1
EPL Technologies, Inc.
Exhibit 3.1
Amended and Restated Articles of Incorporation of
EPL Technologies, Inc., as amended to date
2
Exhibit 3.1
FOR OFFICE USE ONLY
MAIL TO: SECRETARY OF STATE
CORPORATIONS SECTION
1560 BROADWAY, SUITE 200
DENVER, CO 80202
(303) 894-2251
(303) 894-2242
MUST BE TYPED
FILING FEE: $25.00
MUST SUBMIT TWO COPIES
ARTICLES OF AMENDMENT
PLEASE INCLUDE A TYPED TO THE
SELF-ADDRESSED ENVELOPE ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is EPL Technologies, Inc.
----------------------------------------
SECOND: the following amendment to the Articles of Incorporation was adopted on
July 21, 1997, as prescribed by the Colorado Business Corporation Act,
- - -------------
in the manner marked with an X below:
No shares have been issued or Directors Elected - Action by Incorporators
- - ---
No shares have been issued but Directors Elected - Action by Directors
- - ---
Such amendment was adopted by the board of directors where shares have been
- - --- issued.
X Such amendment was adopted by a vote of the shareholders. The number of
- - --- shares voted for the amendment was sufficient for approval.
See Exhibit A
THIRD: The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the amendment
shall be effected, is as follows:
If these amendments are to have a delayed effective date, please list that date: n/a
(Not to exceed ninety (90) days from the date of filing) ----------------------------
----------------------------
By /s/ Timothy B. Owen
----------------------------
Its Secretary and Treasurer
----------------------------
(Title)
3
EXHIBIT A
RESOLVED, that Paragraph A. of Article V of the Articles of Incorporation of the
Company be amended and restated to read in its entirety as follows:
The Corporation shall have the authority to issue fifty million
(50,000,000) shares of common stock with a par value $0.001 per share,
three million two hundred fifty thousand (3,250,000) shares of Series A
10% Cumulative Convertible Preferred Stock with a par value of $1.00
per share ("Series A Preferred Stock"), 531,915 shares of Series B 10%
Cumulative Convertible Preferred Stock with a par value of $0.01 per
share ("Series B Preferred Stock"), 144,444 shares of Series C
Convertible Preferred Stock with a par value of $0.01 per share
("Series C Preferred Stock") and three million, three hundred
twenty-three thousand, six hundred forty-one (3,323,641) shares of
preferred stock with a par value of $0.01 per share ("Board Designated
Preferred Stock"). The Board of Directors of the Corporation may
determine, in whole or in part, the preferences, limitations, and
relative rights of the Board Designated Preferred Stock, within the
limits set forth in Section 7-106-101 of the Colorado Business
Corporation Act, of any class of the Board Designated Preferred Stock,
before the issuance of any shares of that class, or one or more series
within a class of the Board Designated Preferred Stock before the
issuance of any shares of that series. The Board of Directors may
issue, in one or more classes or series, shares of the Board Designated
Preferred Stock with full, limited, multiple, fractional or no voting
rights, and with such designations, preferences, qualifications,
privileges, limitations, restrictions, options, conversion rights, or
other special or relative rights as shall be fixed from time to time by
the Board of Directors, except for and subject to, in each case, the
limits set forth in Section 7-106-101 of the Colorado Business
Corporation Act and in accordance with the provisions and requirements
of Section 7-106-102 of the Colorado Business Corporation Act.
4
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
EPL TECHNOLOGIES, INC.
Pursuant to the provisions of the Colorado Business Corporation Act,
the undersigned corporation (the "Corporation") adopts the following Amended
and Restated Articles of Incorporation. The Corporation certifies as follows:
FIRST: The name of the Corporation is EPL Technologies, Inc.
SECOND: Paragraph A of Article V of the Articles of Incorporation has been
amended to read as it appears below. The amendment was adopted on
July 22, 1996 by a vote of the shareholders. The number of shares
voted for the amendment was sufficient for approval.
THIRD: The following restatement of the Articles of Incorporation was adopted
on July 22, 1996 by the Board of Directors of the Corporation without
shareholder action, as shareholder action was not required for such
restatement.
FOURTH: The following articles correctly set forth the provisions of the
Articles of Incorporation, as amended, and supersede the original
Articles of Incorporation and all amendments thereto:
ARTICLE I
The name of the Corporation is EPL Technologies, Inc.
ARTICLE II
The period of duration of the Corporation shall be perpetual.
ARTICLE III
The purposes for which the Corporation is organized are: The
transaction of all lawful business for which corporations may be incorporated
pursuant to the laws of the State of Colorado, whether acting singly or in
conjunction with any other person or entity.
ARTICLE IV
In furtherance of the purposes set forth in Article III of these
Articles of Incorporation, the Corporation shall have and may exercise all of
the rights, powers, and privileges now or hereafter conferred upon corporations
organized under and pursuant to the laws of the State of Colorado.
5
ARTICLE V
A. Authorized Shares. The Corporation shall have the authority to issue
fifty million (50,000,000) shares of common stock with a par value $0.001 per
share, three million two hundred fifty thousand (3,250,000) shares of Series A
10% Cumulative Convertible Preferred Stock with a par value of $1.00 per share
("Series A Preferred Stock") and two million (2,000,000) shares of preferred
stock with a par value of $.01 per share ("Board Designated Preferred Stock").
The Board of Directors of the Corporation may determine, in whole or in part,
the preferences, limitations, and relative rights of the Board Designated
Preferred Stock, within the limits set forth in Section 7-106-101 of the
Colorado Business Corporation Act, of any class of the Board Designated
Preferred Stock, before the issuance of any shares of that class, or one or
more series within a class of the Board Designated Preferred Stock before the
issuance of any shares of that series. The Board of Directors may issue, in one
or more classes or series, shares of the Board Designated Preferred Stock with
full, limited, multiple, fractional or no voting rights, and with such
designations, preferences, qualifications, privileges, limitations,
restrictions, options, conversion rights, or other special or relative rights
as shall be fixed from time to time by the Board of Directors, except for and
subject to, in each case, the limits set forth in Section 7-106-101 of the
Colorado Business Corporation Act and in accordance with the provisions and
requirements of Section 7-106-102 of the Colorado Business Corporation Act.
B. Transfer Restrictions. The Corporation shall have the right, by
appropriate action, to impose restrictions upon the transfer of any shares of
its stock or any interest therein, from time to time provided that any
restrictions imposed, or notice of the substance thereof, shall be set forth
upon the face or back of the Certificates representing the Corporation's shares
of stock.
C. Preemptive Rights. The holders of the shares of the common stock of
the Corporation shall not be entitled, as of right, to purchase or subscribe
for any unissued or treasury stock of any class, or any additional stock of any
class to be issued by reason of any increase of the authorized shares of the
Corporation of any class, or any bonds, certificates of indebtedness,
debenture, or other securities, rights, warrants or options convertible into
shares of the Corporation or carrying any right to purchase shares of any class
in accordance with their proportionate equity in the Corporation.
D. Cumulative Voting. The cumulative system of voting for Directors or
for any other purpose shall not be allowed.
E. Series A Preferred Stock. The terms, preferences and relative,
participating, optional or other special rights of the Series A Preferred Stock
and the limitations and restrictions thereof are as follows:
Dividend Rights. Holders of the Series A Preferred Stock are entitled to
dividends at the rate of 10% per annum of the par value of the stock. At
the option of the Corporation, these dividends may be paid either in
cash or in common stock. If the dividends are paid in common stock, the
common stock will be valued at the conversion price, which is $0.75 per
share (subject to adjustment for stock splits, stock dividends, the
effect of mergers and the like). If the dividends are not paid, the
right to receive unpaid dividends will accumulate, but without interest.
No dividends may be paid on
6
the common stock at a time when payment of dividends on the Series A
Preferred Stock is in arrears.
Terms of Conversion. Each share of Series A Preferred Stock may be
converted into that number of full shares of common stock of the
Corporation determined by dividing $1.00 by the Conversion Price of $0.75
per share (subject to adjustment for stock splits, stock dividends, the
effect of mergers and the like). Conversion may be elected by the holder of
the Series A Preferred Stock at any time prior to payment of a distribution
in liquidation with respect to the Series A Preferred Stock. Payment in
cash will be made in lieu of issuance of fractional shares.
Voting Rights. Each holder of Series A Preferred Stock is entitled to the
number of votes equal to the number of whole shares of common stock into
which the shares of Series A Preferred Stock are convertible. Except when
voting by class or series is required by law or the Articles of
Incorporation, holders of the Series A Preferred Stock shall vote together
with the holders of the common stock as a single class.
Liquidation Rights. In the event of a liquidation, dissolution or winding
up of the Corporation, the holders of shares of Series A Preferred Stock
are entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders $1.00 per share (subject to adjustment for
stock splits, stock dividends, the effect of mergers and the like affecting
the Series A Preferred Stock). This payment shall be made in full by the
Corporation prior to any payment being made to the holders of the common
stock.
No Other Rights. The Series A Preferred Stock will not have the benefit of
any sinking fund provisions, any redemption provisions, any preemptive
rights to subscribe to any additional shares of any class or series of the
Corporation's stock, or any liability to further calls or assessments. The
Series A Preferred Stock will not have any right to elect a separate class
of Directors of the Corporation. There is no restriction on the repurchase
or redemption of any shares of the Corporation while there is any arrearage
in the payment of dividends on the Series A Preferred Stock.
F. Indemnification. The Corporation shall, to the fullest extent permitted
by law, indemnify Incorporators, Directors, Officers, employees, fiduciaries,
agents, consultants or other parties whom it shall have power to indemnify from
and against any expenses (including attorney's fees), liabilities, claims or
other matters arising by reason of the person's relationship with the
Corporation. The Corporation may obtain and pay for insurance for that purpose.
The indemnification provided for herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under these Articles or
any Bylaw, agreement, vote of shareholders, or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office. This indemnification shall continue as to a person who has terminated
his position for actions occurring during the period of his relationship with
the Corporation, and shall inure to the benefit of the heirs, executors,
personal representatives, and administrators of such a person.
7
ARTICLE VI
The Board of Directors of the Corporation shall consist of not less
than three (3) nor more then seven (7) directors, as set forth in the Bylaws
of the Corporation, who need not be shareholders of the Corporation or
residents of the State of Colorado.
ARTICLE VII
No contract or other transaction between the Corporation and one or
more of its Directors, Officers, agents or employees or any other corporation,
firm, association or entity in which one or more of its Directors, Officers,
agents or employees are directors or officers or are financially interested in
shall be either void or voidable because of such relationship or interest, or
because such Directors or Officers are present at a meeting of the Board of
Directors or a Committee thereof which authorizes, approves or ratifies such
contract or transaction, or because their votes were counted for such purpose
if:
A. The fact of such relationship or interest is disclosed or known
to the Board of Directors or Committee which authorizes, approves or ratifies
the contract or transaction by a majority vote of uninterested directors; or
B. The fact of such relationship or interest is disclosed or known
to the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
C. The contract or transaction is fair and reasonable to the
Corporation.
Interested Directors or Officers may be counted in determining
the presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
ARTICLE VIII
In addition to the other powers now or hereafter conferred upon the
Board of Directors by these Articles of Incorporation, the Bylaws of the
Corporation, or by the law of Colorado, the Board of Directors may from time to
time distribute to the shareholders in partial liquidation, out of the stated
capital or the capital surplus of the Corporation, a portion of the corporate
assets, in cash or in kind; subject, however, to the limitations contained in
the Colorado Business Corporation Act.
ARTICLE IX
With respect to any action to be taken by shareholders of this
Corporation, a vote or concurrence of the holders of a majority of the
outstanding shares present or represented at a meeting and entitled to vote
thereon shall be required.
8
ARTICLE X
The address of the Registered Office of the Corporation is 1675
Broadway, Denver, Colorado 80202. The name of the Registered Agent of the
Corporation at such address is The Corporation Company.
ARTICLE XI
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in, or to add any provisions to, its Articles of
Incorporation from time to time, in any manner permitted by law.
EPL TECHNOLOGIES, INC.
By:
---------------------------------
Name: Shawn J. Collins
Title: Secretary
9
-------------------
FOR OFFICE USE ONLY
MAIL TO: SECRETARY OF STATE
CORPORATIONS SECTION
1560 BROADWAY, SUITE 200
DENVER, CO 80202
(303) 894-2251
FAX (303) 894-2242
MUST BE TYPED -------------------
FILING FEE: $25.00
MUST SUBMIT TWO COPIES
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
PLEASE INCLUDE A TYPED
SELF-ADDRESSED ENVELOPE
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is EPL Technologies, Inc.
SECOND: The following amendment to the Articles of Incorporation was adopted on
July 22, 1996, as prescribed by the Colorado Business Corporation Act, in the
manner marked with an X below:
/ / No shares have been issued or Directors Elected - Action by
Incorporators
/ / No shares have been issued but Directors Elected - Action by Directors
/X/ Such amendment was adopted by the board of directors where shares have
been issued.
/ / Such amendment was adopted by a vote of the shareholders. The number of
shares voted for the amendment was sufficient for approval.
THIRD: The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows: See amendment attached.
If these amendments are to have a delayed effective date, please list that date:
N/A
- - --------------------------------------------------------
(Not to exceed ninety (90) days from the date of filing)
EPL Technologies, Inc.
By /s/ SHAWN J. COLLINS
----------------------------
Its Secretary
------------------------
Title
10
Certificate of Designation, Number, Voting Powers,
Preferences and Rights of the Series of the Preferred Stock
of
EPL TECHNOLOGIES, INC.
To be Designated
Series B Convertible Preferred Stock
EPL Technologies, Inc., a Colorado corporation (the "Corporation"),
pursuant to authority conferred on the Board of Directors of the Corporation by
its Articles of Incorporation, and in accordance with the provisions of Section
7-108-101 of the Colorado Business Corporation Act ("CBCA"), certifies that the
Board of Directors of the Corporation, at a meeting duly called and held
pursuant to Section 7-108-201 of the CBCA, duly adopted the following
resolution providing for the establishment and issuance of a series of
Preferred Stock to be designated "Series B Convertible Preferred Stock" and to
consist of 531,915 shares as follows:
RESOLVED, that, pursuant to the authority expressly granted and vested
in the Board of Directors of this Corporation in accordance with the provisions
of its Amended and Restated Certificate of Incorporation, as amended, a series
of Preferred Stock of the Corporation be and hereby is established, consisting
of 531,915 shares, to be designated "Series B Convertible Preferred Stock" (the
"Series B Preferred Stock"); the Board of Directors be and hereby is authorized
to issue such shares of Series B Preferred Stock from time to time and for such
consideration and on such terms as the Board of Directors shall determine; and
subject to the limitations provided by law and by
11
the Articles of Incorporation, the powers, designations, preferences and
relative, participating, option or other special rights of, and the
qualifications, limitations or restrictions upon, the Series B Preferred Stock
shall be as follows:
2
12
1. Dividends
In each fiscal year of the Corporation, the holders of shares
of Series B Preferred Stock shall be entitled to receive, before any cash
dividends shall be declared and paid upon or set aside for the Common Stock in
such fiscal year, out of the funds legally available for that purpose,
dividends at a rate of ten percent (10%) per annum, or $.47 per share, and no
more, in cash or in stock, at the Corporation's discretion, (i. e., stock at
the stated conversion price) and in preference and priority to any payment of
any cash dividend on Common Stock or any other shares of capital stock of the
Corporation ranking on liquidation junior to the Series B Preferred Stock by
reason of their ownership thereof ("Junior Shares") and pari passu with the
Series A Preferred Stock or any other shares of capital stock of the
Corporation ranking on liquidation pari passu with the Series B Preferred
Stock.
Dividends shall accrue and be deemed to accrue from day to day
whether or not earned or declared and shall be cumulative so that if at any
time after the issuance of the Series B Preferred Stock such dividends shall
not have been paid, or declared and set apart for payment, the deficiency shall
be fully paid on or declared and set apart for payment before any dividend
shall be paid on or declared or set apart for any shares of Junior Shares is
made by the Corporation, except the repurchase of Junior Shares from employees
of this Corporation upon termination of employment. Any accumulation of
dividends on the Series B Preferred Stock shall not bear interest.
2. Liquidation, Dissolution or Winding Up
(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of
shares of Series B Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders, after and subject to the payment in full of all amounts required
to be distributed to the holders of any class of series of stock of the
Corporation ranking on liquidation prior and in preference to the Series B
Preferred Stock, but before any payment shall be made to the holders of Common
Stock or any other Junior Shares, an amount
3
13
equal to $4.70 per share of Series B Preferred Stock (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or
other similar recapitalization affecting such shares). If upon any such
liquidation, dissolution or winding up of the Corporation the remaining assets
of the Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Series B Preferred Stock the full
amount to which they shall be entitled, the holders of shares of Series B
Preferred Stock and any other class of series of stock ranking on liquidation
on a parity with the Series B Preferred Stock shall share ratably in any
distribution of the remaining assets and funds of the Corporation in proportion
to the respective amounts which would otherwise be payable in respect of the
shares held by them upon such distribution if all amounts payable on or with
respect to such shares were paid in full. The Series B Preferred Stock shall
rank on liquidation on a parity with the Series A Preferred Stock and the
Common Stock shall constitute Junior Shares hereunder.
(b) After the payment of all preferential amounts
required to be paid to the holders of any class or series of stock of the
Corporation ranking on liquidation prior and in preference to the Series B
Preferred Stock and any other class or series of stock of the Corporation
ranking on liquidation on a parity with the Series B Preferred Stock, upon the
dissolution, liquidation or winding up of the Corporation, the holders of
shares of Common Stock or any other Junior Shares then outstanding shall be
entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
3. Voting
(a) Each holder of outstanding shares of Series B Preferred
Stock shall be entitled to the number of votes equal to the number of whole
shares of Common Stock into which the shares of Series B Preferred Stock held
by such holder are convertible (as adjusted from time to time pursuant to
Section 4 hereof), at each meeting of stockholders of the Corporation (and
written actions of stockholders in lieu of meetings) with respect to any and
all matters presented to the stockholders of the Corporation for their action
or consideration. Except as required by law or
4
14
by the provisions of its Amended and Restated Certificate of Incorporation, as
amended from time to time, holders of Series B Preferred Stock and any other
outstanding series of Preferred Stock shall vote together with the holders of
Series A Preferred Stock and the Common Stock as a single class or "voting
group" within the meaning of the Colorado Business Corporation Act.
(b) The Corporation shall not (i) amend, alter or repeal the
preferences, special rights or other powers of the Series B Preferred Stock so
as to affect adversely the Series B Preferred Stock, or (ii) amend, alter or
modify its Articles of Incorporation to increase the number of authorized
shares of Series B Preferred Stock, without the written consent or affirmative
vote of the holders of a majority of the then outstanding shares of the Series
B Preferred Stock in writing or by vote at a meeting, consenting or voting (as
the case may be) separately as a class. For this purpose, without limiting
the generality of the foregoing, the authorization of any class or series of
stock with preference or priority over the Series B Preferred Stock as to the
right to receive either dividends or amounts distributable upon liquidation,
dissolution or winding up the Corporation shall be deemed to affect adversely
the Series B Preferred Stock, and the authorization of any class or series of
stock on a parity with the Series B Preferred Stock as to the rights to receive
either dividends or amounts distributable upon liquidation, dissolution or
winding up of the Corporation shall not be deemed to affect adversely the
Series B Preferred Stock.
4. Optional Conversion The holders of the Series B Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert Each share of Series B
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing $4.70 by the Conversion Price (as defined
below) in effect at the time of conversion for each share of Series B Preferred
Stock. The conversion price at which shares of Common Stock shall be
deliverable upon conversion of Series B Preferred Stock without the payment of
additional consideration by the holder thereof (the "Conversion Price") shall
initially be $4.70. Such initial
5
15
Conversion Price, and the rates at which shares of Series B Preferred Stock may
be converted into shares of Common Stock, shall be subject to adjustment as
provided below.
In the event of a liquidation of the Corporation, the Conversion
Rights shall terminate at the close of business on the first full day preceding
the date fixed for the payment of any amounts distributable on liquidation to
the holders of Series B Preferred Stock.
(b) Fractional Shares No fractional shares of
Common Stock shall be issued upon conversion of the Series B 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.
(c) Mechanics of Conversion
(i) In order for a holder of Series B Preferred
Stock to convert shares of Series B Preferred Stock into shares of Common
Stock, such holder shall surrender the certificate or certificates for such
shares of Series B Preferred Stock (or at the principal office of the
Corporation if the Corporation serves as its own transfer agent), together with
written notice that such holder elects to convert all or any number of the
shares of the Series B Preferred Stock represented by such certificate or
certificates. Such notice shall state such holder's name or the names of the
nominees in which such holder wishes the certificate or certificates for shares
of Common Stock to be issued. If required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by a written
instrument or instruments of transfer, in form satisfactory to the Corporation,
duly executed by the registered holder or his, her, or its attorney duly
authorized in writing. The date of receipt of such certificates and notice by
the transfer agent (or by the Corporation if the Corporation serves as its own
transfer agent) shall be the Conversion Date. The Corporation shall, as soon
as practicable after the Conversion Date, issue and deliver at such office to
such holder, or to his, her, or its nominees, a certificate or certificates for
the number of shares of Common
6
16
Stock to which such holder shall be entitled, together with cash in lieu of any
fraction of a share.
(ii) The Corporation shall at all times when the
Series B Preferred Stock shall be outstanding, reserve and keep available out
of its authorized but unissued stock, for the purpose of effecting the
conversion of the Series B Preferred Stock, such number of its duly authorized
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding Series B Preferred Stock. Before taking any
action which would cause an adjustment reducing the Conversion Price below the
then par value of the shares of Common Stock issuable upon conversion of the
Series B Preferred Stock, the Corporation will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Corporation
may validly and legally issue fully paid and nonassessable shares of Common
Stock at each such adjusted Conversion Price.
(d) Issue of Securities Deemed Issue of Additional Shares
of Common Stock
(i) Adjustment for Merger or Reorganization, etc.
In case of any consolidation or merger of the Corporation with or into another
corporation or the sale of all or substantially all of the assets of the
Corporation to another corporation, each share of Series B 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 Series B
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 the Series B 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 Conversion Price) 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 Series B Preferred
Stock.
7
17
(ii) No Impairment
The Corporation will not by amendment of its Restated
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 will
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
Series B Preferred Stock against impairment.
(iii) Certificate as to Adjustments
Upon the occurrence of each adjustment or
readjustment of the 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 holder of
Series B Preferred Stock a certificate setting forth such adjustment or
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 holder of Series B Preferred Stock, furnish or cause to be
furnished to such holder a similar certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Price then in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
property which then would be received upon the conversion of Series B Preferred
Stock.
(5) Notice of Record Date In the event:
(i) that the Corporation declares a dividend (or
any other distribution) on its Common Stock
payable in Common Stock or other securities
of the Corporation;
(ii) that the Corporation subdivides or combines
its outstanding shares of Common Stock;
8
18
(iii) of any reclassification of the Common Stock
of the Corporation (other than a subdivision
or combination of its outstanding shares of
Common Stock or a stock distribution
thereon), or of any consolidation or merger
of the Corporation into or with another
corporation, or of the sale of all or
substantially all of the assets of the
Corporation; or
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation; then the Corporation shall cause
to be filed at its principal office or at the office of the transfer agent of
the Series B Preferred Stock, and shall cause to be mailed to the holders of
the Series B Preferred Stock at their last addresses as shown on the records of
the Corporation or such transfer agent, at least ten days prior to the record
date specified in (A) below or 20 days before the date specified in (B) below,
a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is
not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such
dividend, distribution, subdivision or combination
are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution,
liquidation or winding up is expected to become
effective, and the date as of which it is expected
that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock
for securities or other property deliverable upon
such reclassification, consolidation, merger,
sale, dissolution or winding up.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be affixed hereto and this Certificate of Designation to
9
19
be signed by its Chief Executive Officer and attested by its Secretary this
23rd day of July, 1996
/s/ Paul L. Devine
- - -----------------------------------------------
Paul L. Devine
Chairman, President and Chief Executive Officer
EPL Technologies, Inc.
/s/ Shawn J. Collins
- - -----------------------------------------------
Shawn J. Collins
Secretary
EPL Technologies, Inc.
10
20
[STAMP: STOCK CHANGE]
MAIL TO: SECRETARY OF STATE FOR OFFICE USE ONLY
CORPORATIONS SECTION
1560 BROADWAY, SUITE 200 19971097232 C
DENVER, CO 80202 $25.00
(303) 894-2251 SECRETARY OF STATE
FAX (303) 894-2242 06-18-97 14:39:21
MUST BE TYPED
FILING FEE: $25.00
MUST SUBMIT TWO COPIES DPC 19871604254
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
PLEASE INCLUDE A TYPED
SELF-ADDRESSED ENVELOPE
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is EPL Technologies, Inc. ncgs
SECOND: The following amendment to the Articles of Incorporation was adopted on
June 18, 1997, as prescribed by the Colorado Business Corporation Act, in the
manner marked with an X below:
___ No shares have been Issued or Directors Elected - Action by Incorporators
___ No shares have been Issued but Directors Elected - Action by Directors
X Such amendment was adopted by the board of directors where shares have been
___ issued.
___ Such amendment was adopted by a vote of the shareholders. The number of
shares voted for the amendment was sufficient for approval.
A total of 144,444 shares of the duly authorized preferred stock, $.01 par
value, of the corporation shall be designated Series C Convertible Preferred
Stock and shall have the powers, preferences, rights, qualifications and
restrictions set forth on the Certificate of Designation attached hereto as
Exhibit A.
THIRD: The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the amendment
shall be effected, is as follows: see above
If these amendments are to have a delayed effective date, please list that
date: n/a
(Not to exceed ninety (90) days from the date of filing)
/s/ Timothy B. Owen
---------------
By Timothy B. Owen
---------------
Its Secretary
---------
Title
21
EXHIBIT A
1. Dividends
In each fiscal year of the Corporation, the holders of shares of
Series C Preferred Stock shall be entitled to receive, when and as declared,
before any cash dividends shall be declared and paid upon or set aside for the
Common Stock in such fiscal year, out of the funds legally available for that
purpose, dividends at a rate of ten percent (10%) per annum, or $.45 per share,
and no more, in cash or in stock, at the Corporation's discretion, (i. e., stock
at the stated conversion price) and in preference and priority to any payment of
any cash dividend on Common Stock or any other shares of capital stock of the
Corporation ranking on liquidation junior to the Series C Preferred Stock by
reason of their ownership thereof ("Junior Shares").
Dividends shall accrue and be deemed to accrue from day to day
whether or not earned or declared and shall be cumulative so that if at any time
after the issuance of the Series C Preferred Stock such dividends shall not have
been paid, or declared and set apart for payment, the deficiency shall be fully
paid on or declared and set apart for payment before any dividend shall be paid
on or declared or set apart for any shares of Junior Shares is made by the
Corporation, except the repurchase of Junior Shares from employees of this
Corporation upon termination of employment. Any accumulation of dividends on the
Series C Preferred Stock shall not bear interest.
2. Liquidation, Dissolution or Winding Up
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series C
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its shareholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series C Preferred Stock, but before
any payment shall be made to the holders of Common Stock or any other Junior
Shares, an amount equal to $4.50 per share of Series C Preferred Stock (subject
to appropriate adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting such shares). If upon
any such liquidation, dissolution or winding up of the Corporation the remaining
assets of the Corporation available for distribution to its shareholders shall
be insufficient to pay the holders of shares of Series C Preferred Stock the
full amount to which they shall be entitled, the holders of shares of Series C
Preferred Stock and any other class or series
A-1
22
of stock ranking on liquidation on a parity with the Series C Preferred Stock
shall share ratably in any distribution of the remaining assets and funds of the
Corporation in proportion to the respective amounts which would otherwise be
payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full. The Series
C Preferred Stock shall rank on liquidation on a parity with the Series A
Preferred Stock and Series B Preferred Stock, and the Common Stock shall
constitute Junior Shares hereunder.
(b) After the payment of all preferential amounts required to be
paid to the holders of any class or series of stock of the Corporation ranking
on liquidation prior and in preference to the Series C Preferred Stock and any
other class or series of stock of the Corporation ranking on liquidation on a
parity with the Series C Preferred Stock, upon the dissolution, liquidation or
winding up of the Corporation, the holders of shares of Common Stock or any
other Junior Shares then outstanding shall be entitled to receive the remaining
assets and funds of the Corporation available for distribution to its
shareholders.
3. Voting
(a) Each holder of outstanding shares of Series C Preferred Stock
shall be entitled to the number of votes equal to the number of whole shares of
Common Stock into which the shares of Series C Preferred Stock held by such
holder are convertible (as adjusted from time to time pursuant to Section 4
hereof), at each meeting of shareholders of the Corporation (and written actions
of shareholders in lieu of meetings) with respect to any and all matters
presented to the shareholders of the Corporation for their action or
consideration. Except as required by law or by the provisions of its Amended and
Restated Certificate of Incorporation, as amended from time to time, holders of
Series C Preferred Stock and any other outstanding series of Preferred Stock
shall vote together with the holders of Series A Preferred Stock, Series B
Preferred Stock and Common Stock as a single class or "voting group" within the
meaning of the Colorado Business Corporation Act.
(b) The Corporation shall not (i) amend, alter or repeal the
preferences, special rights or other powers of the Series C Preferred Stock so
as to affect adversely the Series C Preferred Stock, or (ii) amend, alter or
modify its Articles of Incorporation to increase the number of authorized shares
of Series C Preferred Stock, without the written consent or affirmative vote of
the holders of a majority of the then outstanding shares of the Series C
Preferred Stock in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a class. For this purpose, without limiting the
generality of the foregoing, the
A-2
23
authorization of any class or series of stock with preference or priority over
the Series C Preferred Stock as to the right to receive either dividends or
amounts distributable upon liquidation, dissolution or winding up the
Corporation shall be deemed to affect adversely the Series C Preferred Stock,
and the authorization of any class or series of stock on a parity with the
Series C Preferred Stock as to the rights to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall not be deemed to affect adversely the Series C Preferred Stock.
4. Optional Conversion The holders of the Series C Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert Each share of Series C Preferred Stock shall
be convertible, at the option of the holder thereof, at any time into such
number of fully paid and nonassessable shares of Common Stock as is determined
by dividing $4.50 by the Conversion Price (as defined below) in effect at the
time of conversion for each share of Series C Preferred Stock. The conversion
price at which shares of Common Stock shall be deliverable upon conversion of
Series C Preferred Stock without the payment of additional consideration by the
holder thereof (the "Conversion Price") shall initially be $4.50. Such initial
Conversion Price, and the rates at which shares of Series C Preferred Stock may
be converted into shares of Common Stock, shall be subject to adjustment as
provided below.
In the event of a liquidation of the Corporation, the Conversion Rights
shall terminate at the close of business on the first full day preceding the
date fixed for the payment of any amounts distributable on liquidation to the
holders of Series C Preferred Stock.
(b) Fractional Shares No fractional shares of Common Stock shall
be issued upon conversion of the Series C 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.
(c) Mechanics of Conversion
(i) In order for a holder of Series C Preferred Stock to
convert shares of Series C Preferred Stock into shares of Common Stock, such
holder shall surrender the certificate or certificates for such shares of Series
C Preferred Stock at the office of the Corporation's transfer agent (or at the
principal office of the Corporation if the Corporation serves as its own
A-3
24
transfer agent), together with written notice that such holder elects to convert
all or any number of the shares of the Series C Preferred Stock represented by
such certificate or certificates. Such notice shall state such holder's name. If
required by the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by a written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
his, her, or its attorney duly authorized in writing. The date of receipt of
such certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the Conversion Date. The
Corporation shall, as soon as practicable after the Conversion Date, issue and
deliver at such office to such holder, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share.
(ii) The Corporation shall at all times when the Series C
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Series C Preferred Stock, such number of its duly authorized shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding Series C Preferred Stock. Before taking any action which
would cause an adjustment reducing the Conversion Price below the then par value
of the shares of Common Stock issuable upon conversion of the Series C Preferred
Stock, the Corporation will take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common Stock at each such
adjusted Conversion Price.
(d) Adjustment of Conversion Price
(i) Adjustment for Anti-Dilution, Merger or Reorganization,
etc. The Conversion Price and the number and kind of securities issuable upon
the conversion of the Series C Preferred Stock shall be subject to adjustment
from time to time, but only upon the occurrence of any of the events as
hereinafter provided:
(A) In the event the Corporation shall issue Common
Stock as a dividend upon Common Stock or in payment of a dividend thereon, the
Conversion Price then in effect shall be proportionately decreased, effective at
the close of business on the record date for the determination of shareholders
entitled to receive the same (it being understood that any issuance of Common
Stock as a dividend on any class or series of the Corporation's preferred stock
shall have no effect on the Conversion Price);
A-4
25
(B) In the event the Corporation shall at any time
subdivide or combine its outstanding shares of Common Stock, by reclassification
or otherwise, the Conversion Price then in effect shall be proportionately
decreased or increased, as the case may be, effective immediately after the
effective date of such subdivision or combination; and
(C) If any capital reorganization or reclassification of
the capital stock of the Corporation, or consolidation or merger of the
Corporation with another corporation, or the sale of all or substantially all of
its assets to another corporation shall be effected, then, as a condition of
such reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holders of the Series C Preferred
Stock shall thereafter have the right to purchase and receive upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of the
Common Stock of the Corporation purchasable and receivable upon the conversion,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of Common Stock
equal to the number of shares of such Common Stock purchasable and receivable
upon the conversion of the Series C Preferred Stock had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any such
reorganization, reclassification, consolidation, merger or sale, appropriate
provision shall be made with respect to the rights and interests of the holders
of Series C Preferred Stock to the end that the provisions of the Series C
Preferred Stock (including, without limitation, provisions for adjustment of the
Conversion Price and of the number of shares issuable upon conversion of the
Series C Preferred Stock) shall thereafter be applicable as nearly as may be in
relation to any shares of stock, securities, or assets thereafter deliverable
upon exercise of stock, securities, or assets thereafter deliverable upon
conversion of Series C Preferred Stock. The Corporation shall not effect any
such consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof, the successor corporation (if other than the Corporation)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume, by written instrument, the obligation to deliver to the
holders of Series C Preferred Stock such shares of stock, securities, or assets
as, in accordance with the foregoing provisions, the holders of Series C
Preferred Stock may be entitled to purchase.
(ii) No Impairment
The Corporation will not by amendment of its Amended and
Restated Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger,
A-5
26
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 will 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 Series C Preferred Stock against
impairment.
(iii) Certificate as to Adjustments
Upon the occurrence of each adjustment or readjustment of the
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 holder of Series C Preferred Stock a
certificate setting forth such adjustment or 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 holder of Series C Preferred
Stock, furnish or cause to be furnished to such holder a similar certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Price
then in effect, and (iii) the number of shares of Common Stock and the amount,
if any, of other property which then would be received upon the conversion of
Series C Preferred Stock.
(5) Notice of Record Date In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or
other securities of the Corporation;
(ii) that the Corporation subdivides or combines its outstanding
shares of Common Stock;
(iii) of any reclassification of the Common Stock of the Corporation
(other than a subdivision or combination of its outstanding
shares of Common Stock or a stock distribution thereon), or of
any consolidation or merger of the Corporation into or with
another corporation, or of the sale of all or substantially
all of the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series C Preferred Stock, and shall cause to
be mailed to the holders of the
A-6
27
Series C Preferred Stock at their last addresses as shown on the records of the
Corporation or such transfer agent, at least ten days prior to the record date
specified in (A) below or twenty days before the date specified in (B) below, a
notice stating
(A) the record date of such dividend, distribution, subdivision or
combination, or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled
to such dividend, distribution, subdivision or combination are
to be determined, or
(B) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or
winding up.
A-7
28
STOCK CHANGE MAIL TO: SECRETARY OF STATE FOR OFFICE USE ONLY
CORPORATIONS SECTION
1560 BROADWAY, SUITE 200 19971132298 C
DENVER, CO 80202 $25.00
(303) 894-2251 SECRETARY OF STATE
FAX (303) 894-2242 08-19-97 15:00:42
MUST BE TYPED
FILING FEE $25.00 DPC 19871604254
MUST SUBMIT TWO COPIES
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
PLEASE INCLUDE A TYPED
SELF-ADDRESSED ENVELOPE
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is EPL Technologies, Inc. ncgs
---------------------------------------
SECOND: The following amendment to the Articles of Incorporation was adopted on
July 21, 1997, as prescribed by the Colorado Business Corporation Act, in the
manner marked with an X below:
No shares have been issued or Directors Elected - Action by Incorporators
- - -----
No shares have been issued but Directors Elected - Action by Directors
- - -----
Such amendment was adopted by the board of directors where shares have
- - ----- been issued.
X Such amendment was adopted by a vote of the shareholders. The number of
- - ----- shares voted for the amendment was sufficient for approval.
See Exhibit A
THIRD: The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows:
If these amendments are to have a delayed effective date, please list that
date: n/a
--------
(Not to exceed ninety (90) days from the date of filing)
/s/ Timothy B. Owen
------------------------------
By Timothy B. Owen
------------------------------
Its Secretary
---------------------------
Title
29
EXHIBIT A
RESOLVED, that Paragraph A, of Article V of the Articles of Incorporation of
EPL Technologies, Inc. is amended and restated to read in its entirety as
follows:
The Corporation shall have the authority to issue fifty million
(50,000,000) shares of common stock with a par value $0.001 per share,
three million two hundred fifty thousand (3,250,000) shares of Series A
10% Cumulative Convertible Preferred Stock with a par value of $1.00 per
share ("Series A Preferred Stock"), 531,915 shares of Series B Convertible
Preferred Stock with a par value of $0.01 per share ("Series B Preferred
Stock"), 144,444 shares of Series C Convertible Preferred Stock with a par
value of $0.01 per share ("Series C Preferred Stock") and three million,
three hundred twenty-three thousand, six hundred forty-one (3,323,641)
shares of preferred stock with a par value of $0.01 per share ("Board
Designated Preferred Stock"). The Board of Directors of the Corporation
may determine, in whole or in part, the preferences, limitations, and
relative rights of the Board Designated Preferred Stock, within the limits
set forth in Section 7-106-101 of the Colorado Business Corporation Act,
of any class of the Board Designated Preferred Stock, before the issuance
of any shares of that class, or one or more series within a class of the
Board Designated Preferred Stock before the issuance of any shares of that
series. The Board of Directors may issue, in one or more classes or
series, shares of the Board Designated Preferred Stock with full, limited,
multiple, fractional or no voting rights, and with such designations,
preferences, qualifications, privileges, limitations, restrictions,
options, conversion rights, or other special or relative rights as shall
be fixed from time to time by the Board of Directors, except for and
subject to, in each case, the limits set forth in Section 7-106-101 of the
Colorado Business Corporation Act and in accordance with the provisions
and requirements of Section 7-106-102 of the Colorado Business Corporation
Act.
30
FOR OFFICE USE ONLY
MAIL TO: SECRETARY OF STATE
CORPORATIONS SECTION
1560 BROADWAY, SUITE 200
DENVER, CO 80202
(303) 894-2251
(303) 894-2242
MUST BE TYPED
FILING FEE: $25.00
MUST SUBMIT TWO COPIES
ARTICLES OF AMENDMENT
PLEASE INCLUDE A TYPED TO THE
SELF-ADDRESSED ENVELOPE ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is EPL Technologies, Inc.
----------------------------------------
SECOND: the following amendment to the Articles of Incorporation was adopted on
November 3, 1997, as prescribed by the Colorado Business Corporation Act,
- - -------------
in the manner marked with an X below:
No shares have been issued or Directors Elected - Action by Incorporators
- - ---
No shares have been issued but Directors Elected - Action by Directors
- - ---
X Such amendment was adopted by the board of directors where shares have been
- - --- issued.
Such amendment was adopted by a vote of the shareholders. The number of
- - --- shares voted for the amendment was sufficient for approval.
See Exhibit A
THIRD: A changing corporate XXX
FOURTH: The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the amendment
shall be affected, is as follows:
see above
If these amendments are to have a delayed effective date, please list that date: n/a
(Not to exceed ninety (90) days from the date of filing) ----------------------------
----------------------------
By /s/ Timothy B. Owen
----------------------------
Its Secretary and Treasurer
----------------------------
(Title)
31
EXHIBIT A
CERTIFICATE OF DESIGNATION, NUMBER, VOTING POWERS,
PREFERENCES AND RIGHTS OF THE SERIES OF THE PREFERRED STOCK
OF
EPL TECHNOLOGIES, INC.
TO BE DESIGNATED
SERIES D CONVERTIBLE PREFERRED STOCK
Series D Convertible Preferred Stock:
I. Designation and Amount
The designation of this series, which consists of 12,500 shares of
Preferred Stock, is Series D Convertible Preferred Stock (the "Series D
Preferred Stock") and the stated value shall be One Thousand Dollars ($1,000)
per share (the "Stated Value").
II. Rank
The Series D Preferred Stock shall rank (i) prior to the Corporation's
common stock, par value $.001 per share (the "Common Stock"); (ii) prior to any
class or series of capital stock of the Corporation hereafter created (unless,
with the consent of the holders of Series D Preferred Stock obtained in
accordance with Article IX hereof, such class or series of capital stock
specifically, by its terms, ranks senior to or pari passu with the Series D
Preferred Stock) (together with the Common Stock, "Junior Securities"); (iii)
pari passu with the Corporation's Series A 10% Cumulative Preferred Stock, par
value $1.00 per share (the "Series A Preferred"), the Corporation's Series B
Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred")
and the Corporation's Series C Convertible Preferred Stock, par value $.01 per
share (the "Series C Preferred"), and with any class or series of capital stock
of the Corporation hereafter created (with the consent of the holders of Series
D Preferred Stock obtained in accordance with Article IX hereof) specifically
ranking, by its terms, on parity with the Series D Preferred Stock ("Pari Passu
Securities"); and (iv) junior to any class or series of capital stock of the
Corporation hereafter created (with the consent of the holders of Series D
Preferred Stock obtained in accordance with Article IX hereof) specifically
ranking, by its terms, senior to the Series D Preferred Stock ("Senior
Securities"), in each case as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.
1
32
III. Dividends
The Series D Preferred Stock shall not bear any dividends. In no event, so
long as any Series D Preferred Stock shall remain outstanding, shall any
dividend whatsoever be declared or paid upon, nor shall any distribution be made
upon, any Junior Securities, nor shall any shares of Junior Securities be
purchased or redeemed by the Corporation nor shall any moneys be paid to or made
available for a sinking fund for the purchase or redemption of any Junior
Securities, without, in each such case, the unanimous written consent or the
vote of the holders of two-thirds (2/3) of the outstanding shares of Series D
Preferred Stock, voting together as a class. Notwithstanding the foregoing,
dividends may be paid on the Series A Preferred, the Series B Preferred and the
Series C Preferred in accordance with the Certificates of Designation for each
such series as filed with the Secretary of State of the State of Colorado prior
to the date hereof.
IV. Liquidation Preference
A. If the Corporation shall commence a voluntary case under the Federal
bankruptcy laws or any other applicable Federal or State bankruptcy, insolvency
or similar law, or consent to the entry of an order for relief in an involuntary
case under any law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Corporation
or of any substantial part of its property, or make an assignment for the
benefit of its creditors, or admit in writing its inability to pay its debts
generally as they become due, or if a decree or order for relief in respect of
the Corporation shall be entered by a court having jurisdiction in the premises
in an involuntary case under the Federal bankruptcy laws or any other applicable
Federal or state bankruptcy, insolvency or similar law resulting in the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order shall be unstayed and in effect for a
period of forty-five (45) consecutive days and, on account of any such event,
the Corporation shall liquidate, dissolve or wind up, or if the Corporation
shall otherwise liquidate, dissolve or wind up (each such event being considered
a "Liquidation Event"), no distribution shall be made to the holders of any
shares of capital stock of the Corporation (other than Senior Securities) upon
liquidation, dissolution or winding up unless prior thereto, the holders of
shares of Series D Preferred Stock, subject to Article VI, shall have received
the Liquidation Preference (as defined in Article IV.C) with respect to each
share. If upon the occurrence of a Liquidation Event, the assets and funds
available for distribution among the holders of the Series D Preferred Stock and
holders of Pari Passu Securities shall be insufficient to permit the payment to
such holders of the preferential amounts payable thereon, then the entire assets
and funds of the Corporation legally available for distribution to the Series D
Preferred Stock and the Pari Passu Securities shall be distributed ratably among
such shares in proportion to the ratio that the Liquidation Preference payable
on each such share bears to the aggregate liquidation preference payable on all
such shares.
B. At the option of any holder of Series D Preferred Stock, the sale,
conveyance or disposition of all or substantially all of the assets of the
Corporation in a single transaction or series of related transactions, the
effectuation by the Corporation of a transaction or series of related
2
33
transactions (other than an underwritten public offering) in which more than 50%
of the voting power of the Corporation is disposed of, or the consolidation,
merger or other business combination of the Corporation with or into any other
Person (as defined below) or Persons when the Corporation is not the survivor
shall either: (i) be deemed to be a liquidation, dissolution or winding up of
the Corporation pursuant to which the Corporation shall be required to
distribute upon consummation of such transaction an amount equal to 115% of the
Liquidation Preference with respect to each outstanding share of Series D
Preferred Stock in accordance with and subject to the terms of this Article IV
or (ii) be treated pursuant to Article VI.C(d) hereof. "Person" shall mean any
individual, corporation, limited liability company, partnership, association,
trust or other entity or organization. Such option shall be exercised by a
holder not later than thirty (30) days after consummation of the transaction
giving rise to such option.
C. For purposes hereof, the "Liquidation Preference" with respect to a
share of the Series D Preferred Stock shall mean an amount equal to the sum of
(i) the Stated Value thereof, plus (ii) an amount equal to four percent (4%) per
annum of such Stated Value for the period beginning on the date of issuance of
such share and ending on the date of final distribution to the holder thereof
(pro rated for any portion of such period). The liquidation preference with
respect to any Pari Passu Securities shall be as set forth in the Certificate of
Designation filed in respect thereof.
V. Redemption
A. If any of the following events (each, a "Mandatory Redemption Event")
shall occur:
(i) The Corporation fails to issue shares of Common Stock to any
holder of Series D Preferred Stock upon exercise by such holder of its
conversion rights in accordance with the terms of this Certificate of
Designation (for a period of at least sixty (60) days if such failure is solely
as a result of the circumstances governed by the second paragraph of Article
VI.F below and the Corporation is using all commercially reasonable efforts to
authorize a sufficient number of shares of Common Stock as soon as practicable),
fails to transfer or to cause its transfer agent to transfer (electronically or
in certificated form) any certificate for shares of Common Stock issued to any
holder upon conversion of the Series D Preferred Stock as and when required by
this Certificate of Designation or the Registration Rights Agreement, dated as
of November 6, 1997, by and among the Corporation and the other signatories
thereto (the "Registration Rights Agreement"), fails to remove any restrictive
legend (or fails to withdraw any stop transfer instructions in respect thereof)
on any certificate or any shares of Common Stock issued to any holder of Series
D Preferred Stock upon conversion of the Series D Preferred Stock as and when
required by this Certificate of Designation, the Securities Purchase Agreement
dated as of November 6, 1997, by and between the Corporation and the other
signatories thereto (the "Purchase Agreement") or the Registration Rights
Agreement, fails to fulfill its obligations pursuant to Sections 4(c),4(h),4(i),
4(j) or 5 of the Purchase Agreement, or breaches its obligations under that
certain side letter dated November 6, 1997 regarding restrictions on the payment
of dividends (or makes any announcement or otherwise provides notice to any
holder that it does not intend to honor the obligations described in this
paragraph) and any such failure shall continue uncured (or any announcement or
statement not to honor its obligations shall not be rescinded) for ten (10)
business days;
3
34
(ii) The Corporation fails to obtain effectiveness with the
Securities and Exchange Commission (the "SEC") of the Registration Statement (as
defined in the Registration Rights Agreement) prior to April 30, 1998 or such
Registration Statement lapses in effect (or sales otherwise cannot be made
thereunder, whether by reason of the Corporation's failure to amend or
supplement the prospectus included therein in accordance with the Registration
Rights Agreement or otherwise) for more than thirty (30) consecutive days or
sixty (60) days in any twelve (12) month period after such Registration
Statement becomes effective, except in the event of an "Allowed Delay" as
defined in the Registration Rights Agreement;
(iii) The Corporation shall make an assignment for the benefit of
creditors, or apply for or consent to the appointment of a receiver or trustee
for it or for all or substantially all of its property or business; or such a
receiver or trustee shall otherwise be appointed;
(iv) Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Corporation or
any subsidiary of the Corporation and shall be unstayed for a period of
forty-five (45) days;
(v) The Corporation shall fail to maintain the listing of the Common
Stock on the Nasdaq SmallCap Market ("Nasdaq SmallCap"), the Nasdaq National
Market, the New York Stock Exchange or the American Stock Exchange and such
failure shall remain uncured for at least ten (10) days;
then, upon the occurrence and during the continuation of any Mandatory
Redemption Event specified in subparagraphs (i), (ii) or (v) at the option of
one or more holders of then outstanding shares of Series D Preferred Stock by
written notice (the "Mandatory Redemption Notice") to the Corporation of such
Mandatory Redemption Event, or upon the occurrence of any Mandatory Redemption
Event specified in subparagraphs (iii) or (iv), the Corporation shall purchase
such holders' shares of Series D Preferred Stock for an amount per share equal
to the greater of (1) 115% multiplied by the sum of (a) the Stated Value of the
shares to be redeemed, plus (b) an amount equal to four percent (4%) per annum
of such Stated Value for the period beginning on the date of issuance of such
shares and ending on the date of payment of the Mandatory Redemption Amount (as
defined below) (the "Mandatory Redemption Date") and (2) the "parity value" of
the shares to be redeemed, where parity value means the product of (a) the
number of shares of Common Stock issuable upon conversion of such shares in
accordance with Article VI below (treating the Trading Day (as defined in
Article VI.B below) immediately preceding the Mandatory Redemption Date as the
"Conversion Date" (as hereinafter defined) unless the Mandatory Redemption Event
arises as a result of a breach in respect of a specific Conversion Date in which
case such Conversion Date shall be the Conversion Date, and deeming the five
consecutive Trading Days in the Pricing Period (as hereinafter defined)
preceding the Mandatory Redemption Date that maximize the number of shares of
Common Stock issuable for purposes of this proviso as the Market Price Days (as
hereinafter defined), multiplied by (b) the Closing Price (as hereinafter
defined) for the Common Stock on such Conversion Date (the greater of such
amounts being referred to as the "Mandatory Redemption Amount"). Notwithstanding
the foregoing, any holder of Series D Preferred who does not sign the Mandatory
4
35
Redemption Notice shall retain such holder's shares of Series D Preferred Stock,
the rights of which shall continue to be governed by the terms of this
Certificate of Designation. The Corporation shall notify all holders promptly of
the receipt by the Corporation of a Mandatory Redemption Notice from any holder.
In the case of a Mandatory Redemption Event, if the Corporation fails to
pay the Mandatory Redemption Amount for each share within five (5) business days
of written notice that such amount is due and payable, then (assuming there are
sufficient authorized shares) in addition to all other available remedies, each
holder of Series D Preferred Stock shall have the right at any time, so long as
the Mandatory Redemption Event continues, to require the Corporation, upon
written notice, to immediately issue (in accordance with and subject to the
terms of Article VI below), in lieu of the Mandatory Redemption Amount, with
respect to each outstanding share of Series D Preferred Stock held by such
holder, the number of shares of Common Stock of the Corporation equal to the
Mandatory Redemption Amount divided by the Conversion Price then in effect.
B. If the Series D Preferred Stock ceases to be convertible as a result of
the limitations described in the third paragraph of Article VI.A below (a
"19.99% Redemption Event"), and the Corporation has not prior to, or within
thirty (30) days after, the date that such 19.99% Redemption Event arises, (i)
obtained approval of the issuance of the additional shares of Common Stock by
the requisite vote of the holders of the then-outstanding Common Stock
("Stockholder Approval") (not including any shares of Common Stock held by
present or former holders of Series D Preferred Stock that were issued upon
conversion of Series D Preferred Stock) or (ii) received other permission from
Nasdaq, whether pursuant to Nasdaq Requirement 4460(i) or otherwise, allowing
the Corporation to resume issuances of shares of Common Stock upon conversion of
Series D Preferred Stock, then the Corporation shall be obligated to redeem
immediately all of the then outstanding Series D Preferred Stock, in accordance
with this Article V.B. An irrevocable Redemption Notice shall be delivered
promptly to the holders of Series D Preferred Stock at their registered address
appearing on the records of the Corporation and shall state (1) that 19.99% of
the Outstanding Common Amount (as defined in Article VI.A below) has been issued
upon exercise of the Series D Preferred Stock, (2) that the Corporation is
obligated to redeem all of the outstanding Series D Preferred Stock and (3) the
Mandatory Redemption Date, which shall be a date within five (5) business days
of the date of the Redemption Notice. On the Mandatory Redemption Date, the
Corporation shall make payment of the Mandatory Redemption Amount (as defined in
Article V.A. above) in cash.
C. Notwithstanding anything to the contrary in Article VI below, subject
to the terms of this Article V.C. if the Closing Price (as defined below) of the
Common Stock is below the Floor Price (as defined in Article VI.B) on any
Conversion Date (as defined in Article VI.B. below), the Corporation shall have
the option, in lieu of issuing shares of Common Stock to the converting holders
upon conversion in accordance with the terms of Article VI below, to redeem all
or any portion of the shares of Series D Preferred Stock submitted for
conversion for an amount in cash equal to the number of shares that would have
otherwise been issued upon conversion of the Series D Preferred Stock at the
applicable Conversion Price (as defined in Article VI.B below) multiplied by the
Redemption Market Price (as hereinafter defined). "Redemption Market Price"
shall be equal
5
36
to the Closing Price of the Common Stock on the Conversion Date. "Closing
Price," as of any date, means the last sale price of the Common Stock (as
reported by Bloomberg Financial Markets ("Bloomberg")) on the Nasdaq SmallCap or
on the principal securities exchange or market on which the Common Stock is then
being traded on such date. From time to time, the holders may request advance
notice as to whether the Corporation will issue shares of Common Stock, deliver
cash in redemption or any combination thereof in respect of the shares of Series
D Preferred Stock submitted for conversion pursuant to Article VI. Such request
shall be made in writing and the Corporation shall respond in writing as
promptly as practicable but in any event within three (3) business days of
receipt of the request. The Corporation will be bound by such response for a
period of twenty (20) Trading Days from the date of its response. A failure to
respond within three (3) business days shall be deemed to be an election to
issue Common Stock on conversion. Any redemption amounts payable hereunder shall
be paid to the converting holder within five (5) Trading Days of the Conversion
Date.
VI. Conversion at the Option of the Holder
A. Each holder of shares of Series D Preferred Stock may, at its option in
accordance with the terms hereof, upon surrender of the certificates therefor,
convert any or all of its shares of Series D Preferred Stock into Common Stock
as follows (an "Optional Conversion"). Each share of Series D Preferred Stock
shall be convertible into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing (1) the sum of (a) the Stated Value
thereof, plus, (b) the Premium Amount (as defined below), by (2) the then
effective Conversion Price (as defined below); provided, however, that, unless
the holder delivers a waiver in accordance with the immediately following
sentence, in no event shall a holder of shares of Series D Preferred Stock be
entitled to convert any such shares in excess of that number of shares upon
conversion of which the sum of (x) the number of shares of Common Stock
beneficially owned by the holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the shares of Series D Preferred Stock or unexercised
portion of warrants or any other securities containing analogous limitations)
and (y) the number of shares of Common Stock issuable upon the conversion of the
shares of Series D Preferred Stock with respect to which the determination of
this proviso is being made, would result in beneficial ownership by a holder and
such holder's affiliates of more than 4.99% of the outstanding shares of Common
Stock. For purposes of the proviso to the immediately preceding sentence, (i)
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder,
except as otherwise provided in clause (x) of such proviso and (ii) a holder may
waive the limitations set forth therein by written notice to the Corporation
upon not less than sixty-one (61) days prior written notice (with such waiver
taking effect only upon the expiration of such sixty-one (61) day notice
period). The "Premium Amount" means the product of the Stated Value, multiplied
by .04, multiplied by (N/365), where "N" equals the number of days elapsed from
the date of issuance of the Series D Preferred Stock to and including the
Conversion Date (as defined in Article VI.B. below).
Each holder of shares of the Series D Preferred Stock may convert only up
to that percentage (the "Maximum Conversion Amount") of the aggregate number of
shares of Series D Preferred Stock
6
37
initially issued on the Closing Date by the Corporation to such holder specified
below during the time period set forth opposite such percentage:
Number of Days following issuance
Percentage of Series D Preferred Stock
0% 1-180
25% 181-210
50% 211-240
75% 241-270
100% 271;
provided, however, that there shall be excluded from the foregoing restrictions
and any calculation of the foregoing percentages any conversion(s) occurring:
(A) on any Conversion Date on which the high sales price of the Common Stock, as
reported by Bloomberg, on the Nasdaq SmallCap or on the principal securities
exchange or market on which the Common Stock is then being traded, exceeds
either (i) 115% of the then applicable Market Price, based on Market Price Days
designated by holder, or (ii) the Fixed Conversion Price as then in effect; or
(B) on any Conversion Date on or after (i) the date of a public announcement by
the Corporation that it intends to consolidate or merge with any other
corporation (other than a merger solely for purposes of reincorporation) or sell
or transfer all or substantially all of the assets of the Corporation, or (ii)
the date any person, group or entity (including the Corporation) publicly
announces a tender offer (as such term is used in the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act")) to purchase 25% or more of the Corporation's outstanding Common
Stock.
Notwithstanding anything to the contrary contained herein, if, at any
time, the aggregate number of shares of Common Stock then issued upon conversion
of the Series D Preferred Stock equals 19.99% of the "Outstanding Common Amount"
(as hereinafter defined), the Series D Preferred Stock shall, from that time
forward, cease to be convertible into Common Stock in accordance with the terms
of this Article VI and Article VII below, unless the Corporation (i) has
obtained approval of the issuance of the Series D Preferred Stock by a majority
of the total votes cast on such proposal, in person or by proxy, by the holders
of the then-outstanding Common Stock (not including any shares of Common Stock
held by present or former holders of Series D Preferred Stock that were issued
upon conversion of Series D Preferred Stock), or (ii) shall have otherwise
obtained permission to allow such issuances from Nasdaq in accordance with
Nasdaq Requirement 4460(i), or otherwise. For purposes of this paragraph,
"Outstanding Common Amount" shall be determined in accordance with Nasdaq
Requirement 4460 or a successor rule, as may be in effect from time to time. The
maximum number of shares of Common Stock issuable as a result of the 19.99%
limitation set forth herein is hereinafter referred to as the "Maximum Share
Amount." With respect to each holder of Series D Preferred Stock, the Maximum
Share Amount shall refer to such holder's pro rata share thereof determined in
accordance with Article X below. In the event that the Corporation obtains
Stockholder Approval, the approval of The Nasdaq Stock Market or otherwise
concludes that it is able to increase the number of shares to be issued above
the Maximum Share Amount (such increased number being the "New Maximum Share
Amount"), the references to
7
38
Maximum Share Amount, above, shall be deemed to be instead, references to the
greater New Maximum Share Amount. In the event that Stockholder Approval is not
obtained, there are insufficient reserved or authorized shares or a registration
statement covering the additional shares of Common Stock which constitute the
New Maximum Share Amount is not effective prior to the Maximum Share Amount
being issued (if such registration statement is necessary to allow for the
public resale of such securities), the Maximum Share Amount shall remain
unchanged; provided, however, that the holder may grant an extension to obtain a
sufficient reserved or authorized amount of shares or of the period for
obtaining effectiveness of such registration statement. In the event that (a)
the aggregate number of shares of Common Stock issued pursuant to the
outstanding Series D Preferred Stock represents at least twenty percent (20%) of
the Maximum Share Amount and (b) the sum of (x) the aggregate number of shares
of Common Stock issued upon conversion of Series D Preferred Stock plus (y) the
aggregate number of shares of Common Stock that remains issuable upon conversion
of Series D Preferred Stock, together in each case with any shares of Common
Stock that are integrated with the Conversion Shares for purposes of Rule 4460
of the Nasdaq Stock Market, represents at least one hundred percent (100%) of
the Maximum Share Amount (the "Triggering Event"), the Corporation will use its
best efforts to seek and obtain Stockholder Approval (or obtain such other
relief as will allow conversions hereunder in excess of the Maximum Share
Amount) as soon as practicable following the Triggering Event and before the
Mandatory Redemption Date.
B. (a) Subject to subparagraph (b) and (c) and Article VI.C below, the
"Conversion Price" shall be the lesser of (i) the Applicable Percentage (as
defined herein) of the Market Price (as defined herein) (the "Variable
Conversion Price") and (ii) the Fixed Conversion Price. "Market Price" shall
mean the average of the closing bid prices of the Common Stock on Nasdaq
SmallCap, or on the principal securities exchange or other market on which the
Common Stock is then being traded (in each case, as reported by Bloomberg), for
any five (5) consecutive Trading Days (as defined herein) (the "Market Price
Days") in the 25 Trading Day period (the "Pricing Period") ending one (1)
Trading Day prior to the date (the "Conversion Date") the Notice of Conversion
(as defined in Section VI.E) is sent by a holder to the Corporation via
facsimile. "Trading Day" shall mean any day on which the Common Stock is traded
for any period on Nasdaq SmallCap, or on the principal securities exchange or
other securities market on which the Common Stock is then being traded. The
Pricing Period for any shares of Series D Preferred Stock shall not include any
Trading Days prior to the date of original issuance of such Series D Preferred
Stock. The converting holder shall designate the "Market Price Days" on the
Conversion Date, from the Trading Days comprising the Pricing Period and such
selection shall be indicated in the Notice of Conversion. The "Fixed Conversion
Price" shall equal $11.63, or the price described in clause (i) of Article
VI.C(a) if the Corporation makes the election described therein. The "Floor
Price" shall equal $3.88. "Applicable Percentage" shall mean (i) 94%, with
respect to any Conversion Date on which the closing sale price of the Common
Stock on Nasdaq SmallCap, or on the principal securities exchange or market on
which the Common Stock is then traded, as reported by Bloomberg (the "Closing
Price") equals or exceeds the Floor Price and (ii) 100%, with respect to any
Conversion Date on which the Closing Price is less than the Floor Price;
provided, however, that if the Closing Price of the Common Stock is less than
the Floor Price for any thirty (30) consecutive days and the Corporation elects
to reset the Applicable Percentage in accordance with Article VI.C(a) below,
with respect to any Conversion
8
39
Date thereafter on which the Closing Price is below the Floor Price, the
Applicable Percentage shall be 94% instead of 100%.
(b) Notwithstanding anything contained in subparagraph (a) of this
Paragraph B to the contrary, in the event the Corporation (i) makes a public
announcement that it intends to consolidate or merge with any other corporation
(other than a merger in which the Corporation is the surviving or continuing
corporation and its capital stock is unchanged and the stockholders of the
Corporation prior to the date of such consolidation or merger continue to own at
least 51% of the surviving or continuing corporation) or sell or transfer all or
substantially all of the assets of the Corporation or (ii) any person, group or
entity (including the Corporation) publicly announces a tender offer (as such
term is used in the Exchange Act) to purchase 50% or more of the Corporation's
Common Stock (the date of the announcement referred to in clause (i) or (ii) is
hereinafter referred to as the "Announcement Date"), then the Conversion Price
shall, effective upon the Announcement Date and continuing through the Adjusted
Conversion Price Termination Date (as defined below), be equal to the lower of
(x) the Conversion Price which would have been applicable for an Optional
Conversion occurring on the Announcement Date and (y) the Conversion Price that
would otherwise be in effect. From and after the Adjusted Conversion Price
Termination Date, the Conversion Price shall be determined as set forth in
subparagraph (a) of this Article VI.B. For purposes hereof, "Adjusted Conversion
Price Termination Date" shall mean, with respect to any proposed transaction or
tender offer for which a public announcement as contemplated by this
subparagraph (b) has been made, six (6) Trading Days after the date upon which
the Corporation (in the case of clause (i) above) or the person, group or entity
(in the case of clause (ii) above) publicly announces the termination or
abandonment of the proposed transaction or tender offer which caused this
subparagraph (b) to become operative, or the date on which the proposed
transaction or tender offer has been consummated.
(c) In the event that (1) the Corporation fails to obtain
effectiveness with the SEC of the Registration Statement prior to 120 days
following the issuance of the Series D Preferred Stock, or (2) such Registration
Statement lapses in effect, or sales otherwise cannot be made thereunder,
whether by reason of the Corporation's failure or inability to amend or
supplement the prospectus (the "Prospectus") included therein in accordance with
the Registration Rights Agreement or otherwise, after such Registration
Statement becomes effective, then the Pricing Period shall be comprised of, (i)
in the case of an event described in clause (1), the twenty five (25) Trading
Days preceding the 120th day following the issuance of the Series D Preferred
Stock plus all Trading Days through and including the third Trading Day
following the date of effectiveness of the Registration Statement; and (ii) in
the case of an event described in clause (2), the twenty five (25) Trading Days
preceding the date on which the holders are first notified or otherwise first
reasonably determine based on the information available that sales may not be
made under the Prospectus, plus all Trading Days through and including the third
Trading Day following the date on which the holders of Series D Preferred Stock
are notified or otherwise first reasonably determine based on the information
available that such sales may again be made under the Prospectus.
C. The Conversion Price shall be subject to adjustment from time to
time as follows:
9
40
(a) Reset of Original Fixed Conversion Price or Applicable
Percentage. In the event that the Closing Price is below the Floor Price for any
thirty (30) consecutive Trading Days, the Corporation shall either (i)
permanently reset the Fixed Conversion Price to 115% of the average closing bid
price of the Common Stock during such thirty (30) Trading Day period or (ii)
permanently reset the percentage referred to in clause (ii) of the definition of
Applicable Percentage from 100% to 94%. The Corporation shall notify the holders
of Series D Preferred Stock (in writing on the Trading Day next following the
thirty (30) consecutive Trading Day period giving rise to the Corporation's
obligations hereunder) of its election to reset the Fixed Conversion Price or
the Applicable Percentage as provided above, and the choice of which to reset
shall be the Corporation's.
(b) Adjustment to Fixed Conversion Price Due to Stock Split, Stock
Dividend, Etc. If at any time when the Series D Preferred Stock is issued and
outstanding, the number of outstanding shares of Common Stock is increased by a
stock split, stock dividend, combination, reclassification, below-Market Price
rights offering to all holders of Common Stock or other similar event, the Fixed
Conversion Price and the Floor Price shall be proportionately reduced, or if the
number of outstanding shares of Common Stock is decreased by a reverse stock
split, combination or reclassification of shares, or other similar event, the
Fixed Conversion Price and the Floor Price shall be proportionately increased.
In such event, the Corporation shall notify the transfer agent and the
conversion agent for the Series D Preferred Stock (the "Transfer Agent") of such
change on or before the effective date thereof.
(c) Adjustment to Variable Conversion Price. If at any time when
Series D Preferred Stock is issued and outstanding, the number of outstanding
shares of Common Stock is increased or decreased by a stock split, stock
dividend, combination, reclassification, below-Market Price rights offering to
all holders of Common Stock or other similar event, which event shall have taken
place during the reference period for determination of the Conversion Price for
any Optional Conversion or Automatic Conversion of the Series D Preferred Stock,
then the Variable Conversion Price shall be calculated giving appropriate effect
to the stock split, stock dividend, combination, reclassification or other
similar event for the entire Pricing Period immediately preceding the Conversion
Date. In such event, the Corporation shall notify the Transfer Agent of such
change on or before the effective date thereof. Notwithstanding the foregoing,
solely in the case of a below- Market Price rights offering, the Variable
Conversion Price for a share of Series D Preferred Stock shall be adjusted only
if the holder of such share waives in writing his rights to acquire the purchase
rights associated with such rights offering pursuant to Article VI.C(f).
(d) Adjustment Due to Merger, Consolidation, Etc. Subject to Article
IV.B, if, at any time when Series D Preferred Stock is issued and outstanding
and prior to the conversion of all Series D Preferred Stock, there shall be any
merger, consolidation, exchange of shares, recapitalization, reorganization, or
other similar event, as a result of which shares of Common Stock of the
Corporation shall be changed into the same or a different number of shares of
another class or classes of stock or securities of the Corporation or another
entity, or in case of any sale or conveyance of all or substantially all of the
assets of the Corporation other than in connection with a plan of complete
liquidation of the Corporation, then the holders of Series D Preferred Stock
shall thereafter
10
41
have the right to receive upon conversion of the Series D Preferred Stock, upon
the basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon conversion, such
stock, securities or assets which the holders of Series D Preferred Stock would
have been entitled to receive in such transaction had the Series D Preferred
Stock been converted in full (without regard to any limitations on conversion
contained herein) immediately prior to such transaction, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
the holders of Series D Preferred Stock to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Conversion
Price and of the number of shares of Common Stock issuable upon conversion of
the Series D Preferred Stock) shall thereafter be applicable, as nearly as may
be practicable in relation to any securities or assets thereafter deliverable
upon the conversion of Series D Preferred Stock. The Corporation shall not
effect any transaction described in this subsection (d) unless (a) it first
gives, to the extent practical, thirty (30) days' prior written notice (but in
any event at least fifteen (15) business days prior written notice) of such
merger, consolidation, exchange of shares, recapitalization, reorganization or
other similar event or sale of assets (during which time the holders of Series D
Preferred Stock shall be entitled to convert the Series D Preferred Stock) and
(b) the resulting successor or acquiring entity (if not the Corporation) assumes
by written instrument the obligations of this subsection (d). The above
provisions shall similarly apply to successive consolidations, mergers, sales,
transfers or share exchanges.
(e) Adjustment Due to Distribution. Subject to Article III, if the
Corporation shall declare or make any distribution of its assets (or rights to
acquire its assets) to holders of Common Stock as a dividend, stock repurchase,
by way of return of capital or otherwise (including any dividend or distribution
to the Corporation's shareholders in cash or shares (or rights to acquire
shares) of capital stock of a subsidiary (i.e., a spin-off)) (a "Distribution"),
then the holders of Series D Preferred Stock shall be entitled, upon any
conversion of shares of Series D Preferred Stock after the date of record for
determining shareholders entitled to such Distribution, to receive the amount of
such assets which would have been payable to the holder with respect to the
shares of Common Stock issuable upon such conversion had such holder been the
holder of such shares of Common Stock on the record date for the determination
of shareholders entitled to such Distribution.
(f) Purchase Rights. Subject to Article III and Article VI.C(c), if
at any time when any Series D Preferred Stock is issued and outstanding, the
Corporation issues any convertible securities or rights to purchase stock,
warrants, securities or other property (the "Purchase Rights") pro rata to the
record holders of any class of Common Stock, then the holders of Series D
Preferred Stock will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of Common Stock acquirable
upon complete conversion of the Series D Preferred Stock (without regard to any
limitations on conversion contained herein) immediately before the date on which
a record is taken for the grant, issuance or sale of such Purchase Rights, or,
if no such record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights.
11
42
(g) Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this Article VI.C. the
Corporation, at its expense, shall make available to the holders the information
necessary to determine such adjustment or readjustment. The Corporation shall,
upon the written request at any time of any holder of Series D Preferred Stock,
furnish to such holder a certificate setting forth (i) such adjustment or
readjustment, (ii) the Conversion Price at the time in effect and (iii) the
number of shares of Common Stock and the amount, if any, of other securities or
property which at the time would be received upon conversion of a share of
Series D Preferred Stock.
D. For purposes of Article VI.C(b) and (c) above, "Market Price," which
shall be measured as of the record date in respect of the rights offering means
(i) the average of the last reported sale prices for the shares of Common Stock
as reported by Nasdaq SmallCap, as applicable, for the twenty (20) Trading Days
immediately preceding such date, or (ii) if Nasdaq SmallCap is not the principal
trading market for the shares of Common Stock, the average of the last reported
sale prices on the principal trading market for the Common Stock during the same
period, or (iii) if market value cannot be calculated as of such date on any of
the foregoing bases, the Market Price shall be the fair market value as
reasonably determined in good faith by (a) the Board of Directors of the
Corporation, or (b) at the option of two-thirds (2/3) of the holders, with the
expense divided between such holder and the Corporation equally, of the
outstanding Series D Preferred Stock by an independent investment bank of
nationally recognized standing in the valuation of businesses similar to the
business of the Corporation.
E. In order to convert Series D Preferred Stock into full shares of Common
Stock, a holder of Series D Preferred Stock shall: (i) submit a copy of the
fully executed notice of conversion in the form attached hereto as Exhibit A
("Notice of Conversion") to the Corporation by facsimile dispatched on the
Conversion Date (or by other means resulting in notice to the Corporation on the
Conversion Date) at the office of the Corporation or the Transfer Agent that the
holder elects to convert the same, which notice shall specify the number of
shares of Series D Preferred Stock to be converted, the applicable Conversion
Price, the Market Price Days, and a calculation of the number of shares of
Common Stock issuable upon such conversion (together with a copy of the first
page of each certificate to be converted) prior to 12:00 Midnight, New York City
time (the "Conversion Notice Deadline") on the date of conversion specified on
the Notice of Conversion; and (ii) surrender the original certificates
representing the Series D Preferred Stock being converted (the "Preferred Stock
Certificates"), duly endorsed, along with a copy of the Notice of Conversion to
the office of the Corporation or the Transfer Agent as soon as practicable
thereafter. The Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion, unless
either the Preferred Stock Certificates are delivered to the Corporation or its
Transfer Agent as provided above, or the holder notifies the Corporation or its
Transfer Agent that such certificates have been lost, stolen or destroyed
(subject to the requirements of subparagraph (a) below). In the case of a
dispute as to the calculation of the Conversion Price, the Corporation shall
promptly issue such number of shares of Common Stock that are not disputed in
accordance with subparagraph (b) below. The Corporation shall submit the
disputed calculations to its outside accountant via facsimile within two (2)
business days of receipt of the Notice of Conversion. The accountant shall audit
the calculations and notify the Corporation and the holder of the results no
later
12
43
than 96 hours from the time it receives the disputed calculations. The
accountant's calculation shall be deemed conclusive absent manifest error.
(a) Lost or Stolen Certificates. Upon receipt by the Corporation of
evidence of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates representing shares of Series D Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity reasonably satisfactory to the
Corporation, and upon surrender and cancellation of the Preferred Stock
Certificate(s), if mutilated, the Corporation shall execute and deliver new
Preferred Stock Certificate(s) of like tenor and date.
(b) Delivery of Common Stock Upon Conversion. Upon the surrender of
certificates as described above together with a Notice of Conversion, the
Corporation shall issue and, within three (3) business days after such surrender
(or, in the case of lost, stolen or destroyed certificates, after provision of
agreement and indemnification pursuant to subparagraph (a) above) (the "Delivery
Period"), deliver (or cause its Transfer Agent to so issue and deliver) to or
upon the order of the holder (i) that number of shares of Common Stock for the
portion of the shares of Series D Preferred Stock converted as shall be
determined in accordance herewith and (ii) a certificate representing the
balance of the shares of Series D Preferred Stock not converted, if any. In
addition to any other remedies available to the holder, including actual damages
and/or equitable relief, the Corporation shall pay to a holder $500 per day in
cash for each day beyond the three (3) day grace period following the Delivery
Period that the Corporation fails to deliver Common Stock issuable upon
surrender of shares of Series D Preferred Stock with a Notice of Conversion
until such time as the Corporation has delivered all such Common Stock. Such
cash amount shall be paid to such holder by the fifth day of the month following
the month in which it has accrued or, at the option of the holder (by written
notice to the Corporation by the first day of the month following the month in
which it has accrued), shall be convertible into Common Stock in accordance with
the terms of this Article VI.
In lieu of delivering physical certificates representing the Common Stock
issuable upon conversion, provided the Transfer Agent is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of the holder and its compliance with the provisions
contained in Article VI.A. and in this Article VI.E., the Corporation shall use
its best efforts to cause the Transfer Agent to electronically transmit the
Common Stock issuable upon conversion to the holder by crediting the account of
holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission
("DWAC") system. The time periods for delivery and penalties described in the
immediately preceding paragraph shall apply to the electronic transmittals
described herein.
(c) No Fractional Shares. If any conversion of Series D Preferred
Stock would result in a fractional share of Common Stock or the right to acquire
a fractional share of Common Stock, such fractional share shall be disregarded
and the number of shares of Common Stock issuable upon conversion, of the Series
D Preferred Stock shall be the next higher number of shares.
13
44
(d) Conversion Date. The "Conversion Date" shall be the date
specified in the Notice of Conversion, provided that the Notice of Conversion is
submitted by facsimile (or by other means resulting in notice) to the
Corporation or the Transfer Agent before 12:00 Midnight, New York City time, on
the Conversion Date. Subject to Article VI.H, 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 securities as of the
Conversion Date and all rights with respect to the shares of Series D Preferred
Stock surrendered shall forthwith terminate except the right to receive the
shares of Common Stock or other securities or property issuable on such
conversion and except that the holders preferential rights as a holder of Series
D Preferred Stock shall survive to the extent the corporation fails to deliver
such securities.
F. A number of shares of the authorized but unissued Common Stock
sufficient to provide for the conversion of the Series D Preferred Stock
outstanding at the then current Conversion Price shall at all times be reserved
by the Corporation, free from preemptive rights, for such conversion or
exercise. As of the date of issuance of the Series D Preferred Stock, 3,225,806
authorized and unissued shares of Common Stock have been duly reserved for
issuance upon conversion of the Series D Preferred Stock (the "Reserved
Amount"). The Reserved Amount shall be increased from time to time in accordance
with the Corporation's obligations pursuant to Section 4(h) of the Purchase
Agreement. In addition, if the Corporation shall issue any securities or make
any change in its capital structure which would change the number of shares of
Common Stock into which each share of the Series D Preferred Stock shall be
convertible at the then current Conversion Price, the Corporation shall at the
same time also make proper provision so that thereafter there shall be a
sufficient number of shares of Common Stock authorized and reserved, free from
preemptive rights, for conversion of the outstanding Series D Preferred Stock.
If at any time a holder of shares of Series D Preferred Stock submits a
Notice of Conversion, and the Corporation does not have sufficient authorized
but unissued shares of Common Stock available to effect such conversion, in
accordance with the provisions of this Article VI (a "Conversion Default"), the
Corporation shall issue to the holder (or holders, if more than one holder
submits a Notice of Conversion in respect of the same Conversion Date), the
number of shares of Common Stock which are available to effect such conversion
up to such holder's pro rata share of the Reserved Amount, as determined in
accordance with Article X. The number of shares of Series D Preferred Stock
included in the Notice of Conversion which exceeds the amount which is then
convertible into available shares of Common Stock (the "Excess Amount") shall,
notwithstanding anything to the contrary contained herein, not be convertible
into Common Stock in accordance with the terms hereof until (and at the holder's
option at any time after) the date additional shares of Common Stock are
authorized by the Corporation to permit such conversion, at which time the
Conversion Price in respect thereof shall be the lesser of (i) the Conversion
Price on the Conversion Default Date (as defined below) and (ii) the Conversion
Price on the Conversion Date elected by the holder in respect thereof. The
Corporation shall use its best efforts to effect an increase in the authorized
number of shares of Common Stock as soon as possible following a Conversion
Default. In addition, the Corporation shall pay to the holder payments
("Conversion Default Payments") for a Conversion Default in the amount of (a)
(N/365), multiplied by (b) the sum of the Stated Value plus the Premium Amount
per share of Series D Preferred Stock through the Authorization Date (as
14
45
defined below), multiplied by (c) the Excess Amount on the day the holder
submits a Notice of Conversion giving rise to a Conversion Default (the
"Conversion Default Date"), multiplied by (d) .24, where (i) N = the number of
days from the Conversion Default Date to the date (the "Authorization Date")
that the Corporation authorizes a sufficient number of shares of Common Stock to
effect conversion of the full number of shares of Series D Preferred Stock. The
Corporation shall send notice to the holder of the authorization of additional
shares of Common Stock, the Authorization Date and the amount of holder's
accrued Conversion Default Payments. The accrued Conversion Default Payment for
each calendar month shall be paid in cash or shall be convertible into Common
Stock at the Conversion Price, at the holder's option, as follows:
(a) In the event the holder elects to receive such payment in cash,
cash payment shall be made to holder by the fifth day of the month following the
month in which it has accrued; and
(b) In the event the holder elects to take such payment in Common
Stock, the holder may convert such payment amount into Common Stock at the
Conversion Price (as in effect at the time of Conversion) at any time after the
fifth day of the month following the month in which it has accrued in accordance
with the terms of this Article VI (so long as there is then a sufficient number
of authorized shares).
Nothing herein shall limit the holder's right to pursue actual damages for
the Corporation's failure to maintain a sufficient number of authorized shares
of Common Stock, and each holder shall have the right to pursue all remedies
available at law or in equity (including a decree of specific performance and/or
injunctive relief).
G. Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to this Article VI, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series D Preferred Stock
a certificate setting forth such adjustment or 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 holder of Series
D Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustment or readjustment, (ii) the
Conversion Price at the time in effect and (iii) the number of shares of Common
Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of a share of Series D Preferred Stock.
H. Upon submission of a Notice of Conversion by a holder of Series D
Preferred Stock, (i) the shares covered thereby (other than the shares, if any,
which cannot be issued because their issuance would exceed such holder's
allocated portion of the Reserved Amount) shall be deemed converted into shares
of Common Stock and (ii) the holder's rights as a holder of such converted
shares of Series D Preferred Stock shall cease and terminate, excepting only the
right to receive certificates for such shares of Common Stock and to any
remedies provided herein or otherwise available at law or in equity to such
holder because of a failure by the Corporation to comply with the terms of this
Certificate of Designation. Notwithstanding the foregoing, if a holder has not
15
46
received certificates for all shares of Common Stock prior to the tenth (10th)
business day after the expiration of the Delivery Period with respect to a
conversion of shares of Series D Preferred Stock for any reason, then (unless
the holder otherwise elects to retain its status as a holder of Common Stock by
so notifying the Corporation) the holder shall regain the rights of a holder of
such shares of Series D Preferred Stock with respect to such unconverted shares
of Series D Preferred Stock and the Corporation shall, as soon as practicable,
return such unconverted shares of Series D Preferred Stock to the holder or, if
such shares of Series D Preferred Stock have not been surrendered, adjust its
records to reflect that such shares of Series D Preferred Stock have not been
converted. In all cases, the holder shall retain all of its rights and remedies
(including, without limitation, the right to receive Conversion Default Payments
pursuant to Article VI.F. to the extent required thereby for such Conversion
Default and any subsequent Conversion Default).
VII. Automatic Conversion
So long as the Registration Statement is effective and there is not then a
continuing Mandatory Redemption Event, and so long as the Common Stock is listed
for trading on the Nasdaq Small Cap, the Nasdaq National Market System, the
American Stock Exchange or the New York Stock Exchange, and subject to the
19.99% Limitation and the Reserved Amount, each share of Series D Preferred
Stock issued and outstanding on November 6, 2002, shall be automatically
converted into shares of Common Stock in accordance with the terms hereof (the
"Automatic Conversion Date"). The Automatic Conversion Date shall be delayed by
one (1) Trading Day for each Trading Day occurring prior thereto and prior to
the full conversion of the Series D Preferred Stock that sales cannot be made
pursuant to the Registration Statement, whether by reason of the Corporation's
failure to properly supplement or amend the prospectus included therein in
accordance with the terms of the Registration Rights Agreement or otherwise. The
Automatic Conversion Date shall be the Conversion Date for purposes of
determining the Conversion Price and the time within which certificates
representing the Common Stock must be delivered to the holder. The Automatic
Conversion Date shall be the Conversion Date for purposes of determining the
Conversion Price and the time within which certificates representing the Common
Stock must be delivered to the holder.
VIII. Voting Rights
The holders of the Series D Preferred Stock have no voting power
whatsoever, except as otherwise provided by the Colorado Business Corporation
Act ("CBCA"), in this Article VIII, and in Article IX below.
Notwithstanding the above, the Corporation shall provide each holder of
Series D Preferred Stock with prior notification of any meeting of the
shareholders (and copies of proxy materials and other information sent to
shareholders). In the event of any taking by the Corporation of a record of its
shareholders for the purpose of determining shareholders who are entitled to
receive payment of any dividend or other distribution, any right to subscribe
for, purchase or otherwise acquire (including by way of merger, consolidation or
recapitalization) any share of any class or any other securities or
16
47
property, or to receive any other right, or for the purpose of determining
shareholders who are entitled to vote in connection with any proposed sale,
lease or conveyance of all or substantially all of the assets of the
Corporation, or any proposed merger, consolidation, liquidation, dissolution or
winding up of the Corporation, the Corporation shall mail a notice to each
holder, at least ten (10) days prior to the record date specified therein (or
thirty (30) days prior to the consummation of the transaction or event,
whichever is earlier), of the date on which any such record is to be taken for
the purpose of such dividend, distribution, right or other event, and a brief
statement regarding the amount and character of such dividend, distribution,
right or other event to the extent known at such time.
To the extent that under the CBCA the vote of the holders of the Series D
Preferred Stock, voting separately as a class or series as applicable, is
required to authorize a given action of the Corporation, the affirmative vote of
the holders of at least two-thirds (2/3) of the shares of the Series D Preferred
Stock represented at a duly held meeting at which a quorum is present or by the
unanimous written consent of the shares of Series D Preferred Stock (except as
otherwise may be required under the CBCA) shall constitute the approval of such
action by the class. To the extent that under the CBCA holders of the Series D
Preferred Stock are entitled to vote on a matter with holders of Common Stock,
voting together as one class, each share of Series D Preferred Stock shall be
entitled to a number of votes equal to the number of shares of Common Stock into
which it is then convertible using the record date for the taking of such vote
of shareholders as the date as of which the Conversion Price is calculated and
deeming the five consecutive Trading Days in the Pricing Period preceding the
record date that maximize the number of shares of Common Stock issuable for
purposes of this proviso as the Market Price Days. Holders of the Series D
Preferred Stock shall be entitled to notice of all shareholder meetings or
written consents (and copies of proxy materials and other information sent to
shareholders) with respect to which they would be entitled to vote, which notice
would be provided pursuant to the Corporation's bylaws and the CBCA.
IX. Protective Provisions
So long as shares of Series D Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval (by vote, as
provided by the CBCA) of the holders of at least two-thirds (2/3) of the then
outstanding shares of Series D Preferred Stock or the unanimous written consent
of the then outstanding shares of Series D Preferred Stock:
(a) alter or change the rights, preferences or privileges of the
Series D Preferred Stock or any other securities of the Corporation so as to
affect adversely the Series D Preferred Stock;
(b) create any new class or series of capital stock having a
preference over the Series D Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation (as previously defined
in Article II hereof, "Senior Securities");
(c) create any new class or series of capital stock ranking pari
passu with the Series D Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation (as previously defined
in Article II hereof, "Pari Passu Securities");
17
48
(d) increase the authorized number of shares of Series D Preferred
Stock or Senior Securities or Pari Passu Securities; or
(e) do any act or thing not authorized or contemplated by this
Certificate of Designation which would result in taxation of the holders of
shares of the Series D Preferred Stock under Section 305 of the Internal Revenue
Code of 1986, as amended (or any comparable provision of the Internal Revenue
Code as hereafter from time to time amended).
In the event holders of at least two-thirds (2/3) of the then outstanding
shares of Series D Preferred Stock agree to allow the Corporation to alter or
change the rights, preferences or privileges of the shares of Series D Preferred
Stock, pursuant to subsection (a) above, so as to affect the Series D Preferred
Stock, then the Corporation will deliver notice of such approved change to the
holders of the Series D Preferred Stock that did not agree to such alteration or
change (the "Dissenting Holders") and Dissenting Holders shall have the right
for a period of thirty (30) days to convert pursuant to the terms of this
Certificate of Designation as they exist prior to such alteration or change or
continue to hold their shares of Series D Preferred Stock.
The Corporation shall not offer any inducement to any holder of Series D
Preferred Stock to alter or change the rights, preferences or privileges of any
shares of the Series D Preferred Stock without offering such inducement pro rata
to all holders of Series D Preferred Stock then outstanding.
X. Pro Rata Allocations
The Maximum Share Amount and the Reserved Amount shall be allocated by the
Corporation pro rata among the holders (and their respective transferees) based
on the number of shares of Series D Preferred Stock purchased by each holder
from the Corporation relative to the total aggregate number of shares of Series
D Preferred Stock purchased by all holders from the Corporation. Increases to
the Reserved Amount and Maximum Share Amount shall be allocated pro rata among
holders based on the number of shares of Series D Preferred Stock then
outstanding. Each transferee of Series D Preferred Stock succeeds to the pro
rata allocations associated with the shares of Series D Preferred Stock acquired
by such transferee.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
18
49
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Series D Preferred Stock)
The undersigned hereby irrevocably elects to convert ______ shares
of Series D Preferred Stock, represented by stock certificate No(s). __________
(the "Preferred Stock Certificates") into shares of common stock ("Common
Stock") of EPL Technologies, Inc. (the "Corporation") according to the
conditions of the Certificate of Designation of Series D Preferred Stock, as of
the date written below. If securities 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. No fee will
be charged to the holder for any conversion, except for transfer taxes, if any.
A copy of each Preferred Stock Certificate is attached hereto (or evidence of
loss, theft or destruction thereof).
The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable to the undersigned upon conversion of
the Series D Preferred Stock shall be made pursuant to registration of the
securities under the Securities Act of 1933, as amended (the "Act"), or pursuant
to an exemption from registration under the Act.
Date of Conversion:___________________________
Market Price Days:___________________________
Applicable Conversion Price:____________________
Number of Shares of
Common Stock to be Issued:_____________________
Signature:____________________________________
Name:_______________________________________
Address:______________________________________
*The Corporation is not required to issue shares of Common Stock until the
original Series D Preferred Stock Certificate(s) (or evidence of loss, theft or
destruction thereof) to be converted are received by the Corporation or the
Transfer Agent. The Corporation shall issue and deliver shares of Common Stock
to an overnight courier not later than three (3) business days following receipt
of the original Preferred Stock Certificate(s) to be converted, and shall make
payments pursuant to the Certificate of Designation for the number of business
days such issuance and delivery is late.
19
50
Mail to: SECRETARY OF STATE For office use only
CORPORATIONS SECTION
1560 BROADWAY, SUITE 200
DENVER, CO 80202
(303) 894-2251
FAX (303) 894-2242
MUST BE TYPED
FILING FEE $25.00
MUST SUBMIT TWO COPIES
Please include a typed ARTICLES OF AMENDMENT
self-addressed envelope TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is EPL Technologies, Inc.
SECOND: The following amendment to the Articles of Incorporation was adopted on
April 3, 2001, as prescribed by the Colorado Business Corporation Act, in the
manner marked with an X below:
No shares have been Issued or Directors Elected Action by Incorporators
------
No shares have been Issued but Directors Elected Action by Directors
------
Such amendment was adopted by the board of directors where shares have
X been issued and shareholder action was not required.
------
Such amendment was adopted by a vote of the shareholders. The number of
shares voted for the amendment was sufficient for approval.
------
A total of 2,000 shares of the duly authorized preferred stock, $.01
par value, of the corporation shall be designated Series E Convertible
Preferred Stock and shall have the powers, preferences, rights,
qualifications and restrictions set forth on the Certificate of
Designation attached hereto as Exhibit A.
THIRD: The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the amendment
shall be effected, is as follows: SEE ABOVE
If these amendments are to have a delayed effective date, please list that date:
n/a (Not to exceed ninety (90) days from the date of filing)
EPL TECHNOLOGIES, INC.
By:
-----------------------------------------
Paul L. Devine
Its President and CEO
51
EXHIBIT A
CERTIFICATE OF DESIGNATION, NUMBER, VOTING POWERS,
PREFERENCES AND RIGHTS OF THE SERIES OF THE PREFERRED STOCK OF
EPL TECHNOLOGIES, INC.
TO BE DESIGNATED
SERIES E CONVERTIBLE PREFERRED STOCK
1. Designation and Amount. The designation of this series of capital
stock shall be "Series E Convertible Preferred Stock," par value $.01 per share
(the "Series E Preferred Stock"). The number of shares, powers, terms,
conditions, designations, preferences and privileges, relative, participating,
optional and other special rights, and qualifications, limitations and
restrictions, if any, of the Series E Preferred Stock shall be as set forth
herein. The number of authorized shares of the Series E Preferred Stock is 2,000
shares. The initial offering price for the Series E Preferred Stock shall be
$1,000 per share (the "Original Issue Price").
2. Ranking. The Corporation's Series E Preferred Stock shall rank, as
to dividends and upon liquidation, equally with each other and equally with the
Corporation's (i) Series A 10% Cumulative Preferred Stock, par value $1.00 per
share (the "Series A Stock"), (ii) Series B Convertible Preferred Stock, par
value $0.01 per share (the "Series B Stock"), (iii) Series C Convertible
Preferred Stock, par value $0.01 per share, (the "Series C Stock"), (iv) Series
D Preferred Stock, par value $0.01 per share, (the "Series D Stock") and (v)
Series F Convertible Preferred Stock, par value $0.01 per share, (the "Series F
Stock"); and senior and prior to the Corporation's common stock, par value
$0.001 per share (the "Common Stock") and to all other classes or series of
stock issued by the Corporation, except as otherwise approved by the affirmative
vote or consent of the holders of a majority of the shares of Series E Preferred
Stock.
3. Dividends
In each fiscal year of the Corporation, the holders of shares of Series
E Preferred Stock shall be entitled to receive, when and as declared, before any
cash dividends shall be declared and paid upon or set aside for the Common Stock
in such fiscal year, out of the funds legally available for that purpose, for
each share of Series E Preferred Stock held by such holder, dividends at a rate
of ten percent (10%) per annum of the Original Issue Price, or $100.00 per
share, and no more, in cash or in stock, at the Corporation's discretion, (i.e.,
stock at the stated conversion price) and in preference and priority to any
payment of any cash dividend on Common Stock or any other shares of capital
stock of the Corporation ranking on liquidation junior to the Series E Preferred
Stock by reason of their ownership thereof ("Junior Shares").
Dividends shall accrue and be deemed to accrue from day to day whether
or not earned or declared and shall be cumulative so that if at any time after
the issuance of the Series E Preferred Stock such dividends shall not have been
paid, or declared and set apart for payment, the deficiency shall be fully paid
on or declared and set apart for payment before any dividend shall be paid on or
declared or set apart for any shares of Junior Shares is made by the
Corporation, except the repurchase of Junior Shares from employees of this
Corporation upon termination of employment. Any accumulation of dividends on the
Series E Preferred Stock shall not bear interest.
4. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series E
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its shareholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series E Preferred Stock, but before
any payment shall be made to the holders of Common Stock or any other Junior
Shares, an amount equal to $1,000 per share of Series E Preferred Stock (subject
to appropriate adjustment in the event of any stock dividend, stock split,
combination or other
A-1
52
similar recapitalization affecting such shares). If upon any such liquidation,
dissolution or winding up of the Corporation the remaining assets of the
Corporation available for distribution to its shareholders shall be insufficient
to pay the holders of shares of Series E Preferred Stock the full amount to
which they shall be entitled, the holders of shares of Series E Preferred Stock
and any other class or series of stock ranking on liquidation on a parity with
the Series E Preferred Stock shall share ratably in any distribution of the
remaining assets and funds of the Corporation in proportion to the respective
amounts which would otherwise be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to such shares
were paid in full. The Series E Preferred Stock shall rank on liquidation on a
parity with the Series A Stock, the Series B Stock, the Series C Stock, the
Series D Stock and the Series F Stock, and the Common Stock shall constitute
Junior Shares hereunder.
(b) After the payment of all preferential amounts required to be paid
to the holders of any class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series E Preferred Stock and any
other class or series of stock of the Corporation ranking on liquidation on a
parity with the Series E Preferred Stock, upon the dissolution, liquidation or
winding up of the Corporation, the holders of shares of Common Stock or any
other Junior Shares then outstanding shall be entitled to receive the remaining
assets and funds of the Corporation available for distribution to its
shareholders.
5. Voting
(a) Each holder of outstanding shares of Series E Preferred Stock shall
be entitled to the number of votes equal to the number of whole shares of Common
Stock into which the shares of Series E Preferred Stock held by such holder are
convertible (as adjusted from time to time pursuant to Section 7 hereof), at
each meeting of shareholders of the Corporation (and written actions of
shareholders in lieu of meetings) with respect to any and all matters presented
to the shareholders of the Corporation for their action or consideration. Except
as required by law or by the provisions of its Amended and Restated Certificate
of Incorporation, as amended from time to time, holders of Series E Preferred
Stock and any other outstanding series of Preferred Stock shall vote together
with the holders of Series A Stock, Series B Stock, Series C Stock, Series D
Stock, Series F Stock and Common Stock as a single class or "voting group"
within the meaning of the Colorado Business Corporation Act.
(b) The Corporation shall not (i) amend, alter or repeal the
preferences, special rights or other powers of the Series E Preferred Stock so
as to affect adversely the Series E Preferred Stock, or (ii) amend, alter or
modify its Articles of Incorporation to increase the number of authorized shares
of Series E Preferred Stock, without the written consent or affirmative vote of
the holders of a majority of the then outstanding shares of the Series E
Preferred Stock in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a class. For this purpose, without limiting the
generality of the foregoing, the authorization of any class or series of stock
with preference or priority over the Series E Preferred Stock as to the right to
receive either dividends or amounts distributable upon liquidation, dissolution
or winding up the Corporation shall be deemed to affect adversely the Series E
Preferred Stock, and the authorization of any class or series of stock on a
parity with the Series E Preferred Stock as to the rights to receive either
dividends or amounts distributable upon liquidation, dissolution or winding up
of the Corporation shall not be deemed to affect adversely the Series E
Preferred Stock.
6. Redemption. At the option of the Corporation, the Corporation may
redeem and cancel all or any portion of the outstanding shares of the Series E
Preferred Stock by either (i) requiring the holders of shares of Series E
Preferred Stock to convert all or a portion of such shares into Common Stock in
accordance with Section 7 below (a "Conversion Redemption"), or (ii) making a
cash payment of $1,000.00 per share (a "Cash Redemption"). The procedure for a
Conversion Redemption is set forth in Section 7. The procedure for any Cash
Redemption of Series E Preferred Stock shall be as follows:
(A) If the Corporation chooses to redeem all or any portion of the
outstanding shares of the Series E Preferred Stock, it shall specify in a
written notice to the holders of such shares to be redeemed (a "Redemption
Notice"), the number of shares which the Corporation elects to redeem, in
accordance with Section (6)(C) hereof and whether such redemption is a
Conversion Redemption or a Cash Redemption. With respect to a Cash Redemption,
the total sum payable per share of Series E Preferred Stock on the Redemption
Date is
A-2
53
hereinafter referred to as the "Redemption Price," and the payment to be made on
the Redemption Date is hereinafter referred to as the "Redemption Payment."
(B) On and after the Redemption Date, all rights of any holder with
respect to those shares of Series E Preferred Stock being redeemed by the
Corporation pursuant to Section (6)(A), except the right to receive the
Redemption Price per share of Series E Preferred Stock as hereinafter provided
(in case of a Cash Redemption), shall cease and terminate, and such shares of
Series E Preferred Stock shall no longer be deemed to be outstanding, whether or
not the certificates representing such shares have been received by the
Corporation; provided, however, that, notwithstanding anything to the contrary
set forth herein, if the Corporation defaults in either the payment of the
Redemption Payment or the delivery of shares of Common Stock upon conversion,
the rights of the holder with respect to such shares of Series E Preferred Stock
shall continue until the Corporation cures such default.
(C) The Corporation shall send its Redemption Notice pursuant to this
Section (6) by first-class, certified mail, return receipt requested, postage
prepaid, to the holder of such shares of Series E Preferred Stock to be redeemed
(a "Notified Holder") at the holder's address of record with the Corporation. On
the fifth (5th) business day following the date upon which the Corporation sent
the Redemption Notice to the Notified Holder, the Corporation shall (i) in case
of a Cash Redemption, pay the Notified Holder the applicable Redemption Price
pursuant to the terms of Section (6)(A), or (ii) in case of a Conversion
Redemption, deliver the applicable number of shares of Common Stock pursuant to
Section 7; provided that, in either case, the Corporation or its transfer agent
has received the certificate(s) representing the shares of Series E Preferred
Stock to be redeemed. Such payment or delivery date, as the case may be, shall
be referred to herein as the "Redemption Date". Upon redemption of only a
portion of the number of shares covered by a Series E Preferred Stock
certificate, the Corporation shall issue and deliver to or upon the written
order of the holder of such Series E Preferred Stock certificate, at the expense
of the Corporation, a new certificate covering the number of shares of the
Series E Preferred Stock representing the unredeemed portion of the Series E
Preferred Stock certificate, which new certificate shall entitle the holder
thereof to all the rights, powers and privileges of a holder of such shares.
7. Optional Conversion. The holders of the Series E Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series E Preferred Stock shall be
convertible, at the option of the holder thereof or at the option of the
Corporation pursuant to a Conversion Redemption, at any time into such number of
fully paid and nonassessable shares of Common Stock as is determined by dividing
$1,000.00 by the Conversion Price (as defined below) in effect at the time of
conversion for each share of Series E Preferred Stock. The conversion price at
which shares of Common Stock shall be deliverable upon conversion Series E
Preferred Stock without the payment of additional consideration by the holder
thereof (the "Conversion Price") shall initially be $0.65. Such initial
Conversion Price, and the rates at which shares of Series E Preferred Stock may
be converted into shares of Common Stock, shall be subject to adjustment as
provided below.
In the event of a liquidation of the Corporation, the Conversion Rights
shall terminate at the close of business on the first full day preceding the
date fixed for the payment of any amounts distributable on liquidation to the
holders of Series E Preferred Stock.
(b) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series E 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.
(c) Mechanics of Conversion
(i) In order for a holder of Series E Preferred Stock to convert shares
of Series E Preferred Stock into shares of Common Stock, such holder shall
surrender the certificate or certificates for such shares of Series E Preferred
Stock at the office of the Corporation's transfer agent (or at the principal
office of the Corporation if the Corporation serves as its own transfer agent),
together with written notice that such holder elects to convert all or any
number of the shares of the Series E Preferred Stock represented by such
certificate or
A-3
54
certificates. Such notice shall state such holder's name. If required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by a written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or his,
her, or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the Conversion Date. The
Corporation shall, as soon as practicable after the Conversion Date, issue and
deliver at such office to such holder, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share.
(ii) The Corporation shall at all times when the Series E Preferred
Stock shall be outstanding, reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of the Series E
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Series E Preferred Stock. Before taking any action which would cause
an adjustment reducing the Conversion Price below the then par value of the
shares of Common Stock issuable upon conversion of the Series E Preferred Stock,
the Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at each such adjusted
Conversion Price.
(d) Adjustment of Conversion Price
(i) Adjustment for Anti-Dilution, Merger or Reorganization, etc. The
Conversion Price and the number and kind of securities issuable upon the
conversion of the Series E Preferred Stock shall be subject to adjustment from
time to time, but only upon the occurrence of any of the events as hereinafter
provided:
(A) In the event the Corporation shall issue Common Stock as a dividend
upon Common Stock or in payment of a dividend thereon, the Conversion Price then
in effect shall be proportionately decreased, effective at the close of business
on the record date for the determination of shareholders entitled to receive the
same (it being understood that any issuance of Common Stock as a dividend on any
class or series of the Corporation's preferred stock shall have no effect on the
Conversion Price);
(B) In the event the Corporation shall at any time subdivide or combine
its outstanding shares of Common Stock, by reclassification or otherwise, the
Conversion Price then in effect shall be proportionately decreased or increased,
as the case may be, effective immediately after the effective date of such
subdivision or combination; and
(C) If any capital reorganization or reclassification of the capital
stock of the Corporation, or consolidation or merger of the Corporation with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holders of the Series E Preferred
Stock shall thereafter have the right to purchase and receive upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of the
Common Stock of the Corporation purchasable and receivable upon the conversion,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of Common Stock
equal to the number of shares of such Common Stock purchasable and receivable
upon the conversion of the Series E Preferred Stock had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any such
reorganization, reclassification, consolidation, merger or sale, appropriate
provision shall be made with respect to the rights and interests of the holders
of Series E Preferred Stock to the end that the provisions of the Series E
Preferred Stock (including, without limitation, provisions for adjustment of the
Conversion Price and of the number of shares issuable upon conversion of the
Series E Preferred Stock) shall thereafter be applicable as nearly as may be in
relation to any shares of stock, securities, or assets thereafter deliverable
upon exercise of stock, securities, or assets thereafter deliverable upon
conversion of Series E Preferred Stock. The Corporation shall not effect any
such consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof, the successor corporation (if other than the Corporation)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume, by written instrument, the obligation to deliver to the
holders of
A-4
55
Series E Preferred Stock such shares of stock, securities, or assets as, in
accordance with the foregoing provisions, the holders of Series E Preferred
Stock may be entitled to purchase.
(ii) No Impairment
The Corporation will not by amendment of its Amended and Restated
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 will at
all times in good faith assist in the carrying out of all the provisions of this
Section 7 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
Series E Preferred Stock against impairment.
(iii) Certificate as to Adjustments
Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to this Section 7, the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of Series E Preferred Stock a
certificate setting forth such adjustment or 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 holder of Series E Preferred
Stock, furnish or cause to be furnished to such holder a similar certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Price
then in effect, and (iii) the number of shares of Common Stock and the amount,
if any, of other property which then would be received upon the conversion of
Series E Preferred Stock.
8. Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or
other securities of the Corporation;
(ii) that the Corporation subdivides or combines its outstanding
shares of Common Stock;
(iii) of any reclassification of the Common Stock of the Corporation
(other than a subdivision or combination of its outstanding
shares of Common Stock or a stock distribution thereon), or of
any consolidation or merger of the Corporation into or with
another corporation, or of the sale of all or substantially
all of the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series E Preferred Stock, and shall cause to
be mailed to the holders of the Series E Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the record date specified in (A) below or twenty days before the
date specified in (B) below, a notice stating:
(A) the record date of such dividend, distribution, subdivision or
combination, or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled
to such dividend, distribution, subdivision or combination are
to be determined, or
(B) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or
winding up.
A-5
56
Mail to: SECRETARY OF STATE For office use only
CORPORATIONS SECTION
1560 BROADWAY, SUITE 200
DENVER, CO 80202
(303) 894-2251
FAX (303) 894-2242
MUST BE TYPED
FILING FEE $25.00
MUST SUBMIT TWO COPIES
Please include a typed ARTICLES OF AMENDMENT
self-addressed envelope TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is EPL Technologies, Inc.
SECOND: The following amendment to the Articles of Incorporation was adopted on
April 3, 2001, as prescribed by the Colorado Business Corporation Act, in the
manner marked with an X below:
No shares have been Issued or Directors Elected Action by Incorporators
- - -------
No shares have been Issued but Directors Elected Action by Directors
- - -------
X Such amendment was adopted by the board of directors where shares have
- - ------- been issued and shareholder action was not required.
Such amendment was adopted by a vote of the shareholders. The number of
- - ------- shares voted for the amendment was sufficient for approval.
A total of 10,000 shares of the duly authorized preferred stock, $.01
par value, of the corporation shall be designated Series F Convertible
Preferred Stock and shall have the powers, preferences, rights,
qualifications and restrictions set forth on the Certificate of
Designation attached hereto as Exhibit A.
THIRD: The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the amendment
shall be effected, is as follows: SEE ABOVE
If these amendments are to have a delayed effective date, please list that date:
n/a (Not to exceed ninety (90) days from the date of filing)
EPL TECHNOLOGIES, INC.
By:
------------------------------------------
Paul L. Devine
Its President and CEO
57
EXHIBIT A
CERTIFICATE OF DESIGNATION, NUMBER, VOTING POWERS,
PREFERENCES AND RIGHTS OF THE SERIES OF THE PREFERRED STOCK OF
EPL TECHNOLOGIES, INC.
TO BE DESIGNATED
SERIES F CONVERTIBLE PREFERRED STOCK
1. Designation and Amount. The designation of this series of capital
stock shall be "Series F Convertible Preferred Stock," par value $.01 per share
(the "Series F Preferred Stock"). The number of shares, powers, terms,
conditions, designations, preferences and privileges, relative, participating,
optional and other special rights, and qualifications, limitations and
restrictions, if any, of the Series F Preferred Stock shall be as set forth
herein. The number of authorized shares of the Series F Preferred Stock is
10,000 shares. The initial offering price for the Series F Preferred Stock shall
be $1,000 per share (the "Original Issue Price").
2. Ranking. The Corporation's Series F Preferred Stock shall rank, as
to dividends and upon liquidation, equally with each other and equally with the
Corporation's (i) Series A 10% Cumulative Preferred Stock, par value $1.00 per
share (the "Series A Stock"), (ii) Series B Convertible Preferred Stock, par
value $0.01 per share (the "Series B Stock"), (iii) Series C Convertible
Preferred Stock, par value $0.01 per share, (the "Series C Stock"), (iv) Series
D Preferred Stock, par value $0.01 per share, (the "Series D Stock"); and (v)
Series E Preferred Stock, par value $0.01 per share (the "Series E Stock") and
senior and prior to the Corporation's common stock, par value $0.001 per share
(the "Common Stock") and to all other classes or series of stock issued by the
Corporation, except as otherwise approved by the affirmative vote or consent of
the holders of a majority of the shares of Series F Preferred Stock.
3. Dividends
In each fiscal year of the Corporation, the holders of shares of Series
F Preferred Stock shall be entitled to receive, when and as declared, before any
cash dividends shall be declared and paid upon or set aside for the Common Stock
in such fiscal year, out of the funds legally available for that purpose, for
each share of Series F Preferred Stock held by such holder, dividends at a rate
of ten percent (10%) per annum of the Original Issue Price, or $100.00 per
share, and no more, in cash or in stock, at the Corporation's discretion, (i.e.,
stock at the stated conversion price) and in preference and priority to any
payment of any cash dividend on Common Stock or any other shares of capital
stock of the Corporation ranking on liquidation junior to the Series F Preferred
Stock by reason of their ownership thereof ("Junior Shares").
Dividends shall accrue and be deemed to accrue from day to day whether
or not earned or declared and shall be cumulative so that if at any time after
the issuance of the Series F Preferred Stock such dividends shall not have been
paid, or declared and set apart for payment, the deficiency shall be fully paid
on or declared and set apart for payment before any dividend shall be paid on or
declared or set apart for any shares of Junior Shares is made by the
Corporation, except the repurchase of Junior Shares from employees of this
Corporation upon termination of employment. Any accumulation of dividends on the
Series F Preferred Stock shall not bear interest.
4. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series F
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its shareholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series F Preferred Stock, but before
any payment shall be made to the holders of Common Stock or any other Junior
Shares, an amount equal to $1,000 per share of Series F Preferred Stock (subject
to appropriate adjustment in the event of any stock dividend, stock split,
combination or other
A-1
58
similar recapitalization affecting such shares). If upon any such liquidation,
dissolution or winding up of the Corporation the remaining assets of the
Corporation available for distribution to its shareholders shall be insufficient
to pay the holders of shares of Series F Preferred Stock the full amount to
which they shall be entitled, the holders of shares of Series F Preferred Stock
and any other class or series of stock ranking on liquidation on a parity with
the Series F Preferred Stock shall share ratably in any distribution of the
remaining assets and funds of the Corporation in proportion to the respective
amounts which would otherwise be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to such shares
were paid in full. The Series F Preferred Stock shall rank on liquidation on a
parity with the Series A Stock, the Series B Stock, the Series C Stock and the
Series D Stock, and the Common Stock shall constitute Junior Shares hereunder.
(b) After the payment of all preferential amounts required to be paid
to the holders of any class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series F Preferred Stock and any
other class or series of stock of the Corporation ranking on liquidation on a
parity with the Series F Preferred Stock, upon the dissolution, liquidation or
winding up of the Corporation, the holders of shares of Common Stock or any
other Junior Shares then outstanding shall be entitled to receive the remaining
assets and funds of the Corporation available for distribution to its
shareholders.
5. Voting
(a) Each holder of outstanding shares of Series F Preferred Stock shall
be entitled to the number of votes equal to the number of whole shares of Common
Stock into which the shares of Series F Preferred Stock held by such holder are
convertible (as adjusted from time to time pursuant to Section 7 hereof), at
each meeting of shareholders of the Corporation (and written actions of
shareholders in lieu of meetings) with respect to any and all matters presented
to the shareholders of the Corporation for their action or consideration. Except
as required by law or by the provisions of its Amended and Restated Certificate
of Incorporation, as amended from time to time, holders of Series F Preferred
Stock and any other outstanding series of Preferred Stock shall vote together
with the holders of Series A Stock, Series B Stock, Series C Stock, Series D
Stock, Series E Stock and Common Stock as a single class or "voting group"
within the meaning of the Colorado Business Corporation Act.
(b) The Corporation shall not (i) amend, alter or repeal the
preferences, special rights or other powers of the Series F Preferred Stock so
as to affect adversely the Series F Preferred Stock, or (ii) amend, alter or
modify its Articles of Incorporation to increase the number of authorized shares
of Series F Preferred Stock, without the written consent or affirmative vote of
the holders of a majority of the then outstanding shares of the Series F
Preferred Stock in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a class. For this purpose, without limiting the
generality of the foregoing, the authorization of any class or series of stock
with preference or priority over the Series F Preferred Stock as to the right to
receive either dividends or amounts distributable upon liquidation, dissolution
or winding up the Corporation shall be deemed to affect adversely the Series F
Preferred Stock, and the authorization of any class or series of stock on a
parity with the Series F Preferred Stock as to the rights to receive either
dividends or amounts distributable upon liquidation, dissolution or winding up
of the Corporation shall not be deemed to affect adversely the Series F
Preferred Stock.
6. Redemption. At the option of the holders of the Series F Preferred
Stock, the holders may redeem and cancel all or any portion of the outstanding
shares of the Series F Preferred Stock by either of (i) converting all or a
portion of such shares into Common Stock in accordance with Section 7 below (a
"Conversion Redemption"), or (ii) require the Corporation to pay to the holders
a cash payment of $1,000.00 per share plus any dividends not previously paid
pursuant to Section 3 (a "Cash Redemption"); provided, however that any Cash
Redemption shall not be effected any earlier than three (3) years after the date
upon which a holder has been issued the Series F Preferred Stock. Except as
otherwise set forth below,the procedure for a Conversion Redemption is set forth
in Section 7. The procedure for any Cash Redemption of Series F Preferred Stock
shall be as follows:
(A) If any holder chooses to redeem all or any portion of the
outstanding shares of the Series F Preferred Stock, it shall specify in a
written notice to the Corporation (a "Redemption Notice"), the number of shares
which the holder elects to redeem, in accordance with Section 6(C) hereof and
whether such redemption is a Conversion Redemption or a Cash Redemption. With
respect to a Cash Redemption, the total sum payable per
A-2
59
share of Series F Preferred Stock on the Redemption Date is hereinafter referred
to as the "Redemption Price," and the payment to be made on the Redemption Date
is hereinafter referred to as the "Redemption Payment."
(B) On and after the Redemption Date (as defined in Section 6(C)), all
rights of any holder with respect to those shares of Series F Preferred Stock
being redeemed by the Corporation pursuant to Section 6(A), except the right to
receive the Redemption Price per share of Series F Preferred Stock as
hereinafter provided (in case of a Cash Redemption), shall cease and terminate,
and such shares of Series F Preferred Stock shall no longer be deemed to be
outstanding, whether or not the certificates representing such shares have been
received by the Corporation; provided, however, that, notwithstanding anything
to the contrary set forth herein, if the Corporation defaults in either the
payment of the Redemption Payment or the delivery of shares of Common Stock upon
conversion, the rights of the holder with respect to such shares of Series F
Preferred Stock shall continue until the Corporation cures such default.
(C) The holders shall send its Redemption Notice pursuant to this
Section (6) by first-class, certified mail, return receipt requested, postage
prepaid, to the Corporation at the Corporation's address. On the sixtieth (60th)
day following the date upon which the holder sent the Redemption Notice to the
Corporation, the Corporation shall (i) in case of a Cash Redemption, pay the
holder the applicable Redemption Price pursuant to the terms of Section 6(A),
or (ii) in case of a Conversion Redemption, on the fifth (5th) business day
following such date, deliver the applicable number of shares of Common Stock
pursuant to Section 7; provided that, in either case, the Corporation or its
transfer agent has received the certificate(s) representing the shares of Series
F Preferred Stock to be redeemed. Such payment or delivery date, as the case may
be, shall be referred to herein as the "Redemption Date". Upon redemption of
only a portion of the number of shares covered by a Series F Preferred Stock
certificate, the Corporation shall issue and deliver to or upon the written
order of the holder of such Series F Preferred Stock certificate, at the expense
of the Corporation, a new certificate covering the number of shares of the
Series F Preferred Stock representing the unredeemed portion of the Series F
Preferred Stock certificate, which new certificate shall entitle the holder
thereof to all the rights, powers and privileges of a holder of such shares.
7. Optional Conversion. The holders of the Series F Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series F Preferred Stock shall be
convertible, at the option of the holder thereof or at the option of the
Corporation pursuant to a Conversion Redemption, at any time into such number of
fully paid and nonassessable shares of Common Stock as is determined by dividing
$1,000.00 by the Conversion Price (as defined below) in effect at the time of
conversion for each share of Series F Preferred Stock. The conversion price at
which shares of Common Stock shall be deliverable upon conversion Series F
Preferred Stock without the payment of additional consideration by the holder
thereof (the "Conversion Price") shall initially be $0.70. Such initial
Conversion Price, and the rates at which shares of Series F Preferred Stock may
be converted into shares of Common Stock, shall be subject to adjustment as
provided below.
In the event of a liquidation of the Corporation, the Conversion Rights
shall terminate at the close of business on the first full day preceding the
date fixed for the payment of any amounts distributable on liquidation to the
holders of Series F Preferred Stock.
(b) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series F 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.
(c) Mechanics of Conversion
(i) In order for a holder of Series F Preferred Stock to convert shares
of Series F Preferred Stock into shares of Common Stock, such holder shall
surrender the certificate or certificates for such shares of Series F Preferred
Stock at the office of the Corporation's transfer agent (or at the principal
office of the Corporation if the Corporation serves as its own transfer agent),
together with written notice that such holder elects to convert all or any
number of the shares of the Series F Preferred Stock represented by such
certificate or
A-3
60
certificates. Such notice shall state such holder's name. If required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by a written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or his,
her, or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the Conversion Date. The
Corporation shall, as soon as practicable after the Conversion Date, issue and
deliver at such office to such holder, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share.
(ii) The Corporation shall at all times when the Series F Preferred
Stock shall be outstanding, reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of the Series F
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Series F Preferred Stock. Before taking any action which would cause
an adjustment reducing the Conversion Price below the then par value of the
shares of Common Stock issuable upon conversion of the Series F Preferred Stock,
the Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at each such adjusted
Conversion Price.
(d) Adjustment of Conversion Price
(i) Adjustment for Anti-Dilution, Merger or Reorganization, etc. The
Conversion Price and the number and kind of securities issuable upon the
conversion of the Series F Preferred Stock shall be subject to adjustment from
time to time, but only upon the occurrence of any of the events as hereinafter
provided:
(A) In the event the Corporation shall issue Common Stock as a dividend
upon Common Stock or in payment of a dividend thereon, the Conversion Price then
in effect shall be proportionately decreased, effective at the close of business
on the record date for the determination of shareholders entitled to receive the
same (it being understood that any issuance of Common Stock as a dividend on any
class or series of the Corporation's preferred stock shall have no effect on the
Conversion Price);
(B) In the event the Corporation shall at any time subdivide or combine
its outstanding shares of Common Stock, by reclassification or otherwise, the
Conversion Price then in effect shall be proportionately decreased or increased,
as the case may be, effective immediately after the effective date of such
subdivision or combination; and
(C) If any capital reorganization or reclassification of the capital
stock of the Corporation, or consolidation or merger of the Corporation with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holders of the Series F Preferred
Stock shall thereafter have the right to purchase and receive upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of the
Common Stock of the Corporation purchasable and receivable upon the conversion,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of Common Stock
equal to the number of shares of such Common Stock purchasable and receivable
upon the conversion of the Series F Preferred Stock had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any such
reorganization, reclassification, consolidation, merger or sale, appropriate
provision shall be made with respect to the rights and interests of the holders
of Series F Preferred Stock to the end that the provisions of the Series F
Preferred Stock (including, without limitation, provisions for adjustment of the
Conversion Price and of the number of shares issuable upon conversion of the
Series F Preferred Stock) shall thereafter be applicable as nearly as may be in
relation to any shares of stock, securities, or assets thereafter deliverable
upon exercise of stock, securities, or assets thereafter deliverable upon
conversion of Series F Preferred Stock. The Corporation shall not effect any
such consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof, the successor corporation (if other than the Corporation)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume, by written instrument, the obligation to deliver to the
holders of
A-4
61
Series F Preferred Stock such shares of stock, securities, or assets as, in
accordance with the foregoing provisions, the holders of Series F Preferred
Stock may be entitled to purchase.
(ii) No Impairment
The Corporation will not by amendment of its Amended and Restated
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 will at
all times in good faith assist in the carrying out of all the provisions of this
Section 7 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
Series F Preferred Stock against impairment.
(iii) Certificate as to Adjustments
Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to this Section 7, the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of Series F Preferred Stock a
certificate setting forth such adjustment or 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 holder of Series F Preferred
Stock, furnish or cause to be furnished to such holder a similar certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Price
then in effect, and (iii) the number of shares of Common Stock and the amount,
if any, of other property which then would be received upon the conversion of
Series F Preferred Stock.
8. Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or
other securities of the Corporation;
(ii) that the Corporation subdivides or combines its outstanding
shares of Common Stock;
(iii) of any reclassification of the Common Stock of the Corporation
(other than a subdivision or combination of its outstanding
shares of Common Stock or a stock distribution thereon), or of
any consolidation or merger of the Corporation into or with
another corporation, or of the sale of all or substantially
all of the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series F Preferred Stock, and shall cause to
be mailed to the holders of the Series F Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the record date specified in (A) below or twenty days before the
date specified in (B) below, a notice stating:
(A) the record date of such dividend, distribution, subdivision or
combination, or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled
to such dividend, distribution, subdivision or combination are
to be determined, or
(B) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or
winding up.
A-5