities receivable by them as
14
aforesaid during such period, giving application during such period to all
adjustments called for herein.
4.5 ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE, OR SUBSTITUTION. In
the event that at any time or from time to time after the applicable Original
Issue Date, the Common Stock issuable upon the conversion of the Preferred Stock
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a merger, consolidation, or sale of assets provided for
below), then and in each such event the holder of each such share of Preferred
Stock shall have the right thereafter to convert such share into the kind and
amount of shares of stock and other securities and property receivable upon such
reorganization, reclassification, or other change, by a holder of the number of
shares of Common Stock into which such share of Preferred Stock might have been
converted immediately prior to such reorganization, reclassification or change,
all subject to further adjustment as provided herein.
4.6 ADJUSTMENT FOR MERGER, CONSOLIDATION OR SALE OF ASSETS. In the
event that at any time or from time to time after the applicable Original Issue
Date, the Corporation shall merge or consolidate with or into another entity or
sell all or substantially all of its assets (other than a consolidation, merger
or sale which is treated as a liquidation pursuant to SUBSECTION 3.3), each
share of Preferred Stock shall thereafter be convertible into the kind and
amount of shares of stock or other securities or property to which a holder of
the number of shares of Common Stock of the Corporation deliverable upon
conversion of such Preferred Stock would have been entitled upon such
consolidation, merger or sale; and, in such case, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this SECTION 4 set forth with respect to the
rights and interest thereafter of the holders of Preferred Stock, to the end
that the provisions set forth in this SECTION 4 (including provisions with
respect to changes in and other adjustments of the Series Conversion Prices)
shall thereafter be applicable, as nearly as reasonably may be, in relation to
any shares of stock or other property thereafter deliverable upon the conversion
of the Preferred Stock.
4.7 NO IMPAIRMENT. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation but shall at
all times in good faith assist in the carrying out of all the provisions of this
SECTION 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Preferred Stock against impairment.
4.8 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of any Series Conversion Price pursuant to this
SECTION 4, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to each affected
holder of Preferred Stock a certificate setting forth such adjustment or
15
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any affected holder of Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the applicable Conversion Price at the time in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of each share
of Preferred Stock.
4.9 NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall mail to each
holder of Preferred Stock at least ten (10) days prior to such record date a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend or distribution.
4.10 COMMON STOCK RESERVED. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Preferred Stock.
4.11 CERTAIN TAXES. The Corporation shall pay any stamp, issue or
transfer taxes payable in connection with the conversion of the Preferred Stock;
PROVIDED, HOWEVER, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer to a name other than that of the
holder of the Preferred Stock.
4.12 CLOSING OF BOOKS. The Corporation shall at no time close its
transfer books against the transfer of any shares of Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Preferred Stock in any manner which interferes with the timely conversion or
transfer of such Preferred Stock or Common Stock, unless otherwise required by
law.
SECTION 5. REDEMPTION.
5.1 At the written election of holders of a majority of the
outstanding shares of Series C Preferred Stock, made at any time on or after
December 18, 2002 (the "Series C Redemption Election"), the Corporation shall be
required to redeem all, but not less than all, of the outstanding shares of
Series C Preferred Stock in three equal annual installments, upon the terms set
forth in this SECTION 5. The first installment of such redemption (the "First
Series C Redemption Date") shall occur on a date specified by the electing
holders in such written election to redeem shares of Series C Preferred Stock,
which date shall not be earlier than 90 days following the date of the Series C
Redemption Election. The second and third installments of such redemption shall
occur on the first and second anniversaries of the First Series C Redemption
Date, respectively. The Corporation shall redeem one-third of the outstanding
shares of Series C Preferred Stock held by each holder on the First Series C
Redemption Date, one-third of the outstanding shares of Series C Preferred Stock
held by each holder immediately prior to the First Series C Redemption Date on
the first anniversary of the First Series C Redemption Date and the remaining
shares on the second anniversary of the First Series C
16
Redemption Date. On each such redemption date, the holders shall surrender the
certificate or certificates for the shares to be redeemed duly endorsed for
transfer or with duly executed stock transfer powers sufficient to permit
transfer attached, at the offices of the Corporation or of any transfer agent
for the Series C Preferred Stock. The Corporation shall, as soon as practicable
thereafter, issue and deliver to each holder a certificate or certificates for
the balance of the shares not being redeemed. The redemption price per share of
the Series C Preferred Stock shall be equal to the greater of (i) $1.54 (subject
to equitable adjustment in the event of any stock dividend, stock split,
combination, reclassification of shares or other similar event) plus all accrued
but unpaid dividends thereon, if any, at the time of such redemption and (ii)
the Fair Market Value (as defined in SUBSECTION 5.7) per share as of the date of
the Series C Redemption Election. The Series C redemption rights described in
this SUBSECTION 5.1 shall be senior to the Series A and Series B redemption
rights set forth below. The Corporation shall not redeem any Series A Preferred
Stock or Series B Preferred Stock unless it has set aside sufficient funds to
redeem the Series C Preferred Stock in full as provided in Section 5.4 hereof.
5.2 At the written election of holders of a majority of the
outstanding shares of Series A Preferred Stock and Series B Preferred Stock,
acting as a single class, made at any time on or after December 18, 2002 (the
"Series A and B Redemption Election"), the Corporation shall be required to
redeem all, but not less than all, of the outstanding shares of Series A
Preferred Stock and Series B Preferred Stock in three equal annual installments,
upon the terms set forth in this SECTION 5. The first installment of such
redemption (the "First Series A and B Redemption Date") shall occur on a date
specified by the electing holders in such written election to redeem shares of
Series A Preferred Stock and Series B Preferred Stock, which date shall not be
earlier than 90 days following the date of the Series A and B Redemption
Election. The second and third installments of such redemption shall occur on
the first and second anniversaries of the First Series A and B Redemption Date,
respectively. The Corporation shall redeem one-third of the outstanding shares
of Series A Preferred Stock and/or Series B Preferred Stock held by each holder
on the First Series A and B Redemption Date, one-third of the outstanding shares
of such Preferred Stock held by each holder immediately prior to the First
Series A and B Redemption Date on the first anniversary of the First Series A
and B Redemption Date and the remaining shares on the second anniversary of the
First Series A and B Redemption Date. On each such redemption date, the holders
shall surrender the certificate or certificates for the shares to be redeemed
duly endorsed for transfer or with duly executed stock transfer powers
sufficient to permit transfer attached, at the offices of the Corporation or of
any transfer agent for the Series A Preferred Stock and Series B Preferred
Stock. The Corporation shall, as soon as practicable thereafter, issue and
deliver to each holder a certificate or certificates for the balance of the
shares not being redeemed. The redemption price per share of the Series A
Preferred Stock shall be equal to the greater of (i) $.49695 (subject to
equitable adjustment in the event of any stock dividend, stock split,
combination, reclassification of shares or other similar event) plus all accrued
but unpaid dividends thereon, if any, at the time of such redemption and (ii)
the Fair Market Value (as defined in SUBSECTION 5.7) per share as of the date of
the Series A and B Redemption Election. The redemption price per share of the
Series B Preferred Stock shall be equal to the greater of (i) $.60 (subject to
equitable adjustment in the event of any stock dividend, stock split,
combination, reclassification of shares or other similar event) plus all accrued
but unpaid dividends thereon, if any, at the time of such redemption and (ii)
the Fair Market Value
17
(as defined in SUBSECTION 5.7) per share as of the date of the Series A and B
Redemption Election.
5.3 Notice of redemption shall be sent by first class mail, postage
prepaid, to each holder of record of the applicable series of Preferred Stock,
not less than 30 days nor more than 60 days prior to the First Redemption Date
for such series, at the address of such holder as it appears on the books of the
Corporation. Such notice shall set forth (1) the First Redemption Date for such
series, the dates of the second and third installments of such redemption, and
the place of redemption; and (ii) the number of shares to be redeemed on each
date of redemption and the redemption price on each such date, including all
accrued but unpaid dividends thereon, if any, to each redemption date. The
Corporation shall be obligated to redeem the applicable series of Preferred
Stock on the dates and in the amounts set forth in the notice; provided,
however, that any holder of Preferred Stock who is not party to a Redemption
Election may convert any or all of the shares owned by such holder into Common
Stock in accordance with Section 4 at any time prior to the date of redemption
of such shares. The Corporation, if advised before the close of business on the
relevant redemption date by written notice from any holder of record of
Preferred Stock to be redeemed, shall credit against the number of shares of
Preferred Stock required to be redeemed from such holder, and shall not redeem,
the number of shares of Preferred Stock which had been converted by such holder
on or before such date and which had not previously been credited against any
redemption.
5.4 If, on or before a redemption date, the funds necessary for such
redemption shall have been set aside by the Corporation and deposited with a
bank or trust company, in trust for the pro rata benefit of the holders of the
Preferred Stock that has been called for redemption, then, notwithstanding that
any certificates for shares that have been called for redemption shall not have
been surrendered for cancellation, the shares represented thereby shall no
longer be deemed outstanding from and after such redemption date, and all rights
of holders of such shares so called for redemption shall forthwith, after such
redemption date, cease and terminate with respect to such shares, excepting only
the right to receive the redemption funds therefor to which they are entitled.
Any interest accrued on funds so deposited and unclaimed by stockholders
entitled thereto shall be paid to such holders at the time their respective
shares are redeemed or to the Corporation at the time unclaimed amounts are paid
to it. In case the holders of Preferred Stock which shall have been called for
redemption shall not, within six years after the final redemption date, claim
the amounts so deposited with respect to the redemption thereof, any such bank
or trust company shall, upon demand, pay over to the Corporation such unclaimed
amounts and thereupon such bank or trust company shall be relieved of all
responsibility in respect thereof to such holder and such holder shall look only
to the Corporation for the payment thereof. Any funds so deposited with a bank
or trust company which shall not be required for such redemption by reason of
the exercise subsequent to the date of such deposit of the right of conversion
of any shares or otherwise shall be returned to the Corporation forthwith.
5.5 If the Corporation for any reason fails to redeem any of the
shares of Preferred Stock in accordance with SUBSECTIONS 5.1 AND 5.2 on or prior
to the redemption dates
18
determined in accordance with this SECTION 5, then, notwithstanding anything to
the contrary contained in this Certificate of Incorporation:
5.5.1 The Corporation may not incur any indebtedness for money
borrowed (unless the proceeds of such incurrence of indebtedness are used to
make all overdue redemptions) or borrow or reborrow any amounts under any lines
of credit which it may then have outstanding without the prior written consent
of the holders of not less than two-thirds of the then outstanding shares of the
Preferred Stock required to be redeemed; and
5.5.2 Notwithstanding any provision to the contrary contained
herein or in any contract or agreement to which the Corporation is a party, the
number of directors constituting the Board of Directors shall be fixed at eight
and the holders of a majority of the outstanding shares of Preferred Stock
required to be redeemed shall have the right, by written consent or at any
special or annual meeting of the stockholders of the Corporation, voting as a
separate class to the exclusion of the holders of Common Stock and any series of
Preferred Stock not being redeemed, or which is being redeemed in accordance
with the schedule set forth in Section 5.1, to elect five of the eight directors
of the Corporation. Such right shall continue until the Corporation is no longer
in default of its obligation to redeem shares of Preferred Stock pursuant to
SUBSECTIONS 5.1 AND 5.2. Each director elected by the holders of shares of any
Preferred Stock pursuant to this SUBSECTION 5.5.2 (each, an "Additional
Director") shall continue to serve as such director until the date that all
obligations of the Corporation pursuant to this SECTION 5 have been satisfied in
full, notwithstanding that prior to such date a default under this SECTION 5
shall cease to exist. Any Additional Director may be removed by, and shall not
be removed except by, the written consent or vote of the holders of record of a
majority of the outstanding shares of the Preferred Stock entitled to have
originally voted for such director's election, voting together as a separate
class to the exclusion of the holders of Common Stock and any series of
Preferred Stock not being redeemed or which is being redeemed in accordance with
the schedule set forth in Section 5.1. So long as a default under this SECTION 5
shall exist, any vacancy in the office of an Additional Director shall be filled
by the vote or written consent of the holders of a majority of the outstanding
shares of the Preferred Stock entitled to have originally voted for the removed
director's election, voting together as a separate class to the exclusion of the
holders of Common Stock and any series of Preferred Stock not being redeemed, or
which is being redeemed in accordance with the schedule set forth in Section
5.1.
5.6 If the funds of the Corporation legally available for redemption
of shares of Preferred Stock on a redemption date are insufficient to redeem the
total number of shares of Preferred Stock submitted for redemption, those funds
which are legally available will be used to redeem the maximum possible number
of whole shares ratably among the holders of such shares in proportion to the
redemption amounts otherwise payable to them, subject to the priority of the
Series C Preferred Stock specified in the last sentence of Section 5.1. The
shares of Preferred Stock not redeemed shall remain outstanding and entitled to
all rights and preferences provided herein. At any time thereafter when
additional funds of the Corporation are legally available for the redemption of
such shares of Preferred Stock, such funds will be used, at the end of the next
succeeding fiscal quarter, to redeem the balance of such shares, or such portion
thereof for which funds are then legally available.
19
5.7 For the purposes of SUBSECTIONS 5.1 AND 5.2, the "Fair Market
Value" of each share of Preferred Stock shall be determined as follows: if,
within 20 days after the date of the applicable Redemption Election, the
Corporation and the holders of a majority of the outstanding Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, as the case may be,
agree upon the fair market value of one share of Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock, as the case may be, then
the Fair Market Value shall be as so agreed. If the Corporation and such holders
do not agree upon the Fair Marker Value within such 20 day period but agree upon
an appraiser to determine the fair market value per share of the Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, as the
case may be, then such appraiser shall make such determination and such
determination shall govern. If the Corporation and such holders do not, within
such 20 day period, agree as to the Fair Market Value or as to a single
appraiser to determine the fair market value of each share of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, as the case may be,
then the Corporation shall, by notice to the holders of the applicable series of
Preferred Stock, appoint one appraiser, and the holders of a majority of the
outstanding shares of all such series of Preferred Stock electing redemption
shall, by notice to the Corporation and acting as a single class, appoint one
appraiser, both experienced in the appraisal of companies engaged in the
business of the Corporation. If either the Corporation or such holders shall
fail to appoint such an appraiser within 15 days after the lapse of such 20-day
period, then the appraiser appointed by the party which does appoint an
appraiser shall make the appraisal of the Fair Market Value, and such appraisal
shall govern. If two appraisers are appointed, then the average of the
appraisals rendered by such appraisers shall be considered the Fair Market
Value. All appraisal reports shall be rendered in writing and shall be signed by
the appraiser(s), and the Corporation and the holders of the series of Preferred
Stock who designated an appraiser shall use reasonable efforts to cause each
appraiser to render its appraisal report within 20 days after the date of its
appointment. The costs of the appraisals shall be borne by the Corporation. All
notices delivered pursuant to this SUBSECTION 5.7 shall be sent by certified
mail, postage prepaid, or by hand or nationally-recognized overnight delivery
service and shall, in the case of notices to holders of Preferred Stock, be sent
to the address of such holder as it appears on the books of the Corporation.
SECTION 6. NEGATIVE COVENANTS
6.1 SERIES A. So long as at least one-fourth of the number of shares
of Series A Preferred Stock (subject to equitable adjustment in the event of any
stock split, stock dividend, combination or reclassification of shares or other
similar event) shall remain issued and outstanding, the Corporation shall not,
without first having provided the written notice of such proposed action to each
holder of outstanding shares of Series A Preferred Stock and having obtained the
affirmative vote or written consent of the holders of 51% of the shares of
Series A Preferred Stock then outstanding:
6.1.1 amend, alter or repeal any provision of, or add any
provision to, the Corporation's Certificate of Incorporation or By-laws;
20
6.1.2 increase the number of shares of Series A Preferred Stock
designated as Series A Preferred Stock, or reclassify any Common Stock or
Preferred Stock into shares having any preference or priority as to assets
superior to or on a parity with any such preference or priority of the Series A
Preferred Stock;
6.1.3 create, authorize or issue any other class or classes of
stock or series of Common Stock or Preferred Stock or any security convertible
into or evidencing the right to purchase shares of any class or series of Common
Stock or Preferred Stock or any capital stock of the Corporation senior to or in
parity with the Series A Preferred Stock in any respect;
6.1.4 pay or declare any dividend or distribution on any shares
of Common Stock or apply any of its assets to the redemption, retirement,
purchase or other acquisition, directly or indirectly, through subsidiaries or
otherwise, of any shares of Common Stock except (1) pursuant to that certain
Second Amended and Restated Stockholders Agreement dated on or about November 3,
1999 by and among the Corporation and certain stockholders, or (2) pursuant to
repurchase provisions contained in any Stock Restriction Agreement dated as of
December 18, 1997 by and between the Corporation and any of its stockholders; or
6.1.5 effect any sale, lease, assignment, transfer or other
conveyance (other than the grant of a mortgage or security interest in
connection with indebtedness for borrowed money) of all or substantially all the
assets of the Corporation or any of its subsidiaries; any liquidation,
dissolution or winding up of, or any consolidation or merger involving, the
Corporation or any of its subsidiaries; or any recapitalization of the
Corporation.
6.2 SERIES B. So long as at least one-fourth of the number of shares
of Series B Preferred Stock (subject to equitable adjustment in the event of any
stock split, stock dividend, combination or reclassification of shares or other
similar event) shall remain issued and outstanding, the Corporation shall not,
without first having provided the written notice of such proposed action to each
holder of outstanding shares of Series B Preferred Stock and having obtained the
affirmative vote or written consent of the holders of 51% of the shares of
Series B Preferred Stock then outstanding:
6.2.1 amend, alter or repeal any provision of, or add any
provision to, the Corporation's Certificate of Incorporation or By-laws;
6.2.2 increase the number of shares of Series B Preferred Stock
designated as Series B Preferred Stock, or reclassify any Common Stock or
Preferred Stock into shares having any preference or priority as to assets
superior to or on a parity with any such preference or priority of the Series B
Preferred Stock;
6.2.3 create, authorize or issue any other class or classes of
stock or series of Common Stock or Preferred Stock or any security convertible
into or evidencing the right to purchase shares of any class or series of Common
Stock or Preferred Stock or any capital stock of the Corporation senior to or in
parity with the Series B Preferred Stock in any respect;
21
6.2.4 pay or declare any dividend or distribution on any shares
of Common Stock or apply any of its assets to the redemption, retirement,
purchase or other acquisition, directly or indirectly, through subsidiaries or
otherwise, of any shares of Common Stock except (1) pursuant to that certain
Second Amended and Restated Stockholders Agreement dated on or about November 3,
1999 by and among the Corporation and certain stockholders, as the same may be
amended from time to time or (2) pursuant to repurchase provisions contained in
any Stock Restriction Agreement dated as of December 18, 1997 by and between the
Corporation and any of its stockholders; or
6.2.5 effect any sale, lease, assignment, transfer or other
conveyance (other than the grant of a mortgage or security interest in
connection with indebtedness for borrowed money) of all or substantially all the
assets of the Corporation or any of its subsidiaries; any liquidation,
dissolution or winding up of, or any consolidation or merger involving, the
Corporation or any of its subsidiaries; or any recapitalization of the
Corporation.
6.3 SERIES C. So long as at least one-fourth of the number of shares
of Series C Preferred Stock (subject to equitable adjustment in the event of any
stock split, stock dividend, combination or reclassification of shares or other
similar event) shall remain issued and outstanding, the Corporation shall not,
without first having provided the written notice of such proposed action to each
holder of outstanding shares of Series C Preferred Stock and having obtained the
affirmative vote or written consent of the holders of 51% of the shares of
Series C Preferred Stock then outstanding:
6.3.1 amend, alter or repeal any provision of, or add any
provision to, the Corporation's Certificate of Incorporation or By-laws;
6.3.2 increase the number of shares of Series C Preferred Stock
designated as Series C Preferred Stock, or reclassify any Common Stock or
Preferred Stock into shares having any preference or priority as to assets
superior to or on a parity with any such preference or priority of the Series C
Preferred Stock;
6.3.3 create, authorize or issue any other class or classes of
stock or series of Common Stock or Preferred Stock or any security convertible
into or evidencing the right to purchase shares of any class or series of Common
Stock or Preferred Stock or any capital stock of the Corporation senior to or in
parity with the Series C Preferred Stock in any respect;
6.3.4 pay or declare any dividend or distribution on any shares
of Common Stock or any other series of Preferred Stock or apply any of its
assets to the redemption, retirement, purchase or other acquisition, directly or
indirectly, through subsidiaries or otherwise, of any shares of Common Stock or
any other series of Preferred Stock except (1) pursuant to that certain Second
Amended and Restated Stockholders Agreement dated on or about November 3, 1999
by and among the Corporation and certain stockholders, as the same may be
amended from time to time or (2) pursuant to repurchase provisions contained in
any Stock Restriction Agreement dated as of December 18, 1997 by and between the
Corporation and any of its stockholders;
22
6.3.5 effect any sale, lease, assignment, transfer or other
conveyance (other than the grant of a mortgage or security interest in
connection with indebtedness for borrowed money) of all or substantially all the
assets of the Corporation or any of its subsidiaries; any liquidation,
dissolution or winding up of, or any consolidation or merger involving, the
Corporation or any of its subsidiaries; or any recapitalization of the
Corporation;
6.3.6 enter into any agreement that would restrict the
Corporation's ability to perform under that certain Series C Stock Purchase
Agreement dated on or about November 3, 1999 by and among the Corporation and
the holders of Series C Preferred Stock;
6.3.7 sell or lease 25% or more of the assets of the Corporation,
except in the ordinary course of business;
6.3.8 issue additional securities to employees, officer or
directors of the Corporation, except securities (a) issued under stock option
plans in existence as of November 3, 1999 or stock option plans approved by the
holders of Series C Preferred Stock as provided herein, (b) issuable upon the
exercise of outstanding options or warrants or (c) issuable upon the exercise of
options granted in the future at fair market value;
6.3.9 adopt any additional stock option plans or increase the
number of shares available for issuance under plans in effect as of November 3,
1999; or
6.3.10 issue any securities for a price less than fair market
value, other than as may be required by contractual commitments in existence as
of November 3, 1999.
6.4 NOTICE. Any other provision of the Corporation's Certificate of
Incorporation or By-laws to the contrary notwithstanding, notice of any action
specified in SUBSECTIONS 6.1, 6.2 OR 6.3 shall be given by the Corporation to
each holder of outstanding shares of the applicable series of Preferred Stock by
first class mail, postage prepaid, addressed to such holder at the last address
of such holder as shown by the records of the Corporation, at least 20 days
before the date on which the books of the Corporation shall close or a record
shall be taken with respect to such proposed action, or, if there shall be no
such date, at least 20 days before the date when such proposed action is
scheduled to occur. Any holder of outstanding shares of Preferred Stock may
waive any notice required by this SUBSECTION 6.4 by a written document
indicating such waiver.
SECTION 7. NO REISSUANCE OF PREFERRED STOCK. No share or shares of
Preferred Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue.
SECTION 8. RESIDUAL RIGHTS. All rights accruing to the outstanding shares
of the Corporation not expressly provided for to the contrary herein shall be
vested in the Common Stock.
23
Subject to Section 6 above, the Board of Directors of the Corporation shall
have full authority, to the extent permitted by law, to increase, decrease or
otherwise adjust the capital stock of the Corporation, to designate the classes
or series thereof and to determine whether all or any part of such stock shall
have voting powers, full or limited, or no voting powers, and to determine such
designations, and such powers, preferences, relative, participating or optional,
or other special rights and the qualifications, limitations or restrictions
thereof as the Board shall from time to time determine in duly adopted
resolutions.
Subject to Section 6 above, at any time and from time to time when
authorized by resolution of the Board of Directors and without any action by its
stockholders, the Corporation may issue or sell any shares of its capital stock
of any class or series, whether out of the unissued shares thereof authorized by
the Certificate of Incorporation of the Corporation as originally filed or by an
amendment thereof or out of shares of its capital stock acquired by it after the
issue thereof, and whether or not the shares thereof so issued or sold shall
confer upon the holders thereof the right to exchange or convert such shares for
or into other shares of capital stock of the Corporation of any class or classes
or any series thereof. When similarly authorized, but without any action by its
stockholders, the Corporation may issue or grant rights, warrants or options, in
bearer or registered or such other form as the Board of Directors may determine,
for the purchase of shares of the capital stock of any class or series of the
Corporation within such period of time, or without limit as to time, to such
aggregate number of shares, and at such price per share, as the Board of
Directors may determine. Such rights, warrants or options may be issued or
granted separately or in connection with the issue of any bonds, debentures,
notes, obligations or other evidences of indebtedness or shares of the capital
stock of any class or series of the Corporation and for such consideration and
on such terms and conditions as the Board of Directors in its sole discretion
may determine. In each case, the consideration to be received by the Corporation
for any such shares so issued or sold shall be such as shall be fixed from time
to time by resolution of the Board of Directors.
FIFTH: The Corporation shall have perpetual existence.
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter or repeal the by-laws of the Corporation.
To authorize and cause to be executed mortgages and liens upon the real and
personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole Board, to designate one or more committees, each
committee to consist of one or more of the Directors of the Corporation. The
Board may designate one or
24
more Directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. The by-laws may provide
that in the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors, or in the by-laws of the Corporation,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it, but no such committee shall have such power or authority in
reference to amending the certificate of incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the by-laws of the Corporation; and,
unless the resolution or by-laws expressly so provide, no such committee shall
have the power or authority to declare a dividend or to authorize the issuance
of stock, or to adopt a Certificate of Ownership and Merger pursuant to the
provisions of Section 253 of Title 8 of the Delaware Code. As used in this
Article SIXTH, "whole Board" means the total number of Directors which the
Corporation would have if there were no vacancies.
When and as authorized by the stockholders in accordance with statute, to
sell, lease or exchange all or substantially all of the property and assets of
the Corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its Board of Directors
may deem expedient and for the best interests of the Corporation.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or shareholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or a class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the Court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
25
EIGHTH: Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the Corporation may be kept
(subject to any provision contained in the Delaware statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the by-laws of the Corporation. Elections of
Directors need not be by written ballot unless the by-laws of the Corporation
shall so provide.
NINTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
[Remainder of page intentionally has been left blank.]
26
THE UNDERSIGNED, being the President of the Corporation, does make this
certificate, hereby declaring and certifying that this is his act and deed and
the facts herein stated are true, and accordingly has hereunto set his hand this
2nd day of November, 1999.
/s/ Joseph A. Forgione
----------------------
Joseph A. Forgione
President
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘S-1’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 12/18/02 | | 16 | | 17 | | | None on these Dates |
| Filed on: | | 1/14/00 |
| | 11/3/99 | | 10 | | 23 |
| | 12/18/97 | | 21 | | 22 |
| | 9/24/92 | | 1 |
| List all Filings |
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