Exhibit 3.1.1
RESTATED CERTIFICATE OF INCORPORATION
OF
RARE MEDIUM GROUP, INC.
(pursuant to Section 245 of the
Delaware General Corporation Law)
RARE MEDIUM GROUP, INC., a Delaware corporation (the "Company"), the
original Certificate of Incorporation of which was filed with the Secretary of
State of the State of Delaware on August 15, 1985 under the name International
Cogeneration Corporation, HEREBY CERTIFIES AS FOLLOWS:
This Restated Certificate of Incorporation hereby restates and
integrates, without further amendment, pursuant to Section 245 of the General
Corporation Law of the State of Delaware as set forth in Title 8 of the
Delaware Code, the Company's Certificate of Incorporation, as amended to date.
There is no discrepancy between the terms of this Restated Certificate of
Incorporation and the terms of the Company's Certificate of Incorporation, as
amended to date. The text of this Restated Certificate of Incorporation, as so
restated, is as follows:
FIRST: The name of the Company is Rare Medium Group, Inc.
SECOND: The address of the Company's registered office in the State
of Delaware is Corp. Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle 19801. The name of its registered agent at
such address is The Corporation Trust Company.
THIRD: The purpose of the Company is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The aggregate number of shares which the Company shall have
authority to issue shall be:
Three Hundred Ten Million (310,000,000) shares, consisting
of Two Hundred Million (200,000,000) shares of Common Stock, with a
par value of One Cent ($0.01) per share, One Hundred Million
(100,000,000) shares of Non-Voting Common Stock, with a par value
of One Cent ($0.01) per share, and Ten Million (10,000,000) shares of
Preferred Stock, with a par value of One Cent ($0.01) per share. The
Board of Directors, in its sole direction, shall have full and
complete authority, by resolutions, from time to time, to establish
one or more series or classes to issue shares of Preferred Stock, and
to fix, determine and vary the voting rights, designations,
preferences, restrictions, qualifications, privileges, limitations,
options, conversion rights and other special rights of each series or
class of Preferred Stock, including, but not limited to, dividend
rates and manner of payment, preferential amounts payable upon
voluntary or involuntary liquidation, voting rights, conversion
rights, redemption prices, terms and conditions and sinking fund and
stock purchase prices, terms and conditions.
Pursuant to the authority expressly granted to and vested in
the Board of Directors of the Company (the "Board of Directors") by
the provisions of this Restated Certificate of Incorporation of the
Company (the "Restated Certificate of Incorporation"), there is
hereby created, out of the 10,000,000 shares of Preferred Stock, par
value $0.01 per share, of the Company authorized and unissued in
Article Fourth of this Restated Certificate of Incorporation (the
"Preferred Stock"), a series of Preferred Stock consisting of
2,000,000 shares, which series shall have the following powers,
designations, preferences and relative, participating, optional or
other rights, and the following qualifications, limitations and
restrictions (in addition to any powers, designations, preferences
and relative, participating, optional or other rights, and any
qualifications, limitations and restrictions, set forth in this
Restated Certificate of Incorporation which are applicable to the
Preferred Stock):
1. Designation of Amount. The 2,000,000 shares of Preferred Stock
shall be designated the "Series A Convertible Preferred Stock" (the "Series A
Preferred Stock") and the authorized number of shares constituting such series
shall be 2,000,000.
2. Dividends.
(a) The holders of the then outstanding shares of Series A Preferred
Stock will be entitled to receive, when, as and if declared by the Board of
Directors out of funds of the Company legally available therefor, cumulative
dividends, accruing on a daily basis from the Original Issuance Date through
and including the date on which such dividends are paid at the annual rate of
(A) 7.50% from the Original Issuance Date through June 30, 2002 and (B)
thereafter, 4.65% (in either case, the "Applicable Rate"), of the Liquidation
Preference (as hereinafter defined) per share of the Series A Preferred Stock,
payable in arrears on the last day of each of December, March, June and
September, commencing on June 30, 1999; provided that: (i) if any such payment
date is not a Business Day then such dividend shall be payable on the next
Business Day, and (ii) accumulated and unpaid dividends for any prior
quarterly period may be paid at any time. Such dividends shall be deemed to
accrue on the Series A Preferred Stock from the Original Issuance Date and be
cumulative whether or not earned or declared and whether or not there are
profits, surplus or other funds of the Company legally available for the
payment of dividends. The term "Business Day" means a day other than a
Saturday, Sunday or day on which banking institutions in New York are
authorized or required to remain closed. The term "Original Issuance Date"
means, with respect to the Series A Preferred Stock, the first date of
issuance, i.e., June 4, 1999, and, with respect to any Additional Securities
(as hereinafter defined), the date upon which they are issued or, if not
issued, the applicable dividend payment date on which the Additional
Securities were to have been issued.
(b) On any dividend payment date occurring on or prior to June 30,
2002, the Company shall pay a dividend on such Series A Preferred Stock
through the issuance of additional shares of Series A Preferred Stock
("Additional Securities"). On any dividend payment date occurring after June
30, 2002 and on or prior to June 30, 2004, the Company shall pay a dividend on
such Series A Preferred Stock through the issuance of Additional Securities,
provided that at the option of either the holders of a majority of the then
outstanding shares of Series A Preferred Stock (the "Requisite Holders") or
the Company, the Company shall pay the dividends in whole in cash. In the
event the Company or the Requisite Holders, as the case may be, elect to have
such dividends paid in cash, they shall provide the other party written notice
of such election not less than ten days prior to the applicable dividend
payment date. On any dividend payment date occurring after June 30, 2004, all
dividends on such Series A Preferred Stock shall be paid in cash. Shares of
Series A Preferred Stock issued in payment of dividends shall be valued at all
times at $100 per share and each such share shall be issued with a detachable
ten-year warrant (each a "Series 1-A Warrant") that entitles its holder to
purchase from the Company thirteen and one-half (13.5) shares of the Company's
common stock, par value $0.01 per share (the "Common Stock"). The number of
Additional Securities that are issued to the holders of the Series A Preferred
Stock under this paragraph (b) will be the number obtained by dividing (i) the
total dollar amount of cumulative dividends due and payable on the applicable
dividend payment date by (ii) the Liquidation Preference, provided, that the
Company shall not be required to issue fractional shares of Series A Preferred
Stock, but in lieu thereof shall pay in cash the portion of any dividend
payable in shares of Series A Preferred Stock that would otherwise require the
issuance of a fractional share, provided further, that in any such case, the
Company shall issue the holders fractional Series 1-A Warrants in an amount
appropriate to reflect the fractional share of Series A Preferred Stock.
(c) Holders of shares of the Series A Preferred Stock shall be
entitled full cumulative dividends, as herein provided, on the Series A
Preferred Stock and no additional amounts. Except as set forth in paragraph
(f) below, no interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment or payments on the Series A Preferred Stock
that may be in arrears.
(d) If dividends are not paid in full, or declared in full and sums
set apart for the payment thereof, upon the shares of Series A Preferred Stock
and the shares of any other series of Preferred Stock ranking on a parity as
to dividends with the Series A Preferred Stock ("Parity Stock"), all dividends
declared upon shares of Series A Preferred Stock and upon all Parity Stock
shall be paid or declared pro rata so that in all cases the amount of
dividends paid or declared per share on the Series A Preferred Stock and such
Parity Stock shall bear to each other the same ratio that unpaid accumulated
dividends per share, including dividends accrued or in arrears, if any, on the
shares of Series A Preferred Stock and such other shares of Parity Stock, bear
to each other. Unless and until full cumulative dividends on the shares of
Series A Preferred Stock in respect of all past quarterly dividend periods
have been paid, and the full amount of dividends on the shares of Series A
Preferred Stock in respect of the then current quarterly dividend period shall
have been or are contemporaneously declared in full and sums set aside for the
payment thereof, (i) no dividends shall be paid or declared or set aside for
payment or other distribution upon the Common Stock, or any other capital
stock of the Company ranking junior to the Series A Preferred Stock as to
dividends (together with the Common Stock, "Junior Stock"), other than in
shares of, or warrants or rights to acquire, Junior Stock; and (ii) no shares
of Junior Stock or Parity Stock shall be redeemed, retired, purchased or
otherwise acquired for any consideration (or any payment made to or available
for a sinking fund for the redemption of any such shares) by the Company or
any Subsidiary of the Company (except by conversion into or exchange for
shares of Junior Stock). For the purposes hereof, a "Subsidiary" shall mean
any corporation, association or other business entity (i) at least 50% of the
outstanding voting securities of which are at the time owned or controlled by
the Company; or (ii) with respect to which the Company possesses, directly or
indirectly, the power to direct or cause the direction of the affairs or
management of such person. Holders of shares of Series A Preferred Stock shall
not be entitled to any dividends, whether payable in cash, property or shares
of capital stock, in excess of full accrued and cumulative dividends as herein
provided.
The terms "accrued dividends," "dividends accrued" and "dividends in
arrears," whenever used herein with reference to shares of Series A Preferred
Stock shall be deemed to mean an amount which shall be equal to dividends
thereon at the Applicable Rate per share for the respective series from the
date or dates on which such dividends commence to accrue to the end of the
then current quarterly dividend period for such Preferred Stock (or, in the
case of redemption, to the date of redemption), whether or not earned or
declared and whether or not assets for the Company are legally available
therefor, and if full dividends are not declared or paid (whether in cash or
in Additional Securities), then such dividends shall cumulate, with additional
dividends thereon, compounded quarterly, at the Applicable Rate, for each
quarterly period during which such dividends remain unpaid, less the amount of
all such dividends paid, or declared in full and sums set aside for the
payment thereof, upon such shares of Preferred Stock.
(e) The amount of any dividends per share of Series A Preferred Stock
for any full quarterly period shall be computed by multiplying the Applicable
Rate for such quarterly dividend period by the Liquidation Preference per
share and dividing the result by four. Dividends payable on the shares of
Series A Preferred Stock for any period less than a full quarterly dividend
period shall be computed on the basis of a 360-day year of twelve 30-day
months and the actual number of days elapsed for any period less than one
month.
(f) In the event any dividends are declared with respect to the
Common Stock, the holders of the Series A Preferred Stock as of the record
date established by the Board of Directors for such dividend shall be entitled
to receive as additional dividends (the "Additional Dividends") an amount
(whether in the form of cash, securities or other property) equal to the
amount (and in the form) of the dividends that such holder would have received
had the Series A Preferred Stock been converted into Common Stock as of the
date immediately prior to the record date of such dividend, such Additional
Dividends to be payable on the payment date of the dividend established by the
Board of Directors (the "Additional Dividend Payment Date"). The record date
for any such Additional Dividends shall be the record date for the applicable
dividend, and any such Additional Dividends shall be payable to the persons in
whose name this Series A Preferred Stock is registered at the close of
business on the applicable record date.
3. Liquidation Preference. In the event of a liquidation, dissolution
or winding up of the Company, whether voluntary or involuntary, the holders of
Series A Preferred Stock then outstanding shall be entitled to receive out of
the available assets of the Company, whether such assets are stated capital or
surplus of any nature, an amount on such date equal to $100 per share of
Series A Preferred Stock (the "Liquidation Preference") plus the amount of any
accrued and unpaid dividends as of such date, calculated pursuant to Section 2
hereinabove. Such payment shall be made before any payment shall be made or
any assets distributed to the holders of any class or series of the Common
Stock or any other class or series of the Company's capital stock ranking
junior as to liquidation rights to the Series A Preferred Stock. If upon any
such liquidation, dissolution or winding up of the Company the assets
available for payment of the Liquidation Preference are insufficient to permit
the payment to the holders of the Series A Preferred Stock of the full
preferential amounts described in this paragraph, then all the remaining
available assets shall be distributed among the holders of the then
outstanding Series A Preferred Stock pro rata according to the number of then
outstanding shares of Series A Preferred Stock held by each holder thereof. No
event that constitutes a Change of Control (as defined in Section 5(b) below)
shall be considered a liquidation, dissolution or winding up of the Company
for purposes of this Section 3 (unless in connection therewith the liquidation
of the Company is specifically approved).
4. Mandatory Redemption. On June 30, 2012 (the "Redemption Date"),
the Company shall redeem for cash all shares of Series A Preferred Stock that
are then outstanding and any shares of Series A Preferred Stock then issuable
in respect of accrued but unpaid dividends, in each case, at a redemption
price per share equal to the Liquidation Preference thereof plus the amount of
any accrued and unpaid dividends as of such date ("Redemption Price"). Not
more than sixty (60) nor less than thirty (30) days prior to the Redemption
Date, notice by first class mail, postage prepaid, shall be given to each
holder of record of the Series A Preferred Stock, at such holder's address as
it shall appear upon the stock transfer books of the Company on such date.
Each such notice of redemption shall be irrevocable and shall specify the date
that is the Redemption Date, the Redemption Price, the identification of the
shares to be redeemed, the place or places of payment and that payment will be
made upon presentation and surrender of the certificate(s) evidencing the
shares of Series A Preferred Stock to be redeemed and that dividends on the
shares of the Series A Preferred Stock cease to accrue on the Redemption Date.
On or after the Redemption Date, each holder of shares of Series A Preferred
Stock shall surrender the certificate evidencing such shares to the Company at
the place designated in such notice and shall thereupon be entitled to receive
payment of the Redemption Price in the manner set forth in the notice. If, on
the Redemption Date, funds in cash in an amount sufficient to pay the
aggregate Redemption Price for all outstanding shares of Series A Preferred
Stock shall be available therefor and shall have been irrevocably set aside
and deposited with a bank or trust company in trust for purposes of payment of
such Redemption Price, then, notwithstanding that the certificates evidencing
any shares so called for redemption shall not have been surrendered, the
shares shall no longer be deemed outstanding, the holders thereof shall cease
to be stockholders, and all rights whatsoever with respect to the shares so
called for redemption (except the right of the holders to receive the
Redemption Price upon surrender of their certificates therefor) shall
terminate. If at the Redemption Date, the Company does not have sufficient
funds legally available to redeem all the outstanding shares of Series A
Preferred Stock, the Company shall take all measures permitted under the
Delaware General Corporation Law to increase the amount of its capital and
surplus legally available, and the Company shall purchase as many shares of
Series A Preferred Stock as it may legally redeem, ratably from the holders
thereof in proportion to the number of shares held by them, and shall
thereafter from time to time, as soon as it shall have funds available
therefor, redeem as many shares of Series A Preferred Stock as it legally may
until it has redeemed all of the outstanding shares of Series A Preferred
Stock.
5. Optional Redemption.
(a) Change of Control. In the event that any Change of Control (as
hereinafter defined) shall occur at any time while any shares of Series A
Preferred Stock are outstanding, the Requisite Holders shall have the right to
give notice that they are exercising a Change of Control election (a "Change
of Control Election"), with respect to all or any number of such holders'
shares of Series A Preferred Stock, during the period (the "Exercise Period")
beginning on the 20th day and ending on the 90th day after the date of such
Change of Control. Upon any such election, the Company shall redeem for cash
each of such holders' shares (including any shares then issuable in respect of
accrued but unpaid dividends) for which such an election is made, to the
extent permitted by applicable law, at the Redemption Price.
(b) As used herein, "Change of Control" means the occurrence of any
of the following events:
(1) the acquisition by any individual, entity or
group other than Apollo Management, L.P. or its affiliates
(a "Person"), or any Holder (as such term is defined in the
Amended and Restated Securities Purchase Agreement (the
"Agreement") dated as of June 4, 1999 among the Company,
Apollo Investment Fund IV, L.P., Apollo Overseas Partners
IV, L.P. and AIF IV/RRRR LLC), including any "person" within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), of beneficial ownership within the meaning of Rule
13d-3 promulgated under the Exchange Act, of more than 50%
of either (i) the then outstanding shares of Common Stock
(the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding securities of
the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
excluding, however, the following: (A) any acquisition
directly from the Company of Common Stock (excluding any
acquisition resulting from an exercise, conversion or
exchange privilege unless the security being so exercised,
converted or exchanged was acquired directly from the
Company), (B) any acquisition of Common Stock by the
Company, (C) any acquisition of Common Stock by an employee
benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company or
(D) any acquisition of Common Stock by any corporation
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (3) of this Section 5(b);
(2) a majority of the individuals who, as of the
Original Issuance Date of the Series A Preferred Stock,
constitute the members of the Board of Directors not elected
by the holders of Series A Preferred Stock (the "Incumbent
Board") cease for any reason to serve on such Board of
Directors; provided that any individual who becomes a
director of the Company subsequent to such Original Issuance
Date, whose election, or nomination for election by the
Company's stockholders, was approved by the vote of at least
a majority of the directors then comprising the Incumbent
Board shall be deemed a member of the Incumbent Board; and
provided further, that any individual who was initially
elected as a director of the Company as a result of an
actual or threatened election contest, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation
of proxies or consents by or on behalf of any Person other
than the Board of Directors shall not be deemed a member of
the Incumbent Board; or
(3) approval by the stockholders of the Company of
a reorganization, merger or consolidation of the Company or
sale or other disposition of all or substantially all of the
assets of the Company (a "Corporate Transaction");
excluding, however, a Corporate Transaction pursuant to
which (i) the individuals or entities who are the beneficial
owners, respectively, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 50% of,
respectively, the outstanding shares of common stock, and
the combined voting power of the outstanding securities
entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such
Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns 100%
of the Outstanding Company Common Stock or all or
substantially all of the Company's assets either directly or
indirectly) in substantially the same proportions relative
to each other as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities, as the
case may be, (ii) no Person (other than: the Company; any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company; the corporation resulting from such Corporate
Transaction; and any Person which beneficially owned,
immediately prior to such Corporate Transaction, directly or
indirectly, 30% or more of the Outstanding Company Common
Stock or the Outstanding Company Voting Securities, as the
case may be) will beneficially own, directly or indirectly,
30% or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the
outstanding securities of such corporation entitled to vote
generally in the election of directors and (iii) individuals
who were members of the Incumbent Board will continue to
serve as members of the board of directors of the
corporation resulting from such Corporate Transaction.
(c) On or before the tenth (10th) day after a Change of Control, the
Company shall mail to all holders of record of the Series A Preferred Stock at
their respective addresses as the same shall appear on the books of the
Company as of such date, a notice disclosing (i) the Change of Control, (ii)
the Redemption Price per share of the Series A Preferred Stock applicable
hereunder, (iii) the determination of the Requisite Holders to exercise a
Change of Control Election (or the date on which such a determination is
scheduled to be made) and (iv) the procedure which the holder must follow to
exercise the redemption right provided above. To exercise the Change of
Control Election, if applicable, a holder of the Series A Preferred Stock must
deliver during the Exercise Period written notice to the Company (or an agent
designated by the Company for such purpose) of the holder's exercise of the
Change of Control Election, accompanied by each certificate evidencing shares
of the Series A Preferred Stock with respect to which the Change of Control
Election is being exercised, duly endorsed for transfer. On or prior to the
fifth (5th) business day after receipt of delivery of such written notice, the
Company shall accept for payment all shares of Series A Preferred Stock
properly surrendered to the Company (or an agent designated by the Company for
such purpose) during the Exercise Period for redemption in connection with the
exercise of the Change of Control Election and shall cause payment to be made
in cash for such shares of Series A Preferred Stock. If at the time of any
Change of Control, the Company does not have sufficient capital and surplus
legally available to purchase all of the outstanding shares of Series A
Preferred Stock, the Company shall take all measures permitted under the
Delaware General Corporation Law to increase the amount of its capital and
surplus legally available, and the Company shall offer in its written notice
of such Change of Control to purchase as many shares of Series A Preferred
Stock as it has capital and surplus legally available therefor, ratably from
the holders thereof in proportion to the total number of shares tendered, and
shall thereafter from time to time, as soon as it shall have capital and
surplus legally available therefor, offer to purchase as many shares of Series
A Preferred Stock as it has capital and surplus available therefor until it
has offered to purchase all of the outstanding shares of Series A Preferred
Stock.
(d) Optional Redemption by Company. (A) At any time (i) after June
30, 2004 or (ii) after June 30, 2002 if the closing price of the Common Stock
quoted on the NASDAQ National Market System (or the primary national
securities exchange on which the Common Stock is then listed) on each of the
preceding thirty (30) trading days is greater than $12.00 per share (the
"Redemption Threshold"), the Company may, upon sixty (60) days notice, redeem
all, but not less than all, of the then outstanding shares of Series A
Preferred Stock (including shares issuable in respect of accrued but unpaid
dividends) for cash in an amount per share equal to 103% of the Redemption
Price.
(B) The Redemption Threshold is subject to adjustment from time to
time, in the event of any increase or decrease by way of a subdivision or
split-up of the outstanding shares of Common Stock or any decrease by way of a
combination of the outstanding shares of Common Stock into a smaller number of
shares of Common Stock. In any such case, an appropriate adjustment shall be
made to the Redemption Threshold in a manner and on terms that effect the
intent of paragraph (A) above.
(e) Status of Redeemed Shares. Any shares of Series A Preferred Stock
which shall at any time have been redeemed pursuant to Section 4 or 5 hereof
shall, after such redemption, have the status of authorized but unissued
shares of Preferred Stock, without designation as to series.
6. Voting Rights. Except as otherwise provided by applicable law and
in addition to any voting rights provided by law, the holders of Series A
Preferred Stock:
i. shall be entitled to vote together with the holders of the
Common Stock as a single class on all matters submitted for
a vote of holders of Common Stock (except for matters
submitted to the holders of Common Stock in connection with
the transaction contemplated by the Agreement);
ii. shall have such other voting rights as are specified in the
Certificate of Incorporation or as otherwise provided by
Delaware law; and
iii. shall be entitled to receive notice of any stockholders'
meeting in accordance with the Certificate of Incorporation
and By-laws of the Company.
Each share of Series A Preferred Stock shall entitle the holder
thereof to cast 0.875 votes for each whole vote that such holder would be
entitled to cast had such holder converted its Series A Preferred Stock into
shares of Common Stock as of the date immediately prior to the record date for
determining the stockholders of the Company eligible to vote on any such
matter; provided that the total voting power of the holders of the Series A
Preferred Stock shall in no event exceed the voting power of 2,120,000 shares
of Common Stock prior to the obtaining of stockholder approval (the
"Stockholder Approval") for the transactions pursuant to which the Series A
Preferred Stock was issued, as contemplated by the Agreement, and shall in no
event exceed the voting power of 9,750,000 shares of Common Stock in the event
Stockholder Approval is obtained.
(a) In addition to the other voting rights set forth herein, for so
long as the Apollo Stockholders (as such term is defined below) beneficially
own not less than 100,000 shares of Series A Preferred Stock, the following
provisions shall apply:
The holders of Series A Preferred Stock shall have the exclusive
right, voting separately as a single class, to elect one person to
serve on the Board of Directors (such director is referred to as a
"Preferred Stock Director"); provided, that if the size of the Board
of Directors shall be increased, then the holders of Series A
Preferred Stock shall have the right to elect that number of
Preferred Stock Directors such that the number of Preferred Stock
Directors divided by the total number of members of the Board of
Directors (the "Preferred Director Percentage") is at least equal to
the Preferred Director Percentage immediately prior to the increase
in the size of the Board of Directors (without regard to any vacancy
that shall exist from time to time). On or after the date of
Stockholder Approval (if such approval is obtained), the holders of
Series A Preferred Stock shall have the right to elect two Preferred
Stock Directors. In any such election the holders of Series A
Preferred Stock shall be entitled to cast one vote per share of
Series A Preferred Stock held of record on the record date for the
determination of the holders of Series A Preferred Stock entitled to
vote on such election. The initial Preferred Stock Director shall be
appointed by the Board of Directors on the Original Issuance Date to
serve until his or her successor is duly elected; in the event
Stockholder Approval is obtained, the second Preferred Stock Director
shall be appointed immediately after Stockholder Approval to serve
until his or her successor is duly elected; and thereafter the
Preferred Stock Directors shall be elected at the same time as other
members of the Board of Directors. A Preferred Stock Director may
only be removed by the vote of the Requisite Holders, at a vote of
the then outstanding shares of Series A Preferred Stock, voting as a
single class, at a meeting called for such purpose. If for any reason
a Preferred Stock Director shall resign or otherwise be removed from
the Board of Directors, then his or her replacement shall be a person
elected by the holders of the Series A Preferred Stock, in accordance
with the voting procedures set forth in this Section 6(b). The
Preferred Stock Directors shall be appointed by the Board of
Directors to serve on each committee of the Board of Directors in the
same proportions that the number of Preferred Stock Directors bears
to the total number of directors then comprising the Board of
Directors.
(b) So long as any Series A Preferred Stock remains outstanding, the
Company shall not, without the written consent or affirmative vote of the
Requisite Holders, at a meeting of the holders called for that purpose, amend,
alter or repeal, whether by merger, consolidation, combination,
reclassification or otherwise, the Certificate of Incorporation, By-Laws of
the Company or any provision thereof (including the adoption of a new
provision thereof) which would adversely affect the voting power of the Series
A Preferred Stock or any other rights or privileges of the holders of the
Series A Preferred Stock hereunder.
7. Conversion Rights.
(a) General. Subject to and upon compliance with the provisions of
this Section 7, the holders of the shares of Series A Preferred Stock shall be
entitled, at their option, at any time prior to the date fixed for redemption
of such shares, to convert all or any such shares of Series A Preferred Stock
into a number of fully paid and non-assessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of Common Stock. The number of
shares of Common Stock to which a holder of Series A Preferred Stock shall be
entitled upon conversion shall be determined by dividing (x) the Liquidation
Preference of such Series A Preferred Stock (including shares issuable in
respect of accrued but unpaid dividends), plus the amount of any accrued but
unpaid dividends as of the Conversion Date by (y) the Conversion Price in
effect at the close of business on the Conversion Date (determined as provided
in this Section 7).
(b) Conversion Price. The conversion price (the "Conversion Price")
shall initially be $7.00 per share of Common Stock, subject to adjustment from
time to time in accordance with Section 7(d).
(c) Fractions of Shares. No fractional share of Common Stock shall be
issued upon conversion of shares of Series A Preferred Stock. If more than one
share of Series A Preferred Stock shall be surrendered for conversion at one
time by the same holder, the number of full shares of Common Stock to be
issued and which shall be computed on the basis of the aggregate number of
shares of Series A Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of
any shares of Series A Preferred Stock, the Company shall pay a cash
adjustment in respect of such fractional share in an amount equal to the
product of such fraction multiplied by the Fair Market Value (as hereinafter
defined) of one share of Common Stock on the Conversion Date (as hereinafter
defined).
(d) Adjustments to Conversion Price. The Conversion Price shall be
subject to adjustment from time to time as follows:
i. Upon Issuance of Common Stock. If the Company shall, at any
time or from time to time after the Original Issuance Date,
issue any shares of Common Stock, options to purchase or
rights to subscribe for Common Stock, securities by their
terms convertible into or exchangeable for Common Stock, or
options to purchase or rights to subscribe for such
convertible or exchangeable securities, other than
Additional Securities, Series B Preferred Stock or Excluded
Stock, without consideration or for consideration per share
less than either (x) the Conversion Price or (y) the Fair
Market Value of the Common Stock, in effect immediately
prior to the issuance of such Common Stock or securities,
then such Conversion Price shall forthwith be lowered to a
price equal to the price obtained by multiplying:
(A) the Conversion Price in effect immediately prior
to the issuance of such Common Stock or securities
by
(B) a fraction of which (x) the denominator shall be
the number of shares of Common Stock outstanding
on a fully-diluted basis immediately after such
issuance and (y) the numerator shall be the sum of
(i) the number of shares of Common Stock
outstanding on a fully-diluted basis immediately
prior to the date of such issuance and (ii) the
number of additional shares of Common Stock which
the aggregate consideration for the number of
shares of Common Stock so offered would purchase
at the greater of the Conversion Price or the Fair
Market Value per share of Common Stock.
For purposes of this Section 7(d), "fully diluted basis" shall be
determined in accordance with the treasury method of GAAP.
ii. Upon Acquisition of Common Stock. If the Company or any
Subsidiary shall, at any time or from time to time after the
Original Issuance Date, directly or indirectly, redeem,
purchase or otherwise acquire any shares of Common Stock,
options to purchase or rights to subscribe for Common Stock,
securities by their terms convertible into or exchangeable
for Common Stock (other than shares of Series A Preferred
Stock or Series B Preferred Stock that are redeemed
according to their terms), or options to purchase or rights
to subscribe for such convertible or exchangeable
securities, for a consideration per share greater than the
Fair Market Value (plus, in the case of such options,
rights, or securities, the additional consideration required
to be paid to the Company upon exercise, conversion or
exchange) for shares of Common Stock in effect immediately
prior to such event, then the Conversion Price shall
forthwith be lowered to a price equal to the price obtained
by multiplying:
(A) the Conversion Price in effect immediately prior
to such event by
(B) a fraction of which (x) the denominator shall be
the Fair Market Value per share of Common Stock
immediately prior to such event and (y) the
numerator shall be the result of dividing:
(a) (1) the product of (A) the number of shares of
Common Stock outstanding on a fully-diluted basis
and (B) the Fair Market Value per share of Common
Stock, in each case immediately prior to such
event, minus (2) the aggregate consideration paid
by the Company in such event (plus, in the case of
such options, rights, or convertible or
exchangeable securities, the aggregate additional
consideration to be paid by the Company upon
exercise, conversion or exchange), by
(b) the number of shares of Common Stock
outstanding on a fully-diluted basis immediately
after such event.
iii. For the purposes of any adjustment of a Conversion Price
pursuant to paragraphs (i) and (ii) of this Section 7(d),
the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for
cash in a public offering or private placement, the
consideration shall be deemed to be the amount of cash paid
therefor before deducting therefrom any discounts,
commissions or placement fees payable by the Company to any
underwriter or placement agent in connection with the
issuance and sale thereof.
(2) In the case of the issuance of Common Stock for
a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the Fair
Market Value thereof as determined in accordance with the
Appraisal Procedure.
(3) In the case of the issuance of options to
purchase or rights to subscribe for Common Stock, securities
by their terms convertible into or exchangeable for Common
Stock, or options to purchase or rights to subscribe for
such convertible or exchangeable securities, except for
Additional Securities, Shares of Series B Preferred Stock or
options to acquire Excluded Stock:
(a) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of
such options to purchase or rights to
subscribe for Common Stock shall be
deemed to have been issued at the time
such options or rights were issued and
for a consideration equal to the
consideration (determined in the manner
provided in subparagraphs (1) and (2)
above), if any, received by the Company
upon the issuance of such options or
rights plus the minimum purchase price
provided in such options or rights for
the Common Stock covered thereby;
(b) the aggregate maximum number of shares of
Common Stock deliverable upon conversion
of or in exchange of any such convertible
or exchangeable securities or upon the
exercise of options to purchase or rights
to subscribe for such convertible or
exchangeable securities and subsequent
conversion or exchange thereof shall be
deemed to have been issued at the time
such securities, options, or rights were
issued and for a consideration equal to
the consideration received by the Company
for any such securities and related
options or rights (excluding any cash
received on account of accrued interest
or accrued dividends), plus the
additional consideration, if any, to be
received by the Company upon the
conversion or exchange of such securities
or the exercise of any related options or
rights (the consideration in each case to
be determined in the manner provided in
paragraphs (1) and (2) above) and
(c) on any change in the number of shares or
exercise price of Common Stock
deliverable upon exercise of any such
options or rights or conversions of or
exchanges for such securities, other than
a change resulting from the anti-
dilution provisions thereof, the
applicable Conversion Price shall
forthwith be readjusted to such
Conversion Price as would have been
obtained had the adjustment made upon the
issuance of such options, rights or
securities not converted prior to such
change or options or rights related to
such securities not converted prior to
such change been made upon the basis of
such change.
(d) No further adjustment of the Conversion
Price adjusted upon the issuance of any
such options, rights, convertible
securities or exchangeable securities
shall be made as a result of the actual
issuance of Common Stock on the exercise
of any such rights or options or any
conversion or exchange of any such
securities.
iv. Upon Stock Dividends, Subdivisions or Splits. If, at any
time after the Original Issuance Date, the number of shares
of Common Stock outstanding is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or
split-up of shares of Common Stock, then, following the
record date for the determination of holders of Common Stock
entitled to receive such stock dividend, or to be affected
by such subdivision or split-up, the Conversion Price shall
be appropriately decreased so that the number of shares of
Common Stock issuable on conversion of Series A Preferred
Stock shall be increased in proportion to such increase in
outstanding shares.
v. Upon Combinations. If, at any time after the Original
Issuance Date, the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding
shares of Common Stock into a smaller number of shares of
Common Stock, then, following the record date to determine
shares affected by such combination, the Conversion Price
shall be appropriately increased so that the number of
shares of Common Stock issuable on conversion of each share
of Series A Preferred Stock shall be decreased in proportion
to such decrease in outstanding shares.
vi. Upon Reclassifications, Reorganizations, Consolidations or
Mergers. In the event of any capital reorganization of the
Company, any reclassification of the stock of the Company
(other than a change in par value or from par value to no
par value or from no par value to par value or as a result
of a stock dividend or subdivision, split-up or combination
of shares), or any consolidation or merger of the Company
with or into another corporation (where the Company is not
the surviving corporation or where there is a change in or
distribution with respect to the Common Stock), each share
of Series A Preferred Stock shall after such reorganization,
reclassification, consolidation, or merger be convertible
into the kind and number of shares of stock or other
securities or property of the Company or of the successor
corporation resulting from such consolidation or surviving
such merger, if any, to which the holder of the number of
shares of Common Stock deliverable (immediately prior to the
time of such reorganization, reclassification, consolidation
or merger) upon conversion of such Series A Preferred Stock
would have been entitled upon such reorganization,
reclassification, consolidation or merger. The provisions of
this clause shall similarly apply to successive
reorganizations, reclassifications, consolidations, or
mergers.
vii. Deferral in Certain Circumstances. In any case in which the
provisions of this Section 7(d) shall require that an
adjustment shall become effective immediately after a record
date of an event, the Company may defer until the occurrence
of such event (1) issuing to the holder of any Series A
Preferred Stock converted after such record date and before
the occurrence of such event the shares of capital stock
issuable upon such conversion by reason of the adjustment
required by such event and issuing to such holder only the
shares of capital stock issuable upon such conversion before
giving effect to such adjustments, and (2) paying to such
holder any amount in cash in lieu of fractional share of
capital stock pursuant to Section 7(c) above; provided,
however, that the Company shall deliver to such holder an
appropriate instrument or due bills evidencing such holder's
right to receive such additional shares and such cash.
viii. Other Anti-Dilution Provisions. If the Company has issued or
issues any securities on or after the Original Issuance Date
containing provisions protecting the holder or holders
thereof against dilution in any manner more favorable to
such holder or holders thereof than those set forth in this
Section 7(d), such provisions (or any more favorable portion
thereof) shall be deemed to be incorporated herein as if
fully set forth in this Restated Certificate of
Incorporation and, to the extent inconsistent with any
provision of this Restated Certificate of Incorporation
shall be deemed to be substituted therefor.
ix. Appraisal Procedure. In any case in which the provisions of
this Section 7(d) shall necessitate that the Appraisal
Procedure be utilized for purposes of determining an
adjustment to the Conversion Price, the Company may defer
until the completion of the Appraisal Procedure and the
determination of the adjustment (1) issuing to the holder of
any share of Series A Preferred Stock converted after the
date of the event that requires the adjustment and before
completion of the Appraisal Procedure and the determination
of the adjustment, the shares of capital stock issuable upon
such conversion by reason of the adjustment required by such
event and issuing to such holder only the shares of capital
stock issuable upon such conversion before giving effect to
such adjustment and (2) paying to such holder any amount in
cash in lieu of a fractional share of capital stock pursuant
to Section 7(c) above; provided, however, that the Company
shall deliver to such holder an appropriate instrument or
due bills evidencing such holder's right to receive such
additional shares and such cash.
x. Exceptions. Section 7(d) shall not apply to (i) any issuance
of Common Stock upon exercise of any warrants or options (A)
outstanding on the Original Issuance Date of the Series A
Preferred Stock or (B) awarded to employees or directors of
the Company pursuant to an employee stock option plan or
stock incentive plan approved by the Board of Directors;
(ii) any issuance of securities by the Company in
underwritten public offerings; and (iii) repurchases by the
Company of Common Stock approved by the Board of Directors
(collectively, the "Excluded Stock").
Notwithstanding the foregoing, in the case of shares of Series A
Preferred Stock called for redemption, conversion rights will expire at the
close of business on the last Business Day preceding any redemption date
unless the Company defaults in making the payment due upon redemption.
(e) Exercise of Conversion Privilege. In order to exercise the
conversion privilege, the holder of any share of Series A Preferred Stock
shall surrender such Series A Preferred Stock, duly endorsed or assigned to
the Company in blank, at any office or agency of the Company maintained for
such purpose, accompanied by written notice to the Company at such office or
agency that the holder elects to convert such Series A Preferred Stock or, if
less than the entire amount thereof is to be converted, the portion thereof to
be converted.
Series A Preferred Stock shall be deemed to have been converted
immediately prior to the close of business on the day (the "Conversion Date")
of surrender of such shares of Series A Preferred Stock for conversion in
accordance with the foregoing provisions, and at such time the rights of the
holders of such shares of Series A Preferred Stock as holder shall cease, and
the Person or Persons entitled to receive the Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or holders
of such Common Stock as and after such time. As promptly as practicable on or
after the Conversion Date, the Company shall issue and shall deliver at any
office or agency of the Company maintained for the surrender of Series A
Preferred Stock a certificate or certificates for the number of full shares of
Common Stock issuable upon conversion, together with payment in lieu of any
fraction of a share, as provided in Section 7(c).
In the case of any Series A Preferred Stock which is converted in
part only, upon such conversion the Company shall execute and deliver a new
share of Series A Preferred Stock of authorized denomination in aggregate
principal amount equal to the unconverted portion of the principal amount of
such share of Series A Preferred Stock.
(f) Notice of Adjustment of Conversion Price. Whenever the Conversion
Price is adjusted as herein provided:
i. the Company shall compute the adjusted Conversion Price in
accordance with Section 7(d) and shall prepare a certificate
signed by the Treasurer or Chief Financial Officer of the
Company setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be
filed at each office or agency maintained for such purpose
or conversion of shares of Series A Preferred Stock; and
ii. a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall
forthwith be prepared by the Company, and as soon as
practicable after it is prepared, such notice shall be
mailed by the Company at its expense to all holders at their
last addresses as they shall appear in the stock register.
(g) Notice of Certain Corporate Action.
In case:
(a) the Company shall take an action or an event shall occur,
that would require a Conversion Price adjustment pursuant to Section
7(d); or
(b) the Company shall grant to the holders of its Common Stock
rights or warrants to subscribe for or purchase any shares of capital
stock of any class;
(c) of any reclassification of the Common Stock (other than a
subdivision or combination of the outstanding shares of Common
Stock), or of any consolidation, merger or share exchange to which
the Company is a party and for which approval of any stockholders of
the Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company or any Subsidiary shall commence a tender offer
for all or a portion of the outstanding shares of Common Stock (or
shall amend any such tender offer to change the maximum number of
shares being sought or the amount or type of consideration being
offered therefor);
then the Company shall cause to be filed at each office or agency maintained
for such purpose, and shall cause to be mailed to all holders at their last
addresses as they shall appear in the stock register, at least 30 days prior
to the applicable record, effective or expiration date hereinafter specified,
a notice stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution or granting of rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record who will be entitled to such dividend, distribution, rights or warrants
are to be determined, (y) the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding up, or (z) the
date on which such tender offer commenced, the date on which such tender offer
is scheduled to expire unless extended, the consideration offered and the
other material terms thereof (or the material terms of the amendment thereto).
Such notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action on the Conversion
Price and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action
or deliverable upon conversion of the Series A Preferred Stock. Neither the
failure to give any such notice nor any defect therein shall affect the
legality or validity of any action described in clauses (a) through (e) of
this Section 7(g).
(h) Company to Reserve Common Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of the authorized but unissued Common Stock or out of
the Common Stock held in treasury, for the purpose of effecting the conversion
of Series A Preferred Stock, the full number of shares of Common Stock then
issuable upon the conversion of all outstanding shares of Series A Preferred
Stock.
Before taking any action that would cause an adjustment reducing the
conversion price below the then par value (if any) of the shares of Common
Stock deliverable upon conversion of the Series A Preferred Stock, the Company
will take any corporate action that, in the opinion of its counsel, is
necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of Common Stock at such adjusted conversion price.
(i) Taxes on Conversions.
The Company will pay any and all original issuance, transfer, stamp
and other similar taxes that may be payable in respect of the issue or
delivery of shares of Common Stock on conversion of Series A Preferred Stock
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that of the holder of
the share(s) of Series A Preferred Stock to be converted, and no such issue or
delivery shall be made unless and until the Person requesting such issue has
paid to the Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid.
(j) Cancellation of Converted Series A Preferred Stock.
All Series A Preferred Stock delivered for conversion shall be
delivered to the Company to be canceled.
(k) Certain Definitions.
As used in this Section 7, the following terms shall have the
following respective meanings:
"Appraisal Procedure" if applicable, shall mean the following
procedure to determine the fair market value, as to any security, for purposes
of the definition of "Fair Market Value" or the fair market value, as to any
other property (in either case, the "valuation amount"). So long as Apollo
Investment Fund IV, L.P. or any of its affiliates (the "Apollo Stockholders")
beneficially own sufficient shares of Series A Preferred Stock to constitute
the Requisite Holders, the valuation amount shall be determined in good faith
jointly by the Board of Directors and the Requisite Holders; provided,
however, that if such parties are not able to agree on the valuation amount
within a reasonable period of time (not to exceed twenty (20) days), the
valuation amount shall be determined by an investment banking firm of national
recognition, which firm shall be reasonably acceptable to the Board of
Directors and the Requisite Holders. If the Board of Directors and the
Requisite Holders are unable to agree upon an acceptable investment banking
firm within ten (10) days after the date either party proposed that one be
selected, the investment banking firm will be selected by an arbitrator
located in New York City, New York, selected by the American Arbitration
Association (or if such organization ceases to exist, the arbitrator shall be
chosen by a court of competent jurisdiction). The arbitrator shall select the
investment banking firm (within ten (10) days of his appointment) from a list,
jointly prepared by the Board of Directors and the Requisite Holders, of not
more than six investment banking firms of national standing in the United
States, of which no more than three may be named by the Board of Directors and
no more than three may be named by the Requisite Holders. The arbitrator may
consider, within the ten-day period allotted, arguments from the parties
regarding which investment banking firm to choose, but the selection by the
arbitrator shall be made in its sole discretion from the list of six. The
Board of Directors and the Requisite Holders shall submit their respective
valuations and other relevant data to the investment banking firm, and the
investment banking firm shall as soon as practicable thereafter make its own
determination of the valuation amount. The final valuation amount for purposes
hereof shall be the average of the two valuation amounts closest together, as
determined by the investment banking firm, from among the valuation amounts
submitted by the Company and the Requisite Holders and the valuation amount
calculated by the investment banking firm. The determination of the final
valuation amount by such investment-banking firm shall be final and binding
upon the parties. The Company shall pay the fees and expenses of the
investment banking firm and arbitrator (if any) used to determine the
valuation amount. If required by any such investment banking firm or
arbitrator, the Company shall execute a retainer and engagement letter
containing reasonable terms and conditions, including, without limitation,
customary provisions concerning the rights of indemnification and contribution
by the Company in favor of such investment banking firm or arbitrator and its
officers, directors, partners, employees, agents and affiliates. If the Apollo
Stockholders no longer constitute the Requisite Holders, the valuation amount
shall be determined in good faith by the Board of Directors.
"Fair Market Value" means, as to any security, the Twenty Day Average
of the average closing prices of such security's sales on all domestic
securities exchanges on which such security may at the time be listed, or, if
there have been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ National Market
System as of 4:00 P.M., New York City time, on such day, or, if on any day
such security is not quoted in the NASDAQ National Market System, the average
of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization (and in each such case
excluding any trades that are not bona fide, arm's length transactions). If at
any time such security is not listed on any domestic securities exchange or
quoted in the NASDAQ National Market System or the domestic over-the-counter
market, the "Fair Market Value" of such security shall be the fair market
value thereof as determined in accordance with the Appraisal Procedure, using
any appropriate valuation method, assuming an arms-length sale to an
independent party. In determining the fair market value of any class or series
of Common Stock, a sale of all of the issued and outstanding Common Stock will
be assumed, without giving regard to the lack of liquidity of such stock due
to any restrictions (contractual or otherwise) applicable thereto or any
discount for minority interests and assuming the conversion or exchange of all
securities then outstanding that are convertible into or exchangeable for
Common Stock and the exercise of all rights and warrants then outstanding and
exercisable to purchase shares of such stock or securities convertible into or
exchangeable for shares of such stock; provided, however that such assumption
will not include those securities, rights and warrants convertible into Common
Stock where the conversion, exchange or exercise price per share is greater
than the fair market value; provided, further, however, that fair market value
shall be determined with regard to the relative priority of each class or
series of Common Stock (if more than one class or series exists.) "Fair Market
Value" means with respect to property other than securities, the "fair market
value" determined in accordance with the Appraisal Procedure.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, which are in
effect from time to time.
"Twenty Day Average" means, with respect to any prices and in
connection with the calculation of Fair Market Value, the average of such
prices over the twenty Business Days ending on the Business Day immediately
prior to the day as of which "Fair Market Value" is being determined.
8. Preemptive Rights. Holders of shares of Series A Preferred Stock
will have the right to purchase their pro rata portions of any future private
placements by the Company of equity or equity-linked securities, other than
(i) securities issued pursuant to the exercise of options or warrants
currently outstanding, options awarded to employees or directors of the
Company after the date hereof pursuant to currently existing employee
incentive plans, and options hereinafter issued under new employee incentive
plans approved by the Board of Directors and by the Apollo Stockholders and
(ii) securities issued as consideration in acquisitions by the Company.
9. Limitations. In addition to any other rights provided by
applicable law, so long as any shares of Series A Preferred Stock are
outstanding, the Company shall not, without the affirmative vote, or the
written consent as provided by law, of the Requisite Holders, at a vote of the
holders of Series A Preferred Stock, voting separately as a class,
(a) create, authorize or issue any class, series or shares of
Preferred Stock (other than Additional Securities issued pursuant to Section
2(b) hereof and Series B Preferred Stock issued as dividends) or any other
class of capital stock ranking either as to payment of dividends or
distribution of assets upon liquidation (i) prior to the Series A Preferred
Stock, or (ii) on a parity with the Series A Preferred Stock, or (iii) junior
to the Series A Preferred Stock, if such junior securities may be redeemed, in
any circumstance, on or prior to the Redemption Date; or
(b) change the preferences, rights or powers with respect to the
Series A Preferred Stock so as to affect the Series A Preferred Stock
adversely.
10. Dividend Received Deduction. For federal income tax purposes, the
Company shall report distributions on the Series A Preferred Stock as
dividends, to the extent of the Company's current and accumulated earnings and
profits (as determined for federal income tax purposes).
11. Event of Non-Compliance. Whenever an Event of Non-Compliance (as
hereinafter defined) shall have occurred and be continuing, the holders of
Series A Preferred Stock shall have the exclusive right, voting separately as
a class, to elect a sufficient number of additional directors such that the
Preferred Stock Directors constitute a majority of the Board of Directors, at
the Company's next annual meeting of stockholders and at each subsequent
annual meeting of stockholders; provided, however, that if such voting rights
shall become vested more than 90 days or less than 20 days before the date
prescribed for such meeting of stockholders, thereupon the holders of the
shares of Series A Preferred Stock shall be entitled to exercise their voting
rights at a special meeting of the holders of Series A Preferred Stock as
hereinafter set forth. At elections for Preferred Stock Directors, each holder
of Series A Preferred Stock shall be entitled to one vote for each share of
Series A Preferred Stock held. Upon the vesting of such right of the holders
of Series A Preferred Stock, the maximum authorized number of members of the
Board of Directors shall automatically be increased by such number as is
required for the Preferred Stock Directors to constitute a majority of the
Board of Directors and the vacancies so created shall be filled by vote of the
holders of outstanding Series A Preferred Stock as hereinabove set forth. The
right of holders of Series A Preferred Stock, voting separately as a class, to
elect members of the Board of Directors as aforesaid shall continue until such
time as all Events of Non-Compliance shall have been cured, at which time such
rights shall terminate, except as herein or by law expressly provided, subject
to revesting in the event of each and every subsequent Event of
Non-Compliance. Whenever such voting right shall have vested, such right may
be exercised initially either, as provided above, at a special meeting of the
holders of Series A Preferred Stock called as hereinafter provided, or at any
annual meeting of stockholders held for the purpose of electing directors, and
thereafter at such meetings or by the written consent of such holders pursuant
to Section 228 of the Delaware General Corporation Law. The Preferred Stock
Directors elected pursuant to Section 11 shall serve until the next annual
meeting of stockholders of the Company or until their respective successors
shall be elected and shall qualify. Any director elected by the holders of
Series A Preferred Stock may be removed by, and shall not be removed otherwise
than by, the vote of the Requisite Holders, at a vote of the then outstanding
shares of Series A Preferred Stock, voting as a separate class, at a meeting
called for such purpose or by written consent as permitted by law and the
Certificate of Incorporation and By-Laws of the Company. If the office of any
Preferred Stock Director becomes vacant by reason of death, resignation,
retirement, disqualification or removal from office or otherwise, such vacancy
shall be filled by the holders of Series A Preferred Stock voting as a class
as herein provided. Upon any termination of the right of the holders of Series
A Preferred Stock to vote for directors as herein provided, the term of office
of the Preferred Stock Director then in office shall terminate immediately.
Whenever the terms of office of a Preferred Stock Director shall so terminate
and the special voting powers vested in the holders of Series A Preferred
Stock shall have expired, the number of directors shall be such number as may
be provided for pursuant to the By-Laws of the Company irrespective of any
increase made pursuant to the provisions of this Section 11, and such
Preferred Stock Director or Directors shall forthwith resign or the holders of
Series A Preferred Stock shall promptly vote, or act by written consent, to
remove such Preferred Stock Director or Directors pursuant to the procedures
set forth above.
The term "Event of Non-Compliance" shall mean (A) any breach by the
Company of any of its agreements and covenants set forth (i) in Section 7.12,
Section 8.2 or Article 9 of the Agreement, (ii) in Sections 2, 4, 5, 6, 7 or 8
of Article Fourth of this Restated Certificate of Incorporation, or (B) any
obligation of the Company, whether as principal, guarantor, surety or other
obligor, for the payment of indebtedness for borrowed money in excess of
$10,000,000 (i) shall become or shall be declared due and payable prior to the
expressed maturity thereof, or (ii) shall not be paid when due or within any
grace period for the payment thereof, and such default shall remain uncured
for 15 days, or (C) the Common Stock shall no longer be listed for trading on
a United States national securities exchange or the NASDAQ National Market
(provided, that such Event of Non-Compliance shall be deemed to be cured
immediately on the date upon which the Common Stock is again listed for
trading on a United States national securities exchange or the NASDAQ National
Market).
FIFTH: The name and mailing address of the incorporator is
International Cogeneration Corporation, a Nevada corporation, with principal
offices at 320 Walnut Street, Suite 105, Philadelphia, Pennsylvania 19106. The
powers of the incorporator terminated upon the filing of the original
Certificate of Incorporation of the Company on August 15, 1985.
SIXTH: Election of directors need not be by written ballot.
SEVENTH: The Board of Directors is authorized to adopt, amend or
repeal By-Laws of the Company.
EIGHTH: The following provisions are inserted to limit the liability
of directors and officers of the Company to the full extent of the law
allowable and for the conduct of the affairs of the Company, and it is
expressly provided that they are intended to be in furtherance and not in
limitation or exclusion of the powers conferred by law:
(a) No director shall be personally liable to the Company or its
stockholders for monetary damages for breach of his or her fiduciary duty as a
director, except (i) for any breach of the director's duty of loyalty to the
Company or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) for
paying a dividend or approving a stock repurchase which is illegal under
section 174 of Title 8 of the Delaware Code relating to the Delaware General
Corporation Law; or (iv) for any transaction from which the director derived
an improper personal benefit.
(b) No contract or other transaction between the Company and any
other firm or corporation shall be affected or invalidated by reason of the
fact that any one or more of the directors or officers of this Company is or
are interested in, or is a member, stockholder, director or officer or are
members, stockholders, directors or officers, individually or jointly, may be
a party or parties to, or may be interested in, any contract or transaction of
this Company or in which this Company with any person or persons, firm,
association or corporation, shall be affected or invalidated by reason of the
fact that any director or officer or officers of this Company is a party, or
are parties to, or interested, such contract, act of transaction, or in any
way connected, with such person or persons, firms, association or corporation,
and each and every person who may become a director or officer of this Company
is relieved from any liability that might otherwise exist from thus
contracting with this Company for the benefit of himself or any firm,
association, or corporation in which he may be in any way interested.
(c) Subject to such restrictions and regulations contained in by-
laws adopted by the stockholders, the Board of Directors may make, alter,
amend and rescind the by-laws, and may provide therein for the appointment of
an executive committee from their own members, to exercise all or any of the
powers of the board, which may be amended or repealed, at any time, by the
stockholders.
(d) The Board of Directors shall have power, in its discretion, to
provide for and to pay for directors rendering unusual or exceptional services
to the Company special compensation appropriate to the value of such services.
(e) By resolution duly adopted by the holders of not less than a
majority of the shares of stock then issued and outstanding and entitled to
vote at any regular or special meeting of the stockholders of the Company duly
called and held as provided in the by-laws of the Company, any director or
directors of the Company may be removed from office at any time or times, with
or without cause. The Board of Directors may at any time remove any officers
of the Company with or without cause.
(f) The Company may indemnify each person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) by reason of the fact
that he is or was a director, officer, employee or agent of the Company, or is
or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amount paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding, if he acted in good faith in
a manner he reasonably believed to be in or not opposed to the best interest
of the Company, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(g) The Company may indemnify each person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Company to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the Company, or is or was serving at the request of the Company,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interest of the Company, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Company unless and only to the extent
that the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other Court
shall deem proper.
(h) To the extent that a director, officer, employee or agent of the
Company has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to herein or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
(i) Any indemnification under paragraphs herein (unless ordered by a
Court) shall be made by the Company upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in said
paragraphs. Such determination shall be made (1) by the Board of Directors by
a majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (2) if such a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(3) by the stockholders.
(j) The Company may pay expenses incurred by defending a civil or
criminal action, suit or proceeding in advance of the final disposition of
such action, suit or proceeding in the manner provided herein upon receipt of
any undertaking by or on behalf of the director, officer, employee or agent to
repay such amount if it shall be ultimately determined that he is not entitled
to be indemnified by the Company as authorized in this section.
The indemnification and advancement of expenses provided for herein
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
(k) The indemnification and advancement of expenses provided herein
or granted pursuant to this provision shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any by-law, agreement, vote of stockholders or of any
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
(l) The Company may purchase and maintain insurance on behalf of any
person who is or was serving the Company in any capacity referred to
hereinabove against any liability asserted against him and incurred by him in
such capacity, or arising out of his status as such, whether or not the
Company would have the power to indemnify him against such liability under the
provisions herein.
(m) The provisions herein shall be applicable to all claims, action,
suits, or proceedings made or commenced after the adoption hereof, whether
arising from acts or omissions to act occurring before or after the adoption
hereof.
NINTH: The Board of Directors shall be divided into three classes,
each composed of as nearly equal a number of directors as the then total
number of directors constituting the entire Board of Directors permits with
the term of office of one class expiring each year. At the 1999 Annual Meeting
of Stockholders, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding Annual Meeting of Stockholders,
directors of the second class shall be elected to hold office for a term
expiring at the second succeeding Annual Meeting of Stockholders, and
directors of the third class shall be elected to hold office for a term
expiring at the third succeeding Annual Meeting of Stockholders. Subject to
the foregoing, at each Annual Meeting of Stockholders the successors to the
class of directors whose term shall then expire shall be elected to hold
office for a term expiring at the third succeeding Annual Meeting of
Stockholders. Directors shall serve for their respective terms except in the
event of their earlier death, resignation or removal, and until their
successors are duly elected and shall qualify. Newly created directorships,
resulting from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death, resignation,
retirement, removal from office, disqualification or other cause, may be
filled by a majority vote of the directors then in office, though less than a
quorum, and directors so chosen shall hold office for a term expiring at the
Annual Meeting of Stockholders at which the term of office of the class to
which they have been elected expires. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
IN WITNESS WHEREOF, the Company has caused this Restated Certificate
of Incorporation to be executed this 24th day of February, 2000.
RARE MEDIUM GROUP, INC.
By: /s/ Jeffrey J. Kaplan
--------------------------------
Name: Jeffrey J. Kaplan
Title: Executive Vice President and
Chief Financial Officer