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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
GILAT-TO-HOME INC.
GILAT-TO-HOME INC., a corporation organized and existing under and by
virtue of the Delaware General Corporation Law (herein after called the
"Corporation"), for the purposes of changing its corporate name, does hereby
certify that:
FIRST: The Certificate of Incorporation of the Corporation is hereby
amended so that the first paragraph shall henceforth read in its entirety
as follows:
"FIRST: The name of the corporation is "StarBand Communications
Inc." (the "Corporation")."
SECOND: The Board of Directors of the Corporation, acting by written
consent, adopted resolutions declaring advisable the above stated
amendment to the Certificate of Incorporation. The stockholders approved by
written consent the proposed amendment, whereupon such consent was placed
with the minutes of the Corporation and became the evidence of the
stockholder action so taken.
THIRD: The amendment is hereby duly adopted, executed and filed in
accordance with Sections 242 and 103, respectively, of the Delaware General
Corporation Law.
IN WITNESS WHEREOF, said Corporation has caused this Certificate to be
signed by its duly authorized officer, this 11th day of September, 2000.
GILAT-TO-HOME INC.
By: /s/ ZUR FELDMAN
-------------------------------
Name: Zur Feldman
Title: Co-Chairman and Chief
Executive Officer, Director
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Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GILAT-TO-HOME, INC.
* * * * *
PURSUANT TO SECTIONS 242 AND 245 OF THE DELAWARE GENERAL CORPORATION LAW
* * * * *
Gilat-to-Home Inc., a Delaware corporation (the "Corporation"), hereby
certifies as follows:
1. The certificate of incorporation (the "Original Charter") of the
Corporation was filed in the office of the Secretary of State of the State of
Delaware on January 11, 2000.
2. The Original Charter was amended and restated pursuant to Section 242
and Section 245 of the General Corporation Law of the State of Delaware in an
amended and restated certificate of incorporation (the "Amended Charter") of the
Corporation, which was filed in the office of the Secretary of State of the
State of Delaware on March 14, 2000.
3. The Amended Charter was amended and restated pursuant to Section 242
and 245 of the General Corporation Law of the State of Delaware in an amended
and restated certificate (the "Second Amended Charter") of the Corporation,
which was filed in the office of the Secretary of State of the State of Delaware
on April 10, 2000, and all amendments to the Amended Charter reflected in the
Second Amended Charter had been duly proposed by the Board of Directors of the
Corporation and duly adopted by the stockholders of the Corporation in
accordance with the provisions of such Sections.
4. The Second Amended Charter is hereby further amended and restated
pursuant to Section 242 and Section 245 of the General Corporation Law of the
State of Delaware and all amendments to the Second Amended Charter reflected
herein have been duly proposed by the Board of Directors of the Corporation and
duly adopted by the stockholders of the Corporation in accordance with the
provisions of such Sections.
5. This Amended and Restated Certificate of Incorporation restates and
integrates and further amends the Second Amended Charter of the Corporation. The
text of the Second Amended Charter is amended hereby to read as herein set forth
in full:
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FIRST
The name of the corporation is Gilat-to-Home Inc. (the "Corporation").
SECOND
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware (the "DGCL").
FOURTH
The total number of shares of capital stock which the Corporation shall
have the authority to issue is four hundred twenty million (420,000,000), of
which one hundred ten million (110,000,000) shares shall be designated as common
stock, par value $0.05 per share, and two hundred ninety million (290,000,000)
shares as preferred stock, par value $0.05 per share, of which fifty-five
million (55,000,000) shall be designated Series A Convertible Preferred Stock,
fifty-five million (55,000,000) shall be designated Series A-1 Convertible
Preferred Stock, thirty million (30,000,000) shall be designated as Series A-2
Convertible Preferred Stock, one hundred fifty million (150,000,000) shall be
designated Series B Convertible Preferred Stock, ten million (10,000,000) shall
be designated Series C Convertible Preferred Stock and ten million (10,000,000)
shall be designated Series D Preferred Stock, with the terms specified in Annex
A attached hereto.
FIFTH
The board of directors is authorized, subject to limitations prescribed
by law and the provisions of Article FOURTH, to provide for the issuance of the
shares of preferred stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
The authority of the board of directors with respect to each series shall
include, but not be limited to, the determination of the following:
(i) the number of shares constituting that series and the distinctive
designation of that series;
(ii) the dividend rate (or method of determining such rate) on the
shares of that series, any conditions upon which such dividends
shall be paid, whether dividends shall
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be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on
shares of that series;
(iii) whether that series shall have voting rights, in addition to the
voting rights provided by applicable law, and, if so, the terms
of such voting rights;
(iv) whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events
as the board of directors shall determine;
(v) whether or not the shares of the series shall be redeemable,
and, if so, the terms and conditions of such redemption,
including the date or date upon or after which they shall be
redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and
at different redemption dates;
(vi) whether that series shall have a sinking fund for the redemption
or purchase of shares of that series, and, if so, the terms and
conditions of such sinking fund;
(vii) the rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, and the relative rights of priority, if any,
of payment of shares of that series; and
(viii) any other relative rights, preferences and limitations of that
series.
Dividends on outstanding shares of preferred stock shall be paid or
declared and set apart for payment before any dividends shall be paid or
declared and set apart for payment on the shares of common stock with respect to
the same dividend period.
If upon any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, the assets available for distribution to holders of
shares of preferred stock of all series shall be insufficient to pay such
holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all series of preferred
stock in accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto.
SIXTH
The Corporation is to have perpetual existence.
SEVENTH
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter or repeal the
by-laws of the Corporation.
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EIGHTH
The number of directors of the Corporation shall be fixed from time to
time by resolution of the board of directors of the Corporation, but shall be no
fewer than four (4) and no greater than fourteen (14).
NINTH
Any action required or permitted to be taken by the holders of any class
or series of capital stock of the Corporation, including but not limited to the
election of directors, may be taken by written consent or consents, but only if
such written consent or consents are signed by ninety percent (90%) of the
holders of the class or series of capital stock entitled to vote on such action.
TENTH
Elections of directors need not be by written ballot unless the by-laws
of the Corporation shall so provide. Meetings of stockholders may be held within
or without the State of Delaware, as the by-laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the by-laws of the Corporation.
ELEVENTH
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
TWELFTH
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived any improper personal benefit.
Neither the amendment or repeal of this Article TWELFTH, nor the adoption of any
provision of this Certificate of Incorporation inconsistent with this Article
TWELFTH shall adversely affect any right or protection of a director of the
Corporation existing at the time of such amendment or repeal.
THIRTEENTH
The Corporation shall, to the fullest extent permitted by Section 145 of
the DGCL, as the same may be amended and supplemented, or by any successor
thereto, indemnify any and all persons whom it shall have power to indemnify
under said section from and against any and all of the expenses, liabilities or
other matters referred to in or covered by said section. The Corporation shall
advance expenses to the fullest extent permitted by said section. Such right to
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indemnification and advancement of expenses shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person. The
indemnification and advancement of expenses provided for herein shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
* * * * *
IN WITNESS WHEREOF, said Corporation has caused this Amended and Restated
Certificate of Incorporation to be signed by its duly authorized officer this
24th day of August, 2000.
GILAT-TO-HOME INC._
By: /s/ ZUR FELDMAN
------------------------------
Name: Zur Feldman
Title: Co-Chairman and Chief
Executive Officer,
Director
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ANNEX A
TERMS OF SERIES A CONVERTIBLE PREFERRED STOCK,
SERIES A-1 CONVERTIBLE PREFERRED STOCK,
SERIES A-2 CONVERTIBLE PREFERRED STOCK AND
SERIES B CONVERTIBLE PREFERRED STOCK
SERIES C CONVERTIBLE PREFERRED STOCK
SERIES D CONVERTIBLE PREFERRED STOCK
(1) Number and Designation. 55,000,000 shares of the preferred stock, par
value $0.05 per share (the "Preferred Stock"), of the Corporation shall be
designated as Series A Convertible Preferred Stock (the "Series A Preferred
Stock"), 55,000,000 shares of the Preferred Stock shall be designated as Series
A-1 Convertible Preferred Stock (the "Series A-1 Preferred Stock"), 30,000,000
shares of the Preferred Stock shall be designated as Series A-2 Convertible
Preferred Stock (the "Series A-2 Preferred Stock"),150,000,000 shares of the
Preferred Stock shall be designated as Series B Convertible Preferred Stock (the
"Series B Preferred Stock"), 10,000,000 shares of the Preferred Stock shall be
designated as Series C Convertible Preferred Stock (the "Series C Preferred
Stock") and 10,000,000 shares of the Preferred Stock shall be designated as
Series D Convertible Preferred Stock (the "Series D Preferred Stock") (referred
to herein collectively as the "Convertible Preferred Stock") and no other shares
of Preferred Stock shall be designated as Series A Preferred Stock, Series A-1
Preferred Stock, Series A-2 Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock
(2) Definitions.
(a) For purposes of the Convertible Preferred Stock, the following have
the meanings indicated:
"A Relative Junior Securities" means with respect to dividend rights and
rights on liquidation, winding-up and dissolution, the Common Stock of the
Corporation and all other classes of capital stock or series of preferred stock
established, other than the Series A Preferred Stock, Series A-1 Preferred
Stock, Series A-2 Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, or to be established, by the Board of Directors, including the
Series B Preferred Stock and any rights or options exercisable for or
convertible into any such securities of the Corporation but excluding the Series
A Preferred Stock, Series A-1 Preferred Stock, Series A-2 Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock.
"A-1 Relative Junior Securities" means with respect to dividend rights
and rights on liquidation, winding-up and dissolution, the Common Stock of the
Corporation and all other classes of capital stock or series of preferred stock
established, other than the Series A Preferred
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Stock, Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, or to be established, by the Board
of Directors, including the Series B Preferred Stock and any rights or options
exercisable for or convertible into any such securities of the Corporation but
excluding the Series A Preferred Stock, Series A-1 Preferred Stock, Series A-2
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock.
"A-2 Relative Junior Securities" means with respect to dividend rights
and rights on liquidation, winding-up and dissolution, the Common Stock of the
Corporation and all other classes of capital stock or series of preferred stock
established, other than the Series A Preferred Stock, Series A-1 Preferred
Stock, Series A-2 Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, or to be established by the Board of Directors, including the
Series B Preferred Stock and any rights or options exercisable for or
convertible into any such securities of the Corporation but excluding the Series
A Preferred Stock, Series A-1 Preferred Stock, Series A-2 Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock.
"B Relative Junior Securities" means the Common Stock of the Corporation
and all other classes of capital stock or series of preferred stock established,
other than the Series A Preferred Stock, Series A-1 Preferred Stock, Series A-2
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, or to be established, by the Board of Directors, including any
rights or options exercisable for or convertible into any such securities of the
Corporation but excluding the Series A Preferred Stock, Series A-1 Preferred
Stock, Series A-2 Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock.
"Board of Directors" means either the board of directors of the
Corporation or any committee of such board of directors duly authorized to
perform any responsibilities with respect to the Series A Preferred Stock and
Series A-1 Preferred Stock.
"Bylaws" means the Amended and Restated Bylaws of the Corporation adopted
the 14th day of March, 2000.
"C Relative Junior Securities" means with respect to dividend rights and
rights on liquidation, winding-up and dissolution, the Common Stock of the
Corporation and all other classes of capital stock or series of preferred stock
established, other than the Series A Preferred Stock, Series A-1 Preferred
Stock, Series A-2 Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, or to be established, by the Board of Directors, including the
Series B Preferred Stock and any rights or options exercisable for or
convertible into any such securities of the Corporation but excluding the Series
A Preferred Stock, Series A-1 Preferred Stock, Series A-2 Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock.
"Certificate of Incorporation" means the Amended and Restated Certificate
of Incorporation of the Corporation filed in the office of the Secretary of
State of the State of Delaware on June ____, 2000.
"Closing Price" of the Common Stock on any day means either (i) the last
reported per share sale price of the Common Stock on such day, or, in case no
such sale takes place on such day, the average of the reported closing per share
bid and ask prices of the Common Stock on
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such day, in each case on the principal national securities exchange or
quotation system on which the Common Stock is listed or admitted to trading or
quoted, or, if the Common Stock is not listed or admitted to trading or quoted
on any national securities exchange or quotation system, the average of the
closing per share bid and ask prices of the Common Stock on such day in the
over-the-counter market as reported by a generally accepted national quotation
service or, if not so available in such manner, as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose or (ii) if not so available in any such manner, as otherwise
determined at the relevant time in good faith by the Board of Directors.
"Common Stock" means the common stock, par value $0.05 per share, of the
Corporation.
"Company Supply Agreement" means the Broadband Access Services Supply
Agreement, dated as of February 15, 2000, between MSN and the Corporation.
"Conversion Date" has the meaning set forth in paragraph A(4)(a)(ii).
"Convertible Preferred Stock" has the meaning set forth in paragraph (1).
"Corporation" means Gilat-to-Home Inc., a Delaware corporation.
"Current Market Price" on any date in question means, with respect to any
adjustment in the Conversion Rate as set forth herein, (a) prior to the earlier
of the date on which the Corporation becomes subject to the periodic reporting
requirements of Section 13 of the Exchange Act and the date on which a Public
Offering occurs, the Fair Market Value of the Common Stock and (b) from and
after the date on which the Corporation becomes subject to the periodic
reporting requirements of Section 13 of the Exchange Act or the date on which a
Public Offering occurs, the arithmetic average of the daily Closing Prices for
the Common Stock for the 20 consecutive Trading Days (or such fewer number of
days as shall have transpired from the earlier to occur of the date on which the
Corporation has become subject to the periodic reporting requirement of Section
13 of the Exchange and the date on which the Public Offering occurred) ending on
the earlier of the date in question and the day before the Ex Date with respect
to the transaction requiring such adjustment; provided, that (i) if any other
transaction occurs requiring a prior adjustment to the Conversion Rate and the
Ex Date for such other transaction falls after the first of the five consecutive
Trading Days so selected by the Board of Directors, the Closing Price for each
such Trading Day falling prior to the Ex Date for such other transaction shall
be adjusted by multiplying such Closing Price by the same fraction by which the
Conversion Price is so required to be adjusted as a result of such other
transaction and (ii) if any other transaction occurs requiring a subsequent
adjustment to the Conversion Price and the Ex Date for such other transaction
falls on or before the last of the five consecutive Trading Days so selected by
the Board of Directors, the Closing Price for each such Trading Day falling on
or after the Ex Date for such other transaction shall be adjusted by dividing
such Closing Price by the same fraction by which the Conversion Price is so
required to be adjusted as a result of such other transaction; provided,
further, that if both of clauses (i) and (ii) of the immediately preceding
proviso apply, an adjustment pursuant to only one of such clauses shall be made.
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"D Relative Junior Securities" means with respect to dividend rights and
rights on liquidation, winding-up and dissolution, the Common Stock of the
Corporation and all other classes of capital stock or series of preferred stock
established, other than the Series A Preferred Stock, Series A-1 Preferred
Stock, Series A-2 Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, or to be established, by the Board of Directors, including the
Series B Preferred Stock and any rights or options exercisable for or
convertible into any such securities of the Corporation but excluding the Series
A Preferred Stock, Series A-1 Preferred Stock, Series A-2 Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock.
"Dividend Payment Date" means the annual anniversary date of the
applicable Issue Date; provided, however, that if any Dividend Payment Date
falls on any day other than a Trading Day, the dividend payment due on such
Dividend Payment Date shall be paid on the Trading Day immediately following
such Dividend Payment Date.
"Event of Default" means (i) with respect to the Series A Preferred
Stock, any breach by the Corporation of its obligations under the Company Supply
Agreement, Investment Agreement, Gilat Supply Agreement, Performance Guarantee
or under the terms of the Series A Preferred Stock, (ii) with respect to the
Series A-1 Preferred Stock, any breach by the Corporation of its obligations
under the Other Investment Agreement or under the terms of the Series A-1
Preferred Stock, (iii) with respect to the Series A-2 Preferred Stock, any
breach by the Corporation of its obligations under the Other Investment
Agreement or under the terms of the Series A-2 Preferred Stock, (iv) with
respect to the Series B Preferred Stock, any breach by the Corporation of its
obligations under the Company Supply Agreement, Investment Agreement, Gilat
Supply Agreement, Performance Guarantee or under the terms of the Series B
Preferred Stock, (v) with respect to the Series C Preferred Stock, any breach by
the Corporation of its obligations under the Common Stock Purchase Warrant,
dated as of June 26, 2000, by and among the Corporation and Bank Leumi USA (the
"Warrant Agreement") and or under the terms of the Series C Preferred Stock and
(vi) with respect to the Series D Preferred Stock, any breach of the Corporation
of its obligations under the Debt Conversion Letter, dated as of June 26, 2000,
by and among the Corporation and Bank Leumi USA (the "Debt Conversion Letter")
or under the terms of the Series D Preferred Stock.
"Ex Date" means (i) when used with respect to any dividend, distribution
or issuance, the first date on which the of Common Stock trades on the relevant
exchange or in the relevant market from which the Closing Price is obtained
without the right to receive such dividend, distribution or issuance, (ii) when
used with respect to any subdivision or combination of shares of Common Stock,
the first date on which the Common Stock trades on such exchange or in such
market after the time at which holders of the Common Stock may not participate
in such subdivision or combination, (iii) when used with respect to any tender
or exchange offer, the first date on which the Common Stock trades on such
exchange or in such market after holders of the Common Stock may not participate
in such tender or exchange and (iv) when used with respect to any other
transaction, the date of consummation of such transaction.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended.
"Fair Market Value" means the fair market value of any security or asset
of the Corporation as of the date in question (determined in the manner set
forth in paragraphs A(4)(l),
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B(4)(l), C(4)(l), D(4)(l), E(4)(1) or F(4)(1), as applicable) that would have
been paid by a willing buyer to a willing seller in an arm's-length negotiation,
neither being under any compulsion to buy or to sell, and both having reasonable
knowledge of all relevant facts and taking into account all relevant
circumstances and information, including market treatment of similar businesses,
historical operating results and projections for future periods.
"Fundamental Change" means any transaction or event pursuant to which
more than 50% of the Common Stock shall be exchanged for, converted into or
acquired for or constitute the right to receive securities, cash or other
property (whether by means of a tender or exchange offer, reclassification,
consolidation, merger, sale or other disposition of all or substantially all of
the assets of the Corporation, compulsory share exchange, liquidation or
otherwise). In the case of a series of events or transactions resulting in a
Fundamental Change, for purposes of adjusting conversion rights as set forth
herein, such Fundamental Change shall be deemed to have occurred when an
aggregate of more than 50% of the Common Stock of the Corporation shall be
exchanged for, converted into or acquired for or constitute the right to receive
securities, cash or other property, and the adjustment shall be based upon the
highest consideration per share which a holder of Common Stock could have
received in such transactions or events as a result of which more than 50% of
the Common Stock of the Corporation shall have been exchanged for, converted
into or acquired for or constitute the right to receive securities, cash or
other property.
"Gilat Supply Agreement" means the Agreement relating to Gilat Supply
Agreements executed on February 15, 2000, as amended from time to time in
accordance with its terms.
"Holder" means a Person in whose name a share of Convertible Preferred
Stock is registered, as shown on the stock transfer books of the Corporation.
"Investment Agreement" means the Investment Agreement, dated as of
February 15, 2000, by and among Spacenet Inc., the Corporation, Microsoft
G-Holdings, Inc. and Microsoft Corporation, as amended from time to time in
accordance with its terms.
"Issue Date" means, with respect to each series of Convertible Preferred
Stock, the first date on which shares of such series of Convertible Preferred
Stock are issued.
"MSN" means the Microsoft Network L.L.C., a limited liability company
organized under the laws of Delaware.
"Other Investment Agreement" means the Investment Agreement, dated as of
March 30, 2000, by and among Spacenet Inc., the Corporation, EchoStar
Communications Corporation, Furman Selz Investors II L.P., FS Employee Investors
LLC and FS Parallel Fund L.P., as amended from time to time in accordance with
its terms.
"Per Share Premium Amount" means, with respect to any tender or exchange
offer, (i) the Premium Amount paid as part of such tender or exchange offer
divided by (ii) the Post-Tender Offer Number of Underlying Shares.
"Performance Guarantee" means the guarantee of performance and payment
undertaken by Gilat Satellite Networks Ltd. in favor of MSN and Microsoft
G-Holdings, Inc., as amended
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from time to time in accordance with its terms, the form of which is attached as
Annex E to the Company Supply Agreement.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, company,
limited liability company, trust, unincorporated association or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Post-Tender Offer Number of Underlying Shares" means, with respect to
any tender or exchange offer in respect of Common Stock, the number of shares of
Common Stock outstanding at the close of business on the date of expiration of
such tender or exchange offer (before giving effect to the acquisition of shares
of Common Stock pursuant thereto) minus the number of shares of Common Stock
acquired pursuant thereto.
"Preferred Stock" has the meaning set forth in paragraph (1) hereof.
"Premium Amount" means, with respect to any tender or exchange offer, (i)
the Tender Consideration paid in such tender or exchange offer minus (ii) the
product of the Current Market Price on the date of expiration of such tender or
exchange offer and the number of shares of Common Stock acquired pursuant to
such tender or exchange offer.
"Public Offering" has the meaning set forth in paragraph A(4) hereof.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Separation Event" has the meaning set forth in the definition of the
term "Stapled Securities."
"Series A Additional Shares" has the meaning set forth in paragraph A(2)
hereof.
"Series A Conversion Price" has the meaning set forth in paragraph A(4)
hereof.
"Series A Conversion Rate" has the meaning set forth in paragraph A(4)
hereof.
"Series A Liquidation Preference" has the meaning set forth in paragraph
A(3)(a).
"Series A Preferred Stock" has the meaning set forth in paragraph (1)
hereof.
"Series A-1 Additional Shares" has the meaning set forth in paragraph
B(2) hereof.
"Series A-1 Conversion Price" has the meaning set forth in paragraph B(4)
hereof.
"Series A-1 Conversion Rate" has the meaning set forth in paragraph B(4)
hereof.
"Series A-1 Liquidation Preference" has the meaning set forth in
paragraph B(3)(a) hereof.
"Series A-1 Preferred Stock" has the meaning set forth in paragraph (1)
hereof.
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"Series A-2 Additional Shares" has the meaning set forth in paragraph
C(2) hereof.
"Series A-2 Conversion Price" has the meaning set forth in paragraph C(4)
hereof.
"Series A-2 Conversion Rate" has the meaning set forth in paragraph C(4)
hereof.
"Series A-2 Liquidation Preference" has the meaning set forth in
paragraph C(3)(a) hereof.
"Series A-2 Preferred Stock" has the meaning set forth in paragraph (1)
hereof.
"Series B Additional Shares" has the meaning set forth in paragraph D(2)
hereof.
"Series B Conversion Price" has the meaning set forth in paragraph D(4)
hereof.
"Series B Conversion Rate" has the meaning set forth in paragraph D(4)
hereof.
"Series B Liquidation Preference" has the meaning set forth in paragraph
D(3)(a) hereof.
"Series B Preferred Stock" has the meaning set forth in paragraph (1)
hereof.
"Series C Additional Shares" has the meaning set forth in paragraph E(2)
hereof.
"Series C Conversion Price" has the meaning set forth in paragraph E(4)
hereof.
"Series C Conversion Rate" has the meaning set forth in paragraph E(4)
hereof.
"Series C Liquidation Preference" has the meaning set forth in paragraph
E(3)(a) hereof.
"Series C Preferred Stock" has the meaning set forth in paragraph (1)
hereof.
"Series D Additional Shares" has the meaning set forth in paragraph F(2)
hereof.
"Series D Conversion Price" has the meaning set forth in paragraph F(4)
hereof.
"Series D Conversion Rate" has the meaning set forth in paragraph F(4)
hereof.
"Series D Liquidation Preference" has the meaning set forth in paragraph
F(3)(a) hereof.
"Series D Preferred Stock" has the meaning set forth in paragraph (1)
hereof.
"Stapled Securities" means securities issued under any plan or agreement
providing in substance that, until such securities are redeemed or the rights
thereunder are otherwise terminated or a specified event occurs (a "Separation
Event"), (i) a specified number of such securities will appertain to each share
of Common Stock then issued or to be issued in the future (including shares
issued upon conversion of shares of Securities) and (ii) each such security will
be evidenced or represented by the certificate representing the share of Common
Stock to which it appertains and will automatically trade with such share.
A-7
<PAGE> 14
"Stockholders' Agreement" means the Amended and Restated Stockholders'
Agreement, dated as of April 10, 2000, by and among Spacenet Inc., the
Corporation, Microsoft G-Holdings, Inc., EchoStar Communications Corporation,
Furman Selz Investors II L.P., FS Employee Investors LLC, FS Parallel Fund L.P.
and Gilat Satellite Networks Ltd, as amended from time to time in accordance
with its terms.
"Tender Consideration" means, with respect to any tender or exchange
offer, the aggregate of the cash plus the Fair Market Value of all non-cash
consideration paid in respect of such tender or exchange offer.
"Trading Day" means a day on which securities are traded on the
securities exchange or quotation system or in the over-the-counter market on
which the Common Stock is then listed used to determine Closing Prices for the
Common Stock.
Other terms may be defined elsewhere herein and, unless otherwise
indicated, shall have such respective meanings indicated throughout this Annex A
to the Certificate of Incorporation.
(i) The words "hereof," "herein," and "hereunder" and words of similar
import, when used in this Annex A to the Certificate of Incorporation, shall
refer to this Annex A to the Certificate of Incorporation as a whole and not to
any particular provision of this Annex A to the Certificate of Incorporation.
(ii) The terms defined in the singular have a comparable meaning when
used in the plural, and vice versa.
(iii) References herein to a specific paragraph, clause or subclause
shall refer, respectively, to paragraphs, clauses or subclauses of this Annex A
to the Certificate of Incorporation, unless the express context otherwise
requires.
(iv) The words "include," "includes" and "including" when used in this
Annex A to the Certificate of Incorporation, shall be deemed to be followed by
the words "without limitation."
A. SERIES A CONVERTIBLE PREFERRED STOCK
(1) Rank. The Series A Preferred Stock will rank with respect to
dividend rights and rights on liquidation, winding-up and dissolution, equal and
on parity with the Series A-1 Preferred Stock, Series A-2 Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock and senior to the A
Relative Junior Securities.
(2) Dividends and Distributions. (a) The Holders of shares of Series A
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available for the payment of dividends,
.12 additional shares of Series A Preferred Stock per annum per full share of
Series A Preferred Stock issued and outstanding ("Series A Additional Shares").
Such dividends shall be payable on each Dividend Payment Date, and if the date
of the Public Offering shall be any day other than a Dividend Payment Date,
immediately prior to the Public Offering (in an amount equal to the number of
Series A Additional Shares that would payable on the next Dividend Payment Date
multiplied by a
A-8
<PAGE> 15
fraction the numerator of which shall be the number of days elapsed since the
preceding Dividend Payment Date and the denominator of which shall be 365).
Dividends on the Series A Preferred Stock shall be cumulative from the Issue
Date (except that dividends on Series A Additional Shares shall accrue from the
date such Series A Additional Shares are issued or would have been issued in
accordance with this Certificate of Designation if such dividends had been
declared). Such dividends shall be payable to the Holders of record of shares of
the Series A Preferred Stock, as they appear on the stock records of the
Corporation at the close of business on the record date for such dividends. Upon
the declaration of such dividends (other than dividends payable immediately
prior to a Public Offering), the Board of Directors shall fix the relevant
Dividend Payment Date as the record date for such dividend.
(b) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends (other than Series A-1 Additional Shares, Series A-2
Additional Shares, Series B Additional Shares, Series C Additional Shares,
Series D Additional Shares and dividends or distributions paid in shares of, or
options, warrants or rights to subscribe for or purchase shares of, A Relative
Junior Securities) shall be declared or paid or set apart for payment or other
distribution declared or made upon A Relative Junior Securities, nor shall any A
Relative Junior Securities be redeemed, purchased or otherwise acquired (other
than a redemption, purchase or other acquisition of shares of Common Stock made
for purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any such stock) by the
Corporation, directly or indirectly (except by conversion into or exchange for A
Relative Junior Securities).
(c) The Holders of the Series A Preferred Stock shall be entitled to
receive other dividends and distributions, when, as and if declared by the Board
of Directors out of funds legally available for the payment of dividends, in a
sum sufficient for the payment of, the dividend or distribution such Holder
would have been entitled to receive if such Holder had converted its shares of
Series A Preferred Stock immediately prior to the declaration of any dividend or
distribution on any class or series of capital stock of the Corporation, as the
case may be, on all of the then outstanding shares of Series A Preferred Stock
prior to the payment of any dividend or distribution on any A Relative Junior
Securities (any such declaration being subject to the approval of the Holders of
the Series A Preferred Stock as provided in paragraph A(5) hereof); provided,
that with respect to dividends or distributions payable in shares of Common
Stock, the Holders of Series A Preferred Stock shall not be entitled to such
dividends or distribution, but the Series A Conversion Rate shall be adjusted
following such dividend or distribution in accordance with the terms hereof.
(3) Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of A Relative
Junior Securities, the Holders of the shares of Series A Preferred Stock shall,
at their sole election, be entitled to receive $1 per share of Series A
Preferred Stock (the "Series A Liquidation Preference"), plus an amount equal to
all dividends accrued and unpaid thereon to the date of final distribution to
such Holders; but such Holders shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the Holders of the
shares of
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<PAGE> 16
Series A Preferred Stock, the Holders of the shares of Series A-1 Preferred
Stock, the Holders of shares of Series A-2 Preferred Stock, the Holders of the
shares of Series C Preferred Stock and the Holders of the shares of Series D
Preferred Stock shall be insufficient to pay in full the aggregate of the Series
A Liquidation Preference, the Series A-1 Liquidation Preference, the Series A-2
Liquidation Preference, the Series C Liquidation Preference and the Series D
Liquidation Preference, then such assets, or the proceeds thereof, shall be
distributed among the Holders of shares of Series A Preferred Stock, the Holders
of shares of Series A-1 Preferred Stock, the Holders of shares of the Series A-2
Preferred Stock, the Holders of the shares of Series C Preferred Stock and the
Holders of the shares of Series D Preferred Stock ratably in accordance with the
respective amounts that would be payable on such shares of Series A Preferred
Stock, Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock if all amounts payable thereon were
paid in full.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the Holders of the Series A
Preferred Stock, Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series
C Preferred Stock and Series D Preferred Stock, as provided in this paragraph
A(3), paragraph B(3), paragraph C(3), paragraph E(3) and paragraph F(3), any
other series or class or classes of A Relative Junior Securities shall, subject
to the respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the Holders
of the Series A Preferred Stock, Series A-1 Preferred Stock, Series A-2
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock shall not
be entitled to share therein.
(c) If an Event of Default occurs and is continuing, then and in every
such case the Holders of a majority of the outstanding shares of Series A
Preferred Stock have the right upon written notice delivered to the Corporation
to cause the Series A Liquidation Preference for each share of Series A
Preferred Stock to be paid to the Holder of each such share of Series A
Preferred Stock, plus an amount equal to all dividends accrued and unpaid
thereon to the date of final distribution. The right to accelerate the Series A
Preferred Stock provided by the foregoing sentence shall be in addition to other
remedies available to the Holders, whether in law or at equity.
(4) Conversion. (a)(i) A Holder of shares of Series A Preferred Stock
shall have the right at any time and from time to time, at the option of the
Holder, subject to and upon compliance with the provisions of this paragraph
A(4), to convert any or all outstanding shares of Series A Preferred Stock held
by such Holder, but not fractions of shares, into fully paid and non-assessable
shares of Common Stock by surrendering such shares to be converted, such
conversion to be made in the manner provided in this paragraph A(4). The number
of shares of Common Stock deliverable upon conversion of each share of Series A
Preferred Stock shall be equal to $1 divided by $5 ($5 as adjusted as provided
herein shall be the "Series A Conversion Price" and such quotient being the
"Series A Conversion Rate") (calculated as to each conversion to the nearest
1/100th of a share of Common Stock). The Series A Conversion Price and Series A
Conversion Rate is subject to adjustment from time to time pursuant to this
paragraph A(4). Upon conversion of any share of Series A Preferred Stock, the
Holder thereof shall continue to be entitled to receive from the Corporation any
accrued but unpaid dividends thereon.
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<PAGE> 17
(ii) In order to exercise the conversion rights accorded in paragraph
A(4)(a)(i), the Holder of a share or shares Series A Preferred Stock shall
surrender to the Corporation the certificate or certificates evidencing the
share or shares of Series A Preferred Stock to be converted, duly endorsed or
assigned to the Corporation or in blank, accompanied by a completed and signed
written notice of election to convert, specifying the number of shares of Series
A Preferred Stock to be converted, together with the name or names, if other
than the Holder (subject to the terms of the Stockholders' Agreement), in which
the shares of Common Stock should be issued upon conversion and to whom any cash
in lieu of fractional shares shall be paid. Each conversion shall be deemed to
have been effected immediately prior to the close of business on the day on
which the notice of conversion was delivered by the Holder (the "Conversion
Date"). The Person or Persons entitled to receive the Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such Common Stock as of the Conversion Date.
(iii) As promptly as practicable on or after the Conversion Date, the
Corporation shall issue and deliver a certificate or certificates for the number
of full shares of Common Stock issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of any share to the holder or,
upon the holder's written order, to the Person or Persons entitled to receive
the same (such cash payment will be based upon the Closing Price of the Common
Stock on the day preceding the Conversion Date). Upon conversion of only a
portion of the shares of Series A Preferred Stock represented by any
certificate, a new certificate shall be issued representing the unconverted
portion of the certificate so surrendered without cost to the Holder thereof.
Upon the surrender of certificates representing shares of Series A Preferred
Stock to be converted, such shares shall no longer be deemed to be outstanding
and all rights of a Holder with respect to such shares surrendered for
conversion shall immediately terminate except the right to receive the Common
Stock and other amounts pursuant to this paragraph A(4).
(b) (i) Unless already converted, each share of Series A Preferred Stock
then outstanding shall be converted into the number of fully-paid and
non-assessable shares of Common Stock into which such share of Series A
Preferred Stock is then convertible as determined in accordance with paragraph
A(4)(a)(i) hereof, automatically and without further action, immediately upon
the consummation by the Corporation of a primary public offering and sale of
shares of Common Stock and contemporaneously therewith the Holders of shares of
Series A Preferred Stock shall be treated for all purposes as the record holder
of the shares of Common Stock into which such Holder's shares of Series A
Preferred Stock were converted, where the public offering is made pursuant to an
effective registration under the Securities Act on Form S-1, or any successor
form thereto, pursuant to which the gross proceeds to the Corporation are not
less than $40,000,000 (a "Public Offering"), in which case the conversion shall
be deemed to have occurred contemporaneously with the consummation of such
Public Offering.
(ii) Following the conversion of the outstanding shares of Series A
Preferred Stock pursuant to paragraph A(4)(b)(i) hereof, the holders of such
converted shares shall surrender the certificates formerly representing such
shares to the Corporation or any transfer agent for the Common Stock. Thereupon,
the Corporation shall, or shall cause its transfer agent, to issue and promptly
deliver a certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with the cash payment, if any, in
lieu of any fraction of
A-11
<PAGE> 18
any share to the holder or, upon the holder's written order, to the Person or
Persons entitled to receive the same (such cash payment will be based upon the
Closing Price of the Common Stock on the day of such conversion).
(c) If appropriate or if the certificate or certificates evidencing the
converted shares of Series A Preferred Stock were so legended or if required by
the terms of the Stockholders' Agreement, shares of Common Stock delivered upon
any conversion of shares of Series A Preferred Stock shall bear a restrictive
legend as set forth in the Stockholders' Agreement and shall be subject to the
restrictions on transfer referenced in such legend and in the Stockholders'
Agreement.
(d) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of the issue or delivery of shares of
Common Stock to the Holder on conversion of shares of Series A Preferred Stock.
(e) In case:
(i) the Corporation shall authorize any transaction that would
require an adjustment to the Series A Conversion Rate; or
(ii) the Corporation shall authorize any Fundamental Change; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall mail to the Holders, at their last known addresses as
they shall appear upon the stock transfer books of the Corporation, at least 20
days (or, in the case of a transaction referred to in clauses (ii), (iv) or (v)
of paragraph A(4)(f), 10 days) prior to the applicable record, expiration,
issuance or consummation date hereinafter specified, a notice stating (x) the
record date fixed for the determination of holders of Common Stock entitled to
the applicable issuance, dividend or distribution, (y) the date of expiration of
the applicable tender or exchange offer or (z) the date on which the applicable
Fundamental Change (other than a tender or exchange offer), if any, is expected
to be consummated, as the case may be (but no failure to mail such notice or any
defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
(f) The Series A Conversion Rate shall be adjusted from time to time as a
result of the following adjustments to the Series A Conversion Price:
(i) In case the Corporation shall pay or make a dividend or other
distribution on any class of capital stock of the Corporation payable in
Common Stock (other than any such dividend or other distribution of
Stapled Securities), the Series A Conversion Price in effect at the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be adjusted by multiplying such Series A Conversion
Price by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such
number of shares of Common Stock outstanding and the total number of
shares
A-12
<PAGE> 19
constituting such dividend or other distribution of Common Stock,
such adjustment to become effective immediately after the opening of
business on the day following the date fixed for such determination. (For
the purposes of determining adjustments to the Series A Conversion Price
as set forth herein, shares of Common Stock held in the treasury of the
Corporation, and distributions or issuances in respect thereof, shall be
disregarded.)
(ii) In case the Corporation shall issue rights or warrants (other
than pursuant to a distribution of rights under a shareholder rights plan
of the Corporation in customary form or a dividend reinvestment plan or a
distribution of Stapled Securities) to all or substantially all holders
of Common Stock (whether by dividend or in a merger or otherwise)
entitling them, for a period of not more than 45 days from issuance, to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, then the Series A Conversion Price in effect at the opening of
business on the day following the date fixed for such determination shall
be adjusted by multiplying such Series A Conversion Price by a fraction
of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at the then
Current Market Price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so offered
for subscription or purchase, such adjustment to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For purposes of this paragraph A(4)(f)(ii),
the issuance of rights or warrants to subscribe for or purchase
securities convertible into Common Stock shall be deemed to be the
issuance of rights or warrants to purchase the Common Stock into which
such securities are convertible at an aggregate offering price equal to
the sum of the aggregate offering price of such securities and the
minimum aggregate amount (if any) payable upon conversion of such
securities into Common Stock. Such adjustment shall be made successively
whenever any such event shall occur. In case any rights or warrants
referred to in this paragraph in respect of which an adjustment shall
have been made shall expire unexercised, the Series A Conversion Price
shall be readjusted at the time of such expiration to the Series A
Conversion Price that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(iii) In case outstanding shares of Common Stock shall be
subdivided (including by split) into a greater number of shares of Common
Stock, and conversely, in case outstanding shares of Common Stock shall
each be combined into a smaller number of shares of Common Stock
(including by reverse split), the Series A Conversion Price in effect at
the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately adjusted, in each
case, so that the Holder of a share of Series A Preferred Stock
thereafter surrendered for conversion shall be entitled to receive as a
result of such combination or subdivision (without taking into account
any other adjustment hereunder) the number and kind of shares of Common
Stock that such Holder would have owned or have been entitled to receive
after the
A-13
<PAGE> 20
happening of any such subdivision or combination had such share
of Series A Preferred Stock been converted immediately prior to the date
upon which such subdivision or combination becomes effective. An
adjustment made pursuant to this paragraph A(4)(f)(iii) shall become
effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
Such adjustment shall be made successively whenever any such event shall
occur.
(iv) In case the Corporation or any subsidiary of the Corporation
shall consummate a tender or exchange offer (other than an odd lot offer)
involving consideration in excess of 100% of the Current Market Price for
all or any portion of Common Stock, the Series A Conversion Price in
effect immediately prior to the close of business on the date of
expiration of such tender or exchange offer shall be adjusted by
multiplying such Series A Conversion Price by a fraction of which the
numerator shall be the Current Market Price on such date of expiration
less the Per Share Premium Amount paid in such tender or exchange offer
and the denominator shall be such Current Market Price of Common Stock,
such adjustment to become effective immediately prior to the opening of
business on the day following such date of expiration. Such adjustment
shall be made successively whenever any such event shall occur.
(v) In case the Corporation shall, by dividend or otherwise, make
a distribution referred to in clauses (i) or (iii) of this paragraph
A(4)(f), each Holder of a share or shares of Series A Preferred Stock
converting such Series A Preferred Stock subsequent to the close of
business on the date fixed for the determination of stockholders entitled
to receive such distribution and prior to the effectiveness of the Series
A Conversion Price adjustment in respect of such distribution shall be
entitled to receive in addition to the shares of Common Stock otherwise
received upon conversion, on the date of the effectiveness of such Series
A Conversion Price adjustment, such number of shares of Common Stock as
are equal to (x) the number of shares of Common Stock such Holder would
have received had he or she converted such shares of Series A Preferred
Stock after the effectiveness of such Series A Conversion Price
adjustment minus (y) the number of shares of Common Stock otherwise
received by such Holder on the conversion of such shares of Series A
Preferred Stock.
(vi) Except when an adjustment of the Series A Conversion Price is
required pursuant to paragraph A(4)(f)(ii) hereof, in case the
Corporation shall issue securities which provide at any time a right to
purchase, convert into or otherwise acquire Common Stock at a price per
share of Common Stock (or at a conversion rate which results in an
effective conversion price) (the "Diluted Price") less than the Series A
Conversion Price in effect from time to time, the Series A Conversion
Price shall be adjusted by multiplying such Series A Conversion Price by
a fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the day the Diluted Price
is determined plus the number of shares of Common Stock which the
aggregate amount of purchase price payable pursuant to the securities
with the Diluted Price would purchase if the purchase price for such
Common Stock were equal to the Series A Conversion Price in effect on the
day the Diluted Price is determined and the denominator shall be the
number of shares of Common Stock outstanding at the close of
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<PAGE> 21
business on the day the Diluted Price is determined plus the number of
shares of Common Stock purchasable, convertible into or otherwise
acquirable pursuant to the securities with the Diluted Price, such
adjustment to become effective immediately after the opening of business
on the day following the day the Diluted Price is determined. For
purposes of this paragraph A(4)(f)(vi), the issuance of rights or
warrants to subscribe for any securities described in the preceding
sentence shall be deemed to be the issuance of securities described in
such sentence; such adjustment shall be made successively whenever any
such event shall occur.
(vii) Subject to applicable regulatory approvals, the Corporation
may make with the consent of the Holders such adjustments in the Series A
Conversion Rate and the Series A Conversion Price, in addition to those
required by the foregoing paragraphs, as it considers to be advisable to
avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for
income tax purposes.
(viii) Whenever the Series A Conversion Rate and the Series A
Conversion Price are adjusted as a result of or pursuant to the preceding
paragraphs, the Corporation shall mail to the Holders a notice of the
adjustment at least fifteen days prior to the date the adjusted Series A
Conversion Rate and the Series A Conversion Price takes effect, and such
notice shall state the adjusted Series A Conversion Rate and the Series A
Conversion Price and the period each will be in effect.
(ix) The Corporation may not engage in any transaction if, as a
result thereof, the Series A Conversion Price would be reduced below the
par value per share of the Common Stock.
(x) No adjustment in the Series A Conversion Rate shall be
required unless such adjustment would require an increase or decrease of
at least 1% in the Series A Conversion Rate; provided, however, that any
adjustments which by reason of this paragraph are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
(xi) Whenever the Series A Conversion Price is adjusted as herein
provided the Corporation shall promptly following such adjustment (and in
no event later than 10 Business Days thereafter) compute the adjusted
Series A Conversion Price and shall prepare a certificate signed by the
Chief Financial Officer of the Corporation setting forth the adjusted
Series A Conversion Price and resulting Series A Conversion Rate and
showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall forthwith be filed in the books of the
Corporation and a copy thereof shall be delivered to the Holders.
(xii) If any action would require adjustment of the Series A
Conversion Price or the property into which shares of Series A Preferred
Stock are convertible pursuant to more than one of the provisions
described in this paragraph in a manner such that such adjustments are
duplicative, only one adjustment shall be made.
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<PAGE> 22
(g) Prior to a Separation Event with respect to any Stapled Securities,
such Stapled Securities will be deemed, for purposes of the adjustments
contemplated hereby, to comprise part of the shares of Common Stock to which
such Stapled Securities appertain, and as a result, distributions in respect of
such Stapled Securities will be deemed, for such purposes, to be distributions
in respect of such shares of Common Stock.
(h) Each Holder of shares of Series A Preferred Stock who converts any
shares of Series A Preferred Stock after a Separation Event with respect to any
Stapled Securities shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, such
additional shares of Common Stock as are equal to the Fair Market Value at the
time of conversion of the rights to which such Holder would have been entitled
under the Stapled Securities that would have appertained to such shares of
Common Stock if such Holder had converted such shares of Series A Preferred
Stock immediately before such Separation Event. Such adjustment shall be made
successively whenever any such event shall occur.
(i) In the event that the Corporation shall be a party to any Fundamental
Change, then lawful provisions shall be made as part of the terms of such
Fundamental Change whereby the Corporation or the Person formed by the
applicable consolidation or resulting from the applicable merger or which
acquires the applicable assets or the Corporation's shares, as the case may be,
pursuant to such Fundamental Change, is required to assume the obligations
hereunder, and such adjustments, including in the Series A Conversion Price and
the Series A Conversion Rate , shall be made as are equitable so as to preserve
to the Holder the rights and benefits inherent in the Series A Preferred Stock
and so as to reflect the inability of the Holder to participate in any premium
inherent in a Fundamental Change on the same basis as any holder of Common
Stock. The Corporation further agrees that it will not be a party to or permit
such Fundamental Change to occur unless such provisions are so made as a part of
the terms thereof. The substance of this paragraph shall similarly apply to
successive Fundamental Changes.
(j) If the conversion rights of Holders of shares of Series A Preferred
Stock shall be adjusted pursuant to any of the preceding three paragraphs, then
the Corporation shall mail to the Holders of the Series A Preferred Stock, at
their last addresses as they shall appear upon the stock transfer books of the
Corporation, within 5 Business Days after consummation of the transaction
triggering such adjustment, a notice describing such adjustment in appropriate
detail.
(k) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversion of the Series A
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series A Preferred Stock not theretofore
converted. For purposes of this paragraph A(4)(k) the number of shares of Common
Stock that shall be deliverable upon the conversion of all outstanding shares of
Series A Preferred Stock shall be computed as if at the time of computation all
such outstanding shares were held by a single Holder.
(l) Fair Market Value shall be determined in good faith by the Board of
Directors; provided, however, that the Holders of a majority of the shares of
the Series A Preferred Stock may elect to have Fair Market Value determined by a
nationally or internationally recognized
A-16
<PAGE> 23
investment bank (the "Appraiser"), such election to be in writing and delivered
to the Corporation within 20 days after the Holders' receipt of the notice
provided for in paragraph A(4)(e) hereof. The Appraiser shall be selected, as
soon as practicable but no later than ten Business Days after the Holders elect
to request a third party appraisal, by a designee of the Holders, a designee of
the Corporation and a third party jointly selected by the designees of Holders
and the Corporation. The Appraiser so selected shall determine the Fair Market
Value as soon as practicable but not later than 30 days after its selection. The
fees of the Appraiser shall be borne by the Corporation.
(5) Voting Rights. Except as set forth in this paragraph A(5) and
required by applicable law, the Holders of the issued and outstanding shares of
the Series A Preferred Stock have no voting rights. For so long as any shares of
the Series A Preferred Stock are outstanding, the Corporation shall not, without
the affirmative consent or approval of Holders of a majority of the then
outstanding shares of Series A Preferred Stock, voting as a separate class,
given at a meeting called for such purposes or by written consent:
(i) amend, alter or repeal, whether by merger, consolidation or
otherwise, the Certificate of Incorporation or Bylaws of the Corporation
in any manner that would adversely affect the rights, preferences, powers
and privileges of the Series A Preferred Stock, it being, understood that
any amendment of the Certificate of Incorporation or Bylaws of the
Corporation to increase the number of directors comprising the full Board
of Directors or to afford any stockholder of the Corporation preemptive
rights (or enter into any agreement granting such rights to a third
party) shall be deemed to adversely affect the rights, preferences,
powers and privileges of the Series A Preferred Stock;
(ii) reclassify the shares of Common Stock or any class or series
of capital stock of the Corporation hereafter created into any shares of
any class or series of capital stock of the Corporation that, with
respect to liquidation preference or dividends, ranks senior to or on
parity with the Series A Preferred Stock;
(iii) except as specified in the Stockholders' Agreement as being
permitted to be granted under employee benefit plans of the Corporation,
as specified in the Stockholders' Agreement as being required to be
issued on each Dividend Payment Date following the issuance by the
Corporation of shares of capital stock of the Corporation that by their
terms are entitled to receive dividends payable in shares of capital
stock (other than Common Stock, Series A Additional Shares, Series A-1
Additional Shares, Series A-2 Additional Shares, Series B Additional
Shares, Series C Additional Shares and Series D Additional Shares), for
the shares of Series A-1 Preferred Stock, Series A-2 Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock and Common Stock issued or issuable upon conversion of the
Convertible Preferred Stock, issue any class or series of capital stock
of the Corporation (or rights, options or warrants to purchase or
otherwise acquire any such capital stock of the Corporation or notes,
debentures or obligations convertible into any such capital stock);
(iv) adopt an agreement relating to, or otherwise authorize
consummation of, or consummate, a recapitalization, reorganization,
merger, consolidation or similar
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<PAGE> 24
business combination transaction involving the Corporation or a sale or
other transfer of all or substantially all of the assets of the
Corporation;
(v) except as set forth in paragraphs A(2), B(2), C(2), D(2), E(2)
and F(2) hereof, declare or pay any dividend or make any distribution of
assets on any series or class of capital stock of the Corporation whether
in existence as of the date of adoption of the Certificate of
Incorporation or hereafter created (other than pro-rata dividends of
Common Stock on the Common Stock or stock splits); or
(vi) take any action, or refrain from taking any action, which
could reasonably be expected to adversely affect the rights, preferences,
powers and privileges of the Series A Preferred Stock.
B. SERIES A-1 CONVERTIBLE PREFERRED STOCK
(1) Rank. The Series A-1 Preferred Stock will rank with respect to
dividend rights and rights on liquidation, winding-up and dissolution, equal and
on parity with the Series A Preferred Stock, Series A-2 Preferred Stock, Series
C Preferred Stock and Series D Preferred Stock and senior to the A-1 Relative
Junior Securities.
(2) Dividends and Distributions. (a) The Holders of shares of Series
A-1 Preferred Stock shall be entitled to receive, when, as and if declared by
the Board of Directors, out of funds legally available for the payment of
dividends, .12 additional shares of Series A-1 Preferred Stock per annum per
full share of Series A-1 Preferred Stock issued and outstanding ("Series A-1
Additional Shares"). Such dividends shall be payable on each Dividend Payment
Date, and if the date of the Public Offering shall be any day other than a
Dividend Payment Date, immediately prior to the Public Offering (in an amount
equal to the number of Series A-1 Additional Shares that would payable on the
next Dividend Payment Date multiplied by a fraction the numerator of which shall
be the number of days elapsed since the preceding Dividend Payment Date and the
denominator of which shall be 365). Dividends on the Series A-1 Preferred Stock
shall be cumulative from the Issue Date (except that dividends on Series A-1
Additional Shares shall accrue from the date such Series A-1 Additional Shares
are issued or would have been issued in accordance with this Certificate of
Designation if such dividends had been declared). Such dividends shall be
payable to the Holders of record of shares of the Series A-1 Preferred Stock, as
they appear on the stock records of the Corporation at the close of business on
the record date for such dividends. Upon the declaration of such dividends
(other than dividends payable immediately prior to a Public Offering), the Board
of Directors shall fix the relevant Dividend Payment Date as the record date for
such dividend.
(b) So long as any shares of the Series A-1 Preferred Stock are
outstanding, no dividends (other than Series A Additional Shares, Series A-2
Additional Shares, Series B Additional Shares, Series C Additional Shares,
Series D Additional Shares and dividends or distributions paid in shares of, or
options, warrants or rights to subscribe for or purchase shares of, A-1 Relative
Junior Securities) shall be declared or paid or set apart for payment or other
distribution declared or made upon A-1 Relative Junior Securities, nor shall any
A-1 Relative Junior Securities be redeemed, purchased or otherwise acquired
(other than a redemption, purchase or other acquisition of shares of Common
Stock made for purposes of an employee incentive or
A-18
<PAGE> 25
benefit plan of the Corporation or any subsidiary) for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation, directly or indirectly (except by
conversion into or exchange for A-1 Relative Junior Securities).
(c) The Holders of the Series A-1 Preferred Stock shall be entitled to
receive other dividends and distributions, when, as and if declared by the Board
of Directors out of funds legally available for the payment of dividends, in a
sum sufficient for the payment of, the dividend or distribution such Holder
would have been entitled to receive if such Holder had converted its shares of
Series A-1 Preferred Stock immediately prior to the declaration of any dividend
or distribution on any class or series of capital stock of the Corporation, as
the case may be, on all of the then outstanding shares of Series A-1 Preferred
Stock prior to the payment of any dividend or distribution on any A-1 Relative
Junior Securities (any such declaration being subject to the approval of the
Holders of the Series A-1 Preferred Stock as provided in paragraph B(5) hereof);
provided, that with respect to dividends or distributions payable in shares of
Common Stock, the Holders of Series A-1 Preferred Stock shall not be entitled to
such dividends or distribution, but the Series A-1 Conversion Rate shall be
adjusted following such dividend or distribution in accordance with the terms
hereof.
(3) Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of A-1
Relative Junior Securities, the Holders of the shares of Series A-1 Preferred
Stock shall, at their sole election, be entitled to receive $1 per share of
Series A-1 Preferred Stock (the "Series A-1 Liquidation Preference"), plus an
amount equal to all dividends accrued and unpaid thereon to the date of final
distribution to such Holders; but such Holders shall not be entitled to any
further payment. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the Holders of the shares of Series A-1 Preferred Stock, the Holders of
shares of Series A Preferred Stock, the Holders of shares of Series A-2
Preferred Stock, the Holders of the shares of Series C Preferred Stock and the
Holders of the shares of Series D Preferred Stock shall be insufficient to pay
in full the aggregate of the Series A-1 Liquidation Preference, Series A
Liquidation Preference, the Series A-2 Liquidation Preference, the Series C
Liquidation Preference and the Series D Liquidation Preference, then such
assets, or the proceeds thereof, shall be distributed among the Holders of
shares of Series A-1 Preferred Stock, the Holders of shares of Series A
Preferred Stock, the Holders of shares of the Series A-2 Preferred Stock, the
Holders of the shares of Series C Preferred Stock and the Holders of the shares
of Series D Preferred Stock ratably in accordance with the respective amounts
that would be payable on such shares of Series A-1 Preferred Stock, Series A
Preferred Stock, Series A-2 Preferred Stock, Series C Preferred Stock and Series
D Preferred Stock if all amounts payable thereon were paid in full.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the Holders of the Series A-1
Preferred Stock, Series A Preferred Stock, Series A-2 Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock as provided in this paragraph B(3),
paragraph A(3) and paragraph C(3), paragraph E(3) and paragraph F(3), any other
series or class or classes of A-1 Relative Junior Securities shall, subject to
the respective terms and provisions (if any) applying thereto, be entitled to
receive any
A-19
<PAGE> 26
and all assets remaining to be paid or distributed, and the Holders of the
Series A-1 Preferred Stock, Series A Preferred Stock, Series A-2 Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock shall not be
entitled to share therein.
(c) If an Event of Default occurs and is continuing, then and in every
such case the Holders of a majority of the outstanding shares of Series A-1
Preferred Stock have the right upon written notice delivered to the Corporation
to cause the Series A-1 Liquidation Preference for each share of Series A-1
Preferred Stock to be paid to the Holder of each such share of Series A-1
Preferred Stock, plus an amount equal to all dividends accrued and unpaid
thereon to the date of final distribution. The right to accelerate the Series
A-1 Preferred Stock provided by the foregoing sentence shall be in addition to
other remedies available to the Holders, whether in law or at equity.
(4) Conversion. (a)(i) A Holder of shares of Series A-1 Preferred
Stock shall have the right at any time and from time to time, at the option of
the Holder, subject to and upon compliance with the provisions of this paragraph
B(4), to convert any or all outstanding shares of Series A-1 Preferred Stock
held by such Holder, but not fractions of shares, into fully paid and
non-assessable shares of Common Stock by surrendering such shares to be
converted, such conversion to be made in the manner provided in this paragraph
B(4). The number of shares of Common Stock deliverable upon conversion of each
share of Series A-1 Preferred Stock shall be equal to $1 divided by $5 ($5 as
adjusted as provided herein shall be the "Series A-1 Conversion Price" and such
quotient being the "Series A-1 Conversion Rate") (calculated as to each
conversion to the nearest 1/100th of a share of Common Stock). The Series A-1
Conversion Price and Series A-1 Conversion Rate is subject to adjustment from
time to time pursuant to this paragraph B(4). Upon conversion of any share of
Series A-1 Preferred Stock, the Holder thereof shall continue to be entitled to
receive from the Corporation any accrued but unpaid dividends thereon.
(ii) In order to exercise the conversion rights accorded in paragraph
B(4)(a)(i), the Holder of a share or shares Series A-1 Preferred Stock shall
surrender to the Corporation the certificate or certificates evidencing the
share or shares of Series A-1 Preferred Stock to be converted, duly endorsed or
assigned to the Corporation or in blank, accompanied by a completed and signed
written notice of election to convert, specifying the number of shares of Series
A-1 Preferred Stock to be converted, together with the name or names, if other
than the Holder (subject to the terms of the Stockholders' Agreement), in which
the shares of Common Stock should be issued upon conversion and to whom any cash
in lieu of fractional shares shall be paid. The Person or Persons entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common Stock as of the
Conversion Date.
(iii) As promptly as practicable on or after the Conversion Date, the
Corporation shall issue and deliver a certificate or certificates for the number
of full shares of Common Stock issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of any share to the holder or,
upon the holder's written order, to the Person or Persons entitled to receive
the same (such cash payment will be based upon the Closing Price of the Common
Stock on the day preceding the Conversion Date). Upon conversion of only a
portion of the shares of Series A-1 Preferred Stock represented by any
certificate, a new certificate shall be issued
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<PAGE> 27
representing the unconverted portion of the certificate so surrendered without
cost to the Holder thereof. Upon the surrender of certificates representing
shares of Series A-1 Preferred Stock to be converted, such shares shall no
longer be deemed to be outstanding and all rights of a Holder with respect to
such shares surrendered for conversion shall immediately terminate except the
right to receive the Common Stock and other amounts pursuant to this paragraph
B(4).
(b) (i) Unless already converted, each share of Series A-1 Preferred
Stock then outstanding shall be converted into the number of fully-paid and
non-assessable shares of Common Stock into which such share of Series A-1
Preferred Stock is then convertible as determined in accordance with paragraph
B(4)(a)(i) hereof, automatically and without further action, immediately upon
the consummation by the Corporation of a Public Offering and contemporaneously
therewith the Holders of shares of Series A-1 Preferred Stock shall be treated
for all purposes as the record holder of the shares of Common Stock into which
such Holder's shares of Series A-1 Preferred Stock were converted.
(ii) Following the conversion of the outstanding shares of Series A-1
Preferred Stock pursuant to paragraph B(4)(b)(i) hereof, the holders of such
converted shares shall surrender the certificates formerly representing such
shares to the Corporation or any transfer agent for the Common Stock. Thereupon,
the Corporation shall, or shall cause its transfer agent, to issue and promptly
deliver a certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with the cash payment, if any, in
lieu of any fraction of any share to the holder or, upon the holder's written
order, to the Person or Persons entitled to receive the same (such cash payment
will be based upon the Closing Price of the Common Stock on the day of such
conversion).
(c) If appropriate or if the certificate or certificates evidencing the
converted shares of Series A-1 Preferred Stock were so legended or if required
by the terms of the Stockholders' Agreement, shares of Common Stock delivered
upon any conversion of shares of Series A-1 Preferred Stock shall bear a
restrictive legend as set forth in the Stockholders' Agreement and shall be
subject to the restrictions on transfer referenced in such legend and in the
Stockholders' Agreement.
(d) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of the issue or delivery of shares of
Common Stock to the Holder on conversion of shares of Series A-1 Preferred
Stock.
(e) In case:
(i) the Corporation shall authorize any transaction that would
require an adjustment to the Series A-1 Conversion Rate; or
(ii) the Corporation shall authorize any Fundamental Change; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall mail to the Holders, at their last known addresses as
they shall appear upon the stock transfer books of the Corporation, at least 20
days (or, in the case of a transaction
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<PAGE> 28
referred to in clauses (ii), (iv) or (v) of paragraph B(4)(f), 10 days) prior
to the applicable record, expiration, issuance or consummation date hereinafter
specified, a notice stating (x) the record date fixed for the determination of
holders of Common Stock entitled to the applicable issuance, dividend or
distribution, (y) the date of expiration of the applicable tender or exchange
offer or (z) the date on which the applicable Fundamental Change (other than a
tender or exchange offer), if any, is expected to be consummated, as the case
may be (but no failure to mail such notice or any defect therein or in the
mailing thereof shall affect the validity of the corporate action required to be
specified in such notice).
(f) The Series A-1 Conversion Rate shall be adjusted from time to time as
a result of the following adjustments to the Series A-1 Conversion Price:
(i) In case the Corporation shall pay or make a dividend or other
distribution on any class of capital stock of the Corporation payable in
Common Stock (other than any such dividend or other distribution of
Stapled Securities), the Series A-1 Conversion Price in effect at the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be adjusted by multiplying such Series A-1 Conversion
Price by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such
number of shares of Common Stock outstanding and the total number of
shares constituting such dividend or other distribution of Common Stock,
such adjustment to become effective immediately after the opening of
business on the day following the date fixed for such determination. (For
the purposes of determining adjustments to the Series A-1 Conversion
Price as set forth herein, shares of Common Stock held in the treasury of
the Corporation, and distributions or issuances in respect thereof, shall
be disregarded.)
(ii) In case the Corporation shall issue rights or warrants (other
than pursuant to a distribution of rights under a shareholder rights plan
of the Corporation in customary form or a dividend reinvestment plan or a
distribution of Stapled Securities) to all or substantially all holders
of Common Stock (whether by dividend or in a merger or otherwise)
entitling them, for a period of not more than 45 days from issuance, to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, then the Series A-1 Conversion Price in effect at the opening
of business on the day following the date fixed for such determination
shall be adjusted by multiplying such Series A-1 Conversion Price by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at the then
Current Market Price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so offered
for subscription or purchase, such adjustment to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For purposes of this paragraph B(4)(f)(ii),
the issuance of rights or warrants to subscribe for or purchase
securities convertible into Common Stock shall
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<PAGE> 29
be deemed to be the issuance of rights or warrants to purchase the Common
Stock into which such securities are convertible at an aggregate offering
price equal to the sum of the aggregate offering price of such securities
and the minimum aggregate amount (if any) payable upon conversion of such
securities into Common Stock. Such adjustment shall be made successively
whenever any such event shall occur. In case any rights or warrants
referred to in this paragraph in respect of which an adjustment shall
have been made shall expire unexercised, the Series A-1 Conversion Price
shall be readjusted at the time of such expiration to the Series A-1
Conversion Price that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(iii) In case outstanding shares of Common Stock shall be
subdivided (including by split) into a greater number of shares of Common
Stock, and conversely, in case outstanding shares of Common Stock shall
each be combined into a smaller number of shares of Common Stock
(including by reverse split), the Series A-1 Conversion Price in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately adjusted, in each
case, so that the Holder of a share of Series A-1 Preferred Stock
thereafter surrendered for conversion shall be entitled to receive as a
result of such combination or subdivision (without taking into account
any other adjustment hereunder) the number and kind of shares of Common
Stock that such Holder would have owned or have been entitled to receive
after the happening of any such subdivision or combination had such share
of Series A-1 Preferred Stock been converted immediately prior to the
date upon which such subdivision or combination becomes effective. An
adjustment made pursuant to this paragraph B(4)(f)(iii) shall become
effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
Such adjustment shall be made successively whenever any such event shall
occur.
(iv) In case the Corporation or any subsidiary of the Corporation
shall consummate a tender or exchange offer (other than an odd lot offer)
involving consideration in excess of 100% of the Current Market Price for
all or any portion of Common Stock, the Series A-1 Conversion Price in
effect immediately prior to the close of business on the date of
expiration of such tender or exchange offer shall be adjusted by
multiplying such Series A-1 Conversion Price by a fraction of which the
numerator shall be the Current Market Price on such date of expiration
less the Per Share Premium Amount paid in such tender or exchange offer
and the denominator shall be such Current Market Price of Common Stock,
such adjustment to become effective immediately prior to the opening of
business on the day following such date of expiration. Such adjustment
shall be made successively whenever any such event shall occur.
(v) In case the Corporation shall, by dividend or otherwise, make
a distribution referred to in clauses (i) or (iii) of this paragraph
B(4)(f), each Holder of a share or shares of Series A-1 Preferred Stock
converting such Series A-1 Preferred Stock subsequent to the close of
business on the date fixed for the determination of stockholders entitled
to receive such distribution and prior to the effectiveness of the Series
A-1 Conversion Price adjustment in respect of such distribution shall be
entitled to receive in addition to the shares of Common Stock otherwise
received upon conversion, on the date
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<PAGE> 30
of the effectiveness of such Series A-1 Conversion Price adjustment, such
number of shares of Common Stock as are equal to (x) the number of shares
of Common Stock such Holder would have received had he or she converted
such shares of Series A-1 Preferred Stock after the effectiveness of such
Series A-1 Conversion Price adjustment minus (y) the number of shares of
Common Stock otherwise received by such Holder on the conversion of such
shares of Series A-1 Preferred Stock.
(vi) Except when an adjustment of the Series A-1 Conversion Price
is required pursuant to paragraph B(4)(f)(ii) hereof, in case the
Corporation shall issue securities which provide at any time a right to
purchase, convert into or otherwise acquire Common Stock at a Diluted
Price less than the Series A-1 Conversion Price in effect from time to
time, the Series A-1 Conversion Price shall be adjusted by multiplying
such Series A-1 Conversion Price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the day the Diluted Price is determined plus the number of
shares of Common Stock which the aggregate amount of purchase price
payable pursuant to the securities with the Diluted Price would purchase
if the purchase price for such Common Stock were equal to the Series A-1
Conversion Price in effect on the day the Diluted Price is determined and
the denominator shall be the number of shares of Common Stock outstanding
at the close of business on the day the Diluted Price is determined plus
the number of shares of Common Stock purchasable, convertible into or
otherwise acquirable pursuant to the securities with the Diluted Price,
such adjustment to become effective immediately after the opening of
business on the day following the day the Diluted Price is determined.
For purposes of this paragraph B(4)(f)(vi), the issuance of rights or
warrants to subscribe for any securities described in the preceding
sentence shall be deemed to be the issuance of securities described in
such sentence; such adjustment shall be made successively whenever any
such event shall occur.
(vii) Subject to applicable regulatory approvals, the Corporation
may make with the consent of the Holders such adjustments in the Series
A-1 Conversion Rate and the Series A-1 Conversion Price, in addition to
those required by the foregoing paragraphs, as it considers to be
advisable to avoid or diminish any income tax to holders of Common Stock
or rights to purchase Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes.
(viii) Whenever the Series A-1 Conversion Rate and the Series A-1
Conversion Price are adjusted as a result of or pursuant to the preceding
paragraphs, the Corporation shall mail to the Holders a notice of the
adjustment at least fifteen days prior to the date the adjusted Series
A-1 Conversion Rate and the Series A-1 Conversion Price takes effect, and
such notice shall state the adjusted Series A-1 Conversion Rate and the
Series A-1 Conversion Price and the period each will be in effect.
(ix) The Corporation may not engage in any transaction if, as a
result thereof, the Series A-1 Conversion Price would be reduced below
the par value per share of the Common Stock.
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<PAGE> 31
(x) No adjustment in the Series A-1 Conversion Rate shall be
required unless such adjustment would require an increase or decrease of
at least 1% in the Series A-1 Conversion Rate; provided, however, that
any adjustments which by reason of this paragraph are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.
(xi) Whenever the Series A-1 Conversion Price is adjusted as
herein provided the Corporation shall promptly following such adjustment
(and in no event later than 10 Business Days thereafter) compute the
adjusted Series A-1 Conversion Price and shall prepare a certificate
signed by the Chief Financial Officer of the Corporation setting forth
the adjusted Series A-1 Conversion Price and resulting Series A-1
Conversion Rate and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall forthwith be filed
in the books of the Corporation and a copy thereof shall be delivered to
the Holders.
(xii) If any action would require adjustment of the Series A-1
Conversion Price or the property into which shares of Series A-1
Preferred Stock are convertible pursuant to more than one of the
provisions described in this paragraph in a manner such that such
adjustments are duplicative, only one adjustment shall be made.
(g) Prior to a Separation Event with respect to any Stapled Securities,
such Stapled Securities will be deemed, for purposes of the adjustments
contemplated hereby, to comprise part of the shares of Common Stock to which
such Stapled Securities appertain, and as a result, distributions in respect of
such Stapled Securities will be deemed, for such purposes, to be distributions
in respect of such shares of Common Stock.
(h) Each Holder of shares of Series A-1 Preferred Stock who converts any
shares of Series A-1 Preferred Stock after a Separation Event with respect to
any Stapled Securities shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, such
additional shares of Common Stock as are equal to the Fair Market Value at the
time of conversion of the rights to which such Holder would have been entitled
under the Stapled Securities that would have appertained to such shares of
Common Stock if such Holder had converted such shares of Series A-1 Preferred
Stock immediately before such Separation Event. Such adjustment shall be made
successively whenever any such event shall occur.
(i) In the event that the Corporation shall be a party to any Fundamental
Change, then lawful provisions shall be made as part of the terms of such
Fundamental Change whereby the Corporation or the Person formed by the
applicable consolidation or resulting from the applicable merger or which
acquires the applicable assets or the Corporation's shares, as the case may be,
pursuant to such Fundamental Change, is required to assume the obligations
hereunder, and such adjustments, including in the Series A-1 Conversion Price
and the Series A-1 Conversion Rate , shall be made as are equitable so as to
preserve to the Holder the rights and benefits inherent in the Series A-1
Preferred Stock and so as to reflect the inability of the Holder to participate
in any premium inherent in a Fundamental Change on the same basis as any holder
of Common Stock. The Corporation further agrees that it will not be a party to
or permit such
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<PAGE> 32
Fundamental Change to occur unless such provisions are so made as a part of the
terms thereof. The substance of this paragraph shall similarly apply to
successive Fundamental Changes.
(j) If the conversion rights of Holders of shares of Series A-1 Preferred
Stock shall be adjusted pursuant to any of the preceding three paragraphs, then
the Corporation shall mail to the Holders of the Series A-1 Preferred Stock, at
their last addresses as they shall appear upon the stock transfer books of the
Corporation, within 5 Business Days after consummation of the transaction
triggering such adjustment, a notice describing such adjustment in appropriate
detail.
(k) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversion of the Series A-1
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series A-1 Preferred Stock not
theretofore converted. For purposes of this paragraph B(4)(k) the number of
shares of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of Series A-1 Preferred Stock shall be computed as if at the
time of computation all such outstanding shares were held by a single Holder.
(l) Fair Market Value shall be determined in good faith by the Board of
Directors; provided, however, that the Holders of a majority of the shares of
the Series A-1 Preferred Stock may elect to have Fair Market Value determined by
the Appraiser, such election to be in writing and delivered to the Corporation
within 20 days after the Holders' receipt of the notice provided for in
paragraph B(4)(e) hereof. The Appraiser shall be selected, as soon as
practicable but no later than ten Business Days after the Holders elect to
request a third party appraisal, by a designee of the Holders, a designee of the
Corporation and a third party jointly selected by the designees of Holders and
the Corporation. The Appraiser so selected shall determine the Fair Market Value
as soon as practicable but not later than 30 days after its selection. The fees
of the Appraiser shall be borne by the Corporation.
(5) Voting Rights. Except as set forth in this paragraph B(5) and
required by applicable law, the Holders of the issued and outstanding shares of
the Series A-1 Preferred Stock have no voting rights. For so long as any shares
of the Series A-1 Preferred Stock are outstanding, the Corporation shall not,
without the affirmative consent or approval of Holders of a majority of the then
outstanding shares of Series A-1 Preferred Stock, voting as a separate class,
given at a meeting called for such purposes or by written consent:
(i) amend, alter or repeal, whether by merger, consolidation or
otherwise, the Certificate of Incorporation or Bylaws of the Corporation
in any manner that would adversely affect the rights, preferences, powers
and privileges of the Series A-1 Preferred Stock, it being, understood
that any amendment of the Certificate of Incorporation or Bylaws of the
Corporation to increase the number of directors comprising the full Board
of Directors or to afford any stockholder of the Corporation preemptive
rights (or enter into any agreement granting such rights to a third
party) shall be deemed to adversely affect the rights, preferences,
powers and privileges of the Series A-1 Preferred Stock;
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<PAGE> 33
(ii) reclassify the shares of Common Stock or any class or series
of capital stock of the Corporation hereafter created into any shares of
any class or series of capital stock of the Corporation that, with
respect to liquidation preference or dividends, ranks senior to or on
parity with the Series A-1 Preferred Stock;
(iii) except as specified in the Stockholders' Agreement as being
permitted to be granted under employee benefit plans of the Corporation,
as specified in the Stockholders' Agreement as being required to be
issued on each Dividend Payment Date following the issuance by the
Corporation of shares of capital stock of the Corporation that by their
terms are entitled to receive dividends payable in shares of capital
stock (other than Common Stock, Series A Additional Shares, Series A-1
Additional Shares, Series A-2 Additional Shares, Series B Additional
Shares, Series C Additional Shares and Series D Additional Shares), for
the shares of Series A Preferred Stock, Series A-2 Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock and Common Stock issued or issuable upon conversion of the
Convertible Preferred Stock, issue any class or series of capital stock
of the Corporation (or rights, options or warrants to purchase or
otherwise acquire any such capital stock of the Corporation or notes,
debentures or obligations convertible into any such capital stock);
(iv) adopt an agreement relating to, or otherwise authorize
consummation of, or consummate, a recapitalization, reorganization,
merger, consolidation or similar business combination transaction
involving the Corporation or a sale or other transfer of all or
substantially all of the assets of the Corporation;
(v) except as set forth in paragraphs A(2), B(2), C(2), D(2), E(2)
and F(2) hereof, declare or pay any dividend or make any distribution of
assets on any series or class of capital stock of the Corporation whether
in existence as of the date of adoption of the Certificate of
Incorporation or hereafter created (other than pro-rata dividends of
Common Stock on the Common Stock or stock splits); or
(vi) take any action, or refrain from taking any action, which
could reasonably be expected to adversely affect the rights, preferences,
powers and privileges of the Series A-1 Preferred Stock.
C. SERIES A-2 CONVERTIBLE PREFERRED STOCK
(1) Rank. The Series A-2 Preferred Stock will rank with respect to
dividend rights and rights on liquidation, winding-up and dissolution, equal and
on parity with the Series A Preferred Stock, Series A-1 Preferred Stock, Series
C Preferred Stock and Series D Preferred Stock and senior to A-2 Relative Junior
Securities.
(2) Dividends and Distributions. (a) The Holders of shares of Series
A-2 Preferred Stock shall be entitled to receive, when, as and if declared by
the Board of Directors, out of funds legally available for the payment of
dividends, .12 additional shares of Series A-2 Preferred Stock per annum per
full share of Series A-2 Preferred Stock issued and outstanding ("Series A-2
Additional Shares"). Such dividends shall be payable on each Dividend Payment
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<PAGE> 34
Date, and, if the date of the Public Offering shall be any day other than the
day after a Dividend Payment Date, immediately prior to a Public Offering (in an
amount equal to the number of Series A-2 Additional Shares that would payable on
the next Dividend Payment Date multiplied by a fraction the numerator of which
shall be the number of days elapsed since the preceding Dividend Payment Date
and the denominator of which shall be 365). Dividends on the Series A-2
Preferred Stock shall be cumulative from the Issue Date (except that dividends
on Series A-2 Additional Shares shall accrue from the date such Series A-2
Additional Shares are issued or would have been issued in accordance with this
Certificate of Designation if such dividends had been declared). Such dividends
shall be payable to the Holders of record of shares of the Series A-2 Preferred
Stock, as they appear on the stock records of the Corporation at the close of
business on the record date for such dividends. Upon the declaration of such
dividends (other than dividends payable immediately prior to a Public Offering),
the Board of Directors shall fix the relevant Dividend Payment Date as the
record date for such dividend.
(b) So long as any shares of the Series A-2 Preferred Stock are
outstanding, no dividends (other than Series A Additional Shares, Series A-1
Additional Shares, Series B Additional Shares, Series C Additional Shares,
Series D Additional Shares and dividends or distributions paid in shares of, or
options, warrants or rights to subscribe for or purchase shares of, A-2 Relative
Junior Securities) shall be declared or paid or set apart for payment or other
distribution declared or made upon A-2 Relative Junior Securities, nor shall any
A-2 Relative Junior Securities be redeemed, purchased or otherwise acquired
(other than a redemption, purchase or other acquisition of shares of Common
Stock made for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation, directly or indirectly (except by conversion
into or exchange for A-2 Relative Junior Securities).
(c) The Holders of the Series A-2 Preferred Stock shall be entitled to
receive other dividends and distributions, when, as and if declared by the Board
of Directors out of funds legally available for the payment of dividends, in a
sum sufficient for the payment of, the dividend or distribution such Holder
would have been entitled to receive if such Holder had converted its shares of
Series A-2 Preferred Stock immediately prior to the declaration of any dividend
or distribution on any class or series of capital stock of the Corporation, as
the case may be, on all of the then outstanding shares of Series A-2 Preferred
Stock prior to the payment of any dividend or distribution on any A-2 Relative
Junior Securities (any such declaration being subject to the approval of the
Holders of the Series A-2 Preferred Stock as provided in paragraph C(5) hereof);
provided, that with respect to dividends or distributions payable in shares of
Common Stock, the Holders of Series A-2 Preferred Stock shall not be entitled to
such dividends or distribution, but the Series A-2 Conversion Rate shall be
adjusted following such dividend or distribution in accordance with the terms
hereof.
(3) Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of A-2
Relative Junior Securities, the Holders of the shares of Series A-2 Preferred
Stock shall, at their sole election, be entitled to receive $1 per share of
Series A-2 Preferred Stock (the "Series A-2 Liquidation Preference"), plus an
amount equal to all dividends
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<PAGE> 35
accrued and unpaid thereon to the date of final distribution to such Holders;
but such Holders shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the Holders of the shares
of Series A-2 Preferred Stock, the Holders of shares of Series A Preferred
Stock, the Holders of shares of Series A-1 Preferred Stock, the Holders of
shares of Series C Preferred Stock and the Holders of shares of Series D
Preferred Stock shall be insufficient to pay in full the aggregate of the Series
A-2 Liquidation Preference, the Series A Liquidation Preference, the Series A-1
Liquidation Preference, the Series C Liquidation Preference and the Series D
Liquidation Preference, then such assets, or the proceeds thereof, shall be
distributed among the Holders of shares of Series A-2 Preferred Stock, the
Holders of shares of the Series A Preferred Stock, the Holders of shares of
Series A-1 Preferred Stock, the Holders of shares of Series C Preferred Stock
and the Holders of shares of Series D Preferred Stock ratably in accordance with
the respective amounts that would be payable on such shares of Series A-2
Preferred Stock, Series A Preferred Stock, Series A-1 Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock if all amounts payable thereon were
paid in full.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the Holders of the Series A-2
Preferred Stock, Holders of the Series A Preferred Stock, Holders of Series A-1
Preferred Stock, Holders of Series C Preferred Stock and the Holders of Series D
Preferred Stock as provided in this paragraph C(3), paragraph A(3), paragraph
B(3), paragraph E(3) and paragraph F(3), any other series or class or classes of
A-2 Relative Junior Securities shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the Holders of the Series A-2 Preferred
Stock, Series A Preferred Stock, Series A-1 Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock shall not be entitled to share therein.
(c) If an Event of Default occurs and is continuing, then and in every
such case the Holders of a majority of the outstanding shares of Series A-2
Preferred Stock have the right upon written notice delivered to the Corporation
to cause the Series A-2 Liquidation Preference for each share of Series A-2
Preferred Stock to be paid to the Holder of each such share of Series A-2
Preferred Stock, plus an amount equal to all dividends accrued and unpaid
thereon to the date of final distribution. The right to accelerate the Series
A-2 Preferred Stock provided by the foregoing sentence shall be in addition to
other remedies available to the Holders, whether in law or at equity.
(4) Conversion. (a)(i) A Holder of shares of Series A-2 Preferred
Stock shall have the right at any time and from time to time, at the option of
the Holder, subject to and upon compliance with the provisions of this paragraph
C(4), to convert any or all outstanding shares of Series A-2 Preferred Stock
held by such Holder, but not fractions of shares, into fully paid and
non-assessable shares of Common Stock by surrendering such shares to be
converted, such conversion to be made in the manner provided in this paragraph
C(4). The number of shares of Common Stock deliverable upon conversion of each
share of Series A-2 Preferred Stock shall be equal to $1 divided by $6.15 ($6.15
as adjusted as provided herein shall be the "Series A-2 Conversion Price" and
such quotient being the "Series A-2 Conversion Rate") (calculated as to each
conversion to the nearest 1/100th of a share of Common Stock). The Series A-2
Conversion Price and Series A-2 Conversion Rate is subject to adjustment from
time to time
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<PAGE> 36
pursuant to this paragraph C(4). Upon conversion of any share of Series A-2
Preferred Stock, the Holder thereof shall continue to be entitled to receive
from the Corporation any accrued but unpaid dividends thereon.
(ii) In order to exercise the conversion rights accorded in paragraph
C(4)(a)(i), the Holder of a share or shares Series A-2 Preferred Stock shall
surrender to the Corporation the certificate or certificates evidencing the
share or shares of Series A-2 Preferred Stock to be converted, duly endorsed or
assigned to the Corporation or in blank, accompanied by a completed and signed
written notice of election to convert, specifying the number of shares of Series
A-2 Preferred Stock to be converted, together with the name or names, if other
than the Holder (subject to the terms of the Stockholders' Agreement), in which
the shares of Common Stock should be issued upon conversion and to whom any cash
in lieu of fractional shares shall be paid. Each conversion shall be deemed to
have been effected immediately prior to the close of business on the day on
which the notice of conversion was delivered by the Holder (the "Conversion
Date"). The Person or Persons entitled to receive the Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such Common Stock as of the Conversion Date.
(iii) As promptly as practicable on or after the Conversion Date, the
Corporation shall issue and deliver a certificate or certificates for the number
of full shares of Common Stock issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of any share to the holder or,
upon the holder's written order, to the Person or Persons entitled to receive
the same (such cash payment will be based upon the Closing Price of the Common
Stock on the day preceding the Conversion Date). Upon conversion of only a
portion of the shares of Series A-2 Preferred Stock represented by any
certificate, a new certificate shall be issued representing the unconverted
portion of the certificate so surrendered without cost to the Holder thereof.
Upon the surrender of certificates representing shares of Series A-2 Preferred
Stock to be converted, such shares shall no longer be deemed to be outstanding
and all rights of a Holder with respect to such shares surrendered for
conversion shall immediately terminate except the right to receive the Common
Stock and other amounts pursuant to this paragraph C(4).
(b) (i) Unless already converted, each share of Series A-2 Preferred
Stock then outstanding shall be converted into the number of fully-paid and
non-assessable shares of Common Stock into which such share of Series A-2
Preferred Stock is then convertible as determined in accordance with paragraph
C(4)(a)(i) hereof, automatically and without further action, immediately upon
the consummation by the Corporation of a Public Offering and contemporaneously
therewith the Holders of shares of Series A-2 Preferred Stock shall be treated
for all purposes as the record holder of the shares of Common Stock into which
such Holder's shares of Series A-2 Preferred Stock were converted.
(ii) Following the conversion of the outstanding shares of Series A-2
Preferred Stock pursuant to paragraph C(4)(b)(i) hereof, the holders of such
converted shares shall surrender the certificates formerly representing such
shares to the Corporation or any transfer agent for the Common Stock. Thereupon,
the Corporation shall, or shall cause its transfer agent, to issue and promptly
deliver a certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with the cash payment, if any, in
lieu of any fraction of any share to the holder or, upon the holder's written
order, to the Person or Persons entitled to
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<PAGE> 37
receive the same (such cash payment will be based upon the Closing Price of the
Common Stock on the day of such conversion).
(c) If appropriate or if the certificate or certificates evidencing the
converted shares of Series A-2 Preferred Stock were so legended or if required
by the terms of the Stockholders' Agreement, shares of Common Stock delivered
upon any conversion of shares of Series A-2 Preferred Stock shall bear a
restrictive legend as set forth in the Stockholders' Agreement and shall be
subject to the restrictions on transfer referenced in such legend and in the
Stockholders' Agreement.
(d) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of the issue or delivery of shares of
Common Stock to the Holder on conversion of shares of Series A-2 Preferred
Stock.
(e) In case:
(i) the Corporation shall authorize any transaction that would
require an adjustment to the Series A-2 Conversion Rate; or
(ii) the Corporation shall authorize any Fundamental Change; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall mail to the Holders, at their last known addresses as
they shall appear upon the stock transfer books of the Corporation, at least 20
days (or, in the case of a transaction referred to in clauses (ii), (iv) or (v)
of paragraph C(4)(f), 10 days) prior to the applicable record, expiration,
issuance or consummation date hereinafter specified, a notice stating (x) the
record date fixed for the determination of holders of Common Stock entitled to
the applicable issuance, dividend or distribution, (y) the date of expiration of
the applicable tender or exchange offer or (z) the date on which the applicable
Fundamental Change (other than a tender or exchange offer), if any, is expected
to be consummated, as the case may be (but no failure to mail such notice or any
defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
(f) The Series A-2 Conversion Rate shall be adjusted from time to time as
a result of the following adjustments to the Series A-2 Conversion Price:
(i) In case the Corporation shall pay or make a dividend or other
distribution on any class of capital stock of the Corporation payable in
Common Stock (other than any such dividend or other distribution of
Stapled Securities), the Series A-2 Conversion Price in effect at the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be adjusted by multiplying such Series A-2 Conversion
Price by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such
number of shares of Common Stock outstanding and the total number of
shares constituting such dividend or other distribution of Common Stock,
such adjustment to
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<PAGE> 38
become effective immediately after the opening of business on the day
following the date fixed for such determination. (For the purposes of
determining adjustments to the Series A-2 Conversion Price as set forth
herein, shares of Common Stock held in the treasury of the Corporation,
and distributions or issuances in respect thereof, shall be disregarded.)
(ii) In case the Corporation shall issue rights or warrants (other
than pursuant to a distribution of rights under a shareholder rights plan
of the Corporation in customary form or a dividend reinvestment plan or a
distribution of Stapled Securities) to all or substantially all holders
of Common Stock (whether by dividend or in a merger or otherwise)
entitling them, for a period of not more than 45 days from issuance, to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, then the Series A-2 Conversion Price in effect at the opening
of business on the day following the date fixed for such determination
shall be adjusted by multiplying such Series A-2 Conversion Price by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at the then
Current Market Price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so offered
for subscription or purchase, such adjustment to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For purposes of this paragraph C(4)(f)(ii),
the issuance of rights or warrants to subscribe for or purchase
securities convertible into Common Stock shall be deemed to be the
issuance of rights or warrants to purchase the Common Stock into which
such securities are convertible at an aggregate offering price equal to
the sum of the aggregate offering price of such securities and the
minimum aggregate amount (if any) payable upon conversion of such
securities into Common Stock. Such adjustment shall be made successively
whenever any such event shall occur. In case any rights or warrants
referred to in this paragraph in respect of which an adjustment shall
have been made shall expire unexercised, the Series A-2 Conversion Price
shall be readjusted at the time of such expiration to the Series A-2
Conversion Price that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(iii) In case outstanding shares of Common Stock shall be
subdivided (including by split) into a greater number of shares of Common
Stock, and conversely, in case outstanding shares of Common Stock shall
each be combined into a smaller number of shares of Common Stock
(including by reverse split), the Series A-2 Conversion Price in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately adjusted, in each
case, so that the Holder of a share of Series A-2 Preferred Stock
thereafter surrendered for conversion shall be entitled to receive as a
result of such combination or subdivision (without taking into account
any other adjustment hereunder) the number and kind of shares of Common
Stock that such Holder would have owned or have been entitled to receive
after the happening of any such subdivision or combination had such share
of Series A-2 Preferred
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<PAGE> 39
Stock been converted immediately prior to the date upon which such
subdivision or combination becomes effective. An adjustment made pursuant
to this paragraph C(4)(f)(iii) shall become effective immediately after
the opening of business on the day following the day upon which such
subdivision or combination becomes effective. Such adjustment shall be
made successively whenever any such event shall occur.
(iv) In case the Corporation or any subsidiary of the Corporation
shall consummate a tender or exchange offer (other than an odd lot offer)
involving consideration in excess of 100% of the Current Market Price for
all or any portion of Common Stock, the Series A-2 Conversion Price in
effect immediately prior to the close of business on the date of
expiration of such tender or exchange offer shall be adjusted by
multiplying such Series A-2 Conversion Price by a fraction of which the
numerator shall be the Current Market Price on such date of expiration
less the Per Share Premium Amount paid in such tender or exchange offer
and the denominator shall be such Current Market Price of Common Stock,
such adjustment to become effective immediately prior to the opening of
business on the day following such date of expiration. Such adjustment
shall be made successively whenever any such event shall occur.
(v) In case the Corporation shall, by dividend or otherwise, make
a distribution referred to in clauses (i) or (iii) of this paragraph
C(4)(f), each Holder of a share or shares of Series A-2 Preferred Stock
converting such Series A-2 Preferred Stock subsequent to the close of
business on the date fixed for the determination of stockholders entitled
to receive such distribution and prior to the effectiveness of the Series
A-2 Conversion Price adjustment in respect of such distribution shall be
entitled to receive in addition to the shares of Common Stock otherwise
received upon conversion, on the date of the effectiveness of such Series
A-2 Conversion Price adjustment, such number of shares of Common Stock as
are equal to (x) the number of shares of Common Stock such Holder would
have received had he or she converted such shares of Series A-2 Preferred
Stock after the effectiveness of such Series A-2 Conversion Price
adjustment minus (y) the number of shares of Common Stock otherwise
received by such Holder on the conversion of such shares of Series A-2
Preferred Stock.
(vi) Except when an adjustment of the Series A-2 Conversion Price
is required pursuant to paragraph C(4)(f)(ii) hereof, in case the
Corporation shall issue securities which provide at any time a right to
purchase, convert into or otherwise acquire Common Stock at a Diluted
Price less than the Series A-2 Conversion Price in effect from time to
time, the Series A-2 Conversion Price shall be adjusted by multiplying
such Series A-2 Conversion Price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the day the Diluted Price is determined plus the number of
shares of Common Stock which the aggregate amount of purchase price
payable pursuant to the securities with the Diluted Price would purchase
if the purchase price for such Common Stock were equal to the Series A-2
Conversion Price in effect on the day the Diluted Price is determined and
the denominator shall be the number of shares of Common Stock outstanding
at the close of business on the day the Diluted Price is determined plus
the number of shares of Common Stock purchasable, convertible into or
otherwise acquirable pursuant to the securities with the Diluted Price,
such adjustment to become effective immediately after the opening of
business on the
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<PAGE> 40
day following the day the Diluted Price is determined. For purposes of
this paragraph C(4)(f)(vi), the issuance of rights or warrants to
subscribe for any securities described in the preceding sentence shall be
deemed to be the issuance of securities described in such sentence; such
adjustment shall be made successively whenever any such event shall
occur.
(vii) Subject to applicable regulatory approvals, the Corporation
may make with the consent of the Holders such adjustments in the Series
A-2 Conversion Price and the Series A-2 Conversion Rate, in addition to
those required by the foregoing paragraphs, as it considers to be
advisable to avoid or diminish any income tax to holders of Common Stock
or rights to purchase Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes.
(viii) Whenever the Series A-2 Conversion Rate and the Series A-2
Conversion Price are adjusted as a result of or pursuant to the preceding
paragraphs, the Corporation shall mail to the Holders a notice of the
adjustment at least fifteen days prior to the date the adjusted Series
A-2 Conversion Rate and the Series A-2 Conversion Price takes effect, and
such notice shall state the adjusted Series A-2 Conversion Rate and the
Series A-2 Conversion Price and the period each will be in effect.
(ix) The Corporation may not engage in any transaction if, as a
result thereof, the Series A-2 Conversion Price would be reduced below
the par value per share of the Common Stock.
(x) No adjustment in the Series A-2 Conversion Rate shall be
required unless such adjustment would require an increase or decrease of
at least 1% in the Series A-2 Conversion Rate; provided, however, that
any adjustments which by reason of this paragraph are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.
(xi) Whenever the Series A-2 Conversion Price is adjusted as
herein provided the Corporation shall promptly following such adjustment
(and in no event later than 10 Business Days thereafter) compute the
adjusted Series A-2 Conversion Price and shall prepare a certificate
signed by the Chief Financial Officer of the Corporation setting forth
the adjusted Series A-2 Conversion Price and resulting Series A-2
Conversion Rate and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall forthwith be filed
in the books of the Corporation and a copy thereof shall be delivered to
the Holders.
(xii) If any action would require adjustment of the Series A-2
Conversion Price or the property into which shares of Series A-2
Preferred Stock are convertible pursuant to more than one of the
provisions described in this paragraph in a manner such that such
adjustments are duplicative, only one adjustment shall be made.
(g) Prior to a Separation Event with respect to any Stapled Securities,
such Stapled Securities will be deemed, for purposes of the adjustments
contemplated hereby, to comprise part
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<PAGE> 41
of the shares of Common Stock to which such Stapled Securities appertain, and as
a result, distributions in respect of such Stapled Securities will be deemed,
for such purposes, to be distributions in respect of such shares of Common
Stock.
(h) Each Holder of shares of Series A-2 Preferred Stock who converts any
shares of Series A-2 Preferred Stock after a Separation Event with respect to
any Stapled Securities shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, such
additional shares of Common Stock as are equal to the Fair Market Value at the
time of conversion of the rights to which such Holder would have been entitled
under the Stapled Securities that would have appertained to such shares of
Common Stock if such Holder had converted such shares of Series A-2 Preferred
Stock immediately before such Separation Event. Such adjustment shall be made
successively whenever any such event shall occur.
(i) In the event that the Corporation shall be a party to any Fundamental
Change, then lawful provisions shall be made as part of the terms of such
Fundamental Change whereby the Corporation or the Person formed by the
applicable consolidation or resulting from the applicable merger or which
acquires the applicable assets or the Corporation's shares, as the case may be,
pursuant to such Fundamental Change, is required to assume the obligations
hereunder, and such adjustments, including in the Series A-2 Conversion Price
and the Series A-2 Conversion Rate, shall be made as are equitable so as to
preserve to the Holder the rights and benefits inherent in the Series A-2
Preferred Stock and so as to reflect the inability of the Holder to participate
in any premium inherent in a Fundamental Change on the same basis as any holder
of Common Stock. The Corporation further agrees that it will not be a party to
or permit such Fundamental Change to occur unless such provisions are so made as
a part of the terms thereof. The substance of this paragraph shall similarly
apply to successive Fundamental Changes.
(j) If the conversion rights of Holders of shares of Series A-2 Preferred
Stock shall be adjusted pursuant to any of the preceding three paragraphs, then
the Corporation shall mail to the Holders of the Series A-2 Preferred Stock, at
their last addresses as they shall appear upon the stock transfer books of the
Corporation, within 5 Business Days after consummation of the transaction
triggering such adjustment, a notice describing such adjustment in appropriate
detail.
(k) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversion of the Series A-2
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series A-2 Preferred Stock not
theretofore converted. For purposes of this paragraph C(4)(k) the number of
shares of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of Series A-2 Preferred Stock shall be computed as if at the
time of computation all such outstanding shares were held by a single Holder.
(l) Fair Market Value shall be determined in good faith by the Board of
Directors; provided, however, that the Holders of a majority of the shares of
the Series A-2 Preferred Stock may elect to have Fair Market Value determined by
the Appraiser, such election to be in writing and delivered to the Corporation
within 20 days after the Holders' receipt of the notice provided
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<PAGE> 42
for in paragraph C(4)(e) hereof. The Appraiser shall be selected, as soon as
practicable but no later than ten Business Days after the Holders elect to
request a third party appraisal, by a designee of the Holders, a designee of the
Corporation and a third party jointly selected by the designees of Holders and
the Corporation. The Appraiser so selected shall determine the Fair Market Value
as soon as practicable but not later than 30 days after its selection. The fees
of the Appraiser shall be borne by the Corporation.
(5) Voting Rights. Except as set forth in this paragraph C(5) and
required by applicable law, the Holders of the issued and outstanding shares of
the Series A-2 Preferred Stock have no voting rights. For so long as any shares
of the Series A-2 Preferred Stock are outstanding, the Corporation shall not
without the affirmative consent or approval of Holders of a majority of the then
outstanding shares of Series A-2 Preferred Stock, voting as a separate class,
given at a meeting called for such purposes or by written consent:
(i) amend, alter or repeal, whether by merger, consolidation or
otherwise, the Certificate of Incorporation or Bylaws of the Corporation
in any manner that would adversely affect the rights, preferences, powers
and privileges of the Series A-2 Preferred Stock, it being, understood
that any amendment of the Certificate of Incorporation or Bylaws of the
Corporation to increase the number of directors comprising the full Board
of Directors or to afford any stockholder of the Corporation preemptive
rights (or enter into any agreement granting such rights to a third
party) shall be deemed to adversely affect the rights, preferences,
powers and privileges of the Series A-2 Preferred Stock.
(ii) reclassify the shares of Common Stock or any class or series
of capital stock of the Corporation hereafter created into any shares of
any class or series of capital stock of the Corporation that, with
respect to liquidation preference or dividends, ranks senior to or on
parity with the Series A-2 Preferred Stock;
(iii) issue any class or series of capital stock of the
Corporation, other than shares of Series A Preferred Stock, Series A-1
Preferred Stock, Series A-2 Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock (or rights, options
or warrants to purchase or otherwise acquire any such capital stock of
the Corporation or notes, debentures or obligations convertible into any
such capital stock), that, with respect to liquidation preference or
dividends, ranks senior to or on parity with the Series A-2 Preferred
Stock;
(iv) except as set forth in paragraphs A(2), B(2), C(2), D(2),
E(2) and F(2) hereof, declare or pay any dividend or make any
distribution of assets on any series or class of capital stock of the
Corporation whether in existence as of the date of adoption of the
Certificate of Incorporation or hereafter created (other than pro-rata
dividends of Common Stock on the Common Stock or stock splits); or
(v) take any action, or refrain from taking any action, which
could reasonably be expected to adversely affect the rights, preferences,
powers and privileges of the Series A-2 Preferred Stock.
D. SERIES B CONVERTIBLE PREFERRED STOCK
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(1) Rank. The Series B Preferred Stock will rank with respect to
dividend rights and rights on liquidation, winding-up and dissolution, junior to
the Series A Preferred Stock, Series A-1 Preferred Stock, Series A-2 Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock and senior to B
Relative Junior Securities.
(2) Dividends and Distributions. (a) The Holders of shares of Series B
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available for the payment of dividends,
.12 additional shares of Series B Preferred Stock per annum per full share of
Series B Preferred Stock issued and outstanding ("Series B Additional Shares").
Such dividends shall be payable on each Dividend Payment Date, and, if the date
of the Public Offering shall be any day other than the day after a Dividend
Payment Date, immediately prior to a Public Offering (in an amount equal to the
number of Series B Additional Shares that would payable on the next Dividend
Payment Date multiplied by a fraction the numerator of which shall be the number
of days elapsed since the preceding Dividend Payment Date and the denominator of
which shall be 365). Dividends on the Series B Preferred Stock shall be
cumulative from the Issue Date (except that dividends on Series B Additional
Shares shall accrue from the date such Series B Additional Shares are issued or
would have been issued in accordance with this Certificate of Designation if
such dividends had been declared). Such dividends shall be payable to the
Holders of record of shares of the Series B Preferred Stock, as they appear on
the stock records of the Corporation at the close of business on the record date
for such dividends. Upon the declaration of such dividends (other than dividends
payable immediately prior to a Public Offering), the Board of Directors shall
fix the relevant Dividend Payment Date as the record date for such dividend.
(b) So long as any shares of the Series B Preferred Stock are
outstanding, no dividends (other than Series A Additional Shares, Series A-1
Additional Shares, Series A-2 Additional Shares, Series C Additional Shares,
Series D Additional Shares and dividends or distributions paid in shares of, or
options, warrants or rights to subscribe for or purchase shares of, B Relative
Junior Securities) shall be declared or paid or set apart for payment or other
distribution declared or made upon B Relative Junior Securities, nor shall any B
Relative Junior Securities be redeemed, purchased or otherwise acquired (other
than a redemption, purchase or other acquisition of shares of Common Stock made
for purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any such stock) by the
Corporation, directly or indirectly (except by conversion into or exchange for B
Relative Junior Securities).
(c) The Holders of the Series B Preferred Stock shall be entitled to
receive other dividends and distributions, when, as and if declared by the Board
of Directors out of funds legally available for the payment of dividends, in a
sum sufficient for the payment of, the dividend or distribution such Holder
would have been entitled to receive if such Holder had converted its shares of
Series B Preferred Stock immediately prior to the declaration of any dividend or
distribution on any class or series of capital stock of the Corporation, as the
case may be, on all of the then outstanding shares of Series B Preferred Stock
prior to the payment of any dividend or distribution on any B Relative Junior
Securities (any such declaration being subject to the approval of the Holders of
the Series B Preferred Stock as provided in paragraph D(5) hereof); provided,
that with respect to dividends or distributions payable in shares of Common
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Stock, the Holders of Series B Preferred Stock shall not be entitled to such
dividends or distribution, but the Series B Conversion Rate shall be adjusted
following such dividend or distribution in accordance with the terms hereof.
(3) Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of B Relative
Junior Securities, the Holders of the shares of Series B Preferred Stock shall,
at their sole election, be entitled to receive $1 per share of Series B
Preferred Stock (the "Series B Liquidation Preference"), plus an amount equal to
all dividends accrued and unpaid thereon to the date of final distribution to
such Holders; but such Holders shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the Holders of the
shares of Series B Preferred Stock shall be insufficient to pay in full the
preferential amount aforesaid, then such assets, or the proceeds thereof, shall
be distributed among the Holders of shares of Series B Preferred Stock ratably
in accordance with the respective amounts that would be payable on such shares
of Series B Preferred Stock if all amounts payable thereon were paid in full.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the Holders of the Series B
Preferred Stock, as provided in this paragraph D(3), any other series or class
or classes of B Relative Junior Securities shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any and
all assets remaining to be paid or distributed, and the Holders of the Series B
Preferred Stock shall not be entitled to share therein.
(c) If an Event of Default occurs and is continuing, then and in every
such case the Holders of a majority of the outstanding shares of Series B
Preferred Stock have the right upon written notice delivered to the Corporation
to cause the Series B Liquidation Preference for each share of Series B
Preferred Stock to be paid to Holder of each such share of Series B Preferred
Stock, plus an amount equal to all dividends accrued and unpaid thereon to the
date of final distribution. The right to accelerate the Series B Preferred Stock
provided by the foregoing sentence shall be in addition to other remedies
available to the Holders, whether in law or at equity.
(4) Conversion. (a) Shares of Series B Preferred Stock shall be
converted into fully paid and non-assessable shares of Common Stock as specified
in paragraph (b) below. The number of shares of Common Stock deliverable upon
conversion of each share of Series B Preferred Stock shall be equal to $1
divided by $5 ($5 as adjusted as provided herein, shall be the "Series B
Conversion Price" and such quotient being the "Series B Conversion Rate")
(calculated as to each conversion to the nearest 1/100th of a share of Common
Stock). The Series B Conversion Price and Series B Conversion Rate is subject to
adjustment from time to time pursuant to this paragraph D(4). Upon conversion of
any share of Series B Preferred Stock, the Holder thereof shall continue to be
entitled to receive from the Corporation any accrued but unpaid dividends
thereon.
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(b) (i) Each share of Series B Preferred Stock then outstanding shall be
converted into the number of fully-paid and non-assessable shares of Common
Stock into which such share of Series B Preferred Stock is then convertible as
determined in accordance with paragraph D(4)(a)(i) hereof, automatically and
without further action, immediately upon the consummation by the Corporation of
a Public Offering and contemporaneously therewith the Holders of shares of
Series B Preferred Stock shall be treated for all purposes as the record holder
of the shares of Common Stock into which such Holder's shares of Series B
Preferred Stock were converted.
(ii) Following the conversion of the outstanding shares of Series B
Preferred Stock pursuant to paragraph D(4)(b)(i) hereof, the holders of such
converted shares shall surrender the certificates formerly representing such
shares to the Corporation or any transfer agent for the Common Stock. Thereupon,
the Corporation shall, or shall cause its transfer agent, to issue and promptly
deliver a certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with the cash payment, if any, in
lieu of any fraction of any share to the holder or, upon the holder's written
order, to the Person or Persons entitled to receive the same (such cash payment
will be based upon the Closing Price of the Common Stock on the day of such
conversion).
(c) If appropriate or if the certificate or certificates evidencing the
converted shares of Series B Preferred Stock were so legended or if required by
the terms of the Stockholders' Agreement, shares of Common Stock delivered upon
any conversion of shares of Series B Preferred Stock shall bear a restrictive
legend as set forth in the Stockholders' Agreement and shall be subject to the
restrictions on transfer referenced in such legend and in the Stockholders'
Agreement.
(d) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of the issue or delivery of shares of
Common Stock to the Holder on conversion of shares of Series B Preferred Stock.
(e) In case:
(i) the Corporation shall authorize any transaction that would
require an adjustment to the Series B Conversion Rate; or
(ii) the Corporation shall authorize any Fundamental Change; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall mail to the Holders, at their last known addresses as
they shall appear upon the stock transfer books of the Corporation, at least 20
days (or, in the case of a transaction referred to in clauses (ii), (iv) or (v)
of paragraph D(4)(f), 10 days) prior to the applicable record, expiration,
issuance or consummation date hereinafter specified, a notice stating (x) the
record date fixed for the determination of holders of Common Stock entitled to
the applicable issuance, dividend or distribution, (y) the date of expiration of
the applicable tender or exchange offer or (z) the date on which the applicable
Fundamental Change (other than a tender or exchange offer), if any, is expected
to be consummated, as the case may be (but no failure to mail such notice or
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<PAGE> 46
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
(f) The Series B Conversion Rate shall be adjusted from time to time as a
result of the following adjustments to the Series B Conversion Price:
(i) In case the Corporation shall pay or make a dividend or other
distribution on any class of capital stock of the Corporation payable in
Common Stock (other than any such dividend or other distribution of
Stapled Securities), the Series B Conversion Price in effect at the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be adjusted by multiplying such Series B Conversion
Price by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such
number of shares of Common Stock outstanding and the total number of
shares constituting such dividend or other distribution of Common Stock,
such adjustment to become effective immediately after the opening of
business on the day following the date fixed for such determination. (For
the purposes of determining adjustments to the Series B Conversion Price
as set forth herein, shares of Common Stock held in the treasury of the
Corporation, and distributions or issuances in respect thereof, shall be
disregarded.)
(ii) In case the Corporation shall issue rights or warrants (other
than pursuant to a distribution of rights under a shareholder rights plan
of the Corporation in customary form or a dividend reinvestment plan or a
distribution of Stapled Securities) to all or substantially all holders
of Common Stock (whether by dividend or in a merger or otherwise)
entitling them, for a period of not more than 45 days from issuance, to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, then the Series B Conversion Price in effect at the opening of
business on the day following the date fixed for such determination shall
be adjusted by multiplying such Series B Conversion Price by a fraction
of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at the then
Current Market Price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so offered
for subscription or purchase, such adjustment to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For purposes of this paragraph D(4)(f)(ii),
the issuance of rights or warrants to subscribe for or purchase
securities convertible into Common Stock shall be deemed to be the
issuance of rights or warrants to purchase the Common Stock into which
such securities are convertible at an aggregate offering price equal to
the sum of the aggregate offering price of such securities and the
minimum aggregate amount (if any) payable upon conversion of such
securities into Common Stock. Such adjustment shall be made successively
whenever any such event shall occur. In case any rights or
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<PAGE> 47
warrants referred to in this paragraph in respect of which an adjustment
shall have been made shall expire unexercised, the Series B Conversion
Price shall be readjusted at the time of such expiration to the Series B
Conversion Price that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(iii) In case outstanding shares of Common Stock shall be
subdivided (including by split) into a greater number of shares of Common
Stock, and conversely, in case outstanding shares of Common Stock shall
each be combined into a smaller number of shares of Common Stock
(including by reverse split), the Series B Conversion Price in effect at
the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately adjusted, in each
case, so that the Holder of a share of Series B Preferred Stock
thereafter surrendered for conversion shall be entitled to receive as a
result of such combination or subdivision (without taking into account
any other adjustment hereunder) the number and kind of shares of Common
Stock that such Holder would have owned or have been entitled to receive
after the happening of any such subdivision or combination had such share
of Series B Preferred Stock been converted immediately prior to the date
upon which such subdivision or combination becomes effective. An
adjustment made pursuant to this paragraph D(4)(f)(iii) shall become
effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
Such adjustment shall be made successively whenever any such event shall
occur.
(iv) In case the Corporation or any subsidiary of the Corporation
shall consummate a tender or exchange offer (other than an odd lot offer)
involving consideration in excess of 100% of the Current Market Price for
all or any portion of Common Stock, the Series B Conversion Price in
effect immediately prior to the close of business on the date of
expiration of such tender or exchange offer shall be adjusted by
multiplying such Series B Conversion Price by a fraction of which the
numerator shall be the Current Market Price on such date of expiration
less the Per Share Premium Amount paid in such tender or exchange offer
and the denominator shall be such Current Market Price of Common Stock,
such adjustment to become effective immediately prior to the opening of
business on the day following such date of expiration. Such adjustment
shall be made successively whenever any such event shall occur.
(v) In case the Corporation shall, by dividend or otherwise, make
a distribution referred to in clauses (i) or (iii) of this paragraph
D(4)(f), each Holder of a share or shares of Series B Preferred Stock
converting such Series B Preferred Stock subsequent to the close of
business on the date fixed for the determination of stockholders entitled
to receive such distribution and prior to the effectiveness of the Series
B Conversion Price adjustment in respect of such distribution shall be
entitled to receive in addition to the shares of Common Stock otherwise
received upon conversion, on the date of the effectiveness of such Series
B Conversion Price adjustment, such number of shares of Common Stock as
are equal to (x) the number of shares of Common Stock such Holder would
have received had he or she converted such shares of Series B Preferred
Stock after the effectiveness of such Series B Conversion Price
adjustment minus (y) the
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number of shares of Common Stock otherwise received by such Holder on the
conversion of such shares of Series B Preferred Stock.
(vi) Subject to applicable regulatory approvals, the Corporation
may make with the consent of the Holders such adjustments in the Series B
Conversion Price and the Series B Conversion Rate, in addition to those
required by the foregoing paragraphs, as it considers to be advisable to
avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for
income tax purposes.
(vii) Whenever the Series B Conversion Rate and the Series B
Conversion Price are adjusted as a result of or pursuant to the preceding
paragraphs, the Corporation shall mail to the Holders a notice of the
adjustment at least fifteen days prior to the date the adjusted Series B
Conversion Rate and the Series B Conversion Price takes effect, and such
notice shall state the adjusted Series B Conversion Rate and the Series B
Conversion Price and the period each will be in effect.
(viii) The Corporation may not engage in any transaction if, as a
result thereof, the Series B Conversion Price would be reduced below the
par value per share of the Common Stock.
(ix) No adjustment in the Series B Conversion Rate shall be
required unless such adjustment would require an increase or decrease of
at least 1% in the Series B Conversion Rate; provided, however, that any
adjustments which by reason of this paragraph are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
(x) Whenever the Series B Conversion Price is adjusted as herein
provided the Corporation shall promptly following such adjustment (and in
no event later than 10 Business Days thereafter) compute the adjusted
Series B Conversion Price and shall prepare a certificate signed by the
Chief Financial Officer of the Corporation setting forth the adjusted
Series B Conversion Price and resulting Series B Conversion Rate and
showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall forthwith be filed in the books of the
Corporation and a copy thereof shall be delivered to the Holders.
(xi) If any action would require adjustment of the Series B
Conversion Price or the property into which shares of Series B Preferred
Stock are convertible pursuant to more than one of the provisions
described in this paragraph in a manner such that such adjustments are
duplicative, only one adjustment shall be made.
(g) Prior to a Separation Event with respect to any Stapled Securities,
such Stapled Securities will be deemed, for purposes of the adjustments
contemplated hereby, to comprise part of the shares of Common Stock to which
such Stapled Securities appertain, and as a result, distributions in respect of
such Stapled Securities will be deemed, for such purposes, to be distributions
in respect of such shares of Common Stock.
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(h) Each Holder of shares of Series B Preferred Stock who converts any
shares of Series B Preferred Stock after a Separation Event with respect to any
Stapled Securities shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, such
additional shares of Common Stock as are equal to the Fair Market Value at the
time of conversion of the rights to which such Holder would have been entitled
under the Stapled Securities that would have appertained to such shares of
Common Stock if such Holder had converted such shares of Series B Preferred
Stock immediately before such Separation Event. Such adjustment shall be made
successively whenever any such event shall occur.
(i) In the event that the Corporation shall be a party to any Fundamental
Change, then lawful provisions shall be made as part of the terms of such
Fundamental Change whereby the Corporation or the Person formed by the
applicable consolidation or resulting from the applicable merger or which
acquires the applicable assets or the Corporation's shares, as the case may be,
pursuant to such Fundamental Change, is required to assume the obligations
hereunder, and such adjustments, including in the Series B Conversion Price and
the Series B Conversion Rate, shall be made as are equitable so as to preserve
to the Holder the rights and benefits inherent in the Series B Preferred Stock
and so as to reflect the inability of the Holder to participate in any premium
inherent in a Fundamental Change on the same basis as any holder of Common
Stock. The Corporation further agrees that it will not be a party to or permit
such Fundamental Change to occur unless such provisions are so made as a part of
the terms thereof. The substance of this paragraph shall similarly apply to
successive Fundamental Changes.
(j) If the conversion rights of Holders of shares of Series B Preferred
Stock shall be adjusted pursuant to any of the preceding three paragraphs, then
the Corporation shall mail to the Holders of the Series B Preferred Stock, at
their last addresses as they shall appear upon the stock transfer books of the
Corporation, within 5 Business Days after consummation of the transaction
triggering such adjustment, a notice describing such adjustment in appropriate
detail.
(k) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversion of the Series B
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series B Preferred Stock not theretofore
converted. For purposes of this paragraph D(4)(k) the number of shares of Common
Stock that shall be deliverable upon the conversion of all outstanding shares of
Series B Preferred Stock shall be computed as if at the time of computation all
such outstanding shares were held by a single Holder.
(l) Fair Market Value shall be determined in good faith by the Board of
Directors; provided, however, that the Holders of a majority of the shares of
the Series B Preferred Stock may elect to have Fair Market Value determined by
the Appraiser, such election to be in writing and delivered to the Corporation
within 20 days after the Holders' receipt of the notice provided for in
paragraph D(4)(e) hereof. The Appraiser shall be selected, as soon as
practicable but no later than ten Business Days after the Holders elect to
request a third party appraisal, by a designee of the Holders, a designee of the
Corporation and a third party jointly selected by the designees of Holders and
the Corporation. The Appraiser so selected shall determine the Fair
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Market Value as soon as practicable but not later than 30 days after its
selection. The fees of the Appraiser shall be borne by the Corporation.
(5) Voting Rights. Except as set forth in this paragraph D(5) and
required by applicable law, the Holders of the issued and outstanding shares of
the Series B Preferred Stock have no voting rights. For so long as any shares of
the Series B Preferred Stock are outstanding, the Corporation shall not, except
as specifically contemplated herein, without the affirmative consent or approval
of Holders of a majority of the then outstanding shares of Series B Preferred
Stock, voting as a separate class, given at a meeting called for such purposes
or by written consent:
(i) amend, alter or repeal, whether by merger, consolidation or
otherwise, the Certificate of Incorporation or Bylaws of the Corporation
in any manner that would adversely affect the rights, preferences, powers
and privileges of the Series B Preferred Stock, it being, understood that
any amendment of the Certificate of Incorporation or Bylaws of the
Corporation to increase the number of directors comprising the full Board
of Directors or to afford any stockholder of the Corporation preemptive
rights (or enter into any agreement granting such rights to a third
party) shall be deemed to adversely affect the rights, preferences,
powers and privileges of the Series B Preferred Stock.
(ii) reclassify the shares of Common Stock or any class or series
of capital stock of the Corporation hereafter created into any shares of
any class or series of capital stock of the Corporation that, with
respect to liquidation preference or dividends, ranks senior to or on
parity with the Series B Preferred Stock;
(iii) issue any class or series of capital stock of the Corporation,
other than shares of Series A Preferred Stock, Series A-1 Preferred
Stock, Series A-2 Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock (or rights, options or warrants to purchase or otherwise
acquire any such capital stock of the Corporation or notes, debentures or
obligations convertible into any such capital stock) that, with respect
to liquidation preference or dividends, ranks senior to or on parity with
the Series B Preferred Stock;
(iv) adopt an agreement relating to, or otherwise authorize
consummation of, or consummate, a recapitalization, reorganization,
merger, consolidation or similar business combination transaction
involving the Corporation or a sale or other transfer of all or
substantially all of the assets of the Corporation;
(v) except as set forth in paragraphs A(2), B(2), C(2), D(2), E(2)
and F(2) hereof, declare or pay any dividend or make any distribution of
assets on any series or class of capital stock of the Corporation whether
in existence as of the date of adoption of the Certificate of
Incorporation or hereafter created (other than pro-rata dividends of
Common Stock on the Common Stock or stock splits); or
(vi) take any action, or refrain from taking any action, which
could reasonably be expected to adversely affect the rights, preferences,
powers and privileges of the Series B Preferred Stock.
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E. SERIES C CONVERTIBLE PREFERRED STOCK
(6) Rank. The Series C Preferred Stock will rank with respect to
dividend rights and rights on liquidation, winding-up and dissolution, equal and
on parity with the Series A Preferred Stock, Series A-1 Preferred Stock, Series
A-2 Preferred Stock and Series D Preferred Stock and senior to the C Relative
Junior Securities.
(7) Dividends and Distributions. (a) The Holders of shares of Series C
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available for the payment of dividends,
.12 additional shares of Series C Preferred Stock per annum per full share of
Series C Preferred Stock issued and outstanding ("Series C Additional Shares").
Such dividends shall be payable on each Dividend Payment Date, and, if the date
of the Public Offering shall be any day other than the day after a Dividend
Payment Date, immediately prior to a Public Offering (in an amount equal to the
number of Series C Additional Shares that would payable on the next Dividend
Payment Date multiplied by a fraction the numerator of which shall be the number
of days elapsed since the preceding Dividend Payment Date and the denominator of
which shall be 365). Dividends on the Series C Preferred Stock shall be
cumulative from the Issue Date (except that dividends on Series C Additional
Shares shall accrue from the date such Series C Additional Shares are issued or
would have been issued in accordance with this Certificate of Designation if
such dividends had been declared). Such dividends shall be payable to the
Holders of record of shares of the Series C Preferred Stock, as they appear on
the stock records of the Corporation at the close of business on the record date
for such dividends. Upon the declaration of such dividends (other than dividends
payable immediately prior to a Public Offering), the Board of Directors shall
fix the relevant Dividend Payment Date as the record date for such dividend.
(b) So long as any shares of the Series C Preferred Stock are
outstanding, no dividends (other than Series A Additional Shares, Series A-1
Additional Shares, Series A-2 Additional Shares, Series B Additional Shares,
Series D Additional Shares and dividends or distributions paid in shares of, or
options, warrants or rights to subscribe for or purchase shares of, C Relative
Junior Securities) shall be declared or paid or set apart for payment or other
distribution declared or made upon C Relative Junior Securities, nor shall any C
Relative Junior Securities be redeemed, purchased or otherwise acquired (other
than a redemption, purchase or other acquisition of shares of Common Stock made
for purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any such stock) by the
Corporation, directly or indirectly (except by conversion into or exchange for C
Relative Junior Securities).
(c) The Holders of the Series C Preferred Stock shall be entitled to
receive other dividends and distributions, when, as and if declared by the Board
of Directors out of funds legally available for the payment of dividends, in a
sum sufficient for the payment of, the dividend or distribution such Holder
would have been entitled to receive if such Holder had converted its shares of
Series C Preferred Stock immediately prior to the declaration of any dividend or
distribution on any class or series of capital stock of the Corporation, as the
case may be, on all of the then outstanding shares of Series C Preferred Stock
prior to the payment of any dividend or distribution on any C Relative Junior
Securities (any such declaration being subject
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to the approval of the Holders of the Series C Preferred Stock as provided in
paragraph E(5) hereof); provided, that with respect to dividends or
distributions payable in shares of Common Stock, the Holders of Series C
Preferred Stock shall not be entitled to such dividends or distribution, but the
Series C Conversion Rate shall be adjusted following such dividend or
distribution in accordance with the terms hereof.
(8) Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of C Relative
Junior Securities, the Holders of the shares of Series C Preferred Stock shall,
at their sole election, be entitled to receive $1 per share of Series C
Preferred Stock (the "Series C Liquidation Preference"), plus an amount equal to
all dividends accrued and unpaid thereon to the date of final distribution to
such Holders; but such Holders shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the Holders of the
shares of Series C Preferred Stock, the Holders of the shares of Series A
Preferred Stock, the Holders of the shares of Series A-1 Preferred Stock, the
Holders of the shares of Series A-2 Preferred Stock and the Holders of the
shares of Series D Preferred Stock shall be insufficient to pay in full the
aggregate of the Series C Liquidation Preference, the Series A Liquidation
Preference, the Series A-1 Liquidation Preference, the Series A-2 Liquidation
Preference and the Series D Liquidation Preference, then such assets, or the
proceeds thereof, shall be distributed among the Holders of shares of Series C
Preferred Stock, the Holders of the shares of Series A Preferred Stock, the
Holders of shares of Series A-1 Preferred Stock, the Holders of the shares of
Series A-2 Preferred Stock and the Holders of the shares of Series D Preferred
Stock ratably in accordance with the respective amounts that would be payable on
such shares of Series C Preferred Stock, the Series A Preferred Stock, Series
A-1 Preferred Stock, Series A-2 Preferred Stock and Series D Preferred Stock if
all amounts payable thereon were paid in full.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the Holders of the Series C
Preferred Stock, Series A Preferred Stock, Series A-2 Preferred Stock and Series
D Preferred Stock, as provided in this paragraph E(3), any other series or class
or classes of C Relative Junior Securities shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any and
all assets remaining to be paid or distributed, and the Holders of the Series C
Preferred Stock, Series A Preferred Stock, Series A-1 Preferred Stock, Series
A-2 Preferred Stock and Series D Preferred Stock shall not be entitled to share
therein.
(c) If an Event of Default occurs and is continuing, then and in every
such case the Holders of a majority of the outstanding shares of Series C
Preferred Stock have the right upon written notice delivered to the Corporation
to cause the Series C Liquidation Preference for each share of Series C
Preferred Stock to be paid to the Holder of each such share of Series C
Preferred Stock, plus an amount equal to all dividends accrued and unpaid
thereon to the date of final distribution. The right to accelerate the Series C
Preferred Stock provided by the foregoing sentence shall be in addition to other
remedies available to the Holders, whether in law or at equity.
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(9) Conversion. (a)(i) A Holder of shares of Series C Preferred Stock
shall have the right at any time and from time to time, at the option of the
Holder, subject to and upon compliance with the provisions of this paragraph
E(4), to convert any or all outstanding shares of Series C Preferred Stock held
by such Holder, but not fractions of shares, into fully paid and non-assessable
shares of Common Stock by surrendering such shares to be converted, such
conversion to be made in the manner provided in this paragraph E(4). The number
of shares of Common Stock deliverable upon conversion of each share of Series C
Preferred Stock shall be equal to $1 divided by $6.15 ($6.15 as adjusted as
provided herein shall be the "Series C Conversion Price" and such quotient being
the "Series C Conversion Rate") (calculated as to each conversion to the nearest
1/100th of a share of Common Stock). The Series C Conversion Price and Series C
Conversion Rate is subject to adjustment from time to time pursuant to this
paragraph E(4). Upon conversion of any share of Series C Preferred Stock, the
Holder thereof shall continue to be entitled to receive from the Corporation any
accrued but unpaid dividends thereon.
(ii) In order to exercise the conversion rights accorded in paragraph
E(4)(a)(i), the Holder of a share or shares Series C Preferred Stock shall
surrender to the Corporation the certificate or certificates evidencing the
share or shares of Series C Preferred Stock to be converted, duly endorsed or
assigned to the Corporation or in blank, accompanied by a completed and signed
written notice of election to convert, specifying the number of shares of Series
C Preferred Stock to be converted, together with the name or names, if other
than the Holder (subject to the terms of the Warrant Agreement), in which the
shares of Common Stock should be issued upon conversion and to whom any cash in
lieu of fractional shares shall be paid. The Person or Persons entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common Stock as of the
Conversion Date.
(iii) As promptly as practicable on or after the Conversion Date, the
Corporation shall issue and deliver a certificate or certificates for the number
of full shares of Common Stock issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of any share to the holder or,
upon the holder's written order, to the Person or Persons entitled to receive
the same (such cash payment will be based upon the Closing Price of the Common
Stock on the day preceding the Conversion Date). Upon conversion of only a
portion of the shares of Series C Preferred Stock represented by any
certificate, a new certificate shall be issued representing the unconverted
portion of the certificate so surrendered without cost to the Holder thereof.
Upon the surrender of certificates representing shares of Series C Preferred
Stock to be converted, such shares shall no longer be deemed to be outstanding
and all rights of a Holder with respect to such shares surrendered for
conversion shall immediately terminate except the right to receive the Common
Stock and other amounts pursuant to this paragraph E(4).
(b) (i) Unless already converted, each share of Series C Preferred Stock
then outstanding shall be converted into the number of fully-paid and
non-assessable shares of Common Stock into which such share of Series C
Preferred Stock is then convertible as determined in accordance with paragraph
E(4)(a)(i) hereof, automatically and without further action, immediately upon
the consummation by the Corporation of a Public Offering and contemporaneously
therewith the Holders of shares of Series C Preferred Stock shall be treated
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for all purposes as the record holder of the shares of Common Stock into which
such Holder's shares of Series C Preferred Stock were converted.
(ii) Following the conversion of the outstanding shares of Series C
Preferred Stock pursuant to paragraph E(4)(b)(i) hereof, the holders of such
converted shares shall surrender the certificates formerly representing such
shares to the Corporation or any transfer agent for the Common Stock. Thereupon,
the Corporation shall, or shall cause its transfer agent, to issue and promptly
deliver a certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with the cash payment, if any, in
lieu of any fraction of any share to the holder or, upon the holder's written
order, to the Person or Persons entitled to receive the same (such cash payment
will be based upon the Closing Price of the Common Stock on the day of such
conversion).
(c) If appropriate or if the certificate or certificates evidencing the
converted shares of Series C Preferred Stock were so legended or if required by
the terms of the Stockholders' Agreement, shares of Common Stock delivered upon
any conversion of shares of Series C Preferred Stock shall bear a restrictive
legend as set forth in the Stockholders' Agreement and shall be subject to the
restrictions on transfer referenced in such legend and in the Stockholders'
Agreement.
(d) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of the issue or delivery of shares of
Common Stock to the Holder on conversion of shares of Series C Preferred Stock.
(e) In case:
(i) the Corporation shall authorize any transaction that would
require an adjustment to the Series C Conversion Rate; or
(ii) the Corporation shall authorize any Fundamental Change; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall mail to the Holders, at their last known addresses as
they shall appear upon the stock transfer books of the Corporation, at least 20
days (or, in the case of a transaction referred to in clauses (ii), (iv) or (v)
of paragraph E(4)(f), 10 days) prior to the applicable record, expiration,
issuance or consummation date hereinafter specified, a notice stating (x) the
record date fixed for the determination of holders of Common Stock entitled to
the applicable issuance, dividend or distribution, (y) the date of expiration of
the applicable tender or exchange offer or (z) the date on which the applicable
Fundamental Change (other than a tender or exchange offer), if any, is expected
to be consummated, as the case may be (but no failure to mail such notice or any
defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
(f) The Series C Conversion Rate shall be adjusted from time to time as a
result of the following adjustments to the Series C Conversion Price:
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(i) In case the Corporation shall pay or make a dividend or other
distribution on any class of capital stock of the Corporation payable in
Common Stock (other than any such dividend or other distribution of
Stapled Securities), the Series C Conversion Price in effect at the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be adjusted by multiplying such Series C Conversion
Price by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such
number of shares of Common Stock outstanding and the total number of
shares constituting such dividend or other distribution of Common Stock,
such adjustment to become effective immediately after the opening of
business on the day following the date fixed for such determination. (For
the purposes of determining adjustments to the Series C Conversion Price
as set forth herein, shares of Common Stock held in the treasury of the
Corporation, and distributions or issuances in respect thereof, shall be
disregarded.)
(ii) In case the Corporation shall issue rights or warrants (other
than pursuant to a distribution of rights under a shareholder rights plan
of the Corporation in customary form or a dividend reinvestment plan or a
distribution of Stapled Securities) to all or substantially all holders
of Common Stock (whether by dividend or in a merger or otherwise)
entitling them, for a period of not more than 45 days from issuance, to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, then the Series C Conversion Price in effect at the opening of
business on the day following the date fixed for such determination shall
be adjusted by multiplying such Series C Conversion Price by a fraction
of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at the then
Current Market Price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so offered
for subscription or purchase, such adjustment to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For purposes of this paragraph E(4)(f)(ii),
the issuance of rights or warrants to subscribe for or purchase
securities convertible into Common Stock shall be deemed to be the
issuance of rights or warrants to purchase the Common Stock into which
such securities are convertible at an aggregate offering price equal to
the sum of the aggregate offering price of such securities and the
minimum aggregate amount (if any) payable upon conversion of such
securities into Common Stock. Such adjustment shall be made successively
whenever any such event shall occur. In case any rights or warrants
referred to in this paragraph in respect of which an adjustment shall
have been made shall expire unexercised, the Series C Conversion Price
shall be readjusted at the time of such expiration to the Series C
Conversion Price that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
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(iii) In case outstanding shares of Common Stock shall be
subdivided (including by split) into a greater number of shares of Common
Stock, and conversely, in case outstanding shares of Common Stock shall
each be combined into a smaller number of shares of Common Stock
(including by reverse split), the Series C Conversion Price in effect at
the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately adjusted, in each
case, so that the Holder of a share of Series C Preferred Stock
thereafter surrendered for conversion shall be entitled to receive as a
result of such combination or subdivision (without taking into account
any other adjustment hereunder) the number and kind of shares of Common
Stock that such Holder would have owned or have been entitled to receive
after the happening of any such subdivision or combination had such share
of Series C Preferred Stock been converted immediately prior to the date
upon which such subdivision or combination becomes effective. An
adjustment made pursuant to this paragraph E(4)(f)(iii) shall become
effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
Such adjustment shall be made successively whenever any such event shall
occur.
(iv) In case the Corporation or any subsidiary of the Corporation
shall consummate a tender or exchange offer (other than an odd lot offer)
involving consideration in excess of 100% of the Current Market Price for
all or any portion of Common Stock, the Series C Conversion Price in
effect immediately prior to the close of business on the date of
expiration of such tender or exchange offer shall be adjusted by
multiplying such Series C Conversion Price by a fraction of which the
numerator shall be the Current Market Price on such date of expiration
less the Per Share Premium Amount paid in such tender or exchange offer
and the denominator shall be such Current Market Price of Common Stock,
such adjustment to become effective immediately prior to the opening of
business on the day following such date of expiration. Such adjustment
shall be made successively whenever any such event shall occur.
(v) In case the Corporation shall, by dividend or otherwise, make
a distribution referred to in clauses (i) or (iii) of this paragraph
E(4)(f), each Holder of a share or shares of Series C Preferred Stock
converting such Series C Preferred Stock subsequent to the close of
business on the date fixed for the determination of stockholders entitled
to receive such distribution and prior to the effectiveness of the Series
C Conversion Price adjustment in respect of such distribution shall be
entitled to receive in addition to the shares of Common Stock otherwise
received upon conversion, on the date of the effectiveness of such Series
C Conversion Price adjustment, such number of shares of Common Stock as
are equal to (x) the number of shares of Common Stock such Holder would
have received had he or she converted such shares of Series C Preferred
Stock after the effectiveness of such Series C Conversion Price
adjustment minus (y) the number of shares of Common Stock otherwise
received by such Holder on the conversion of such shares of Series C
Preferred Stock.
(vi) Except when an adjustment of the Series C Conversion Price is
required pursuant to paragraph E(4)(f)(ii) hereof, in case the
Corporation shall issue securities which provide at any time a right to
purchase, convert into or otherwise acquire Common
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Stock at a Diluted Price less than the Series C Conversion Price in
effect from time to time, the Series C Conversion Price shall be adjusted
by multiplying such Series C Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at
the close of business on the day the Diluted Price is determined plus the
number of shares of Common Stock which the aggregate amount of purchase
price payable pursuant to the securities with the Diluted Price would
purchase if the purchase price for such Common Stock were equal to the
Series C Conversion Price in effect on the day the Diluted Price is
determined and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the day the Diluted Price
is determined plus the number of shares of Common Stock purchasable,
convertible into or otherwise acquirable pursuant to the securities with
the Diluted Price, such adjustment to become effective immediately after
the opening of business on the day following the day the Diluted Price is
determined. For purposes of this paragraph E(4)(f)(vi), the issuance of
rights or warrants to subscribe for any securities described in the
preceding sentence shall be deemed to be the issuance of securities
described in such sentence; such adjustment shall be made successively
whenever any such event shall occur.
(vii) Subject to applicable regulatory approvals, the Corporation
may make with the consent of the Holders such adjustments in the Series C
Conversion Price and the Series C Conversion Rate, in addition to those
required by the foregoing paragraphs, as it considers to be advisable to
avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for
income tax purposes.
(viii) Whenever the Series C Conversion Rate and the Series C
Conversion Price are adjusted as a result of or pursuant to the preceding
paragraphs, the Corporation shall mail to the Holders a notice of the
adjustment at least fifteen days prior to the date the adjusted Series C
Conversion Rate and the Series C Conversion Price takes effect, and such
notice shall state the adjusted Series C Conversion Rate and the Series C
Conversion Price and the period each will be in effect.
(ix) The Corporation may not engage in any transaction if, as a
result thereof, the Series C Conversion Price would be reduced below the
par value per share of the Common Stock.
(x) No adjustment in the Series C Conversion Rate shall be
required unless such adjustment would require an increase or decrease of
at least 1% in the Series C Conversion Rate; provided, however, that any
adjustments which by reason of this paragraph are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
(xi) Whenever the Series C Conversion Price is adjusted as herein
provided the Corporation shall promptly following such adjustment (and in
no event later than 10 Business Days thereafter) compute the adjusted
Series C Conversion Price and shall prepare a certificate signed by the
Chief Financial Officer of the Corporation setting forth
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the adjusted Series C Conversion Price and resulting Series C Conversion
Rate and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed in the
books of the Corporation and a copy thereof shall be delivered to the
Holders.
(xii) If any action would require adjustment of the Series C
Conversion Price or the property into which shares of Series C Preferred
Stock are convertible pursuant to more than one of the provisions
described in this paragraph in a manner such that such adjustments are
duplicative, only one adjustment shall be made.
(g) Prior to a Separation Event with respect to any Stapled Securities,
such Stapled Securities will be deemed, for purposes of the adjustments
contemplated hereby, to comprise part of the shares of Common Stock to which
such Stapled Securities appertain, and as a result, distributions in respect of
such Stapled Securities will be deemed, for such purposes, to be distributions
in respect of such shares of Common Stock.
(h) Each Holder of shares of Series C Preferred Stock who converts any
shares of Series C Preferred Stock after a Separation Event with respect to any
Stapled Securities shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, such
additional shares of Common Stock as are equal to the Fair Market Value at the
time of conversion of the rights to which such Holder would have been entitled
under the Stapled Securities that would have appertained to such shares of
Common Stock if such Holder had converted such shares of Series C Preferred
Stock immediately before such Separation Event. Such adjustment shall be made
successively whenever any such event shall occur.
(i) In the event that the Corporation shall be a party to any Fundamental
Change, then lawful provisions shall be made as part of the terms of such
Fundamental Change whereby the Corporation or the Person formed by the
applicable consolidation or resulting from the applicable merger or which
acquires the applicable assets or the Corporation's shares, as the case may be,
pursuant to such Fundamental Change, is required to assume the obligations
hereunder, and such adjustments, including in the Series C Conversion Price and
the Series C Conversion Rate, shall be made as are equitable so as to preserve
to the Holder the rights and benefits inherent in the Series C Preferred Stock
and so as to reflect the inability of the Holder to participate in any premium
inherent in a Fundamental Change on the same basis as any holder of Common
Stock. The Corporation further agrees that it will not be a party to or permit
such Fundamental Change to occur unless such provisions are so made as a part of
the terms thereof. The substance of this paragraph shall similarly apply to
successive Fundamental Changes.
(j) If the conversion rights of Holders of shares of Series C Preferred
Stock shall be adjusted pursuant to any of the preceding three paragraphs, then
the Corporation shall mail to the Holders of the Series C Preferred Stock, at
their last addresses as they shall appear upon the stock transfer books of the
Corporation, within 5 Business Days after consummation of the transaction
triggering such adjustment, a notice describing such adjustment in appropriate
detail.
(k) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of
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effecting conversion of the Series C Preferred Stock, the full number of shares
of Common Stock deliverable upon the conversion of all outstanding shares of
Series C Preferred Stock not theretofore converted. For purposes of this
paragraph E(4)(k) the number of shares of Common Stock that shall be deliverable
upon the conversion of all outstanding shares of Series C Preferred Stock shall
be computed as if at the time of computation all such outstanding shares were
held by a single Holder.
(l) Fair Market Value shall be determined in good faith by the Board of
Directors; provided, however, that the Holders of a majority of the shares of
the Series C Preferred Stock may elect to have Fair Market Value determined by
the Appraiser, such election to be in writing and delivered to the Corporation
within 20 days after the Holders' receipt of the notice provided for in
paragraph E(4)(e) hereof. The Appraiser shall be selected, as soon as
practicable but no later than ten Business Days after the Holders elect to
request a third party appraisal, by a designee of the Holders, a designee of the
Corporation and a third party jointly selected by the designees of Holders and
the Corporation. The Appraiser so selected shall determine the Fair Market Value
as soon as practicable but not later than 30 days after its selection. The fees
of the Appraiser shall be borne by the Corporation.
(10) Voting Rights. Except as set forth in this paragraph E(5) and
required by applicable law, the Holders of the issued and outstanding shares of
the Series C Preferred Stock have no voting rights. For so long as any shares of
the Series C Preferred Stock are outstanding, the Corporation shall not, except
as specifically contemplated herein, without the affirmative consent or approval
of Holders of a majority of the then outstanding shares of Series C Preferred
Stock, voting as a separate class, given at a meeting called for such purposes
or by written consent:
(i) amend, alter or repeal, whether by merger, consolidation or
otherwise, the Certificate of Incorporation or Bylaws of the Corporation
in any manner that would adversely affect the rights, preferences, powers
and privileges of the Series C Preferred Stock, it being, understood that
any amendment of the Certificate of Incorporation or Bylaws of the
Corporation to increase the number of directors comprising the full Board
of Directors or to afford any stockholder of the Corporation preemptive
rights (or enter into any agreement granting such rights to a third
party) shall be deemed to adversely affect the rights, preferences,
powers and privileges of the Series C Preferred Stock.
(ii) reclassify the shares of Common Stock or any class or series
of capital stock of the Corporation hereafter created into any shares of
any class or series of capital stock of the Corporation that, with
respect to liquidation preference or dividends, ranks senior to or on
parity with the Series C Preferred Stock;
(iii) adopt an agreement relating to, or otherwise authorize
consummation of, or consummate, a recapitalization, reorganization,
merger, consolidation or similar business combination transaction
involving the Corporation or a sale or other transfer of all or
substantially all of the assets of the Corporation;
(iv) except as set forth in paragraphs A(2), B(2), C(2), D(2) E(2)
and F(2) hereof, declare or pay any dividend or make any distribution of
assets on any series or
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class of capital stock of the Corporation whether in existence as of the
date of adoption of the Certificate of Incorporation or hereafter created
(other than pro-rata dividends of Common Stock on the Common Stock or
stock splits); or
(v) take any action, or refrain from taking any action, which
could reasonably be expected to adversely affect the rights, preferences,
powers and privileges of the Series C Preferred Stock.
F. SERIES D CONVERTIBLE PREFERRED STOCK
(1) Rank. The Series D Preferred Stock will rank with respect to
dividend rights and rights on liquidation, winding-up and dissolution, equal and
on parity with the Series A Preferred Stock, Series A-1 Preferred Stock, Series
A-2 Preferred Stock and Series C Preferred Stock and senior to D Relative Junior
Securities.
(2) Dividends and Distributions. (a) The Holders of shares of Series D
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available for the payment of dividends,
.12 additional shares of Series D Preferred Stock per annum per full share of
Series D Preferred Stock issued and outstanding ("Series D Additional Shares").
Such dividends shall be payable on each Dividend Payment Date, and, if the date
of the Public Offering shall be any day other than the day after a Dividend
Payment Date, immediately prior to a Public Offering (in an amount equal to the
number of Series D Additional Shares that would payable on the next Dividend
Payment Date multiplied by a fraction the numerator of which shall be the number
of days elapsed since the preceding Dividend Payment Date and the denominator of
which shall be 365). Dividends on the Series D Preferred Stock shall be
cumulative from the Issue Date (except that dividends on Series D Additional
Shares shall accrue from the date such Series D Additional Shares are issued or
would have been issued in accordance with this Certificate of Designation if
such dividends had been declared). Such dividends shall be payable to the
Holders of record of shares of the Series D Preferred Stock, as they appear on
the stock records of the Corporation at the close of business on the record date
for such dividends. Upon the declaration of such dividends (other than dividends
payable immediately prior to a Public Offering), the Board of Directors shall
fix the relevant Dividend Payment Date as the record date for such dividend.
(b) So long as any shares of the Series D Preferred Stock are
outstanding, no dividends (other than Series A Additional Shares, Series A-1
Additional Shares, Series A-2 Additional Shares, Series B Additional Shares,
Series C Additional Shares and dividends or distributions paid in shares of, or
options, warrants or rights to subscribe for or purchase shares of, D Relative
Junior Securities) shall be declared or paid or set apart for payment or other
distribution declared or made upon D Relative Junior Securities, nor shall any D
Relative Junior Securities be redeemed, purchased or otherwise acquired (other
than a redemption, purchase or other acquisition of shares of Common Stock made
for purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any such stock) by the
Corporation, directly or indirectly (except by conversion into or exchange for D
Relative Junior Securities).
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(c) The Holders of the Series D Preferred Stock shall be entitled to
receive other dividends and distributions, when, as and if declared by the Board
of Directors out of funds legally available for the payment of dividends, in a
sum sufficient for the payment of, the dividend or distribution such Holder
would have been entitled to receive if such Holder had converted its shares of
Series D Preferred Stock immediately prior to the declaration of any dividend or
distribution on any class or series of capital stock of the Corporation, as the
case may be, on all of the then outstanding shares of Series D Preferred Stock
prior to the payment of any dividend or distribution on any D Relative Junior
Securities (any such declaration being subject to the approval of the Holders of
the Series D Preferred Stock as provided in paragraph F(5) hereof); provided,
that with respect to dividends or distributions payable in shares of Common
Stock, the Holders of Series D Preferred Stock shall not be entitled to such
dividends or distribution, but the Series D Conversion Rate shall be adjusted
following such dividend or distribution in accordance with the terms hereof.
(3) Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of D Relative
Junior Securities, the Holders of the shares of Series D Preferred Stock shall,
at their sole election, be entitled to receive $1 per share of Series D
Preferred Stock (the "Series D Liquidation Preference"), plus an amount equal to
all dividends accrued and unpaid thereon to the date of final distribution to
such Holders; but such Holders shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the Holders of the
shares of Series D Preferred Stock, the Holders of the shares of Series A
Preferred Stock, the Holders of the shares of Series A-1 Preferred Stock, the
Holders of the shares of Series A-2 Preferred Stock and the Holders of shares of
Series C Preferred Stock shall be insufficient to pay in full the aggregate of
the Series D Liquidation Preference, the Series A Liquidation Preference, the
Series A-1 Liquidation Preference, the Series A-2 Liquidation Preference and the
Series C Liquidation Preference, then such assets, or the proceeds thereof,
shall be distributed among the Holders of shares of Series D Preferred Stock,
the Holders of the shares of Series A Preferred Stock, the Holders of the shares
of Series A-1 Preferred Stock, the Holders of the shares of Series A-2 Preferred
Stock and the Holders of shares of Series C Preferred Stock ratably in
accordance with the respective amounts that would be payable on such shares of
Series D Preferred Stock, the Holders of the shares of Series A Preferred Stock,
the Holders of the shares of Series A-1 Preferred Stock, the Holders of the
shares of Series A-2 Preferred Stock and the Holders of shares of Series C
Preferred Stock if all amounts payable thereon were paid in full.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the Holders of the Series D
Preferred Stock, the Holders of the shares of Series A Preferred Stock, the
Holders of the shares of Series A-1 Preferred Stock, the Holders of the shares
of Series A-2 Preferred Stock and the Holders of shares of Series C Preferred
Stock as provided in this paragraph F(3), any other series or class or classes
of D Relative Junior Securities shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the Holders of the Series D Preferred
Stock the Holders of the shares of Series A Preferred Stock, the Holders of the
shares of Series A-1 Preferred Stock, the Holders of the shares of Series A-2
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Preferred Stock and the Holders of shares of Series C Preferred Stock shall not
be entitled to share therein.
(c) If an Event of Default occurs and is continuing, then and in every
such case the Holders of a majority of the outstanding shares of Series D
Preferred Stock have the right upon written notice delivered to the Corporation
to cause the Series D Liquidation Preference for each share of Series D
Preferred Stock to be paid to Holder of each such share of Series D Preferred
Stock, plus an amount equal to all dividends accrued and unpaid thereon to the
date of final distribution. The right to accelerate the Series D Preferred Stock
provided by the foregoing sentence shall be in addition to other remedies
available to the Holders, whether in law or at equity.
(4) Conversion. (a)(i) A Holder of shares of Series D Preferred Stock
shall have the right at any time and from time to time, at the option of the
Holder, subject to and upon compliance with the provisions of this paragraph
F(4), to convert any or all outstanding shares of Series D Preferred Stock held
by such Holder, but not fractions of shares, into fully paid and non-assessable
shares of Common Stock by surrendering such shares to be converted, such
conversion to be made in the manner provided in this paragraph F(4). The number
of shares of Common Stock deliverable upon conversion of each share of Series D
Preferred Stock shall be equal to $1 divided by $6.15 ($6.15 as adjusted as
provided herein shall be the "Series D Conversion Price" and such quotient being
the "Series D Conversion Rate") (calculated as to each conversion to the nearest
1/100th of a share of Common Stock). The Series D Conversion Price and Series D
Conversion Rate is subject to adjustment from time to time pursuant to this
paragraph F(4). Upon conversion of any share of Series D Preferred Stock, the
Holder thereof shall continue to be entitled to receive from the Corporation any
accrued but unpaid dividends thereon.
(ii) In order to exercise the conversion rights accorded in paragraph
F(4)(a)(i), the Holder of a share or shares Series D Preferred Stock shall
surrender to the Corporation the certificate or certificates evidencing the
share or shares of Series D Preferred Stock to be converted, duly endorsed or
assigned to the Corporation or in blank, accompanied by a completed and signed
written notice of election to convert, specifying the number of shares of Series
D Preferred Stock to be converted, together with the name or names, if other
than the Holder (subject to the terms of the Debt Conversion Letter), in which
the shares of Common Stock should be issued upon conversion and to whom any cash
in lieu of fractional shares shall be paid. The Person or Persons entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common Stock as of the
Conversion Date.
(iii) As promptly as practicable on or after the Conversion Date, the
Corporation shall issue and deliver a certificate or certificates for the number
of full shares of Common Stock issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of any share to the holder or,
upon the holder's written order, to the Person or Persons entitled to receive
the same (such cash payment will be based upon the Closing Price of the Common
Stock on the day preceding the Conversion Date). Upon conversion of only a
portion of the shares of Series D Preferred Stock represented by any
certificate, a new certificate shall be issued representing the unconverted
portion of the certificate so surrendered without cost to the Holder
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thereof. Upon the surrender of certificates representing shares of Series D
Preferred Stock to be converted, such shares shall no longer be deemed to be
outstanding and all rights of a Holder with respect to such shares surrendered
for conversion shall immediately terminate except the right to receive the
Common Stock and other amounts pursuant to this paragraph F(4).
(b) (i) Unless already converted, each share of Series D Preferred Stock
then outstanding shall be converted into the number of fully-paid and
non-assessable shares of Common Stock into which such share of Series D
Preferred Stock is then convertible as determined in accordance with paragraph
F(4)(a)(i) hereof, automatically and without further action, immediately upon
the consummation by the Corporation of a Public Offering and contemporaneously
therewith the Holders of shares of Series D Preferred Stock shall be treated for
all purposes as the record holder of the shares of Common Stock into which such
Holder's shares of Series C Preferred Stock were converted.
(ii) Following the conversion of the outstanding shares of Series D
Preferred Stock pursuant to paragraph F(4)(b)(i) hereof, the holders of such
converted shares shall surrender the certificates formerly representing such
shares to the Corporation or any transfer agent for the Common Stock. Thereupon,
the Corporation shall, or shall cause its transfer agent, to issue and promptly
deliver a certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with the cash payment, if any, in
lieu of any fraction of any share to the holder or, upon the holder's written
order, to the Person or Persons entitled to receive the same (such cash payment
will be based upon the Closing Price of the Common Stock on the day of such
conversion).
(c) If appropriate or if the certificate or certificates evidencing the
converted shares of Series D Preferred Stock were so legended or if required by
the terms of the Stockholders' Agreement, shares of Common Stock delivered upon
any conversion of shares of Series D Preferred Stock shall bear a restrictive
legend as set forth in the Stockholders' Agreement and shall be subject to the
restrictions on transfer referenced in such legend and in the Stockholders'
Agreement.
(d) The Corporation shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of the issue or delivery of shares of
Common Stock to the Holder on conversion of shares of Series D Preferred Stock.
(e) In case:
(i) the Corporation shall authorize any transaction that would
require an adjustment to the Series D Conversion Rate; or
(ii) the Corporation shall authorize any Fundamental Change; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall mail to the Holders, at their last known addresses as
they shall appear upon the stock transfer books of the Corporation, at least 20
days (or, in the case of a transaction referred to in clauses (ii), (iv) or (v)
of paragraph F(4)(f), 10 days) prior to the applicable record,
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expiration, issuance or consummation date hereinafter specified, a notice
stating (x) the record date fixed for the determination of holders of Common
Stock entitled to the applicable issuance, dividend or distribution, (y) the
date of expiration of the applicable tender or exchange offer or (z) the date on
which the applicable Fundamental Change (other than a tender or exchange offer),
if any, is expected to be consummated, as the case may be (but no failure to
mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
(f) The Series D Conversion Rate shall be adjusted from time to time as a
result of the following adjustments to the Series D Conversion Price:
(i) In case the Corporation shall pay or make a dividend or other
distribution on any class of capital stock of the Corporation payable in
Common Stock (other than any such dividend or other distribution of
Stapled Securities), the Series D Conversion Price in effect at the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be adjusted by multiplying such Series D Conversion
Price by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such
number of shares of Common Stock outstanding and the total number of
shares constituting such dividend or other distribution of Common Stock,
such adjustment to become effective immediately after the opening of
business on the day following the date fixed for such determination. (For
the purposes of determining adjustments to the Series D Conversion Price
as set forth herein, shares of Common Stock held in the treasury of the
Corporation, and distributions or issuances in respect thereof, shall be
disregarded.)
(ii) In case the Corporation shall issue rights or warrants (other
than pursuant to a distribution of rights under a shareholder rights plan
of the Corporation in customary form or a dividend reinvestment plan or a
distribution of Stapled Securities) to all or substantially all holders
of Common Stock (whether by dividend or in a merger or otherwise)
entitling them, for a period of not more than 45 days from issuance, to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, then the Series D Conversion Price in effect at the opening of
business on the day following the date fixed for such determination shall
be adjusted by multiplying such Series D Conversion Price by a fraction
of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at the then
Current Market Price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so offered
for subscription or purchase, such adjustment to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For purposes of this paragraph F(4)(f)(ii),
the issuance of rights or warrants to subscribe for or purchase
securities convertible into Common Stock shall
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be deemed to be the issuance of rights or warrants to purchase the Common
Stock into which such securities are convertible at an aggregate offering
price equal to the sum of the aggregate offering price of such securities
and the minimum aggregate amount (if any) payable upon conversion of such
securities into Common Stock. Such adjustment shall be made successively
whenever any such event shall occur. In case any rights or warrants
referred to in this paragraph in respect of which an adjustment shall
have been made shall expire unexercised, the Series D Conversion Price
shall be readjusted at the time of such expiration to the Series D
Conversion Price that would have been in effect if no adjustment had been
made on account of the distribution or issuance of such expired rights or
warrants.
(iii) In case outstanding shares of Common Stock shall be
subdivided (including by split) into a greater number of shares of Common
Stock, and conversely, in case outstanding shares of Common Stock shall
each be combined into a smaller number of shares of Common Stock
(including by reverse split), the Series D Conversion Price in effect at
the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately adjusted, in each
case, so that the Holder of a share of Series D Preferred Stock
thereafter surrendered for conversion shall be entitled to receive as a
result of such combination or subdivision (without taking into account
any other adjustment hereunder) the number and kind of shares of Common
Stock that such Holder would have owned or have been entitled to receive
after the happening of any such subdivision or combination had such share
of Series D Preferred Stock been converted immediately prior to the date
upon which such subdivision or combination becomes effective. An
adjustment made pursuant to this paragraph F(4)(f)(iii) shall become
effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
Such adjustment shall be made successively whenever any such event shall
occur.
(iv) In case the Corporation or any subsidiary of the Corporation
shall consummate a tender or exchange offer (other than an odd lot offer)
involving consideration in excess of 100% of the Current Market Price for
all or any portion of Common Stock, the Series D Conversion Price in
effect immediately prior to the close of business on the date of
expiration of such tender or exchange offer shall be adjusted by
multiplying such Series D Conversion Price by a fraction of which the
numerator shall be the Current Market Price on such date of expiration
less the Per Share Premium Amount paid in such tender or exchange offer
and the denominator shall be such Current Market Price of Common Stock,
such adjustment to become effective immediately prior to the opening of
business on the day following such date of expiration. Such adjustment
shall be made successively whenever any such event shall occur.
(v) In case the Corporation shall, by dividend or otherwise, make
a distribution referred to in clauses (i) or (iii) of this paragraph
F(4)(f), each Holder of a share or shares of Series D Preferred Stock
converting such Series D Preferred Stock subsequent to the close of
business on the date fixed for the determination of stockholders entitled
to receive such distribution and prior to the effectiveness of the Series
D Conversion Price adjustment in respect of such distribution shall be
entitled to receive in
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addition to the shares of Common Stock otherwise received upon
conversion, on the date of the effectiveness of such Series D Conversion
Price adjustment, such number of shares of Common Stock as are equal to
(x) the number of shares of Common Stock such Holder would have received
had he or she converted such shares of Series D Preferred Stock after the
effectiveness of such Series D Conversion Price adjustment minus (y) the
number of shares of Common Stock otherwise received by such Holder on the
conversion of such shares of Series D Preferred Stock.
(vi) Except when an adjustment of the Series D Conversion Price is
required pursuant to paragraph F(4)(f)(ii) hereof, in case the
Corporation shall issue securities which provide at any time a right to
purchase, convert into or otherwise acquire Common Stock at a Diluted
Price less than the Series D Conversion Price in effect from time to
time, the Series D Conversion Price shall be adjusted by multiplying such
Series D Conversion Price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business
on the day the Diluted Price is determined plus the number of shares of
Common Stock which the aggregate amount of purchase price payable
pursuant to the securities with the Diluted Price would purchase if the
purchase price for such Common Stock were equal to the Series D
Conversion Price in effect on the day the Diluted Price is determined and
the denominator shall be the number of shares of Common Stock outstanding
at the close of business on the day the Diluted Price is determined plus
the number of shares of Common Stock purchasable, convertible into or
otherwise acquirable pursuant to the securities with the Diluted Price,
such adjustment to become effective immediately after the opening of
business on the day following the day the Diluted Price is determined.
For purposes of this paragraph F(4)(f)(vi), the issuance of rights or
warrants to subscribe for any securities described in the preceding
sentence shall be deemed to be the issuance of securities described in
such sentence; such adjustment shall be made successively whenever any
such event shall occur.
(vii) Subject to applicable regulatory approvals, the Corporation
may make with the consent of the Holders such adjustments in the Series D
Conversion Price and the Series D Conversion Rate, in addition to those
required by the foregoing paragraphs, as it considers to be advisable to
avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for
income tax purposes.
(viii) Whenever the Series D Conversion Rate and the Series D
Conversion Price are adjusted as a result of or pursuant to the preceding
paragraphs, the Corporation shall mail to the Holders a notice of the
adjustment at least fifteen days prior to the date the adjusted Series D
Conversion Rate and the Series D Conversion Price takes effect, and such
notice shall state the adjusted Series D Conversion Rate and the Series D
Conversion Price and the period each will be in effect.
(ix) The Corporation may not engage in any transaction if, as a
result thereof, the Series D Conversion Price would be reduced below the
par value per share of the Common Stock.
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(x) No adjustment in the Series D Conversion Rate shall be
required unless such adjustment would require an increase or decrease of
at least 1% in the Series D Conversion Rate; provided, however, that any
adjustments which by reason of this paragraph are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
(xi) Whenever the Series D Conversion Price is adjusted as herein
provided the Corporation shall promptly following such adjustment (and in
no event later than 10 Business Days thereafter) compute the adjusted
Series D Conversion Price and shall prepare a certificate signed by the
Chief Financial Officer of the Corporation setting forth the adjusted
Series D Conversion Price and resulting Series D Conversion Rate and
showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall forthwith be filed in the books of the
Corporation and a copy thereof shall be delivered to the Holders.
(xii) If any action would require adjustment of the Series D
Conversion Price or the property into which shares of Series D Preferred
Stock are convertible pursuant to more than one of the provisions
described in this paragraph in a manner such that such adjustments are
duplicative, only one adjustment shall be made.
(g) Prior to a Separation Event with respect to any Stapled Securities,
such Stapled Securities will be deemed, for purposes of the adjustments
contemplated hereby, to comprise part of the shares of Common Stock to which
such Stapled Securities appertain, and as a result, distributions in respect of
such Stapled Securities will be deemed, for such purposes, to be distributions
in respect of such shares of Common Stock.
(h) Each Holder of shares of Series D Preferred Stock who converts any
shares of Series D Preferred Stock after a Separation Event with respect to any
Stapled Securities shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, such
additional shares of Common Stock as are equal to the Fair Market Value at the
time of conversion of the rights to which such Holder would have been entitled
under the Stapled Securities that would have appertained to such shares of
Common Stock if such Holder had converted such shares of Series D Preferred
Stock immediately before such Separation Event. Such adjustment shall be made
successively whenever any such event shall occur.
(i) In the event that the Corporation shall be a party to any Fundamental
Change, then lawful provisions shall be made as part of the terms of such
Fundamental Change whereby the Corporation or the Person formed by the
applicable consolidation or resulting from the applicable merger or which
acquires the applicable assets or the Corporation's shares, as the case may be,
pursuant to such Fundamental Change, is required to assume the obligations
hereunder, and such adjustments, including in the Series D Conversion Price and
the Series D Conversion Rate, shall be made as are equitable so as to preserve
to the Holder the rights and benefits inherent in the Series D Preferred Stock
and so as to reflect the inability of the Holder to participate in any premium
inherent in a Fundamental Change on the same basis as any holder of Common
Stock. The Corporation further agrees that it will not be a party to or permit
such Fundamental Change to occur unless such provisions are so made as a part of
the terms thereof. The substance of this paragraph shall similarly apply to
successive Fundamental Changes.
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(j) If the conversion rights of Holders of shares of Series D Preferred
Stock shall be adjusted pursuant to any of the preceding three paragraphs, then
the Corporation shall mail to the Holders of the Series D Preferred Stock, at
their last addresses as they shall appear upon the stock transfer books of the
Corporation, within 5 Business Days after consummation of the transaction
triggering such adjustment, a notice describing such adjustment in appropriate
detail.
(k) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversion of the Series D
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series D Preferred Stock not theretofore
converted. For purposes of this paragraph F(4)(k) the number of shares of Common
Stock that shall be deliverable upon the conversion of all outstanding shares of
Series D Preferred Stock shall be computed as if at the time of computation all
such outstanding shares were held by a single Holder.
(l) Fair Market Value shall be determined in good faith by the Board of
Directors; provided, however, that the Holders of a majority of the shares of
the Series D Preferred Stock may elect to have Fair Market Value determined by
the Appraiser, such election to be in writing and delivered to the Corporation
within 20 days after the Holders' receipt of the notice provided for in
paragraph F(4)(e) hereof. The Appraiser shall be selected, as soon as
practicable but no later than ten Business Days after the Holders elect to
request a third party appraisal, by a designee of the Holders, a designee of the
Corporation and a third party jointly selected by the designees of Holders and
the Corporation. The Appraiser so selected shall determine the Fair Market Value
as soon as practicable but not later than 30 days after its selection. The fees
of the Appraiser shall be borne by the Corporation.
(5) Voting Rights. Except as set forth in this paragraph F(5) and
required by applicable law, the Holders of the issued and outstanding shares of
the Series D Preferred Stock have no voting rights. For so long as any shares of
the Series D Preferred Stock are outstanding, the Corporation shall not, except
as specifically contemplated herein, without the affirmative consent or approval
of Holders of a majority of the then outstanding shares of Series D Preferred
Stock, voting as a separate class, given at a meeting called for such purposes
or by written consent:
(i) amend, alter or repeal, whether by merger, consolidation or
otherwise, the Certificate of Incorporation or Bylaws of the Corporation
in any manner that would adversely affect the rights, preferences, powers
and privileges of the Series D Preferred Stock, it being, understood that
any amendment of the Certificate of Incorporation or Bylaws of the
Corporation to increase the number of directors comprising the full Board
of Directors or to afford any stockholder of the Corporation preemptive
rights (or enter into any agreement granting such rights to a third
party) shall be deemed to adversely affect the rights, preferences,
powers and privileges of the Series D Preferred Stock.
(ii) reclassify the shares of Common Stock or any class or series
of capital stock of the Corporation hereafter created into any shares of
any class or series of capital
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stock of the Corporation that, with respect to liquidation preference or
dividends, ranks senior to or on parity with the Series D Preferred
Stock;
(iii) adopt an agreement relating to, or otherwise authorize
consummation of, or consummate, a recapitalization, reorganization,
merger, consolidation or similar business combination transaction
involving the Corporation or a sale or other transfer of all or
substantially all of the assets of the Corporation;
(iv) except as set forth in paragraphs A(2), b(2), C(2), D(2),
E(2) and F(2)hereof, declare or pay any dividend or make any distribution
of assets on any series or class of capital stock of the Corporation
whether in existence as of the date of adoption of the Certificate of
Incorporation or hereafter created (other than pro-rata dividends of
Common Stock on the Common Stock or stock splits); or
(v) take any action, or refrain from taking any action, which
could reasonably be expected to adversely affect the rights, preferences,
powers and privileges of the Series D Preferred Stock.
G. GENERAL PROVISIONS
(1) The headings of the paragraphs, clauses and subclauses of this
Annex A to the Certificate of Incorporation are for convenience of reference
only and shall not define, limit or affect any of the provisions hereof.
(2) The shares of Convertible Preferred Stock shall bear the following
legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE,
TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION OR
IS OTHERWISE IN COMPLIANCE WITH THE SECURITIES ACT AND SUCH LAWS.
TRANSFERS OF AND OTHER TRANSACTIONS IN THE SECURITIES ARE SUBJECT
TO THE TERMS AND CONDITIONS OF THE AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT DATED AS OF APRIL 10, 2000 BY AND AMONG
THE ISSUER, SPACENET INC., MICROSOFT G-HOLDINGS, INC., ECHOSTAR
COMMUNICATIONS CORPORATION, FURMAN SELZ INVESTORS II L.P., FS
EMPLOYEE INVESTORS LLC, FS PARALLEL FUND L.P. AND GILAT SATELLITE
NETWORKS LTD. (THE "AGREEMENT"). A COPY OF THE AGREEMENT IS
AVAILABLE AT THE OFFICES OF THE ISSUER.
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(3) The Corporation will maintain in the United States an office or
agency where certificates evidencing the Convertible Preferred Stock may be
presented or surrendered for registration of transfer or exchange, or for
conversion, and where notices and demands to or upon the Corporation in respect
of the Convertible Preferred Stock may be served. On the date hereof, such
office is maintained care of Spacenet Inc., 1750 Old Meadow Road, McLean,
Virginia 22102. The Corporation shall provide for the registration and transfer
of certificates evidencing the Series A Preferred Stock, Series A-1 Preferred
Stock, Series A-2 Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock on the stock transfer books of the
Corporation at such office.
(4) The Holder of a certificate evidencing shares of Convertible
Preferred Stock may, at its option but subject to the restrictions on transfer
contained in the Stockholders' Agreement, surrender the same for registration of
transfer at such office and the Corporation shall execute and deliver, in the
name of the designated transferee, one or more new certificates evidencing
shares of Convertible Preferred Stock. Every certificate evidencing shares of
Convertible Preferred Stock presented or surrendered for registration of
transfer or for exchange shall (if so required by the Corporation) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Corporation duly executed, by the Holder thereof or his
attorney duly authorized in writing.
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