<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8 - K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 31, 1999
Allin Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State of Other Jurisdiction of Incorporation)
0-21395 21-1795265
(Commission File Number) (IRS Employer Identification No.)
400 Greentree Commons, 381 Mansfield Avenue
Pittsburgh, Pennsylvania 15220-2751
(Address of Principal Executive Offices) (Zip Code)
(412) 928-8800
(Registrant's Telephone Number, Including Area Code)
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Certain matters in this report on Form 8-K constitute "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are typically identified by the words "believes,"
"expects," "anticipates," "intends," "estimates," and similar expressions.
Readers are cautioned that any such forward-looking statements are not
guarantees of performance and that matters referred to in such forward looking
statements involve known and unknown risks, uncertainties and other factors
which may cause actual results, performance or achievements of Allin Corporation
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among other things, risks and uncertainties discussed in the Allin Corporation's
quarterly Report on Form 10-Q for the period ended March 31, 1999 throughout
Part I -- Item 2 -- Management's Discussion and Analysis of Financial Condition
and Results of Operations and under the caption "Special Note on Forward-Looking
Statements" included therein. Allin Corporation undertakes no obligation to
update publicly any forward looking statements, whether as a result of new
information, future events or otherwise.
2
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Item 5 -- Other Events
This filing by Allin Corporation (the "Company") is being made to
disseminate information concerning the effect on the Company's capital structure
of preferred stock newly issued in May 1999 in exchange for previously
outstanding preferred stock and promissory notes of the Company.
Information included in this Report on Form 8-K includes the following:
. Unaudited Consolidated Balance Sheet of Allin Corporation &
Subsidiaries as of May 31, 1999
. Unaudited Consolidated Statement of Operations of Allin Corporation &
Subsidiaries for the Five Months Ended May 31, 1999
. Unaudited Consolidated Statement of Cash Flows of Allin Corporation &
Subsidiaries for the Five Months Ended May 31, 1999
. Notes to Unaudited Consolidated Financial Statements of Allin
Corporation
3
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ALLIN CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
May 31,
1999
---------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,086
Accounts receivable, net of allowance for
doubtful accounts of $301 3,653
Inventory 766
Prepaid expenses 303
---------------
Total current assets 6,808
Property and equipment, at cost:
Leasehold improvements 458
Furniture and equipment 2,439
On-board equipment 2,998
---------------
5,895
Less--accumulated depreciation (3,357)
---------------
2,538
Assets held for resale 59
Notes receivable from employees 32
Software development costs, net of accumulated
amortization of $881 32
Goodwill, net of accumulated amortization of $1,158 13,603
Other assets, net of accumulated amortization of
$3,037 2,521
---------------
Total assets $ 25,593
===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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ALLIN CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
May 31
1999
---------------
<S> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank lines of credit $ 1,920
Notes payable 1
Accounts payable 688
Accrued liabilities:
Compensation and payroll taxes 784
Dividends on Series C convertible,
redeemable preferred stock 619
Dividends on Series D redeemable
preferred stock 14
Other 745
Current portion of deferred revenue 284
Income taxes payable 25
---------------
Total current liabilities 5,080
Non-current portion of notes payable 1,003
Deferred income taxes 81
Commitments and contingencies
Shareholders' equity:
Common stock, par value $.01 per share - authorized
20,000,000 shares, issued 5,995,830 shares 60
Preferred stock, par value $.01 per share,
authorized 100,000 shares:
Series C redeemable preferred stock, designated,
issued and outstanding 25,000 shares 2,500
Series D convertible redeemable preferred stock,
designated, issued and outstanding
2,750 shares 2,152
Series E convertible redeemable preferred stock,
designated 2,000 shares, issued and
outstanding 1,926 shares 1,926
Series F convertible redeemable preferred stock,
designated, issued and outstanding
1,000 shares 1,000
Additional paid-in-capital 40,553
Warrants 598
Deferred compensation (39)
Treasury stock at cost, 7,767 shares (25)
Retained deficit (29,296)
---------------
Total shareholders' equity 19,429
---------------
Total liabilities and shareholders' equity $ 25,593
===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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ALLIN CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Five Months
Ended
May 31,
1999
---------------
<S> <C>
Revenue $ 10,276
Cost of sales 6,581
---------------
Gross profit 3,695
Selling, general & administrative 5,094
---------------
Loss from operations (1,399)
Interest expense, net 131
---------------
Loss before provision for income taxes (1,530)
Provision for income taxes 19
---------------
Loss from continuing operations (1,549)
Gain on disposal of segment (5)
---------------
Net loss (1,544)
Accretion and dividends on preferred stock 345
---------------
Net loss attributable to common shareholders $ (1,889)
===============
Loss per common share from continuing operations
attributable to common shareholders -
basic and diluted $ (0.32)
===============
Income (loss) per common share from discontinued
operations - basic and diluted $ 0.00
===============
Net loss per common share attributable to common
shareholders - basic and diluted $ (0.32)
===============
Weighted average shares outstanding - basic and diluted 5,969,162
---------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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ALLIN CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Five Months
Ended
May 31,
1999
---------------
<S> <C>
Cash flows from operating activities:
Net loss $ (1,544)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation and amortization 1,040
Amortization of deferred compensation (25)
Loss from writedown and sale of assets 93
Changes in certain assets and liabilities:
Accounts receivable (885)
Inventory (323)
Prepaid expenses 16
Assets held for resale (44)
Other assets 2
Accounts and notes payable 113
Accrued liabilities 360
Income taxes payable (87)
Deferred revenues 208
---------------
Net cash flows from operating activities $ (1,076)
---------------
Cash flows from investing activities:
Proceeds from sale of assets $ 21
Proceeds from note receivable related to
sale of subsidiary 463
Capital expenditures (87)
---------------
Net cash flows from investing activities $ 397
---------------
Cash flows from financing activities:
Net borrowing on lines of credit $ 414
Payment of dividends on Series B preferred stock (82)
Debt acquisition costs (1)
Repayment of note payable (74)
Repayment of capital lease obligations (2)
---------------
Net cash flows from financing activities $ 255
---------------
Net change in cash and cash equivalents $ (424)
Cash and cash equivalents, beginning of period 2,510
---------------
Cash and cash equivalents, end of period $ 2,086
===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
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Allin Corporation and Subsidiaries
Notes to Consolidated Financial Statements
1. Basis of Presentation
The information contained in these financial statements and notes for the
five-month period ended May 31, 1999 should be read in conjunction with the
audited financial statements and notes for the years ended December 31, 1997
and 1998, contained in Allin Corporation's (the "Company") Annual Report on
Form 10-K for the year ended December 31, 1998. The accompanying unaudited
Consolidated Financial Statements have been prepared in accordance with
generally accepted accounting principles and the rules and regulations of the
Securities and Exchange Commission. These interim statements do not include
all of the information and footnotes required for complete financial
statements. It is management's opinion that all adjustments (including all
normal recurring accruals) considered necessary for a fair presentation have
been made; however, results for these interim periods are not necessarily
indicative of results to be expected for the full year.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries. The Company is the sole shareholder of all of its
subsidiaries. It is the Company's policy to consolidate all majority-owned
subsidiaries where the Company has control. All significant intercompany
accounts and transactions have been eliminated.
Disposal of Segment
On September 30, 1998, the Company sold all of the issued and outstanding
capital stock of SportsWave, Inc. ("SportsWave"), a wholly-owned subsidiary.
The sale of SportsWave represents the disposal of a segment since SportsWave
comprised the entirety of the Company's sports marketing business. An
adjustment to the gain recorded on the disposal of SportsWave was recorded
during the five-month period ended May 31, 1999. The adjustment to the gain
on disposal is presented after loss from continuing operations.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue and Cost of Sales Recognition
Allin Corporation of California ("Allin Consulting-California") and Allin
Consulting of Pennsylvania, Inc. ("Allin Consulting-Pennsylvania") charge
consulting fees, typically on an hourly basis, to their clients for their
technology consulting services. Revenue and related cost of sales are
recognized as services are performed.
Allin Interactive Corporation's ("Allin Interactive") recognition method for
revenue and cost of sales for systems integration services and fixed price
consulting services is determined based on the size and expected duration of
the project. For systems integration and fixed price consulting projects in
excess of $250,000 of revenue and expected to be of greater than 90 days
duration, the Company recognizes revenue and cost of sales based on percentage
of completion. For all other projects, revenue and cost of sales are
recognized upon completion of the project. Time based consulting revenue and
cost of sales are recognized as services are
8
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performed. Interactive television transactional revenue and management fees
and any associated cost of sales are recognized as the services are performed.
Allin Digital Imaging Corp. ("Allin Digital") recognizes revenue and cost of
sales for systems integration services upon completion of the respective
projects. Revenue and associated cost of sales for equipment and consumable
sales is recognized upon shipment of the product. Technology support fees and
associated cost of sales are recognized as services are performed.
Allin Network Products, Inc. ("Allin Network") recognizes revenue and
associated cost from the sale of products at the time the products are
shipped.
Earnings Per Share
Earnings per share ("EPS") of common stock have been computed in accordance
with Financial Accounting Standards Board Statement No. 128, "Earnings Per
Share" ("SFAS No. 128"). The shares used in calculating basic and diluted EPS
includes the weighted average of the outstanding common shares of the Company,
excluding 18,901 shares of outstanding restricted stock for the five-month
period ended May 31, 1999. The restricted stock, outstanding stock options
and the Company's convertible preferred stock would all be considered dilutive
securities under SFAS No. 128; however, these securities have not been
included in the calculation of diluted EPS, for the applicable periods, as
their effect would be anti-dilutive. The additional shares that would have
been included in the diluted EPS calculation, if their effect was not anti-
dilutive, were 18,901 for the five-month period ended May 31, 1999.
Inventory
Inventory, consisting principally of digital photography equipment and
software, and computer hardware, software and communications equipment, is
stated at the lower of cost (determined on the first-in, first-out method) or
market.
Software Development Costs
Costs of software development are capitalized subsequent to the project
achieving technological feasibility and prior to market introduction. Prior to
the project achieving technological feasibility and after market introduction,
development costs are expensed as incurred. Amortization of capitalized
software costs for internally developed software products and systems is
computed on a product-by-product basis over a three-year period.
Financial Instruments
As of May 31, 1999, the Company's Consolidated Balance Sheet includes a note
payable to a shareholder which relates to the acquisition of Allin Consulting-
California. The note payable is recorded at the face value of the instrument.
The Company accrues interest at a fixed rate and anticipates making interest
payments in the future in accordance with the terms of the note. All other
financial instruments are classified as current and will be utilized within
the next operating cycle.
Supplemental Disclosure Of Cash Flow Information
Cash payments for income taxes were approximately $169,000 during the five
months ended May 31, 1999. Cash payments for interest were approximately
$104,000 during the five months ended May 31, 1999.
Dividends of approximately $115,000 were accrued but unpaid during the five-
month period ended May 31, 1999 on Series A convertible, redeemable preferred
stock and Series B redeemable preferred stock.
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2. Preferred Stock
The Company has authorized the issuance of 100,000 shares of preferred stock
with a par value of $.01 per share. Of the authorized shares, 40,000 have
been designated as Series A Convertible Redeemable Preferred Stock, 5,000 as
Series B Redeemable Preferred Stock, 25,000 as Series C Redeemable Preferred
Stock, 2,750 as Series D Convertible Redeemable Preferred Stock, 2,000 as
Series E Convertible Redeemable Preferred Stock and 1,000 as Series F
Convertible Redeemable Preferred Stock.
Exchange of Series A Convertible Redeemable Preferred Stock for Series C
Redeemable Preferred Stock
On May 31, 1999, the holders of all of the 25,000 outstanding shares of the
Company's Series A preferred stock, which had been issued in August 1996,
exchanged their shares for a like number of shares of the Company's Series
C preferred stock, having a liquidation preference of $100 per share.
There is no mandatory redemption date for the Series C preferred stock
whereas mandatory redemption had been required on June 30, 2006 for the
Series A preferred stock. Series C preferred stock earns dividends at the
rate of 8% per annum, compounded quarterly, until June 30, 2006, when the
Company will be obligated to pay accrued dividends, subject to legally
available funds. Any accrued dividends on the Series C preferred stock not
paid by this date will compound thereafter at a rate of 12% per annum.
After June 30, 2006, dividends on the Series C preferred stock will accrue
and compound at a rate of 12% per annum and will be payable quarterly,
subject to legally available funds. Accrued but unpaid dividends on Series
C preferred stock were approximately $619,000 as of May 31, 1999. The
Company's current credit agreement with S&T Bank prohibits payment of
dividends on Series C preferred stock during the term of the agreement.
Exchange of Series B Redeemable Preferred Stock for Series D Convertible
Redeemable Preferred Stock
On May 31, 1999, the holders of all of the 2,750 outstanding shares of the
Company's Series B preferred stock, which had been issued in August 1998,
exchanged their shares for a like number of shares of the Company's Series
D preferred stock having a liquidation preference of $1,000 per share.
There is no mandatory redemption date for the Series D preferred stock
whereas mandatory redemption had been required for Series B preferred stock
on the earlier of August 13, 2003 or following certain asset sales by the
Company, as defined in the Certificate of Designation for Series B
Preferred Stock, which is filed as an exhibit to the Company's Current
Report on Form 8-K dated as of August 13, 1998. Series D preferred stock
earns dividends at the rate of 6% per annum, payable and compounded
quarterly. Series D preferred stock is convertible into the Company's
common stock on terms identical to those of Series B preferred stock.
Until and including August 13, 1999, the first anniversary of the original
issuance of the Series B preferred shares, each Series D share will be
convertible into the number of shares of common stock determined by (a)
dividing 1,000 by $3.6125, which is 85% of the $4.25 per share price prior
to the date of closing of the acquisition of Allin Consulting-Pennsylvania
or (b) if it results in a greater number of shares of common stock,
dividing 1,000 by the greater of (i) 85% of the closing price of the common
stock as reported by The Nasdaq Stock Market ("Nasdaq") on the trading date
prior to the date of conversion, or (ii) $2.00. After the first
anniversary of the original issuance of Series B preferred shares, each
share of Series D preferred stock is convertible into the number of shares
of common stock determined by (a) above, or if it results in a greater
number of shares of common stock, dividing 1,000 by 85% of the closing
price of the common stock as reported by Nasdaq on the first trading date
following the first anniversary of the closing date.
10
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Exchange of Promissory Note for Series E Convertible Redeemable Preferred
Stock
On May 31, 1999, the holder of a promissory note issued by the Company in
connection with the acquisition of Allin Consulting-Pennsylvania, with an
outstanding principal balance of approximately $1,926,000 exchanged the
promissory note for 1,926 shares of the Company's Series E preferred stock
having a liquidation preference of $1,000 per share. There will be no
mandatory redemption date for the Series E preferred stock. Series E
preferred stock earns dividends at the rate of 6% per annum, payable
quarterly, subject to legally available funds. The promissory note would
have converted to the Company's common stock if the principal balance was
not repaid prior to August 13, 2000. Series E preferred stock is
convertible to the Company's common stock on terms substantially identical
to those of the promissory note. If not redeemed by the Company earlier,
outstanding Series E preferred stock will automatically convert as of
August 13, 2000 into the number of shares of the Company's common stock
equal to the amount obtained by dividing the liquidation preference of the
outstanding shares of Series E preferred stock plus accrued and unpaid
dividends, if any, by (i) $4.406 or (ii) at the holder's option, the
average of the bid and asked prices of the common stock for the thirty days
preceding August 13, 2000, subject to a $2.00 minimum price. Upon the
happening of certain events, the holder of Series E preferred stock will be
able to convert the shares of the Series E preferred stock into the
Company's common stock prior to August 13, 2000.
Exchange of Promissory Note for Series F Convertible Redeemable Preferred
Stock
On May 31, 1999, the holder of a promissory note issued by the Company in
connection with the acquisition of Allin Consulting-California, with an
outstanding principal balance of $2,000,000 agreed to a reduction in the
principal amount of the promissory note by $1,000,000 in exchange for 1,000
shares of the Company's Series F preferred stock having a liquidation
preference of $1,000 per share. There will be no mandatory redemption date
for the Series F preferred stock. Series F preferred stock earns dividends
at the rate of 7% per annum. The dividends will accrue until April 15,
2000, when accrued dividends will be payable subject to legally available
funds. Dividends will be payable and will compound quarterly after April
15, 2000, subject to legally available funds. Series F preferred stock is
convertible to the Company's Common Stock until the earlier of May 31, 2004
or the Company's redemption of the Series F preferred shares. Until and
including May 31, 2000, Series F preferred stock is convertible into the
number of shares of the Company's common stock equal to the amount obtained
by (i) dividing 1000 by 85% of the closing price of the common stock as
reported by Nasdaq on the last trading date prior to the issuance of Series
F preferred stock or (ii) if it results in a greater number of common
shares, dividing 1000 by the greater of (a) 85% of the closing price of the
common stock as reported by Nasdaq on the last trading date prior to
conversion or (b) 47.1% of the closing price of the common stock as
reported by Nasdaq on the last trading date prior to the issuance of Series
F preferred stock. From June 1, 2000 until May 31, 2004, Series F
preferred stock will be convertible into the number of shares of the
Company's common stock equal to the amount obtained by (i) dividing 1000 by
85% of the closing price of the common stock as reported by Nasdaq on the
last trading date prior to the issuance of Series F preferred stock or (ii)
if it results in a greater number of common shares, dividing 1000 by the
greater of (a) 85% of the closing price of the common stock as reported by
Nasdaq on the last trading date prior to the first anniversary of the date
of issuance of the Series F preferred stock or (b) 47.1% of the closing
price of the common stock as reported by Nasdaq on the last trading date
prior to the issuance of Series F preferred stock.
The amended and restated promissory note is not convertible to the
Company's common stock. Inclusion of the convertibility feature in the
Series F preferred stock for which a portion of the note was exchanged
resulted in the issuance of preferred stock with a non-detachable
conversion feature that is "in the money" at the date of issuance.
Therefore, a beneficial conversion feature was recognized by allocating a
portion of the proceeds equal to the intrinsic value of that feature to
additional paid-in-capital during May 1999, when the Series F preferred
stock was issued. The value of the beneficial conversion feature,
approximately
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$176,000, was calculated by determining the number of common shares that
would be issued assuming conversion at the market price at the date of
issuance and the number to be issued at the conversion price and
multiplying the difference in number of common shares by the market price.
The beneficial conversion feature was treated as an immediate dividend to
the Series F preferred shareholder since the Series F preferred shareholder
had rights for immediate conversion. Consequently, the value of the
beneficial conversion feature represented a dividend that would accrete
immediately upon approval. Since the Company had an accumulated deficit as
of the issuance date, the accretion was netted against additional paid-in-
capital rather than accumulated deficit, resulting in no net change to
shareholders' equity. The beneficial conversion feature results in
additional accretion of preferred stock in determining net loss available
to common shareholders during 1999, which resulted in lower earnings per
share. The beneficial conversion feature will not otherwise impact the
earnings per share calculations during periods in which the Company has net
losses as the effect would be anti-dilutive.
3. Liability for Employee Termination Benefits
The Company recognizes liabilities for involuntary employee termination
benefits in the period management approves the plan of termination if during
that period management has approved and committed to the plan of termination
and established the benefits to be received; communicated benefit plans to
employees; identified numbers, functions and locations of anticipated
terminations; and the period of time for the plan of termination indicates
significant changes are not likely.
A reorganization charge of approximately $208,000 was recorded as of
January 12, 1999 to establish a liability for severance costs associated with
the termination of services of the Company's president. Associated expenses
are reflected in Selling, general & administrative expenses on the
Consolidated Statement of Operations during that period. As of May 31, 1999,
approximately $83,000 of the amount accrued under the January 12, 1999 charge
had been paid. The remaining balance, approximately $125,000, is included in
accrued compensation and payroll taxes on the Consolidated Balance Sheet. It
is anticipated that payments under this plan will be completed by January
2000.
A reorganization charge of approximately $491,000 was recorded as of
February 4, 1998 to establish a liability for separation costs associated with
a plan for reorganization of operations, including the resignations of certain
senior executives. Associated expenses are reflected in Selling, general &
administrative expenses on the Consolidated Statement of Operations during
that period. The plan included three positions including the Company's
president, chief operating officer and an administrative assistant, all of
whom have ceased employment with the Company. As of May 31, 1999, all of the
amount accrued under the February 4, 1998 charge had been paid.
4. Equity Transactions
A total of 340,398 options for common shares, exercisable at an average
exercise price of $3.25 per share were awarded under the Company's 1998 Stock
Plan during the five months ended May 31, 1999. The exercise prices of the
options awarded ranged from $3.00 per share to $3.25 per share. Unless
forfeited earlier, a total of 280,998 of the options will vest with respect to
20% of the shares subject to each grant on each of the first through fifth
anniversaries of the grant date, except that 78,750 will vest earlier in the
event of a change in control of the Company, as defined in certain employment
agreements. A total of 60,000 of the options will vest on the earlier to occur
of May 15, 2001 or a change in control of the Company. See Item 11 --
Executive Compensation of the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 for additional information concerning the vesting
of options in the event of a change in control of the Company. The right to
exercise options to purchase shares expires seven years from the grant date or
earlier for certain of the options if the option holder ceases to be employed
by the Company or a subsidiary. Non-vested options to purchase 9,000 shares of
common stock awarded under the Company's 1998 Stock Plan were forfeited under
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the terms of the Plan during the five months ended May 31, 1999. Options
granted under the 1998 Stock Plan to purchase 331,398 shares of common stock
remain outstanding as of May 31, 1999.
During the five months ended March 31, 1999, vested options to purchase 1,160
shares and non-vested options to purchase 640 shares of common stock
previously awarded under the Company's 1997 Stock Plan were forfeited under
the terms of the Plan. There were no options awarded under the 1997 Stock
Plan during the five months ended May 31, 1999. Options granted under the
1997 Stock Plan to purchase 289,200 shares of common stock remain outstanding
as of May 31, 1999.
During the five months ended May 31, 1999, non-vested options to purchase
23,500 shares of common stock previously awarded under the Company's 1996
Stock Plan were forfeited under the terms of the Plan. There were no options
awarded under the 1996 Stock Plan during the five months ended May 31, 1999.
Options granted under the 1996 Stock Plan to purchase 209,900 shares of common
stock remain outstanding as of May 31, 1999.
During the five months ended May 31, 1999, a total of 5,967 restricted shares
of the Company's common stock were forfeited due to their holders' termination
of employment. The forfeited restricted stock reverted to treasury stock,
which the Company has recorded at cost.
5. Industry Segment Information
Basis for Determining Segments
The Company has determined the segments reported based on the types of
services and products offered, which is consistent with management's method of
evaluating the financial performance of segments.
The term "Allin Consulting" is used to denote the collective operations of
Allin Consulting-California and Allin Consulting-Pennsylvania. Allin
Consulting provides technology consulting services oriented around solutions
areas meeting customer needs for information technology infrastructure,
business operations, and electronic business technology services. Segments
related to Allin Consulting's operations include Information Technology
Infrastructure, Business Operations, Electronic Business and Other, which
reflects operational activity not attributable to the identified segments.
The term "Interactive Media Solutions & Product Sales" is used to denote
collectively the Company's operational activity related to interactive
television and digital photography systems and applications as well as
computer hardware and software sales. Allin Interactive provides specialized
systems integration, consulting and operational services related to
interactive television systems and applications. Allin Digital provides
specialized systems integration and technical support for digital photography
systems and also sells ancillary products related to digital photography
operations. Allin Network sells computer hardware and software. These
operations are grouped together, and are differentiated from the Company's
other technology consulting solutions areas, because of the specialized nature
of the interactive technology and because the sales activity and strategies
for these operations involve projects with significant equipment components in
addition to consulting expertise. Segments related to these operations
include Interactive Television Systems Integration & Consulting, Interactive
Television Transactional Revenue & Management Fees, Digital Imaging Systems
Integration & Ancillary Products and Computer Hardware and Software Sales.
Measurement Method
The Company's basis for measurement of segment revenue, gross profit and
assets is consistent with that utilized for the Company's Consolidated
Statements of Income and Consolidated Balance Sheets. There are no
differences in measurement method.
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Revenue
Information on revenue derived from external customers is as follows:
<TABLE>
<CAPTION>
Revenue from
(Dollars in thousands) External
Customers
Five Month Period ended May 31 1999
------------------
<S> <C>
Allin Consulting Solutions Areas:
Information Technology Infrastructure $ 1,714
Business Operations 5,742
Knowledge Management 125
Electronic Business 12
Other 123
------------------
Total Allin Consulting $ 7,716
Interactive Media Solutions & Product Sales:
Interactive Television Systems Integration & Consulting $ 455
Interactive Television Transactional Revenue & Management Fees 875
Digital Imaging Systems Integration & Ancillary Products 1,030
Computer Hardware & Software Sales 200
------------------
Total Interactive Media Solutions & Product Sales $ 2,560
------------------
Consolidated Revenue from External Customers $10,276
==================
</TABLE>
Certain of the Company's segments have also performed services for related
entities in other segments. All revenue recorded for these services is
eliminated in consolidation. The Company does not break down technology
consulting services performed for related entities into further segments.
Information on revenue derived from services for related entities in other
segments is as follows:
<TABLE>
<CAPTION>
Revenue from
(Dollars in thousands) Related
Entities
Five Month Period ended May 31 1999
-------------------
<S> <C>
Technology Consulting $ 89
Interactive Television Systems Integration & Consulting 33
Computer Hardware & Software Sales 137
-------------------
Total Revenue from Related Entities in Other Segments $ 259
===================
</TABLE>
14
<PAGE>
Gross Profit
Gross profit is the segment profitability measure that the Company's
management believes is determined in accordance with the measurement
principles most consistent with those used in measuring the corresponding
amounts in the Company's consolidated financial statements. Revenue and cost
of sales for services performed for related entities is eliminated in
calculating gross profit. Information on gross profit is as follows:
<TABLE>
<CAPTION>
(Dollars in thousands) Gross Profit
Five Month Period ended May 31 1999
------------------------
<S> <C>
Allin Consulting Solutions Areas:
Information Technology Infrastructure $ 751
Business Operations 1,691
Knowledge Management 49
Electronic Business 6
Other (43)
------------------------
Total Allin Consulting $2,454
Interactive Media Solutions & Product Sales:
Interactive Television Systems Integration & Consulting $ 241
Interactive Television Transactional Revenue & Management Fees 757
Digital Imaging Systems Integration & Ancillary Products 209
Computer Hardware & Software Sales 34
------------------------
Total Interactive Media Solutions & Product Sales $1,241
------------------------
Consolidated Gross Profit $3,695
========================
</TABLE>
15
<PAGE>
Item 7c. Exhibits
Exhibit
Number Description of Exhibit
- ------ ----------------------
4.1 Certificate of Voting Powers, Designations,
Preferences and Relative, Participating,
Optional or Other Rights, and the
Qualifications, Limitations or Restrictions
Thereof, of the Series C Redeemable Preferred
Stock of Allin Corporation
4.2 Certificate of Voting Powers, Designations,
Preferences and Relative, Participating,
Optional or Other Rights, and the
Qualifications, Limitations or Restrictions
Thereof, of the Series D Convertible Redeemable
Preferred Stock of Allin Corporation
4.3 Certificate of Voting Powers, Designations,
Preferences and Relative, Participating,
Optional or Other Rights, and the
Qualifications, Limitations or Restrictions
Thereof, of the Series E Convertible Redeemable
Preferred Stock of Allin Corporation
4.4 Certificate of Voting Powers, Designations,
Preferences and Relative, Participating,
Optional or Other Rights, and the
Qualifications, Limitations or Restrictions
Thereof, of the Series F Convertible Redeemable
Preferred Stock of Allin Corporation
4.5 Second Amended and Restated Promissory Note
dated as of June 1, 1999 by and between Allin
Corporation and Les Kent
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ALLIN CORPORATION
Date: June 15, 1999 By: /s/ Richard W. Talarico
-----------------------
Richard W. Talarico
Chairman and Chief Executive Officer
Date: June 15, 1999 By: /s/ Dean C. Praskach
--------------------
Dean C. Praskach
Vice President-Finance and
Chief Accounting Officer
17
<PAGE>
Allin Corporation
Form 8-K
May 31, 1999
Exhibit Index
Exhibit
Number Description of Exhibit
- ------ ----------------------
4.1 Certificate of Voting Powers, Designations, Preferences and Relative,
Participating, Optional or Other Rights, and the Qualifications,
Limitations or Restrictions Thereof, of the Series C Redeemable
Preferred Stock of Allin Corporation
4.2 Certificate of Voting Powers, Designations, Preferences and Relative,
Participating, Optional or Other Rights, and the Qualifications,
Limitations or Restrictions Thereof, of the Series D Convertible
Redeemable Preferred Stock of Allin Corporation
4.3 Certificate of Voting Powers, Designations, Preferences and Relative,
Participating, Optional or Other Rights, and the Qualifications,
Limitations or Restrictions Thereof, of the Series E Convertible
Redeemable Preferred Stock of Allin Corporation
4.4 Certificate of Voting Powers, Designations, Preferences and Relative,
Participating, Optional or Other Rights, and the Qualifications,
Limitations or Restrictions Thereof, of the Series F Convertible
Redeemable Preferred Stock of Allin Corporation
4.5 Second Amended and Restated Promissory Note dated as of June 1, 1999
by and between Allin Corporation and Les Kent
18
<PAGE>
Exhibit 4.1
CERTIFICATE OF VOTING POWERS,
DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF THE
SERIES C REDEEMABLE PREFERRED STOCK
OF
ALLIN CORPORATION
_____________________________________________
Allin Corporation, a corporation organized and existing by virtue of the
laws of the State of Delaware (the "Corporation"), does hereby certify that the
following resolutions were duly adopted by the Board of Directors of the
Corporation by Unanimous Written Consent dated May 13, 1999.
RESOLVED THAT, pursuant to the authority expressly granted to and vested in
the Board of Directors of the Corporation by the provisions of the Certificate
of Incorporation of the Corporation (the "Certificate of Incorporation"), the
Board of Directors hereby creates, from the shares of Preferred Stock (the
"Preferred Stock") of the Corporation authorized to be issued pursuant to the
Certificate of Incorporation, a series of the Preferred Stock designated Series
C Redeemable Preferred Stock, and hereby fixes the voting powers, designations,
preferences and relative participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, of the shares of such
Series as follows:
1. Designation. Twenty-Five thousand (25,000) shares of the
-----------
Preferred Stock are hereby designated Series C Redeemable Preferred Stock with a
par value of $.01 per share (the "Series C Preferred Stock").
2. Rank. The Series C Preferred Stock shall rank (i) senior to the
----
Common Stock, (ii) pari passu with the Series A Convertible Redeemable Preferred
---- -----
Stock, (iii) junior to the Series B Convertible Redeemable Preferred Stock, and
(iv) junior to the Series D Convertible Redeemable Preferred Stock and the
Series E Convertible Redeemable Preferred Stock, which two series are to be
created concurrently with the Series C Preferred Stock.
3. Dividends.
---------
(a) The holders of shares of Series C Preferred Stock shall be
entitled to receive, when and as declared out of funds legally available for the
payment of dividends by the Board of Directors, cash dividends on each share of
the Series C Preferred Stock (referred to as a "Share") at a rate per annum of
8% of the liquidation value thereof, from and including August 16, 1996 to and
including the earlier of (i) the date on which the Redemption Price of such
Share is paid or (ii) June 30, 2006.
Such dividends, to the extent declared by the Board of Directors, will be
payable quarterly in arrears on each October 31, January 31, April 30 and July
31 (hereinafter referred to as "Dividend Payment Dates"). To the extent that
dividends are not paid on a particular Dividend Payment Date, all such dividends
will accrue and compound on a quarterly basis and will be paid on or before the
Redemption Date.
(b) If the Corporation has not paid the Redemption Price of any
Share on or before June 30, 2006, subject to legally available funds for the
payment of dividends, the Corporation will pay all accrued and unpaid dividends,
if any, as of June 30, 2006 on such Share within ten (10) business days after
June 30, 2006. To
<PAGE>
the extent that all accrued and unpaid dividends as of June 30, 2006 are not so
paid, all such dividends will compound on a quarterly basis at a rate per annum
of 12% and will be paid on or before the Redemption Date.
(c) Following June 30, 2006, the holders of Shares of Series C
Preferred Stock for which the Redemption Price has never been paid shall be
entitled to receive, when and as declared out of funds legally available for the
payment of dividends by the Board of Directors, cash dividends on each Share of
the Series C Preferred Stock at a rate per annum of 12% of the Liquidation Value
thereof, from and including July 1, 2006 to and including the date on which the
Redemption Price of such Share is paid.
Such dividends, to the extent declared by the Board of Directors, will be
payable quarterly in arrears on each Dividend Payment Date. To the extent that
dividends are not paid on a particular Dividend Payment Date, all such dividends
will accrue and compound on a quarterly basis and will be paid on or before the
Redemption Date.
(d) So long as any shares of the Series C Preferred Stock are
outstanding, the Corporation will not declare or pay or set apart for payment
any dividends (other than a dividend in common stock or in any other class of
stock ranking junior to the Series C Preferred Stock as to dividends and upon
liquidation) or make any other distribution on any class of stock of the
Corporation ranking junior to the Series C Preferred Stock either as to
dividends or upon liquidation (collectively, "Junior Securities") and will not
redeem, purchase or otherwise acquire for value, or set apart money for any
sinking or other analogous fund for the redemption or purchase of any shares of
any Junior Securities (in any such case, a "Junior Payment"), unless all
dividends on the Series C Preferred Stock for the Dividend Payment Date
immediately prior to or concurrent with the payment with respect to any such
dividend, distribution, redemption, purchase or acquisition as to such Junior
Securities shall have been paid, or declared and a sum sufficient for the
payment thereof set aside by the Corporation separate and apart from its other
funds.
4. Liquidation.
-----------
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, before any payment or distribution
of the assets of the Corporation (whether capital, surplus or earnings) or
proceeds therefrom shall be made to or set apart for the holders of shares of
any Junior Securities, the holders of shares of Series C Preferred Stock shall
be entitled to receive payment of $100 per share (the "Liquidation Value") held
by them, plus an amount equal to all dividends accrued and compounded and unpaid
on such shares to the date of such payment.
(b) If upon any liquidation, dissolution or winding up of the
Corporation, the Corporation's assets to be distributed among the holders of the
Series C Preferred Stock are insufficient to permit payment to such holders of
the aggregate amount which they are entitled to be paid, then the entire assets
to be distributed will be distributed ratably among such holders based upon the
aggregate Liquidation Value of the Series C Preferred Stock held by each such
holder. The Corporation will mail written notice of such liquidation,
dissolution or winding up, not less than sixty (60) days prior to the payment
date stated therein, to each record holder of Series C Preferred Stock. Neither
the consolidation nor merger of the Corporation into or with any other
corporation or corporations, nor the sale or transfer by the Corporation of all
or any part of its assets, nor the reduction of the capital stock of the
Corporation, will be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this paragraph.
5. Redemption.
----------
(a) Optional Redemption. At any time, the Corporation shall have
-------------------
the right to redeem all or part of the outstanding Shares of Series C Preferred
Stock, by giving written notice thereof to the affected stockholder or
stockholders (the "Redemption Notice"). The Redemption Notice shall specify (i)
the redemption date which shall be not less than thirty (30) days from the date
of the Redemption Notice and (ii) the number of shares to be redeemed. If fewer
than all of the outstanding Shares of Series C Preferred Stock are to be
redeemed,
<PAGE>
such Shares shall be redeemed on a pro rata basis among the holders of record of
outstanding Shares of Series C Preferred Stock.
(b) Redemption Price. The redemption price for Shares of Series C
----------------
Preferred Stock shall be One Hundred Dollars ($100) per Share, plus an amount
equal to all accrued and compounded and unpaid dividends to the date of
redemption (the "Redemption Price").
(c) Redemption Procedure. Unless default is made in the payment
--------------------
of the Redemption Price, all rights of the holders of Shares of Series C
Preferred Stock as stockholders of the Corporation by reason of the ownership of
the respective Shares of Series C Preferred Stock shall cease at the close of
business on the Redemption Date ("Redemption Date"), except the right to receive
payment in full of the Redemption Price of such Shares of Series C Preferred
Stock on presentation and surrender of the certificate or certificates for such
Shares of Series C Preferred Stock, and after the Redemption Date such Shares of
Series C Preferred Stock shall not be deemed to be outstanding. In case less
than all the Shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed Shares of Series C
Preferred Stock without cost to the holder thereof.
At its option, the Corporation may, on or prior to the Redemption Date,
deposit an amount equal to the aggregate Redemption Price of the Shares of the
Series C Preferred Stock to be redeemed with a bank or trust company (the
"Depositary"), having its principal office in the City of Pittsburgh,
Commonwealth of Pennsylvania, and designated by the Board of Directors, to be
held in trust by the Depositary, for the sole benefit of the holders of the
Series C Preferred Stock, for payment to the holders of such Shares of Series C
Preferred Stock then to be redeemed. If such deposit is made and the funds so
deposited are made immediately available to the holders of the Shares of the
Series C Preferred Stock to be redeemed, the Corporation shall thereupon be
released and discharged (subject to the provisions of the next paragraph of this
Section) from its obligation to make payment of the Redemption Price of the
Shares of Series C Preferred Stock to be redeemed, and the holders of such
Shares shall look only to the Depositary for such payment.
Any funds deposited with the Depositary as aforesaid with respect to payment
of the Redemption Price of Shares of the Series C Preferred Stock remaining
unclaimed at the end of five (5) years from and after the Redemption Date in
respect of which such funds were deposited, shall be returned to the Corporation
forthwith; and thereafter the holders of Shares of the Series C Preferred Stock
redeemed on such Redemption Date shall look only to the Corporation for the
payment of the Redemption Price thereof. Any interest accrued on any funds
deposited with the Depositary shall belong to the Corporation and shall be paid
to it by the Depositary from time to time on demand.
On or after the Redemption Date, the holders of Shares of Series C Preferred
Stock which have been redeemed shall surrender their certificates representing
such Shares to the Corporation at its principal place of business or as
otherwise notified, and thereupon the Redemption Price of such Shares of Series
C Preferred Stock shall be paid to the order of the holder of record of the
Shares of Series C Preferred Stock represented by such certificate or
certificates and each surrendered certificate shall be cancelled, and such
Shares of Series C Preferred Stock shall be retired and shall not be reissued.
<PAGE>
6. Voting. Except as otherwise provided by the Delaware General
------
Corporation Law and in this Section, the holders of Series C Preferred Stock
shall have no voting rights whatsoever. Without the consent of the holders of
at least a majority of the number of shares of Series C Preferred Stock at the
time outstanding and eligible to vote, given in person or by proxy, either in
writing or at a meeting called for the purpose at which the holders of Series C
Preferred Stock shall vote as a class, neither the Certificate of Incorporation
nor the Certificate of Designation relating to the Series C Preferred Stock
shall be changed, nor shall the Board of Directors take any action, so as to
affect adversely the rights and preferences of the Series C Preferred Stock as
set forth herein.
ATTEST: ALLIN CORPORATION
/s/ Robert V. Fulton By: /s/ Dean C. Praskach
- -------------------- --------------------------------------
Name Printed: Dean C. Praskach
----------------------------
Title: Chief Financial Officer & Secretary
-----------------------------------
<PAGE>
Exhibit 4.2
CERTIFICATE OF VOTING POWERS,
DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF THE
SERIES D CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
ALLIN CORPORATION
_____________________________________________
Allin Corporation, a corporation organized and existing by virtue of the
laws of the State of Delaware (the "Corporation"), does hereby certify that the
following resolutions were duly adopted by the Board of Directors of the
Corporation on May 13, 1999.
RESOLVED THAT, pursuant to the authority expressly granted to and vested in
the Board of Directors of the Corporation by the provisions of the Certificate
of Incorporation of the Corporation (the "Certificate of Incorporation"), the
Board of Directors hereby creates, from the shares of Preferred Stock (the
"Preferred Stock") of the Corporation authorized to be issued pursuant to the
Certificate of Incorporation, a series of the Preferred Stock designated Series
D Convertible Redeemable Preferred Stock, and hereby fixes the voting powers,
designations, preferences and relative participating, optional or other rights,
and the qualifications, limitations or restrictions thereof, of the shares of
such Series as follows:
7. Designation. Two thousand seven hundred and fifty (2,750) shares
-----------
of the Preferred Stock are hereby designated Series D Convertible Redeemable
Preferred Stock with a par value of $.01 per share (the "Series D Preferred
Stock").
8. Rank. The Series D Preferred Stock shall rank (i) senior to the
----
Common Stock and the Series A Convertible Redeemable Preferred Stock; (ii)
senior to the Series C Redeemable Preferred Stock, which series is to be created
concurrently with the Series D Preferred Stock; (iii) pari passu with the Series
---- -----
B Redeemable Preferred Stock; and (iv) junior to the Series E Convertible
Redeemable Preferred Stock, which series is to be created concurrently with the
Series D Preferred Stock.
9. Dividends.
---------
(a) The holders of shares of Series D Preferred Stock shall be
entitled to receive, when and as declared out of funds legally available for the
payment of dividends by the Board of Directors, cash dividends on each share of
the Series D Preferred Stock (referred to as a "Share") at a rate per annum of
6% of the Liquidation Value thereof, from and including the date of issuance of
such Share to and including the date on which the Redemption Price of such Share
is paid.
Such dividends, to the extent declared by the Board of Directors, will be
payable quarterly in arrears on each October 31, January 31, April 30 and July
31 (hereinafter referred to as "Dividend Payment Dates"). To the extent that
dividends are not paid on a particular Dividend Payment Date, all such dividends
will accrue and compound on a quarterly basis and will be paid on or before the
Redemption Date.
<PAGE>
(b) So long as any shares of the Series D Preferred Stock are
outstanding, the Corporation will not declare or pay or set apart for payment
any dividends (other than a dividend in common stock or in any other class of
stock ranking junior to the Series D Preferred Stock as to dividends and upon
liquidation) or make any other distribution on any class of stock of the
Corporation ranking junior to the Series D Preferred Stock either as to
dividends or upon liquidation (collectively, "Junior Securities") and will not
redeem, purchase or otherwise acquire for value, or set apart money for any
sinking or other analogous fund for the redemption or purchase of any shares of
any Junior Securities (in any such case, a "Junior Payment"), unless all
dividends on the Series D Preferred Stock for the Dividend Payment Date
immediately prior to or concurrent with the payment with respect to any such
dividend, distribution, redemption, purchase or acquisition as to such Junior
Securities shall have been paid, or declared and a sum sufficient for the
payment thereof set aside by the Corporation separate and apart from its other
funds.
10. Liquidation.
-----------
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, before any payment or distribution
of the assets of the Corporation (whether capital, surplus or earnings) or
proceeds therefrom shall be made to or set apart for the holders of shares of
any Junior Securities, the holders of shares of Series D Preferred Stock shall
be entitled to receive payment of $1,000 per share (the "Liquidation Value")
held by them, plus an amount equal to all dividends accrued and compounded and
unpaid on such Shares to the date of such payment.
(b) If upon any liquidation, dissolution or winding up of the
Corporation, the Corporation's assets to be distributed among the holders of the
Series D Preferred Stock are insufficient to permit payment to such holders of
the aggregate amount which they are entitled to be paid, then the entire assets
to be distributed will be distributed ratably among such holders based upon the
aggregate Liquidation Value of the Series D Preferred Stock held by each such
holder. The Corporation will mail written notice of such liquidation,
dissolution or winding up, not less than sixty (60) days prior to the payment
date stated therein, to each record holder of Series D Preferred Stock. Neither
the consolidation nor merger of the Corporation into or with any other
corporation or corporations, nor the sale or transfer by the Corporation of all
or any part of its assets, nor the reduction of the capital stock of the
Corporation, will be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this paragraph.
<PAGE>
11. Redemption.
----------
(a) Optional Redemption. At any time after August 13, 2003, the
-------------------
Corporation shall have the right to redeem all or part of the outstanding Shares
of Series D Preferred Stock, by giving written notice thereof to the affected
stockholder or stockholders (the "Redemption Notice"). The Redemption Notice
shall specify (i) the redemption date which shall be not less than thirty (30)
days from the date of the Redemption Notice and (ii) the number of shares to be
redeemed. If fewer than all of the outstanding Shares of Series D Preferred
Stock are to be redeemed, such Shares of Series D Preferred Stock shall be
redeemed on a pro rata basis among the holders of record of outstanding Shares
of Series D Preferred Stock.
(b) Redemption Price. The redemption price for Shares of Series D
----------------
Preferred Stock shall be One Thousand Dollars ($1,000) per Share, plus an amount
equal to all accrued and compounded and unpaid dividends to the date of
redemption (the "Redemption Price").
(c) Redemption Procedure. Unless default is made in the payment
--------------------
of the Redemption Price, all rights of the holders of such Shares of Series D
Preferred Stock as stockholders of the Corporation by reason of the ownership of
the respective Shares of Series D Preferred Stock shall cease at the close of
business on the Redemption Date ("Redemption Date"), except the right to receive
payment in full of the Redemption Price of such Shares of Series D Preferred
Stock on presentation and surrender of the certificate or certificates for such
Shares of Series D Preferred Stock, and after the Redemption Date such Shares of
Series D Preferred Stock shall not be deemed to be outstanding. In case less
than all the Shares of Series D Preferred Stock represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed Shares of Series D Preferred Stock without cost to the holder
thereof.
At its option, the Corporation may, on or prior to the Redemption Date,
deposit an amount equal to the aggregate Redemption Price of the Shares of the
Series D Preferred Stock to be redeemed with a bank or trust company (the
"Depositary"), having its principal office in the City of Pittsburgh,
Commonwealth of Pennsylvania, and designated by the Board of Directors, to be
held in trust by the Depositary, for the sole benefit of the holders of the
Series D Preferred Stock, for payment to the holders of such Shares of Series D
Preferred Stock then to be redeemed. If such deposit is made and the funds so
deposited are made immediately available to the holders of the Shares of the
Series D Preferred Stock to be redeemed, the Corporation shall thereupon be
released and discharged (subject to the provisions of the next paragraph of this
Section) from its obligation to make payment of the Redemption Price of the
Shares of Series D Preferred Stock to be redeemed, and the holders of such
Shares shall look only to the Depositary for such payment.
Any funds deposited with the Depositary as aforesaid with respect to payment
of the Redemption Price of Shares of the Series D Preferred Stock remaining
unclaimed at the end of five (5) years from and after the Redemption Date in
respect of which such funds were deposited, shall be returned to the Corporation
forthwith; and thereafter the holders of Shares of the Series D Preferred Stock
redeemed on such Redemption Date shall look only to the Corporation for the
payment of the Redemption Price thereof. Any interest accrued on any funds
deposited with the Depositary shall belong to the Corporation and shall be paid
to it by the Depositary from time to time on demand.
On or after the Redemption Date, the holders of Shares of Series D Preferred
Stock which have been redeemed shall surrender their certificates representing
such Shares to the Corporation at its principal place of business or as
otherwise notified, and thereupon the Redemption Price of such Shares of Series
D Preferred Stock shall be paid to the order of the holder of record of the
Shares of Series D Preferred Stock represented by such certificate or
certificates and each surrendered certificate shall be cancelled, and such
Shares of Series D Preferred Stock shall be retired and shall not be reissued.
12. Voting. Except as otherwise provided by the Delaware General
------
Corporation Law and in this Section, the holders of Series D Preferred Stock
shall have no voting rights whatsoever. Without the consent of the holders of
at least a majority of the number of shares of Series D Preferred Stock at the
time outstanding and eligible to vote, given in person or by proxy, either in
writing or at a meeting called for the purpose at which the holders of
<PAGE>
Series D Preferred Stock shall vote as a class, neither the Certificate of
Incorporation nor the Certificate of Designation relating to the Series D
Preferred Stock shall be changed, nor shall the Board of Directors take any
action, so as to affect adversely the rights and preferences of the Series D
Preferred Stock as set forth herein.
13. Conversion.
----------
(a) Conversion Rights. Each holder of the Series D Preferred
-----------------
Stock will have the right to convert all or a portion of his Shares of Series D
Preferred Stock into common stock of the Corporation in accordance with this
paragraph 7 at any time prior to August 13, 2003. Until and including August 13,
1999, each share of Series D Preferred Stock held by each holder may be
converted into the number of common shares, rounded to the ninth decimal place,
determined by (i) dividing 1,000 by $ 3.6125, or (ii) if it results in a greater
number of shares of common stock, dividing 1,000 by the greater of (A) 85% of
the closing price of the common stock as reported by The Nasdaq Stock Market on
the trading date prior to the date of the conversion or (B) $2.00. After August
13, 1999, each share of Series D Preferred Stock held by each holder may be
converted into the number of common shares, rounded to the ninth decimal place,
determined by (i) dividing 1,000 by $3.6125 or (ii) if it results in a greater
number of shares of common stock, dividing 1,000 by 85% of the closing price of
the common stock as reported by The Nasdaq Stock Market on the first trading
date following August 13, 1999. Holders of the Series D Preferred Stock who
exercise the foregoing conversion right shall have the right to receive any
accrued, but unpaid dividends. No fractional shares of common stock shall be
issued; instead a cash payment will be made in lieu of the issuance of any
fractional shares of common stock. Any shares of Series D Preferred Stock which
are not converted to common stock will remain outstanding until so converted or
until redeemed by the Corporation. In the event that the number of shares of
outstanding common stock is changed by any stock dividend, stock split or
combination of shares at any time shares of Series D Preferred Stock are
outstanding, the number of shares of common stock that may be acquired upon
conversion of such outstanding Series D Preferred Stock in accordance with the
foregoing shall be proportionately adjusted.
(b) Conversion Procedures. Any holder of Series D Preferred Stock
---------------------
wishing to exercise the foregoing conversion right shall give written notice
thereof to the Corporation (the "Conversion Notice"). Upon receipt of the
Conversion Notice, the Corporation shall set a date for the conversion of the
Series D Preferred Stock, which date shall be not more than thirty (30) days
from the date of the Conversion Notice (the "Conversion Date"). All rights of a
holder of the Series D Preferred Stock as a preferred stockholder of the
Corporation by reason of the ownership of Series D Preferred Shares being
converted shall cease at the close of business on the Conversion Date, except
the right to receive, on presentation and surrender of the certificate or
certificates for the Series D Preferred Stock being converted, the shares of
common stock into which the Series D Preferred Stock is converted and cash
payments, if any, in lieu of fractional shares, as provided for in the preceding
paragraph of this Section, and after the Conversion Date such Shares shall not
be deemed to be outstanding. From and after the Conversion Date, the holders of
the converted Series D Preferred Stock shall have the rights of common
stockholders, including the right to one vote for each share of common stock
held by such holder or that such holder is entitled to receive upon presentation
and surrender of certificates for shares of Series D Preferred Stock as provided
for in the preceding sentence, but such holders shall have no rights as
preferred stockholders with respect to shares of Series D Preferred Stock
converted.
ATTEST: ALLIN CORPORATION
/s/ Robert V. Fulton By: /s/ Dean C. Praskach
- -------------------- --------------------------------------
Name Printed: Dean C. Praskach
----------------------------
Title: Chief Financial Officer & Secretary
-----------------------------------
<PAGE>
Exhibit 4.3
CERTIFICATE OF VOTING POWERS,
DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF THE
SERIES E CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
ALLIN CORPORATION
_____________________________________________
Allin Corporation, a corporation organized and existing by virtue of the
laws of the State of Delaware (the "Corporation"), does hereby certify that the
following resolutions were duly adopted by the Board of Directors of the
Corporation on May 13, 1999.
RESOLVED THAT, pursuant to the authority expressly granted to and vested in
the Board of Directors of the Corporation by the provisions of the Certificate
of Incorporation of the Corporation (the "Certificate of Incorporation"), the
Board of Directors hereby creates, from the shares of Preferred Stock (the
"Preferred Stock") of the Corporation authorized to be issued pursuant to the
Certificate of Incorporation, a series of the Preferred Stock designated Series
E Convertible Redeemable Preferred Stock, and hereby fixes the voting powers,
designations, preferences and relative participating, optional or other rights,
and the qualifications, limitations or restrictions thereof, of the shares of
such Series as follows:
14. Designation. Two thousand (2,000) shares of the Preferred Stock
-----------
are hereby designated Series E Convertible Redeemable Preferred Stock with a par
value of $.01 per share (the "Series E Preferred Stock").
15. Rank. The Series E Preferred Stock shall rank (i) senior to the
----
Common Stock, the Series A Convertible Redeemable Preferred Stock, the Series B
Convertible Redeemable Preferred Stock and (ii) senior to the Series C
Redeemable Preferred Stock and the Series D Convertible Redeemable Preferred
Stock, which two series are to be created concurrently with the Series E
Preferred Stock.
16. Dividends.
---------
(c) The holders of shares of Series E Preferred Stock shall be
entitled to receive, to the extent that funds are legally available therefor and
the Corporation's then senior lender gives any required consent, cash dividends
on each share of the Series E Preferred Stock (referred to as a "Share") at a
rate per annum of 6% of the Liquidation Value thereof, from and including the
date of issuance of such Share to and including the date on which the Redemption
Price of such Share is paid.
Such dividends will be payable quarterly in arrears on each October 1, January
1, April 1 and July 1 (hereinafter referred to as "Dividend Payment Dates"). To
the extent that dividends are not paid on a particular Dividend Payment Date
because funds are not legally available for the payment of such dividends or the
Corporation's then senior lender does not consent to the payment of such
dividends, all such dividends will accrue and compound on a quarterly basis and
will be paid on or before the Redemption Date.
(d) So long as any shares of the Series E Preferred Stock are
outstanding, the Corporation will not declare or pay or set apart for payment
any dividends (other than a dividend in common stock or in any other class of
stock ranking junior to the Series E Preferred Stock as to dividends and upon
liquidation) or make any
<PAGE>
other distribution on any class of stock of the Corporation ranking junior to
the Series E Preferred Stock either as to dividends or upon liquidation
(collectively, "Junior Securities") and will not redeem, purchase or otherwise
acquire for value, or set apart money for any sinking or other analogous fund
for the redemption or purchase of any shares of any Junior Securities (in any
such case, a "Junior Payment"), unless all dividends on the Series E Preferred
Stock for the Dividend Payment Date immediately prior to or concurrent with the
payment with respect to any such dividend, distribution, redemption, purchase or
acquisition as to such Junior Securities shall have been paid, or declared and a
sum sufficient for the payment thereof set aside by the Corporation separate and
apart from its other funds.
17. Liquidation.
-----------
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, before any payment or distribution
of the assets of the Corporation (whether capital, surplus or earnings) or
proceeds therefrom shall be made to or set apart for the holders of shares of
any Junior Securities, the holders of shares of Series E Preferred Stock shall
be entitled to receive payment of $1,000 per share (the "Liquidation Value")
held by them, plus an amount equal to all dividends accrued and compounded and
unpaid on such shares to the date of such payment.
(b) If upon any liquidation, dissolution or winding up of the
Corporation, the Corporation's assets to be distributed among the holders of the
Series E Preferred Stock are insufficient to permit payment to such holders of
the aggregate amount which they are entitled to be paid, then the entire assets
to be distributed will be distributed ratably among such holders based upon the
aggregate Liquidation Value of the Series E Preferred Stock held by each such
holder. The Corporation will mail written notice of such liquidation,
dissolution or winding up, not less than sixty (60) days prior to the payment
date stated therein, to each record holder of Series E Preferred Stock. Neither
the consolidation nor merger of the Corporation into or with any other
corporation or corporations, nor the sale or transfer by the Corporation of all
or any part of its assets, nor the reduction of the capital stock of the
Corporation, will be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this paragraph.
18. Redemption.
----------
(a) Optional Redemption. At any time, the Corporation shall have
-------------------
the right to redeem all or part of the outstanding Shares of the Series E
Preferred Stock, by giving written notice thereof to the affected stockholder or
stockholders (the "Redemption Notice"). The Redemption Notice shall specify (i)
the redemption date which shall be not less than thirty (30) days from the date
of the Redemption Notice and (ii) the number of shares to be redeemed. If fewer
than all of the outstanding Shares of Series E Preferred Stock are to be
redeemed, such Shares of Series E Preferred Stock shall be redeemed on a pro
rata basis among the holders of record of outstanding Shares of Series E
Preferred Stock.
(b) Redemption Price. The redemption price for Shares of Series E
----------------
Preferred Stock shall be One Thousand Dollars ($1,000) per Share, plus an amount
equal to all accrued and compounded and unpaid dividends to the date of
redemption (the "Redemption Price").
(c) Redemption Procedure. Unless default is made in the payment
--------------------
of the Redemption Price, all rights of the holders of such Shares of Series E
Preferred Stock as stockholders of the Corporation by reason of the ownership of
the respective Shares of Series E Preferred Stock shall cease at the close of
business on the Redemption Date ("Redemption Date"), except the right to receive
payment in full of the Redemption Price of such Shares of Series E Preferred
Stock on presentation and surrender of the certificate or certificates for such
Shares of Series E Preferred Stock, and after the Redemption Date such Shares of
Series E Preferred Stock shall not be deemed to be outstanding. In case less
than all the Shares of Series E Preferred Stock represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed Shares of Series E Preferred Stock without cost to the holder
thereof.
<PAGE>
At its option, the Corporation may, on or prior to the Redemption Date,
deposit an amount equal to the aggregate Redemption Price of the Shares of the
Series E Preferred Stock to be redeemed with a bank or trust company (the
"Depositary"), having its principal office in the City of Pittsburgh,
Commonwealth of Pennsylvania, and designated by the Board of Directors, to be
held in trust by the Depositary, for the sole benefit of the holders of the
Series E Preferred Stock, for payment to the holders of such Shares of Series E
Preferred Stock then to be redeemed. If such deposit is made and the funds so
deposited are made immediately available to the holders of the Shares of the
Series E Preferred Stock to be redeemed, the Corporation shall thereupon be
released and discharged (subject to the provisions of the next paragraph of this
Section) from its obligation to make payment of the Redemption Price of the
Shares of Series E Preferred Stock to be redeemed, and the holders of such
Shares of Series E Preferred Stock shall look only to the Depositary for such
payment.
Any funds deposited with the Depositary as aforesaid with respect to payment
of the Redemption Price of Shares of the Series E Preferred Stock remaining
unclaimed at the end of five (5) years from and after the Redemption Date in
respect of which such funds were deposited, shall be returned to the Corporation
forthwith; and thereafter the holders of Shares of the Series E Preferred Stock
redeemed on such Redemption Date shall look only to the Corporation for the
payment of the Redemption Price thereof. Any interest accrued on any funds
deposited with the Depositary shall belong to the Corporation and shall be paid
to it by the Depositary from time to time on demand.
On or after the Redemption Date, the holders of Shares of Series E Preferred
Stock which have been redeemed shall surrender their certificates representing
such Shares of Series E Preferred Stock to the Corporation at its principal
place of business or as otherwise notified, and thereupon the Redemption Price
of such Shares of Series E Preferred Stock shall be paid to the order of the
holder of record of the Shares of Series E Preferred Stock represented by such
certificate or certificates and each surrendered certificate shall be cancelled,
and such Shares of Series E Preferred Stock shall be retired and shall not be
reissued.
19. Voting. Except as otherwise provided by the Delaware General
------
Corporation Law and in this Section, the holders of Series E Preferred Stock
shall have no voting rights whatsoever. Without the consent of the holders of
at least a majority of the number of shares of Series E Preferred Stock at the
time outstanding and eligible to vote, given in person or by proxy, either in
writing or at a meeting called for the purpose at which the holders of Series E
Preferred Stock shall vote as a class, neither the Certificate of Incorporation
nor the Certificate of Designation relating to the Series E Preferred Stock
shall be changed, nor shall the Board of Directors take any action, so as to
affect adversely the rights and preferences of the Series E Preferred Stock as
set forth herein.
20. Conversion.
----------
(a) Automatic Conversion. If not earlier converted or redeemed,
--------------------
all Shares of Series E Preferred Stock outstanding as of August 13, 2000, will
automatically convert into the number of shares of common stock of the
Corporation equal to (i) the amount obtained by dividing the Liquidation Value
of the then outstanding Shares of Series E Preferred Stock plus accrued and
unpaid dividends, if any, by $4.406 or (ii) at the holder's option, the amount
obtained by dividing the Liquidation Value of the then outstanding Shares of
Series E Preferred Stock plus accrued and unpaid dividends, if any, by the
average of the bid and asked prices of the Corporation's common stock for the 30
days preceding August 13, 2000, subject to a $2.00 minimum per share price (the
"Conversion Formula").
(b) Optional Conversion Rights. In the event of a Conversion
--------------------------
Triggering Event, each holder of Series E Preferred Stock will have the
following options: (i) to convert all of such holders' Shares of Series E
Preferred Stock (but not including accrued and unpaid dividends, if any) into
shares of the Corporation's common stock in accordance with the Conversion
Formula and seek payment from the Corporation of accrued and unpaid dividends,
if any, through the date of conversion or (ii) to convert all of such holders'
Shares of Series E Preferred Stock as well as accrued and unpaid dividends
through the date of conversion, if any, into shares of the Corporation's common
stock in accordance with the Conversion Formula. In addition, if dividends are
not paid on a particular Dividend Payment Date, each holder of Series E
Preferred Stock may also elect to convert all of such holders' Shares of Series
E Preferred Stock (but not accrued and unpaid dividends, if any) into shares of
common
<PAGE>
stock of the Corporation in accordance with the Conversion Formula and continue
to receive quarterly payments until August 13, 2000 equal to what the accrued
dividends would have been as if the holders' shares of Series E Preferred Stock
remained outstanding.
For purposes of this Section, a "Conversion Triggering Event" shall occur
when:
(i) the Corporation fails to pay dividends on a particular Dividend
Payment Date; or
(ii) any material warranty, representation or statement made or furnished
to a holder of Series E Preferred Stock by or on behalf of the
Corporation in that certain Stock Purchase Agreement dated August 12,
1998 among the Corporation, KCS Computer Services, Inc. and the
shareholders of KCS Computer Services, Inc. proves to have been false
or misleading in any material respect when made or furnished; or
(iii) there occurs dissolution, termination of existence, charter
revocation or forfeiture, insolvency, liquidation, reorganization,
arrangement, adjustment, compensation or other similar relief,
business failure, assignment for the benefit of creditors, or the
commencement of proceedings under any law relating to bankruptcy,
insolvency, relief of debtors or protection of creditors, termination
of legal entities or any other similar law now or in the future in
effect, or a proceeding shall be instituted in respect of the
Corporation seeking appointment of a receiver, trustee, custodian,
liquidator, assignee, sequestrator or other similar official for the
Corporation or for all or any substantial part of its property by or
against the Corporation or any surety of any of the obligations of the
Corporation; or
(iv) the Corporation shall become insolvent, shall become generally unable
to pay its debts as they become due, shall voluntarily suspend
transaction of its business, shall make a general assignment for the
benefit of creditors, shall institute a proceeding described above or
shall consent to any order for relief, declaration, finding or relief
described in clause (iii) above, shall institute a proceeding
described in clause (iii) above or shall consent to the appointment or
to the taking of possession by any such official of all or any
substantial part of its property whether or not any proceeding is
instituted, dissolves, winds-up or liquidates itself or any
substantial part of its property, or shall take any action in
furtherance of any of the foregoing.
<PAGE>
The optional conversion rights provided for in this Paragraph 7(b) shall not
arise and a Conversion Triggering Event shall not occur if the Corporation fails
to pay dividends on a particular Dividend Payment Date, if the Corporation's
then senior lender, if any, does not permit the payment of dividends on the
Series E Preferred Stock.
(c) Other Conversion Provisions. Upon any conversion, no
---------------------------
fractional shares of common stock shall be issued; instead a cash payment will
be made in lieu of the issuance of any fractional shares of common stock. Any
shares of Series E Preferred Stock which are not converted to common stock will
remain outstanding until so converted or until redeemed by the Corporation. In
the event that the number of shares of outstanding common stock is changed by
any stock dividend, stock split or combination of shares at any time shares of
Series E Preferred Stock are outstanding, the number of shares of common stock
that may be acquired upon conversion of such outstanding Series E Preferred
Stock in accordance with the foregoing shall be proportionately adjusted.
(d) Conversion Procedures. In the event of automatic conversion
---------------------
pursuant to Paragraph 7(a), such conversion shall be deemed to occur on August
13, 2000 (the "Automatic Conversion Date"). Any holder of Series E Preferred
Stock shall specify its conversion option set forth in clauses (i) and (ii) of
Paragraph 7(a) on or prior to the Automatic Conversion Date. Any holder of
Series E Preferred Stock wishing to exercise the optional conversion rights
pursuant to Paragraph 7(b) shall give written notice thereof to the Corporation
(the "Conversion Notice"), and such Conversion Notice shall specify the
conversion option selected by the holder with respect to accrued and unpaid
dividends, if any. Upon receipt of the Conversion Notice, the Corporation shall
set a date for the conversion of the Series E Preferred Stock, which date shall
be not more than thirty (30) days from the date of the Conversion Notice (the
"Optional Conversion Date" and together with the Automatic Conversion Date, the
"Conversion Date"). All rights of a holder of the Series E Preferred Stock as a
preferred stockholder of the Corporation by reason of the ownership of Series E
Preferred Shares being converted shall cease at the close of business on the
Conversion Date, except the right to receive, on presentation and surrender of
the certificate or certificates for the Series E Preferred Stock being
converted, the shares of common stock into which the Series E Preferred Stock is
converted and cash payments, if any, in lieu of fractional shares, as provided
for in the preceding paragraph of this Section, and after the Conversion Date
such Shares shall not be deemed to be outstanding. From and after the Conversion
Date, the holders of the converted Series E Preferred Stock shall have the
rights of common stockholders, including the right to one vote for each share of
common stock held by such holder or that such holder is entitled to receive upon
presentation and surrender of certificates for shares of Series E Preferred
Stock as provided for in the preceding sentence, but such holders shall have no
rights as preferred stockholders with respect to shares of Series E Preferred
Stock converted.
ATTEST: ALLIN CORPORATION
/s/ Robert V. Fulton By: /s/ Dean C. Praskach
- -------------------- --------------------------------------
Name Printed: Dean C. Praskach
----------------------------
Title: Chief Financial Officer & Secretary
-----------------------------------
<PAGE>
Exhibit 4.4
CERTIFICATE OF VOTING POWERS,
DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF THE
SERIES F CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
ALLIN CORPORATION
_____________________________________________
Allin Corporation, a corporation organized and existing by virtue of the
laws of the State of Delaware (the "Corporation"), does hereby certify that the
following resolutions were duly adopted by the Board of Directors of the
Corporation on May 27, 1999.
RESOLVED THAT, pursuant to the authority expressly granted to and vested in
the Board of Directors of the Corporation by the provisions of the Certificate
of Incorporation of the Corporation (the "Certificate of Incorporation"), the
Board of Directors hereby creates, from the shares of Preferred Stock (the
"Preferred Stock") of the Corporation authorized to be issued pursuant to the
Certificate of Incorporation, a series of the Preferred Stock designated Series
F Convertible Redeemable Preferred Stock, and hereby fixes the voting powers,
designations, preferences and relative participating, optional or other rights,
and the qualifications, limitations or restrictions thereof, of the shares of
such Series as follows:
1. Designation. One thousand (1,000) shares of the Preferred Stock
-----------
are hereby designated Series F Convertible Redeemable Preferred Stock with a par
value of $.01 per share (the "Series F Preferred Stock").
2. Rank. The Series F Preferred Stock shall rank (i) senior to the
----
Common Stock, the Series A Convertible Redeemable Preferred Stock, the Series B
Convertible Redeemable Preferred Stock, the Series C Redeemable Preferred Stock,
and the Series D Convertible Redeemable Preferred Stock, and (ii) junior to the
Series E Convertible Redeemable Preferred Stock.
3. Dividends.
---------
(e) The holders of shares of Series F Preferred Stock shall be
entitled to receive, when and as declared out of funds legally available for the
payment of dividends by the Board of Directors, cash dividends on each share of
the Series F Preferred Stock (referred to as a "Share") at a rate per annum of
7% of the Liquidation Value thereof, from and including the date of issuance of
such Share to and including the date on which the Redemption Price of such Share
is paid.
Such dividends will accrue beginning on the date of issuance of the Shares and
shall be payable quarterly in arrears on each October 15, January 15, April 15
and July 15 beginning on April 15, 2000 (hereinafter referred to as "Dividend
Payment Dates"). To the extent that dividends are not paid on a particular
Dividend Payment Date, all such dividends will accrue and compound on a
quarterly basis and will be paid on or before the Redemption Date.
(f) So long as any shares of the Series F Preferred Stock are
outstanding, the Corporation will not declare or pay or set apart for payment
any dividends (other than a dividend with respect to the Series B
<PAGE>
Preferred Stock of the Corporation, a dividend with respect to the Series D
Preferred Stock of the Corporation, a dividend in common stock or a dividend in
any other class of stock ranking junior to the Series F Preferred Stock as to
dividends and upon liquidation) or make any other distribution on any class of
stock of the Corporation ranking junior to the Series F Preferred Stock either
as to dividends or upon liquidation (collectively, "Junior Securities") and will
not redeem, purchase or otherwise acquire for value, or set apart money for any
sinking or other analogous fund for the redemption or purchase of any shares of
any Junior Securities (in any such case, a "Junior Payment"), unless all
dividends on the Series F Preferred Stock for the Dividend Payment Date
immediately prior to or concurrent with the payment with respect to any such
dividend, distribution, redemption, purchase or acquisition as to such Junior
Securities shall have been paid, or declared and a sum sufficient for the
payment thereof set aside by the Corporation separate and apart from its other
funds.
4. Liquidation.
-----------
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, before any payment or distribution
of the assets of the Corporation (whether capital, surplus or earnings) or
proceeds therefrom shall be made to or set apart for the holders of shares of
any Junior Securities, the holders of shares of Series F Preferred Stock shall
be entitled to receive payment of $1,000 per share (the "Liquidation Value")
held by them, plus an amount equal to all dividends accrued and compounded and
unpaid on such Shares to the date of such payment.
(b) If upon any liquidation, dissolution or winding up of the
Corporation, the Corporation's assets to be distributed among the holders of the
Series F Preferred Stock are insufficient to permit payment to such holders of
the aggregate amount which they are entitled to be paid, then the entire assets
to be distributed will be distributed ratably among such holders based upon the
aggregate Liquidation Value of the Series F Preferred Stock held by each such
holder. The Corporation will mail written notice of such liquidation,
dissolution or winding up, not less than sixty (60) days prior to the payment
date stated therein, to each record holder of Series F Preferred Stock. Neither
the consolidation nor merger of the Corporation into or with any other
corporation or corporations, nor the sale or transfer by the Corporation of all
or any part of its assets, nor the reduction of the capital stock of the
Corporation, will be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this paragraph.
<PAGE>
5. Redemption.
----------
(a) Optional Redemption. At any time, the Corporation shall have
-------------------
the right to redeem all or part of the outstanding Shares of Series F Preferred
Stock, by giving written notice thereof to the affected stockholder or
stockholders (the "Redemption Notice"). The Redemption Notice shall specify (i)
the redemption date which shall be not less than thirty (30) days from the date
of the Redemption Notice and (ii) the number of shares to be redeemed. If fewer
than all of the outstanding Shares of Series F Preferred Stock are to be
redeemed, such Shares of Series F Preferred Stock shall be redeemed on a pro
rata basis among the holders of record of outstanding Shares of Series F
Preferred Stock.
(b) Redemption Price. The redemption price for Shares of Series F
----------------
Preferred Stock shall be One Thousand Dollars ($1,000) per Share, plus an amount
equal to all accrued and compounded and unpaid dividends to the date of
redemption (the "Redemption Price").
(c) Redemption Procedure. Unless default is made in the payment
--------------------
of the Redemption Price, all rights of the holders of such Shares of Series F
Preferred Stock as stockholders of the Corporation by reason of the ownership of
the respective Shares of Series F Preferred Stock shall cease at the close of
business on the Redemption Date ("Redemption Date"), except the right to receive
payment in full of the Redemption Price of such Shares of Series F Preferred
Stock on presentation and surrender of the certificate or certificates for such
Shares of Series F Preferred Stock, and after the Redemption Date such Shares of
Series F Preferred Stock shall not be deemed to be outstanding. In case less
than all the Shares of Series F Preferred Stock represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed Shares of Series F Preferred Stock without cost to the holder
thereof.
At its option, the Corporation may, on or prior to the Redemption Date,
deposit an amount equal to the aggregate Redemption Price of the Shares of the
Series F Preferred Stock to be redeemed with a bank or trust company (the
"Depositary"), having its principal office in the City of Pittsburgh,
Commonwealth of Pennsylvania, and designated by the Board of Directors, to be
held in trust by the Depositary, for the sole benefit of the holders of the
Series F Preferred Stock, for payment to the holders of such Shares of Series F
Preferred Stock then to be redeemed. If such deposit is made and the funds so
deposited are made immediately available to the holders of the Shares of the
Series F Preferred Stock to be redeemed, the Corporation shall thereupon be
released and discharged (subject to the provisions of the next paragraph of this
Section) from its obligation to make payment of the Redemption Price of the
Shares of Series F Preferred Stock to be redeemed, and the holders of such
Shares shall look only to the Depositary for such payment.
Any funds deposited with the Depositary as aforesaid with respect to payment
of the Redemption Price of Shares of the Series F Preferred Stock remaining
unclaimed at the end of five (5) years from and after the Redemption Date in
respect of which such funds were deposited, shall be returned to the Corporation
forthwith; and thereafter the holders of Shares of the Series F Preferred Stock
redeemed on such Redemption Date shall look only to the Corporation for the
payment of the Redemption Price thereof. Any interest accrued on any funds
deposited with the Depositary shall belong to the Corporation and shall be paid
to it by the Depositary from time to time on demand.
On or after the Redemption Date, the holders of Shares of Series F Preferred
Stock which have been redeemed shall surrender their certificates representing
such Shares to the Corporation at its principal place of business or as
otherwise notified, and thereupon the Redemption Price of such Shares of Series
F Preferred Stock shall be paid to the order of the holder of record of the
Shares of Series F Preferred Stock represented by such certificate or
certificates and each surrendered certificate shall be cancelled, and such
Shares of Series F Preferred Stock shall be retired and shall not be reissued.
6. Voting. Except as otherwise provided by the Delaware General
------
Corporation Law and in this Section, the holders of Series F Preferred Stock
shall have no voting rights whatsoever. Without the consent of the holders of
at least a majority of the number of shares of Series F Preferred Stock at the
time outstanding and eligible
<PAGE>
to vote, given in person or by proxy, either in writing or at a meeting called
for the purpose at which the holders of Series F Preferred Stock shall vote as a
class, neither the Certificate of Incorporation nor the Certificate of
Designation relating to the Series F Preferred Stock shall be changed, nor shall
the Board of Directors take any action so as to affect adversely the rights and
preferences of the Series F Preferred Stock as set forth herein.
7. Conversion.
----------
(a) Conversion Rights. Each holder of the Series F Preferred
-----------------
Stock will have the right to convert all or a portion of his Shares of Series F
Preferred Stock into common stock of the Corporation in accordance with this
paragraph 7 at any time prior to the earlier to occur of (a) the fifth
anniversary of the date of issuance of Series F Preferred Stock to such holder
and (b) the date on which such Series F Preferred Stock is redeemed by the
Corporation. Until and including the first anniversary date of the issuance of
the Series F Preferred Stock to the holder thereof, each share of Series F
Preferred Stock held by such holder may be converted into the number of common
shares, rounded to the ninth decimal place, determined by (I) dividing 1,000 by
85% of the closing price of the common stock as reported by The Nasdaq Stock
Market on the last trading date prior to the issuance of Series F Preferred
Stock to such holder, or (II) if it results in a greater number of shares of
common stock, dividing 1,000 by the greater of (A) 85% of the closing price of
the common stock as reported by The Nasdaq Stock Market on the last trading date
prior to the date of conversion or (B) 47.1% of the closing price of the common
stock as reported by The Nasdaq Stock Market on the last trading date prior to
the date of issuance of the Series F Preferred Stock to such holder. After the
first anniversary of the date of issuance of the Series F Preferred Stock to
such holder, each share of Series F Preferred Stock held by such holder may be
converted into the number of common shares, rounded to the ninth decimal place,
determined by (I) dividing 1,000 by 85% of the closing price of the common stock
as reported by The Nasdaq Stock Market on the last trading date prior to the
date of issuance of Series F Preferred Stock to such holder, or (II) if it
results in a greater number of shares of common stock, dividing 1,000 by the
greater of (A) 85% of the closing price of the common stock as reported by The
Nasdaq Stock Market on the last trading date prior to the first anniversary of
the date of issuance of the Series F Preferred Stock to such holder and (B)
47.1% of the closing price of the common stock as reported by The Nasdaq Stock
Market on the last trading date prior to the date of issuance of the Series F
Preferred Stock to such holder. Holders of the Series F Preferred Stock who
exercise the foregoing conversion right shall have the right to receive any
accrued, but unpaid dividends. No fractional shares of common stock shall be
issued; instead a cash payment will be made in lieu of the issuance of any
fractional shares of common stock. Any shares of Series F Preferred Stock which
are not converted to common stock will remain outstanding until so converted or
until redeemed by the Corporation. In the event that the number of shares of
outstanding common stock is changed by any stock dividend, stock split or
combination of shares at any time shares of Series F Preferred Stock are
outstanding, the number of shares of common stock that may be acquired upon
conversion of such outstanding Series F Preferred Stock in accordance with the
foregoing shall be proportionately adjusted.
[rest of page intentionally left blank]
<PAGE>
(b) Conversion Procedures. Any holder of Series F Preferred Stock
---------------------
wishing to exercise the foregoing conversion right shall give written notice
thereof to the Corporation (the "Conversion Notice"). Upon receipt of the
Conversion Notice, the Corporation shall set a date for the conversion of the
Series F Preferred Stock, which date shall be not more than thirty (30) days
from the date of the Conversion Notice (the "Conversion Date"). All rights of a
holder of the Series F Preferred Stock as a preferred stockholder of the
Corporation by reason of the ownership of Series F Preferred Stock being
converted shall cease at the close of business on the Conversion Date, except
the right to receive, on presentation and surrender of the certificate or
certificates for the Series F Preferred Stock being converted, the shares of
common stock into which the Series F Preferred Stock is converted and cash
payments, if any, in lieu of fractional shares, as provided for in the preceding
paragraph of this Section, and after the Conversion Date such Shares shall not
be deemed to be outstanding. From and after the Conversion Date, the holders of
the converted Series F Preferred Stock shall have the rights of common
stockholders, including the right to one vote for each share of common stock
held by such holder or that such holder is entitled to receive upon presentation
and surrender of certificates for shares of Series F Preferred Stock as provided
for in the preceding sentence, but such holders shall have no rights as
preferred stockholders with respect to shares of Series F Preferred Stock
converted.
ATTEST: ALLIN CORPORATION
/s/ Robert V. Fulton By: /s/ Dean C. Praskach
- -------------------- --------------------------
Name Printed: Dean C. Praskach
----------------
Title: Secretary
-----------------------
<PAGE>
Exhibit 4.5
SECOND AMENDED AND RESTATED
PROMISSORY NOTE
$1,000,000 June 1, 1999
FOR VALUE RECEIVED, ALLIN CORPORATION, f/k/a Allin Communications Corporation,
a Delaware corporation ("Payor"), promises to pay to Les Kent ("Payee"), at such
place as Payee may from time to time appoint in writing, in lawful money of the
United States of America, the principal sum of ONE MILLION DOLLARS ($1,000,000).
The principal amount of this Promissory Note shall be due and payable in two
(2) equal installments of Five Hundred Thousand Dollars ($500,000) each, the
first installment to be paid on April 15, 2000, and the second installment to be
paid on October 15, 2000 (with April 15, 2000 and October 15, 2000 being
referred to herein as the "Principal Payment Dates"); provided, however, that
Payor may at its option, from time to time, defer the payment of principal on
this Note to a date or dates selected by Payor, provided, however, that all
principal is due and payable in full by April 15, 2005.
The outstanding principal balance under this Note shall bear interest at a
rate of seven percent (7%) per annum, compounded quarterly. Interest began to
accrue on the principal amount of this Note on November 6, 1996 and shall
continue to accrue until all principal under this Note has been paid in full.
Interest shall be due and payable on each date on which a principal payment is
made hereunder; provided, however, that all interest accrued and unpaid as of
May 31, 1999 shall be paid to Payee on or before April 1, 2000. Further
provided that unless Payor is prohibited from doing so by any Lender to Payor,
Payor will make quarterly payments of interest ("Quarterly Interest Payments")
to Payee on each April 15, July 15, October 15 and January 15, commencing April
15, 2000 ("Quarterly Interest Payment Dates").
Payor, at its option, may prepay this Note, in whole or in part, with interest
accrued to date at any time without penalty or premium.
If any amount under this Note is not paid when due, (i) Payee shall have all
of the rights and remedies provided by any applicable law, rule or regulation
and (ii) Payee will be entitled to recover (a) interest on the unpaid amount at
a rate per annum equal to 9% per annum, from the date such amount was due until
paid and (b) reasonable costs of collection (including reasonable attorneys'
fees); provided, however, that if any lender to Payor prohibits Payor from
making Quarterly Interest Payments, interest payments will not be due on the
Quarterly Interest Payment Dates. Furthermore, if Payor elects to defer the
Principal Payment Dates, principal and interest shall not be due on the
Principal Payment Dates.
No delay on the part of Payee in the exercise of any power or right under this
Note shall operate as a waiver thereof, nor shall a single or partial exercise
of any power or right preclude other or further exercise thereof or exercise of
any other power or right.
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Payor, its successors or assigns, and all persons liable for the payment of
this Note waive presentment for payment, demand, protest, and notice of demand,
protest, and nonpayment, and consent to any and all renewals, extensions or
modifications that might be made by Payee as to the time of payment of this Note
from time to time.
This Note shall be governed by the laws of the Commonwealth of Pennsylvania
without regard to principles of conflicts of laws.
Time is of the essence with respect to all of Payor's obligations and agreements
under this Note.
IN WITNESS WHEREOF, Payor has caused this Note to be signed the date first
above written.
ALLIN CORPORATION
By: /s/ Richard W. Talarico
-----------------------
Richard W. Talarico
Chief Executive Officer
