Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
Production Group International, INC.
FIRST: Name. The name of the corporation is Production Group
----
International, Inc.
SECOND: Registered Office and Agent. The address of the Corporation's
---------------------------
registered office in the State of Delaware is Corporation Trust Center, 1209
Orange Street, in the City of Wilmington, County of New Castle. The name of the
Corporation's registered agent at such address is The Corporation Trust Company.
THIRD: Purpose. The nature of the business or purposes to be conducted
-------
or promoted by the Corporation is as follows:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware and to possess and
exercise all of the powers and privileges granted under such law and the
other laws of the State of Delaware.
FOURTH: Capital Stock.
-------------
(A) Authorized Capital. The total number of shares of capital stock
------------------
which the Corporation shall have authority to issue is Forty Million Five
Hundred Twenty-Three Thousand One Hundred and Fifty-Five (40,523,155) shares, of
which (i) Thirty Million (30,000,000) shares shall be Common Stock, $.01 par
value per share, and (ii) Ten Million Five Hundred Twenty-Three Thousand One
Hundred and Fifty-Five (10,523,155) shares shall be Preferred Stock, $.01 par
value per share.
(B) Rights, Preferences and Restrictions of Preferred Stock.
-------------------------------------------------------
The Preferred Stock authorized by this Certificate of Incorporation may be
issued from time to time in series. The rights, preferences, privileges, and
restrictions granted to and imposed on the Series A Preferred Stock (the "Series
A Stock"), which series shall consist of 600,000 shares, on the Series B
Preferred Stock (the "Series B Stock"), which series shall consist of 400,000
shares, on the Series C Preferred Stock (the "Series C Stock"), which series
shall consist of 1,350,000 shares, on the Series D Preferred Stock (the "Series
D Stock") which Series shall consist of 1,600,000, and on the Series E Preferred
Stock (the "Series E Stock"), which series shall consist of 1,796,407 shares are
as set forth below in this Division (B) of Article FOURTH. Except as to the
Series A Stock, the Series B Stock, the Series C Stock, the Series D Stock, and
the Series E Stock, and except as otherwise provided in this Certificate of
Incorporation, the Board of Directors is hereby authorized, subject to
limitations prescribed by the Delaware General Corporation Law (the "DGCL") and
the provisions of this Certificate of Incorporation, for the issuance from time
to time of additional shares of Preferred Stock in one or more series, 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 other rights of the shares of each such series and to fix the
qualifications, limitations and restrictions thereon, including, but without
limiting the generality of the foregoing, the following:
(a) the number of shares constituting that series and the
distinctive designation of that series;
(b) the dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends on shares
of that series;
(c) whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting
rights;
(d) whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors
shall determine;
(e) whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the
dates upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption rates;
(f) whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(g) the rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of
shares of that series; and
(h) any other relative powers, preferences, and rights of that
series, and qualifications, limitations or restrictions on that series.
Subject to compliance with applicable Protective Provisions set forth
in 7 below, the Board of Directors is also authorized to increase or decrease
the number of shares of any series (other than the Series A Stock, the Series B
Stock, the Series C Stock, the Series D Stock, and the Series E Stock), prior or
subsequent to the issue of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be so decreased, the shares constituting such decrease shall resume the status
which they had prior to the adoption of the resolution originally fixing the
number of shares of such series.
1. Dividend Provisions. Subject to the rights of series of
-------------------
Preferred Stock which may from time to time come into existence, the holders of
the Series A Stock, the Series C Stock, the Series D Stock, and the Series E
Stock shall be entitled to receive dividends, out of any assets legally
available therefor, prior and in preference to any declaration or payment of any
-2-
dividend (payable other than in Common Stock or other nonredeemable equity
securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock of the
Corporation) on the Common Stock of the Corporation, at the per share rate of
$.08, $0.26, $0.70 and $0.835 per annum, respectively, or, if greater (as
determined on a per annum basis and on an as converted basis for the Preferred
Stock), an amount equal to that paid on any other outstanding shares of the
Corporation, payable quarterly when, as and if declared by the Board of
Directors. Subject to the prior rights of holders of all classes of stock at the
time outstanding having prior rights as to dividends, the holders of Series B
Stock shall be entitled to receive, when and as declared by the Board of
Directors, out of any assets of the Corporation legally available therefor, such
dividends as may be declared from time to time by the Board of Directors. The
right to such dividends on shares of the Series A Stock, the Series B Stock, the
Series C Stock, the Series D Stock, or the Series E Stock shall not be
cumulative and no right shall accrue to holders of shares of the Series A Stock,
the Series B Stock, the Series C Stock, the Series D Stock, or the Series E
Stock by reason of the fact that dividends on said shares are not declared in
any prior year, nor shall any undeclared or unpaid dividend bear or accrue
interest.
2. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, either voluntary or involuntary, subject to the rights of
series of Preferred Stock which may from time to time come into existence:
(i) The holders of the Series E Stock shall be entitled
to receive, prior and in preference to any distribution of any of the assets of
the Corporation to the holders of Series A Stock, Series C Stock, Series B
Stock, Series D Stock, or Common Stock by reason of their ownership thereof, an
amount per share equal to $8.35 for each outstanding share of Series E Stock
held by each such holder (the "Original Series E Issue Price") plus any declared
but unpaid dividends on such stock. If, upon the occurrence of such event, the
assets and funds thus distributed among the holders of the Series E Stock shall
be insufficient to permit the payments to such holders of the full aforesaid
preferential amount, then, subject to the rights of series of Preferred Stock
which may from time to time come into existence, the entire assets and funds of
the Corporation legally available for distribution shall be distributed ratably
among the holders of the Series E Stock in proportion to the amount of such
stock owned by each such holder.
(ii) Upon the completion of the distribution required by
subsection a(i) of this Section 2, and subject to the rights of series of
Preferred Stock which may come into existence, the holders of the Series D Stock
shall be entitled to receive, prior and in preference to any distribution of any
of the assets of the Corporation to the holders of Series A Stock, Series C
Stock, Series B Stock, or Common Stock by reason of their ownership thereof, an
amount per share equal to $7.00 for each outstanding share of Series D Stock
held by each such holder (the "Original Series D Issue Price") plus any declared
but unpaid dividends on such stock. If, upon the occurrence of such event, the
assets and funds thus distributed among the
-3-
holders of the Series D Stock shall be insufficient to permit the payments to
such holders of the full aforesaid preferential amount, then, subject to the
rights of series of Preferred Stock which may from time to time come into
existence, the entire assets and funds of the Corporation legally available for
distribution shall be distributed ratably among the holders of the Series D
Stock in proportion to the amount of such stock owned by each such holder.
(iii) Upon the completion of the distribution required
by subsections (a)(i) and (ii) of this Section 2, and subject to the rights of
series of Preferred Stock which may from time to time come into existence, the
holders of the Series A Stock and Series C Stock shall be entitled to receive,
prior and in preference to any distribution of any of the assets of the
Corporation to the holders of Series B Stock, or Common Stock by reason of their
ownership thereof, an amount per share equal to $.84 and $2.60 for each
outstanding share of Series A Stock and Series C Stock, respectively, held by
each such holder (the "Original Series A Issue Price" and "Original Series C
Issue Price", respectively) plus any declared but unpaid dividends on such
stock. If, upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series A Stock and Series C Stock shall be
insufficient to permit the payments to such holders of the full aforesaid
preferential amount, then, subject to the rights of series of Preferred Stock
which may from time to time come into existence, the entire assets and funds of
the Corporation legally available for distribution upon completion of the
distribution required by subsection (a)(i) and (ii) of this Section 2 shall be
distributed ratably among the holders of the Series A Stock and Series C Stock
in proportion to the aggregate liquidation preference to which each such holder
is entitled.
(iv) Upon the completion of the distribution required by
subsections (a)(i), (ii) and (iii) of this Section 2, and subject to the rights
of series of Preferred Stock which may from time to time come into existence,
the holders of the Series B Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the Corporation to the
holders of Common Stock by reason of their ownership thereof, an amount per
share equal to the price paid for a share of Series B Stock pursuant to the
terms of the agreement by which the shares of Series B Stock were first issued
(the "Original Series B Issue Price") for each share of Series B Stock held by
each such holder plus any declared but unpaid dividends on the Series B Stock.
If upon the occurrence of such event, the assets and funds thus distributed
among the holders of the Series B Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then,
subject to the rights of series of Preferred Stock which may from time to time
come into existence, the entire assets and funds of the Corporation legally
available for distribution upon completion of the distribution required by
subsections (a)(i), (ii) and (iii) of this Section 2 shall be distributed
ratably among the holders of the Series B Stock in proportion to the amount of
such stock owned by each such holder.
(v) Upon the completion of the distributions required by
subsections (a)(i), (a)(ii), (a)(iii) and (a)(iv) of this Section 2, and subject
to the rights of series of Preferred Stock which may from time to time come into
existence, the holders of the Common Stock of the Corporation shall receive all
of the remaining assets of the Corporation.
-4-
(b) A consolidation or merger of the Corporation with or into
any other corporation or corporations (other than a merger of the Corporation
into its wholly-owned subsidiary) which results in the Corporation's
stockholders immediately prior to such transaction not holding at least 20% of
the voting power of the surviving or continuing entity, or a sale, conveyance or
disposition of all or substantially all of the assets of the Corporation or the
effectuation by the Corporation of a transaction or series of related
transactions in which more than 80% of the voting power of the Corporation is
disposed of, shall be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section 2, with additional implementing provisions as
specified in Section 5.
3. Redemption. The Preferred Stock is not redeemable.
----------
4. Conversion. The holders of the Series A Stock, the
----------
Series B Stock, the Series C Stock, the Series D, and the Series E Stock shall
have conversion rights (the "Conversion Rights") as follows:
(a) Right to Convert.
----------------
(i) Each share of Series A Stock, Series B Stock, Series
C Stock, Series D Stock, and Series E Stock shall be convertible, at the option
of the holder thereof, at any time after the date of issuance of such share at
the office of the Corporation or any transfer agent for the Series A Stock, the
Series B Stock, the Series C Stock, the Series D Stock, or the Series E Stock,
respectively, into such number of fully paid and nonassessable shares of Common
Stock equal to the quotient determined by dividing the Initial Conversion Price
(as hereinafter defined) for such share of Preferred Stock by the respective
Conversion Price (as hereinafter defined) for such share in effect at the time
of conversion.
(ii) Each share of Series A Stock, Series B Stock, Series
C Stock, Series D Stock, and Series E Stock shall automatically be converted
into shares of Common Stock at the Conversion Price then in effect for such
series of Preferred Stock immediately upon the consummation of the Corporation's
sale of its Common Stock in a bona fide, firm commitment underwriting pursuant
to a registration statement on Form S-1 under the Securities Act of 1933, as
amended, the public offering price of which is not less than $15.00 per share
(appropriately adjusted to reflect subsequent stock dividends, stock splits, or
recapitalizations) and $12,000,000 in the aggregate.
All certificates evidencing shares of Series A Stock,
Series B Stock, Series C Stock, Series D Stock, and Series E Stock which are
required to be surrendered for automatic conversion in accordance with the
foregoing provision shall, from and after the date such certificates are so
required to be surrendered, be deemed to have been retired and cancelled and the
shares of the Series A Stock, Series B Stock, Series C Stock, Series D Stock,
and Series E Stock represented thereby converted into Common Stock for all
purposes, notwithstanding the failure of the holder or holders thereof to
surrender such certificates on or prior to such date.
-5-
(b) Conversion Price. As used in this Article FOURTH, the
----------------
term "Conversion Price" shall mean, for each share of Series A Stock, Series B
Stock, Series C Stock, Series D Stock, and Series E Stock, the Initial
Conversion Price as adjusted from time to time pursuant to the provisions of
this Section 4, and the term "Initial Conversion Price" shall mean, for each
share of Series A Stock, $.84 per share, for each share of Series B Stock, the
Original Series B Issue Price per share, for each share of Series C Stock, $2.60
per share, for each share of Series D Stock, $7.00 per share, and for each share
of Series E Stock, $8.35 per share.
(c) Mechanics of Conversion. Before any holder of the Series
-----------------------
A Stock, the Series B Stock, the Series C Stock, the Series D Stock, or the
Series E Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any transfer agent for
such holder, and shall give written notice by mail, postage prepaid, to the
Corporation at its principal corporate office, of the election to convert the
same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The Corporation shall,
as soon as practicable thereafter, issue and deliver at such office to such
holder, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of such holder to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock as of such date. If the conversion is in connection with an
underwritten offer of securities registered pursuant to the Securities Act of
1933, as amended, the conversion may, at the option of any holder tendering
shares of Series A Stock, Series B Stock, Series C Stock, Series D Stock, or
Series E Stock for conversion, be conditioned upon the closing with the
underwriter of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock issuable upon such conversion
of such shares of Series A Stock, Series B Stock, Series C Stock, Series D
Stock, or Series E Stock shall not be deemed to have converted such Preferred
Stock until immediately prior to the closing of such sale of securities.
(d) Conversion Price Adjustments for Series A Stock, Series
-------------------------------------------------------
B Stock, Series C Stock, Series D Stock and Series E Stock. The respective
- ----------------------------------------------------------
Conversion Price for the Series A Stock, the Series B Stock, the Series C Stock,
the Series D Stock, and the Series E Stock shall be subject to adjustment from
time to time as follows:
(i) (A) If the corporation shall issue any Additional Stock
(as defined below) without consideration or for a consideration per share less
than the applicable Conversion Price for the Series A Stock, the Series B Stock,
the Series C Stock, the Series D Stock, or the Series E Stock in effect
immediately prior to the issuance of such Additional Stock, the respective
Conversion Price for the Series A Stock, Series B Stock, Series C Stock, Series
D Stock, or Series E Stock, as applicable, in effect immediately prior to each
such issuance shall forthwith (except as otherwise provided in this clause (i))
be adjusted to a price equal to the
-6-
quotient obtained by dividing the total computed under clause (x) below by the
total computed under clause (y) below as follows:
(x) an amount equal to the sum of
(1) the aggregate purchase price of all
shares of Series A Stock, Series B Stock, Series C Stock,
Series D Stock, or Series E Stock, as applicable, sold
pursuant to the agreement to which shares of Series A
Stock, Series B Stock, Series C Stock, Series D Stock, or
Series E Stock, as applicable, are first issued (the
"Series A Stock Purchase Agreement," the "Series B Stock
Purchase Agreement," the "Series C Stock Purchase
Agreement," the "Series D Stock Purchase Agreement," or the
"Series E Stock Purchase Agreement," as applicable), plus
(2) the aggregate consideration, if
any, received by the Corporation for all Additional Stock
issued on or after the date of the Series A Stock Purchase
Agreement (the "Series A Purchase Date"), the Series B
Stock Purchase Agreement (the "Series B Purchase Date"),
the Series C Stock Purchase Agreement (the "Series C
Purchase Date"), the Series D Stock Purchase Agreement (the
"Series D Purchase Date"), or the Series E Stock Purchase
Agreement (the "Series E Purchase Date"), as applicable,
other than shares of Common Stock issued or issuable upon
conversion of such series of Preferred Stock:
(y) an amount equal to the sum of
(1) the aggregate purchase price of the
shares of Series A Stock sold pursuant to the Series A
Stock Purchase Agreement, shares of Series B Stock sold
pursuant to the Series B Stock Purchase Agreement, shares
of Series C Stock sold pursuant to the Series C Stock
Purchase Agreement, shares of Series D Stock, or shares of
Series E Stock sold pursuant to the Series E Stock Purchase
Agreement, as applicable, divided by the Conversion Price
for such shares of Series A Stock in effect at the Series A
Purchase Date, Series B Stock in effect at the Series B
Purchase Date, Series C Stock in effect at the Series C
Purchase Date, Series D Stock in effect at the Series D
Purchase Date, or Series E Stock in effect at the Series E
Purchase Date, as applicable (or such higher or lower
Conversion Price for the Series A Stock, Series B Stock,
Series C Stock, Series D Stock, or Series E Stock, as
applicable, as results from the application of subsections
4(d)(iii) and (iv) and assuming that these Articles there
in effect as of the Series A Purchase Date, Series B
Purchase Date, Series C Purchase Date, Series D Purchase
Date, or Series E Purchase Date, as applicable), plus
-7-
(2) the number of shares of Additional
Stock issued since the Series A Purchase Date, Series B
Purchase Date, Series C Purchase Date, Series D Purchase
Date, or Series E Purchase Date, as applicable (increased
or decreased to the extent that the number of such shares
of Additional Stock shall have been increased or decreased
as the result of the application of subsections 4(d)(iii)
and (iv) hereof).
(B) No adjustment of the respective
Conversion Price for the Series A Stock, Series B Stock, the Series C Stock,
Series D Stock, or Series E Stock shall be made in an amount less than one cent
per share, provided that any adjustments which are not required to be made by
reason of this sentence shall be carried forward and shall be either taken into
account in any subsequent adjustment made prior to 3 years from the date of the
event giving rise to the adjustment being carried forward, or shall be made at
the end of 3 years from the date of the event giving rise to the adjustment
being carried forward. Except to the limited extent provided for in subsections
(E)(3) and (E)(4), no adjustment of such Conversion Price pursuant to this
subsection 4(d)(i) shall have the effect of increasing the Conversion Price
above the Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined by
the Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance (whether
before, on, or after the Series A Purchase Date, Series B Purchase Date, Series
C Purchase Date, Series D Purchase Date, or Series E Purchase Date, as
applicable) of options to purchase or rights to subscribe for Common Stock,
securities by their terms convertible into or exchangeable for Common Stock, or
options to purchase or rights to subscribe for such convertible or exchangeable
securities, the following provisions shall apply for all purposes of this
subsection 4(d)(i) and subsection 4(d)(ii) below:
1. The aggregate maximum number of
shares of Common Stock deliverable upon exercise of such options
to purchase or rights to subscribe for Common Stock shall be
deemed to have been issued at the time such options or rights
were issued and for a consideration equal to the consideration
(determined in the manner provided in subsections 4(d)(i)(C) and
(d)(i)(D)), if any, received by the corporation upon the issuance
of such options or rights plus the minimum exercise price
provided in such options or rights for the Common Stock covered
thereby.
-8-
2. The aggregate maximum number of
shares of Common Stock deliverable upon conversion of or in
exchange for any such convertible or exchangeable securities, or
upon the exercise of options to purchase or rights to subscribe
for such convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been
issued at the time such securities were issued or such options or
rights were issued and for a consideration equal to the
consideration, if any, received by the corporation for any such
securities and related options or rights (excluding any cash
received on account of accrued interest or accrued dividends),
plus the additional consideration, if any, to be received by the
corporation upon the conversion or exchange of such securities or
the exercise of any related options or rights (the consideration
in each case to be determined in the manner provided in
subsections 4(d)(i)(C) and (d)(i)(D)).
3. In the event of any change in the
number of shares of Common Stock deliverable or in the
consideration payable to the Corporation upon exercise of such
options or rights, or upon conversion of or in exchange for such
convertible or exchangeable securities, including, but not
limited to, a change resulting from the antidilution provisions
thereof, the respective Conversion Price of the Series A Stock,
the Series B Stock, the Series C Stock, the Series D Stock, or
the Series E Stock, to the extent in any way affected by or
computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment
shall be made for the actual issuance of Common Stock or any
payment of such consideration upon the exercise of any such
options or rights or the conversion or exchange of such
securities.
4. Upon the expiration of any such
options or rights, the termination of any such rights to convert
or exchange or the expiration of any options or rights related to
such convertible or exchangeable securities, the respective
Conversion Price of the Series A Stock, the Series B Stock, the
Series C Stock, the Series D Stock, or the Series E Stock, to the
extent in any way affected by or computed using such options,
rights or securities or options or rights related to such
securities, shall be recomputed to reflect the issuance of only
the number of shares of Common Stock (and convertible or
exchangeable securities which remain in effect) actually issued
upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the
options or rights related to such securities.
5. The number of shares of Common
Stock deemed issued and the consideration deemed paid therefor
pursuant to subsections 4(d)(i)(E)(1) and (2) shall be
appropriately adjusted to reflect any change, termination or
expiration of the type described in either subsection
4(d)(i)(E)(3) or (4).
-9-
(ii) "Additional Stock" shall mean any shares
of Common Stock issued (or deemed to have been issued pursuant to subsection
4(d)(i)(E)) by the Corporation after the Series A Purchase Date, the Series B
Purchase Date, the Series C Purchase Date, the Series D Purchase Date, or the
Series E Purchase Date, as applicable, other than
(A) shares of Common Stock issued
pursuant to a transaction described in subsection 4(d)(iii)
hereof, or
(B) shares of Common Stock issuable or
issued to employees, directors or consultants of the
Corporation directly or pursuant to a stock benefit plan
approved by the Board of Directors of the Corporation, so
long as the total number of such shares so issued since the
date of inception of the Corporation does not exceed
1,261,000 (net of repurchased shares and canceled options),
or
(C) shares of Common Stock issued upon
conversion of the Series A Stock, Series B Stock, Series C
Stock, Series D Stock, or Series E Stock.
(iii) In the event the Corporation should at
any time or from time to time after the Series E Purchase Date fix a record date
for the effectuation of a split or subdivision of the outstanding shares of
Common Stock or the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the respective Conversion Price for the Series A Stock, Series B Stock, Series C
Stock, Series D Stock, and Series E Stock shall be appropriately decreased so
that the number of shares of Common Stock issuable upon conversion of each share
of such series shall be increased in proportion to such increase of the
aggregate of shares of Common Stock outstanding and those issuable with respect
to such Common Stock Equivalents.
(iv) If the number of shares of Common Stock
outstanding at any time after the Series E Purchase Date is decreased by a
combination of the outstanding shares of Common Stock, then, following the
Record date of such combination, the respective Conversion Price for the Series
A Stock, Series B Stock, Series C Stock, Series D Stock, and Series E Stock
shall be appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased in
proportion to such decrease in outstanding shares.
-10-
(e) Other Distributions. In the event the Corporation shall
-------------------
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) then, in each such case for the purpose of this subsection 4(e), the
holders of the Series A Stock, Series B Stock, Series C Stock, Series D Stock,
and Series E Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the corporation into which their shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time
-----------------
there shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger, or sale of assets transaction provided for elsewhere in
this Section 4 or Section 5), provision shall be made so that the holders of the
Series A Stock, the holders of the Series B Stock, the holders of the Series C
Stock, the holders of the Series D Stock, and the holders of the Series E Stock
shall thereafter be entitled to receive, upon conversion of such Preferred
Stock, the number of shares of stock or other securities or property of the
corporation or otherwise, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization. In any such case,
an appropriate adjustment shall be made in the application of the provisions of
this Section 4 with respect to the rights of the holders of the Series A Stock,
the holders of the Series B Stock, the holders of the Series C Stock, the
holders of the Series D Stock, and the holders of the Series E Stock after the
recapitalization to the end that the provisions of this Section 4 (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of the Preferred Stock) shall be applicable after
that event as nearly equivalent as may be practicable.
(g) No Impairment. The Corporation will not, by amendment of
-------------
its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A Stock, the holders of the
Series B Stock, the holders of the Series C Stock, the holders of the Series D
Stock, and the holders of Series E Stock against impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
------------------------------------------------------
(i) No fractional shares shall be issued upon conversion
of the Series A Stock, Series B Stock, Series C Stock, Series D Stock, or Series
E Stock, and the number of shares of Common Stock to be issued shall be rounded
to the nearest whole share. Such rounding shall be based on the total number of
shares of Series A Stock, Series B Stock, Series C Stock, Series D Stock, or
Series E Stock such respective holder is at the time converting
-11-
into Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of the respective Conversion Price of the Series A Stock, Series B
Stock, Series C Stock, Series D Stock, or Series E Stock pursuant to this
Section 4, the Corporation, at its expense, shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of such Preferred Stock a certificate setting forth such
adjustment or readjustment, and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written,
reasonable request of any holder of Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (A) such adjustment
and readjustment, (B) the Conversion Price at the time in effect, and (C) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of a share of such Preferred
Stock.
(i) Notices of Record Date. In the event of any taking by
----------------------
the Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Preferred Stock, at least 20 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. The
---------------------------------------------
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of the Series A Stock, Series B Stock, Series C Stock,
Series D Stock, and Series E Stock such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Stock, Series B Stock, Series C Stock, Series
D Stock, and Series E Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Series A Stock, Series B Stock, Series C
Stock, Series D Stock, and Series E Stock, in addition to such other remedies as
shall be available to the holder of such Preferred Stock, the Corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes.
(k) Notices. Any notice required by the provisions of this
-------
Section 4 to be given to the holders of shares of Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at such holder's address appearing on the
books of the Corporation.
-12-
5. Merger, Consolidation.
---------------------
(a) At any time, in the event of:
(i) any transaction or series of related transactions
effectuated by the corporation (including, without limitation, any
reorganization, merger or consolidation) which will result in the corporation's
shareholders immediately prior to such transaction not holding (by virtue of
such shares or securities issued solely with respect thereto) at least 20% of
the voting power of the surviving or continuing entity, or
(ii) a sale of all or substantially all of the assets of
the corporation, unless the corporation's shareholders immediately prior to such
sale will, as a result of such sale, hold (by virtue of securities issued as
consideration for the corporation's sale) at least 20% of the voting power of
the purchasing entity, then, subject to the rights of series of Preferred Stock
which may from time to time come into existence, the proceeds of such
transaction shall be distributed as specified in Section 2 above as if such
transaction were a liquidation, dissolution or winding up of the Corporation.
(b) Any securities to be delivered to the holders of the
Preferred Stock pursuant to subsection 5(a) above shall be valued as follows:
(i) Securities not subject to investment letter or other
similar restrictions on free marketability:
(A) If traded on a securities exchange, the value
shall be deemed to be the average of the closing prices of the securities on
such exchange over the 30-day calendar period ending three (3) days prior to the
closing:
(B) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
are applicable) over the 30-day calendar period ending three (3) days prior to
the closing; or
(C) If there is no active public market, the value
shall be the fair market value thereof, as mutually determined by the
corporation and the holders of Preferred Stock which would be entitled to
receive such securities or the same type of securities and which Preferred Stock
represents at least a majority of the voting power of all then outstanding
shares of such Preferred Stock.
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall be to make
an appropriate discount from the market value determined as above in (i) (A),
(B), or (C) to reflect the approximate fair market value thereof, as mutually
determined by the corporation and the holders of Preferred Stock which would be
entitled to receive such securities or the same type of securities and which
-13-
represent at least a majority of the voting power of all then outstanding shares
of such Preferred Stock.
(c) In the event the requirements of subsection 5(a) are not
complied with, the corporation shall forthwith either:
(i) cause such closing to be postponed until such time as
the requirements of this Section 5 have been complied with, or
(ii) cancel such transaction, in which event the rights,
preferences and privileges of the holders of Series A Stock, the holders of
Series B Stock, the holders of Series C Stock, the holders of Series D Stock,
and the holders of Series E Stock shall revert to and be the same as such
rights, preferences and privileges existing immediately prior to the date of the
first notice referred to in subsection 5(d) hereof.
(d) The Corporation shall give each holder of record of
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 5, and the corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after the corporation has given the first notice
provided for herein or sooner than ten (10) days after the corporation has given
notice of any material changes provided for herein: provided, however, that such
periods may be shortened upon the written consent of the holders of a majority
of the shares of Series A, Series B, Series C, Series D, and Series E Stock then
outstanding, voting together as a single class.
(e) The provisions of this Section 5 are in addition to the
protective provisions of Section 7 hereof.
6. Voting Rights. The holder of each share of Series A Stock,
-------------
Series B Stock, Series C Stock, Series D Stock, and Series E Stock shall have
the right to one vote for each share of Common Stock into which such Preferred
Stock could then be converted (with any fractional share determined on an
aggregate conversion basis being rounded to the nearest whole share), and with
respect to such vote, such holder shall have full voting rights and powers equal
to the voting rights and powers of the holders of Common Stock, and shall be
entitled, notwithstanding any provision hereof, to notice of any shareholders'
meeting in accordance with the By-Laws of the Corporation, and shall be entitled
to vote, together with holders of Common Stock, with respect to any question
upon which holders of Common Stock have the right to vote.
-14-
7. Protective Provisions.
---------------------
(a) Subject to the rights of series of Preferred Stock which
may from time to time come into existence, so long as any shares of Series A
Stock, Series B Stock, Series C Stock, Series D Stock, and Series E Stock are
outstanding, the Corporation shall not, without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least a
majority of the voting power of the then outstanding shares of such Series A
Stock, Series B Stock, Series C Stock, Series D Stock, and Series E Stock,
voting together as a single class:
(i) authorize or issue, or obligate itself to issue, any
other equity security, including any other security convertible into or
exercisable for any equity security having a preference over, or being on a
parity with, the Series A Stock, the Series B Stock, the Series C Stock, the
Series D Stock, or the Series E Stock with respect to voting, dividends or upon
liquidation;
(ii) pay or declare any dividend on its Common Stock or
any other junior equity security other than a dividend in Common Stock of the
Corporation;
(iii) redeem, purchase or otherwise acquire (or pay into or
set aside for a sinking fund for such purpose) any of the Common Stock;
provided, however, that this restriction shall not apply to the repurchase of
shares of Common Stock from employees, officers, directors, consultants, or
other persons performing services for the Corporation or any subsidiary pursuant
to agreements under which the Corporation has the option to repurchase such
shares at cost or at cost plus interest upon the occurrence of certain events,
such as the termination of employment; provided, further, that this restriction
shall not apply to the repurchase of shares of Common Stock pursuant to the
Second Restated Investors' Rights Agreement between the Corporation and certain
of its stockholders dated on or about February 22, 1996;
(iv) sell, convey, or otherwise dispose of or encumber all
or substantially all of its property or business or merge into or consolidate
with any other corporation (other than a wholly owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than 50%
of the voting power of the Corporation is disposed of;
(v) increase the authorized number of shares of Preferred
Stock; or
(vi) adversely alter or change the rights, preferences or
privileges of the shares of Series A Stock, Series B Stock, Series C Stock,
Series D Stock, or Series E Stock.
8. Status of Converted Stock. In the event any shares of Preferred
-------------------------
Stock shall be converted pursuant to Section 4 hereof, the shares so converted
shall be canceled and
-15-
shall not be issuable by the Corporation, and the Certificate of Incorporation
of the Corporation shall be appropriately amended to effect the corresponding
reduction in the Corporation's authorized capital stock.
(C) Common Stock.
------------
(1) Dividend Rights. Subject to the prior rights of holders
---------------
of all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of the corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
(2) Liquidation Rights. Upon the liquidation, dissolution,
------------------
or winding up of the corporation, the assets of the corporation shall be
distributed as provided in Section 2 of Division (B) of this Article FOURTH.
(3) Redemption. The Common Stock is not redeemable.
----------
(4) Voting Rights. The holder of each share of Common Stock
-------------
shall have the right to one vote, and shall be entitled to notice of any
shareholders' meeting in accordance with the By-Laws of the Corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
FIFTH: Board of Directors.
------------------
(A) General. Except as otherwise provided in this Certificate of
-------
Incorporation or a certificate of designation relating to the rights of the
holders of any series of Preferred Stock, voting separately by series, to elect
additional directors under specified circumstances, the number of directors of
the Corporation shall be as fixed from time to time by or pursuant to the By-
Laws of the Corporation (the "By-Laws"). No director of the Corporation (a
"Director") need be a stockholder.
(B) Classification. The Directors, other than those who may be
--------------
elected by the holders of any series of Preferred Stock voting separately by
series, shall be classified with respect to the time for which they severally
hold office into three separate classes, Class I, Class II and Class III, which
shall be as nearly equal in number as possible, and shall be adjusted from time
to time in the manner specified in the By-Laws of the Corporation to maintain
such proportionality. Each initial Director in Class I shall hold office for a
term expiring at the 1999 annual meeting of stockholders. Each initial Director
in Class II shall hold office initially for a term expiring at the 1998 annual
meeting of stockholders. Each initial Director in Class III shall hold office
for a term expiring at the 1997 annual meeting of stockholders. Notwithstanding
the foregoing provisions of this Article Fifth, each Director shall serve until
such Director's successor is duly elected and qualified or until such Director's
earlier death, resignation or removal. At each annual meeting of
-16-
stockholders, the successors to the class of Directors whose term expires at
that meeting shall be elected to hold office for a term expiring at the annual
meeting of stockholders held in the third year following the year of their
election and until their successors have been duly elected and qualified or
until any such Director's earlier death, resignation or removal.
(C) Election, By-Laws. In furtherance of and not in limitation of
-----------------
powers conferred by statute, it is further provided:
(a) Election of Directors need not be by written ballot.
(b) The Board of Directors is expressly authorized to adopt,
amend, modify or repeal the By-Laws by the affirmative vote of a majority
of the directors then in office.
This Article FIFTH shall not be amended, modified or repealed in any
manner, directly or indirectly, except by the affirmative vote of the holders of
sixty-six and two-thirds percent (66 2/3%) or more of all votes entitled to be
cast.
SIXTH: Limitation on Liability. No Director of the Corporation shall be
-----------------------
personally liable to the Corporation or to any stockholder of the Corporation
for monetary damages for breach of fiduciary duty as a Director, provided that
this provision shall not limit the liability of a Director (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, or (iv) for any
transaction from which the Director derived an improper personal benefit.
If the DGCL any other statute of the State of Delaware hereafter is
amended to authorize the further elimination or limitation of the liability of
Directors of the Corporation, then the liability of a Director of the
Corporation shall be limited to the fullest extent permitted by the statutes of
the State of Delaware, as so amended, and such elimination or limitation of
liability shall be in addition to, and not in lieu of, the limitation on the
liability of a Director provided by the foregoing provisions of this Article
SIXTH.
This Article SIXTH shall not be amended, modified or repealed in any
manner, directly or indirectly, except by the affirmative vote of the holders of
sixty-six and two-thirds percent (66 2/3%) or more of all votes entitled to be
cast. Any repeal of or amendment to this Article SIXTH shall be prospective
only and shall not adversely affect any limitation on the liability of a
Director of the corporation existing at the time of such repeal or amendment.
SEVENTH: Indemnification. To the extent permitted by law, the Corporation
---------------
shall fully indemnify 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) by reason of the fact
that such person is or was a Director or officer of the Corporation, or is or
was serving at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust, employee benefit plan or
other
-17-
enterprise, 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.
To the extent permitted by law, the Corporation may fully indemnify
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) by reason of the fact that such
person is or was an employee or agent of the Corporation, or is or was serving
at the request of the Corporation as an employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, 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.
The Corporation may advance expenses (including attorneys' fees)
incurred by a Director or officer in advance of the final disposition of such
action, suit or proceeding upon the receipt of an undertaking by or on behalf of
the Director or officer to repay such amount if it shall ultimately be
determined that such Director or officer is not entitled to indemnification.
The Corporation may advance expenses (including attorneys' fees) incurred by an
employee or agent in advance of the final disposition of such action, suit or
proceeding upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
This Article SEVENTH shall not be amended, modified or repealed in any
manner, directly or indirectly, except by the affirmative vote of the holders of
sixty-six and two-thirds percent (66 2/3%) or more of all votes entitled to be
cast.
EIGHTH: Actions by Stockholders. Except as otherwise provided herein or
-----------------------
in the Corporation's By-Laws or required by applicable law, if a quorum is
present at a meeting of the Stockholders, action on a matter other than the
election of directors shall be approved if the votes cast favoring the action
exceed the votes cast opposing the action, including, without limitation,
approval of a plan of merger or share exchange or a sale of all or substantially
all of the assets of the Corporation.
Upon the closing of an underwritten initial public offering of the
Company's Common Stock pursuant to an effective registration statement under the
Securities Act of 1933, as amended, any action required or permitted to be taken
by the stockholders of the Corporation must be effected at a duly called annual
or special meeting of stockholders, and may not be effected by any consent in
writing by such stockholders, unless such consent is unanimous. Meetings of
stockholders may be held within or without the State of Delaware, as the By-Laws
may provide.
NINTH: Amendment. The Corporation reserves the right to amend, alter,
---------
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute and the Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
-18-
TENTH: Incorporator. The name and mailing address of the sole
------------
incorporator is Nancy A. Spangler, 1200 19th Street, N.W., Washington, D.C.
20036.
IN WITNESS WHEREOF, the undersigned, for the purpose of forming a
corporation pursuant to the General Corporation Law of the State of Delaware,
does make, file and record this Certificate and does hereby certify that the
facts herein stated are true, and accordingly hereto sets his hand this 16th day
of October, 1996.
/s/ Nancy A. Spangler
-------------------------------------
Nancy A. Spangler, Incorporator
-19-
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Production Group International, Inc. (hereinafter called the
"Corporation"), organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
That by unanimous written consent of the Board of Directors of the
Corporation, resolutions were duly adopted, pursuant to Section 242 of the
General Corporation Law of the State of Delaware, setting forth amendments to
the Certificate of Incorporation of the Corporation and declaring said
amendments to be advisable. The stockholders of the Corporation waived notice of
the time, place and purpose of a special meeting of the stockholders and duly
approved said amendment by written consent in accordance with Sections 228 and
242 of the General Corporation law of the State of Delaware. The resolutions
setting forth the amendments are as follows:
RESOLVED. That the Certificate of Incorporation be amended so that the
--------
price referenced in Article FOURTH(B)(4)(a)(ii) shall be changed from "$15.00
per share" to "$9.00 per share."
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be affixed
hereto and this Certificate of Amendment to be signed by its President this 24th
day of October, 1996.
PRODUCTION GROUP INTERNATIONAL, INC.
By: /s/ Mark N. Sirangelo
--------------------------------
Mark N. Sirangelo
President