AMENDED AND RESTATED CERTIFICATE
OF
INCORPORATION
OF
STRATEGY.COM INCORPORATED
--------------------------
(Originally Incorporated on February 22, 2000 as Strategy.com Incorporated)
ARTICLE ONE
NAME
The name of the corporation is Strategy.com Incorporated.
ARTICLE TWO
REGISTERED OFFICE
The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent at such
address is The Corporation Trust Company.
ARTICLE THREE
PURPOSE
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act for which corporations may be organized under the
General Corporation Law of Delaware. The corporation shall possess and
exercise all the powers and privileges granted by the General Corporation Law
of the State of Delaware, by any other law or by this Certificate, together
with any powers incidental thereto as far as such powers and privileges are
necessary or convenient to the conduct, promotion, or attainment of the
purposes of the corporation.
ARTICLE FOUR
CAPITAL STRUCTURE
The total number of shares of capital stock which the corporation shall
have the authority to issue is 322,315,984 shares, consisting of three
classes of capital stock:
(a) 190,431,973 shares of Class A Common Stock, par value $0.001 per
share (the "Class A Common Stock");
(b) 84,000,000 shares of Class B Common Stock, par value $0.001 per
share (the "Class B Common Stock") (the Class A Common Stock and the Class B
Common Stock are collectively referred to as the "Common Stock"); and
(c) 47,884,011 Series A Preferred Stock, par value $0.001 per share (the
"Series A Preferred Stock")
At the effective time of this Amended and Restated Certificate of
Incorporation, each share of common stock of the corporation outstanding
immediately prior thereto shall be changed and converted, without any action
on the part of the holders hereof, into one share of Class B Common Stock.
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ARTICLE FIVE
COMMON STOCK
5.1 Identical Rights. Except as otherwise set forth in this ARTICLE
FIVE, the rights and privileges of the Common Stock shall be identical,
including without limitation the right to participate ratably in dividends
and liquidation distributions. The corporation may not make any dividend or
distribution with respect to any class of Common Stock unless at the same
time the corporation makes a ratable dividend or distribution with respect to
each outstanding share of Common Stock regardless of class. In the case of
dividends or distributions payable in shares of a class of Common Stock, only
shares of Class A Common Stock may be distributed with respect to Class A
Common Stock and only shares of Class B Common Stock may be distributed with
respect to Class B Common Stock, and the number of shares of Common Stock
payable per share will be equal for each class. In addition, neither the
shares of Class A Common Stock nor the shares of Class B Common Stock may be
subdivided, consolidated, reclassified or otherwise changed unless
concurrently the shares of the other class of Common Stock are subdivided,
consolidated, reclassified or otherwise changed in the same proportion and
the same manner.
5.2 Voting Rights. The holders of the Common Stock shall vote as a
single class on all matters submitted to a vote of the stockholders to which
the holders of Common Stock are entitled to vote, except as may be required
by Delaware law or as otherwise expressly specified
in this Certificate of Incorporation. Each share of Class A Common Stock
shall be entitled to one vote and each share of Class B Common Stock shall be
entitled to ten votes. The corporation, by action of its Board of Directors
and the affirmative vote of the holders of a majority of the voting power of
the capital stock of the corporation entitled to vote, may increase or
decrease the number of authorized shares of Common Stock of the corporation
(but not below the number of shares of Common Stock then outstanding)
irrespective of the provisions of Section 242(b)(2) of the General
Corporation Law of Delaware.
5.3 Conversion Rights.
(a) Voluntary Conversion. Each share of Class B Common Stock is
convertible into one share Class A Common Stock at any time at the option of
the holder.
(b) Automatic Conversion. Each share of Class B Common Stock
shall convert automatically into one share of Class A Common Stock upon its
sale, assignment, gift or other transfer, other than a transfer approved in
advance of the effectiveness thereof by the holders of a majority of the
Class B Common Stock outstanding, voting separately as a class; provided,
however, that a transfer effected as a result of the death of the transferor
may be approved by the holders of a majority of the Class B Common Stock
outstanding, voting separately as a class, within thirty (30) days of such
transfer. For purposes of determining whether a transfer has been approved by
the holders of a majority of the Class B Common Stock outstanding, the shares
for which approval of the transfer is being sought shall continue to be
considered outstanding shares of Class B Common Stock and the proposed
transferor (or in the case of shares transferred as a result of the death of
the proposed tranferor, the Executor or similar personal representative of
such proposed transferor) shall be entitled to vote on such transfer.
Notwithstanding the foregoing, (i) the provisions of this Section
5.3(b) shall not apply in the case of a merger or similar transaction by the
corporation in which all the outstanding shares of Common Stock of the
corporation regardless of class are purchased by the acquiror, and (ii) any
holder of Class B Common Stock may pledge his shares of Class B Common Stock
to a
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financial institution (the "Pledgee") pursuant to a bona fide pledge of
such shares as collateral security for indebtedness due to the Pledgee;
provided that such shares remain subject to the provisions of this Section
5.3 and that, if the Pledgee forecloses or takes similar action, such pledged
shares of Class B Common Stock shall be converted automatically into shares
of Class A Common Stock as provided in this Section 5.3(b); provided,
however, that if within five business days after such foreclosure or similar
event such converted shares are returned to the pledgor, such shares shall be
converted automatically back into shares of Class B Common Stock.
5.4 Unconverted Shares. If less than all of the shares of Class B
Common
Stock evidenced by a certificate surrendered to the corporation (in
accordance with such procedures as the Board of Directors may determine) are
converted, the corporation shall execute and deliver to or upon the written
order of the holder of such certificate a new certificate evidencing the
number of shares of Class B Common Stock which are not converted without
charge to the holder.
5.5 Reservation. The corporation hereby reserves, and shall at all
times
reserve and keep available, out of its authorized and unissued shares of
Class A Common Stock, for the purposes of effecting conversions, such number
of duly authorized shares of Class A Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of Class B
Common Stock. The corporation covenants that all the shares of Class A
Common Stock so issuable shall, when so issued, be duly and validly issued,
fully paid and non- assessable. The corporation shall take all such action
as may be necessary to assure that all such shares of Class A Common Stock
may be so issued without violation of any applicable law or regulation. The
corporation shall not take any action that results in any adjustment of the
conversion ratio if the total number of shares of Class A Common Stock issued
and issuable after such action upon conversion of the shares of Class B
Common Stock would exceed the total number of shares of Class A Common Stock
then authorized by the corporation's certificate of incorporation.
5.6 Merger. Upon the merger or consolidation of the corporation,
holders of each class of Common Stock will be entitled to receive equal per
share payments or distributions, except that in any transaction in which
shares of capital stock are distributed to holders of Common Stock, the
shares of capital stock distributed to holders of Class A Common Stock and
Class B Common Stock may differ, but only to the extent that the Class A
Common Stock and the Class B Common Stock differ in this Certificate of
Incorporation.
5.7 Liquidation. Upon any dissolution or liquidation of the
corporation,
holders of Common Stock shall be entitled to receive ratably all assets of
the corporation available for distribution to stockholders.
ARTICLE SIX
PREFERRED STOCK
SERIES A PREFERRED STOCK.
The rights, preferences, powers, privileges and restrictions,
qualifications and limitations of the Series A Preferred Stock are as follows:
1. Dividends.
(a) The Corporation shall not declare or pay any cash dividends on
shares of
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Common Stock until the holders of the Series A Preferred Stock then
outstanding shall have first received, or simultaneously receive, a cash
dividend on each outstanding share of Series A Preferred Stock in an amount
at least equal to the product of (i) the per share amount, if any, of the
dividends or other distributions to be declared, paid or set aside for the
Common Stock, multiplied by (ii) the number of whole shares of Common Stock
into which such share of Series A Preferred Stock is then convertible.
(b) The holders of shares of Series A Preferred Stock shall be entitled
to receive, out of funds legally available therefor, dividends of $0.2552 per
share per annum (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization
affecting such shares), payable when and as declared by the Board of
Directors of the Corporation. Such dividends shall accrue and shall be
cumulative from the date of issuance of each share of Series A Preferred
Stock, whether or not declared.
2. Liquidation, Dissolution or Winding Up; Certain Mergers,
Consolidations and Asset Sales.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series
A Preferred Stock then outstanding shall be entitled to be paid out of the
assets of the Corporation available for distribution to its stockholders,
before any payment shall be made to the holders of Common Stock or any other
class or series of stock ranking on liquidation junior to the Series A
Preferred Stock (such Common Stock and other stock being collectively
referred to as "Junior Stock") by reason of their ownership thereof, an
amount equal to $3.19 per share (subject to appropriate adjustment in the
event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares), plus any dividends accrued or
declared but unpaid thereon. If upon any such liquidation, dissolution or
winding up of the Corporation the remaining assets of the Corporation
available for distribution to its stockholders shall be insufficient to pay
the holders of shares of Series A Preferred Stock the full amount to which
they shall be entitled, the holders of shares of Series A Preferred Stock and
any class or series of stock ranking on liquidation on a parity with the
Series A Preferred Stock shall share ratably in any distribution of the
remaining assets and funds of the Corporation in proportion to the respective
amounts which would otherwise be payable in respect of the shares held by
them upon such distribution if all amounts payable on or with respect to such
shares were paid in full. After the payment of all such preferential amounts
required to be paid to the holders of Series A Preferred Stock and any other
class or series of stock of the Corporation ranking on liquidation on a
parity with the Series A Preferred Stock, upon the dissolution, liquidation
or winding up of the Corporation, the remaining assets and funds of the
Corporation available for distribution to its stockholders shall be
distributed among the holders of shares of Series A Preferred Stock, Common
Stock and any other class or series of stock entitled to participate in
liquidation distributions with the holders of Common Stock, pro rata based on
the number of shares of Common Stock held by each (assuming conversion into
Common Stock of all such shares). The amount per share of Series A Preferred
Stock determined pursuant to this clause (a) shall in no event exceed $6.38
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization affecting such shares).
(b) Notwithstanding Subsection 2(a), in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of shares of Series A Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, the greater of (i) the amount determined
pursuant to Subsection 2(a) or (ii) an amount equal to the portion of the
assets of the Corporation remaining
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for distribution to stockholders which such holder would have received if
each share of Series A Preferred Stock had been converted into the number of
shares of Common Stock issuable upon the conversion of a share of Series A
Convertible Preferred Stock immediately prior to any such liquidation,
dissolution or winding up of the Corporation after taking into account the
rights of holders of any other class or series of capital stock of the
Corporation (including Common Stock) entitled to share in such distribution in
either case.
(c) In the event of any merger or consolidation in which (i) the
Corporation is a constituent party or (ii) a subsidiary of the Corporation is
a constituent party and the Corporation issues shares of its capital stock
pursuant to such merger or consolidation (except any such merger or
consolidation involving the Corporation or a subsidiary in which the holders
of capital stock of the Corporation immediately prior to such merger or
consolidation continue to hold immediately following such merger or
consolidation more than 50% by voting power of the capital stock of (A) the
surviving or resulting corporation or (B) if the surviving or resulting
corporation is a wholly owned subsidiary of another corporation immediately
following such merger or consolidation, the parent corporation of such
surviving or resulting corporation), or sale of all or substantially all the
assets of the Corporation, if the holders of at least 66 2/3% of the then
outstanding shares of Series A Preferred Stock so elect by giving written
notice thereof to the Corporation at least three days before the effective
date of such event, then such merger, consolidation or asset sale shall be
deemed to be a liquidation of the Corporation for purposes of this Section 2,
and the agreement or plan of merger or consolidation with respect to such
merger, consolidation or sale shall provide that the consideration payable to
the stockholders of the Corporation (in the case of a merger or
consolidation), or consideration payable to the Corporation, together with
all other available assets of the Corporation (in the case of an asset sale),
shall be distributed to the holders of capital stock of the Corporation in
accordance with Subsections 2(a) and 2(b) above. The amount deemed
distributed to the holders of Series A Preferred Stock upon any such merger,
consolidation or asset sale shall be the cash or the value of the property,
rights or securities distributed to such holders by the Corporation or the
acquiring person, firm or other entity. The value of such property, rights
or other securities shall be determined in good faith by the Board of
Directors of the Corporation.
3. Voting.
(a) On any matter presented to the stockholders of the Corporation for
their action or consideration at any meeting of stockholders of the
Corporation (or by written action of stockholders in lieu of meeting), each
holder of outstanding shares of Series A Preferred Stock shall be entitled to
the number of votes equal to the number of whole shares of Common Stock into
which the shares of Series A Preferred Stock held by such holder are
convertible as of the record date for determining stockholders entitled to
vote on such matter. Except as provided by law, by the provisions of
Subsection 3(b) below or by the provisions establishing any other series of
Preferred Stock, holders of Series A Preferred Stock and of any other
outstanding series of Preferred Stock shall vote together with the holders of
Common Stock as a single class.
(b) The approval (by vote or written consent, as provided by law) of
the holders of more than 50% of the outstanding shares of Series A Preferred
Stock, voting together as a single class shall be necessary for effecting or
validating the following actions:
(A) Any amendment, alteration, or repeal of any provision of this
Amended and Restated Certificate of Incorporation or the Bylaws of the
Corporation (including any filing of a Certificate of Designation) that could
adversely affect the holders of shares of Series A Preferred Stock, including
any such amendment (or similar effect that could occur by virtue of the
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merger or consolidation of the Corporation) that does any of the following:
(i) increases or decreases the par value of the issued shares
of Series A Preferred Stock;
(ii) changes issued shares of Series A Preferred Stock into a
lesser number of shares of the same class, or into the same or a different
number of shares of any other class, with or without par value, theretofore
or then authorized
(iii)changes the terms of, or adds terms to, the terms of the
Series A Preferred Stock in any manner that could adversely affect the
holders of such shares;;
(iv) changes the terms of issued shares of any class senior,
junior or pari passu in any manner that could adversely affect the holders of
shares of Series A Preferred Stock;
(v) authorizes shares of another class that are convertible
into, or authorizes the conversion of shares of another class into, shares of
Series A Preferred Stock or authorizes the Board of Directors to fix or alter
conversion rights of shares of another class that are convertible into shares
of Series A Preferred Stock;
(vi) provides, in the case of any amendment described in
3(b)(A)(i) or (ii), that the stated capital of the Corporation will be
reduced or eliminated as a result of the amendment, or provides in the case
of 3(b)(A)(v), that the stated capital of the Corporation will be reduced or
eliminated upon the exercise of such conversion rights; or
(vii)changes substantially the purposes of the Corporation, or
provides that thereafter an amendment to the Amended and Restated Certificate
may be adopted that changes substantially the purposes of the Corporation; or
(viii) changes the Corporation into a nonprofit corporation
(B) Any authorization, designation, sale or issuance whether by
reclassification or otherwise, of any new class or series of stock or any
other securities convertible into equity securities of the Corporation
ranking senior to the Series A Preferred Stock in rights of voting,
redemption, liquidation preference, voting or dividends or any increase in
the authorized or designated number of any such new class or series;
(C) Any redemption, repurchase, payment of dividends or other
distributions with respect to any Junior Stock; or
(D) Any agreement by the Corporation or its shareholders effecting (i)
any sale, lease, assignment, transfer or other conveyance of all or
substantially all the assets or capital stock of the Corporation, (ii) any
merger into or with or consolidation with any other corporation where the
Corporation is not the surviving entity and where the stockholders of the
Corporation prior to such merger or consolidation do not hold more than 50%
of the voting power of the Corporation after such transaction, (iii) any
recapitalization, reclassification, reorganization or any similar transaction
with respect to any of its shares of capital stock in a manner which could
adversely affect the holders of Series A Preferred Stock, or (iv) any
transaction or series of related transactions in which more than 50% of the
voting power of the Corporation is disposed of.
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4. Optional Conversion. The holders of the Series A Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time
to time, and without the payment of additional consideration by the holder
thereof, into such number of fully paid and nonassessable shares of Class A
Common Stock as is determined by dividing $3.19 by the Series A Conversion
Price (as defined below) in effect at the time of conversion. The "Series A
Conversion Price" shall initially be $3.19. Such initial Series A Conversion
Price, and the rate at which shares of Series A Preferred Stock may be
converted into shares of Class A Common Stock, shall be subject to adjustment
as provided below.
In the event of a notice of redemption of any shares of Series A
Preferred Stock pursuant to Section 6 hereof, the Conversion Rights of the
shares designated for redemption shall terminate at the close of business on
the first full day preceding the date fixed for redemption, unless the
redemption price is not paid on such redemption date, in which case the
Conversion Rights for such shares shall continue until such price is paid in
full. In the event of a liquidation of the Corporation, the Conversion
Rights shall terminate at the close of business on the first full day
preceding the date fixed for the payment of any amounts distributable on
liquidation to the holders of Series A Preferred Stock.
(b) Fractional Shares. No fractional shares of Class A Common Stock
shall be issued upon conversion of the Series A Preferred Stock. In lieu of
any fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Series A Conversion Price.
(c) Mechanics of Conversion.
(i) In order for a holder of Series A Preferred Stock to convert
shares of Series A Preferred Stock into shares of Class A Common Stock, such
holder shall surrender the certificate or certificates for such shares of
Series A Preferred Stock, at the office of the transfer agent for the Series
A Preferred Stock (or at the principal office of the Corporation if the
Corporation serves as its own transfer agent), together with written notice
that such holder elects to convert all or any number of the shares of the
Series A Preferred Stock represented by such certificate or certificates.
Such notice shall state such holder's name or the names of the nominees in
which such holder wishes the certificate or certificates for shares of Class
A Common Stock to be issued. If required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by a written
instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the registered holder or his or its attorney
duly authorized in writing. The date of receipt of such certificates and
notice by the transfer agent (or by the Corporation if the Corporation serves
as its own transfer agent) shall be the conversion date ("Conversion Date"),
and the shares of Class A Common Stock issuable upon conversion of the shares
represented by such certificate shall be deemed to be outstanding of record
as of such date. The Corporation shall, as soon as practicable after the
Conversion Date, issue and deliver at such office to such holder of Series A
Preferred Stock, or to his or its nominees, a certificate or certificates for
the number of shares of Class A Common Stock to which such holder shall be
entitled, together with cash in lieu of any fraction of a share.
(ii) The Corporation shall at all times when the Series A Preferred
Stock shall be outstanding, reserve and keep available out of its authorized
but unissued stock, for the
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purpose of effecting the conversion of the Series A Preferred Stock, such number
of its duly authorized shares of Class A Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding Series A Preferred
Stock. Before taking any action which would cause an adjustment reducing the
Series A Conversion Price below the then par value of the shares of Class A
Common Stock issuable upon conversion of the Series A Preferred Stock, the
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Class A Common Stock at such
adjusted Series A Conversion Price.
(iii)Upon any such conversion, no adjustment to the Series A
Conversion Price shall be made for any accrued or declared but unpaid
dividends on the Series A Preferred Stock surrendered for conversion or on
the Class A Common Stock delivered upon conversion.
(iv) All shares of Series A Preferred Stock which shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including the rights,
if any, to receive notices and to vote, shall immediately cease and terminate
on the Conversion Date, except only the right of the holders thereof to
receive shares of Class A Common Stock in exchange therefor and payment of
any dividends accrued or declared but unpaid thereon. Any shares of Series A
Preferred Stock so converted shall be retired and cancelled and shall not be
reissued, and the Corporation (without the need for stockholder action) may
from time to time take such appropriate action as may be necessary to reduce
the authorized number of shares of Series A Preferred Stock accordingly.
(v) The Corporation shall pay any and all issue and other taxes
that may be payable in respect of any issuance or delivery of shares of Class
A Common Stock upon conversion of shares of Series A Preferred Stock pursuant
to this Section 4. The Corporation shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Class A Common Stock in a name other than
that in which the shares of Series A Preferred Stock so converted were
registered, and no such issuance or delivery shall be made unless and until
the person or entity requesting such issuance has paid to the Corporation the
amount of any such tax or has established, to the satisfaction of the
Corporation, that such tax has been paid.
(d) Adjustments to Series A Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this Section 4, the
following definitions shall apply:
(A) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Class A Common Stock or
Convertible Securities.
(B) "Series A Original Issue Date" shall mean the date on
which a share of Series A Preferred Stock was first issued.
(C) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible
into or exchangeable for Class A Common Stock, but excluding Options.
(D) "Additional Shares of Common Stock" shall mean all shares
of Common Stock issued (or, pursuant to Subsection 4(d)(iii) below, deemed to
be issued) by the Corporation after the Series A Original Issue Date, other
than:
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(I) shares of Common Stock issued or issuable upon
conversion or exchange of any Convertible Securities or exercise of any
Options outstanding on the Series A Original Issue Date;
(II) shares of Common Stock issued or issuable as a
dividend or distribution on Series A Preferred Stock;
(III) shares of Common Stock issued or issuable by
reason of a dividend, stock split, split-up or other distribution on shares
of Common Stock that is covered by Subsection 4(e) or 4(f) below; or
(IV) up to 10,000,000 shares of Common Stock (or Options
with respect thereto) and such additional number of shares as may be approved
by the compensation committee of the Board of Directors of the Corporation,
issued or issuable to employees or directors of, or consultants to, the
Corporation, or any Corporation holding directly or indirectly more than 50%
by voting power of the capital stock of the Corporation, pursuant to a plan
or arrangement approved by the Board of Directors of the Corporation
(provided that any shares subject to Options that expire or terminate
unexercised shall not count towards the maximum number set forth in this
clause (IV)).
(ii) No Adjustment of Series A Conversion Price. No adjustment in
the Series A Conversion Price shall be made as the result of the issuance of
Additional Shares of Common Stock if: (a) the consideration per share
(determined pursuant to Subsection 4(d)(v)) for such Additional Share of
Common Stock issued or deemed to be issued by the Corporation is equal to or
greater than the applicable Series A Conversion Price in effect immediately
prior to the issuance or deemed issuance of such Additional Shares, or (b)
prior to such issuance or deemed issuance, the Corporation receives written
notice from the holders of at least 66 2/3% of the then outstanding shares of
Series A Preferred Stock agreeing that no such adjustment shall be made as
the result of the issuance or deemed issuance of Additional Shares of Common
Stock.
(iii)Issue of Securities Deemed Issue of Additional Shares of
Common Stock. If the Corporation at any time or from time to time after the
Series A Original Issue Date shall issue any Options (excluding Options
covered by Subsection 4(d)(i)(D)(IV) above) or Convertible Securities or
shall fix a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible Securities,
then the maximum number of shares of Common Stock (as set forth in the
instrument relating thereto without regard to any provision contained therein
for a subsequent adjustment of such number) issuable upon the exercise of
such Options or, in the case of Convertible Securities and Options therefor,
the conversion or exchange of such Convertible Securities, shall be deemed to
be Additional Shares of Common Stock issued as of the time of such issue or,
in case such a record date shall have been fixed, as of the close of business
on such record date, provided that Additional Shares of Common Stock shall
not be deemed to have been issued unless the consideration per share
(determined pursuant to Subsection 4(d)(v) hereof) of such Additional Shares
of Common Stock would be less than the applicable Series A Conversion Price
in effect on the date of and immediately prior to such issue, or such record
date, as the case may be, and provided further that in any such case in which
Additional Shares of Common Stock are deemed to be issued:
(A) No further adjustment in the Series A Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares
of Common Stock upon the exercise of such Options or conversion or exchange
of such Convertible Securities;
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(B) If such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase or decrease
in the consideration payable to the Corporation, then upon the exercise,
conversion or exchange thereof, the Series A Conversion Price computed upon
the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
any such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities;
(C) Upon the expiration or termination of any such
unexercised Option or unconverted Convertible Security, the Series A
Conversion Price shall not be readjusted, but the Additional Shares of Common
Stock deemed issued as the result of the original issue of such Option or
Convertible Security shall not be deemed issued for the purposes of any
subsequent adjustment of the Series A Conversion Price;
(D) In the event of any change in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange of any such
Option or Convertible Security, including, but not limited to, a change
resulting from the anti-dilution provisions thereof, the Series A Conversion
Price then in effect shall forthwith be readjusted to such Series A
Conversion Price as would have obtained had the adjustment which was made
upon the issuance of such Option or Convertible Security not exercised,
converted or exchanged prior to such change been made upon the basis of such
change; and
(E) No readjustment pursuant to clause (B) or (D) above shall
have the effect of increasing the Series A Conversion Price to an amount
which exceeds the lower of (i) the Series A Conversion Price on the original
adjustment date, or (ii) the Series A Conversion Price that would have
resulted from any issuances of Additional Shares of Common Stock between the
original adjustment date and such readjustment date.
In the event the Corporation, after the Series A Original Issue Date,
amends the terms of any such Options or Convertible Securities (whether such
Options or Convertible Securities were outstanding on the Series A Original
Issue Date or were issued after the Series A Original Issue Date), then such
Options or Convertible Securities, as so amended, shall be deemed to have
been issued after the Series A Original Issue Date and the provisions of this
Subsection 4(d)(iii) shall apply.
(iv) Adjustment of Series A Conversion Price Upon Issuance of
Additional Shares of Common Stock.
In the event the Corporation shall at any time after the Series A
Original Issue Date issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Subsection
4(d)(iii)), without consideration or for a consideration per share less than
the applicable Series A Conversion Price in effect immediately prior to such
issue, then and in such event, such Series A Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying such Series A Conversion Price by a fraction,
(A) the numerator of which shall be (1) the number of shares of Common Stock
outstanding immediately prior to such issue plus (2) the number of shares of
Common Stock which the aggregate consideration received or to be received by
the Corporation for the total number of Additional Shares of Common Stock so
issued would purchase at such Series A Conversion Price; and (B) the
denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of such
Additional Shares of
10
Common Stock so issued; provided that, (i) for the purpose of this Subsection
4(d)(iv), all shares of Common Stock issuable upon conversion or exchange of
Convertible Securities outstanding immediately prior to such issue shall be
deemed to be outstanding, and (ii) the number of shares of Common Stock deemed
issuable upon conversion or exchange of such outstanding Convertible Securities
shall not give effect to any adjustments to the conversion or exchange price or
conversion or exchange rate of such Convertible Securities resulting from the
issuance of Additional Shares of Common Stock that is the subject of this
calculation.
(v) Determination of Consideration. For purposes of this
Subsection 4(d), the consideration received by the Corporation for the issue
of any Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property: Such consideration shall:
(I) insofar as it consists of cash, be computed at the
aggregate of cash received by the Corporation, excluding amounts paid or
payable for accrued interest or dividends;
(II) insofar as it consists of property other than cash,
be computed at the fair market value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(III) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (I) and (II)
above, as determined in good faith by the Board of Directors.
(B) Options and Convertible Securities. The consideration
per share received by the Corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Subsection 4(d)(iii), relating to
Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options
or the conversion or exchange of such Convertible Securities, or in the case
of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
(y) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(vi) Multiple Closing Dates. In the event the Corporation shall
issue on more than one date Additional Shares of Common Stock which are
comprised of shares of the same series or class of Preferred Stock, and such
issuance dates occur within a period of no more than 120 days, then, upon the
final such issuance, the Series A Conversion Price shall be readjusted to give
effect to all such issuances as if they occurred on the date of the final such
issuance (and
11
without giving effect to any adjustments as a result of such prior issuances
within such period). (e) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the Series A Original
Issue Date effect a subdivision of the outstanding Common Stock, the Series A
Conversion Price then in effect immediately before that subdivision shall be
proportionately decreased. If the Corporation shall at any time or from time to
time after the Series A Original Issue Date combine the outstanding shares of
Common Stock, the Series A Conversion Price then in effect immediately before
the combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Series A Original
Issue Date shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such event the
Series A Conversion Price then in effect immediately before such event shall
be decreased as of the time of such issuance or, in the event such a record
date shall have been fixed, as of the close of business on such record date,
by multiplying the Series A Conversion Price then in effect by a fraction:
(1) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Series A Conversion Price shall be recomputed
accordingly as of the close of business on such record date and thereafter
the Series A Conversion Price shall be adjusted pursuant to this paragraph as
of the time of actual payment of such dividends or distributions; and
provided further, however, that no such adjustment shall be made if the
holders of Series A Preferred Stock simultaneously receive (i) a dividend or
other distribution of shares of Common Stock in a number equal to the number
of shares of Common Stock as they would have received if all outstanding
shares of Series A Preferred Stock had been converted into Common Stock on
the date of such event or (ii) a dividend or other distribution of shares of
Series A Preferred Stock which are convertible, as of the date of such event,
into such number of shares of Common Stock as is equal to the number of
additional shares of Common Stock being issued with respect to each share of
Common Stock in such dividend or distribution.
(g) Adjustments for Other Dividends and Distributions. In the event
the Corporation at any time or from time to time after the Series A Original
Issue Date shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation (other than shares of Common Stock)
or in cash or other property (other than cash out of earnings or earned
surplus, determined in accordance with generally accepted accounting
principles), then and in each such event provision shall be made so that the
holders of the Series A Preferred Stock shall receive upon conversion thereof
in addition to the number of shares of Common Stock receivable thereupon, the
kind and amount of securities of the Corporation, cash or other property
which they would have been entitled to receive had the Series A Preferred
Stock been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and
12
including the conversion date, retained such securities receivable by them as
aforesaid during such period, giving application to all adjustments called for
during such period under this paragraph with respect to the rights of the
holders of the Series A Preferred Stock; provided, however, that no such
adjustment shall be made if the holders of Series A Preferred Stock
simultaneously receive a dividend or other distribution of such securities, cash
or other property in an amount equal to the amount of such securities as they
would have received if all outstanding shares of Series A Preferred Stock had
been converted into Common Stock on the date of such event.
(h) Adjustment for Merger or Reorganization, etc. Subject to the
provisions of Subsection 2(c), if there shall occur any reorganization,
recapitalization, consolidation or merger involving the Corporation in which
the Common Stock (but not the Series A Preferred Stock) is converted into or
exchanged for securities, cash or other property (other than a transaction
covered by paragraphs (e), (f) or (g) of this Section 4), then, following any
such reorganization, recapitalization, consolidation or merger, each share of
Series A Preferred Stock shall be convertible into the kind and amount of
securities, cash or other property which a holder of the number of shares of
Common Stock of the Corporation issuable upon conversion of one share of
Series A Preferred Stock immediately prior to such reorganization,
recapitalization, consolidation or merger would have been entitled to receive
pursuant to such transaction; and, in such case, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Section 4 set forth with respect to the
rights and interest thereafter of the holders of the Series A Preferred
Stock, to the end that the provisions set forth in this Section 4 (including
provisions with respect to changes in and other adjustments of the Series A
Conversion Price) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other property thereafter
deliverable upon the conversion of the Series A Preferred Stock.
(i) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out
of all the provisions of this Section 4 and in the taking of all such action
as may be necessary or appropriate in order to protect the Conversion Rights
of the holders of the Series A Preferred Stock against impairment.
(j) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price pursuant to this
Section 4, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of Series A Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series A Preferred Stock, furnish or
cause to be furnished to such holder a certificate setting forth (i) the
Series A Conversion Price then in effect, and (ii) the number of shares of
Common Stock and the amount, if any, of other securities, cash or property
which then would be received upon the conversion of Series A Preferred Stock.
(k) Notice of Record Date. In the event:
(i) the Corporation shall take a record of the holders of its
Common Stock (or other stock or securities at the time issuable upon
conversion of the Series A Preferred Stock) for the purpose of entitling or
enabling them to receive any dividend or other distribution, or to
13
receive any right to subscribe for or purchase any shares of stock of any class
or any other securities, or to receive any other right; or
(ii) of any capital reorganization of the Corporation, any
reclassification of the Common Stock of the Corporation, any consolidation or
merger of the Corporation with or into another corporation (other than a
consolidation or merger in which the Corporation is the surviving entity and
its Common Stock is not converted into or exchanged for any other securities
or property), or any transfer of all or substantially all of the assets of
the Corporation; or
(iii)of the voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation,
then, and in each such case, the Corporation will mail or cause to be mailed
to the holders of the Series A Preferred Stock a notice specifying, as the
case may be, (i) the record date for such dividend, distribution or right,
and the amount and character of such dividend, distribution or right, or (ii)
the effective date on which such reorganization, reclassification,
consolidation, merger, transfer, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time
issuable upon the conversion of the Series A Preferred Stock) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
10 days prior to the record date or effective date for the event specified in
such notice.
5. Mandatory Conversion.
(a) Upon the closing of the sale of shares of Class A Common
Stock, at a price to the public of at least $10.00 per share (subject to
appropriate adjustment for stock splits, stock dividends, combinations and
other similar recapitalizations affecting such shares), in a firm-commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, resulting in at least
$30,000,000 of net proceeds to the Corporation (the "Mandatory Conversion
Date"), (i) all outstanding shares of Series A Preferred Stock shall
automatically be converted into shares of Class A Common Stock, at the then
effective conversion rate and (ii) the number of authorized shares of
Preferred Stock shall be automatically reduced by the number of shares of
Preferred Stock that had been designated as Series A Preferred Stock, and all
provisions included under the caption "Series A Preferred Stock", and all
references to the Series A Preferred Stock, shall be deleted and shall be of
no further force or effect.
(b) All holders of record of shares of Series A Preferred Stock
shall be given written notice of the Mandatory Conversion Date and the place
designated for mandatory conversion of all such shares of Series A Preferred
Stock pursuant to this Section 5. Such notice need not be given in advance of
the occurrence of the Mandatory Conversion Date. Such notice shall be sent by
first class or registered mail, postage prepaid, to each record holder of Series
A Preferred Stock at such holder's address last shown on the records of the
transfer agent for the Series A Preferred Stock (or the records of the
Corporation, if it serves as its own transfer agent). Upon receipt of such
notice, each holder of shares of Series A Preferred Stock shall surrender his or
its certificate or certificates for all such shares to the Corporation at the
place designated in such notice, and shall thereafter receive certificates for
the number of shares of Class A Common Stock to which such holder is entitled
pursuant to this Section 5. On the Mandatory Conversion Date, all outstanding
shares of Series A Preferred Stock shall be deemed to have been converted
14
into shares of Class A Common Stock, which shall be deemed to be outstanding of
record, and all rights with respect to the Series A Preferred Stock so
converted, including the rights, if any, to receive notices and vote (other than
as a holder of Class A Common Stock) will terminate, except only the rights of
the holders thereof, upon surrender of their certificate or certificates
therefor, to receive certificates for the number of shares of Class A Common
Stock into which such Series A Preferred Stock has been converted, and payment
of any accrued or declared but unpaid dividends thereon. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or by
his or its attorney duly authorized in writing. As soon as practicable after the
Mandatory Conversion Date and the surrender of the certificate or certificates
for Series A Preferred Stock, the Corporation shall cause to be issued and
delivered to such holder, or on his or its written order, a certificate or
certificates for the number of full shares of Class A Common Stock issuable on
such conversion in accordance with the provisions hereof and cash as provided in
Subsection 4(b) in respect of any fraction of a share of Class A Common Stock
otherwise issuable upon such conversion.
(c) All certificates evidencing shares of Series A Preferred Stock
which are required to be surrendered for conversion in accordance with the
provisions hereof shall, from and after the Mandatory Conversion Date, be
deemed to have been retired and cancelled and the shares of Series A
Preferred Stock represented thereby converted into Class A Common Stock for
all purposes, notwithstanding the failure of the holder or holders thereof to
surrender such certificates on or prior to such date. Such converted Series
A Preferred Stock may not be reissued, and the Corporation may thereafter
take such appropriate action (without the need for stockholder action) as may
be necessary to reduce the authorized number of shares of Series A Preferred
Stock accordingly.
6. Redemption.
(a) The Corporation will, subject to the conditions set forth
below, on October 17, 2005 and on each of the first and second anniversaries
thereof (each such date being referred to hereinafter as a "Mandatory
Redemption Date"), upon receipt not less than 60 nor more than 120 days prior
to the applicable Mandatory Redemption Date of written request(s) for
redemption from holders of at least 66 2/3% of the shares of Series A
Preferred Stock then outstanding (an "Initial Redemption Request"), redeem
from each holder of shares of Series A Preferred Stock that requests
redemption pursuant to the Initial Redemption Request or pursuant to a
subsequent election made in accordance with Section 6(b) below (a "Requesting
Holder"), at a price equal to $3.19 per share, plus any dividends accrued or
declared but unpaid thereon, subject to appropriate adjustment in the event
of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares (the "Mandatory Redemption Price"),
the number of shares of Series A Preferred Stock requested to be redeemed by
each Requesting Holder, but not more than the following respective portions
of the number of shares of Series A Preferred Stock held by such Requesting
Holder on the applicable Mandatory Redemption Date.
15
Maximum
Mandatory Portion of Shares of Series A
Redemption Date Preferred Stock To Be Redeemed
October 17, 2005 33%
October 17, 2006 50%
October 17, 2007 All outstanding shares of
Series A Preferred Stock
(b) The Corporation shall provide notice of its receipt of an
Initial Redemption Request, specifying the time, manner and place of
redemption and the Mandatory Redemption Price (a "Redemption Notice"), by
first class or registered mail, postage prepaid, to each holder of record of
Series A Preferred Stock at the address for such holder last shown on the
records of the transfer agent therefor (or the records of the Corporation, if
it serves as its own transfer agent), not less than 45 days prior to the
applicable Mandatory Redemption Date. Each holder of Series A Preferred
Stock (other than a holder who has made the Initial Redemption Request) may
elect to become a Requesting Holder on such Mandatory Redemption Date by so
indicating in a written notice mailed to the Company, by first class or
registered mail, postage prepaid, at least 30 days prior to the applicable
Mandatory Redemption Date. Except as provided in Section 6(c) below, each
Requesting Holder shall surrender to the Corporation on the applicable
Mandatory Redemption Date the certificate(s) representing the shares to be
redeemed on such date, in the manner and at the place designated in the
Redemption Notice. Thereupon, the Mandatory Redemption Price shall be paid
to the order of each such Requesting Holder and each certificate surrendered
for redemption shall be cancelled.
(c) If the funds of the Corporation legally available for
redemption of Series A Preferred Stock on any Mandatory Redemption Date are
insufficient to redeem the number of shares of Series A Preferred Stock
required under this Section 6 to be redeemed on such date from Requesting
Holders, those funds which are legally available will be used to redeem the
maximum possible number of such shares of Series A Preferred Stock ratably on
the basis of the number of shares of Series A Preferred Stock which would be
redeemed on such date if the funds of the Corporation legally available
therefor had been sufficient to redeem all shares of Series A Preferred Stock
required to be redeemed on such date. At any time thereafter when additional
funds of the Corporation become legally available for the redemption of
Series A Preferred Stock, such funds will be used, at the end of the next
succeeding fiscal quarter, to redeem the balance of the shares which the
Corporation was theretofore obligated to redeem, ratably on the basis set
forth in the preceding sentence.
(d) Unless there shall have been a failure to pay the Mandatory
Redemption Price, on the Mandatory Redemption Date all rights of the holder
of each share redeemed on such date as a stockholder of the Corporation by
reason of the ownership of such share will cease, except the right to receive
the Mandatory Redemption Price of such share, without interest, upon
presentation and surrender of the certificate representing such share, and
such share will not from and after such Mandatory Redemption Date be deemed
to be outstanding.
(e) Any Series A Preferred Stock redeemed pursuant to this Section
6 will be cancelled and will not under any circumstances be reissued, sold or
transferred and the Corporation may from time to time take such appropriate
action as may be necessary to reduce the authorized Series A Preferred Stock
accordingly.
7. Right of First Refusal.
16
No stockholder of the Corporation shall sell, assign, pledge or
otherwise transfer (collectively, "transfer") to (x) any party which the
Board of Directors reasonably determines to be a competitor of the
Corporation or of MicroStrategy Incorporated, or (y) any party set forth on
Exhibit I of that certain Series A Preferred Stock Purchase Agreement by and
among the Corporation and the individuals and entities listed on Exhibit A
thereto, dated as of October 17, 2000 (each, a "Prohibited Transferee"), any
of shares of Series A Preferred Stock of the Corporation or any right or
interest therein, whether voluntarily or by operation of law, or by gift or
otherwise, except by a transfer which meets the following requirements:
(a) If any stockholder (the "Selling Stockholder") proposes to transfer
any shares of Series A Preferred Stock of the Corporation (the "Offered
Shares") to a Prohibited Transferee, then the Selling Stockholder shall first
give written notice of the proposed transfer (the "Transfer Notice") to the
Corporation. The Transfer Notice shall name the proposed transferee and
state the number of Offered Shares, the price per share and all other
material terms and conditions of the transfer.
(b) For 15 days following its receipt of such Transfer Notice, the
Corporation shall have the option to purchase all or any lesser part of the
Offered Shares at the price and upon the terms set forth in the Transfer
Notice. In the event the Corporation elects to purchase all of the Offered
Shares, it shall give written notice of its election to the Selling
Stockholder within such 15-day period and the settlement of the sale of such
Offered Shares shall be made as provided below in Subsection (d).
(c) If the Corporation does not elect to acquire all of the Offered
Shares, the Corporation shall, within 15 days after receipt of the Transfer
Notice, give written notice of its decision to MicroStrategy Incorporated, a
Delaware corporation ("MSTR") and the holders of shares of Series A Preferred
Stock then outstanding (collectively with MSTR, the "Eligible
Stockholders"). Such notice shall state the number of Offered Shares
available for purchase. Each Eligible Stockholder shall be entitled to
purchase that proportion of the Offered Shares available for purchase as the
number of shares of Common Stock owned by him bears to the total number of
issued and outstanding shares of Common Stock of the Corporation then owned
by all Eligible Stockholders. For this purpose, any shares of Preferred
Stock or Class B Common Stock of the Corporation then outstanding shall be
treated as if converted into the number of shares of Class A Common Stock
into which such shares may then be converted. Within ten days after mailing
of such notice to the Eligible Stockholders, each Eligible Stockholder shall
give written notice to the Corporation and the Selling Stockholder stating
how many shares of his pro rata allotment he will purchase and how many
additional shares he will purchase if additional Offered Shares are made
available. If an Eligible Stockholder fails to respond in writing within
this ten-day period to the notice given by the Corporation, the right of such
Eligible Stockholder to acquire his proportionate part of the Offered Shares
of the Selling Stockholder shall terminate. If one or more Eligible
Stockholders do not elect to acquire his full pro rata shares of the Offered
Shares available, these Offered Shares shall be allocated to each other
Eligible Stockholder in proportion to the respective number of additional
shares which Eligible Stockholders indicated they would purchase. If any
Eligible Stockholder is thereby given the right to purchase a greater number
of Offered Shares than he has subscribed for, the excess shall be reallocated
to the other Eligible Stockholders on the same proportionate basis described
above. The Corporation shall allocate and reallocate the shares available
according to this procedure, but it shall have discretion to allocate amounts
of less than 100 shares as it sees fit in its sole discretion. All
allocations and reallocations pursuant to this Subsection (c) must be
completed within 14 days after the end of the ten-day period referred to
above.
17
(d) If the Corporation and/or Eligible Stockholders elect to acquire
all or any portion of the Offered Shares, the Corporation shall so notify the
Selling Stockholder and settlement shall be made at the principal office of
the Corporation in cash within 30 days after the Corporation receives the
Transfer Notice; provided that if the terms of payment set forth in the
Transfer Notice were other than cash against delivery, the Corporation and/or
the Eligible Stockholders shall pay for the Offered Shares on the same terms
and conditions set forth in the Transfer Notice.
(e) If the Corporation and/or the Eligible Stockholders do not elect to
acquire all of the Offered Shares, the Selling Stockholder may, within the
90-day period following the expiration of the option rights granted to the
Corporation and the Eligible Stockholders, transfer the remaining Offered
Shares to the proposed transferee or any other purchaser, provided that this
sale shall not be on terms and conditions more favorable to the purchaser
than those contained in the Transfer Notice. Notwithstanding any of the
above, all Offered Shares transferred pursuant to this Section shall be
subject to the provisions of this Section in the same manner and to the same
extent as before the transfer.
(f) The following transactions shall be exempt from the provisions of
this Section:
(1) A stockholder's transfer of any or all of his shares either
during his lifetime or on death by will or intestacy to his immediate family
or to a trust the beneficiaries of which are exclusively one or more of the
stockholder and a member or members of the stockholder's immediate family.
"Immediate family" shall mean spouse, lineal descendant, father, mother,
brother or sister of the stockholder making the transfer;
(2) A stockholder's bona fide pledge or mortgage of his shares
with a commercial lending institution, including any pledge in which record
ownership is transferred to such financial institution and any foreclosure or
other exercise of creditors' rights pursuant to such pledge;
(3) A corporate stockholder's transfer of any or all of its shares
pursuant to and in accordance with the terms of any merger, consolidation,
reclassification of shares or capital reorganization of the corporate
stockholder, or pursuant to a sale of substantially all of the stock or
assets of a corporate stockholder;
(4) A corporate stockholder's transfer of any or all of its shares
to any or all of its stockholders;
(5) A transfer by a stockholder which is a partnership to any or
all of its partners or retired partners, or to the estate of any partner or
retired partner;
(6) A transfer pursuant to an agreement among the stockholder and
other stockholder(s) of the Corporation providing for "take-me-along" or
"co-sale" rights or any stock restriction agreement between the stockholder
and the Corporation;
(7) A transfer to a person who is already a stockholder of the
Corporation;
(8) A transfer to the guardian or conservator of the stockholder;
(9) Any transfer pursuant to an effective registration statement
filed by the Corporation with the Securities and Exchange Commission;
18
provided, however, that in any such case, except as otherwise provided in
Subsection (l) below, the transferee, assignee, pledgee, mortgagee or other
recipient shall receive and hold such stock subject to the provisions of this
Section and there shall be no further transfer of such stock except in
accordance with this Section.
(g) A stockholder of the Corporation shall be deemed to have given a
Transfer Notice to the Corporation and to have offered to sell all of the
shares of stock of the Corporation then held by such stockholder:
(1) if such stockholder dies and as a result any transfer of stock
is to be made other than as permitted by Subsection (f)(1) above;
(2) if such stockholder applies for or consents to the appointment
of a custodian, receiver, trustees or liquidator of any of his properties;
(3) if such stockholder admits in writing his inability to pay his
debts as they mature;
(4) if there is a dissolution, termination of existence,
liquidation, insolvency or business failure of the stockholder;
(5) if there is a composition or an assignment or trust mortgage
for the benefit of creditors by the stockholder;
(6) upon the commencement by or against the stockholder of any
proceeding under the United States Bankruptcy Code or any other federal or
state bankruptcy, reorganization, receivership, insolvency or other similar
law affecting the rights of creditors generally; or
(7) if that stockholder's shares are subject to (i) attachment or
execution of a judgment or (ii) any other transfer by court order, operation
of law, by gift or otherwise without consideration (other than pursuant to
Subsection (f)).
If any offer is deemed to have been made under this Subsection (g), the
Corporation and/or the Eligible Stockholders may elect to purchase all or any
portion of such Offered Shares, and the price to be paid by the Corporation
and/or the Eligible Stockholders for the Offered Shares so deemed to be offered
shall be, if the Board of Directors shall in good faith have established at any
time within the 13 months preceding the date of purchase a fair market value for
such stock (including without limitation a valuation established as the purchase
or exercise price under an employee stock purchase or stock option plan which
requires that the purchase or exercise price be at fair market value, a
valuation established by an arm's-length sale of such stock by the Corporation,
or a valuation established specifically for purposes of this Section), the most
recent valuation for such stock established by the Board of Directors. If the
parties do not agree with the price set by the Board of Directors, then the
price shall be the fair market value of such shares as determined by an
appraiser mutually satisfactory to the Corporation and the Selling Stockholder
deemed to be making such offer or his successors-in-interest, or, if they cannot
agree on a single appraiser, by an appraiser appointed by the Corporation, a
second appraiser appointed by such Selling Stockholder or his
successors-in-interest and a third appraiser appointed by the other two
appraisers. Each party shall bear the cost of his or its own appraiser, and the
cost of the third appraiser shall be shared equally by the parties. If the
shares are not purchased by the Corporation and/or the Eligible Stockholders but
are transferred to other parties, the transferee
19
shall hold such stock subject to the provisions of this Section and there shall
be no further transfer of such stock except in accordance with this Section.
(h) The Corporation may assign its rights to purchase stock in any
particular transaction under this Section to one or more persons or entities.
(i) MSTR may assign its rights to purchase stock in any particular
transaction under this Section to one or more persons or entities.
(j) Any sale or transfer, or purported sale or transfer, of securities
of the Corporation shall be null and void unless the terms, conditions and
provisions of this Section are strictly observed and followed.
(k) The foregoing right of first refusal shall terminate upon either of
the following dates, whichever shall first occur:
(1) Upon the closing of the first public offering of securities of
the Corporation which is effected pursuant to a registration statement filed
with, and declared effective by, the Securities and Exchange Commission under
the Securities Act of 1933, as amended (other than an offering registered on
Form S-4, Form S-8 or any successor forms) that results in aggregate gross
proceeds to the Corporation (aggregate sales price to the public less
underwriters' discounts) of at least $30,000,000 with a net sales price per
share (gross sales price per share to the public less underwriters'
discounts) of not less than $10.00; or
(2) upon the sale of all or substantially all of the shares or
business of the Corporation, by merger, consolidation, sale of assets or
otherwise.
(l) The certificates representing shares of stock of the Corporation
shall bear a legend substantially in the following form (in addition to, or
in combination with, any legend required by applicable federal and state
securities laws and agreements relating to the transfer of the Corporation's
securities):
"The shares represented by this certificate are subject to
a right of first refusal in favor of the Corporation and
certain stockholders, as provided in the Certificate of
Incorporation of the Corporation."
(m) Whenever the neuter, masculine or feminine gender or the plural or
singular number is used herein, it shall be deemed to represent whatever
gender or number the context or circumstances require.
(n) Any notice hereunder shall be in writing and shall be deemed to
have been duly given when mailed by first class mail, or delivered by hand,
(i) if to the Corporation, to its principal executive office, attention:
President; and (ii) if to a stockholder, to the address of the stockholder
listed in the stock transfer books of the Corporation.
8. Waiver. Any of the rights of the holders of Series A Preferred
Stock set forth herein may be waived by the affirmative vote of the holders
of more than 66 2/3% of the shares of Series A Preferred Stock then
outstanding.
ARTICLE SEVEN
BOARD OF DIRECTORS
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In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter or repeal the
by- laws of the corporation, but the stockholders may make additional by-laws
and may alter or repeal any by-law whether adopted by them or otherwise.
Election of directors need not be by written ballot unless required by
the by-laws of the corporation.
Except to the extent that the General Corporation Law of Delaware
prohibits the elimination or limitation of liability of directors for
breaches of fiduciary duty, no director of the corporation shall be
personally liable to the corporation or its stockholders for monetary damages
for any breach of fiduciary duty as a director, notwithstanding any provision
of law imposing such liability. No amendment to or repeal of this provision
shall apply to or have any effect on the liability or alleged liability of
any director of the corporation for or with respect to any acts or omissions
of such director occurring prior to such amendment.
ARTICLE EIGHT
INDEMNIFICATION
The corporation shall, to the fullest extent permitted by Section 145 of
the General Corporation Law of Delaware, as amended from time to time,
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, by reason of the
fact that he is or was, or has agreed to become, a director or officer of the
corporation, or is or was serving, or has agreed to serve, at the request of
the corporation, as a director, officer or trustee of, or in a similar
capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) (any such person being
referred to hereafter as an "Indemnitee"), or by reason of any action alleged
to have been taken or omitted in such capacity, against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by or on behalf of an Indemnitee in
connection with such action, suit or proceeding and any appeal therefrom;
provided that the corporation shall not indemnify an Indemnitee seeking
indemnification in connection with a proceeding (or part thereof) initiated
by such Indemnitee unless the initiation thereof was approved by the Board of
Directors of the corporation; and provided further that the corporation shall
not indemnify an Indemnitee to the extent such Indemnitee is reimbursed from
the proceeds of insurance, and in the event the corporation makes any
indemnification payments to an Indemnitee and such Indemnitee is subsequently
reimbursed from the proceeds of insurance, such Indemnitee shall promptly
refund such indemnification payments to the corporation to the extent of such
insurance reimbursement.
As a condition precedent to his right to be indemnified, the Indemnitee
must notify the corporation in writing as soon as practicable of any action,
suit, proceeding or investigation involving him for which indemnity will or
could be sought. With respect to any action, suit, proceeding or
investigation of which the corporation is so notified, the corporation will
be entitled to participate therein at its own expense and/or to assume the
defense thereof at its own expense, with legal counsel reasonably acceptable
to the Indemnitee.
In the event that the corporation does not assume the defense of any
action, suit, proceeding or investigation of which the corporation receives
notice under this Article, the corporation shall pay in advance of the final
disposition of such matter any expenses (including attorneys' fees) incurred by
an Indemnitee in defending any such action, suit, proceeding or investigation or
any
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appeal therefrom; provided, however, that the payment of such expenses incurred
by an Indemnitee in advance of the final disposition of such matter shall be
made only upon receipt of an undertaking by or on behalf of the Indemnitee to
repay all amounts so advanced in the event that it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified by the
corporation as authorized in this Article, which undertaking shall be accepted
without reference to the financial ability of the Indemnitee to make such
repayment; and further provided that no such advancement of expenses shall be
made if it is determined that (i) the Indemnitee did not act in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation, or (ii) with respect to any criminal action or
proceeding, the Indemnitee had reasonable cause to believe his conduct was
unlawful.
All determinations hereunder as to the entitlement of an Indemnitee to
indemnification or advancement of expenses shall be made in each instance by
(a) a majority vote of the directors of the corporation consisting of persons
who are not at that time parties to the action, suit or proceeding in
question ("disinterested directors"), whether or not a quorum, (b) the vote
of the holders of shares representing a majority of the votes entitled to be
cast in the election of directors, exclusive of any shares held by any party
to the action, suit or proceeding in question, (c) independent legal counsel
(who may, to the extent permitted by law, be regular legal counsel to the
corporation), or (d) a court of competent jurisdiction.
The indemnification rights provided in this ARTICLE EIGHT shall not be
deemed exclusive of any other rights to which an Indemnitee may be entitled
under any law, agreement or vote of stockholders or disinterested directors
or otherwise, and shall inure to the benefit of the heirs, executors and
administrators of the Indemnitee. The corporation may, to the extent
authorized from time to time by its Board of Directors, grant indemnification
rights to other employees or agents of the corporation or other persons
serving the corporation and such rights may be equivalent to, or greater or
less than, those set forth in this Article.
ARTICLE NINE
AMENDMENTS
Subject to Section 3 of ARTICLE SIX, the corporation reserves the right
to amend, alter, change or repeal any provision contained in this
certificate, in the manner now or hereafter prescribed by the law of the
State of Delaware. All rights conferred upon stockholders herein are granted
subject to this reservation.
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IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation, which restates and integrates and further amends the
provisions of the Certificate of Incorporation of the corporation, and which
has been duly adopted in accordance with Sections 242 and 245 of the Delaware
General Corporation Law, has been executed by its duly authorized officer
this 17th day of October, 2000.
STRATEGY.COM INCORPORATED
By: /s/ Wm. Nicholas Weir
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Name: Wm. Nicholas Weir
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Title: President & COO
-------------------------
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