Registration Statement for Securities Offered Pursuant to a Transaction — Form S-3
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-3 Registration Form S-3 38 186K
2: EX-3.1 Amendment to Articles of Incorporation 17 70K
3: EX-4.3 Form of Warrant - Series A Preferred Shares 15 54K
4: EX-10.1 Convertible Preferred Stock Purchase Agreement 25 105K
5: EX-10.2 Registration Rights Agreement 22 77K
EX-3.1 — Amendment to Articles of Incorporation
| EX-3.1 | 1st Page of 17 | TOC | ↑Top | Previous | Next | ↓Bottom | Just 1st |
|---|
Exhibit 3.1
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
DAW TECHNOLOGIES, INC.
Pursuant to the provisions of the Utah Revised Business Corporation Act
(the "Act"), the undersigned corporation hereby adopts the following Articles of
Amendment to its Articles of Incorporation:
I.
The name of the Corporation is Daw Technologies, Inc. (the
"Corporation")
II.
The Articles of Incorporation of the Corporation are hereby amended by
adding a new Section C to Article III, which Section C shall read as follows:
C. 3% Series A Convertible Preferred Stock
Section 1. Designation, Amount and Par Value. There is hereby created
out of the authorized and unissued shares of Preferred Stock of the Corporation
(i) a series of Preferred Stock designated as the 3% Series A Convertible
Preferred Stock (the "Series A Preferred Stock") which series shall consist of
500 shares (which shall not be subject to increase without the consent of the
holders of the Series A Preferred Stock (each, a "Holder" and collectively, the
"Holders")). Each share of Series A Preferred Stock shall have a par value of
$.01 and a stated value equal to the sum of $10,000 plus all accrued dividends
to the date of determination to the extent not previously paid in cash in
accordance with the terms hereof (the "Stated Value").
Section 2. Dividends.
(a) Holders shall be entitled to receive, out of funds legally available
therefor, and the Corporation shall pay, cumulative dividends at the rate per
share (as a percentage of the Stated Value per share) of 3% per annum, payable
on each Conversion Date (as defined herein) for such share, in cash or by
accretion of the Stated Value. Subject to the terms and conditions herein, the
decision whether to accrete dividends hereunder to the Stated Value or to pay
for dividends in cash shall be at the discretion of the Corporation. The
Corporation shall provide the Holders written notice of its intention to accrete
dividends hereunder to the Stated Value or pay dividends in cash not less than
ten days prior to each Conversion Date for so long as shares of Series A
Preferred Stock are outstanding (the Corporation may indicate in such notice
that the election contained in such notice
Exhibit 3.1
shall continue for later periods until revised). Failure to timely provide such
written notice shall be deemed (if permitted hereunder) an election by the
Corporation to accrete dividends hereunder to the Stated Value. Dividends on the
Series A Preferred Stock shall be calculated on the basis of a 360-day year,
shall accrue daily commencing on the Original Issue Date (as defined in Section
III.C.7), and shall be deemed to accrue from such date whether or not earned or
declared and whether or not there are profits, surplus or other funds of the
Corporation legally available for the payment of dividends. Except as otherwise
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued on account of the Series A Preferred Stock, such
payment shall be distributed ratably among the Holders based upon the number of
shares of Series A Preferred Stock held by each Holder. Any dividends to be paid
in cash hereunder that are not paid within three Trading Days (as defined in
Section III.C. 7) following a Dividend Payment Date shall continue to accrue and
shall entail a late fee, which must be paid in cash, at the rate of 18% per
annum or the lesser rate permitted by applicable law (such fees to accrue daily,
from the date such dividend is due hereunder through and including the date of
payment).
(b) Notwithstanding anything to the contrary contained herein, the
Corporation must pay dividends in cash if:
(i) the number of shares of Common Stock (as defined in Section
III.C.7) at the time authorized, unissued and unreserved for all purposes is
insufficient to accrete such dividends to the Stated Value to permit conversion
in full of all outstanding Stated Value;
(ii) after the Dividend Effectiveness Date (as defined in Section
III.C.7), Underlying Shares (as defined in Section III.C.7) (x) are not
registered for resale pursuant to an effective Underlying Shares Registration
Statement (as defined in Section III.C.7) and (y) may not be sold without volume
restrictions pursuant to Rule 144 promulgated under the Securities Act (as
defined in Section III.C.7 ), as determined by counsel to the Corporation
pursuant to a written opinion letter, addressed to the Corporation's transfer
agent in the form and substance acceptable to the applicable Holder and such
transfer agent (if the Corporation is permitted and elects to pay dividends in
shares of Common Stock under this clause (ii) prior to the Dividend
Effectiveness Date and thereafter an Underlying Shares Registration Statement
shall be declared effective by the Commission (as defined in Section III.C.7 ),
the Company shall, within three Trading Days after the date of such declaration
of effectiveness, exchange certificates representing such Underlying Shares for
certificates representing shares of Common Stock that are free of restrictive
legends of any kind);
(iii) the Common Stock is not then listed or quoted on the Nasdaq
National Market ("NASDAQ"), or on the New York Stock Exchange, American Stock
Exchange or Nasdaq SmallCap Market (each, a "Subsequent Market"); or
(iv) the accretion of such dividends to the Stated Value and
subsequent conversions of all then outstanding Stated Value would result in a
violation of Section III.C.5(a)(iii) or the rules of the NASDAQ or any other
rules and regulations governing any Subsequent Market on which the Common Stock
is then listed or quoted for trading, for which accretion the Corporation
Exhibit 3.1
has not obtained, or does obtain within thirty days of the Dividend
Effectiveness Date, the consent of NASDAQ or such Subsequent Market.
(c) So long as any Series A Preferred Stock shall remain outstanding,
neither the Corporation nor any subsidiary thereof shall redeem, purchase or
otherwise acquire directly or indirectly any Junior Securities (as defined in
Section III.C.7 ), nor shall the Corporation directly or indirectly pay or
declare any dividend or make any distribution (other than a dividend or
distribution described in Section III.C.5 or dividends due and paid in the
ordinary course on Series A Preferred Stock at such times when the Corporation
is in compliance with its payment and other obligations hereunder) upon, nor
shall any distribution be made in respect of, any Junior Securities, nor shall
any monies be set aside for or applied to the purchase or redemption (through a
sinking fund or otherwise) of any Junior Securities or shares pari passu with
the Series A Preferred Stock.
Section 3. Voting Rights. Except as otherwise provided herein and as
otherwise required by law, the Series A Preferred Stock shall have no voting
rights. However, so long as any shares of the Series A Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote of the
Holders of a majority of the shares of the Series A Preferred Stock then
outstanding, (a) alter or change adversely the powers, preferences or rights
given to the Series A Preferred Stock or alter or amend this Section III.C., (b)
authorize or create any class of stock ranking as to dividends or distribution
of assets upon a Liquidation (as defined in Section III.C.4) senior to or
otherwise pari passu with the Series A Preferred Stock, (c) amend its
certificate or articles of incorporation or other charter documents so as to
affect adversely any rights of the Holders, (d) increase the authorized number
of shares of Series A Preferred Stock, or (e) enter into any agreement to do any
of the foregoing.
Section 4. Liquidation. Upon any liquidation, dissolution or winding-up
of the Corporation, whether voluntary or involuntary (a "Liquidation"), the
Holders shall be entitled to receive out of the assets of the Corporation,
whether such assets are capital or surplus, for each share of Series A Preferred
Stock an amount equal to the Stated Value per share (the "Liquidation Payment)
before any distribution or payment shall be made to the holders of any Junior
Securities, and if the assets of the Corporation shall be insufficient to pay
the Liquidation Payment in full, then the entire assets to be distributed to the
Holders shall be distributed among the Holders ratably in accordance with the
respective amounts that would be payable on such shares if the Liquidation
Payment were paid in full. A sale, conveyance or disposition of 50% or more of
the assets of the Corporation or the effectuation by the Corporation of a
transaction or series of related transactions in which more than 33% of the
voting power of the Corporation is disposed of, or a consolidation or merger of
the Corporation with or into any other company or companies into one or more
companies not wholly-owned by the Corporation shall not be treated as a
Liquidation, but instead shall be subject to the provisions of Section III.C5.
The Corporation shall mail to each Holder a written notice of any such
Liquidation setting forth the date of the Liquidation Payment, not less than 45
days prior to such date.
Section 5. Conversion.
Exhibit 3.1
(a)(i) Conversions at Option of Holder. Each share of Series A Preferred
Stock shall be convertible into shares of Common Stock (subject to the
limitations set forth in Section 5(a)(iii)), at the Conversion Ratio (as defined
in Section III.C.7), at the option of the Holder at any time and from time to
time from and after the Original Issue Date. Holders shall effect conversions by
surrendering the certificate or certificates representing the shares of Series A
Preferred Stock to be converted to the Corporation, together with the form of
conversion notice attached hereto as Exhibit A (a "Conversion Notice"). Each
Conversion Notice shall specify the number of shares of Series A Preferred Stock
to be converted and the date on which such conversion is to be effected, which
date may not be prior to the date the Holder delivers such Conversion Notice by
facsimile (the "Conversion Date"). If no Conversion Date is specified in a
Conversion Notice, the Conversion Date shall be the date that a Conversion
Notice is deemed delivered hereunder. If the Holder is converting less than all
shares of Series A Preferred Stock represented by the certificate or
certificates tendered by the Holder with the Conversion Notice, or if a
conversion hereunder cannot be effected in full for any reason, the Corporation
shall promptly deliver to such Holder (in the manner and within the time set
forth in Section III.C.5(b)) a certificate representing the number of shares of
Series A Preferred Stock that have not been converted.
(ii) Automatic Conversion. Subject to the provisions of this
paragraph, all outstanding shares of Series A Preferred Stock for which
conversion notices have not previously been received or for which redemption has
not been made or required hereunder shall be automatically converted on the
earlier to occur of: (A) the first anniversary of the Effective Date (as defined
in the Purchase Agreement), at the then applicable Conversion Price (as defined
herein), and (B) the Trading Day, if any, immediately following a period of
thirty consecutive Trading Days (each of which must occur following the
Effective Date) during each of which the Per Share Market Value (as defined in
Section III.C.7) shall exceed 200% of the Fixed Conversion Price (as defined in
Section III.C.5(c)(i)), at the Fixed Conversion Price (as adjusted hereunder).
The conversion contemplated by this Section III.C.5(a)(ii) shall not occur
without the consent of the Holder at such time as (a)(1) an Underlying Shares
Registration Statement is not then effective or (2) the Holder is not permitted
to resell Underlying Shares pursuant to Rule 144(k) promulgated under the
Securities Act, without volume restrictions, as evidenced by an opinion letter
of counsel acceptable to the Holder and the transfer agent for the Common Stock;
(b) there are not sufficient shares of Common Stock authorized and reserved for
issuance upon such conversion; or (c) the Corporation shall have defaulted in
any material respect on its covenants and obligations hereunder or under the
Purchase Agreement or Registration Rights Agreement (each as defined in Section
III.C.7). Notwithstanding the foregoing, the date on which an automatic
conversion would otherwise occur under this subsection shall be extended (on a
day-for-day basis) for any Trading Days after the Effective Date that a Holder
is unable to resell Underlying Shares under an Underlying Shares Registration
Statement due to (a) the Common Stock not being listed or quoted for trading on
the NASDAQ or any Subsequent Market, (b) the failure of such Underlying Shares
Registration Statement to be declared effective, or if so declared, to remain
effective during the Effectiveness Period (as defined in the Registration Rights
Agreement) as to all Underlying Shares, or (c) the suspension of the Holder's
right to resell Underlying Shares thereunder. The provisions of Sections
5(a)(iii)(A) and (B) shall not apply to any automatic conversion pursuant to
this Section 5(a)(ii).
Exhibit 3.1
(iii) Certain Conversion Restrictions.
(A) A Holder may not convert shares of Series A Preferred Stock
or receive shares of Common Stock as payment of dividends hereunder to the
extent such conversion or receipt of such dividend payment would result in the
Holder, together with any affiliate thereof, beneficially owning (as determined
in accordance with Section 13(d) of the Exchange Act (as defined in Section
III.C.7) and the rules promulgated thereunder) in excess of 4.999% of the then
issued and outstanding shares of Common Stock, including shares issuable upon
conversion of, and payment of dividends on, the shares of Series A Preferred
Stock held by such Holder after application of this Section. Since the Holder
will not be obligated to report to the Company the number of shares of Common
Stock it may hold at the time of a conversion hereunder, unless the conversion
at issue would result in the issuance of shares of Common Stock in excess of
4.999% of the then outstanding shares of Common Stock without regard to any
other shares which may be beneficially owned by the Holder or an affiliate
thereof, the Holder shall have the authority and obligation to determine whether
the restriction contained in this Section will limit any particular conversion
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of the
shares of Series A Preferred Stock are convertible shall be the responsibility
and obligation of the Holder. If the Holder has delivered a Conversion Notice
for shares of Series A Preferred Stock that, without regard to any other shares
that the Holder or its affiliates may beneficially own, would result in the
issuance in excess of the permitted amount hereunder, the Company shall notify
the Holder of this fact and shall honor the conversion for the maximum number of
shares of Series A Preferred Stock permitted to be converted on such Conversion
Date in accordance with the periods described in Section 5(b) and, at the option
of the Holder, either retain shares of Series A Preferred Stock tendered for
conversion in excess of the permitted amount hereunder for future conversions or
return such excess shares of Series A Preferred Stock permitted to the Holder.
The provisions of this Section may be waived by a Holder (but only as to itself
and not to any other Holder) upon not less than 61 days prior notice to the
Company. Other Holders shall be unaffected by any such waiver.
(B) A Holder may not convert shares of Series A Preferred Stock
or receive shares of Common Stock as payment of dividends hereunder to the
extent such conversion or receipt of such dividend payment would result in the
Holder, together with any affiliate thereof, beneficially owning (as determined
in accordance with Section 13(d) of the Exchange Act and the rules promulgated
thereunder) in excess of 9.999% of the then issued and outstanding shares of
Common Stock, including shares issuable upon conversion of, and payment of
dividends on, the shares of Series A Preferred Stock held by such Holder after
application of this Section. Since the Holder will not be obligated to report to
the Company the number of shares of Common Stock it may hold at the time of a
conversion hereunder, unless the conversion at issue would result in the
issuance of shares of Common Stock in excess of 9.999% of the then outstanding
shares of Common Stock without regard to any other shares which may be
beneficially owned by the Holder or an affiliate thereof, the Holder shall have
the authority and obligation to determine whether the restriction contained in
this Section will limit any particular conversion hereunder and to the extent
that the Holder determines
Exhibit 3.1
that the limitation contained in this Section applies, the determination of
which portion of the shares of Series A Preferred Stock are convertible shall be
the responsibility and obligation of the Holder. If the Holder has delivered a
Conversion Notice for shares of Series A Preferred Stock that, without regard to
any other shares that the Holder or its affiliates may beneficially own, would
result in the issuance in excess of the permitted amount hereunder, the Company
shall notify the Holder of this fact and shall honor the conversion for the
maximum number of shares of Series A Preferred Stock permitted to be converted
on such Conversion Date in accordance with the periods described in Section 5(b)
and, at the option of the Holder, either retain shares of Series A Preferred
Stock tendered for conversion in excess of the permitted amount hereunder for
future conversions or return such excess shares of Series A Preferred Stock
permitted to the Holder. The provisions of this Section may be waived by a
Holder (but only as to itself and not to any other Holder) upon not less than 61
days prior notice to the Company. Other Holders shall be unaffected by any such
waiver.
(b)(i) Not later than three Trading Days after each Conversion Date, the
Corporation will deliver to the Holder (A) a certificate or certificates which
shall be free of restrictive legends and trading restrictions (other than those
required by Section 3.1(b) of the Purchase Agreement) representing the number of
shares of Common Stock being acquired upon the conversion of shares of Series A
Preferred Stock, (B) one or more certificates representing the number of shares
of Series A Preferred Stock not converted and (C) a bank check in the amount of
accrued and unpaid dividends (if the Corporation has elected or is required to
pay accrued dividends in cash). Notwithstanding the foregoing or anything to the
contrary contained herein, the Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon conversion of
any shares of Series A Preferred Stock until one Trading Day after certificates
evidencing such shares of Series A Preferred Stock are delivered for conversion
to the Company, or the Holder of such Series A Preferred Stock notifies the
Corporation that such certificates have been lost, stolen or destroyed and
provides a bond (or other adequate security) reasonably satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection therewith. The Corporation shall, upon request of the Holder, if
available, use its best efforts to deliver any certificate or certificates
required to be delivered by the Corporation under this Section electronically
through the Depository Trust Corporation or another established clearing
corporation performing similar functions. If in the case of any Conversion
Notice such certificate or certificates are not delivered to or as directed by
the applicable Holder by the third Trading Day after the Conversion Date, the
Holder shall be entitled to elect by written notice to the Corporation at any
time on or before its receipt of such certificate or certificates thereafter, to
rescind such conversion, in which event the Corporation shall immediately return
the certificates representing the shares of Series A Preferred Stock tendered
for conversion.
(ii) If the Corporation fails to deliver to the Holder such
certificate or certificates pursuant to Section III.C.5(b)(i), by the third
Trading Day after the Conversion Date, the Corporation shall pay to such Holder,
in cash, as liquidated damages and not as a penalty, $5,000 for each Trading Day
after such third Trading Day until such certificates are delivered. Nothing
herein shall limit a Holder's right to pursue actual damages for the
Corporation's failure to deliver certificates
Exhibit 3.1
representing shares of Common Stock upon conversion within the period specified
herein and such Holder shall have the right to pursue all remedies available to
it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.
(iii) In addition to any other rights available to the Holder, if
the Corporation fails to deliver to the Holder such certificate or certificates
pursuant to Section III.C.5(b)(i), by the third Trading Day after the Conversion
Date, and if after such third Trading Day the Holder purchases (in an open
market transaction or otherwise) Common Stock to deliver in satisfaction of a
sale by such Holder of the Underlying Shares which the Holder was entitled to
receive upon such conversion (a "Buy-In"), then the Corporation shall (A) pay in
cash to the Holder the amount by which (x) the Holder's total purchase price
(including brokerage commissions, if any) for the Common Stock so purchased
exceeds (y) the product of (1) the aggregate number of shares of Common Stock
that such Holder was entitled to receive from the conversion at issue multiplied
by (2) the market price of the Common Stock at the time of the sale giving rise
to such purchase obligation and (B) at the option of the Holder, either return
the shares of Series A Preferred Stock for which such conversion was not honored
or deliver to such Holder the number of shares of Common Stock that would have
been issued had the Corporation timely complied with its conversion and delivery
obligations under Section III.C.5(b)(i). For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted conversion of shares of Series A Preferred Stock with
respect to which the aggregate market price of the Underlying Shares on the date
of conversion totaled $10,000, under clause (A) of the immediately preceding
sentence the Corporation shall be required to pay the Holder $1,000. The Holder
shall provide the Corporation written notice indicating the amounts payable to
the Holder in respect of the Buy-In. Nothing herein shall limit a Holder's right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Corporation's failure to timely deliver
certificates representing shares of Common Stock upon conversion of the shares
of Series A Preferred Stock as required pursuant to the terms hereof.
(c)(i) The conversion price (the "Conversion Price") for each share of
Series A Preferred Stock in effect on any Conversion Date be the lesser of (1)
$1.32 (the "Fixed Conversion Price") and (2) 80% of the average of the five
lowest consecutive Per Share Market Values during the twenty- five Trading Days
preceding the applicable Conversion Date (which may include Trading Days prior
to the Original Issue Date), provided, that such twenty-five Trading Day period
shall be extended for the number of Trading Days during such period in which (A)
trading in the Common Stock is suspended by the NASDAQ or a Subsequent Market on
which the Common Stock is then listed, or (B) after the date declared effective
by the Commission, the Underlying Shares Registration Statement is either not
effective, or the Prospectus included in the Underlying Shares Registration
Statement may not be used by the Holder for the resale of Underlying Shares.
(ii) If the Corporation, at any time while any shares of Series A
Preferred Stock are outstanding, shall (a) pay a stock dividend or otherwise
make a distribution or distributions on shares of its Junior Securities or pari
passu securities payable in shares of Common Stock, (b) subdivide outstanding
shares of Common Stock into a larger number of shares, (c) combine
Exhibit 3.1
outstanding shares of Common Stock into a smaller number of shares, or (d) issue
by reclassification and exchange of the Common Stock any shares of capital stock
of the Corporation, then the Fixed Conversion Price shall be multiplied by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding before such event, and the denominator of which shall be the number
of shares of Common Stock outstanding after such event. Any adjustment made
pursuant to this Section III.C.5(c)(ii) shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
(iii) If the Corporation, at any time while any shares of
Preferred Stock are outstanding, shall issue rights, warrants or options to all
holders of Common Stock entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the Per Share Market Value at the
record date mentioned below, then the Conversion Price shall be multiplied by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to the issuance of such rights, warrants or
options, plus the number of shares of Common Stock which the aggregate offering
price of the total number of shares so offered would purchase at such Per Share
Market Value, and the denominator of which shall be the sum of the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of Common Stock offered for subscription or purchase. Such
adjustment shall be made whenever such rights or warrants are issued, and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. However, upon the
expiration of any right, warrant or option to purchase shares of Common Stock,
the issuance of which resulted in an adjustment in the Conversion Price pursuant
to this Section III.C.5(c)(iii), if any such right, warrant or option shall
expire and shall not have been exercised, then the Conversion Price, effective
immediately upon such expiration shall be increased to the price which it would
have been (but reflecting any other adjustments in the Conversion Price made
pursuant to the provisions of this Section III.C.5 upon the issuance of other
rights or warrants) had the adjustment of the Conversion Price made upon the
issuance of such rights, warrants, or options been made on the basis of offering
for subscription or purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights, warrants or options actually
exercised.
(iv) If the Corporation or any subsidiary thereof, as applicable
with respect to Common Stock Equivalents (as defined below), at any time while
any shares of Series A Preferred Stock are outstanding, shall issue shares of
Common Stock or rights, warrants, options or other securities or debt that is
convertible into or exchangeable for shares of Common Stock ("Common Stock
Equivalents"), entitling any Person to acquire shares of Common Stock at a price
per share less than the Conversion Price (if the holder of the Common Stock or
Common Stock Equivalent so issued shall at any time, whether by operation of
purchase price adjustments, reset provisions, floating conversion, exercise or
exchange prices or otherwise, or due to warrants, options or rights issued in
connection with such issuance, be entitled to receive shares of Common Stock at
a price less than the Conversion Price, such issuance shall be deemed to have
occurred for less than the Conversion Price), then the Conversion Price shall be
multiplied by a fraction, the numerator of
Exhibit 3.1
which shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such Common Stock or such Common Stock Equivalents plus
the number of shares of Common Stock which the offering price for such shares of
Common Stock or Common Stock Equivalents would purchase at the Conversion Price,
and the denominator of which shall be the sum of the number of shares of Common
Stock outstanding immediately prior to such issuance plus the number of shares
of Common Stock so issued or issuable, provided, that (i) for purposes hereof,
all shares of Common Stock that are issuable upon conversion, exercise or
exchange of Common Stock Equivalents shall be deemed outstanding immediately
after the issuance of such Common Stock Equivalents and (ii) no adjustment shall
be made pursuant to this Section III.C.5(c) as a result of the issuance of
shares of Common Stock (and options, warrants or other rights associated
therewith) pursuant to (A) employee benefit plans maintained by the Company or
adopted subsequent to the Original Issue Date, (B) an acquisition agreement
executed by and between the Company and Intelligent Enclosures Corporation, (C)
senior credit debt financing arrangements between the Company and existing or
prospective institutional lenders whose primary business is the lending of
money, or (D) equipment leasing transactions between the Company and existing or
prospective equipment lessors. Such adjustment shall be made whenever such
Common Stock or Common Stock Equivalents are issued. However, upon the
expiration of any Common Stock Equivalents the issuance of which resulted in an
adjustment in the Conversion Price pursuant to this Section, if any such Common
Stock Equivalents shall expire and shall not have been exercised, the Conversion
Price shall, effective immediately upon such expiration, be increased to the
price which it would have been (but reflecting any other adjustments in the
Conversion Price made pursuant to the provisions of this Section after the
issuance of such Common Stock Equivalents) had the adjustment of the Conversion
Price made upon the issuance of such Common Stock Equivalents been made on the
basis of offering for subscription or purchase only that number of shares of the
Common Stock actually purchased upon the exercise of such Common Stock
Equivalents actually exercised.
(v) If the Corporation, at any time while shares of Series A
Preferred Stock are outstanding, shall distribute to all holders of Common Stock
(and not to Holders) evidences of its indebtedness or assets or rights or
warrants to subscribe for or purchase any security (excluding those referred to
in Sections III.C.5(c)(ii)-(iv) above), then in each such case the Conversion
Price at which each share of Series A Preferred Stock shall thereafter be
convertible shall be determined by multiplying the Conversion Price in effect
immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction, the denominator of which
shall be the Per Share Market Value determined as of the record date mentioned
above, and the numerator of which shall be such Per Share Market Value on such
record date less the then fair market value at such record date of the portion
of such assets or evidence of indebtedness so distributed applicable to one
outstanding share of Common Stock as determined by the Board of Directors in
good faith. In either case the adjustments shall be described in a statement
provided to the Holders of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.
Exhibit 3.1
(vi) All calculations under this Section III.C.5 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may be. The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Corporation, and the
disposition of any such shares shall be considered an issue or sale of Common
Stock.
(vii) Whenever the Fixed Conversion Price or the Conversion Price
is adjusted pursuant to Section III.C.5(c)(ii), (iii), (iv) or (v) the
Corporation shall promptly mail to each Holder, a notice setting forth the
Conversion Price or Fixed Conversion Price (as applicable) after such adjustment
and setting forth a brief statement of the facts requiring such adjustment.
(viii) In case of any reclassification of the Common Stock, or
any compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property (other than compulsory share exchanges
which constitute Change of Control Transactions), the Holders of the Series A
Preferred Stock then outstanding shall have the right thereafter to convert such
shares only into the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
reclassification or share exchange, and the Holders of the Preferred Stock shall
be entitled upon such event to receive such amount of securities, cash or
property as a holder of the number of shares of Common Stock of the Corporation
into which such shares of Series A Preferred Stock could have been converted
immediately prior to such reclassification or share exchange would have been
entitled. This provision shall similarly apply to successive reclassifications
or share exchanges.
(ix) In case of any merger or consolidation of the Corporation
with or into another Person, or sale by the Corporation of more than one-half of
the assets of the Corporation in one or a series of related transactions, a
Holder shall have the right thereafter to (A) convert its shares of Series A
Preferred Stock into the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and such Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and
property as the shares of Common Stock into which such shares of Series A
Preferred Stock could have been converted immediately prior to such merger,
consolidation or sales would have been entitled or (B) in the case of a merger
or consolidation, (x) require the surviving entity to issue shares of
convertible preferred stock or convertible debentures with such aggregate stated
value or in such face amount, as the case may be, equal to the Stated Value of
the shares of Series A Preferred Stock then held by such Holder, plus all
accrued and unpaid dividends and other amounts owing thereon, which newly issued
shares of preferred stock or debentures shall have terms identical (including
with respect to conversion) to the terms of the Series A Preferred Stock
(except, in the case of debentures, as may be required to reflect the
differences between debt and equity) and shall be entitled to all of the rights
and privileges of a Holder of Series A Preferred Stock set forth herein and the
agreements pursuant to which the Preferred Stock was issued (including, without
limitation, as such rights relate to the acquisition, transferability,
registration and listing of such shares of stock other securities issuable upon
conversion thereof), and (y) simultaneously with the issuance of such
convertible preferred stock or convertible debentures, shall
Exhibit 3.1
have the right to convert such instrument only into shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
Common Stock following such merger or consolidation. In the case of clause (B),
the conversion price applicable for the newly issued shares of convertible
preferred stock or convertible debentures shall be based upon the amount of
securities, cash and property that each share of Common Stock would receive in
such transaction, the Conversion Ratio immediately prior to the effectiveness or
closing date for such transaction and the Conversion Price stated herein. The
terms of any such merger, sale or consolidation shall include such terms so as
to continue to give the Holders of Series A Preferred Stock the right to receive
the securities, cash and property set forth in this Section III.C.5(c)(ix) upon
any conversion or redemption following such event. This provision shall
similarly apply to successive such events. The rights set forth in this Section
III.C.5.(c)(ix) shall not alter the rights of a Holder set forth in Section
III.C.7, provided, that, a Holder may only exercise the rights set forth in this
Section III.C.5(c)(ix) or the rights set forth in Section III.C.7 with respect
to a single event giving rise to such rights.
(x) If (a) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock, (b) the Corporation shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock, (c) the
Corporation shall authorize the granting to all holders of Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights, (d) the approval of any stockholders of the Corporation
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Corporation is a party, any sale or
transfer of all or substantially all of the assets of the Corporation, of any
compulsory share of exchange whereby the Common Stock is converted into other
securities, cash or property, or (e) the Corporation shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Corporation; then the Corporation shall notify the Holders at their last
addresses as they shall appear upon the stock books of the Corporation, at least
20 calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, 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, distributions, redemption, rights or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, 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
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange. Holders are entitled to
convert shares of Series A Preferred Stock during the 20-day period commencing
the date of such notice to the effective date of the event triggering such
notice.
(d) The Corporation covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of Common Stock solely for
the purpose of issuance upon conversion of Series A Preferred Stock, each as
herein provided, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holders, not less than such number of
shares of Common Stock as shall be issuable (taking into account the provisions
of Section
Exhibit 3.1
III.C.5(a) and Section III.C.5(c)) upon the conversion of all outstanding shares
of Series A Preferred Stock. The Corporation covenants that all shares of Common
Stock that shall be so issuable shall, upon issue, be duly and validly
authorized and issued and fully paid and nonassessable.
(e) Upon a conversion hereunder the Corporation shall not be required to
issue stock certificates representing fractions of shares of Common Stock, but
may if otherwise permitted, make a cash payment in respect of any final fraction
of a share based on the Per Share Market Value at such time. If any fraction of
an Underlying Share would, except for the provisions of this Section III.C.5(e),
be issuable upon a conversion hereunder, the Corporation shall pay an amount in
cash equal to the Conversion Ratio multiplied by such fraction.
(f) The issuance of certificates for Common Stock on conversion of
Series A Preferred Stock shall be made without charge to the Holders thereof for
any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificate, provided that the Corporation shall not
be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in
a name other than that of the Holder of such shares of Series A Preferred Stock
so converted.
(g) Shares of Series A Preferred Stock converted into Common Stock or
redeemed in accordance with the terms hereof shall be canceled and may not be
reissued.
(h) Any and all notices or other communications or deliveries to be
provided by the Holders of the Series A Preferred Stock hereunder, including,
without limitation, any Conversion Notice, shall be in writing and delivered
personally, by facsimile or sent by a nationally recognized overnight courier
service, addressed to the attention of the Chief Executive Officer of the
Corporation addressed to 2700 South 900 West, Salt Lake City, Utah 84119 or to
facsimile number (801) 973-6640, or to such other address or facsimile number as
shall be specified in writing by the Corporation for such purpose. Any and all
notices or other communications or deliveries to be provided by the Corporation
hereunder shall be in writing and delivered personally, by facsimile or sent by
a nationally recognized overnight courier service, addressed to each Holder at
the facsimile telephone number or address of such Holder appearing on the books
of the Corporation, or if no such facsimile telephone number or address appears,
at the principal place of business of the Holder. Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:30 p.m. (New York City time)(with confirmation of
transmission), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section at or later than 6:30 p.m. (New York City time) on any
date and earlier than 11:59 p.m. (New York City time) on such date (with
confirmation of transmission), (iii) upon receipt, if sent by a nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given.
Section 6. Redemption Upon Triggering Events.
Exhibit 3.1
(a) Upon the occurrence of a Triggering Event, each Holder shall (in
addition to all other rights it may have hereunder or under applicable law),
have the right, exercisable at the sole option of such Holder, to require the
Corporation to redeem all or a portion of the Series A Preferred Stock then held
by such Holder for a redemption price, in cash, equal to the sum of (i) the
Mandatory Redemption Amount multiplied by the number of shares of Series A
Preferred Stock subject to such redemption plus (ii) the product of (A) the
number of Underlying Shares issued in respect of conversions hereunder and then
held by the Holder and (B) the Per Share Market Value on the date such
redemption is demanded or the date the redemption price hereunder is paid in
full, whichever is greater (such sum, the "Redemption Price"). The Redemption
Price shall be due and payable within five Trading Days of the date on which the
demand therefor is provided by a Holder. If the Corporation fails to pay the
Redemption Price hereunder in full pursuant to this Section III.C.6(a) on the
date such amount is due in accordance with this Section III.C.6(a), the
Corporation will pay interest thereon at a rate of 18% per annum (or the lesser
amount permitted by applicable law), accruing daily from such date until the
Redemption Price, plus all such interest thereon, is paid in full. For purposes
of this Section III.C.6(a), a share of Series A Preferred Stock is outstanding
until such date as the Holder shall have received Underlying Shares upon a
conversion (or attempted conversion) thereof that meets the requirements hereof.
A "Triggering Event" means any one or more of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):
(i) the failure of an Underlying Shares Registration
Statement to be declared effective by the Commission on or prior to the 180th
day after the Original Issue Date;
(ii) if, during the Effectiveness Period, the
effectiveness of the Underlying Shares Registration Statement lapses for any
reason for more than an aggregate of ten Trading Days (which need not be
consecutive Trading Days), or the Holder shall not be permitted to resell
Registrable Securities under the Underlying Shares Registration Statement for
more than an aggregate of ten Trading Days (which need not be consecutive
Trading Days);
(iii) the failure of the Common Stock to be listed for
trading on the NASDAQ or on a Subsequent Market or the suspension of the Common
Stock from trading on the NASDAQ or on a Subsequent Market, in either case, for
more than twenty Trading Days (which need not be consecutive Trading Days);
(iv) the Corporation shall fail for any reason to deliver
certificates representing Underlying Shares issuable upon a conversion hereunder
that comply with the provisions hereof prior to the tenth day after the
Conversion Date or the Corporation shall provide notice to any Holder, including
by way of public announcement, at any time, of its intention not to comply with
requests for conversion of any shares of Series A Preferred Stock in accordance
with the terms hereof;
Exhibit 3.1
(v) the Corporation shall be a party to any Change of
Control Transaction, or shall redeem more than a de minimis number of Common
Stock or other Junior Securities (other than redemptions of Underlying Shares);
(vi) an Event (as defined in the Registration Rights
Agreement) shall not have been cured to the satisfaction of the Holders prior to
the expiration of 60 days from the Event Date (as defined in the Registration
Rights Agreement) relating thereto (other than an Event resulting from a failure
of an Underlying Shares Registration Statement to be declared effective by the
Commission on or prior to the 180th day after the Original Issue Date, which
shall be covered by Section III.C.6.(a)(i));
(vii) the Corporation shall fail for any reason to pay in
full the amount of cash due pursuant to a Buy-In within seven days after notice
therefor is delivered hereunder or shall fail to pay all amounts owed on account
of an Event within seven days of the date due;
(viii) the Corporation shall fail to have available a
sufficient number of authorized and unreserved shares of Common Stock to issue
to such Holder upon a conversion hereunder; or
(ix) the Corporation shall fail to observe or perform any
other material covenant, agreement or warranty contained in, or otherwise commit
any breach of the Transaction Documents (as defined in Section III.C.7), and
such failure or breach shall not, if subject to the possibility of a cure by the
Corporation, have been remedied within twenty Business Days after the date on
which written notice of such failure or breach shall have been given.
Section 7. Definitions. For the purposes hereof, the following
terms shall have the following meanings:
"Change of Control Transaction" means the occurrence of any of
(i) an acquisition after the date hereof by an individual or legal entity or
"group" (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital
stock of the Corporation, by contract or otherwise) of in excess of 33% of the
voting securities of the Corporation, (ii) a replacement at one time or over
time of more than one-half of the members of the Corporation's board of
directors which is not approved by a majority of those individuals who are
members of the board of directors on the date hereof (or by those individuals
who are serving as members of the board of directors on any date whose
nomination to the board of directors was approved by a majority of the members
of the board of directors who are members on the date hereof), (iii) the merger
of the Corporation with or into another entity that is not wholly- owned by the
Corporation, consolidation or sale of 50% or more of the assets of the
Corporation in one or a series of related transactions, or (iv) the execution by
the Corporation of an agreement to which the Corporation is a party or by which
it is bound, providing for any of the events set forth above in (i), (ii) or
(iii).
Exhibit 3.1
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Corporation's common stock, par value
$.01 per share, and stock of any other class into which such shares may
hereafter have been reclassified or changed.
"Conversion Ratio" means, at any time, a fraction, the numerator
of which is the Stated Value, and the denominator of which is the Conversion
Price at such time.
"Dividend Effectiveness Date" means the earlier to occur of (x)
the Effectiveness Date (as defined in the Registration Rights Agreement) and (y)
the date that an Underlying Shares Registration Statement is declared effective
by the Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Junior Securities" means the Common Stock and all other equity
securities of the Corporation other than the Series A Preferred Stock and those
securities that are outstanding on the Original Issue Date and which are
explicitly senior in rights or liquidation preference to the Series A Preferred
Stock.
"Mandatory Redemption Amount" for each share of Series A
Preferred Stock means the sum of (i) the greater of (A) 120% of the Stated
Value, and (B) the product of (a) the Per Share Market Value on the Trading Day
immediately preceding (x) the date of the Triggering Event or the Conversion
Date, as the case may be, or (y) the date of payment in full by the Corporation
of the applicable redemption price, whichever is greater, and (b) the Conversion
Ratio calculated on the date of the Triggering Event, or the Conversion Date, as
the case may be, and (ii) all other amounts, costs, expenses and liquidated
damages due in respect of such share of Series A Preferred Stock.
"Original Issue Date" shall mean the date of the first issuance
of any shares of the Series A Preferred Stock regardless of the number of
transfers of any particular shares of Series A Preferred Stock and regardless of
the number of certificates which may be issued to evidence such Series A
Preferred Stock.
"Per Share Market Value" means on any particular date (a) the
closing bid price per share of Common Stock on such date on the NASDAQ or on the
Subsequent Market on which the Common Stock is then listed or quoted, or if
there is no such price on such date, then the closing bid price on the NASDAQ or
on such Subsequent Market on the date nearest preceding such date, or (b) if the
Common Stock is not then listed or quoted on the NASDAQ or on a Subsequent
Market, the closing bid price for a shares of Common Stock in the
over-the-counter market, as reported by the National Quotation Bureau
Incorporated or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the National Quotation Bureau Incorporated (or
similar organization or agency succeeding to its functions of reporting prices),
then the average of the "Pink Sheet" quotes for the relevant conversion period,
as determined in good faith by the Holder, or (d) if the Common Stock
Exhibit 3.1
is not then publicly traded, the fair market value of a share of Common Stock as
determined by an appraiser selected in good faith by the Holders of a majority
of the shares of the Series A Preferred Stock.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
"Purchase Agreement" means the Convertible Preferred Stock
Purchase Agreement, dated as of the Original Issue Date, to which the
Corporation and the original Holder are parties, as amended, modified or
supplemented from time to time in accordance with its terms, pursuant to which
the original Holder acquired the Series A Preferred Stock.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Original Issue Date, to which the Corporation and the
original Holder are parties, as amended, modified or supplemented from time to
time in accordance with its terms.
"Securities Act" means the Securities Act of 1933, as amended.
"Trading Day" means (a) a day on which the Common Stock is traded
on the NASDAQ or on the Subsequent Market on which the Common Stock is then
listed or quoted, as the case may be, or (b) if the Common Stock is not listed
on the NASDAQ or on a Subsequent Market, a day on which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or
(c) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which
the Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in (a), (b) and
(c) hereof, then Trading Day shall mean any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.
"Transaction Documents" shall have the meaning set forth in the
Purchase Agreement.
"Underlying Shares" means, collectively, the shares of Common
Stock into which the shares of Series A Preferred Stock are convertible in
accordance with the terms hereof.
"Underlying Shares Registration Statement" means a registration
statement that meets the requirements of the Registration Rights Agreement and
registers the resale of all Underlying Shares by the Holder, who shall be named
as a "selling stockholder" thereunder.
[The remainder of this page is intentionally left blank]
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert shares of Series A Preferred Stock)
The undersigned hereby elects to convert the number of shares of 3% Series A
Convertible Preferred Stock indicated below, into shares of common stock, par
value $.01 per share (the "Common Stock"), of Daw Technologies, Inc., a Utah
corporation (the "Corporation"), according to the conditions hereof, as of the
date written below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Corporation in accordance therewith. No fee will be
charged to the Holder for any conversion, except for such transfer taxes, if
any.
[Enlarge/Download Table]
Conversion calculations:
------------------------------------------------------------------
Date to Effect Conversion
------------------------------------------------------------------
Number of shares of Series A Preferred Stock to be Converted
------------------------------------------------------------------
Stated Value of shares of Series A Preferred Stock to be Converted
------------------------------------------------------------------
Number of shares of Common Stock to be Issued
------------------------------------------------------------------
Applicable Conversion Price
------------------------------------------------------------------
Signature
------------------------------------------------------------------
Name
------------------------------------------------------------------
Address
↑Top
Filing Submission 0000950149-00-001274 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Sun., May 5, 5:53:44.1am ET 