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CERTIFICATE OF INCORPORATION
of
FIRST COLONIAL SECURITIES HOLDING CORP.
In compliance with the requirements of the General Corporation Law of
the State of Delaware, as amended, the undersigned, desiring to be incorporated
as a business, hereby certifies that:
1. The name of the corporation is: First Colonial Securities Holding
Corp.
2. The address of its registered office in the State of Delaware is: c/o
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, in
the County of New Castle. The name of its registered agent is The Corporation
Trust Company.
3. The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware, as amended.
4. The total number of shares of stock which the corporation shall have
the authority to issue is Twenty-Five Million (25,000,000), to be divided into
two classes designated "Common Stock" and "Preferred Stock". The corporation
shall be authorized to issue (a) Twenty Million (20,000,000) shares of Common
Stock and (b) Five Million (5,000,000) shares of Preferred Stock. Each share of
stock shall have a par value of $.01 per share.
The Board of Directors shall have the full authority permitted by law,
by duly adopted resolutions, to divide the authorized and unissued shares of
Preferred Stock into classes or series, or both, and to provide for the issuance
thereof not exceeding in the aggregate the number of shares of Preferred Stock
authorized by this Certificate of Incorporation, as amended from time to time;
and to determine with respect to each such class and/or series the voting
powers, if any (which voting powers, if granted, may be full or limited),
designations, preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions relating thereto,
including without limiting the generality of the foregoing, the voting rights
relating to shares of Preferred Stock of any class and/or series (which may be
one or more votes per share or a fraction of a vote per share, which
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may vary over time and which may be applicable generally or only upon the
happening and continuance of stated events or conditions), the rate of dividend
to which holders of Preferred Stock of any class and/or series may be entitled
(which may be cumulative or noncumulative), the rights of holders of Preferred
Stock of any class and/or series or of the corporation, or both, in the event of
liquidation, dissolution or winding up of the affairs of the corporation, the
rights, if any, of holders of Preferred Stock of any class and/or series to
convert or exchange such shares of Preferred Stock of such class and/or series
for shares of any other class or series of capital stock or for any other
securities, property or assets of the corporation or any subsidiary (including
the determination of the price or prices or the rate or rates applicable to such
rights to convert or exchange and the adjustment thereof, the time or times
during which the right to convert or exchange shall be applicable and the time
or times during which a particular price or rate shall be applicable), whether
or not the shares of that class and/or series shall be redeemable, and if so,
the terms and conditions of such redemption, including the date or dates upon or
after which they shall be redeemable, and the amount per share payable in case
of redemption, which amount may vary under different conditions and at different
redemption dates, and whether any shares of that class and/or series shall be
redeemed pursuant to a retirement or sinking fund or otherwise and the terms and
conditions of such obligation.
Before the corporation shall issue any shares of Preferred Stock or any
class and/or series, a certificate setting forth a copy of the resolution or
resolutions of the Board of Directors fixing the voting powers, designations,
preferences, the relative, participating, optional or other special rights, if
any, and the qualifications, limitations and restrictions, if any, relating to
the shares of Preferred Stock of such class and/or series, and the number of
shares of Preferred Stock of such class and/or series authorized by the Board of
Directors to be issued shall be signed on behalf of the corporation and shall be
filed in the manner prescribed by the General Corporation Law of the State of
Delaware. The Board of Directors is further authorized to increase (but not
above the total number of authorized shares of the class) or decrease (but not
below the number of such shares of such series then outstanding) the number of
shares of any class or series subsequent to the issuance of shares of that class
or series.
5. The board of directors is authorized to make, alter or repeal the
by-laws of the corporation. Election of directors need not be by written
ballot.
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6. The name and mailing address of the incorporator is:
Dean M. Schwartz, Esquire
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103-7098
7. To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or may hereafter be amended, a director of this
corporation, or any other person as may be authorized by this certificate to
exercise or perform any of the powers or duties otherwise conferred or imposed
upon a director, shall not be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director.
8. Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding will be paid by the corporation in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it is ultimately determined that he is not entitled to be indemnified by the
corporation as authorized in Section 145 of the General Corporation Law of the
State of Delaware, as amended. Any repeal or modification of any of the
provisions of Sections 7 or 8 shall be prospective and shall not adversely
affect any right or protection of a director, officer or other person existing
at the time of, or increase the liability of any director of the Corporation
with respect to any acts or omissions of such director occurring prior to, such
repeal or modification.
9. The corporation is to have perpetual existence.
10. No holder of shares of stock of the corporation shall have any
preemptive or other right, except as such rights are expressly provided by
contract, to purchase or subscribe for or receive any shares of any class, or
series thereof, of stock of the corporation, whether now or hereafter
authorized, or any warrants, options, bonds, debentures or other securities
convertible into, exchangeable for or carrying any right to purchase any share
of any class, or series thereof, of stock; but such additional shares of stock
and such warrants, options, bond, debentures or other securities convertible
into, exchangeable for or carrying any right to purchase any shares of any
class, or series thereof, of stock may be issued or disposed of by the Board of
Directors to such persons, and on such terms and for such lawful consideration
as in its discretion it shall deem advisable or as the corporation shall have by
contract agreed.
11. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this
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Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are granted subject
to this reservation.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, as amended, do hereby make this certificate, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand as of this 12th day of August, 1997.
/s/ Dean M. Schwartz
--------------------------
Dean M. Schwartz, Esquire
Incorporator
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FIRST COLONIAL SECURITIES HOLDING CORP.
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware (the "DGCL"), First Colonial Securities Holding Corp. (the
"Corporation"), a corporation organized and existing under the DGCL, hereby
certifies as follows:
FIRST: The Certificate of Incorporation of the Corporation authorizes
the issuance of up to 5,000,000 shares of Preferred Stock, par value $.01 per
share (the "Preferred Stock"), and further authorizes the Board of Directors of
the Corporation by resolution or resolutions to provide for the issuance of
Preferred Stock in series and to establish the number of shares to be included
in each such series and to fix the designation, voting powers, preferences and
relative rights and qualifications, limitations or restrictions of each such
series.
SECOND: The Board of Directors of the Corporation, by action by written
consent dated as of August 12 1997, duly adopted the following resolution
authorizing the creation and issuance of a series of Preferred Stock to be
designated as Series A Convertible Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation is
hereby created, and that the designation and number of shares thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows;
1. Designation and Number. The shares of such series of Preferred Stock
shall be designated "Series A Convertible Preferred Stock" (the "Series A
Preferred Stock"). The number of shares constituting such series shall be
150,000.
2. Rank. The Series A Preferred Stock shall, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank senior to (i)
the Corporation's common stock, par value $.01 per share (the "Common Stock"),
and (ii) all classes and series of stock of the Corporation now or hereafter
authorized, issued or outstanding that by their terms expressly provide that
they are junior to the Series A Preferred Stock (collectively, the "Junior
Securities").
3. Dividends. (a) The holders of shares of the Series A Preferred Stock,
in preference to the holders of Junior Securities, shall be entitled to receive,
when, as and if declared by the Board of Directors of the Corporation, out of
assets of the Corporation legally available therefor, cumulative dividends
payable in cash at the annual rate of 10% per annum. Such dividends shall be
cumulative and shall accrue and be payable, in arrears, quarterly on December
31, March 31, June 30 and September 30 in each year (each, a "Dividend Payment
Date"), commencing December 31, 1997, to holders of record at the close of
business on the date specified by the Board of Directors at the time such
dividend is declared (the "Record Date"). All dividends paid with respect to
shares of Series A Preferred Stock pursuant to this Section 3 shall be paid pro
rata to the holders entitled thereto.
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(b) Dividends on the shares of Series A Preferred Stock shall accrue and
be cumulative from the date of the original issuance of shares of Series A
Preferred Stock (the "Issue Date"), whether or not earned or declared. Accrued
but unpaid dividends shall not bear interest.
(c) Each fractional share of Series A Preferred Stock outstanding shall
be entitled to a ratably proportionate amount of all dividends accruing with
respect to each outstanding share of Series A Preferred Stock pursuant to
Subsection 3(a), and all such dividends with respect to such outstanding
fractional shares shall be cumulative and shall accrue (whether or not
declared), and shall be payable in the same manner and at such times as provided
for in Subsection 3(a) with respect to dividends on each outstanding share of
Series A Preferred Stock. Each fractional share of Series A Preferred Stock
outstanding shall also be entitled to a ratably proportionate amount of any
other distributions made with respect to each outstanding share of Series A
Preferred Stock, and all such distributions shall be payable in the same manner
and at the same time as distributions on each outstanding share of Series A
Preferred Stock.
(d) Accrued but unpaid dividends for any past dividend periods may be
declared by the Board of Directors and paid on any date fixed by the Board of
Directors, whether or not a regular Dividend Payment Date, to holders of record
on the books of the Corporation on such record date as may be fixed by the Board
of Directors, which record date shall be no more than 60 days prior to the
payment date thereof. Holders of Series A Preferred Stock will not be entitled
to any dividends, whether payable in cash, property or stock, in excess of the
full cumulative dividends provided for herein
(e) So long as any shares of the Series A Preferred Stock are
outstanding, the Corporation shall not declare, pay or set apart for payment any
dividend or make any distribution on any Junior Securities (other than
dividends or distributions payable in additional shares of Junior Securities),
unless at the time of such dividend or distribution the Corporation shall have
paid all accrued and unpaid dividends on the outstanding shares of Series A
Preferred Stock
(f) Whenever dividends on the Series A Preferred Stock are in arrears,
the Corporation shall not declare dividends on or make any other distribution in
respect of any other capital stock ranking on a parity with the Series A
Preferred Stock as to dividends and on which dividends are payable in arrears,
unless simultaneously therewith dividends are paid pro rata on the Series A
Preferred Stock.
(g) The Corporation shall not, directly or indirectly, retire, redeem,
purchase or otherwise acquire any Junior Securities unless the Series A
Preferred Stock has been redeemed or retired in full; provided, however, that
the Corporation may repurchase shares of Common Stock
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from any employees of the Corporation upon termination of employment if such
repurchase is required or permitted by the terms of any stock subscription
agreement, employment agreement, option agreement or similar agreement, plan or
arrangement between the Corporation and such employee relating to the employment
of such employee and providing for the repurchase by the Corporation of Common
Stock or options to acquire Common Stock, provided that at the time of any
repurchase under this Subsection 3(g) all dividends accrued on the Series A
Preferred Stock shall have been paid or set aside for payment.
(h) The Corporation shall not retire, redeem, purchase or otherwise
acquire any capital stock ranking on a parity with the Series A Preferred Stock
as to dividends or upon the dissolution, liquidation or winding up of the
Corporation except for mandatory redemptions made in accordance with the terms
of such parity stock, provided that at the time of any such redemption all
dividends accrued on the Series A Preferred Stock shall have been paid or set
aside for payment
4. Liquidation Preference
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of Series A Preferred
Stork shall be entitled to receive out of the assets of the Corporation, for
each share of Series A Preferred Stock then outstanding, before any payment or
distribution shall be made in respect of the Common Stock or any other class or
series of stock ranking junior to the Series A Preferred Stock upon liquidation,
dissolution or winding up, cash in the amount of $10.00 (as adjusted for any
stock dividend, split, combination, recapitalization or similar transaction with
respect to the capital stock of the Corporation), plus an amount equal to all
accrued and unpaid dividends thereon to the date of such payment, whether or not
declared. After payment in full of the liquidation preference of the Series A
Preferred Stock, holders of Series A Preferred Stock shall not be entitled to
receive any additional cash, property or other assets of the Corporation upon
liquidation, dissolution or winding up of the Corporation.
(b) If the assets of the Corporation available for distribution to the
holders of Series A Preferred Stock upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, shall be insufficient
to pay the full preferential amount to which holders of Series A Preferred Stock
are entitled pursuant to Subsection 4(a), no distribution shall be made in
respect of any shares of any other class or series of stock ranking on a parity
with the Series A Preferred Stock upon liquidation, dissolution or winding up,
unless the distribution is made pro rata, so that the ratio of the amount
distributed per share on the Series A Preferred Stock to the amount distributed
per share on each such other class or series of stock shall be the same as the
ratio of the amount of the liquidation preference per share of the Series A
Preferred Stock to the amount of the liquidation preference per share of each
such other class or series of stock.
(c) For the purposes of this Section 4, neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with any other
corporation shall be deemed to be a voluntary or involuntary liquidation,
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dissolution or winding up of the Corporation, unless such voluntary sale,
conveyance, exchange or transfer shall be in connection with a plan of
liquidation, dissolution or winding up of the Corporation.
5. Conversion. The holders of Series A Preferred Stock shall have
conversion rights as follows:
(a) Conversion at the Option of the Holder. Each share of Series A
Preferred Stock shall be convertible, at the option of the holder thereof and
without the payment of additional consideration, at any time, into the number of
shares of Common Stock determined by dividing $10.00 by the Current Conversion
Price (as hereinafter defined) in effect on the Conversion Date (as hereinafter
defined).
To effect the conversion of shares of Series A Preferred Stock, the
holder of record thereof shall make a written demand for such conversion (a
"Conversion Demand") upon the Corporation at its principal executive offices
setting forth therein (i) the number of shares of Series A Preferred Stock to be
converted, (ii) the certificate or certificates representing such shares, (iii)
the proposed date of conversion, which shall be a business day not less than 15
nor more than 30 days after the date of such Conversion Demand (the "Conversion
Date"); and (iv) the name of any nominee to which any shares of Common Stock
into which such shares are to be converted are to be registered. Within five
days of receipt of the Conversion Demand, the Corporation shall give written
notice (a "Conversion Notice") to such holder setting forth therein (i) the
address of the place or places at which the certificate or certificates
representing the shares so to be converted are to be surrendered; and (ii)
whether the certificate or certificates to be surrendered are required to be
endorsed for transfer or accompanied by a duly executed stock power or other
appropriate instrument of assignment and, if so, the form of such endorsement or
power or other instrument of assignment. The Conversion Notice shall be sent by
first class mail, postage prepaid, to such holder at such holder's address as
may be set forth in the Conversion Demand or, if not set forth therein, as it
appears on the records of the stock transfer agent for the Series A Preferred
Stock, if any, or, if none, of the Corporation. On or before the Conversion
Date, the holder of Series A Preferred Stock so to be converted shall surrender
the certificate or certificates representing such shares, duly endorsed for
transfer or accompanied by a duly executed stock power or other instrument of
assignment, if the Conversion Notice so provides, to the Corporation at any
place set forth in such notice or, if no such place is so set forth, at the
principal executive offices of the Corporation. As soon as practicable after the
Conversion Date and the surrender of the certificate or certificates
representing such shares, the Corporation shall issue and deliver to such
holder, or its nominee, at such holder's address as it appears on the records of
the stock transfer agent for the Series A Preferred Stock, if any, or, if none,
of the Corporation a certificate or certificates for the number of whole shares
of Common Stock issuable upon such conversion in accordance with the provisions
hereof, together with cash payable in lieu of any fraction of a share of Common
Stock pursuant to Subsection 5(c).
The resale of the shares of Common Stock issuable upon conversion of the
Series A Preferred Stock may be restricted from resale by a holder unless the
resale of such shares of
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Common Stock is (i) registered under the Securities Art and any applicable state
securities laws or (ii) exempt from the registration requirements of the
Securities act and all applicable state securities laws. The certificates
representing such shares of Common Stock may be issued with a restrictive legend
to the foregoing effect.
(b) Conversion at the Option of the Company. In the event that (i) the
Common Stock is listed for trading on an exchange or automated dealer quotation
system and the closing price per share of Common Stock on any such exchange or
system (the "Trading Price") is equal to or greater than $6.50 for 20
consecutive trading days and (ii) the shares of Common Stock issuable upon
conversion of the then outstanding shares of Series A Preferred Stock may be
resold by all holders thereof pursuant to Rule 144 promulgated under the
Securities Act (without regard to the volume limitations set forth in paragraph
(e) thereof) or are the subject of an effective registration statement
registering their resale under the Securities Act, the Company may cause all,
but not less than all, of the then outstanding shares of Preferred Stock to be
converted into number of shares of Common Stock equal to the number of shares of
Series A Preferred Stock then outstanding multiplied by $10.00 divided by the
Current Conversion Price in effect on the Mandatory Conversion Date (as defined
below).
For the Company to effect the mandatory conversion of all outstanding
shares of Series A Preferred Stock, the Corporation shall give written notice (a
"Mandatory Conversion Notice") to each record holder of Series A Preferred Stock
setting forth therein (i) the effective date of such mandatory conversion which
shall be a business day not less than 15 nor more than 30 days after the date of
the Mandatory Conversion Notice (the "Mandatory Conversion Date"), (ii) the
address of the place or places at which the certificate or certificates
representing the shares so to be converted are to be surrendered; and (iii)
whether the certificate or certificates to be surrendered are required to be
endorsed for transfer or accompanied by a duly executed stock power or other
appropriate instrument of assignment and, if so, the form of such endorsement or
power or other instrument of assignment. The Mandatory Conversion Notice shall
be sent by first class mail, postage prepaid, to each holder at such holder's
address as it appears on the records of the stock transfer agent for the Series
A Preferred Stock, if any, or, if none, of the Corporation. On or before the
Mandatory Conversion Date, each holder of Series A Preferred Stock shall
surrender the certificate or certificates representing his shares, duly endorsed
for transfer or accompanied by a duly executed stock power or other instrument
of assignment, if the Mandatory Conversion Notice so provides, to the
Corporation at any place set forth in such notice or, if no such place is so set
forth, at the principal executive offices of the Corporation. As soon as
practicable after the Mandatory Conversion Date and the surrender of the
certificate or certificates representing such shares, the Corporation shall
issue and deliver to each holder, or its nominees at such holder's address as it
appears on the records of the stock transfer agent for the Series A Preferred
Stock, if any, or, if none, of the Corporation a certificate or certificates for
the number of whole shares of Common Stock issuable upon conversion in
accordance with the provisions hereof, together with cash payable in lieu of any
fraction of a share of Common Stock pursuant to Subsection 5(c).
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(c) No Fractional Shares. No fractional shares of Common Stock or scrip
shall be issued upon conversion of shares of Series A Preferred Stock. In lieu
of any fractional share to which the holder would be entitled but for the
provisions of this Subsection 5(c), based on the full number of shares of Series
A Preferred Stock held by such holder, the Corporation shall pay cash in an
amount equal to the same fraction of the Current Market Price (as hereinafter
defined) of one share of Common Stock on the Conversion Date or the Mandatory
Conversion Date, as applicable.
(d) Reservation of Stock. The Corporation shall, at all times when any
shares of Series A Preferred Stork are outstanding, reserve and keep available
out of its authorized but unissued stock, such number of shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Preferred Stock.
(e) Dividends: Rights. All outstanding shares of Series A Preferred
Stock to be converted pursuant to the Conversion Notice or the Mandatory
Conversion Notice, as the case may be, shall, on the Conversion Date or the
Mandatory Conversion Date, as applicable, be converted into Common Stock for all
purposes, notwithstanding the failure of the holder thereof to surrender any
certificate representing such shares on or prior to such date. On and after the
Conversion Date or the Mandatory Conversion Date, as applicable, (i) no such
share of Series A Preferred Stock shall be deemed to be outstanding or be
transferrable on the books of the Corporation or the stock transfer agent, if
any, for the Series A Preferred Stock, and (ii) the holder of such shares, as
such, shall not be entitled to receive any dividends or other distributions, to
receive notices or to vote such shares or to exercise or to enjoy any other
powers, preferences or rights thereof, other than the right, upon surrender of
the certificate or certificates representing such shares, to receive a
certificate or certificates for the number of shares of Common Stock into which
such shares have been converted. On the Conversion Date or the Mandatory
Conversion Date, as applicable, all such shares shall be retired and canceled
and shall have the status of authorized and unissued shares of Preferred Stock,
undesignated as to series.
(f) Current Conversion Price: Adjustments. The Current Conversion Price
of the Series A Preferred Stock shall be $5.00 per share as of the Issue Date
and thereafter such amount as adjusted in the manner hereinafter set forth.
(i) Sale of Securities Below Current Conversion Price. If at any
time after the Issue Date the Corporation shall issue any shares of Common
Stock, Convertible Securities (as hereinafter defined), Rights (as hereinafter
defined) or Related Rights (as hereinafter defined) (collectively, "Securities")
without consideration or for a consideration per share or unit less than the
Current Conversion Price in effect immediately prior to the issuance of such
Securities, then the Current Conversion Price in effect immediately prior to
each such issuance shall forthwith be reduced, to the quotient obtained by
dividing:
(A) an amount equal to the sum of (1) the total number of shares
of Common Stock outstanding immediately prior to such issuance (including for
this purpose the number of shares of Common Stock into which the shares of
Series A Preferred Stock outstanding
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immediately prior to such issuance are convertible on the date of such issuance
in accordance with Subsection 5(a) (without regard to Subsection 5(c)), without
giving effect to such issuance) multiplied by the Current Conversion Price in
effect immediately prior to such issuance, and (2) the amount of consideration,
if any, received by the Corporation upon such issuance, by
(B) the total number of shares of Common Stock outstanding
immediately after such issuance, including the number of shares of Common Stock
(1) into which the shares of Series A Preferred Stock outstanding immediately
prior to such issuance are convertible on the date of such issuance in
accordance with Subsection 5(a) (without regard to Subsection 5(c)), without
giving effect to such issuance, (2) into or for which any such newly issued
Convertible Securities are then convertible or exchangeable and (3) issuable
upon the exercise of any such Rights or Related Rights.
(ii) Certain Definitions and Procedures. For the purpose of this
Section 5, the following definitions and procedures shall apply:
(A) Rights. In the case of the issuance of options, warrants or
other rights to purchase or otherwise acquire Common Stock, whether or not at
the time exercisable (collectively, "Rights"), the total number of shares of
Common Stock issuable upon exercise of such Rights shall be deemed to have been
issued at the time such Rights are issued, for a consideration equal to the sum
of the consideration, if any, received by the Corporation upon the issuance of
such Rights and the minimum purchase or exercise price payable upon the exercise
of such Rights for the Common Stock to be issued upon the exercise thereof.
(B) Convertible Securities and Related Rights. In the case of
the issuance of any class or series of stock or any bonds, debentures, notes or
other securities or obligations convertible into or exchangeable for Common
Stock, whether or not then convertible or exchangeable (collectively,
"Convertible Securities"), or options, warrants or other rights to purchase or
otherwise acquire Convertible Securities (collectively, "Related Rights"), the
total number of shares of Common Stock issuable upon the conversion or exchange
of such Convertible Securities or exercise of such Related Rights shall be
deemed to have been issued at the time such Convertible Securities or Related
Rights are issued, for a consideration equal to the sum of (1) the
consideration, if any, received by the Corporation upon issuance of such
Convertible Securities or Related Rights (excluding any cash received on account
of accrued interest or dividends) and (2) (I) in the case of Convertible
Securities, the minimum additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of such Convertible Securities or
(II) in the case of Related Rights, the sum of (x) the minimum purchase or
exercise price payable upon the exercise of such Related Rights for Convertible
Securities and (y) the minimum additional consideration, if any, to be received
by the Corporation upon the conversion or exchange of the Convertible Securities
issued upon the exercise of such Related Rights.
(C) Changes. On any change in the number of shares of Common
Stock issuable upon the exercise of Rights or Related Rights or upon the
conversion or exchange of
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Convertible Securities or on any change in the minimum purchase or exercise
price of Rights, Related Rights or Convertible Securities, including, but not
limited to, a change resulting from the anti-dilution provisions of such Rights,
Related Rights or Convertible Securities, the Current Conversion Price to the
extent in any way affected by such Rights, Related Rights or Convertible
Securities shall forthwith be readjusted to be thereafter the Current Conversion
Price that would have been obtained had the adjustment that was made upon the
issuance of such Rights, Related Rights or Convertible Securities been made
after giving effect to such change. No further adjustment shall be made in
respect of such change upon the actual issuance of Common Stock or any payment
of consideration upon the exercise of any such Rights or Related Rights or the
conversion or exchange of such Convertible Securities.
(D) Expiration or Cancellation. On the expiration or
cancellation of any such Rights, Related Rights or Convertible Securities, if
the Current Conversion Price shall have been adjusted upon the issuance thereof,
the Current Conversion Price shall forthwith be readjusted to such Current
Conversion Price as would have been obtained had the adjustment made upon the
issuance of such Rights, Related Rights or Convertible Securities been made upon
the basis of the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such Rights or Related Rights or the conversion or
exchange of such Convertible Securities.
(E) Cash. In the case of the issuance of such Securities for
cash, the amount of consideration received by the Corporation shall be deemed to
be the amount of cash paid therefor before deducting any discounts, commissions
or other expenses paid or incurred by the Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof. In the case of the
issuance of securities for property other than cash, the value of such property
shall be determined by the Board of Directors in good faith.
(g) Consolidation, Merger, Sale, Etc. In case of any capital
reorganization or reclassification of outstanding shares of Common Stock, or
any merger or consolidation of the Corporation with or into another entity
(other than mergers or consolidations of wholly-owned subsidiaries into the
Corporation or any wholly-owned subsidiary), or any sale or conveyance of all or
substantially all of the assets of the Corporation (each, a "Transaction"), then
lawful and adequate provision shall be made whereby each share of Series A
Preferred Stock shall, after such Transaction, be convertible into the kind and
number of shares of stock or other securities or property of the Corporation or
of the corporation resulting from such Transaction, or to which assets shall
have been sold in such Transaction, to which the holder of shares of Series A
Preferred Stock would have been entitled if it had held the Common Stock
issuable upon the conversion of such shares of Series A Preferred Stock on the
record date, or, if none, immediately prior to such Transaction, at the Current
Conversion Price in effect on such date. The provision of this Subsection 5(g)
shall similarly apply to each successive Transaction.
(h) Stock Dividends, Split, Combinations. If the Corporation shall (i)
declare a dividend or other distribution payable in Securities or (ii) split its
outstanding shares of Common Stork into a larger number of shares or (iii)
combine its outstanding sham of Common Stock into
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a smaller number of shares, then the Current Conversion Price in effect
immediately prior to such dividend or other distribution, split or combination,
as the case may be, shall forthwith be proportionally adjusted so that each
holder of Series A Preferred Stock shall be entitled to receive the number of
shares of Common Stock which such holder would have owned or been entitled to
receive had such Series A Preferred Stock been converted immediately prior to
the record date for such dividend or other distribution, split or combination. -
Successive adjustments to the Current Conversion Price shall be made upon each
such dividend or other distribution, split or combination.
(i) Current Market Price. For the purposes hereof, the "Current Market
Price" of one share of Common Stock on any date shall be deemed to be the
average of the daily closing prices for the 30 consecutive business days
commencing 45 business days before the day in question. The closing price for
each day shall be the last reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or if not listed or admitted to trading on any national securities exchange, the
last reported sales price on the NASDAQ National Market, if the Common Stock is
included therein or, if not, the average of the highest reported bid and lowest
reported asked prices as reported by The Nasdaq Market, Inc., or the nearest
comparable system, or, if no such price is available, as determined in good
faith by the Board of Directors.
(j) No Impairment. The Corporation shall not, by amendment of its
Articles of Incorporation or through any reorganization, sale, exchange or other
disposition of assets, merger, consolidation, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this
Section 5 by the Corporation, but will at all times in good faith carry out all
the provisions of this Section 5 and take all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of Series A
Preferred Stock against impairment.
(k) Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Current Conversion Price pursuant to this Section 5, the
Corporation shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish a notice of adjustment to each holder of
Series A Preferred Stock, which notice shall set forth, in reasonable detail,
the facts upon which such adjustment or readjustment is based.
(l) Notices of Record Date. In the event (i) any record date is fixed
for the purpose of determining the holders of any class or series of stock or
other securities who are entitled to receive any dividend or other distribution
or (ii) of any recapitalization or reorganization of the capital stock of the
Corporation, any merger or consolidation of the Corporation, or any sale,
exchange or other disposition of all or substantially all the assets of the
Corporation or any voluntary or involuntary dissolution, liquidation or winding
up of the Corporation, the Corporation shall mail to each holder of Series A
Preferred Stock at least 10 days prior to the record date therefor a notice
setting forth (a) such record date and a description of such dividend or
distribution, (b) the date on which any such recapitalization, reorganization,
merger, consolidation, disposition, dissolution,
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liquidation or winding up is expected to become effective, and (c) the time, if
any is to be fixed, as to when the holders of record of Common Stock (or other
securities) shall be entitled to exchange their shares of Common Stock (or other
securities) for securities or other property deliverable upon such
recapitalization, reorganization, merger, consolidation, disposition,
dissolution, liquidation or winding up.
(m) Issue Taxes. The Corporation shall pay all issue and other
non-income taxes that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of Series A Preferred Stock,
other than taxes payable as a result of the issuance of delivery of Common Stock
to a person other than the record holder of the Series A Preferred surrendered
for conversion.
(n) Minimum Adjustment: No Increase. No adjustment of the Current
Conversion Price shall be made in an amount less than one cent, provided that
any adjustment that is not made by reason of this Subsection 5(n) shall be
carried forward and shall be taken into account in any subsequent adjustment.
Except to the limited extent provided for in Subsection 5(f)(ii)(C) or (D) or
5(h), no adjustments of the Current Conversion Price in accordance with this
Section 5 shall have the effect of increasing the Current Conversion Price above
the Current Conversion Price in effect immediately prior to such adjustment.
(o) Notwithstanding anything herein to the contrary, the rights of the
holders to convert shares of Series A Preferred Stock shall cease on the 10th
day following the delivery of a Redemption Notice (as hereinafter defined)
pursuant to Section 6.
6. Redemption.
(a) Subject to the terms of this Subsection 6(a), to the extent the
Corporation shall have funds legally available therefor, the Corporation, at its
option, may redeem, in whole or in part, the shares of Series A Preferred Stock
outstanding, at any time after the third anniversary of the date of the initial
issuance of the Series A Preferred Stock, upon notice given as hereinafter
provided, at a redemption price equal to $11.00 per share.
(b) In the event that fewer than all the outstanding shares of Series A
Preferred Stock are to be redeemed, the shares to be redeemed shall be redeemed
pro rata.
(c) Notice of such redemption (the "Redemption Notice") shall be mailed
by first-class mail, postage prepaid, not less than 30 days nor more than 60
days prior to the redemption date to the holders of record of the shares to be
redeemed at their respective addresses as they shall appear in the records of
the Corporation; provided, however, that failure to give such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
proceeding for the redemption of any shares so to be redeemed except as to the
holder to whom the Corporation has failed to give such notice or except as to
the holder to whom notice was defective. Each Redemption Notice shall state: (i)
the redemption date; (ii) the number of shares of Series A Preferred Stock to be
redeemed and,
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if less than all the shares held by such holder are to be redeemed, the number
of such shares to be redeemed; (iii) the redemption price; (iv) the place or
places where certificates for such shares are to be surrendered for payment of
the redemption price; (v) that dividends on the shares to be redeemed will cease
to accrue on such redemption date and (vi) that the holder's right to convert
such shares into shares of Common Stock shall terminate on the close of business
on the day preceding such redemption date.
(d) Notice by the Corporation having been mailed as provided in
Subsection 6(c), and provided that on or before the applicable redemption date
funds necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the pro rata
benefit of the holders of the shares so called for redemption, then, from and
after such redemption date (unless the Corporation defaults in the payment of
the redemption price, in which case such rights shall continue until the
redemption price is paid), dividends on the shares of Series A Preferred Stock
so called for redemption shall cease to accrue, and such shares shall no longer
be deemed to be outstanding and shall not have the status of shares of Series A
Preferred Stock, and all rights of the holders thereof as shareholders of the
Corporation (except the right to receive the applicable redemption price and any
accrued and unpaid dividends from the Corporation to the date of redemption and
the right to convert such shares into shares of Common Stock, which shall
continue until the close of business on the 10th day preceding the date of
redemption) shall cease. Upon surrender of the certificates for any shares so
redeemed (properly endorsed or assigned for transfer, if the Board of Directors
of the Corporation shall so require and a notice by the Corporation shall so
state), such shares shall be redeemed by the Corporation at the applicable
redemption price as provided herein. In case fewer than all the shares
represented by any such certificate are redeemed, a new certificate or
certificates shall be issued representing the unredeemed shares without cost to
the holder thereof.
7. Reacquired Shares. Shares of Series A Preferred Stock that have been
issued and reacquired in any manner, including shares reacquired by purchase,
redemption or conversion, shall have the status of authorized and unissued
shares of the class of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock other than
the Series A Preferred Stock.
8. Voting
(a) Except as otherwise provided herein or as required by applicable
law, the holders of Series A Preferred Stock shall have no voting rights.
(b) The consent of the holders of a majority (or such greater number as
may then be required by law) of the shares of Series A Preferred Stock at the
time outstanding, given in person or by proxy, by a vote at a meeting called for
the purpose, or by consent in lieu thereof, at which the holders of shares of
Series A Preferred Stock shall vote together as a separate class, shall be
necessary for authorizing, effecting or validating:
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(i) any change in the preferences, limitations or special rights of
the Series A Preferred Stock adverse to the Series A Preferred Stock;
(ii) a new class or series of shares having a preference as to
dividends or assets that is on a parity with, or senior to, the Series A
Preferred Stock; or
(iii) any increase in the number of authorized shares of any class
or series having a preference as to dividends or assets that is senior in any
respect to the Series A Preferred Stock.
9. No Sinking Fund. The Corporation shall not be required to make any
payment to any sinking fund or otherwise to deposit or set aside any funds or
other assets of the Corporation in respect of the Series A Preferred Stock.
10. Amount of Noncash Dividends, Distributions or Consideration. Whenever a
dividend or distribution is to be made in, or any consideration received or paid
by the Corporation consists of, securities or other property other than cash,
the amount of such dividend, distribution or consideration shall be the fair
market value of such securities or other property as determined in good faith by
the Board of Directors.
11. Definition of Certain Preferences. For purposes hereof, any class or
series of stock of the Corporation shall be deemed to rank:
(a) senior to the Series A Preferred Stock, either as to dividends or
upon liquidation, dissolution or winding up, if the holders of shares of that
class or series of stock shall be entitled to receive dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation, as
the case may be, in preference or priority to the holders of Series A Preferred
Stock;
(b) on a parity with the Series A Preferred Stock, either as to
dividends or upon liquidation, dissolution or winding up whether or not the
dividend rates, dividend payment dates, redemption or liquidation prices per
share or conversion or sinking fund provisions, if any, are different from those
of the Series A Preferred Stock, if the holders of shares of that class or
series of stock shall be entitled to receive dividends or amounts distributable
upon liquidation, dissolution or winding up of the Corporation, as the case may
be, in proportion to their respective dividend preferences (whether based on
their respective dividend rates or the respective amounts of accumulated and
unpaid dividends thereon) or their respective liquidation preferences, without
preference or priority, one over the other, as between the holders of shares of
that class or series of stock and the holders of shares of Series A Preferred
Stock; and
(c) junior to the Series A Preferred Stock, either as to dividends or
upon liquidation, if the holders of shares of Series A Preferred Stock shall be
entitled to receive dividends
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or amounts distributable upon liquidation, dissolution or winding up of the
Corporation, as the case may be, in preference or priority to the holders of
shares of that class or series of stock.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed this certificate on behalf of the Corporation this 12 day of August,
1997.
First Colonial Securities Holding Corp.
By: /s/ Steven Schwartz
--------------------------------------
Name: Steven Schwartz
Title: President
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