Exhibit 3.2
ANNEXURE "A" TO THE
WRITTEN RESOLUTIONS OF THE BOARD OF DIRECTORS
OF
VIGILANT INTERNATIONAL, LTD.
DESIGNATING THE RIGHTS AND PREFERENCES OF
SERIES A PREFERRED SHARES
Dated 5 September 2003
The terms of the authorized Series A Preferred Shares (as defined
below) of Vigilant International, Ltd., an exempted company formed with limited
liability under the laws of the Cayman Islands (the "Company"), shall be as set
forth below in this Annexure A to the Written Resolutions of the Board of
Directors of the Company.
(a) Designation. (1) There is hereby created from the authorized and
unissued Preferred Shares, par value $0.0001 per share, of the Company a series
of convertible redeemable Preferred Shares designated as the Company's "Series A
Preferred Shares" (the "Series A Preferred Shares") having such rights and
preferences set forth herein. Each Series A Preferred Share shall have a
liquidation preference of $10.00 (the "Liquidation Preference").
(2) All Series A Preferred Shares purchased, exchanged, converted or
otherwise acquired by the Company shall be canceled and, upon the taking of any
action required by applicable law, shall be restored to the status of authorized
but unissued Preferred Shares, par value $0.0001 per share, of the Company,
without designation as to series, and may thereafter be reissued.
(b) Currency. All Series A Preferred Shares shall be denominated in
United States currency, and all payments and distributions thereon or with
respect thereto shall be made in United States currency. All references herein
to "$" or "dollars" refer to United States currency.
(c) Ranking. The Series A Preferred Shares shall, with respect to
dividend rights and rights upon liquidation, winding up or dissolution, rank (1)
prior to each other class or series of shares of the Company except Parity
Shares (as defined below) and (2) on a parity with Parity Shares. For purposes
hereof, (A) "Junior Shares" shall mean the Class A Com-
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mon Shares of the Company, par value $0.0001 per share (the "Class A Common
Shares"), and the Class B Common Shares of the Company, par value $0.0001 per
share (the "Class B Common Shares," and together with the Class A Common Shares,
the "Common Shares"), and the shares of any other class or series of equity
securities of the Company that, by the terms of the Articles of Association of
the Company or of the instrument by which the Board of Directors shall fix the
rights, preferences and limitations thereof, shall not be designated as Parity
Shares and (B) "Parity Shares" shall mean the shares of any other class or
series of equity securities of the Company that, by the terms of the Articles of
Association of the Company or of the instrument by which the Board of Directors
shall fix the rights, preferences and limitations thereof, shall, in the event
that the dividends thereon are not paid in full, be entitled to share ratably
with the Series A Preferred Shares, or shall, in the event that the amounts
payable thereon on liquidation are not paid in full, be entitled to share
ratably with the Series A Preferred Shares in any distribution of assets other
than by way of dividends in proportion to the sums which would be payable in
such distribution if all sums payable were discharged in full.
(d) Dividends. (1) The holders of Series A Preferred Shares shall be
entitled to receive, from funds legally available therefor in the case of
dividends paid in cash, dividends at the annual rate per Series A Preferred
Share of 15% of the sum of (A) the Liquidation Preference and (B) all unpaid
dividends, if any, whether or not declared, from the Issuance Date to the
applicable Dividend Payment Date. Except as provided below with respect to the
initial dividend period, dividends on Series A Preferred Shares shall be payable
semi-annually on March 1 and September 1 of each year beginning on March 1, 2004
(each, a "Dividend Payment Date"), except that if any Dividend Payment Date is
not a Business Day then the Dividend Payment Date shall be on the first
immediately succeeding business day. Dividends payable with respect to Series A
Preferred Shares for the semi-annual period beginning on the day following a
Dividend Payment Date shall accrue on the first day of such semi-annual period
(or in the case of the period ending on March 1, 2004, such dividends shall
accrue on the Issuance Date) and shall be payable whether the Series A Preferred
Shares remain outstanding on the succeeding Dividend Payment Date.
(2) Dividends on the Series A Preferred Shares may be paid, in the
sole discretion of the Board of Directors, either in (A) cash, (B) additional
Series A Preferred Shares or (C) any combination of cash and additional Series A
Preferred Shares, and the issuance of the requisite number of Series A Preferred
Shares (such number determined as provided in the next sentence) pursuant to (B)
or (C) shall constitute full payment of any such dividend. Series A Preferred
Shares issued to pay dividends shall be valued at the Liquidation Preference and
fractional shares shall be issued. All dividend payments paid with respect to
Series A Preferred Shares shall be paid pro rata to the holders entitled
thereto. All Series A Preferred Shares issued as a dividend in respect of Series
A Preferred Shares shall thereupon be duly authorized, validly issued, fully
paid and non-assessable. In no event shall an election
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by the Board of Directors to pay dividends, in full or in part, in cash or in
Series A Preferred Shares in lieu of payment, in full or in part, in cash
preclude the Board of Directors from electing any such alternative in respect of
all or any portion of any subsequent dividend.
(3) Dividends to be paid on a Dividend Payment Date shall be paid to
the holders of record of Series A Preferred Shares as they appear on the share
register of the Company at the close of business on such record dates, which
shall be not more than 45 days nor fewer than 10 days preceding each Dividend
Payment Date thereof, as shall be fixed by the Board of Directors.
(e) Liquidation Preference. (1) Upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company or a reduction or decrease
in the Company's shares resulting in a distribution of assets to the holders of
any class or series of the Company's shares, each holder of Series A Preferred
Shares shall be entitled to payment out of the assets of the Company available
for distribution of an amount equal to the Liquidation Preference per Series A
Preferred Share held by such holder, plus all accumulated and unpaid dividends
thereon, before any distribution is made on any Junior Shares, including,
without limitation, Common Shares. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company or a reduction or decrease
in the Company's capital shares, the amounts payable with respect to Series A
Preferred Shares and all other Parity Shares are not paid in full, the holders
of Series A Preferred Shares and the holders of the Parity Shares shall share
equally and ratably in any distribution of assets of the Company in proportion
to the full liquidation preference and all accumulated and unpaid dividends to
which each such holder is entitled.
(2) Neither the voluntary sale, conveyance, exchange or transfer
(for cash, shares, securities or other consideration) of all or substantially
all of the property or assets of the Company nor the consolidation, merger or
amalgamation of the Company with or into any person or the consolidation, merger
or amalgamation of any person with or into the Company shall alone be deemed to
be a voluntary or involuntary liquidation, dissolution or winding up of the
Company, or a reduction or decrease in the capital of the Company, without the
adoption of a formal plan of liquidation by the Company.
(f) Voting Rights. Except as required by applicable law, the
Articles of Association of the Company and as may otherwise be provided herein
or in any amendment hereto, the holders of Series A Preferred Shares shall not
be entitled to any voting rights as shareholders of the Company except as
follows:
(1) The affirmative vote of the holders of at least nine-tenths of
the outstanding Series A Preferred Shares, voting together as a single
class, in person or by proxy, at a special or annual meeting called for
the purpose, or by written resolution in lieu of a meeting, shall be
required to amend, repeal or change any provisions of this
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Annexure A in any manner that would adversely affect, alter or change the
powers, preferences or special rights of the Series A Preferred Shares;
provided, however, that the creation, authorization or issuance of any
other class or series of Junior or Parity Shares or the increase or
decrease in the amount of authorized shares of any such class or series or
of the Series A Preferred Shares, or any increase, decrease or change in
the par value of any class or series of shares (including the Series A
Preferred Shares), shall not require the consent of the holders of the
Series A Preferred Shares and shall not be deemed to affect adversely,
alter or change the powers, preferences and special rights of the Series A
Preferred Shares. With respect to any matter on which the holders of the
Series A Preferred Shares are entitled to vote as a separate class, each
Series A Preferred Share shall be entitled to one vote.
(2) Holders of Series A Preferred Shares shall be entitled to notice
of any shareholders' meeting. The holders of Series A Preferred Shares
shall be entitled to vote upon all matters upon which holders of the
Common Shares have the right to vote. Each Series A Preferred Share shall
be entitled to a number of votes equal to the number of votes that the
number of Class B Common Shares into which such Series A Preferred Shares
could be converted pursuant to the provisions of paragraphs (g)(1) and (h)
hereof would have had such Series A Preferred Shares been converted into
Class B Common Shares at the record date for the determination of the
shareholders entitled to vote on such matters, or, if no such record date
is established, at the date such vote is taken or any written resolution
of shareholders is solicited, such votes to be counted together with all
other shares having general voting powers and not separately as a class.
(g) Conversion.
(1) Optional Conversion. Each Series A Preferred Share shall be
convertible at any time and from time to time at the option of the holder
thereof into fully paid and nonassessable Class B Common Shares. The mechanism
of conversion is by means of redemption of the Series A Preferred Shares and by
issue of Class B Common Shares and references herein to "conversion" shall be
construed accordingly. The number of Class B Common Shares deliverable upon
conversion of a Series A Preferred Share as of the Issuance Date, subject to
adjustment as hereinafter provided, shall be one.
(2) Mandatory Conversion. Following the second anniversary of the
Issuance Date, the Series A Preferred Shares shall automatically convert into
Class B Common Shares. The number of Class B Common Shares deliverable upon
conversion of a Series A Preferred Share shall be as set forth in paragraphs
(g)(1) and (h).
(3) Fractional Shares. In connection with the conversion of any
Series A Preferred Shares, no fractions of Class B Common Shares shall be
issued, but in lieu thereof,
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the Company shall pay a cash adjustment in respect of such fractional interest
in an amount equal to such fractional interest multiplied by the Current Market
Price of the Class A Common Shares as of the date of conversion. If more than
one Series A Preferred Share shall be surrendered for conversion by the same
holder at the same time, the number of full Class B Common Shares issuable on
conversion thereof shall be computed on the basis of the total number of Series
A Preferred Shares so surrendered.
(4) Mechanics of Conversion. Before any holder of Series A Preferred
Shares shall be entitled to convert the same into Class B Common Shares, such
holder shall give written notice to the Company of the election to convert the
same and shall state therein the name or names in which the Class B Common
Shares are to be issued and if such Series A Preferred Shares have been issued
in certificated form, surrender the certificate or certificates therefor, duly
endorsed in favor of the Company, or deliver an appropriate indemnity agreement,
at the office of the Company or its transfer agent for the Series A Preferred
Shares. The Company shall, as soon as practicable thereafter, cause the issue of
the Class B Common Shares to be recorded on the share register of the Company,
and, if to be issued in certificated form, issue and deliver at such office to
such former holder of Series A Preferred Shares, or to the nominee or nominees
of such holder, a certificate or certificates for, the number of Class B Common
Shares to which such holder shall be entitled as aforesaid. An appropriate entry
shall be made on the share register of the Company for the remaining Series A
Preferred Shares in any case in which fewer than all of the Series A Preferred
Shares held by a holder are converted. Each conversion shall be deemed to have
been effected immediately prior to the close of business on the Business Day on
which the notice of conversion of Series A Preferred Shares is given and, if
applicable, such share certificates and other documents have been received by
the Company as aforesaid.
(5) Issue Taxes. The Company shall pay all issue taxes, if any,
incurred in respect of the issue of Class B Common Shares on conversion of
Series A Preferred Shares. If a holder of shares surrendered for conversion
specifies that the Class B Common Shares to be issued on conversion are to be
issued in a name or names other than the name or names in which such surrendered
shares stand, the Company shall not be required to pay any transfer or other
taxes incurred by reason of the issuance of such Class B Common Shares to the
name of another.
(6) Reservation of Shares. The Company shall at all times reserve
and keep available, free from preemptive rights, for issuance upon the
conversion of Series A Preferred Shares, such number of its authorized but
unissued Class B Common Shares as will from time to time be sufficient to permit
the conversion of all outstanding Series A Preferred Shares. Prior to the
delivery of any securities which the Company shall be obligated to deliver upon
conversion of the Series A Preferred Shares, the Company shall comply with all
applicable laws and regulations which require action to be taken by the Company.
All Class B Common Shares delivered upon conversion of the Series A Preferred
Shares will upon deliv-
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ery be duly and validly issued and fully paid and nonassessable, free of all
liens and charges and not subject to any preemptive rights.
(h) Conversion Adjustments. The number of Class B Common Shares into
which each Series A Preferred Share is convertible shall be subject to
adjustment from time to time as follows:
(1) Share Splits and Combinations. In case the Company shall at any
time or from time to time after the Issuance Date (A) subdivide or split
the outstanding Class B Common Shares, (B) combine or reclassify the
outstanding Class B Common Shares into a different number of shares or (C)
issue by reclassification of the Class B Common Shares any shares of the
Company, then, and in each such case, the number of Class B Common Shares
into which each Series A Preferred Share is convertible shall be adjusted
so that the holder of any Series A Preferred Shares thereafter surrendered
for conversion shall be entitled to receive the number of Class B Common
Shares or other securities of the Company which such holder would have
owned or have been entitled to receive after the occurrence of any of the
events described above, had such Series A Preferred Shares been
surrendered for conversion immediately prior to the occurrence of such
event or the record date therefor, whichever is earlier. An adjustment
made pursuant to this subparagraph (1) shall become effective at the close
of business on the day upon which such corporate action becomes effective.
Such adjustment shall be made successively whenever any event listed above
shall occur.
(2) Share Dividends in Common Shares. In case the Company at any
time or from time to time after the Issuance Date pays a dividend or makes
a distribution in Class B Common Shares on the Class B Common Shares the
number of Class B Common Shares into which each Series A Preferred Share
is convertible shall be adjusted so that the holder of any Series A
Preferred Shares thereafter surrendered for conversion shall be entitled
to receive the number of Class B Common Shares that such holder would have
owned or have been entitled to receive after such dividend, had such
Series A Preferred Shares been surrendered for conversion immediately
prior to the record date for the determination of holders entitled to
receive such dividend.
(3) Distribution of Indebtedness, Securities, Cash or Assets. In
case the Company distributes to all holders of Class B Common Shares
(whether by dividend or other distribution, or in a merger, amalgamation
or consolidation or otherwise) evidences of indebtedness, shares of any
class or series, other securities, including rights or warrants to
subscribe for securities, cash or assets, in each case, of the Company or
any of its subsidiaries (other than a dividend or distribution which is
made directly to the holders of Series A Preferred Shares pursuant to
paragraph (d) above), the Company shall distribute to the holders of
Series A Preferred Shares the same in an amount per Series A Preferred
Share equal to the amount as would be payable with respect to
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the number of Class B Common Shares into which such Series A Preferred
Share is convertible pursuant to paragraphs (g)(1) and (h).
(4) Transactions in Which Class B Common Shares are Exchanged. In
case at any time the Company shall be a party to any transaction
(including, without limitation, a merger, amalgamation, consolidation,
sale of all or substantially all of the Company's assets, liquidation or
recapitalization of the Class B Common Shares and excluding any
transaction to which clauses (1), (2) or (3) of this paragraph (h) apply)
in which the previously outstanding Class B Common Shares shall be changed
into or exchanged for different securities of the Company or capital stock
or other securities of another corporation or entity (including cash) or
any combination of any of the foregoing (each such transaction being a
"Transaction"), the Company shall make all necessary provisions such that
each Series A Preferred Share shall thereafter be convertible into, in
lieu of Class B Common Shares, the amount of securities or other property
to which such holder would actually have been entitled as a holder of
Class B Common Shares upon the consummation of the Transaction if such
holder had converted such Series A Preferred Shares immediately prior to
such Transaction (subject to adjustments from and after consummation of
the Transaction as nearly equivalent as possible to the adjustments
provided for in this paragraph (h)).
(5) Below Market Offerings of Common Shares. In case the
Company shall at any time, or from time to time, issue Common Shares (or
securities convertible into, or exercisable for, Common Shares) at a price
per share (or having a conversion or exercise price per share) less than
the Current Market Price (or, in the case of an issuance or sale in
connection with an underwritten public offering, less than 99% of the
Current Market Price less underwriting discounts and commissions) as of
the date of issuance of such shares or of such other securities, then, and
in each such case, the number of Class B Common Shares into which each
Series A Preferred Share is convertible shall be adjusted so that the
holder of each share thereof shall be entitled to receive, upon the
conversion thereof, the number of Class B Common Shares determined by
multiplying (A) the number of Class B Common Shares into which such share
was convertible on the day immediately prior to such date by (B) a
fraction, the numerator of which shall be the sum of (i) the number of
Common Shares outstanding on such date and (ii) the number of additional
Common Shares issued (or into which the other securities may convert or be
exercised), and the denominator of which shall be the sum of (aa) the
number of Common Shares outstanding on such date and (bb) the number of
Common Shares which the aggregate consideration receivable by the Company
for the total number of Common Shares so issued (or into which the other
securities may convert or be exercised) would purchase at such Current
Market Price on such date. An adjustment made pursuant to this
subparagraph (5) shall be made on the next Business Day following the date
on which any such issuance is made and shall be effective retroactively
immediately after the close of business on such
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date. For purposes of this subparagraph (5), the aggregate consideration
receivable by the Company in connection with the issuance of Common
Shares, or of other securities convertible into or exercisable for Common
Shares, shall be deemed to be equal to the sum of the aggregate offering
price (before deduction of reasonable underwriting discounts or
commissions and expenses) of all such securities plus the minimum
aggregate amount, if any, payable upon conversion or exercise of any such
other securities into Common Shares.
The provisions of this clause (h) shall not apply to the issuance of any Common
Shares (i) pursuant to any restricted share, share option, share purchase or
similar plan or arrangement for the benefit of employees or directors of the
Company or any of its subsidiaries approved by the Board of Directors or a duly
organized committee thereof, or (ii) issued upon conversion of Series A
Preferred Shares, including pursuant to the purchase price adjustments therein.
(i) Redemption. (1) Upon the completion of the an Initial Public
Offering, the Company shall redeem outstanding Series A Preferred Shares having
an aggregate Liquidation Preference and accrued but unpaid dividends equal to
the net proceeds to the Company from such Initial Public Offering at the
redemption price (to be paid in accordance with the next sentence) equal to 110%
of the Liquidation Preference thereof, plus an amount equal to the dividends
unpaid thereon, if any, whether or not declared, to the redemption date. The
redemption price on any Series A Preferred Shares redeemed shall be paid as
follows: (x) an amount equal to 100% of the Liquidation Preference shall be paid
in cash, and (y) the remainder of the redemption price shall be paid through
delivery by the Company of Class A Common Shares having a value (based on the
initial offering price to the public (gross of any underwriting discounts and
commissions) of the Class A Common Shares in such Initial Offering) equal to 10%
of the Liquidation Preference plus an amount equal any such unpaid dividends.
(2) Not less than 10 days nor more than 45 days (such date as fixed
by the Board of Directors of the Company is referred to herein as the
"Redemption Record Date") prior to the date fixed for any redemption of Series A
Preferred Shares, a notice specifying the time and place of the redemption shall
be given by first class mail, postage prepaid, to the holders of record on the
Redemption Record Date of the Series A Preferred Shares to be redeemed at their
respective addresses as the same shall appear on the books of the Company,
notifying each holder of record that such Series A Preferred Shares shall be
cancelled on the share register of the Company on the redemption date and
thereupon the redemption price of the shares, and any unpaid dividends thereon
to the redemption date, shall be paid to the order of the holder whose name
appears on the share register of the Company, or if such Series A Preferred
Shares are issued in certificated form, calling upon each holder of record to
surrender to the Company on the redemption date at the place designated in the
notice such holder's
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certificate or certificates representing the Series A Preferred Shares. On or
after the redemption date, each holder of Series A Preferred Shares shall, if
such Series A Preferred Shares are issued in certificated form, present and
surrender such holder's certificate or certificates for such shares to the
Company at the place designated in the redemption notice and thereupon the
redemption price of the shares, and any unpaid dividends thereon to the
redemption date, shall be paid to or on the order of the person whose name
appears on such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled.
(3) All redemptions or repurchases of the Series A Preferred Shares
by the Company shall be made pro rata to the holders thereof.
(j) Certain Definitions. As used in this Annexure A, the following
terms shall have the following meanings, unless the context otherwise requires:
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or a
United States federal or Cayman Island holiday.
"Current Market Price" as of any given date, means (1) the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, per Class A Common
Share in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange, or (2) if the Class A Common Shares are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Class A Common Shares
are listed or admitted to trading, or (3) if the Class A Common Shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the Nasdaq Stock Market or
such other system then in use, or (4) if on any such date the Class A Common
Shares are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Class A Common Shares selected by the Board of Directors, or (4) if none of
(1) through (4) are applicable, the fair market value of the Class A Common
Shares as determined by the Board of Directors in good faith.
"FPC" means Fox, Paine & Company, LLC.
"Initial Public Offering" means an underwritten initial public
offering or public offerings (on a cumulative basis) of Class A Common Shares
pursuant to a registration statement or registration statements under the
Securities Act of 1933, as amended, with aggregate gross proceeds to the Company
of at least $50 million.
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"Issuance Date" means the first date of issuance of any Series A
Preferred Shares.
(k) Headings. The headings used herein are for convenience of
reference only and shall not define, limit or affect any of the provisions
hereof.