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EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MCMS, INC.
ARTICLE ONE
The name of the corporation is MCMS, Inc. (hereinafter called the
"Corporation").
ARTICLE TWO
The address of the Corporation's registered office in the state of
Delaware is Corporation Service Company, 2711 Centreville Road, Wilmington (New
Castle County), Delaware 19808. The name of its registered agent at such address
is Corporation Service Company.
ARTICLE THREE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE FOUR
AUTHORIZED CAPITAL STOCK
The Corporation is authorized to issue 6,000,000 shares of Series A
Convertible Preferred Stock, par value $0.001 per share (the "Series A Preferred
Stock"), 6,000,000 shares of Series B Convertible Preferred Stock, par value
$0.001 per share (the "Series B Preferred Stock"), 1,000,000 shares of Series C
Convertible Preferred Stock, par value $0.001 per share (the "Series C Preferred
Stock" and, together with the Series A Preferred Stock and the Series B
Preferred Stock, the "Preferred Stock"), and 750,000 shares of undesignated
preferred stock, par value $0.001 per share, 30,000,000 shares of voting common
stock, par value $0.001 per share (the "Class A Common Stock"), 12,000,000
shares of nonvoting common stock, par value $0.001 per share (the "Class B
Common Stock"), and 2,000,000 shares of super-voting common stock, par value
$0.001 per share (the "Class C Common Stock").
The 750,000 undesignated shares of preferred stock authorized by these
Amended and Restated Articles of Incorporation may be issued from time to time
in one or more series. For any wholly unissued series of previously undesignated
preferred stock, the Board of Directors is hereby authorized to fix and alter
the dividend rights, dividend rates, conversion rights, voting rights, rights
and terms of redemption (including sinking fund provisions), redemption prices,
liquidation
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preferences, the number of shares constituting any such series and the
designation thereof, or any of them.
For any series of preferred stock having issued and outstanding shares,
the Board of Directors is further authorized to increase or decrease (but not
below the number of shares of such series then outstanding) the number of
shares of such series when the number of shares of such series was originally
fixed by the Board of Directors, but such increase or decrease shall be subject
to the limitations and restrictions stated in the resolution of the Board of
Directors originally fixing the number of shares of such series, if any. If the
number of shares of any series is so decreased, then the shares constituting
such decrease shall resume the status that they had prior to the adoption of
the resolution originally fixing the number of shares of such series.
Set forth below is a statement of the preferences, limitations and
relative rights of each class and series of stock of the Corporation. Unless
otherwise indicated, all cross-references in each Subdivision of this Article
Fourth refer to other paragraphs in such Subdivision.
I. PREFERRED STOCK
Section 1. Dividends.
1A. General Obligation. When, as and if declared by the Corporation's
Board of Directors and to the extent permitted under the Delaware General
Corporation Law, the Corporation shall pay preferential dividends in cash to the
holders of the Preferred Stock on each share of the Preferred Stock (a "Share")
at the rate of 10 percent per annum of the sum of the Liquidation Value thereof
plus all declared and unpaid dividends thereon from and including the date of
issuance of such Share to and including the first to occur of (i) the date on
which the Liquidation Value of such Share (plus all declared and unpaid
dividends thereon) is paid to the holder thereof in connection with the
liquidation of the Corporation or the redemption of such Share by the
Corporation, (ii) the date on which such Share is converted into shares of
Conversion Stock hereunder or (iii) the date on which such share is otherwise
acquired by the Corporation. Such dividends shall not be cumulative. The date on
which the Corporation initially issues any Share shall be deemed to be its "date
of issuance" regardless of the number of times transfer of such Share is made on
the stock records maintained by or for the Corporation and regardless of the
number of certificates which may be issued to evidence such Share. Additionally,
in the event that a Share of Series B Preferred Stock is converted into a Share
of Series A Preferred Stock, the "date of issuance" with respect to such Share
of Series A Preferred Stock shall be the date of issuance of the Share of Series
B Preferred Stock, the conversion of which resulted in the issuance of such
Share of Series A Preferred Stock.
1B. Participating Dividends. In the event that the Corporation declares
or pays any dividends upon the Common Stock (whether payable in cash, securities
or other property) other than dividends payable in connection with or pursuant
to the Recapitalization (as defined below) or solely in shares of Common Stock,
the Corporation shall also declare and pay to the holders of the Preferred Stock
at the same time that it declares and pays such dividends to the holders of the
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Common Stock, the dividends which would have been declared and paid with respect
to the Common Stock issuable upon conversion of the Preferred Stock had all of
the outstanding Preferred Stock been converted immediately prior to the record
date for such dividend, or if no record date is fixed, the date as of which the
record holders of Common Stock entitled to such dividends are to be determined;
provided that if any dividend consists of voting securities, the Corporation
shall make available to each holder of Series B Preferred Stock, at such
holder's request, dividends consisting of securities which are non-voting
(except as otherwise required by law), which are otherwise identical to the
dividends consisting of voting securities and which are convertible into such
voting securities on the same terms as Class B Common Stock is convertible into
Class A Common Stock.
Section 2. Liquidation.
Upon any liquidation, dissolution or winding up of the Corporation
(whether voluntary or involuntary), each holder of Preferred Stock shall be
entitled to be paid, before any distribution or payment is made upon any Junior
Securities, an amount in cash equal to the aggregate Liquidation Value of all
Shares held by such holder (plus all declared and unpaid dividends thereon),
and, except as set forth herein, the holders of Preferred Stock shall not be
entitled to any further payment. If upon any such liquidation, dissolution or
winding up of the Corporation the Corporation's assets to be distributed among
the holders of the Preferred Stock are insufficient to permit payment to such
holders of the aggregate amount which they are entitled to be paid under this
Section 2, then the entire assets available to be distributed to the
Corporation's shareholders shall be distributed pro rata among such holders
based upon the aggregate Liquidation Value (plus all declared and unpaid
dividends) of the Preferred Stock held by each such holder. Prior to the
liquidation, dissolution or winding up of the Corporation, the Corporation shall
declare for payment all declared and unpaid dividends with respect to the
Preferred Stock, but only to the extent of funds of the Corporation legally
available for the payment of dividends. Not less than 60 days prior to the
payment date stated therein, the Corporation shall mail written notice of any
such liquidation, dissolution or winding up to each record holder of Preferred
Stock, setting forth in reasonable detail the amount of proceeds to be paid with
respect to each Share and each share of Common Stock in connection with such
liquidation, dissolution or winding up. Any Change in Control or Fundamental
Change (both as defined below) shall be deemed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of this Section 2.
Section 3. Priority of Preferred Stock on Dividends and Redemptions.
So long as any Preferred Stock remains outstanding, without the prior
written consent of the holders of a majority of the outstanding shares of
Preferred Stock, the Corporation shall not, nor shall it permit any Subsidiary
to, redeem, purchase or otherwise acquire directly or indirectly any Junior
Securities, nor shall the Corporation directly or indirectly pay or declare any
dividend or make any distribution upon any Junior Securities, if at the time of
or immediately after any such redemption, purchase, acquisition, dividend or
distribution the Corporation has failed to pay the full amount of dividends
declared but unpaid on the Preferred Stock; provided that the
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Corporation may repurchase shares of Common Stock from present or former
employees of the Corporation and its Subsidiaries in accordance with the
provisions of agreements or plans providing the Corporation with repurchase
rights.
Section 4. Voting Rights. Except as otherwise required by law and subject
to the provisions set forth in this Article Fourth, the holders of shares of
Common Stock issued and outstanding and Preferred Stock issued and outstanding
shall vote together as a single class on all matters subject to shareholder
approval. Notwithstanding the foregoing, the holders of Preferred Stock shall
have no right to vote except as set forth in this Section 4 and as otherwise
expressly required by law.
4A. Series A Preferred Stock. Each holder of the Series A Preferred Stock
(i) shall have one vote for each share of Class A Common Stock that would be
issuable to such holder upon the conversion of all the shares of Series A
Preferred Stock held by such holder on the record date for the determination of
shareholders entitled to vote, or if no record date is specified, as of the date
of such vote, and (ii) shall be entitled to notice of each shareholders' meeting
in accordance with the Bylaws of the Corporation.
4B. Series B Preferred Stock. Holders of Series B Preferred Stock shall
have no rights to vote except as provided in this paragraph and as otherwise
expressly required by law. In the event a right to vote expressly required by
law arises, each holder of Series B Preferred Stock (i) shall be entitled to one
vote for each share of Class A Common Stock that would be issuable to such
holder upon the conversion of all the shares of Series B Preferred Stock held by
such holder (whether by way of conversion through Class B Common Stock or
through Series A Preferred Stock) on the record date for the determination of
shareholders entitled to vote, or if no record date is specified, as of the date
of such vote, and (ii) shall be entitled to notice of any shareholders' meeting
in accordance with the Bylaws of the Corporation.
4C. Series C Preferred Stock.Each holder of the Series C Preferred Stock
(i) shall have two votes for each share of Class C Common Stock that would be
issuable to such holder upon the conversion of all the shares of Series C
Preferred Stock held by such holder on the record date for the determination of
shareholders entitled to vote, or if no record date is specified, as of the date
of such vote, and (ii) shall be entitled to notice of each shareholders' meeting
in accordance with the Bylaws of the Corporation.
Section 5. Conversion.
5A. Conversion Procedure.
(i)At any time and from time to time, any holder of Preferred Stock may
convert all or any portion of the Preferred Stock (including any fraction of a
Share) held by such holder into a number of shares of Conversion Stock computed
by multiplying the number of Shares to be converted by $11.33 and dividing the
result by the Conversion Price then in effect. Subject to
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and upon compliance with the provisions of this Section 5, any holder of Series
A Preferred Stock shall be entitled at any time and from time to time in such
shareholder's sole discretion and at such shareholder's option, to convert any
and all of the shares of Series A Preferred Stock held by such shareholder into
the same number of shares of Series B Preferred Stock. Any holder of Series B
Preferred Stock may convert all or any portion of the Series B Preferred Stock
(including any fraction of a Share) held by such holder into an equal number of
shares of Series A Preferred Stock; provided however, that no holder of Series B
Preferred Stock shall be entitled to convert shares of Series B Preferred Stock
into Series A Preferred Stock, if and to the extent that after giving effect to
such conversion, such holder (together with all other persons within the same
"group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"))) holds shares of capital stock of the
Corporation representing more than 49% of the voting power of the then
outstanding capital stock of the Corporation; and provided, further, that,
Series B Preferred Stock that is Restricted Stock may not be converted into
Series A Preferred Stock, if and to the extent that immediately prior thereto,
or as a result of such conversion, with respect to such Restricted Stock, the
Regulated Shareholder who owns or has owned such Restricted Stock, reasonably
determines that the issuance of shares of Series A Preferred Stock upon the
conversion of such Restricted Stock would result in a Regulatory Problem for
such Regulated Shareholder.
(ii)Except as otherwise provided herein, each conversion of Preferred
Stock shall be deemed to have been effected as of the close of business on the
date on which the certificate or certificates representing the Preferred Stock
to be converted have been surrendered for conversion at the principal office of
the Corporation. At the time any such conversion has been effected, the rights
of the holder of the Shares converted as a holder of Preferred Stock shall cease
and the Person or Persons in whose name or names any certificate or certificates
for shares of Conversion Stock or Preferred Stock, as applicable, are to be
issued upon such conversion shall be deemed to have become the holder or holders
of record of the shares of Conversion Stock or Preferred Stock, as applicable,
represented thereby.
(iii)Notwithstanding any other provision hereof, if a conversion of
Preferred Stock is to be made in connection with a Qualified Public Offering (as
defined below), a Change in Control, a Fundamental Change or other transaction
affecting the Corporation, the conversion of any Shares of Preferred Stock may,
at the election of the holder thereof, be conditioned upon the consummation of
such transaction, in which case such conversion shall not be deemed to be
effective until immediately prior to such transaction being consummated.
(iv)As soon as possible after a conversion has been effected (but in any
event within five (5) business days in the case of subparagraph (a) below), the
Corporation shall deliver to the converting holder:
(a)a certificate or certificates representing the number of shares of
Conversion Stock or Preferred Stock, as applicable, issuable by reason of such
conversion in such name or names and such denomination or denominations as the
converting holder has specified;
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(b)payment in an amount equal to all declared and unpaid dividends with
respect to each Share converted which have not been paid prior thereto, plus the
amount payable under subparagraph (ix) below with respect to such conversion;
and
(c)a certificate representing any Shares of Preferred Stock which were
represented by the certificate or certificates delivered to the Corporation in
connection with such conversion but which were not converted.
(v)If at the time of conversion of any Preferred Stock there are declared
but unpaid dividends on such Preferred Stock being converted into Conversion
Stock, such dividends may, at the converting holder's option, be converted into
an additional number of shares of Conversion Stock determined by dividing the
amount of the unpaid dividends to be applied for such purpose, by the Conversion
Price then in effect.
(vi)The issuance of certificates for shares of Conversion Stock or
Preferred Stock, as applicable, upon conversion of Preferred Stock shall be made
without charge to the holders of such Preferred Stock for any issuance tax in
respect thereof or other cost incurred by the Corporation in connection with
such conversion and the related issuance of shares of Conversion Stock or
Preferred Stock, as applicable, provided that the Corporation shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name other than that of the
holder of the Preferred Stock which is being converted. Upon conversion of each
Share of Preferred Stock, the Corporation shall take all such actions as are
necessary in order to insure that the Conversion Stock or Preferred Stock, as
applicable, issuable with respect to such conversion shall be validly issued,
fully paid and nonassessable, free and clear of all taxes, liens, charges and
encumbrances with respect to the issuance thereof.
(vii)The Corporation shall not close its books against the transfer of
Preferred Stock or of Conversion Stock issued or issuable upon conversion of
Preferred Stock in any manner which interferes with the timely conversion of
Preferred Stock. The Corporation shall assist and cooperate with any holder of
Shares required to make any governmental filings or obtain any governmental
approval prior to or in connection with any conversion of Shares hereunder
(including, without limitation, making any filings required to be made by the
Corporation).
(viii) The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of Conversion Stock and each series of
Preferred Stock, solely for the purpose of issuance upon the conversion of the
Preferred Stock, such number of shares of Conversion Stock and each series of
Preferred Stock, as applicable, issuable upon the conversion of all outstanding
Preferred Stock. All shares of Conversion Stock and each series of Preferred
Stock, as applicable, which are so issuable shall, when issued, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges. The Corporation shall take all such actions as may be necessary to
assure that all such shares of Conversion Stock and Preferred Stock, as
applicable, may be so issued without violation of any applicable law or
governmental
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regulation or any requirements of any domestic securities exchange upon which
shares of Conversion Stock or Preferred Stock, as applicable, may be listed
(except for official notice of issuance which shall be immediately delivered by
the Corporation upon each such issuance). The Corporation shall not take any
action which would cause the number of authorized but unissued shares of
Conversion Stock and shares of each series of Preferred Stock, as applicable, to
be less than the number of such shares required to be reserved hereunder for
issuance upon conversion of the Preferred Stock.
(ix)If any fractional interest in a share of Conversion Stock would,
except for the provisions of this subparagraph, be delivered upon any conversion
of the Preferred Stock, the Corporation, in lieu of delivering the fractional
share therefor, shall pay an amount in cash to the holder thereof equal to the
Market Price of such fractional interest as of the date of conversion.
5B. Conversion Events. Each of the following shall constitute a
"Conversion Event":
(a)any public offering or public sale of securities of the Corporation
(including a public offering registered under the Securities Act of 1933, as
amended, or a public sale pursuant to Rule 144 of the Securities and Exchange
Commission or any similar rule then in force);
(b)any sale of securities of the Corporation to a person or a group of
persons (within the meaning of the 1934 Act) if, after such sale, such person or
group of persons in the aggregate would own or control securities of the
Corporation (without giving effect to the Restricted Stock transferred in such
Conversion Event) which possess in the aggregate the ordinary voting power to
elect a majority of the Corporation's directors;
(c)any sale of securities of the Corporation to a person or group of
persons (within the meaning of the 1934 Act) if, after such sale, such person or
group of persons would not, in the aggregate, own, control or have the right to
acquire more than two percent (2%) of the outstanding securities of any class of
voting securities of the Corporation; or
(d)a transaction approved in advance by the Board of Governors of the
Federal Reserve System as being in compliance with the requirements of the Bank
Holding Company Act.
5C. Conversion Price.
(i)The initial Conversion Price shall be $11.33. In order to prevent
dilution of the conversion rights granted under this Section 5, the Conversion
Price shall be subject to adjustment from time to time pursuant to this
paragraph 5C.
(ii) If and whenever on or after the original date of issuance of the
Preferred Stock the Corporation issues or sells, or in accordance with paragraph
5D is deemed to have issued or sold, any Additional Stock (as defined below) for
a consideration per share less than the Conversion Price in effect immediately
prior to the time of such issue or sale, then immediately upon such
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issue or sale or deemed issue or sale the Conversion Price shall be reduced to
the Conversion Price determined by dividing (a) the sum of (1) the product
derived by multiplying the Conversion Price in effect immediately prior to such
issue or sale by the number of shares of Common Stock Deemed Outstanding
immediately prior to such issue or sale, plus (2) the consideration, if any,
received by the Corporation upon such issue or sale, by (b) the number of shares
of Common Stock Deemed Outstanding immediately after such issue or sale.
(iii)"Additional Stock" shall mean any shares of Common Stock issued (or
deemed to have been issued pursuant to paragraph 5D) by the Corporation after
the original date of issuance of the Preferred Stock other than:
(A) 2,500,000 shares of Common Stock, issued or sold or (deemed issued or
sold) to employees, directors, consultants, vendors, lessors and lenders of the
Corporation and its Subsidiaries pursuant to stock option plans and stock
ownership plans not repurchased at cost by the Corporation and lease and loan
(as such number of shares is proportionately adjusted for subsequent stock
splits, combinations and dividends affecting the Common Stock and as such number
includes all such stock options and purchase rights outstanding at the time of
the issuance of the Preferred Stock);
(B)Shares of Common Stock issued pursuant to a transaction described in
paragraph 5E hereof;
(C)Capital stock or warrants or options to purchase capital stock issued
as consideration for bona fide acquisitions, mergers or similar transactions,
the terms of which are approved by the Board of Directors of the Corporation;
(D)Shares of Common Stock issued or issuable upon conversion of the
Preferred Stock;
(E)Shares of Common Stock issued or issuable in a Qualified Public
Offering prior to or in connection with which all outstanding shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock will be
converted to Common Stock; and
(F)Shares of Common Stock issued in connection with or pursuant to the
Recapitalization.
5D. Effect on Conversion Price of Certain Events. For purposes of
determining the adjusted Conversion Price under paragraph 5C, the following
shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any manner
grants or sells any Options and the price per share for which Common Stock is
issuable upon the exercise of such Options, or upon conversion or exchange of
any Convertible Securities issuable upon exercise of such Options, is less than
the Conversion Price in effect immediately prior to the time of the granting or
sale of such Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the exercise
of such Options shall be
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deemed to be outstanding and to have been issued and sold by the Corporation at
the time of the granting or sale of such Options for such price per share. For
purposes of this paragraph, the "price per share for which Common Stock is
issuable" shall be determined by dividing (A) the total amount, if any, received
or receivable by the Corporation as consideration for the granting or sale of
such Options, plus the minimum aggregate amount of additional consideration
payable to the Corporation upon exercise of all such Options, plus in the case
of such Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the Corporation upon the
issuance or sale of such Convertible Securities and the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock issuable upon
the exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options. No further
adjustment of the Conversion Price shall be made when Convertible Securities are
actually issued upon the exercise of such Options or when Common Stock is
actually issued upon the exercise of such Options or the conversion or exchange
of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation in any manner
issues or sells any Convertible Securities and the price per share for which
Common Stock is issuable upon conversion or exchange thereof is less than the
Conversion Price in effect immediately prior to the time of such issue or sale,
then the maximum number of shares of Common Stock issuable upon conversion or
exchange of such Convertible Securities shall be deemed to be outstanding and to
have been issued and sold by the Corporation at the time of the issuance or sale
of such Convertible Securities for such price per share. For the purposes of
this paragraph, the "price per share for which Common Stock is issuable" shall
be determined by dividing (A) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange thereof, by (B)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities. No further adjustment of the
Conversion Price shall be made when Common Stock is actually issued upon the
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustments of the Conversion Price had been or are to be made pursuant to
other provisions of this Section 5, no further adjustment of the Conversion
Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase price
provided for in any Options, the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities or the rate at which
any Convertible Securities are convertible into or exchangeable for Common Stock
changes at any time, the Conversion Price in effect at the time of such change
shall be immediately adjusted to the Conversion Price which would have been in
effect at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or sold;
provided that if such adjustment would result in an increase of the Conversion
Price then in effect, such adjustment shall not be effective until 30 days after
written notice thereof has been given by the Corporation to all holders of the
Preferred Stock.
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For purposes of paragraph 5D, if the terms of any Option or Convertible Security
which was outstanding as of the date of issuance of the Preferred Stock are
changed in the manner described in the immediately preceding sentence, then such
Option or Convertible Security and the Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have been issued as
of the date of such change; provided that no such change shall at any time cause
the Conversion Price hereunder to be increased.
(iv) Treatment of Expired Options and Unexercised Convertible Securities.
Upon the expiration of any Option or the termination of any right to convert or
exchange any Convertible Security without the exercise of any such Option or
right, the Conversion Price then in effect hereunder shall be adjusted
immediately to the Conversion Price which would have been in effect at the time
of such expiration or termination had such Option or Convertible Security, to
the extent outstanding immediately prior to such expiration or termination,
never been issued; provided that if such adjustment would result in an increase
of the Conversion Price then in effect, such adjustment shall not be effective
until 30 days after written notice thereof has been given by the Corporation to
all holders of the Preferred Stock. For purposes of paragraphs 5C and 5D, the
expiration or termination of any Option or Convertible Security which was
outstanding as of the date of issuance of the Preferred Stock shall not cause
the Conversion Price hereunder to be adjusted unless, and only to the extent
that, a change in the terms of such Option or Convertible Security caused it to
be deemed to have been issued after the date of issuance of the Preferred Stock.
(v) Calculation of Consideration Received. If any Common Stock, Option or
Convertible Security is issued or sold or deemed to have been issued or sold for
cash, the consideration received therefor shall be deemed to be the amount
received by the Corporation therefor (net of discounts, commissions and related
expenses). If any Common Stock, Option or Convertible Security is issued or sold
for a consideration other than cash, the amount of the consideration other than
cash received by the Corporation shall be the fair value of such consideration,
except where such consideration consists of securities, in which case the amount
of consideration received by the Corporation shall be the Market Price thereof
as of the date of receipt. If any Common Stock, Option or Convertible Security
is issued to the owners of the non-surviving entity in connection with any
merger in which the Corporation is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such Common Stock, Option or Convertible Security, as the case may be. The fair
value of any consideration other than cash and securities shall be determined in
good faith by the Board of Directors of the Corporation. If such parties are
unable to reach agreement within a reasonable period of time, the fair value of
such consideration shall be determined by an independent appraiser experienced
in valuing such type of consideration jointly selected by the Corporation and
the holders of a majority of the outstanding Preferred Stock. The determination
of such appraiser shall be final and binding upon the parties, and the fees and
expenses of such appraiser shall be borne by the Corporation.
(vi) Integrated Transactions. In case any Option is issued in connection
with the issue or sale of other securities of the Corporation, together
comprising one integrated transaction in
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which no specific consideration is allocated to such Option by the parties
thereto, the Option shall be deemed to have been issued for a consideration of
$0.01.
(vii) Treasury Shares. The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Corporation or any Subsidiary, and the disposition of any shares so owned
or held shall be considered an issue or sale of Common Stock.
(viii) Record Date. If the Corporation takes a record of the holders of
Common Stock for the purpose of entitling them (a) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (b) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or upon the making of such other distribution or
the date of the granting of such right of subscription or purchase, as the case
may be.
5E. Subdivision or Combination of Common Stock. If the Corporation at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced, and if the Corporation at any
time combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased. If the Corporation in any manner subdivides its
outstanding shares of Series A Preferred Stock into a greater number of shares,
then the Series B Preferred Stock shall be similarly subdivided and, if the
Corporation in any manner combines its outstanding shares of Series A Preferred
Stock into a smaller number of shares, then the number of shares of Series B
Preferred Stock immediately prior to such combination shall be proportionately
reduced.
5F. Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other transaction, in
each case which is effected in such a manner that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, other than
the Recapitalization, is referred to herein as an "Organic Change." Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Preferred Stock then outstanding) to insure that each of the holders of
Preferred Stock shall thereafter have the right to acquire and receive, in lieu
of or in addition to (as the case may be) the shares of Conversion Stock
immediately theretofore acquirable and receivable upon the conversion of such
holder's Preferred Stock, such shares of stock, securities or assets as such
holder would have received in connection with such Organic Change if such holder
had converted its Preferred Stock immediately prior to such Organic Change. In
each such case, the Corporation shall also make appropriate provisions (in form
and substance satisfactory to the holders of a majority of the
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Preferred Stock then outstanding) to insure that the provisions of this Section
5 and Section 6 hereof shall thereafter be applicable to the Preferred Stock
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Corporation, an
immediate adjustment of the Conversion Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of Conversion Stock
acquirable and receivable upon conversion of Preferred Stock, if the value so
reflected is less than the Conversion Price in effect immediately prior to such
consolidation, merger or sale). The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Corporation) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance satisfactory to the holders of a majority of the Preferred
Stock then outstanding), the obligation to deliver to each such holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
5G. Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 5 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the
Corporation's Board of Directors shall make an appropriate adjustment in the
Conversion Price so as to protect the rights of the holders of Preferred Stock;
provided that no such adjustment pursuant to this Section 5G shall increase the
Conversion Price as otherwise determined pursuant to this Section 5 or decrease
the number of shares of Conversion Stock issuable upon conversion of each Share
of Preferred Stock.
5H. Notices.
(i)Immediately upon any adjustment of the Conversion Price, the
Corporation shall give written notice thereof to all holders of Preferred Stock,
setting forth in reasonable detail and certifying the calculation of such
adjustment.
(ii)The Corporation shall give written notice to all holders of Preferred
Stock at least twenty (20) days prior to the date on which the Corporation
closes its books or takes a record (a) with respect to any dividend or
distribution upon Common Stock (other than the Recapitalization), (b) with
respect to any pro rata subscription offer to holders of Common Stock or (c) for
determining rights to vote with respect to any Organic Change, dissolution or
liquidation.
(iii)The Corporation shall also give written notice to the holders of
Preferred Stock at least twenty (20) days prior to the date on which any Organic
Change shall take place.
5I. Automatic Conversion of Preferred Stock to Common Stock.
(i)Each share of Preferred Stock shall automatically be converted into
corresponding shares of Conversion Stock at the Conversion Price (without the
payment of such Conversion Price) at the time in effect for such share
immediately upon the earlier of (i) the Corporation's
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sale of its Common Stock in a Qualified Public Offering or (ii) the date
specified by written consent or agreement of the holders of 67 percent of the
then outstanding shares of Preferred Stock. Any such automatic conversion shall
only be effected at the time of and subject to the closing of the sale of such
shares pursuant to such Qualified Public Offering and upon written notice of
such automatic conversion delivered to all holders of Preferred Stock at least
seven (7) days prior to such closing.
5J. Automatic Conversion of Series A Preferred Stock or Series C
Preferred Stock to Series B Preferred Stock.
Notwithstanding anything in these Articles to the contrary, if at any
time, any holder of capital stock of the Corporation or group (within the
meaning of Section 13(d)(3) of the 1934 Act) including any such holder would
hold more than 49 percent of the aggregate voting power of the capital stock of
the Corporation then outstanding, all shares of voting capital stock with voting
power greater than 49 percent held by such holder shall, immediately prior to
such time, automatically convert into shares of the Corporation's non-voting
capital stock in accordance with the Conversion Priority. In addition, if at any
time, a Regulated Shareholder together with any affiliates thereof collectively
would hold more than 4.9 percent of all of voting power of any class of voting
capital stock of the Corporation then outstanding, all shares of voting capital
stock with voting power greater than 4.9 percent of such class held by the
Regulated Shareholder together with any affiliates thereof shall, immediately
prior to such time, automatically convert into shares of the Corporation's
non-voting capital stock of such class or series, as the case may be.
Section 6. Purchase Rights.
If at any time the Corporation grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock
generally (the "Purchase Rights"), then each holder of Preferred Stock shall be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such holder could have acquired if such holder
had held the number of shares of Conversion Stock acquirable upon conversion of
such holder's Preferred Stock immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights; provided
that if the Purchase Rights involve voting securities, the Corporation shall
make available to each holder of Series B Preferred Stock, at such holder's
request, Purchase Rights involving securities which are non-voting (except as
otherwise required by law), which are otherwise identical to the Purchase Rights
involving voting securities and which are convertible into such voting
securities on the same terms as Class B Common Stock is convertible into Class A
Common Stock.
Section 7. Registration of Transfer.
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The Corporation shall keep at its principal office (or such other place
as the Corporation reasonably designates) a register for the registration of
shares of Preferred Stock. Upon the surrender of any certificate representing
shares of any series of Preferred Stock at such place, the Corporation shall, at
the request of the registered shareholder of such certificate, execute and
deliver a new certificate or certificates in exchange therefor representing in
the aggregate the number of shares of such series represented by the surrendered
certificate, and the Corporation forthwith shall cancel such surrendered
certificate. Each such new certificate will represent such number of shares of
such series as is requested by the shareholder of the surrendered certificate
and will be substantially identical in form to the surrendered certificate.
Subject to any other restrictions on transfer to which such shareholder or such
shares may be bound, the Corporation will also register such new certificate in
such name as requested by the holder of the surrendered certificate.
Section 8. Replacement.
Upon receipt of evidence reasonably satisfactory to the Corporation (an
affidavit of the registered holder shall be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing Shares
of Preferred Stock, and in the case of any such loss, theft or destruction, upon
receipt of indemnity reasonably satisfactory to the Corporation (provided that
if the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Corporation shall (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the number of Shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.
Section 9. Definitions.
"Affiliate" shall mean with respect to any person, any other person,
directly or indirectly controlling, controlled by or under common control with
such person. For the purpose of the above definition, the term "control"
(including with correlative meaning, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"Bank Holding Company Act" shall mean the Bank Holding Company Act of
1956, as amended and any rules and regulations or interpretations promulgated
thereunder (including without limitation, Regulation Y of the Board of Governors
of the Federal Reserve System, 12 CAR Part 225 or any successor to such
Regulation) by the Board of Governors of the Federal Reserve System.
"Change in Control" means the occurrence of any of the following events:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the 1934
Act) is or becomes the
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"beneficial owner" (as defined in Rule 13d-3 under said 1934 Act), directly or
indirectly, of securities of the Corporation representing 50 percent or more of
the total voting power represented by the Corporation's then outstanding voting
securities; or (ii) the consummation of a merger or consolidation of the
Corporation with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 50 percent of the total voting power represented by the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation, (iii) or the shareholders of the Corporation
approve a plan of complete liquidation of the Corporation or (iv) the
consummation of the sale or disposition by the Corporation of all or
substantially all of the Corporation's assets. Notwithstanding anything herein
to the contrary, the Recapitalization shall not be deemed a Change in Control.
"Common Stock" means, collectively, the Corporation's Class A Common
Stock, par value $0.001 per share, the Corporation's Class B Common Stock, par
value $0.001 per share, the Corporation's Class C Common Stock, par value $0.001
per share, and any capital stock of any class of the Corporation hereafter
authorized which is not limited to a fixed sum or percentage of par or stated
value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
"Common Stock Deemed Outstanding" means, at any given time, the number of
shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to subparagraphs 5D(i)
and 5D(ii) hereof whether or not the Options or Convertible Securities are
actually exercisable at such time, but excluding any shares of Common Stock
issuable upon conversion of the Preferred Stock.
"Conversion Priority" means that in the event of an automatic conversion
of the voting capital stock into non-voting capital stock pursuant to (i)
Article Fourth, Subdivision I, Section 5, Paragraph 5J, (ii) Article Fourth,
Subdivision II, Section 4 and (iii) Article Fourth, Subdivision IV, Section 4,
then the priority of conversion for all shares of voting capital stock held by
an affected holder with voting power greater than 49 percent of the total voting
power of the outstanding capital stock of the Corporation shall be (a) Class A
Common Stock into Class B Common Stock first, (b) Class C Common Stock into
Class B Common Stock second (if additional voting capital stock must be
automatically converted), (c) Series A Preferred Stock into Series B Preferred
Stock third (if additional voting capital stock must be automatically
converted), and (d) Series C Preferred Stock into Series B Preferred Stock (if
additional voting capital stock must be automatically converted).
"Conversion Stock" with respect to (i) the Series A Preferred Stock,
means shares of the Corporation's Class A Common Stock, par value $0.001 per
share (ii) the Series B Preferred Stock, means shares of the Corporation's Class
B Common Stock, par value $0.001 per share and (iii) the Series C Preferred
Stock, means shares of the Corporation's Class C Common Stock, par
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value $0.001 per share; provided that if there is a change such that the
securities issuable upon conversion of the Preferred Stock are issued by an
entity other than the Corporation or there is a change in the type or class of
securities so issuable, then the term "Conversion Stock" shall mean one share of
the security issuable upon conversion of the Preferred Stock if such security is
issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
"Convertible Securities" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock.
"Fundamental Change" means (a) any sale or transfer of more than 50
percent of the assets of the Corporation and its Subsidiaries on a consolidated
basis (measured either by book value in accordance with generally accepted
accounting principles consistently applied or by fair market value determined in
the reasonable good faith judgment of the Corporation's Board of Directors) in
any transaction or series of transactions (other than sales in the ordinary
course of business) and (b) any merger or consolidation to which the Corporation
is a party, except for a merger in which the Corporation is the surviving
corporation, the terms of the Preferred Stock are not changed and the Preferred
Stock is not exchanged for cash, securities or other property, and after giving
effect to such merger, the holders of the Corporation's outstanding capital
stock possessing the voting power (under ordinary circumstances) to elect a
majority of the Corporation's Board of Directors immediately prior to the merger
shall continue to own the Corporation's outstanding capital stock possessing the
voting power (under ordinary circumstances) to elect a majority of the
Corporation's Board of Directors; provided that a merger or other transaction
conducted for the sole purpose of changing the Corporation's domicile shall not
be considered a Fundamental Change. Notwithstanding anything herein to the
contrary, the Recapitalization shall not be considered a Fundamental Change.
"Junior Securities" means any capital stock or other equity securities of
the Corporation, except for (i) the Preferred Stock and (ii) the 12 1/2% Senior
Exchangeable Preferred Stock and the 12 1/2% Series B Senior Exchangeable
Preferred Stock which are to be designated by the Board of Directors in
connection with the Recapitalization.
"Liquidation Value" of any Share as of any particular date shall be equal
to $11.33.
"Market Price" of any security means the average of the closing prices of
such security's sales on the principal securities exchange on which such
security may at the time be listed, or, if there has been no sales on such
exchange on any day, the average of the highest bid and lowest asked prices on
such exchange at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of 21 days consisting of the day as of
which "Market Price" is being determined and the 20 consecutive business days
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prior to such day. If at any time such security is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
"Market Price" shall be the fair value thereof determined by the Corporation's
Board of Directors. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an independent
appraiser experienced in valuing securities jointly selected by the Corporation
and the holders of a majority of the Preferred Stock. The determination of such
appraiser shall be final and binding upon the parties, and the Corporation shall
pay the fees and expenses of such appraiser.
"Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
"Person" means an individual, a partnership, a corporation, a limited
liability company, a limited liability, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political Subdivision thereof.
"Qualified Public Offering" means any offering by the Corporation of its
capital stock or equity securities to the public pursuant to an effective
registration statement under the Securities Act of 1933, as then in effect, or
any comparable statement under any similar federal statute then in force
pursuant to which the public offering price per share of which is not less than
$14.00 (adjusted to reflect stock dividends, stock splits or recapitalizations)
after the date hereof and results in aggregate gross cash proceeds to the
Corporation of at least $30,000,000 (before deduction of underwriting discounts
and expenses).
"Recapitalization" means the transactions contemplated by the
Recapitalization Agreement.
"Recapitalization Agreement" means the Amended and Restated
Recapitalization Agreement, dated as of February 1, 1998, by and among the
Corporation, Micron Electronics, Inc., MEI California, Inc. and certain
investors, as such agreement may from time to time be amended in accordance with
its terms.
"Regulated Shareholder" shall mean any shareholder (i) that is subject to
the provisions of the Bank Holding Company Act and (ii) that holds shares of
capital stock of the Corporation.
"Regulatory Problem" shall mean, with respect to any shareholder, any set
of facts, events or circumstances the existence of which would cause such
shareholder to believe that there is a substantial risk of assertion by a
governmental entity (which belief shall be reasonable in connection with the
prevailing regulatory environment) that such shareholder is or would be in
violation of any law, regulation, rule or other requirement of any governmental
authority (including without limitation, the Bank Holding Company Act).
"Restricted Stock" shall mean Class B Common Stock or Series B Preferred
Stock ever held of record by any Regulated Shareholder or its Affiliates,
excluding treasury shares;
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provided, however, that any such shares shall cease to be Restricted Stock when
such shares are transferred in a transaction which is a Conversion Event, a
transaction approved in advance by the Board of Governors of the Federal Reserve
System as being in compliance with the requirements of the Bank Holding Company
Act or are acquired by the Corporation or any subsidiary of the Corporation, as
the case may be.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control the managing general partner of such limited liability
company, partnership, association or other business entity.
Section 10. Amendment and Waiver.
No amendment, modification or waiver shall be binding or effective with
respect to any provision of Sections 1 to 11 hereof without the prior written
consent of the holders of at least 67 percent of the Preferred Stock outstanding
at the time such action is taken; provided that no such action shall change (a)
the Conversion Price of the Preferred Stock or the number of shares or class of
stock into which the Preferred Stock is convertible, without the prior written
consent of the holders of at least 75 percent of the Preferred Stock then
outstanding or (b) the percentage of Preferred Stock required to approve any
change described in clause (a) above, without the prior written consent of the
holders of at least 75 percent of the Preferred Stock then outstanding; and
provided further that no change in the terms hereof may be accomplished by
merger or consolidation of the Corporation with another corporation or entity
unless the Corporation has obtained the prior written consent of the holders of
the applicable percentage of the Preferred Stock then outstanding and provided
further that (i) no change, amendment, modification or waiver shall be made
which adversely affects one class of Common Stock in a manner differently than
each other class of Common Stock without the consent of each holder of such
class of Common Stock, (ii) no change, amendment, modification or waiver shall
be made which adversely affects one series of Preferred Stock in a manner
differently than each other series of Preferred Stock without the consent of
each holder of such series of Preferred Stock and (iii) no change, amendment,
modification or waiver shall be made to the ability of each class and series to
convert to non-voting classes and series of common and preferred stock.
Section 11. Notices.
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Except as otherwise expressly provided hereunder, all notices referred to
herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested and postage prepaid, or by reputable overnight
courier service, charges prepaid, and shall be deemed to have been given when so
mailed or sent (i) to the Corporation, at its principal executive offices and
(ii) to any shareholder, at such holder's address as it appears in the stock
records of the Corporation (unless otherwise indicated by any such holder).
II. CLASS A COMMON STOCK
Section 1. Dividends.
The holders of shares of Class A Common Stock shall be entitled to
receive such dividends as from time to time may be declared by the Board of
Directors of the Corporation, subject to the provisions of Subdivision I of this
Article Fourth with respect to the rights of holders of the Preferred Stock and
subject to the simultaneous payment of equivalent dividends on the Class B
Common Stock and Class C Common Stock as set forth in Subdivisions III and IV
hereof.
Section 2. Liquidation.
Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment in full of the amounts to be
paid to holders of Preferred Stock pursuant to Subdivision I, Section 2 hereof,
the holders of Class A Common Stock, the holders of Class B Common Stock, and
the holders of Class C Common Stock shall share ratably based upon the number of
shares of Common Stock held by them in all remaining assets of the Corporation
available for distribution to its shareholders.
Section 3. Voting Rights.
Except as otherwise required by law and subject to the provisions set
forth in this Article Fourth, the holders of shares of Common Stock issued and
outstanding and Preferred Stock issued and outstanding shall vote together as a
single class on all matters subject to shareholder approval. Notwithstanding the
foregoing, the holders of Class A Common Stock shall have no right to vote
except as set forth in this section and as otherwise expressly required by law.
All shares of Class A Common Stock shall be identical with each other in
every respect. The shares of Class A Common Stock shall entitle the holders
thereof to one vote for each share upon all matters upon which shareholders have
the right to vote.
Section 4. Conversion.
(i)Shares of Class A Common Stock held by a Substantial Shareholder, a
Regulated Shareholder or any of their affiliates may be converted, at the option
of the holder thereof at any time, into an equal number of fully paid and
non-assessable shares of Class B Common Stock.
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The Corporation shall at all times take such action as is necessary to assure
that an adequate number of shares of Class B Common Stock is available and
reserved for issuance upon conversion of all outstanding shares of Class A
Common Stock. The Corporation will not take any action with respect to any
series or class of its capital stock if subsequent to such action the provisions
of the preceding sentence could not be complied with.
(ii)Notwithstanding anything in these Articles to the contrary, if at any
time, any holder of capital stock of the Corporation or group (within the
meaning of Section 13(d)(3) of the 1934 Act) including such holder would hold
more than 49 percent of the aggregate voting power of the capital stock of the
Corporation then outstanding, all shares of voting capital stock with voting
power greater than 49 percent held by such holder shall, immediately prior to
such time, automatically convert into shares of the Corporation's non-voting
capital stock in accordance with the Conversion Priority. In addition, if at any
time, a Regulated Shareholder together with any affiliates thereof collectively
would hold more than 4.9 percent of the aggregate voting power of any class of
voting capital stock of the Corporation then outstanding, all shares of voting
capital stock with voting power greater than 4.9 percent of such class held by
such Regulated Shareholder together with any affiliates thereof shall,
immediately prior to such time, automatically convert into shares of the
Corporation's non-voting capital stock of such class or series, as the case may
be.
III. CLASS B COMMON STOCK
Section 1. Dividends.
The holders of shares of Class B Common Stock shall be entitled to
receive such dividends as from time to time may be declared by the Board of
Directors of the Corporation, subject to the provisions of Subdivision I of this
Article Fourth with respect to the rights of holders of the Preferred Stock.
Such dividends shall be equivalent in every respect to dividends declared on
Class A Common Stock and Class C Common Stock; provided, however, that in the
event that the holders of Class A Common Stock receive a dividend payable in
shares of Class A Common Stock or Class C Common Stock, then holders of Class B
Common Stock shall receive a number of shares of Class B Common Stock which is
equal to the number of shares of Class A Common Stock or Class C Common Stock
which they would, but for this proviso, have received pursuant to this
paragraph.
Section 2. Liquidation.
Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment in full of the amounts to be
paid to holders of Preferred Stock pursuant to Subdivision I, Section 2 hereof,
the holders of Class A Common Stock, the holders of Class B Common Stock, and
the holders of the Class C Common Stock shall share ratably based upon the
number of shares of Common Stock held by them in all remaining assets of the
Corporation available for distribution to its shareholders.
Section 3. Voting Rights.
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Except as otherwise required by law and subject to the provision set
forth in this Article Fourth, the holders of shares of Common Stock issued and
outstanding and Preferred Stock issued and outstanding shall vote together as a
single class on all matters subject to shareholder approval. Notwithstanding the
foregoing, the holders of Class B Common Stock shall have no right to vote
except as set forth in this section and as otherwise expressly required by law.
In the event a right to vote expressly required by law arises, each
holder of Class B Common Stock (i) shall be entitled to vote, together as a
single class with the holders of the Class A Common Stock, (ii) shall be
entitled to one vote for each share of Class A Common Stock that would be
issuable to such holder upon the conversion of all of the shares of Class B
Common Stock held by such holder on the record date for determination of
shareholders entitled to vote and (iii) shall be entitled to notice of any
shareholders meeting in accordance with the Bylaws of the Corporation.
Section 4. Conversion.
(i)Subject to and upon compliance with the provisions of this section,
each holder of Class B Common Stock shall be entitled at any time and from time
to time in such shareholder's sole discretion and at such shareholder's option,
to convert any or all of the shares of Class B Common Stock held by such
shareholder into the same number of shares of Class A Common Stock; provided,
however, that no holder of Class B Common Stock shall be entitled to convert
shares of Class B Common Stock into Class A Common Stock, if and to the extent
that after giving effect to such conversion, such holder (together with other
persons within the same "group" (within the meaning of Section 13(d)(3) of the
1934 Act)) holds shares of capital stock of the Corporation representing more
than 49% of the voting power of the then outstanding capital stock of the
Corporation; and provided, further, that, Class B Common Stock that is
Restricted Stock may not be converted into Class A Common Stock, if and to the
extent that immediately prior thereto, or as a result of such conversion, with
respect to such Restricted Stock, the Regulated Shareholder who owns or has
owned such Restricted Stock, reasonably determines that the issuance of shares
of Class A Common Stock upon the conversion of such Restricted Stock would
result in a Regulatory Problem for such Regulated Shareholder.
(ii)Each share of Class B Common Stock shall automatically be converted
into a share of Class A Common Stock immediately upon the Corporation's sale of
its Common Stock in a Qualified Public Offering. Any such automatic conversion
shall only be effected at the time of and subject to the closing of the sale of
such shares pursuant to such Qualified Public Offering and upon written notice
of such automatic conversion delivered to all holders of Class B Common Stock at
least seven (7) days prior to such closing. Notwithstanding anything herein to
the contrary, no shares of Class B Common Stock held by any holder or group
(within the meaning of Section 13(d)(3) of the 1934 Act) of holders or a
Regulated Shareholder together with any affiliates thereof as the case may be,
shall be converted into shares of Class A Common Stock to the extent such
conversion, if after giving effect to the Qualified Public Offering, would
increase the voting power of capital stock held by such holders or group (within
the meaning of
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Section 13(d)(3) of the 1934 Act) of holders or Regulated Shareholder together
with any affiliates thereof above 49 percent or 4.9 percent, respectively, of
the voting power of the then outstanding capital stock of the Corporation.
IV. CLASS C COMMON STOCK
Section 1. Dividends.
The holders of shares of Class C Common Stock shall be entitled to
receive such dividends as from time to time may be declared by the Board of
Directors of the Corporation, subject to the provisions of Subdivision I of this
Article Fourth with respect to the rights of holders of the Preferred Stock and
subject to the simultaneous payment of equivalent dividends on the Class A
Common Stock and Class B Common Stock as set forth in Subdivisions II and III
hereof.
Section 2. Liquidation.
Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment in full of the amounts to be
paid to holders of Preferred Stock pursuant to Subdivision I, Section 2 hereof,
the holders of Class A Common Stock, the holders of Class B Common Stock, and
the holders of Class C Common Stock shall share ratably based upon the number of
shares of Common Stock held by them in all remaining assets of the Corporation
available for distribution to its shareholders.
Section 3. Voting Rights.
Except as otherwise required by law and subject to the provision set
forth in this Article Fourth, the holders of shares of Common Stock issued and
outstanding and Preferred Stock issued and outstanding shall vote together as a
single class on all matters subject to shareholder approval. Notwithstanding the
foregoing, the holders of Class C Common Stock shall have no right to vote
except as set forth in this section and as otherwise expressly required by law.
All shares of Class C Common Stock shall be identical with each other in
every respect. The shares of Class C Common Stock shall entitle the holders
thereof to two votes for each share upon all matters upon which shareholders
have the right to vote.
Section 4. Conversion.
(i)Shares of Class C Common Stock held by any holder of capital stock or
group (within the meaning of Section 13(d)(3) of the 1934 Act) including such
holder owning 49% or more of the voting power of the outstanding capital stock
of the Corporation or a Regulated Shareholder together with any of their
affiliates may be converted, at the option of such holder at any time, into an
equal number of fully paid and non-assessable shares of Class B Common Stock.
The Corporation shall at all times take such action as is necessary to assure
that an adequate number of shares of Class B Common Stock is available and
reserved for issuance upon conversion of all
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outstanding shares of Class C Common Stock. The Corporation will not take any
action with respect to any series or class of its capital stock if subsequent to
such action the provisions of the preceding sentence could not be complied with.
(iii)Each share of Class C Common Stock shall automatically be converted
into a share of Class A Common Stock immediately upon the Corporation's sale of
its Common Stock in a Qualified Public Offering. Any such automatic conversion
shall only be effected at the time of and subject to the closing of the sale of
such shares pursuant to such Qualified Public Offering and upon written notice
of such automatic conversion delivered to all holders of Class C Common Stock at
least seven (7) days prior to such closing.
(iv)Notwithstanding anything in these Articles to the contrary, if at any
time, any holder of capital stock of the Corporation or group (within the
meaning of Section 13(d)(3) of the 1934 Act) including such holder would hold
more than 49 percent of the aggregate voting power of the capital stock of the
Corporation then outstanding, all shares of voting capital stock with voting
power greater than 49 percent held by any such holder shall, immediately prior
to such time, automatically convert into shares of the Corporation's non-voting
capital stock in accordance with the Conversion Priority. In addition, if at any
time, a Regulated Shareholder together with any affiliates thereof collectively
would hold more than 4.9 percent of the aggregate voting power of any class of
voting capital stock of the Corporation then outstanding, all shares of voting
capital stock with voting power greater than 4.9 percent of such class held by
such Regulated Shareholder together with any affiliates thereof shall,
immediately prior to such time, automatically convert into shares of the
Corporation's non-voting capital stock of such class or series, as the case may
be.
V. PROVISIONS RELATING TO ALL CLASSES OF COMMON STOCK
Section 1. Conversion Procedure.
Each conversion of shares of one class of Common Stock of the Corporation
into shares of another class of Common Stock of the Corporation shall be
effected by the surrender of the certificate or certificates representing the
shares to be converted (the "Converting Shares") at the principal office of the
Corporation (or such other office or agency of the Corporation as the
Corporation may designate by written notice to the holders of Common Stock) at
any time during its usual business hours, together with written notice by the
holder of such Converting Shares, stating that such shareholder desires to
convert the Converting Shares, or a stated number of the shares represented by
such certificate or certificates, into an equal number of shares of the other
class of Common Stock (the "Converted Shares"). Such notice shall also state the
name or names (with addresses) and denominations in which the certificate or
certificates for Converted Shares are to be issued and shall include
instructions for the delivery thereof. The Corporation shall promptly notify
each Regulated Shareholder of its receipt of such notice. Promptly after such
surrender and the receipt of such written notice, the Corporation will issue and
deliver in accordance with the surrendering shareholder's instructions the
certificate or certificates
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evidencing the Converted Shares issuable upon such conversion, and the
Corporation will deliver to the converting shareholder a certificate (which
shall contain such legends as were set forth on the surrendered certificate or
certificates) representing the shares which were represented by the certificate
or certificates that were delivered to the Corporation in connection with such
conversion, but which were not converted; provided, however, that if such
conversion is subject to Section 2 of this Subdivision VI, the Corporation shall
not issue such certificate or certificates until the expiration of the Deferral
Period referred to therein. Such conversion, to the extent permitted by law,
shall be deemed to have been effected as of the close of business on the date on
which such certificate or certificates shall have been surrendered and such
notice shall have been received by the Corporation, and at such time the rights
of the holder of the Converting Shares as such shareholder shall cease (except
that, in the case of a conversion subject to Section 2 of this Subdivision VI,
the conversion shall be deemed to be effective upon the expiration of the
Deferral Period referred to therein) and the person or persons in whose name or
names the certificate or certificates for the Converted Shares are to be issued
upon such conversion shall be deemed to have become the shareholder or
shareholders of record of the Converted Shares. Upon issuance of shares in
accordance with this Subdivision VI, such Converted Shares shall be duly
authorized, validly issued, fully paid and non-assessable. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Common Stock may be listed (except for official notice of
issuance which will be immediately transmitted by the Corporation upon
issuance). This Corporation shall not close its books against the transfer of
shares of Common Stock in any manner which would interfere with the timely
conversion of any shares of Common Stock. Notwithstanding the foregoing, in the
event such Regulated Shareholder or any affiliate thereof collectively holds
more than an amount equal to 4.9 percent of the aggregate amount of voting
capital stock of the Corporation then outstanding, all shares of voting capital
stock greater than 4.9 percent shall automatically convert into shares of the
Corporation's non-voting Class B Common Stock or Series B Preferred Stock, as
the case may be.
Section 2. Restrictions on Redemptions, Etc.
(1)The Corporation shall not redeem, purchase, acquire or take any other
action affecting outstanding shares of Common Stock or Preferred Stock if, after
giving effect to such redemption, purchase, acquisition or other action, a
Regulated Shareholder (other than any such shareholder which requested that the
Corporation take such action, or which otherwise waives in writing its rights
under this paragraph (1) of this section) would own more than 4.9 percent of the
voting power of any class of voting capital stock of the Corporation then
outstanding (determined by assuming such Regulated Shareholder (but no other
shareholder) has exercised, converted or exchanged all of its options, warrants
and other convertible or exchangeable securities) unless the Corporation gives
written notice (the "Deferral Notice") of such action to each Regulated
Shareholder. The Corporation will defer making any such conversion, redemption,
purchase or other acquisition, or taking any such other action for a period of
twenty (20) days (the "Deferral Period") after the receipt of the Deferral
Notice by each Regulated Shareholder in order to allow each Regulated
Shareholder to determine whether it wishes to
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convert or take any other action with respect to the Common Stock or Preferred
Stock it owns, controls or has the power to vote. Upon complying with the
procedures hereinabove set forth in this paragraph (1), the Corporation may so
convert or directly or indirectly redeem, purchase or otherwise acquire any
shares of Common Stock or any other class of capital stock of the Corporation or
take any other action affecting the voting rights of such shares.
(2)The Corporation shall not redeem, purchase, acquire or take any other
action affecting outstanding shares of Common Stock or Preferred Stock if, after
giving effect to such redemption, purchase, acquisition or other action, a
Regulated Shareholder would own more than 24.9 percent of the total equity of
the Corporation or more than 24.9 percent of the total value of all capital
stock of the Corporation (determined by assuming such Regulated Shareholder (but
no other shareholder) has exercised, converted or exchanged all of its options,
warrants and other convertible or exchangeable securities).
Section 3. Stock Splits; Adjustment.
If the Corporation shall in any manner subdivide (by stock split, stock
dividend or otherwise) or combine (by reverse stock split or otherwise) the
outstanding shares of the Class A Common Stock, the Class B Common Stock or the
Class C Common Stock, then the outstanding shares of each other class of Common
Stock shall be subdivided or combined, as the case may be, to the same extent,
shares and share alike, and effective provision shall be made for the protection
of the conversion rights hereunder.
In case of any reorganization, reclassification or change of shares of
the Class A Common Stock, the Class B Common Stock or the Class C Common Stock
(other than a change in par value or from par to not par value or as a result of
subdivision or combination), or in the case of any consolidation of the
Corporation with one or more corporations or a merger of the Corporation with
another corporation (other than a consolidation or merger in which the
Corporation is the resulting or surviving corporation and which does not result
in any reclassification or change of outstanding shares of Class A Common Stock,
Class B Common Stock or Class C Common Stock), each holder of Class A Common
Stock, Class B Common Stock or Class C Common Stock shall receive the same type,
kind and amount of shares of stock and other securities and properties
(including cash) receivable upon such reorganization, reclassification, change,
consolidation or merger, with respect to each share of Class A Common Stock,
Class B Common Stock and Class C Common Stock held; provided, however, that each
Regulated Shareholder shall receive non-voting capital stock or cash at the
discretion of the Corporation in lieu of and to the extent that any such asset
distribution would cause a Regulatory Problem, with respect to such Regulated
Shareholder. In the event of such reorganization, reclassification, change,
consolidation or merger, effective provision shall be made in the Articles of
Incorporation or other operative document of the resulting or surviving
corporation or otherwise which shall entitle holders of such other shares of
stock and other securities and property deliverable to holders of Class A Common
Stock, Class B Common Stock or Class C Common Stock to the conversion rights of
the Class A Common Stock, Class B Common Stock and Class C Common Stock, as near
as reasonably practicable.
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Section 4. Reservation of Shares.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Class A Common Stock, Class B Common Stock and
Class C Common Stock or its treasury shares, solely for the purpose of issuance
upon the conversion of shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Class A Common Stock, Class B Common Stock and
Class C Common Stock, such number of shares of such class as are then issuable
upon the conversion of all outstanding shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Class A Common Stock, Class
B Common Stock and Class C Common Stock which may be converted.
Section 5. No Charge.
The issuance of certificates for shares of any class of Common Stock
(upon conversion of shares of any other class of Common Stock or otherwise)
shall be made without charge to the holders of such shares for any issuance tax
in respect thereof or other cost incurred by the Corporation in connection with
such conversion and/or the issuance of shares of Common Stock; provided,
however, that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Common Stock
converted.
Section 6. Registration of Transfer.
The Corporation shall keep at its principal office (or such other place
as the Corporation reasonably designates) a register for the registration of
shares of Common Stock. Upon the surrender of any certificate representing
shares of any class of Common Stock at such place, the Corporation shall, at the
request of the registered shareholder of such certificate, execute and deliver a
new certificate or certificates in exchange therefor representing in the
aggregate the number of shares of such class represented by the surrendered
certificate, and the Corporation forthwith shall cancel such surrendered
certificate. Each such new certificate will represent such number of shares of
such class as is requested by the shareholder of the surrendered certificate and
will be substantially identical in form to the surrendered certificate. Subject
to any other restrictions on transfer to which such shareholder or such shares
may be bound, the Corporation will also register such new certificate in such
name as requested by the holder of the surrendered certificate.
ARTICLE FIVE
The directors shall have the power to adopt, amend or repeal
By-Laws, except as may be otherwise be provided in the By-Laws.
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ARTICLE SIX
The Corporation expressly elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware.
ARTICLE SEVEN
Section 1. Nature of Indemnity. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he (or a person of whom
he is the legal representative), is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee,
fiduciary or agent or in any other capacity while serving as a director,
officer, employee, fiduciary or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent which it is empowered to do so by the
General Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment) against all expense, liability and loss (including attorneys' fees
actually and reasonably incurred by such person in connection with such
proceeding and such indemnification shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, except as provided
in Section 2 of this Article Seven, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding initiated by such
person only if such proceeding was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this Article Seven shall
be a contract right and, subject to Sections 2 and 5 of this Article Seven,
shall include the right to payment by the Corporation of the expenses incurred
in defending any such proceeding in advance of its final disposition. The
Corporation may, by action of the Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
Section 2. Procedure for Indemnification of Directors and
Officers. Any indemnification of a director or officer of the Corporation under
Section 1 of this Article Seven or advance of expenses under Section 5 of this
Article Seven shall be made promptly, and in any event within 30 days, upon the
written request of the director or officer. If a determination by the
Corporation that the director or officer is entitled to indemnification pursuant
to this Article Seven is required, and the Corporation fails to respond within
sixty days to a written request for indemnity, the Corporation shall be deemed
to have approved the request. If the Corporation denies a written request for
indemnification or advancing of expenses, in whole or in part, or if payment in
full pursuant to such request is not made within 30 days, the right to
indemnification or advances as granted by this Article Seven shall be
enforceable by the director or officer in any
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court of competent jurisdiction. Such person's costs and expenses incurred in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the Corporation. Neither the failure of the
Corporation (including the Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the Corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 3. Nonexclusivity of Article Seven. The rights to
indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Article Seven shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the certificate of incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 4. Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the Corporation or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the Corporation would have the power
to indemnify such person against such liability under this Article Seven.
Section 5. Expenses. Expenses incurred by any person described in
Section 1 of this Article Seven in defending a proceeding shall be paid by the
Corporation in advance of such proceeding's final disposition, unless otherwise
determined by the Board of Directors in the specific case after consultation
with legal counsel, upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered by
the foregoing provisions of this Article Seven and who are or were employees or
agents of the Corporation, or who are or were serving at the request of the
Corporation as employees or agents
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of another corporation, partnership, joint venture, trust or other enterprise,
may be indemnified to the extent authorized at any time or from time to time by
the Board of Directors.
Section 7. Contract Rights. The provisions of this Article Seven
shall be deemed to be a contract right between the Corporation and each director
or officer who serves in any such capacity at any time while this Article Seven
and the relevant provisions of the General Corporation Law of the State of
Delaware or other applicable law are in effect, and any repeal or modification
of this Article Seven or any such law shall not affect any rights or obligations
then existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article
Seven, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
Seven with respect to the resulting or surviving corporation as he or she would
have with respect to such constituent corporation if its separate existence had
continued.
ARTICLE EIGHT
The Corporation reserves the right to amend or repeal any
provisions contained in this Certificate of Incorporation from time to time and
at any time in the manner now or hereafter prescribed by the laws of the State
of Delaware, and all rights conferred upon stockholders and directors are
granted subject to such reservation.
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