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EXHIBIT 3.1(a)
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
NEXT GENERATION NETWORK, INC.
NEXT GENERATION NETWORK, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify:
FIRST: The Corporation was originally incorporated on June 7, 1990 as
"The Mentus Corporation".
SECOND: This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Section 228, Section 242 and
Section 245 of the General Corporation Law of the State of Delaware.
THIRD: The Certificate of Incorporation of the Corporation is hereby
amended and restated to read in its entirety as set forth in the attached
Exhibit A.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by its duly authorized officer this 6th day of November 2000.
By: /S/ THOMAS M. PUGLIESE
----------------------
Thomas M. Pugliese
Vice-Chairman and CEO
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EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
NEXT GENERATION NETWORK, INC.
1. Name. The name of the corporation is Next Generation Network,
Inc. (the "Corporation").
2. Registered Office and Agent. The address and registered office of
the Corporation in the State of Delaware is 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
3. Purpose. The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
4. Authorized Capital.
Common Stock. The Corporation shall be authorized to issue Twenty Five
Million (25,000,000) shares of common stock, $.01 par value per share.
Preferred Stock. The Corporation's Board of Directors shall be
authorized to provide for the issuance of Eight Million (8,000,000) shares of
preferred stock, $1.00 par value per share, by filing a certificate or
certificates pursuant to the applicable law of the State of Delaware to fix the
designations, rights, powers and preferences of such shares, and any
qualifications, limitations or restrictions thereof or pertaining thereto and
which shall be issued from time to time in one or more series, as set forth
below. The authority of the Board shall include, but not be limited to, the
authority to determine the following with respect to such preferred stock: (i)
the rate of dividends, if any, whether such dividends shall be cumulative, and,
if so, the date on which such cumulative dividends shall commence; (ii) the
rights thereof in the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; (iii) the conversion privileges,
if any, and the terms and conditions thereof, including provisions for
adjustment of the conversion rate based on such events as the Board of Directors
may determine; (iv) the redemption feature, if any, and the terms and conditions
thereof, including the date upon or after which such shares shall be redeemable,
and the amount per share payable in the event of redemption, which amount may
vary under different conditions and at different redemption dates; (v) the
voting rights, if any (in addition to such voting rights as may be required by
law) and the terms and conditions of such voting privileges; (vi) the exchange
privileges, if any, and the terms and conditions thereof, including the terms of
any security for which the Board of Directors may determine the preferred stock
to be exchangeable; and (vii) any and all other designations, rights, powers or
preferences thereof, or qualifications, restrictions or limitations pertaining
thereto, that lawfully may be provided for by resolution of the Board of
Directors and
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any be included in a certificate of the kind contemplated under Section 151(g)
of the General Corporation Law of the State of Delaware or any successor
statute.
The Board of Directors of the Corporation has previously duly adopted a
resolution creating and authorizing the issuance of a series of preferred stock,
par value $1.00 per share, of the Corporation designated as the "Series A 8.25%
Convertible Exchangeable Preferred Stock." The Restated Certificate of
Designations, Preferences and Relative Participating, Optional and Other Special
Rights, Qualifications, Limitations and Restrictions of Series A 8.25%
Convertible Exchangeable Preferred Stock is restated to read in its entirety as
set forth in attached Exhibit I, which is incorporated herein by reference.
The Board of Directors of the Corporation has previously duly adopted a
resolution creating and authorizing the issuance of a series of preferred stock,
par value $1.00 per share, of the Corporation designated as the "Series D 8%
Convertible Participating Preferred Stock". The Certificate of Designations,
Preferences and Relative Participating, Optional and Other Special Rights,
Qualifications, Limitations and Restrictions of Series D 8% Convertible
Participating Preferred Stock is set forth in attached Exhibit II, which is
incorporated herein by reference.
5. Bylaws. Except as otherwise provided in the bylaws of the
Corporation, the board of directors is expressly authorized at any time and from
time to time to make, alter, amend or repeal the bylaws of the Corporation.
6. Ballots. Election of directors need not be by written ballot
except as otherwise provided in the Bylaws of the Corporation.
7. Larger Vote. The Bylaws of the Corporation may require a larger
than majority vote of the stock or of the directors for any corporate action.
8. Liability of Directors and Officers. The personal liability of
the directors and officers of the Corporation is hereby eliminated or limited to
the fullest extent permitted by the provisions of Section 102(b)(7) of the
General Corporation Law of the State of Delaware, as the same may be amended and
supplemented, or any successor statute. The provisions of this section shall be
deemed to be a contract with each director and officer of the Corporation who
serves as such at any time while this section is in effect, and such provisions
are cumulative of and shall be in addition to and independent of any and all
other limitations on the liabilities of directors and officers of the
Corporation. In any action, suit or proceeding involving the application of the
provisions of this section, the party or parties challenging the right of a
director or officer to the benefits of this section shall have the burden of
proof.
9. Indemnification. The Corporation shall, to the fullest extent
permitted by the provisions of Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented, indemnify any
and all persons whom it shall have the power to indemnify under said section
from and against any and all of the expenses, liabilities, or other matters
referred to in or covered by said section, and the indemnification provided for
herein shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as
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to action in such person's official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.
10. Non-Cumulative Voting. Except as otherwise provided by the board
of directors in accordance with Article Four above, all rights to vote and all
voting power shall be exclusively vested in the holders of the Corporation's
common stock. All voting shall be non-cumulative.
11. Amendments. From time to time any of the provisions of this
certificate of incorporation may be amended, altered or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the Corporation by
this certificate of incorporation are granted subject to the provisions of this
Article Eleven.
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EXHIBIT I
CERTIFICATE OF DESIGNATIONS
FOR THE SERIES A 8.25% CONVERTIBLE
PREFERRED STOCK
(FORMERLY DESIGNATED AS THE 8.25% CONVERTIBLE
EXCHANGEABLE PREFERRED STOCK)
OF
NEXT GENERATION NETWORK, INC.
1. Designation and Amount. The shares of the series of Preferred
Stock of the Corporation previously designated as "8.25% Convertible
Exchangeable Preferred Stock" are hereby redesignated as "Series A 8.25%
Convertible Preferred Stock" (the "Series A Preferred Stock") and the number of
shares constituting such series shall continue to be Twenty Thousand (20,000).
2. Rank. The Series A Preferred Stock shall, with respect to
dividend rights and rights on liquidation, dissolution and winding up, rank (a)
prior to all classes of Common Stock of the Corporation, (b) prior to any other
series or class of the Corporation's stock now existing or hereafter created if
so designated in the resolution of the Corporation's Board of Directors or the
provisions of the Corporation's Certificate of Incorporation creating such other
series or class, (c) on a parity with any other series or class of the
Corporation's stock now existing or hereafter created if so designated in the
resolution of the Corporation's Board of Directors or the provisions of the
Corporation's Certificate of Incorporation creating such other series, and (d)
junior to any series or class of the Corporation's stock if so designated in the
resolution of the Board of Directors or the provisions of the Corporation's
Certificate of Incorporation creating such other series, provided said
resolution or provisions and the creation, authorization and issuance of such
stock is approved by a majority of the outstanding shares of Series A Preferred
Stock. All equity securities of the Corporation now existing or hereafter
created which (i) rank below the Series A Preferred Stock are collectively
referred to herein as "Junior Stock," (ii) rank on a parity with the Series A
Preferred Stock are collectively referred to herein as "Parity Stock," and (iii)
rank senior to the Series A Preferred Stock are collectively referred to herein
as "Senior Stock." The term "Senior Stock" shall in any event include (without
limitation) the Series B Preferred Stock and the Series C Preferred Stock. The
term `Series B Preferred Stock' means the Series B Senior Cumulative Compounding
Convertible Redeemable Preferred Stock, par value $1.00 per share, of the
Corporation, and shall also include any capital stock into which shares of the
Series B Preferred Stock may be changed, and the term 'Series C Preferred Stock'
means the Series C Senior Cumulative Compounding Convertible Redeemable
Preferred Stock, par value $1.00 per share, of the Corporation, and shall also
include any capital stock into which shares of the Series C Preferred Stock may
be changed.
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3. Dividends. (a) Subject to the rights of the holders of Senior
Stock, the holders of Series A Preferred Stock shall be entitled to receive or
have set apart for payment, when, as and if declared by the Corporation's Board
of Directors, out of funds legally available for the payment of dividends,
cumulative dividends thereon at the rate of $41.25 per share per annum. Such
dividends shall begin to accrue on and after the date of issuance of the Series
A Preferred Stock and shall be payable (if, as and when declared) in equal
semi-annual installments (computed by dividing the annual dividend amount by
two) on June 15 and December 15 (each, a "Dividend Payment Date"), commencing on
June 15, 1991. The amount of dividends payable for the initial dividend period
and for any period shorter than a full semi-annual dividend period shall be
computed on the basis of a 360-day year consisting of twelve 30-day months. Any
such dividends which are declared and paid will be payable pro rata to the
holders of record as they appear on the stock books of the Corporation on such
record dates as shall be fixed by the Board of Directors of the Corporation in
accordance with the Corporation's bylaws.
(b) Any dividend not paid when due shall be fully
cumulative and shall accrue (whether or not earned or declared). No interest or
dividends shall accrue or be payable on any accrued unpaid dividends on the
Series A Preferred Stock. Subject to paragraphs 3(a), 3(c), 3(d) and 3(e), the
Corporation may make payments in respect of accrued dividends at any time.
(c) Notwithstanding anything contained herein to the
contrary, the Board of Directors shall not declare, pay or set apart for payment
any dividends on shares of Series A Preferred Stock if any provisions of the
Corporation's Certificate of Incorporation or any resolution of the
Corporation's Board of Directors (in each case as in effect from time to time)
creating the Series B Preferred Stock, the Series C Preferred Stock or any other
Senior Stock of any agreement, instrument or debenture relating to indebtedness
or any Senior Stock of the Corporation prohibits such declaration, payment or
setting apart for payment or provides that such declaration, payment or setting
apart for payment would constitute a breach thereof or a default thereunder;
provided, however, that nothing herein contained shall in any way or under any
circumstances be construed or deemed to (i) require the Board of Directors to
declare, or the Corporation to pay or set apart for payment, any dividends on
shares of the Series A Preferred Stock at any time, whether permitted by any
such provisions, agreement, instrument or debenture or not, or (ii) adversely
affect the cumulative accrual of dividends on Series A Preferred Stock if such
provisions, agreement, instrument or debenture prohibits such declaration,
payment or setting aside for payment or provides that such declaration, payment
or setting aside for payment would constitute a breach thereof or a default
thereunder.
(d) The Corporation shall not pay dividends on the Series A
Preferred Stock unless it has paid or set apart for payment or contemporaneously
pays or sets apart for payment all accrued and unpaid dividends for all prior
periods on any Parity Stock. Notwithstanding the foregoing sentence, but subject
to the rights of the holders of Senior Stock, dividends may be paid or declared
and set apart for payment of the Series A Preferred Stock if at the same time
dividends for the same or comparable dividend period or periods are paid or
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declared or set apart for payment on all issued and outstanding shares of Parity
Stock, such dividends to be paid, declared or set aside pro rata in proportion
to the ratio between accrued and unpaid dividends on the Parity Stock and the
accrued and unpaid dividends on the Series A Preferred Stock.
(e) (i) Holders of shares of the Series A Preferred Stock
shall be entitled to receive the dividends provided for in paragraph 3(a) hereof
in preference to and in priority over the payment of any dividends upon any of
the Junior Stock.
(ii) Subject to the rights of holders of Senior Stock,
if any, the Corporation shall not (A) declare, pay or set apart for payment any
dividend on any Junior Stock or Parity Stock or make any payment on account of,
or set apart for payment, money for a sinking or other similar fund, for the
purchase, redemption or other retirement of any Junior Stock or Parity Stock or
any warrants, rights, calls or options exercisable for or convertible into
Junior Stock or Parity Stock, or (B) make any distribution in respect of any
Junior Stock or Parity Stock, either directly or indirectly, other than
distributions or dividends in Junior Stock or Parity Stock to the holders of
Junior Stock or Parity Stock, respectively, or (C) permit any corporation in
which the Corporation owns directly or indirectly a majority of the outstanding
shares of capital stock, to purchase or redeem any Junior Stock or Parity Stock
or any warrants, rights, calls or options exercisable for or convertible into
Junior Stock or Parity Stock, unless in each such case the Corporation has paid
or declared or set apart for payment, or concurrently with such declaration,
payment, setting apart for payment, purchase, redemption and/or distribution in
respect of any Junior Stock or Parity Stock, pays, declares or sets apart for
payment, all accrued and unpaid dividends on shares of the Series A Preferred
Stock for all prior periods. Notwithstanding the foregoing sentence, dividends
may be paid or declared and set apart for payment on Parity Stock if at the same
time dividends for the same or comparable dividend period or periods are paid or
declared and set apart for payment on all issued and outstanding shares of
Series A Preferred Stock, such dividends to be paid, declared or set aside pro
rata in proportion to the ratio between accrued and unpaid dividends on the
Series A Preferred Stock and the accrued and unpaid dividends on the Parity
Stock.
(iii) The foregoing provisions of this paragraph 3(e),
shall not restrict or prohibit the retirement of any shares of the Corporation's
capital stock or warrants, options or rights to acquire such capital stock by
exchange for, or out of the proceeds of, the substantially concurrent sales of
shares of (A) its capital stock which, by its terms, is not subject to mandatory
redemption or redemption at the option of the holder thereof and is not
exchangeable for any indebtedness of the Corporation ("Permitted Stock") or (B)
warrants, options or rights to acquire Permitted Stock.
4. Liquidation Rights. If the Corporation is voluntarily or
involuntarily dissolved, liquidated or its affairs wound up, after payment or
provision for payment of the debts and other liabilities of the Corporation, and
after liquidation of all Senior Stock, the holders of the Series A Preferred
Stock then outstanding shall be entitled to receive, out of the net assets of
the Corporation, an amount equal to the sum of $500 per share of Series A
Preferred Stock
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outstanding, plus all accrued and unpaid dividends (whether or not earned or
declared) on such Series A Preferred Stock to the date fixed for liquidation,
dissolution or winding up (the "Liquidation Price") before any payment is made
or any assets of the Corporation distributed or paid over to the holders of any
Junior Stock (in their capacity as such holders). If the distributable assets of
the Corporation are insufficient to permit payment in full of the liquidation
price of any Parity Stock and the Liquidation Price of the Series A Preferred
Stock, then such assets shall be distributed ratably among the holders of Series
A Preferred Stock and the holders of any Parity Stock in proportion to the
amount that each would have been entitled to receive if such assets were
sufficient to pay the full liquidation price of all outstanding shares of Series
A Preferred Stock and Parity Stock. The holders of Series A Preferred Stock
shall not be entitled to receive any further amounts in respect of any
dissolution, liquidation or winding up of the affairs of the Corporation, or any
other distribution of assets, after payment in full of the Liquidation Price
therefor. No payments shall be made in respect of any Junior Stock until payment
in full of the Liquidation Price of the Series A Preferred Stock. A merger or
consolidation of the Corporation with or into any other corporation or sale or
conveyance of all or any part of the assets of the Corporation for cash,
securities or other property shall not be deemed to be a voluntary or
involuntary liquidation or dissolution or winding up of the Corporation within
the meaning of this paragraph 4 unless the holders of the Series B Preferred
Stock or the Series C Preferred Stock elect to treat such event as such a
liquidation, dissolution or winding up in accordance with the terms thereof. For
purposes of the foregoing, the phrase 'after liquidation of all Senior Stock' in
the first sentence of this Paragraph 4 shall mean, in the case of the Series B
Preferred Stock or the Series C Preferred Stock, the payment to the holders
thereof of the full amounts provided for in Section 5(a) of the resolution of
the Board of Directors of the Corporation creating such series (or any successor
provisions of the Corporation's Certificate of Incorporation), as the same has
been or from time to time may be amended. Liquidation rights terminate upon
conversion of the Series A Preferred Stock into Common Stock.
5. Optional Redemption. (a) At Option of Corporation. To the extent
funds are legally available therefor and subject to the rights of holders of
Senior Stock and any agreement, instrument or debenture now existing or
hereafter arising relating to indebtedness of the Corporation or any Senior
Stock, the Series A Preferred Stock is redeemable for cash, at the option of the
Corporation, in whole or in part, at any time or from time to time at $500.00
per share, plus the total amount of all accrued and unpaid dividends on the
shares of Series A Preferred Stock to be redeemed to the redemption date.
The Corporation shall not redeem any less than all of
the then outstanding shares of Series A Preferred Stock unless and until all
accrued and unpaid dividends on the then outstanding shares of Series A
Preferred Stock and (except with respect to the shares to be redeemed) the then
current semi-annual dividends thereon have been paid in full.
(b) If less than all outstanding shares of Series A
Preferred Stock are to be redeemed, the shares to be redeemed shall be redeemed
in integral multiples of $500 by lot or in such other manner as the Board of
Directors may determine.
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(c) Notice of redemption of the Series A Preferred Stock
shall be given by first class mail, postage prepaid, mailed not less than 30
days prior to the redemption date, to each holder of record of shares to be
redeemed at such holder's address as the same appears on the stock register of
the Corporation. Each such notice shall state: (i) the redemption date; (ii) the
number of shares of Series A Preferred Stock to be redeemed and, if less than
all the shares held by such holder are to be redeemed from such holder, the
number of shares to be redeemed from such holder; (iii) the redemption price;
(iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi)
that the shares are convertible into Common Stock until the close of business on
the tenth day prior to the redemption date.
(d) Notice having been mailed as aforesaid, or if given by
a holder as set forth below, from and after the redemption date (unless default
shall be made by the Corporation in making payment of the redemption price of
the Series A Preferred Stock called for redemption) dividends on the shares of
Series A Preferred Stock so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding and shall have the
status of authorized but unissued shares of preferred stock, unclassified as to
series, and shall not be reissued as shares of Series A Preferred Stock, and all
rights of the holders thereof as stockholders of the Corporation (except the
right to receive from the Corporation the redemption price and any accrued and
unpaid dividends) shall cease. Upon surrender of the certificates for any shares
so redeemed in accordance with said notice the Corporation shall pay the
redemption price (or issue a redemption certificate under subparagraph 5(e), as
the case may be) for such redeemed shares and same shall then be canceled. In
the event fewer than all of the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
(e) There is no mandatory redemption or sinking fund
obligation with respect to the Series A Preferred Stock.
(f) Shares of Series A Preferred Stock that have been
converted into Common Stock have no redemption rights.
6. Conversion. (a) Each share of Series A Preferred Stock may be
converted, in whole but not in part, into such number of shares of Common Stock
of the Corporation as shall equal (i) the sum of (x) $500 plus (y) all accrued
and unpaid dividends (whether or not earned or declared) on such share
determined as of the date such share is deemed to be converted in accordance
with the last sentence of paragraph 6(c) of this resolution less (z) the amount
of funds, if any, payable with respect to such share pursuant to the last
sentence of this paragraph 6(a), divided by (ii) the Conversion Price (as
hereinafter defined). The conversion rights of Series A Preferred Stock called
for redemption expire on the close of business on the tenth day before the
redemption date, unless the Corporation defaults in making payment of the
redemption price of the shares called for redemption. As used herein, the term
"Conversion Price" means $135.27, as adjusted in accordance with the provisions
of this paragraph 6. No
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payment or adjustment for accrued and unpaid dividends on the shares of Series A
Preferred Stock, or on the shares of Common Stock into which the Series A
Preferred Stock is converted, is to be made on conversion; provided, however,
that, if a share of Series A Preferred Stock (other than a share of Series A
Preferred Stock called for redemption within such period) is converted between
the record date with respect to any dividend payment and the next succeeding
Dividend Payment Date, such share of Series A Preferred Stock must be
accompanied by funds equal to the dividend payable on such Dividend Payment Date
on the shares of Series A Preferred Stock so converted.
(b) Any holder of shares of Series A Preferred Stock
electing to convert such shares or any portion thereof shall deliver the
certificates therefor, with the form of notice of election to convert on such
certificates (which is set forth on the back of each certificate representing
shares of Series A Preferred Stock) fully completed and duly executed, to the
principal executive office of the Corporation or, if a transfer agent is named
by the Corporation for the Common Stock, to the principal office of the transfer
agent. The conversion right with respect to any such shares of Series A
Preferred Stock shall be deemed to have been exercised at the date upon which
the certificates therefor with such notice of election duly executed shall have
been so delivered, and the person or persons entitled to receive the Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Common Stock upon said date.
(c) The Corporation shall not issue fractional shares of
Common Stock upon conversion of shares of Series A Preferred Stock. Instead of
any fractional share of Common Stock which would otherwise be issuable upon
conversion of any share or shares of Series A Preferred Stock, the Corporation
shall deliver to the holder a check in an amount equal to the fraction of the
Common Stock resulting from the conversion multiplied by the Conversion Price.
(d) If a holder converts shares of Series A Preferred
Stock, the Corporation shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of shares of Common Stock upon the conversion. The
holder, however, shall pay any such tax which is due because the shares are
issued in a name other than the name of such holder.
(e) The Corporation shall reserve out of its authorized
but unissued Common Stock or its Common Stock held in treasury enough shares of
Common Stock to permit the conversion of all of the shares of Series A Preferred
Stock. The Corporation shall from time to time, in accordance with the laws of
the State of Delaware, increase the authorized amount of its Common Stock if at
any time the authorized amount of its Common Stock remaining unissued shall not
be sufficient to permit the conversion of all shares of Series A Preferred Stock
at the time outstanding. In order that the Corporation may issue shares of
Common Stock upon conversion of shares of Series A Preferred Stock, the
Corporation will use its reasonable efforts to comply with all applicable
federal and state securities laws relating to such issuance, but this sentence
shall not be deemed to require the Corporation to register or qualify any of the
shares of Common Stock under the federal or any state securities law.
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All shares of Common Stock which may be issued upon
conversion of the shares of Series A Preferred Stock shall be validly issued,
fully paid and nonassessable.
(f) The Conversion Price shall be subject to adjustment as
follows:
(i) No Adjustments Except as Specifically Set Forth.
Except as specifically set forth herein, there shall be no adjustment to the
Conversion Price.
(ii) Adjustments for Certain Distributions.
(A) Stock Dividends, Subdivisions,
Combinations and Recapitalization. Subject to clauses (ii)(C) and (v) of this
paragraph 6, if the Corporation shall at any time (1) declare or pay a dividend
or declare, pay or make any other distribution on the Common Stock in shares of
Common Stock, (2) subdivide the outstanding shares of Common Stock into a
greater number of shares or (3) combine the outstanding shares of Common Stock
into a smaller number of shares, then in each and every such event the number of
shares of Common Stock issuable upon conversion of each outstanding share of
Series A Preferred Stock shall be adjusted so that the holder of such share
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock which such holder would have owned and would have been
entitled to receive by virtue of the happening of any of the events described
above had such share been converted (x) in the case of a dividend or
distribution, immediately prior to the record date for determination of the
stockholders entitled to receive such dividend or distribution (or, if no such
record date is fixed, immediately prior to any other time as of which the
holders of Common Stock entitled to participate in such distribution was
determined) or (y) in the case of a subdivision or combination, on the effective
date of such subdivision or combination; and the Conversion Price shall be
adjusted to equal the product obtained by multiplying the Conversion Price in
effect immediately prior to the applicable time referred to in subclause (x) or
(y) of this sentence by a fraction the numerator of which is the number of
shares of Common Stock into which such share of Series A Preferred Stock was
convertible immediately prior to such time and the denominator of which is the
number of shares of Common Stock into which such share of Series A Preferred
Stock was convertible immediately after such adjustment. Subject to clauses
(ii)(C) and (v) of this paragraph 6, if the Corporation shall at any time issue
any shares of capital stock of the Corporation by way of reclassification of the
Common Stock, then the number and kind of shares of Common Stock and/or other
capital stock issuable upon conversion of each outstanding share of Series A
Preferred Stock and the Conversion Price shall be adjusted so that the holder of
such share thereafter surrendered for conversion shall be entitled to receive
the kind and number of shares of capital stock which such holder would have
owned and would have been entitled to receive by virtue of the happening of such
event had such share been converted immediately prior to the record date for
determination of the stockholders entitled to receive shares of such capital
stock in such reclassification (or, if no such record date is fixed, immediately
prior to any other time as of which the holders of Common Stock entitled to
participate in such reclassification was determined). In the event that such
dividend or distribution is not paid or made or such subdivision, combination or
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reclassification is not effected, the number and kind of shares of Common Stock
and/or other capital stock issuable upon conversion of each outstanding share of
Series A Preferred Stock and the Conversion Price shall again be adjusted to be
the Conversion Price which would then be in effect if such record date or
effective date had not been so fixed.
(B) Certain Other Distributions. Subject to
clauses (ii)(C) and (v) of this paragraph 6, if the Corporation shall at any
time declare or make any distribution to all holders of outstanding shares of
Common Stock of any cash or other assets, any debt securities or other evidences
of its indebtedness or any capital stock other than Common Stock (excluding in
any such case dividends, distributions, issuances and other events referred to
in paragraph 6(f)(ii)(A) hereof), then (1) the number of shares of Common Stock
issuable upon conversion of each outstanding share of Series A Preferred Stock
shall be adjusted so that the holder of such share thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock
equal to the product of the number of shares of Common Stock into which such
share of Series A Preferred Stock was convertible immediately prior to such
adjustment multiplied by a fraction (x) the numerator of which shall be the
Current Market Price per share of the Common Stock at the date of taking such
record or, if no record is taken, at the date as of which the holders of Common
Stock entitled to participate in such distribution were determined or if no such
determination is made, on the date of such distribution, and (B) the denominator
of which shall be the absolute value of the difference between such Current
Market Price per share of Common Stock at such date and the amount allocable to
one share of Common Stock at such date of any such cash so distributable and of
the fair market value (as determined as of such date in good faith by the Board
of Directors) of such cash, other assets, debt securities, other evidences of
indebtedness or capital stock so distributed and (2) the Conversion Price shall
be adjusted to equal the product obtained by multiplying the Conversion Price in
effect immediately prior to such adjustment by a fraction the numerator of which
is the number of shares of Common Stock into which a single share of Series A
Preferred Stock is convertible immediately prior to the adjustment and the
denominator is the number of shares of Common Stock into which a single share of
Series A Preferred Stock is convertible immediately after such adjustment. Any
adjustment pursuant to this paragraph 6(f)(ii)(B) shall become effective
immediately after the record date of the distribution in question (or, if no
such record date is fixed, immediately after any other time as of which the
holders of Common Stock entitled to participate in such distribution was
determined). In the event that such distribution is not made, the number of
shares of Common Stock issuable upon conversion of each outstanding share of
Series A Preferred Stock and the Conversion Price shall again be adjusted to be
the Conversion Price which would then be in effect if such record date or
effective date had not been so fixed. As used herein, the term "Current Market
Price" means, in respect of any share of Common Stock as of any time, (1) if the
Common Stock is then publicly traded, the average, for the 30 consecutive
trading days before the date in question, of the reported last sales prices,
regular way, as reported on the New York Exchange Composite Tape or, if the
Common Stock is not listed or admitted to trading on the New York Stock Exchange
at such time, in the principal consolidated or composite transaction reporting
system on the principal national securities exchange on which such security is
listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, on the Nasdaq National Market or, if such security
is
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not quoted on the Nasdaq National Market, the average of the closing bid and
asked prices for each such day in the over-the-counter market as reported by the
National Association of Securities Dealers, Inc. or, if bid and asked prices
shall not be reported through the National Association of Securities Dealers,
Inc., the average of the bid and asked prices for each such day as furnished by
any New York Stock Exchange member firm regularly making a market in such
security selected for such purpose by the Board of Directors or (2) if the
Common Stock is not then publicly traded, the fair market value per share of
Common Stock as at such date as determined by the Board of Directors of the
Corporation in good faith.
(C) No adjustment pursuant to paragraph
6(f)(ii)(A) or 6(f)(ii)(B) shall be required by reason of distributions of cash
payable out of consolidated current or retained earnings if the sum of the cash
dividends payable after the date hereof does not exceed the net income of the
Corporation subsequent to the date hereof.
(D) Each adjustment pursuant to paragraph
6(f)(ii) hereof shall become effective immediately after the record date for the
event requiring such adjustment, (or, if no such record date is fixed,
immediately after any other time as of which the holders of Common Stock
entitled to participate in such dividend or distribution was determined and
immediately after the effective date in the case of a subdivision, combination
or reclassification.
(E) All determinations of the fair market value
of any property, assets or securities required by this paragraph 6 shall be made
by the Corporation's Board of Directors in good faith.
(iii) Rounding. All calculations under this Article
shall be made to the nearest cent or to the nearest 1/100th of a share, as the
case may be.
(iv) When Adjustment May Be Deferred. No adjustment in
the Conversion Price need be made unless the adjustment would require an
increase or decrease of at least 1% in the Conversion Price. Any adjustments
that are not made shall be carried forward and taken into account in any
subsequent adjustment. When the cumulative net effect of more than one
adjustment would require an increase or decrease of at least 1% in the
Conversion Price, such adjustment shall thereupon be given effect.
(v) When No Adjustment Required. No adjustment need be
made for (a) a change in the par value of the Common Stock, or from par value to
no par value, or from no par value to par value, (b) issuance of treasury shares
that have been acquired by the Corporation after the date hereof. Other than the
adjustments to the Conversion Price set forth herein, a holder of Series A
Preferred Stock shall have no preemptive right which enables said holder to
maintain a specific proportion of shares of capital stock of the Corporation or
any security convertible into or carrying rights or options to purchase such
shares. For the sake of clarity and without implying that any such adjustment
otherwise would be required by this paragraph 6, no adjustment shall be made by
reason of issuance of shares of Common Stock
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upon conversion of the Series A Preferred Stock, the Series B Preferred Stock or
the Series C Preferred Stock or any adjustment to the conversion price or
conversion rate thereof.
(vi) Certificate of Adjustments. Whenever the
Conversion Price is adjusted, the Corporation shall file in the custody of its
Secretary, at its principal office in the United States a certificate setting
forth in reasonable detail the facts requiring the adjustment and the manner of
computing such adjustment. Each such certificate shall be made available at all
reasonable times for inspection by any holder.
(vii) Reorganization. If there is (a) any
consolidation or merger to which the Corporation is a party (other than a
consolidation or merger with a wholly-owned subsidiary or in which the
Corporation is the surviving corporation and which does not result in any
reclassification of, or change (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of Common Stock), or (b) any
sale or conveyance of the properties and assets of the Corporation as, or
substantially as, an entirety to any other corporation; then the Corporation or
such successor or purchasing corporation, as the case may be, shall provide in
its Certificate of Incorporation that each share of Series A Preferred Stock
shall be convertible into the kind and amount of shares of stock and other
securities or property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock issuable upon conversion of each such share of Series A Preferred
Stock immediately prior to such reclassification, change, consolidation, merger,
sale or conveyance. Such Certificate of Incorporation shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this paragraph 6. The Corporation shall cause notice
of the execution of any such event contemplated by this paragraph 6 to be mailed
to each holder of Series A Preferred Stock as soon as practicable. The above
provisions of this paragraph 6 shall be similarly applied to successive
reclassification, consolidations, mergers and sales.
7. Shares Acquired By Corporation. All shares of Series A Preferred
Stock converted or redeemed, retired, purchased or otherwise acquired by the
Corporation shall cease to be issued or outstanding for all purposes and shall
be retired and shall be restored to the status of authorized, undesignated and
unissued shares of preferred stock of the Corporation and may be reissued as
part of another series of the preferred stock of the Corporation, but such
shares shall not be reissued as Series A Preferred Stock.
8. Voting.
(a) The holders of record of shares of Series A Preferred
Stock shall not be entitled to any voting rights except as required by
applicable law or as hereinafter provided in this paragraph 8. Any provision of
this resolution which, for the benefit of the holders of Series A Preferred
Stock, prohibits, limits or restricts actions by the Corporation, or imposes
obligations on the Corporation, may be waived in whole or in part, or the
application of all or any part of such provision in any particular circumstance
or generally may be waived, in
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each case with the consent of the holders of a majority of the shares of Series
A Preferred Stock then outstanding, either in writing or by vote at a meeting
called for such purpose at which the holders of Series A Preferred Stock shall
vote as a separate class, unless such waiver, by its terms, has an adverse
effect upon the shares of Series A Preferred Stock of any holder that does not
affect all shares of Series A Preferred Stock on an equal per share basis, in
which case such waiver shall require the prior approval of such holder.
(b) Without the affirmative vote or consent of the holders
of a majority of the outstanding shares of Series A Preferred Stock voting as a
separate class, the Corporation will not: (A) create any class or series of
capital stock other than the Series B Preferred Stock or the Series C Preferred
Stock, ranking senior to the Series A Preferred Stock either as to dividends or
liquidation preference, or (B) amend, alter or repeal (whether by merger,
consolidation or otherwise) the Corporation's Certificate of Incorporation to
materially adversely affect the powers, rights or preferences of the Series A
Preferred Stock as set forth herein. Nothing in this paragraph 8 shall restrict
the Corporation from increasing the authorized preferred stock of the
Corporation or from creating, or require the consent of holders of Series A
Preferred Stock to the creation and issuance or modification of, any other
capital stock of the Corporation ranking junior to, or on parity with, the
Series A Preferred Stock, and any such increase, creation, issuance or
modification shall not be deemed to materially and adversely affect the powers,
rights and preferences of the Series A Preferred Stock.
(c) No amendment, alteration, waiver or departure from the
provisions of the Corporation's Certificate of Incorporation or the resolution
of the Corporation's Board of Directors creating the Series B Preferred Stock or
the Series C Preferred Stock shall be deemed to (i) result in any change in the
powers, preferences or special rights of the shares of Series A Preferred Stock
so as to affect them adversely within the meaning of Section 242(b)(2) of the
Delaware General Corporation Law (or any amended or successor statutory
provision), or (ii) require any vote or consent of the holders of shares of
Series A Preferred Stock pursuant to paragraph 8(b) of this resolution or
otherwise.
9. Non-assessable Status of Series A Preferred Stock. All the shares
of Series A Preferred Stock for which the full consideration determined by the
Board of Directors (which shall be not less than the par value of such shares)
has been paid or delivered, in cash or property in accordance with the
resolutions of the Board of Directors authorizing the issuance of such shares,
shall be deemed fully paid stock and the holder of such shares shall not be
liable for any further call or assessment or any other payment thereon.
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EXHIBIT II
CERTIFICATE OF DESIGNATIONS FOR THE
SERIES D 8% CONVERTIBLE PARTICIPATING PREFERRED STOCK
OF
NEXT GENERATION NETWORK, INC.
Section 1. Designation and Amount. The number of shares
constituting the Series D 8% Convertible Participating Preferred Stock (the
"Series D Preferred Stock") shall be Seven Million Five Hundred Thousand
(7,500,000).
Section 2. Dividends.
2A. General Obligation. When and as declared by the
Corporation's Board of Directors and to the extent permitted under the Delaware
General Corporation Law, the Corporation shall pay preferential dividends to the
holders of the Series D Preferred Stock, as provided in this Section 2. Except
as otherwise provided herein, dividends on each share of the Series D Preferred
Stock (a "Share") shall accrue, whether or not declared or paid, on a daily
basis (computed on the basis of a 360-day year consisting of twelve 30-day
months) at the rate of eight percent (8%) per annum compounded annually of the
sum of the Liquidation Value thereof plus all accrued, accumulated and unpaid
dividends thereon from and including the date of issuance of such Share to and
including the first to occur of (i) the date on which the Liquidation Value of
such Share along with all accrued, accumulated and unpaid dividends thereon is
paid to the holder thereof in connection with either the liquidation of the
Corporation or the redemption of such Share by the Corporation, (ii) the date on
which such Share is converted into shares of Conversion Stock hereunder or (iii)
the date on which such Share is otherwise acquired by the Corporation. Such
dividends shall accrue whether or not they have been declared and whether or not
there are profits, surplus or other funds of the Corporation legally available
for the payment of dividends, and such dividends shall be cumulative such that
all accrued, accumulated and unpaid dividends shall be fully paid before any
dividends, distributions, redemptions or other payments may be made with respect
to any Junior Securities (as defined below). The date on which the Corporation
initially issues any Share shall be deemed to be its "date of issuance"
regardless of the number of times transfer of such Share is made on the stock
records maintained by or for the Corporation and regardless of the number of
certificates which may be issued to evidence such Share.
2B. Dividend Payment Dates. All dividends which have accrued
on the Series D Preferred Stock shall be payable on June 15 and December 15 of
each year, beginning June 15, 2001 (collectively, the "Dividend Payment Dates").
To the extent that all dividends which have accrued on each Share outstanding
during the six-month period (or other period in the case
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of the initial Dividend Payment Date) ending upon each such Dividend Payment
Date are not paid in full, such accrued and unpaid dividends will be accumulated
and remain accumulated dividends with respect to such Share until paid.
2C. Participating Dividends. In the event that the Corporation
declares or pays any dividends upon the Common Stock (whether payable in cash,
securities or other property), other than dividends payable solely in shares of
Common Stock, the Corporation shall also declare and pay to the holders of the
Series D Preferred Stock, at the same time that it declares and pays such
dividends to the holders of the Common Stock, the dividends which would have
been declared and paid with respect to the Common Stock issuable upon conversion
of the Series D Preferred Stock had all of the outstanding Series D Preferred
Stock been converted immediately prior to the record date for such dividend, or
if no record date is fixed, the date as of which the record holders of Common
Stock entitled to such dividends are to be determined.
Section 3. Liquidation.
3A. Priority of Series D Preferred Stock Upon Liquidation.
Upon any liquidation, dissolution or winding up of the Corporation (whether
voluntary or involuntary) (a "Liquidation Event"), after payment or provision
for payment of the debts and other liabilities of the Corporation, each holder
of Series D Preferred Stock then outstanding shall be entitled to be paid (a
"Preferred Liquidation Payment"), out of the net assets of the Corporation,
before any distribution or payment is made upon any Junior Securities, an amount
in cash equal to the aggregate Liquidation Value of all Shares held by such
holder along with all accumulated, accrued and unpaid dividends thereon. In
addition to and after payment in full of all Preferred Liquidation Payments
under this Section 3 and any payments due to the holders of Series A Preferred
Stock, upon any Liquidation Event, the holders of the Series D Preferred shall
be entitled to participate on an as if converted basis with the holders of
Common Stock as a single class in the distribution of assets of the Corporation
with respect to the Common Stock. If upon any such Liquidation Event, the
Corporation's assets to be distributed among the holders of the Series D
Preferred Stock are insufficient to permit payment to such holders of the
aggregate amount which they are entitled to be paid under this Section 3, then
the entire assets available to be distributed to the Corporation's stockholders
shall be distributed pro rata among such holders based upon the aggregate
Liquidation Value along with all accumulated, accrued and unpaid dividends
thereon of the Series D Preferred Stock held by each such holder. Not less than
thirty (30) days prior to the payment date stated therein, the Corporation shall
mail written notice of any such Liquidation Event to each record holder of
Series D Preferred Stock, setting forth in reasonable detail the amount of
proceeds to be paid with respect to each Share, each share of Series A Preferred
Stock and each share of Common Stock in connection with such Liquidation Event.
3B. Change of Control. The occurrence of a Change of Control
shall be deemed to be a Liquidation Event for purposes of this Section 3, and
the holders of the Series D Preferred Stock shall be entitled to receive payment
from the Corporation of the amounts payable with respect to the Series D
Preferred Stock upon a Liquidation Event under this Section 3 in cancellation of
their Shares upon the consummation of any such transaction. Each holder of
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Series D Preferred Stock shall have the right to elect the benefits of either
this Section 3 or paragraph 7E hereof in connection with any such merger,
consolidation or sale of assets.
Section 4. Priority of Series D Preferred Stock on Dividends
and Redemptions.
4A. No Payments With Respect to Junior Securities. So long as
any Series D Preferred Stock remains outstanding and any accumulated or accrued
dividends of such Series D Preferred Stock remain unpaid, without the prior
written consent of the holders of two-thirds of the outstanding shares of Series
D Preferred Stock, taken together as a single series, the Corporation shall not,
nor shall it permit any Subsidiary to, redeem, purchase or otherwise acquire
directly or indirectly any Junior Securities, nor shall the Corporation directly
or indirectly pay or declare or set apart for payment any dividend or make any
distribution upon any Junior Securities; provided, that the Company may
repurchase shares of Common Stock issued pursuant to the terms and conditions of
stock option plans approved by the Corporation's Board of Directors.
4B. No Issuance of Senior or pari passu Securities. For so
long as any Series D Preferred Stock remains outstanding, without the prior
written consent of the holders of a majority of the outstanding shares of the
Series D Preferred Stock, taken together as a single series, the Corporation
shall not amend its Certificate of Incorporation or Bylaws or take any other
action to approve or issue any capital stock or other equity securities
(including increasing the number of authorized shares of Series D Preferred
Stock) of the Corporation that is senior or pari passu in right to the payment
of dividends, payment upon liquidation, redemption or otherwise to the Series D
Preferred Stock. Additionally, so long as any Series D Preferred Stock remains
outstanding, without the prior written consent of the holders of a majority of
the outstanding shares of Series D Preferred Stock, taken together as a single
series, the Corporation shall not amend its Certificate of Incorporation or
Bylaws or take any other action that would alter the rights, preferences or
privileges of the Series D Preferred Stock as in effect on the date of the
original issuance of the Series D Preferred Stock.
Section 5. Redemptions.
5A. Mandatory Redemptions. To the extent funds are legally
available therefor, if upon the earlier to occur of (i) November 6, 2005 and
(ii) the sale of all or substantially all of the assets of the Corporation, the
holders of record of at least a majority of the outstanding Shares shall elect,
by written notice to the Corporation (a "Redemption Notice"), to have all (but
not less than all) of the outstanding Shares redeemed, the Corporation shall
redeem all of such Shares (pursuant to the terms and conditions of this Section
5) on the Redemption Date no later than thirty (30) days after the Corporation's
receipt of the Redemption Notice.
5B. Redemption Payments. For each Share which is to be
redeemed hereunder, the Corporation shall be obligated on the applicable
Redemption Date to pay to the holder thereof (upon surrender by such holder at
the Corporation's principal office of the certificate representing such Share)
an amount in cash in immediately available funds equal to the greater of (i) the
Liquidation Value of such Share along with any accrued, accumulated and
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unpaid dividends thereon and (ii) the Fair Market Value of the Common Stock
underlying such Share (such amount, the "Redemption Price"). If the funds of the
Corporation legally available for redemption of Shares on any Redemption Date
are insufficient to redeem the total number of Shares to be redeemed on such
date, those funds which are legally available shall be used to redeem the
maximum possible number of Shares pro rata among the holders of the Shares to be
redeemed based upon the Redemption Price of such Shares held by each such
holder. At any time thereafter when additional funds of the Corporation are
legally available for the redemption of Shares, such funds shall immediately be
used to redeem the balance of the Shares which the Corporation has become
obligated to redeem on any Redemption Date but which it has not redeemed.
5C. Dividends After Redemption Date. No Share shall be
entitled to any dividends accruing after the date on which the Redemption Price
of such Share is paid to the holder of such Share. On such date, all rights of
the holder of such Share shall cease, and such Share shall no longer be deemed
to be issued and outstanding, whether or not certificates representing such
Shares have been received by the Corporation.
5D. Redeemed or Otherwise Acquired Shares. Any Shares which
are redeemed or otherwise acquired by the Corporation shall be canceled and
retired to authorized but unissued shares and shall not be reissued, sold or
transferred.
5E. Other Redemptions or Acquisitions. The Corporation shall
not, nor shall it permit any Subsidiary to, redeem or otherwise acquire any
Shares of Series D Preferred Stock, except as expressly authorized herein or
pursuant to a purchase offer made (with at least thirty (30) days prior written
notice to all holders of Series D Preferred Stock) pro rata to all holders of
Series D Preferred Stock on the basis of the number of Shares owned by each such
holder.
Section 6. Voting Rights.
6A. Election of Directors. In the election of directors of the
Corporation, the holders of the Series D Preferred Stock, voting separately as a
single class to the exclusion of all other classes of the Corporation's capital
stock and with each Share of Series D Preferred Stock entitled to one vote,
shall be entitled to elect a number of directors to serve on the Corporation's
Board of Directors based upon such holders' aggregate pro rata ownership of the
Common Stock Deemed Outstanding (provided, that such number of directors shall
in no event be less than one (1)) until their successors are duly elected by the
holders of the Series D Preferred Stock or they are removed from office by the
holders of the Series D Preferred Stock. If the holders of the Series D
Preferred Stock for any reason fail to elect anyone to fill any such
directorship, such position shall remain vacant until such time as the holders
of the Series D Preferred Stock elect a director to fill such position and shall
not be filled by resolution or vote of the Corporation's Board of Directors or
the Corporation's other stockholders.
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6B. Other Voting Rights.
(i) The holders of the Series D Preferred Stock shall be
entitled to notice of all stockholders meetings in accordance with the
Corporation's bylaws, and except as otherwise required by applicable law, the
holders of the Series D Preferred Stock shall be entitled to vote on all matters
submitted to the stockholders for a vote together with the holders of the Common
Stock voting together as a single class with each share of Common Stock entitled
to one vote per share and each Share of Series D Preferred Stock entitled to one
vote for each share of Common Stock issuable upon conversion of such Share of
Series D Preferred Stock as of the date immediately prior to the record date for
such vote or, if no record date is specified, as of the date of such vote.
(ii) (For so long as the Series D Stockholders own at least
50% of the Shares held by the Series D Stockholders as of November 6, 2000 (as
adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like), without the prior written consent of the holders of a majority of
the then outstanding Shares, the Corporation shall not:
(A) become subject to any agreement or instrument
which by its terms would (under any circumstances) restrict the
Corporation's right to comply with the terms of the Purchase Agreement
or any of the Related Documents;
(B) use the proceeds from the sale of the Series D
Preferred Stock other than in accordance with Section 8.5 of the
Purchase Agreement;
(C) other than any transaction pursuant to any
Related Document, enter into any material transaction or series of
transactions outside the ordinary course of business consistent with
past practice (including with respect to quantity, quality and
frequency) with any stockholder, director, officer, employee or
affiliate;
(D) other than in connection with a Qualified Public
Offering, authorize, create or issue any equity or equity-related
securities (including any debt securities with equity "kickers"), or
any rights or securities directly or indirectly convertible into or
exercisable or exchangeable for such securities (other than stock
options pursuant to the Corporation's existing stock option plans);
provided, that such consent will not be unreasonably withheld in
connection with an IPO;
(E) directly or indirectly declare or pay any
dividends or make any distributions upon any of its capital stock or
other equity securities (or any securities directly or indirectly
convertible into or exercisable or exchangeable for equity securities)
other than the Series D Preferred Stock pursuant to the terms of this
Certificate of Designations;
(F) merge or consolidate with any Person;
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(G) sell, lease or otherwise dispose of all or
substantially all of the assets of the Corporation (computed on the
basis of book value, determined in accordance with United States
generally accepted accounting principles as in effect from time to
time, consistently applied, or fair market value, determined by the
Board in its reasonable good faith judgment) in any transaction or
series of related transactions (other than sales of inventory in the
ordinary course of business);
(H) liquidate, dissolve or effect a recapitalization
or reorganization in any form of transaction (including, without
limitation, any reorganization into a limited liability Corporation, a
partnership or any other non-corporate entity which is treated as a
partnership for federal income tax purposes);
(I) acquire any interest in any Corporation or
business (whether by a purchase of assets, purchase of stock, merger or
otherwise), enter into any joint venture or make any investment
involving consideration of or in an amount of $2,000,000 or more;
(J) other than as contemplated in the Purchase
Agreement, amend, alter or repeal the Corporation's Bylaws or
Certificate of Incorporation (including this Certificate of
Designations) as to increase the number of authorized shares of the
Common Stock or any series of preferred stock or materially affect the
preferences, special rights or other powers of the Series D Preferred
Stock or the Conversion Stock;
(K) change the composition of or the authorized
number of directors constituting the Corporation's Board of Directors;
(L) amend or modify any stock option plan or employee
stock ownership plan as in existence as of the date of the Purchase
Agreement, adopt any new stock option plan or employee stock ownership
plan or issue any shares of Common Stock to its employees other than
pursuant to the Corporation's existing stock option and employee stock
ownership plans;
(M) enter into the ownership, active management or
operation of any business other than the business of the Corporation as
it is carried on as of the original date of issuance of the Series D
Preferred Stock or any logical extensions thereof or discontinue the
business of the Corporation, whether by liquidation, dissolution,
winding up or otherwise; or
(N) hire or fire Senior Management;
(iii) For so long as the Series D Stockholders own at least
50% of the Shares held by the Series D Stockholders as of November 6, 2000 (as
adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like), without the prior written consent of
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the holders of a majority of the then outstanding Shares, the Corporation shall
not permit any of its Subsidiaries to take any of the actions set forth in
subparagraphs 6B(ii)(A) through (N).
(iv) The Company covenants that as promptly as practicable
after November 6, 2000, it shall take all actions to amend the articles of
association, charter or other governing documents of all of its direct or
indirect current and future Subsidiaries (whether U.S. or foreign), to provide
that none of the actions listed in subparagraphs 6B(ii)(A) through (N) hereto
may be taken by such Subsidiary without the written consents set forth in
subparagraph 6B(iii).
6C. Termination of Voting Rights. This Section 6 shall
automatically terminate upon the consummation of a Qualified Public Offering.
Section 7. Conversion.
7A. Conversion Procedure.
(i) (A) Subject to the provisions of this Section 7, at any
time and from time to time following November 6, 2001, any holder of
Series D Preferred Stock may convert all or any portion of the Series D
Preferred Stock (including any fraction of a Share) held by such holder
along with the aggregate accumulated, accrued and unpaid dividends
thereon into a number of shares of Conversion Stock computed by (x)
multiplying the number of Shares to be converted by the sum of $8.45
(as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) plus all accumulated, accrued and
unpaid dividends on such Shares, and (y) dividing the result by the
Conversion Price then in effect.
(B) Subject to the provisions of this Section 7, at
any time and from time to time following November 6, 2001 and upon
either (1) the consummation of an IPO (x) having a per share value
(based upon either the aggregate net proceeds received by the
Corporation in such offering, after applicable underwriting discounts
and commissions, or the Fair Market Value of the Common Stock on the
thirtieth Business Day following such IPO) that would yield (on an as
converted basis) each holder of Series D Preferred Stock no less than a
100% annualized internal rate of return (based upon the initial
purchase price per Preferred Share and excluding any dividend payments
made on the Series D Preferred Stock) on such holder's Shares and (y)
resulting in aggregate net proceeds (after applicable underwriting
discounts and commissions) to the Corporation of at least $50 million,
or (2) the prior written consent of the holders of at least 66 2/3% of
the Series D Preferred Stock, the Corporation may require the holders
of Series D Preferred Stock to convert all of the outstanding Series D
Preferred Stock (including any fraction of a Share) along with the
aggregate accumulated, accrued and unpaid dividends thereon into a
number of shares of Conversion Stock computed by (x) multiplying the
number of Shares to be converted by the sum of $8.45 (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations and
the like) plus all accumulated, accrued and unpaid dividends on such
Shares, and (y) dividing the result by the Conversion Price then in
effect.
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(ii) Except as otherwise provided herein, each conversion of
Series D Preferred Stock shall be deemed to have been effected as of the close
of business on (A) in the case of any conversion at the option of any holder of
Series D Preferred Stock, the date on which the certificate or certificates
representing the Series D Preferred Stock to be converted have been surrendered
for conversion at the principal office of the Corporation, or (B) in the case of
any conversion at the option of the Corporation, the date specified for such
conversion in the notice provided by the Corporation pursuant to subparagraph
7G(iii) below. At the time any such conversion has been effected, the rights of
the holder of the Shares converted as a holder of Series D Preferred Stock shall
cease and the Person or Persons in whose name or names any certificate or
certificates for shares of Conversion Stock are to be issued upon such
conversion shall be deemed to have become the holder or holders of record of the
shares of Conversion Stock represented thereby.
(iii) The conversion rights of any Share subject to redemption
hereunder shall terminate on the applicable Redemption Date for such Share
unless the Corporation has failed to pay to the holder thereof the Redemption
Price of such Share.
(iv) Notwithstanding any other provision hereof, if a
conversion of Series D Preferred Stock is to be made in connection with a Change
of Control or other transaction affecting the Corporation, the conversion of any
Shares may, at the election of the holder thereof, be conditioned upon the
consummation of such transaction, in which case such conversion shall not be
deemed to be effective until such transaction has been consummated.
(v) As soon as possible after a conversion has been effected
(but in any event within three (3) Business Days after notice of such conversion
has been delivered to the Corporation, provided that such conversion has been
effected by such date, in the case of subparagraph (A) below), the Corporation
shall deliver to the converting holder:
(A) a certificate or certificates representing the
number of shares of Conversion Stock issuable by reason of such
conversion in such name or names and such denomination or denominations
as the converting holder has specified;
(B) payment in an amount equal to the amount payable
under subparagraph (ix) below with respect to such conversion; and
(C) a certificate representing any Shares which were
represented by the certificate or certificates delivered to the
Corporation in connection with such conversion but which were not
converted.
Notwithstanding the foregoing, in the case of any automatic conversion
effected under subparagraph 7A(i)(B), the Company shall not be required
to deliver certificates representing shares of Conversion Stock until
the holders of Shares have surrendered certificates representing the
Shares.
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(vi) The issuance of certificates for shares of Conversion
Stock upon conversion of the Series D Preferred Stock shall be made without
charge to the holders of such Series D Preferred Stock for any issuance tax in
respect thereof or other cost incurred by the Corporation in connection with
such conversion and the related issuance of shares of Conversion Stock;
provided, that the holder shall pay any such tax which is due because the shares
of Conversion Stock are issued in a name other than the name of such holder.
Upon conversion of each Share, the Corporation shall take all such actions as
are necessary in order to insure that the Conversion Stock issuable with respect
to such conversion shall be validly issued, fully paid and nonassessable, free
and clear of all taxes, liens, charges and encumbrances with respect to the
issuance thereof.
(vii) The Corporation shall not close its books against the
transfer of Series D Preferred Stock or of Conversion Stock issued or issuable
upon conversion of Series D Preferred Stock in any manner which interferes with
the timely conversion of Series D Preferred Stock. The Corporation shall assist
and cooperate with any holder of Shares required to make any governmental
filings or obtain any governmental approval prior to or in connection with any
conversion of Shares hereunder (including, without limitation, making any
filings required to be made by the Corporation).
(viii) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock or its
shares of Conversion Stock held in treasury, solely for the purpose of issuance
upon the conversion of Series D Preferred Stock, such number of shares of
Conversion Stock issuable upon the conversion of all outstanding Series D
Preferred Stock. All shares of Conversion Stock which are so issuable shall,
when issued, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges. The Corporation shall use its best efforts to
take all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance); provided, that this sentence shall not be deemed to require the
Corporation to register or qualify any of the shares of Conversion Stock under
the federal or any state securities laws. The Corporation shall use its best
efforts to not take any action which would cause the number of authorized but
unissued shares of Conversion Stock to be less than the number of such shares
required to be reserved hereunder for issuance upon conversion of Series D
Preferred Stock.
(ix) If any fractional interest in a share of Conversion Stock
would, except for the provisions of this subparagraph, be delivered upon any
conversion of Series D Preferred Stock, the Corporation, in lieu of delivering
the fractional share therefor, shall pay an amount to the holder thereof equal
to the Fair Market Value of such fractional interest as of the date of
conversion.
(x) If the shares of Conversion Stock issuable by reason of
conversion of Series D Preferred Stock are convertible into or exchangeable for
any other stock or securities of the Corporation, the Corporation shall, at the
converting holder's option, upon surrender of the
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Shares to be converted by such holder as provided herein together with any
notice, statement or payment required to effect such conversion or exchange of
Conversion Stock, deliver to such holder or as otherwise specified by such
holder a certificate or certificates representing the stock or securities into
which the shares of Conversion Stock issuable by reason of such conversion are
so convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such holder has specified.
7B. Conversion Price.
(i) The initial Conversion Price shall be $8.45. In order to
prevent dilution of the conversion rights granted under this Section 7, the
Conversion Price shall be subject to adjustment from time to time pursuant to
this paragraph 7B.
(ii) If and whenever on or after the original date of issuance
of the Series D Preferred Stock, the Corporation issues or sells, or in
accordance with paragraph 7C is deemed to have issued or sold, any shares of its
Common Stock for a consideration per share less than the Conversion Price in
effect immediately prior to such time, then immediately upon such issue or sale
the Conversion Price shall be reduced to the Conversion Price determined by
dividing (A) an amount equal to the sum of (x) the product derived by
multiplying the Conversion Price in effect immediately prior to such issue or
sale by the number of shares of Common Stock Deemed Outstanding immediately
prior to such issue or sale, plus (y) the consideration, if any, received by the
Corporation upon such issue on sale, by (B) the number of shares of Common Stock
Deemed Outstanding immediately after such issue or sale.
(iii) Notwithstanding the foregoing, there shall be no
adjustment in the Conversion Price hereunder with respect to the granting of
stock options or warrants to employees, officers, directors, consultants and
other persons approved by the Corporation's Board of Directors pursuant to stock
option plans or warrant issuances approved by the Corporation's Board of
Directors.
7C. Effect on Conversion Price of Certain Events. For
purposes of determining the adjusted Conversion Price under paragraph 7B, the
following shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
manner grants or sells any Options and the price per share for which Common
Stock is issuable upon the exercise of such Options, or upon conversion or
exchange of any Convertible Securities issuable upon exercise of such Options,
is less than the Conversion Price in effect immediately prior to the time of the
granting or sale of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options, or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options, shall be deemed to be outstanding and to have
been issued and sold by the Corporation at the time of the granting or sale of
such Option for such price per share. For purposes of this paragraph, the "price
per share for which Common Stock is issuable upon exercise of such Options or
upon conversion or exchange of such Convertible Securities" is determined by
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dividing (A) the total amount, if any, received or receivable by the Corporation
as consideration for the granting or sale of such Options, plus the minimum
aggregate amount of additional consideration payable to the Corporation upon the
exercise of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the issuance or sale of
such Convertible Securities and the conversion or exchange thereof, by (B) 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 shall be made when such Convertible Security is actually
issued upon the exercise of such Option or when Common Stock is actually issued
upon the exercise of such Option or the conversion or exchange of such
Convertible Security, but shall only be made upon the date of deemed issuance.
(ii) Issuance of Convertible Securities. If the Corporation in
any manner issues or sells any Convertible Securities and the price per share
for which Common Stock is issuable upon conversion or exchange thereof is less
than the Conversion Price in effect immediately prior to the time of such issue
or sale, then the maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Corporation at the time of
the issuance or sale of such Convertible Securities for such price per share.
For the purposes of this paragraph, the "price per share for which Common Stock
is issuable upon conversion or exchange thereof" is determined by dividing (A)
the total amount received or receivable by the Corporation as consideration for
the issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (B) 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 shall be made when
Common Stock is actually issued upon the conversion or exchange of such
Convertible Security, and if any such issue or sale of such Convertible Security
is made upon exercise of any Options for which adjustments of the Conversion
Price had been or are to be made pursuant to other provisions of this Section 7,
no further adjustment of the Conversion Price shall be made by reason of such
issue or sale.
(iii) Change in Option Price or Conversion Rate. If (A) the
purchase price provided for in any Options, (B) the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities or
(C) the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock changes at any time, the Conversion Price in
effect at the time of such change shall be immediately adjusted to the
Conversion Price which would have been in effect at such time had such Options
or Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold; provided, that if such adjustment would
result in an increase of the Conversion Price then in effect, such adjustment
shall not be effective until thirty (30) days after written notice thereof has
been given by the Corporation to all holders of the Series D Preferred Stock.
For purposes of paragraph 7C, if the terms of any Option or Convertible Security
which was outstanding as of the date of issuance of the Series D Preferred Stock
are changed in the manner described in the immediately
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preceding sentence, then such Option or Convertible Security and the Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such change; provided, that no such
change shall at any time cause the Conversion Price hereunder to be increased.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Security without the exercise of any such
Option or right, the Conversion Price then in effect hereunder shall be adjusted
immediately to the Conversion Price which would have been in effect at the time
of such expiration or termination had such Option or Convertible Security, to
the extent outstanding immediately prior to such expiration or termination,
never been issued; provided, that if such expiration or termination would result
in an increase in the Conversion Price then in effect, such increase shall not
be effective until thirty (30) days after written notice thereof has been given
to all holders of the Series D Preferred Stock. For purposes of paragraph 7C,
the expiration or termination of any Option or Convertible Security which was
outstanding as of the date of issuance of the Series D Preferred Stock shall not
cause the Conversion Price hereunder to be adjusted unless, and only to the
extent that, a change in the terms of such Option or Convertible Security caused
it to be deemed to have been issued after the date of issuance of the Series D
Preferred Stock.
(v) Calculation of Consideration Received. If any Common
Stock, Option or Convertible Security is issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Corporation therefor (net of discounts,
commissions and related expenses). If any Common Stock, Option or Convertible
Security is issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Corporation shall be the fair
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the
Corporation shall be the Fair Market Value thereof as of the date of receipt. If
any Common Stock, Option or Convertible Security is issued to the owners of the
non-surviving entity in connection with any merger in which the Corporation is
the surviving corporation, the amount of consideration therefor shall be deemed
to be the fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common Stock, Option or
Convertible Security, as the case may be. The fair value of any consideration
other than cash and securities shall be determined jointly by the Corporation's
Board of Directors and the holders of a majority of the Common Stock Deemed
Outstanding. If such parties are unable to reach agreement within a reasonable
period of time, the fair value of such consideration shall be determined by an
independent appraiser experienced in valuing such type of consideration jointly
selected by the Corporation's Board of Directors and the holders of a majority
of the Common Stock Deemed Outstanding. The determination of such appraiser
shall be final and binding upon the parties, and the fees and expenses of such
appraiser shall be borne by the Corporation.
(vi) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the Corporation,
together comprising one integrated
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transaction in which no specific consideration is allocated to such Option by
the parties thereto, the Option shall be deemed to have been issued for a
consideration of $.01.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation or any Subsidiary, and the disposition of any
shares so owned or held shall be considered an issue or sale of Common Stock.
(viii) Record Date. If the Corporation takes a record of the
holders of Common Stock for the purpose of entitling them (a) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (b) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date shall be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or 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.
7D. Subdivision or Combination of Common Stock. If the
Corporation 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 shall be proportionately reduced, and if
the Corporation at any time combines (by 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
shall be proportionately increased.
7E. Reorganization, Reclassification, Consolidation, Merger
or Sale. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Corporation's assets or other
transaction, in each case which is effected in such a manner that the 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 an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series D Preferred Stock then outstanding) to ensure that each of the
holders of Series D Preferred Stock shall thereafter have the right to acquire
and receive, in lieu of or in addition to (as the case may be) the shares of
Conversion Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's Series D Preferred Stock, such shares of stock,
securities or assets as such holder would have received in connection with such
Organic Change if such holder had converted its Series D Preferred Stock
immediately prior to such Organic Change. In each such case, the Corporation
shall also make appropriate provisions (in form and substance satisfactory to
the holders of a majority of the Series D Preferred Stock then outstanding) to
ensure that the provisions of this Section 7 and Sections 2 and 8 hereof shall
thereafter be applicable to the Series D Preferred Stock (including, in the case
of any such consolidation, merger or sale in which the successor entity or
purchasing entity is other than the Corporation, an immediate adjustment of the
Conversion Price to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and a corresponding
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immediate adjustment in the number of shares of Conversion Stock acquirable and
receivable upon conversion of Series D Preferred Stock, if the value so
reflected is less than the Conversion Price in effect immediately prior to such
consolidation, merger or sale). The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Corporation) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance satisfactory to the holders of a majority of the Series D
Preferred Stock then outstanding), the obligation to deliver to each such holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
7F. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 7 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Corporation's Board of Directors shall make an appropriate adjustment
in the Conversion Price so as to protect the rights of the holders of Series D
Preferred Stock; provided, that no such adjustment shall increase the Conversion
Price as otherwise determined pursuant to this Section 7 or decrease the number
of shares of Conversion Stock issuable upon conversion of each Share.
7G. Notices.
(i) Promptly following any adjustment of the Conversion
Price, the Corporation shall give written notice thereof to all holders of
Series D Preferred Stock, setting forth in reasonable detail and certifying the
calculation of such adjustment.
(ii) The Corporation shall give written notice to all holders
of Series D Preferred Stock at least thirty (30) days prior to the date on which
the Corporation closes its books or takes a record (a) with respect to any
dividend or distribution upon Common Stock, (b) with respect to any pro rata
subscription offer to holders of Common Stock or (c) for determining rights to
vote with respect to any Organic Change, dissolution or liquidation.
(iii) The Corporation shall also give written notice to the
holders of Series D Preferred Stock at least thirty (30) days prior to the date
on which (A) any Organic Change and (B) any conversion at the option of the
Corporation pursuant to subparagraph 7A(i) above shall take place (which notice
shall specify the date upon which such event shall take place).
Section 8. Purchase Rights.
If at any time the Corporation grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then each holder of Series D Preferred
Stock shall be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such holder could have acquired if
such holder had held the number of shares of Conversion Stock acquirable upon
conversion of such holder's Series D Preferred Stock immediately before the date
on which a record is taken for the grant, issuance or
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sale of such Purchase Rights, or if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights. This Section 8 shall automatically
terminate upon a Qualified Public Offering.
Section 9. Registration of Transfer.
The Corporation shall keep at its principal office a register
for the registration of Series D Preferred Stock. Upon the surrender of any
certificate representing Series D Preferred Stock at such place, the Corporation
shall, at the request of the record holder of such certificate, execute and
deliver (at the Corporation's expense, unless registration in a new holder's
name is required) a new certificate or certificates in exchange therefor
representing in the aggregate the number of Shares represented by the
surrendered certificate. Each such new certificate shall be registered in such
name and shall represent such number of Shares as is requested by the holder of
the surrendered certificate and shall be substantially identical in form to the
surrendered certificate, and dividends shall accrue on the Series D Preferred
Stock represented by such new certificate from the date to which dividends have
been fully paid on such Series D Preferred Stock represented by the surrendered
certificate.
Section 10. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing Series D Preferred Stock, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided, that if the holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Corporation shall
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of Shares of such class
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate, and dividends
shall accrue on the Series D Preferred Stock represented by such new certificate
from the date to which dividends have been fully paid on such lost, stolen,
destroyed or mutilated certificate.
Section 11. Definitions.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banks in New York City are authorized or obligated by law or
executive order to close.
"Change of Control" means (a) any sale, transfer or issuance
or series of sales, transfers and/or issuances of Common Stock by the
Corporation or any holders thereof which results in any Person or group of
Persons (as the term "group" is used under the Securities Exchange Act of 1934),
other than the holders of the Corporation's securities as of the date of
issuance of the Shares, beneficially owning (as such term is used in the
Securities Exchange Act of 1934) more than 50% of the Common Stock Deemed
Outstanding at the time of such sale, transfer or issuance or series of sales,
transfers and/or issuances, (b) any sale or transfer of all or
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substantially all of the assets of the Corporation and its Subsidiaries on a
consolidated basis (measured either by book value in accordance with generally
accepted accounting principles consistently applied or by fair market value
determined in the reasonable good faith judgment of the Corporation's Board of
Directors) in any transaction or series of transactions (other than sales in the
ordinary course of business) and (c) any merger or consolidation to which the
Corporation is a party, except for a merger in which the Corporation is the
surviving corporation, the terms of the Series D Preferred Stock are not changed
and the Series D Preferred Stock is not exchanged for cash, securities or other
property, and after giving effect to such merger, the holders of the
Corporation's outstanding capital stock possessing a majority of the voting
power (under ordinary circumstances) to elect a majority of the Corporation's
Board of Directors immediately prior to the merger shall continue to own the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's Board of
Directors.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means, collectively, the Corporation's Common
Stock, $.01 par value per share, and any capital stock of any class of the
Corporation hereafter authorized which is not limited to a fixed sum or
percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Corporation.
"Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to
subparagraphs 7C(i) and 7C(ii) hereof whether or not the Options or Convertible
Securities are actually exercisable at such time.
"Conversion Stock" means shares of the Corporation's Common
Stock, $.01 par value per share, issued or issuable upon conversion of the
Series D Preferred Stock; provided, that if there is a change such that the
securities issuable upon conversion of Series D Preferred Stock are issued by an
entity other than the Corporation or there is a change in the type or class of
securities so issuable, then the term "Conversion Stock" shall mean one share of
the security issuable upon conversion of Series D Preferred Stock if such
security is issuable in shares, or shall mean the smallest unit in which such
security is issuable if such security is not issuable in shares.
"Convertible Securities" means any stock or securities
directly or indirectly convertible into or exchangeable for Common Stock.
"Fair Market Value" of any security means the average of the
closing prices of such security's sales on all securities exchanges on which
such security may at the time be listed, or, if there has been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the
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Nasdaq Stock Market System as of 4:00 P.M., New York time, or, if on any day
such security is not quoted in the Nasdaq Stock Market System, the average of
the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of thirty (30) days consisting of the Business Day as of which
"Fair Market Value" is being determined and the twenty-nine (29) consecutive
Business Days prior to such day. If at any time such security is not listed on
any securities exchange or quoted in the Nasdaq Stock Market System or the
over-the-counter market, the "Fair Market Value" shall be the fair value thereof
determined jointly by the Corporation's Board of Directors and the holders of a
majority of the Conversion Stock. If such parties are unable to reach agreement
within a reasonable period of time, such fair value shall be determined by an
independent appraiser experienced in valuing securities jointly selected by the
Corporation's Board of Directors and the holders of a majority of the Conversion
Stock. The determination of such appraiser shall be final and binding upon the
parties, and the Corporation shall pay the fees and expenses of such appraiser.
"Intellectual Property" has the meaning assigned thereto in
the Purchase Agreement.
"IPO" means the sale in an initial firmly underwritten public
offering registered under the Securities Act of 1933, as amended, and
underwritten by a nationally recognized investment bank selected by the
Corporation of any shares of Common Stock which are listed on any securities
exchange or quoted on the NASDAQ Stock Market System or the over-the-counter
market following such offering.
"Junior Securities" means any capital stock or other equity
securities of the Corporation, except for the Series D Preferred Stock.
"Liquidation Value" of any Share as of any particular date
shall be equal to $8.45 (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like).
"Options" means any rights, warrants or options to subscribe
for or purchase Common Stock or Convertible Securities.
"Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization or other
entity.
"Purchase Agreement" means the Stock Purchase Agreement, dated
as of November 6, 2000, by and among the Corporation and certain investors, as
such agreement may from time to time be amended in accordance with its terms.
"Qualified Public Offering" means the sale, in a firmly
underwritten public offering registered under the Securities Act of 1933, as
amended, and underwritten by a nationally recognized investment bank selected by
the Corporation of shares of Common Stock
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(a) having a per share value (based upon the aggregate net proceeds received by
the Corporation in such offering, after applicable underwriting discounts and
commissions) that would yield (on an as converted basis) each holder of Series D
Preferred Stock no less than a 100% annualized internal rate of return (based
upon the initial purchase price per Share and excluding any dividend payments
made on the Series D Preferred Stock) on such holder's Shares and (b) resulting
in aggregate net proceeds (after applicable underwriting discounts and
commissions) to the Corporation of at least $50 million, and which are listed on
any securities exchange or quoted on the Nasdaq Stock Market System or the
over-the-counter market following such offering.
"Redemption Date" as to any Share has the meaning given that
term in Section 5 herein; provided, that no such Redemption Date specified
herein shall be a Redemption Date unless the Redemption Price of such Share is
actually paid in full on such date, and if not so paid in full, the Redemption
Date shall be the date on which such amount is fully paid.
"Redemption Price" has the meaning given that term in
paragraph 5B herein.
"Related Documents" has the meaning assigned thereto in the
Purchase Agreement.
"Senior Management" has the meaning assigned thereto in the
Purchase Agreement.
"Series A Preferred Stock" means the Series A 8.25%
Convertible Preferred Stock of the Corporation, $1.00 par value per share.
"Series D Preferred Stock" has the meaning given that term in
paragraph 1 herein.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing general partner of such
limited liability company, partnership, association or other business entity.
Section 12. Amendment and Waiver.
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No amendment, modification or waiver shall be binding or
effective with respect to any provision of Sections 1 to 13 hereof without the
prior written consent of the holders of at least a majority of the Series D
Preferred Stock outstanding at the time such action is taken; provided, that no
such action shall change (a) the rate at which or the manner in which dividends
on the Series D Preferred Stock accrue or the times at which such dividends
become payable or the amount payable on redemption of the Series D Preferred
Stock or the times at which redemption of Series D Preferred Stock is to occur,
without the prior written consent of the holders of all of the Series D
Preferred Stock then outstanding, (b) the Conversion Price of the Series D
Preferred Stock or the number of shares or class of stock into which the Series
D Preferred Stock is convertible, without the prior written consent of the
holders of all of the Series D Preferred Stock then outstanding, or (c) the
percentage required to approve any change described in clauses (a) and (b)
above, without the prior written consent of the holders of all of the Series D
Preferred Stock then outstanding; and provided further, that no change in the
terms hereof may be accomplished by merger or consolidation of the Corporation
with another corporation or entity unless the Corporation has obtained the prior
written consent of the holders of the applicable percentage of the Series D
Preferred Stock then outstanding.
Section 13. Notices.
Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be (i) delivered in person,
(ii) transmitted by telecopy, (iii) sent by registered or certified mail,
postage prepaid with return receipt requested, or (iv) sent by reputable
overnight courier service, fees prepaid, to (x) the Corporation, at its
principal executive offices and (y) to any stockholder, at such stockholder's
address or telecopy as it appears in the records of the Corporation (unless
otherwise indicated in writing by any such stockholder). Notices shall be deemed
given upon personal delivery, upon receipt of return receipt in the case of
delivery by mail, upon acknowledgment by the receiving telecopier or one day
following deposit with an overnight courier service.