EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
WORK INTERNATIONAL CORPORATION
ARTICLE ONE
Work International Corporation (the "Corporation"), pursuant to the
provisions of Article 4.07 of the Texas Business Corporation Act (the "TBCA"),
hereby adopts these Amended and Restated Articles of Incorporation which
accurately copy the articles of incorporation and all amendments thereto that
are in effect to date and as further amended by such Amended and Restated
Articles of Incorporation as hereinafter set forth and which contain no other
changes in any provision thereof:
ARTICLE TWO
The articles of incorporation of the Corporation are amended by the Amended
and Restated Articles of Incorporation as follows:
Article I is amended and restated in its entirety as follows:
"ARTICLE I
NAME
The name of the corporation is WORK International Corporation (the
"Corporation")."
The first paragraph of Article IV is amended (i) to increase the aggregate
number of authorized shares to 55,000,000 from 25,000,000, and (ii) to increase
the authorized shares of common stock, par value $.001 ("Common Stock"), to
50,000,000 from 20,000,000. Article IV is further amended by adding a new
second paragraph providing for a split of the presently outstanding 2,975,000
shares of Common Stock into 1,491,085 shares of Common Stock by splitting each
outstanding share of Common Stock into 0.50120488 of a share of Common Stock
(the "Reverse Split"). So amended, the first two paragraphs of Article IV are
restated in their entirety as follows:
"The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is 55,000,000 shares, consisting
of: (i) 50,000,000 shares of common stock, par value $.001 per share
(the "Common Stock"), and (ii) 5,000,000 shares of preferred stock, par
value $.001 per share
(the "Preferred Stock"). Shares of any class of capital
stock of the Corporation may be issued for such consideration and for such
corporate purposes as the Board of Directors of the Corporation (the "Board
of Directors") may from time to time determine. Each share of Common Stock
shall be entitled to one vote. The Board of Directors has designated two
series of the Corporation's Preferred Stock. The Statement of Designation,
Preferences, Rights and Limitations of the Series A Preferred Stock is
attached hereto as Exhibit A and is incorporated herein by reference. The
Statement of Designation, Preferences, Rights and Limitations of the Series
B Preferred Stock is attached hereto as Exhibit B and is incorporated
herein by reference.
Each of the shares of the Common Stock outstanding at the date and
time these Amended and Restated Articles of Incorporation are filed shall
be split into 0.50120488 of a share of the Common Stock (the "Reverse
Split") without any further action by the shareholders or Board of
Directors of the Corporation. No fractional shares shall be issued, and
the number of shares to be issued to each stockholder shall be rounded up
or down to the nearest whole number. Pursuant to the terms of the
Statement of Designation, Preferences, Rights and Limitations of the Series
A Preferred Stock, as a result of the Reverse Split, the Conversion Factor
for the Series A Preferred Stock will be 4.98798. Pursuant to the terms of
the Statement of Designation, Preferences, Rights and Limitations of the
Series B Preferred Stock, as a result of the Reverse Split, the Conversion
Factor for the Series B Preferred Stock will be 7.980768."
Paragraph A of Article X is amended to delay dividing the board of
directors into three classes until the Corporation has a class or series of
capital stock registered under the Securities Exchange Act of 1934 and to change
the year-end dates preceding the annual meetings marking the expiration of the
terms of directors first elected to Class I, Class II, and Class III to 1998,
1999, and 2000 respectively. So amended, paragraph A of Article X is restated
in its entirety as follows:
"A. NUMBER, ELECTION AND TERMS OF DIRECTORS. The number of directors
which shall constitute the whole Board of Directors shall be fixed from
time to time by a majority of the directors then in office; provided,
however, that from and after the first date as of which the Corporation has
a class or series of capital stock registered under the Exchange Act, the
number of directors which shall constitute the whole Board of Directors
shall be not less than three and the Board of Directors shall be divided
into three classes: Class I, Class II and Class III. Each director shall
serve for a term ending on the third annual meeting following the annual
meeting at which such director was elected; provided, however, that the
directors first elected to Class I shall serve for a term expiring
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at the annual meeting next following the end of the calendar year 1998, the
directors first elected to Class II shall serve for a term expiring at the
annual meeting next following the end of the calendar year 1999, and the
directors first elected to Class III shall serve for a term expiring at the
annual meeting next following the end of the calendar year 2000. Each
director shall hold office until the annual meeting at which such
director's term expires and, the foregoing notwithstanding, shall serve
until his successor shall have been duly elected and qualified or until his
earlier death, resignation or removal. Election of directors need not be by
written ballot unless the Bylaws of the Corporation shall so provide."
ARTICLE THREE
The Reverse Split will reduce the stated capital of the Corporation by
$1,483.91 to a total of $1,494.59.
ARTICLE FOUR
The amendment made by these Amended and Restated Articles of Incorporation
was effected in conformity with the provisions of the TBCA and such amendment
(the "Amendment") made by these Amended and Restated Articles of Incorporation
was duly adopted by the unanimous written consent of the shareholders of the
Corporation entitled to vote thereon, in accordance with Article 9.10 of the
TBCA, as of the 10th day of July 1998.
ARTICLE FIVE
The number of shares of the Corporation outstanding at the time of such
adoption was 2,975,000 shares of Common Stock, 1,000 shares of Series A
Preferred Stock and 2,500 shares of Series B Preferred Stock; the number of
shares entitled to vote thereon was 2,975,000 shares of Common Stock. In
accordance with Article 9.10 of the TBCA, the holders of all shares of Common
Stock gave their written consent in favor of the Amendment.
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ARTICLE SIX
The articles of incorporation and all amendments and supplements thereto
are hereby superseded by the Amended and Restated Articles of Incorporation
attached hereto as Exhibit I which accurately copy the entire text thereof as
amended as above set forth.
Dated: July 10, 1998 Work International Corporation
/s/ B. Garfield French
-------------------------------------
B. Garfield French
President and Chief Executive Officer
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EXHIBIT I
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
WORK INTERNATIONAL CORPORATION
ARTICLE I
NAME
The name of the corporation is WORK International Corporation (the
"Corporation").
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Texas is c/o C T
Corporation System, 811 Dallas Avenue, Houston, Texas 77002. The name of its
registered agent at such address is C T Corporation System.
ARTICLE III
PURPOSES
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the TBCA.
ARTICLE IV
AUTHORIZED CAPITAL STOCK
The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is 55,000,000 shares, consisting of:
(i) 50,000,000 shares of common stock, par value $.001 per share (the "Common
Stock"), and (ii) 5,000,000 shares of preferred stock, par value $.001 per share
(the "Preferred Stock"). Shares of any class of capital stock of the
Corporation may be issued for such consideration and for such corporate purposes
as the Board of Directors of the Corporation (the "Board of Directors") may from
time to time determine. Each share of Common Stock shall be entitled to one
vote. The Board of Directors has designated two series of the Corporation's
Preferred Stock. The Statement of Designation, Preferences, Rights and
Limitations of the Series A Preferred Stock is attached hereto as Exhibit A and
is incorporated herein by reference. The Statement of Designation, Preferences,
Rights and Limitations of the Series B Preferred Stock is attached hereto as
Exhibit B and is incorporated herein by reference.
Each of the shares of the Common Stock outstanding at the date and time
these Amended and Restated Articles of Incorporation are filed shall be split
into 0.50120488 of a share of the Common Stock (the "Reverse Split") without any
further action by the shareholders or Board of Directors of the Corporation. No
fractional shares shall be issued, and the number of shares to be issued to each
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stockholder shall be rounded up or down to the nearest whole number. Pursuant
to the terms of the Statement of Designation, Preferences, Rights and
Limitations of the Series A Preferred Stock, as a result of the Reverse Split,
the Conversion Factor for the Series A Preferred Stock will be 4.98798. Pursuant
to the terms of the Statement of Designation, Preferences, Rights and
Limitations of the Series B Preferred Stock, as a result of the Reverse Split,
the Conversion Factor for the Series B Preferred Stock will be 7.980768.
A. PREFERRED STOCK. The Preferred Stock may be divided into and issued
from time to time in one or more series as may be fixed and determined by the
Board of Directors. The relative rights and preferences of the Preferred Stock
of each series shall be such as shall be stated in any resolution or resolutions
adopted by the Board of Directors setting forth the designation of the series
and fixing and determining the relative rights and preferences thereof (a
"Directors' Resolution"). The Board of Directors is hereby authorized to fix and
determine the powers, designations, preferences, and relative, participating,
optional or other rights, including, without limitation, voting powers, full or
limited, preferential rights to receive dividends or assets upon liquidation,
rights of conversion or exchange into Common Stock, Preferred Stock of any
series or other securities, any right of the Corporation to exchange or convert
shares into Common Stock, Preferred Stock of any series or other securities, or
redemption provision or sinking fund provisions, as between series and as
between the Preferred Stock or any series thereof and the Common Stock, and the
qualifications, limitations or restrictions thereof, if any, all as shall be
stated in a Directors' Resolution, and the shares of Preferred Stock or any
series thereof may have full or limited voting powers, or be without voting
powers, all as shall be stated in a Directors' Resolution. Except where
otherwise set forth in the Directors' Resolution providing for the issuance of
any series of Preferred Stock, the number of shares comprising such series may
be increased or decreased (but not below the number of shares then outstanding)
from time to time by like action of the Board of Directors. The shares of
Preferred Stock of any one series shall be identical with the other shares in
the same series in all respects except as to the dates from and after which
dividends thereon shall cumulate, if cumulative.
B. REACQUIRED SHARES OF PREFERRED STOCK. Shares of any series of any
Preferred Stock that have been redeemed (whether through the operation of a
sinking fund or otherwise), purchased by the Corporation, or which, if
convertible or exchangeable, have been converted into, or exchanged for, shares
of stock of any other class or classes or any evidences of indebtedness shall
have the status of authorized and unissued shares of Preferred Stock and may be
reissued as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of Preferred Stock or as part
of any other series of Preferred Stock, all subject to the conditions or
restrictions on issuance set forth in the Directors' Resolution providing for
the issuance of any series of Preferred Stock and to any filing required by law.
C. INCREASE IN AUTHORIZED PREFERRED STOCK. The number of authorized
shares of Preferred Stock may be increased or decreased by the affirmative vote
of the holders of a majority of the stock of the Corporation entitled to vote
without the separate vote of holders of Preferred Stock as a class.
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ARTICLE V
EXISTENCE
The existence of the Corporation is to be perpetual.
ARTICLE VI
NO PREEMPTIVE RIGHTS
No stockholder shall be entitled, as a matter of right, to subscribe for or
acquire additional, unissued or treasury shares of any class of capital stock of
the Corporation whether now or hereafter authorized, or any bonds, debentures or
other securities convertible into, or carrying a right to subscribe to or
acquire such shares, but any shares or other securities convertible into, or
carrying a right to subscribe to or acquire such shares may be issued or
disposed of by the Board of Directors to such persons and on such terms as in
its discretion it shall deem advisable.
ARTICLE VII
NO CUMULATIVE VOTING
At each election of directors, every stockholder entitled to vote at such
election shall have the right to vote in person or by proxy the number of shares
owned by him for as many persons as there are directors to be elected and for
whose election he has a right to vote. No stockholder shall have the right to
cumulate his votes in any election of directors.
ARTICLE VIII
NO STOCKHOLDER ACTION WITHOUT A MEETING
Except as otherwise required by law, special meetings of the stockholders
of the Corporation may be called only by the Chairman of the Board, the Chief
Executive Officer, the President, the Board of Directors by the written order of
a majority of the entire Board of Directors, by such other persons as may be set
forth in the Bylaws of the Corporation (the "Bylaws"), or by the holders of at
least fifty percent of all of the shares entitled to vote at the proposed
special meeting; provided, however that from and after the first date as of
which the Corporation has a class or series of capital stock registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at an annual or special meeting of stockholders of the Corporation and
may not be effected by any consent in writing by such stockholders, and a
special meeting of stockholders of the Corporation may be called only by the
Chairman of the Board, the Chief Executive Officer, the President or the Board
of Directors by the written order of a majority of the entire Board of
Directors, and not by the stockholders except as otherwise provided by law or
the Bylaws.
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ARTICLE IX
VOTE REQUIRED
Except as otherwise required by law, any corporate action that requires
the approval of the stockholders of the Corporation, including, but not limited
to, amendment of these Articles of Incorporation or any merger, reorganization,
dissolution or liquidation of the Corporation, shall be approved by the
affirmative vote of a majority of the shares entitled to vote thereon.
ARTICLE X
BOARD OF DIRECTORS
The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors. In addition to the authority and
powers conferred upon the Board of Directors by the TBCA or by the other
provisions of these Articles of Incorporation, the Board of Directors is hereby
authorized and empowered to exercise all such powers and do all such acts and
things as may be exercised or done by the Corporation, subject to the provisions
of the TBCA, these Articles of Incorporation and the Bylaws of the Corporation
(the "Bylaws"); provided, however, that no Bylaws hereafter adopted by the
stockholders of the Corporation, or any amendments thereto, shall invalidate any
prior act of the Board of Directors that would have been valid if such Bylaws or
amendment had not been adopted.
1. NUMBER, ELECTION AND TERMS OF DIRECTORS. The number of directors
which shall constitute the whole Board of Directors shall be fixed from time to
time by a majority of the directors then in office; provided, however, that from
and after the first date as of which the Corporation has a class or series of
capital stock registered under the Exchange Act, the number of directors which
shall constitute the whole Board of Directors shall be not less than three and
the Board of Directors shall be divided into three classes: Class I, Class II
and Class III. Each director shall serve for a term ending on the third annual
meeting following the annual meeting at which such director was elected;
provided, however, that the directors first elected to Class I shall serve for a
term expiring at the annual meeting next following the end of the calendar year
1998, the directors first elected to Class II shall serve for a term expiring at
the annual meeting next following the end of the calendar year 1999, and the
directors first elected to Class III shall serve for a term expiring at the
annual meeting next following the end of the calendar year 2000. Each director
shall hold office until the annual meeting at which such director's term expires
and, the foregoing notwithstanding, shall serve until his successor shall have
been duly elected and qualified or until his earlier death, resignation or
removal. Election of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide
2. SUCCEEDING DIRECTORS. At such annual election, the directors chosen
to succeed those whose terms then expire shall be of the same class as the
directors they succeed, unless, by reason of any intervening changes in the
authorized number of directors, the Board of Directors shall have designated one
or more directorships whose terms then expires as directorships of another class
in order to more nearly achieve equality of number of directors among the
classes. In the event of any changes in the authorized number of directors,
each director then continuing to serve shall
nevertheless continue as a director of the class of which he is a member until
the expiration of his current term, or his prior death, resignation or removal.
The Board of Directors shall specify the class to which a newly created
directorship shall be allocated.
3. REMOVAL OF DIRECTORS. No director of the Corporation shall be removed
from office as a director by vote or other action of the stockholders or
otherwise except for cause, and then only by the affirmative vote of the holders
of at least a majority of the voting power of all outstanding shares of capital
stock of the Corporation generally entitled to vote in the election of
directors, voting together as a single class. Except as may otherwise be
provided by law, cause of removal of a director shall be deemed to exist only
if: (i) the director whose removal is proposed has been convicted, or where a
director is granted immunity to testify where another has been convicted, of a
felony by a court of competent jurisdiction and such conviction is no longer
subject to direct appeal; (ii) such director has been found by the affirmative
vote of a majority of the entire Board of Directors at any regular or special
meeting of the Board of Directors called for that purpose or by a court of
competent jurisdiction to have been grossly negligent or guilty of misconduct in
the performance of his duties to the Corporation in a matter of substantial
importance to the Corporation; or (iii) such director has been adjudicated by a
court of competent jurisdiction to be mentally incompetent, which mental
incompetency directly affects his ability as a director of the Corporation.
4. VACANCIES. Newly created directorships resulting from any increase in
the number of directors and any vacancies on the Board of Directors resulting
from death, resignation, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified or until his earlier death, resignation or removal.
No decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
ARTICLE XI
INDEMNIFICATION
A. MANDATORY INDEMNIFICATION. Each person who at any time is or was a
director or officer of the Corporation, and is threatened to be or is made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative (a
"Proceeding"), by reason of the fact that such person is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, venturer, proprietor, member,
employee, trustee, agent or similar functionary of another domestic or foreign
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other for-profit or non-profit enterprise, whether the basis of
a Proceeding is an alleged action in such person's official capacity or in
another capacity while holding such office, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the TBCA, or any
other applicable law as may from time to time be in effect (but, in the case of
any such amendment or enactment, only to the extent that such amendment or law
permits the Corporation to provide broader indemnification rights than such law
prior to such amendment or enactment
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permitted the Corporation to provide), against all expense, liability and loss
(including, without limitation, court costs and attorneys' fees, judgments,
fines, excise taxes or penalties, and amounts paid or to be paid in settlement)
actually and reasonably incurred or suffered by such person in connection with a
Proceeding, and such indemnification shall continue as to a person who has
ceased to be a director or officer of the Corporation or a director, officer,
partner, venturer, proprietor, member, employee, trustee, agent or similar
functionary of another domestic or foreign corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other for-profit
or non-profit enterprise, and shall inure to the benefit of such person's heirs,
executors and administrators. The Corporation's obligations under this Section A
include, but are not limited to, the convening of any meeting, and the
consideration of any matter thereby, required by statute in order to determine
the eligibility of any person for indemnification.
B. PREPAYMENT OF EXPENSES. Expenses incurred by a director or officer of
the Corporation in defending a Proceeding shall be paid by the Corporation in
advance of the final disposition of such Proceeding to the fullest extent
permitted by, and only in compliance with, the TBCA or any other applicable laws
as may from time to time be in effect, including, without limitation, any
provision of the TBCA which requires, as a condition precedent to such expense
advancement, the delivery to the Corporation of an undertaking, by or on behalf
of such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under Section A of this Article X or otherwise. Repayments of all
amounts so advanced shall be upon such terms and conditions, if any, as the
Corporation's Board of Directors deems appropriate.
C. VESTING. The Corporation's obligation to indemnify and to prepay
expenses under Sections A and B of this Article X shall arise, and all rights
granted to the Corporation's directors and officers hereunder shall vest, at the
time of the occurrence of the transaction or event to which a Proceeding
relates, or at the time that the action or conduct to which such Proceeding
relates was first taken or engaged in (or omitted to be taken or engaged in),
regardless of when such Proceeding is first threatened, commenced or completed.
Notwithstanding any other provision of these Articles of Incorporation or the
Bylaws, no action taken by the Corporation, either by amendment of these
Articles of Incorporation or the Bylaws or otherwise, shall diminish or
adversely affect any rights to indemnification or prepayment of expenses granted
under Sections A and B of this Article X which shall have become vested as
aforesaid prior to the date that such amendment or other corporate action is
effective or taken, whichever is later.
D. ENFORCEMENT. If a claim under Section A or Section B or both Sections
A and B of this Article X is not paid in full by the Corporation within thirty
(30) days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit in a court of competent
jurisdiction against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part, the claimant shall also be entitled to
be paid the expense of prosecuting such claim. It shall be a defense to any
such suit (other than a suit brought to enforce a claim for expenses incurred in
defending any Proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the TBCA or other applicable law to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall
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be on the Corporation. The failure of the Corporation (including its Board of
Directors, independent legal counsel, or stockholders) to have made a
determination prior to the commencement of such suit as to whether
indemnification is proper in the circumstances based upon the applicable
standard of conduct set forth in the TBCA or other applicable law shall neither
be a defense to the action nor create a presumption that the claimant has not
met the applicable standard of conduct. The termination of any Proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which such person reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal Proceeding, had reasonable cause to believe that his conduct was
unlawful.
E. NONEXCLUSIVE. The indemnification provided by this Article X shall
not be deemed exclusive of any other rights to which a person seeking
indemnification may be entitled under any statute, bylaw, other provisions of
these Articles of Incorporation, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
F. PERMISSIVE INDEMNIFICATION. The rights to indemnification and
prepayment of expenses which are conferred to the Corporation's directors and
officers by Sections A and B of this Article X may be conferred upon any
employee or agent of the Corporation if, and to the extent, authorized by the
Board of Directors.
G. INSURANCE. The Corporation shall have power to purchase and maintain
insurance, at its expense, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, venturer,
proprietor, member, employee, trustee, agent or similar functionary of another
domestic or foreign corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other for-profit or non-profit
enterprise against any expense, liability or loss asserted against such person
and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the
provisions of this Article X, the Bylaws, the TBCA or other applicable law.
H. IMPLEMENTING ARRANGEMENTS. Without limiting the power of the
Corporation to procure or maintain insurance or other arrangement on behalf of
any of the persons as described in Section G of this Article X, the Corporation
may, for the benefit of persons eligible for indemnification by the Corporation,
(i) create a trust fund, (ii) establish any form of self-insurance, (iii) secure
its indemnity obligation by grant of a security interest or other lien on the
assets of the Corporation, or (iv) establish a letter of credit, guaranty or
surety arrangement.
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ARTICLE XII
LIMITED DIRECTOR LIABILITY
No director of the Corporation shall be personally liable to the
Corporation or to its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that this Article XI shall not eliminate or limit
the liability of a director: (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) an act or omission for which the liability of a director is expressly
provided for by an applicable statute, or (iv) for any transaction from which
the director derived an improper personal benefit.
If the Texas Miscellaneous Corporation Laws Act or any other applicable law
is amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the such laws, as so amended. No amendment to or repeal of this Article XI will
apply to, or have any effect on, the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of the
director occurring prior to such amendment or repeal.
ARTICLE XII
BYLAWS
Except as otherwise required by law, the Board of Directors is expressly
and exclusively authorized to adopt, amend or repeal the Bylaws, or adopt new
Bylaws, without any action on the part of the stockholders, and the stockholders
of the Corporation may not adopt, amend or repeal the Bylaws, or adopt new
Bylaws.
ARTICLE XIV
INITIAL CONSIDERATION FOR ISSUANCE OF SHARES
The Corporation shall not commence business until it has received for the
issuance of its shares consideration of at least $1,000, consisting of money,
labor done or property actually received.
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ARTICLE XV
CURRENT BOARD OF DIRECTORS
The names and mailing addresses of the current members of the Board of
Directors are:
B. Garfield French
700 Louisiana, Suite 3900
Houston, Texas 77002
Samuel R. Sacco
700 Louisiana, Suite 3900
Houston, Texas 77002
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EXHIBIT A
STATEMENT OF DESIGNATION, PREFERENCES, RIGHTS AND LIMITATIONS
OF THE
SERIES A PREFERRED STOCK
OF
WORK INTERNATIONAL CORPORATION
Pursuant to Section 2.13 of the Texas Business Corporation Act (the
"TBCA"), Work International Corporation, a corporation organized and existing
under the TBCA (the "Corporation"), does hereby certify:
That, pursuant to authority conferred upon the Board of Directors of the
Corporation by its Articles of Incorporation, and pursuant to the provisions of
the TBCA, such Board of Directors by unanimous written consent dated October 6,
1997, duly adopted a resolution providing for the issuance of a series of One
Thousand (1,000) shares of the Corporation's Preferred Stock, $.001 par value
per share, to be designated "Series A Preferred Stock," and fixing the voting
powers, preferences and relative, participating, optional or other rights, and
the qualifications, limitations or restrictions thereof, which resolution is as
follows:
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of the Corporation in accordance with the provisions of
its Articles of Incorporation, there shall be established and authorized for
issuance a series of the Corporation's Preferred Stock, $.001 par value per
share, designated "Series A Preferred Stock" (herein referred to as "Series A
Preferred Stock"), consisting of One Thousand (1,000) shares, each of the par
value of $.001 per share, and having the voting powers, preferences and
relative, participating, optional and other rights, and the qualifications,
limitations or restrictions set forth below:
1. Voting Rights.
(a) The Corporation shall not, without the consent of the holders of
at least a majority of the shares of the outstanding Series A Preferred Stock,
adopt any amendment to this Statement which would alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely, provided that no such consent shall be required with respect to
(i) any amendment to this Statement that increases or decreases the number of
shares of Series A Preferred Stock which the Corporation is authorized to issue
(provided that no such amendment shall reduce the number of authorized shares to
below the number of shares then outstanding), or (ii) the establishment or
issuance of any other series of Preferred Stock or any other class of stock of
the Corporation that has any powers, preferences or rights that are different
from, greater than, superior to or in preference of the Series A Preferred
Stock.
(b) Except as provided in paragraph (a) above or otherwise required by
law, the holders of Series A Preferred Stock shall have no right or power to
vote on the election of directors or on any other question or in any proceedings
involving the Corporation.
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2. Liquidation.
(a) Preference. Subject to the rights of the holders of any other
class or series of capital stock of the Corporation ranking senior to or on a
parity with the Series A Preferred Stock with respect to liquidation, in the
event of any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, the holders of record of the
issued and outstanding shares of Series A Preferred Stock shall be entitled to
receive, out of the assets of the Corporation legally available for distribution
to the holders of shares of Series A Preferred Stock, prior and in preference to
any distribution of any of the assets of the Corporation to the holders of
common stock, par value $.001 per share (the "Common Stock"), of the Corporation
and any other class or series of capital stock of the Corporation ranking junior
to the Series A Preferred Stock with respect to liquidation, an amount in cash
per share equal to $1,000. If, upon such liquidation, dissolution or winding up
of the affairs of the Corporation, the assets of the Corporation distributable
among the holders of Series A Preferred Stock and any class or series of capital
stock of the Corporation ranking on a parity therewith in respect thereto shall
be insufficient to permit the payment in full to all such holders of shares of
the preferential amounts payable to them, then the entire assets of the
Corporation available for distribution to such holders of shares shall be
distributed ratably among such holders in proportion to the respective amounts
that would be payable per share if such assets were sufficient to permit payment
in full. After payment of the full amount to which they are entitled upon
liquidation pursuant to this Section 2(a), the holders of shares of Series A
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Corporation. Neither a consolidation or merger of
the Corporation with another corporation or other entity nor a sale, transfer,
lease or exchange of all or part of the Corporation's assets will be considered
a liquidation, dissolution or winding up of the affairs of the Corporation for
purposes of this Section 2(a).
(b) Adjustments. The liquidation preference provided for herein with
respect to the Series A Preferred Stock shall be equitably adjusted to reflect
any stock dividend, stock distribution, stock split or reverse stock split,
combination of shares, subdivision of shares or reclassification of shares with
respect to the Series A Preferred Stock.
3. Conversion Rights. The Series A Preferred Stock shall be convertible
as follows:
(a) Optional Conversion. Subject to and upon compliance with the
provisions of this Section, the holder of any shares of Series A Preferred Stock
shall have the right at such holder's option, without the payment of any
additional consideration therefor, to convert any shares of Series A Preferred
Stock into fully paid and nonassessable shares of Common Stock at the Conversion
Ratio (as defined herein) in effect on any Conversion Date (as defined herein)
upon the terms hereinafter set forth.
(b) Conversion Ratio. Each share of Series A Preferred Stock shall be
convertible pursuant to this Section into a number of shares of Common Stock
determined by dividing: (x) 1,000 by (y) the Conversion Factor in effect on any
Conversion Date (the "Conversion Ratio"). For the purposes of this Section 3,
the term "Conversion Factor" initially shall mean 2.5.
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(c) Mechanics of Conversion. The holder of any shares of Series A
Preferred Stock may exercise the conversion right specified in Section 3(a) by
surrendering to the Corporation or any transfer agent of the Corporation the
certificate or certificates for the shares to be converted, accompanied by
written notice specifying the number of shares to be converted. Conversion
shall be deemed to have been effected on the date when delivery of notice of an
election to convert and of certificates for shares being converted is made, and
such date is referred to herein as the "Conversion Date." Subject to the
provisions of Section 3(f)(iv), as promptly as practicable thereafter the
Corporation shall issue and deliver, or caused to be issued and delivered, to
the holder a certificate or certificates for the number of full shares of Common
Stock to which such holder is entitled and a check or cash with respect to any
fractional interest in a share of Common Stock as provided in Section 3(e).
Subject to the provisions of Section 3(f)(iv), the person in whose name the
certificate or certificates for Common Stock are to be issued shall be deemed to
have become a holder of record of such Common Stock on the applicable Conversion
Date. Upon conversion of only a portion of the number of shares covered by a
certificate representing shares of Series A Preferred Stock surrendered for
conversion, the Corporation shall issue and deliver, or caused to be issued and
delivered, to the holder of the certificate so surrendered for conversion, at
the expense of the Corporation, a new certificate covering the number of shares
of Series A Preferred Stock representing the unconverted portion of the
certificate so surrendered.
(d) Mandatory Conversion. Immediately upon the closing of any initial
public offering of the Common Stock, each share of Series A Preferred Stock then
outstanding shall be automatically converted, without any action on the part of
the holder thereof, into such shares of Common Stock as such share of Series A
Preferred Stock would be convertible into if converted at the option of the
holder pursuant to Section 3(a). Following such mandatory conversion, holders
of shares of Series A Preferred Stock shall only be entitled to the rights of
holders of Common Stock and the Corporation.
(e) Fractional Shares. No fractional shares of Common Stock or scrip
shall be issued upon conversion of shares of Series A Preferred Stock. If more
than one share of Series A Preferred Stock is surrendered for conversion at any
one time by the same holder, the number of full shares of Common Stock issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of shares so surrendered. Instead of any fractional shares of Common Stock
which would otherwise be issuable upon conversion of any shares of Series A
Preferred Stock, the Corporation shall pay out of funds legally available
therefor a cash adjustment in respect of such fractional interest, rounded to
the nearest one hundredth (1/100th) of a share, in an amount equal to that
fractional interest of the then fair value, rounded to the nearest cent ($.01),
of one share of Common Stock, as determined in good faith by the Board of
Directors of the Corporation, irrespective of any accounting treatment, which
determination shall be final and binding; provided, however, if the Common Stock
is then traded or quoted on a national exchange or a nationally recognized
quotation system, the fair market value shall be the closing price of a share of
Common Stock on such exchange or quotation system as of the Conversion Date.
(f) Conversion Factor Adjustments. The Conversion Factor shall be
subject to adjustment from time to time as follows:
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(i) Issuance of Preferred Stock. If the Corporation shall issue
any shares of a class of Preferred Stock that is convertible into Common
Stock at a conversion ratio more favorable to the holder of such Preferred
Stock than the Conversion Ratio currently in effect for the Series A
Preferred Stock (the "Other Preferred Stock"), then the Conversion Factor
shall be adjusted so as to make the Conversion Ratio for the Series A
Preferred Stock equal to the conversion ratio of such Other Preferred
Stock.
(ii) Stock Dividends, Subdivisions, Reclassifications or
Combinations. If the Corporation shall (x) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (y)
subdivide or reclassify the outstanding shares of Common Stock into a
greater number of shares of Common Stock or (z) combine or reclassify the
outstanding shares of Common Stock into a smaller number of shares of
Common Stock, the Conversion Factor in effect at the time of the record
date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to that
number determined by multiplying the Conversion Factor in effect by a
fraction (x) the numerator of which shall be the total number of issued and
outstanding shares of Common Stock immediately prior to such dividend,
distribution, subdivision, combination or reclassification and (y) the
denominator of which shall be the total number of issued and outstanding
shares of Common Stock immediately after such dividend, distribution,
subdivision, combination or reclassification. Successive adjustments in
the Conversion Factor shall be made whenever any event specified above
shall occur.
(iii) Rounding of Calculations: Minimum Adjustment. All
calculations under this Section 3(f) shall be made to the nearest cent
($.01) or to the nearest one hundredth (1/100th) of a share, as the case
may be. Notwithstanding any provision of this Section 3 to the contrary,
no adjustment in the Conversion Factor shall be made if the amount of such
adjustment would be less than 1% of the then current Conversion Factor
until the end of one year after such adjustment otherwise would have been
required; but any such amount shall be carried forward and an adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount
or amounts so carried forward, shall aggregate 1% of the then current
Conversion Factor or more, provided that if the events giving rise to such
adjustments occur within three months of each other, then such adjustments
shall be calculated as if the events giving rise to them had occurred
simultaneously on the date of the first such event.
(iv) Timing of Issuance of Additional Common Stock Upon Certain
Adjustments. In any case in which the provisions of this Section 3(f)
provide that an adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until the occurrence of
such event (x) issuing to the holder of any share of Series A Preferred
Stock converted after such record date and before the occurrence of such
event, the additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above the
shares of Common Stock issuable upon such conversion before giving effect
to such adjustment and (y) paying to such holder any amount of cash in lieu
of a fractional share of Common Stock pursuant to Section 3(e); provided
that the Corporation upon request shall deliver to such holder a due bill
or
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other appropriate instrument evidencing such holder's right to receive
such additional shares, and such cash, upon the occurrence of the event
requiring such adjustment.
(g) Statement Regarding Adjustments. Whenever the Conversion Factor
shall be adjusted as provided in Section 3(f), the Corporation shall forthwith
file, at the office of any transfer agent for the Series A Preferred Stock and
at the principal office of the Corporation, a statement showing in detail the
method of calculation of such adjustment, the facts requiring such adjustment
and the Conversion Factor that shall be in effect after such adjustment, and the
Corporation shall, upon the request of any holder of Series A Preferred Stock,
cause a copy of such statement to be sent by mail, first class postage prepaid
to such holder at his address appearing on the Corporation's records. Each such
statement shall be signed by the Corporation's president or chief financial
officer. Where appropriate, such copy may be given in advance and may be
included as part of a notice required to be mailed under the provisions of
Section 3(h).
(h) Notice to Holders. In the event the Corporation shall propose to
take any action of the type described in Section 3(f)(ii) or 3(i), the
Corporation shall give notice to each holder of shares of Series A Preferred
Stock in the manner set forth in Section 3(g), which notice shall specify the
record date, if any, with respect to any such action and the approximate date on
which such action is to take place. Such notice shall also set forth such facts
with respect thereto as shall be reasonably necessary to indicate the effect of
such action (to the extent such effect may be known at the date of such notice)
on the Conversion Factor and the number, kind or class of shares or other
securities or property which shall be deliverable upon conversion of shares of
Series A Preferred Stock. In the case of any action which would require the
fixing of a record date, such notice shall be given at least 10 calendar days
prior to the date so fixed, and in the case of all other action, such notice
shall be given at least 15 calendar days prior to the taking of such proposed
action. Failure to give such notice, or any defect therein, shall not affect
the legality or validity of any such action.
(i) Mergers, etc. In the event the Corporation shall be a party to
any transaction (including, without limitation, a merger, consolidation, sale,
lease or transfer of all or substantially all of its assets, reclassification of
the Common Stock or reorganization of the Corporation) as a result of which
shares of Common Stock shall be converted into the right to receive stock,
securities or other property (including cash or any combination thereof), each
share of Series A Preferred Stock shall thereafter be convertible into the kind
and amount of shares of stock and other securities and property receivable
(including cash) upon the consummation of such transaction by a holder of that
number of shares of Common Stock, or fraction thereof, into which one share of
Series A Preferred Stock was convertible immediately prior to such transaction.
(j) Treasury Stock. For the purposes of this Section 3, the sale or
other disposition of any shares of Common Stock theretofore held in the
Corporation's treasury shall be deemed to be an issuance thereof.
(k) Costs. The Corporation shall pay all documentary, stamp, transfer
or other transactional taxes attributable to the issuance or delivery of shares
of Common Stock upon conversion of any shares of Series A Preferred Stock;
provided that the Corporation shall not be required to pay any taxes which may
be payable in respect of any transfer involved in the issuance
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or delivery of any certificate for such shares in the name other than that of
the holder of the shares of Series A Preferred Stock in respect of which such
shares are being issued.
4. Reacquired Shares. Any shares of Series A Preferred Stock converted
or otherwise acquired by the Corporation in any manner whatsoever shall not be
reissued as part of such series and shall be retired promptly after the
acquisition thereof. All such shares shall upon their retirement become
authorized but unissued shares of Preferred Stock.
5. Dividends.
(a) Generally. Subject to the rights of the holders of any class or
series of capital stock of the Corporation ranking senior to or on a parity with
the Series A Preferred Stock with respect to dividends, the holders of the
Series A Preferred Stock shall be entitled to receive, if, as and when declared
by the Board of Directors out of any assets of the Corporation legally available
therefor, such dividends as may be declared from time to time by the Board of
Directors in respect of the Series A Preferred Stock.
(b) Allocation of Dividends. Dividends payable on the Series A
Preferred Stock, if paid, or if declared and set apart for payment, must be paid
or declared and set apart for payment on all outstanding shares of Series A
Preferred Stock contemporaneously. If dividends payable on the Series A
Preferred Stock and any other class or series of capital stock of the
Corporation ranking on a parity therewith in respect thereto are declared and
paid in an amount less than all accumulated and current dividends on all such
shares, the total amount declared and paid shall be allocated among all of such
shares so that the per share dividend to be declared and paid on each share is
the same percentage of the sum of the accumulated dividends for each such share.
(c) Dividend Payment Preference. The Series A Preferred Stock shall
have preference over the Common Stock as to payment of dividends. The
Corporation shall not declare or pay any distributions to the holders of the
Common Stock or any other class or series of capital stock ranking junior to the
Series A Preferred Stock in respect of the payment of dividends at any time
during which dividends declared or payable on outstanding Series A Preferred
Stock have not been paid in full. In this Section 5(c), "distribution" means
the transfer of cash or property without consideration, whether by way of
dividend or otherwise (except a dividend solely in shares of Common Stock), or
the purchase or redemption by the Corporation of shares of Common Stock or any
other shares of capital stock of the Corporation ranking junior to the Series A
Preferred Stock in respect of payment of dividends for cash or property, but
does not include the repurchase by the Corporation of shares from an officer,
director, employee or consultant of the Corporation.
6. Redemption.
(a) Optional Redemption. The shares of Series A Preferred Stock shall
be redeemable, in whole or in part, at the option of the Corporation at any
time, and from time to time, after October 1, 2000, at the redemption price of
$1,000 per share.
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(b) Mechanics of Redemption. Except as otherwise required by law,
notice of any redemption pursuant to this Section 6 must be delivered in writing
to the holder of Series A Preferred Stock whose shares are selected for
redemption not less than 30 days prior to the redemption date. Such notice
shall state: (i) the redemption date; (ii) the number of shares of Series A
Preferred Stock to be redeemed; (iii) the redemption price; and (iv) the method
by which certificates for such shares are to be surrendered for redemption.
Upon surrender of the certificate for any shares called for redemption and not
previously converted (properly endorsed or signed for transfer), such shares
shall be redeemed by the Corporation at the date of redemption. From and after
the date of redemption, unless the Corporation shall default in providing for
the payment of the applicable redemption price, shares of Series A Preferred
Stock will no longer be deemed to be outstanding and all rights in respect of
such shares of the Corporation will cease, except the right to receive the
redemption price.
7. Exclusion of Other Rights. Unless otherwise required by law, the
shares of Series A Preferred Stock shall not have any voting powers, preferences
or relative, participating, optional or other special rights other than those
specifically set forth herein.
A-7
EXHIBIT B
STATEMENT OF DESIGNATION, PREFERENCES, RIGHTS AND LIMITATIONS
OF THE
SERIES B PREFERRED STOCK
OF
WORK INTERNATIONAL CORPORATION
Pursuant to Section 2.13 of the Texas Business Corporation Act (the
"TBCA"), Work International Corporation, a corporation organized and existing
under the TBCA (the "Corporation"), does hereby certify:
That, pursuant to authority conferred upon the Board of Directors of the
Corporation by its Articles of Incorporation, and pursuant to the provisions of
the TBCA, such Board of Directors by unanimous written consent dated March 4,
1998, duly adopted a resolution providing for the issuance of a series of Three
Thousand (3,000) shares of the Corporation's Preferred Stock, $.001 par value
per share, to be designated "Series B Preferred Stock," and fixing the voting
powers, preferences and relative, participating, optional or other rights, and
the qualifications, limitations or restrictions thereof, which resolution is as
follows:
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of the Corporation in accordance with the provisions of
its Articles of Incorporation, there shall be established and authorized for
issuance a series of the Corporation's Preferred Stock, $.001 par value per
share, designated "Series B Preferred Stock" (herein referred to as "Series B
Preferred Stock"), consisting of Three Thousand (3,000) shares, each of the par
value of $.001 per share, and having the voting powers, preferences and
relative, participating, optional and other rights, and the qualifications,
limitations or restrictions set forth below:
1. Voting Rights.
(a) The Corporation shall not, without the consent of the holders of
at least a majority of the shares of the outstanding Series B Preferred Stock,
adopt any amendment to this Statement which would alter or change the powers,
preferences or special rights of the Series B Preferred Stock so as to affect
them adversely, provided that no such consent shall be required with respect to
(i) any amendment to this Statement that increases or decreases the number of
shares of Series B Preferred Stock which the Corporation is authorized to issue
(provided that no such amendment shall reduce the number of authorized shares to
below the number of shares then outstanding), or (ii) the establishment or
issuance of any other series of Preferred Stock or any other class of stock of
the Corporation that has any powers, preferences or rights that are different
from, greater than, superior to or in preference of the Series B Preferred
Stock.
(b) Except as provided in paragraph (a) above or otherwise required by
law, the holders of Series B Preferred Stock shall have no right or power to
vote on the election of directors or on any other question or in any proceedings
involving the Corporation.
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2. Liquidation.
(a) Preference. Subject to the rights of the holders of any other
class or series of capital stock of the Corporation ranking senior to or on a
parity with the Series B Preferred Stock with respect to liquidation, in the
event of any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, the holders of record of the
issued and outstanding shares of Series B Preferred Stock shall be entitled to
receive, out of the assets of the Corporation legally available for distribution
to the holders of shares of Series B Preferred Stock, prior and in preference to
any distribution of any of the assets of the Corporation to the holders of
common stock, par value $.001 per share (the "Common Stock"), of the Corporation
and any other class or series of capital stock of the Corporation ranking junior
to the Series B Preferred Stock with respect to liquidation, an amount in cash
per share equal to $1,000. If, upon such liquidation, dissolution or winding up
of the affairs of the Corporation, the assets of the Corporation distributable
among the holders of Series B Preferred Stock and any class or series of capital
stock of the Corporation ranking on a parity therewith in respect thereto shall
be insufficient to permit the payment in full to all such holders of shares of
the preferential amounts payable to them, then the entire assets of the
Corporation available for distribution to such holders of shares shall be
distributed ratably among such holders in proportion to the respective amounts
that would be payable per share if such assets were sufficient to permit payment
in full. After payment of the full amount to which they are entitled upon
liquidation pursuant to this Section 2(a), the holders of shares of Series B
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Corporation. Neither a consolidation or merger of
the Corporation with another corporation or other entity nor a sale, transfer,
lease or exchange of all or part of the Corporation's assets will be considered
a liquidation, dissolution or winding up of the affairs of the Corporation for
purposes of this Section 2(a).
(b) Adjustments. The liquidation preference provided for herein with
respect to the Series B Preferred Stock shall be equitably adjusted to reflect
any stock dividend, stock distribution, stock split or reverse stock split,
combination of shares, subdivision of shares or reclassification of shares with
respect to the Series B Preferred Stock.
3. Conversion Rights. The Series B Preferred Stock shall be convertible
as follows:
(a) Optional Conversion. Subject to and upon compliance with the
provisions of this Section, the holder of any shares of Series B Preferred Stock
shall have the right at such holder's option, without the payment of any
additional consideration therefor, to convert any shares of Series B Preferred
Stock into fully paid and nonassessable shares of Common Stock at the Conversion
Ratio (as defined herein) in effect on any Conversion Date (as defined herein)
upon the terms hereinafter set forth.
(b) Conversion Ratio. Each share of Series B Preferred Stock shall be
convertible pursuant to this Section into a number of shares of Common Stock
determined by dividing: (x) 1,000 by (y) the Conversion Factor in effect on any
Conversion Date (the "Conversion Ratio"). For the purposes of this Section 3,
the term "Conversion Factor" initially shall mean 4.0.
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(c) Mechanics of Conversion. The holder of any shares of Series B
Preferred Stock may exercise the conversion right specified in Section 3(a) by
surrendering to the Corporation or any transfer agent of the Corporation the
certificate or certificates for the shares to be converted, accompanied by
written notice specifying the number of shares to be converted. Conversion
shall be deemed to have been effected on the date when delivery of notice of an
election to convert and of certificates for shares being converted is made, and
such date is referred to herein as the "Conversion Date." Subject to the
provisions of Section 3(f)(iv), as promptly as practicable thereafter the
Corporation shall issue and deliver, or caused to be issued and delivered, to
the holder a certificate or certificates for the number of full shares of Common
Stock to which such holder is entitled and a check or cash with respect to any
fractional interest in a share of Common Stock as provided in Section 3(e).
Subject to the provisions of Section 3(f)(iv), the person in whose name the
certificate or certificates for Common Stock are to be issued shall be deemed to
have become a holder of record of such Common Stock on the applicable Conversion
Date. Upon conversion of only a portion of the number of shares covered by a
certificate representing shares of Series B Preferred Stock surrendered for
conversion, the Corporation shall issue and deliver, or caused to be issued and
delivered, to the holder of the certificate so surrendered for conversion, at
the expense of the Corporation, a new certificate covering the number of shares
of Series B Preferred Stock representing the unconverted portion of the
certificate so surrendered.
(d) Mandatory Conversion. Immediately upon the closing of any initial
public offering of the Common Stock, each share of Series B Preferred Stock then
outstanding shall be automatically converted, without any action on the part of
the holder thereof, into such shares of Common Stock as such share of Series B
Preferred Stock would be convertible into if converted at the option of the
holder pursuant to Section 3(a). Following such mandatory conversion, holders
of shares of Series B Preferred Stock shall only be entitled to the rights of
holders of Common Stock and the Corporation.
(e) Fractional Shares. No fractional shares of Common Stock or scrip
shall be issued upon conversion of shares of Series B Preferred Stock. If more
than one share of Series B Preferred Stock is surrendered for conversion at any
one time by the same holder, the number of full shares of Common Stock issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of shares so surrendered. Instead of any fractional shares of Common Stock
which would otherwise be issuable upon conversion of any shares of Series B
Preferred Stock, the Corporation shall pay out of funds legally available
therefor a cash adjustment in respect of such fractional interest, rounded to
the nearest one hundredth (1/100th) of a share, in an amount equal to that
fractional interest of the then fair value, rounded to the nearest cent ($.01),
of one share of Common Stock, as determined in good faith by the Board of
Directors of the Corporation, irrespective of any accounting treatment, which
determination shall be final and binding; provided, however, if the Common Stock
is then traded or quoted on a national exchange or a nationally recognized
quotation system, the fair market value shall be the closing price of a share of
Common Stock on such exchange or quotation system as of the Conversion Date.
(f) Conversion Factor Adjustments. The Conversion Factor shall be
subject to adjustment from time to time as follows:
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(i) Issuance of Preferred Stock. If the Corporation shall issue
any shares of a class of Preferred Stock that is convertible into Common
Stock at a conversion ratio more favorable to the holder of such Preferred
Stock than the Conversion Ratio currently in effect for the Series B
Preferred Stock (the "Other Preferred Stock"), then the Conversion Factor
shall be adjusted so as to make the Conversion Ratio for the Series B
Preferred Stock equal to the conversion ratio of such Other Preferred
Stock.
(ii) Stock Dividends, Subdivisions, Reclassifications or
Combinations. If the Corporation shall (x) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (y)
subdivide or reclassify the outstanding shares of Common Stock into a
greater number of shares of Common Stock or (z) combine or reclassify the
outstanding shares of Common Stock into a smaller number of shares of
Common Stock, the Conversion Factor in effect at the time of the record
date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to that
number determined by multiplying the Conversion Factor in effect by a
fraction (x) the numerator of which shall be the total number of issued and
outstanding shares of Common Stock immediately prior to such dividend,
distribution, subdivision, combination or reclassification and (y) the
denominator of which shall be the total number of issued and outstanding
shares of Common Stock immediately after such dividend, distribution,
subdivision, combination or reclassification. Successive adjustments in
the Conversion Factor shall be made whenever any event specified above
shall occur.
(iii) Rounding of Calculations: Minimum Adjustment. All
calculations under this Section 3(f) shall be made to the nearest cent
($.01) or to the nearest one hundredth (1/100th) of a share, as the case
may be. Notwithstanding any provision of this Section 3 to the contrary,
no adjustment in the Conversion Factor shall be made if the amount of such
adjustment would be less than 1% of the then current Conversion Factor
until the end of one year after such adjustment otherwise would have been
required; but any such amount shall be carried forward and an adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount
or amounts so carried forward, shall aggregate 1% of the then current
Conversion Factor or more, provided that if the events giving rise to such
adjustments occur within three months of each other, then such adjustments
shall be calculated as if the events giving rise to them had occurred
simultaneously on the date of the first such event.
(iv) Timing of Issuance of Additional Common Stock Upon Certain
Adjustments. In any case in which the provisions of this Section 3(f)
provide that an adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until the occurrence of
such event (x) issuing to the holder of any share of Series B Preferred
Stock converted after such record date and before the occurrence of such
event, the additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above the
shares of Common Stock issuable upon such conversion before giving effect
to such adjustment and (y) paying to such holder any amount of cash in lieu
of a fractional share of Common Stock pursuant to Section 3(e); provided
that the Corporation upon request shall deliver to such holder a due
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bill or other appropriate instrument evidencing such holder's right to
receive such additional shares, and such cash, upon the occurrence of the
event requiring such adjustment.
(g) Statement Regarding Adjustments. Whenever the Conversion Factor
shall be adjusted as provided in Section 3(f), the Corporation shall forthwith
file, at the office of any transfer agent for the Series B Preferred Stock and
at the principal office of the Corporation, a statement showing in detail the
method of calculation of such adjustment, the facts requiring such adjustment
and the Conversion Factor that shall be in effect after such adjustment, and the
Corporation shall, upon the request of any holder of Series B Preferred Stock,
cause a copy of such statement to be sent by mail, first class postage prepaid
to such holder at his address appearing on the Corporation's records. Each such
statement shall be signed by the Corporation's president or chief financial
officer. Where appropriate, such copy may be given in advance and may be
included as part of a notice required to be mailed under the provisions of
Section 3(h).
(h) Notice to Holders. In the event the Corporation shall propose to
take any action of the type described in Section 3(f)(ii) or 3(i), the
Corporation shall give notice to each holder of shares of Series B Preferred
Stock in the manner set forth in Section 3(g), which notice shall specify the
record date, if any, with respect to any such action and the approximate date on
which such action is to take place. Such notice shall also set forth such facts
with respect thereto as shall be reasonably necessary to indicate the effect of
such action (to the extent such effect may be known at the date of such notice)
on the Conversion Factor and the number, kind or class of shares or other
securities or property which shall be deliverable upon conversion of shares of
Series B Preferred Stock. In the case of any action which would require the
fixing of a record date, such notice shall be given at least 10 calendar days
prior to the date so fixed, and in the case of all other action, such notice
shall be given at least 15 calendar days prior to the taking of such proposed
action. Failure to give such notice, or any defect therein, shall not affect
the legality or validity of any such action.
(i) Mergers, etc. In the event the Corporation shall be a party to
any transaction (including, without limitation, a merger, consolidation, sale,
lease or transfer of all or substantially all of its assets, reclassification of
the Common Stock or reorganization of the Corporation) as a result of which
shares of Common Stock shall be converted into the right to receive stock,
securities or other property (including cash or any combination thereof), each
share of Series B Preferred Stock shall thereafter be convertible into the kind
and amount of shares of stock and other securities and property receivable
(including cash) upon the consummation of such transaction by a holder of that
number of shares of Common Stock, or fraction thereof, into which one share of
Series B Preferred Stock was convertible immediately prior to such transaction.
(j) Treasury Stock. For the purposes of this Section 3, the sale or
other disposition of any shares of Common Stock theretofore held in the
Corporation's treasury shall be deemed to be an issuance thereof.
(k) Costs. The Corporation shall pay all documentary, stamp, transfer
or other transactional taxes attributable to the issuance or delivery of shares
of Common Stock upon conversion of any shares of Series B Preferred Stock;
provided that the Corporation shall not be required to pay any taxes which may
be payable in respect of any transfer involved in the issuance
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or delivery of any certificate for such shares in the name other than that of
the holder of the shares of Series B Preferred Stock in respect of which such
shares are being issued.
4. Reacquired Shares. Any shares of Series B Preferred Stock converted
or otherwise acquired by the Corporation in any manner whatsoever shall not be
reissued as part of such series and shall be retired promptly after the
acquisition thereof. All such shares shall upon their retirement become
authorized but unissued shares of Preferred Stock.
5. Dividends.
(a) Generally. Subject to the rights of the holders of any class or
series of capital stock of the Corporation ranking senior to or on a parity with
the Series B Preferred Stock with respect to dividends, the holders of the
Series B Preferred Stock shall be entitled to receive, if, as and when declared
by the Board of Directors out of any assets of the Corporation legally available
therefor, such dividends as may be declared from time to time by the Board of
Directors in respect of the Series B Preferred Stock.
(b) Allocation of Dividends. Dividends payable on the Series B
Preferred Stock, if paid, or if declared and set apart for payment, must be paid
or declared and set apart for payment on all outstanding shares of Series B
Preferred Stock contemporaneously. If dividends payable on the Series B
Preferred Stock and any other class or series of capital stock of the
Corporation ranking on a parity therewith in respect thereto are declared and
paid in an amount less than all accumulated and current dividends on all such
shares, the total amount declared and paid shall be allocated among all of such
shares so that the per share dividend to be declared and paid on each share is
the same percentage of the sum of the accumulated dividends for each such share.
(c) Dividend Payment Preference. The Series B Preferred Stock shall
have preference over the Common Stock as to payment of dividends. The
Corporation shall not declare or pay any distributions to the holders of the
Common Stock or any other class or series of capital stock ranking junior to the
Series B Preferred Stock in respect of the payment of dividends at any time
during which dividends declared or payable on outstanding Series B Preferred
Stock have not been paid in full. In this Section 5(c), "distribution" means
the transfer of cash or property without consideration, whether by way of
dividend or otherwise (except a dividend solely in shares of Common Stock), or
the purchase or redemption by the Corporation of shares of Common Stock or any
other shares of capital stock of the Corporation ranking junior to the Series B
Preferred Stock in respect of payment of dividends for cash or property, but
does not include the repurchase by the Corporation of shares from an officer,
director, employee or consultant of the Corporation.
6. Redemption.
(a) Optional Redemption. The shares of Series B Preferred Stock shall
be redeemable, in whole or in part, at the option of the Corporation at any
time, and from time to time, after March 1, 2001, at the redemption price of
$1,000 per share.
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(b) Mechanics of Redemption. Except as otherwise required by law,
notice of any redemption pursuant to this Section 6 must be delivered in writing
to the holder of Series B Preferred Stock whose shares are selected for
redemption not less than 30 days prior to the redemption date. Such notice
shall state: (i) the redemption date; (ii) the number of shares of Series B
Preferred Stock to be redeemed; (iii) the redemption price; and (iv) the method
by which certificates for such shares are to be surrendered for redemption.
Upon surrender of the certificate for any shares called for redemption and not
previously converted (properly endorsed or signed for transfer), such shares
shall be redeemed by the Corporation at the date of redemption. From and after
the date of redemption, unless the Corporation shall default in providing for
the payment of the applicable redemption price, shares of Series B Preferred
Stock will no longer be deemed to be outstanding and all rights in respect of
such shares of the Corporation will cease, except the right to receive the
redemption price.
7. Exclusion of Other Rights. Unless otherwise required by law, the
shares of Series B Preferred Stock shall not have any voting powers, preferences
or relative, participating, optional or other special rights other than those
specifically set forth herein.
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