EXHIBIT 3.1
PREMIERE GLOBAL SERVICES, INC.
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
ARTICLE I
NAME
The name of the Corporation is Premiere Global Services, Inc.
ARTICLE II
PURPOSE
The Corporation is being formed in connection with the reincorporation
of Premiere Technologies, Inc. from a Florida corporation to a Georgia
corporation, pursuant to an Agreement and Plan of Merger between Premiere
Technologies, Inc. and the Corporation. The Corporation is organized for the
purpose of transacting any and all lawful business authorized and not prohibited
by the Georgia Business Corporation Code (the "Code"), as the same may from time
to time be amended, and to have and to exercise all power necessary, convenient
or incidental to carrying out such business.
ARTICLE III
CAPITALIZATION
The Corporation shall have authority, exercisable by its Board of
Directors, to issue up to 150,000,000 shares of common stock, par value $.01 per
share ("Common Stock"), and 5,000,000 shares of preferred stock, par value $.01
per share ("Preferred Stock"), any part or all of which shares of Preferred
Stock may be established and designated from time to time by the Board of
Directors, in such series and with such preferences, limitations and relative
rights as may be determined by the Board of Directors.
The first series, designated as Series A Preferred Stock (the "Series A
Preferred"), will consist of 128,983 shares and will have the preferences,
voting powers, relative, participating, optional or other special rights and
privileges, and the qualifications, limitations and restrictions as shown on
EXHIBIT "A" attached hereto and incorporated herein by reference.
ARTICLE IV
DIRECTORS
The initial number of directors of the Corporation shall be five, which
number may be increased or decreased pursuant to the Bylaws of the Corporation.
ARTICLE V
LIMITATION ON DIRECTOR LIABILITY
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of the duty of
care or any other duty as a director, except that such liability shall not be
eliminated for:
(i) any appropriation, in violation of the director's duties,
of any business opportunity of the Corporation;
(ii) acts or omissions that involve intentional misconduct or
a knowing violation of law;
(iii) liability under Section 14-2-832 (or any successor
provision or redesignation thereof) of the Code; and
(iv) any transaction from which the director received an
improper personal benefit.
If at any time the Code shall have been amended to authorize the
further elimination or limitation of the liability of a director, then the
liability of each director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Code, as so amended, without further action
by the shareholders, unless the provisions of the Code, as amended, require
further action by the shareholders.
Any repeal or modification of the foregoing provisions of this Article
V shall not adversely affect the elimination or limitation of liability or
alleged liability pursuant hereto of any director of the Corporation for or with
respect to any alleged act or omission of the director occurring prior to such
repeal or modification.
ARTICLE VI
OTHER CONSTITUENCIES
In discharging the duties of their respective positions and in
determining what is believed to be in the best interests of the Corporation, the
Board of Directors, committees of the Board of Directors, and individual
directors, in addition to considering the effects of any action on the
Corporation or its shareholders, may consider the interests of the employees,
customers, suppliers and creditors of the Corporation and its subsidiaries, the
communities in which offices or other establishments of the Corporation and its
subsidiaries are located, and all other factors such directors consider
pertinent. This provision solely grants discretionary authority to the directors
and shall not be deemed to provide to any other constituency any right to be
considered.
IN WITNESS WHEREOF, the undersigned has executed these Amended and
Restated Articles of Incorporation as of the 15th day of March, 2006.
/s/ L. SCOTT ASKINS
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L. Scott Askins
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EXHIBIT "A"
Preferences, Limitations and Rights of Series A Preferred:
(1) DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of shares of Series A Preferred shall
be entitled to receive dividends at a rate of eight percent (8%) of the
Conversion Value (as defined in Section 3(a) below) per annum per share of
Series A Preferred, which shall be fully cumulative, prior and in preference to
any declaration or payment of any dividend (payable other than in Common Stock)
or other distribution on any other class or series of Preferred Stock or the
Common Stock of the Corporation (and excluding any stock splits and subdivisions
for which an adjustment is made under Section 3(d)(vi)(1) below). The
dividend(s) payable hereunder shall be payable annually on March 31 of each year
(each an "Annual Dividend Date") commencing on March 31, 1996, except that if
any such date is a Saturday, Sunday or legal holiday (a "Non-Business Day") then
such dividend shall be payable on the next day that is not a Saturday, Sunday or
legal holiday on which banks in the State of Georgia are permitted to be closed
(a "Business Day") to holders of record as they appear on the stock books of the
Corporation on the applicable record date, which shall be not more than 60 nor
less than 10 days preceding the payment date for such dividends, as fixed by the
Board of Directors (the "Record Date"). The foregoing dividend on the Series A
Preferred shall accrue from the date of issuance of each share, but shall be
payable only when, as and if declared by the Board of Directors out of funds
legally available therefor. The dividend shall be payable in cash, except as
otherwise provided in the next paragraph. In addition to the above dividends,
each person who is a holder of record of Series A Preferred at the time of the
initial issuance of shares of Series A Preferred by the Corporation shall be
entitled to receive a one-time supplemental dividend per share of Series A
Preferred in an amount equal to the dividend which would have accrued on a share
of Series A Preferred had such share been issued on January 18, 1994, and
remained outstanding until the day prior to the date of initial issuance, with
the dividend computed at the rate of eight percent (8%) of the Conversion Value
per annum per share of Series A Preferred. The supplemental dividend shall be
payable in cash, except as otherwise provided in the next paragraph, on the
Annual Dividend Date occurring on March 31, 1996, or the next following Business
Day. The supplemental dividend shall be payable only when, as and if declared by
the Board of Directors out of funds legally available therefor. All subsequent
references herein to dividends on the Series A Preferred shall include such
supplemental dividend. The amount of dividends payable for any period that is
shorter or longer than a full annual dividend shall be computed on the basis of
a 360-day year of twelve 30-day months. All accrued but unpaid dividends shall
accrue interest after each Annual Dividend Date at a rate of eight percent (8%)
per annum (compounded on an annual basis) from each Annual Dividend Date.
The Board of Directors of the Corporation may, within sixty (60) days
after each Annual Dividend Date, elect (the "Dividend Election") to pay the
annual cash dividends payable for such year on such Annual Dividend Date in
shares of Common Stock (the "Payments-in-Kind") rather than cash. If such an
election is made, the Corporation shall promptly notify the holders of record of
the Series A Preferred entitled to such annual dividend of the election to make
the Payments-in-Kind in lieu of cash dividends for such Annual Dividend Date. A
Dividend Election for any particular Annual Dividend Date shall operate only for
such Annual Dividend Date. Payments-in-Kind shall be payable as of the Annual
Dividend Date of each year for which the election is made, except that if such
date is a Non-Business Day then such Payment-in-Kind shall be payable as of the
next Business Day to holders of record as they appear on the stock books of the
Corporation on the applicable Record Date. Each Payment-in-Kind shall be equal
in amount to be that number of shares of Common Stock that is equal in number to
the aggregate cash dividend payable on any such dividend date divided by the
Conversion Value (as defined in Section 3(a) below), and shall be allocated on a
pro rata basis to each holder entitled to receive such dividend. Certificates
representing the shares of Common Stock issuable on payment of any
Payment-in-Kind shall
be delivered to each holder entitled to receive such Payment-in-Kind (in
appropriate denominations) on or before the ninetieth (90th) day following the
Annual Dividend Date for which such Payment-in-Kind is elected to be made
hereunder. No interest shall accrue on a Payment-in-Kind issued in compliance
with the terms hereof. If a Payment-in-Kind is not made in compliance with the
terms hereof, the Corporation shall be obligated to pay the cash dividends under
the procedures in the previous paragraph.
(b) Notwithstanding Section l(a) hereof, the
Corporation may at any time, out of funds legally available therefor, repurchase
shares of Common Stock of the Corporation (i) issued to or held by employees,
directors or consultants of the Corporation or its subsidiaries upon termination
of their employment or services, pursuant to any agreement providing for such
right of repurchase, or (ii) issued to or held by any person subject to the
Corporation's right of first refusal to purchase such shares where the purchase
is pursuant to the exercise of such right of first refusal, in either case
whether or not dividends on the Series A Preferred Stock shall have been
declared and paid or funds set aside therefor, subject to any other contractual
restrictions entered into by the Corporation.
(2) LIQUIDATION RIGHTS. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
distributions shall be made to the holders of Series A Preferred in respect of
such Series A Preferred before any amount shall be paid to the holders of any
other class or series of capital stock of the Corporation, in the following
manner:
(a) SERIES A PREFERRED. The holders of the Series A
Preferred shall be entitled to be paid first out of the assets of the
Corporation available for distribution to holders of its capital stock an amount
per share equal to (i) the Conversion Value (as defined in Section 3(a) below),
as appropriately adjusted to reflect any stock split, stock dividend,
combination, recapitalization and the like (collectively a "Recapitalization")
of the Series A Preferred, plus (ii) all accrued or declared but unpaid
dividends (including any interest accrued thereon calculated through the date of
liquidation). If, upon the occurrence of a liquidation, dissolution or winding
up, the assets and funds thus distributed among the holders of the Series A
Preferred shall be insufficient to permit the payment to such holders of their
full liquidation preferences, then the entire assets and funds of the
Corporation legally available for distribution to the holders of capital stock
shall. be distributed ratably among the holders of the Series A Preferred.
(b) REMAINING ASSETS. If assets are remaining after
payment of the full preferential amount with respect to the Series A Preferred
set forth in Section 2(a) above, then the holders of any other class or series
of Preferred Stock, if any, shall be entitled to their respective preferential
amounts on liquidation, and thereafter the holders of the Common Stock shall be
entitled to share ratably in all such remaining assets and surplus funds based
on the number of shares of Common Stock held by each.
(c) EVENTS DEEMED A LIQUIDATION. For purposes of this
Section 2, the holders of a majority of the Series A Preferred may elect, as
part of any approval of such class required under Section 8 below, to have
treated as a liquidation, dissolution or winding up of the Corporation the
consolidation or merger of the Corporation with or into any other corporation or
the sale or other transfer in a single transaction or a series of related
transactions of all or substantially all of the assets of the Corporation, or
any other reorganization of the Corporation, unless the stockholders of the
Corporation immediately prior to any such transaction are holders of a majority
of the voting securities of the surviving or acquiring corporation immediately
thereafter (and for purposes of this calculation equity securities which any
stockholder or the Corporation owned immediately prior to such merger or
consolidation as a stockholder of another party to the transaction shall be
disregarded).
(d) VALUATION OF SECURITIES AND PROPERTY. In the
event the Corporation proposes to distribute assets other than cash in
connection with any liquidation, dissolution or winding up of the
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Corporation, the value of the assets to be distributed to the holders of shares
of Series A Preferred shall be determined in good faith by the Board of
Directors. Any securities not subject to investment letter or similar
restrictions on free marketability shall be valued as follows:
(i) If traded on a national securities
exchange or the Nasdaq National Market System ("Nasdaq"), the value
shall be deemed to be the average of the security's closing prices on
such exchange or Nasdaq over the thirty (30) day period ending three
(3) days prior to the distribution;
(ii) If actively traded over-the-counter
(other than Nasdaq), the value shall be deemed to be the average of the
closing bid prices over the thirty (30) day period ending three (3)
days prior to the distribution; and
(iii) If there is no active public market,
the value shall be the fair market value thereof as determined in good
faith by the Board of Directors.
The method of valuation of securities subject to investment letter or other
restrictions on free marketability shall be adjusted to make an appropriate
discount from the market value determined as above in clauses (i), (ii) or (iii)
to reflect the fair market value thereof as determined in good faith by the
Board of Directors. The holders of at least 50% of the outstanding Series A
Preferred shall have the right to challenge any determination by the Board of
Directors of fair market value pursuant to this Section 2(d), in which case the
determination of fair market value shall be made by an independent appraiser
selected jointly by the Board of Directors and the challenging parties, the cost
of such appraisal to be borne equally by the Corporation and the challenging
parties.
(3) CONVERSION. The holders of the Series A Preferred have
conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series A
Preferred shall initially be convertible, at the option of the holder thereof,
at any time on or after the earlier of (i) January 18, 1997, (ii) the date the
Corporation becomes subject to the periodic reporting requirements of the
Securities Act of 1934, as amended, (iii) the date the Corporation enters into a
transaction for a consolidation or merger of the Corporation into any other
corporation or the sale or other transfer in a single transaction or series of
related transactions of all or substantially all of the assets of the
Corporation which will result in the exchange of each share of Series A
Preferred (or shares issuable upon conversion thereof) for cash or property with
a value (as defined in Section 2(d) of at least two times the Conversion Value
(as defined herein) on or prior to January 18, 1996, and at least three times
the Conversion Value if after such date (a "Qualified Merger"), or (iv) the
giving by the Corporation of the Redemption Notice under Section 5 below (each
of the foregoing an "Eligible Conversion Date"), but not later than on or prior
to the second day prior to such date, if any, as may have been fixed for the
redemption thereof in any call for redemption pursuant to Section 5 below, at
the principal office of the Corporation or any transfer agent for the Series A
Preferred, into the number of fully paid and nonassessable shares of Common
Stock which results from dividing the Conversion Price (as hereinafter
specified) per share in effect for such series at the time of conversion into
the per share Conversion Value (as hereinafter specified) of such series. The
initial Conversion Price of the Series A Preferred shall be $31.012 per share,
and the Conversion Value of the Series A Preferred shall be $31.012 per share.
The initial Conversion Price of the Series A Preferred shall be subject to
adjustment from time to time as provided in Section 3(d) hereof. The Conversion
Value shall not be subject to adjustment (except in connection with a
Recapitalization). Upon conversion, all accrued or declared but unpaid dividends
(including any interest accrued thereon calculated as of the date of conversion)
on the Series A Preferred shall be paid in cash, to the extent permitted by
applicable law.
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(b) AUTOMATIC CONVERSION. Each share of Series A
Preferred shall automatically be converted into shares of Common Stock upon the
closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of securities for the account of the Corporation to
the public, (i) the net proceeds of which exceed $10,000,000 at a price per
share to the public of at least $10, and (ii) the aggregate value of the shares
of Common Stock issuable on conversion of each share of Series A Preferred is at
least two times the Conversion Value if prior to or on January 18, 1996, and at
least three times the Conversion Value after such date. Upon conversion, all
accrued or declared but unpaid dividends (including any interest accrued thereon
calculated as of the date of conversion) on the Series A Preferred shall be paid
in cash, to the extent permitted by applicable law.
(c) MECHANICS OF CONVERSION. Before any holder of
Series A Preferred shall be entitled to convert the same into shares of Common
Stock and to receive certificates therefor, he or she shall surrender the
certificate or certificates therefor, duly endorsed, at the principal office of
the Corporation or of any transfer agent for the Series A Preferred, and shall
give written notice to the Corporation at such office that he or she elects to
convert the same; provided, however, that in the event of an automatic
conversion pursuant to Section 3(b) hereof, the outstanding shares of Series A
Preferred shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent; and provided
further that the Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such automatic conversion
unless and until the certificates evidencing such shares of Series A Preferred
are either delivered to the Corporation or its transfer agent as provided above,
or the holder notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates. The Corporation shall, as
soon as practicable after such delivery, or after such agreement and
indemnification, issue and deliver at such office to such holder of Series A
Preferred, a certificate or certificates for the number of shares of Common
Stock to which he or she shall be entitled as aforesaid and a check payable to
the holder in the amount of any accrued or declared but unpaid dividends
(including any interest accrued thereon calculated as of the date of conversion)
payable pursuant to Section I hereof, if any. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the shares of Series A Preferred to be converted, or, in the case
of automatic conversion, immediately prior to the occurrence of the event
leading to such automatic conversion, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date. In the event of a notice of redemption of any shares
of Series A Preferred pursuant to Section 5 below, the conversion rights shall
terminate as to the shares designated for redemption at the close of business on
the second day preceding the redemption date, unless default is made in payment
of the redemption price, in which case the conversion rights for such shares
shall continue until such payment. If the Corporation fails to pay all such
dividends (and interest thereon) within twenty (20) days of the date of
conversion, the holder entitled to such dividends (and interest thereon) may
elect to have the Corporation issue to such holder, in lieu of such cash
payment, additional shares of Common Stock calculated by dividing the total
amount payable on such date by the Conversion Value.
(d) ADJUSTMENTS TO CONVERSION PRICE.
(i) SPECIAL DEFINITIONS. For purposes of
this Section 3(d), the following definitions shall apply:
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(1) "OPTIONS" shall mean rights,
options or warrants to subscribe for, purchase or otherwise acquire
either Common Stock or Convertible Securities.
(2) "CONVERTIBLE SECURITIES" shall
mean any evidences of indebtedness, shares or other securities
convertible into or exchangeable for Common Stock.
(3) "ADDITIONAL SHARES OF COMMON
STOCK" shall mean all shares of Common Stock issued (or, pursuant to
Section 3(d)(iii), deemed to be issued) by the Corporation after the
Original Issue Date, other than shares of Common Stock issued or
issuable:
(A) upon conversion of
shares of Series A Preferred;
(B) pursuant to a stock
grant, option plan or purchase plan, other employee stock incentive
program or agreement, not to exceed 320,260 shares, net of repurchases
and cancellations and expirations (without exercise) of Options;
(C) as a dividend or
distribution on Series A Preferred;
(D) in a transaction
described in Section 3(d)(vi); or
(E) by way of dividend or
other distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the foregoing
clauses (A), (B), (C), (D), or this clause (E).
(4) "ORIGINAL ISSUANCE DATE" shall
mean the date on which the first share of Series A Preferred was
issued.
(ii) NO ADJUSTMENT OF CONVERSION PRICES. No
adjustment in the Conversion Price of the Series A Preferred shall be
made in respect of the issuance of Additional Shares of Common Stock
unless the consideration per share for an Additional Share of Common
Stock issued or deemed to be issued by the Corporation is less than the
Conversion Price for the Series A Preferred in effect on the date of,
and immediately prior to, such issue.
(iii) DEEMED ISSUE OF ADDITIONAL SHARES OF
COMMON STOCK.
(1) OPTIONS AND CONVERTIBLE
SECURITIES. In the event the Corporation at any time or from time to
time after the Original Issue Date shall issue any Options (other than
the issuance of Options pursuant to the Corporation's Option Pool of
25,000 shares of Common Stock, and the issuance of Options in
replacement or substitution of the Options issued prior to the Original
Issue Date) 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 (as set forth in the instrument relating thereto
without regard to any provisions contained therein for a subsequent
adjustment of such number) of Common Stock issuable upon the exercise
of such Options or, in the case of Convertible Securities and Options
therefor, the exercise of such Options and 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 Section 3(d)(v) hereof) of such Additional
Shares of Common Stock would be less than the Conversion Price in
effect on the date of and immediately prior to such issue, or such
record date,
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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) except as provided in
Section 3(d)(iii)(1)(B), 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 change in the consideration payable to the
Corporation, or change in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof (other than
under or by reason of provisions designed to protect against dilution),
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; and
(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 (1) the
Conversion Price on the original adjustment date or (2) 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.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event the
Corporation shall issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to
Section 3(d)(iii)) without consideration or for a consideration per
share less than the Conversion Price of the Series A Preferred in
effect on the date of and immediately prior to such issue (such
issuance price being referred to herein as the "Dilution Price"), then
and in each such event the Conversion Price of the Series A Preferred
shall be reduced to a price (calculated to the nearest cent) determined
by multiplying such Conversion Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus 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 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 purposes of this Section 3(d)(iv),
all shares of Common Stock issuable upon conversion of all outstanding
Series A Preferred and other classes or series of Preferred Stock and
all outstanding Options (provided such Options have an exercise price
below the Conversion Price of the Series A Preferred immediately prior
to such issue) and Convertible Securities shall be deemed to be
outstanding, and, immediately after any Additional Shares of Common
Stock are deemed issued pursuant to Section 3(d)(iii) such Additional
Shares of Common Stock shall be deemed to be outstanding.
(v) DETERMINATION OF CONSIDERATION. For
purposes of this Section 3(d), the consideration received by the
Corporation for the issue of any Additional Shares of Common Stock
shall be computed as follows:
(1) CASH AND PROPERTY: Such
consideration shall:
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(A) insofar as it consists
of cash, be computed at the aggregate amount of cash received by the
Corporation;
(B) insofar as it consists
of property other than cash, be computed at the fair value thereof at
the time of such issue, as determined by the Board of Directors in the
good faith exercise of its reasonable business judgment; and
(C) 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 (A) and (B) above, as determined by the
Board of Directors in the good faith exercise of its reasonable
business judgment.
(2) 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 Section 3(d)(iii)(1), relating to Options and Convertible
Securities, shall be determined by dividing
(A) 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
(B) 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.
(vi) OTHER ADJUSTMENTS.
(1) SUBDIVISIONS, COMBINATIONS, OR
CONSOLIDATIONS OF COMMON STOCK. In the event the outstanding shares of
Common Stock shall be subdivided, combined or consolidated, by stock
split, stock dividend, combination or like event, into a greater or
lesser number of shares of Common Stock, the Conversion Price of the
Series A Preferred in effect immediately prior to such subdivision,
combination, consolidation or stock dividend shall, concurrently with
the effectiveness of such subdivision, combination or consolidation, be
proportionately adjusted.
(2) RECLASSIFICATIONS. In the case, at
any time after the date hereof, of any capital reorganization or any
reclassification of the stock of the Corporation (other than as a
result of a stock dividend or subdivision, split-up or combination of
shares), or the consolidation or merger of the Corporation with or into
another person (other than a consolidation or merger (A) in which the
Corporation is the continuing entity and which does not result in any
change in the Common Stock or (B) which is treated as a liquidation
pursuant to Section 2(c)), the shares of the Series A Preferred shall,
after such reorganization, reclassification, consolidation or merger be
convertible into the kind and number of shares of stock or other
securities or property of the Corporation or otherwise to which such
holder would have been entitled if immediately prior to
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such reorganization, reclassification, consolidation or merger he had
converted his shares of the Series A Preferred into Common Stock. The
provisions of this clause 3(d)(vi)(2) shall similarly apply to
successive reorganizations, reclassifications, consolidations or
mergers.
(e) CERTIFICATE AS TO ADJUSTMENTS. Upon the
occurrence of each adjustment or readjustment of the Conversion Price of the
Series A Preferred pursuant to this Section 3, 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 A Preferred 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 A Preferred, furnish or
cause to be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Price of the Series A
Preferred at the time in effect, and (iii) the number of shares of Common Stock
and the amount, if any, of other property which at the time would be received
upon the conversion of the Series A Preferred.
(f) STATUS OF CONVERTED STOCK. In case any shares of
Series A Preferred shall be converted pursuant to Section 3 hereof, the shares
so converted shall be canceled, shall not be reissuable and shall cease to be a
part of the authorized capital stock of the Corporation.
(g) FRACTIONAL SHARES. In lieu of any fractional
shares to which he holder of Series A Preferred would otherwise be entitled upon
conversion, the Corporation shall pay cash equal to such fraction multiplied by
the fair market value of one share of Common Stock as determined by the Board of
Directors in the good faith exercise of its reasonable business judgment.
(h) MISCELLANEOUS.
(i) All calculations under this Section 3
shall be made to the nearest cent or to the nearest one hundredth
(1/100) of a share, as the case may be.
(ii) The holders of at least 50% of the
outstanding Series A Preferred shall have the right to challenge any
determination by the Board of Directors of fair market value pursuant
to this Section 3, in which case such determination of fair market
value shall be made by an independent appraiser selected jointly by the
Board of Directors and the challenging parties, the cost of such
appraisal to be borne equally by the Corporation and the challenging
parties.
(iii) No adjustment in the Conversion Price
of the Series A Preferred need be made if such adjustment would result
in a change in such Conversion Price of less than $0.01. Any adjustment
of less than $0.01 which is not made shall be carried forward and shall
be made at the time of and together with any subsequent adjustment
which, on a cumulative basis, amounts to an adjustment of $0.01 or more
in such Conversion Price.
(I) NO IMPAIRMENT. The Corporation will not through
any reorganization, recapitalization, 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 3 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 Series A Preferred against impairment.
(J) RESERVATION OF STOCK ISSUABLE UPON CONVERSION.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for
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the purpose of effecting the conversion of the shares of Series A Preferred,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Series A
Preferred. If at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all then outstanding
shares of Series A Preferred, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(4) VOTING RIGHTS. Except as otherwise required by law or by
Section 8 hereof, the holders of all Series A Preferred issued and outstanding,
in the aggregate, shall be entitled to the number of votes equal to (a) sixteen
percent (16%) of the number of shares of Common Stock at the record date for
determination of the stockholders entitled to vote on such matters, minus (b)
the number of votes attributable to shares of Common Stock previously issued
upon conversion of such Series A Preferred, if any, or, if no such record date
is established, at the date such vote is taken or any written consent of
stockholders is solicited, such votes to be counted together with all other
shares of stock of the Corporation having general voting power and not
separately as a class. Fractional votes by the holders of Series A Preferred
shall not, however, be permitted, and any fractional voting rights shall (after
aggregating all shares into which shares of Series A Preferred held by each
holder could be converted) be rounded to the nearest whole number.
(5) REDEMPTION.
(a) At any time after January 18, 1996, the
Corporation may, by giving a Notice of Redemption (as defined below), elect to
redeem all (and not less than all) of the Series A Preferred outstanding on the
Redemption Date (as defined below) out of funds legally available therefor. The
Corporation shall pay in cash therefor a sum per share equal to three times the
Conversion Value, together with all accrued or declared but unpaid dividends
(including any interest accrued thereon) calculated as of the earlier of (i) ten
(10) days following the Notice of Redemption or (ii) the date of conversion of
the Series A Preferred pursuant to Section 5(b)(ii) with respect to such shares
as of the date of the redemption (collectively the "Redemption Value").
(b) Any notice of redemption (the "Notice of
Redemption") given by the Corporation shall be delivered by mail, first class
postage prepaid, to each holder of record (at the close of business on the
business day preceding the day on which notice is given) of Series A Preferred,
at the address last shown on the records of the Corporation for such holder or
given by the holder to the Corporation, for the purpose of notifying such holder
of the redemption to be effected. The Notice of Redemption shall specify a date
(the "Redemption Date") between 45 and 75 days after the mailing of the Notice
of Redemption on which the Series A Preferred then outstanding shall be redeemed
and the place at which payment may be obtained, which shall be the principal
offices of the Corporation or such other place as shall be mutually agreeable to
the Corporation and holders of a majority of the Series A Preferred. The Notice
of Redemption shall call upon each holder of Series A Preferred to either (i)
surrender to the Corporation, in the manner and at the place designated, such
holder's certificate or certificates representing the shares to be redeemed or
(ii) convert such Series A Preferred into Common Stock prior to the Redemption
Date in accordance with the provisions of Section 3 above.
(c) On the Redemption Date, the Corporation shall pay
by cash or check to the order of the person whose name appears on the
certificate or certificates of the Series A Preferred that (i) shall not have
been converted pursuant to Section 3 hereof and (ii) shall have been surrendered
to the Corporation in the manner and at the place designated in the Notice of
Redemption, the Redemption Value, and thereupon each surrendered certificate
shall be canceled.
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(d) If the funds of the Corporation legally available
for redemption of the Series A Preferred are insufficient to redeem the total
number of shares of Series A Preferred outstanding on the Redemption Date, the
Corporation shall not have the right to redeem any of the Series A Preferred.
(e) From and after the Redemption Date, unless there
shall have been a default in payment of the Redemption Value, all rights of the
holders of shares of Series A Preferred (except the right to receive the
Redemption Value subsequent to the Redemption Date 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.
(6) NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Corporation shall mail to each
holder of Series A Preferred, at least twenty (20) days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.
(7) NOTICES. Any notice required by the provisions of the
Articles of Incorporation to be given to the holders of Series A Preferred shall
be deemed given when deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his or her address appearing on the books
of the Corporation.
(8) PROTECTIVE PROVISIONS.
(a) APPROVAL OF CERTAIN TRANSACTIONS WHILE ANY SERIES
A PREFERRED IS OUTSTANDING. So long as any shares of Series A Preferred are
outstanding, the Corporation shall not, without first obtaining the approval of
the holders of at least a majority of the Series A Preferred then outstanding,
voting as a separate class, take any action that:
(i) alters the rights, preferences or
privileges of the Series A Preferred;
(ii) increases or decreases the authorized
number of shares of Series A Preferred or any series of Preferred Stock
of the Corporation;
(iii) creates any new class or series of
shares that has a preference over or is on a parity with the Series A
Preferred with respect to voting, dividends or liquidation preferences;
(iv) reclassifies stock into shares having a
preference over or parity with the Series A Preferred with respect to
voting, dividends or liquidation preferences;
(v) authorizes any dividend or other
distribution with respect to the Common Stock (other than a dividend
payable in Common Stock or as authorized by Section 1);
(vi) repurchases, redeems or retires any
shares of capital stock of the Corporation other than pursuant to
contractual rights to repurchase shares of Common Stock held by
employees, directors or consultants of the Corporation or its
subsidiaries upon termination of their employment or services or
pursuant to the exercise of a contractual right of first refusal held
by the Corporation.
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(b) APPROVAL OF CERTAIN TRANSACTIONS AS LONG AS AT
LEAST 64,492 SERIES A PREFERRED OUTSTANDING. As long as at least 64,492 shares
of Series A Preferred are outstanding (as adjusted for any Recapitalization),
the Corporation shall not, without first obtaining the approval of the holders
of at least a majority of the Series A Preferred then outstanding, voting as a
separate class, take any action that:
(i) results in the consolidation or merger
with or into any other corporation (other than a merger approved under
Section 8(b)(iv) below) or the sale or other transfer in a single
transaction or a series of related transactions of all or substantially
all of the assets of the Corporation, or otherwise results in the
reorganization of the Corporation; provided, however, that no such
approval shall be necessary if any of the above transactions results in
cash proceeds or equity securities that are freely tradeable on a
recognized public market to the holders of Series A Preferred of a
value of at least (i) two times the Conversion Value if such
transaction(s) occurs prior to or on January 18, 1996, or (ii) three
times the Conversion Value if after such date (as adjusted for any
Recapitalization);
(ii) materially changes the business of the
Corporation to a business outside
the field of telecommunications;
(iii) issues any Common Stock or other
security of the Corporation exchangeable, convertible or exercisable
into any of the capital stock of the Corporation, except pursuant to
the stock or option plans permitted under Section 3(d)(B);
(iv) involves the acquisition, by merger or
otherwise, by the Corporation of assets or securities valued at more
than $1,000,000 in one or a series of related transactions;
(v) requires the Corporation to incur any
indebtedness in excess of that obtained under credit facilities from
credit sources regularly engaged in lending for working capital
purposes, except for the refinancing of any existing indebtedness and
trade payables (including acquisitions of equipment) in the ordinary
course of business;
(vi) consummates any material transaction
with an "affiliate" (as such term is used under the Securities Act of
1933, as amended) of the Corporation; or
(vii) increases management compensation to
Boland T. Jones, D. Gregory Smith or Leonard DeNittis by more than ten
percent (10%) of the amounts permitted by their respective employment
agreements in effect on the date of these Articles of Incorporation.
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