EXHIBIT 3.2
TRANSIT GROUP, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS THEREOF
____________________
Pursuant to Section 607.1004 of the
Florida Business Corporation Act
____________________
TRANSIT GROUP, INC. (the "Company"), a corporation organized and
existing under the laws of the State of Florida, hereby certifies that pursuant
to the provisions of Section 607.1004 of the Florida Business Corporation Act,
its Board of Directors, by action taken April 10, 2001, adopted the following
resolution, which resolution remains in full force and effect as of the date
hereof:
WHEREAS, the Board of Directors of the Company is authorized, within
the limitations and restrictions stated in the articles of incorporation, to fix
by resolution or resolutions the designation of preferred stock and the powers,
preferences and relative participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including, without limiting
the generality of the foregoing, such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets,
conversion or exchange, and such other subjects or matters as may be fixed by
resolution or resolutions of the Board of Directors under the Florida Business
Corporation Act; and
WHEREAS, it is the desire of the Board of Directors of the Company,
pursuant to its authority as aforesaid, to authorize and fix the terms of the
preferred stock to be designated the Series B Convertible Preferred Stock of the
Company and the number of shares constituting such preferred stock;
NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized the
Series B Convertible Preferred Stock on the terms and with the provisions herein
set forth:
TERMS, PREFERENCES, RIGHTS AND LIMITATIONS
of
SERIES B CONVERTIBLE PREFERRED STOCK
of
TRANSIT GROUP, INC.
The relative rights, preferences, powers, qualifications, limitations
and restrictions granted to or imposed upon the Series B Convertible Preferred
Stock or the holders thereof are as follows:
1. Definitions. For purposes of this Certificate, the following
definitions shall apply:
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Common Stock" shall mean the Common Stock, $.01 par value per share,
of the Company.
"Company" shall mean Transit Group, Inc., a Florida corporation.
"Conversion Price" shall mean the amount computed by dividing the
Liquidation Preference by the Conversion Ratio.
"Conversion Ratio" has the meaning set forth in Section 7 hereof, and
shall initially be one hundred (100).
"Convertible Preferred Stock" shall refer to shares of Series B
Convertible Preferred Stock, no par value per share, of the Company.
"Current Market Price," when used with reference to shares of Common
Stock or other securities on any date, shall mean the average of the daily
market prices for the 10 consecutive Trading Days immediately prior to such
date. The daily market price for each such Trading Day shall be (i) the last
sale price on such day on the principal stock exchange or NASDAQ Stock Market on
which such Common Stock is then listed or admitted to trading, (ii) if no sale
takes place on such day on any such exchange or market, the average of the last
reported closing bid and asked prices on such day as officially quoted on any
such exchange or market, (iii) if the Common Stock is not then listed or
admitted to trading on any stock exchange or such market, the average of the
last reported closing bid and asked prices on such day in the over-the-counter
market,
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as furnished by NASDAQ or the National Quotation Bureau, Inc., (iv) if neither
such corporation at the time is engaged in the business of reporting such
prices, as furnished by any similar firm then engaged in such business, or (v)
if there is no such firm, as furnished by any member of the National Association
of Securities Dealers ("NASD") selected mutually by the Required Holders and
Company or, if they cannot agree upon such selection, as selected by two such
members of the NASD, one of which shall be selected by the Required Holders and
one of which shall be selected by Company.
"Dividend Rate" shall mean 10.5% per annum.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder, all as the same shall be in
effect at the time. Reference to a particular section of the Securities Exchange
Act of 1934, as amended, shall include reference to the comparable section, if
any, of any such similar Federal statute.
"Fair Market Value" shall mean the amount which a willing buyer would
pay a willing seller in an arm's-length transaction, with neither being under
any compulsion to buy or sell.
"Fully Diluted Outstanding" shall mean, with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all shares of Common Stock outstanding at such date and all shares of Common
Stock issuable upon the conversion of the Convertible Preferred Stock
outstanding on such date, and other options or warrants to purchase, or
securities convertible into, shares of Common Stock outstanding on such date
which would be deemed outstanding in accordance with GAAP for purposes of
determining book value or net income per share.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"Liquidation Preference" shall mean $5.00 per share.
"Organic Change" shall mean (A) any sale, lease, exchange or other
transfer of all or substantially all of the property and assets of the Company,
(B) any liquidation, dissolution or winding up of the Company, whether voluntary
or involuntary, (C) any merger or consolidation to which the Company is a party
and which the holders of the voting securities of the Company immediately prior
thereto own less than a majority of the outstanding voting securities of the
surviving entity immediately following such transaction, or (D) any transaction,
other than the conversion of accrued and unpaid dividends into shares of
Convertible Preferred Stock as contemplated in Section 3(a) below, following
which any Person or group of Persons (as such term is used in Section 13(d) of
the Exchange Act) shall beneficially own (as defined in Rule 13d-3 under the
Exchange Act) securities of the Company representing 50% or more of the voting
securities of the Company then outstanding. For purposes of the preceding
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sentence, "voting securities" shall mean securities, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect the corporate
directors (or Persons performing similar functions).
"Original Issue Date" shall mean the date of the original issuance of
shares of Convertible Preferred Stock.
"Permitted Issuances" shall mean issuances of shares of Common Stock
(i) upon the exercise or conversion of warrants or convertible securities of the
Company outstanding on the Original Issue Date (including the Series A Preferred
Stock and the Convertible Preferred Stock), (ii) upon the exercise of employee
stock options issued with the approval of the Company's Board of Directors
pursuant to Company's current stock option plans, (iii) upon the exercise of
options to purchase up to an additional 30,000,000 shares of Common Stock issued
with approval of the Company's Board of Directors, and (iv) upon the exercise of
options to purchase shares of Common Stock issued to the bank group led by Bank
One, N.A., the Company's primary lender, and General Electric Capital
Corporation. "Permitted Issuances" shall also include the issuance of
Convertible Preferred Stock (i) as a placement fee relating to the purchase of
the Convertible Preferred Stock and as a deferral fee to certain members of the
Carroll Fulmer family, in an aggregate amount up to 1,100,000 shares, (ii) as a
dividend to holders of the Convertible Preferred Stock, and (iii) to holders of
the Series A Preferred Stock for dividends accrued prior to January 31, 2001.
"Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
"Redemption Date" shall mean the date on which any shares of
Convertible Preferred Stock are redeemed by the Company.
"Redemption Price" has the meaning set forth in Section 6(a) (i) of
this Certificate of Designation.
"Required Holders" shall mean the holders of at least a majority of
the outstanding shares of Convertible Preferred Stock.
"Series A Preferred Stock" shall mean the Series A Convertible
Preferred Stock, no par value, of the Company.
"Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power or the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
"Trading Day" shall mean a Business Day or, if the Common Stock is
listed or admitted to trading on any national securities exchange or NASDAQ
market, a day on which such exchange or market is open for the transaction of
business.
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2. Designation: Number of Shares. The designation of the preferred
stock authorized by this resolution shall be "Series B Convertible Preferred
Stock" and the number of shares of Convertible Preferred Stock authorized hereby
shall be 4,000,000 shares.
3. Dividends.
(a) So long as any shares of Convertible Preferred Stock shall be
outstanding, the holders of such Convertible Preferred Stock shall be entitled
to receive out of any funds legally available therefor, when, as and if declared
by the Board of Directors of the Company, preferential dividends in cash at the
Dividend Rate on the Liquidation Preference hereunder. Such dividends shall be
cumulative and begin to accrue from the Original Issue Date, whether or not
declared and whether or not there shall be net profits or net assets of the
Company legally available for the payment of those dividends. Each holder of the
Convertible Preferred Stock shall be entitled to convert its accrued and unpaid
dividends into additional shares of Convertible Preferred Stock at a price per
share of $5.00 (adjusted for stock splits and the like).
(b) So long as any shares of Convertible Preferred Stock shall be
outstanding, (i) no dividend whatsoever shall be paid or declared, and no
distribution shall be made, on account of any Common Stock, and (ii) no shares
of Common Stock shall be purchased, redeemed or acquired by the Company and no
funds shall be paid into or set aside or made available for a sinking fund for
the purchase, redemption or acquisition thereof, other than redemptions of
shares of Common Stock pursuant to contractual obligations in existence on the
Original Issue Date and shares of Series A Preferred Stock and Convertible
Preferred Stock. Notwithstanding the foregoing, if the Company has made all
dividend payments required by Section 3(a), the Company shall not be prohibited
from paying dividends on the Series A Preferred Stock.
4. Liquidation Rights of Convertible Preferred Stock.
(a) In the event of any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary, the holders of Convertible
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Company available for distribution to its stockholders, whether such
assets are capital, surplus or earnings, before any payment or declaration and
setting apart for payment of any amount shall be made in respect of any shares
of Common Stock or any share of Series A Preferred Stock or any other class or
series of the Company's preferred stock ranking junior to the Convertible
Preferred Stock with respect to the payment of dividends or distribution of
assets on liquidation, dissolution or winding up of the Company, for each share
of Convertible Preferred Stock, an amount equal to the Liquidation Preference
plus all declared or accrued and unpaid dividends in respect of any liquidation,
dissolution or winding up consummated.
(b) If upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the assets to be distributed among
the holders of
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Convertible Preferred Stock shall be insufficient to permit the payment to such
stockholders of the full preferential amounts aforesaid, then the entire assets
of the Company to be distributed shall be distributed ratably among the holders
of Convertible Preferred Stock, based on the full preferential amounts for the
number of shares of Convertible Preferred Stock held by each holder.
(c) After payment to the holders of Convertible Preferred Stock of the
amounts set forth in Section 4(a) hereof, the entire remaining assets and funds
of the Company legally available for distribution, if any, shall be distributed
among the holders of any Company stock entitled to a preference over the Common
Stock in accordance with the terms thereof and, thereafter, to the holders of
Common Stock, in which distribution the holders of Convertible Preferred Stock
and Series A Preferred Stock shall participate on an as if converted basis.
(d) If there is an Organic Change of the type referred to in clauses
(a) or (c) of the definition of Organic Change, then such transaction shall be
deemed a liquidation for purposes of distributions to stockholders of the
consideration received in such transaction; provided, however, that solely for
the purposes of this Section 4(d), an Organic Change of the type referred to in
such clause (c) shall not be deemed a liquidation for purposes of this Section
4(d) if, immediately after consummation of the Organic Change, the stockholders
of Company (as determined immediately prior to such Organic Change) own at least
35% of the voting capital stock of the surviving entity.
5. Voting Rights. In addition to any voting rights provided by law, the
holders of shares of Convertible Preferred Stock shall have the following voting
rights:
(a) So long as any of the Convertible Preferred Stock is outstanding,
each share of Convertible Preferred Stock shall entitle the holder thereof to
vote on all matters voted on by the holders of Common Stock, voting together as
a single and not separate class with other shares entitled to vote at all
meetings of the stockholders of the Company. With respect to any such vote, each
share of Convertible Preferred Stock shall entitle the holder thereof to cast
the number of votes equal to the number of votes which could be cast in such
vote by a holder of the number of shares of Common Stock of the Company into
which such share of Convertible Preferred Stock is convertible on the record
date for such vote.
(b) The affirmative vote of the Required Holders, voting together as a
class, in person or by proxy, at a special or annual meeting of stockholders
called for the purpose, or pursuant to a written consent of stockholders shall
be necessary to
(i) authorize, adopt or approve an amendment to the articles of
incorporation of the Company which would alter or change in any manner the
terms, powers, preferences or special rights of the shares of Convertible
Preferred Stock or grant waivers thereof, or which would otherwise
adversely affect the rights of the Convertible Preferred Stock, provided
that no such modification or
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amendment may, without the consent of each holder of Convertible Preferred
Stock affected thereby, (A) change the redemption date of the Convertible
Preferred Stock; (B) raise the Conversion Price or reduce the Liquidation
Preference, Dividend Rate or Redemption Price of the Convertible Preferred
Stock; (C) adversely affect any of the conversion features of the
Convertible Preferred Stock set forth in Section 7 hereof; or (D) reduce
the percentage of outstanding Convertible Preferred Stock necessary to
modify or amend the terms thereof or to grant waivers thereof; or
(ii) issue any shares of the capital stock of the Company ranking
senior to, or pari passu with (either as to dividends or upon voluntary or
involuntary liquidation, dissolution or winding up) the Convertible
Preferred Stock, or issue any securities convertible into or exchangeable
for such shares, except shares of Common Stock. This provision is not
intended to limit the right of the Company to increase the number of
authorized shares of Convertible Preferred Stock as may be necessary for
the Company to fulfill its obligations in the event that dividends accrued
on the Convertible Preferred Stock are converted into additional shares of
Convertible Preferred Stock pursuant to Section 3(a) hereof.
(c) The foregoing rights of holders of shares of Convertible Preferred
Stock to take any actions as provided in this Section 5 may be exercised at any
annual meeting of stockholders or at a special meeting of stockholders held for
such purpose as hereinafter provided or at any adjournment thereof or pursuant
to any written consent of stockholders.
6. Redemption of Convertible Preferred Stock.
(a) Upon at least thirty (30) Business Days prior written notice to
the Company by any of the holders of the Convertible Preferred Stock (the
"Redemption Notice"), which written notice may not be sent for a redemption
prior to fifty-four months from the Original Issue Date, the Company shall
redeem, at the redemption price equal to the sum of the Liquidation Preference
per share plus an amount equal to the accrued and unpaid dividends per share of
Convertible Preferred Stock to be redeemed (the "Redemption Price"), the number
of shares of Convertible Preferred Stock specified in such notice, up to one-
third of the shares issued on the Original Issue Date if the Redemption Notice
is given for a redemption on or after fifty-four months from the Original Issue
Date, up to two-thirds of such amount if given for a redemption on or after
sixty-six months from the Original Issue Date and up to all such shares if given
for a redemption on or after seventy-eight months from the Original Issue Date
and for a period of one year thereafter. If the Required Holders so elect, on or
after seventy-eight months from the Original Issue Date but before ninety months
from the Original Issue Date or at any time upon the occurrence of an Organic
Change, the Company shall redeem all of the outstanding shares of Convertible
Preferred Stock; provided, however, that solely for the purposes of this Section
6(a), an Organic Change of the type referred to in clause (c) of the definition
of Organic Change shall not be deemed an Organic Change for purposes of this
Section 6(a) if, immediately after consummation of the Organic
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Change, the stockholders of Company (as determined immediately prior to such
Organic Change) own at least 35% of the voting capital stock of the surviving
entity. Such redemption rights shall expire ninety months from the Original
Issue Date, except upon the occurrence of an Organic Change.
(b) Upon receipt of a Redemption Notice, the Company shall fix a date
for redemption (the "Redemption Date"), which shall be no later than thirty (30)
Business Days after the date of the Redemption Notice. Within five (5) business
days following receipt of any Redemption Notice, the Company shall notify each
other holder of record of shares of Convertible Preferred Stock and Series A
Preferred Stock which has not made a redemption request at such time, specifying
the name of the holder or holders who have given the Redemption Notice and the
number of shares covered by such request. Each other holder shall then have a
period of fifteen (15) Business Days following the date of such notice from the
Company in which to provide to the Company a Redemption Notice in order for the
Company to simultaneously redeem their shares of Convertible Preferred Stock and
Series A Preferred Stock which are then subject to redemption. The redemption of
any shares of Series A Preferred Stock will be made pursuant to the terms set
forth in the Certificate of Designations with respect thereto. Each holder of
Convertible Preferred Stock who has given the Company a Redemption Notice shall
surrender the certificate or certificates representing such shares of
Convertible Preferred Stock to the Company, duly endorsed for transfer in the
manner and at the place designated by the Company in a notice to the redeeming
holders, and thereupon the Redemption Price for such shares shall be payable in
cash on the Redemption Date to the person whose name appears on such certificate
or certificates as the owner thereof, and each surrendered certificate shall be
cancelled and retired. In the event that less than all of the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(c) Unless the Company defaults in the payment in full of the
Redemption Price, dividends on the Convertible Preferred Stock called for
redemption shall cease to accumulate on the Redemption Date, and the holders of
such shares redeemed shall cease to have any further rights with respect thereto
on the Redemption Date, other than to receive the Redemption Price without
interest.
(d) If, at the time of any redemption pursuant to this Section 6, the
funds of the Company legally available for redemption of Convertible Preferred
Stock are insufficient to redeem the number of shares required to be redeemed,
those funds which are legally available shall be used to redeem the maximum
possible number of such shares, pro rata based upon the number of shares to be
redeemed. At any time thereafter when additional funds of the Company become
legally available for the redemption of Convertible Preferred Stock, such funds
shall immediately be used to redeem the balance of the shares of Convertible
Preferred Stock which the Company has become obligated to redeem pursuant to
this subparagraph, but which it has not redeemed.
(e) The Company may not otherwise redeem or repurchase the Convertible
Preferred Stock.
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(f) Notwithstanding anything to the contrary herein, the rights
granted under this Section 6 shall be superior to the redemption rights of the
holders of any other class of stock, including the Series A Preferred Stock. The
available funds of the Company shall first be used to satisfy any redemption
request made by the holders of Convertible Preferred Stock pursuant to this
Section 6. Any funds available after satisfaction in full of the redemption
rights of the holders of the Convertible Preferred Stock shall be available for
the redemption of such other classes of the Company's stock.
7. Conversion. (a) Subject to the provisions for adjustment hereinafter
set forth, each share of Convertible Preferred Stock shall be convertible at any
time after the earlier of (i) the ninetieth (90th) day following the Original
Issue Date or (ii) the effective date of an amendment to the Articles of
Incorporation of the Company increasing the number of authorized shares of
Common Stock to 500,000,000 and from time to time thereafter, at the option of
the holder thereof (such conversion, an "Optional Conversion") into fully paid
and nonassessable shares of Common Stock. The number of shares of Common Stock
deliverable upon conversion of a share of Convertible Preferred Stock, adjusted
as hereinafter provided, is referred to herein as the "Conversion Ratio." The
Conversion Ratio shall initially be one hundred (100), subject to adjustment
from time to time pursuant to paragraph (f) of this Section 7. No fractional
shares shall be issued upon the conversion of any shares of Convertible
Preferred Stock. All shares of Common Stock (including fractions thereof)
issuable upon conversion of more than one share of Convertible Preferred Stock
by a holder thereof shall be aggregated for purposes of determining whether
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a share of Common Stock, the Company shall, in lieu of issuing any
fractional share, pay the holder otherwise entitled to such fraction a sum in
cash equal to the Current Market Price of such fraction on the date of
conversion.
(b) (i) An Optional Conversion of the Convertible Preferred Stock
may be effected by any such holder upon the surrender to the Company at the
principal office of the Company of the certificate for such Convertible
Preferred Stock to be converted accompanied by a written notice stating that
such holder elects to convert all or a specified number of such shares (which
may be fractional shares) in accordance with the provisions of this Section 7
and specifying the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. Upon an Optional
Conversion of any shares of Convertible Preferred Stock, dividends on the
Convertible Preferred Stock so converted shall cease to accumulate, and the
Company shall pay the holder thereof all accrued and unpaid dividends owing in
respect of such shares so converted, which dividends shall be paid when declared
by the Board, or may be converted into additional shares of Convertible
Preferred Stock at the holder's election as provided in Section 3(a) above.
(ii) In case the written notice specifying the name or names in
which such holder wishes the certificate or certificates for shares of
Common Stock to be issued shall specify a name or names other than that of
such holder, such notice shall be accompanied by payment of all transfer
taxes payable upon the issuance
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of shares of Common Stock in such name or names. Other than such taxes, the
Company will pay any and all issue and other taxes (other than taxes based
on income) that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of Convertible Preferred Stock
pursuant hereto. As promptly as practicable, and in any event within five
Business Days after the surrender of such certificate or certificates and
the receipt of such notice relating thereto and, if applicable, payment of
all transfer taxes (or the demonstration to the satisfaction of the Company
that such taxes have been paid), the Company shall deliver or cause to be
delivered (i) certificates representing the number of validly issued, fully
paid and nonassessable full shares of Common Stock to which the holder of
shares of Convertible Preferred Stock being converted shall be entitled and
(ii) if less than the full number of shares of Convertible Preferred Stock
evidenced by the surrendered certificate or certificates is being
converted, a new certificate or certificates, of like tenor, for the number
of shares evidenced by such surrendered certificate or certificates less
the number of shares being converted.
(iii) In the case of an Optional Conversion, such conversion
shall be deemed to have been made at the close of business on the date of
giving the written notice referred to in the first sentence of (b)(i) above
and of such surrender of the certificate or certificates representing the
shares of Convertible Preferred Stock to be converted so that the rights of
the holder thereof as to the shares being converted shall cease except for
the right to accrued dividends as set forth in Section (b) (ii) above and
the right to receive shares of Common Stock in accordance herewith, and the
person entitled to receive the shares of Common Stock shall be treated for
all purposes as having become the record holder of such shares of Common
Stock at such time.
(c) In case any shares of Convertible Preferred Stock are to be
redeemed pursuant to Section 6, all rights of conversion shall cease and
terminate as to the shares of Convertible Preferred Stock to be redeemed at the
close of business on the Business Day next preceding the date fixed for
redemption unless the Company shall default in the payment of the Redemption
Price.
(d) The Conversion Ratio shall be subject to adjustment from time to
time in certain instances as hereinafter provided.
(e) The Company shall at all times reserve, and keep available for
issuance upon the conversion of the Convertible Preferred Stock, such number of
its authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the conversion of all outstanding shares of Convertible
Preferred Stock, and shall take all action required to increase the authorized
number of shares of Common Stock if necessary to permit the conversion of all
outstanding shares of Convertible Preferred Stock.
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(f) The Conversion Ratio will be subject to adjustment from time to
time as follows:
(i) In case the Company shall at any time or from time to time
after the Original Issue Date (A) pay a dividend, or make a distribution,
on the outstanding shares of Common Stock in shares of Common Stock, (B)
subdivide the outstanding shares of Common Stock, (C) combine the
outstanding shares of Common Stock into a smaller number of shares or (D)
issue by reclassification of the shares of Common Stock any shares of
capital stock of the Company, then, and in each such case, the Conversion
Ratio in effect immediately prior to such event or the record date
therefor, whichever is earlier, shall be adjusted so that the holder of any
shares of Convertible Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock or other
securities of the Company which such holder would have owned or have been
entitled to receive after the happening of any of the events described
above, had such shares of Convertible Preferred Stock been surrendered for
conversion immediately prior to the happening of such event or the record
date therefor, whichever is earlier. An adjustment made pursuant to this
clause (i) shall become effective (x) in the case of any such dividend or
distribution, immediately after the close of business on the record date
for the determination of holders of shares of Common Stock entitled to
receive such dividend or distribution, or (y) in the case of such
subdivision, reclassification or combination, at the close of business on
the day upon which such corporate action becomes effective. No adjustment
shall be made pursuant to this clause (i) in connection with any
transaction to which paragraph (g) applies.
(ii) In case the Company shall issue shares of Common Stock (or
rights, warrants or other securities convertible into or exchangeable for
shares of Common Stock) after the Original Issue Date, other than issuances
covered by clause (i) above and Permitted Issuances, at a price per share
(or having an exercise, conversion or exchange price per share) less than
the Conversion Price as of the date of issuance of such shares or of such
rights, warrants or other convertible or exchangeable securities, then, and
in each such case, the Conversion Price shall be reduced (but not
increased) to a price determined by dividing (A) an amount equal to the sum
of (x) the number of shares of Fully Diluted Outstanding Common Stock
outstanding immediately prior to such issue multiplied by the then existing
Conversion Price, plus (y) the consideration, if any, received by Company
upon such issue, by (B) the total number of shares of Fully Diluted
Outstanding Common Stock outstanding immediately after such issue or sale.
The Conversion Ratio shall be adjusted to equal the Liquidation Preference
divided by the Conversion Price. For the purpose of determining the
consideration received by the Company upon any such issue pursuant to
clause (y) above, if the consideration received by the Company is other
than cash, its value will be deemed its Fair Market Value, as determined in
good faith by the Board of Directors of the Company.
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(iii) An adjustment made pursuant to clause (ii) above shall be
made on the next Business Day following the date on which any such issuance
is made and shall be effective retroactively immediately after the close of
business on such date. For purposes of clause (ii), the aggregate
consideration received by the Company in connection with the issuance of
shares of Common Stock or of rights, warrants or other securities
exchangeable or convertible into shares of Common Stock shall be deemed to
be equal to the sum of the aggregate offering price of all such Common
Stock and such rights, warrants, or other exchangeable or convertible
securities plus the minimum aggregate amount, if any, receivable upon
exchange or conversion of any such exchangeable or convertible securities
into shares of Common Stock.
(iv) In case the Company shall at any time or from time to time
after the Original Issue Date declare, order, pay or make a dividend or
other distribution (including, without limitation, any distribution of
stock or other securities or property or rights or warrants to subscribe
for securities of the Company or any of its Subsidiaries by way of dividend
or spinoff), on its Common Stock, other than dividends or distributions of
shares of Common Stock which are referred to in clause (i) of this
paragraph (f), then, and in each such case, the Conversion Ratio shall be
adjusted so that the holder of each share of Convertible Preferred Stock
shall be entitled to receive, upon the conversion thereof, the number of
shares of Common Stock determined by multiplying (1) the applicable
Conversion Ratio on the day immediately prior to the record date fixed for
the determination of stockholders entitled to receive such dividend or
distribution by (2) a fraction, the numerator of which shall be the Current
Market Price per share of Common Stock at such record date, and the
denominator of which shall be such Current Market Price per share of Common
Stock less the Fair Market Value of such dividend or distribution per share
of Common Stock. No adjustment shall be made pursuant to this clause (v) in
connection with any transaction to which paragraph (g) applies.
(v) For purposes of this paragraph (f), the number of shares of
Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Company or any of its
subsidiaries.
(vi) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or
other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment in the number of
shares of Common Stock issuable upon exercise of the right of conversion
granted by this paragraph (f) or in the Conversion Ratio then in effect
shall be required by reason of the taking of such record.
(vii) Anything in this paragraph (f) to the contrary
notwithstanding, the Company shall not be required to give effect to any
adjustment in the Conversion
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Ratio unless and until the net effect of one or more adjustments (each of
which shall be carried forward), determined as above provided, shall have
resulted in a change of the Conversion Ratio by at least one-tenth of one
share of Common Stock, and when the cumulative net effect of more than one
adjustment so determined shall be to change the Conversion Ratio by at
least one-tenth of one share of Common Stock, such change in Conversion
Ratio shall thereupon be given effect.
(viii) If any option or warrant expires or is cancelled without
having been exercised, then, for the purposes of the adjustments set forth
above, such option or warrant shall have been deemed not to have been
issued and the Conversion Ratio shall be adjusted accordingly. No holder of
Common Stock which was previously issued upon conversion of Convertible
Preferred Stock shall have any obligation to redeem or cancel any such
shares of Common Stock as a result of the operation of this paragraph
(viii).
(g) In case of any Organic Change (or any other merger or
consolidation to which the Company is a party, which for purposes of this
paragraph (g) shall be deemed an Organic Change), each share of Convertible
Preferred Stock then outstanding, other than those shares to be redeemed
pursuant to Section 6 hereof, shall thereafter be convertible into, in lieu of
the Common Stock issuable upon such conversion prior to consummation of such
Organic Change, the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such Organic
Change by a holder of that number of shares of Common Stock into which one share
of Convertible Preferred Stock was convertible immediately prior to such Organic
Change (including, on a pro rata basis, the cash, securities or property
received by holders of Common Stock in any tender or exchange offer that is a
step in such Organic Change). In case securities or property other than Common
Stock shall be issuable or deliverable upon conversion as aforesaid, then all
references in this Section 7 shall be deemed to apply, so far as appropriate and
nearly as may be, to such other securities or property.
(h) In case at any time or from time to time the Company shall
pay any stock dividend or make any other non-cash distribution to the holders of
its Common Stock, or shall offer for subscription pro rata to the holders of its
Common Stock any additional shares of stock of any class or any other right, or
there shall be any capital reorganization or reclassification of the Common
Stock of the Company or consolidation or merger of the Company with or into
another corporation, or any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, or there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company, then, in any one or more of said cases, the Company shall give at
least 20 days' prior written notice to the registered holders of the Convertible
Preferred Stock at the addresses of each as shown on the books of the Company as
of the date on which (i) the books of the Company shall close or a record shall
be taken for such stock dividend, distribution or subscription rights or (ii)
such reorganization, reclassification, consolidation, merger, sale or
conveyance, dissolution, liquidation or winding up shall
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take place, as the case may be, provided that in the case of any Organic Change
to which paragraph (g) applies the Company shall give at least 30 days' prior
written notice as aforesaid. Such notice shall also specify the date as of which
the holders of the Common Stock of record shall participate in said dividend,
distribution or subscription rights or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken.
8. Reports as to Adjustments. Upon any adjustment of the
Conversion Ratio then in effect and any increase or decrease in the number of
shares of Common Stock issuable upon the operation of the conversion set forth
in Section 7, then, and in each such case, the Company shall promptly deliver to
each holder of the Convertible Preferred Stock, a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the Conversion Ratio then in
effect following such adjustment and the increased or decreased number of shares
issuable upon the conversion granted by Section 7, and shall set forth in
reasonable detail the method of calculation of each and a brief statement of the
facts requiring such adjustment. Where appropriate, such notice to holders of
the Convertible Preferred Stock may be given in advance.
9. Certain Covenants. Any registered holder of Convertible
Preferred Stock may proceed to protect and enforce its rights and the rights of
such holders by any available remedy by proceeding at law or in equity to
protect and enforce any such rights, whether for the specific enforcement of any
provision in this Certificate of Designation or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
10. No Reissuance of Preferred Stock. No Convertible Preferred
Stock acquired by the Company by reason of redemption, purchase, or otherwise
shall be reissued, and all such shares shall be cancelled, retired and
eliminated from the shares which the Company shall be authorized to issue.
11. Notices. All notices to the Company permitted hereunder shall
be personally delivered or sent by first class mail, postage prepaid, addressed
to its principal office located at 2859 Paces Ferry Road, Suite 1740, Atlanta,
Georgia 30339, or to such other address at which its principal office is located
and as to which notice thereof is similarly given to the holders of the
Convertible Preferred Stock at their addresses appearing on the books of the
Company.
[EXECUTION SET FORTH ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, TRANSIT GROUP, INC. has caused this Certificate to
be signed by its President and Secretary, respectively, on this 10th day of
April, 2001.
/s/ Philip A. Belyew
----------------------------------------
PHILIP A. BELYEW, President
/s/ James G. Overley
----------------------------------------
JAMES G. OVERLEY, Secretary
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