EXHIBIT 4.3
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
of
SERIES A PREFERRED STOCK AND SERIES B PREFERRED STOCK
of
BANCTEC, INC.
(Pursuant to Section 151 of the Delaware General Corporation Law)
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BANCTEC, INC., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), hereby certifies that, pursuant to
authority vested in the Board of Directors of the Corporation by Article Fourth
of the Certificate of Incorporation of the Corporation, the following resolution
was adopted as of February 27, 2001 by the Board of Directors of the Corporation
pursuant to Section 141 of the Delaware General Corporation Law:
"RESOLVED that, pursuant to authority vested in the Board of Directors
of the Corporation by Article Fourth of the Corporation's Certificate of
Incorporation, of the total authorized number of 1,000,000 shares of
Preferred Stock, $.01 par value per share, of the Corporation, there shall
be designated a series of 35,520 shares which shall constitute a single
series to be known as "Series B Preferred Stock" (hereinafter called the
"Series B Preferred Stock"). The Series B Preferred Stock shall have the
voting powers, designations, preferences and other special rights, and
qualifications, limitations and restrictions thereof set forth below. In
addition, the voting powers, designations, preferences and other special
rights, and qualifications, limitations and restrictions of the 100,000
shares of Series A Preferred Stock previously issued by the Corporation
(hereinafter called the "Series A Preferred Stock" and, collectively with
the Series B Preferred Stock, the "Preferred Stock") are hereby amended and
restated as set forth below:
Except as otherwise expressly provided herein, (a) all shares of
Series A Preferred Stock shall be identical and shall entitle the holders
thereof to the same rights and privileges, and all shares of Series B
Preferred Stock shall be identical and shall entitle the holders thereof to
the same rights and privileges and (b) with respect to dividend rights,
redemption rights and rights on liquidation, winding up, corporate
reorganization and dissolution, the Series A Preferred Stock and the Series
B Preferred Stock shall (i) rank pari passu with each other and (ii) rank
senior to (A) the Common Stock, $.01 par value per share, of the
Corporation (the "Common Stock"), (B) the Class A Common
Stock, s.01 par value per share, of the Corporation (the "Class A Common
Stock") and (C) all classes and series of stock of the Corporation now or
hereafter authorized, issued or outstanding ranking pari passu or junior to
the Preferred Stock (such stock, collectively with the Common Stock and the
Class A Common Stock, being hereinafter called the "Junior Stock").
SERIES A AND SERIES B PREFERRED STOCK
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1. Dividends.
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1A. Dividends. The holders of Preferred Stock shall be entitled
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to receive, out of funds legally available for such purpose, cash dividends
at the rate of (i) in the case of the Series A Preferred Stock, 7% per
annum (computed on the basis of a 365-day year) of the Stated Value (as
defined below) per share and (ii) in the case of the Series B Preferred
Stock, 25% per annum (computed on the basis of a 365-day year) of the
Stated Value (as defined below) per share. Such dividends shall be payable
(x) quarterly in arrears on March 1, June 1, September 1 and December 1 of
each year (each such payment date being referred to herein as a "Dividend
Payment Date"), commencing on the Dividend Payment Date immediately
following the date of issuance thereof, or (y) when and as declared by the
Board of Directors of the Corporation. Dividends on the Preferred Stock
shall be cumulative and shall accrue quarterly from and after the date of
issue of the Preferred Stock whether or not declared and whether or not
there are any funds of the Corporation legally available for the payment of
dividends. The Board of Directors of the Corporation may fix a record date
for the determination of holders of Preferred Stock entitled to receive
payment of a dividend declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.
1B. Adjustment to Stated Value. Notwithstanding anything to the
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contrary provided in this Certificate of Designations, in the event that
any portion of the quarterly dividend on the Preferred Stock is not
declared and paid in cash on any Dividend Payment Date, the amount of such
accrued dividend which is not so paid shall be accumulated and shall
automatically be added to the Stated Value of such share on such Dividend
Payment Date. Accumulated dividends on shares of Preferred Stock that have
previously been added to the Stated Value thereof pursuant to the terms of
this subparagraph 1B, may, in the discretion of the Board of Directors of
the Corporation, be paid in cash on any Dividend Payment Date. Accumulated
dividends on any share of Preferred Stock which are added to the Stated
Value of such share pursuant to this subparagraph 1B shall not be deemed to
be in arrears for any purpose whatsoever. As used herein, the "Stated
Value" per share of the Preferred Stock shall mean the sum of (i) $150,
plus (ii) all accumulated and unpaid dividends, if any, added to such
Stated Value pursuant to this subparagraph 1B, less (iii) all amounts paid
in cash in respect of such previously accumulated and unpaid dividends, if
any, that were originally added to such Stated Value pursuant to this
subparagraph 1B.
1C. Dividend Preference. As long as any shares of Preferred
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Stock
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shall remain outstanding, in no event shall any dividend be declared or
paid upon, nor shall any distribution be made upon, any shares of Junior
Stock, nor (without the consent of the holders of a majority in interest of
the outstanding Preferred Stock voting together as a single class) shall
any shares of Junior Stock be purchased or redeemed by the Corporation
(other than purchases and repurchases of shares of Common Stock from
employees, consultants and other stockholders of the Corporation pursuant
to, and in accordance with the terms of, an employee stock option plan
established by the Corporation pursuant to which the Corporation has the
right to repurchase such shares of Common Stock for a consideration not
greater than the consideration paid for such shares by such employee,
consultant or stockholder), nor shall any moneys be paid to or made
available for a sinking fund for the purchase or redemption of shares of
any Junior Stock.
2. Redemption. The shares of Preferred Stock shall be
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redeemable as follows:
2A. Mandatory Redemption. To the extent legally permitted and
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approved by the holders of a majority of the Series A Preferred Stock at
the time outstanding, the Corporation shall redeem (in the manner and with
the effect provided in subparagraphs 2D through 2G below), on September 22,
2008, all issued and outstanding shares of Series A Preferred Stock.
2B. Redemption at Option of Holders. In case of (i) a merger or
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consolidation of the Corporation with or into another entity (other than a
merger in which the Corporation is the surviving corporation and which will
not result in more than 50% of the capital stock of the Corporation
outstanding immediately after the effective date of such merger being owned
of record or beneficially by persons other than the holders of such capital
stock immediately prior to such merger), (ii) the sale or other disposition
of all or substantially all of the assets or properties of the Corporation
or any of its subsidiaries, or of any division of the Corporation or any of
its subsidiaries, (iii) the acquisition of "beneficial ownership" by any
"person" or "group" (other than Welsh, Carson, Anderson & Stowe VIII, L.P.
or its affiliates) of voting stock of the Corporation representing more
than 50% of the voting power of all outstanding shares of such voting
stock, whether by way of merger or consolidation or otherwise, or (iv) a
"Qualified IPO" as defined in subparagraph 4H (any event described in the
foregoing clauses (i) through (iv) being referred to herein as a "Liquidity
Event"), the Corporation shall, not later than 45 days prior to the
effective date of any such Liquidity Event, give written notice thereof
(the "Liquidity Event Notice") to each holder of shares of Preferred Stock.
In the event that within 15 days after receipt of the Liquidity Event
Notice, the holders of a majority of the outstanding shares of Series A
Preferred Stock elect, by written notice to the Corporation, to have any or
all of their shares of Series A Preferred Stock redeemed, the Corporation
shall redeem, to the
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extent legally permitted, the same (in the manner and with the effect
provided in subparagraphs 2D through 2G below) not later than the day prior
to the effective date of such Liquidity Event.
As used herein, (i) the terms "person" and "group" shall have the
meaning set forth in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not applicable, (ii) the
term "beneficial owner" shall have the meaning set forth in Rules 13d-3 and
13d-5 under the Exchange Act, whether or not applicable, except that a
person shall be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time or upon the occurrence of
certain events, and (iii) any "person" or "group" will be deemed to
beneficially own any voting stock of the Corporation so long as such person
or group beneficially owns, directly or indirectly, in the aggregate a
majority of the voting stock of a registered holder of the voting stock of
the Corporation.
2C. Redemption at Option of Corporation. The Corporation may,
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in its sole discretion, redeem at any time and from time to time (in the
manner and with the effect provided in subparagraphs 2D through 2G below),
any whole number of shares of Series A Preferred Stock or Series B
Preferred Stock.
2D. Redemption Price. Any date on which the Corporation elects
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or is required to redeem shares of Preferred Stock as provided in
subparagraph 2A, 2B or 2C shall be referred to as a "Redemption Date." The
Preferred Stock to be redeemed on a Redemption Date shall be redeemed by
paying for each share the sum of (i) the Stated Value per share as of such
Redemption Date, plus (ii) an amount equal to dividends accumulated and
unpaid thereon (to the extent not included in the Stated Value of such
shares) up to such Redemption Date, the sum of (i) and (ii) being herein
sometimes referred to as the "Redemption Price". In the case of a
redemption pursuant to subparagraph 2A or 2C above, not less than 30 days
before such Redemption Date, written notice shall be given by registered
mail, postage prepaid to the holders of record of the Preferred Stock to be
redeemed, such notice to be addressed to each such stockholder at his post
office address as shown by the records of the Corporation, specifying the
number of shares of Series A Preferred Stock to be redeemed, the paragraph
or paragraphs of this Certificate of Designations pursuant to which such
redemption shall be made, the Redemption Price and the place and date of
such redemption, which date shall not be a day on which banks in the City
of New York are required or authorized to close. If a notice of redemption
shall have been duly given under subparagraph 2B above or this subparagraph
2C and if on or before such Redemption Date the funds necessary for
redemption shall have been set aside so as to be and continue to be
available therefor, then, notwithstanding that any certificate for shares
of Preferred Stock to be redeemed shall not have been surrendered for
cancellation, after the close of business on such Redemption Date, the
shares so called for redemption shall no longer be deemed outstanding, the
dividends thereon shall cease to accrue, and all rights with respect to
such shares shall forthwith after the close of business on the Redemption
Date, cease, except only the right of the holders thereof to receive, upon
presentation of the certificate
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representing shares so called for redemption, the Redemption Price
therefor, without interest thereon.
2E. Redeemed or Otherwise Acquired Shares to Be Retired. Any
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shares of the Preferred Stock redeemed pursuant to this paragraph 2 or
otherwise acquired by the Corporation in any manner whatsoever shall be
permanently retired and shall not under any circumstances be reissued; and
the Corporation may from time to time take such appropriate corporate
action as may be necessary to reduce the number of authorized shares of
Preferred Stock accordingly.
2F. Shares to be Redeemed. In case of the redemption under this
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paragraph 2, for any reason, of only a part of the outstanding shares of
the Series A Preferred Stock or the Series B Preferred Stock on a
Redemption Date, all shares of Preferred Stock to be redeemed shall be
selected pro rata, and there shall be so redeemed from each registered
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holder in whole shares, as nearly as practicable to the nearest share, that
proportion of all the shares of the applicable class to be redeemed which
the number of shares held of record by such holder bears to the total
number of shares of Preferred Stock of the applicable class at the time
outstanding.
2G. Credit Facility. Notwithstanding anything herein to the
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contrary, any redemption of shares of Preferred Stock pursuant to
subparagraph 2B above is subject to the following: Any cash proceeds or
other consideration received by the Corporation or any subsidiary of the
Corporation, as the case may be, in connection with any of the transactions
described in subparagraph 2B shall be used by the Corporation to repay any
and all amounts owed by the Corporation pursuant to the terms and
conditions of the Credit Agreement, dated as of July 22, 1999, among the
Corporation and the other parties signatory thereto, prior to the
Corporation's redemption of any Preferred Stock pursuant to subparagraph
2B.
3. Liquidation. Upon any liquidation, dissolution or winding
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up of the Corporation, whether voluntary or involuntary, the holders of the
shares of Preferred Stock, before any distribution or payment is made upon
the Junior Stock, shall be entitled to be paid for each share, with each
series being determined separately the sum of (x) the Stated Value per
share as of such date of liquidation, dissolution or winding up (the
"Liquidation Date"), plus (y) an amount equal to dividends accumulated but
unpaid thereon (to the extent not included in the Stated Value of such
share) up to the Liquidation Date, the sum of (x) and (y) above being
herein sometimes referred to as the "Liquidation Payments".
If, upon such liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the assets to be distributed
among the holders of Preferred Stock shall be insufficient to permit
payment to such holders of the preferential amounts to which they are
entitled, then the entire assets of the Corporation to be so distributed
shall be distributed ratably among the holders of Preferred Stock. Upon
any such liquidation, dissolution or winding up of the Corporation, after
the holders of Preferred Stock shall have been paid in full the amounts to
which they shall be entitled,
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the remaining net assets of the Corporation available for distribution to
its shareholders may be distributed to the holders of the Junior Stock.
Written notice of such liquidation, dissolution or winding up, stating a
payment date, the amount of the Liquidation Payments, and the place where
said Liquidation Payments shall be payable, shall be given by registered
mail, postage prepaid, not less than 45 days prior to the payment date
stated therein, to the holders of record of Preferred Stock, such notice to
be addressed to each such holder at his post office address as shown by the
records of the Corporation. A Liquidity Event shall not be deemed to be a
liquidation, dissolution or winding up of the Corporation within the
meaning of the provisions of this paragraph 3.
4. Conversion of Series B Preferred Stock.
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4A. Right to Convert. Subject to the terms and conditions of
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this paragraph 4, the holder of any share or shares of Series B Preferred
Stock shall have the right, at its option at any time, to convert any such
shares of Series B Preferred Stock (except that upon any liquidation,
dissolution or winding up of the Corporation the right of conversion shall
terminate at the close of business on the last full business day next
preceding the date fixed for payment of the amount distributable on the
Series B Preferred Stock), into such number of fully paid and nonassessable
whole shares of Common Stock as is obtained by multiplying the number of
shares of the Series B Preferred Stock so to be converted by $150 and
dividing the result by $8.325 per share, or by the conversion price as last
adjusted and in effect at the date any share or shares of Series B
Preferred Stock are surrendered for conversion (such conversion price as
last adjusted being referred to herein as the "Series B Conversion Price").
The rights of conversion contained in this subparagraph 4A shall
be exercised by the holder of shares of Series B Preferred Stock by giving
written notice that such holder elects to convert a stated number of shares
of Series B Preferred Stock into Common Stock and by surrender of a
certificate or certificates for the shares so to be converted to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the
holder or holders of the Series B Preferred Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
4B. Issuance of Certificates; Time Conversion Effected.
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Promptly after the receipt of the written notice referred to in
subparagraph 4A and surrender of the certificate or certificates for the
share or shares of Series B Preferred Stock to be converted, the
Corporation shall issue and deliver, or cause to be issued and delivered,
to the holder, registered in such name or names as such holder may direct,
a certificate or certificates for the number of whole shares of Common
Stock issuable upon the conversion of such share or shares of Series B
Preferred Stock. To the extent permitted by law, such conversion shall be
deemed to have been effected, and the Series B Conversion Price shall be
determined, as of the close of business on the date on which such written
notice shall have been received by the Corporation and the certificate or
certificates for such share or shares shall have been surrendered as
aforesaid, and at such
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time the rights of the holder of such share or shares of Series B Preferred
Stock shall cease, and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder or holders
of record of the shares represented thereby.
4C. Dividends; Fractional Shares; Partial Conversion.
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Notwithstanding any other provision of this Certificate of Designations,
upon any conversion of shares of Series B Preferred Stock into Common
Stock, the holder of such shares shall relinquish any right to receive
dividends accumulated and unpaid thereon (whether or not included in the
Stated Value of such shares). No fractional shares may be issued upon
conversion of the Series B Preferred Stock into Common Stock. In case the
number of shares of Series B Preferred Stock represented by the certificate
or certificates surrendered pursuant to subparagraph 4A exceeds the number
of shares converted, the Corporation shall, upon such conversion, execute
and deliver to the holder thereof, at the expense of the Corporation, a new
certificate or certificates for the number of shares of Series B Preferred
Stock represented by the certificate or certificates surrendered which are
not to be converted. If any fractional interest in a share of Common Stock
would, except for the provisions of the first sentence of this subparagraph
4C, be deliverable upon any such conversion, the Corporation, in lieu of
delivering the fractional share thereof, shall pay to the holder
surrendering the Series B Preferred Stock for conversion an amount in cash
equal to the current market price or fair value of such fractional interest
as determined in good faith by the Board of Directors of the Corporation.
4D. Adjustment of Series B Conversion Price Upon Issuance of
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Common Stock. Except as provided in subparagraph 4F hereof, if the
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Corporation shall issue or sell, or is in accordance with subparagraphs
4D(1) through 4D(6) deemed to have issued or sold, any shares of its Common
Stock without consideration or for a consideration per share less than the
Series B Conversion Price in effect immediately prior to the time of such
issue or sale, then, forthwith upon such issue or sale, the Series B
Conversion Price shall be reduced to the price (calculated to the nearest
cent) determined by dividing (i) an amount equal to the sum of (a) Adjusted
Outstanding Common Stock (as defined below) multiplied by the then existing
Series B Conversion Price, plus (b) the consideration, if any, received by
the Corporation upon such issue or sale, by (ii) an amount equal to the sum
of Adjusted Outstanding Common Stock plus the number of shares of Common
Stock issued or sold or deemed to have been issued or sold.
For the purposes of this subparagraph 4D, the following terms
shall have the meanings set forth below:
"Adjusted Outstanding Common Stock" shall mean the sum of (i) the
number of shares of Common Stock outstanding immediately prior to such
issue or sale (including as outstanding all shares of Common Stock
issuable upon conversion of outstanding Series B Preferred Stock),
plus (ii) the number of shares of Common Stock issuable upon the
exercise of any outstanding stock subscription warrants and vested
stock options (reduced by the number of shares which, when multiplied
by the then current Series B Conversion Price, would
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equal the aggregate exercise price for such warrants or options, as
the case may be).
For purposes of this subparagraph 4D, the following subparagraphs
4D(1) to 4D(6) shall also be applicable:
4D(1) Issuance of Rights or Options. In case at any time the
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Corporation shall in any manner grant (whether directly or by assumption in
a merger or otherwise) any rights to subscribe for or to purchase, or any
options for the purchase of, Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (such rights or options
being herein called "Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities") whether or not
such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case of
such Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issue or sale
of such Convertible Securities and upon the conversion or exchange thereof,
by (ii) the total maximum number of shares of Common Stock issuable upon
the exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be
less than the Series B Conversion Price in effect immediately prior to the
time of the granting of such Options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to
have been issued for such price per share as of the date of granting of
such Options and thereafter shall be deemed to be outstanding. Except as
otherwise provided in subparagraph 4D(3), no adjustment of the Series B
Conversion Price shall be made upon the actual issue of such Common Stock
or of such Convertible Securities upon exercise of such Options or upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
4D(2) Issuance of Convertible Securities. In case the
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Corporation shall in any manner issue (whether directly or by assumption in
a merger or otherwise) or sell any Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (i) the total amount
received or receivable by the Corporation as consideration for the issue or
sale of such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (ii) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Series B Conversion Price in
effect immediately prior to the time of such issue or sale, then the total
maximum number
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of shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such price
per share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding, provided that
(a) except as otherwise provided in subparagraph 4D(3) below, no adjustment
of the Series B Conversion Price shall be made upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible
Securities, and (b) if any such issue or sale of such Convertible
Securities is made upon exercise of any Option to purchase any such
Convertible Securities for which adjustments of the Series B Conversion
Price have been or are to be made pursuant to other provisions of this
subparagraph 4D, no further adjustment of the Series B Conversion Price
shall be made by reason of such issue or sale.
4D(3) Change in Option Price or Conversion Rate. Upon the
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happening of any of the following events, namely, if (i) the purchase price
provided for in any Option referred to in subparagraph 4D(1), (ii) the
additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in subparagraph 4D(1) or 4D(2) or
(iii) the rate at which any Convertible Securities referred to in
subparagraph 4D(1) or 4D(2) are convertible into or exchangeable for Common
Stock shall change at any time (in each case other than under or by reason
of provisions designed to protect against dilution), then the Series B
Conversion Price in effect at the time of such event shall, as required,
forthwith be readjusted to such Series B Conversion Price which would have
been in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time initially
granted, issued or sold; and on the expiration of any such Option or the
termination of any such right to convert or exchange such Convertible
Securities, the Series B Conversion Price then in effect hereunder shall,
as required, forthwith be increased to the Series B Conversion Price which
would have been in effect at the time of such expiration or termination had
such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued, and
the Common Stock issuable thereunder shall no longer be deemed to be
outstanding. If the purchase price provided for in any such Option
referred to in subparagraph 4D(1) or the rate at which any Convertible
Securities referred to in subparagraph 4D(1) or 4D(2) are convertible into
or exchangeable for Common Stock shall be reduced at any time under or by
reason of provisions with respect thereto designed to protect against
dilution, then, in case of the delivery of Common Stock upon the exercise
of any such Option or upon conversion or exchange of any such Convertible
Securities, the Series B Conversion Price then in effect hereunder shall,
as required, forthwith be adjusted to such respective amount as would have
been obtained had such Option or Convertible Securities never been issued
as to such Common Stock and had adjustments been made upon the issuance of
the shares of Common Stock delivered as aforesaid, but only if as a result
of such adjustment the Series B Conversion Price then in effect hereunder
is thereby reduced.
4D(4) Stock Dividends. In case the Corporation shall declare a
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dividend or make any other distribution upon any stock of the Corporation
payable in Common Stock, Options or Convertible Securities (other than any
such dividend payable solely in
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Common Stock, which shall be treated as a subdivision of the Corporation's
shares of Common Stock into a greater number of shares pursuant to
subparagraph 4E below), any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
4D(5) Consideration for Stock. In case any shares of Common
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Stock, Options or Convertible Securities shall be issued or sold for cash,
the consideration received therefor shall be deemed to be the amount
received by the Corporation therefor, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Corporation in connection therewith. In case any shares of
Common Stock, Options or Convertible Securities shall be issued or sold for
a consideration other than cash, the amount of the consideration other than
cash received by the Corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the Board of Directors of
the Corporation as confirmed by the Corporation's auditors, without
deduction therefrom of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Corporation in connection
therewith. In case any Options shall be issued in connection with the
issue and sale of other securities of the Corporation, together comprising
one integral transaction in which no specific consideration is allocated to
such Options by the Corporation, such Options shall be deemed to have been
issued without consideration, and the Series B Conversion Price shall be
reduced as if the Corporation had subdivided its outstanding shares of
Common Stock into a greater number of shares, as provided in subparagraph
4E hereof.
4D(6) Record Date. In case the Corporation shall take a record
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of the holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities, or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be, provided that such
shares of Common Stock shall in fact have been issued or sold.
4E. Subdivision or Combination of Stock. In case the
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Corporation shall at any time subdivide its outstanding shares of Common
Stock into a greater number of shares, the Series B Conversion Price in
effect immediately prior to such subdivision shall be proportionately
reduced, and conversely, in case the outstanding shares of Common Stock of
the Corporation shall be combined into a smaller number of shares, the
Series B Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
4F. Certain Issues of Common Stock Excepted. Anything herein
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to the contrary notwithstanding, the Corporation shall not be required to
make any adjustment of the Series B Conversion Price upon the issuance of
Common Stock upon (i) the
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conversion of outstanding shares of Series B Preferred Stock or (ii) the
exercise of warrants to purchase Common Stock issued by the Company prior
to the date of first issuance of Series B Preferred Stock.
4G. Reorganization, Reclassification, Consolidation, Merger or
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Sale. If any capital reorganization or reclassification of the capital
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stock of the Corporation or any consolidation or merger of the Corporation
with another corporation, or the sale of all or substantially all of its
assets to another corporation shall be effected in such a way (including,
without limitation, by way of consolidation or merger) that holders of
Common Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provisions (in form satisfactory to the holders of at least 66-
2/3% of the outstanding shares of Series B Preferred Stock) shall be made
whereby each holder of a share or shares of Series B Preferred Stock shall
thereafter have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock of
the Corporation immediately theretofore receivable upon the conversion of
such shares of Series B Preferred Stock, such shares of stock, securities
or assets as may be issuable or payable with respect to or in exchange for
a number of outstanding shares of such Common Stock equal to the number of
shares of such stock immediately theretofore so receivable had such
reorganization, reclassification, consolidation, merger or sale not taken
place, and in any such case appropriate provision shall be made with
respect to the rights and interests of such holder to the end that the
provisions hereof (including, without limitation, provisions for adjustment
of the Series B Conversion Price) shall thereafter be applicable, as nearly
practicable, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such conversion rights
(including, if necessary to effect the adjustments contemplated herein, an
immediate adjustment, by reason of such reorganization, reclassification,
consolidation, merger or sale, of the Series B Conversion Price to the
value for the Common Stock reflected by the terms of such reorganization,
reclassification, consolidation, merger or sale if the value so reflected
is less than the Series B Conversion Price in effect immediately prior to
such reorganization, reclassification, consolidation, merger or sale). In
the event of a merger or consolidation of the Corporation as a result of
which a greater or lesser number of shares of common stock of the surviving
corporation is issuable to holders of Common Stock of the Corporation
outstanding immediately prior to such merger or consolidation, the Series B
Conversion Price in effect immediately prior to such merger or
consolidation shall be adjusted in the same manner as though there were a
subdivision or combination of the outstanding shares of Common Stock of the
Corporation. The Corporation will not effect any such consolidation or
merger, or any sale of all or substantially all of its assets and
properties, unless prior to the consummation thereof the successor
corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets shall
assume by written instrument (in form reasonably satisfactory to the
holders of at least a majority of the shares of Series B Preferred Stock at
the time outstanding), executed and mailed or delivered to each holder of
shares of Series B Preferred Stock at the last address of such holder
appearing on the books of the Corporation, the obligation to deliver to
such holder such shares of stock, securities or
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assets as, in accordance with the foregoing provisions, such holder may be
entitled to receive.
4H. Conversion Upon Qualified IPO. In the event that, at any
-----------------------------
time while any of the Series B Preferred Stock shall be outstanding, (i)
the Corporation shall complete an underwritten public offering underwritten
by a securities firm of nationally recognized standing involving the sale
by the Corporation of shares of Common Stock in which the aggregate net
proceeds to the Corporation are at least $20,000,000 (a "Qualified IPO")
and (b) the holders of a majority of the Series B Preferred Stock shall
have elected, by giving written notice to the Corporation within 15 days
after receipt of the related Liquidity Event Notice, to cause all
outstanding shares of Series B Preferred Stock to be converted into Common
Stock pursuant to this subparagraph 4H (and such holders shall not have
elected to have their shares of Series B Preferred Stock redeemed by the
Corporation pursuant to subparagraph 2B), then all outstanding shares of
Series B Preferred Stock shall, automatically and without further action on
the part of the holders of the Series B Preferred Stock, be converted into
shares of Common Stock in accordance with the terms of this paragraph 4
with the same effect as if the certificates evidencing such shares had been
surrendered for conversion, such conversion to be effective simultaneously
with the closing of such public offering, provided, however, that
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certificates evidencing the shares of Common Stock issuable upon such
conversion shall not be issued except on surrender of the certificates for
the shares of the Series B Preferred Stock so converted.
4I. Notice of Adjustment. Upon any adjustment of the Series B
--------------------
Conversion Price, then and in each such case the Corporation shall give
written notice thereof, by first class mail, postage prepaid, addressed to
each holder of shares of Series B Preferred Stock at the address of such
holder as shown on the books of the Corporation, which notice shall state
the Series B Conversion Price resulting from such adjustment, setting forth
in reasonable detail the method of calculation and the facts upon which
such calculation is based.
4J. Other Notices. In case at any time:
-------------
(1) the Corporation shall declare any dividend upon its Junior
Stock payable in cash or stock or make any other distribution to the
holders of its Junior Stock;
(2) the Corporation shall offer for subscription pro rata to the
--- ----
holders of its Common Stock any additional shares of stock of any
class or other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with, or a sale of a
substantial portion of its assets to, another entity; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
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then, in any one or more of said cases, the Corporation shall give, by
first class mail, postage prepaid, addressed to each holder of any shares
of Series B Preferred Stock at the address of such holder as shown on the
books of the Corporation, (a) at least 45 days' prior written notice of the
date on which the books of the Corporation shall close or a record shall be
taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, at least 45 days' prior written notice of the date when the
same shall take place. Such notice in accordance with the foregoing clause
(a) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause
(b) shall also specify the date on which the holders of Common Stock shall
be entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may be.
4K. Stock to be Reserved. The Corporation will at all times
--------------------
reserve and keep available out of its authorized Common Stock or its
treasury shares, solely for the purpose of issue upon the conversion of the
Series B Preferred Stock as herein provided, such number of shares of
Common Stock as may then be issuable upon the conversion of all outstanding
shares of Series B Preferred Stock. The Corporation covenants that all
shares of Common Stock which shall be so issued shall be duly and validly
issued and fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof and, without limiting the
generality of the foregoing, the Corporation covenants that it will from
time to time take all such action as may be requisite to assure that the
par value per share of the Common Stock is at all times equal to or less
than the effective Series B Conversion Price. The Corporation will take
all such action as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirements of any national securities exchange upon
which the Common Stock of the Corporation may be listed. The Corporation
will not take any action which results in any adjustment of the Series B
Conversion Price if the total number of shares of Common Stock issued and
issuable after such action upon conversion of the Series B Preferred Stock
would exceed the total number of shares of Common Stock then authorized by
the Corporation's Certificate of Incorporation.
4L. No Reissuance of Series B Preferred Stock. Shares of Series
-----------------------------------------
B Preferred Stock which are converted into shares of Common Stock as
provided herein shall not be reissued.
4M. Issue Tax. The issuance of certificates for shares of
---------
Common Stock upon conversion of the Series B Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect
thereof.
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4N. Closing of Books. The Corporation will at no time close its
----------------
transfer books against the transfer of any Series B Preferred Stock or of
any shares of Common Stock issued or issuable upon the conversion of any
shares of Series B Preferred Stock in any manner which interferes with the
timely conversion of such Series B Preferred Stock.
4O. Definition of Common Stock. As used in this paragraph 4,
--------------------------
the term "Common Stock" shall mean and include the Corporation's authorized
Common Stock, $.01 par value, and the Corporation's authorized Class A
Common Stock, $.01 par value, as constituted on the date of the filing of
this Certificate of Designations, and shall also include any capital stock
of any class of the Corporation thereafter authorized which shall not be
limited to a fixed sum or percentage of par value in respect of the rights
of the holders thereof to participate in dividends or in the distribution
of assets upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, provided, however, that such term, when used
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to describe the securities receivable upon conversion of shares of the
Series B Preferred Stock of the Corporation, shall include only shares
designated as Common Stock of the Corporation on the date of filing of this
Certificate of Designations, any shares resulting from any combination or
subdivision thereof referred to in subparagraph 4E, or in case of any
reorganization or reclassification of the outstanding shares thereof, the
stock, securities or assets provided for in subparagraph 4G.
5. Voting. Except as otherwise provided by law, the Certificate
------
of Incorporation of the Corporation or this Certificate of Designations,
the holders of Preferred Stock shall not be entitled to vote on any matters
to be voted on by the stockholders of the Corporation.
6. Restrictions. At any time when shares of Preferred Stock
------------
are outstanding, except where the vote or written consent of the holders of
a greater number of shares of Preferred Stock of the Corporation is
required by law or the Certificate of Incorporation of the Corporation, and
in addition to any other vote required by law, without the prior consent of
the holders of at least 66-2/3% of the outstanding Preferred Stock, given
in person or by proxy, either by written consent without a meeting or at a
special meeting called for that purpose, at which meeting the holders of
the shares of such Preferred Stock shall vote together as a class:
(1) the Corporation will not (i) create or authorize the
creation of any additional class or series of shares unless the same
ranks junior to the Preferred Stock as to the payment of dividends,
redemption rights and the distribution of assets upon the liquidation,
dissolution or winding up of the Corporation, (ii) increase the
authorized amount of the Preferred Stock or the authorized amount of
any additional class or series of shares unless the same ranks junior
to the Preferred Stock as to the payment of dividends, redemption
rights and the distribution of assets upon the liquidation,
dissolution or winding up of the Corporation, (iii) create or
authorize any obligation or security convertible into shares of
Preferred Stock or into shares of any other class or series unless the
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same ranks junior to the Preferred Stock as to the payment of
dividends, redemption rights and the distribution of assets upon the
liquidation, dissolution or winding up of the Corporation, whether any
such creation or authorization or increase shall be by means of
amendment of the Certificate of Incorporation, by a Certificate of
Designations, or by merger, consolidation or otherwise, (iv) modify or
amend any right, preference or term of the Preferred Stock or (v)
create or authorize any debt obligation or security of the Corporation
convertible into (or which is issued or sold as a unit with a warrant
or other right to subscribe for) any equity security of the
Corporation (including, without limitation, Common Stock or equity
securities junior to the Preferred Stock);
(2) the Corporation will not amend, alter or repeal the
Corporation's Certificate of Incorporation or By-laws in any manner,
or file any directors' resolutions pursuant to the General Corporation
Law of the State of Delaware containing any provision, in either case,
which adversely affects the respective preferences, qualifications,
special or relative rights or privileges of the Preferred Stock or
which in any manner adversely affects the Preferred Stock or the
holders thereof;
(3) the Corporation will not purchase or set aside any sums for
the purchase of any shares of stock of the Corporation or the purchase
of any options, warrants or other rights to acquire any shares of
stock of the Corporation, except for redemptions of Preferred Stock
pursuant to paragraph 2 hereof; or
(4) the Corporation will not declare, or set aside funds for the
payment of, dividends or distributions on any class of stock of the
Corporation, other than dividends on Preferred Stock pursuant to
paragraph 1 hereof."
IN WITNESS WHEREOF, this Certificate of Designations has been executed
by the Corporation as of this 27/th/ day of February, 2001.
BANCTEC, INC.
By /s/ Richard A. Mc Donough
------------------------------------------
Richard A. McDonough
Secretary
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