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PROBUSINESS SERVICES, INC.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
6.9% SENIOR CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
Pursuant to Section 151 of the Delaware General Corporation Law
The undersigned, Thomas H. Sinton, President of ProBusiness
Services, Inc., a Delaware corporation (the "Corporation"), DOES HEREBY
CERTIFY that the following resolution, creating a series of 1,800,000 shares
of Preferred Stock was duly adopted by the Board of Directors, on July 28,
2000:
WHEREAS, the Board of Directors is authorized, within the
limitations and restrictions stated in the Certificate of Incorporation of
the Corporation, to provide by resolution or resolutions for the issuance of
shares of Preferred Stock, par value $.001 per share, of the Corporation, in
one or more classes or series with such voting powers, full or limited, or no
voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions as shall be stated and expressed in the
resolution or resolutions providing for the issuance thereof adopted by the
Board of Directors, and as are not stated and expressed in the Certificate of
Incorporation, or any amendment thereto, including (but without limiting the
generality of the foregoing) such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets and
such other subjects or matters as may be fixed by resolution or resolutions
of the Board of Directors under the General Corporation Law of the State of
Delaware; and
WHEREAS, it is the desire of the Board of Directors,
pursuant to its authority as aforesaid, to authorize and fix the terms of a
series of Preferred Stock and the number of shares constituting such series.
NOW, THEREFORE, BE IT RESOLVED:
1. DESIGNATION AND NUMBER OF SHARES. There shall be hereby created
and established a series of Preferred Stock designated as "6.9% Senior
Convertible Preferred Stock" (the "Preferred Stock"). The authorized number
of shares of Preferred Stock shall be 1,800,000. Capitalized terms used
herein and not otherwise defined shall have the meanings set forth in Section
11 below.
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2. RANK.
(a) The Preferred Stock shall with respect to distributions of
assets and rights upon the occurrence of a Liquidation rank senior to (i) all
classes of common stock of the Corporation (including, without limitation,
the Common Stock, par value $.001 per share, of the Corporation (the "Common
Stock")) and (ii) each other class or series of Capital Stock of the
Corporation hereafter created which does not expressly rank PARI PASSU with
or senior to the Preferred Stock (the "Junior Stock").
(b) Notwithstanding anything to the contrary contained in the
Certificate of Incorporation of the Corporation, the affirmative vote of the
holders of a majority of the Preferred Stock shall be a prerequisite to the
designation or issuance of any shares of Capital Stock ranking senior to the
Preferred Stock in the event of a Liquidation.
3. DIVIDENDS.
(a) The holders of shares of Preferred Stock shall be entitled
to receive cumulative dividends at an annual rate equal to 6.9% of the
Liquidation Preference in the form of additional fully paid and nonassessable
shares of Preferred Stock. Such dividends shall be payable quarterly on the
first day of October, January, April and July, commencing October 1, 2000
("Dividend Payment Dates"), except that if any Dividend Payment Date is not a
Business Day, then such quarterly dividend shall be payable on the next
succeeding Business Day and such next succeeding Business Day shall be the
Dividend Payment Date. Each of such quarterly dividends shall be fully
cumulative and shall accrue (whether or not declared) on a daily basis, with
additional dividends on any accrued but unpaid dividends compounding
quarterly at a rate of 6.9% per annum, from the first day of the quarter in
which such dividend may be payable as herein provided, except that with
respect to the first dividend payment, such dividend shall accrue from the
date of original issuance of the shares of Preferred Stock. The issuance of
shares of Preferred Stock shall constitute full payment of such dividend and
all such shares which may be issued in payment of such dividend shall, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable.
Upon the occurrence of a Sale Transaction or the announcement of a redemption
of all of the outstanding shares of Preferred Stock pursuant to Section 5,
accrued or accumulated dividends on Preferred Stock shall be due and payable
upon the closing of such Sale Transaction or the date of such redemption, as
the case may be.
(b) RESERVATION OF SHARES. The Corporation shall reserve and
keep available out of its authorized and unissued shares of Preferred Stock
solely for the purposes of paying dividends on shares of Preferred Stock such
number of shares of Preferred Stock as shall from time to time be sufficient
for such purposes, including
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(immediately following the initial issuance of shares of Preferred Stock) at
least the number of additional shares of Preferred Stock to pay all dividends
that will accrue on the Preferred Stock through August 1, 2006. The Board
shall, from time to time, if necessary, propose to the stockholders of the
Corporation amendments to the Certificate of Incorporation to increase the
Corporation's authorized capital stock and take such actions as may be
necessary to permit the issuance of shares of Preferred Stock upon the
declaration of any dividend payable in shares of Preferred Stock.
(c) In lieu of any fractional shares to which the holder of
Preferred Stock would otherwise be entitled, the Corporation shall pay cash
equal to such fraction multiplied by the then-effective Conversion Price.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Preferred Stock of
each holder at the time converting into Common Stock and the number of shares
of Common Stock issuable upon such aggregate conversion.
4. LIQUIDATION PREFERENCE.
(a) PRIORITY PAYMENT. Upon the occurrence of a Liquidation, the
holders of shares of Preferred Stock shall be entitled to be paid for each
share of Preferred Stock held thereby, out of, but only to the extent of, the
assets of the Corporation legally available for distribution to its
stockholders, an amount equal to $26.50 (the "Liquidation Preference") plus,
as provided in Section 3 above, all accrued and unpaid dividends, if any,
with respect to each share of Preferred Stock, before any payment or
distribution is made to any Junior Stock. If the assets of the Corporation
available for distribution to the holders of Preferred Stock shall be
insufficient to permit payment in full to such holders of the sums which such
holders are entitled to receive in such case, then all of the assets
available for distribution to holders of the Preferred Stock shall be
distributed among and paid to such holders ratably in proportion to the
amounts that would be payable to such holders if such assets were sufficient
to permit payment in full.
(b) NO ADDITIONAL PAYMENT. After the holders of all shares of
Preferred Stock shall have been paid in full the amounts to which they are
entitled in paragraph 4(a), the shares of Preferred Stock shall not be
entitled to any further participation in any distribution of assets of the
Corporation and the remaining assets of the Corporation shall be distributed
to the holders of Junior Stock.
(c) NOTICE. Written notice of a Liquidation stating a payment
or payments and the place where such payment or payments shall be payable,
shall be delivered in person, mailed by certified mail, return receipt
requested, mailed by overnight mail or sent by telecopier, not less than ten
(10) days prior to the earliest payment date stated therein, to the holders
of record of the Preferred Stock, such notice
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to be addressed to each such holder at its address as shown by the records of
the Corporation.
(d) OPTION. At the election of the holders of two-thirds (2/3)
of the Preferred Stock, a Sale Transaction shall be deemed to be a
Liquidation pursuant to this Section 4. In the event such an election is
made, the holders of shares of Preferred Stock shall be paid the Liquidation
Preference in the same kind of consideration paid to the holders of shares of
Common Stock upon such Sale Transaction and, if the consideration is paid in
any combination of securities, property or cash, in the same ratio that each
kind of consideration bears to the other. In addition, the holders of shares
of Preferred Stock shall be entitled to make any election in the kind of
consideration to be paid upon such Sale Transaction that is available to the
holders of shares of Common Stock. Any securities of the surviving Person to
be delivered to the holders of Preferred Stock pursuant to this Section 4(d)
shall be valued as follows:
(i) With respect to securities that do not constitute
"restricted securities," as such term is defined in Rule 144(a)(3)
promulgated under the Securities Act, the value shall be deemed to be the
Current Market Price of such securities as of three (3) days prior to the
date of distribution.
(ii) With respect to securities that constitute "restricted
securities," as such term is defined in Rule 144(a)(3) promulgated under the
Securities Act, and that are of the same class or series as securities that
are publicly traded, the value shall be adjusted to make an appropriate
discount from the value as set forth above in clause (i) to reflect the
appropriate fair market value thereof, as mutually determined by the Board of
Directors and the holders of a majority of the shares of Preferred Stock, or
if there is no active public market with respect to such class or series of
securities, such securities shall be valued in accordance with clause (i)
above, giving appropriate weight, if any, to such restriction as mutually
determined by the Board of Directors and the holders of a majority of the
shares of Preferred Stock, or if the Board of Directors and the holders of a
majority of the shares of Preferred Stock shall fail to agree, at the
Corporation's expense by an appraiser chosen by the Board of Directors and
reasonably acceptable to the holders of a majority of the shares of Preferred
Stock.
5. OPTIONAL REDEMPTION. If, as of any date after August 1, 2003, the
Current Market Price of the Common Stock is equal to or greater than $39.00
(as adjusted for stock splits and dividends, recapitalizations, and similar
transactions), then the Corporation may, at the option of the Board of
Directors, redeem from any source of funds legally available therefor, in
whole or in part, in the manner provided herein, any or all whole number of
shares of Preferred Stock at any time outstanding for a cash amount per share
to be redeemed equal to the Liquidation Preference (the "Redemption Price").
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6. REDEMPTION PROCEDURE. At least 30 days prior to the date fixed
for redemption of the Preferred Stock pursuant to Section 5 (the "Redemption
Date"), written notice ("Redemption Notice") shall be mailed, postage
prepaid, to each holder of record of the Preferred Stock at its address last
shown on the records of the Corporation. The Redemption Notice shall state:
(a) whether all or less than all of the outstanding shares of
Preferred Stock are to be redeemed and the total number of shares of
Preferred Stock being redeemed;
(b) the number of shares of Preferred Stock held by the holder
that the Corporation intends to redeem;
(c) the date of the redemption and the Redemption Price; and
(d) that the holder is to surrender to the Corporation, in the
manner and at the place designated, his or her certificate or certificates
representing shares of Preferred Stock to be redeemed upon payment in
immediately available funds of the Redemption Price.
On or before the date fixed for any redemption of shares, each holder of
shares of Preferred Stock to be redeemed on such date, unless the holder has
exercised his right to convert the shares as provided in Section 8, shall
surrender the certificate or certificates representing such shares of
Preferred Stock to the Corporation, in the manner and at the place designated
in the Redemption Notice, and thereupon the Redemption Price for such shares
shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event less than all of the
shares represented by such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares.
If the Redemption Notice is duly given, and if on or prior to the
Redemption Date the Redemption Price is either paid or made available for
payment, then notwithstanding that the certificates evidencing any of the
shares of Preferred Stock so called for redemption have not been surrendered,
all rights with respect to such shares shall forthwith after the Redemption
Date cease and terminate, except only the right of the holders to receive the
Redemption Price without interest upon surrender of their certificates
therefor.
7. VOTING RIGHTS; ELECTION OF DIRECTOR.
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(a) The holders of Preferred Stock, except as otherwise required
under Delaware law or as set forth in Sections 7(b) and 7(c), shall not be
entitled or permitted to vote on any matter required or permitted to be voted
upon by the stockholders of the Corporation.
(b) Except as set forth in Sections 2(b) and (7(c), each
outstanding share of Preferred Stock shall entitle the holder thereof to
vote, in person or by proxy, at a special or annual meeting of stockholders
or in any written consent in lieu of meeting, on all matters entitled to be
voted on by holders of Common Stock voting together as a single class with
the Common Stock (and with other shares entitled to vote thereon, if any).
With respect to any such vote, each share of Preferred Stock shall entitle
the holder thereof to cast that number of votes per share as is equal to the
number of votes that such holder would be entitled to cast had its shares of
Preferred Stock been converted into shares of Common Stock pursuant to
Section 8(a) or Section 8(b) on the record date for determining the
stockholders of the Corporation eligible to vote on any such matters.
Fractional votes by the holders of Preferred Stock shall not, however, be
permitted and any fractional voting rights shall (after aggregating all
shares into which shares of Preferred Stock held by each holder could be
converted) be rounded to the nearest whole number.
(c) If General Atlantic Partners 70, L.P.("GAP LP"), GAP
Coinvestment Partners II, L.P. ("GAP Coinvestment"), GapStar, LLC ("GapStar")
and/or any Affiliate thereof in the aggregate own at least a majority of the
outstanding shares of Preferred Stock, then the holders of the Preferred
Stock, voting as a separate class, shall be entitled to elect one director of
the Corporation.
The Preferred Stock shall not vote together as a single class with the Common
Stock (and all other classes and series of stock of the Corporation entitled
to vote thereon, if any) with respect to the election of all of the other
directors of the Corporation. If the conditions set forth in the first
sentence of this Section 7(c) necessary for the holders of the Preferred
Stock to vote as a separate class for the election of directors are not
satisfied, the Preferred Stock shall vote together as a single class with the
Common Stock (and all other classes and series of stock of the Corporation
entitled to vote thereon, if any) with respect to the election of all of the
directors of the Corporation elected by such holders. At any meeting held for
the purpose of electing directors at a time when the Preferred Stock is
entitled to vote as a separate class for the election of directors, the
presence in person or by proxy of the holders of a majority of the shares of
Preferred Stock then outstanding shall constitute a quorum of the Preferred
Stock for the election of the directors to be elected solely by the holders
of the Preferred Stock; the holders of Preferred Stock shall be entitled to
cast one vote per share of Preferred Stock in any such election; and the
directors to be elected exclusively by the holders of Preferred Stock shall
be elected by the affirmative vote of the holders of a majority of the
outstanding shares of Preferred Stock. A vacancy in a directorship filled by
the
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holders of the Preferred Stock voting as a separate class pursuant to this
Section 7(c) shall be filled only by vote or written consent of the holders
of the Preferred Stock.
8. CONVERSION.
(a) CONVERSION AT THE OPTION OF THE HOLDER. Any holder of
Preferred Stock shall have the right, at its option, at any time and from
time to time, to convert, subject to the terms and provisions of this Section
8, any or all of such holder's shares of Preferred Stock into such number of
fully paid and non-assessable shares of Common Stock as is equal to the
product of the number of shares of Preferred Stock being so converted
multiplied by the quotient of (i) the Liquidation Preference divided by (ii)
the conversion price of $26.50 per share, subject to adjustment as provided
in Section 8(d) (such price, the "Conversion Price"). Such conversion right
shall be exercised by the surrender of certificate(s) representing the shares
of Preferred Stock to be converted to the Corporation at any time during
usual business hours at its principal place of business to be maintained by
it (or such other office or agency of the Corporation as the Corporation may
designate by notice in writing to the holders of Preferred Stock),
accompanied by written notice that the holder elects to convert such shares
of Preferred Stock and specifying the name or names (with address) in which a
certificate or certificates for shares of Common Stock are to be issued and
(if so required by the Corporation) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Corporation duly executed by
the holder or its duly authorized legal representative and transfer tax
stamps or funds therefor, if required pursuant to Section 8(j). All
certificates representing shares of Preferred Stock surrendered for
conversion shall be delivered to the Corporation for cancellation and
canceled by it.
(b) CONVERSION AT THE OPTION OF THE CORPORATION. If the Current
Market Price of the Common Stock on August 1, 2005 is equal to or greater
than the Conversion Price, the Corporation shall have the right, at its
option, five (5) days following such date to cause the holders of Preferred
Stock to convert, subject to the terms and provisions of this Section 8, all,
but not less than all, of the outstanding shares of Preferred Stock into such
number of fully paid and non-assessable shares of Common Stock as is equal to
the product of the total number of outstanding shares of Preferred Stock
multiplied by the quotient of (w) the Liquidation Preference divided by (x)
the Conversion Price. If on August 1, 2005 (and on each successive August 1
thereafter until the Current Market Price equals or exceeds the Conversion
Price) the Current Market Price of the Common Stock is less than the
Conversion Price, the Corporation shall have the right, at its option, to
either (i) extend the date specified in the first sentence of this Section
8(b) to the next August 1 (in which case all of the terms and provisions of
such sentence shall be applicable to such extended date) or (ii) cause the
holders of Preferred Stock to convert, subject to the terms and provisions of
this Section 8, all, but not less than all, of the outstanding shares of
Preferred Stock
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into such number of fully paid and non-assessable shares of Common Stock as
is equal to the product of the total number of outstanding shares of
Preferred Stock multiplied by the quotient of (y) the Liquidation Preference
divided by (z) the Current Market Price.
At least 30 days prior to the date fixed for conversion of the Preferred
Stock pursuant to Section 8(b), written notice ("Conversion Notice") shall be
mailed, postage prepaid, to each holder of record of the Preferred Stock at
its address last shown on the records of the Corporation. The Conversion
Notice shall state:
(I) the date of the conversion and the number of shares of
Common Stock into which each share of Preferred Stock will be converted,
assuming and provided that the Current Market Price on August 1, 2005 (or a
successive August 1, if applicable) is equal to or greater than the
Conversion Price; and
(II) that the holder is to surrender to the Corporation, in
the manner and at the place designated, his or her certificate or
certificates representing shares of Preferred Stock to be converted.
On or before the date fixed for any such conversion of shares, each
holder of shares of Preferred Stock shall surrender the certificate or
certificates representing such shares of Preferred Stock to the Corporation
for cancellation, in the manner and at the place designated in the Conversion
Notice, accompanied by a written notice specifying the name or names (with
address) in which a certificate or certificates for shares of Common Stock
are to be issued.
As promptly as practicable after the surrender of any shares of
Preferred Stock pursuant to Section 8(a) or 8(b), the Corporation shall
(subject to compliance with the applicable provisions of federal and state
securities laws) deliver to the holder of such shares so surrendered
certificate(s) representing the number of fully paid and nonassessable shares
of Common Stock into which such shares are entitled to be converted. At the
time of the surrender of such certificate(s), the Person in whose name any
certificate(s) for shares of Common Stock shall be issuable upon such
conversion shall be deemed to be the holder of record of such shares of
Common Stock on such date, notwithstanding that the share register of the
Corporation shall then be closed or that the certificates representing such
Common Stock shall not then be actually delivered to such Person.
Immediately upon conversion as provided in this Section 8, each holder
of Preferred Stock shall be deemed to be the holder of record of the Common
Stock issuable upon conversion of such holder's Preferred Stock,
notwithstanding that the share register of the Corporation shall then be
closed or that certificates representing the Common Stock shall not then
actually be delivered to such Person.
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(c) TERMINATION OF RIGHTS. On the date of any conversion
pursuant to Sections 8(a) or 8(b) above, all rights with respect to the
shares of Preferred Stock so converted, including the rights, if any, to
receive dividends (provided that all accrued and unpaid dividends with
respect to the shares of Preferred Stock that have not been paid as of such
date shall remain as obligations of the Company after the date of any such
conversion), notices and to vote, shall terminate, except only the rights of
holders thereof to (i) receive certificates for the number of shares of
Common Stock into which such shares of Preferred Stock have been converted
and (ii) exercise the rights to which they are entitled as holders of Common
Stock.
(d) CONVERSION PRICE ADJUSTMENTS. The Conversion Price, and the
number and type of securities to be received upon conversion of the Preferred
Stock, shall be subject to adjustment as follows:
(i) DIVIDEND, SUBDIVISION, COMBINATION OR RECLASSIFICATION
OF COMMON STOCK. In the event that the Corporation shall at any time or from
time to time, prior to conversion of the Preferred Stock (w) pay a dividend
or make a distribution (other than a dividend or distribution in which
holders of shares of Preferred Stock participate, in the manner provided in
Section 3) on the outstanding shares of Common Stock payable in Capital
Stock, (x) subdivide the outstanding shares of Common Stock into a larger
number of shares, (y) combine the outstanding shares of Common Stock into a
smaller number of shares or (z) issue any shares of its Capital Stock in a
reclassification of the Common Stock (other than any such event for which an
adjustment is made pursuant to another clause of this Section 8(d)), then,
and in each such case, the Conversion Price in effect immediately prior to
such event shall be adjusted (and any other appropriate actions shall be
taken by the Corporation) so that the holder of any share of Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number
of shares of Common Stock or other securities of the Corporation that such
holder would have owned or would have been entitled to receive upon or by
reason of any of the events described above, had such share of Preferred
Stock been converted immediately prior to the occurrence of such event. An
adjustment made pursuant to this Section 8(d)(i) shall become effective
retroactively (x) in the case of any such dividend or distribution, to a date
immediately following the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend or
distribution or (y) in the case of any such subdivision, combination or
reclassification, to the close of business on the day upon which such
corporate action becomes effective.
(ii) ISSUANCE OF COMMON STOCK OR COMMON STOCK EQUIVALENT
BELOW CONVERSION PRICE. If the Corporation shall at any time or from time to
time prior to conversion of the Preferred Stock, issue or sell in excess of
an aggregate of 1,396,430 shares of Common Stock or Common Stock Equivalents
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(subject to adjustment for the events described in Section 8(d)(i) above) at
a price per share of Common Stock (the "New Issue Price") that is less than
94.3% of the Conversion Price then in effect as of the record date or Issue
Date (as defined below), as the case may be (the "Relevant Date") (treating
the price per share of Common Stock, in the case of the issuance of any
Common Stock Equivalent, as equal to (x) the sum of the price for such Common
Stock Equivalent plus any additional consideration payable (without regard to
any anti-dilution adjustments) upon the conversion, exchange or exercise of
such Common Stock Equivalent divided by (y) the number of shares of Common
Stock initially underlying such Common Stock Equivalent), other than (A)
issuances or sales for which an adjustment is made pursuant to another
paragraph of this Section 8(d) and (B) issuances in connection with an
Excluded Transaction, THEN, and in each such case, the Conversion Price then
in effect shall be adjusted by MULTIPLYING the Conversion Price in effect on
the day immediately prior to the Relevant Date by a fraction (i) the
numerator of which shall be the sum of the number of shares of Common Stock
outstanding on the Relevant Date PLUS the number of shares of Common Stock
which the aggregate consideration received by the Corporation for the total
number of such additional shares of Common Stock so issued would purchase at
the Conversion Price on the Relevant Date (or, in the case of Common Stock
Equivalents, the number of shares of Common Stock which the aggregate
consideration received by the Corporation upon the issuance of such Common
Stock Equivalents and receivable by the Corporation upon the conversion,
exchange or exercise of such Common Stock Equivalents would purchase at the
Conversion Price on the Relevant Date) and (ii) the denominator of which
shall be the sum of the number of shares of Common Stock outstanding on the
Relevant Date PLUS the number of additional shares of Common Stock issued or
to be issued (or, in the case of Common Stock Equivalents, the maximum number
of shares of Common Stock into which such Common Stock Equivalents initially
may convert, exchange or be exercised).
Such adjustment shall be made whenever such shares of Common Stock or Common
Stock Equivalents are issued, and shall become effective retroactively (x) in
the case of an issuance to the stockholders of the Corporation, as such, to a
date immediately following the close of business on the record date for the
determination of stockholders entitled to receive such shares of Common Stock
or Common Stock Equivalents and (y) in all other cases, on the date (the
"Issue Date") of such issuance; PROVIDED, HOWEVER, that the determination as
to whether an adjustment is required to be made pursuant to this Section
8(d)(ii) shall only be made upon the issuance of such shares of Common Stock
or Common Stock Equivalents, and not upon the issuance of any security into
which the Common Stock Equivalents convert, exchange or may be exercised; and
PROVIDED, FURTHER, that if any Common Stock Equivalents (or any portions
thereof) which shall have given rise to an adjustment pursuant to this
Section 8(d)(ii) shall have expired or terminated without the exercise
thereof and/or if by reason of the terms of such Common Stock Equivalents
there shall have been an
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increase or increases, with the passage of time or otherwise, in the price
payable upon the exercise or conversion thereof, then the Conversion Price
hereunder shall be readjusted (but to no greater extent than originally
adjusted) in order to (A) eliminate from the computation any additional
shares of Common Stock corresponding to such Common Stock Equivalents as
shall have expired or terminated, (B) treat the additional shares of Common
Stock, if any, actually issued or issuable pursuant to the previous exercise
of such Common Stock Equivalents as having been issued for the consideration
actually received and receivable therefor and (C) treat any of such Common
Stock Equivalents which remain outstanding as being subject to exercise or
conversion on the basis of such exercise or conversion price as shall be in
effect at the time.
(iii) CERTAIN DISTRIBUTIONS. In case the Corporation shall
at any time or from time to time, prior to conversion of the Preferred Stock,
distribute to all holders of shares of the Common Stock (including any such
distribution made in connection with a merger or consolidation in which the
Corporation is the resulting or surviving Person and the Common Stock is not
changed or exchanged) cash, evidences of indebtedness of the Corporation or
another issuer, securities of the Corporation or another issuer or other
assets (excluding dividends or distributions in which holders of shares of
Preferred Stock participate in the manner provided in Section 3 and dividends
payable in shares of Common Stock for which adjustment is made under another
paragraph of this Section 8(d) or rights or warrants to subscribe for or
purchase securities of the Corporation (excluding those distributions in
respect of which an adjustment in the Conversion Price is made pursuant to
another paragraph of this Section 8(d)), THEN, and in each such case, the
Conversion Price then in effect shall be adjusted (and any other appropriate
actions shall be taken by the Corporation) by multiplying the Conversion
Price in effect immediately prior to the date of such distribution by a
fraction (x) the numerator of which shall be the Current Market Price of the
Common Stock immediately prior to the date of distribution less the then fair
market value (as determined by the Board of Directors in the exercise of
their fiduciary duties) of the portion of the cash, evidences of
indebtedness, securities or other assets so distributed or of such rights or
warrants applicable to one share of Common Stock and (y) the denominator of
which shall be the Current Market Price of the Common Stock immediately prior
to the date of distribution (but such fraction shall not be greater than
one); PROVIDED, HOWEVER, that no adjustment shall be made with respect to any
distribution of rights or warrants to subscribe for or purchase securities of
the Corporation if the holder of shares of Preferred Stock would otherwise be
entitled to receive such rights or warrants upon conversion at any time of
shares of Preferred Stock into Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective
retroactively to a date immediately following the close of business on the
record date for the determination of stockholders entitled to receive such
distribution.
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(iv) OTHER CHANGES. In case the Corporation at any time or
from time to time, prior to the conversion of the Preferred Stock, shall take
any action affecting its Common Stock similar to or having an effect similar
to any of the actions described in any of Sections 8(d)(i) or (ii) or Section
8(g) (but not including any action described in any such Section) and the
Board of Directors in good faith determines that it would be equitable in the
circumstances to adjust the Conversion Price as a result of such action,
then, and in each such case, the Conversion Price shall be adjusted in such
manner and at such time as the Board of Directors in good faith determines
would be equitable in the circumstances (such determination to be evidenced
in a resolution, a certified copy of which shall be mailed to the holders of
the shares of Preferred Stock).
(v) NO ADJUSTMENT. Notwithstanding anything herein to the
contrary, no adjustment under this Section 8(d) need be made to the
Conversion Price if the Corporation receives written notice from holders of a
majority of the outstanding Preferred Stock that no such adjustment is
required.
(e) ABANDONMENT. If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay or
deliver such dividend or distribution, then no adjustment in the Conversion
Price shall be required by reason of the taking of such record.
(f) CERTIFICATE AS TO ADJUSTMENTS. Upon any increase or
decrease in the Conversion Price, the Corporation shall within a reasonable
period (not to exceed ten (10) Business Days) following any of the foregoing
transactions deliver to each registered holder of Preferred Stock a
certificate, signed by (i) the Chief Executive Officer of the Corporation and
(ii) the Chief Financial Officer of the Corporation, setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased
Conversion Price then in effect following such adjustment.
(g) REORGANIZATION, RECLASSIFICATION. In case of any merger
or consolidation of the Corporation (other than a Sale Transaction) or any
capital reorganization, reclassification or other change of outstanding shares
of Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value) (each, a "Transaction"), the
Corporation shall execute and deliver to each holder of Preferred Stock at least
twenty (20) Business Days prior to effecting such Transaction a certificate
stating that the holder of each share of Preferred Stock shall have the right to
receive in such Transaction, in exchange for each share of Preferred Stock, a
security identical to (and not less favorable than) the Preferred Stock, and
provision shall be made therefor in the agreement, if any, relating to such
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Transaction. Any certificate delivered pursuant to this Section 8(g) shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 8. The provisions
of this Section 8(g) and any equivalent thereof in any such certificate
similarly shall apply to successive transactions.
In the event the holders of two-thirds (2/3) of the Preferred Stock do
not elect to receive the payments contemplated by Section 4(d), then upon the
consummation of a Sale Transaction, each outstanding share of Preferred Stock
shall be converted into the kind and amount of shares of stock or other
securities, property or cash receivable upon such Sale Transaction by a
holder of the number of shares of Common Stock into which such share of
Preferred Stock could have been converted immediately prior to such Sale
Transaction and provision shall be made therefor in the agreement, if any,
relating to such Sale Transaction.
(h) NOTICES. In case at any time or from time to time:
(w) the Corporation shall declare a dividend (or any other
distribution) on its shares of Common Stock;
(x) the Corporation shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights or warrants;
(y) there shall be any Transaction; or
(z) there shall occur a Sale Transaction;
then the Corporation shall mail to each holder of shares of Preferred Stock
at such holder's address as it appears on the transfer books of the
Corporation, as promptly as possible but in any event at least ten (10) days
prior to the applicable date hereinafter specified, a notice stating (A) the
date on which a record is to be taken for the purpose of such dividend,
distribution or granting of rights or warrants or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or granting of rights or warrants are
to be determined, or (B) the date on which such Transaction or Sale
Transaction is expected to become effective and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for shares of stock or other securities or property or
cash deliverable upon such Transaction or Sale Transaction. Notwithstanding
the foregoing, in the case of any event to which Section 8(g) is applicable,
the Corporation shall also deliver the certificate described in Section 8(g)
to each holder of Preferred Stock at least ten (10) Business Days' prior to
effecting such reorganization or reclassification as aforesaid.
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14
(i) RESERVATION OF COMMON STOCK. The Corporation shall at all
times reserve and keep available for issuance upon the conversion of the
Preferred Stock, such number of its authorized but unissued shares of Common
Stock as will from time to time be sufficient to permit the conversion of all
outstanding shares of Preferred Stock, and shall take all action to increase
the authorized number of shares of Common Stock if at any time there shall be
insufficient authorized but unissued shares of Common Stock to permit such
reservation or to permit the conversion of all outstanding shares of
Preferred Stock; PROVIDED that (i) the holders of shares of Preferred Stock
vote such shares in favor of any such action that requires a vote of
stockholders and (ii) such holders cause any directors elected by them
pursuant to Section 7(c) to vote in favor of any such action that requires a
vote of the Board of Directors.
(j) NO CONVERSION TAX OR CHARGE. The issuance or delivery of
certificates for Common Stock upon the conversion of shares of Preferred
Stock shall be made without charge to the converting holder of shares of
Preferred Stock for such certificates or for any tax in respect of the
issuance or delivery of such certificates or the securities represented
thereby (excluding any federal or state income taxes owed by the holders of
the Preferred Stock as a consequence of such issuance or delivery), and such
certificates shall be issued or delivered in the respective names of, or
(subject to compliance with the applicable provisions of federal and state
securities laws) in such names as may be directed by, the holders of the
shares of Preferred Stock converted; PROVIDED, HOWEVER, that the Corporation
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate in a
name other than that of the holder of the shares of Preferred Stock
converted, and the Corporation shall not be required to issue or deliver such
certificate unless or until the Person or Persons requesting the issuance or
delivery thereof shall have paid to the Corporation the amount of such tax or
shall have established to the reasonable satisfaction of the Corporation that
such tax has been paid.
9. CERTAIN REMEDIES. Any registered holder of Preferred Stock shall
be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Certificate of Designations and to enforce specifically
the terms and provisions of this Certificate of Designations in any court of
the United States or any state thereof having jurisdiction, this being in
addition to any other remedy to which such holder may be entitled at law or
in equity.
10. BUSINESS DAY. If any payment shall be required by the terms hereof
to be made on a day that is not a Business Day, such payment shall be made on
the immediately succeeding Business Day.
11. DEFINITIONS. As used in this Certificate of Designations, the
following terms shall have the following meanings (with terms defined in the
singular
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having comparable meanings when used in the plural and VICE VERSA), unless
the context otherwise requires:
"Affiliate" shall mean any Person who is an "affiliate" as defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act. In
addition, the following shall be deemed to be Affiliates of GAP Coinvestment,
GAP LP and GapStar: (a) GAP LLC, the members of GAP LLC, the limited partners
of GAP Coinvestment and the limited partners of GAP LP; (b) any Affiliate of
GAP LLC, the members of GAP LLC, the limited partners of GAP Coinvestment and
the limited partners of GAP LP; and (c) any limited liability company or
partnership a majority of whose members or partners, as the case may be, are
members or former members of GAP LLC or consultants or key employees of
General Atlantic Service Corporation, a Delaware corporation and an Affiliate
of GAP LLC. In addition, GAP LP, GapStar and GAP Coinvestment shall be deemed
to be Affiliates of one another.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day except a Saturday, a Sunday, or other day
on which commercial banks in the State of New York or California are
authorized or required by law or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however
designated and whether voting or non-voting) of, such Person's capital stock
and any and all rights, warrants or options exchangeable for or convertible
into such capital stock (but excluding any debt security whether or not it is
exchangeable for or convertible into such capital stock).
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" shall have the meaning ascribed to it in Section 2(a)
hereof.
"Common Stock Equivalent" shall mean any security or obligation which is
by its terms convertible or exchangeable into shares of Common Stock or
another Common Stock Equivalent, and any option, warrant or other
subscription or purchase right with respect to Common Stock.
"Conversion Notice" shall have the meaning ascribed to it in Section
8(b) hereof.
"Conversion Price" shall have the meaning ascribed to it in Section 8(a)
hereof.
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"Corporation" shall have the meaning ascribed to it in the first
paragraph of this Certificate of Designation.
"Current Market Price" per share shall mean, as of the date of
determination, (a) the average of the daily Market Price under clause (a),
(b) or (c) of the definition thereof of the Common Stock during the
immediately preceding thirty (30) trading days ending on such date, excluding
for the purposes of calculating such average the five highest and five lowest
Market Prices from such 30 trading day period, and (b) if the Common Stock is
not then listed or admitted to trading on any national securities exchange or
quoted in the over-the-counter market, then the Market Price under clause (d)
of the definition thereof on such date.
"Dividend Payment Date" shall have the meaning ascribed to it in Section
3(a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Excluded Transaction" means (a) any issuance of up to an aggregate of
5,963,571 shares of restricted stock or options to purchase shares of Common
Stock (subject to adjustment in the event of stock splits, combinations or
similar occurrences) to employees, officers or directors of the Corporation
pursuant to a stock option plan or other employee benefit arrangement
approved by the Board of Directors, (b) capital stock issued as full or
partial consideration for a merger, acquisition, strategic alliance or other
similar non-financing agreement approved by the Board of Directors and (c)
any issuance of Common Stock (i) upon the conversion of shares of Preferred
Stock, (ii) as a dividend on shares of Preferred Stock or (iii) upon
conversion or exercise of any Common Stock Equivalents.
"GAP Coinvestment" shall have the meaning ascribed to it in Section 7(c)
hereof.
"GAP LLC" means General Atlantic Partners, LLC, a Delaware limited
liability company and the general partner of GAP LP and the managing member
of GapStar, and any successor to such entity.
"GAP LP" shall have the meaning ascribed to it in Section 7(c) hereof.
"GapStar" shall have the meaning ascribed to it in Section 7(c) hereof.
"Issue Date" shall have the meaning ascribed to it in Section 8(d)(ii)
hereof.
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"Junior Stock" shall have the meaning ascribed to it in Section 2(a)
hereof.
"Liquidation" shall mean the voluntary or involuntary liquidation under
applicable bankruptcy or reorganization legislation, or the dissolution or
winding up of the Corporation.
"Liquidation Preference" shall have the meaning ascribed to it in
Section 4(a) hereof.
"Market Price" shall mean, as of the date of determination, (a) if the
Common Stock is listed on a national securities exchange, the closing price
per share of Common Stock on such date published in THE WALL STREET JOURNAL
(NATIONAL EDITION) or, if no such closing price on such date is published in
THE WALL STREET JOURNAL (NATIONAL EDITION), the average of the closing bid
and asked prices on such date, as officially reported on the principal
national securities exchange on which the Common Stock is then listed or
admitted to trading; or (b) if the Common Stock is not then listed or
admitted to trading on any national securities exchange but is designated as
a national market system security by the National Association of Securities
Dealers, Inc., the last trading price of the Common Stock on such date; or
(c) if there shall have been no trading on such date or if the Common Stock
is not designated as a national market system security by the National
Association of Securities Dealers, Inc., the average of the reported closing
bid and asked prices of the Common Stock on such date as shown by the
National Market System of the National Association of Securities Dealers,
Inc. Automated Quotations System and reported by any member firm of the New
York Stock Exchange selected by the Corporation; or (d) if none of (a), (b)
or (c) is applicable, a market price per share determined in good faith by
the Board of Directors.
"New Issue Price" shall have the meaning ascribed to it in Section
8(d)(ii) hereof.
"Person" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental body or other entity of any kind.
"Redemption Notice" shall have the meaning ascribed to it in Section 6
hereof.
"Redemption Price" shall have the meaning ascribed to it in Section 5
hereof.
"Relevant Date" shall have the meaning ascribed to it in Section
8(d)(ii) hereof.
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"Sale Transaction" shall mean (a) (i) the merger or consolidation of the
Corporation into or with one or more Persons, (ii) the merger or
consolidation of one or more Persons into or with the Corporation or (iii) a
tender offer or other business combination, if, in the case of (i), (ii) or
(iii) the stockholders of the Corporation prior to such merger or
consolidation do not retain at least a majority of the voting power of the
surviving Person or (b) the voluntary sale, conveyance, exchange or transfer
to another Person of (i) the voting Capital Stock of the Corporation if,
after such sale, conveyance, exchange or transfer, the stockholders of the
Corporation prior to such sale, conveyance, exchange or transfer do not
retain at least a majority of the voting power of the Corporation or (ii) all
or substantially all of the assets of the Corporation.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Preferred Stock" shall have the meaning ascribed to it in Section 1
hereof.
"Transaction" shall have the meaning ascribed to it in Section 8(g)
hereof.
IN WITNESS WHEREOF, the undersigned has executed and subscribed this
certificate this 28th day of July, 2000.
By: _____________________________________________
Name: Thomas H. Sinton
Title: President and Chief Executive Officer
