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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D)
of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) March 20, 2000
THE AMERICAN SPORTS MACHINE, INC.
(Exact name of registrant as specified in its charter)
FLORIDA
(State or other jurisdiction of incorporation or organization)
0-26327 65-0877744
(Commission File Number) (IRS Employer Identification Number)
222 LAKEVIEW AVENUE, SUITE 160-146
WEST PALM BEACH, FLORIDA 33401
(Address of principal executive offices)
(561) 832-5698
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
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The Information Statement dated March 20, 2000 describing the
reincorporation in Delaware named the officers and directors (collectively, the
"Executives") of SoftQuad Software, Ltd., a Delaware corporation ("SoftQuad")
who would become the officers and directors of The American Sports Machine,
Inc., a Florida corporation (the "Corporation") on the Effective Date of the
reincorporation (as that term is defined in the Information Statement).
As of April 3, 2000 a majority of the shareholders of the Corporation
elected the Executives to the positions described in the Information Statement
(i.e. in advance of the Effective Date).
The Certificate of Incorporation of SoftQuad will be the Certificate of
Incorporation of the Corporation after the Effective Date. The changes to the
Restated Certificate of Incorporation from the one previously filed with the
Information Statement are not substantive and were made only for the purpose of
correcting drafting errors.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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Financial Statements
None
Exhibits
Exhibit A - Restated Certificate of Incorporation
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE AMERICAN SPORTS MACHINE, INC.
By: /s/ Roberto Drassinower
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Roberto Drassinower, President
Date: April 4, 2000
1
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EXHIBIT A
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RESTATED CERTIFICATE OF INCORPORATION
OF
SOFTQUAD SOFTWARE, LTD.
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This Restated Certificate of Incorporation of SoftQuad Software, Ltd.,
originally incorporated in the State of Delaware on March 3, 2000, has been duly
adopted in accordance with the provisions of Sections 241 and 245 of the General
Corporation Law of the State of Delaware to read as follows:
ARTICLE I
NAME
The name of the Corporation is SoftQuad Software, Ltd.
ARTICLE II
DURATION
The Corporation is to have perpetual existence.
ARTICLE III
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Delaware is the
Corporation Trust Center at 1209 Orange Street, in the City of Wilmington,
County of New Castle, State of Delaware. The name of its registered agent at
such address is The Corporation Trust Company.
ARTICLE IV
PURPOSES
The purpose for which the Corporation is organized is to transact all
lawful business for which corporations may be incorporated pursuant to the laws
of the State of Delaware. The Corporation shall have all the powers of a
corporation organized under the General Corporation Law of the State of
Delaware.
ARTICLE V
CAPITAL STOCK
A. Number and Designation. The Corporation shall have authority to issue
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seventy five million and one (75,000,001) shares of capital stock, of which 50
million shall be shares of common stock, par value $0.001 per share ("Common
Stock"), and one share shall be special voting stock, par value $0.001 per share
("Special Voting Stock") 25 million shall be shares of preferred stock, par
value $0.001 per share ("Preferred Stock"). The shares may be issued by the
Corporation from time to time as approved by the board of directors of the
Corporation without the approval of the stockholders except as otherwise
provided in this Article V or the rules of a national securities exchange if
applicable. The consideration for the issuance of the shares shall be paid to or
received by the Corporation in full before their issuance and shall not be less
than the par value per share. The consideration for the issuance of the shares
shall be cash, services rendered, personal property (tangible or intangible),
real property, leases of real property or any combination of the foregoing. In
the absence of actual fraud in the transaction, the judgment of the board of
directors as to the value of such consideration shall be
Exhibit A - Page 1
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conclusive. Upon payment of such consideration such shares shall be deemed to
be fully paid and nonassessable. In the case of a stock dividend, the part of
the surplus of the Corporation which is transferred to stated capital upon the
issuance of shares as a stock dividend shall be deemed to be the consideration
for their issuance.
A description of the different classes and series (if any) of the
Corporation's capital stock, and a statement of the relative powers,
designations, preferences and rights of the shares of each class and series (if
any) of capital stock, and the qualifications, limitations or restrictions
thereof, are as follows:
B. Common Stock and Special Voting Stock. The holders of Common Stock and
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the holders of Special Voting Stock shall have the respective rights and
preferences set forth in this Article V.
(1) Rights and Privileges. Except as provided in this Certificate, the
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holders of the Common Stock and Special Voting Stock shall exclusively
possess all voting power. Except as otherwise provided in this Article V or
as otherwise required by applicable law, all shares of Common Stock will be
identical and will entitle the holders thereof to the same rights and
privileges and shall rank equally, share ratably, and be identical in all
respects as to all matters.
(2) Voting Rights. Except as otherwise required by law: (i) the
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holders of Common Stock will be entitled to one vote per share on all
matters to be voted on by the Corporation's shareholders; (ii) the holder
of the share of Special Voting Stock shall have a number of votes equal to
the number of Exchangeable Shares (the "Exchangeable Shares") of Softquad
Acquisition Corp., an Ontario corporation, issued and outstanding from time
to time which are not owned by the Corporation or any of its direct or
indirect subsidiaries. Except as otherwise required by law or this Restated
Certificate of Incorporation, (iii) the holders of Common Stock and the
Special Voting Stock shall vote together as a single class in the election
of directors and on all matters submitted to a vote of stockholders of the
Corporation; (iv) no holder of Common Stock or Special Voting Stock shall
have the right to cumulate votes in the election of Directors of the
Corporation or for any other purpose.
(3) Payment of Dividends. Whenever there shall have been paid, or
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declared and set aside for payment, to the holders of the outstanding
shares of any class or series of stock having preference over the Common
Stock as to the payment of dividends, the full amount of dividends and
sinking fund or retirement fund or other retirement payments, if any, to
which such holders are respectively entitled in preference to the Common
Stock, then dividends may be paid on the Common Stock, and on any class or
series of stock entitled to participate therewith as to dividends, out of
any assets legally available for the payment of dividends, but only when
and as declared by the board of directors of the Corporation.
(4) Distributions in Liquidation. In the event of any liquidation,
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dissolution or winding up of the Corporation, after there shall have been
paid, or declared and set aside for payment, to the holders of the
outstanding shares of any class having preference over the Common Stock in
any such event, the full preferential amounts to which they are
respectively entitled, the holders of the Common Stock and of any class or
series of stock entitled to participate therewith, in whole or in part, as
to distribution of assets shall be entitled, after payment or provision for
payment of all debts and liabilities of the Corporation, to participate
ratably on a per share basis in all distributions of the remaining assets
of the Corporation available for distribution, in cash or in kind, as
though all shares of Common Stock were of a single class.
(5) Provisions Regarding Special Voting Stock. (a) Pursuant to the
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terms of that certain voting and exchange trust agreement by and between
the Corporation, SoftQuad Acquisition Corp., SoftQuad Software, Inc. and
the Trustee (as defined herein), one share of Special Voting Stock is being
issued to the Trustee.
(b) The holder of the share of Special Voting Stock is entitled to
exercise the voting rights attendant thereto in such manner as such holder
desires.
(c) At such time as the Special Voting Stock has no votes attached to
it because there are no Exchangeable Shares of SoftQuad Acquisition Corp.
outstanding which are not owned by the Corporation or a direct or indirect
subsidiary and there are no shares of stock, debt, options or other
agreements of SoftQuad Acquisition Corp. to any person (other than the
Corporation or a direct or indirect subsidiary), the Special Voting Stock
shall be cancelled.
Exhibit A - Page 2
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C. Serial Preferred Stock. Except as provided in this Certificate, the
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board of directors of the Corporation is authorized, by resolution or
resolutions from time to time adopted, to provide for the issuance of serial
preferred stock in series and to fix and state the powers, designations,
preferences and relative, participating, optional or other special rights of the
shares of each such series, and the qualifications, limitation or restrictions
thereof, including, but not limited to determination of any of the following:
(1) the distinctive serial designation and the number of shares
constituting such series;
(2) the rights in respect of dividends, if any, to be paid on the
shares of such series, whether dividends shall be cumulative and, if so,
from which date or dates, the payment or date or dates for dividends, and
the participating or other special rights, if any, with respect to
dividends;
(3) the voting powers, full or limited, if any, of the shares of such
series;
(4) whether the shares of such series shall be redeemable and, if so,
the price or prices at which, and the terms and conditions upon which such
shares may be redeemed;
(5) the amount or amounts payable upon the shares of such series in
the event of voluntary or involuntary liquidation, dissolution or winding
up of the Corporation;
(6) whether the shares of such series shall be entitled to the
benefits of a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and, if so entitled, the amount of such fund and
the manner of its application, including the price or prices at which such
shares may be redeemed or purchased through the application of such funds;
(7) whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or any other series
of the same or any other class or classes of stock of the Corporation and,
if so convertible or exchangeable, the conversion price or prices, or the
rate or rates of exchange, and the adjustments thereof, if any, at which
such conversion or exchange may be made, and any other terms and conditions
of such conversion or exchange;
(8) the subscription or purchase price and form of consideration for
which the shares of such series shall be issued; and
(9) whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial preferred
stock and whether such shares may be reissued as shares of the same or any
other series of serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of the Corporation of the same series,
except the times from which dividends on shares which may be issued from time to
time of any such series may begin to accrue.
D. Class A Convertible Preferred Stock.
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Designation and Amount
The designation of this class of shares shall be "Class A
Convertible Preferred Stock" (the "Class A Preferred Stock"), $.001;
the initial stated value per share shall be $1.3574 (the "Initial
Stated Value"); and the number of shares constituting such class shall
be 1,473,405. The number of shares of the Class A Preferred Stock may
be decreased from time to time by a resolution or resolutions of the
Board of Directors; provided, however, that such number shall not be
decreased below the aggregate number of shares of the Class A
Preferred Stock then outstanding.
Exhibit A - Page 3
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Rank
(a) With respect to dividends, the Class A Preferred Stock shall
rank on a parity with the Corporation's Common Stock. With respect to
dividends, all Equity Securities of the Corporation (other than
convertible debt securities) to which the Class A Preferred Stock
ranks junior, with respect to dividends, are collectively referred to
herein as the "Senior Dividend Securities."
(b) With respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the Class A Preferred Stock shall rank (i) on a parity
with each other class of preferred stock; and (ii) senior to the
Common Stock, and, except as specified above, all other classes of
capital stock of the Corporation hereafter issued by the Corporation.
With respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, all Equity Securities of the Corporation to which the
Class A Preferred Stock ranks senior, including the Common Stock, are
collectively referred to herein as "Junior Liquidation Securities";
all Equity Securities of the Corporation (other than convertible debt
securities) to which the Class A Preferred Stock ranks on parity are
collectively referred to herein as "Parity Liquidation Securities."
(c) The Class A Preferred Stock shall be subject to the creation
of Junior Liquidation Securities, but no Parity Liquidation Securities
or Senior Dividend Securities shall be created except in accordance
with the terms hereof.
Dividends
Dividends on the Class A Preferred Stock shall be paid only when,
as and if declared by the Board of Directors from time to time out of
funds then legally available for the payment of dividends.
Liquidation Preference
(a) In the event of a liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of then
outstanding shares of Class A Preferred Stock shall be entitled to
receive out of the assets of the Corporation, whether such assets are
capital or surplus of any nature, an amount per share equal to the
Initial Stated Value thereof, before any payment shall be made or any
assets distributed to the holders of any Junior Liquidation Securities
(the "Initial Preferred Distribution"). After the Initial Preferred
Distribution has been made, the holders of Class A Preferred Stock
shall be entitled to share pro rata with the holders of Common Stock
in the distribution of any remaining assets of the Corporation on the
basis of each whole outstanding share of the Class A Preferred Stock
receiving an amount equal to the Formula Number then in effect times
such distribution on each share of the Common Stock. The distributions
on the Class A Preferred Stock pursuant to the immediately preceding
sentence of this paragraph (a) are hereinafter referred to as
"Participating Liquidation Distributions." No distribution on the
Common Stock in respect of which a Participating Liquidation
Distribution is required shall be paid or set aside for payment on the
Common Stock unless a Participating Liquidation Distribution in
respect of such distribution is concurrently paid.
(b) All the assets of the Corporation available for distribution
to stockholders shall be distributed ratably (in proportion to the
full distributable amounts to which holders of Class A Preferred Stock
and Parity Liquidation Securities, if any, are respectively entitled
upon such dissolution, liquidation or winding up) among the holders of
the then outstanding shares of Class A Preferred Stock and Parity
Liquidation Securities, if any, when such assets are not sufficient to
pay in full the aggregate amounts payable thereon.
Exhibit A - Page 4
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(c) Neither a consolidation or merger of the Corporation with or
into any other Person or Persons, nor a sale, conveyance, lease,
exchange or transfer of all or part of the Corporation's assets for
cash, securities or other property to a Person or Persons shall be
deemed to be a liquidation, dissolution or winding up of the
Corporation for purposes of this Section D, but the holders of shares
of Class A Preferred Stock shall nevertheless be entitled from and
after any such consolidation, merger or sale, conveyance, lease,
exchange or transfer of all or part of the Corporation's assets to the
rights provided by this Section D following any such transaction.
Notice of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, stating the payment date or dates when,
and the place or places where, the amounts distributable to each
holder of shares of Class A Preferred Stock in such circumstances
shall be payable, shall be given by first-class mail, postage prepaid,
mailed not less than 30 days prior to any payment date stated therein,
to holders of record as they appear on the stock record books of the
Corporation as of the date such notices are first mailed.
Voting Rights
(a) The holders of Class A Preferred Stock shall be entitled to
the number of votes per share of Class A Preferred Stock equal to the
number of shares of Common Stock for which such share of Class A
Preferred Stock is then convertible pursuant to this Section D at each
meeting of stockholders of the Corporation with respect to any and all
matters presented to the stockholders of the Corporation for their
action and consideration.
(b) So long as any shares of the Class A Preferred Stock are
outstanding, (i) each share of Class A Preferred Stock shall entitle
the holder thereof to vote on all matters voted on by holders of
Common Stock and Special Voting Stock; and (ii) the shares of Class A
Preferred Stock shall vote together with shares of Common Stock and
Special Voting Stock as a single class.
(c) The foregoing rights of holders of shares of Class A
Preferred Stock to take any actions as provided in this Section D may
be exercised at any annual meeting of stockholders or at a special
meeting of stockholders held for such purpose as hereinafter provided
or at any adjournment thereof, or by the written consent, delivered to
the Secretary of the Corporation, of the holders of the minimum number
of shares required to take such action, if action by written consent
of stockholders of the Corporation is then permitted.
(d) The Corporation shall not enter into any agreement or issue
any security that prohibits, conflicts or is inconsistent with, or
would be breached by, the Corporation's performance of its obligations
hereunder.
Conversion
The holders of the Class A Preferred Stock shall have conversion
rights as follows:
(a) Each share of Class A Preferred Stock shall be
convertible at the direction of, and by notice to the Corporation
from, the holder thereof, at any time, at the office of the
Corporation or any transfer agent for such Class, into one (1)
fully paid and nonassessable share of Common Stock subject (x) to
adjustment from time to time as provided below (as so adjusted,
the "conversion ratio") and (y) to limitations resulting from the
available number of shares of Common Stock which may be reserved
for issuance upon such conversion.
(b) If a holder of Class A Preferred Stock gives notice (a
"Conversion Notice") of conversion under paragraph (a) above,
such holder shall surrender with such Conversion Notice the duly
endorsed certificate or certificates for the Class A Preferred
Stock being converted, at the office of the Corporation or of any
transfer agent for such Class, and shall state therein the name
or names in which the certificate or certificates for shares of
Common
Exhibit A - Page 5
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Stock are to be issued. The Corporation shall, as soon as
practicable after the surrender of a Class A Preferred Stock
certificate or certificates pursuant to a Conversion Notice,
issue and deliver at such office to such holder, or to the
nominee or nominees of such holder, a certificate or certificates
for the number of shares of Common Stock to which such holder
shall be entitled as aforesaid. Such conversion shall be deemed
to have been made immediately prior to the close of business on
the date of such Conversion Notice and the person or persons
entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the recordholder
or holders of such shares of Common Stock as of such date. The
issuance of certificates or shares of Common Stock upon
conversion of shares of Class A Preferred Stock shall be made
without charge for any issue, stamp or other similar tax in
respect of such issuance.
(c) No fractional shares shall be issued upon conversion of
any shares of Class A Preferred Stock and the number of shares of
Common Stock to be issued shall be rounded down to the nearest
whole share, and the holder of Class A Preferred Stock shall be
paid in cash for any fractional share.
(d) In case at any time or from time to time the Corporation
shall pay any dividend or make any other distribution to the
holders of its Common Stock or other class of securities, or
shall offer for subscription pro rata to the holders of its
Common Stock or other class of securities any additional shares
of stock of any class or any other right, or there shall be any
capital reorganization or reclassification of the Common Stock of
the Corporation or consolidation or merger of the Corporation
with or into another corporation, or any sale or conveyance to
another corporation of the property of the Corporation as an
entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up
of the Corporation, then, in any one or more of said cases the
Corporation shall give at least 20 days' prior written notice
(the time of mailing of such notice shall be deemed to be the
time of giving thereof) to the registered holders of the Class A
Preferred Stock at the addresses of each as shown on the books of
the Corporation maintained by the Transfer Agent thereof of the
date on which (i) the books of the Corporation shall close or a
record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization,
reclassification, consolidation, merger, sale or conveyance,
dissolution, liquidation or winding up shall take place, as the
case may be, provided that in the case of any Transaction to
which paragraph (h) applies the Corporation shall give at least
30 days' prior written notice as aforesaid. Such notice shall
also specify the date as of which the holders of the Common Stock
of record shall participate in said dividend, distribution or
subscription rights or shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or
winding up, as the case may be. Failure to give such notice shall
not invalidate any action so taken.
(e) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the
shares of Class A Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of Class A Preferred
Stock, and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of Class A Preferred
Stock, then in addition to such other remedies as shall be
available to the holder of Class A Preferred Stock, the
Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.
Exhibit A - Page 6
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(f) Any notice required by the provisions of paragraph (d)
to be given the holders of shares of Class A Preferred Stock
shall be deemed given if sent by facsimile transmission, by
telex, or if deposited in the United States mail, postage
prepaid, and addressed to each holder of record at his, her or
its address appearing on the books of the Corporation.
(g) The conversion ratio shall be subject to adjustment from
time to time as follows:
(i) In case the Corporation shall at any time or from
time to time after the Issue Date (A) pay a dividend or make
a distribution, on the outstanding shares of Common Stock in
shares of Common Stock, (B) subdivide the outstanding shares
of Common Stock into a larger number of shares of Common
Stock, (C) combine the outstanding shares of Common Stock
into a smaller number of shares or (D) issue by
reclassification of the shares of Common Stock any shares of
capital stock of the Corporation, then, and in each such
case, the conversion ratio in effect immediately prior to
such event or the record date therefor, whichever is
earlier, shall be adjusted so that the holder of any shares
of Class A 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 have been entitled to
receive after the happening of any of the events described
above, had such shares of Class A Preferred Stock been
surrendered for conversion immediately prior to the
happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this
clause (i) shall become effective (x) in the case of any
such dividend or distribution, immediately after the close
of business on the record date for the determination of
holders of shares of Common Stock entitled to receive such
dividend or distribution, or (y) in the case of any such
subdivision, reclassification or combination, at the close
of business on the day upon which such corporate action
becomes effective.
(ii) In the case the Corporation shall, after the Issue
Date, issue shares of Common Stock at a price per share, or
securities convertible into or exchangeable for shares of
Common Stock ("Convertible Securities") having a "Conversion
Price" (as defined below) less than the Current Market Price
(for a period of 15 consecutive Trading Days prior to such
date), then, and in each such case, the conversion ratio
shall be adjusted so that the holder of each share of Class
A Preferred Stock shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (A) the applicable conversion
ratio on the day immediately prior to such date by (B) a
fraction, the numerator of which shall be the sum of (1) the
number of shares of Common Stock outstanding on the date on
which such shares or Convertible Securities are issued and
(2) the number of additional shares of Common Stock issued,
or into which the Convertible Securities may convert, and
the denominator of which shall be the sum of (x) the number
of shares of Common Stock outstanding on such date and (y)
the number of shares of Common Stock which the aggregate
consideration receivable by the Corporation for the total
number of shares of Common Stock so issued, or the number of
shares of Common Stock which the aggregate of the Conversion
Price of such Convertible Securities so issued, would
purchase at such Current Market price on such date. An
adjustment made pursuant to this clause (ii) shall be made
on the next Business Day following the date on which any
such issuance is made and shall be effective retroactively
immediately after the close of business on such date. For
purposes of this clause (ii), the aggregate consideration
receivable by the Corporation in connection with the
issuance of any securities shall be deemed to be the sum of
the aggregate offering price to
Exhibit A - Page 7
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the public (before deduction of underwriting discounts or
commissions and expenses payable to third parties), and the
"Conversion Price" of any Convertible Securities is the
total amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible
Securities (before deduction of underwriting discounts or
commissions and expenses payable to third parties) plus the
minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion,
exchange or exercise of any such Convertible Securities.
Neither (A) the issuance of any shares of Common Stock
(whether treasury shares or newly issued shares) pursuant to
a dividend or distribution on, or subdivision, combination
or reclassification of, the outstanding shares of Common
Stock requiring an adjustment in the conversion ratio
pursuant to clause (i) of this Section D, or pursuant to any
employee benefit plan or program of the Corporation or
pursuant to any option, warrant, right, or Convertible
Security outstanding as of the date hereof nor (B) the
issuance of shares of Common Stock pursuant thereto shall be
deemed to constitute an issuance of Common Stock or
Convertible Securities by the Corporation to which this
clause (ii) applies. Upon expiration of any Convertible
Securities that shall not have been exercised or converted
and for which an adjustment shall have been made pursuant to
this clause (ii), the Conversion Price computed upon the
original issue thereof shall upon such expiration be
recomputed as if the only additional shares of Common Stock
issued were such shares of Common Stock (if any) actually
issued upon exercise of such Convertible Securities and the
consideration received therefor was the consideration
actually received by the Corporation for the issue of such
Convertible Securities (whether or not exercised or
converted) plus the consideration actually received by the
Corporation upon such exercise of conversion.
(iii) In case the Corporation shall at any time or from
time to time after the Issue Date declare, order, pay or
make a dividend or other distribution (including, without
limitation, any distribution of stock or other securities or
property or rights or warrants to subscribe for securities
of the Corporation or any of its Subsidiaries by way of
dividend or spin-off), on its Common Stock, other than
dividends or distributions of shares of Common Stock that
are referred to in clause (i) of this paragraph (g), then,
and in each such case, the conversion ratio shall be
adjusted so that the holder of each share of Class A
Preferred Stock shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (1) the applicable conversion
ratio on the day immediately prior to the record date fixed
for the determination of stockholders entitled to receive
such dividend or distribution by (2) a fraction, the
numerator of which shall be the then Current Market Price
per share of Common Stock for the period of 20 Trading Days
preceding such record date, and the denominator of which
shall be such Current Market Price per share of Common Stock
for the period of 20 Trading Days preceding such record date
less the Fair Market Value (as defined in Section (vii)) per
share of Common Stock (as determined in good faith by the
Board of Directors of the Corporation, a certified
resolution with respect to which shall be mailed to each
holder of shares of Class A Preferred Stock) of such
dividend or distribution; provided, however, that in the
event of a distribution of shares of capital stock of a
Subsidiary of the Corporation (a "Spin-Off") made to holders
of shares of Common Stock, the numerator of such fraction
shall be the sum of the Current Market Price per share of
Common Stock for the period of 20 Trading Days preceding the
35th Trading Day after the effective date of such Spin-Off
and the Current Market Price of the number of
Exhibit A - Page 8
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shares (or the fraction of a share) of capital stock of the
Subsidiary which is distributed in such Spin-Off in respect
of one share of Common Stock for the period of 20 Trading
Days preceding such 35th Trading Day and the denominator of
which shall be the current market price per share of the
Common Stock for the period of 20 Trading Days proceeding
such 35th Trading Day. An adjustment made pursuant to this
clause (iii) shall be made upon the opening of business on
the next Business Day following the date on which any such
dividend or distribution is made and shall be effective
retroactively immediately after the close of business on the
record date fixed for the determination of stockholders
entitled to receive such dividend or distribution; provided,
however, if the proviso to the preceding sentence applies,
then such adjustment shall be made and be effective as of
such 35th Trading Day after the effective date of such
Spin-Off.
(iv) For purposes of this paragraph (g), 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.
(v) Anything in this paragraph (g) to the contrary
notwithstanding, the Corporation shall not be required to
give effect to any adjustment in the conversion ratio unless
and until the net effect of one or more adjustments (each of
which shall be carried forward), determined as above
provided, shall have resulted in a change of the conversion
ratio by at least one-hundredth of one share of Common
Stock, and when the cumulative net effect of more than one
adjustment so determined shall be to change the conversion
ratio by at least one-hundredth of one share of Common
Stock, such change in conversion ratio shall thereupon be
given effect.
(vi) The certificate of any firm of independent public
accountants of recognized standing selected by the Board of
Directors of the Corporation (which may be the firm of
independent public accountants regularly employed by the
Corporation) shall be presumptively correct for any
computation made under this paragraph (g).
(vii) 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 thereafter no adjustment in
the number of shares of Common Stock issuable upon exercise
of the right of conversion granted by this paragraph (g) or
in the conversion ratio then in effect shall be required by
reason of the taking of such record.
(viii) There shall be no adjustment of the conversion
ratio in case of the issuance of any stock of the
Corporation in a merger, reorganization, acquisition or
other similar transaction except as set forth in paragraph
(g)(i), G(ii) and H of this Section D.
(h) In case of any reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification
covered by paragraph (g)(i) of this Section D), or in case of any
consolidation or merger of the Corporation with or into another
corporation, or in the case of any sale or conveyance to another
corporation of the property of the Corporation as an entirety or
substantially as an entirety (each of the foregoing being
referred to as a "Transaction"), each share of Class A Preferred
Stock then outstanding shall thereafter be convertible into, in
lieu of the Common Stock issuable upon such conversion prior to
consummation of such Transaction, 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
Exhibit A - Page 9
<PAGE>
of Common Stock into which one share of Class A Preferred Stock
was convertible immediately prior to such Transaction (including,
on a pro rata basis, the cash, securities or property received by
holders of Common Stock in any tender or exchange offer that is a
step in such Transaction). In case securities or property other
than Common Stock shall be issuable or deliverable upon
conversion as aforesaid, then all reference in this paragraph (h)
shall be deemed to apply, so far as appropriate and as nearly as
may be, to such other securities or property.
(i) Upon any adjustment of the conversion ratio then in
effect and any increase or decrease in the number of shares of
Common Stock issuable upon the operation of the conversion set
forth in this Section D, then, and in each such case, the
Corporation shall promptly deliver to the registered holders of
the Class A Preferred and Common Stock, a certificate signed by
the President or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary 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 conversion ratio then in effect
following such adjustment and the increased or decreased number
of shares issuable upon the conversion set forth in this Section
D.
E. Class B Convertible Preferred Stock
---------------------------------------
Designation and Amount
The designation of this class of shares shall be "Class B
Convertible Preferred Stock" (the "Class B Preferred Stock"), $.001;
the initial stated value per share shall be $2.903226 (the "Initial
Stated Value"); and the number of shares constituting such class shall
be 1,722,222. The number of shares of the Class B Preferred Stock may
be decreased from time to time by a resolution or resolutions of the
Board of Directors; provided, however, that such number shall not be
decreased below the aggregate number of shares of the Class B
Preferred Stock then outstanding.
Rank
(a) With respect to dividends, the Class B Preferred Stock shall
rank on a parity with the Corporation's Common Stock. With respect to
dividends, all Equity Securities of the Corporation (other than
convertible debt securities) to which the Class B Preferred Stock
ranks junior, with respect to dividends, are collectively referred to
herein as the "Senior Dividend Securities."
(b) With respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the Class B Preferred Stock shall rank (i) on a parity
with each other class of preferred stock; and (ii) senior to the
Common Stock, and, except as specified above, all other classes of
capital stock of the Corporation hereafter issued by the Corporation.
With respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, all Equity Securities of the Corporation to which the
Class B Preferred Stock ranks senior, including the Common Stock, are
collectively referred to herein as "Junior Liquidation Securities";
all Equity Securities of the Corporation (other than convertible debt
securities) to which the Class B Preferred Stock ranks on parity are
collectively referred to herein as "Parity Liquidation Securities."
(c) The Class B Preferred Stock shall be subject to the creation
of Junior Liquidation Securities, but no Parity Liquidation Securities
or Senior Dividend Securities shall be created except in accordance
with the terms hereof.
Exhibit A - Page 10
<PAGE>
Dividends
Dividends on the Class B Preferred Stock shall be paid only when,
as and if declared by the Board of Directors from time to time out of
funds then legally available for the payment of dividends.
Liquidation Preference
(a) In the event of a liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of then
outstanding shares of Class B Preferred Stock shall be entitled to
receive out of the assets of the Corporation, whether such assets are
capital or surplus of any nature, an amount per share equal to the
Initial Stated Value thereof, before any payment shall be made or any
assets distributed to the holders of any Junior Liquidation Securities
(the "Initial Preferred Distribution"). After the Initial Preferred
Distribution has been made, the holders of Class B Preferred Stock
shall be entitled to share pro rata with the holders of Common Stock
in the distribution of any remaining assets of the Corporation on the
basis of each whole outstanding share of the Class B Preferred Stock
receiving an amount equal to the Formula Number then in effect times
such distribution on each share of the Common Stock. The distributions
on the Class B Preferred Stock pursuant to the immediately preceding
sentence of this paragraph (a) are hereinafter referred to as
"Participating Liquidation Distributions." No distribution on the
Common Stock in respect of which a Participating Liquidation
Distribution is required shall be paid or set aside for payment on the
Common Stock unless a Participating Liquidation Distribution in
respect of such distribution is concurrently paid.
(b) All the assets of the Corporation available for distribution
to stockholders shall be distributed ratably (in proportion to the
full distributable amounts to which holders of Class B Preferred Stock
and Parity Liquidation Securities, if any, are respectively entitled
upon such dissolution, liquidation or winding up) among the holders of
the then outstanding shares of Class B Preferred Stock and Parity
Liquidation Securities, if any, when such assets are not sufficient to
pay in full the aggregate amounts payable thereon.
(c) Neither a consolidation or merger of the Corporation with or
into any other Person or Persons, nor a sale, conveyance, lease,
exchange or transfer of all or part of the Corporation's assets for
cash, securities or other property to a Person or Persons shall be
deemed to be a liquidation, dissolution or winding up of the
Corporation for purposes of this Section D, but the holders of shares
of Class B Preferred Stock shall nevertheless be entitled from and
after any such consolidation, merger or sale, conveyance, lease,
exchange or transfer of all or part of the Corporation's assets to the
rights provided by this Section D following any such transaction.
Notice of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, stating the payment date or dates when,
and the place or places where, the amounts distributable to each
holder of shares of Class B Preferred Stock in such circumstances
shall be payable, shall be given by first-class mail, postage prepaid,
mailed not less than 30 days prior to any payment date stated therein,
to holders of record as they appear on the stock record books of the
Corporation as of the date such notices are first mailed.
Voting Rights
(a) The holders of Class B Preferred Stock shall be entitled to
the number of votes per share of Class B Preferred Stock equal to the
number of shares of Common Stock for which such share of Class B
Preferred Stock is then convertible pursuant to this Section D at each
meeting of stockholders of the Corporation with respect to any and all
matters presented to the stockholders of the Corporation for their
action and consideration.
Exhibit A - Page 11
<PAGE>
(b) So long as any shares of the Class B Preferred Stock are
outstanding, (i) each share of Class B Preferred Stock shall entitle
the holder thereof to vote on all matters voted on by holders of
Common Stock and Special Voting Stock; and (ii) the shares of Class B
Preferred Stock shall vote together with shares of Common Stock and
Special Voting Stock as a single class.
(c) The foregoing rights of holders of shares of Class B
Preferred Stock to take any actions as provided in this Section E may
be exercised at any annual meeting of stockholders or at a special
meeting of stockholders held for such purpose as hereinafter provided
or at any adjournment thereof, or by the written consent, delivered to
the Secretary of the Corporation, of the holders of the minimum number
of shares required to take such action, if action by written consent
of stockholders of the Corporation is then permitted.
(d) The Corporation shall not enter into any agreement or issue
any security that prohibits, conflicts or is inconsistent with, or
would be breached by, the Corporation's performance of its obligations
hereunder.
Conversion
The holders of the Class B Preferred Stock shall have conversion
rights as follows:
(a) Each share of Class B Preferred Stock shall be convertible at
the direction of, and by notice to the Corporation from, the holder
thereof, at any time, at the office of the Corporation or any transfer
agent for such Class, into one (1) fully paid and nonassessable share
of Common Stock subject (x) to adjustment from time to time as
provided below (as so adjusted, the "conversion ratio") and (y) to
limitations resulting from the available number of shares of Common
Stock which may be reserved for issuance upon such conversion.
(b) If a holder of Class B Preferred Stock gives notice (a
"Conversion Notice") of conversion under paragraph (a) above, such
holder shall surrender with such Conversion Notice the duly endorsed
certificate or certificates for the Class B Preferred Stock being
converted, at the office of the Corporation or of any transfer agent
for such Class, and shall state therein the name or names in which the
certificate or certificates for shares of Common Stock are to be
issued. The Corporation shall, as soon as practicable after the
surrender of a Class B Preferred Stock certificate or certificates
pursuant to a Conversion Notice, issue and deliver at such office to
such holder, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled as aforesaid. Such conversion
shall be deemed to have been made immediately prior to the close of
business on the date of such Conversion Notice and the person or
persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the recordholder
or holders of such shares of Common Stock as of such date. The
issuance of certificates or shares of Common Stock upon conversion of
shares of Class B Preferred Stock shall be made without charge for any
issue, stamp or other similar tax in respect of such issuance.
(c) No fractional shares shall be issued upon conversion of any
shares of Class B Preferred Stock and the number of shares of Common
Stock to be issued shall be rounded down to the nearest whole share,
and the holder of Class B Preferred Stock shall be paid in cash for
any fractional share.
(d) In case at any time or from time to time the Corporation
shall pay any dividend or make any other distribution to the holders
of its Common Stock or other class of securities, or shall offer for
subscription pro rata to the holders of its Common Stock or other
class of securities any additional shares of stock of any class or any
other right, or there shall be any capital reorganization or
reclassification of the Common Stock of the Corporation or
consolidation or merger of the Corporation with or into another
corporation, or any sale or conveyance to another corporation of the
property of the Corporation as an entirety or substantially as an
entirety,
Exhibit A - Page 12
<PAGE>
or there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Corporation, then, in any one or more of said
cases the Corporation shall give at least 20 days' prior written
notice (the time of mailing of such notice shall be deemed to be the
time of giving thereof) to the registered holders of the Class B
Preferred Stock at the addresses of each as shown on the books of the
Corporation maintained by the Transfer Agent thereof of the date on
which (i) the books of the Corporation shall close or a record shall
be taken for such stock dividend, distribution or subscription rights
or (ii) such reorganization, reclassification, consolidation, merger,
sale or conveyance, dissolution, liquidation or winding up shall take
place, as the case may be, provided that in the case of any
Transaction to which paragraph (h) applies the Corporation shall give
at least 30 days' prior written notice as aforesaid. Such notice shall
also specify the date as of which the holders of the Common Stock of
record shall participate in said dividend, distribution or
subscription rights or shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or winding
up, as the case may be. Failure to give such notice shall not
invalidate any action so taken.
(e) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the shares of Class B
Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all
outstanding shares of Class B Preferred Stock, and if at any time the
number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of
Class B Preferred Stock, then in addition to such other remedies as
shall be available to the holder of Class B Preferred Stock, the
Corporation will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient
for such purposes.
(f) Any notice required by the provisions of paragraph (d) to be
given the holders of shares of Class B Preferred Stock shall be deemed
given if sent by facsimile transmission, by telex, or if deposited in
the United States mail, postage prepaid, and addressed to each holder
of record at his, her or its address appearing on the books of the
Corporation.
(g) The conversion ratio shall be subject to adjustment from time
to time as follows:
(i) In case the Corporation shall at any time or from time
to time after the Issue Date (A) pay a dividend or make a
distribution, on the outstanding shares of Common Stock in shares
of Common Stock, (B) subdivide the outstanding shares of Common
Stock into a larger number of shares of Common Stock, (C) combine
the outstanding shares of Common Stock into a smaller number of
shares or (D) issue by reclassification of the shares of Common
Stock any shares of capital stock of the Corporation, then, and
in each such case, the conversion ratio in effect immediately
prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the holder of any shares of
Class B 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 have been entitled to receive after the happening
of any of the events described above, had such shares of Class B
Preferred Stock been surrendered for conversion immediately prior
to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this clause
(i) shall become effective (x) in the case of any such dividend
or distribution, immediately after the close of business on the
record date for the determination of holders of shares
Exhibit A - Page 13
<PAGE>
of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision,
reclassification or combination, at the close of business on the
day upon which such corporate action becomes effective.
(ii) In the case the Corporation shall, after the Issue
Date, issue shares of Common Stock at a price per share, or
securities convertible into or exchangeable for shares of Common
Stock ("Convertible Securities") having a "Conversion Price" (as
defined below) less than the Current Market Price (for a period
of 15 consecutive Trading Days prior to such date), then, and in
each such case, the conversion ratio shall be adjusted so that
the holder of each share of Class B Preferred Stock shall be
entitled to receive, upon the conversion thereof, the number of
shares of Common Stock determined by multiplying (A) the
applicable conversion ratio on the day immediately prior to such
date by (B) a fraction, the numerator of which shall be the sum
of (1) the number of shares of Common Stock outstanding on the
date on which such shares or Convertible Securities are issued
and (2) the number of additional shares of Common Stock issued,
or into which the Convertible Securities may convert, and the
denominator of which shall be the sum of (x) the number of shares
of Common Stock outstanding on such date and (y) the number of
shares of Common Stock which the aggregate consideration
receivable by the Corporation for the total number of shares of
Common Stock so issued, or the number of shares of Common Stock
which the aggregate of the Conversion Price of such Convertible
Securities so issued, would purchase at such Current Market price
on such date. An adjustment made pursuant to this clause (ii)
shall be made on the next Business Day following the date on
which any such issuance is made and shall be effective
retroactively immediately after the close of business on such
date. For purposes of this clause (ii), the aggregate
consideration receivable by the Corporation in connection with
the issuance of any securities shall be deemed to be the sum of
the aggregate offering price to the public (before deduction of
underwriting discounts or commissions and expenses payable to
third parties), and the "Conversion Price" of any Convertible
Securities is the total amount received or receivable by the
Corporation as consideration for the issue or sale of such
Convertible Securities (before deduction of underwriting
discounts or commissions and expenses payable to third parties)
plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion, exchange or
exercise of any such Convertible Securities. Neither (A) the
issuance of any shares of Common Stock (whether treasury shares
or newly issued shares) pursuant to a dividend or distribution
on, or subdivision, combination or reclassification of, the
outstanding shares of Common Stock requiring an adjustment in the
conversion ratio pursuant to clause (i) of this Section E, or
pursuant to any employee benefit plan or program of the
Corporation or pursuant to any option, warrant, right, or
Convertible Security outstanding as of the date hereof nor (B)
the issuance of shares of Common Stock pursuant thereto shall be
deemed to constitute an issuance of Common Stock or Convertible
Securities by the Corporation to which this clause (ii) applies.
Upon expiration of any Convertible Securities that shall not have
been exercised or converted and for which an adjustment shall
have been made pursuant to this clause (ii), the Conversion Price
computed upon the original issue thereof shall upon such
expiration be recomputed as if the only additional shares of
Common Stock issued were such shares of Common Stock (if any)
actually issued upon exercise of such Convertible Securities and
the consideration received therefor was the consideration
actually received by the Corporation for the issue of such
Convertible Securities (whether or not exercised or converted)
plus the consideration actually received by the Corporation upon
such exercise of conversion.
Exhibit A - Page 14
<PAGE>
(iii) In case the Corporation shall at any time or from time
to time after the Issue Date declare, order, pay or make a
dividend or other distribution (including, without limitation,
any distribution of stock or other securities or property or
rights or warrants to subscribe for securities of the Corporation
or any of its Subsidiaries by way of dividend or spin-off), on
its Common Stock, other than dividends or distributions of shares
of Common Stock that are referred to in clause (i) of this
paragraph (g), then, and in each such case, the conversion ratio
shall be adjusted so that the holder of each share of Class B
Preferred Stock shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by
multiplying (1) the applicable conversion ratio on the day
immediately prior to the record date fixed for the determination
of stockholders entitled to receive such dividend or distribution
by (2) a fraction, the numerator of which shall be the then
Current Market Price per share of Common Stock for the period of
20 Trading Days preceding such record date, and the denominator
of which shall be such Current Market Price per share of Common
Stock for the period of 20 Trading Days preceding such record
date less the Fair Market Value (as defined in Section (vii)) per
share of Common Stock (as determined in good faith by the Board
of Directors of the Corporation, a certified resolution with
respect to which shall be mailed to each holder of shares of
Class B Preferred Stock) of such dividend or distribution;
provided, however, that in the event of a distribution of shares
of capital stock of a Subsidiary of the Corporation (a
"Spin-Off") made to holders of shares of Common Stock, the
numerator of such fraction shall be the sum of the Current Market
Price per share of Common Stock for the period of 20 Trading Days
preceding the 35th Trading Day after the effective date of such
Spin-Off and the Current Market Price of the number of shares (or
the fraction of a share) of capital stock of the Subsidiary which
is distributed in such Spin-Off in respect of one share of Common
Stock for the period of 20 Trading Days preceding such 35th
Trading Day and the denominator of which shall be the current
market price per share of the Common Stock for the period of 20
Trading Days proceeding such 35th Trading Day. An adjustment made
pursuant to this clause (iii) shall be made upon the opening of
business on the next Business Day following the date on which any
such dividend or distribution is made and shall be effective
retroactively immediately after the close of business on the
record date fixed for the determination of stockholders entitled
to receive such dividend or distribution; provided, however, if
the proviso to the preceding sentence applies, then such
adjustment shall be made and be effective as of such 35th Trading
Day after the effective date of such Spin-Off.
(iv) For purposes of this paragraph (g), 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.
(v) Anything in this paragraph (g) to the contrary
notwithstanding, the Corporation shall not be required to give
effect to any adjustment in the conversion ratio unless and until
the net effect of one or more adjustments (each of which shall be
carried forward), determined as above provided, shall have
resulted in a change of the conversion ratio by at least
one-hundredth of one share of Common Stock, and when the
cumulative net effect of more than one adjustment so determined
shall be to change the conversion ratio by at least one-hundredth
of one share of Common Stock, such change in conversion ratio
shall thereupon be given effect.
Exhibit A - Page 15
<PAGE>
(vi) The certificate of any firm of independent public
accountants of recognized standing selected by the Board of
Directors of the Corporation (which may be the firm of
independent public accountants regularly employed by the
Corporation) shall be presumptively correct for any computation
made under this paragraph (g).
(vii) 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 thereafter
no adjustment in the number of shares of Common Stock issuable
upon exercise of the right of conversion granted by this
paragraph (g) or in the conversion ratio then in effect shall be
required by reason of the taking of such record.
(viii) There shall be no adjustment of the conversion ratio
in case of the issuance of any stock of the Corporation in a
merger, reorganization, acquisition or other similar transaction
except as set forth in paragraph (g)(i), (g)(ii) and (h) of this
Section E.
(h) In case of any reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification
covered by paragraph (g)(i) of this Section E), or in case of any
consolidation or merger of the Corporation with or into another
corporation, or in the case of any sale or conveyance to another
corporation of the property of the Corporation as an entirety or
substantially as an entirety (each of the foregoing being referred to
as a "Transaction"), each share of Class B Preferred Stock then
outstanding shall thereafter be convertible into, in lieu of the
Common Stock issuable upon such conversion prior to consummation of
such Transaction, 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
of Common Stock into which one share of Class B Preferred Stock was
convertible immediately prior to such Transaction (including, on a pro
rata basis, the cash, securities or property received by holders of
Common Stock in any tender or exchange offer that is a step in such
Transaction). In case securities or property other than Common Stock
shall be issuable or deliverable upon conversion as aforesaid, then
all reference in this paragraph (h) shall be deemed to apply, so far
as appropriate and as nearly as may be, to such other securities or
property.
(i) Upon any adjustment of the conversion ratio then in effect
and any increase or decrease in the number of shares of Common Stock
issuable upon the operation of the conversion set forth in this
Section D, then, and in each such case, the Corporation shall promptly
deliver to the registered holders of the Class B Preferred and Common
Stock, a certificate signed by the President or a Vice President and
by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary 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 conversion ratio then in
effect following such adjustment and the increased or decreased number
of shares issuable upon the conversion set forth in this Section D.
F. Additional Definitions
-----------------------
For the purposes of this Restated Certificate of Incorporation, the
following terms shall have the meanings indicated:
Exhibit A - Page 16
<PAGE>
"Business Day" means any day, other than a Saturday, Sunday or a
day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Current Market Price," when used with reference to shares of
Common Stock or other securities on any date, shall mean the closing
price per share of Common Stock or such other securities on such date
and, when used with reference to shares of Common Stock or other
securities for any period shall mean the average of the daily closing
prices per share of Common Stock or such other securities for such
period. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the Common Stock or such other
securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Common Stock or such other
securities are listed or admitted to trading or, if the Common Stock
is not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc.
National Market System or such other securities are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Stock or such other securities selected by the Board of Directors of
the Corporation. If the Common Stock or such other securities are not
publicly held or so listed or publicly traded, "Current Market Price"
shall mean the Fair Market Value per share of Common Stock or of such
other securities as determined in good faith by the Board of Directors
of the Corporation based on an opinion of an independent investment
banking firm with an established national reputation as a valuer of
securities, which opinion may be based on such assumption as such firm
shall deem to be necessary and appropriate.
"Equity Securities" of any Person means any and all common stock,
preferred stock and any other class of capital stock of, and any
partnership or limited liability company interests of such Person or
any other similar interests of any Person that is not a corporation,
partnership or limited liability company.
"Fair Market Value" shall mean the amount which a willing buyer
would pay a willing seller in an arm's-length transaction.
"Formula Number" shall mean one (1); provided, however, that if
the Corporation shall (i) declare or pay any dividend or make any
distribution on the Common Stock, payable in shares of Common Stock;
(ii) subdivide (by a stock split or otherwise) the outstanding shares
of Common Stock into a larger number of shares of Common Stock; or
(iii) combine (by a reverse stock split or otherwise) the outstanding
shares of Common Stock into a smaller number of shares of Common
Stock, then in each such case the Formula Number in effect immediately
prior to such event shall be adjusted to a number determined by
multiplying the Formula Number then in effect by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event (and rounding the result to the nearest whole
number); and provided further, that, if the Corporation shall issue
any shares of its capital stock in a merger, reclassification, or
change of the outstanding shares of Common Stock, then in each such
event the Formula Number shall be appropriately adjusted to reflect
such merger, reclassification, or change so that each share of
Preferred Stock continues to be the economic equivalent of a Formula
Number of shares of Common Stock immediately prior to such merger,
reclassification, or change.
"Issue Date" shall mean the first date on which shares of Class A
Preferred Stock and Class B Preferred Stock respectively are issued.
Exhibit A - Page 17
<PAGE>
"Person" means any individual, corporation, company, association,
partnership, joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Subsidiary" means, as to any Person, any other Person of which
more than 50% of the shares of the Voting Securities or other voting
interests are owned or controlled, or the ability to select or elect
50% or more of the directors or similar managers is held, directly or
indirectly, by such first Person and one or more of its Subsidiaries.
"Trading Day" means a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business or, if the Common
Stock is not listed or admitted to trading on any national securities
exchange a Business Day.
"Voting Securities" means, (i) with respect to the Company, the
Equity Securities of the Company entitled to vote generally for the
election of directors of the Company, and (ii) with respect to any
other Person, any securities of or interests in such Person entitled
to vote generally for the election of directors or any similar
managing person of such Person.
G. Miscellaneous
-------------
(a) Notices. Any notice referred to herein shall be in writing and,
unless first-class mail shall be specifically permitted for such notices
under the terms hereof, shall be deemed to have been given upon personal
delivery thereof, upon transmittal of such notice by telecopy (with
confirmation of receipt by telecopy or telex) or five days after
transmittal by registered or certified mail, postage prepaid, addressed as
follows:
(i) if to the Corporation, to its office at 161 Eglinton Avenue
East, Suite 400, Toronto, Ontario, Canada M4P 1J5 (Attention:
Secretary), or to the transfer agent for the Class A and Class B
Preferred Stock;
(ii) if to a holder of the Common Stock, Special Voting Stock,
Class A Preferred Stock or Class B Preferred Stock, to such holder at
the address of such holder as listed in the stock record books of the
Corporation (which may include the records of any transfer agent for
such stock); or
(iii) to such other address as the Corporation or such holder, as
the case may be, shall have designated by notice similarly given.
(b) Reacquired Shares. Any shares of Common Stock, Class A Preferred
Stock or Class B Preferred Stock purchased or otherwise acquired by the
Corporation, directly or indirectly, in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof (and shall not
be deemed to be outstanding for any purpose) and, if necessary to provide
for the lawful purchase of such shares, the capital represented by such
shares shall be reduced in accordance with the General Corporation Law of
Delaware. All such shares of Common Stock, Class A Preferred Stock or Class
B Preferred Stock shall upon their cancellation and upon the filing of an
appropriate certificate with the Secretary of State of the State of
Delaware, become authorized but unissued shares of (i) Common Stock, or
(ii) in the case of reacquired Preferred Stock, $.001 par value, of the
Corporation and may be reissued as part of another class of Preferred
Stock, $.001 par value, of the Corporation subject to the conditions or
restrictions on issuance set forth herein.
(c) Enforcement. Any registered holder of shares of Common Stock,
Special Voting Stock, Class A Preferred Stock or Class B Preferred Stock
may proceed to protect and enforce its rights and the rights of such
holders by any
Exhibit A - Page 18
<PAGE>
available remedy by proceeding at law or in equity to protect and enforce
any such rights, whether for the specific enforcement of any provision in
this Restated Certificate of Incorporation or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
(d) Transfer Taxes. Except as otherwise agreed upon pursuant to the
terms of this Restated Certificate of Incorporation, the Corporation shall
pay any and all documentary, stamp or similar issue or transfer taxes and
other governmental charges that may be imposed under the laws of the United
States of America or any political subdivision or taxing authority thereof
or therein in respect of any issue or delivery of Common Stock on
conversion of, or other securities or property issued on account of, shares
of Class A Preferred Stock or Class B Preferred Stock pursuant hereto or
certificates representing such shares or securities. The Corporation shall
not, however, be required to pay any such tax or other charge that may be
imposed in connection with any transfer involved in the issue or transfer
and delivery of any certificate for Common Stock or other securities or
property in a name other than that in which the shares of Class A Preferred
Stock or Class B Preferred Stock so exchanged, or on account of which such
securities were issued, were registered and no such issue or delivery shall
be made unless and until the Person requesting such issue has paid to the
Corporation the amount of any such tax or has established to the
satisfaction of the Corporation that such tax has been paid or is not
payable.
(e) Transfer Agent. The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the Common Stock, Class A
Preferred Stock and/or Class B Preferred Stock. Upon any such appointment
or discharge of a transfer agent, the Corporation shall send notice thereof
by first-class mail, postage prepaid, to each holder of record of shares of
Common Stock, Class A Preferred Stock or Class B Preferred Stock, as
applicable.
(f) Record Dates. In the event that the Common Stock, Class A
Preferred Stock and/or Class B Preferred Stock shall be registered under
either the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, the Corporation shall establish appropriate record
dates with respect to payments and other actions to be made with respect to
the Common Stock, Class A Preferred Stock and Class B Preferred Stock, as
the case may be.
ARTICLE VI
PREEMPTIVE RIGHTS
No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series of
stock or of other securities of the Corporation shall have any preemptive right
to purchase or subscribe for any unissued stock of any class or series, or any
unissued bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock or carrying any right to purchase
stock which may be issued pursuant to resolution of the board of directors of
the Corporation to such persons, firms, corporations or associations, whether or
not holders thereof.
ARTICLE VII
REPURCHASE OF SHARES
The Corporation may from time to time, pursuant to authorization by the
board of directors of the Corporation and without action by the stockholders,
purchase or otherwise acquire shares of any class, bonds, debentures, notes,
scrip, warrants, obligations, evidences or indebtedness, or other securities of
the Corporation in such manner, upon such terms, and in such amounts as the
board of directors shall determine; subject, however, to such limitations or
restrictions, if any, as are contained in the express terms of any class of
shares of the Corporation outstanding at the time of the purchase or acquisition
in question or as are imposed by law.
ARTICLE VIII
MEETINGS OF STOCKHOLDERS; CUMULATIVE VOTING
Exhibit A - Page 19
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A. Cumulative Voting. There shall be no cumulative voting by stockholders
-----------------
of any class or series in the election of directors of the Corporation.
B. Place of Meetings. Meetings of stockholders may be held at such place
------------------
as the bylaws may provide.
ARTICLE IX
DIRECTORS
A. Number and Vacancies. The number of directors of the Corporation shall
--------------------
be such number, not less than one (exclusive of directors, if any, to be elected
by holders of preferred stock of the Corporation), as shall be provided from
time to time in a resolution adopted by the board of directors. Exclusive of
directors, if any, elected by holders of preferred stock, vacancies in the board
of directors of the Corporation, however caused, and newly created directorships
shall be filled by a vote of a majority of the directors then in office, whether
or not a quorum, and any director so chosen shall hold office for a term
expiring at the next annual meeting of stockholders or when the director's
successor is elected and qualified.
ARTICLE X
REMOVAL OF DIRECTORS
Notwithstanding any other provision of this Certificate or the bylaws of
the Corporation, any director or all the directors of a single class (but not
the entire board of directors) of the Corporation may be removed, at any time,
with or without cause by the affirmative vote or written consent of the holders
of a majority of the voting power of the outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class). Notwithstanding the foregoing,
whenever the holders of any one or more series of preferred stock of the
Corporation shall have the right, voting separately as a class, to elect one or
more directors of the Corporation, the preceding provisions of this Article X
shall not apply with respect to the director or directors elected by such
holders of preferred stock.
ARTICLE XI
INDEMNIFICATION
Any person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (whether or not by or in the right of
the corporation) by reason of the fact that he is or was a director, officer,
incorporator, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, incorporator, employee,
partner, trustee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise (including an employee benefit plan), shall be
entitled to be indemnified by the corporation to the full extent then permitted
by law against expenses (including counsel fees and disbursements), judgments,
fines (including excise taxes assessed on a person with respect to an employee
benefit plan), and amounts paid in settlement incurred by him in connection with
such action, suit, or proceeding. Such right of indemnification shall inure
whether or not the claim asserted is based on matters which antedate the
adoption of this Article XV. Such right of indemnification shall continue as to
a person who has ceased to be a director, officer, incorporator, employee,
partner, trustee, or agent and shall inure to the benefit of the heirs and
personal representatives of such a person. The indemnification provided by this
Article XV shall not be deemed exclusive of any other rights which may be
provided now or in the future under any provision currently in effect or
hereafter adopted of the bylaws, by any agreement, by vote of stockholders, by
resolution of disinterested directors, by provisions of law, or otherwise.
ARTICLE XII
LIMITATIONS ON DIRECTORS' LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except: (A) for any breach of the director's duty of loyalty
Exhibit A - Page 20
<PAGE>
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) under Section 174 of the General Corporation Law of the State of
Delaware, or (D) for any transaction from which the director derived any
improper personal benefit. If the General Corporation law of the State of
Delaware is amended after the date of filing of this Certificate to further
eliminate or limit the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended.
Any repeal or modification of the foregoing paragraph (b)y the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE XIII
AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the Corporation is expressly authorized to adopt,
repeal, alter, amend and rescind the bylaws of the Corporation by a vote of a
majority of the board of directors. Notwithstanding any other provision of this
Certificate or the bylaws of the Corporation, and in addition to any affirmative
vote required by law (and notwithstanding the fact that some lesser percentage
may be specified by law), the bylaws shall be adopted, repealed, altered,
amended or rescinded by the stockholders of the Corporation by the vote or
written consent of the holders of a majority of the voting power of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class).
ARTICLE XVIII
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION
Subject to the provisions hereof, the Corporation reserves the right to
repeal, alter, amend or rescind any provision contained in this Certificate in
the manner now or hereafter prescribed by law, and all rights conferred on
stockholders herein are granted subject to this reservation.
WE, THE UNDERSIGNED, do hereby certify that the Corporation has not
received any payment for any of its stock and that this Restated Certificate of
Incorporation has been duly adopted in accordance with the provisions of Section
241 of the General Corporation Law of the State of Delaware as of the 10th day
of March, 2000.
SOFTQUAD SOFTWARE, LTD.
By: /s/ Roberto Drassinower
------------------------------------
Roberto Drassinower, President & CEO
SOFTQUAD SOFTWARE, LTD.
By: /s/ David Adams
------------------------------------
David Adams, Secretary
Exhibit A - Page 21
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