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EXHIBIT 3.1
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF BLUE RHINO CORPORATION
(Incorporated on November 29, 1994)
BLUE RHINO CORPORATION, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: Pursuant to Section 242 and 245 of the General Corporation Law of
the State of Delaware (the "Delaware Law"), the Amended and Restated Certificate
of Incorporation, as amended, of BLUE RHINO CORPORATION, a Delaware corporation
(the "Corporation"), is hereby restated and amended to read in its entirety as
follows:
"SECOND AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION
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FIRST: The name of the Corporation is Blue Rhino Corporation.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle. The name of the registered agent of the Corporation at such address is
The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
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.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is One Hundred Twenty Million (120,000,000) shares
consisting of:
One Hundred Million (100,000,000) shares of Common Stock with a par value
of $.001 per share (the "Common Stock"); and
Twenty Million (20,000,000) shares of Preferred Stock, with a par value of
$.001 per share (the "Preferred Stock")
Except as otherwise required by law or expressly provided herein, the
holder of each share of Common Stock shall have one vote on each matter
submitted to a vote of the stockholders of the Corporation.
The holders of the Common Stock shall be entitled to receive dividends at
such times and in such amounts as may be determined by the Board of Directors
of the Corporation.
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In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the Corporation, the holders of
Common Stock, shall be entitled to share ratably in the remaining assets of the
Corporation.
The holders of the Preferred Stock shall be entitled to such rights and
preferences as may be approved from time to time by the Board of Directors of
the Corporation as set forth in a Certificate of Designation filed pursuant to
the Delaware Law.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The following provisions are included for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its Board of Directors and stockholders:
1. The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal the By-laws of the Corporation, subject to any
limitation thereof contained in the By-laws. The stockholders shall also have
the power to adopt, amend or repeal the By-laws of the Corporation; provided,
however, that, in addition to any vote of the holders of capital stock of the
Corporation required by law or by this Second Amended and Restated Certificate
of Incorporation, the affirmative vote of the holders of at least seventy-five
percent (75%) of the voting power of all of the then outstanding shares of the
capital stock of the Corporation entitled to vote generally in the election of
directors shall be required to adopt, amend or repeal any provision of the
By-laws of the Corporation.
2. Upon the consummation of an initial public offering of Common Stock
(the "Initial Public Offering Date"), stockholders of the Corporation may not
thereafter take any action by written consent in lieu of a meeting.
3. Special meetings of stockholders may be called at any time only by the
Chairman of the Board of Directors, the President or a majority of the Board of
Directors. Business transacted at any special meeting of stockholders shall be
limited to matters relating to the purpose or purposes stated in the notice of
meeting.
4. The books of the Corporation may be kept at such place within or
without the State of Delaware as the By-laws of the Corporation may provide or
as may be designated from time to time by the Board of Directors of the
Corporation.
5. Election of directors need not be by written ballot unless the By-laws
of the Corporation so provide.
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SEVENTH:
1. Number of Directors. The number of directors which shall constitute
the whole Board of Directors shall be not less than three as determined by
resolution of a majority of the Board of Directors. The number of directors may
be decreased at any time and from time to time by a majority of the directors
then in office, but only to eliminate vacancies existing by reason of the
death, resignation, removal or expiration of the term of one or more directors.
The directors shall be elected at the annual meeting of stockholders by such
stockholders as have the right to vote on such election. Directors need not be
stockholders of the Corporation.
2. Classification and Term of Directors. The Board of Directors shall be
divided into three classes, Class A, Class B and Class C, as nearly equal in
numbers as the then total number of directors constituting the entire Board
permits with the term of office of one class expiring each year. The Board
shall designate the class of each of the existing Directors. At the first
annual meeting of stockholders after the filing of this Second Amended and
Restated Certificate, the Class A Directors shall be elected to hold office for
a three year term. At the second annual meeting of the stockholders after the
filing of this Certificate, the Class B Directors shall be elected to hold
office for a three year term. At the third annual meeting of the stockholders
after the date of filing of this Certificate, the Class C Directors shall be
elected to hold office for a term expiring at the third succeeding annual
meeting. Any vacancies in the Board of Directors for any reason, and any
directorships resulting from any increase in the number of directors, may be
filled by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall hold
office until the next election of the class for which such directors shall have
been chosen and until their successors shall be elected and qualified. At each
annual meeting of stockholders the successors to the class of directors whose
term shall then expire shall be elected to hold office for a term expiring at
the third succeeding annual meeting.
3. Increases or Decreases in the Number of Directors. In the event of any
increase or decrease in the authorized number of directors, each director then
serving as such shall nevertheless continue as director until the expiration of
such director's current term or his or her prior death, retirement or
resignation. No decrease in the number of directors constituting the whole
Board of Directors shall shorten the term of an incumbent director.
4. Removal. Following the Initial Public Offering Date, any one or more
or all of the directors may be removed only with cause, and then only by the
holders of at least a majority of the shares then entitled to vote at an
election of directors.
5. Stockholder Nominations and Introduction of Business, Etc. Following
the Initial Public Offering Date, advance notice of stockholder nominations for
election of directors and other business to be brought by stockholders before a
meeting of stockholders shall be given in the manner provided in the By-laws of
the Corporation.
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EIGHTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. If the General Corporation Law of the State of
Delaware is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended. Any repeal or modification of this Article Eighth by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
NINTH: Each person who is or was a director or officer of the Corporation,
and each person who serves or served at the request of the Corporation as a
director or officer of another enterprise, shall be indemnified by the
Corporation in accordance with, and to the fullest extent authorized by, the
General Corporation Law of Delaware as it may be in effect from time to time.
The right of indemnity provided herein shall not be deemed exclusive of any
other rights to which any person may be entitled under any By-law, agreement,
vote of stockholders or directors, or otherwise. The Corporation may provide
indemnification to any such person, by agreement or otherwise, on such terms and
conditions as the Board of Directors may approve. Any agreement for
indemnification of any director, officer, employee or other person may provide
indemnification rights which are broader or otherwise differ from those set
forth herein. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the By-laws of the Corporation regarding the manner and conditions under
which indemnification shall be provided hereunder by the Corporation and the
extent thereof from time to time as deemed appropriate by the Board of Directors
in the best interests of the Corporation.
TENTH: The Board of Directors of the Corporation, when evaluating any offer
of another party to (a) make a tender or exchange offer for any equity security
of the Corporation; (b) merge or consolidate the Corporation with another
Corporation; or (c) purchase or otherwise acquire all or substantially all of
the properties and assets of the Corporation may, in connection with the
exercise of its judgment in determining what is in the best interests of the
Corporation and its stockholders, give the consideration to all factors the
directors deem relevant, including without limitation (i) the effects upon the
employees, suppliers, customers, creditors and others having similar relations
with the Corporation, upon the communities in which the Corporation conducts its
business or on such other constituencies of the Corporation as the Board of
Directors considers relevant under the circumstances; (ii) not only the
consideration being offered (after taking into account taxes) in relation to the
then current market price for the Corporation's outstanding shares of capital
stock, but also the Board of Director's estimate of the (A) future value of the
Corporation (including the unrealized value of its properties and assets) as an
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independent going concern and (B) the current value of the Corporation in a
freely negotiated transaction; (iii) the purpose of the Corporation, and any of
its subsidiaries, to provide quality products and services on a long term basis;
(iv) whether the proposed transaction might violate federal or state laws; and
(v) the long-term as well as short-term interests of the Corporation and its
stockholders, including the possibility that such interests may be best served
by the continued independence of the Corporation. If, on the basis of such
factors, the Board of Directors so determines that a proposal or offer to
acquire or merge the Corporation, or to sell its assets, is not in the best
interests of the Corporation, it may reject the proposal or offer. If the Board
of Directors determines to reject any such proposal or sale, the Board of
Directors shall have no obligation to facilitate, to remove any barriers to, or
to refrain from impeding the proposal or offer except as may be required by
applicable law. Except to the extent required by applicable law, the
consideration of any or all of such factors shall not be a violation of the
business judgment rule or of any duty of the directors to the stockholders or a
group of stockholders, even if the directors reasonably determine that any such
factor or factors outweigh the financial or other benefits to the Corporation or
a shareholder or group of stockholders.
ELEVENTH: The Corporation has elected to be governed by Section 203 of the
Delaware Law.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Second Amended and Restated Certificate
of Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon the stockholders herein are granted subject to this
reservation; provided, however, that, following the Initial Public Offering
Date, in addition to any vote of the holders of the capital stock of the
Corporation required by law or this Second Amended and Restated Certificate of
Incorporation, the affirmative vote of the holders of shares of voting stock of
the Corporation representing at least seventy-five percent (75%) of the voting
power of all of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors shall be
required to (i) reduce or eliminate the number of authorized shares of capital
stock set forth in Article Fourth or (ii) amend or repeal or adopt any provision
inconsistent with Articles Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, and
this Article Twelfth of this Second Amended and Restated Certificate of
Incorporation."
SECOND: The Board of Directors of the Corporation, at a meeting duly called
at which a quorum existed, July adopted resolutions proposing and approving the
Second Amended and Restated Certificate of Incorporation of the Corporation and
directing that such Second Amended and Restated Certificate of Incorporation be
submitted to the stockholders of the Corporation to consider and adopt the same.
THIRD: Pursuant to Section 27.8 of the Delaware Law, the adoption of the
Second Amended and Restated Certificate of Incorporation was consented to in
writing by a majority of the holders of the voting power of all shares of
capital stock of the Corporation entitled to vote thereon.
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FOURTH: The Second Amended and Restated Certificate of Incorporation was
duly adopted in accordance with the provisions of the General Corporation Law
of the State of Delaware, including Section 242 thereof.
IN WITNESS WHEREOF, BLUE RHINO CORPORATION has caused this Certificate to
be signed by its President and its corporate seal to be hereunto affixed and
attested by its Secretary this 19th day of May, 1998.
BLUE RHINO CORPORATION
By: /s/ Billy D. Prim
-------------------
Billy D. Prim
President
SEAL
ATTEST:
By: /s/ Mark Castaneda
-------------------
Mark Castaneda
Secretary
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CERTIFICATE OF AMENDMENT
TO THE
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BLUE RHINO CORPORATION
(a Delaware corporation)
Pursuant to Section 242 of the General Corporation Law of the State of Delaware,
the Second Amended and Restated Certificate of Incorporation of Blue Rhino
Corporation, a Delaware corporation (the "Certificate of Incorporation"), filed
with the Secretary of State of Delaware on May 19, 1998, is hereby amended as
follows:
Article FOURTH is hereby amended to read in its entirety as follows:
FOURTH: The total number of shares of stock (common and preferred) which
the corporation shall have authority to issue is Forty Five Million
(45,000,000) shares consisting of:
(a) Thirty Seven Million Five Hundred Thousand (37,500,000) shares of
common stock, with a par value of $.001 per share (the "Common Stock"); and
(b) Seven Million Five Hundred Thousand (7,500,000) shares of preferred
stock, with a par value of $.001 per share (the "Preferred Stock").
Except as otherwise required by law or expressly provided herein, the
holder of each share of Common Stock shall have one vote on each matter
submitted to a vote of the stockholders of the Corporation.
The holders of the Common Stock shall be entitled to receive dividends at
such times and in such amounts as may be determined by the Board of Directors
of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the Corporation, the holders of
Common Stock, shall be entitled to share ratably in the remaining assets of the
Corporation.
The holders of the Preferred Stock shall be entitled to such rights and
preferences as may be approved from time to time by the Board of Directors of
the Corporation as set forth in a Certificate of Designation filed pursuant to
the Delaware Law.
DATED: December 21, 1999
Blue Rhino Corporation
/s/ Mark Castaneda
----------------------
Mark Castaneda
Secretary
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CERTIFICATE OF CORRECTION
TO
CERTIFICATE OF AMENDMENT
TO THE
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BLUE RHINO CORPORATION
Blue Rhino Corporation, a Delaware corporation (the "Corporation"), does
hereby certify that:
1. The name of the Corporation is Blue Rhino Corporation.
2. The Certificate of Amendment (the "Amendment") to the Second Amended
and Restated Certificate of the Corporation (the "Certificate of
Incorporation"), which was filed with the Secretary of State of
Delaware on December 21, 1999, was an inaccurate record of the
corporate action therein referred to and requires correction in
accordance with Section 103 of the General Corporation Law of the
State of Delaware.
3. The inaccuracy to be corrected is as follows:
The total number of shares of stock (common and preferred) which the
corporation shall have authority to issue pursuant to Article FOURTH
of the Certificate of Incorporation was incorrectly stated as Forty
Five Million (45,000,000) shares consisting of Thirty Seven Million
Five Hundred Thousand (37,500,000) shares of common stock, with a par
value of $.001 per share, and Seven Million Five Hundred Thousand
(7,500,000) shares of preferred stock, with a par value of $.001 per
share.
4. Article FOURTH of the Certificate of Incorporation is hereby corrected
by deleting Article FOURTH in its entirety and substituting therefor
the following:
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is One Hundred Twenty Million
(120,000,000) shares consisting of:
(a) One Hundred Million (100,000,000) shares of Common Stock with a
par value of $.001 per share (the "Common Stock"); and
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(b) Twenty Million (20,000,000) share of Preferred Stock, with a par
value of $.001 per share (the "Preferred Stock").
Except as otherwise required by law or expressly provided herein,
the holder of each such share of Common Stock shall have one vote on
each matter submitted to a vote of the stockholders of the
Corporation.
The holders of the Common Stock shall be entitled to receive
dividends at such times and in such amounts as may be determined by
the Board of Directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment or
provision for payment of the debts and other liabilities of the
Corporation, the holders of Common Stock shall be entitled to share
ratably in the remaining assets of the Corporation.
The holders of the Preferred Stock shall be entitled to such
rights and preferences as may be approved from time to time by the
Board of Directors of the Corporation as set forth in a Certificate of
Designation filed pursuant to the Delaware Law.
IN WITNESS WHEREOF, the undersigned officers of the Corporation hereby
acknowledge by setting their hands hereunto on this 17th day of April, 2000,
that this Certificate of Correction to the Certificate of Amendment to the
Second Amended and Restated Certificate Incorporation is the act and deed of
the Corporation and that the facts stated herein are true.
BLUE RHINO CORPORATION
By: /s/ Billy D. Prim
--------------------------
Billy D. Prim, President
ATTEST:
By: /s/ Mark Castaneda
-----------------------
Mark Castaneda, Secretary
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BLUE RHINO CORPORATION
CERTIFICATE OF DESIGNATION, RIGHTS
AND PREFERENCES OF SERIES A CONVERTIBLE PREFERRED
STOCK
Pursuant to Section 151 of the
General Corporation Law of
the State of Delaware
I, Billy D. Prim, President of Blue Rhino Corporation, a Delaware
corporation (the "COMPANY"), pursuant to the provisions of Section 151 of the
General Corporation Law of the State of Delaware, do hereby make this
Certificate of Designation and do hereby state and certify that pursuant to the
authority expressly vested in the Company's Board of Directors by the Company's
Second Amended and Restated Certificate of Incorporation, as amended, the Board
of Directors duly adopted the following resolutions:
RESOLVED, that, pursuant to Article FOURTH of the Company's Second Amended
and Restated Certificate of Incorporation, as amended (the "RESTATED
CERTIFICATE"), which Restated Certificate authorizes 20,000,000 shares of
Preferred Stock, $0.001 par value per share ("PREFERRED STOCK"), the Board of
Directors (the "BOARD") hereby designates 2,000,000 shares of Preferred Stock
as Series A Convertible Preferred Stock ("SERIES A PREFERRED") and hereby fixes
the designation and preferences and relative, participating, optional and other
special rights, qualifications, limitations and restrictions of the Series A
Preferred as set forth below:
1. Dividends.
(a) The holders of the then outstanding shares of Series A Preferred
shall be entitled to receive, when, as and if declared by the Board out of any
funds legally available therefor, and in preference to the holders of shares of
any other class or series of capital stock of the Company ("JUNIOR STOCK"),
cumulative dividends (the "SERIES A DIVIDEND") at the annual rate per share
(and no more) of: (i) 5% of the Conversion Price (as defined in Section 4(b))
as of the Original Issue Date or the most recent anniversary of the Original
Issue Date, whichever is later, for the period beginning on September 7, 2000
(the "ORIGINAL ISSUE DATE") and ending on the third anniversary of the Original
Issue Date; (ii) 12% of the Conversion Price (as defined in Section 4(b)) as of
the third anniversary of the Original Issue Date, for the period beginning
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immediately following the third anniversary of the Original Issue Date and
ending on the fourth anniversary of the Original Issue Date; and (iii) 15% of
the Conversion Price (as defined in Section 4(b)) as of the most recent
anniversary of the Original Issue Date, for all periods after the fourth
anniversary of the Original Issue Date; in each case subject to equitable
adjustment for stock splits, stock dividends, reverse stock splits and other
similar corporate reorganizations or reclassifications that result in any
change in the number of outstanding shares of Series A Preferred; provided,
that the dividend rate per share attributable to the portion of any period in
which the Company is not fulfilling (or has not fulfilled) its obligations set
forth in Section 2(a) of its Registration Rights Agreement dated September 7,
2000 to (A) cause the Initial Registration Statement (as defined therein) to be
declared effective under the Securities Act of 1933, as amended, on or before
the first anniversary of the Original Issue Date, (B) cause the Initial
Registration Statement to cover all of the Company's common stock, par value
$0.001 ("COMMON STOCK"), issuable upon conversion of the Series A Preferred and
(C) permit the holders of Series A Preferred to sell shares of Common Stock at
any time during the Effectiveness Period, except when sales are restricted by
the Company's insider trading policies approved by the Board, shall be 15% of
the Conversion Price (as defined in Section 4(b)) as of the most recent
anniversary of the Original Issue Date. The Series A Dividend shall accrue from
the Original Issue Date and shall be payable or accruable quarterly in arrears
on the 20th day of December, March, June and September of each year (each, an
"ACCRUAL DATE"), commencing December 20, 2000; provided, that the accrued but
unpaid Series A Dividend, if any, may be declared and paid at any time, whether
or not on an Accrual Date. The Series A Dividend shall be fully cumulative and
shall accrue (whether or not declared), without interest, from the previous
Accrual Date, except that the first quarterly dividend shall accrue from the
Original Issue Date.
(b) At the election of the Company, the Series A Dividend may be paid in
cash, in shares of Common Stock or in a combination of cash and shares of
Common Stock; provided, that no fractional share of Common Stock shall be
issued in payment of any portion of the Series A Dividend. If the Company
elects to pay all or any portion of the Series A Dividend in shares of Common
Stock, such shares shall be valued based on the Average Closing Price as of the
date on which the Board authorizes issuance of such shares. "AVERAGE CLOSING
PRICE" shall mean, as of any particular date:
(i) if the Common Stock is then traded on a securities exchange or
the NASDAQ National Market, the average of the closing prices of the Common
Stock on such securities exchange over the thirty trading days ending three (3)
business days prior to such date, as reported in The Wall Street Journal --
Eastern Edition listing for each such day (corrected for obvious typographical
errors);
(ii) if the Common Stock is then traded over-the-counter, the average
of the closing bid or sale prices (whichever are applicable) over the thirty
trading days
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ending three (3) business days prior to such date as reported in The Wall
Street Journal - Eastern Edition listing for each such day (corrected for
obvious typographical errors); and
(iii) if there is no active public market for the Common Stock,
the value shall be the fair market value thereof, as determined in good
faith by the Board.
(c) Each holder of then outstanding shares of each Series A Preferred
shall be entitled to share ratably with the holders of Common Stock in all
dividends or other non-liquidating distributions declared and paid on the Common
Stock, other than those payable solely in shares of Common Stock (which shall
have the effects described in Section 4(1)), on the basis that such holder held,
on the record date for such dividend or distribution, the number of shares of
Common Stock into which such holder's shares would have been convertible on such
date upon exercise of the Conversion Rights described in Section 4.
2. Liquidation.
(a) Series A Liquidation Preference.
(i) In the event of any liquidation, dissolution or winding up of the
affairs of the Company, whether voluntary or involuntary (a "GENERAL
LIQUIDATION EVENT"), after payment or provision for payment of the debts
and other liabilities and obligations of the Company as required by law,
the holders of each share of Series A Preferred then outstanding shall be
entitled to be paid out of the net assets of the Company available for
distribution to its stockholders, before any payment or declaration and
setting apart for payment of any amount shall be made in respect of Junior
Stock, an amount equal to $6.00 per share of Series A Preferred, plus the
accrued but unpaid Series A Dividend, if any, to and including the date
full payment is tendered to the holders of the Series A Preferred with
respect to such General Liquidation Event (the "SERIES A LIQUIDATION
PREFERENCE"). If the Company shall at any time or from time to time effect
a subdivision of the outstanding Series A Preferred (or declare and pay a
dividend thereon payable in additional shares of Series A Preferred), the
Series A Liquidation Preference then in effect immediately before that
subdivision (or dividend) shall be proportionately decreased; conversely,
if the Company shall at any time or from time to time reduce the
outstanding shares of Series A Preferred by combination or reverse stock
split, the Series A Liquidation Preference then in effect immediately
before the combination shall be proportionately increased. Any such
adjustment pursuant to the preceding sentence shall become effective at the
close of business on the date the subdivision or combination becomes
effective or the dividend is paid. If upon the occurrence of a General
Liquidation Event, the assets and funds to be distributed among the holders
of Series A Preferred shall be insufficient to permit the payment to such
holders of the full Series A Liquidation Preference, then such assets and
funds of the Company legally available for
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distribution shall be distributed ratably among the holders of Series A
Preferred based upon the number of shares of Series A Preferred then held
by them.
(ii) Unless the holders of a majority of then outstanding shares
of Series A Preferred otherwise elect, a Fundamental Transaction (as
defined in Section 2(a)(iii)) shall be treated as a General Liquidation
Event with respect to the Series A Preferred. In such event, the holders of
Series A Preferred shall have the right to receive payment of the Series A
Liquidation Preference in lieu of receiving the consideration and other
securities and property provided for under Section 4(i).
(iii) "FUNDAMENTAL TRANSACTION" shall mean the consummation of:
(A) a share exchange, consolidation or merger of the Company with or into
any other corporation or other entity or any other corporate reorganization
in which the Company is not the surviving entity (unless the stockholders
of the Company immediately prior to such share exchange, consolidation,
merger or reorganization own or control in excess of fifty percent (50%) of
the general voting power of either the surviving entity or an entity that
owns or controls in excess of fifty percent (50%) of the general voting
power of the surviving entity); or (B) a sale of all or substantially all
of the assets of the Company (unless the stockholders of the Company
immediately prior to such sale own or control in excess of fifty percent
(50%) of the general voting power of either the purchasing party or parties
or an entity that owns or controls in excess of fifty percent (50%) of the
general voting power of the purchasing party or parties). The determination
of "general voting power" shall be based on the aggregate number of votes
that are attributable to outstanding securities entitled to vote in the
election of directors, general partners, managers or persons performing
analogous functions to directors of the entity in question, without regard
to contractual arrangements that establish a management structure or that
vest the right to designate directors in certain parties.
(b) Distribution of Remaining Liquidation Proceeds. After payment in
full of the Series A Liquidation Preference, the remaining net assets of the
Company shall next be distributed ratably per share to the holders of Common
Stock. Except as expressly set forth in Section 2(a)(i), holders of Series A
Preferred shall not be entitled to any distribution in the event of a General
Liquidation Event.
(c) Valuation of Securities. If the assets to be distributed pursuant
to this Section 2 consist of securities, such securities shall be valued at
their fair market value, determined as follows:
(i) if traded (and then tradable) on a securities exchange or
the NASDAQ National Market, the value shall be deemed to be the average of
the closing prices of the securities on such exchange over the thirty (30)
trading day
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period ending three (3) business days prior to the date of the Liquidation
Notice (as defined in Section 2(d));
(ii) if traded (and then tradable) over-the-counter, the value shall
be deemed to be the average of the closing bid or sale prices (whichever
are applicable) over the thirty (30) trading day period ending three (3)
days prior to the date of the Liquidation Notice; and
(iii) if there is no active public market (or if not then tradable in
a public market), the value shall be the fair market value thereof, as
determined in good faith by a majority of the Board.
(iv) In the event that the holders of a majority of the outstanding
shares of Series A Preferred (a "DISPUTING PARTY") give prompt written
notice to the Company that they dispute the determination of the Board made
pursuant to Section 2(c)(iii), each of the Company and the Disputing Party
shall select an investment banking firm or other expert of recognized
standing, and the two firms or other experts so selected shall select a
third firm or expert who shall determine conclusively the fair market value
(in the case of Section 2(c)(iii). The cost of such firms or experts shall
be divided equally between the Disputing Party (jointly and severally), on
the one hand, and the Company, on the other hand.
(d) Notice. Written notice (the "LIQUIDATION NOTICE") of any General
Liquidation Event, which states the payment date, the place where said payments
shall be made and the date on which Conversion Rights (as defined in Section 4)
terminate as to such shares (which shall be not less than five (5) days after
the date of such Liquidation Notice), or of the expected effective date for a
Fundamental Transaction, shall be given by first class mail, postage prepaid,
or by telecopy or facsimile, not less than ten (10) days prior to the payment
date stated therein (or, in the case of a Fundamental Transaction, the expected
effective date thereof), to holders of record of Series A Preferred, such
Liquidation Notice to be addressed to each such holder at its address as shown
on the records of the Company.
3. Voting Rights.
(a) General. Except as otherwise required by law, the holders of each
share of Series A Preferred shall be entitled to: (i) notice of any
stockholders' meeting in accordance with the bylaws of the Company; (ii) vote
on all matters upon which holders of Common Stock have the right to vote and
(iii) a number of votes on such matters equal to the largest number of full
shares of Common Stock into which such shares of Series A Preferred could be
converted pursuant to Section 4 on the record date for determination of
stockholders entitled to vote on such matters or, if no such record date is
established, on the date such vote is taken or a written consent is effective;
provided, that for this purpose only, the Series A Preferred shall be deemed
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convertible as of the Original Issue Date and not, as set forth in Section 4(a),
after the first anniversary of the Original Issue Date. Except to the extent
class or series voting is otherwise required by law or the Restated
Certificate, the holders of shares of Series A Preferred and Common Stock shall
vote together as a single voting group on all matters and not as separate
voting groups.
(b) Class C Director. The Board shall consist of no more than nine (9)
members. Notwithstanding Section 3(a), for so long as shares of Series A
Preferred remain outstanding, the holders of a majority of the outstanding
shares of Series A Preferred, voting as a separate class, shall be entitled to
elect one (1) director to the Board, which director shall be a Class C
Director, at each meeting of the Company's stockholders for the election of
Class C Directors.
4. Conversion.
The holders of the Series A Preferred shall have the following conversion
rights (the "CONVERSION RIGHTS"):
(a) Right to Convert. Each share of Series A Preferred shall be
convertible, at the option of the holder thereof at any time after the first
anniversary of the Original Issue Date and prior to the mandatory conversion as
set forth in Section 4(c), at the office of the Company or any transfer agent
for the Series A Preferred or Common Stock, into fully paid and nonassessable
shares of Common Stock, at the Conversion Price (as defined in Section 4(b))
therefor in effect at the time of conversion.
(b) Conversion Price. Shares of Series A Preferred shall be convertible
into the number of shares of Common Stock equal to $6.00 (the "ORIGINAL ISSUE
PRICE") divided by the Conversion Price per share in effect at the time of
conversion for each share of Series A Preferred being converted. The "CONVERSION
PRICE" per share for the Series A Preferred as of the Original Issue Date shall
be $6.00; provided, that, in the event that the Company's consolidated EBITDA
for the fiscal year ending July 31, 2001 is less than $11,800,000, the
Conversion Price as of the Original Issue Date shall be deemed to have been the
greatest of: (i) $4.50; (ii) book value per share of the Common Stock as of the
Original Issue Date as determined in good faith by the Company or (iii) the
closing bid price per share of the Common Stock on the NASDAQ National Market on
the Original Issue Date, and any adjustments to the Conversion Price made
pursuant hereto between the Original Issue Date and the date on which such
determination of EBITDA is made shall be re-evaluated and, if applicable,
re-adjusted. The Conversion Price shall be subject to adjustment from time to
time as provided herein.
For purposes hereof, "EBITDA" shall mean: the Company's Net Income less
the sum of (i) interest expense, (ii) provision for income taxes, (iii)
depreciation and amortization and (iv) nonrecurring expenses, in each case for
the Company's fiscal year ending July 31, 2001, all as
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shown on the Company's audited consolidated Statement of Operations for the
year ending July 31, 2001.
(c) Mandatory Conversion. At the option of the Company upon at least
fifteen (15) days written notice (the "NOTICE") to the holders of Series A
Preferred given at any time after the second anniversary of the Original Issue
Date, each then outstanding share of Series A Preferred shall be converted
automatically as of the effective date set forth in the Notice (the "MANDATORY
CONVERSION DATE"), without any action on the part of the holder thereof, into a
number of shares of Common Stock determined as provided in Section 4(b)
("MANDATORY CONVERSION"); provided that: (i) the Common stock is then traded on
a national securities exchange or the NASDAQ National Market; (ii) the average
of the closing prices of the Common Stock on such national securities exchange
over the ten (10) trading days ending three (3) business days prior to the date
that the Notice is deemed given as provided in Section 4(n), as reported in The
Wall Street Journal - Eastern Edition listing for each such day (corrected for
obvious typographical errors), is at least equal to 160% of the then effective
Conversion Price; and (iii) the Company shall have no obligation to issue and
deliver to any such holder of Series A Preferred on such date a certificate for
the number of shares of Common Stock to which such holder shall be entitled
until such time as such holder has surrendered its certificate or certificates
for its Series A Preferred, duly endorsed, at the office of the Company or any
transfer agent for the Common Stock or the holder notifies the Company that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection therewith. All rights with respect to shares of Series A
Preferred outstanding as of the Mandatory Conversion Date shall forthwith
terminate, except only the right of the holders of such shares to receive Common
Stock upon surrender of their certificates for the Series A Preferred and their
rights with respect to the accrued but unpaid Series A Dividend, if any.
(d) Mechanics of Conversion; Unpaid Dividends. Before any holder of Series
A Preferred shall be entitled to convert the same into shares of Common Stock,
such holder shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Company or of any transfer agent for the Series A
Preferred or Common Stock and shall give written notice by mail, postage
prepaid, to the Company at such office that such holder elects to convert the
same and shall state therein the number of shares of Series A Preferred being
converted and the name or names in which the certificate or certificates for
shares of Common Stock are to be issued. Thereupon the Company shall promptly
issue and deliver at such office to such holder of Series A Preferred or to the
nominee or nominees of such holder a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled.
Such conversion shall be deemed to have been made immediately prior to the
close of business on the date of such surrender of the shares of Series A
Preferred to be converted, and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such
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shares of Common Stock on such date. Upon conversion of such shares of Series A
Preferred, the accrued but unpaid Series A Dividend, if any, shall be paid
in cash or in shares of Common Stock as provided in Section 1(h).
(e) Adjustment for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the Original Issue Date effect a
subdivision of the outstanding Common Stock, the Conversion Price then in
effect immediately before that subdivision shall be proportionately decreased;
conversely, if the Company shall at any time or from time to time after the
Original Issue Date reduce the outstanding shares of Common Stock by
combination or otherwise, the Conversion Price then in effect immediately
before the combination shall be proportionately increased. Any adjustment under
this Section 4(c) shall become effective at the close of business on the date
the subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the event the
Company at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Conversion
Price then in effect shall be decreased as of the time of such issuance or, in
the event such a record date shall have been fixed, as of the close of business
on such record date, by multiplying the Conversion Price then in effect by a
fraction:
(1) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, plus the number of
shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price shall be recomputed accordingly as of the close
of business on such record date and thereafter the Conversion Price shall be
adjusted pursuant to this Section 4(f) as of the time of actual payment of such
dividends or distributions.
(g) Adjustments for Other Dividends and Distributions. In the event
the Company at any time or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Company other than shares of Common Stock, then and in each
such event provision shall be made so that the holders of Series A Preferred
shall receive upon conversion thereof, in addition to the number of shares of
Common Stock receivable thereupon, the amount of securities of the Company that
they would have
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received had their Series A Preferred been converted into Common Stock on the
date of such event and had thereafter, during the period from the date of such
event to and including the conversion date, retained such securities receivable
by them as aforesaid during such period giving application to all adjustments
called for during such period under this Section 4 with respect to the rights
of the holders of the Series A Preferred.
(h) Adjustment for Reclassification, Exchange or Substitution. If
the Common Stock issuable upon the conversion of the Series A Preferred shall
be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation or sale of
assets provided for elsewhere in this Section 4), then and in each such event
the holders of each share of Series A Preferred shall have the right thereafter
to convert such share into the kind and amounts of shares of stock and other
securities and property receivable upon such reorganization, reclassification
or other change, by holders of the number of shares of Common Stock into which
such shares of Series A Preferred might have been converted immediately prior
to such reorganization, reclassification or change, all subject to further
adjustment as provided herein.
(i) Reorganization or Fundamental Transaction. If at any time or from
time to time there shall be a capital reorganization of the Common Stock (other
than a subdivision, combination, reclassification or exchange of shares provided
for elsewhere in this Section 4) or a Fundamental Transaction (as defined in
Section 2(a)(iii)) that the holders of at least a majority of the outstanding
shares of Series A Preferred have elected not to treat as a General Liquidation
Event under Section 2(a)(ii), then, as a part of such reorganization or
Fundamental Transaction, provision shall be made so that the holders of the
Series A Preferred shall thereafter be entitled to receive upon conversion
thereof the number of shares of stock or other securities or property of the
Company, or of the successor entity resulting from such Fundamental Transaction,
to which a holder of that number of shares of Common Stock deliverable upon
conversion of the Series A Preferred would have been entitled on such capital
reorganization or Fundamental Transaction. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 4
with respect to the rights of the holders of the Series A Preferred after the
reorganization or Fundamental Transaction to the end that the provisions of this
Section 4 (including adjustment of the Conversion Price then in effect and the
number of shares of Common Stock into which each share of Series A Preferred is
convertible) shall be applicable after such reorganization or Fundamental
Transaction as nearly equivalent as may be practicable.
(j) Sale of Shares Below Conversion Price.
(i) If at any time or from time to time after the Original
Issue Date, the Company shall issue or sell Additional Shares of Common
Stock (as defined in Section 4(j)(v)), other than as a dividend as provided
in Section 4(f), and other than upon a subdivision or combination of
shares of Common Stock as provided in Section 4(e), for a
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consideration per share less than the then effective Conversion Price, then and
in each case the Conversion Price shall be reduced to the price per share at
which such Additional Shares of Common Stock are issued (the "ISSUANCE PRICE"),
provided that in no event shall the Company issue or sell Additional Shares of
Common Stock for a consideration per share less than the then effective
Conversion Price without (x) prior shareholder approval of both the issuance or
sale of such Additional Shares of Common Stock and the resulting increase in
the number of shares of Common Stock issuable upon conversion of the Series A
Preferred at the Issuance Price or (y) the prior written consent of the holders
of a majority of the outstanding shares of Series A Preferred, in which case
upon issuance or sale of such Additional Shares of Common Stock, the Conversion
Price shall be reduced not to the Issuance Price, but instead to the greatest
of (A) the price per share at which such Additional Shares of Common Stock are
issued; (B) book value per share of the Common Stock as of the Original Issue
Date as determined in good faith by the Company or (C) the closing bid price
per share of the Common Stock on the NASDAQ National Market on the Original
Issue Date.
(ii) For the purpose of making the adjustments provided in Section
4(j)(i), the consideration received by the Company for any issue or sale of
securities shall:
(A) to the extent it consists of cash, be computed at the net amount
of cash received by the Company after deduction of any underwriting or
similar commissions, concessions or compensation paid or allowed by the
Company in connection with such issue or sale;
(B) to the extent it consists of services or property other than cash,
be computed at the fair value of such services or property as determined in
good faith by the Board; and
(C) if Additional Shares of Common Stock, Convertible Securities (as
hereinafter defined), or rights or options to purchase either Additional
Shares of Common Stock or Convertible Securities are issued or sold
together with other stock or securities or other assets of the Company for
a consideration that covers both, be computed as the portion of the
consideration so received that may be reasonably determined in good faith
by the Board to be allocable to such Additional Shares of Common Stock,
Convertible Securities or rights or options.
(iii) For the purpose of the adjustment provided in Section 4(j)(i), if at
any time or from time to time, the Company shall issue any rights or options
for the purchase of, or stock or other securities convertible into, Additional
Shares of Common Stock (such convertible stock or securities being hereinafter
referred to as "CONVERTIBLE SECURITIES"), then, in each case, if the
Effective Price (as hereinafter defined) of such
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rights, options or Convertible Securities shall be less than the then existing
Conversion Price, the Company shall be deemed to have issued at the time of the
issuance of such rights, options or Convertible Securities the maximum number of
Additional Shares of Common Stock issuable upon exercise or conversion thereof
and to have received as consideration for the issuance of such shares an amount
equal to the total amount of the consideration, if any, received by the Company
for the issuance of such rights, options or Convertible Securities, plus, in the
case of such options or rights, the minimum amounts of consideration, if any,
payable to the Company upon exercise or conversion of such options or rights.
For purposes of the foregoing, "EFFECTIVE PRICE" shall mean the quotient
determined by dividing the total of all such consideration by such maximum
number of Additional Shares of Common Stock. No further adjustment of the
existing Conversion Price adjusted upon the issuance of such rights, options or
Convertible Securities shall be made as a result of the actual issuance of
Additional Shares of Common Stock on the exercise of any such rights or options
or the conversion of any such Convertible Securities.
If any such rights or options or the conversion privilege represented by
any such Convertible Securities shall expire without having been exercised, the
existing Conversion Price adjusted upon the issuance of such rights, options or
Convertible Securities shall be readjusted to the Conversion Price that would
have been in effect had an adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of such rights or
options, or upon the conversion of such Convertible Securities, and such
Additional Shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of all
such rights or options, whether or not exercised, or the consideration received
for issuing or selling the Convertible Securities actually converted plus the
consideration, if any, actually received by the Company on the conversion of
such Convertible Securities.
(iv) For the purpose of the adjustment provided for in Section 4(j)(i), if
at any time or from time to time, the Company shall issue any rights or options
for the purchase of Convertible Securities, then in each such case, if the
Effective Price thereof is less than then existing Conversion Price, the Company
shall be deemed to have issued at the time of the issuance of such rights or
options the maximum number of Additional Shares of Common Stock issuable upon
conversion of the total amount of Convertible Securities covered by such rights
or options and to have received as consideration for the issuance of such
Additional Shares of Common Stock an amount equal to the amount of
consideration, if any, received by the Company for the issuance of such rights
or options, plus the minimum amounts of consideration, if any, payable to the
Company upon the conversion of such Convertible Securities. For the purposes of
the foregoing "Effective Price" shall mean the quotient determined by dividing
the total amount of such
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consideration by such maximum number of Additional Shares of Common Stock. No
further adjustment of the Conversion Price adjusted upon the issuance of such
rights or options shall be made as a result of the actual issuance of the
Convertible Securities upon the exercise of such rights or options or upon the
actual issuance of Additional Shares of Common Stock upon the conversion of such
Convertible Securities.
The provisions of Section 4(j)(iii) for the readjustment of the Conversion
Price upon the expiration of rights or options or the rights of conversion of
Convertible Securities shall apply mutatis mutandis to the rights, options and
Convertible Securities referred to in this Section 4(j)(iv).
(v) Definition. The term "Additional Shares of Common Stock" as used
herein shall mean all shares of Common Stock issued or deemed issued by the
Company after the Original Issue Date, whether or not subsequently reacquired or
retired by the Company, other than: (A) pursuant to a stock split, stock
dividend or reclassification or similar organic change involving the Company's
capital stock; (B) upon conversion of the Series A Preferred; (C) to Thomas E.
Brandtonies or to Gold Bank, or upon exercise of the warrant granted to Thomas
E. Brandtonies, in connection with the Company's acquisition of shares of the
capital stock of QuickShip, Inc.; (D) pursuant to the exercise of options or
warrants approved by the Board; (E) as an inducement to lenders of the Company
to advance sums or otherwise to make financial accommodations, or as
compensation to lenders for advancing sums or otherwise making financial
accommodations, to the Company or one or more of its subsidiaries, to the extent
such issuance is approved by the Board; (F) as compensation to vendors or
lessors of the Company in connection with, or as an inducement to vendors or
lessors of the Company to enter into, agreements with the Company and not as
part of an offering of the Company's securities, to the extent such issuance is
approved by the Board; (G) to employees, officers, directors, distributors,
consultants or other persons performing services for or on behalf of the
Company, in each case to the extent issued solely in its status as such and not
as part of an offering of the Company's securities, pursuant to any stock option
plan, stock purchase plan, management incentive plan, consulting agreement or
other contract or arrangement approved by the Board (collectively, "PLANS"); and
(H) in consideration of the acquisition by the Company of the assets, capital
stock or other equity interests of, or in connection with a joint venture with,
another entity, to the extent such issuance is approved by the Board; provided,
that such issuance (after giving effect thereto), when aggregated with all other
issuances contemplated by this clause (H), does not constitute a number of
shares (as equitably adjusted in the event of a stock split, stock dividend,
combination or other similar recapitalization) greater than 20% of the number of
shares of Common Stock outstanding (determined on a fully diluted, as-converted
basis) as of the Original Issue Date (after giving effect to the issuance of
Series A Preferred).
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(k) Accountants' Certificate of Adjustment. In each case of an adjustment
or readjustment of the Conversion Price for the number of shares of Common
Stock or other securities issuable upon conversion of the Series A Preferred,
at the request of any holder of Series A Preferred, the Company, at its
expense, shall cause independent certified public accountants of recognized
standing selected by the Company (who may be the independent certified public
accountants then auditing the books of the Company) to compute such adjustment
or readjustment in accordance herewith and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to each registered holder of the Series A Preferred at
the holder's address as shown in the Company's books. The certificate shall set
forth such adjustment or readjustment, showing in reasonable detail the facts
upon which such adjustment or readjustment is based.
(l) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of shares of Series A Preferred. In lieu of any
fractional shares to which the holder would otherwise be entitled, the Company
shall pay cash equal to the product of such fraction multiplied by the fair
market value of one share of Common Stock on the date of conversion, as
determined in good faith by the Board. Whether or not fractional shares are
issuable upon such conversion shall be determined on the basis of the total
number of shares of Series A Preferred the holder is at the time converting
into Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
(m) Reservation of Stock Issuable Upon Conversion. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the
shares of the Series A Preferred, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred. As a condition precedent to the
taking of any action which would cause an adjustment to the Conversion Price,
the Company will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient in order that it may
validly and legally issue the shares of its Common Stock issuable based upon
such adjusted Conversion Price.
(n) Notices. Any notice required by the provisions of this Section 4 to be
given to the holder of shares of the Series A Preferred shall be deemed given
when personally delivered to such holder or on the business day after the same
has been deposited in the United States mail, certified or registered mail,
return receipt requested, postage prepaid, and addressed to each holder of
record at its address appearing on the books of the Company.
(o) Payment of Taxes. The Company will pay all taxes and other
governmental charges (other than taxes measured by the revenue or income of the
holders of the Series A Preferred) that may be imposed in respect of the issue
or delivery of shares of Common Stock upon conversion of shares of the Series A
Preferred.
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5. Protective Provisions. From the Original Issue Date until such time as
no shares of Series A Preferred remain outstanding, the Company shall not,
directly or indirectly, take any of the following actions without first
obtaining the affirmative vote or the written consent of the holders of a
majority of the then outstanding shares of Series A Preferred:
(a) create, authorize, designate, reclassify, issue or sell any class or
series of capital stock of the Company, or rights, options, warrants or other
securities convertible into or exchangeable for any capital stock of the
Company, or any "phantom" equity or stock appreciation rights, that rank as to
payment of dividends or distribution of assets upon liquidation senior to or
pari passu with the Series A Preferred;
(b) amend, repeal, alter or modify the terms, rights, preferences or
privileges of the shares of the Series A Preferred;
(c) increase or decrease the authorized number of shares of Series A
Preferred or Common Stock;
(d) amend or waive any provision of the Restated Certificate or the bylaws
of the Company if such amendment would adversely affect the rights of the
holders of Series A Preferred; or
(e) declare or pay any dividend with respect to Junior Stock, or make any
payment on account of, or set apart for payment money for a sinking or other
similar fund for, the repurchase, redemption or other retirement of any shares
of Common Stock or any warrants, rights or options exercisable for or
convertible into shares of Common Stock, or make any distribution in respect of
shares of Common Stock, either directly or indirectly, and whether in cash,
obligations or shares of the Company or other property (other than
distributions or dividends in Common Stock to the holders of Common Stock),
except, in each case; (i) pursuant to equity incentive agreements or
arrangements with service providers upon termination of their services to the
Company; or (ii) pursuant to agreements entered into to evidence grants or
awards or other compensation under any Plan.
6. Preemptive Rights.
(a) The holders of outstanding shares of Series A Preferred (the
"PREEMPTIVE HOLDERS") shall have the preemptive rights described in this
Section 6 with regard to all issuances by the Company after the Original Issue
Date of shares of Common Stock or warrants, options or other rights to purchase
shares of Common Stock or any securities convertible into or exchangeable for
shares of Common Stock (collectively, the "NEW SECURITIES"); provided, however,
that New Securities do not include:
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(i) securities issued in connection with a stock split, stock
dividend or reclassification or similar organic change involving the
Company's capital stock;
(ii) Common Stock issued upon the conversion of Series A
Preferred (as adjusted for all subsequent stock dividends, subdivisions and
combinations, the "CONVERSION SHARES");
(iii) securities issued upon conversion of any other security
so long as such other security was itself either a New Security or was
outstanding as of the Original Issue Date;
(iv) securities issued upon the exercise of any warrant,
option or other right to purchase securities so long as such warrant,
option or other right was itself either a New Security, is excluded from
the definition of New Security pursuant to Section 6(a)(v) or was
outstanding as of the Original Issue Date;
(v) warrants, options or other rights to purchase securities
or securities convertible into or exchangeable for securities issued
pursuant to any Plan to employees, officers, directors, distributors,
consultants, or other persons performing services for or on behalf of the
Company, in each case to the extent issued solely in its status as such and
not as part of an offering of the Company's securities;
(vi) securities issued to Thomas E. Brandtonies or to Gold
Bank, or upon exercise of the warrant granted to Thomas E. Brandtonies, in
connection with the Company's acquisition of shares of the capital stock
of QuickShip, Inc.;
(vii) securities issued as an inducement to lenders of the
Company to advance sums or otherwise to make financial accommodations, or
to compensate lenders for advancing sums or otherwise making financial
accommodations, to the Company or one or more of its subsidiaries, to the
extent such issuance is approved by the Board;
(viii) securities issued as compensation to vendors or lessors
of the Company in connection with, or as an inducement to vendors or
lessors of the Company to enter into, agreements with the Company and not
as part of an offering of the Company's securities, to the extent such
issuance is approved by the Board; and
(ix) securities issued in consideration of the acquisition by
the Company of the assets, capital stock or other equity interests of, or
in connection with a joint venture with, another entity, to the extent such
issuance is approved by the Board; provided, that such issuance (after
giving effect thereto), when aggregated with all other issuances
contemplated by this clause (ix), does not constitute a number of shares of
Common Stock (on a fully diluted, as-converted basis and as equitably
adjusted in the
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event of a stock split, stock dividend or other similar recapitalization)
greater than 20% of the number of shares of Common Stock outstanding
(determined on a fully diluted, as-converted basis) as of the Original Issue
Date (after giving effect to the issuance of Series A Preferred).
b. In the event that the Company proposes to offer to sell any New
Securities, the Company shall first give to each of the Preemptive Holders
written notice stating such intention. The written notice shall contain a full,
accurate and complete description of the price and terms of such proposed sale,
and shall contain an unconditional offer to sell a Pro Rata Share (as defined
in Section 6(d)) of such New Securities to such Preemptive Holder on the same
terms and conditions as set forth in the notice. Each Preemptive Holder shall
have 20 days from the date such written notice is given to elect to purchase
all or a portion of such Preemptive Holder's Pro Rata share of the New
Securities, by giving written notice to the Company of such election and the
quantity of New Securities such Preemptive Holder will purchase. In addition,
each Preemptive Holder may elect to purchase more than its Pro Rata Share (an
"EXCESS ELECTION") and, to the extent one or more of the other Preemptive
Holders does not elect to purchase its full Pro Rata Share (the "UNALLOCATED
SHARE"), each Preemptive Holder so electing may purchase such portion of the
Unallocated Share equal to the percentage that its Excess Election is of the
aggregate amount of Excess Elections of all Preemptive Holders.
(c) In the event that any Preemptive Holder elects to purchase any
of the New Securities within the election period described in Section 6(b), the
consideration for such purchases shall be paid to the Company and a certificate
or other instrument evidencing the New Securities shall be delivered to the
electing Preemptive Holder concurrently with the closing of the sale of New
Securities to the third party purchaser(s) thereof, subject in all cases to the
execution and delivery by the Company and the Preemptive Holder of a purchase
agreement or subscription agreement relating to such New Securities and all
other documents in form and substance substantially similar, to the extent
applicable, to those executed and delivered by the Company and the third party
purchaser(s). The Company shall provide notice of such date to the purchasing
Preemptive Holders at least three (3) days prior thereto.
(d) As used in this Section 6, the "PRO RATA SHARE" of the New
Securities that a Preemptive Holder will be offered an opportunity to purchase
is a fraction of the total New Securities proposed to be issued, the numerator
of which is the number of Conversion Shares and other shares of Common Stock
then owned by such Preemptive Holder plus the number of Conversion Shares and
other shares of Common Stock that could be obtained by conversion on such date
of all Series A Preferred held by such Preemptive Holder or by exercise of any
option, warrant or similar right, and the denominator of which is the number of
shares of Common Stock outstanding on such date on a fully diluted basis
(assuming conversion of all of the outstanding Series A Preferred and the
exercise of all outstanding options, warrants or similar rights).
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(e) During the 90-day period following the expiration of the 20-day
election period described in Section 6(b), the Company may issue the New
Securities that Preemptive Holders have not purchased pursuant to this Section
6, but only on terms and conditions and at a price no more favorable to the
purchasers thereof than was specified in the Company's notice to the Preemptive
Holders.
(f) All rights accorded to any Preemptive Holder under this Section 6 may
be waived or modified, either generally or in the case of any particular
issuance of New Securities, and either prospectively or retroactively, if those
Preemptive Holders who hold, in the aggregate, a majority of the shares of
Common Stock held by all Preemptive Holders (computed on a fully diluted basis
assuming the exercise of all options, warrants and similar rights and the
conversion and exchange of all securities convertible into or exchangeable for
Common Stock) execute and deliver to the Company a written instrument to that
effect.
7. No Reissuance of Series A Preferred.
No share or shares of Series A Preferred acquired by the Company by reason
of redemption, purchase, conversion or otherwise shall be reissued, and all
such shares shall be canceled, retired and eliminated from the shares which the
Company shall be authorized to issue.
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IN WITNESS WHEREOF, Blue Rhino Corporation caused this Certificate to be
signed by its President and attested by its Secretary on this 7th day of
September, 2000.
BLUE RHINO CORPORATION
By: /s/ Billy D. Prim
-----------------------------
Billy D. Prim
CEO and President
ATTEST:
/s/ Mark Castaneda
- ---------------------------------
Mark Castaneda
Secretary
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BLUE RHINO CORPORATION
CERTIFICATE OF DESIGNATION, NUMBER OF AUTHORIZED SHARES
OF SERIES A CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151 of the
General Corporation Law of
the State of Delaware
I, Billy D. Prim, President of Blue Rhino Corporation, a Delaware
corporation (the "COMPANY"), pursuant to the provisions of Section 151 of the
General Corporation Law of the State of Delaware, do hereby make this
Certificate of Designation and do hereby state and certify that the Board of
Directors duly adopted the following resolution:
WHEREAS, pursuant to the authority expressly vested in the Company's
Board of Directors by the Company's Second Amended and Restated Certificate of
Incorporation, as amended, the Board of Directors has previously fixed the
designation and preferences and relative, participating, optional, and other
special rights, qualifications, limitations and restrictions (collectively,
"RIGHTS") of the Company's Series A Convertible Preferred Stock, $0.001 par
value per share ("SERIES A PREFERRED"), which Rights were reflected in a
Certificate of Designation dated and filed on September 7, 2000 pursuant to
Section 151 of the General Corporation Law of the State of Delaware;
RESOLVED, that the number of authorized shares of Series A Preferred
be and hereby is increased to 3,133,333.
IN WITNESS WHEREOF, Blue Rhino Corporation caused this Certificate to
be signed by its President and attested by its Secretary on this 25th day of
October, 2000.
BLUE RHINO CORPORATION
By: /s/ Billy D. Prim
--------------------
Billy D. Prim
CEO and President
ATTEST:
/s/ Mark Castaneda
- ------------------------
Mark Castaneda
Secretary