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Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ITC/\DELTACOM, INC.
ITC/\DeltaCom, Inc., a corporation duly organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that:
1. Section 4.1 of the Certificate of Incorporation of the
Corporation, as heretofore amended, is hereby further amended to read in its
entirety as follows:
4.1. Authorized Shares; Increase in Authorized Shares.
The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is 205,000,000 shares, of which
200,000,000 shares shall be classified as shares of Common Stock, with a par
value of $0.01 per share ("Common Stock"), and 5,000,000 shares shall be
classified as shares of Preferred Stock, with a par value of $0.01 per share
("Preferred Stock"). The Board of Directors expressly is authorized to provide
for the issuance of shares of Preferred Stock in one or more series without the
approval of the stockholders of the Corporation. The number of authorized shares
of any class of stock of the Corporation may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the capital stock of the Corporation entitled to
vote (irrespective of the right to vote thereupon as a class that the holders of
the shares of any such class would otherwise be entitled to under Section
242(b)(2) of the Delaware General Corporation Law).
2. The foregoing amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, ITC/\DeltaCom, Inc. has caused this Certificate of
Amendment to be executed by its duly authorized officer on this 17th day of May
2000.
ITC/\DELTACOM, INC.
By: /s/ J. Thomas Mullis
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Name: J. Thomas Mullis
Title: Senior Vice President
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RESTATED CERTIFICATE OF INCORPORATION
OF
ITC/\DELTACOM, INC.
ITC/\DELTACOM, INC., a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows:
1. The name under which the corporation was originally incorporated is
ITC/\DeltaCom, Inc. and the original Certificate of Incorporation of the
corporation was filed with the Secretary of State of the State of Delaware on
March 24, 1997.
2. This Restated Certificate of Incorporation restates and integrates and
does not further amend the provisions of the Certificate of Incorporation of the
corporation as heretofore amended or supplemented, and there is no discrepancy
between those provisions and the provisions of this Restated Certificate of
Incorporation.
3. This Restated Certificate of Incorporation has been duly adopted in
accordance with the provisions of Section 245 of the General Corporation Law of
the State of Delaware.
4. The text of the Certificate of Incorporation of the corporation is
hereby restated and integrated to read in its entirety as follows:
1. NAME.
The name of the corporation is ITC/\DeltaCom, Inc. (the
"Corporation").
2. REGISTERED OFFICE AND AGENT.
The registered office of the Corporation shall be located at 1013
Centre Road, Wilmington, Delaware 19805 in the County of New Castle. The
registered agent of the Corporation at such address shall be Corporation Service
Company.
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3. PURPOSE AND POWERS.
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware as from time to time amended (the "Delaware General
Corporation Law"). The Corporation shall have all power necessary or helpful to
engage in such acts and activities.
4. CAPITAL STOCK.
4.1. Authorized Shares; Increase in Authorized Shares.
The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is 205,000,000 shares, of which
200,000,000 shares shall be classified as shares of Common Stock, with a par
value of $0.01 per share ("Common Stock"), and 5,000,000 shares shall be
classified as shares of Preferred Stock, with a par value of $0.01 per share
("Preferred Stock"). The Board of Directors expressly is authorized to provide
for the issuance of shares of Preferred Stock in one or more series without the
approval of the stockholders of the Corporation. The number of authorized shares
of any class of stock of the Corporation may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the capital stock of the Corporation entitled to
vote (irrespective of the right to vote thereupon as a class that the holders of
the shares of any such class would otherwise be entitled to under Section
242(b)(2) of the Delaware General Corporation Law).
4.2. Common Stock.
4.2.1. Relative Rights.
The Common Stock shall be subject to all of the rights, privileges,
preferences and priorities of the Preferred Stock as set forth in the
certificates of designations filed to establish the respective series of
Preferred Stock. Each share of Common Stock shall have the same relative rights
as, and be identical in all respects to, all the other shares of Common Stock.
4.2.2. Voting Rights.
Each holder of record of shares of Common Stock shall be entitled to
attend all special and annual meetings of the stockholders of the Corporation
and, share for share and without regard to class, together with the holders of
all other classes of stock entitled to attend such meetings and to vote (except
any class or series of stock having special voting rights), to cast one
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vote in person or by proxy for each outstanding share of Common Stock so held
upon any matter or thing (including, without limitation, the election of one or
more directors) properly considered and acted upon by the stockholders.
4.2.3. Dividends.
Subject to the rights, if any, of the holders of shares of Preferred
Stock, the holders of record of the Common Stock, and any class or series of
stock entitled to participate therewith as to dividends, shall be entitled to
receive dividends, when, as and if declared by the Board of Directors, out of
any assets legally available for the payment of dividends thereon.
4.2.4. Dissolution, Liquidation, Winding Up.
In the event of any dissolution, liquidation or winding up of the
Corporation (whether voluntary or involuntary), the holders of record of the
Common Stock then outstanding, and all holders of any class or series of stock
entitled to participate (in whole or in part) therewith as to distribution of
assets, shall become entitled to participate equally on a per-share basis in the
distribution of any assets of the Corporation remaining after the Corporation
shall have paid or provided for payment of all debts and liabilities of the
Corporation, and shall have paid (or set aside for payment) to the holders of
any class or series of stock having preference over the Common Stock in the
event of dissolution, liquidation or winding up, the full preferential amounts
(if any) to which they are entitled.
4.3. Preferred Stock.
4.3.1. Issuance, Designations, Powers, Etc.
The Board of Directors expressly is authorized, subject to limitations
prescribed by the Delaware General Corporation Law and the provisions of this
Certificate of Incorporation, to provide (by resolution and by filing a
certificate of designations pursuant to the Delaware General Corporation Law)
for the issuance from time to time of the shares of Preferred Stock in one or
more series, to establish from time to time the number of shares to be included
in each such series, and to fix the designation, powers, preferences and other
rights of the shares of each such series and to fix the qualifications,
limitations and restrictions thereon, including, but without limiting the
generality of the foregoing, the following:
(i) the number of shares constituting that series and the distinctive
designation of that series;
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(ii) the dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of that
series;
(iii) whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting rights;
(iv) whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;
(v) whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
(vi) whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(vii) the rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of that series; and
(viii) any other relative powers, preferences, and rights of that
series, and qualifications, limitations or restrictions on that series.
Pursuant to authority granted to the Board of Directors of the
Corporation in the Corporation's original Certificate of Incorporation, on
October 16, 1997, the Board of Directors of the Corporation duly adopted
resolutions creating the Series A Convertible Preferred Stock, par value $.01
per share, of the Corporation, the rights, powers and preferences for which are
set forth in Attachment 1 hereto and incorporated by reference herein and made
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an integral part hereof.
4.3.2. Dissolution, Liquidation, Winding Up.
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of Preferred Stock of
each series shall be entitled to receive only such amount or amounts as shall
have been fixed by the certificate of designations or by the resolution or
resolutions of the Board of Directors providing for the issuance of such series.
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4.4. Redemption.
Notwithstanding any other provision of this Certificate of
Incorporation to the contrary, outstanding shares of stock of the Corporation
shall always be subject to redemption by the Corporation, by action of the Board
of Directors, if in the judgment of the Board of Directors such action should be
taken, pursuant to Section 151(b) of the Delaware General Corporation Law or any
other applicable provision of law, to the extent necessary to prevent the loss
or secure the reinstatement of any license or franchise from any governmental
agency held by the Corporation or any of its subsidiaries to conduct any portion
of the business of the Corporation or any of its subsidiaries, which license or
franchise is conditioned upon some or all of the holders of the Corporation's
stock possessing prescribed qualifications. The terms and conditions of such
redemption shall be as follows:
(a) The redemption price of the shares to be redeemed pursuant to
this Section 4.4 shall be determined by the Board of Directors and shall be
equal to the Fair Market Value (as defined herein) of such shares or, if such
shares were purchased by one or more Disqualified Holders (as defined herein)
within one year of the Redemption Date (as defined herein), the lesser of (i)
the Fair Market Value of such shares and (ii) the purchase price paid by such
Disqualified Holder for such shares.
(b) At the election of the Corporation, the redemption price of such
shares may be paid in cash, Redemption Securities (as defined herein) or any
combination thereof.
(c) If fewer than all shares held by Disqualified Holders are to be
redeemed, the shares to be redeemed shall be selected in such manner as shall be
determined by the Board of Directors, which may include selection first of the
most recently purchased shares thereof, selection by lot or selection in any
other manner determined by the Board of Directors.
(d) At least 30 days' prior written notice of the Redemption Date
shall be given to any Disqualified Holder of shares selected to be redeemed
(unless waived in writing by any such holder), provided that the Redemption Date
may be the date on which written notice shall be given to such holder if the
cash or Redemption Securities necessary to effect the redemption shall have been
deposited in trust for the benefit of such holder and subject to immediate
withdrawal by it upon surrender of the stock certificates formerly representing
the shares redeemed.
(e) From and after the Redemption Date, any and all rights of
whatever nature that any Disqualified Holder may have with respect to any shares
selected for redemption (including, without limitation, any rights to vote
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or participate in dividends declared on stock of the same class or series as
such shares) shall cease and terminate, and such Disqualified Holder shall
thenceforth be entitled only to receive, with respect to such shares, the cash
or Redemption Securities payable upon redemption.
(f) The Board of Directors may also impose additional terms and
conditions.
(g) For purposes of this Section 4.4:
(i) "Disqualified Holder" shall mean any holder of shares of stock
of the Corporation whose holding of such stock, either
individually or when taken together with the holding of shares
of stock of the Corporation by any other holders, may result,
in the judgment of the Board of Directors, in the loss of, or
the failure to secure the reinstatement of, any license or
franchise from any governmental agency held by the Corporation
or any of its subsidiaries to conduct any portion of the
business of the Corporation or any of its subsidiaries.
(ii) "Fair Market Value" of a share of the Corporation's stock of
any class or series shall mean the average Closing Price (as
defined herein) for such a share for each of the 45 most
recent days on which shares of stock of such class or series
shall have been traded preceding the day on which notice of
redemption shall be given pursuant to paragraph (d) of this
Section 4.4; provided, however, that if shares of stock of
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such class or series are not traded on any securities exchange
or in the over-the-counter market, "Fair Market Value" shall
be determined by the Board of Directors in good faith.
"Closing Price" on any day means the reported closing sales
price or, in case no such sale takes place, the average of the
reported closing bid and asked prices on the principal United
States securities exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest
closing sales price or bid quotation for such stock on the
Nasdaq National Market of The Nasdaq Stock Market, Inc. or any
system then in use, or if no such prices or quotations are
available, the fair market value on the day in question as
determined by the Board of Directors in good faith.
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(iii) "Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of any shares of stock of the
Corporation pursuant to this Section 4.4.
(iv) "Redemption Securities" shall mean any debt or equity
securities of the Corporation, any of its subsidiaries or any
other corporations, or any combination thereof, having such
terms and conditions as shall be approved by the Board of
Directors and which, together with any cash to be paid as part
of the redemption price, in the opinion of any investment
banking firm selected by the Board of Directors (which may be
a firm which provides other investment banking, brokerage or
other services to the Corporation), has a value, at the time
notice of redemption is given pursuant to paragraph (d) of
this Section 4.4, at least equal to the price required to be
paid pursuant to paragraph (a) of this Section 4.4 (assuming
for purposes of such valuation, in the case of Redemption
Securities to be publicly traded, such Redemption Securities
were fully distributed and trading under normal conditions).
5. BOARD OF DIRECTORS.
5.1. Classification.
Except as otherwise provided in this Certificate of Incorporation or a
certificate of designations relating to the rights of the holders of any series
of Preferred Stock, voting separately by series, to elect additional directors
under specified circumstances, the number of directors of the Corporation shall
be as fixed from time to time by the Board of Directors of the Corporation. The
directors, other than those who may be elected by the holders of any series of
Preferred Stock voting separately by series, shall be classified, with respect
to the time for which they severally hold office, into three classes, Class I,
Class II and Class III, which shall be as nearly equal in number as possible,
and shall be adjusted from time to time by the Board of Directors to maintain
such proportionality. Each initial director in Class I shall hold office for a
term expiring at the 2000 annual meeting of stockholders, each initial director
in Class II shall hold office for a term expiring at the 1999 annual meeting of
stockholders, and each initial director in Class III shall hold office for a
term expiring at the 1998 annual meeting of stockholders. Elections of directors
need not be by written ballot.
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Notwithstanding the foregoing provisions of this Section 5.1, each
director shall serve until such director's successor is duly elected and
qualified or until such director's earlier death, resignation or removal. At
each annual meeting of stockholders, the successors to the class of directors
whose term expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the third year following
the year of their election and until their successors have been duly elected and
qualified or until any such director's earlier death, resignation or removal.
Except as set forth below with respect to vacancies and newly created
directorships, directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors.
5.2. Removal.
Except as otherwise provided pursuant to the provisions of this
Certificate of Incorporation or a certificate of designations relating to the
rights of the holders of any series of Preferred Stock, voting separately by
series, to elect directors under specified circumstances, any director or
directors may be removed from office at any time, but only for cause and only by
the affirmative vote of not less than 66-2/3% of the total number of votes of
the then outstanding shares of stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, and
only if notice of such proposal was contained in the notice of such meeting. At
least 30 days prior to any meeting of stockholders where the removal of
directors prior to expiration of their term in office will be considered,
written notice shall be sent to the director or directors whose removal will be
considered at such meeting. Any vacancy in the Board of Directors resulting
from any such removal or otherwise shall be filled in accordance with Section
5.3 hereof.
5.3. Vacancies and Change of Authorized Number.
Vacancies and newly created directorships resulting from any increase
in the authorized number of directors elected by all of the stockholders having
the right to vote as a single class may only be filled by a majority of the
directors then in office, although fewer than a quorum, or by a sole remaining
director. In the event that one or more directors resign from the board,
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have the power to fill such vacancy
or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective. Notwithstanding the foregoing, whenever the
holders of any class or classes of stock or series thereof are entitled to elect
one or more directors by the provisions of this Certificate of Incorporation,
vacancies and newly created directorships of such class or classes or series
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may only be filled by a majority of the directors elected by such class or
classes or series thereof in office, or by a sole remaining director so elected.
Each director chosen in accordance with this Section 5.3 shall hold office until
the next election of the class for which such director shall have been chosen,
and until such director's successor is elected and qualified, or until the
director's earlier death, resignation or removal.
5.4. Directors Elected by Holders of Preferred Stock.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies, removal and other features of such directorships shall be governed by
the terms of the certificate of designations applicable thereto, and such
directors so elected shall not be divided into classes pursuant to this Section
5 unless expressly provided by the certificate of designations.
5.5. Limitation of Liability.
No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty as a
director; provided, however, that this provision shall not eliminate or limit
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the liability of a director: (a) for any breach of the director's duty of
loyalty to the Corporation or its stockholders; (b) for acts or omissions that
are not in good faith or that involve intentional misconduct or a knowing
violation of law; (c) for liability under Section 174 of the Delaware General
Corporation Law; or (d) for any transaction from which the director received any
improper personal benefit. Any repeal or modification of this Section 5.5 shall
be prospective only, and shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification
with respect to acts or omissions occurring prior to such repeal or
modification.
6. ACTIONS BY STOCKHOLDERS.
6.1. Action at Meetings or By Unanimous Consent.
Except as otherwise provided in this Certificate of Incorporation or a
certificate of designations relating to the rights of the holders of any series
of Preferred Stock, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders, and may not be effected by any consent in
writing by such stockholders, unless such consent is unanimous.
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6.2. Special Meetings of Stockholders.
Special meetings of the stockholders may be called at any time but
only by (a) the chairman of the board of the Corporation or (b) a majority of
the directors in office, although less than a quorum.
7. AMENDMENT OF CERTIFICATE OF INCORPORATION.
Notwithstanding any other provisions of this Certificate of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this Certificate of
Incorporation or the Bylaws of the Corporation), the affirmative vote of 66-2/3%
of the total number of votes of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to amend or repeal, or to adopt
any provision inconsistent with the purpose or intent of, Section 5 or Section 6
hereof, and this Section 7. Notice of any such proposed amendment, repeal or
adoption shall be contained in the notice of the meeting at which it is to be
considered. Subject to the provisions set forth herein, the Corporation
reserves the right to amend, alter, repeal or rescind any provision contained in
this Certificate of Incorporation in the manner now or hereafter prescribed by
law.
8. AMENDMENT OF BYLAWS.
In furtherance and not in limitation of the powers conferred by the
Delaware General Corporation Law, the Board of Directors is expressly authorized
and empowered to adopt, amend and repeal the Bylaws of the Corporation.
Notwithstanding any other provisions of this Certificate of Incorporation or the
Bylaws of the Corporation (and notwithstanding the fact that a lesser percentage
may be specified by law, this Certificate of Incorporation or the Bylaws of the
Corporation), in order for the stockholders of the Corporation to amend or
repeal the Bylaws of the Corporation, the affirmative vote of 66-2/3% of the
total number of votes of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required.
* * * * *
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IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be executed by its duly authorized officer, as
of this 14th day of June, 2000.
/s/ J. Thomas Mullis
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J. Thomas Mullis
Senior Vice President
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Attachment 1
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RESTATED CERTIFICATE OF DESIGNATIONS OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING OR OTHER RIGHTS,
AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, OF
SERIES A CONVERTIBLE PREFERRED STOCK
($0.01 Par Value)
OF
ITC/\DELTACOM, INC.
_________________
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
_________________
ITC/\DELTACOM, INC., a Delaware corporation (the "Corporation"), does
hereby certify that the following resolutions were duly adopted by the Board of
Directors of the Corporation pursuant to authority conferred upon the Board of
Directors by Section 4 of the Restated Certificate of Incorporation of the
Corporation, which authorizes the issuance of up to 5,000,000 shares of
preferred stock, at a meeting of the Board of Directors:
RESOLVED, that the issue of a series of preferred stock, $0.01 par
value, of the Corporation is hereby authorized and the designation, powers,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, in addition to those set
forth in the Restated Certificate of Incorporation of the Corporation, are
hereby fixed as follows:
1. NUMBER OF SHARES AND DESIGNATION
1,750,000 shares of the preferred stock, $0.01 par value, of the
Corporation are hereby constituted as a series of the preferred stock
designated as Series A Convertible Preferred Stock (the "Series A Preferred
Stock"). Without the consent of the then current holders of shares of
Series A Preferred Stock as provided for herein, the number of authorized
shares of Series A Preferred Stock may not be increased or decreased below
the number of then currently outstanding shares of Series A Preferred
Stock.
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2. DEFINITIONS
For purposes of the Series A Preferred Stock, the following terms
shall have the meanings indicated:
"Acceptance Notice" shall have the meaning set forth in Section
9.3.
"Board of Directors" shall mean the board of directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Series A
Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of Georgia are
authorized or obligated by law or executive order to close.
"Common Stock" shall mean the Common Stock of the Corporation,
par value $0.01 per share.
"Conversion Date" shall mean March 14, 2002.
"Conversion Price" shall mean the conversion price per share of
Common Stock into which the Series A Preferred Stock is convertible,
as such Conversion Price may be adjusted pursuant to Section 6. The
"Initial Conversion Price" shall be obtained by multiplying $13.2378
by the Relative Fair Market Valuation of the Corporation (equivalent
to the rate of one share of Common Stock for each share of Series A
Preferred Stock).
"Current Market Price" shall mean, as of a particular date, the
average of the high bid and low asked prices per share of Common Stock
in the over-the-counter market, as reported by The Nasdaq Stock Market
or such other system then in use, or such other exchange or inter-
dealer quotation system on which the Common Stock is principally
traded or authorized to be quoted; or, if the Common Stock is not so
traded or authorized to be quoted on any such exchange or inter-dealer
quotation system, then the price per share of Common Stock most
recently designated by the Board of Directors as the "fair market
value" thereof for purposes of granting incentive stock options.
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"Issue Date" shall mean the first date on which shares of Series
A Preferred Stock are issued.
"Notice" shall have the meaning set forth in Section 9.2.
"Person" shall mean any individual, firm, partnership,
corporation or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Relative Fair Market Valuation of the Corporation" shall mean
the fair market value of the Corporation expressed as a percentage of
the ITC Holding Fair Market Value, determined as of the date the
initial public offering price per share of the common stock of the
Corporation (the "IPO Price") is established. The "ITC Holding Fair
Market Value" shall be determined by the Board of Directors (or a
committee thereof) of ITC West Point, Inc., by reference to the
business and operations of ITC Holding Company, Inc. immediately prior
to the transfer of assets and liabilities to ITC West Point, Inc. to
be undertaken in connection with a corporate reorganization by ITC
Holding Company, Inc. The fair market value of the Corporation will
be determined by the Board of Directors of the Corporation (or a
committee thereof), by reference to the IPO Price.
"Securities" shall have the meaning set forth in Section 6.4.2.
"Series A Preferred Liquidation Distribution" shall have the
meaning set forth in Section 4.
"Series A Preferred Stock" shall mean the series of preferred
stock, $0.01 par value, of the Corporation designated as Series A
Convertible Preferred Stock.
"Shares" shall have the meaning set forth in Section 9.1.
"Stockholder" shall have the meaning set forth in Section 9.1.
"Subsidiaries" shall mean any and all corporations, partnerships,
limited liability companies, joint ventures, associations and other
entities controlled by the Corporation directly or indirectly through
one or more intermediaries.
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"The Nasdaq Stock Market" shall mean the National Market System
of The Nasdaq Stock Market, Inc.
"Trading Day" means a day on which any exchange or inter-dealer
quotation system on which the Common Stock is principally traded or
authorized to be quoted is open for the transaction of business.
"Transaction" shall have the meaning set forth in Section 6.5.
"Transfer" shall have the meaning set forth in Section 9.1.
"Transfer Agent" means such agent or agents, if any, of the
Corporation as may be designated by the Board of Directors of the
Corporation as the transfer agent for the Series A Preferred Stock.
"Transferring Stockholder" shall have the meaning set forth in
Section 9.2.
3. DIVIDENDS
3.1. Right to Receive Dividends
The holders of shares of the Series A Preferred Stock shall be
entitled to receive, when and if declared by the Board of Directors out of
funds legally available therefor, dividends in an amount per share of
Series A Preferred Stock equal to the dividends payable on the number of
shares of Common Stock into which one share of Series A Preferred Stock is
then convertible (assuming that the Conversion Date has already occurred),
determined as of the date fixed for determining holders of shares of Common
Stock entitled to receive such dividends. Each such dividend shall be
payable in arrears to the holders of record of shares of the Series A
Preferred Stock, as they appear on the stock records of the Corporation at
the close of business on such record dates, not more than 60 days preceding
the payment dates thereof, as shall be fixed by the Board of Directors.
3.2. Dividends on Other Stock
So long as any shares of the Series A Preferred Stock are outstanding,
no dividends shall be declared or paid or set apart for payment on any
class or series of stock of the Corporation ranking, as to dividends, on a
parity with the Series A Preferred Stock, for any period, nor shall any
shares ranking on a parity with the Series A Preferred
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Stock be redeemed or purchased by the Corporation or any Subsidiary, unless
dividends have been or contemporaneously are declared and paid (or are
declared and a sum sufficient for the payment thereof set apart for such
payment) on the Series A Preferred Stock in an amount per share of Series A
Preferred Stock equal to dividends declared and paid or payable on the
number of shares of Common Stock into which one share of Series A Preferred
Stock is then convertible (assuming that the Conversion Date has already
occurred), in accordance with Section 3.1.
4. LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus)
shall be made to or set apart for the holders of Common Stock or any other
series or class or classes of stock of the Corporation ranking junior to
the Series A Preferred Stock, upon liquidation, dissolution or winding up,
the holders of the shares of Series A Preferred Stock shall be entitled to
receive the Initial Conversion Price per share plus an amount equal to all
dividends declared and unpaid thereon to the date of final distribution to
such holders (the "Series A Preferred Liquidation Distribution"). After the
Series A Preferred Liquidation Distribution has been made and after the
holders of shares of any other class or series of stock having preference
over the Common Stock in the event of liquidation, dissolution or winding
up have received the full preferential amounts to which they are entitled,
the holders of shares of Common Stock and any other class or series of
stock entitled to participate with the Common Stock in the event of
liquidation, dissolution or winding up shall be entitled to receive out of
the assets of the Corporation legally available for distribution to
stockholders (whether capital or surplus) cash in amount per share equal to
the amount of the Series A Preferred Liquidation Distribution. Thereafter,
the holders of the Series A Preferred Stock shall be entitled to share
ratably with the holders of the shares of Common Stock and any other class
or series of stock entitled to participate with the Common Stock in the
event of liquidation, dissolution or winding up, in any and all assets
remaining to be paid or distributed, such that distributions shall be made
in respect of each share of Series A Preferred Stock in an amount equal to
the distributions made in respect of the number of shares of Common Stock
into which such share of Series A Preferred Stock is then convertible. If,
upon any liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation, or proceeds thereof, distributable among the
holders of the shares of Series A Preferred Stock and any other shares of
stock ranking, as to liquidation, dissolution or winding up, on a parity
with the Series A Preferred Stock,
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shall be insufficient to pay in full the preferential amount aforesaid and
liquidating payments in respect thereof, then such assets, or the proceeds
thereof, shall be distributed among the holders of shares of Series A
Preferred Stock and any such other stock ratably in accordance with the
respective amounts which would be payable on such shares of Series A
Preferred Stock and any such other stock if all amounts payable thereon
were paid in full. For the purposes of this Section 4, (i) a consolidation
or merger of the Corporation with one or more corporations, (ii) a sale or
transfer of all or substantially all of the Corporation's assets, (iii) a
statutory share exchange or (iv) a spin-off of assets of the Corporation to
its stockholders shall not be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary.
5. SHARES TO BE RETIRED
All shares of Series A Preferred Stock purchased by the Corporation or
converted shall be retired and canceled and shall be restored to the status
of authorized but unissued shares of preferred stock, without designation
as to series.
6. CONVERSION
Holders of shares of Series A Preferred Stock shall have the right to
convert all or a portion of such shares into shares of Common Stock, as
follows:
6.1. Right of Conversion
Subject to and upon compliance with the provisions of this Section 6,
a holder of shares of Series A Preferred Stock shall have the right, at
his, her or its option, at any time after March 14, 2002, to convert any or
all of such shares into the number of fully paid and nonassessable shares
of Common Stock (calculated as to each conversion to the nearest 1/100th of
a share) obtained by dividing the aggregate liquidation preference of such
shares by the Conversion Price and by surrender of such shares so to be
converted by the holder thereof, such surrender to be made in the manner
provided in Section 6.2. No shares of Series A Preferred Stock may be
converted into fractional shares of Common Stock. Any fractional interest
in respect of a share of Common Stock arising upon such conversion shall be
settled as provided in Section 6.3.
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6.2. Exercise of Conversion Right
In order to exercise the conversion right, the holder of each share of
Series A Preferred Stock to be converted shall surrender the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Transfer Agent or, if no Transfer Agent has
been appointed by the Corporation, at the principal office of the
Corporation, accompanied by written notice to the Corporation that the
holder thereof elects to convert its shares of Series A Preferred Stock or
a specified portion thereof. Unless the shares issuable on conversion are
to be issued in the same name as the name in which such share of Series A
Preferred Stock is registered, each share surrendered for conversion shall
be accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid).
Holders of shares of Series A Preferred Stock at the close of business
on a dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding dividend payment date
notwithstanding the conversion thereof following such dividend payment
record date and prior to such dividend payment date.
As promptly as practicable after the surrender of certificates for
shares of Series A Preferred Stock as aforesaid, the Corporation shall
issue and shall deliver at such office to such holder, or on his, her or
its written order, (i) a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such shares in
accordance with the provisions of this Section 6, (ii) if less than the
full number of shares of Series A Preferred Stock evidenced by the
surrendered certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificates less the number of shares being converted, and
(iii) any fractional interest in respect of a share of Common Stock arising
upon such conversion shall be settled as provided in Section 6.3.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for
shares of Series A Preferred Stock shall have been surrendered and such
notice received by the Corporation as aforesaid, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become
the holder or holders of
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record of the shares represented thereby at such time on such date and such
conversion shall be at the Conversion Price in effect at such time on such
date, unless the stock transfer books of the Corporation shall be closed on
that date, in which event such person or persons shall be deemed to have
become such holder or holders of record at the close of business on the
next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon
which such shares shall have been surrendered and such notice received by
the Corporation. All shares of Common Stock delivered upon conversion of
the Series A Preferred Stock shall upon delivery be duly and validly issued
and fully paid and nonassessable.
6.3. No Fractional Shares Upon Conversion
No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon conversion of the Series A Preferred
Stock. Instead of any fractional interest in a share of Common Stock which
would otherwise be deliverable upon the conversion of a share of Series A
Preferred Stock, the Corporation shall pay to the holder of such share an
amount in cash (computed to the nearest cent) equal to such fraction of a
share multiplied by the Current Market Price of one share of Common Stock
as of the date of conversion. If more than one share shall be surrendered
for conversion at one time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of Series A Preferred Stock so
surrendered.
6.4. Adjustment of Conversion Price
The Conversion Price shall be adjusted from time to time as follows:
6.4.1. Stock Dividends, Reorganizations, Reclassifications
In case the Corporation shall after the Issue Date (A) pay a dividend
or make a distribution on its Common Stock in shares of its Common Stock,
(B) subdivide its outstanding Common Stock into a greater number of shares,
(C) combine its outstanding Common Stock into a smaller number of shares or
(D) issue any shares of capital stock by reclassification of its Common
Stock, the Conversion Price in effect immediately prior thereto shall be
adjusted so that the holder of any share of Series A Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock of the Corporation which such holder would
have owned or have been entitled to receive after the happening of any of
the events described above had such share of Series A Preferred Stock been
converted immediately prior
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to the happening of such event or the record date therefor, whichever is
earlier. An adjustment made pursuant to this Section 6.4.1 shall become
effective immediately after the close of business on the record date in the
case of a dividend or distribution (except as provided in Section 6.8
below) and shall become effective immediately after the close of business
on the record date in the case of a subdivision, combination or
reclassification.
6.4.2. Certain Other Distributions to Holders of Common Stock
In case the Corporation shall distribute to all holders of its Common
Stock any shares of capital stock of the Corporation (other than Common
Stock) or evidences of its indebtedness or assets (other than a regular
cash dividend that the Board of Directors determines, in good faith, can be
maintained by the Corporation for at least four consecutive periods
covering not less than one year and that the Board of Directors intends to
maintain for at least four consecutive periods covering not less than one
year, out of profits or surplus) or rights or warrants to subscribe for or
purchase any of its securities (any of the foregoing being hereinafter in
this Section 6.4.2 called the "Securities"), then in each such case, unless
the Corporation elects to reserve shares or other units of such Securities
for distribution to the holders of the Series A Preferred Stock upon the
conversion of the shares of Series A Preferred Stock so that any such
holder converting shares of Series A Preferred Stock will receive upon such
conversion, in addition to the shares of the Common Stock to which such
holder is entitled, the amount and kind of such Securities which such
holder would have received if such holder had, immediately prior to the
record date for the distribution of the Securities, converted his or her
shares of Series A Preferred Stock into Common Stock (such election to be
based upon a determination by the Board of Directors that such reservation
will not materially adversely affect the interests of any holder of Series
A Preferred Stock in any such reserved Securities), the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying (I) the Conversion Price in effect immediately prior to the
date of such distribution by (II) a fraction, the numerator of which shall
be the Current Market Price per share of the Common Stock on the record
date mentioned below less the fair market value (as determined by the Board
of Directors, whose determination shall, if made in good faith, be
conclusive) of the portion of the capital stock or assets or evidences of
indebtedness so distributed or of such rights or warrants applicable to one
share of Common Stock, and the denominator of which shall be the Current
Market Price per share of the Common Stock. Such adjustment shall become
effective immediately, except as provided in Section 6.8 below, after the
record
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date for the determination of stockholders entitled to receive such
distribution.
6.4.3. No De Minimis Adjustments
No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason of this
-----------------
Section 6.4.3 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment; and provided further that
any adjustment shall be required and made in accordance with the provisions
of this Section 6 (other than this Section 6.4.3) not later than such time
as may be required in order to preserve the tax-free nature of a
distribution to the holders of shares of Common Stock. All calculations
under this Section 6 shall be made to the nearest cent (with $.005 being
rounded upward) or to the nearest 1/100 of a share (with .005 of a share
being rounded upward), as the case may be. Anything in this Section 6.4.3
to the contrary notwithstanding, the Corporation shall be entitled, to the
extent permitted by law, to make such reductions in the Conversion Price,
in addition to those required by Section 6.4.3, as it in its discretion
shall determine to be advisable in order that any stock dividends,
subdivision of shares, distribution of rights or warrants to purchase stock
or securities, or a distribution of other assets (other than cash
dividends) hereafter made by the Corporation to its stockholders shall not
be taxable.
6.4.4. No Adjustment Where Similar Dividend, Distribution, or
Issuance With Respect to Preferred Stock
No adjustment in the Conversion Price shall be required in the event
of any dividend, distribution or issuance to holders of shares of Common
Stock pursuant to Sections 6.4.1 or 6.4.2 above if holders of shares of
Series A Preferred Stock have received the same dividend, distribution or
issuance in accordance with Section 3.
6.5. Certain Transactions
In case the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, sale of all or substantially
all of the Corporation's assets or recapitalization of the Common Stock and
excluding any transaction as to which Section 6.4.1 applies) (each of the
foregoing being referred to as a "Transaction"), in each case as a result
of which shares of Common Stock shall be converted into the right to
receive stock, securities or other property (including cash or any
combination thereof), each share of Series A Preferred Stock which is not
converted into the right to receive stock,
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securities or other property in connection with such Transaction shall
thereafter be convertible into the kind and amount of shares of stock and
other securities and property receivable (including cash) upon the
consummation of such Transaction by a holder of that number of shares or
fraction thereof of Common Stock into which one share of Series A Preferred
Stock was convertible immediately prior to such Transaction. The
Corporation shall not be a party to any Transaction unless the terms of
such Transaction are consistent with the provisions of this Section 6.5,
and it shall not consent or agree to the occurrence of any Transaction
until the Corporation has entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of the holders of
the Series A Preferred Stock which will contain provisions enabling the
holders of the Series A Preferred Stock which remains outstanding after
such Transaction to convert into the consideration received by holders of
Common Stock at the Conversion Price immediately after such Transaction.
The provisions of this Section 6.5 shall similarly apply to successive
Transactions.
6.6. Notice of Certain Events
If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than a regular cash dividend that
the Board of Directors determines can be maintained by the Corporation for
at least four consecutive periods covering at least one year and that the
Board of Directors intends to maintain for at least four consecutive
periods covering at least one year out of profits or surplus); or
(ii) the Corporation shall authorize the granting to the holders
of the Common Stock of rights or warrants to subscribe for or purchase any
shares of any class or any other rights or warrants; or
(iii) there shall be any reclassification of the Common Stock
(other than an event to which Section 6.4.1 applies) or any consolidation
or merger to which the Corporation is a party and for which approval of any
stockholders of the Corporation is required, or the sale or transfer of all
or substantially all of the assets of the Corporation;
then in each such case the Corporation shall cause to be filed with
the Transfer Agent, if any, and shall cause to be mailed to the holders of
shares of the Series A Preferred Stock at their addresses as shown on the
stock records of the Corporation, as promptly as possible, but at least 15
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days prior to the applicable date specified in clauses (A) and (B) below, a
notice stating (A) the date on which a record is to be taken for the
purpose of such dividend, distribution or 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 rights or
warrants are to be determined or (B) the date on which such
reclassification, consolidation, merger, sale or transfer is expected, that
holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale or transfer. Failure to
give such notice or any defect therein shall not affect the legality or
validity of the proceedings described in this Section 6.
6.7. Notice of Adjustment in Conversion Price
Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price and the date on which
such adjustment becomes effective and shall promptly mail such notice of
such adjustment of the Conversion Price to the holder of each share of
Series A Preferred Stock at his, her or its last address as shown on the
stock records of the Corporation.
6.8. Adjustment in Conversion Price and Record Dates
In any case in which Section 6.4 provides that an adjustment shall
become effective immediately after a record date for an event, the
Corporation may defer until the occurrence of such event (A) issuing to the
holder of any share of Series A Preferred Stock converted after such record
date and before the occurrence of such event the additional shares of
Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock issuable upon such
conversion before giving effect to such adjustment and (B) paying to such
holder any amount in cash in lieu of any fraction pursuant to Section 6.3.
6.9. Determination of Number of Outstanding Shares of Common Stock
For purposes of this Section 6, the number of shares of Common Stock
at any time outstanding shall not include any shares of Common Stock then
owned or held by or for the account of the Corporation.
6.10. Adjustments Required by Multiple Sections
If any action or transaction would require adjustment of the
Conversion Price pursuant to more than one paragraph of this
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Section 6, only one adjustment shall be made and such adjustment shall be
the amount of adjustment which has the highest absolute value.
6.11. Other Actions Affecting Conversion Rights
In case the Corporation shall take any action affecting the Common
Stock, other than action described in this Section 6, that in the opinion
of the Board of Directors would materially adversely affect the conversion
rights of the holders of the shares of Series A Preferred Stock, the
Conversion Price for the Series A Preferred Stock may be adjusted, to the
extent permitted by law, in such manner, if any, and at such time, as the
Board of Directors may determine to be equitable in the circumstances.
6.12. Reservation of Common Stock for Issuance Upon Conversion
The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of
Common Stock held in its treasury, or both, for the purpose of effecting
conversion of the Series A Preferred Stock, the full number of shares of
Common Stock deliverable upon the conversion of all outstanding shares of
Series A Preferred Stock not theretofore converted. For purposes of this
Section 6.12, the number of shares of Common Stock which shall be
deliverable upon the conversion of all outstanding shares of Series A
Preferred Stock shall be computed as if at the time of computation all such
outstanding shares were held by a single holder.
6.13. Fully Paid and Nonassessable Shares Upon Conversion
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value of the shares of Common Stock
deliverable upon conversion of the Series A Preferred Stock, the
Corporation shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.
6.14. Listing of Shares Issuable Upon Conversion
The Corporation shall use all reasonable efforts to list the shares
of Common Stock required to be delivered upon conversion of the Series A
Preferred Stock, prior to such delivery, on any exchange or inter-dealer
quotation system on which the Common Stock is principally traded or
authorized to be quoted at such time.
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6.15. Compliance with Laws and Regulatory Requirements
Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the Series A Preferred Stock, the
Corporation shall use all reasonable efforts to comply with all federal and
state laws and regulations thereunder requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by,
any governmental authority, and any such conversion or delivery shall be
subject to any applicable requirements of law or regulation.
6.16. Payment of Issue or Transfer Taxes
The Corporation shall pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of
shares of Common Stock on conversion of the Series A Preferred Stock
pursuant hereto; provided, however, that the Corporation shall not be
------------------
required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock in a name other
than that of the holder of the Series A Preferred Stock to be converted,
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Corporation the amount of
any such tax or has established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
7. RANKING
Any class or classes of stock of the Corporation shall be deemed to
rank:
(a) prior to the Series A Preferred Stock, as to dividends or as to
distribution of assets upon liquidation, dissolution or winding up, if the
holders of such class shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of Series A Preferred
Stock;
(b) on a parity with the Series A Preferred Stock, (A) as to
dividends, if such stock shall be Common Stock or if the holders of such
class of stock and the Series A Preferred Stock shall be entitled to the
receipt of dividends in proportion to their respective amounts of declared
and unpaid dividends per share, without preference or priority one over the
other, or (B) as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the liquidation price per share thereof be
different from that of the Series A Preferred Stock, if the holders of such
class of stock and the Series A Preferred Stock shall be entitled to the
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receipt of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of liquidation prices, without
preference or priority one over the other; and
(c) junior to the Series A Preferred Stock, (A) as to dividends, if
the holders of Series A Preferred Stock shall be entitled to the receipt of
dividends in preference or priority to the holders of shares of such stock,
or (B) as to distribution of assets upon liquidation, dissolution or
winding up, if such stock shall be Common Stock or if the holders of Series
A Preferred Stock shall be entitled to receipt of amounts distributable
upon liquidation, dissolution or winding up in preference or priority to
the holders of shares of such stock.
8. VOTING
(a) Except as herein provided or as otherwise from time to time
required by law, holders of Series A Preferred Stock shall have no voting
rights.
(b) So long as any shares of the Series A Preferred Stock remain
outstanding, the consent of the holders of at least two-thirds of the
shares of Series A Preferred Stock outstanding at the time given in person
or by proxy, either in writing or at any special or annual meeting, shall
be necessary to permit, effect or validate any one or more of the
following:
(i) The authorization, creation or issuance, or any increase
in the authorized or issued amount, of any class or series of stock
ranking prior to Series A Preferred Stock as to dividends or the
distribution of assets upon liquidation, dissolution or winding up;
(ii) The increase in the authorized or issued amount of
Series A Preferred Stock; or
(iii) The amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated
Certificate of Incorporation of the Corporation (including any of the
provisions hereof) that would affect any right, preference or voting
power of Series A Preferred Stock or of the holders thereof; provided,
---------
however, that any increase in the amount of authorized preferred stock
--------
or the creation and issuance of other series of preferred stock, or
any increase in the amount of authorized shares of such series or of
any other series of preferred stock, in each case ranking on a parity
with or junior to the Series
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A Preferred Stock with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding up,
shall not be deemed to affect such rights, preferences or voting
powers.
9. RESTRICTIONS ON TRANSFER; RIGHTS OF FIRST REFUSAL
9.1. Restrictions on Transfers
Except as hereinafter provided, no holder of Series A Preferred Stock
(a "Stockholder") shall sell, assign, transfer, give (whether by inter
vivos transfer or, upon the death of any Stockholder, by testamentary
disposition or pursuant to the laws of intestate succession), pledge,
encumber or otherwise dispose of ("Transfer") all or any part of such
Stockholder's shares of Series A Preferred Stock of the Corporation (the
"Shares") to any person, trust, association, partnership, firm, corporation
or other legal entity without the prior written consent of the Corporation.
9.2. Notice of Proposed Transfer
Except for Transfers pursuant to Section 9.1 or 9.6, any Stockholder
desiring to Transfer any of the Shares (the "Transferring Stockholder")
prior to making a Transfer must give written notice to the Corporation of
the portion of the Transferring Stockholder's Shares which the Transferring
Stockholder desires to Transfer and all the proposed material terms and
conditions of such Transfer (such notice is hereinafter referred to as the
"Notice"). Such Notice shall constitute an offer by the Transferring
Stockholder to sell to the Corporation, all, but not less than all, of the
Shares which the Transferring Stockholder proposes to dispose of, upon the
terms set forth in the Notice.
9.3. Acceptance of Offer by the Corporation or the Stockholders
The Corporation may accept the offer of the Transferring Stockholder
as set forth in the Notice, in whole or in part, by giving written notice
of such acceptance (the "Acceptance Notice") at any time within 45 days
following the date the Notice was delivered to the Corporation by the
Transferring Stockholder.
9.4. Closing
If the Offer of the Transferring Stockholder is accepted by the
Corporation pursuant to Section 9.3 hereof, the closing of the purchase by
the Corporation of the Shares being sold by the Transferring
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Stockholder shall be held at the main office of the Corporation within 30
days after the acceptance of the offer by the Corporation, on the date and
at the time specified by the Corporation. At each such closing, (a) the
Transferring Stockholder shall deliver (i) certificates representing the
shares of stock to be transferred, endorsed in blank or accompanied by duly
executed blank stock powers and (ii) appropriate representations that the
Transferring Stockholder has good, valid and unencumbered title to the
Shares being transferred and has transferred free and clear title thereto
to the Corporation, and (b) the Corporation shall deliver the full amount
of the purchase price set forth in the Notice by check or wire transfer of
immediately available federal funds to an account designated by the
Transferring Stockholder.
9.5. Sale of Series A Preferred Stock if Offered is Rejected
If the Corporation does not accept the offer of the Transferring
Stockholder in the manner herein provided, then the Transferring
Stockholder shall be permitted to Transfer all of the Shares proposed to be
Transferred; provided; however, that (i) such Transfer must be made to the
transferee in strict accordance with the terms as described in the Notice;
and (ii) such transfer must be consummated within 90 days following the
delivery of the Notice to the Corporation on a date and at a time and place
of which the Transferring Stockholder shall give the Corporation at least
ten days' notice. The Corporation may designate an individual whom the
Transferring Stockholder shall permit to attend the closing of such
Transfer and to examine the documents implementing such Transfer. In the
event the Transferring Stockholder fails to consummate such proposed
Transfer prior to the expiration of such 90-day period, then prior to any
subsequent Transfer of all or any portion of the Transferring Stockholder's
Shares, the Transferring Stockholder shall be required to give the notice
contemplated by Section 9.2, and the restrictions on Transfer and rights of
first refusal contained herein shall again be applicable with respect
thereto.
9.6. Permitted Transfers
Notwithstanding the foregoing provisions of this Section 9, a
Stockholder may at any time Transfer the Shares owned by it, to (i) any
spouse or lineal descendant of such Stockholder, (ii) a parent,
grandparent, brother or sister of such Stockholder, (iii) any trust
established for the benefit of such Stockholder or any spouse or lineal
descendent thereof, or (iv) any corporation in which such Stockholder owns
all of the issued and outstanding capital stock. Any transfer specified in
this Section 9.6 shall not be subject to any of the
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restrictions on transfer or rights of first refusal set forth in this
Section 9.
9.7. Applicability of Restrictions on Transfer
(a) The restrictions on Transfer and the right of first refusal with
respect to the Shares shall terminate upon the date the Corporation becomes
subject to the reporting requirements of Sections 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended.
(b) The rights of first refusal set forth in this Section 9 shall not
apply to any proposed exchange to be effected pursuant to a merger or
consolidation approved by the Stockholders or any proposed pledge by any
Stockholder of any of the Shares to any financial institution as security
for indebtedness of such Stockholder to such financial institution.
However, any financial institution which accepts the pledge of Shares shall
be subject to these restrictions on Transfer and the right of first refusal
in the event of foreclosure on such Shares.
10. RECORD HOLDERS
The Corporation and any Transfer Agent may deem and treat the record
holder of any shares of Series A Preferred Stock as the true and lawful
owner thereof for all purposes, and neither the Corporation nor any
Transfer Agent shall be affected by any notice to the contrary.
* * * * *
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