EXHIBIT 10(X)
_______________________________________________________________________________
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
between
INTERLEAF, INC.
and
LINDNER INVESTMENTS
October 14, 1996
_______________________________________________________________________________
TABLE OF CONTENTS
PAGE
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1. Authorization and Sale of Shares.............................. 1
1.1 Authorization............................................ 1
1.2 Sale of Shares........................................... 1
1.3 Use of Proceeds.......................................... 1
2. The Closing.................................................... 1
3. Representations of the Company................................. 2
3.1 Organization and Standing................................. 2
3.2 Capitalization............................................ 2
3.3 Authorization of Transaction.............................. 3
3.4 Noncontravention.......................................... 3
3.5 Reports and Financial Statements.......................... 3
3.6 Absence of Material Adverse Changes....................... 4
3.7 Litigation................................................ 4
4. Representations of the Purchaser............................... 5
4.1 Investment................................................ 5
4.2 Authority................................................. 5
4.3 Experience................................................ 5
4.4 Access to Information..................................... 5
4.5 Status.................................................... 6
5. Covenants of the Company....................................... 6
5.1 Inspection................................................ 6
5.2 Financial Statements and Other Information................ 6
5.3 Reservation of Common Stock............................... 6
6. Transfer of Shares............................................. 6
6.1 Restricted Shares......................................... 6
6.2 Requirements for Transfer................................. 7
6.3 Legend.................................................... 7
7. Registration Rights............................................ 7
7.1 Registration of Shares.................................... 7
7.2 Limitations on Registrations.............................. 8
7.3 Registration Procedures................................... 9
7.4 Requirements of the Purchaser............................. 10
7.5 Indemnification........................................... 10
8. Miscellaneous.................................................. 10
8.1 Successors and Assigns.................................... 10
8.2 Confidentiality........................................... 11
8.3 Survival of Representations and Warranties................ 11
8.4 Notices................................................... 11
8.5 Brokers and Closing Costs................................. 12
8.6 Entire Agreement.......................................... 12
8.7 Amendments and Waivers.................................... 12
8.8 Counterparts.............................................. 12
8.9 Section Headings.......................................... 12
8.10 Severability.............................................. 13
8.11 Governing Law............................................. 13
Exhibit A Certificate of Vote of Directors Establishing a Series
of a Class of Stock
Exhibit B Opinion of Hale and Dorr
Exhibit C Opinion of John K. Hyvner, Esq.
Exhibit D Issuance of Shares
ii
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
This Agreement dated as of October 14, 1996 is entered into by and
between Interleaf, Inc., a Massachusetts corporation (the "Company"), and
Lindner Investments, a Massachusetts business trust (the "Purchaser").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. AUTHORIZATION AND SALE OF SHARES.
1.1 AUTHORIZATION. The Company has duly authorized the sale and
issuance, pursuant to the terms of this Agreement, of 1,200,000 shares of its
Series C Convertible Preferred Stock, $0.10 par value per share (the "Series
C Preferred Stock"), having the rights, restrictions, privileges and
preferences set forth in the Certificate of Vote of Directors Establishing a
Series of a Class of Stock attached hereto as EXHIBIT A (the "Certificate of
Vote"). The Company has adopted and will file prior to the Closing (as
defined below) the Certificate of Vote with the Secretary of State of the
Commonwealth of Massachusetts.
1.2 SALE OF SHARES. Subject to the terms and conditions of this
Agreement, at the Closing the Company will issue and sell to the Purchaser,
and the Purchaser will purchase, 1,004,904 shares of Series C Preferred Stock
for the purchase price of $9.9512 per share. The shares of Series C
Preferred Stock being sold under this Agreement are referred to as the
"Shares."
1.3 USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Shares for working capital and general corporate purposes.
2. THE CLOSING. The closing ("Closing") of the sale and purchase of the
Shares under this Agreement shall take place at the offices of Hale and Dorr,
60 State Street, Boston, Massachusetts at 3:00 p.m. on October 15, 1996. The
date of the Closing is hereinafter referred to as the "Closing Date." At the
Closing:
(a) the Company shall deliver to the Purchaser a certificate, as of
the most recent practicable date, as to the
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corporate good standing of the Company issued by the Secretary of State of
the Commonwealth of Massachusetts;
(b) the Company shall deliver to the Purchaser the Articles of
Organization of the Company, as amended and in effect as of the Closing Date
(excluding the Certificate of Vote), certified by the Secretary of State of
the Commonwealth of Massachusetts, and the Certificate of Vote with a stamped
filing acknowledgment by the Secretary of the Commonwealth of Massachusetts;
(c) Hale and Dorr, counsel for the Company, shall deliver to the
Purchaser an opinion, dated the Closing Date, in substantially the form
attached hereto as EXHIBIT B;
(d) John K. Hyvnar, General Counsel of the Company, shall deliver to
the Purchaser an opinion, dated the Closing Date, in substantially the form
attached hereto as EXHIBIT C;
(e) the Company shall deliver to the Purchaser certificates for the
Shares being purchased by the Purchaser, registered in the name of one or
more series into which the Purchaser's shares of beneficial interest have
been divided, as set forth on EXHIBIT D attached hereto;
(f) the Purchaser shall pay to the Company the purchase price for the
Shares, by wire transfer or certified check; and
(g) the Company and the Purchaser shall execute and deliver a
Cross-Receipt.
3. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and
warrants to the Purchaser as follows as of the date hereof:
3.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. The Company is duly qualified to do business
as a foreign corporation and is in good standing in any jurisdiction in which
the failure to so qualify would have a material adverse effect on the
operations or financial condition of the Company.
3.2 CAPITALIZATION. The authorized capital stock of the Company at
the Closing will consist of (a) 30,000,000 shares of common stock, $.01 par
value per share, of which 17,459,219 shares were issued and outstanding as of
September 30, 1996, and
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(b) 5,000,000 shares of Preferred Stock, $.01 par value per share, of which
(i) 200,000 shares have been designated as Series A Junior Participating
Preferred Stock (none of which are issued or outstanding), (ii) 2,142,857
shares have been designated as Senior Series B Convertible Preferred Stock
(of which 861,911 shares were outstanding as of September 30, 1996) and (iii)
1,200,000 shares have been designated as Series C Preferred Stock (none of
which are issued and outstanding immediately prior to the Closing). At the
Closing, the Common Stock and the Preferred Stock of the Company will have
the voting powers, designations, preferences, rights and qualifications, and
limitations or restrictions set forth in the Articles of Organization
(including the Certificate of Vote). All of the issued and outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. All of the Shares, and all of
the shares of Series C Preferred Stock issued pursuant to Section 7.1(b),
will be, when issued in accordance with this Agreement, duly authorized,
validly issued, fully paid and nonassessable.
3.3 AUTHORIZATION OF TRANSACTION. The Company has all requisite
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by the
Company and the consummation of the transactions contemplated hereby by the
Company have been duly and validly authorized by all necessary corporate
action on the part of the Company. The issuance, sale and delivery of the
Shares in accordance with this Agreement, and the issuance and delivery of
the shares of Common Stock issuable upon conversion of the Shares, have been
duly authorized by all necessary corporate action on the part of the Company,
and all such shares have been duly reserved for issuance. This Agreement has
been duly and validly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against it in
accordance with its terms.
3.4 NONCONTRAVENTION. Neither the execution and delivery of this
Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby, will (a) conflict with or violate any
provision of the Articles of Organization or By-laws of the Company, (b)
require on the part of the Company any filing with, or permit, authorization,
consent or approval of, any governmental entity (other than the filing of the
Certificate of Vote), (c) conflict with, result in breach of, constitute a
default under, or require any notice, consent or waiver under, any contract,
agreement or other instrument to which the Company is a party or by which it
is bound (other than any consent as waiver which has already been obtained),
or
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(d) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company.
3.5 REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has previously furnished to the Purchaser complete
and accurate copies, as amended or supplemented, of its (i) Annual Report on
Form 10-K for the fiscal year ended March 31, 1996, as filed with the
Securities and Exchange Commission (the "SEC"), and (ii) its Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996, as filed with the SEC (such
reports are collectively referred to herein as the "Company Reports"). The
Company Reports constitute all of the documents required to be filed by the
Company under Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") with the SEC since March 31, 1996. As of their
respective dates, the Company Reports did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
financial statements and unaudited interim financial statements of the
Company included in the Company Reports (i) comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, (ii) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto,
and in the case of quarterly financial statements, as permitted by Form 10-Q
under the Exchange Act), (iii) fairly present the consolidated financial
condition, results of operations and cash flows of the Company as of the
respective dates thereof and for the periods referred to therein, and (iv)
are consistent with the books and records of the Company.
(b) The Company has provided to the Purchaser a copy of its press
release dated September 30, 1996 with respect to the financial results of the
Company for the quarter then ended. The Company has also provided to and
discussed with the Purchaser such information as the Purchaser has requested
(to the extent available) regarding the financial results of the Company for
such quarter and the current operations, financial condition (including the
amount of available cash) and plans of the Company.
3.6 ABSENCE OF MATERIAL ADVERSE CHANGES. Except as disclosed by the
Company to the Purchaser prior to the date hereof, since June 30, 1996, there
has not been any material
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adverse change in the assets, business, financial condition or results of
operations of the Company.
3.7 LITIGATION. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending, or, to the best of the
Company's knowledge, any basis therefor or threat thereof, against the
Company, which questions the validity of this Agreement or the right of the
Company to enter into it, or which might result, either individually or in
the aggregate, in any material adverse change in the business, prospects,
assets or condition, financial or otherwise, of the Company.
4. REPRESENTATIONS OF THE PURCHASER. The Purchaser represents and
warrants to the Company as follows:
4.1 INVESTMENT. The Purchaser is acquiring the Shares, and the
shares of Common Stock into which the Shares may be converted, for its own
account for investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with any present intention of
distributing or selling the same; and the Purchaser has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for the disposition thereof. The Purchaser acknowledges
that the Shares are restricted securities as defined under the Securities Act
of 1933, as amended (the "Securities Act") and shall bear the legend set
forth in Section 6.3 hereof.
4.2 AUTHORITY. The Purchaser has full power and authority to enter
into and to perform this Agreement in accordance with its terms. The
Purchaser represents that it has not been organized, reorganized or
recapitalized specifically for the purpose of investing in the Company. This
Agreement has been duly executed and delivered by the Purchaser and
constitutes a valid and binding obligation of the Purchaser, enforceable
against it in accordance with its terms.
4.3 EXPERIENCE. The Purchaser has carefully reviewed the
representations concerning the Company contained in this Agreement and has
made detailed inquiry concerning the Company, its business and its personnel;
the officers of the Company have made available to the Purchaser any and all
written information which it has requested and have answered to the
Purchaser's satisfaction all inquiries made by the Purchaser; and the
Purchaser has sufficient knowledge and experience in investing in companies
similar to the Company so as to be able to evaluate the risks and merits of
its investment in the Company and is able
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financially to bear the risks thereof, including a complete loss of its
investment.
4.4 ACCESS TO INFORMATION. The Purchaser acknowledges that the
Company has provided to and discussed with the Purchaser such information as
the Purchaser has requested (to the extent available) regarding the financial
results of the Company for the quarter ended September 30, 1996 and the
current operations, financial condition (including the amount of available
cash) and plans of the Company. The Purchaser represents and warrants that,
in making this investment, it has not relied upon any information or
representations and warranties of Hambrecht & Quist LLC, including without
limitation representations and warranties regarding the Company, its
officers, financial condition, business and prospects, or the terms of the
purchase of the Shares.
4.5 STATUS. The Purchaser is an "accredited Investor" as that term
is defined in Rule 501 of Regulation D promulgated under the Securities Act.
5. COVENANTS OF THE COMPANY.
5.1 INSPECTION. So long as the Purchaser (or any of its affiliates)
holds at least 25% of the Shares originally issued pursuant to this
Agreement, the Company shall permit the Purchaser, or any authorized
representative thereof, to visit and inspect the properties of the Company,
including its corporate and financial records, and to discuss its business
and finances with officers of the Company, during normal business hours
following reasonable notice and as often as may be reasonably requested,
without interruption of the business of the Company and subject to the
confidentiality obligations of Section 8.2 hereof.
5.2 FINANCIAL STATEMENTS AND OTHER INFORMATION. So long as the
Purchaser (or any of its affiliates) holds at least 25% of the Shares
originally issued pursuant to this Agreement, the Company shall deliver to
the Purchaser:
(a) within 90 days after the end of each fiscal year of the Company,
an audited balance sheet of the Company as at the end of such year, and
audited statements of income and of cash flows of the Company for such year,
certified by certified public accountants of established national reputation
selected by the Company, and prepared in accordance with generally accepted
accounting principles;
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(b) within 45 days after the end of each fiscal quarter of the
Company, an unaudited balance sheet of the Company as at the end of such
quarter, and unaudited statements of income and of cash flows of the Company
for such fiscal quarter and for the current fiscal year to the end of such
fiscal quarter; and
(c) with reasonable promptness, such other notices, information and
data with respect to the Company as the Company files with the SEC or
delivers to the holders of its Common Stock, and such other information and
data as the Purchaser may from time to time reasonably request.
5.3 RESERVATION OF COMMON STOCK. The Company shall reserve and
maintain a sufficient number of shares of Common Stock for issuance upon
conversion of all of the outstanding Shares.
6. TRANSFER OF SHARES.
6.1 RESTRICTED SHARES. "Restricted Shares" means (i) the Shares,
(ii) the shares of Common Stock issued or issuable upon conversion of the
Shares, and (iii) any other shares of capital stock of the Company issued in
respect of such shares (as a result of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events); PROVIDED, HOWEVER,
that shares of Common Stock which are Restricted Shares shall cease to be
Restricted Shares (i) upon any sale pursuant to a registration statement
under the Securities Act, Section 4(1) of the Securities Act or Rule 144
under the Securities Act, or (ii) at such time as they become eligible for
sale under Rule 144(k) under the Securities Act.
6.2 REQUIREMENTS FOR TRANSFER. Restricted Shares shall not be sold
or transferred unless either (a) they first shall have been registered under
the Securities Act, or (b) the Company first shall have been furnished with
an opinion of legal counsel, reasonably satisfactory to the Company, to the
effect that such sale or transfer is exempt from the registration
requirements of the Securities Act.
6.3 LEGEND. Each certificate representing Restricted Shares shall
bear a legend substantially in the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be offered,
sold or otherwise transferred, pledged or hypothecated unless and
until such
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shares are registered under such Act or an opinion of counsel
satisfactory to the Company is obtained to the effect that
such registration is not required."
The foregoing legend shall be removed from the certificates representing
any Restricted Shares, at the request of the holder thereof, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Securities
Act.
7. REGISTRATION RIGHTS.
7.1 REGISTRATION OF SHARES.
(a) The Company shall use its best efforts to file with the SEC,
as promptly as practicable following the Closing, a registration statement on
Form S-3 (the "Registration Statement") covering the resale to the public by
the Purchaser of the shares of common stock of the Company issued upon
conversion of the Shares (the "Registrable Shares"). The Company shall use
its best efforts to cause the Registration Statement to be declared effective
by the SEC as soon as practicable, but in no event later than January 15,
1997. The Company shall cause the Registration Statement to remain effective
until the date three years after the Closing Date or such earlier time as all
of the Registrable Shares covered by the Registration Statement have been
sold pursuant thereto.
(b) In the event the Registration Statement has not been
declared effective under the Securities Act by the SEC by the close of
business on January 15, 1997, the Company shall issue to the Purchaser within
15 days following the end of each calendar month (beginning with January
1997), until the Registration Statement is declared effective, such number of
shares of Series C Preferred Stock as is equal to (i) (A) the number of
shares purchased at the Closing pursuant to this Agreement multiplied by (B)
$.001 multiplied by (C) the number of weeks (including fractions of a week)
during such month for which the Registration Statement was not declared
effective (excluding, for January 1997, any period prior to the close of
business on January 15, 1997) divided by (ii) (A) the average of the daily
trading volume-weighted last reported sale prices per share of the common
stock of the Company on the Nasdaq National Market, as reported by Nasdaq, on
the last ten trading days of such month multiplied by (B) four. Any shares
of Series C Preferred Stock issuable pursuant to this Section 7.1(b) shall be
considered "Shares" for purposes of Sections 4, 6 and 7 of this Agreement.
The issuance by the Company of such shares of Series C Preferred
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Stock pursuant to this Section 7.1(b) shall constitute liquidated damages
with respect to the Company's failure to cause the Registration Statement to
be declared effective by January 15, 1997, and shall be in lieu of any other
claims or damages to which the Purchaser may be entitled with respect thereto.
7.2 LIMITATIONS ON REGISTRATIONS.
(a) The Company may, by written notice to the Purchaser, (i)
delay the filing or effectiveness of the Registration Statement or (ii)
suspend the Registration Statement after effectiveness and require that the
Purchaser immediately cease sales of shares pursuant to the Registration
Statement, in the event that (A) the Company files a registration statement
(other than a registration statement on Form S-8 or Form S-4 or their
successor forms) with the SEC for a public offering of its securities, or (B)
the Company is engaged in any activity or transaction or preparations or
negotiations for any activity or transaction that the Company desires to keep
confidential for business reasons, if the Company determines in good faith
that the public disclosure requirements imposed on the Company under the
Securities Act in connection with the Registration Statement would require
disclosure of such activity, transaction, preparations or negotiations.
Notwithstanding the foregoing, such right shall not be exercised more than
twice in any 12-month period, and no such delay or suspension may continue
for more than 30 days.
(b) If the Company delays or suspends the Registration Statement
or requires the Purchaser to cease sales of shares pursuant to paragraph (a)
above, the Company shall, as promptly as practicable following the
termination of the circumstance which entitled the Company to do so, take
such actions as may be necessary to file or reinstate the effectiveness of
the Registration Statement and/or give written notice to the Purchaser
authorizing them to resume sales pursuant to the Registration Statement. If
as a result thereof the prospectus included in the Registration Statement has
been amended to comply with the requirements of the Securities Act, the
Company shall enclose such revised prospectus with the notice to the
Purchaser given pursuant to this paragraph (b), and the Purchaser shall make
no offers or sales of shares pursuant to the Registration Statement other
than by means of such revised prospectus. Moreover, if the Company delays or
suspends the Registration Statement or requires the Purchaser to cease sales
of shares pursuant to clause (i) of paragraph (a) above as a result of the
circumstances set forth in clause (A) of such paragraph (a), the Company
shall permit the Purchaser to include
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in a registration statement filed by the Company during such period, any
Registrable Shares that would have been included in the Registration
Statement, subject to the right of the Company to limit the number of
Registrable Shares to be included in a registration statement relating to a
unwritten offering of securities of the Company if the managing underwriter
of such offering determines that the inclusion of such shares in such
offering would adversely affect the marketability of such offering.
7.3 REGISTRATION PROCEDURES.
(a) In connection with the filing by the Company of the
Registration Statement, the Company shall furnish to the Purchaser a copy of
the prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act.
(b) The Company shall use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under
the securities laws of such states as the Purchaser shall reasonably request.
(c) If the Company has delivered preliminary or final
prospectuses to the Purchaser and after having done so the prospectus is
amended to comply with the requirements of the Securities Act, the Company
shall promptly notify the Purchaser and, if requested by the Company, the
Purchaser shall immediately cease making offers or sales of shares under the
Registration Statement and return all prospectuses to the Company. The
Company shall promptly provide the Purchaser with revised prospectuses and,
following receipt of the revised prospectuses, the Purchaser shall be free to
resume making offers and sales under the Registration Statement.
(d) The Company shall pay the expenses incurred by it in
complying with its obligations under this Section 7 including all
registration and filing fees, exchange listing fees, fees and expenses of
counsel for the Company, and fees and expenses of accountants for the
Company, but excluding (i) any brokerage fees, selling commissions or
underwriting discounts incurred by the Purchaser in connection with sales
under the Registration Statement.
7.4 REQUIREMENTS OF THE PURCHASER.
(a) The Purchaser shall furnish to the Company in writing such
information regarding the Purchaser and the proposed
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sale of Registrable Shares by the Purchaser as shall be required in
connection therewith by the SEC or any state securities law authorities.
(b) The Purchaser shall indemnify the Company and each of its
directors and officers against, and hold the Company and each of its
directors and officers harmless from, any losses, claims, damages, expenses
or liabilities (including reasonable attorneys fees) to which the Company or
such directors and officers may become subject by reason of any statement or
omission in the Registration Statement made in reliance upon, or in
conformity with, a written statement by the Purchaser furnished pursuant to
this Section 7.4.
(c) The Purchaser shall report to the Company sales made
pursuant to the Registration Statement.
7.5 INDEMNIFICATION. The Company agrees to indemnify and hold
harmless the Purchaser against any losses, claims, damages, expenses or
liabilities to which the Purchaser may become subject by reason of any untrue
statement of a material fact contained in the Registration Statement or any
omission to state therein a fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such losses,
claims, damages, expenses or liabilities arise out of or are based upon
information furnished to the Company by or on behalf of the Purchaser for use
in the Registration Statement. The Company shall have the right to assume
the defense and settlement of any claim or suit for which the Company may be
responsible for indemnification under this Section 7.5.
8. MISCELLANEOUS.
8.1 SUCCESSORS AND ASSIGNS. This Agreement, and the rights and
obligations of the Purchaser hereunder, may be assigned by the Purchaser to
any person or entity to which at least 10% of the Shares originally issued
pursuant to this Agreement are transferred by the Purchaser, and such
transferee shall be deemed a "Purchaser" for purposes of this Agreement;
provided that the transferee provides to the Company a written instrument
notifying the Company of such transfer and assignment and agreeing to be
bound by the terms of this Agreement.
8.2 CONFIDENTIALITY. The Purchaser agrees that it will keep
confidential and will not disclose or divulge any confidential, proprietary
or secret information which the Purchaser may obtain from the Company
pursuant to financial statements, reports and other materials submitted by
the Company
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to the Purchaser pursuant to this Agreement, or pursuant to visitation or
inspection rights granted hereunder, unless such information is known, or
until such information becomes known, to the public; PROVIDED, HOWEVER, that
the Purchaser may disclose such information (i) to its attorneys,
accountants, consultants, and other professionals to the extent necessary to
obtain their services in connection with its investment in the Company, (ii)
to any prospective purchaser of any Shares from the Purchaser as long as such
prospective purchaser agrees in writing to be bound by the provisions of this
Section, or (iii) to any affiliate of the Purchaser; subject to the agreement
of such party to keep such information confidential as set forth herein.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the closing of the transactions
contemplated hereby.
8.4 NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be
delivered by hand, sent via a reputable nationwide overnight courier service
or mailed by first class certified or registered mail, return receipt
requested, postage prepaid:
If to the Company, at Interleaf, Inc., 62 Fourth Avenue, Waltham,
Massachusetts 02154, Attn: Clerk, or at such other address or addresses as
may have been furnished in writing by the Company to the Purchaser; or
If to the Purchaser, at 7711 Carondelet Avenue, Suite 700, St. Louis,
Missouri 63105, or at such other address or addresses as may have been
furnished in writing by the Purchaser to the Company.
Notices provided in accordance with this Section 8.4 shall be deemed
delivered upon personal delivery, one business day after being sent via a
reputable nationwide overnight courier service, or two business days after
deposit in the mail.
8.5 BROKERS AND CLOSING COSTS.
(a) The Company and the Purchaser each agree to indemnify and
save the other harmless from and against any and all claims, liabilities or
obligations with respect to brokerage or finders' fees or commissions in
connection with the transactions contemplated by this Agreement asserted by
any person on the basis of any agreement, statement or representation alleged
to have been made by such indemnifying party. The
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Company specifically acknowledges that it is responsible for the fees and
expenses of Hambrecht & Quist LLC relating to this transaction.
(b) The Company will pay all costs and expenses relating to the
Closing, including the fees and expenses of counsel for the Purchaser (which
shall not exceed $2,000).
8.6 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating
to such subject matter.
8.7 AMENDMENTS AND WAIVERS. Except as otherwise expressly set forth
in this Agreement, any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Purchaser. Any amendment or waiver
effected in accordance with this Section 8.7 shall be binding upon each
holder of any Shares (including shares of Common Stock into which such Shares
have been converted), each future holder of all such securities and the
Company. No waivers of or exceptions to any term, condition or provision of
this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
8.9 SECTION HEADINGS. The section headings are for the convenience
of the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
8.10 SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
8.11 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
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Executed as of the date first written above.
INTERLEAF, INC.
By:/s/ G. Gordon M. Large
-------------------------------
G. Gordon M. Large
Executive Vice President and
Chief Financial Officer
(print name and title)
LINDNER INVESTMENTS
By:/s/ Larry Callahan
-------------------------------
Larry Callahan
Vice President
(print name and title)
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EXHIBIT A
to
Certificate of Vote of Directors Establishing
a Series of a Class of Stock
of
INTERLEAF, INC.
To be Designated
SERIES C CONVERTIBLE PREFERRED STOCK
Interleaf, Inc., a Massachusetts corporation (the "Corporation"),
pursuant to authority conferred on the Board of Directors of the Corporation
by the Articles of Organization and in accordance with the provisions of
Section 26 of the Business Corporation Law of the Commonwealth of
Massachusetts, certifies that the Board of Directors of the Corporation, at a
meeting duly called and held, at which a quorum was present and acting
throughout, duly voted to establish a series of Preferred Stock, $0.10 par
value per share, of the Corporation and that the designation and number of
shares, and the preferences, voting powers, qualifications, and special or
relative rights or privileges thereof are fixed as follows:
1. DESIGNATION AND AMOUNT. The shares of such series shall be designated
as "Series C Convertible Preferred Stock" (the "Series C Preferred Stock")
and the number of shares constituting the Series C Preferred Stock shall be
1,200,000.
2. DIVIDENDS. The holders of shares of Series C Preferred Stock shall be
entitled to receive, out of funds legally available therefor, dividends of
$.24878 per share on April 15, 1998 and October 15, 1998, and $.49756 per
share on each April 15
and October 15 thereafter (subject in each case to appropriate adjustment in
the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares). Such dividends shall accrue and
shall be cumulative, from and after October 15, 1997, whether or not declared
by the Board of Directors.
3. LIQUIDATION, DISSOLUTION OR WINDING UP; CERTAIN MERGERS,
CONSOLIDATIONS AND ASSET SALES.
(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 Common Stock, Series A
Preferred Stock, Series B Preferred Stock or any other class or series of
stock ranking on liquidation junior to the Series C Preferred Stock (such
Common Stock, Series A Preferred Stock, Series B Preferred Stock and other
stock being collectively referred to as "Junior Stock") by reason of their
ownership thereof, an amount equal to $9.9512 per share (subject to
appropriate adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting such shares), plus
any declared or accrued but unpaid dividends on 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 shares
of Series C Preferred Stock and any class or series of stock ranking on
liquidation on a parity with the Series C Preferred Stock shall share ratably
in any distribution of the remaining assets and funds of the Corporation in
proportion to the respective amounts which would otherwise be payable in
respect of the shares held by them upon such distribution if all amounts
payable on or with respect to such shares were paid in full.
(b) After the payment of all preferential amounts required to be paid
to the holders of Senior Preferred Stock, Series C Preferred Stock and any
other class or series of stock
-2-
of the Corporation ranking on liquidation on a parity with the Series C
Preferred Stock, upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of Junior Stock then outstanding shall be
entitled to receive the remaining assets and funds of the Corporation
available for distribution to its stockholders, in accordance with the terms
of such Junior Stock.
(c) Any merger or consolidation of the Corporation or a subsidiary
into or with another corporation or a sale of all or substantially all of the
assets of the Corporation shall not be deemed to be a liquidation,
dissolution or winding up of the Corporation for purposes of this Section 3.
4. VOTING.
(a) Each holder of outstanding shares of Series C Preferred Stock
shall be entitled to the number of votes equal to one-half the number of
whole shares of Common Stock into which the shares of Series C Preferred
Stock held by such holder are convertible (as adjusted from time to time
pursuant to Section 5 hereof) as of the record date, at each meeting of
stockholders of the Corporation (and written actions of stockholders in lieu
of meetings) with respect to any and all matters presented to the
stockholders of the Corporation for their action or consideration. Except as
provided by law or by the provisions of Subsections 3(b) or 3(c) below or by
the provisions establishing any other series of stock, holders of Series C
Preferred Stock and of any other outstanding series of stock shall vote
together with the holders of Common Stock as a single class.
(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
of any shares of capital stock with preference or priority over the Series C
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution
-3-
or winding up of the Corporation shall be deemed to affect adversely the
Series C Preferred Stock and the authorization of any shares of capital 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.
(c) So long as at least 251,226 shares of Series C Preferred Stock
(subject to appropriate adjustment in the event of any dividend, stock split,
combination or other similar recapitalization affecting such shares) are
outstanding, the Corporation shall not, without the prior written consent of
the holders of at least 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: (i) take any action that
would result in the holders of the Series C Preferred Stock becoming subject
to taxation under Section 305 of the Internal Revenue Code of 1986, as
amended; or (ii) declare or pay any dividends on capital stock (other than
dividends payable solely in capital stock).
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, and without the payment of additional consideration by the
holder thereof, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing $9.9512 by the Conversion Price (as
defined below) in effect at the time of conversion. The "Conversion Price"
shall initially be $2.4878. Such 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 7 hereof, the Conversion Right 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 Right for
such shares shall continue until such price is paid in full. In the event of
a liquidation of the Corporation, the Conversion Right shall terminate at the
close of business on the first full business day preceding the date fixed for
the payment of any amounts distributable on liquidation to the holders of
Series C Preferred Stock.
-4-
(b) FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon conversion of the Series C Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.
(c) MECHANICS OF CONVERSION.
(i) In order for a holder of Series C Preferred Stock to convert
shares of Series C Preferred Stock into shares of Common Stock, such holder
shall surrender the certificate or certificates for such shares of Series C
Preferred Stock, at the office of the 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 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.
(iii) 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
-5-
rights with respect to such shares, including the rights, if any, to receive
notices and to vote or to receive dividends, shall immediately cease and
terminate on the Conversion Date. Any shares of Series C Preferred Stock so
converted shall be retired and cancelled and shall not be reissued, and the
Corporation (without the need for stockholder action) may from time to time
take such appropriate action as may be necessary to reduce the authorized
number of shares of Series C Preferred Stock accordingly.
(iv) The Corporation shall pay any and all issue and other taxes
that may be payable in respect of any issuance or delivery of shares of
Common Stock upon conversion of shares of Series C Preferred Stock pursuant
to this Section 5. The Corporation shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in a name other than that in
which the shares of Series C Preferred Stock so converted were registered,
and no such issuance or delivery shall be made unless and until the person or
entity requesting such issuance has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid.
(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.
(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:
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(I) shares of Common Stock issued or issuable by
reason of a dividend or other distribution on shares of Common
Stock that is covered by Subsection 5(e) or 5(f) below; or
(II) shares of Common Stock issued or issuable to
employees or directors of, or consultants to, the
Corporation pursuant to plans adopted by the Board of
Directors of the Corporation.
(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 (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 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 such 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
-7-
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 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, 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
becoming effective, be recomputed to reflect such increase insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(C) 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;
(D) 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 anti-dilution provisions thereof, the Conversion Price then in
effect shall forthwith be readjusted to such Conversion Price as would have
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; and
(E) No readjustment pursuant to clause (B) or (D) 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
issuances of Additional
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Shares of Common Stock between the original adjustment date and such
readjustment date.
In the event the Corporation, after the Original Issue Date, amends any
Options or Convertible Securities (whether such Options or Convertible
Securities were outstanding on the Original Issue Date or were issued after
the Original Issue Date) to increase the number of shares issuable thereunder
or decrease the consideration to be paid upon exercise or conversion thereof,
then such Options or Convertible Securities, as so amended, shall be deemed
to have been issued after the Original Issue Date and the provisions of this
Subsection 5(d)(iii) shall apply.
(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 stock split or combination as provided in
Subsection 5(e) or upon a dividend or distribution as provided in Subsection
5(f)), 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 or to be 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, (i) for the purpose of this Subsection 5(d)(iv),
all shares of Common Stock issuable upon conversion or exercise of
Convertible Securities or Options
-9-
outstanding immediately prior to such issue shall be deemed to be
outstanding, and (ii) for the purpose of this Subsection 5(d)(iv), the number
of shares of Common Stock deemed issuable upon conversion or exercise of such
outstanding Convertible Securities or Options shall not give effect to any
adjustments to the conversion price or conversion rate or exercise price of
such Convertible Securities or Options resulting from the issuance of
Additional Shares of Common Stock that is the subject of this calculation.
(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:
(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;
(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,
-10-
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.
(vi) MULTIPLE CLOSING DATES. In the event the Corporation shall
issue on more than one date Additional Shares of Common Stock which are
comprised of shares of the same series or class of Convertible Securities,
and such issuance dates occur within a period of no more than 120 days, then
the Conversion Price shall be adjusted only once on account of such
issuances, with such adjustment to occur upon the final such issuance and to
give effect to all such issuances as if they occurred on the date of the
final such issuance.
(e) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Corporation
shall at any time or from time to time after the 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.
(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 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 C 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 C Preferred Stock then in
effect by a fraction:
(1) 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
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(2) 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 C Preferred Stock
shall be recomputed accordingly as of the close of business on such record
date and thereafter the Conversion Price for the Series C Preferred Stock
shall be adjusted pursuant to this paragraph as of the time of actual payment
of such dividends or distributions; and provided further, however, that no
such adjustment shall be made if the holders of Series C Preferred Stock
simultaneously receive a dividend or other distribution of shares of Common
Stock in a number equal to the number of shares of Common Stock as they would
have received if all outstanding shares of Series C Preferred Stock had been
converted into Common Stock on the date of such event.
(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 the Series C 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 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 C 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 the Series C Preferred Stock been converted into
Common Stock on the date of such event and had they thereafter, during the
period from the date of such event to and including the conversion date,
retained such securities receivable by them as 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 Series C
Preferred Stock; and provided further, however, that no such adjustment shall
be made if the holders of Series C Preferred Stock simultaneously receive a
dividend or other distribution of such securities in an amount equal to the
amount of such securities as they would have received if all outstanding
shares of Series C Preferred Stock had been converted into Common Stock on
the date of such event.
-12-
(h) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE, OR SUBSTITUTION. If
the Common Stock issuable upon the conversion of the Series C 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 Series C 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 Series C Preferred Stock might have
been converted immediately prior to such reorganization, reclassification, or
change, all subject to further adjustment as provided herein.
(i) NO IMPAIRMENT. The Corporation will not, by amendment of its
Articles of Organization 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.
(j) CERTIFICATE AS TO ADJUSTMENTS. Within 30 days after the
occurrence of each adjustment or readjustment of the Conversion Price
pursuant to this Section 5, the Corporation at its expense shall 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.
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(k) 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 mail to the holders of the Series C Preferred
Stock at their last addresses as shown on the records of the Corporation, at
least ten days prior to the 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
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such reclassification, consolidation, merger, sale, dissolution or
winding up.
6. MANDATORY CONVERSION.
(a) Effective upon either of the following times (each a "Mandatory
Conversion Time"), all outstanding shares of Series C Preferred Stock shall
automatically be converted into shares of Common Stock, at the then effective
conversion rate:
(i) Immediately prior to the consummation of any consolidation
or merger of the Corporation with or into, or the sale of all or
substantially all of the assets of the Corporation to, another corporation
whose common stock is listed on the Nasdaq National Market or a national
securities exchange; or
(ii) Upon the close of business on the 20th trading day in any
period of 20 consecutive trading days for which the volume-weighted average
of the last reported sale prices per share of the Common Stock of the
Corporation on the Nasdaq National Market, as reported by Nasdaq, is equal to
or greater than $3.7317 (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other similar recapitalizations affecting
such shares); provided that no such Mandatory Conversion Time shall be deemed
to occur under this clause (ii) unless the Registration Statement (as defined
in the Series C Preferred Stock Purchase Agreement between the Corporation
and Lindner Investments dated October 14, 1996) is effective under the
Securities Act of 1933, as amended, at all times during such 20-day period.
(b) No later than 20 days prior to the Mandatory Conversion Time (in
the case of a Mandatory Conversion Time under clause (i) above) or no later
than 20 days after the Mandatory Conversion Time (in the case of a Mandatory
Conversion Time under clause (ii) above), the Corporation shall deliver
written notice of the Mandatory Conversion Time, and the conversion of the
Series C Preferred Stock effected pursuant thereto, to all holders of record
of shares of Series C Preferred Stock. Such notice shall be sent by first
class or registered mail, postage prepaid, to each record holder of Series C
Preferred Stock at such holder's address last shown on the records of the
transfer agent for the Series C Preferred Stock (or the records of the
Corporation, if it serves as its own transfer agent). Upon receipt of such
notice, each holder of shares of Series C Preferred Stock shall promptly
surrender his or its certificate or certificates for all such shares to the
Corporation in
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accordance with the instructions set forth in such notice, and shall
thereafter receive certificates for the number of shares of Common Stock to
which such holder is entitled pursuant to this Section 6. As of the
Mandatory Conversion Time, all rights with respect to the Series C Preferred
Stock so converted, including the rights, if any, to receive notices and vote
(other than as a holder of Common Stock) will terminate, except only the
rights of the holders thereof, upon surrender of their certificate or
certificates therefor, to receive certificates for the number of shares of
Common Stock into which such Series C Preferred Stock has been converted. If
so required by the Corporation, certificates surrendered for conversion shall
be endorsed or accompanied by written instrument or instruments of transfer,
in form satisfactory to the Corporation, duly executed by the registered
holder or by his or its attorney duly authorized in writing. As soon as
practicable after the surrender of the certificate or certificates for Series
C Preferred Stock, the Corporation shall cause to be issued and delivered to
such holder, or on his or its written order, a certificate or certificates
for the number of full shares of Common Stock issuable on such conversion in
accordance with the provisions hereof and cash as provided in Subsection 5(b)
in respect of any fraction of a share of Common Stock otherwise issuable upon
such conversion.
(c) All certificates evidencing shares of Series C Preferred Stock
which are required to be surrendered for conversion in accordance with the
provisions hereof shall, from and after the Mandatory Conversion Time, be
deemed to have been retired and cancelled and the shares of Series C
Preferred Stock represented thereby converted into Common Stock for all
purposes, notwithstanding the failure of the holder or holders thereof to
surrender such certificates on or prior to such date. Upon such mandatory
conversion of the Series C Preferred Stock pursuant to this Section 6, all
provisions hereof included under the caption "Series C Convertible Preferred
Stock", and all references herein to the Series C Preferred Stock, shall be
deleted and shall be of no further force or effect, and the Corporation may
thereafter take such appropriate action (without the need for stockholder
action) as may be necessary to give effect thereto.
7. OPTIONAL REDEMPTION.
(a) At any time and from time to time on or after October 16, 1999,
the Corporation may, at the option of its Board of Directors, redeem the
Series C Preferred Stock, in whole or in part, for the following redemption
prices per share (subject to
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appropriate adjustment for stock splits, stock dividends, combinations or
other similar recapitalizations affecting such shares), plus any declared or
accrued but unpaid dividends thereon to the Redemption Date (as defined
below), which shall be payable in cash (hereinafter referred to as the
"Redemption Price").
If the Redemption Date is
From October 16, 1999 through October 15, 2000 $12.43900
From October 16, 2000 through October 15, 2001 $11.94144
From October 16, 2001 through October 15, 2002 $11.44388
From October 16, 2002 through October 15, 2003 $10.94632
From October 16, 2003 through October 15, 2004 $10.44876
From and after October 16, 2004 $ 9.9512
(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 Date and the
time at which such holder's conversion rights (pursuant to Section 5 hereof)
as to such shares terminate (which shall be the close of business on the
fifth full day preceding the Redemption Date) and calling upon such holder to
surrender to the Corporation, in the manner designated, his 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 or its certificate or certificates representing
such shares to the Corporation, in the manner 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
cancelled. In the
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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 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) 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.
8. WAIVER. Any of the rights of the holders of Series C Preferred Stock
set forth herein may be waived by the affirmative vote of the holders of more
than fifty percent (50%) of the shares of Series C Preferred Stock then
outstanding.
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EXHIBIT D
Lindner Growth Fund 502,452 shares
Lindner Dividend Fund 502,452 shares