Exhibit 3
RESTATED CERTIFICATE OF INCORPORATION
OF
ANICOM, INC.
(Original Certificate of Incorporation filed December 28, 1994)
Anicom, Inc. (the "Corporation"), a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"DGCL") does hereby certify that the Restated Certificate of Incorporation of
the Corporation set forth below has been duly adopted in accordance with
Sections 242 and 245 of the DGCL:
ARTICLE I
The name of the corporation is Anicom, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Corporation Trust Center, Wilmington, County of
New Castle, Delaware 19801. The name of its registered agent at such address is
The Corporation Trust Company.
ARTICLE III
The nature of the business to be conducted or promoted is to engage in
any lawful act or activity for which corporations may be organized under the
DGCL.
ARTICLE IV
A. The Corporation shall have authority to issue the following classes
of stock, in the number of shares and at the par value as indicated opposite the
name of the class:
SHARES PAR VALUE
CLASS AUTHORIZED PER SHARE
------------------- ------------ -----------
Common Stock 10,000,000 $.001
Preferred Stock 1,000,000 $.01
B. The designations and the powers, preferences and relative,
participating, optional or other rights of the capital stock and the
qualifications, limitations or restrictions thereof are as follows:
1. Common Stock.
a. Voting Rights: Except as otherwise required by law or
expressly provided herein, the holders of shares of Common Stock shall
be entitled to one vote per share on each matter submitted to a vote of
the stockholders of the Corporation.
b. Dividends: Subject to the rights of the holders, if any, of
preferred stock, the holders of Common Stock shall be entitled to
receive dividends at such times and in such amounts as may be
determined by the Board of Directors of the Corporation.
c. Liquidation Rights: In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment or provision for payment of the debts and
other liabilities of the Corporation and the preferential amounts to
which the holders of any outstanding shares of Preferred Stock shall be
entitled upon dissolution, liquidation of winding up, the assets of the
Corporation available for distribution to stockholders shall be
distributed ratably among the holders of the shares of Common Stock.
2. Preferred Stock.
Preferred Stock may be issued from time to time in one or more
series. Subject to the other provisions of this Certificate of
Incorporation, the Board of Directors is authorized, subject to any
limitations prescribed by law, to provide for the issuance of and issue
shares of the Preferred Stock in series, and by filing a certificate
pursuant to the laws of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to
fix the designation, powers, preferences and rights of the shares of
each such series and any qualifications, limitations or restrictions
thereof. The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of
the Common Stock, without a vote of the holders of any Preferred Stock,
or of any series thereof, unless a vote of any such holders is required
pursuant to the certificate or certificates establishing such series of
Preferred Stock.
ARTICLE V
The business and affairs of the Corporation shall be managed by or
under the direction of a board of directors consisting of not less than six (6)
nor more than fifteen (15) directors. The exact number shall be determined from
time to time by resolution adopted by the affirmative vote of a majority of the
directors in office at the time of adoption of such resolution. Initially, the
number of directors shall be eight (8) and shall consist of the following
persons: Alan B. Anixter, Scott C. Anixter, Carl E. Putnam, Donald C. Welchko,
William R. Anixter, Ira J. Kaufman, Michael Segal and Lee B. Stern.
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The directors shall be divided into three classes, Class I, Class II
and Class III; with Class I having three members, Class II having three members,
and Class III having two members. Class I shall initially consist of the
following directors: Scott C. Anixter, Carl E. Putnam and Lee B. Stern. Class II
shall initially consist of the following directors: Alan B. Anixter, Michael
Segal and Donald C. Welchko. Class III shall initially consist of the following
directors: William R. Anixter and Ira J. Kaufman. The initial term of office of
the Class I, Class II and Class III directors shall expire at the annual meeting
of stockholders in 1996, 1997 and 1998, respectively. Beginning in 1996, at each
annual meeting of stockholders, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes by the Board of Directors so as to maintain the number of
directors in each class as nearly equal as reasonably possible, and any
additional director of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide with the
remaining term of that class. In no case will a decrease in the number of
directors shorten the term of any incumbent director even though such decrease
may result in an inequality of the classes until the expiration of such term. A
director shall hold office until the annual meeting of the year in which his or
her term expires and until his or her successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement or removal
from office. Any director may be removed, with or without cause, by the holders
of a majority of the shares entitled to vote at an election of directors. Except
as required by law or the provisions of this Certificate of Incorporation, all
vacancies on the board of directors and newly-created directorships shall be
filled by the board of directors. Any director elected to fill a vacancy not
resulting from an increase in the number of directors shall have the same
remaining term as that of his or her predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorship shall be governed by the terms
of this Certificate of Incorporation and any resolutions of the Board of
Directors applicable thereto, and such directors so elected shall not be divided
into classes pursuant to this Article V. Notwithstanding anything to the
contrary contained in this Certificate of Incorporation, the affirmative vote of
the holders of at least two-thirds of the voting power of the shares entitled to
vote generally in the election of directors shall be required to amend, alter or
repeal, or to adopt any provision inconsistent with, this Article V.
ARTICLE VI
(a) Written Consent. Any action required or permitted to be taken by
the stockholders of the Corporation shall be effected at a duly called annual or
special meeting of stockholders of the Corporation and shall not be effected by
consent in writing by the holders of outstanding stock pursuant to Section 228
of the DGCL or any other provision of the DGCL.
(b) Special Meetings. Special meetings of stockholders of the
Corporation may be called upon not less than ten nor more than 60 days' written
notice by the Board of Directors pursuant to a resolution approved by a majority
of the Board of Directors or at the request in writing of the stockholders
owning at least ten percent (10%) of the entire capital stock of the corporation
issued and outstanding and entitled to vote.
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(c) Amendment. Notwithstanding anything contained in this Certificate
of Incorporation to the contrary, the affirmative vote of the holders of at
least two-thirds of the shares entitled to vote generally in the election of
directors shall be required to amend, alter or repeal, or to adopt any provision
inconsistent with this Article VI.
ARTICLE VII
In furtherance and not in limitation of the power conferred by statute,
the Board of Directors is expressly authorized to make, alter, amend or repeal
the By-Laws of the Corporation. The By-Laws of the Corporation may be altered,
amended, or repealed, or new By-Laws may be adopted, by the Board of Directors
in accordance with the preceding sentence or by the vote of the holders of at
least two-thirds of the voting power of the shares of the Corporation entitled
to be cast generally in the election of directors at an annual or special
meeting of stockholders, provided that if such alteration, amendment, repeal or
adoption of new By-Laws is effected at a duly called special meeting, notice of
such alteration, amendment, repeal or adoption of new By-Laws is contained in
the notice of such special meeting.
ARTICLE VIII
No stockholder of the Corporation shall by reason of holding shares of
any class of stock have any cumulative voting right. At all elections of
directors of the corporation, or at elections held under specified
circumstances, each holder of stock or of any class or classes or of a series or
series thereof shall only be entitled to one vote for each share of capital
stock held by such stockholder.
ARTICLE IX
A director of the Corporation shall not in the absence of fraud be
disqualified by his office from dealing or contracting with the Corporation
either as a vendor, purchaser or otherwise, nor in the absence of fraud shall a
director of the Corporation be liable to account to the Corporation for any
profit realized by him from or through any transaction or contract of the
Corporation by reason of the fact that he, or any firm of which he is a member
or any corporation of which he is an officer, director or stockholder, was
interested in such transaction or contract if such transaction or contract has
been authorized, approved or ratified in a manner provided in the DGCL for
authorization, approval or ratification of transactions or contracts between the
Corporation and one or more of its directors or officers or between the
Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest.
ARTICLE X
Meetings of stockholders may be held within or without the State of
Delaware as the ByLaws may provide. The books of the Corporation may be kept
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors of the Corporation or in the By-Laws of
the Corporation. Election of directors need not be by written ballot unless the
By-Laws of the Corporation so provide.
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ARTICLE XI
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of the DGCL or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of the DGCL order a meeting of the creditors or
class of creditors and/or the stockholders or class of stock of the Corporation,
as the case may be, to be summoned in such manner as the said court directs. If
a majority in number representing two-thirds the value of the creditors or class
of creditors and/or the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement or to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement of the said reorganization
shall, if sanctioned by the Court to which the said application has been made,
be binding on all the creditors or class of creditors and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
ARTICLE XII
A. Indemnification of Officers and Directors: The Corporation
shall:
(a) indemnify, to the fullest extent permitted by the DGCL,
any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an
action by or in the right of the Corporation) by reason of the fact
that such person is or was a director, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, or if such person has previously been designated for
indemnification by the resolution of the Board of Directors, an
officer, employee or agent of the Corporation, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in
good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe such person's conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith
and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that
such person's conduct was unlawful; and
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(b) indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that such person is or was
a director, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or if such
person has previously been designated for indemnification by the
resolution of the Board of Directors, an officer, employee or agent of
the Corporation, against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if such person acted in good faith
and in a manner such person reasonably believed to be in or not opposed
to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper; and
(c) indemnify any director, or, if such person has previously
been designated for indemnification by the resolution of the Board of
Directors, an officer, employee or agent against expenses (including
attorneys' fees) actually and reasonably incurred by such person in
connection therewith, to the extent that such director, officer,
employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to
in Article XII.A. (a) and (b), or in defense of any claim, issue or
matter therein; and
(d) make any indemnification under Article XII.A. (a) and (b)
(unless ordered by a court) only as authorized in the specific case
upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because such director,
officer, employee or agent has met the applicable standard of conduct
set forth in Article XII.A. (a) and (b). Such determination shall be
made (1) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the
stockholders of the Corporation; and
(e) pay expenses incurred by a director or officer in
defending a civil or criminal action, suit or proceeding in advance of
the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that such director or
officer is not entitled to be indemnified by the Corporation as
authorized in this Article XII. Notwithstanding the foregoing, the
Corporation shall not be obligated to pay expenses incurred by a
director or officer with respect to any threatened, pending, or
completed claim, suit or action, whether civil, criminal,
administrative, investigative or otherwise
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("Proceedings") initiated or brought voluntarily by a director or
officer and not by way of defense (other than Proceedings brought to
establish or enforce a right to indemnification under the provisions of
this Article XII unless a court of competent jurisdiction determines
that each of the material assertions made by the director or officer in
such proceeding were not made in good faith or were frivolous). The
Corporation shall not be obligated to indemnify the director or officer
for any amount paid in settlement of a Proceeding covered hereby
without the prior written consent of the Corporation to such
settlement; and
(f) not deem the indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections of this
Article XII exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such director's or officer's official
capacity and as to action in another capacity while holding such
office; and
(g) have the right, authority and power to purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the
power to indemnify such person against such liability under the
provisions of this Article XII; and
(h) deem the provisions of this Article XII to be a contract
between the Corporation and each director, or appropriately designated
officer, employee or agent who serves in such capacity at any time
while this Article XII is in effect and any repeal or modification of
this Article XII shall not affect any rights or obligations then
existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter
brought or threatened based in whole or in part upon such state of
facts. The provisions of this Article XII shall not be deemed to be a
contract between the Corporation and any directors, officers, employees
or agents of any other Corporation (the "Second Corporation") which
shall merge into or consolidate with this Corporation when this
Corporation shall be the surviving or resulting Corporation, and any
such directors, officers, employees or agents of the Second Corporation
shall be indemnified to the extent required under the DGCL only at the
discretion of the board of directors of this Corporation; and
(i) continue the indemnification and advancement of expenses
provided by, or granted pursuant to, this Article XII, unless otherwise
provided when authorized or ratified, as to a person who has ceased to
be a director, officer, employee or agent of the Corporation and shall
inure to the benefit of the heirs, executors and administrators of such
a person.
B. Elimination of Certain Liability of Directors: No director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
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liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, as the same exists or hereafter may be amended, or (iv)
for any transaction from which the director derived an improper personal
benefit. If the DGCL is amended to authorize the further elimination or
limitation of liability of directors, then the liability of a director of the
Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended DGCL.
Any repeal or modification of this Article XII by the stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
ARTICLE XIII
The Board of Directors of the Corporation may adopt a resolution
proposing to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter prescribed by
statute.
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be signed by its President and Secretary, all on
February 16, 1995.
ANICOM, INC.
By: /s/ Carl E. Putnam
------------------
Carl E. Putnam
President
By: /s/ David R. Shevitz
--------------------
David R. Shevitz
Secretary
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CERTIFICATE OF MERGER
OF
PINNACLE WIRE & CABLE, INC., an Ohio corporation
WITH AND INTO
ANICOM, INC., a Delaware corporation
* * * * * * * * *
The undersigned corporation DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger are as follows:
NAME STATE OF INCORPORATION
- ---------------------------------------------------- ----------------------
Pinnacle Wire & Cable, Inc. (the merged corporation) Ohio
Anicom, Inc. (the surviving corporation) Delaware
SECOND: That the agreement of merger between the parties to the merger
has been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 252 of
the General Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation of the merger is
Anicom, Inc.
FOURTH: That the Certificate of Incorporation of Anicom, Inc.
which is surviving the merger, shall be the Certificate of Incorporation of the
surviving corporation.
FIFTH: That the executed agreement of merger is on file at the
principal place of business of the surviving corporation. The address of said
principal place of business is 6133 N. River Road, Suite 410, Rosemont, IL
60018.
SIXTH: That a copy of the Plan and Agreement of Merger will be
furnished on requested and without cost to any stockholder of any constituent
corporation.
SEVENTH: The authorized capital stock of each foreign
corporation which is a party to the merger is as follows:
Corporation Class Number of Shares Par Value Per Share
- --------------------------------------------------------------------------------
Pinnacle Wire &
Cable, Inc.
(Ohio) Common 100 $5.00
EIGHTH: This Certificate of Merger shall be effective at
5:00 p.m. (Delaware time) on July 31, 1995.
Dated: July 28, 1995 ANICOM, INC.
By: /s/ Donald C. Welchko
--------------------------------
Name: Donald C. Welchko
Title: Chief Financial Officer
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
ANICOM, INC.
ANICOM, INC., a corporation organized and existing under and by virtue
of the General Corporation law of the State of Delaware (the "Act"), DOES HEREBY
CERTIFY THAT:
1. In accordance with the provisions of Section 242 of the Act,
an amendment to the Certificate of Incorportion of this
Corporation has been duly adopted by the Board of Directors of
this Corporation and by the stockholders of this Corporation
at a Special Meeting of Stockholders.
2. Said amendment amends subparagraph A of Article 4 of the
Certificate of Incorporation so that, as amended, subparagraph
A of Article 4 shall read in its entirety as follows:
"A. The corporation shall have the authority to issue the
following classes of stock, in the number of shares and at the par
value as indicated opposite the name of the class:
No. Shares Par Value
Class Authorized Per Share
Common Stock 30,000,000 $.001
Preferred Stock 1,000,000 $.01"
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
duly executed this 25th day of September, 1996.
By /s/ Carl Putnam
--------------------------
Carl Putnam, President and
Chief Operating Officer
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK
OF
ANICOM, INC.
Anicom, Inc. (the "Company" or "Issuer"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the Board of Directors of the
Company by the Certificate of Incorporation, as amended, of the Company, and
pursuant to Section 151 of the General Corporation Law of the State of Delaware,
the Board of Directors of the Company at a meeting duly held, adopted
resolutions providing for the designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations or
restrictions thereof, of Twenty-Seven Thousand (27,000) shares of Series A
Convertible Preferred Stock, of the Company, as follows:
RESOLVED, that the Company is authorized to issue 27,000
shares of Series A Convertible Preferred Stock, $.01 par value (the
"Series A Preferred Shares"), which shall have the following powers,
designations, preferences and other special rights:
(1) Dividends and Liquidation Preference.
(a) Generally. The holders of the Series A Preferred
Shares shall be entitled to receive on each share issued and
outstanding, out of assets legally available for such purpose,
cumulative preferential dividends which shall accrue and compound
annually, commencing to accrue on the date of issuance of such Series A
Preferred Share and receipt by the Company of all the full purchase
price due therefor (the "Issuance Date") at the rate of:
(i) 5% per annum during the first five (5)
years commencing on the Issuance Date; and
(ii) 15% per annum during the years
commencing on the fifth anniversary of the Issuance Date,
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of the Liquidation Preference (as defined below); such dividends shall
be cumulative, and accrue daily, whether or not earned, declared, or
legally available for payment, from and after the Issuance Date up to
and including the date the Series A Preferred Shares shall no longer be
outstanding. Accrued dividends shall be payable, quarterly, in arrears,
in cash or in shares of the Company's common stock, par value $.001 per
share (the "Common Stock") at the Company's option, valued at the then
applicable Average Trading Price (as defined below) ending on the day
prior to the date of issuance of such shares; provided that such shares
have been registered under the Securities Act of 1933, as amended, and
listed for trading on the principal securities exchange or trading
market where the Company's Common Stock is then listed or traded (the
"Dividend Shares"). The liquidation preference of the Series A
Preferred Shares shall be $1,000.00 per share plus any accrued and
unpaid dividends (the "Liquidation Preference").
(b) Special Dividend Adjustment. Notwithstanding
Section 1(a)(i) above, the dividend payable by the Company shall be
subject to adjustment pursuant to Section 8.3(a) of that certain Series
A Convertible Preferred Stock Purchase Agreement dated May 21, 1997 by
and among the Company and certain investors set forth therein.
(2) Voting Rights. On matters subject to voting by holders of
the Common Stock, holders of Series A Preferred Shares shall vote
together with the holders of Common Stock, on an as converted basis at
the then applicable Conversion Ratio (as defined below) (as if such
shares of Series A Preferred Shares had been fully converted
immediately prior to the date on which a date of record is taken for
such vote, or, if no record is taken, the date as of which the record
holders of the Common Stock entitled to vote are to be determined) as
one class. The Series A Preferred Shares will not be entitled to any
voting rights as a separate class other than with respect to any
proposed amendments to the terms and conditions of the Series A
Preferred Shares that would be adverse to the holders of the Series A
Preferred Shares.
(3) Redemption. At any time after the fifth (5th) anniversary
of the Issuance Date, Issuer, at its option, may redeem all, but not
less than all, of the then outstanding Series A Preferred Shares for an
amount (the "Redemption Price") equal to the Liquidation Preference as
of the effective date of such redemption by giving notice (a
"Redemption Notice") to each holder of Series A Preferred Shares and
the Company's transfer agent not less than thirty (30) days nor more
than sixty (60) days prior to the date on which such shares are to be
redeemed. Such Notice of Redemption at the Company's election shall
indicate (A) the date that such redemption is to become effective, (B)
the applicable Redemption Price, (C) where and how payment of the
Redemption Price will be made, and (D) the then current Conversion
Price. The Redemption Price may be paid, at Issuer's option, either in
cash or shares of Common Stock valued at ninety percent (90%) of the
Average Trading Price (defined below) as of the effective date of such
redemption; provided, that (i) such
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shares have been registered under the Securities Act of 1933, as
amended and listed for trading on the principal securities exchange or
trading market where the Company's Common Stock is then listed or
traded, and (ii) prior to giving such a Redemption Notice, if Issuer
elects to redeem with Common Stock, Issuer will first obtain
stockholder approval of the issuance to the extent then required by the
rules and regulations of the NASD or of such other national exchange
upon which Issuer's Common Stock is then traded. Notice of redemption
having been given as aforesaid, dividends on the Series A Preferred
Shares shall cease to accrue as of the effective date of such
redemption unless the Issuer defaults in the payment of the Redemption
Price.
(4) Conversion of Series A Preferred Shares. The Series A
Preferred Shares shall be convertible into shares of Common Stock on
the following terms and conditions:
(a) Conversion by Holder. Upon written notice to the
Company by the holder thereof, each Series A Preferred Share shall be
convertible at any time into a number of fully paid and nonassessable
shares (calculated to the nearest whole share) of Common Stock to be
determined by dividing the Liquidation Preference by the then current
Conversion Price (the "Conversion Ratio").
(b) Mandatory Conversion. The outstanding Series A
Preferred Shares will be deemed to have been converted into shares of
Common Stock at the Conversion Ratio automatically without further
action required of the Issuer or holders thereof, upon the following
terms and conditions:
(i) If, at any time during the first
twelve (12) months following the
Issuance Date, the Average Trading
Price of the Common Stock is at
least 130% of the Conversion Price,
then 33-1/3% of the then
outstanding Series A Preferred
Shares will convert into Common
Stock, such conversion to be
allocated among the holders
thereof, on a pro rata basis based
upon their respective holdings.
(ii) If, at any time during the first
twenty-four (24) months following
the Issuance Date, the Average
Trading Price of the Common Stock
is equal to or exceeds the
percentage of the Conversion Price
set forth below, then the
corresponding percentage of the
then outstanding Series A Preferred
Shares will convert into Common
Stock, such conversion to be
allocated among the holders
thereof, on a pro rata basis based
upon their respective holdings:
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Average Trading Price as a Percentage of Series A Preferred
Percentage of Conversion Price Shares to be Converted
-------------------------------- --------------------------------
160% 662/3%
190% 100%
(iii) If, at any time after the second
anniversary of the Issuance Date,
the Average Trading Price of the
Common Stock is equal to or exceeds
the percentage of the Conversion
Price set forth below for each
corresponding year following the
Issuance Date, then 100% of the
then outstanding Series A Preferred
Shares will convert into Common
Stock:
Year Average Trading Price as a Percentage of
Conversion Price
---------- ----------------------------------------
3 140%
4 150%
5 175%
Notwithstanding the foregoing, no mandatory conversion shall occur
unless and until the shares of Common Stock to be issued have been registered
under the Securities Act of 1933, as amended, and listed for trading on the
principal securities exchange or trading market where the Company's Common Stock
is then listed or traded. Immediately upon the occurrence of a mandatory
conversion, the Company will notify all holders of Series A Preferred Shares of
the mandatory conversion.
(c) Certain Definitions.
(i) "Conversion Price" means eight dollars
and sixty-two and one-half cents ($8.625); provided that, if the
Average Trading Price as of the second anniversary of the Issuance Date
is less than eight dollars and sixty-two and one-half cents ($8.625),
then the Conversion Price shall thereafter be adjusted downward but
never upward to equal the greater of the Average Trading Price or six
dollars ($6.00), subject to the terms and conditions of Section 4(d).
(ii) "Average Trading Price" means, as of a
given date, an amount equal to the arithmetic average of the last
closing sale price of the Common Stock on the Nasdaq National Market
(the "Nasdaq-NM") for the ten (10) day period ending one day prior to
the date of determination as reported by Bloomberg Financial Markets
("Bloomberg"), or, if the Nasdaq-NM is not the principal trading market
-4-
for such security, the last closing sale price of such security on the
principal securities exchange or trading market where such security is
listed or traded for the ten (10) day period ending one day prior to
the date of determination as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price of such security in the
over-the-counter market on the electronic bulletin board for such
security for the ten (10) day period ending one day prior to the date
of determination as reported by Bloomberg, or, if no closing bid price
is reported for such security by Bloomberg, the last closing trade
price of such security as reported by Bloomberg or, if no last closing
trade price is reported for such security by Bloomberg, the average of
the bid prices for the ten (10) day period ending one day prior to the
date of determination of any market makers for such security as
reported in the "pink sheets" by the National Quotation Bureau, Inc.
(d) Adjustment to Conversion Price. In order to
prevent dilution of the conversion rights granted to holders of Series
A Preferred Shares hereunder, the Conversion Price will be subject to
adjustment from time to time pursuant to this Section 4(d).
(i) Adjustment for Dilutive Events. If and
whenever on or after the original date of issuance of the Series A
Preferred Shares the Company issues or sells, or in accordance with
Section 4(d)(ii) below is deemed to have issued or sold, in one
transaction or a series of related transactions, any shares of Common
Stock for consideration per share less than the Conversion Price in
effect immediately prior to the time of such issue or sale (a "Dilutive
Event"), then forthwith upon the occurrence of any such Dilutive Event
the Conversion Price will be reduced so that the Conversion Price in
effect immediately following the Dilutive Event will equal the quotient
derived by dividing (i) the sum of (x) the product derived by
multiplying the Conversion Price in effect immediately prior to such
Dilutive Event times 27,000,000, plus (y) the product of (A) the Price
Per Share in the Dilutive Event, times (B) three times the
consideration received by the Company in such Dilutive Event, by (ii)
the sum of (x) 27,000,000, plus (y) three times the consideration
received by the Company in the Dilutive Event; provided that the
Conversion Price will not be reduced pursuant to this sentence if the
foregoing calculation results in a Conversion Price in excess of $8.15
(the "Threshold Price"). Notwithstanding the foregoing, the issuance by
the Company of any equity securities to management, directors or
employees of the Company pursuant to plans and options to purchase
equity securities issued in accordance with such plans approved by the
Board and in effect as of the date of the first issuance of the Series
A Preferred Shares shall not constitute a Dilutive Event.
(ii) Common Stock Deemed Outstanding. For
purposes of determining the adjusted Conversion Price pursuant to
Section 4(d)(i) above the following events shall be deemed to be an
issuance and sale of Common Stock by the Company:
-5-
(A) Issuance of Rights or Options. If (i) the
Company in any manner grants any rights or options to subscribe for or
to purchase shares of Common Stock or any securities convertible into
or exchangeable for shares of Common Stock (such rights or options
referred to herein as "Options" and such convertible or exchangeable
stock or securities referred to herein as "Convertible Securities") and
(ii) the Price Per Share of shares of Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of such
Convertible Securities is less than the Conversion Price in effect
immediately prior to the time of the granting of such Options, then (x)
the total maximum amount of such Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of the total
maximum number of Convertible Securities issuable upon the exercise of
such Options will be deemed to be Common Stock issued and sold by the
Company, and (y) the consideration received pursuant to the Dilutive
Event will equal the Price Per Share times the number of shares of
Common Stock so deemed issued and sold by the Company. For purposes of
this Section 4(d)(ii)(A), the "Price Per Share" will be determined by
dividing (i) the total amount, if any, received or receivable by the
Company as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Company upon 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 to the Company upon
the issuance or sale of such Convertible Securities and 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. No further adjustment of the Conversion
Price will be made when Convertible Securities are actually issued upon
the exercise of such Options or when Common Stock is actually issued
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(B) Issuance of Convertible Securities. If
(i) the Company in any manner issues or sells any Convertible
Securities and (ii) the Price Per Share of shares of Common Stock
issuable upon such conversion or exchange is less than the Conversion
Price in effect immediately prior to the time of such issue or sale,
then (x) the maximum number of shares of Common Stock issuable upon
conversion or exchange of such Convertible Securities will be deemed to
be Common Stock issued and sold by the Company, and (y) the
consideration received pursuant to the Dilutive Event will equal the
Price Per Share times the number of shares of Common Stock so deemed
issued and sold by the Company. For the purposes of this Section
4(d)(ii)(B), the "Price Per Share" will be determined by dividing (i)
the total amount received or receivable by the Company as consideration
for the issue or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Company 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. No further adjustment
of the Conversion Price will be made when Common Stock is actually
issued upon
-6-
the conversion or exchange of such Convertible Securities, and if any
such issue or sale of such Convertible Securities is made upon exercise
of any Options for which adjustments to the Conversion Price had been
or are to be made pursuant to Section 4(d)(ii)(A) above, no further
adjustment of the Conversion Price will be made by reason of such issue
or sale.
(C) Change in Option Price or Conversion
Rate. If at any time there is a change in (i) the purchase price
provided for in any Options, (ii) the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities,
or (iii) the rate at which any Convertible Securities are convertible
into or exchangeable for Common Stock, then the Conversion Price in
effect at the time of such change will be readjusted to the Conversion
Price which would have been in effect had those Options or Convertible
Securities still outstanding at the time of such change provided for
such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time such Options or
Convertible Securities were initially granted, issued or sold.
(D) Calculation of Consideration Received. If
any shares of Common Stock, Option or Convertible Security are issued
or sold or deemed to have been issued or sold for cash, the
consideration received therefor or the Price Per Share, as the case may
be, will be deemed to be the net amount received or to be received,
respectively, by the Company therefor. In case any shares of Common
Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other
than cash received by the Company or the non-cash portion of the Price
Per Share, as the case may be, will be the fair value of such
consideration received or to be received, respectively, by the Company;
except where such consideration consists of securities, in which case
the amount of consideration received or to be received, respectively,
by the Company will be the Average Trading Price thereof as of the date
of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued in connection with any merger in which the
Company is the surviving corporation, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net
assets and business of the non-surviving corporation as is attributable
to such shares of Common Stock, Options or Convertible Securities, as
the case may be. The fair value of any consideration other than cash
and securities will be determined jointly by the Company and the
holders of a majority of the outstanding Series A Preferred Shares. If
such parties are unable to reach agreement within a reasonable period
of time, the fair value of such consideration will be determined by an
independent appraiser jointly selected by the Company and the holders
of a majority of the outstanding Series A Preferred Shares.
(E) Integrated Transactions. In case any
Option is issued in connection with the issuance or sale of other
securities of the Company, together comprising one integrated
transaction in which no specific consideration is
-7-
allocated to such Option by the parties thereto, the Option will be
deemed to have been issued for a consideration of $.01.
(F) Record Date. If the Company takes a
record of the holders of Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in shares of
Common Stock, Options or in Convertible Securities or (ii) to subscribe
for or purchase shares of Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the
issuance or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or upon the making
of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(iii) Adjustment of Conversion Price upon
Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common
Stock into a greater number of shares, the Conversion Price, the
Threshold Price and the amounts set forth in Section 4(c)(i) in effect
immediately prior to such subdivision will be proportionately reduced,
and if the Company at any time combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of shares, the Conversion Price, the
Threshold Price and the amounts set forth in Section 4(c)(i) in effect
immediately prior to such combination will be proportionately
increased.
(iv) Reorganization, Reclassification,
Consolidation, Merger or Sale. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially
all of the Company's assets to another Person (as defined below) or
other transaction which is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or
in exchange for Common Stock is referred to herein as "Organic Change."
Prior to the consummation of any Organic Change, the Company will make
appropriate provision to ensure that (I) each of the holders of the
Series A Preferred Shares will thereafter have the right to acquire and
receive in lieu of or addition to (as the case may be) the shares of
Common Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's Series A Preferred Shares, such shares of
stock, securities or assets as may be issued or payable with respect to
or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon the conversion of such
holder's Series A Preferred Shares had such Organic Change not taken
place and (II) each of the holders of Series A Preferred Shares will
continue to have the same rights and preferences, in any surviving
entity, as those which apply to the Series A Preferred Shares pursuant
to this Certificate. In any such case, the Company will make
appropriate provision with respect to such holders' rights and
interests to ensure that the provisions of this Section 4(d) will
thereafter be applicable
-8-
to the Series A Preferred Shares. The Company will not effect any such
consolidation, merger or sale, unless prior to the consummation
thereof, the successor entity (if other than the Company) resulting
from consolidation or merger or the entity purchasing such assets
assumes, by written instrument, the obligation to deliver to each
holder of Series A Preferred Shares such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may
be entitled to acquire. "Person" shall mean an individual, a limited
liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any
department or agency thereof.
(v) Notices.
(A) Immediately upon any adjustment of the
Conversion Price, the Company will give written notice thereof to each
holder of Series A Preferred Shares, setting forth in reasonable detail
and certifying the calculation of such adjustment.
(B) The Company will give written notice to
each holder of Series A Preferred Shares at least twenty (20) days
prior to the date on which the Company closes its books or takes a
record (I) with respect to any dividend or distribution upon the Common
Stock, (II) with respect to any pro rata subscription offer to holders
of Common Stock or (III) for determining rights to vote with respect to
any Organic Change, dissolution or liquidation; provided that in no
event shall such notice be provided to such holder prior to such
information being made known to the public.
(C) The Company will also give written notice
to each holder of Series A Preferred Shares at least twenty (20) days
prior to the date on which any Organic Change, dissolution or
liquidation will take place.
(D) The Company shall give written notice to
the holders of the Series A Preferred Shares promptly after the
occurrence of the automatic conversion of the Series A Preferred Shares
into Common Stock as set forth in Section 4(b) hereof.
(e) Mechanics of Conversion. Subject to and in
compliance with all federal and state securities laws, the conversion
of Series A Preferred Shares pursuant to this Section 4 will be deemed
to have been effected (and the holder thereof will be deemed to be the
registered holder of the Conversion Shares), automatically if
conversion is pursuant to Section 4(b), or, if converted at the option
of the holder of Series A Preferred Shares pursuant to Section 4(a), by
and on the date of surrender of certificates representing the Series A
Preferred Shares being converted to the Company at its principal place
of business, together with the Notice of Conversion attached hereto as
Exhibit I. As soon as practicable, but in no event later than five (5)
business days after such conversion, the Company shall cause the
transfer agent
-9-
to deliver to the registered holder thereof (a) a certificate
representing the shares of Common Stock to which the holder is entitled
as a result of such conversion, and (b) a new certificate for Series A
Preferred Shares for the unconverted shares of Series A Preferred
Shares, if any, represented by the surrendered certificate. The Company
shall at all times reserve for issuance a sufficient number of shares
of Common Stock to be issued as Conversion Shares, and upon issuance
thereof, the Conversion Shares shall be fully paid and nonassessable.
(f) Record Holder. The person or persons entitled to
receive the shares of Common Stock issuable upon a conversion of Series
A Preferred Shares shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on the Conversion
Date.
(5) Change of Control. If at any time there is a Change of
Control (as defined below) of the Company, the Company shall,
immediately following the occurrence of any such event, send a notice
to each holder offering to repurchase the Series A Preferred Shares (or
at each holder's option, any portion thereof) for an amount equal to
the Liquidation Preference on the date of such repurchase. If any
holder desires to accept such offer in whole or in part, such holder
must advise the Company of such acceptance within thirty (30) days of
the date of receiving such notice. The Company shall then repurchase
the Series A Preferred Shares or portion thereof so tendered for
repurchase by such holder by paying the purchase price to the holder
(or any person or persons designated by such holder in such acceptance
notice), in immediately available funds, within ten (10) business days
of the Company's receipt of such holder's acceptance notice. If a
holder tenders only a portion of such holder's Series A Preferred
Shares, the holder shall deliver such certificate of Series A Preferred
Shares to the Company and the Company then shall issue to the holder a
new certificate of Series A Preferred Shares, representing the portion
of the Series A Preferred Shares not repurchased by the Company. For
purposes of this Section, "Change of Control" means any event or series
of events by which (i) any person or group (as defined in Rule 13d-1 of
the Exchange Act) obtains a majority (by voting or otherwise) of the
securities of the Company ordinarily having the right to vote in the
election of directors; (ii) during any two year period commencing at
any time on or after the Closing Date, individuals who at the beginning
of such period constituting the Board of Directors cease for any reason
to constitute a majority of the Board of Directors; (iii) any sale,
lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, the assets of the
Company; (iv) the merger or consolidation of the Company with or into
another corporation or the merger of another corporation into the
Company with the effect that immediately after such transaction any
beneficial owner shall have become the beneficial owner of securities
of the surviving corporation of such merger or consolidation
representing a majority of the combined voting power of the outstanding
securities of the surviving corporation ordinarily having the right to
vote in the election of directors; or (v) the adoption of a plan
leading to the liquidation or dissolution of the Company.
Notwithstanding the foregoing, the Company shall not
-10-
be obligated to repurchase the Series A Preferred Shares pursuant to
the terms of this Section 5 if such repurchase in the opinion of the
Company's then current auditors, would jeopardize the "pooling"
accounting treatment of the transaction giving rise to such Change of
Control.
(6) Taxes. The Company shall pay any and all taxes which may
be imposed upon it with respect to the issuance and delivery of Common
Stock upon the conversion of the Series A Preferred Shares as herein
provided. The Company shall not be required in any event to pay any
transfer or other taxes by reason of the issuance of such Common Stock
in names other than those in which the Series A Preferred Shares
surrendered for conversion are registered on the Company's records, and
no such conversion or issuance of Common Stock shall be made unless and
until the person requesting such issuance has paid to the Company the
amount of any such tax, or has established to the satisfaction of the
Company and its transfer agent, if any, that such tax has been paid.
(7) Liquidation, Dissolution, Winding-Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Company, the holders of the Series A Preferred Shares shall be entitled
to receive in cash out of the assets of the Company, whether from
capital or from earnings available for distribution to its stockholders
(the "Preferred Funds"), before any amount shall be paid to the holders
of any of the capital stock of the Company of any class junior in rank
to the Series A Preferred Shares in respect of the preferences as to
the distributions and payments on the liquidation, dissolution and
winding up of the Company, an amount per Series A Preferred Share equal
to the Liquidation Preference; provided that, if the Preferred Funds
are insufficient to pay the full amount due to the holders of Series A
Preferred Shares, then each holder of Series A Preferred Shares shall
receive a percentage of the Preferred Funds equal to the full amount of
Preferred Funds payable to such holder as a percentage of the full
amount of Preferred Funds payable to all holders of Series A Preferred
Shares. The purchase or redemption by the Company of stock of any
class, in any manner permitted by law, shall not, for the purposes
hereof, be regarded as a liquidation, dissolution or winding up of the
Company. Neither the consolidation or merger of the Company with or
into any other Person, nor the sale or transfer by the Company of less
than substantially all of its assets, shall, for the purposes hereof,
be deemed to be a liquidation, dissolution or winding up of the
Company. No holder of Series A Preferred Shares shall be entitled to
receive any amounts with respect thereto upon any liquidation,
dissolution or winding up of the Company other than the amounts
provided for herein.
(8) Repurchases of Series A Preferred Stock by the Issuer.
Neither the Issuer nor any of its subsidiaries shall repurchase any
outstanding shares of Series A Preferred Stock unless the Issuer on the
same terms either (i) offers to purchase all of the then outstanding
shares of Series A Preferred Stock or (ii) offers to purchase shares of
Series A Preferred Stock from the holders in proportion to the
respective number of shares of Series A Preferred Stock held by each
holder. In any such
-11-
repurchase by the Issuer or any of its subsidiaries, if all shares of
Series A Preferred Stock are not being repurchased, then the number of
shares of Series A Preferred Stock to be repurchased shall be allocated
among all shares of Series A Preferred Stock held by holders which
accept the Issuer's repurchase offer so that the shares of Series A
Preferred Stock are repurchased from such holders in proportion to the
respective number of shares of Series A Preferred Stock held by each
such holder which accepts the Issuer's offer (or in such other
proportion as agreed by all such holders who accept the Issuer's
offer).
(9) Shares to be Retired. Any share of Series A Preferred
Stock converted, redeemed, repurchased or otherwise acquired by the
Corporation shall be retired and canceled and may not be reissued.
(10) No Fractional Shares. In connection with any conversion,
liquidation, redemption, or otherwise, the Company shall only issue
Common Stock in denominations equal to the nearest, lower whole number;
fractional shares due holders will be allocated their cash value and
paid by the Company to the holder by check.
(11) Preferred Rank. All shares of Common Stock and all
additional shares of preferred stock of the Company shall be of junior
rank to all Series A Preferred Shares in respect to the preferences as
to dividends and distributions and payments upon the liquidation,
dissolution and winding up of the Company and the rights of the shares
of Common Stock and of any shares of preferred stock, other than the
Series A Preferred Stock shall be subject to the preferences and
relative rights of the Series A Preferred Shares.
(12) Vote to Change the Terms of Series A Preferred Shares.
The affirmative vote at a meeting duly called for such purpose or the
written consent without a meeting of the holders of not less than
two-thirds (2/3) of the then outstanding Series A Preferred Shares
(excluding any Series A Preferred Shares held by the Company or
affiliates of the Company) shall be required for the Company to amend,
alter, change or repeal any of the powers, designations, preferences
and rights of the Series A Preferred Shares.
(13) Lost or Stolen Certificates. Upon receipt by the Company
of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any preferred stock certificates representing the
Series A Preferred Shares, and (in the case of loss, theft or
destruction) of any indemnification undertaking by the holder to the
Company that is reasonably satisfactory to the Company, and upon
surrender and cancellation of the preferred stock certificate(s), if
mutilated, the Company shall execute and deliver new preferred stock
certificate(s) of like tenor and date. However, the Company shall not
be obligated to re-issue such lost or stolen preferred stock
certificates if holder contemporaneously requests the Company to
convert such Series A Preferred Shares into Common Stock.
-12-
IN WITNESS WHEREOF, the Company has caused this certificate to be
signed by Donald C. Welchko , its Chief Financial Officer and Vice President as
of the 21st day of May 1997.
ANICOM, INC.
By: /s/ Donald C. Welchko
--------------------------
Title: Vice President and CFO
-----------------------
-13-
EXHIBIT I
ANICOM, INC.
NOTICE OF CONVERSION
Reference is made to the Certificate of Designations, Preferences and Rights of
Convertible Preferred Stock, Series A, of Anicom, Inc. (the "Designation"). In
accordance with and pursuant to the Designation, the undersigned hereby elects
to convert the number of shares of Convertible Preferred Stock, Series A, par
value $.001 (the "Series A Preferred"), of Anicom, Inc., a Delaware corporation
(the "Company"), indicated below into shares of Common Stock, par value $.001
(the "Common Stock"), of the Company, by tendering the stock certificate(s)
representing the share(s) of Series A Preferred specified below as of the date
specified below:
Date of Conversion ________________________________________________
Number of shares of Series A
Preferred to be converted: ______________________________________
Stock certificates no(s). of Series A
Preferred to be converted: ______________________________________
Please confirm the following information:
Conversion Price: ___________________________________
Number of shares of Common Stock
to be issued: ___________________________________
Please issue the Common Stock into which the Series A Preferred shares are being
converted in the following name and to the following address:
Issue to: ___________________________________
___________________________________
___________________________________
Phone No. of converting holder: ___________________________________
Duly executed: By_________________________________
Name & Title: ___________________________________
Dated: ___________________________________
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
ANICOM, INC.
ANICOM, INC., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "Act"), DOES HEREBY
CERTIFY THAT:
1. In accordance with the provisions of Section 242 of the Act,
an amendment to the Amended and Restated Certificate of
Incorporation of this Corporation has been duly adopted by the
Board of Directors of this Corporation and by the stockholders
of this Corporation at the Annual Meeting of Stockholders.
2. Said amendment amends subparagraph A of Article 4 of the
Amended and Restated Certificate of Incorporation so that, as
amended, subparagraph A of Article 4 shall read in its
entirety as follows:
"Authorized Shares. The total number of shares of all classes
of stock which the Corporation shall have authority to issue
is sixty-one million (61,000,000) shares, consisting of sixty
million (60,000,000) shares of Common Stock, $.001 par value
per share (the "Common Stock"), and one million (1,000,000)
shares of Preferred Stock, $.01 par value per share (the
"Preferred Stock")."
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
duly executed this 2nd day of June, 1997.
By /s/ Carl E. Putnam
-----------------------------------
Carl E. Putnam, President and Chief
Operating Officer
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
ANICOM, INC.
ANICOM, INC., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "Act"), DOES HEREBY
CERTIFY THAT:
1. In accordance with the provisions of Section 242 of the Act,
an amendment to the Amended and Restated Certificate of
Incorporation of this Corporation has been duly adopted by the
Board of Directors of this Corporation and by the stockholders
of this Corporation at the Annual Meeting of Stockholders.
2. Said amendment amends subparagraph A of Article Four of the
Amended and Restated Certificate of Incorporation so that, as
amended, subparagraph A of Article Four shall read in its
entirety as follows:
"Authorized Shares. The total number of shares of all classes
of stock which the Corporation shall have authority to issue
is one hundred one million (101,000,000) shares, consisting of
one hundred million (100,000,000) shares of Common Stock,
$.001 par value per share (the "Common Stock"), and one
million (1,000,000) shares of Preferred Stock, $.01 par value
per share (the "Preferred Stock")."
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
duly executed this 17th day of July, 1998.
ANICOM, INC.
By /s/ Carl E. Putnam
-----------------------------------
Carl E. Putnam, President and Chief
Operating Officer
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES B CONVERTIBLE PREFERRED STOCK
OF
ANICOM, INC.
Anicom, Inc. (the "Company"), a corporation organized and existing
under the General Corporation Law of the State of Delaware, does hereby certify
that, pursuant to authority conferred upon the Board of Directors of the Company
by the Certificate of Incorporation, as amended, of the Company, and pursuant to
Section 151 of the General Corporation Law of the State of Delaware, the Board
of Directors of the Company at a meeting duly held, adopted resolutions
providing for the designations, preferences and relative, participating,
optional or other rights, and the qualifications, limitations or restrictions
thereof, of Twenty Thousand (20,000) shares of Series B Convertible Preferred
Stock, of the Company, as follows:
RESOLVED, that the Company is authorized to issue 20,000
shares of Series B Convertible Preferred Stock (the "Series B Preferred
Stock"), $.01 par value (the "Series B Preferred Shares"), which shall
have the following powers, designations, preferences and other special
rights:
(1) Dividends and Liquidation Preference. The holders of the
Series B Preferred Shares shall be entitled to receive on each share
issued and outstanding, out of assets legally available for such
purpose, cumulative preferential dividends which shall accrue and
compound quarterly on each March 1, June 1, September 1 and December 1
(each, a "Dividend Reference Date"), commencing to accrue on the date
of issuance of such Series B Preferred Share (the "Issuance Date") at
the rate of three percent (3%) per annum of the Liquidation Preference
(as defined below); such dividends shall be cumulative, and accrue
daily, whether or not earned, declared, or legally available for
payment, from and after the Issuance Date up to and including the date
the Series B Preferred Shares shall no longer be outstanding. Accrued
dividends shall be payable, in arrears, in cash on each March 1 and
September 1, beginning March 1, 1999 (each, a "Dividend Payment Date").
The liquidation preference of the Series B Preferred Shares shall be
$1,000.00 per share plus any
-1-
accrued and unpaid dividends through the date of payment (in the case
of a redemption or Liquidation) or conversion, as the case may be (the
"Liquidation Preference").
(2) Voting Rights. The Series B Preferred Shares will not be
entitled to any voting rights of any kind, whether as a separate class
or together with other classes or series of securities, except that the
holders of the Series B Preferred Shares shall be entitled to the
following rights: (i) the Series B Preferred Shares shall vote as a
separate class with respect to any proposed amendments to the terms and
conditions of the Series B Preferred Shares that would be adverse to
the holders of the Series B Preferred Shares; (ii) so long as the
Initial Holder or its Permitted Transferees own any of the then
outstanding Series B Preferred Shares, following the occurrence of an
Event of Noncompliance and until such Event of Noncompliance is cured,
the Initial Holder or its Permitted Transferees shall, collectively, be
entitled to vote together with the holders of Common Stock, as one
class, on an as converted basis at the then applicable Conversion Ratio
(as defined below) all Series B Preferred Shares beneficially owned
thereby (as if such Series B Preferred Shares had been fully converted
immediately prior to the date on which a date of record is taken for
such vote, or, if no record is taken, the date as of which the record
holders of Common Stock entitled to vote are to be determined); (iii)
the right to elect the Series B Directors to the extent provided for in
Section 3(e) hereof; (iv) so long as the Initial Holder or its
Permitted Transferees own any of the then outstanding Series B
Preferred Shares, the affirmative vote of the holders of a majority of
the then outstanding Series B Preferred Shares, voting as a separate
class and as a single voting group, shall be necessary for authorizing,
effectuating or validating any Adverse Organic Change; (v) so long as
the Initial Holder or its Permitted Transferees own any of the then
outstanding Series B Preferred Shares, in the event that the Company
desires to purchase or redeem in excess of 5% of the outstanding shares
of any class of Junior Securities in one or more transactions during
any twelve (12) consecutive month period (the "5% Threshold"), before
purchasing or redeeming any Junior Securities in excess of such 5%
Threshold during any such calendar quarter, the Company shall first
offer to purchase or redeem from the Initial Holder and its Permitted
Transferees all of the outstanding Series B Preferred Shares owned by
the Initial Holder and its Permitted Transferees at a price equal to
the Liquidation Preference as of such date; and (vi) such other voting
rights as may be provided by law.
(3) Redemption.
(a) Mandatory Redemption. On the fifth anniversary of
the Issuance Date (the "Mandatory Redemption Date"), the Company shall
redeem all (but, subject to Section 3(e) hereof, not less than all) of
the then outstanding Series B Preferred Shares for a price per share
(the "Redemption Price") equal to the Liquidation Preference as of such
date. The Redemption Price shall be paid in cash to the holders of the
Series B Preferred Shares on the Mandatory Redemption Date,
-2-
provided that if any holder has not delivered to the Company
certificates representing the Series B Preferred Shares on or prior to
the Mandatory Redemption Date, the Company shall send written notice to
each such holder that the Mandatory Redemption Date has occurred and
shall pay the Redemption Price to each such holder within ten (10)
business days of receipt of its share certificate(s).
(b) Redemption at Company's Option. At any time after
the third anniversary of the Issuance Date, the Company, at its option,
may redeem all (but not less than all), of the then outstanding Series
B Preferred Shares for a price per share equal to the Redemption Price
as of the Company Redemption Date by giving notice (a "Call Notice") to
each holder of Series B Preferred Shares not less than sixty (60) days
prior to the Company Redemption Date. Such Call Notice shall indicate
(A) the date that such redemption is to become effective (the "Company
Redemption Date"), (B) the applicable Redemption Price, (C) where
payment of the Redemption Price will be made, and (D) the then current
Conversion Price. Notwithstanding the foregoing, the Series B Preferred
Shares may be converted in accordance with Section 4 hereof at any time
after a Call Notice has been given, but prior to the Company Redemption
Date. On and after the Company Redemption Date, the holder of any
Series B Preferred Shares shall have no further rights except to
receive, upon surrender of the certificate(s) representing the Series B
Preferred Shares, the Redemption Price; provided, however, that if the
holder of any Series B Preferred Shares delivers the certificate(s)
representing the Series B Preferred Shares held by such holder to the
Company on the Company Redemption Date or within three (3) business
days thereafter and the Company fails to pay to such holder the
Redemption Price with respect to such Series B Preferred Shares within
thirty (30) days after the Company Redemption Date, then such holder
will retain all of its rights as a shareholder with respect to such
Series B Preferred Shares, including the accrual of dividends from the
Redemption Date until such payment is made; provided further, however,
that if the holder of any Series B Preferred Shares delivers the
certificate(s) representing the Series B Preferred Shares held by such
holder to the Company after the third (3rd) business day after the
Company Redemption Date, except as set forth in the following clause,
then such holder shall not retain any of its rights as a shareholder
with respect to such Series B Preferred Shares, including the accrual
of dividends; provided further, however, that if the holder of any
Series B Preferred Shares delivers the certificate(s) representing the
Series B Preferred Shares held by such holder to the Company after the
third (3rd) business day after the Company Redemption Date and the
Company fails to pay to such holder the Redemption Price with respect
to such Series B Preferred Shares within thirty (30) days after the
date on which such certificate(s) have been delivered to the Company
(the "Tender Date"), then such holder will retain all of its rights as
a shareholder with respect to such Series B Preferred Shares from the
Tender Date until such payment is made, including the accrual of
dividends from the Tender Date until such payment is made.
(c) Scheduled Redemption at Holder's Option. Each
holder of Series B Preferred Shares, at its option, may require the
Company to redeem all (but
-3-
not less than all), of the then outstanding Series B Preferred Shares
beneficially owned by such holder for a price per share equal to the
Redemption Price as of the effective date of such redemption (i) at any
time after the third anniversary of the Issuance Date by giving notice
to the Company not less than fifty (50) days prior to the date on which
such shares are to be redeemed or (ii) at any time following the
occurrence of an Event of Noncompliance which has not been cured by the
Company by giving notice to the Company not less than one (1) business
day prior to the date on which such shares are to be redeemed.
(d) Special Redemption at Holder's Option. As a
condition to the issuance or sale by the Company of any Senior or Pari
Passu Securities (as defined below), the Company shall give notice (a
"Senior or Pari Passu Securities Issuance Notice") to the Initial
Holder and its Permitted Transferees, so long as the Initial Holder and
its Permitted Transferees own any of the then outstanding Series B
Preferred Shares, not less than ten (10) business days prior to the
date on which such Senior or Pari Passu Securities are to be issued or
sold, describing in reasonable detail the powers, designations,
preferences and other special rights of such Senior or Pari Passu
Securities. Following any such notice, the Initial Holder and its
Permitted Transferees, so long as the Initial Holder and its Permitted
Transferees own any of the then outstanding Series B Preferred Shares,
at their collective option, may require the Company to redeem all (but
not less than all) of the then outstanding Series B Preferred Shares
then held by the Initial Holder and its Permitted Transferees for a
price per share equal to the Redemption Price as of the effective date
of such redemption by giving notice (a "Special Put Notice") to the
Company within five (5) business days of the receipt by the Initial
Holder and its Permitted Transferees of the Senior or Pari Passu
Securities Issuance Notice. Upon receipt of such Special Put Notice,
the Company shall be obligated to redeem all (but not less than all) of
the then outstanding Series B Preferred Shares then held by the Initial
Holder and its Permitted Transferees on a date no later than sixty (60)
days after the date upon which the Senior or Pari Passu Securities
Issuance Notice was received by the Initial Holder and its Permitted
Transferees.
(e) Insufficient Funds; Failure to Redeem. If the
funds of the Company legally available for redemption of Series B
Preferred Shares are insufficient to redeem the total number of Series
B Preferred Shares to be redeemed, those funds which are legally
available will be used to redeem the maximum possible number of Series
B Preferred Shares ratably among the holders of such shares to be
redeemed based upon the aggregate Redemption Price of the Series B
Preferred Shares held by each such holder. Thereafter, when additional
funds of the Company are legally available for the redemption of Series
B Preferred Shares, such funds will be used to redeem the balance of
the Series B Preferred Shares which the Company became obligated to
redeem but which it has not redeemed (such redemptions to be made on a
monthly basis). In case fewer than the total number of Series B
Preferred Shares represented by any certificate are redeemed in any
installment, a new certificate representing the number of unredeemed
Series B Preferred Shares will be
-4-
issued to the holder without cost to such holder promptly after
surrender of the certificate representing the redeemed Series B
Preferred Shares. So long as the Initial Holder and its Permitted
Transferees are, collectively, the owners of at least 20% of the then
outstanding Series B Preferred Shares, if the Company fails to redeem
all of the then outstanding Series B Preferred Shares on or before any
redemption date, whether due to the lack of sufficient funds or
otherwise, and such failure to redeem is not cured in full on or before
the tenth (10th) business day following written notice from the Initial
Holder and its Permitted Transferee to the Company of such failure to
redeem, thereafter, the Initial Holder and its Permitted Transferees
shall, collectively, be entitled to elect two members of the Board of
Directors (the "Series B Directors") who shall be entitled to serve
until the earlier of (i) the redemption of all of the then outstanding
Series B Preferred Shares beneficially owned by the Initial Holder and
its Permitted Transferees, or (ii) the date as of which the Initial
Holder and its Permitted Transferees no longer are, collectively, the
owners of at least 20% of the then outstanding Series B Preferred
Shares. The Company covenants and agrees to amend its bylaws, if
necessary, and take such other actions as may be necessary to allow the
Initial Holder and its Permitted Transferees to, collectively, elect
the Series B Directors upon the occurrence of the circumstances
described in this Section 3(e).
(4) Conversion of Series B Preferred Shares. The Series B
Preferred Shares shall be convertible into shares of Common Stock on
the following terms and conditions:
(a) Conversion by Holder. Upon written notice to the
Company by the holder thereof, each Series B Preferred Share shall be
convertible at any time into a number of fully paid and nonassessable
shares (calculated to the nearest whole share) of Common Stock to be
determined by dividing the Liquidation Preference by the then current
Conversion Price (the "Conversion Ratio").
(b) Mandatory Conversion. If, at any time following
the Issuance Date, the Average Trading Price of the Common Stock
exceeds the percentage of the Conversion Price set forth below, then
the corresponding number of Series B Preferred Shares will convert into
Common Stock at the then applicable Conversion Ratio automatically,
without further action required of the Company or holders thereof, such
conversion to be allocated among the holders thereof on a pro rata
basis based upon their respective holdings:
Average Trading Price as a Number of Series B Preferred
Percentage of Conversion Price Shares to be Converted
-------------------------------- ---------------------------------
130% 6,667 (less any Series B Preferred
Shares previously converted)
-5-
160% 13,333 (less any Series B Preferred
Shares previously converted)
190%
20,000 (less any Series B Preferred
Shares previously converted)
(c) Adjustment to Conversion Price. In order to
prevent dilution of the conversion rights granted to holders of Series
B Preferred Shares hereunder, the Conversion Price will be subject to
adjustment from time to time pursuant to this Section 4(c).
(i) Adjustment of Conversion Price upon
Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common
Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced,
and if the Company at any time combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of shares, the Conversion Price in
effect immediately prior to such combination will be proportionately
increased.
(ii) Reorganization, Reclassification,
Consolidation, Merger or Sale. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially
all of the Company's assets to another Person or other transaction
which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common
Stock is referred to herein as "Organic Change." Prior to the
consummation of any Organic Change, the Company will make appropriate
provision to ensure that each of the holders of the Series B Preferred
Shares will thereafter have the right to acquire and receive in lieu of
or addition to (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion
of such holder's Series B Preferred Shares, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon the conversion of such
holder's Series B Preferred Shares had such Organic Change not taken
place. In any such case, the Company will make appropriate provision
with respect to such holders' rights and interests to ensure that the
provisions of this Section 4(c) will thereafter be applicable to the
Series B Preferred Shares. The Company will not effect any such Organic
Change, unless prior to the consummation thereof, the successor entity
(if other than the Company) resulting from consolidation or merger or
the entity purchasing such assets assumes, by written instrument, the
obligation to deliver to each holder of Series B Preferred Shares such
shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
-6-
(iii) Notices.
(A) Immediately upon any adjustment
of the Conversion Price, the Company will give written notice thereof
to each holder of Series B Preferred Shares, setting forth in
reasonable detail and certifying the calculation of such adjustment.
(B) The Company will give written
notice to each holder of Series B Preferred Shares at least twenty (20)
days prior to the date on which the Company closes its books or sets a
record date (I) with respect to any dividend or distribution upon the
Common Stock, (II) with respect to any pro rata subscription offer to
holders of Common Stock or (III) for determining rights to vote with
respect to any Organic Change or Liquidation; provided that in no event
shall such notice be provided to such holder prior to such information
being made known to the public.
(C) The Company will also give
written notice to each holder of Series B Preferred Shares at least
twenty (20) days prior to the date on which any Organic Change or
Liquidation will take place.
(D) The Company shall give written
notice to the holders of the Series B Preferred Shares promptly after
the occurrence of the automatic conversion of the Series B Preferred
Shares into Common Stock as set forth in Section 4(b) hereof.
(d) Mechanics of Conversion. Subject to and in
compliance with all federal and state securities laws, the conversion
of Series B Preferred Shares pursuant to this Section 4 will be deemed
to have been effected (and the holder thereof will be deemed to be the
registered holder of the Conversion Shares), automatically if
conversion is pursuant to Section 4(b) hereof, or, if converted at the
option of the holder of Series B Preferred Shares pursuant to Section
4(a) hereof, by and on the date of surrender of certificates
representing the Series B Preferred Shares being converted to the
Company at its principal place of business, together with the Notice of
Conversion attached hereto as Exhibit I. As soon as practicable after
such conversion, the Company shall cause the transfer agent to deliver
to the registered holder thereof (a) a certificate representing the
shares of Common Stock to which the holder is entitled as a result of
such conversion, and (b) a new certificate for Series B Preferred
Shares for the unconverted shares of Series B Preferred Shares, if any,
represented by the surrendered certificate. The Company shall at all
times reserve for issuance a sufficient number of shares of Common
Stock to be issued as Conversion Shares, and upon issuance thereof, the
Conversion Shares shall be fully paid and nonassessable.
(e) Record Holder. The person or persons entitled to
receive the shares of Common Stock issuable upon a conversion of Series
B Preferred Shares
-7-
shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on the Conversion Date.
(5) Transferability
(a) Right of First Offer. Prior to selling or
otherwise disposing (each, a "Transfer") of any Series B Preferred
Shares to any Person, other than a Permitted Transferee, the holder
proposing to make such Transfer (the "Transferring Holder") shall
deliver a written notice (an "Offer Notice") to the Company. The Offer
Notice shall disclose in reasonable detail the proposed number of
Series B Preferred Shares to be transferred (the "Offered Series B
Preferred Shares") and the proposed terms and conditions of the
Transfer. The Company may elect to purchase all (but not less than all)
of the Offered Series B Preferred Shares at the price and on the terms
specified therein by delivering written notice of such election to the
Transferring Holder within ten (10) business days (the "Election
Period") after the delivery of the Offer Notice. If the Company has
elected to purchase all of the Offered Series B Preferred Shares from
the Transferring Holder, the transfer of such shares shall be
consummated within thirty (30) days after the Company's notice of its
intent to purchase such shares on the terms and upon the conditions
specified in the Offer Notice. To the extent that the Company has not
elected to purchase all of the Offered Series B Preferred Shares, the
Transferring Holder may, within forty-five (45) days after the
expiration of the Election Period, transfer all (but not less than all)
of such Offered Series B Preferred Shares to one or more Persons in
concurrent transactions at a price no less than the price per share
specified in the Offer Notice and on other terms no more favorable than
offered to the Company in the Offer Notice. Prior to any transfer of
any Offered Series B Preferred Shares after such forty-five (45) day
period has expired, such Offered Series B Preferred Shares shall first
be offered to the Company under this Section 5(a).
(b) Securities Law Restrictions. In addition to the
terms set forth in Section 5(a) hereof, the Series B Preferred Shares
may not be transferred, except pursuant to an exemption or exclusion
from the registration requirements under the Securities Act of 1933, as
amended, which does not require the filing by the Company with the
Securities and Exchange Commission of any registration statement,
offering circular or other document, in which case, the Transferring
Holder shall first supply to the Company an opinion of counsel (which
opinion and counsel shall be reasonably satisfactory to the Company)
that such exemption or exclusion is available; provided that no such
opinion of counsel shall be required with respect to a transfer by the
Initial Holder to a Permitted Transferee.
(c) Legend. Each certificate evidencing Series B
Preferred Shares shall be stamped or otherwise imprinted with a legend
in substantially the following form:
-8-
"THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD OTHER THAN TO A PERMITTED TRANSFEREE EXCEPT PURSUANT TO
AN AVAILABLE EXEMPTION OR EXCLUSION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, PROVIDED THAT AN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE
COMPANY, HAS BEEN GIVEN BY COUNSEL SATISFACTORY TO THE COMPANY
TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED. IN ADDITION,
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE PURSUANT TO THE CERTIFICATE OF
DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES B CONVERTIBLE
PREFERRED STOCK, OF THE COMPANY (THE "DESIGNATIONS"). A COPY
OF SUCH DESIGNATIONS SHALL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
(6) Certain Definitions.
"Adverse Organic Change" means any recapitalization,
reorganization, reclassification, consolidation, merger or sale of all
or substantially all of the Company's assets to another Person or other
transaction which is effected in such a way that holders of Series B
Preferred Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets, other than cash
per share equal to the Liquidation Preference or other than shares of
capital stock of the Company or successor entity having rights and
preferences no less favorable to those provided to the holders of the
Series B Preferred Shares prior to such transaction.
"Average Trading Price" means, as of a given date, an
amount equal to the arithmetic average of the last closing sale price
of the Common Stock on the Principal Market for the Measurement Period
as reported by Bloomberg Financial Markets, absent manifest error.
"Conversion Price" means $14.25, subject to
adjustment as provided in Section 4(c) hereof.
"Conversion Date" means, as to any particular Series
B Preferred Shares, the date such shares are automatically converted
pursuant to Section 4(b) and in the case of a conversion by a holder,
the date on which such holder delivers to the Company the certificates
representing the Series B Preferred Stock being converted or such later
date as may be specified by such holder in the Notice of Conversion.
-9-
"Conversion Shares" means shares of the Company's
Common Stock, US $.001 par value, issuable upon conversion of the
Series B Preferred Shares, as provided in Section 4 hereof.
"Event of Noncompliance" means the failure by the
Company to (i) declare a dividend pursuant to Section 1 hereof on any
Dividend Reference Date, (ii) pay a dividend pursuant to Section 1
hereof on any Dividend Payment Date or (iii) pay the Redemption Price
when due, in any such case, which failure continues for a period of ten
(10) business days following notice thereof to the Company from the
holders of the Series B Preferred Shares.
"Initial Holder" means the Person to whom the Series
B Preferred Shares are initially issued by the Company.
"Junior Securities" shall mean shares of the
Company's Common Stock, US $.001 par value per share, and any other
class of capital stock of the Company which by its terms is subordinate
in liquidation preference and payment of dividends to the rights of the
holders of the Series B Preferred Stock.
"Measurement Period" means a ten (10) consecutive
trading day period, provided that if the aggregate trading volume
reported by Bloomberg Financial Markets (absent manifest error) during
such period is less than 1,300,000 shares of Common Stock, additional
trading days will be added to the Measurement Period until the
Measurement Period covers the first to occur of (A) aggregate trading
volume of 1,300,000 shares of Common Stock, or (B) twenty consecutive
trading days with an aggregate trading volume of at least 450,000
shares of Common Stock.
"Permitted Transferee" means (i) Ronald Stern (or, in
the event of Ronald Stern's death or permanent incompetency, his
personal representative for purposes of the administration of his
estate or the protection and management of his assets) or (ii) any
other Person, directly or indirectly, controlled by, or under the
common control of, Ronald Stern as of the date of any Transfer thereto.
"Person" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
association or other entity or organization, an unincorporated
organization and a government or any department or agency thereof.
"Principal Market" means the quotation system or
national exchange from among the Nasdaq National Market, the New York
Stock Exchange or the American Stock Exchange, or any successor to any
of the foregoing, upon which the largest volume of shares of the
Company's Common Stock shall have traded during the sixty (60) trading
days prior to the date of determination.
-10-
"Senior or Pari Passu Securities" means any equity
securities (or any securities convertible into or exchangeable for any
equity securities) which are senior or pari passu in rank and priority
with the Series B Preferred Shares in respect to the preferences as to
dividends, distributions or redemptions or payments upon a Liquidation.
(7) Taxes. The Company shall pay any and all taxes which may
be imposed upon it with respect to the issuance and delivery of Common
Stock upon the conversion of the Series B Preferred Shares as herein
provided. The Company shall not be required in any event to pay any
transfer or other taxes by reason of the issuance of such Common Stock
in names other than those in which the Series B Preferred Shares
surrendered for conversion are registered on the Company's records, and
no such conversion or issuance of Common Stock shall be made unless and
until the person requesting such issuance has paid to the Company the
amount of any such tax, or has established to the satisfaction of the
Company and its transfer agent, if any, that such tax has been paid.
(8) Liquidation, Dissolution, Winding-Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Company (a "Liquidation"), the holders of the Series B Preferred Shares
shall be entitled to receive in cash out of the assets of the Company,
whether from capital or from earnings available for distribution to its
stockholders (the "Preferred Funds"), before any amount shall be paid
to the holders of any Junior Securities, an amount per Series B
Preferred Share equal to the Liquidation Preference; provided that, if
the Preferred Funds are insufficient to pay the full amount due to the
holders of Series B Preferred Shares, then each holder of Series B
Preferred Shares shall receive a percentage of the Preferred Funds
equal to the full amount of Preferred Funds payable to such holder as a
percentage of the full amount of Preferred Funds payable to all holders
of Series B Preferred Shares. The purchase or redemption by the Company
of stock of any class, in any manner permitted by law, shall not, for
the purposes hereof, be regarded as a Liquidation. Neither the
consolidation or merger of the Company with or into any other Person,
nor the sale or transfer by the Company of less than substantially all
of its assets, shall, for the purposes hereof, be deemed to be a
Liquidation. No holder of Series B Preferred Shares shall be entitled
to receive any amounts with respect thereto upon any Liquidation other
than the amounts provided for herein.
(9) Shares to be Retired. Any share of Series B Preferred
Stock converted, redeemed, repurchased or otherwise acquired by the
Company shall be retired and canceled and may not be reissued.
(10) No Fractional Shares. In connection with any conversion,
Liquidation, redemption, or otherwise, the Company shall only issue
Common Stock in denominations equal to the nearest, lower whole number;
fractional shares due holders will be allocated their cash value and
paid by the Company to the holder by check.
-11-
(11) Preferred Rank. All shares of Common Stock shall be of
junior rank to all Series B Preferred Shares in respect to the
preferences as to dividends and distributions and payments upon a
Liquidation and the rights of the shares of Common Stock shall be
subject to the preferences and relative rights of the Series B
Preferred Shares.
(12) Lost or Stolen Certificates. Upon receipt by the Company
of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any preferred stock certificates representing the
Series B Preferred Shares, and (in the case of loss, theft or
destruction) of any indemnification undertaking by the holder to the
Company that is reasonably satisfactory to the Company, and upon
surrender and cancellation of the preferred stock certificate(s), if
mutilated, the Company shall execute and deliver new preferred stock
certificate(s) of like tenor and date. However, the Company shall not
be obligated to re-issue such lost or stolen preferred stock
certificates if holder contemporaneously requests the Company to
convert such Series B Preferred Shares into Common Stock.
(13) Shareholder Action. Except as otherwise set forth herein,
any matter to be voted upon by the holders of the Series B Preferred
Shares may be approved by the written consent of the holders of a
majority of the then outstanding Series B Preferred Shares.
(14) Additional Series B Preferred Shares. The Company hereby
covenants and agrees that, other than the Series B Preferred Shares, it
shall not authorize or issue any additional shares of Series B
Preferred Stock.
IN WITNESS WHEREOF, the Company has caused this certificate to be
signed by Donald C. Welchko, its Vice President as of the 18th day of September,
1998.
ANICOM, INC.
By: /s/ Donald C. Welchko
---------------------
Title: Vice President
-------------------
-12-
EXHIBIT I
ANICOM, INC.
NOTICE OF CONVERSION
Reference is made to the Certificate of Designations, Preferences and Rights of
Series B Convertible Preferred Stock of Anicom, Inc. (the "Designation"). In
accordance with and pursuant to the Designation, the undersigned hereby elects
to convert the number of shares of Series B Convertible Preferred Stock, par
value $.01 (the "Series B Preferred"), of Anicom, Inc., a Delaware corporation
(the "Company"), indicated below into shares of Common Stock, par value $.001
(the "Common Stock"), of the Company, by tendering the stock certificate(s)
representing the share(s) of Series B Preferred specified below as of the date
specified below:
Date of Conversion _________________________________
Number of shares of Series B
Preferred to be converted: _________________________________
Stock certificates no(s). of Series B
Preferred to be converted: _________________________________
Please confirm the following information:
Conversion Price: _________________________________
Number of shares of Common Stock
to be issued: _________________________________
Please issue the Common Stock into which the Series B Preferred Shares are being
converted in the following name and to the following address:
Issue to: _________________________________
_________________________________
_________________________________
Phone No. of converting holder: _________________________________
Duly executed: By_______________________________
Name & Title: _________________________________
Dated: _________________________________