SCHEDULE 14 C
INFORMATION STATEMENT PURSUANT TO SECTION 14 (C)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary information statement
[X] Definitive information statement
Confidential, for use of the Commission only (as permitted by Rule 14c-5(d)(2))
THE AMERICAN SPORTS MACHINE, INC.
(NAME OF COMPANY AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies: Not
Applicable.
(2) Aggregate number of securities to which transaction applies: Not
Applicable.
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): Not Applicable.
(4) Proposed maximum aggregate value of transaction: Not Applicable.
(5) Total fee paid: Not Applicable.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: Not Applicable.
(2) Form, Schedule or Registration Statement No. : Not Applicable.
(3) Filing Party: Not Applicable.
(4) Date Filed: Not Applicable.
<PAGE>
[GRAPHIC OMITED]
THE AMERICAN SPORTS MACHINE, INC.
222 LAKEVIEW AVENUE, SUITE 160-146
WEST PALM BEACH, FLORIDA 33401
April 3, 2000
DEAR SHAREHOLDER:
The Information Statement sent to you and dated March 20, 2000 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 (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).
Enclosed is the most recent restatement of the Certificate of Incorporation
of SoftQuad which will be the Certificate of Incorporation of the Corporation
after the Effective Date. The changes to the enclosed Restated Certificate of
Incorporation from the one previously sent to you are not substantive and were
made only for the purpose of correcting drafting errors.
Sincerely,
/s/Roberto Drassinower
- -----------------------
Roberto Drassinower
President
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
SOFTQUAD SOFTWARE, LTD.
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
------------------------
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
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
--------------------------------------
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
-----------------------
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 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
----------------------
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,
------------------------------
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 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.
C. Serial Preferred Stock. Except as provided in this Certificate, the
------------------------
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.
---------------------------------------
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.
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.
(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
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.
(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
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
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
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.
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.
(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,
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
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.
(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.
(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:
"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.
"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
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
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
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
