EXHIBIT 3(i).1
RESTATED CERTIFICATE OF INCORPORATION
OF
SHARED TECHNOLOGIES INC.
INTRODUCTION. SHARED TECHNOLOGIES INC. was originally incorporated under
the name of Balcon, Inc. by Certificate of Incorporation filed on September 23,
1987. By a Plan and Agreement of Merger dated March 8, 1988, Balcon, Inc. merged
with Shared Technologies Inc., survived the merger, and changed its name to
Shared Technologies Inc. This restatement only restates and integrates, and does
not further amend, the provisions of the Corporation's Restated Certificate of
Incorporation as heretofore amended or supplemented, and there is no discrepancy
between the provisions thereof and of this Restated Certificate of
Incorporation. This Restated Certificate of Incorporation was duly adopted
pursuant to Section 245 of the Delaware General Corporation Law by the Board of
Directors.
FIRST. The name of this corporation shall be:
SHARED TECHNOLOGIES INC.
SECOND. Its registered office in the State of Delaware is to be located at
1013 Centre Road, in the City of Wilmington, County of New Castle 19805, and its
registered agent at such address is CORPORATION SERVICE COMPANY.
THIRD. The purpose of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law.
FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is (i) 20,000,000 shares of Common
Stock, $.004 par value per share ("Common Stock"), and (ii) 10,000,000 shares of
Preferred Stock, $.01 par value per share.
A. Common Stock. Shares of Common Stock shall have the following voting
powers, rights and preferences:
1. Voting Rights. Except as otherwise required by Statute or as otherwise
provided in this Restated Certificate of Incorporation, the holders of shares of
Common Stock shall be entitled to vote on all matters at all meetings of the
stockholders of the Corporation, and shall be entitled to one vote for each
share of Common Stock entitled to vote at such meeting, voting together, as one
class, with the holders of any shares of Preferred Stock who
are entitled to vote, except to the extent that a class vote for any class or
series of stock is required by statute.
2. Dividends. Subject to any preferential dividend rights applicable to
shares of Preferred Stock, the holders of shares of Common Stock shall be
entitled to receive such dividends as may be declared by the Board of Directors.
3. Liquidation. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, after distribution in full of the
preferential amounts to be distributed to the holders of shares of Preferred
Stock, the holders of shares of Common Stock shall be entitled to receive all of
the remaining assets of the Corporation available for distribution to the
holders of Common Stock, ratably in proportion to the number of shares of Common
Stock held by them.
B. Preferred Stock. Shares of Preferred Stock shall have the following
voting powers, rights and preferences.
Preferred Stock may be issued from time to time in one or more series, each
of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of any
series of Preferred Stock which may be redeemed, purchased or acquired by the
Corporation may be reissued as shares of the same series or as shares of one or
more other series of Preferred Stock except as otherwise provided by law.
Different series of Preferred Stock shall not be construed to constitute
different classes of shares for the purpose of voting by classes unless
expressly provided.
Authority is hereby expressly granted to the Board of Directors from time
to time to issue the Preferred Stock in one or more series, and in connection
with the creation of any such series, by resolution or resolutions providing for
the issue of the shares thereof, to determine and fix such voting powers, full
or limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be stated and expressed in such resolutions, all to the full extent now or
hereafter permitted by the Delaware General Corporation Law. Without limiting
the generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series to the extent
permitted by law.
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DESIGNATION OF SERIES C PREFERRED STOCK
1. Designation; Rank. The series of Preferred Stock designated and known as
"Series C Preferred Stock" shall consist of 5,000,000 shares, par value $.01 per
share. Shares of the Series C Preferred Stock shall, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank senior and
prior to the Common Stock, par value $.004 per share (the "Common Stock") of the
Corporation and to any other class or series of capital stock of the Corporation
hereafter issued (all of such equity securities of the Corporation to which the
Series C Preferred Stock ranks prior, including all classes of Common Stock, are
at times collectively referred to herein as the "Junior Securities").
2. Dividends.
(a) The holders of the Series C Preferred Stock shall be entitled to
receive, out of any funds legally available therefor, dividends in cash at the
annual rate of $.32 per share (subject to appropriate adjustment for stock
splits, stock dividends, combinations or other similar recapitalizations
affecting such shares), and no more, in equal quarterly payments in arrears on
March 31, June 30, September 30 and December 31 in each year (each such date is
referred to as a "Dividend Payment Date") commencing on September 30, 1992,
payable in preference and priority to any payment of any cash dividend on Common
Stock or any other shares of capital stock of this Corporation. Such dividends
shall be paid to the holders of record at the close of business on the date
specified by the Board of Directors of the Corporation at the time such dividend
is declared. If the Dividend Payment Date is not a business day, the Dividend
Payment Date shall be the next succeeding business day.
(b) Each of such quarterly dividends shall be fully cumulative and shall
accrue, whether or not earned or declared, without interest, from the first day
of the quarter in which such dividend may be payable as herein provided, except
that with respect to the first quarterly dividend, such dividend shall accrue
from September 15, 1992.
(c) No dividends shall be declared or paid or set apart for payment on the
Junior Securities, or on the Preferred Stock of any series ranking, as to
dividends, junior to the Series C Preferred Stock, for any period unless full
cumulative dividends have been or contemporaneously are declared and paid (or
declared and a sum sufficient for the payment thereof set apart for such
payment) on the Series C Preferred Stock for all dividend payment periods ending
on or prior to the date of payment of
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such full cumulative dividends. Unless full cumulative dividends on the Series C
Preferred Stock have been paid, no other distribution shall be made upon the
Junior Securities or upon any other such series of Preferred Stock.
(d) In the event that the Corporation shall have cumulative, accrued and
unpaid dividends outstanding immediately prior to, and in the event of a
conversion of any shares of Series C Preferred Stock as provided in Section 5
hereof, the Corporation shall, at the option of the holder of such shares, pay
in cash to such holder the full amount of any such dividends or allow such
dividends to be converted into Common Stock in accordance with, and pursuant to
the terms specified in, Section 5 hereof, except that the Conversion Price (as
that term is defined in Section 5(a)) for such purpose shall be the then fair
market value of the Common Stock as determined by the Board of Directors of the
Corporation.
3. 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 stockholders, after and subject to
the payment in full of all amounts required to be distributed to the holders of
any other class or series of stock of the Corporation ranking on liquidation
prior and in preference to the Series C Preferred Stock (collectively referred
to as "Senior Preferred Stock"), but before any payment shall be made to the
holders of any Junior Securities by reason of their ownership thereof, an amount
equal to $4 per share (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 C Preferred Stock the full amount to which they shall be
entitled, the holders of 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.
(b) After the payment of all preferential amounts required to be paid to
the holders of Senior Preferred Stock and Series C Preferred Stock upon the
dissolution, liquidation or winding up of the Corporation, the holders of shares
of Junior Securities then outstanding shall be
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entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
(c) Written notice of such liquidation, dissolution or winding up, stating
a payment date and the place where said payments shall be made, shall be given
by mail, postage prepaid, or by telex to non-U.S. residents, not less than 20
days prior to the payment date stated therein, to the holders of record of the
Series C Preferred Stock, such notice to be addressed to each such holder at its
address as shown by the records of the Corporation.
(d) Whenever the distribution provided for in this Section 3 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with one or more
other corporations shall be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, unless such voluntary sale, conveyance, exchange
or transfer shall be in connection with a plan of liquidation, dissolution or
winding up of the business of the Corporation.
4. Voting
(a) Except as may be otherwise provided in these terms of the Series C
Preferred Stock or by law, the Series C Preferred Stock shall not be entitled to
vote.
(b) The Corporation shall not 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, without the written consent or
affirmative vote of the holders of a majority of the then outstanding shares of
Series C Preferred Stock, given 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 or issuance of any
series of Series Preferred Stock with preference or priority over the Series C
Preferred Stock as to the right to receive either dividends or amounts
distributable
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upon liquidation, dissolution or winding up of the Corporation shall be deemed
to affect adversely the Series C Preferred Stock, and the authorization or
issuance of any series of Series Preferred Stock on a parity with Series C
Preferred Stock as to the right 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. The number
of authorized shares of Series C Preferred Stock may be increased or decreased
(but not below the number of shares then outstanding) by the affirmative vote of
the holders of a majority of the then outstanding shares of the Common Stock,
Series C Preferred Stock and all other classes or series of stock of the
Corporation entitled to vote thereon, voting as a single class.
5. 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 and from time to
time, into such number of fully paid and nonassessable shares of Common Stock as
is determined by dividing $4.00 by the Conversion Price (as defined below) in
effect at the time of conversion. 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 $8.00. Such initial Conversion Price, and the rate 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 notice of redemption of any shares of Series C Preferred
Stock pursuant to Section 6 hereof, the Conversion Rights of the shares
designated for redemption shall terminate at the close of business on the fifth
full day preceding the date fixed for redemption, unless the redemption price is
not paid when due, in which case the Conversion Rights for such shares shall
continue until such price is paid in full. 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
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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 transfer agent for the Series C 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 C 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 a form satisfactory to the Corporation, duly executed by
the registered holder or his 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 ("Conversion Date").
The Corporation shall, as soon as practicable after the Conversion
Date, issue and deliver at such office to such holder of Series C
Preferred Stock, or to his or its nominees, 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 such adjusted Conversion Price.
(iii) Upon any such conversion, no adjustment to the
Conversion Price shall be made for any accrued and unpaid dividends on
the Series C Preferred Stock surrendered for conversion or on the
Common Stock delivered upon conversion.
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(iv) All shares of Series C Preferred Stock which shall have
been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares,
including the rights, if any, to receive notices and to vote, shall
immediately cease and terminate on the Conversion Date, except only the
right of the holders thereof to receive shares of Common Stock in
exchange therefor and payment of any accrued and unpaid dividends
thereon. Any shares of Series C Preferred Stock so converted shall be
retired and canceled and shall not be reissued, and the Corporation may
from time to time take such appropriate action as may be necessary to
reduce the authorized Series C Preferred Stock accordingly.
(d) Adjustments to Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this Subsection
5(d), the following definitions shall apply:
(A) "Option" shall mean rights, options or warrants
to subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities, excluding options granted to employees or
consultants of the Corporation pursuant to an option plan adopted by
the Board of Directors (subject to appropriate adjustment for any stock
dividend, stock split, combination or other similar recapitalization
affecting such shares).
(B) "Original Issue Date" shall mean the date on
which a share of Series C Preferred Stock was first issued.
(C) "Convertible Securities" shall mean any evidences
of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(D) "Additional Shares of Common Stock" shall mean
all shares of Common Stock issued (or, pursuant to Subsection 5(d)(iii)
below, deemed to be issued) by the Corporation after the Original Issue
Date, other than shares of Common Stock issued or issuable:
(I) upon conversion of shares of Series C
Preferred Stock outstanding on the Original Issue Date;
(II) as a dividend or distribution on Series
C Preferred Stock;
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(III) by reason of a dividend, stock split,
split-up or other distribution on shares of Common Stock
excluded from the definition of Additional Shares of Common
Stock by the foregoing clauses (I) and (II) or this clause
(III); or
(IV) upon the exercise of options excluded
from the definition of "Option" in Subsection 5(d)(i)(A).
(ii) No Adjustment of Conversion Price. No adjustment in the
number of shares of Common Stock into which the Series C Preferred
Stock is convertible shall be made by adjustment in the applicable
Conversion Price thereof: (a) unless the consideration per share
(determined pursuant to Subsection 5(d)(v)) for an Additional Share of
Common Stock issued or deemed to be issued by the Corporation is less
than the applicable Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares, or (b) if
prior to such issuance, the Corporation receives written notice from
the holders of at least a majority of the then outstanding shares of
Series C Preferred Stock agreeing that no such adjustment shall be made
as the result of the issuance of Additional Shares of Common Stock.
(iii) Issue of Securities Deemed Issue of Additional Shares of
Common Stock. If the Corporation at any time or from time to time after
the Original Issue Date shall issue any Options or Convertible
Securities or shall fix a record date for the determination of holders
of any class of securities entitled to receive any such Options or
Convertible Securities, then the maximum number of shares of Common
Stock (as set forth in the instrument relating thereto without regard
to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares
of Common Stock issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of business on such
record date, provided that Additional Shares of Common Stock shall not
be deemed to have been issued unless the consideration per share
(determined pursuant to Subsection 5(d)(v) hereof) of such Additional
Shares of Common Stock would be less than the applicable Conversion
Price in effect on the date of and immediately prior to such issue, or
such record date, as the case may be, and provided further that in any
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such case in which Additional Shares of Common Stock are deemed to be
issued:
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion
or exchange of such Convertible Securities;
(B) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any
increase in the consideration payable to the Corporation, or decrease
in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or
the rights of conversion or exchange under such Convertible Securities;
(C) no readjustment pursuant to clause (B) above
shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) the Conversion Price on the original
adjustment date, or (ii) the Conversion Price that would have resulted
from any issuance of Additional Shares of Common Stock between the
original adjustment date and such readjustment date;
(D) upon the expiration or termination of any
unexercised Option, the Conversion Price shall not be readjusted, but
the Additional Shares of Common Stock deemed issued as the result of
the original issue of such Option shall not be deemed issued for the
purposes of any subsequent adjustment of the Conversion Price; and
(E) in the event of any change in the number of
shares of Common Stock issuable upon the exercise, conversion or
exchange of any Option or Convertible Security, including, but not
limited to, a change resulting from the antidilution provisions
thereof, the Conversion Price then in effect shall forthwith be
readjusted to such Conversion Price as would have been obtained had the
adjustment which was made upon the issuance of such Option or
Convertible Security not exercised or converted prior to such change
been made upon the basis of such change, but no further adjustment
shall be made for the actual issuance of
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Common Stock upon the exercise or conversion of any such Option or
Convertible Security.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock. In the event the Corporation shall
at any time after the Original Issue Date issue Additional Shares of
Common Stock (including Additional Shares of Common Stock deemed to be
issued pursuant to Subsection 5(d)(iii), but excluding shares issued as
a dividend or distribution as provided in Subsection 5(f) or upon a
stock split or combination as provided in Subsection 5(e)), without
consideration or for a consideration per share less than the applicable
Conversion Price in effect on the date of and immediately prior to such
issue, then, and in such event, such Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying such Conversion Price by a fraction,
(A) the numerator of which shall be (1) the number of shares of Common
Stock outstanding immediately prior to such issue plus (2) the number
of shares of Common Stock which the aggregate consideration received by
the Corporation for the total number of Additional Shares of Common
Stock so issued would purchase at such Conversion Price; and (B) the
denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of such
Additional Shares of Common Stock so issued; provided that, for the
purpose of this Subsection 5(d)(iv), all shares of Common Stock
issuable upon conversion of shares of Series C Preferred Stock
outstanding immediately prior to such issue shall be deemed to be
outstanding, and immediately after any Additional Shares of Common
Stock are deemed issued pursuant to Subsection 5(d)(iii) (other than
shares excluded from the definition of "Additional Shares of Common
Stock" by virtue of clause (IV) of Subsection 5(d)(i)(D)), such
Additional Shares of Common Stock shall be deemed to be outstanding.
Notwithstanding the foregoing, the applicable Conversion Price
shall not be so reduced at such time if the amount of such reduction
would be an amount less than $.05, but any such amount shall be carried
forward and reduction with respect thereto made at the time of and
together with any subsequent reduction which, together with such amount
and any other amount or amounts so carried forward, shall aggregate
$.05 or more.
(v) Determination of Consideration. For purposes of this
Subsection 5(d), the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as
follows:
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(A) Cash and Property: Such consideration shall:
(I) insofar as it consists of cash, be
computed at the aggregate of cash received by the Corporation,
excluding amounts paid or payable for accrued interest or
accrued dividends;
(II) insofar as it consists of property
other than cash, be computed at the fair market value thereof
at the time of such issue, as determined in good faith by the
Board of Directors; and
(III) in the event Additional Shares of
Common Stock are issued together with other shares or
securities or other assets of the Corporation for
consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (I)
and (II) above, as determined in good faith by the Board of
Directors.
(B) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional
Shares of Common Stock deemed to have been issued pursuant to
Subsection 5(d)(iii) relating to Options and Convertible Securities
shall be determined by dividing (x) the total amount, if any, received
or receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to the Corporation
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and
the conversion or exchange of such Convertible Securities, by (y) the
maximum number of shares of Common Stock (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities.
(e) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time or from time to time after the Original Issue Date for a
series of Preferred Stock effect a subdivision of the outstanding Common Stock,
the Conversion Price then in effect immediately before that
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subdivision shall be proportionately decreased. If the Corporation shall at any
time or from time to time after the Original Issue Date for a series of the
Preferred Stock combine the outstanding shares of Common Stock, the Conversion
Price then in effect immediately before the combination shall be proportionately
increased. Any adjustment under this paragraph shall become effective at the
close of business on the date the subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Original Issue Date
for a series of Preferred Stock shall make or issue, or fix a record date for
the determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event the Conversion Price for such series of Preferred Stock then in
effect shall be decreased as of the time of such issuance or, in the event such
a record date shall have been fixed, as of the close of business on such record
date, by multiplying the Conversion Price for such series of Preferred Stock
then in effect by a fraction:
(i) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, if such record date shall
have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price for such series of Preferred Stock shall be recomputed
accordingly as of the close of business on such record date and
thereafter the Conversion Price for such series of Preferred Stock
shall be adjusted pursuant to this paragraph as of the time of actual
payment of such dividends or distributions.
(g) Adjustments for Other Dividends and Distributions. In the event the
Corporation at any time or from time to time after the Original Issue Date for a
series of Preferred Stock shall
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make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of such series of
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Preferred Stock been
converted into Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period
giving application to all adjustments called for during such period, under this
paragraph with respect to the rights of the holders of the Preferred Stock.
(h) Adjustment for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon the conversion of the Preferred Stock shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification, or otherwise (other
than a subdivision or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation, or sale of assets provided
for below), then and in each such event the holder of each such share of
Preferred Stock shall have the right thereafter to convert such share into the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification, or other change, by holders of the
number of shares of Common Stock into which such shares of Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(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 (other than a consolidation, merger or sale which is treated as a
liquidation pursuant to Subsection 3(a)), each share of Series C 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 C 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 5
set forth with respect to the rights and interest thereafter of the holders of
the Series C Preferred Stock, to the end that the provisions set forth in this
Section 5 (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
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thereafter deliverable upon the conversion of the Series C Preferred Stock.
(j) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 5 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.
(k) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
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.
(1) 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 dividend or 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;
15
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 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.
6. Optional Redemption.
(a) At any time and from time to time after June 30, 1993, the Corporation
may, at the option of its Board of Directors, redeem the Series C Preferred
Stock, in whole or in part, by paying $6 per share (subject to appropriate
adjustment for stock splits, stock dividends, combinations or other similar
recapitalization affecting such shares) in cash for each share of Series C
Preferred Stock then redeemed (hereinafter referred to as the "Redemption
Price").
(b) In the event of any redemption of only a part of the then outstanding
Series C Preferred Stock, the Corporation shall effect such redemption pro rata
among the holders thereof based on the number of shares of Series C Preferred
Stock held by such holders on the date of the Redemption Notice (as defined
below).
(c) `At least 30 days prior to the date fixed for any redemption of Series
C Preferred Stock (hereinafter referred to as the "Redemption Date"), written
notice shall be mailed, by first class or registered mail, postage prepaid, to
each holder of record of Series C Preferred Stock to be redeemed, at his or its
address last shown on the records of the transfer agent of the Series C
Preferred Stock (or the records of the Corporation, if it serves as its own
transfer agent), notifying such holder of the election of the Corporation to
redeem such shares, specifying the Redemption
16
Date and the date on which such holder's Conversion Rights (pursuant to Section
5 hereof) as to such shares terminate and calling upon such holder to surrender
to the Corporation, in the manner and at the place designated, his, her or its
certificate or certificates representing the shares to be redeemed (such notice
is hereinafter referred to as the "Redemption Notice"). On or prior to the
Redemption Date, each holder of Series C Preferred Stock to be redeemed shall
surrender his, her or its certificate or certificates representing such shares
to the Corporation, in the manner and at the place designated in the Redemption
Notice, and thereupon the Redemption Price of such shares shall be payable to
the order of the person whose name appears on such certificate or certificates
as the owner thereof and each surrendered certificate shall be canceled. In the
event less than all the shares represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares. From and
after the Redemption Date, unless there shall has been a default in payment of
the Redemption Price, all rights of the holders of the Series C Preferred Stock
designated for redemption in the Redemption Notice as holders of Series C
Preferred Stock of the Corporation (except the right to receive the Redemption
Price without interest upon surrender of their certificate or certificates)
shall cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever.
(d) Subject to the provisions hereof, the Board of Directors of the
Corporation shall have authority to prescribe the manner in which Series C
Preferred Stock shall be redeemed from time to time. Any shares of Series C
Preferred Stock so redeemed shall permanently be retired, shall no longer be
deemed outstanding and shall not under any circumstances be reissued, and the
Corporation may from time to time take such appropriate action as may be
necessary to reduce the authorized Series C Preferred Stock accordingly. Nothing
herein contained shall prevent or restrict the purchase by the Corporation, from
time to time either at public or private sale, of the whole or any part of the
Series C Preferred Stock at such price or prices as the Corporation may
determine, subject to the provisions of applicable law.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
17
DESIGNATION OF SERIES D PREFERRED STOCK
1. Designation; Rank. The series of Preferred Stock designated and
known as "Series D Preferred Stock" shall consist of 1,000,000 shares, par value
$.01 per share. Shares of the Series D Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
senior and prior to the Common Stock, par value $.004 per share (the "Common
Stock") of the Corporation and junior to the Series C Preferred Stock.
2. Dividends.
(a) The holders of the Series D Preferred Stock shall be entitled to
receive, when declared by the Directors out of any funds legally available
therefor, dividends in cash at the annual rate of $0.2375 per share (subject to
appropriate adjustment for stock splits, stock dividends, combinations or other
similar recapitalizations affecting such shares), and no more, in equal
quarterly payments in arrears on March 31, June 30, September 30 and December 31
in each year (each such date is referred to as a "Dividend Payment Date")
commencing on March 31, 1994, payable in preference and priority to any payment
of any cash dividend on Common Stock and junior in preference and priority to
any payment of any cash dividend to the holders of Series C Preferred Stock.
Such dividends shall be paid to the holders of record at the close of business
on the date specified by the Board of Directors of the Corporation at the time
such dividend is declared; provided, however, that the amount payable to
shareholders for the first such dividend due on March 31, 1994, shall be
pro-rated on a daily basis from the date of issue. If the Dividend Payment Date
is not a business day, the Dividend Payment Date shall be the next succeeding
business day.
(b) Each of such quarterly dividends shall be fully cumulative and
shall accrue, whether or not earned or declared, without interest, from the date
of issue of the Series D Preferred Stock.
(c) No dividends shall be declared or paid or set apart for payment on
the Common Stock, or on the Preferred Stock of any series ranking, as to
dividends, junior to the Series D Preferred Stock, for any period unless full
cumulative dividends have been or contemporaneously are declared and paid (or
declared and a sum sufficient for the payment thereof set apart for such
payment) on the Series D Preferred Stock for all dividend payment periods ending
on or prior to the date of payment of such full cumulative dividends. (The
Common Stock and any such series of Preferred Stock are referred to hereinafter
as "Junior Securities".) Unless full cumulative dividends on the Series D
Preferred Stock have been paid, no other
18
distribution shall be made upon or in respect of the Junior Securities.
(d) In the event that the Corporation shall have cumulative, accrued and
unpaid dividends outstanding immediately prior to, and in the event of a
conversion of any shares of Series D Preferred Stock as provided in Section 5
hereof, the Corporation shall, at its option, pay in cash to such holder the
full amount of any such dividends or allow such dividends to be converted into
Common Stock and the conversion price for such purpose shall be the then fair
market value of the Common Stock as determined by the Board of Directors of the
Corporation.
3. 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 D 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 other class or series of stock of the Corporation ranking on liquidation
prior and in preference to the Series D Preferred Stock, (collectively referred
to as "Senior Preferred Stock") but before any payment shall be made to the
holders of any Junior Securities by reason of their ownership thereof, an amount
equal to $4.75 per share (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 D Preferred Stock the full amount to which they shall be
entitled, the holders of Series D 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.
(b) After the payment of all preferential amounts required to be paid to
the holders of Senior Preferred Stock and Series D Preferred Stock upon the
dissolution, liquidation or winding up of the Corporation, the holders of shares
of Junior Securities then outstanding shall be entitled to receive the remaining
assets and funds of the Corporation available for distribution to its
stockholders.
(c) Written notice of such liquidation, dissolution or winding up, stating
a payment date and the place where said
19
payments shall be made, shall be given by mail, postage prepaid, or by
telecopier to non-U.S. residents, not less than 20 days prior to the payment
date stated therein, to the holders of record of the Series D Preferred Stock,
such notice to be addressed to each such holder at its address as shown by the
records of the Corporation.
(d) Whenever the distribution provided for in this Section 3 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary sale,
conveyance, exchange or transfer (for case, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with one or more
other corporations shall be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, unless such voluntary sale, conveyance, exchange
or transfer shall be in connection with a plan of liquidation, dissolution or
winding up of the business of the Corporation.
4. Voting.
(a) Except as may be otherwise provided in these terms of the Series D
Preferred Stock or by law, the Series D Preferred Stock shall not be entitled to
vote.
(b) The Corporation shall not amend, alter or repeal the preferences,
special rights or other powers of the Series D Preferred Stock so as to affect
adversely the Series D Preferred Stock, without the written consent or
affirmative vote of the holders of a majority of the then outstanding shares of
Series D Preferred Stock, given 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 or issuance of any
series of Preferred Stock with preference or priority over the Series D
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed to affect adversely the Series D Preferred Stock, and the
authorization or issuance of any series of Preferred Stock on a parity with
Series D Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed not to affect adversely the Series D Preferred Stock. The number
of authorized shares of Series D Preferred Stock may be increased or decreased
(but not below the number of shares then outstanding) by the affirmative vote of
the holders of
20
a majority of the then outstanding shares of the Common Stock, Series D
Preferred Stock and all other classes or series of stock of the Corporation
entitled to vote thereon, voting as a single class.
5. Optional Conversion. The holders of the Series D Preferred
Stock shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series D Preferred Stock shall be
convertible, at the option of the holder thereof, at any time, into one share of
fully paid and nonassessable Common Stock (subject to appropriate adjustment in
the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares).
In the event of a notice of redemption of any shares of Series D
Preferred Stock pursuant to Section 6 hereof, the Conversion Rights of the
shares designated for redemption shall terminate at the close of business on the
fifth full day preceding the date fixed for redemption, unless the redemption
price is not paid when due, in which case the Conversion Rights for such shares
shall continue until such price is paid in full. 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 D Preferred Stock.
(b) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series D 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 D Preferred Stock to
convert shares of Series D Preferred Stock into shares of Common Stock,
such holder shall surrender the certificate or certificates for such
shares of Series D Preferred Stock at the office of the transfer agent
for the Series D 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 D Preferred Stock represented by
such certificate or certificates for shares of Common stock to be
issued, provided however, that the holder shall pay any transfer taxes
arising from the issuance of the Common Stock to any person or entity
other than the holder.
21
If required by the Corporation, certificates surrendered for conversion
shall be endorsed or accompanied by a written instrument or instruments
of transfer, in a form satisfactory to the Corporation, duly executed
by the registered holder or his 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 ("Conversion Date").
The Corporation shall, as soon as practicable after the Conversion
Date, issue and deliver at such office to such holder of Series D
Preferred Stock, or to his or its nominees, 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 D
Preferred Stock shall be outstanding, reserve and keep available out of
is authorized but unissued stock, for the purpose of effecting the
conversion of the Series D 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 D
Preferred Stock.
(iii) All shares of Series D Preferred Stock which shall have
been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares,
including the rights, if any, to receive notices and to vote, shall
immediately cease and terminate on the Conversion Date, except only the
right of the holders thereof to receive shares of Common Stock in
exchange therefor and payment of any accrued and unpaid dividends
thereon. Any shares of Series D Preferred Stock so converted shall be
retired and canceled and shall not be reissued, and the Corporation may
from time to time take such appropriate action as may be necessary to
reduce the authorized Series D Preferred Stock accordingly.
(d) Adjustment for Reclassification, Exchange, or Substitution. If the
Common Stock issuable upon the conversion of the Series D Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for above in section 5(a) hereof, or a reorganization, merger, consolidation, or
sale of assets provided for below in Section 5(e) hereof), then and in each
event the holder of each such share of Series D Preferred Stock shall have the
22
right thereafter to convert such share of Series D Preferred Stock into the kind
and amount of shares of stock and other securities receivable upon such
reorganization, reclassification, or other change by a holder of the number of
shares of Common Stock into which such shares of Series D Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(e) 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 (other than a consolidation, merger or sale which is treated as a
liquidation pursuant to Subsection 3(a)), each share of Series D 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 D 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 5
with respect to the rights and interest thereafter of the holders of the Series
D Preferred Stock, to the end that the provisions set forth in this Section 5
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 D Preferred Stock.
(f) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
section 5 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 D Preferred Stock against impairment.
(g) 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;
23
(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 dividend or 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 D Preferred Stock, and shall cause to
be mailed to the holders of the Series D 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.
6. Optional Redemption.
(a) At any time and from time to time, the Corporation may, at the
option of its Board of Directors, redeem the Series D Preferred Stock, in whole
or in part, by paying $7 per share (subject to appropriate adjustment for stock
splits, stock dividends, combinations or other similar recapitalizations
affecting such shares) in cash for each share of Series D Preferred Stock then
redeemed (hereinafter referred to as the "Redemption Price").
(b) In the event of any redemption of only a part of the then
outstanding Series D Preferred Stock, the Corporation shall effect such
redemption pro rata among the holders thereof based on the number of shares of
Series D Preferred Stock held of record by such holders on the date of the
Redemption Notice (as defined below).
24
(c) At least 30 days prior to the date fixed for any redemption of
Series D Preferred Stock (hereinafter referred to as the "Redemption Date"),
written notice shall be mailed, by first class mail, postage prepaid, to each
holder of record of Series D Preferred Stock to be redeemed, at his or its
address last shown on the records of the transfer agent of the Series D
Preferred Stock (or the records of the Corporation, if it serves as its own
transfer agent), notifying such holder of the election of the Corporation to
redeem such shares specifying the Redemption Date and the date on which such
holder's Conversion Rights (pursuant to Section 5 hereof) as to such shares
terminate and calling upon such holder to surrender to the Corporation, in the
manner and at the place designated, his, her or its certificate or certificates
representing the shares to be redeemed (such notice is hereinafter referred to
as the "Redemption Notice"). On or prior to the Redemption Date, each holder of
Series D Preferred Stock to be redeemed shall surrender his, her or its
certificate or certificates representing such shares to the Corporation, in the
manner and at the place designated in the Redemption Notice, and thereupon the
Redemption Price of such shares shall be payable to the order of the person
whose name appears on such certificate or certificates as the owner thereof and
each surrendered certificate shall be canceled. In the event less than all the
shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares. From and after the Redemption
Date, unless there shall have been a default in payment of the Redemption Price,
all rights of the holders of the Series D Preferred Stock designated for
redemption in the Redemption Notice as holders of Series D Preferred Stock of
the Corporation (except the right to receive the Redemption Price without
interest upon surrender of their certificate or certificates) shall cease with
respect to such shares, and such shares shall not thereafter be transferred on
the books of the Corporation or be deemed to be outstanding for any purpose
whatsoever.
(d) Subject to the provisions hereof, the Board of Directors of the
Corporation shall have authority to prescribe the manner in which Series D
Preferred Stock shall be redeemed from time to time. Any shares of Series D
Preferred Stock so redeemed shall permanently be retired, shall no longer be
deemed outstanding and shall not under any circumstances be reissued, and the
Corporation may from time to time take such appropriate action as may be
necessary to reduce the authorized Series D Preferred Stock accordingly. Nothing
herein contained shall prevent or restrict the purchase by the Corporation, from
time to time either at public or private sale, of the whole or any part of the
Series D Preferred Stock at such price or prices as the Corporation may
determine, subject to the provisions of applicable law.
25
DESIGNATION OF SERIES E PREFERRED STOCK
1. Designation; Rank. The series of Preferred Stock designated and
known as "Series E Preferred Stock" shall consist of 400,000 shares, par value
$.01 per share. Shares of the Series E Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
senior and prior to the Common Stock, par value $.004 per share (the "Common
Stock") of the Corporation, junior to the Series C Preferred Stock and on a
parity with the Series D Preferred Stock and Series F Preferred Stock.
2. Dividends.
(a) The holders of the Series E Preferred Stock shall be entitled to
receive, when declared by the Directors out of any funds legally available
therefor, dividends in cash or, at the Corporation's option, in Common Stock, at
the annual rate of $0.30 per share (subject to appropriate adjustment for stock
splits, stock dividends, combinations or other similar recapitalizations
affecting such shares), and no more, on the earlier to occur of (i) the
Conversion Date (as hereinafter defined) and (ii) the Redemption Date (as
hereinafter defined) (the "Dividend Payment Date"), payable in preference and
priority to any payment of any cash dividend on Common Stock, junior in
preference and priority to any dividend payment to the holders of Series C
Preferred Stock and on a parity with any dividend payment to the holders of
Series D Preferred Stock and Series F Preferred Stock. Such dividends shall be
paid to the holders of record at the close of business on the Dividend Payment
Date. If the Dividend Payment Date is not a business day, the Dividend Payment
Date shall be the next succeeding business day. If the Corporation elects to pay
such dividends in Common Stock, the conversion price per share (the "Conversion
Price") shall be the lesser of (i) $3.75 and (ii) the closing price per share of
the Common Stock on the principal national securities exchange on which the
Common Stock is then listed or admitted to trading or, if not then listed or
admitted to trading on any such exchange, on the NASDAQ National Market System,
or if not then listed or traded on any such exchange or system, the bid price
per share on the NASDAQ Small-Cap Market, averaged over the 30 trading days
immediately preceding the Conversion Date (subject to appropriate adjustment in
the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares).
(b) Dividends shall be fully cumulative and shall accrue, whether or
not earned or declared, without interest, from the date of issue of the Series E
Preferred Stock.
26
(c) No dividends shall be declared or paid or set apart for payment on
the Common Stock, or on the Preferred Stock of any series ranking, as to
dividends, junior to or on a parity with the Series E Preferred Stock, for any
period unless full cumulative dividends have been or contemporaneously are
declared and paid (or declared and a sum sufficient for the payment thereof set
apart for such payment) on the Series E Preferred Stock for all dividend payment
periods ending on or prior to the date of payment of such full cumulative
dividends. (The Common Stock and any such series of Preferred Stock are referred
to hereinafter as "Junior Securities".) Unless full cumulative dividends on the
Series E Preferred Stock have been paid, no other distribution shall be made
upon or in respect of the Junior Securities.
3. 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 stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series E Preferred Stock,
(collectively referred to as "Senior Preferred Stock") but before any payment
shall be made to the holders of any Junior Securities by reason of their
ownership thereof, and on a parity with any dividend payment to the holders of
Series D Preferred Stock and Series F Preferred Stock, an amount equal to $3.75
per share (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
E Preferred Stock the full amount to which they shall be entitled, the holders
of 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.
(b) After the payment of all preferential amounts required to be paid
to the holders of Senior Preferred Stock and Series E Preferred Stock upon the
dissolution, liquidation or winding up of the Corporation, the holders of shares
of Junior Securities then outstanding shall be
27
entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
(c) Written notice of such liquidation, dissolution or winding up,
stating a payment date and the place where said payments shall be made, shall be
given by mail, postage prepaid, or by telecopier to non-U.S. residents, not less
than 20 days prior to the payment date stated therein, to the holders of record
of the Series E Preferred Stock, such notice to be addressed to each such holder
at its address as shown by the records of the Corporation.
(d) Whenever the distribution provided for in this Section 3 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary sale,
conveyance, exchange or transfer (for case, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with one or more
other corporations shall be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, unless such voluntary sale, conveyance, exchange
or transfer shall be in connection with a plan of liquidation, dissolution or
winding up of the business of the Corporation.
4. Voting.
(a) Except as may be otherwise provided in these terms of the Series E
Preferred Stock or by law, the Series E Preferred Stock shall not be entitled to
vote.
(b) The Corporation shall not 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, without the written consent or
affirmative vote of the holders of a majority of the then outstanding shares of
Series E Preferred Stock, given 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 or issuance of any
series of Preferred 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 of the Corporation
shall be deemed to affect adversely the Series E Preferred Stock, and the
authorization or issuance of any series of Preferred Stock on a parity with
Series E Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or
28
winding up of the Corporation shall be deemed not to affect adversely the Series
E Preferred Stock. The number of authorized shares of Series E Preferred Stock
may be increased or decreased (but not below the number of shares then
outstanding) by the affirmative vote of the holders of a majority of the then
outstanding shares of the Common Stock, Series E Preferred Stock and all other
classes or series of stock of the Corporation entitled to vote thereon, voting
as a single class.
5. Conversion.
(a) Mandatory Conversion. On January 1, 1995 (the "Conversion Date"),
each share of Series E Preferred Stock shall automatically and without further
action on the part of any holder of Series E Preferred Stock be converted into
the number of shares of fully paid and nonassessable Common Stock derived by
dividing $3.75 by the Conversion Price. Upon such conversion, each share of
Series E Preferred Stock shall be cancelled and not subject to reissuance. On or
before September 30, 1994, the Corporation shall provide written notice (the
"Conversion Notice") to the holders hereof of the Corporation's intention not to
exercise the redemption option provided for in Section 6 hereof and to allow the
Series E Preferred Stock to automatically convert pursuant to this Section 5(a).
The immediately preceding sentence notwithstanding, the Corporation shall not be
deemed to have waived its right to redeem the Series E Preferred Stock pursuant
to Section 6 hereof by virtue of the issuance of the Conversion Notice."
(b) Delivery of Stock Certificates. The holder of any shares of Series
E Preferred Stock converted pursuant to Section 5(a) hereof, shall deliver to
the Corporation during regular business hours at the office of the transfer
agent of the Corporation for the Series E Preferred Stock, or at such other
place as may be designated by the Corporation, the certificate or certificates
for the shares so converted, duly endorsed or assigned in blank to the
Corporation. As promptly as practicable thereafter, the Corporation shall issue
and deliver to such holder, at the place designated by such holder, a
certificate or certificates for the number of shares of Common Stock to which
such holder is entitled. The person in whose name the certificate for such
Common Stock is to be issued shall be deemed to have become a stockholder of
record on the Conversion Date unless the transfer books of the Corporation are
closed on that date, in which event he shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer books
are open.
(c) 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
29
the holder would otherwise be entitled, the Corporation shall pay cash equal to
such fraction multiplied by the Conversion Price.
(d) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time or from time to time after the date on which a share of Series
E Preferred Stock was first issued ("Original Issue Date") effect a subdivision
of the outstanding Common Stock, the Conversion Price then in effect immediately
before that subdivision shall be proportionately decreased. If the Corporation
shall at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock, the Conversion Price then in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this paragraph shall become effective at the close of business
on the date the subdivision or combination becomes effective.
(e) Adjustment for Certain Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Conversion
Price for the Series E Preferred Stock then in effect shall be decreased as of
the time of such issuance or, in the event such a record date shall have been
fixed, as of the close of business on such record date, by multiplying the
Conversion Price for the Series E Preferred Stock then in effect by a fraction:
(i) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, if such record date shall
have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price for the Series E Preferred Stock shall be recomputed
accordingly as of the close of business on such record date and
thereafter the Conversion Price for the Series E Preferred Stock shall
be adjusted pursuant to this paragraph as of the time of actual payment
of such dividends or distributions.
30
(f) Adjustments for Other Dividends and Distributions. In the event the
Corporation at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of the Series E
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Preferred Stock been
converted into Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period
giving application to all adjustments called for during such period, under this
paragraph with respect to the rights of the holders of the Preferred Stock.
(g) Adjustment for Reclassification, Exchange, or Substitution. If the
Common Stock issuable upon the conversion of the Series E Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for in Sections 5(d), (e) and (f) hereof, or a reorganization, merger,
consolidation, or sale of assets provided for in Section 5(h) hereof), then and
in each event the holder of each such share of Series E Preferred Stock shall
have the right thereafter to convert such share of Series E Preferred Stock into
the kind and amount of shares of stock and other securities receivable upon such
reorganization, reclassification, or other change by a holder of the number of
shares of Common Stock into which such shares of Series E Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(h) 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 (other than a consolidation, merger or sale which is treated as a
liquidation pursuant to Subsection 3(a)), each share of Series E 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 E 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
31
Board of Directors) shall be made in the application of the provisions in this
Section 5 with respect to the rights and interest thereafter of the holders of
the Series E Preferred Stock, to the end that the provisions set forth in this
Section 5 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 E Preferred Stock.
(i) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the holders of the Series E Preferred Stock
against impairment of their conversion rights.
(j) 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 dividend or 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
(10) days prior to the record date specified in (A) below or twenty (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
32
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.
(k) Optional Conversion. Except as set forth in Section 5(a)
hereof, the holders of the Series E Preferred Stock shall not have the right to
convert their shares of Series E Preferred Stock into Common Stock.
6. Optional Redemption.
(a) At any time and from time to time on or before December 31, 1994,
the Corporation may, at the option of its Board of Directors, redeem the Series
E Preferred Stock, in whole or in part, by paying $3.75 per share (subject to
appropriate adjustment for stock splits, stock dividends, combinations or other
similar recapitalizations affecting such shares) in cash for each share of
Series E Preferred Stock then redeemed (hereinafter referred to as the
"Redemption Price").
(b) In the event of any redemption of only a part of the then
outstanding Series E Preferred Stock, the Corporation shall effect such
redemption pro rata among the holders thereof based on the number of shares of
Series E Preferred Stock held of record by such holders on the date of the
Redemption Notice (as defined below).
(c) At least ten (10) days prior to the date fixed for any redemption
of Series E Preferred Stock (hereinafter referred to as the "Redemption Date"),
written notice shall be mailed, by first class mail, postage prepaid, to each
holder of record of Series E Preferred Stock to be redeemed, at his or its
address last shown on the records of the transfer agent of the Series E
Preferred Stock (or the records of the Corporation, if it serves as its own
transfer agent), notifying such holder of the election of the Corporation to
redeem such shares specifying the Redemption Date and calling upon such holder
to surrender to the Corporation, in the manner and at the place designated, his,
her or its certificate or certificates representing the shares to be redeemed
(such notice is hereinafter referred to as the "Redemption Notice"). On or prior
to the Redemption Date, each holder of Series E Preferred Stock to be redeemed
shall surrender his, her or its certificate or
33
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and thereupon the Redemption
Price of such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares. From and after the Redemption Date,
unless there shall have been a default in payment of the Redemption Price, all
rights of the holders of the Series E Preferred Stock designated for redemption
in the Redemption Notice as holders of Series E Preferred Stock of the
Corporation (except the right to receive the Redemption Price without interest
upon surrender of their certificate or certificates) shall cease with respect to
such shares, and such shares shall not thereafter be transferred on the books of
the Corporation or be deemed to be outstanding for any purpose whatsoever.
(d) Subject to the provisions hereof, the Board of Directors of the
Corporation shall have authority to prescribe the manner in which Series E
Preferred Stock shall be redeemed from time to time. Any shares of Series E
Preferred Stock so redeemed shall permanently be retired, shall no longer be
deemed outstanding and shall not under any circumstances be reissued, and the
Corporation may from time to time take such appropriate action as may be
necessary to reduce the authorized Series E Preferred Stock accordingly. Nothing
herein contained shall prevent or restrict the purchase by the Corporation, from
time to time either at public or private sale, of the whole or any part of the
Series E Preferred Stock at such price or prices as the Corporation may
determine, subject to the provisions of applicable law.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
34
DESIGNATION OF SERIES F PREFERRED STOCK
1. Designation; Rank. The series of Preferred Stock designated and
known as "Series F Preferred Stock" shall consist of 700,000 shares, par value
$.01 per share. Shares of the Series F Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
senior and prior to the Common Stock, par value $.004 per share (the "Common
Stock") of the Corporation, junior to the Series C Preferred Stock and on a
parity with the Series D Preferred Stock and Series E Preferred Stock.
2. Dividends. The holders of the Series F Preferred Stock shall
not be entitled to receive dividends.
3. 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 stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series F Preferred Stock,
(collectively referred to as "Senior Preferred Stock") but before any payment
shall be made to the holders of Common Stock and any series of Preferred Stock
ranking on liquidation junior to the Series F Preferred Stock ("Junior
Securities") by reason of their ownership thereof, and on a parity with any
dividend payment to the holders of Series D Preferred Stock and Series E
Preferred Stock, an amount equal to $5.00 per share (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 F Preferred Stock the full amount to
which they shall be entitled, the holders of 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.
(b) After the payment of all preferential amounts required to be paid
to the holders of Senior Preferred Stock and Series F Preferred Stock upon the
dissolution,
35
liquidation or winding up of the Corporation, the holders of shares of Junior
Securities then outstanding shall be entitled to receive the remaining assets
and funds of the Corporation available for distribution to its stockholders.
(c) Written notice of such liquidation, dissolution or winding up,
stating a payment date and the place where said payments shall be made, shall be
given by mail, postage prepaid, or by telecopier to non-U.S. residents, not less
than 20 days prior to the payment date stated therein, to the holders of record
of the Series F Preferred Stock, such notice to be addressed to each such holder
at its address as shown by the records of the Corporation.
(d) Whenever the distribution provided for in this Section 3 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
(e) For the purposes of this Section 3, neither the voluntary sale,
conveyance, exchange or transfer (for case, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with one or more
other corporations shall be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, unless such voluntary sale, conveyance, exchange
or transfer shall be in connection with a plan of liquidation, dissolution or
winding up of the business of the Corporation.
4. Voting.
(a) Except as may be otherwise provided in these terms of the Series F
Preferred Stock or by law, the Series F Preferred Stock shall not be entitled to
vote.
(b) The Corporation shall not 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, without the written consent or
affirmative vote of the holders of a majority of the then outstanding shares of
Series F Preferred Stock, given 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 or issuance of any
series of Preferred 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 of the Corporation
shall be deemed to affect adversely the Series F Preferred Stock, and the
authorization or issuance of any series of Preferred Stock on a parity with
Series F
36
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed not to affect adversely the Series F Preferred Stock. The number
of authorized shares of Series F Preferred Stock may be increased or decreased
(but not below the number of shares then outstanding) by the affirmative vote of
the holders of a majority of the then outstanding shares of the Common Stock,
Series F Preferred Stock and all other classes or series of stock of the
Corporation entitled to vote thereon, voting as a single class.
5. Conversion.
(a) Mandatory Conversion. On July 1, 1995 (the "Conversion Date"), each
share of Series F Preferred Stock shall automatically and without further action
on the part of any holder of Series F Preferred Stock be converted into the
number of shares of fully paid and nonassessable Common Stock derived by
dividing the number 1 by a fraction, the denominator of which is $5.00 and the
numerator of which is ninety percent (90%) of the closing price per share of the
Common Stock on the principal national securities exchange on which the Common
Stock is then listed or admitted to trading or, if not then listed or admitted
to trading on any such exchange, on the NASDAQ National Market System, or if not
then listed or traded on any such exchange or system, the bid price per share on
the NASDAQ Small-Cap Market, averaged over the 30 trading days immediately
preceding the Conversion Date. Upon such conversion, each share of Series F
Preferred Stock shall be cancelled and not subject to reissuance."
(b) Delivery of Stock Certificates. The holder of any shares of Series
F Preferred Stock converted pursuant to Section 5(a) hereof, shall deliver to
the Corporation during regular business hours at the office of the transfer
agent of the Corporation for the Series F Preferred Stock, or at such other
place as may be designated by the Corporation, the certificate or certificates
for the shares so converted, duly endorsed or assigned in blank to the
Corporation. As promptly as practicable thereafter, the Corporation shall issue
and deliver to such holder, at the place designated by such holder, a
certificate or certificates for the number of shares of Common Stock to which
such holder is entitled. The person in whose name the certificate for such
Common Stock is to be issued shall be deemed to have become a stockholder of
record on the Conversion Date unless the transfer books of the Corporation are
closed on that date, in which event he shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer books
are open.
37
(c) 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 $5.00.
(d) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time or from time to time after the date on which a share of Series
F Preferred Stock was first issued ("Original Issue Date") effect a subdivision
of the outstanding Common Stock, the Conversion Price then in effect immediately
before that subdivision shall be proportionately decreased. If the Corporation
shall at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock, the Conversion Price then in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this paragraph shall become effective at the close of business
on the date the subdivision or combination becomes effective.
(e) Adjustment for Certain Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Conversion
Price for the Series F Preferred Stock then in effect shall be decreased as of
the time of such issuance or, in the event such a record date shall have been
fixed, as of the close of business on such record date, by multiplying the
Conversion Price for the Series F Preferred Stock then in effect by a fraction:
(i) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, if such record date shall
have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price for the Series F Preferred Stock shall be recomputed
accordingly as of the close of business on such record date and
thereafter the Conversion Price for the Series F Preferred Stock shall
be adjusted pursuant to this
38
paragraph as of the time of actual payment of such dividends or
distributions.
(f) Adjustments for Other Dividends and Distributions. In the event the
Corporation at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of the Series F
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Preferred Stock been
converted into Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period
giving application to all adjustments called for during such period, under this
paragraph with respect to the rights of the holders of the Preferred Stock.
(g) Adjustment for Reclassification, Exchange, or Substitution. If the
Common Stock issuable upon the conversion of the Series F Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for in Sections 5(d), (e) and (f) hereof, or a reorganization, merger,
consolidation, or sale of assets provided for in Section 5(h) hereof), then and
in each event the holder of each such share of Series F Preferred Stock shall
have the right thereafter to convert such share of Series F Preferred Stock into
the kind and amount of shares of stock and other securities receivable upon such
reorganization, reclassification, or other change by a holder of the number of
shares of Common Stock into which such shares of Series F Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(h) 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 (other than a consolidation, merger or sale which is treated as a
liquidation pursuant to Subsection 3(a)), each share of Series F 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 F
39
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 5 with respect to the rights and interest thereafter of the holders
of the Series F Preferred Stock, to the end that the provisions set forth in
this Section 5 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 F Preferred Stock.
(i) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the holders of the Series F Preferred Stock
against impairment of their conversion rights.
(j) 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 dividend or 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
(10) days prior to the record date specified in (A) below or twenty (20) days
before the date specified in (B) below, a notice stating
40
(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.
(k) Optional Conversion. Except as set forth in Section 5(a)
hereof, the holders of the Series F Preferred Stock shall not have the right to
convert their shares of Series F Preferred Stock into Common Stock.
6. Redemption. The Corporation shall not have any right to redeem the
Series F Preferred Stock.
FIFTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
SIXTH. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law, (i) for 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) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article Sixth shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
SEVENTH. The number of directors constituting the entire Board of
Directors shall be as set forth in or pursuant to the by-laws of the
Corporation. The Board of Directors shall be divided into three classes,
designated Classes I, II and III, which shall be as nearly equal in number as
possible. Initially, directors of Class I shall be elected to hold office for a
term expiring at the annual meeting of stockholders in 1995, directors of Class
II shall be elected to hold office for a term expiring at the annual meeting of
stockholders in 1996 and directors of Class III
41
shall be elected to hold office for a term expiring at the annual meeting of
stockholders in 1997. At each annual meeting of stockholders following such
initial classification and election, the respective successors of each class
shall be elected for three-year terms.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Restated Certificate of Incorporation to be signed by
its President and attested by its Secretary this day of June, 1994.
SHARED TECHNOLOGIES INC.
ATTEST
/s/ Kenneth M. Dorros By:/s/ Anthony D. Autorino
Kenneth M. Dorros, Secretary Anthony D. Autorino
President
[Corporate Seal]