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EXHIBIT 3(a)
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
REGENT COMMUNICATIONS, INC.
Regent Communications, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby certifies that the
Corporation was originally incorporated under the name "JS Communications, Inc."
on November 4, 1996, and that its original Certificate of Incorporation was
filed with the Secretary of State of the State of Delaware on the same date. The
Corporation further certifies that the Corporation changed its named from JS
Communications, Inc. to Regent Communications, Inc. upon the filing with the
Secretary of State of Delaware of a Certificate of Amendment on May 16, 1997.
The Corporation further certifies that this Amended and Restated Certificate of
Incorporation amends and restates the provisions previously filed with the
Secretary of State of the State of Delaware.
FIRST: Name. The name of the Corporation is Regent Communications, Inc.
SECOND: Registered Office and Registered Agent. The registered office
of the Corporation in the State of Delaware is 1209 Orange Street, New Castle
County, Wilmington, Delaware 19801. The Registered Agent at the same address is
The Corporation Trust Company.
THIRD: Purposes. The purposes of the Corporation are 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: Capital Stock.
A. Authorized Capital Stock. The total number of shares of all classes
of stock which the Corporation shall have authority to issue is Fifty Million
(50,000,000) shares, consisting of a class of Thirty Million (30,000,000) shares
of Common Stock, par value of $.01 per share, and a class of Twenty Million
(20,000,000) shares of Preferred Stock, par value of $.01 per share.
B. Common Stock. The Common Stock shall have full voting rights and
other characteristics of common stock recognized under the General Corporation
Law of the State of Delaware subject to the rights and preferences of Preferred
Stock; provided, however, in the event the Corporation holds (directly or
indirectly) a license or franchise from the Federal Communications Commission to
conduct its business and such license or franchise is conditioned upon some or
all of the holders of its capital stock possessing prescribed qualifications,
such Common Stock and the Preferred Stock shall be subject to redemption by the
Corporation, to the extent necessary to prevent the loss of such license or
franchise or to reinstate it, for cash, property or rights, including other
securities of the Corporation, at such time or times as the Board of Directors
determines upon notice and following the same procedures as are applicable to
redemption of Preferred Stock at a redemption price equal to the greater of the
amount of its liquidation preference or its fair market value; and provided
further, that the
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Board of Directors is authorized, subject to limitations prescribed by law and
the provisions of this Article FOURTH, to provide for the issuance of a series
of Common Stock designated Series B Common Stock consisting of such number of
shares constituting said series as the Board of Directors shall determine from
time to time, each share to be convertible at any time at the option of the
holder in the same manner and subject to the same conditions as were applicable
to a voluntary conversion of the Series D Convertible Preferred Stock set forth
in Section 7 of Subpart G of this Article FOURTH into one share of Common Stock
(subject to equitable adjustment for stock splits, reverse stock splits, common
stock dividends and the like), and such Series B Common Stock, having the
restricted voting rights applicable to the Series D Convertible Preferred Stock
set forth in Section 3 of Subpart G of this Article FOURTH and constituting the
series of Common Stock issuable upon a mandatory conversion of the Series D
Convertible Preferred Stock pursuant to Section 7[c][i] of Subpart G of this
Article FOURTH, and by filing a certificate pursuant to the applicable law of
the State of Delaware to fix the number of shares to be included in such Series
B Common Stock and to set forth the restricted voting and conversion rights
thereof.
C. Preferred Stock. The Board of Directors is authorized, subject to
the limitations prescribed by law and the provisions of this Article FOURTH, to
provide for the issuance of the shares of Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designations, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof.
The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
[1] The number of shares constituting that series and the
distinctive designation of that series;
[2] The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates,
and the relative rights of priority, if any, of payment of dividends on
shares of that series;
[3] Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such
voting rights;
[4] Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events as the Board of
Directors shall determine;
[5] Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates;
[6] Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
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[7] The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of
shares of that series;
[8] Any other relative rights, preferences and limitations of
that series.
D. Designation of Series A Convertible Preferred Stock. A series of the
Preferred Stock of the Corporation is hereby created and authorized, and the
designations, amount and stated value of such series of Preferred Stock and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereon, are as follows:
SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as "Series A Convertible
Preferred Stock" (the "Series A Preferred") and the number of shares
constituting such series shall be 620,000 shares. The stated value of the Series
A Preferred shall be $5 per share, the original per share issue price (the
"Stated Value").
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series A Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and October
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), accruing commencing with the date of issue of such shares, on shares of
the Series A Preferred at the rate of $.35 per share per annum. No interest
shall be paid on accrued but unpaid dividends.
SECTION 3. VOTING RIGHTS.
In addition to voting rights required by law or by this Amended
Certificate of Incorporation, as amended or restated from time to time (the
"Certificate of Incorporation"), subject to restrictions contained in this
Certificate of Incorporation the holders of Series A Preferred shall be entitled
to vote on all matters submitted to a vote of the Corporation's stockholders.
Except as otherwise required by law or provided by this Certificate of
Incorporation or by the Board of Directors pursuant to Subpart C of this Article
FOURTH, the holders of the Series A Preferred, shall vote together with the
holders of all other series of the Corporation's voting preferred stock and the
holders of the Corporation's Common Stock as one class with one vote per share
(in the case of Preferred Stock, subject to adjustments as provided in Section 7
below and if convertible into Common Stock, one vote per share of Common Stock
into which such convertible Preferred Stock is then convertible) on all matters
submitted to a vote of the Corporation's stockholders.
SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series A Preferred as provided in
Section 2 are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series A Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or
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winding up) to the Series A Preferred, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any such junior stock, (B) pay dividends on or make any
other distributions on any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred, except
dividends paid ratably on the Series A Preferred and all such parity stock on
which dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled, (C) redeem or purchase
or otherwise acquire for consideration any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior to the Series A Preferred or in
satisfaction of contractual obligations to do so entered into with the written
consent of the holders of a majority of outstanding shares of Series A Preferred
(including, without limitation, in satisfaction of the provisions contained in
the Stockholders' Agreement), or (D) purchase or otherwise acquire for
consideration any shares of the Series A Preferred, or any shares of stock
ranking on a parity with the Series A Preferred except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series of classes, or except pursuant to the provisions of the
Stockholders' Agreement. As used in this Amended and Restated Certificate of
Incorporation, the term "Stockholders' Agreement" shall mean that certain Second
Amended and Restated Stockholders' Agreement, dated in June, 1998, among the
Corporation and certain of its stockholders, as the same may be further amended,
restated or modified from time to time. All references to the Stockholders'
Agreement shall be applicable as long as the Stockholders' Agreement remains in
effect.
SECTION 5. REACQUIRED SHARES.
Any shares of the Series A Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, or otherwise in accordance with Delaware General
Corporation Law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of the Series A Preferred unless,
prior thereto, the holders of the Series B Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (B) to the holders of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
unless, prior thereto, the holders of Series A Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (C) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred, except distributions made ratably on the Series A Preferred and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
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SECTION 7. CONVERSION.
[a] Optional Conversion. Subject to the provisions for
adjustment hereinafter set forth, each share of the Series A Preferred
shall be convertible at any time at the option of the holder thereof,
in the manner hereinafter set forth, into one (1) fully paid and
nonassessable share of Common Stock of the Corporation.
[b] Mandatory Conversion. Subject to the provisions for
adjustment set forth in this Section 7, each share of the Series A
Preferred shall be convertible at the option of the Board of Directors,
under the conditions hereinafter set forth, into one (1) fully paid and
nonassessable share of Common Stock of the Corporation. The Board of
Directors of the Corporation may require conversion of all shares of
the Series A Preferred into shares of Common Stock in preparation for
or upon any of the following:
[i] A public offering of equity securities of the
Corporation of at least $10,000,000 in gross proceeds;
[ii] A private placement of equity securities of the
Corporation of at least $25,000,000 in gross proceeds;
[iii] A private placement of equity securities of the
Corporation of at least $10,000,000 in gross proceeds under
circumstances where the investor(s) reasonably believe the
conversion of the Series A Preferred is necessary to achieve
its (their) investment objectives;
[iv] A merger of the Corporation with another
corporation or other entity, whether or not the Corporation is
a survivor of such transaction whereby as a result the
stockholders of the Corporation hold less than 50% of the
outstanding capital stock of the surviving entity; or
[v] An acquisition of equity securities of the
Corporation in one transaction or in a series of related
transactions which results in a transfer of majority voting
control of the Corporation.
[c] The number of shares of Common Stock into which each share
of the Series A Preferred is convertible shall be adjusted from time to
time as follows:
[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series A
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of its Common Stock into a greater number
of shares of Common Stock (by reclassification or otherwise),
then, and in each such case, the number of shares of Common
Stock into which each share of the Series A Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the sum of (I) the number of shares of Common Stock
into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number
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of shares of Common Stock which such holder would have been
entitled to receive in connection with the occurrence of such
event had such share been converted immediately prior thereto,
and the denominator of which is the number of shares of Common
Stock determined in accordance with clause (I) above. An
adjustment made pursuant to this subparagraph [c][i] shall
become effective (a) in the case of any such dividend,
immediately after the close of business on the record date for
the determination of holders of Common Stock entitled to
receive such dividend, or (b) in the case of any such
subdivision, at the close of business on the day immediately
prior to the day upon which such corporate action becomes
effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series A Preferred
shall combine or consolidate the outstanding shares of its
Common Stock into a lesser number of shares of Common Stock,
by reclassification or otherwise, then, and in each such case,
the number of shares of Common Stock into which each share of
the Series A Preferred is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares of
Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event by (b) a
fraction, the numerator of which is the number of shares which
the holder would have owned after giving effect to such event
had such share been converted immediately prior to the
occurrence of such event and the denominator of which is the
number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event.
An adjustment made pursuant to this subparagraph b(ii] shall
become effective at the close of business on the date
immediately prior to the day upon which such corporate action
becomes effective.
[iii] In case the Corporation after the issuance of
such share of Series A Preferred shall: (A) issue any options,
warrants, or other rights (excluding those issued in exchange
for options to purchase common stock in Faircom Inc. pursuant
to the terms of a merger, and excluding options to purchase
Common Stock issued to management of the Corporation
exercisable for up to the lesser of 2,000,000 shares of Common
Stock (subject to adjustment pursuant to provisions applicable
to the options in the case of stock splits, reverse stock
splits and the like) or that number of shares of Common Stock
equal to fifteen percent (15%) of the aggregate number of
outstanding shares of Common Stock and other equity securities
of the Corporation exercisable for the purchase of, or
convertible into, Common Stock computed on a fully-diluted
basis) entitling the holder thereof to subscribe for, or
purchase, Common Stock at a price per share which, when added
to the amount of consideration received or receivable by the
Corporation for such options, warrants, or other rights, is
less than the then fair market value per share of the Common
Stock at the date of such issuance; (B) issue or sell
securities of the Corporation convertible into, or
exchangeable for, Common Stock at a price per share which,
when added to the amount of consideration received or
receivable, from the Corporation for such exchangeable or
convertible securities, is less than the then fair market
value of a share of Common Stock at the date of such issuance;
or (C) issue or sell additional shares of Common Stock for
consideration representing less than the then fair market
value of the Common Stock at the date of such issuance; then
the number of shares of Common Stock into which each share of
the Series A Preferred is convertible shall be adjusted so
that, thereafter, until further
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adjusted, the holder of each share thereof shall be entitled
to receive, upon the conversion thereof, the number of shares
of Common Stock determined by multiplying (w) the number of
shares of Common Stock into which such shares are convertible
immediately prior to the occurrence of such event by (x) a
fraction, the numerator of which shall be the number of shares
of Common Stock outstanding prior to such issuance plus the
number of additional shares of Common Stock issuable upon
exercise of such options, warrants, or rights, or exchangeable
or convertible securities, or the additional number of shares
of Common Stock issued at such time, and the denominator of
which shall be the number of shares of Common Stock
outstanding prior to such issuance plus the number of shares
of Common Stock that either (y) the sum of the aggregate
exercise price of the total number of shares of Common Stock
issuable upon exercise of such options, warrants, or rights,
or upon conversion or exchange of such convertible securities,
and the aggregate amount of consideration, if any, received or
receivable by the Corporation for such options, warrants, or
rights, or convertible or exchangeable securities, or (z) the
aggregate consideration received in connection with the sale
of shares of its Common Stock for less than the then fair
market value, as the case may be, would purchase at the then
fair market value.
[iv] In the event that, at any time, or from
time to time, after the issuance such share of the Series A
Preferred, the Common Stock issuable upon conversion of the
Series A Preferred Stock is changed into the same or a
different number of shares of any class or classes of stock,
whether by recapitalization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock
dividend, or a reorganization, merger, consolidation or sale
of assets, provided for elsewhere in this Section 7), then,
and in any such event, each holder of Series A Preferred shall
have the right thereafter to convert such stock into the kind
and amount of stock and other securities and property
receivable upon such recapitalization, reclassification, or
other change, by holders of the number of shares of Common
Stock into which such shares of Series A Preferred could have
been converted immediately prior to such recapitalization,
reclassification, or change, all subject to further adjustment
as provided herein.
[v] If at any time, or from time to time
after the issuance such share of the Series A Preferred there
is a capital reorganization of the Common Stock other than a
recapitalization, subdivision, combination, reclassification,
or exchange of shares provided for elsewhere in this Section
7) or a merger or consolidation of the Corporation with or
into another corporation, or the sale of all, or substantially
all, of the Corporations' properties and assets to any other
person, then, as a part of such reorganization, merger,
consolidation, or sale, provision shall be made so that the
holders of the Series A Preferred shall thereafter be entitled
to receive upon conversion of the Series A Preferred the
number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock
deliverable upon conversion would have been entitled on such
capital reorganization, merger, consolidation, or sale. In any
such case, appropriate adjustment shall be made in the
application of the provisions of this Section 7 with respect
to the rights of the holders of Series A Preferred after the
reorganization, merger, consolidation, or sale to the end that
the provisions of this Section 7 shall be applicable after
that event and be as nearly equivalent as may be practicable.
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[vi] Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which
caused an adjustment pursuant to this Section 7 to be made, if
any thereof shall not have been exercised, the number of
shares of Common Stock into which each share of the Series A
Preferred is convertible shall, upon such expiration, be
readjusted and shall thereafter be such as it would have been
had it been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (a)
the only shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion or
exchange privileges and (b) such shares of Common Stock, if
any, were issued or sold for the consideration actually
received by the Corporation upon such exercise plus the
aggregate consideration, if any, actually received by the
Corporation for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange
privileges, whether or not exercised.
[d] If any adjustment in the number of shares of Common Stock
into which each share of the Series A Preferred may be converted
required pursuant to this Section 7 would result in an increase or
decrease of less than 1% in the number of shares of Common Stock into
which each share of the Series A Preferred is then convertible, the
amount of any such adjustment shall be carried forward and adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of
the number of shares of Common Stock into which each share of the
Series A Preferred is then convertible; provided that any such
adjustments carried forward shall be made immediately following receipt
of notice from a holder of the intent to convert all or a portion of
the Series A Preferred such that upon conversion the holder shall
receive such number of shares of Common Stock as such holder is
entitled, taking into account all adjustments required by this Section
7. All calculations under this paragraph [d] shall be made to the
nearest one-hundredth of a share.
[e] Subject to the limitation in Section 7[h] below, the
holder of any shares of the Series A Preferred may convert such shares
into shares of Common Stock pursuant to paragraph [a] of this Section 7
by surrendering for such purpose to the Corporation, at its principal
office or at such other office or agency maintained by the Corporation
for that purpose, a certificate or certificates representing the shares
of Series A Preferred to be converted (or if such certificate or
certificates cannot be found, an affidavit of lost securities in form
and substance acceptable to the Corporation) accompanied by a written
notice stating that such holder elects to convert all or a specified
number of such shares in accordance with the provisions of this Section
7 and specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. In
case such notice shall specify a name or names other than that of such
holder, such notice shall be accompanied by payment of all transfer
taxes payable upon the issuance of shares of Common Stock in such name
or names. As promptly as practicable, and in any event within five
business days after the surrender of such certificates and the receipt
of such notice relating thereto and, if applicable, payment of all
transfer taxes, the Corporation shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully paid
and nonassessable shares of Common Stock of the Corporation to which
the holder of the Series A Preferred so converted shall be entitled and
(ii) if less than the full number of shares of the Series A Preferred
evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or
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certificates less the number of shares converted. Such conversions
shall be deemed to have been made at the close of business on the date
of giving of such notice and of such surrender of the certificate or
certificates representing the shares of the Series A Preferred to be
converted so that the rights of the holder thereof shall cease except
for the right to receive Common Stock of the corporation in accordance
herewith and any accumulated, accrued or unpaid dividends pursuant to
paragraph [g] below,, and the converting holder shall be treated for
all purposes as having become the record holder of such Common Stock of
the Corporation at such time.
[f] The Series A Preferred shall convert to Common Stock of
the Corporation pursuant to paragraph [b] of this Section 7
automatically upon notice in writing to the stockholders, including all
holders of the Series A Preferred, setting forth the date of such
conversion and the material terms of the triggering event. As promptly
as practicable after such notice, and in any event within five business
days after the surrender of certificates for the Series A Preferred (if
required by the Board of Directors), the Corporation shall deliver or
cause to be delivered to each holder of Series A Preferred certificates
representing the number of validly issued, fully paid and nonassessable
shares of Common Stock of the Corporation to which such holder of the
Series A Preferred so converted shall be entitled. Such conversion
shall be deemed to have been made at the close of business on the date
set forth in such notice of mandatory conversion so that the rights of
the holder thereof shall cease with or without surrender of
certificates for the Series A Preferred, except for the right to
receive Common Stock of the Corporation in accordance herewith and any
accumulated, accrued or unpaid dividends pursuant to paragraph [g]
below,, and the converting holder shall be treated for all purposes as
having become the record holder of such Common Stock of the Corporation
at such time.
[g] Upon conversion of any shares of the Series A Preferred
pursuant to paragraphs [a] or [b] of this Section 7, the holder thereof
shall be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted, including any
dividends on such shares of the Series A Preferred declared prior to
such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series A Preferred
entitled to receive payment of such dividend.
[h] Shares of the Series A Preferred may not be converted
after the close of business on the third business day preceding the
Redemption Date pursuant to Section 8.
[i] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series A Preferred.
[j] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall
deem appropriate in their discretion, unless the holder(s) of more than
twenty-five percent (25%) of the outstanding shares of Preferred Stock
of the Corporation demand in good faith and in writing that "fair
market value" be determined by an appraiser who shall be mutually
acceptable to the Board of Directors and such holders, whose
determination shall be binding and whose fees and expenses shall be
paid by the Corporation.
[k] The provisions in paragraph [c][ii] above shall not apply
to, and no adjustment shall be made as a result of, a reverse stock
split of Common Stock made by the Corporation on December 1, 1997.
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SECTION 8. REDEMPTION.
[a] The Corporation may, at the election of its Board of
Directors, at any time or from time to time, redeem the whole or part
of the Series A Preferred, at the Stated Value, plus an amount equal to
all unpaid dividends thereon, including accrued dividends, whether or
not declared, to the date of redemption. In case the Corporation shall
elect to redeem less than all the Series A Preferred, the Corporation
shall select pro rata the shares so to be redeemed, except that if the
Board of Directors determines in its reasonable business judgment that
to do so by lot would be in the best interests of the Corporation, then
the shares so to be redeemed shall be selected by lot in such manner as
shall be prescribed by the Board of Directors.
[b] Notice of every such redemption shall be mailed, first
class postage prepaid, not less than thirty (30) nor more than sixty
(60) days prior to the date fixed for redemption ("Redemption Date"),
to each holder of record of the shares to be redeemed, at his or her
address as the same appears on the record of stockholders; but neither
failure to mail any such notice to one or more such holders nor any
defect in any such notice shall affect the sufficiency of the
proceedings for redemptions as to other holders. Each such notice shall
state the Redemption Date; the number of shares of Series A Preferred
to be redeemed, and, if less than all the shares of Series A Preferred
held by such holder are to be redeemed, the manner of selecting by lot
the shares to be redeemed; the place or places where such shares are to
be surrendered for payment; that dividends on the shares to be redeemed
will cease on such Redemption Date; and the effect of such redemption
on the right of conversion.
[c] Notice having been mailed as aforesaid, from and after the
Redemption Date, all dividends on the shares so called for redemption
shall cease to accrue, said shares shall no longer be deemed to be
outstanding, all rights of the holders thereof as stockholders of the
Corporation (except the right to receive payment for the shares, the
right to receive declared dividends pursuant to Section 7[g] above, and
the right to convert such shares into shares of Common Stock of the
Corporation until the close of business on the third business day
preceding the Redemption Date, as provided in Section 7) shall cease,
and, upon surrender in accordance with said notice of the certificates
for any such shares (properly endorsed or assigned for transfer, if the
Board of Directors shall so require), such shares shall be redeemed by
the Corporation in accordance with this Section 8. In connection with
the determination of the amount of dividends accruing with respect to
any conversion in the period between a notice of redemption and the
Redemption Date, on a date which is not a Quarterly Dividend Payment
Date, the amount of any such dividends shall be prorated based upon the
number of days which have elapsed since the immediately preceding
Quarterly Dividend Payment Date (excluding such Quarterly Dividend
Payment Date itself).
SECTION 9. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which the shares of
the Series A Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series A Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series A Preferred is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the
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outstanding shares of the Series A Preferred a notice stating that the number of
shares into which the shares of Series A Preferred are convertible has been
adjusted and setting forth the new number of shares into which each share of the
Series A Preferred is convertible as a result of such adjustment and when such
adjustment will become effective. Notwithstanding the foregoing, the Corporation
shall incur no liability for its failure to take any action set forth in this
Section 9, nor shall such failure affect the validity, rights or preferences of
any shares of the Series A Preferred.
SECTION 10. RANKING.
The Series A Preferred shall rank senior to the Common Stock and any
other series of Preferred Stock of the Corporation hereafter created (except for
the Series B Preferred, which shall rank senior to the Series A Preferred, and
except for the Series C Preferred, the Series D Preferred, the Series E
Preferred, the Series F Preferred, and any other series of Preferred Stock which
the Board of Directors shall establish and designate to rank equal therewith
pursuant to Subpart C of this Article FOURTH, with which it shall rank equal),
as to the payment of dividends and the distribution of assets and rights upon
liquidation, dissolution or winding up of the Corporation.
SECTION 11. DIRECTORSHIP.
The holders of the Series A Preferred, as a class, shall be entitled to
be represented on the Board of Directors by one Director (the "Series A
Director") who, upon nomination by such holders, as a class, will stand for
election by voting by the holders of the Preferred Stock (subject to limitations
in this Article FOURTH or established by the Board of Directors pursuant to
Section C of this Article FOURTH) and holders of Common Stock together, except
under circumstances where the number of individuals nominated for election
exceeds the number of Directors to be elected. In the event the number of
individuals nominated for election exceeds the number of Directors to be elected
then the holders of the Series A Preferred shall have the sole right to vote
for, elect and remove the individual nominated by them, as a class, to serve as
the Series A Director, and in such event the further right to vote for, elect or
remove any of the other Directors who are not to be elected solely by the
holders of another class or series of Preferred Stock. The Series A Director,
upon being elected, will serve for the same term and have the same voting powers
as other Directors. In addition, the Series A Director shall serve as a member
of the Compensation, Audit, and Nominating Committees of the Board of Directors
(or any other committee of the Board performing such functions), which
Committees will be composed of at least one Director, in addition to the Series
A Director, who is not an employee of the Corporation.
E. Designation of Series B Senior Convertible Preferred Stock. A series
of the Preferred Stock of the corporation is hereby created and authorized, and
the designations, amount and stated value of such series of Preferred Stock and
the voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereon, are as follows:
SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as Series B Senior
Convertible Preferred (the "Series B Preferred") and the number of shares
constituting such series shall be 1,000,000 shares. The stated value of the
Series B Preferred shall be $5 per share, the original per share issue price
(the "Stated Value").
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SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series B Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and October
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), accruing commencing with the date of issue of such shares, on shares of
the Series B Preferred at the rate of $.35 per share per annum; provided,
however, such rate shall be increased to $.45 per share per annum immediately
upon but only for the period during which the ratio of (a) the sum of (i) the
Corporation's Consolidated Total Debt plus (ii) the aggregate Stated Value of
the then outstanding shares of Series B Preferred to (b) the Corporation's
Adjusted Consolidated Operating Cash Flow for any four fiscal quarter period
ending as of the last day of any fiscal quarter of the Corporation exceeds, as a
result of the incurrence by the Corporation of additional debt, 7.75 to 1.00. No
interest shall be paid on accrued but unpaid dividends. For purposes of this
Section, the terms "Consolidated Total Debt" and "Adjusted Consolidated
Operating Cash Flow" shall have the meanings given those terms in that certain
Credit Agreement, dated as of November 14, 1997, as amended through June 11,
1998, among the Corporation, the Lenders listed therein, General Electric
Capital Corporation (as Documentation Agent), and Bank of Montreal, Chicago
Branch (as Agent) (not taking into account any modification or amendment of such
definitions at any time after June 11, 1998 not consented to in writing by
holders of the Series B Preferred and irrespective of the termination of such
Credit Agreement).
SECTION 3. VOTING RIGHTS.
Except as provided herein or otherwise required by law, the voting
power of the Corporation shall be vested in the holders of shares of Common
Stock, Series A Preferred, Series C Preferred, Series E Preferred, Series F
Preferred, and such other series of voting preferred stock as are from time to
time designated, and the holders of shares of Series B Preferred and the Series
D Preferred shall have no voting power except that with respect to the events
described below, the holders of the Series A Preferred, the Series B Preferred,
the Series C Preferred, the Series D Preferred, the Series E Preferred, Series
F. Preferred, and all other series of voting preferred stock as are from time to
time designated to have such voting rights, and the holders of the Corporation's
Common Stock shall vote together as one class with one vote per share (in the
case of Preferred Stock, subject to adjustments as provided in Section 7 below
and if convertible into Common Stock, one vote per share of Common Stock into
which such convertible Preferred Stock is then convertible), to the extent such
of the following events are otherwise subject to the vote of any holders of
capital stock of the Corporation pursuant to the requirements of the Delaware
General Corporation Law:
[a] any amendment of this Amended and Restated Certificate of
Incorporation;
[b] a sale of all or substantially all of the assets of the
Corporation;
[c] the dissolution, liquidation or termination of the
Corporation;
[d] any acquisition of, or merger of the Corporation with,
another corporation or other entity, whether or not the Corporation is
a survivor of such transaction;
[e] any change in the fundamental nature of the business of
the Corporation;
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[f] any transaction with affiliates, except upon fair and
reasonable terms comparable to an arms-length transaction; and
[g] any change in the Corporation's capital structure in a
manner that dilutes the ownership interest of the holders of Series B
Preferred.
SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series B Preferred as provided in
Section 2 are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series B Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Preferred, except dividends paid
ratably on the Series B Preferred and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled, (C) redeem or purchase or
otherwise acquire for consideration any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior to the Series B Preferred or in
satisfaction of contractual obligations to do so entered into with the written
consent of the holders of a majority of outstanding shares of Series B
Preferred, or (D) purchase or otherwise acquire for consideration any shares of
the Series B Preferred, or any shares of stock ranking on a parity with the
Series B Preferred except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series of classes.
SECTION 5. REACQUIRED SHARES.
Any shares of the Series B Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, or otherwise in accordance with Delaware General
Corporation Law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred unless, prior thereto, the holders of Series B Preferred shall have
received the Stated Value per share, plus an amount equal to unpaid dividends
thereon, including accrued dividends, whether or not declared, to the date of
such payment or (B) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
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B Preferred, except distributions made ratably on the Series B Preferred and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 7. CONVERSION.
[a] Optional Conversion. Subject to the provisions for
adjustment hereinafter set forth, each share of the Series B Preferred
shall be convertible at any time at the option of the holder thereof,
in the manner hereinafter set forth, into one-half (1/2) fully paid and
nonassessable share of Common Stock of the Corporation.
[b] Mandatory Conversion. Subject to the provisions for
adjustment set forth in this Section 7, each share of the Series B
Preferred shall be convertible at the option of the Board of Directors
into one-half (1/2) fully paid and nonassessable share of Common Stock
of the Corporation in the event of, and concurrently with the closing
of, a public offering of Common Stock of the Corporation at a per share
price of at least $12.00 (subject to adjustment for stock splits, stock
dividends, reverse stock splits and the like) with gross proceeds to
the Corporation of at least $25,000,000 (excluding the effect of any
over-allotment option).
[c] The number of shares of Common Stock into which each share
of the Series B Preferred is convertible shall be adjusted from time to
time as follows:
[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series B
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of its Common Stock into a greater number
of shares of Common Stock (by reclassification or otherwise),
then, and in each such case, the number of shares of Common
Stock into which each share of the Series B Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the sum of (I) the number of shares of Common Stock
into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number of shares of
Common Stock which such holder would have been entitled to
receive in connection with the occurrence of such event had
such share been converted immediately prior thereto, and the
denominator of which is the number of shares of Common Stock
determined in accordance with clause (I) above. An adjustment
made pursuant to this subparagraph [c][i] shall become
effective (a) in the case of any such dividend, immediately
after the close of business on the record date for the
determination of holders of Common Stock entitled to receive
such dividend, or (b) in the case of any such subdivision, at
the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series B Preferred
shall combine or consolidate the outstanding shares of its
Common Stock into a lesser number of shares of Common Stock,
by reclassification or otherwise, then, and in each such case,
the number of shares of Common Stock into which each share of
the Series B Preferred is convertible shall be
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adjusted so that the holder of each share thereof shall be
entitled to receive, upon the conversion thereof, the number
of shares of Common Stock determined by multiplying (a) the
number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event
by (b) a fraction, the numerator of which is the number of
shares which the holder would have owned after giving effect
to such event had such share been converted immediately prior
to the occurrence of such event and the denominator of which
is the number of shares of Common Stock into which such share
was convertible immediately prior to the occurrence of such
event. An adjustment made pursuant to this subparagraph b[ii]
shall become effective at the close of business on the date
immediately prior to the day upon which such corporate action
becomes effective.
[iii] In case the Corporation after the
issuance of such share of Series B Preferred shall: (A) issue
any options, warrants, or other rights entitling the holder
thereof to subscribe for, or purchase, Common Stock at a price
per share which, when added to the amount of consideration
received or receivable by the Corporation for such options,
warrants, or other rights, is less than the then fair market
value per share of the Common Stock at the date of such
issuance (other than stock options issued in exchange for
options to purchase common stock in Faircom Inc. pursuant to
the terms of a merger and options to purchase Common Stock
issued to management of the Corporation exercisable for up to
the lesser of 2,000,000 shares of Common Stock (subject to
adjustment pursuant to provisions applicable to the options in
the case of stock splits, reverse stock splits and the like)
or that number of shares of Common Stock equal to fifteen
percent (15%) of the aggregate number of outstanding shares of
Common Stock and other equity securities of the Corporation
exercisable for the purchase of, or convertible into, Common
Stock computed on a fully-diluted basis); (B) issue or sell
securities of the Corporation convertible into, or
exchangeable for, Common Stock at a price per share which,
when added to the amount of consideration received or
receivable, from the Corporation for such exchangeable or
convertible securities, is less than the then fair market
value of a share of Common Stock at the date of such issuance;
or (C) issue or sell additional shares of Common Stock for
consideration representing less than the then fair market
value of the Common Stock at the date of such issuance; then
the number of shares of Common Stock into which each share of
the Series B Preferred is convertible shall be adjusted so
that, thereafter, until further adjusted, the holder of each
share thereof shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (w) the number of shares of Common
Stock into which such shares are convertible immediately prior
to the occurrence of such event by (x) a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding prior to such issuance plus the number of
additional shares of Common Stock issuable upon exercise of
such options, warrants, or rights, or exchangeable or
convertible securities, or the additional number of shares of
Common Stock issued at such time, and the denominator of which
shall be the number of shares of Common Stock outstanding
prior to such issuance plus the number of shares of Common
Stock that either (y) the sum of the aggregate exercise price
of the total number of shares of Common Stock issuable upon
exercise of such options, warrants, or rights, or upon
conversion or exchange of such convertible securities, and the
aggregate amount of consideration, if any, received or
receivable by the Corporation for such options, warrants, or
rights, or convertible or
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exchangeable securities, or (z) the aggregate consideration
received in connection with the sale of shares of its Common
Stock for less than the then fair market value, as the case
may be, would purchase at the then fair market value.
[iv] In the event that, at any time, or from
time to time, after the issuance of such share of the Series B
Preferred, the Common Stock issuable upon conversion of the
Series B Preferred is changed into the same or a different
number of shares of any class or classes of stock, whether by
recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section 7), then, and in any
such event, each holder of Series B Preferred shall have the
right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable
upon such recapitalization, reclassification, or other change,
by holders of the number of shares of Common Stock into which
such shares of Series B Preferred could have been converted
immediately prior to such recapitalization, reclassification,
or change, all subject to further adjustment as provided
herein.
[v] If at any time, or from time to time
after the issuance of such share of the Series B Preferred
there is a capital reorganization of the Common Stock (other
than a recapitalization, subdivision, combination,
reclassification, or exchange of shares provided for elsewhere
in this Section 7) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of
all, or substantially all, of the Corporation's properties and
assets to any other person, then, as a part of such
reorganization, merger, consolidation, or sale, provision
shall be made so that the holders of the Series B Preferred
shall thereafter be entitled to receive upon conversion of the
Series B Preferred the number of shares of stock or other
securities or property to which a holder of the number of
shares of Common Stock deliverable upon conversion would have
been entitled on such capital reorganization, merger,
consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions
of this Section 7 with respect to the rights of the holders of
Series B Preferred after the reorganization, merger,
consolidation, or sale to the end that the provisions of this
Section 7 shall be applicable after that event and be as
nearly equivalent as may be practicable.
[vi] Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which
caused an adjustment pursuant to this Section 7 to be made, if
any thereof shall not have been exercised, the number of
shares of Common Stock into which each share of the Series B
Preferred is convertible shall, upon such expiration, be
readjusted and shall thereafter be such as it would have been
had it been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (a)
the only shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion or
exchange privileges and (b) such shares of Common Stock, if
any, were issued or sold for the consideration actually
received by the Corporation upon such exercise plus the
aggregate consideration, if any, actually received by the
Corporation for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange
privileges, whether or not exercised.
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[d] If any adjustment in the number of shares of Common Stock
into which each share of the Series B Preferred may be converted
required pursuant to this Section 7 would result in an increase or
decrease of less than 1% in the number of shares of Common Stock into
which each share of the Series B Preferred is then convertible, the
amount of any such adjustment shall be carried forward and adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of
the number of shares of Common Stock into which each share of the
Series B Preferred is then convertible; provided that any such
adjustments carried forward shall be made immediately following receipt
of notice from a holder of the intent to convert all or a portion of
the Series B Preferred such that upon conversion the holder shall
receive such number of shares of Common Stock as such holder is
entitled, taking into account all adjustments required by this Section
7. All calculations under this paragraph [d] shall be made to the
nearest one-hundredth of a share.
[e] Subject to the limitation in Section 7[h] below, the
holder of any shares of the Series B Preferred may convert such shares
into shares of Common Stock pursuant to paragraph [a] of this Section 7
by surrendering for such purpose to the Corporation, at its principal
office or at such other office or agency maintained by the Corporation
for that purpose, a certificate or certificates representing the shares
of Series B Preferred to be converted (or if such certificate or
certificates cannot be found, an affidavit of lost securities in form
and substance acceptable to the Corporation) accompanied by a written
notice stating that such holder elects to convert all or a specified
number of such shares in accordance with the provisions of this Section
7 and specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. In
case such notice shall specify a name or names other than that of such
holder, such notice shall be accompanied by payment of all transfer
taxes payable upon the issuance of shares of Common Stock in such name
or names. As promptly as practicable, and in any event within five
business days after the surrender of such certificates and the receipt
of such notice relating thereto and, if applicable, payment of all
transfer taxes, the Corporation shall deliver or cause to be delivered
(I) certificates representing the number of validly issued, fully paid
and nonassessable shares of Common Stock of the Corporation to which
the holder of the Series B Preferred so converted shall be entitled and
(ii) if less than the full number of shares of the Series B Preferred
evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or
certificates less the number of shares converted. Such conversions
shall be deemed to have been made at the close of business on the date
of giving of such notice and of such surrender of the certificate or
certificates representing the shares of the Series B Preferred to be
converted so that the rights of the holder thereof shall cease except
for the right to receive Common Stock of the Corporation in accordance
herewith and any accumulated, accrued or unpaid dividends pursuant to
paragraph [g] below, and the converting holder shall be treated for all
purposes as having become the record holder of such Common Stock of the
Corporation at such time.
[f] The Series B Preferred shall convert to Common Stock of
the Corporation pursuant to paragraph [b] of this Section 7
automatically upon notice in writing to the stockholders, including all
holders of the Series B Preferred, setting forth the date of such
conversion and the material terms of the triggering public offering. As
promptly as practicable after such notice, and in any event within five
business days after the surrender of certificates for the Series B
Preferred (if required by the Board of Directors), the Corporation
shall deliver or
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cause to be delivered to each holder of Series B Preferred certificates
representing the number of validly issued, fully paid and nonassessable
shares of Common Stock of the Corporation to which such holder of the
Series B Preferred so converted shall be entitled. Such conversion
shall be deemed to have been made at the close of business on the date
set forth in such notice of mandatory conversion so that the rights of
the holder thereof shall cease with or without surrender of
certificates for the Series B Preferred, except for the right to
receive Common Stock of the Corporation in accordance herewith and any
accumulated, accrued or unpaid dividends pursuant to paragraph [g]
below, and the converting holder shall be treated for all purposes as
having become the record holder of such Common Stock of the Corporation
at such time.
[g] Upon conversion of any shares of the Series B Preferred
pursuant to paragraphs [a] or [b] of this Section 7, the holder thereof
shall be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted, including any
dividends on such shares of the Series B Preferred declared prior to
such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series B Preferred
entitled to receive payment of such dividend.
[h] Shares of the Series B Preferred may not be converted
after the close of business on the third business day preceding the
Redemption Date pursuant to Section 8.
[i] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series B Preferred.
[j] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall
deem appropriate in their discretion, unless the holder(s) of more than
twenty-five percent (25%) of the outstanding shares of Preferred Stock
of the Corporation demand in good faith and in writing that "fair
market value" be determined by an appraiser, who shall be mutually
acceptable to the Board of Directors and such holders, whose
determination shall be binding and whose fees and expenses shall be
paid by the Corporation.
SECTION 8. REDEMPTION.
[a] The Corporation may, at the election of its Board of
Directors, at any time or from time to time, redeem the whole or part
of the Series B Preferred, at the Stated Value, plus an amount equal to
all unpaid dividends thereon, including accrued dividends, whether or
not declared, to the date of redemption. In case the Corporation shall
elect to redeem less than all the Series B Preferred, the Corporation
shall select pro rata the shares so to be redeemed, except that if the
Board of Directors determines in its reasonable business judgment that
to do so by lot would be in the best interests of the Corporation, then
the shares so to be redeemed shall be selected by lot in such manner as
shall be prescribed by the Board of Directors.
[b] Notice of every such redemption shall be mailed, first
class postage prepaid, not less than thirty (30) nor more than sixty
(60) days prior to the date fixed for redemption ("Redemption Date"),
to each holder of record of the shares to be redeemed, at his or her
address as the same appears on the record of stockholders; but neither
failure to mail any such notice to one or more such holders nor any
defect in any such notice shall affect the sufficiency of the
proceedings for redemptions as to other holders. Each such notice shall
state the Redemption
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Date; the number of shares of Series B Preferred to be redeemed, and,
if less than all the shares of Series B Preferred held by such holder
are to be redeemed, the manner of selecting by lot the shares to be
redeemed; the place or places where such shares are to be surrendered
for payment; that dividends on the shares to be redeemed will cease on
such Redemption Date; and the effect of such redemption on the right of
conversion.
[c] Notice having been mailed as aforesaid, from and after the
Redemption Date, all dividends on the shares so called for redemption
shall cease to accrue, said shares shall no longer be deemed to be
outstanding, all rights of the holders thereof as stockholders of the
Corporation (except the right to receive payment for the shares, and
the right to convert such shares into shares of Common Stock of the
Corporation until the close of business on the third business day
preceding the Redemption Date, as provided in Section 7) shall cease,
and, upon surrender in accordance with said notice of the certificates
for any such shares (properly endorsed or assigned for transfer, if the
Board of Directors shall so require), such shares shall be redeemed by
the Corporation in accordance with this Section 8. In connection with
the determination of the amount of dividends accruing with respect to
any conversion in the period between a notice of redemption and the
Redemption Date, on a date which is not a Quarterly Dividend Payment
Date, the amount of any such dividends shall be prorated based upon the
number of days which have elapsed since the immediately preceding
Quarterly Dividend Payment Date (excluding such Quarterly Dividend
Payment Date itself)
SECTION 9. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which the shares of
the Series B Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series B Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series B Preferred is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the outstanding
shares of the Series B Preferred a notice stating that the number of shares into
which the shares of Series B Preferred are convertible has been adjusted and
setting forth the new number of shares into which each share of the Series B
Preferred is convertible as a result of such adjustment and when such adjustment
will become effective. Notwithstanding the foregoing, the Corporation shall
incur no liability for its failure to take any action set forth in this Section
9, nor shall such failure affect the validity, rights or preferences of any
shares of the Series B Preferred.
SECTION 10. RANKING.
The Series B Preferred shall rank senior to the Common Stock, the
Series A Preferred, the Series C Preferred, the Series D Preferred, the Series E
Preferred, the Series F Preferred, and any other series of Preferred Stock of
the Corporation hereafter created, as to the payment of dividends and the
distribution of assets and rights upon liquidation, dissolution or winding up of
the Corporation.
F. Designation of Series C Convertible Preferred Stock. A series of the
Preferred Stock of the corporation is hereby created and authorized, and the
designations, amount and stated value of such series of Preferred Stock and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereon, are as follows:
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SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as Series C Convertible
Preferred (the "Series C Preferred") and the number of shares constituting such
series shall be 4,000,000 shares. The stated value of the Series C Preferred
shall be $5 per share, the original per share issue price (the "Stated Value").
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series C Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and October
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), accruing commencing with the date of issue of such shares, on shares of
the Series C Preferred at the rate of $.35 per share per annum. No interest
shall be paid on accrued but unpaid dividends.
SECTION 3. VOTING RIGHTS.
In addition to voting rights required by law or by the Certificate of
Incorporation, subject to restrictions contained in this Certificate of
Incorporation the holders of Series C Preferred shall be entitled to vote on all
matters submitted to a vote of the Corporation's stockholders. Except as
otherwise required by law or provided by this Certificate of Incorporation or by
the Board of Directors pursuant to Subpart C of this Article FOURTH, the holders
of the Series C Preferred shall vote together with the holders of all other
series of the Corporation's voting preferred stock and the holders of the
Corporation's Common Stock as one class with one vote per share (in the case of
Preferred Stock, subject to adjustments as provided in Section 7 below and if
convertible into Common Stock, one vote per share of Common Stock into which
such convertible Preferred Stock is then convertible) on all matters submitted
to a vote of the Corporation's stockholders.
SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series C Preferred as provided in
section 2 are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series C Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series C
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred, except dividends paid
ratably on the Series C Preferred and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled, (C) redeem or purchase or
otherwise acquire for consideration any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series C
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior to the Series C Preferred or in
satisfaction of contractual obligations to do so entered into with the written
consent of the holders of a majority of outstanding shares of Series C Preferred
(including, without limitation, in satisfaction of the provisions contained in
the Stockholders' Agreement), or (D) purchase or otherwise acquire for
consideration any
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shares of the Series C Preferred, or any shares of stock ranking on a parity
with the Series C Preferred except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series of
classes, or except pursuant to the provisions of the Stockholders' Agreement.
SECTION 5. REACQUIRED SHARES.
Any shares of the Series C Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, or otherwise in accordance with Delaware General
Corporation Law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of the Series C Preferred unless,
prior thereto, the holders of the Series B Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (B) to the holders of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series C Preferred
unless, prior thereto, the holders of Series C Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (C) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series C
Preferred, except distributions made ratably on the Series C Preferred and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 7. OPTIONAL CONVERSION.
Each share of the Series C Preferred may be converted at any time, at
the option of the holder thereof, into shares of Common Stock of the
Corporation, on the terms and conditions set forth below in this Section 7:
[a] Subject to the provisions for adjustment hereinafter set
forth, each share of the Series C Preferred shall be convertible at the
option of the holder thereof, in the manner hereinafter set forth, into
one (1) fully paid and nonassessable share of Common Stock of the
Corporation.
[b] The number of shares of Common Stock into which each share
of the Series C Preferred is convertible shall be adjusted from time to
time as follows:
[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series C
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of
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its Common Stock into a greater number of shares of Common
Stock (by reclassification or otherwise), then, and in each
such case, the number of shares of Common Stock into which
each share of the Series C Preferred is convertible shall be
adjusted so that the holder of each share thereof shall be
entitled to receive, upon the conversion thereof, the number
of shares of Common Stock determined by multiplying (a) the
number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event
by (b) a fraction, the numerator of which is the sum of (I)
the number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event
plus (II) the number of shares of Common Stock which such
holder would have been entitled to receive in connection with
the occurrence of such event had such share been converted
immediately prior thereto, and the denominator of which is the
number of shares of Common Stock determined in accordance with
clause (I) above. An adjustment made pursuant to this
subparagraph b[i] shall become effective (a) in the case of
any such dividend, immediately after the close of business on
the record date for the determination of holders of Common
Stock entitled to receive such dividend, or (b) in the case of
any such subdivision, at the close of business on the day
immediately prior to the day upon which such corporate action
becomes effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series C Preferred
shall combine or consolidate the outstanding shares of its
Common Stock into a lesser number of shares of Common Stock,
by reclassification or otherwise, then, and in each such case,
the number of shares of Common Stock into which each share of
the Series C Preferred is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares of
Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event by (b) a
fraction, the numerator of which is the number of shares which
the holder would have owned after giving effect to such event
had such share been converted immediately prior to the
occurrence of such event and the denominator of which is the
number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event.
An adjustment made pursuant to this subparagraph b[ii] shall
become effective at the close of business on the date
immediately prior to the day upon which such corporate action
becomes effective.
[iii] In case the Corporation after the issuance of
such share of Series C Preferred shall: (A) issue any options,
warrants, or other rights (excluding options to purchase
Common Stock issued to management of the Corporation
exercisable for up to the lesser of 2,000,000 shares of Common
Stock (subject to adjustment pursuant to provisions applicable
to the options in the case of stock splits, reverse stock
splits and the like) or that number of shares of Common Stock
equal to fifteen percent (15%) of the aggregate number of
outstanding shares of Common Stock and other equity securities
of the Corporation exercisable for the purchase of, or
convertible into, Common Stock computed on a fully-diluted
basis) entitling the holder thereof to subscribe for, or
purchase, Common Stock at a price per share which, when added
to the amount of consideration received or receivable by the
Corporation for such options, warrants, or other rights, is
less than the then fair market value per share of the Common
Stock at the date of such issuance: (B) issue or sell
securities of the
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Corporation convertible into, or exchangeable for, Common
Stock at a price per share which, when added to the amount of
consideration received or receivable, from the Corporation for
such exchangeable or convertible securities, is less than the
then fair market value of a share of Common Stock at the date
of such issuance; or (C) issue or sell additional shares of
Common Stock for consideration representing less than the then
fair market value of the Common Stock at the date of such
issuance; then the number of shares of Common Stock into which
each share of the Series C Preferred is convertible shall be
adjusted so that, thereafter, until further adjusted, the
holder of each share thereof shall be entitled to receive,
upon the conversion thereof, the number of shares of Common
Stock determined by multiplying (w) the number of shares of
Common Stock into which such shares are convertible
immediately prior to the occurrence of such event by (x) a
fraction, the numerator of which shall be the number of shares
of Common Stock outstanding prior to such issuance plus the
number of additional shares of Common Stock issuable upon
exercise of such options, warrants, or rights, or exchangeable
or convertible securities, or the additional number of shares
of Common Stock issued at such time, and the denominator of
which shall be the number of shares of Common Stock
outstanding prior to such issuance plus the number of shares
of Common Stock that either (y) the sum of the aggregate
exercise price of the total number of shares of Common Stock
issuable upon exercise of such options, warrants, or rights,
or upon conversion or exchange of such convertible securities,
and the aggregate amount of consideration, if any, received or
receivable by the Corporation for such options, warrants, or
rights, or convertible or exchangeable securities, or (z) the
aggregate consideration received in connection with the sale
of shares of its Common Stock for less than the then fair
market value, as the case may be, would purchase at the then
fair market value.
[iv] In the event that, at any time, or from
time to time, after the issuance of such share of the Series C
Preferred, the Common Stock issuable upon conversion of the
Series C Preferred is changed into the same or a different
number of shares of any class or classes of stock, whether by
recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section 7), then, and in any
such event, each holder of Series C Preferred shall have the
right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable
upon such recapitalization, reclassification, or other change,
by holders of the number of shares of Common Stock into which
such shares of Series C Preferred could have been converted
immediately prior to such recapitalization, reclassification,
or change, all subject to further adjustment as provided
herein.
[v] If at any time, or from time to time
after the issuance of such share of the Series C Preferred
there is a capital reorganization of the Common Stock other
than a recapitalization, subdivision, combination,
reclassification, or exchange of shares provided for elsewhere
in this Section 7) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of
all, or substantially all, of the Corporations' properties and
assets to any other person, then, as a part of such
reorganization, merger, consolidation, or sale, provision
shall be made so that the holders of the Series C Preferred
shall thereafter be entitled to receive upon conversion of the
Series C Preferred the number of shares of stock or other
securities
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or property to which a holder of the number of shares of
Common Stock deliverable upon conversion would have been
entitled on such capital reorganization, merger,
consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions
of this Section 7 with respect to the rights of the holders of
Series C Preferred after the reorganization, merger,
consolidation, or sale to the end that the provisions of this
Section 7 shall be applicable after that event and be as
nearly equivalent as may be practicable.
[vi] Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which
caused an adjustment pursuant to this Section 7 to be made, if
any thereof shall not have been exercised, the number of
shares of Common Stock into which each share of the Series C
Preferred is convertible shall, upon such expiration, be
readjusted and shall thereafter be such as it would have been
had it been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (a)
the only shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion or
exchange privileges and (b) such shares of Common Stock, if
any, were issued or sold for the consideration actually
received by the Corporation upon such exercise plus the
aggregate consideration, if any, actually received by the
Corporation for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange
privileges, whether or not exercised.
[c] If any adjustment in the number of shares of Common Stock
into which each share of the Series C Preferred may be converted
required pursuant to this Section 7 would result in an increase or
decrease of less than 1% in the number of shares of Common Stock into
which each share of the Series C Preferred is then convertible, the
amount of any such adjustment shall be carried forward and adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of
the number of shares of Common Stock into which each share of the
Series C Preferred is then convertible; provided that any such
adjustments carried forward shall be made immediately following receipt
of notice from a holder of the intent to convert all or a portion of
the Series C Preferred such that upon conversion the holder shall
receive such number of shares of Common Stock as such holder is
entitled, taking into account all adjustments required by this Section
7. All calculations under this paragraph [c] shall be made to the
nearest one-hundredth of a share.
[d] The holder of any shares of the Series C Preferred may
convert such shares into shares of Common Stock by surrendering for
such purpose to the Corporation, at its principal office or at such
other office or agency maintained by the Corporation for that purpose,
a certificate or certificates representing the shares of Series C
Preferred to be converted (or if such certificate or certificates
cannot be found, an affidavit of lost securities in form and substance
acceptable to the Corporation) accompanied by a written notice stating
that such holder elects to convert all or a specified number of such
shares in accordance with the provisions of this Section 7 and
specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. In
case such notice shall specify a name or names other than that of such
holder, such notice shall be accompanied by payment of all transfer
taxes payable upon the issuance of shares of Common Stock in such name
or names. As promptly as practicable, and in any event within five
business days after the surrender of such certificates
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and the receipt of such notice relating thereto and, if applicable,
payment of all transfer taxes, the Corporation shall deliver or cause
to be delivered (i) certificates representing the number of validly
issued, fully paid and nonassessable shares of Common Stock of the
Corporation to which the holder of the Series C Preferred so converted
shall be entitled and (ii) if less than the full number of shares of
the Series C Preferred evidenced by the surrendered certificate or
certificates are being converted, a new certificate or certificates, of
like tenor, for the number of shares evidenced by such surrendered
certificate or certificates less the number of shares converted. Such
conversions shall be deemed to have been made at the close of business
on the date of giving of such notice and of such surrender of the
certificate or certificates representing the shares of the Series C
Preferred to be converted so that the rights of the holder thereof
shall cease except for the right to receive Common Stock of the
Corporation in accordance herewith and any accumulated, accrued or
unpaid dividends pursuant to paragraph [e] below, and the converting
holder shall be treated for all purposes as having become the record
holder of such Common Stock of the Corporation at such time.
[e] Upon conversion of any shares of the Series C Preferred,
the holder thereof shall be entitled to receive any accumulated,
accrued or unpaid dividends in respect of the shares so converted,
including any dividends on such shares of the Series C Preferred
declared prior to such conversion if such holder held such shares on
the record date fixed for the determination of holders of the Series C
Preferred entitled to receive payment of such dividend.
[f] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series C Preferred.
[g] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall
deem appropriate in their discretion, unless the holder(s) of more than
twenty-five percent (25%) of the outstanding shares of Preferred Stock
of the Corporation demand in good faith and in writing that "fair
market value" be determined by an appraiser who shall be mutually
acceptable to the Board of Directors and such holders, whose
determination shall be binding and whose fees and expenses shall be
paid by the Corporation.
SECTION 8. MANDATORY CONVERSION.
Each share of the Series C Preferred shall be converted, at the option
of the Board of Directors, into shares of Common Stock of the Corporation, on
the terms and conditions set forth below in this Section 8:
[a] Subject to the provisions for adjustment set forth in
Section 7, which shall also apply to conversions pursuant to this
Section 8, each share of the Series C Preferred shall be convertible at
the option of the Board of Directors, under the conditions hereinafter
set forth, into one (1) fully paid and nonassessable share of Common
Stock of the Corporation.
[b] The Board of Directors of the Corporation may require
conversion of all shares of the Series C Preferred into shares of
Common Stock upon any of the following events if, and only if, all
other outstanding shares of Preferred Stock of the Corporation, other
than those which rank senior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred, are
concurrently either redeemed or converted:
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[i] A public offering of equity securities of the
Corporation of at least $10,000,000 in gross proceeds;
[ii] A private placement of equity securities of the
Corporation of at least $25,000,000 in gross proceeds;
[iii] A private placement of equity securities of the
Corporation of at least $10,000,000 in gross proceeds under
circumstances where the investor(s) reasonably believe the
conversion of the Series C Preferred is necessary to achieve
its (their) investment objectives;
[iv] A merger of the Corporation with another
corporation or other entity, whether or not the Corporation is
a survivor of such transaction whereby as a result the
stockholders of the Corporation hold less than 50% of the
outstanding capital stock of the surviving entity; or
[v] An acquisition of equity securities of the
Corporation in one transaction or in a series of related
transactions which results in a transfer of majority voting
control of the Corporation.
[c] The Series C Preferred shall convert to Common Stock of
the Corporation automatically upon notice in writing to the
stockholders, including all holders of the Series C Preferred, setting
forth the date of such conversion and the material terms of the
triggering event. As promptly as practicable after such notice, and in
any event within five business days after the surrender of certificates
for the Series C Preferred (if required by the Board of Directors), the
Corporation shall deliver or cause to be delivered to each holder of
Series C Preferred certificates representing the number of validly
issued, fully paid and nonassessable shares of Common Stock of the
Corporation to which such holder of the Series C Preferred so converted
shall be entitled. Such conversion shall be deemed to have been made at
the close of business on the date set forth in such notice of mandatory
conversion so that the rights of the holder thereof shall cease with or
without surrender of certificates for the Series C Preferred, except
for the right to receive Common Stock of the Corporation in accordance
herewith and any accumulated, accrued or unpaid dividends pursuant to
paragraph [d] below, and the converting holder shall be treated for all
purposes as having become the record holder of such Common Stock of the
Corporation at such time.
[d] Upon conversion of the Series C Preferred, the holder
thereof shall be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted, including any
dividends on such shares of the Series C Preferred declared prior to
such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series C Preferred
entitled to receive payment of such dividend.
[e] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series C Preferred.
SECTION 9. REPORTS AS TO ADJUSTMENTS.
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Whenever the number of shares of Common Stock into which the shares of
the Series C Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series C Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series C Preferred is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the outstanding
shares of the Series C Preferred a notice stating that the number of shares into
which the shares of Series C Preferred are convertible has been adjusted and
setting forth the new number of shares into which each share of the Series C
Preferred is convertible as a result of such adjustment and when such adjustment
will become effective. Notwithstanding the foregoing, the Corporation shall
incur no liability for its failure to take any action set forth in this Section
9, nor shall such failure affect the validity, rights or preferences of any
shares of the Series C Preferred.
SECTION 10. RANKING.
The Series C Preferred shall rank senior to the Common Stock and any
other series of Preferred Stock of the Corporation hereafter created (except for
the Series B Preferred, which shall rank senior to the Series C Preferred, and
except for the Series A Preferred, the Series D Preferred, the Series E
Preferred, the Series F Preferred, and any other series of Preferred Stock which
the Board of Directors shall establish and designate to rank equal therewith
pursuant to Subpart C of this Article FOURTH, with which it shall rank equal),
as to the payment of dividends and the distribution of assets and rights upon
liquidation, dissolution or winding up of the Corporation.
SECTION 11. DIRECTORSHIP.
The holders of the Series C Preferred, as a class, shall be entitled to
be represented on the Board of Directors by one Director (the "Series C
Director") who, upon nomination by such holders, as a class, will stand for
election by voting by the holders of the Preferred Stock entitled to vote for
the election of directors (subject to limitations in this Article FOURTH or
established by the Board of Directors pursuant to Section C of this Article
FOURTH) and holders of Common Stock together, except under circumstances where
the number of individuals nominated for election exceeds the number of Directors
to be elected. In the event the number of individuals nominated for election
exceeds the number of Directors to be elected, then the holders of the Series C
Preferred shall have the sole right to vote for, elect and remove the individual
nominated by them, as a class, to serve as the Series C Director, and in such
event the further right to vote for, elect or remove any of the other Directors
who are not to be elected solely by the holders of another class or series of
Preferred Stock.. The Series C Director, upon being elected, will serve for the
same term and have the same voting powers as other Directors. The right to elect
the Series C Director pursuant to the terms hereof shall be exercisable by the
holders of a majority of the Series C Preferred at their option upon at least 60
days notice to the Corporation; provided, however, if the Corporation is subject
to the reporting requirements of the Securities Exchange Act of 1934, such
notice must be provided on or before the date established by the Corporation for
the submission of proposals pursuant to the proxy rules promulgated under the
Securities Exchange Act of 1934. The Series C Director, if not an employee of
the Corporation, shall serve as a member of the Compensation, Audit, and
Nominating Committees of the Board of Directors (or any other Committee of the
Board performing such functions), which Committees will be composed of at least
one Director, in addition to the Series C Director, who is not an employee of
the Corporation.
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G. Designation of Series D Convertible Preferred Stock. A series of the
Preferred Stock of the corporation is hereby created and authorized, and the
designations, amount and stated value of such series of Preferred Stock and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereon, are as follows:
SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as Series D Convertible
Preferred (the "Series D Preferred") and the number of shares constituting such
series shall be 1,000,000 shares. The stated value of the Series D Preferred
shall be $5 per share, the original per share issue price (the "Stated Value").
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series D Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and October
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), accruing commencing with the date of issue of such shares, on shares of
the Series D Preferred at the rate of $.35 per share per annum. No interest
shall be paid on accrued but unpaid dividends.
SECTION 3. VOTING RIGHTS.
Except as provided herein or otherwise required by law, the voting
power of the Corporation shall be vested in the holders of shares of Common
Stock, Series A Preferred, Series C Preferred, Series E Preferred, Series F
Preferred, and such other series of voting preferred stock as are from time to
time designated, and the holders of shares of Series B Preferred and the Series
D Preferred shall have no voting power, except that with respect to the events
described below, the holders of the Series A Preferred, the Series B Preferred,
the Series C Preferred, the Series D Preferred, the Series E Preferred, the
Series F Preferred, and all other series of voting preferred stock as are from
time to time designated to have such voting rights, and the holders of the
Corporation's Common Stock shall vote together as one class with one vote per
share (in the case of Preferred Stock, subject to adjustments as provided in
Section 7 below and if convertible into Common Stock, one vote per share of
Common Stock into which such convertible Preferred Stock is then convertible),
to the extent such of the following events are otherwise subject to the vote of
any holders of capital stock of the Corporation:
[a] any amendment of this Amended and Restated Certificate of
Incorporation, including the same as it may hereafter be amended or
restated, which (i) authorizes, or modifies the rights, preferences or
terms of, any security that is or would be senior in any respect to the
Series D Preferred, (ii) modifies any of the rights, preferences or
terms of the Series D Preferred, or (iii) would otherwise significantly
and adversely affect the Series D Preferred.
[b] a sale of all or substantially all of the assets of the
Corporation;
[c] the dissolution, liquidation or termination of the
Corporation;
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[d] any merger of the Corporation with another corporation or
entity, whether or not the Corporation is the survivor;
[e] any material change in the fundamental nature of the
business of the Corporation;
[f] any transaction with affiliates, except upon fair and
reasonable terms comparable to an arms-length transaction; and
[g] any change in the Corporation's capital structure in a
manner that dilutes the economic interest of the holders of Series D
Preferred.
At such time as the holders of the Series D Preferred shall have
obtained the consent (which does not need to have become final) of the Federal
Communications Commission to the exercise by the holders of the Series D
Preferred of the voting rights set forth below or at such time as the consent of
the Federal Communications Commission is not necessary under applicable law,
rule or regulation (in the opinion of counsel acceptable to the Board of
Directors), then on the election of a majority of the holders of the Series D
Preferred, in addition to voting rights required by law, the holders of Series D
Preferred shall be entitled to vote on all matters submitted to a vote of the
Corporation's stockholders in accordance with the next sentence. Except as
otherwise required by law or this Certificate of Incorporation, the holders of
the Series D Preferred and the holders of the Corporation's Common Stock shall
vote together as part of the same class and each of the outstanding shares of
the Series D Preferred shall have a number of votes per share on a matter equal
to the quotient of (a) the lesser of (1) the number of shares of Common Stock
into which the outstanding shares of Series D Preferred are then convertible,
and (2) the difference between (A) the product of (i) the fraction equal to
0.049 divided by 0.951, multiplied by (ii) the sum of the number of votes
entitled to be a cast by the Corporation's Common Stock and any Series of
Preferred (other than the Series D Preferred) which votes as a class with the
Corporation's Common Stock on such matter minus (B) the number of shares of the
Corporation's Common Stock issued pursuant to Section 7[a][i] of this Subarticle
G of Article 4 (fully adjusted to reflect the events described in Section
7[c][i] and [ii], divided by (b) the number of outstanding shares of Series D
Preferred. It is the intention of this provision that it should be construed
consistently with the limitations to which bank holding companies and foreign
banks treated as bank holding companies are subject with respect to the
ownership or control of voting securities under the Bank Holding Company Act of
1956, as amended.
SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series D Preferred as provided in
section 2 are in arrears,, thereafter and until dividends, including all accrued
dividends, on shares of the Series D Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series D
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series D Preferred, except dividends paid
ratably on the Series D Preferred and all such parity stock on which dividends
are payable or in arrears
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in proportion to the total amounts to which the holders of all such shares are
then entitled, (C) redeem or purchase or otherwise acquire for consideration any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series D Preferred, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the Corporation ranking
junior to the Series D Preferred or in satisfaction of contractual obligations
to do so entered into with the written consent of the holders of a majority of
outstanding shares of Series D Preferred (including, without limitation, in
satisfaction of the provisions contained in the Stockholders' Agreement), or (D)
purchase or otherwise acquire for consideration any shares of the Series D
Preferred, or any shares of stock ranking on a parity with the Series D
Preferred except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series of classes or except
pursuant to the provisions of the Stockholders' Agreement.
SECTION 5. REACQUIRED SHARES.
Any shares of the Series D Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, or otherwise in accordance with Delaware General
Corporation Law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of the Series D Preferred unless,
prior thereto, the holders of the Series B Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (B) to the holders of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series D Preferred
unless, prior thereto, the holders of Series D Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (C) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series D
Preferred, except distributions made ratably on the Series D Preferred and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 7. CONVERSION.
[a] Optional Conversion. Subject to Section 7[c] and to the
provisions for adjustment hereinafter set forth, each share of the
Series D Preferred shall be convertible at the option of the holder
thereof, in the manner hereinafter set forth, into one (1) fully paid
and nonassessable share of Common Stock of the Corporation.
[b] Mandatory Conversion. Subject to the provisions for
adjustment set forth in this Section 7, each share of the Series D
Preferred shall be convertible at the option of the Board of
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Directors, under the conditions hereinafter set forth, into one (1)
fully paid and nonassessable share of Common Stock of the Corporation
in the event of, and concurrently with the closing of, a public
offering of Common Stock (or Series B Common Stock if required pursuant
to clause [c][i] below) of the Corporation at a per share price of at
least $12.00 (subject to adjustment for stock splits, stock dividends,
reverse stock splits and the like) with gross proceeds to the
Corporation of at least $25,000,000 (excluding the effect of any
over-allotment option).
[c] Shares of Series D Preferred may be converted by a holder
pursuant to Section 7[a] or at the option of the Board of Directors
pursuant to Section 7[b]only:
[i] To acquire shares of Common Stock; provided,
however, that to the extent necessary to prevent the holders
of Series D Preferred Stock from being in violation of any
applicable law or regulation, all shares issuable to such
holder on conversion of Series D Preferred, together with all
of the shares of Common Stock previously acquired on
conversion of Series D Preferred under this provision (fully
adjusted to reflect the events described in Section 7[c]),
shall, at the time and as a condition of such conversion, be
designated Series B Common Stock, which will have all of the
characteristics of the Common Stock with the sole exception
that the voting rights of such Series B Common Stock shall be
subject to the same voting rights limitations as are
applicable to the Series D Preferred pursuant to Section 3
above and will be convertible at any time into Common Stock at
the option of the holder in the same manner and subject to the
same conditions as were applicable to a voluntary conversion
of the Series D Preferred set forth in this Section 7; or
[ii] In a widely dispersed public distribution of the
resulting Common Stock; or
[iii] In connection with a private placement in which
no one party directly or indirectly acquires the right to
purchase in excess of 2% of the Common Stock; or
[iv] In an assignment to one or more financial
intermediaries (e.g., broker-dealer or investment banker) for
the purpose of conducting a widely dispersed distribution of
the resulting Common Stock on behalf of the holder; or
[v] On effectiveness of an amendment to or repeal of
the Bank Holding Company Act of 1956, as amended (including
any replacement law, "BHCA"), or the International Banking Act
of 1978, as amended ("IBA"), as a result of which a bank
holding company (as defined in the BHCA) and a foreign bank
with a U.S. branch or agency may acquire the resulting shares
of Common Stock without limitation; or
[vi] On receipt and finality of an order approving
the transaction from the Board of Governors of the Federal
Reserve System (including any successor agency responsible for
supervision and enforcement under the BHCA or IBA, "FRB")
under the BHCA or the IBA.
[d] The number of shares of Common Stock into which each share
of the Series D Preferred is convertible shall be adjusted from time to
time as follows:
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[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series D
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of its Common Stock into a greater number
of shares of Common Stock (by reclassification or otherwise),
then, and in each such case, the number of shares of Common
Stock into which each share of the Series D Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the sum of (I) the number of shares of Common Stock
into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number of shares of
Common Stock which such holder would have been entitled to
receive in connection with the occurrence of such event had
such share been converted immediately prior thereto, and the
denominator of which is the number of shares of Common Stock
determined in accordance with clause (I) above. An adjustment
made pursuant to this subparagraph [d][i] shall become
effective (a) in the case of any such dividend, immediately
after the close of business on the record date for the
determination of holders of Common Stock entitled to receive
such dividend, or (b) in the case of any such subdivision, at
the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series D Preferred
shall combine or consolidate the outstanding shares of its
Common Stock into a lesser number of shares of Common Stock,
by reclassification or otherwise, then, and in each such case,
the number of shares of Common Stock into which each share of
the Series D Preferred is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares of
Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event by (b) a
fraction, the numerator of which is the number of shares which
the holder would have owned after giving effect to such event
had such share been converted immediately prior to the
occurrence of such event and the denominator of which is the
number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event.
An adjustment made pursuant to this subparagraph d[ii] shall
become effective at the close of business on the date
immediately prior to the day upon which such corporate action
becomes effective.
[iii] In case the Corporation after the
issuance of such share of Series D Preferred shall: (A) issue
any options, warrants, or other rights (excluding those issued
in exchange for options to purchase common stock in Faircom
Inc. pursuant to the terms of a merger, and excluding options
to purchase Common Stock issued to management of the
Corporation exercisable for up to the lesser of 2,000,000
shares of Common Stock (subject to adjustment pursuant to
provisions applicable to the options in the case of stock
splits, reverse stock splits and the like) or that number of
shares of Common Stock equal to fifteen percent (15%) of the
aggregate number of outstanding shares of Common Stock and
other equity securities of the Corporation exercisable for the
purchase of, or convertible into, Common Stock computed on a
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fully-diluted basis) entitling the holder thereof to subscribe
for, or purchase, Common Stock at a price per share which,
when added to the amount of consideration received or
receivable by the Corporation for such options, warrants, or
other rights, is less than the then fair market value per
share of the Common Stock at the date of such issuance; (B)
issue or sell securities of the Corporation convertible into,
or exchangeable for, Common Stock at a price per share which,
when added to the amount of consideration received or
receivable, from the Corporation for such exchangeable or
convertible securities, is less than the then fair market
value of a share of Common Stock at the date of such issuance;
or (C) issue or sell additional shares of Common Stock for
consideration representing less than the then fair market
value of the Common Stock at the date of such issuance; then
the number of shares of Common Stock into which each share of
the Series D Preferred is convertible shall be adjusted so
that, thereafter, until further adjusted, the holder of each
share thereof shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (w) the number of shares of Common
Stock into which such shares are convertible immediately prior
to the occurrence of such event by (x) a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding prior to such issuance plus the number of
additional shares of Common Stock issuable upon exercise of
such options, warrants, or rights, or exchangeable or
convertible securities, or the additional number of shares of
Common Stock issued at such time, and the denominator of which
shall be the number of shares of Common Stock outstanding
prior to such issuance plus the number of shares of Common
Stock that either (y) the sum of the aggregate exercise price
of the total number of shares of Common Stock issuable upon
exercise of such options, warrants, or rights, or upon
conversion or exchange of such convertible securities, and the
aggregate amount of consideration, if any, received or
receivable by the Corporation for such options, warrants, or
rights, or convertible or exchangeable securities, or (z) the
aggregate consideration received in connection with the sale
of shares of its Common Stock for less than the then fair
market value, as the case may be, would purchase at the then
fair market value.
[iv] In the event that, at any time, or from
time to time, after the issuance of such share of the Series D
Preferred, the Common Stock issuable upon conversion of the
Series D Preferred is changed into the same or a different
number of shares of any class or classes of stock, whether by
recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section 7), then, and in any
such event, each holder of Series D Preferred shall have the
right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable
upon such recapitalization, reclassification, or other change,
by holders of the number of shares of Common Stock into which
such shares of Series D Preferred could have been converted
immediately prior to such recapitalization, reclassification,
or change, all subject to further adjustment as provided
herein.
[v] If at any time, or from time to time
after the issuance of such share of the Series D Preferred,
there is a capital reorganization of the Common Stock other
than a recapitalization, subdivision, combination,
reclassification, or exchange of shares provided for elsewhere
in this Section 7) or a merger or consolidation of the
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Corporation with or into another corporation, or the sale of
all, or substantially all, of the Corporations' properties and
assets to any other person, then, as a part of such
reorganization, merger, consolidation, or sale, provision
shall be made so that the holders of the Series D Preferred
shall thereafter be entitled to receive upon conversion of the
Series D Preferred the number of shares of stock or other
securities or property to which a holder of the number of
shares of Common Stock deliverable upon conversion would have
been entitled on such capital reorganization, merger,
consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions
of this Section 7 with respect to the rights of the holders of
Series D Preferred after the reorganization, merger,
consolidation, or sale to the end that the provisions of this
Section 7 shall be applicable after that event and be as
nearly equivalent as may be practicable.
[vi] Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which
caused an adjustment pursuant to this Section 7 to be made, if
any thereof shall not have been exercised, the number of
shares of Common Stock into which each share of the Series D
Preferred is convertible shall, upon such expiration, be
readjusted and shall thereafter be such as it would have been
had it been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (a)
the only shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion or
exchange privileges and (b) such shares of Common Stock, if
any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for
the issuance, sale or grant of all such rights, options,
warrants or conversion or exchange privileges, whether or not
exercised.
[e] If any adjustment in the number of shares of Common Stock
into which each share of the Series D Preferred may be converted
required pursuant to this Section 7 would result in an increase or
decrease of less than 1% in the number of shares of Common Stock into
which each share of the Series D Preferred is then convertible, the
amount of any such adjustment shall be carried forward and adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of
the number of shares of Common Stock into which each share of the
Series D Preferred is then convertible; provided that any such
adjustments carried forward shall be made immediately following receipt
of notice from a holder of the intent to convert all or a portion of
the Series D Preferred such that upon conversion the holder shall
receive such number of shares of Common Stock as such holder is
entitled, taking into account all adjustments required by this Section
7. All calculations under this paragraph [e] shall be made to the
nearest one-hundredth of a share.
[f] Subject to the limitation in Section 7[i] below, the
holder of any shares of the Series D Preferred may convert such shares
into shares of Common Stock pursuant to paragraph [a] of this Section 7
by surrendering for such purpose to the Corporation, at its principal
office or at such other office or agency maintained by the Corporation
for that purpose, a certificate or certificates representing the shares
of Series D Preferred to be converted (or if such certificate or
certificates cannot be found, an affidavit of lost securities in form
and substance acceptable to the Corporation) accompanied by a written
notice stating that such holder elects to convert all or
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a specified number of such shares in accordance with the provisions of
this Section 7 and specifying the name or names in which such holder
wishes the certificate or certificates for shares of Common Stock to be
issued. In case such notice shall specify a name or names other than
that of such holder, such notice shall be accompanied by payment of all
transfer taxes payable upon the issuance of shares of Common Stock in
such name or names. As promptly as practicable, and in any event within
five business days after the surrender of such certificates and the
receipt of such notice relating thereto and, if applicable, payment of
all transfer taxes, the Corporation shall deliver or cause to be
delivered (i) certificates representing the number of validly issued,
fully paid and nonassessable shares of Common Stock of the Corporation
to which the holder of the Series D Preferred so converted shall be
entitled and (ii) if less than the full number of shares of the Series
D Preferred evidenced by the surrendered certificate or certificates
are being converted, a new certificate or certificates, of like tenor,
for the number of shares evidenced by such surrendered certificate or
certificates less the number of shares converted. Such conversions
shall be deemed to have been made at the close of business on the date
of giving of such notice and of such surrender of the certificate or
certificates representing the shares of the Series D Preferred to be
converted so that the rights of the holder thereof shall cease except
for the right to receive Common Stock of the Corporation in accordance
herewith and any accumulated, accrued or unpaid dividends pursuant to
paragraph [h] below,, and the converting holder shall be treated for
all purposes as having become the record holder of such Common Stock of
the Corporation at such time.
[g] The Series D Preferred shall convert to Common Stock of
the Corporation pursuant to paragraph [b] of this Section 7
automatically upon notice in writing to the stockholders, including all
holders of the Series D Preferred, setting forth the date of such
conversion and the material terms of the triggering public offering. As
promptly as practicable after such notice, and in any event within five
business days after the surrender of certificates for the Series D
Preferred (if required by the Board of Directors), the Corporation
shall deliver or cause to be delivered to each holder of Series D
Preferred certificates representing the number of validly issued, fully
paid and nonassessable shares of Common Stock of the Corporation to
which such holder of the Series D Preferred so converted shall be
entitled. Such conversion shall be deemed to have been made at the
close of business on the date set forth in such notice of mandatory
conversion so that the rights of the holder thereof shall cease with or
without surrender of certificates for the Series D Preferred, except
for the right to receive Common Stock of the Corporation in accordance
herewith and any accumulated, accrued or unpaid dividends pursuant to
paragraph [h] below, and the converting holder shall be treated for all
purposes as having become the record holder of such Common Stock of the
Corporation at such time.
[h] Upon conversion of any shares of the Series D Preferred
pursuant to paragraph [a] or [b] of this Section 7, the holder thereof
shall be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted, including any
dividends on such shares of the Series D Preferred declared prior to
such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series D Preferred
entitled to receive payment of such dividend.
[i] Shares of the Series D Preferred may not be converted
after the close of business on the third business day preceding the
Redemption Date pursuant to Section 8.
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[j] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series D Preferred.
[k] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall
deem appropriate in their discretion, unless the holder(s) of more than
twenty-five percent (25%) of the outstanding shares of Preferred Stock
of the Corporation demand in good faith and in writing that "fair
market value" be determined by an appraiser, who shall be mutually
acceptable to the Board of Directors and such holders, whose
determination shall be binding and whose fees and expenses shall be
paid by the Corporation.
SECTION 8. REDEMPTION.
[a] The Corporation may, at the election of its Board of
Directors, at any time or from time to time, redeem the whole or part
of the Series D Preferred, at the Stated Value, plus an amount equal to
all unpaid dividends thereon, including accrued dividends, whether or
not declared, to the date of redemption. In case the Corporation shall
elect to redeem less than all the Series D Preferred, the Corporation
shall select pro rata the shares so to be redeemed, except that if the
Board of Directors determines in its reasonable business judgment that
to do so by lot would be in the best interests of the Corporation, then
the shares so to be redeemed shall be selected by lot in such manner as
shall be prescribed by the Board of Directors.
[b] Notice of every such redemption shall be mailed, first
class postage prepaid, not less than thirty (30) nor more than sixty
(60) days prior to the date fixed for redemption ("Redemption Date"),
to each holder of record of the shares to be redeemed, at his or her
address as the same appears on the record of stockholders; but neither
failure to mail any such notice to one or more such holders nor any
defect in any such notice shall affect the sufficiency of the
proceedings for redemptions as to other holders. Each such notice shall
state the Redemption Date; the number of shares of Series D Preferred
to be redeemed, and, if less than all the shares of Series D Preferred
held by such holder are to be redeemed, the manner of selecting by lot
the shares to be redeemed; the place or places where such shares are to
be surrendered for payment; that dividends on the shares to be redeemed
will cease on such Redemption Date; and the effect of such redemption
on the right of conversion.
[c] Notice having been mailed as aforesaid, from and after the
Redemption Date, all dividends on the shares so called for redemption
shall cease to accrue, said shares shall no longer be deemed to be
outstanding, all rights of the holders thereof as stockholders of the
Corporation (except the right to receive payment for the shares, the
right to receive declared dividends pursuant to Section 7[g] above, and
the right to convert such shares into shares of Common Stock of the
Corporation until the close of business on the third business day
preceding the Redemption Date, as provided in Section 7) shall cease,
and, upon surrender in accordance with said notice of the certificates
for any such shares (properly endorsed or assigned for transfer, if the
Board of Directors shall so require), such shares shall be redeemed by
the Corporation in accordance with this Section 8. In connection with
the determination of the amount of dividends accruing with respect to
any conversion in the period between a notice of redemption and the
Redemption Date, on a date which is not a Quarterly Dividend Payment
Date, the amount of any such dividends shall be prorated based upon the
number of days which have elapsed since the
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immediately preceding Quarterly Dividend Payment Date (excluding such
Quarterly Dividend Payment Date itself).
SECTION 9. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which the shares of
the Series D Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series D Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series D Preferred is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the outstanding
shares of the Series D Preferred a notice stating that the number of shares into
which the shares of Series D Preferred are convertible has been adjusted and
setting forth the new number of shares into which each share of the Series D
Preferred is convertible as a result of such adjustment and when such adjustment
will become effective. Notwithstanding the foregoing, the Corporation shall
incur no liability for its failure to take any action set forth in this Section
9, nor shall such failure affect the validity, rights or preferences of any
shares of the Series D Preferred.
SECTION 10. RANKING.
The Series D Preferred shall rank senior to the Common Stock and any
other series of Preferred Stock of the Corporation hereafter created (except for
the Series B Preferred, which shall rank senior to the Series D Preferred, and
except for the Series A Preferred, the Series C Preferred, the Series E
Preferred, the Series F Preferred, and any other series of Preferred Stock which
the Board of Directors shall establish and designate to rank equal therewith
pursuant to Subpart C of this Article FOURTH, with which it shall rank equal),
as to the payment of dividends and the distribution of assets and rights upon
liquidation, dissolution or winding up of the Corporation.
H. Designation of Series E Convertible Preferred Stock. A series of the
Preferred Stock of the Corporation is hereby created and authorized, and the
designations, amount and stated value of such series of Preferred Stock and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereon, are as follows:
SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as "Series E Convertible
Preferred Stock" (the "Series E Preferred") and the number of shares
constituting such series shall be 5,000,000 shares. The stated value of the
Series E Preferred shall be $5 per share, the original per share issue price
(the "Stated Value") .
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series E Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and October
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), accruing
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commencing with the date of issue of such shares, on shares of the Series E
Preferred at the rate of $.35 per share per annum. No interest shall be paid on
accrued but unpaid dividends.
SECTION 3. VOTING RIGHTS.
In addition to voting rights required by law or by this Amended
Certificate of Incorporation, as amended or restated from time to time (the
"Certificate of Incorporation"), subject to restrictions contained in this
Certificate of Incorporation the holders of Series E Preferred shall be entitled
to vote on all matters submitted to a vote of the Corporation's stockholders.
Except as otherwise required by law or provided by this Certificate of
Incorporation or by the Board of Directors pursuant to Subpart C of this Article
FOURTH, the holders of the Series E Preferred shall vote together with the
holders of all other series of the Corporation's voting preferred stock and the
holders of the Corporation's Common Stock as one class with one vote per share
(in the case of Preferred Stock, subject to adjustments as provided in Section 7
below and if convertible into Common Stock, one vote per share of Common Stock
into which such convertible Preferred Stock is then convertible) on all matters
submitted to a vote of the Corporation's stockholders.
SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series E Preferred as provided in
Section 2 are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series E Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series E
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series E Preferred, except dividends paid
ratably on the Series E Preferred and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled, (C) redeem or purchase or
otherwise acquire for consideration any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series E
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior to the Series E Preferred or in
satisfaction of contractual obligations to do so entered into with the written
consent of the holders of a majority of aggregate outstanding shares of Series A
Preferred and Series E Preferred outstanding as of the date of the creation of
such contractual obligations (including, without limitation, in satisfaction of
the provisions contained in the Stockholders' Agreement), or (D) purchase or
otherwise acquire for consideration any shares of the Series E Preferred or any
shares of stock ranking on a parity with the Series E Preferred except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series of classes or except pursuant to
the provisions of the Stockholders' Agreement.
SECTION 5. REACQUIRED SHARES.
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Any shares of the Series E Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, or otherwise in accordance with Delaware General
Corporation Law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of the Series E Preferred unless,
prior thereto, the holders of the Series B Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (B) to the holders of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series E Preferred
unless, prior thereto, the holders of Series E Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (C) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series E
Preferred, except distributions made ratably on the Series E Preferred and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 7. OPTIONAL CONVERSION.
Each share of the Series E Preferred may be converted at any time, at
the option of the holder thereof, into shares of Common Stock of the
Corporation, on the terms and conditions set forth below in this Section 7:
[a] Subject to the provisions for adjustment hereinafter set
forth, each share of the Series E Preferred shall be convertible at the
option of the holder thereof, in the manner hereinafter set forth, into
one (1) fully paid and nonassessable share of Common Stock of the
Corporation.
[b] The number of shares of Common Stock into which each share
of the Series E Preferred is convertible shall be adjusted from time to
time as follows:
[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series E
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of its Common Stock into a greater number
of shares of Common Stock (by reclassification or otherwise),
then, and in each such case, the number of shares of Common
Stock into which each share of the Series E Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the sum of (I) the number of shares of Common Stock
into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number of shares of
Common Stock which such holder would have been entitled to
receive in
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connection with the occurrence of such event had such share
been converted immediately prior thereto, and the denominator
of which is the number of shares of Common Stock determined in
accordance with clause (I) above. An adjustment made pursuant
to this subparagraph [b][i] shall become effective (a) in the
case of any such dividend, immediately after the close of
business on the record date for the determination of holders
of Common Stock entitled to receive such dividend, or (b) in
the case of any such subdivision, at the close of business on
the day immediately prior to the day upon which such corporate
action becomes effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series E Preferred
shall combine or consolidate the outstanding shares of its
Common Stock into a lesser number of shares of Common Stock,
by reclassification or otherwise, then, and in each such case,
the number of shares of Common Stock into which each share of
the Series E Preferred is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares of
Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event by (b) a
fraction, the numerator of which is the number of shares which
the holder would have owned after giving effect to such event
had such share been converted immediately prior to the
occurrence of such event and the denominator of which is the
number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event.
An adjustment made pursuant to this subparagraph b(ii] shall
become effective at the close of business on the date
immediately prior to the day upon which such corporate action
becomes effective.
[iii] In case the Corporation after the issuance of
such share of Series E Preferred shall: (A) issue any options,
warrants, or other rights (excluding those issued in exchange
for options to purchase common stock in Faircom Inc. pursuant
to the terms of a merger, and excluding options to purchase
Common Stock issued to management of the Corporation
exercisable for up to the lesser of 2,000,000 shares of Common
Stock (subject to adjustment pursuant to provisions applicable
to the options in the case of stock splits, reverse stock
splits and the like) or that number of shares of Common Stock
equal to fifteen percent (15%) of the equity aggregate number
of outstanding shares of Common Stock and other securities of
the Corporation exercisable for the purchase of, or
convertible into, Common Stock, computed on a fully-diluted
basis) entitling the holder thereof to subscribe for, or
purchase, Common Stock at a price per share which, when added
to the amount of consideration received or receivable by the
Corporation for such options, warrants, or other rights, is
less than the then fair market value per share of the Common
Stock at the date of such issuance; (B) issue or sell
securities of the Corporation convertible into, or
exchangeable for, Common Stock at a price per share which,
when added to the amount of consideration received or
receivable, from the Corporation for such exchangeable or
convertible securities, is less than the then fair market
value of a share of Common Stock at the date of such issuance;
or (C) issue or sell additional shares of Common Stock for
consideration representing less than the then fair market
value of the Common Stock at the date of such issuance; then
the number of shares of Common Stock into which each share of
the Series E Preferred is convertible shall be adjusted so
that, thereafter, until further adjusted, the holder of each
share thereof shall be entitled to receive, upon the
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conversion thereof, the number of shares of Common Stock
determined by multiplying (w) the number of shares of Common
Stock into which such shares are convertible immediately prior
to the occurrence of such event by (x) a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding prior to such issuance plus the number of
additional shares of Common Stock issuable upon exercise of
such options, warrants, or rights, or exchangeable or
convertible securities, or the additional number of shares of
Common Stock issued at such time, and the denominator of which
shall be the number of shares of Common Stock outstanding
prior to such issuance plus the number of shares of Common
Stock that either (y) the sum of the aggregate exercise price
of the total number of shares of Common Stock issuable upon
exercise of such options, warrants, or rights, or upon
conversion or exchange of such convertible securities, and the
aggregate amount of consideration, if any, received or
receivable by the Corporation for such options, warrants, or
rights, or convertible or exchangeable securities, or (z) the
aggregate consideration received in connection with the sale
of shares of its Common Stock for less than the then fair
market value, as the case may be, would purchase at the then
fair market value.
[iv] In the event that, at any time, or from
time to time, after the issuance of such share of the Series E
Preferred, the Common Stock issuable upon conversion of the
Series E Preferred is changed into the same or a different
number of shares of any class or classes of stock, whether by
recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section 7), then, and in any
such event, each holder of Series E Preferred shall have the
right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable
upon such recapitalization, reclassification, or other change,
by holders of the number of shares of Common Stock into which
such shares of Series E Preferred could have been converted
immediately prior to such recapitalization, reclassification,
or change, all subject to further adjustment as provided
herein.
[v] If at any time, or from time to time
after the issuance of such share of the Series E Preferred
there is a capital reorganization of the Common Stock other
than a recapitalization, subdivision, combination,
reclassification, or exchange of shares provided for elsewhere
in this Section 7) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of
all, or substantially all, of the Corporations' properties and
assets to any other person, then, as a part of such
reorganization, merger, consolidation, or sale, provision
shall be made so that the holders of the Series E Preferred
shall thereafter be entitled to receive upon conversion of the
Series E Preferred the number of shares of stock or other
securities or property to which a holder of the number of
shares of Common Stock deliverable upon conversion would have
been entitled on such capital reorganization, merger,
consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions
of this Section 7 with respect to the rights of the holders of
Series E Preferred after the reorganization, merger,
consolidation, or sale to the end that the provisions of this
Section 7 shall be applicable after that event and be as
nearly equivalent as may be practicable.
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[vi] Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which
caused an adjustment pursuant to this Section 7 to be made, if
any thereof shall not have been exercised, the number of
shares of Common Stock into which each share of the Series E
Preferred is convertible shall, upon such expiration, be
readjusted and shall thereafter be such as it would have been
had it been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (a)
the only shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion or
exchange privileges and (b) such shares of Common Stock, if
any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for
the issuance, sale or grant of all such rights, options,
warrants or conversion or exchange privileges, whether or not
exercised.
[c] If any adjustment in the number of shares of Common Stock
into which each share of the Series E Preferred may be converted
required pursuant to this Section 7 would result in an increase or
decrease of less than 1% in the number of shares of Common Stock into
which each share of the Series E Preferred is then convertible, the
amount of any such adjustment shall be carried forward and adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of
the number of shares of Common Stock into which each share of the
Series E Preferred is then convertible; provided that any such
adjustments carried forward shall be made immediately following receipt
of notice from a holder of the intent to convert all or a portion of
the Series B Preferred such that upon conversion the holder shall
receive such number of shares of Common Stock as such holder is
entitled, taking into account all adjustments required by this Section
7. All calculations under this paragraph [c] shall be made to the
nearest one-hundredth of a share.
[d] The holder of any shares of the Series E Preferred may
convert such shares into shares of Common Stock by surrendering for
such purpose to the Corporation, at its principal office or at such
other office or agency maintained by the Corporation for that purpose,
a certificate or certificates representing the shares of Series E
Preferred to be converted (or if such certificate or certificates
cannot be found, an affidavit of lost securities in form and substance
acceptable to the Corporation) accompanied by a written notice stating
that such holder elects to convert all or a specified number of such
shares in accordance with the provisions of this Section 7 and
specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. In
case such notice shall specify a name or names other than that of such
holder, such notice shall be accompanied by payment of all transfer
taxes payable upon the issuance of shares of Common Stock in such name
or names. As promptly as practicable, and in any event within five
business days after the surrender of such certificates and the receipt
of such notice relating thereto and, if applicable, payment of all
transfer taxes, the Corporation shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully paid
and nonassessable shares of Common Stock of the Corporation to which
the holder of the Series E Preferred so converted shall be entitled and
(ii) if less than the full number of shares of the Series E Preferred
evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or
certificates less the number of shares converted. Such conversions
shall be deemed to have
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been made at the close of business on the date of giving of such notice
and of such surrender of the certificate or certificates representing
the shares of the Series E Preferred to be converted so that the rights
of the holder thereof shall cease except for the right to receive
Common Stock of the corporation in accordance herewith and any
accumulated, accrued or unpaid dividends pursuant to paragraph [e]
below, and the converting holder shall be treated for all purposes as
having become the record holder of such Common Stock of the Corporation
at such time.
[e] Upon conversion of any shares of the Series E Preferred,
the holder thereof shall be entitled to receive any accumulated,
accrued or unpaid dividends in respect of the shares so converted,
including any dividends on such shares of the Series E Preferred
declared prior to such conversion if such holder held such shares on
the record date fixed for the determination of holders of the Series E
Preferred entitled to receive payment of such dividend.
[f] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series E Preferred.
[g] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall
deem appropriate in their discretion, unless the holder(s) of more than
twenty-five percent (25%) of the outstanding shares of Preferred Stock
of the Corporation demand in good faith and in writing that "fair
market value" be determined by an appraiser, who shall be mutually
acceptable to the Board of Directors and such holders, whose
determination shall be binding and whose fees and expenses shall be
paid by the Corporation.
SECTION 8. MANDATORY CONVERSION.
Each share of the Series E Preferred shall be converted, at the option
of the Board of Directors, into shares of Common Stock of the Corporation, on
the terms and conditions set forth below in this Section 8:
[a] Subject to the provisions for adjustment set forth in
Section 7, which shall also apply to conversions pursuant to this
Section 8, each share of the Series E Preferred shall be convertible at
the option of the Board of Directors, under the conditions hereinafter
set forth, into one (1) fully paid and nonassessable share of Common
Stock of the Corporation.
[b] The Board of Directors of the Corporation may require
conversion of all shares of the Series E Preferred into shares of
Common Stock in preparation for or upon any of the following:
[i] A public offering of equity securities of the
Corporation of at least $10,000,000 in gross proceeds;
[ii] A private placement of equity securities of the
Corporation of at least $25,000,000 in gross proceeds;
[iii] A private placement of equity securities of the
Corporation of at least $10,000,000 in gross proceeds under
circumstances where the investor(s) reasonably
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believe the conversion of the Series E Preferred is necessary
to achieve its (their) investment objectives;
[iv] A merger of the Corporation with another
corporation or other entity, whether or not the Corporation is
a survivor of such transaction whereby as a result the
stockholders of the Corporation hold less than 50% of the
outstanding capital stock of the surviving entity; or
[v] An acquisition of equity securities of the
Corporation in one transaction or in a series of related
transactions which results in a transfer of majority voting
control of the Corporation.
[c] The Series E Preferred shall convert to Common Stock of
the Corporation automatically upon notice in writing to the
stockholders, including all holders of the Series E Preferred, setting
forth the date of such conversion and the material terms of the
triggering event. As promptly as practicable after such notice, and in
any event within five business days after the surrender of certificates
for the Series E Preferred (if required by the Board of Directors), the
Corporation shall deliver or cause to be delivered to each holder of
Series E Preferred certificates representing the number of validly
issued, fully paid and nonassessable shares of Common Stock of the
Corporation to which such holder of the Series E Preferred so converted
shall be entitled. Such conversion shall be deemed to have been made at
the close of business on the date set forth in such notice of mandatory
conversion so that the rights of the holder thereof shall cease with or
without surrender of certificates for the Series E Preferred, except
for the right to receive Common Stock of the Corporation in accordance
herewith and any accumulated, accrued or unpaid dividends pursuant to
paragraph [d] below, and the converting holder shall be treated for all
purposes as having become the record holder of such Common Stock of the
Corporation at such time.
[d] Upon conversion of the Series E Preferred, the holder
thereof shall be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted, including any
dividends on such shares of the Series E Preferred declared prior to
such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series E Preferred
entitled to receive payment of such dividend.
[e] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series E Preferred.
SECTION 9. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which the shares of
the Series E Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series E Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series E Preferred is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the outstanding
shares of the Series E Preferred a notice stating that the number of shares into
which the shares of Series E Preferred are convertible has been adjusted and
setting forth the new number of
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shares into which each share of the Series E Preferred is convertible as a
result of such adjustment and when such adjustment will become effective.
Notwithstanding the foregoing, the Corporation shall incur no liability for its
failure to take any action set forth in this Section 9, nor shall such failure
affect the validity, rights or preferences of any shares of the Series E
Preferred.
SECTION 10. RANKING.
The Series E Preferred shall rank senior to the Common Stock and any
other series of Preferred Stock of the Corporation hereafter created (except for
the Series B Preferred, which shall rank senior to the Series E Preferred, and
except for the Series A Preferred, the Series C Preferred, the Series D
Preferred, the Series F Preferred, and any other series of Preferred Stock which
the Board of Directors shall establish and designate to rank equal therewith
pursuant to Subpart C of this Article FOURTH, with which it shall rank equal),
as to the payment of dividends and the distribution of assets and rights upon
liquidation, dissolution or winding up of the Corporation.
I. Designation of Series F Convertible Preferred Stock. A series of the
Preferred Stock of the Corporation is hereby created and authorized, and the
designations, amount and stated value of such series of Preferred Stock and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereon, are as follows:
SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as Series F Convertible
Preferred (the "Series F Preferred") and the number of shares constituting such
series shall be 4,100,000 shares. The stated value of the Series F Preferred
shall be $5 per share, the original per share issue price (the "Stated Value").
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series F Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and October
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), accruing commencing with the date of issue of such shares, on shares of
the Series F Preferred at the rate of $.50 per share per annum; provided,
however, that if and to the extent that the holder of a share of the Series F
Preferred does not receive a cash dividend on any given Quarterly Dividend
Payment Date in full payment of the accrued and unpaid dividend on such share of
the Series F Preferred or any previously cumulated dividend on such share for
the period ending on such Quarterly Dividend Payment Date and beginning on the
immediately preceding Quarterly Dividend Payment Date (or, if such share was
first issued during such period, beginning on the date of such issuance), such
unpaid portion of such dividend shall be cumulative and shall itself accrue,
whether or not declared and whether or not the Corporation has at the time funds
legally available for such purpose, from and after such date, until the date so
paid in full, dividends on a daily basis at a rate of 10% per annum, compounded
quarterly. No interest shall be paid on accrued but unpaid dividends.
SECTION 3. VOTING RIGHTS.
In addition to voting rights required by law or by this Amended
Certificate of Incorporation, as amended or restated from time to time (the
"Certificate of Incorporation"), subject to restrictions
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contained in this Certificate of Incorporation the holders of Series F Preferred
shall be entitled to vote on all matters submitted to a vote of the
Corporation's stockholders. Except as otherwise required by law or provided by
this Certificate of Incorporation or by the Board of Directors pursuant to
Subpart C of this Article FOURTH, the holders of the Series F Preferred, shall
vote together with the holders of all other series of the Corporation's voting
preferred stock and the holders of the Corporation's Common Stock as one class
with one vote per share (in the case of Preferred Stock, subject to adjustments
as provided in Section 7 below and if convertible into Common Stock, one vote
per share of Common Stock into which such convertible Preferred Stock is then
convertible) on all matters submitted to a vote of the Corporation's
stockholders. Further, this Certificate of Incorporation may not be amended to
change the liquidation preference, conversion rate, dividend rate or voting, put
or redemption rights of any series of the Corporation's Preferred Stock without
the approval of the holders of a majority of the outstanding shares of the
Series F Preferred, voting as a separate class.
SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series F Preferred as provided in
Section 2 are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series F Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series F
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series F Preferred, except dividends paid
ratably on the Series F Preferred and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled, (C) redeem or purchase or
otherwise acquire for consideration any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series F
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior to the Series F Preferred or in
satisfaction of contractual obligations to do so entered into with the written
consent of the holders of a majority of outstanding shares of Series F Preferred
(including, without limitation, in satisfaction of the provisions contained in
the Stockholders' Agreement), or (D) purchase or otherwise acquire for
consideration any shares of the Series F Preferred, or any shares of stock
ranking on a parity with the Series F Preferred except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors (including the Series F Directors voting as part of the majority),
after consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall unanimously
determine in good faith will result in fair and equitable treatment among the
respective series of classes or except pursuant to the provisions of the
Stockholders' Agreement.
SECTION 5. REACQUIRED SHARES.
Any shares of the Series F Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, or otherwise in accordance with Delaware General
Corporation Law.
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SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of the Series F Preferred unless,
prior thereto, the holders of the Series B Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (B) to the holders of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series F Preferred
unless, prior thereto, the holders of Series F Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (C) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series F
Preferred, except distributions made ratably on the Series F Preferred and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 7. CONVERSION.
[a] Optional Conversion. Subject to the provisions for
adjustment hereinafter set forth, each share of the Series F Preferred
shall be convertible at any time at the option of the holder thereof,
in the manner hereinafter set forth, into one (1) fully paid and
nonassessable share of Common Stock of the Corporation.
[b] Mandatory Conversion. Subject to the provisions for
adjustment set forth in this Section 7, each share of the Series F
Preferred shall be convertible at the option of the Board of Directors
into one (1) fully paid and nonassessable share of Common Stock of the
Corporation in the event of, and concurrently with the closing of, a
public offering of Common Stock of the Corporation at a per share price
of at least $12.00 (subject to adjustment for stock splits, stock
dividends, reverse stock splits and the like) with gross proceeds to
the Corporation of at least $25,000,000 (excluding the effect of any
over-allotment option).
[c] The number of shares of Common Stock into which each share
of the Series F Preferred is convertible shall be adjusted from time to
time as follows:
[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series F
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of its Common Stock into a greater number
of shares of Common Stock (by reclassification or otherwise),
then, and in each such case, the number of shares of Common
Stock into which each share of the Series F Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the sum of (I) the number of shares of Common Stock
into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number of shares of
Common Stock which such holder would have been entitled to
receive in connection with the occurrence of such event had
such share been converted immediately prior thereto, and the
denominator of which is the number of shares of Common Stock
determined in
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accordance with clause (I) above. An adjustment made pursuant
to this subparagraph [c][i] shall become effective (a) in the
case of any such dividend, immediately after the close of
business on the record date for the determination of holders
of Common Stock entitled to receive such dividend, or (b) in
the case of any such subdivision, at the close of business on
the day immediately prior to the day upon which such corporate
action becomes effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series F Preferred
shall combine or consolidate the outstanding shares of its
Common Stock into a lesser number of shares of Common Stock,
by reclassification or otherwise, then, and in each such case,
the number of shares of Common Stock into which each share of
the Series F Preferred is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares of
Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible
immediately prior to the occurrence of such event by (b) a
fraction, the numerator of which is the number of shares which
the holder would have owned after giving effect to such event
had such share been converted immediately prior to the
occurrence of such event and the denominator of which is the
number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event.
An adjustment made pursuant to this subparagraph b[ii] shall
become effective at the close of business on the date
immediately prior to the day upon which such corporate action
becomes effective.
[iii] In case the Corporation after the
issuance of such share of Series F Preferred shall: (A) issue
any options, warrants, or other rights (excluding those issued
in exchange for options to purchase common stock in Faircom
Inc. pursuant to the terms of a merger, and excluding options
to purchase Common Stock issued to management of the
Corporation exercisable for up to the lesser of 2,000,000
shares of Common Stock (subject to adjustment pursuant to
provisions applicable to the options in the case of stock
splits, reverse stock splits and the like) or that number of
shares of Common Stock equal to fifteen percent (15%) of the
aggregate number of outstanding shares of Common Stock and
other equity securities of the Corporation exercisable for the
purchase of, or convertible into, Common Stock, computed on a
fully-diluted basis) entitling the holder thereof to subscribe
for, or purchase, Common Stock at a price per share which,
when added to the amount of consideration received or
receivable by the Corporation for such options, warrants, or
other rights, is less than the then fair market value per
share of the Common Stock at the date of such issuance; (B)
issue or sell securities of the Corporation convertible into,
or exchangeable for, Common Stock at a price per share which,
when added to the amount of consideration received or
receivable, from the Corporation for such exchangeable or
convertible securities, is less than the then fair market
value of a share of Common Stock at the date of such issuance;
or (C) issue or sell additional shares of Common Stock for
consideration representing less than the then fair market
value of the Common Stock at the date of such issuance; then
the number of shares of Common Stock into which each share of
the Series F Preferred is convertible shall be adjusted so
that, thereafter, until further adjusted, the holder of each
share thereof shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (w) the number of shares of Common
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Stock into which such shares are convertible immediately prior
to the occurrence of such event by (x) a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding prior to such issuance plus the number of
additional shares of Common Stock issuable upon exercise of
such options, warrants, or rights, or exchangeable or
convertible securities, or the additional number of shares of
Common Stock issued at such time, and the denominator of which
shall be the number of shares of Common Stock outstanding
prior to such issuance plus the number of shares of Common
Stock that either (y) the sum of the aggregate exercise price
of the total number of shares of Common Stock issuable upon
exercise of such options, warrants, or rights, or upon
conversion or exchange of such convertible securities, and the
aggregate amount of consideration, if any, received or
receivable by the Corporation for such options, warrants, or
rights, or convertible or exchangeable securities, or (z) the
aggregate consideration received in connection with the sale
of shares of its Common Stock for less than the then fair
market value, as the case may be, would purchase at the then
fair market value.
[iv] In the event that, at any time, or from
time to time, after the issuance of such share of the Series F
Preferred, the Common Stock issuable upon conversion of the
Series F Preferred is changed into the same or a different
number of shares of any class or classes of stock, whether by
recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section 7), then, and in any
such event, each holder of Series F Preferred shall have the
right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable
upon such recapitalization, reclassification, or other change,
by holders of the number of shares of Common Stock into which
such shares of Series F Preferred could have been converted
immediately prior to such recapitalization, reclassification,
or change, all subject to further adjustment as provided
herein.
[v] If at any time, or from time to time
after the issuance of such share of the Series F Preferred,
there is a capital reorganization of the Common Stock other
than a recapitalization, subdivision, combination,
reclassification, or exchange of shares provided for elsewhere
in this Section 7) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of
all, or substantially all, of the Corporations' properties and
assets to any other person, then, as a part of such
reorganization, merger, consolidation, or sale, provision
shall be made so that the holders of the Series F Preferred
shall thereafter be entitled to receive upon conversion of the
Series F Preferred the number of shares of stock or other
securities or property to which a holder of the number of
shares of Common Stock deliverable upon conversion would have
been entitled on such capital reorganization, merger,
consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions
of this Section 7 with respect to the rights of the holders of
Series F Preferred after the reorganization, merger,
consolidation, or sale to the end that the provisions of this
Section 7 shall be applicable after that event and be as
nearly equivalent as may be practicable.
[vi] Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which
caused an adjustment pursuant to this
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Section 7 to be made, if any thereof shall not have been
exercised, the number of shares of Common Stock into which
each share of the Series F Preferred is convertible shall,
upon such expiration, be readjusted and shall thereafter be
such as it would have been had it been originally adjusted (or
had the original adjustment not been required, as the case may
be) as if (a) the only shares of Common Stock so issued were
the shares of Common Stock, if any, actually issued or sold
upon the exercise of such rights, options, warrants or
conversion or exchange privileges and (b) such shares of
Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all
such rights, options, warrants or conversion or exchange
privileges, whether or not exercised.
[d] If any adjustment in the number of shares of Common Stock
into which each share of the Series F Preferred may be converted
required pursuant to this Section 7 would result in an increase or
decrease of less than 1% in the number of shares of Common Stock into
which each share of the Series F Preferred is then convertible, the
amount of any such adjustment shall be carried forward and adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of
the number of shares of Common Stock into which each share of the
Series F Preferred is then convertible; provided that any such
adjustments carried forward shall be made immediately following receipt
of notice from a holder of the intent to convert all or a portion of
the Series F Preferred such that upon conversion the holder shall
receive such number of shares of Common Stock as such holder is
entitled, taking into account all adjustments required by this Section
7. All calculations under this paragraph [d] shall be made to the
nearest one-hundredth of a share.
[e] Subject to the limitation in Section 7[h] below, the
holder of any shares of the Series F Preferred may convert such shares
into shares of Common Stock pursuant to paragraph [a] of this Section 7
by surrendering for such purpose to the Corporation, at its principal
office or at such other office or agency maintained by the Corporation
for that purpose, a certificate or certificates representing the shares
of Series F Preferred to be converted (or if such certificate or
certificates cannot be found, an affidavit of lost securities in form
and substance acceptable to the Corporation) accompanied by a written
notice stating that such holder elects to convert all or a specified
number of such shares in accordance with the provisions of this Section
7 and specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. In
case such notice shall specify a name or names other than that of such
holder, such notice shall be accompanied by payment of all transfer
taxes payable upon the issuance of shares of Common Stock in such name
or names. As promptly as practicable, and in any event within five
business days after the surrender of such certificates and the receipt
of such notice relating thereto and, if applicable, payment of all
transfer taxes, the Corporation shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully paid
and nonassessable shares of Common Stock of the Corporation to which
the holder of the Series F Preferred so converted shall be entitled and
(ii) if less than the full number of shares of the Series F Preferred
evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or
certificates less the number of shares converted. Such conversions
shall be deemed to have been made at the close of business on the date
of giving of such notice and of such surrender of the certificate or
certificates representing
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the shares of the Series F Preferred to be converted so that the rights
of the holder thereof shall cease except for the right to receive
Common Stock of the Corporation in accordance herewith and any
accumulated, accrued or unpaid dividends pursuant to paragraph [g]
below, and the converting holder shall be treated for all purposes as
having become the record holder of such Common Stock of the Corporation
at such time.
[f] The Series F Preferred shall convert to Common Stock of
the Corporation pursuant to paragraph [b] of this Section 7
automatically upon notice in writing to the stockholders, including all
holders of the Series F Preferred, setting forth the date of such
conversion and the material terms of the triggering public offering. As
promptly as practicable after such notice, and in any event within five
business days after the surrender of certificates for the Series F
Preferred (if required by the Board of Directors), the Corporation
shall deliver or cause to be delivered to each holder of Series F
Preferred certificates representing the number of validly issued, fully
paid and nonassessable shares of Common Stock of the Corporation to
which such holder of the Series F Preferred so converted shall be
entitled. Such conversion shall be deemed to have been made at the
close of business on the date set forth in such notice of mandatory
conversion so that the rights of the holder thereof shall cease with or
without surrender of certificates for the Series F Preferred, except
for the right to receive Common Stock of the Corporation in accordance
herewith and any accumulated, accrued or unpaid dividends pursuant to
paragraph [g] below, and the converting holder shall be treated for all
purposes as having become the record holder of such Common Stock of the
Corporation at such time.
[g] Upon conversion of any shares of the Series F Preferred
pursuant to paragraph [a] or [b] of this Section 7, the holder thereof
shall be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted (whether or not
declared or otherwise payable as of such date of conversion), including
any dividends on such shares of the Series F Preferred declared prior
to such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series F Preferred
entitled to receive payment of such dividend.
[h] Shares of the Series F Preferred may not be converted
after the close of business on the third business day preceding the
Redemption Date pursuant to Section 8.
[i] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series F Preferred.
[j] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall
deem appropriate in their discretion, unless the holder(s) of more than
twenty-five percent (25%) of the outstanding shares of Preferred Stock
of the Corporation demand in good faith and in writing that "fair
market value" be determined by an appraiser, who shall be mutually
acceptable to the Board of Directors and such holders, whose
determination shall be binding and whose fees and expenses shall be
paid by the Corporation.
SECTION 8. REPORTS AS TO ADJUSTMENTS.
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Whenever the number of shares of Common Stock into which the shares of
the Series F Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series F Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series F Preferred is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the outstanding
shares of the Series F Preferred a notice stating that the number of shares into
which the shares of Series F Preferred are convertible has been adjusted and
setting forth the new number of shares into which each share of the Series F
Preferred is convertible as a result of such adjustment and when such adjustment
will become effective. Notwithstanding the foregoing, the Corporation shall
incur no liability for its failure to take any action set forth in this Section
8, nor shall such failure affect the validity, rights or preferences of any
shares of the Series F Preferred.
SECTION 9. RANKING.
The Series F Preferred shall rank senior to the Common Stock and any
other series of Preferred Stock of the Corporation hereafter created (except for
the Series B Preferred, which shall rank senior to the Series F Preferred, and
except for the Series A Preferred, the Series C Preferred, the Series D
Preferred, the Series E Preferred, and any other series of Preferred Stock which
the Board of Directors shall establish and designate to rank equal therewith
pursuant to Subpart C of this Article FOURTH, with which it shall rank equal),
as to the payment of dividends and the distribution of assets and rights upon
liquidation, dissolution or winding up of the Corporation.
SECTION 10. DIRECTORSHIPS.
The holders of the Series F Preferred, as a class, shall be
entitled to be represented on the Board of Directors by two Directors (the
"Series F Directors") who, upon nomination by such holders, as a class, will
stand for election by voting by the holders of the Preferred Stock (subject to
limitations in this Article FOURTH or established by the Board of Directors
pursuant to Section C of this Article FOURTH) and holders of Common Stock
together, except under circumstances where the number of individuals nominated
for election exceeds the number of Directors to be elected. In the event the
number of individuals nominated for election exceeds the number of Directors to
be elected, then the holders of the Series F Preferred shall have the sole right
to vote for, elect and remove the individuals nominated by them, as a class, to
serve as the Series F Directors, and in such event the further right to vote
for, elect or remove any of the other Directors who are not to be elected solely
by the holders of another class or series of Preferred Stock. The Series F
Directors, upon being elected, will serve for the same term and have the same
voting powers as other Directors. The right to elect the Series F Directors
pursuant to the terms hereof shall be exercisable by the holders of a majority
of the Series F Preferred at their option upon at least 60 days notice to the
Corporation; provided, however, if the Corporation is subject to the reporting
requirements of the Securities Exchange Act of 1934, such notice must be
provided on or before the date established by the Corporation for the submission
of proposals pursuant to the proxy rules promulgated under the Securities Act of
1934. One of the Series F Directors shall serve as a member of the Compensation
Committee and the other shall serve as a member of the Audit and Nominating
Committees of the Board of Directors (or such other Committees of the Board
performing such functions), which Committees will be composed of at least one
Director, in addition to the Series F Director, who is not an employee of the
Corporation.
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FIFTH: Incorporator. The name and mailing address of the incorporator
is Terry Jacobs, 50 East RiverCenter Boulevard, Covington, Kentucky 41011, whose
powers as incorporator have ceased by virtue of the election of the Board of
Directors.
SIXTH: Elimination of Director Liability. 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 Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. If the Delaware
General Corporation Law is amended after the filing of the Certificate of
Incorporation of which this Article is a part 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 Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph 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.
SEVENTH: Right to Indemnification.
A. Indemnification. The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party, or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding"), by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another Corporation or of a partnership, joint venture, trust, enterprise or
non-profit entity, including service with respect to employee benefit plans,
against all liability and loss suffered and expenses reasonably incurred by such
person. The Corporation shall be required to indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
B. Prepayment of Expenses. The Corporation shall pay the expenses of
directors and executive officers of the Corporation, and may pay the expenses of
all other officers, employees or agents of the Corporation, incurred in
defending any proceeding, in advance of its final disposition, provided,
however, that the payment of expenses incurred by a director, officer, employee
or agent in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the director, officer, employee or agent
to repay all amounts advanced if it should be ultimately determined that the
director, officer, employee or agent is not entitled to be indemnified under
this Article SEVENTH or otherwise.
C. Claims. If a claim for indemnification or payment of expenses under
this Article is not paid in full within sixty days after a written claim
therefor has been received by the Corporation, the claimant may file suit to
recover the unpaid amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such claim. In any such
action the Corporation shall have the burden of proving that the claimant was
not entitled to the requested indemnification or payment of expenses under
applicable law.
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D. Non-Exclusivity of Rights. The rights conferred on any person by
this Article SEVENTH shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, bylaws, agreement, vote of stockholders or
disinterested directors or otherwise.
E. Other Indemnification. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another Corporation, partnership, joint venture,
trust, enterprise or nonprofit entity, shall be reduced by any amount such
person may collect as indemnification from such other Corporation, partnership,
joint venture, trust, enterprise or non-profit enterprise.
F. Amendment or Repeal. Any repeal or modification of the foregoing
provisions of this Article SEVENTH shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
EIGHTH: Bylaws. In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized to make, alter or repeal bylaws of the Corporation.
*******
The Corporation further certifies:
II. That at a meeting of the Board of Directors of Regent
Communications, Inc. resolutions were duly adopted setting forth the foregoing
Amended and Restated Certificate of Incorporation, declaring adoption of the
same to be advisable and submitting it to the shareholders of said corporation
for approval.
III. That thereafter, pursuant to resolution of its Board of Directors,
consents of the stockholders of the corporation were executed, in accordance
with Section 228 of the General Corporation Law of the State of Delaware, by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Pursuant to Section
228 of the General Corporation Law of the State of Delaware, written notice has
been given to stockholders who have not consented in writing.
IV. That said amendment was duly adopted in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware.
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IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by Terry S. Jacobs, its Chairman, and William L. Stakelin, its Secretary,
this 11th day of June, 1998.
By: /s/ Terry S. Jacobs
-------------------------
Terry S. Jacobs, Chairman
ATTEST:
/s/ William L. Stakelin
------------------------------
William L. Stakelin, Secretary
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CERTIFICATE OF DESIGNATION, NUMBER, POWERS PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL, AND OTHER SPECIAL RIGHTS AND THE QUALIFICATIONS,
LIMITATIONS, RESTRICTIONS, AND OTHER DISTINGUISHING CHARACTERISTICS OF
SERIES G PREFERRED STOCK OF REGENT COMMUNICATIONS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation")
is
REGENT COMMUNICATIONS, INC.
2. The certificate of incorporation (as amended) of the corporation
authorizes the issuance of 20,000,000 shares of Preferred Stock (of a par value
of $.01 each) and expressly vests in the Board of Directors of the corporation
the authority provided therein to issue any or all of said shares in one or more
series and by resolution or resolutions, the designation, number, full or
limited voting powers, or the denial of voting powers, preferences and relative,
participating, optional, and other special rights and the qualifications,
limitations, restrictions, and other distinguishing characteristics of each
series to be issued.
3. The Board of Directors of the corporation, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
designating a new series of Preferred Stock as Series G Preferred Stock:
"RESOLVED, that the Board of Directors hereby designates a new
series of Preferred Stock to be known as "Series G Convertible
Preferred Stock", the number, amount, stated value, voting
powers, preferences and relative, participating, optional and
other special rights of which, and the qualifications,
limitations or restrictions thereon, are set forth on Exhibit
A attached hereto;
RESOLVED FURTHER, that the statements contained in the
foregoing resolution designating the said Series G Preferred
Stock shall, upon the effective date of said series, be deemed
to be included in and be a part of the certificate of
incorporation of the corporation pursuant to the provisions of
Sections 104 and 151 of the General Corporation Law of the
State of Delaware;
RESOLVED FURTHER, that the officers of the corporation and
each of them individually hereby are authorized to execute and
deliver, for and on behalf of the corporation a Certificate of
Designation to be filed with the Delaware Secretary of State
and any other documents or filings required by applicable law
required to amend the corporation's Certificate and to
otherwise effectuate the intent of the foregoing resolutions."
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The effective time and date of the series herein certified shall be the filing
of this certificate.
IN WITNESS WHEREOF, the undersigned officer has executed this document
the 11th day of January, 1999.
/s/ Terry S. Jacobs
---------------------------------
Terry S. Jacobs, Chairman and CEO
COMMONWEALTH OF KENTUCKY )
) SS:
COUNTY OF KENTON )
BE IT REMEMBERED, that on this 11th day of January, 1999, before me,
the subscriber, a Notary Public in and for said county, personally came Terry S.
Jacobs, the Chairman and CEO of Regent Communications, Inc., and acknowledged
that he signed the foregoing instrument on behalf of said corporation and that
the signing thereof is his voluntary act and deed and the voluntary act and deed
of said corporation.
IN TESTIMONY THEREOF, I have hereunto subscribed my name and affixed my
seal on this day and year aforesaid.
/s/ Christina Tenhundfeld
------------------------------
Notary Public
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EXHIBIT A
SECTION 1. DESIGNATION, AMOUNT AND STATED VALUE.
The shares of such series shall be designated as Series G Convertible
Preferred (the "Series G Preferred") and the number of shares constituting such
series shall be 4,000,000 shares. The stated value of the Series G Preferred
shall be $5 per share, the original per share issue price (the "Stated Value").
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
The holders of shares of the Series G Preferred shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
out of funds legally available for such purpose, cumulative dividends payable
quarterly in cash on the first business day of January, April, July and October
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), accruing commencing with the date of issue of such shares, on shares of
the Series G Preferred at the rate of $.50 per share per annum; provided,
however, that if and to the extent that the holder of a share of the Series G
Preferred does not receive a cash dividend on any given Quarterly Dividend
Payment Date in full payment of the accrued and unpaid dividend on such share of
the Series G Preferred or any previously cumulated dividend on such share for
the period ending on such Quarterly Dividend Payment Date and beginning on the
immediately preceding Quarterly Dividend Payment Date (or, if such share was
first issued during such period, beginning on the date of such issuance), such
unpaid portion of such dividend shall be cumulative and shall itself accrue,
whether or not declared and whether or not the Corporation has at the time funds
legally available for such purpose, from and after such date, until the date so
paid in full, dividends on a daily basis at a rate of 10% per annum, compounded
quarterly. No interest shall be paid on accrued but unpaid dividends.
SECTION 3. VOTING RIGHTS.
In addition to voting rights required by law or by the Company's
Amended and Restated Certificate of Incorporation, as amended or restated from
time to time (the "Certificate of Incorporation"), subject to restrictions
contained in the Certificate of Incorporation the holders of Series G Preferred
shall be entitled to vote on all matters submitted to a vote of the
Corporation's stockholders. Except as otherwise required by law or provided by
the Certificate of Incorporation or by the Board of Directors pursuant to
Subpart C of Article Fourth of the Certificate of Incorporation, the holders of
the Series G Preferred shall vote together with the holders of all other series
of the Corporation's voting preferred stock and the holders of the Corporation's
Common Stock as one class with one vote per share (in the case of Preferred
Stock, subject to adjustments as provided in Section 7 below and if convertible
into Common Stock, one vote per share of Common Stock into which such
convertible Preferred Stock is then convertible) on all matters submitted to a
vote of the Corporation's stockholders.
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SECTION 4. CERTAIN RESTRICTIONS.
Whenever dividends payable on the Series G Preferred as provided in
Section 2 are in arrears, thereafter and until dividends, including all accrued
dividends, on shares of the Series G Preferred outstanding shall have been paid
in full or declared and set apart for payment, the Corporation shall not (A) pay
dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series G
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
such junior stock, (B) pay dividends on or make any other distributions on any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series G Preferred, except dividends paid
ratably on the Series G Preferred and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled, (C) redeem or purchase or
otherwise acquire for consideration any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series G
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior to the Series G Preferred or in
satisfaction of contractual obligations to do so entered into with the written
consent of the holders of a majority of outstanding shares of Series F Preferred
and Series G Preferred voting together as one class on the matter (including,
without limitation, in satisfaction of the provisions contained in the
Stockholders' Agreement), or (D) purchase or otherwise acquire for consideration
any shares of the Series G Preferred, or any shares of stock ranking on a parity
with the Series G Preferred except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall unanimously
determine in good faith will result in fair and equitable treatment among the
respective series of classes or except pursuant to the provisions of the
Stockholders' Agreement.
SECTION 5. REACQUIRED SHARES.
Any shares of the Series G Preferred which have been converted to
Common Stock or have been purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, or otherwise in accordance with Delaware General
Corporation Law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of the Series G Preferred unless,
prior thereto, the holders of the Series B Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (B) to the holders of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series G Preferred
unless, prior thereto, the holders of Series G Preferred shall have received the
Stated Value per share, plus an amount equal to unpaid dividends thereon,
including accrued dividends, whether or not declared, to the date of such
payment, or (C) to the holders of stock ranking on a parity
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(either as to dividends or upon liquidation, dissolution or winding up) with the
Series G Preferred, except distributions made ratably on the Series G Preferred
and all other such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up.
SECTION 7. CONVERSION.
[a] Optional Conversion. Subject to the provisions for
adjustment hereinafter set forth, each share of the Series G Preferred
shall be convertible at any time at the option of the holder thereof,
in the manner hereinafter set forth, into one (1) fully paid and
nonassessable share of Common Stock of the Corporation.
[b] Mandatory Conversion. Subject to the provisions for
adjustment set forth in this Section 7, each share of the Series G
Preferred shall be convertible at the option of the Board of Directors
into one (1) fully paid and nonassessable share of Common Stock of the
Corporation in the event of, and concurrently with the closing of, a
public offering of Common Stock of the Corporation at a per share price
of at least $12.00 (subject to adjustment for stock splits, stock
dividends, reverse stock splits and the like) with gross proceeds to
the Corporation of at least $25,000,000 (excluding the effect of any
over-allotment option).
[c] The number of shares of Common Stock into which each share
of the Series G Preferred is convertible shall be adjusted from time to
time as follows:
[i] In case the Corporation shall at any time or from
time to time after the issuance of such share of Series G
Preferred declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
outstanding shares of its Common Stock into a greater number
of shares of Common Stock (by reclassification or otherwise),
then, and in each such case, the number of shares of Common
Stock into which each share of the Series G Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the sum of (I) the number of shares of Common Stock
into which such share was convertible immediately prior to the
occurrence of such event plus (II) the number of shares of
Common Stock which such holder would have been entitled to
receive in connection with the occurrence of such event had
such share been converted immediately prior thereto, and the
denominator of which is the number of shares of Common Stock
determined in accordance with clause (I) above. An adjustment
made pursuant to this subparagraph [c][i] shall become
effective (a) in the case of any such dividend, immediately
after the close of business on the record date for the
determination of holders of Common Stock entitled to receive
such dividend, or (b) in the case of any such subdivision, at
the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
[ii] In case the Corporation at any time or from time
to time after the issuance of such share of Series G Preferred
shall combine or consolidate the
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outstanding shares of its Common Stock into a lesser number of
shares of Common Stock, by reclassification or otherwise,
then, and in each such case, the number of shares of Common
Stock into which each share of the Series G Preferred is
convertible shall be adjusted so that the holder of each share
thereof shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of
which is the number of shares which the holder would have
owned after giving effect to such event had such share been
converted immediately prior to the occurrence of such event
and the denominator of which is the number of shares of Common
Stock into which such share was convertible immediately prior
to the occurrence of such event. An adjustment made pursuant
to this subparagraph b[ii] shall become effective at the close
of business on the date immediately prior to the day upon
which such corporate action becomes effective.
[iii] In case the Corporation after the issuance of such share
of Series G Preferred shall: (A) issue any options, warrants,
or other rights (excluding options to purchase Common Stock
issued to management of the Corporation exercisable for up to
the lesser of 2,000,000 shares of Common Stock (subject to
adjustment pursuant to provisions applicable to the options in
the case of stock splits, reverse stock splits and the like)
or that number of shares of Common Stock equal to fifteen
percent (15%) of the aggregate number of outstanding shares of
Common Stock and other equity securities of the Corporation
exercisable for the purchase of, or convertible into, Common
Stock, computed on a fully-diluted basis) entitling the holder
thereof to subscribe for, or purchase, Common Stock at a price
per share which, when added to the amount of consideration
received or receivable by the Corporation for such options,
warrants, or other rights, is less than the then fair market
value per share of the Common Stock at the date of such
issuance; (B) issue or sell securities of the Corporation
convertible into, or exchangeable for, Common Stock at a price
per share which, when added to the amount of consideration
received or receivable, from the Corporation for such
exchangeable or convertible securities, is less than the then
fair market value of a share of Common Stock at the date of
such issuance; or (C) issue or sell additional shares of
Common Stock for consideration representing less than the then
fair market value of the Common Stock at the date of such
issuance; then the number of shares of Common Stock into which
each share of the Series G Preferred is convertible shall be
adjusted so that, thereafter, until further adjusted, the
holder of each share thereof shall be entitled to receive,
upon the conversion thereof, the number of shares of Common
Stock determined by multiplying (w) the number of shares of
Common Stock into which such shares are convertible
immediately prior to the occurrence of such event by (x) a
fraction, the numerator of which shall be the number of shares
of Common Stock outstanding prior to such issuance plus the
number of additional shares of Common Stock issuable upon
exercise of such options, warrants, or rights, or exchangeable
or convertible securities, or the additional number of shares
of Common Stock issued at such time, and the denominator of
which shall be the number of shares of Common Stock
outstanding prior to such issuance plus the number of shares
of Common Stock that either (y) the sum of the aggregate
exercise price of the total number of shares of Common Stock
issuable upon exercise of such options,
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warrants, or rights, or upon conversion or exchange of such
convertible securities, and the aggregate amount of
consideration, if any, received or receivable by the
Corporation for such options, warrants, or rights, or
convertible or exchangeable securities, or (z) the aggregate
consideration received in connection with the sale of shares
of its Common Stock for less than the then fair market value,
as the case may be, would purchase at the then fair market
value.
[iv] In the event that, at any time, or from
time to time, after the issuance of such share of the Series G
Preferred, the Common Stock issuable upon conversion of the
Series G Preferred is changed into the same or a different
number of shares of any class or classes of stock, whether by
recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend, or a
reorganization, merger, consolidation or sale of assets,
provided for elsewhere in this Section 7), then, and in any
such event, each holder of Series G Preferred shall have the
right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable
upon such recapitalization, reclassification, or other change,
by holders of the number of shares of Common Stock into which
such shares of Series G Preferred could have been converted
immediately prior to such recapitalization, reclassification,
or change, all subject to further adjustment as provided
herein.
[v] If at any time, or from time to time
after the issuance of such share of the Series G Preferred,
there is a capital reorganization of the Common Stock other
than a recapitalization, subdivision, combination,
reclassification, or exchange of shares provided for elsewhere
in this Section 7) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of
all, or substantially all, of the Corporation's properties and
assets to any other person, then, as a part of such
reorganization, merger, consolidation, or sale, provision
shall be made so that the holders of the Series G Preferred
shall thereafter be entitled to receive upon conversion of the
Series G Preferred the number of shares of stock or other
securities or property to which a holder of the number of
shares of Common Stock deliverable upon conversion would have
been entitled on such capital reorganization, merger,
consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions
of this Section 7 with respect to the rights of the holders of
Series G Preferred after the reorganization, merger,
consolidation, or sale to the end that the provisions of this
Section 7 shall be applicable after that event and be as
nearly equivalent as may be practicable.
[vi] Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which
caused an adjustment pursuant to this Section 7 to be made, if
any thereof shall not have been exercised, the number of
shares of Common Stock into which each share of the Series G
Preferred is convertible shall, upon such expiration, be
readjusted and shall thereafter be such as it would have been
had it been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (a)
the only shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion or
exchange privileges and (b) such shares of Common Stock, if
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any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for
the issuance, sale or grant of all such rights, options,
warrants or conversion or exchange privileges, whether or not
exercised.
[d] If any adjustment in the number of shares of Common Stock
into which each share of the Series G Preferred may be converted
required pursuant to this Section 7 would result in an increase or
decrease of less than 1% in the number of shares of Common Stock into
which each share of the Series G Preferred is then convertible, the
amount of any such adjustment shall be carried forward and adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of
the number of shares of Common Stock into which each share of the
Series G Preferred is then convertible; provided that any such
adjustments carried forward shall be made immediately following receipt
of notice from a holder of the intent to convert all or a portion of
the Series G Preferred such that upon conversion the holder shall
receive such number of shares of Common Stock as such holder is
entitled, taking into account all adjustments required by this Section
7. All calculations under this paragraph [d] shall be made to the
nearest one-hundredth of a share.
[e] Subject to the limitation in Section 7[h] below, the
holder of any shares of the Series G Preferred may convert such shares
into shares of Common Stock pursuant to paragraph [a] of this Section 7
by surrendering for such purpose to the Corporation, at its principal
office or at such other office or agency maintained by the Corporation
for that purpose, a certificate or certificates representing the shares
of Series G Preferred to be converted (or if such certificate or
certificates cannot be found, an affidavit of lost securities in form
and substance acceptable to the Corporation) accompanied by a written
notice stating that such holder elects to convert all or a specified
number of such shares in accordance with the provisions of this Section
7 and specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. In
case such notice shall specify a name or names other than that of such
holder, such notice shall be accompanied by payment of all transfer
taxes payable upon the issuance of shares of Common Stock in such name
or names. As promptly as practicable, and in any event within five
business days after the surrender of such certificates and the receipt
of such notice relating thereto and, if applicable, payment of all
transfer taxes, the Corporation shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully paid
and nonassessable shares of Common Stock of the Corporation to which
the holder of the Series G Preferred so converted shall be entitled and
(ii) if less than the full number of shares of the Series G Preferred
evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or
certificates less the number of shares converted. Such conversions
shall be deemed to have been made at the close of business on the date
of giving of such notice and of such surrender of the certificate or
certificates representing the shares of the Series G Preferred to be
converted so that the rights of the holder thereof shall cease except
for the right to receive Common Stock of the Corporation in accordance
herewith and any accumulated, accrued or unpaid dividends pursuant to
paragraph [g] below, and the converting holder shall be treated for all
purposes as having become the record holder of such Common Stock of the
Corporation at such time.
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[f] The Series G Preferred shall convert to Common Stock of
the Corporation pursuant to paragraph [b] of this Section 7
automatically upon notice in writing to the stockholders, including all
holders of the Series G Preferred, setting forth the date of such
conversion and the material terms of the triggering public offering. As
promptly as practicable after such notice, and in any event within five
business days after the surrender of certificates for the Series G
Preferred (if required by the Board of Directors), the Corporation
shall deliver or cause to be delivered to each holder of Series G
Preferred certificates representing the number of validly issued, fully
paid and nonassessable shares of Common Stock of the Corporation to
which such holder of the Series G Preferred so converted shall be
entitled. Such conversion shall be deemed to have been made at the
close of business on the date set forth in such notice of mandatory
conversion so that the rights of the holder thereof shall cease with or
without surrender of certificates for the Series G Preferred, except
for the right to receive Common Stock of the Corporation in accordance
herewith and any accumulated, accrued or unpaid dividends pursuant to
paragraph [g] below, and the converting holder shall be treated for all
purposes as having become the record holder of such Common Stock of the
Corporation at such time.
[g] Upon conversion of any shares of the Series G Preferred
pursuant to paragraph [a] or [b] of this Section 7, the holder thereof
shall be entitled to receive any accumulated, accrued or unpaid
dividends in respect of the shares so converted (whether or not
declared or otherwise payable as of such date of conversion), including
any dividends on such shares of the Series G Preferred declared prior
to such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series G Preferred
entitled to receive payment of such dividend.
[h] Shares of the Series G Preferred may not be converted
after the close of business on the third business day preceding the
Redemption Date pursuant to Section 8.
[i] The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares
of Common Stock of the Corporation issuable upon the conversion of all
outstanding shares of the Series G Preferred.
[j] For purposes of this Section, "fair market value" shall be
as determined by the Board of Directors in such manner as they shall
deem appropriate in their discretion, unless the holder(s) of more than
twenty-five percent (25%) of the outstanding shares of Preferred Stock
of the Corporation demand in good faith and in writing that "fair
market value" be determined by an appraiser, who shall be mutually
acceptable to the Board of Directors and such holders, whose
determination shall be binding and whose fees and expenses shall be
paid by the Corporation.
SECTION 8. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Common Stock into which the shares of
the Series G Preferred are convertible is adjusted as provided in Section 7, the
Corporation will (A) promptly compute such adjustment and furnish to each
transfer agent for the Series G Preferred a certificate, signed by a principal
financial officer of the Corporation, setting forth the number of shares of
Common Stock into which each share of the Series G Preferred is convertible as a
result of such adjustment, a
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brief statement of the facts requiring such adjustment and the computation
thereof and when such adjustment will become effective and (B) promptly mail to
the holders of record of the outstanding shares of the Series G Preferred a
notice stating that the number of shares into which the shares of Series G
Preferred are convertible has been adjusted and setting forth the new number of
shares into which each share of the Series G Preferred is convertible as a
result of such adjustment and when such adjustment will become effective.
Notwithstanding the foregoing, the Corporation shall incur no liability for its
failure to take any action set forth in this Section 8, nor shall such failure
affect the validity, rights or preferences of any shares of the Series G
Preferred.
SECTION 9. RANKING.
The Series G Preferred shall rank senior to the Common Stock and any
other series of Preferred Stock of the Corporation hereafter created (except for
the Series B Preferred, which shall rank senior to the Series G Preferred, and
except for the Series A Preferred, the Series C Preferred, the Series D
Preferred, the Series E Preferred, the Series F Preferred, and any other series
of Preferred Stock which the Board of Directors shall establish and designate to
rank equal therewith pursuant to Subpart C of Article Fourth of the Company's
Certificate of Incorporation, with which it shall rank equal), as to the payment
of dividends and the distribution of assets and rights upon liquidation,
dissolution or winding up of the Corporation.