<PAGE>
Registration No._________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Inprise Corporation
(Exact name of registrant as specified in its charter)
Delaware 94-2895440
(State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization)
100 Enterprise Way
Scotts Valley, California 95066-3249
(Address of principal executive offices) (Zip code)
-------------------------------------------------------
Inprise Corporation
1997 Stock Option Plan, 1997 Employee Stock
Purchase Plan, and 1998 Nonstatutory Stock Option
Plan
-------------------------------------------------------
(Full title of the plan)
Hobart McK. Birmingham
Vice President, General Counsel
and Secretary
Inprise Corporation
100 Enterprise Way
Scotts Valley, California 95066-3249
-------------------------------------------------------
(Name and address of agent for service)
Telephone number, including area code, of agent for service: (831) 431-1000.
This registration statement shall hereafter become effective in accordance with
Rule 462 promulgated under the Securities Act of 1933, as amended.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of maximum maximum
Securities to be Amount to be offering price aggregate Amount of
registered/1/ registered/2/ per share/3/ offering price/3/ registration fee
- ----------------------------------------------------------------------------------------------------------
1997 Stock Option Plan
- ----------------------
<S> <C> <C> <C> <C>
Common Stock 255,610 $7.66 $ 1,957,972.60 $ 577.60
Par Value $0.01 2,144,390 $6.71 $14,388,856.90 $4,244.71
1997 Employee Stock Purchase Plan
- ---------------------------------
Common Stock 100,000 $5.70 $ 570,000.00 $ 168.15
Par Value $0.01
1998 Nonstatutory Stock Option Plan
- -----------------------------------
Common Stock 183,148 $8.63 $ 1,580,567.24 $ 466.27
Par Value $0.01 16,852 $6.71 $ 113,076.92 $ 33.36
TOTALS 2,700,000 $18,610,473.66 $5,490.09
</TABLE>
- ---------------------------------------
/1/ The securities to be registered include options and rights to acquire
Common Stock.
/2/ Pursuant to Rule 416(a), this registration statement also covers any
additional securities that may be offered or issued in connection with any stock
split, stock dividend or similar transaction.
/3/ Estimated pursuant to Rule 457 solely for purposes of calculating the
registration fee. As to shares subject to outstanding but unexercised options
under the 1997 Stock Option Plan and the 1998 Nonstatutory Stock Option Plan,
the price is computed on the basis of the weighted average exercise price. As to
the remaining shares under the 1997 Stock Option Plan and the 1998 Nonstatutory
Stock Option Plan, the $6.71 price is based upon the average of the high and low
prices of the Common Stock on August 10, 1998, as reported on the Nasdaq
National Market. The 1997 Employee Stock Purchase Plan establishes a purchase
price equal to 85% of the fair market value of the Company's Common Stock, and,
therefore, the price for shares under this plan is based upon 85% of the average
of the high and low prices of the Common Stock on August 10, 1998, as reported
on the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
--------------------------------------------------
Item 3. Incorporation of Documents by Reference
---------------------------------------
Inprise Corporation (the "Company") hereby incorporates by reference
in this registration statement the following documents:
(a) The Company's latest annual report on Form 10-K filed pursuant to
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), containing audited financial statements for the nine-month
period ended December 31, 1997 as filed with the Securities and Exchange
Commission on March 31, 1998
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the period covered by the registrant document
referred to in (a) above.
(c) The description of the Company's Common Stock contained in its
Registration Statement filed with the Commission under the Exchange Act,
including any amendment or report filed for the purpose of updating such
description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment to this registration statement which indicates that all
securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
Item 4. Description of Securities
-------------------------
The class of securities to be offered is registered under Section 12
of the Exchange Act.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
Inapplicable.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
Section 102(b) of the Delaware General Corporation Law authorizes a
corporation to provide in its Certificate of Incorporation that a director of
the corporation shall not be personally liable to corporation or its
stockholders for monetary damages for breach or alleged breach of the director's
"duty of care." While this statute does not change directors' duty of care, it
enables corporations to limit available relief to equitable remedies such as
injunction or rescission. The statute has no effect on a director's duty of
loyalty or liability for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law,
<PAGE>
illegal payment of dividends or stock redemptions or repurchases, or for any
transaction from which the director derives an improper personal benefit. As
permitted by the statute, the Company has adopted provisions in its Certificate
of Incorporation which eliminate to the fullest extent permissible under
Delaware law the personal liability of its directors to the Company and its
stockholders for monetary damages for breach or alleged breach of their duty of
care.
Section 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of officers, directors, employees and agents of
a corporation. The Bylaws of the Company provide for indemnification of its
directors, officers, employees and agents to the full extent permitted by under
Delaware law, including those circumstances in which indemnification would
otherwise be discretionary under Delaware law. The Company's Bylaws also
empower it to enter into indemnification agreements with its directors and
officers and to purchase insurance on behalf of any person whom it is required
or permitted to indemnify. The Company has entered into agreements with its
directors and certain of its executive officers that require the Company to
indemnify such persons to the fullest extent permitted under Delaware law
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was a director or
an executive officer of the Company or any of its affiliated enterprises. The
indemnification agreements also set forth certain procedures that will apply in
the event of a claim for indemnification thereunder.
Section 145 of the General Corporation Law of the State of Delaware
provides for indemnification in terms sufficiently broad to indemnify such
individuals, under certain circumstances, for liabilities (including
reimbursement of expenses incurred) arising under the Securities Act of 1933, as
amended (the "Securities Act").
Item 7. Exemption From Registration Claimed
-----------------------------------
Inapplicable.
Item 8. Exhibits
--------
See Exhibit Index.
Item 9. Undertakings
------------
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (l)(ii) do not apply if the
- -------- -------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Scotts Valley, State of California,
on August 11, 1998.
Inprise Corporation
By: /s/ Kathleen M. Fisher
______________________________
Kathleen M. Fisher
Vice President and Chief Financial
Officer
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
--------------------------------
The officers and directors of Inprise Corporation whose signatures appear
below, hereby constitute and appoint Hobart McK. Birmingham and Kathleen Fisher,
and each of them, their true and lawful attorneys and agents, with full power of
substitution, each with power to act alone, to sign and execute on behalf of the
undersigned any amendment or amendments to this registration statement on Form
S-8, and each of the undersigned does hereby ratify and confirm all that each of
said attorney and agent, or their or his substitutes, shall do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------------- ------------------------------------ ---------------------
<S> <C> <C>
/s/ Delbert W. Yocam Chairman of the Board, Chief August 12, 1998
- ---------------------------------- Executive Officer, and Director ---------------------
Delbert W. Yocam (Principal Executive Officer)
/s/ Kathleen M. Fisher Vice President and Chief Financial August 12, 1998
- ---------------------------------- Officer (Principal Financial and ---------------------
Kathleen M. Fisher Accounting Officer)
/s/ George Hara Director July 21, 1998
- ---------------------------------- ---------------------
George Hara
/s/ Stephen J. Lewis Director July 21, 1998
- ---------------------------------- ---------------------
Stephen J. Lewis
/s/ William F. Miller Director July 21, 1998
- ---------------------------------- ---------------------
William F. Miller
/s/ Harry J. Saal Director July 21, 1998
- ---------------------------------- ---------------------
Harry J. Saal
</TABLE>
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
<S> <C>
4.1 Restated Certificate of Incorporation, as amended, of the Company
4.2 Amended Bylaws of the Company
4.3 Rights Agreement dated as of December 23, 1991, between the Company and Manufacturers
Hanover Trust Company of California is incorporated by reference to an Exhibit to the
Company's Annual Report on Form 10-K for the year ended March 31, 1990, filed with
the Securities and Exchange Commission
5 Opinion re legality
23.1 Consent of Counsel (included in Exhibit 5)
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Ernst & Young LLP
24 Power of Attorney (included in signature pages to this registration statement)
</TABLE>
<PAGE>
EXHIBIT 4.1
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
BORLAND INTERNATIONAL, INC.
Borland International, Inc. (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State of Delaware (the
"DGCL"), DOES HEREBY CERTIFY that the Amendment of the Restated Certificate of
Incorporation set forth in the following resolution has been duly adopted in
accordance with the provisions of Section 242 of the DGCL.
RESOLVED, that the Restated Certificate of Incorporation of the Corporation
be amended by striking Article 1 in its entirety and replacing it with the
following:
"FIRST: The name of the Corporation is Inprise Corporation."
IN WITNESS WHEREOF, this Certificate of Amendment to the Restated
Certificate of Incorporation has been executed on behalf of the Corporation by
its Chief Executive Officer on this 5th day of June, 1998.
/s/ Delbert W. Yocam
-------------------------
Delbert W. Yocam, Chief Executive Officer
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
BORLAND INTERNATIONAL, INC.
* * * * *
Borland International, Inc., a corporation organized and existing under and
by virtue of the Delaware General Corporation Law filed its original Certificate
of Incorporation with the Secretary of State of Delaware on July 10, 1989 under
the name Borland International Delaware, Inc. Pursuant to Section 245 of the
Delaware General Corporation Law, Borland International, Inc. DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of Borland International, Inc. has duly
adopted resolutions setting forth the Restated Certificate of Incorporation of
said corporation, declaring said restatement of the Certificate of Incorporation
to be advisable. Said Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Corporation's
Certificate of Incorporation as heretofore amended and supplemented and there is
no discrepancy between such provisions and the provisions of the Restated
Certificate of Incorporation. The resolution setting forth the proposed
restatement is as follows:
RESOLVED, that the Certificate of Incorporation of the Corporation shall be
restated to read as set forth in Exhibit A hereto.
SECOND: That said amendment was duly adopted in accordance with the
provisions of Section 245 of the General Incorporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Borland International Delaware, Inc. has caused
this certificate to be signed by Delbert W. Yocam, its President, and Hobart
McK. Birmingham, its Secretary, this 21st day of October, 1997.
By: /s/ Delbert W. Yocam
-----------------------------------
Delbert W. Yocam, President
Attested: /s/ Hobart McK. Birmingham
-----------------------------------
Hobart McK. Birmingham, Secretary
<PAGE>
EXHIBIT A
---------
RESTATED CERTIFICATE OF INCORPORATION
OF
BORLAND INTERNATIONAL, INC.
FIRST: The name of this corporation shall be BORLAND INTERNATIONAL, INC.
(a) SECOND: The purpose of this corporation is to engage in any lawful
act or activity for which a corporation may be organized under the Delaware
General Corporation Law. THIRD: (a) This corporation is authorized to issue two
(2) classes of stock to be designated, respectively, "preferred stock" and
"common stock." The total number of shares which the corporation is authorized
to issue is one hundred and one million (101,000,000) shares. One million
(1,000,000) shares shall be preferred stock, with a par value of One Cent ($.01)
per share, and one hundred million (100,000,000) shares shall be Common Stock,
with a par value of One Cent ($.01) per share.
(b) The preferred stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price
or prices, and the liquidation preferences of any wholly unissued series of
preferred stock, and the number of shares constituting any such series and the
designation thereof, or any of them; and to increase or decrease the number of
shares of any series subsequent to the issue of shares of that series, but not
below the number of shares of such series then outstanding. In case the number
of shares of any series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
(c) Pursuant to the authority granted pursuant to paragraph (b) of
this Article Third, the Board of Directors has created a series of Preferred
Stock designated as Series A Junior Participating Preferred Stock with the
following rights, powers, preferences, qualifications, limitations and
restrictions:
Section 1. Designation and Amount. The shares of such series
----------------------
shall be designated as "Series A Junior Participating Preferred Stock" and
the number of shares constituting such series shall be 100,000.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating
Preferred Stock shall be entitled to receive, when, as and if declared
<PAGE>
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the fifteenth day of March, June,
September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to the greater of
(a) $.01 or (b) subject to the provision for adjustment hereinafter set
forth, 1000 times the aggregate per share amount of all cash dividends,
and 1000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend payable
in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common
Stock, par value of $.01 per share, of the Corporation (the "Common
Stock") since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the Corporation shall at any
time after December 20, 1991 (the "Rights Declaration Date") (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the
amount to which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph
(A) above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $.01 per share on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of issue of
such shares of Series A Junior Participating Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A
Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of
which
<PAGE>
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Junior
Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro-rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days prior
to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
-------------
Junior Participating Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle
the holder thereof to 1000 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the Corporation shall
at any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to six
(6) quarterly dividends thereon, the occurrence of such contingency shall
mark the beginning of a period (herein called a "default period") which
shall extend until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly dividend
period on all shares of Series A Junior Participating Preferred Stock then
outstanding shall have been declared and paid or set apart for payment.
During each default period, all holders of Preferred Stock (including
holders of the Series A Junior Participating Preferred Stock) with
dividends in arrears in an amount equal to six (6) quarterly dividends
thereon, voting as a class, irrespective of series, shall have the right to
elect one (1) Director.
<PAGE>
(ii) During any default period, such voting right of the holders
of Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of
this Section 3(C) or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders, provided that neither such
voting right nor the right of the holders of any other series of
Preferred Stock, if any, to increase, in certain cases, the authorized
number of Directors shall be exercised unless the holders of ten percent
(10%) in number of shares of Preferred Stock outstanding shall be present
in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of
such voting right. At any meeting at which the holders of Preferred Stock
shall exercise such voting right initially during an existing default
period, they shall have the right, voting as a class, to elect Directors
to fill such vacancies, if any, in the Board of Directors as may then
exist up to one (1) Director or, if such right is exercised at an annual
meeting, to elect one (1) Director. If the number which may be so elected
at any special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make such increase
in the number of Directors as shall be necessary to permit the election
by them of the required number. After the holders of the Preferred Stock
shall have exercised their right to elect Directors in any default period
and during the continuance of such period, the number of Directors shall
not be increased or decreased except by vote of the holders of Preferred
Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Junior
----------
Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of
the total number of shares of Preferred Stock outstanding, irrespective
of series, may request, the calling of a special meeting of the holders
of Preferred Stock, which meeting shall thereupon be called by the
President, a Vice-President or the Secretary of the Corporation. Notice
of such meeting and of any annual meeting at which holders of Preferred
Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be
given to each holder of record of Preferred Stock by mailing a copy of
such notice to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time not earlier
than 10 days and not later than 60 days after such order or request or in
default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder
or stockholders owning in the aggregate not less than ten percent (10%)
of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue
to be entitled to elect the whole
<PAGE>
number of Directors until the holders of Preferred Stock shall have
exercised their right to elect one (1) Director voting as a class, after
the exercise of which right (x) the Director so elected by the holders of
Preferred Stock shall continue in office until his successor shall have
been elected by such holders or until the expiration of the default
period, and (y) any vacancy in the Board of Directors may (except as
provided in paragraph (C)(ii) of this Section 3) be filled by vote of a
majority of the remaining Directors theretofore elected by the holders of
the class of stock which elected the Director whose office shall have
become vacant. References in this paragraph (C) to Directors elected by
the holders of a particular class of stock shall include Directors
elected by such Directors to fill vacancies as provided in clause (y) of
the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of
Preferred Stock as a class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the certificate
of incorporation or by-laws irrespective of any increase made pursuant to
the provisions of paragraph (C)(ii) of this Section 3 (such number being
subject, however, to change thereafter in any manner provided by law or
in the certificate of incorporation or bylaws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and (z) in
the preceding sentence may be filled by a majority of the remaining
Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not declared,
on shares of Series A Junior Participating Preferred Stock outstanding
shall have be paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock;
(ii) declare or pay dividends on or make any other distribution
on any shares of stock ranking pari passu (either as to dividends or upon
----------
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating Preferred Stock and all such stock ranking
pari passu with the Series A Junior Participating Preferred Stock on
----------
which dividends are
<PAGE>
payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking pari passu (either as to dividends or upon
----------
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such stock ranking
pari passu with the Series A Junior Participating Preferred Stock in
----------
exchange for shares of any stock of the Corporation ranking junior (either
as to dividends or upon dissolution, liquidation or winding up) to the
Series A Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares
of Series A Junior Participating Preferred Stock, or any shares of stock
ranking pari passu with the Series A Junior Participating Preferred Stock,
----------
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
-----------------
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new Series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up
--------------------------------------
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares
of Series A Junior Participating Preferred Stock shall have received $10
per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment
(the "Series A Liquidation Preference"). Following the payment of the full
amount of the Series A Liquidation Preference, no additional
<PAGE>
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the
Series A Liquidation Preference by (ii) 1000 (as appropriately adjusted
as set forth in subparagraph C below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common
Stock) (such number in clause (ii), the "Adjustment Number"). Following
the payment of the full amount of the Series A Liquidation Preference and
the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively,
holders of Series A Junior Participating Preferred Stock and holders of
shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the
Adjustment Number to 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of Preferred Stock, if
any, which rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to
the holders of such parity shares in proportion to the respective
liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the Adjustment Number in effect immediately prior to
such event shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
--------------------------
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property,
then in any such case the shares of Series A Junior Participating
Preferred Stock shall at the same time be similarly exchanged or changed
in an amount per share (subject to the provision of adjustment
hereinafter set forth) equal to 1000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the
<PAGE>
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior
-------------
Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred
-------
Stock shall rank junior to all other Series of the Corporation's Preferred
Stock as to the payment of dividends and the distribution of assets, unless
the terms of any such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate of Incorporation
---------
of the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of
the Series A Junior Participating Preferred Stock so as to affect then
adversely without the affirmative vote of the holders of a majority or
more of the outstanding shares of Series A Junior Participating Preferred
Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Junior Participating
-----------------
Preferred Stock may be issued in fractions of a share which shall entitle
the holder, in proportion to such holder's fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have
the benefit of all other rights of holders of Series A Junior Participating
Preferred Stock.
(d) Pursuant to the authority granted pursuant to paragraph (b) of
this Article Third, the Board of Directors has created a series of Preferred
Stock, $0.01 par value, designated as Series B Convertible Preferred Stock,
consisting of 1,470 shares, the powers, preferences and relative, participating,
optional or other special rights of which, and the qualifications, limitations
or restrictions of which, are as follows:
Section 1. Voting. The holders of the Series B Convertible
------- - ------
Preferred Stock shall have such voting rights as are set forth below except
as otherwise required by law from time to time.
The affirmative approval (by vote or written consent as permitted
by applicable law) of the holders of at least 66-2/3% of the outstanding
shares of the Series B Convertible Preferred Stock, voting separately as
a class, will be required for (i) any amendment, alteration or repeal of
the Corporation's Certificate of Incorporation, as amended from time to
time, (including any Certificate of Determination, Rights and
Preferences) if such amendment, alteration or repeal adversely affects
the powers,
<PAGE>
preferences or rights of the Series B Convertible Preferred Stock
(including, without limitation, by creating any class or series of equity
securities having a preference over the Series B Convertible Preferred
Stock with respect to dividends, redemption, distribution upon
liquidation or in any other respect), or (ii) any amendment to or waiver
of the terms of the Series B Convertible Preferred Stock or this
Certificate.
Except as provided in the preceding paragraph, to the extent that
under applicable law or under the Corporation's Certificate of
Incorporation or By-Laws, each as amended from time to time, the approval
of the holders of the Series B Convertible Preferred Stock, voting
separately as a class, is required to authorize a given action of the
Corporation, the affirmative approval (by vote or written consent as
permitted by applicable law) of the holders of a majority of the
outstanding shares of the Series B Convertible Preferred Stock shall
constitute the approval of such action by the class. To the extent that
under applicable law or under the Corporation's Certificate of
Incorporation or By-Laws, each as amended from time to time, the holders of
the Series B Convertible Preferred Stock are entitled to vote on a matter
with holders of the Common Stock, voting together as one class, each share
of Series B Convertible Preferred Stock shall be entitled to that number of
votes as shall be equal to the number of shares of the Corporation's Stock
(the "Common Stock") into which each share of Series B Convertible
Preferred Stock is convertible on the record date for any meeting of
stockholders or on the date of any written consent of stockholders, as
applicable (without regard to any conversion restrictions hereunder).
Holders of the Series B Convertible Preferred Stock shall be entitled to
notice of all shareholder meetings or written consents (whether or not they
are entitled to vote thereat), which notice will be provided pursuant to
the Corporation's By Laws, as amended from time to time, and applicable
statutes.
Section 2. Dividends. No dividends shall accrue with respect to
------- - ---------
the Series B Convertible Preferred Stock.
Section 3. Liquidation Preference.
------- - ----------- ----------
(a) Preference. In the event of any liquidation, dissolution or
----------
winding up of the affairs of the Corporation, voluntarily or involuntarily,
the holders of each share of Series B Convertible Preferred Stock shall be
entitled to be paid pro rata out of the assets of the Corporation available
for distribution to its stockholders, whether such assets are capital,
surplus, or earnings, before any payment or declaration and setting apart
for payment of any amount shall be made in respect of any shares of the
Corporation's Common Stock or shares of any other capital stock of the
Corporation ranking junior to the Series B Convertible Preferred Stock
(collectively, "Junior Stock"), a preferential amount equal to Fifty
Thousand Dollars ($50,000.00) per share of Series B Convertible Preferred
Stock held by them (such preferential amount, as adjusted to reflect any
stock split, stock dividend, combination, recapitalization or
reorganization, being hereinafter referred to as the "Series B Preferred
Stock Liquidation Preference"). Upon the holder's receipt of the full
Preferred Stock Liquidation Preference on any share of Series B
<PAGE>
Convertible Preferred Stock, such share shall be deemed to be cancelled,
and the holder of such share of Series B Convertible Preferred Stock
shall return the certificate representing such share to the Corporation
for cancellation. Except as otherwise provided herein, upon payment of
the Series B Preferred Stock Liquidation Preference upon each share of
Series B Convertible Preferred Stock, the Corporation shall have no
further obligation to make any other payments or distributions out of the
assets of the Corporation on any shares of Series B Convertible Preferred
Stock in connection with such liquidation, dissolution or winding up of
the Corporation. If upon such liquidation, dissolution or winding up, the
assets of the Corporation are insufficient (after payment of the
liquidation preference of any class of preferred stock ranking senior on
liquidation to the Series B Convertible Preferred Stock) to provide for
the payment in full of the Series B Preferred Stock Liquidation
Preference for each share of Series B Convertible Preferred Stock
outstanding, such assets as are available shall be paid out pro rata
(determined in accordance with the liquidation preferences of the
relevant series of preferred stock) to the outstanding shares of Series B
Convertible Preferred Stock and to any holders of any series of preferred
stock that ranks pari passu with the Series B Convertible Preferred
---- -----
Stock.
(b) Remaining Assets. After the payment or distribution to the
----------------
holders of the Series B Convertible Preferred Stock of the full Series B
Preferred Stock Liquidation Preference, the holders of the Junior Stock
then outstanding shall be entitled to receive all remaining assets of the
Corporation to be distributed.
Section 4. Conversion.
--------- ----------
The holders of the Series B Convertible Preferred Stock shall have
conversion rights in accordance with the following provisions:
(a) Voluntary Conversion. Each holder of one or more shares of
--------------------
Series B Convertible Preferred Stock shall be entitled, at any time and
from time to time and at such holder's option, to convert into fully paid
and nonassessable shares of Common Stock (as such shares of Common Stock
may be constituted on the conversion date) at the rate specified in
Section 4(d) hereof, subject to adjustment in accordance with Section 5
hereof, up to that number of shares of Series B Convertible Preferred
Stock equal to the Convertible Percentage (as determined in accordance
with the following table) of the number of shares of Series B Convertible
Preferred Stock then held by such holder; provided that, in determining
--------
the number of shares of Series B Convertible Preferred Stock then held by
such holder for purposes of this Section 4(a), such holder shall be
deemed to then hold that number of shares of Series B Convertible
Preferred Stock actually then held by such holder plus that number of
shares of Series B Convertible Preferred Stock previously converted by
such holder in accordance with this Section 4(a).
<PAGE>
Date of Conversion
(number of days after issuance of the Series B
Convertible Preferred Stock being converted) Convertible Percentage
---------------------------------------------- --------------------------
1 to 45 0%
46 to 90 20%
91 to 135 40%
136 to 180 60%
181 to 225 80%
greater than 225 100%
Anything in this Section 4(a) to the contrary notwithstanding, a
holder of shares of Series B Convertible Preferred Stock shall be permitted
to voluntarily convert any number of such holder's shares of Series B
Convertible Preferred Stock in accordance with this Section 4(a) in the
event that the applicable rate of conversion specified in Section 4(d)
hereof, subject to adjustment in accordance with Section 5 hereof, is no
less than the Market Price on the Original Issuance Date (as defined below)
for such shares of Series B Preferred Stock, subject to adjustment in
accordance with Section 5 hereof. The Original Issuance Date shall mean
(i) with respect to any shares of Series B Preferred Stock issued at the
First Closing and the Second Closing, the First Closing Date, (ii) with
respect to any shares of Series B Preferred Stock issued at the Put
Closing, the Put Closing Date (as defined in the Subscription Agreements
for the Series B Preferred Stock), and (iii) with respect to any shares of
Series B Preferred Stock issued pursuant to an Additional Purchase Notice
(as defined in the Subscription Agreements for the Series B Preferred
Stock), the closing date of any purchase of shares of Series B Preferred
Stock pursuant to such notice. The term "Fixed Price," as used herein,
shall mean (i) with respect to the shares of Series B Preferred Stock
issued on the First Closing Date or the Second Closing Date (as defined in
the Subscription Agreements for the Series B Preferred Stock), the Market
Price as of the First Closing Date, (ii) with respect to the shares of
Series B Preferred Stock issued as of the Put Closing Date (as defined in
the Subscription Agreements for the Series B Preferred Stock) the Market
Price as of the Put Closing Date, and (iii) with respect to the shares of
Series B Preferred Stock issued pursuant to an Additional Purchase Notice
(as defined in the Subscription Agreements for the Series B Preferred
Stock), the Market Price as of the closing date of any such issuance,
subject in each case to adjustment as provided herein.
(b) Forced Conversion. On any day for which both (i) the
-----------------
registration statement (the "Registration Statement") filed by the
Corporation pursuant to the Registration Rights Agreement among the
Corporation and the initial purchasers of shares of Series B Convertible
Preferred Stock shall have been effective on each of the preceding ninety
(90) trading days, and during which time no stop order suspending the
qualification of the Common Stock for sale in any jurisdiction has been
issued and no other transfer restrictions have been imposed, and (ii) the
Market Price of the Common Stock for each of the preceding twenty (20)
trading days shall not have been less than
<PAGE>
200% of the Fixed Price on the Original Issuance Date (subject to
appropriate adjustment in the event of any stock split, combination,
recapitalization, reclassification or other capital reorganization as
contemplated by Section 5 hereof), the Corporation may, at its option,
deliver to each of the holders of record of shares of Series B Convertible
Preferred Stock a notice (the "Forced Conversion Notice") of the
Corporation's election to cause the conversion of all, but not less than
all, shares of Series B Convertible Preferred Stock then outstanding. The
date on which the Forced Conversion Notice is received (as defined in
Section 15) by the holders shall be referred to as the "Forced Conversion
Notice Date." The term "Market Price" shall mean, with respect to the
Common Stock on any day, the last reported per share sales price of Common
Stock reported on such business day or, in case no sales take place on such
day, the average of the closing bid and asked prices on such prior day, in
either case, as reported on the Bloomberg Financial Markets for such day,
or, if not reported on the Bloomberg Financial Markets, the last quoted
price on such prior day (or, if not so quoted, the average of the last
quoted high bid and low asked prices) in the over the counter market, as
reported by NASDAQ or such other system then in use, or, if on any such
prior day no bids are quoted by any such organization, the average of the
closing bid and asked prices on such prior day furnished by a professional
market maker making a market in Common Stock selected by the Board of
Directors of the Company, and, if on any such prior day, no market maker is
making a market in the Common Stock, the fair market value of the Common
Stock as of such prior day determined reasonably and in good faith by the
Board of Directors of the Company.
Upon receipt of the Forced Conversion Notice and notwithstanding
any limitations upon conversion set forth in Section 4(a) hereof, each
holder of one or more shares of Series B Convertible Preferred Stock shall
be entitled, at any time or times within the period of thirty (30) calendar
days following the Forced Conversion Notice Date (the "Forced Conversion
Period"), to convert any or all of such holder's shares of Series B
Convertible Preferred Stock into fully paid and nonassessable shares of
Common Stock (as such shares of Common Stock may be constituted on the
conversion date) at the rate specified in Section 4(d) hereof, subject to
adjustment in accordance with Section 5 hereof (without regard to the
conversion restrictions in (S)4(a)). Subject to the provisions of the
following paragraph, on the last day of the Forced Conversion Period, each
share of Series B Convertible Preferred Stock then outstanding shall be
converted automatically and without further action into fully paid and
nonassessable shares of Common Stock (as such shares of Common Stock may be
constituted on the conversion date) at the rate specified in Section 4(d)
hereof, subject to adjustment in accordance with Section 5 hereof, all as
if Conversion Notices had been delivered with respect to all such shares of
Series B Convertible Preferred Stock on the last day of the Forced
Conversion Period.
Anything in this Section 4(b) to the contrary notwithstanding,
any Forced Conversion Notice delivered in accordance with this Section 4(b)
shall be deemed null, void and of no effect upon the occurrence, at any
time during the Forced Conversion
<PAGE>
Period, of any one or more of the following events: (i) the Market Price of
the Common Stock is less than 85% of the Market Price of the Common Stock
on the Forced Conversion Notice Date, (ii) the issuance of any stop order
suspending the qualification of the Common Stock for sale in any
jurisdiction, (iii) the issuance of any stop order suspending the
effectiveness of the Registration Statement, (iv) the suspension of trading
of the Common Stock by the Securities and Exchange Commission, the NASDAQ
or the NASD, or the delisting of the Common Stock from the NASDAQ, or (v)
the occurrence of any material breach by the Corporation of any of its
obligations in respect of the Series B Convertible Preferred Stock
hereunder.
(c) Mandatory Conversion. On the fifth anniversary of the Original
--------------------
Issuance Date, each outstanding share of Series B Convertible Preferred
Stock shall be converted automatically and without further action into
fully paid and nonassessable shares of Common Stock (as such shares of
Common Stock may be constituted on the conversion date) at the rate
specified in Section 4(d) hereof, subject to adjustment in accordance with
Section 5 hereof, and a conversion notice shall be deemed to have been
given by the holder of each such outstanding share of Series B Convertible
Preferred Stock on such date.
(d) Conversion Rate.
---------------
(i) Each share of Series B Convertible Preferred Stock that
is converted into shares of Common Stock in accordance with Sections 4(a),
(b) and (c) hereof shall convert into such number of shares of Common
Stock as may be purchased with $50,000.00 at a price equal to the lower
of (i) the lowest Market Price of the Common Stock during the seven (7)
trading days immediately preceding the Holder Conversion Date (as defined
in Section 4(e) hereof) or (ii) the Fixed Price, subject to adjustment in
accordance with Section 5 hereof.
(ii) The number of shares of Common Stock into which each
share of Series B Convertible Preferred Stock may be converted pursuant
to this Section 4(d), as such may be adjusted from time to time in
accordance with Section 5 hereof, is hereafter referred to as the
"Conversion Rate."
(e) Mechanics of Conversion. Unless conversion is (i) mandatory in
-----------------------
accordance with Section 4(c) hereof or (ii) forced in accordance with
Section 4(b) hereof and the applicable Forced Conversion Period has
expired, any or all shares of Series B Convertible Preferred Stock may be
converted by the holder thereof by giving written notice (the "Conversion
Notice") by facsimile by 11:00 p.m. Eastern Standard Time, together with
the holder's calculation of the Conversion Rate to the Corporation, that
the holder elects to convert the number of shares specified therein, which
notice and election shall be irrevocable by the holder; and by delivering
the certificate or certificates representing the Series B Convertible
Preferred Stock to be converted, duly endorsed, by either overnight courier
or two-day courier, to the principal office of the Corporation or of
<PAGE>
any transfer agent for the Series B Convertible Preferred Stock, provided,
--------
however, in the event that such certificate or certificates have been lost,
-------
stolen or destroyed, in lieu of delivering such certificate or certificates
the holder may notify the Corporation of such loss, theft or destruction
and deliver to the Corporation an instrument reasonably satisfactory to the
Corporation indemnifying the Corporation from any loss incurred by it in
connection with such lost, stolen or destroyed certificate or certificates.
The Corporation shall, as soon as possible and in any event
within three business days, verify the holder's calculation of the
Conversion Rate as calculated by the holder, or if the Corporation
disagrees with the holder's calculation of the Conversion Rate, deliver to
the holder the Corporation's calculation of the Conversion Rate. The
Corporation shall use its best efforts to issue and deliver as soon as
possible, and in any event within five business days after delivery to the
Corporation of a Conversion Notice, to the holder of Series B Convertible
Preferred Stock requesting conversion of shares thereunder, or to its
designee, one or more certificates representing that number of shares of
Common Stock to which such holder shall be entitled, together with one or
more certificates representing any shares of Series B Convertible Preferred
Stock represented by the certificate or certificates delivered by such
holder but not submitted for conversion. The Corporation shall be deemed
to have received the Conversion Notice on the date of dispatch by the
holder to the Corporation (the "Holder Conversion Date") and the person or
persons entitled to receive the shares of Common Stock issuable upon the
conversion specified therein shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date,
provided that the certificate or certificates representing the shares of
Series B Convertible Preferred Stock to be converted (or a notice of loss,
theft or destruction and an indemnification instrument in lieu thereof),
are received by the Corporation or any transfer agent for the Series B
Convertible Preferred Stock within five (5) business days thereafter. If
such certificate or certificates (or such notice and indemnification
instrument) are not received by the Corporation or any transfer agent for
the Series B Convertible Preferred Stock within five (5) business days
after the Holder Conversion Date, the Conversion Notice shall, at the
election of the Corporation by written notice to the holder requesting such
conversion, become null and void unless the holder delivers such
certificate or certificates (or such notice and instrument of
indemnification) within three (3) business days after receipt by the holder
of such election by the Corporation.
(f) Limitation on Conversion. Notwithstanding anything to the
------------------------
contrary herein, in no event shall any holder be entitled to or required to
convert Series B Convertible Preferred Stock in excess of that number of
shares which, upon giving effect to such conversion, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder
and its affiliates to exceed 4.9% of the outstanding shares of the Common
Stock following such conversion. For purposes of the foregoing proviso,
the aggregate number of shares of Common Stock beneficially owned by the
holder and its affiliates shall include the number of shares of Common
Stock issuable upon conversion of the shares of Series B Convertible
Preferred Stock with respect to
<PAGE>
which the determination of such proviso is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i)
conversion of the remaining, nonconverted shares of Series B Convertible
Preferred Stock beneficially owned by the holder and its affiliates and
(ii) exercise or conversion of the unexercised or unconverted portion of
any other securities of the Company (including, without limitation, any
warrants) subject to a limitation on conversion or exercise analogous to
the limitation contained herein beneficially owned by the holder and its
affiliates. Except as set forth in the preceding sentence, for purposes of
this paragraph, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended. The
provisions of this paragraph shall automatically terminate upon the last
day of the Forced Conversion Period or upon the fifth anniversary of the
Original Issuance Date for the initial shares of Series B Convertible
Preferred Stock.
Section 5. Adjustments; Reorganizations.
------- - ----------- ---------------
(a) Adjustment for Stock Splits and Combinations. If, at any time
--------------------------------------------
or times after the Original Issuance Date, the Corporation effects a
subdivision (by any stock split, stock dividend, recapitalization or
otherwise) of the Common Stock into a greater number of shares or
combination (by reverse stock split or otherwise), of the outstanding
Common Stock into a smaller number of shares, the Conversion Rate and/or
the Fixed Price, as applicable, in effect immediately before such
subdivision shall be proportionately increased or decreased, as
appropriate.
(b) Adjustment for Certain Dividends and Distributions. If the
--------------------------------------------------
Corporation at any time or from time to time after the Original Issuance
Date makes, or fixes a record date for the determination of holders of
Common Stock entitled to receive a dividend or other distribution payable
in additional shares of Common Stock or in other securities of the
Corporation, then and in each such event provision shall be made so that
the holders of Series B Convertible Preferred Stock shall receive that
number of shares of Common Stock or other securities of the Corporation, as
the case may be, to which such holders would be entitled to receive had
such holders converted each share of Series B Convertible Preferred Stock
then outstanding into Common Stock immediately prior to the record date for
the determination of holders of Common Stock entitled to receive such
dividend or other distribution (without regard to any restrictions on
conversion).
(c) Adjustment for Other Dividends and Distributions. In the event
------------------------------------------------
that the Corporation, at any time or from time to time after the Original
Issuance Date, makes or fixes a record date for the determination of
holders of Common Stock entitled to receive a dividend or other
distribution payable other than in securities of the Corporation, then and
in each such event provision shall be made so that the holders of Series B
Convertible Preferred Stock shall receive the amount of such dividend or
other distribution, payable in the form in which such dividend or other
distribution is to be paid to holders of Common Stock, to which such
holders would be entitled to receive had such holders converted each share
of Series B Convertible Preferred Stock then outstanding into Common Stock
<PAGE>
immediately prior to the record date for the determination of holders of
Common Stock entitled to receive such dividend or other distribution (and
without regard to any restrictions on conversion).
(d) Adjustment for Reclassification, Exchange and Substitution. In
----------------------------------------------------------
the event that at any time or from time to time after the Original Issuance
Date, the Common Stock issuable upon the conversion of the Series B
Convertible Preferred Stock is changed into the same or a different number
of shares of any class or classes of stock, whether by recapitalization,
reclassification or otherwise (other than a subdivision or combination of
shares or stock dividend or reorganization provided for elsewhere in this
Section 5), then and in each such event each holder of shares of Series B
Convertible Preferred Stock shall have the right thereafter to convert such
stock into the kind of stock receivable upon such recapitalization,
reclassification or other change by holders of shares of Common Stock, all
subject to further adjustment as provided herein. In such event, the
formula set forth herein for conversion and the Fixed Price shall be
equitably adjusted to reflect such change in number of shares or, if shares
of a new class of stock are issued, to reflect the market price of the
class or classes of stock issued in connection with the above described
transaction.
(e) Reorganization. If at any time or from time to time after the
--------------
Original Issuance Date there is a capital reorganization of the Common
Stock (other than a recapitalization, subdivision, combination,
reclassification, or exchange of shares provided for elsewhere in this
Section 5), then as a part of such reorganization, provision shall be made
so that the holders of the Series B Convertible Preferred Stock shall
thereafter be entitled to receive upon conversion of shares of Series B
Convertible Preferred Stock the number of shares of stock or other
securities or property to which a holder of the number of shares of Common
Stock deliverable upon conversion would have been entitled on such capital
reorganization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 5 with respect to the
rights of the holders of the Series B Convertible Preferred Stock after the
reorganization to the end that the provisions of this Section 5 (including
adjustment of the Conversion Rate and the Fixed Price then in effect and
the number of shares issuable upon conversion of shares of the Series B
Convertible Preferred Stock) shall be applicable after that event and be as
nearly equivalent as may be practicable, including, by way of illustration
and not limitation, by equitably adjusting the formula set forth herein for
conversion to reflect the market price of the securities or property issued
in connection with the above described transaction.
(f) Acquisition. In the event of (i) a sale or other disposition of
-----------
all or substantially all of the assets of the Corporation or (ii) any
merger, consolidation or other corporate reorganization or transaction or
series of related transactions in which in excess of 50% of the
Corporation's voting power is transferred, the holders of the Series B
Convertible Preferred Stock shall vote with respect to the approval of such
transaction together with the holders of the Common Stock as one class
(assuming conversion of all
<PAGE>
Series B Convertible Preferred Stock). The holders of the Series B
Convertible Preferred Stock shall be entitled to receive on consummation of
any such transaction the consideration which they would have received had
all Series B Convertible Preferred Stock been converted to Common Stock
immediately prior to the consummation of such transaction (without regard
to any then applicable restrictions on conversion).
Section 6. Fractional Shares. No fractional shares of Common Stock
------- - ---------- ------
or scrip representing fractional shares of Common Stock shall be issuable
hereunder. The number of shares of Common Stock that are issuable upon any
conversion of one or more shares of Series B Convertible Preferred Stock
shall be rounded up or down to the nearest whole share.
Section 7. Reservation of Stock Issuable Upon Conversion.
------- - ---------------------------------------------
(a) Reservation Requirement. The Corporation has reserved and the
-----------------------
Corporation shall continue to reserve and keep available at all times, free
of preemptive rights, shares of Common Stock for the purpose of enabling
the Corporation to satisfy any obligation to issue shares of its Common
Stock upon conversion of the authorized shares of Series B Convertible
Preferred Stock; provided, however, that the number of shares so reserved
shall at all times be at least 6,000,000 shares. The number of shares so
reserved may be reduced by the number of shares actually delivered pursuant
to conversion of shares of Series B Convertible Preferred Stock; provided
that in no event shall the number of shares so reserved be less than 125%
of the maximum number required to satisfy remaining conversion rights on
the unconverted shares of Series B Convertible Preferred Stock (and without
regard to any restrictions on conversion hereunder) and the number of
shares so reserved shall be increased to reflect stock splits and stock
dividends and distributions.
(b) Default. If the Corporation does not have a sufficient number
-------
of shares of Common Stock available to satisfy the Corporation's
obligations to a holder of one or more shares of Series B Convertible
Preferred Stock upon receipt of a Conversion Notice, or if the Corporation
is otherwise prohibited by applicable law, regulation, or stock exchange or
trading market rule from issuing shares of Common Stock upon receipt of a
Conversion Notice because the aggregate number of shares of Common Stock
for which shares of Series B Convertible Preferred Stock have been
converted since the Original Issuance Date exceeds 7,400,000 (each, a
"Conversion Default"), or if the Corporation fails for any other reason
(other than due to the failure of any holder of Series B Convertible
Preferred Stock to timely deliver the stock certificate for the shares of
Series B Convertible Preferred Stock to be converted or reasonably
satisfactory indemnification instruments) to issue shares of Common Stock
upon receipt of any Conversion Notice for a period of 30 days, the holder
of one or more shares of Series B Convertible Preferred Stock requesting
conversion shall have the right, upon notice to the Corporation, to require
the Corporation to redeem such shares of Series B Convertible Preferred
Stock, as soon as possible and in any event within 30 days of such notice,
at a price per share
<PAGE>
which shall be the greater of (i) 110% of the Series B Preferred Stock
Liquidation Preference or (ii) the product of the Conversion Rate and the
Market Price of the Common Stock on the Holder Conversion Date, such
redemption amount to be payable in cash, in readily marketable securities
(the marketability and value of which shall be mutually agreed upon by the
Corporation and the holder or shall be determined by a nationally
recognized investment banking firm), or in a combination thereof.
Section 8. No Reissuance of Shares of Series B Preferred Stock. No
------- - ---------------------------------------------------
share or shares of Series B Convertible Preferred Stock acquired by the
Corporation by reason of redemption, purchase, conversion or otherwise
shall be reissued as Series B Convertible Preferred Stock, and all such
shares shall be retired and shall return to the status of authorized,
unissued and retired and undesignated shares of preferred stock of the
Corporation. Except as provided in the Subscription Agreements entered
into by the Corporation and the initial holders of shares of Series B
Convertible Preferred Stock on or about the Original Issuance Date, no
additional shares of Series B Convertible Preferred Stock shall be
authorized or issued without the consent of at least 66-2/3% in interest of
the holders of shares of Series B Convertible Preferred Stock outstanding
immediately prior thereto.
Section 9. No Impairment. The Corporation shall not intentionally
------- - -- ----------
take any action which would impair the rights and privileges of the shares
of Series B Convertible Preferred Stock set forth herein.
Section 10. Holder's Rights if Shares are Delisted or if Trading in
------- -- -------------------------------------------------------
Common Stock is Suspended. In the event that at any time on or after the
-------------------------
date hereof and prior to the fifth anniversary of the Original Issuance
Date, trading in the shares of the Common Stock is suspended on the
principal quotation system, market or exchange for such shares, for a
period of five (5) consecutive trading days, other than as a result of the
suspension of trading in securities in general, or if the Common Stock is
delisted, then, at the option of any holder of one or more shares of Series
B Convertible Preferred Stock, the Corporation shall redeem the number of
such holder's shares of Series B Convertible Preferred Stock as such holder
shall designate, on such date as such holder shall designate (which date
shall be within five (5) days thereof), and at the price per share which is
the greater of (i) 110% of the Series B Preferred Stock Liquidation
Preference for all such shares of Series B Convertible Preferred Stock or
(ii) the product of the Conversion Rate and the Market Price of the Common
Stock on the date of suspension or delisting, such redemption amount to be
payable in cash, in readily marketable securities (the marketability and
value of which shall be mutually agreed upon by the Corporation and the
holder or shall be determined by a nationally recognized investment banking
firm), or in a combination thereof.
Section 11. Anti-Dilution Redemption. At any time or from time to
------- -- ------------- ----------
time (subject to the limitations set forth in this Section 11), the
Corporation, at its option, may deliver to each of the holders of record of
shares of Series B Convertible Preferred Stock a notice
<PAGE>
(the "Anti-Dilution Redemption Notice") stating the Corporation's
intention to redeem all shares of Series B Convertible Preferred Stock
(or such lesser number of shares the aggregate redemption price for which
shall not exceed the maximum stated in the Anti-Dilution Redemption
Notice) (such shares to be redeemed on a first-surrendered, first-
redeemed basis, with any shares the redemption of which would exceed such
aggregate maximum dollar amount to be converted in accordance with
Section 4 hereof) surrendered for conversion during the thirty (30) day
period (an "Anti-Dilution Redemption Period") beginning on the fifth
(5th) business day following the Receipt Date (as defined below) at a
Conversion Rate greater than 8,333 (1/3) shares of Common Stock per share
of Series B Convertible Preferred Stock, subject to adjustment in
accordance with Section 5 hereof. For purposes of this Section 11, the
"Receipt Date", as to any holder of shares of Series B Convertible
Preferred Stock, shall mean the business day following the date on which
the Anti-Dilution Redemption Notice is received by such holder. Each
share of Series B Convertible Preferred Stock surrendered for conversion
by the holder thereof on the date of, or on either of the two (2)
business days immediately following, the Receipt Date shall be converted
by the Corporation (and not redeemed), unless such holder consents in
writing to redemption in lieu of conversion. The Corporation may
terminate redemptions pursuant to an Anti-Dilution Redemption Notice at
any time by delivering to each of the holders of record of shares of
Series B Convertible Preferred Stock a notice (the "Termination Notice")
stating the Corporation's intention to terminate such redemptions, such
termination to take effect on the date on which such Termination Notice
is delivered by the Corporation, which date shall be written on the face
of such Termination Notice.
Each share of Series B Convertible Preferred Stock to redeemed by the
Corporation during an Anti-Dilution Redemption Period shall be redeemed at
a price (the "Anti-Dilution Redemption Price") equal to the product of (i)
the number of shares of Common Stock into which such share of Series B
Convertible Preferred Stock would otherwise convert pursuant to Section
4(d) hereof and (ii) the Market Price of the Common Stock on the date on
which such share of Series B Convertible Preferred Stock is submitted for
redemption. The Corporation shall redeem each surrendered share of Series
B Convertible Preferred Stock (subject to the limitation contained in the
preceding paragraph) by delivering to the holder that surrendered each such
share a check or wire transfer representing the Anti-Dilution Redemption
Price thereof, within the number of days after the date 30 days following
the date of the Anti-Dilution Redemption Notice determined in accordance
with the following table, but only if the Corporation shall have funds
legally available for such payment.
<PAGE>
Number of shares of Series B Convertible
Preferred Stock presented for conversion Number of Days
------------------------------------------------ ----------------------
up to 100 5
101 to 200 10
201 to 300 15
301 to 400 25
greater than 400 35
If the Corporation, for any reason, is unable to complete or
terminates a redemption pursuant to an Anti-Dilution Redemption Notice,
then each holder of one or more shares of Series B Convertible Preferred
Stock which were to be redeemed during the Anti-Dilution Redemption Period
shall be entitled, at such holder's option, (i) to convert any such shares
at a rate equal to the greater of (A) the Conversion Rate in effect on the
date of the Conversion Notice relating to such shares or (B) the Conversion
Rate in effect on the first business day immediately following the last day
on which such shares were required to be redeemed (as determined in
accordance with the preceding table) or (ii) to rescind such Conversion
Notice. Once the Corporation, for any reason, has failed to complete or
has terminated a redemption (other than by delivery of a Termination
Notice) pursuant to an Anti-Dilution Redemption Notice, then the
Corporation shall not be permitted to deliver any additional Anti-Dilution
Redemption Notice unless the Corporation has first obtained the consent of
a majority in interest of the holders of the shares of Series B Convertible
Preferred Stock then outstanding.
Section 12. Full Redemption. On any one (but only one) of the dates
------- -- ---- ----------
which are the second, third and fourth anniversary of the effectiveness of
the Registration Statement, the Corporation, at its option, may redeem all,
but not less than all, shares of the Series B Convertible Preferred Stock
then outstanding at a redemption price per share equal to 110% of the
Series B Preferred Stock Liquidation Preference for all such shares of
Series B Convertible Preferred Stock, but only if the Corporation shall
have funds legally available for such payment.
Upon any redemption of shares of Series B Convertible Preferred Stock
pursuant to this Section 12, written notice (the "Redemption Notice") shall
be given by the Corporation to each holder of one or more shares of Series
B Convertible Preferred Stock for shares to be redeemed at least twenty
(20) days prior to the date fixed for redemption (the "Redemption Date").
Such Redemption Notice shall specify the Redemption Date, shall state that
all shares of Series B Convertible Preferred Stock outstanding are to be
redeemed and the number of shares of Series B Convertible Preferred Stock
to be so redeemed, and shall call upon each such holder to surrender on or
prior to the Redemption Date, at the place designated in the Redemption
Notice, such holder's certificate or certificates representing the shares
of Series B Convertible Preferred Stock
<PAGE>
to be redeemed. Unless a holder shall elect to convert one or more of such
holder's shares of Series B Convertible Preferred Stock into Common Stock
in accordance with Section 4 hereof, such holder shall surrender the
certificate or certificates evidencing such holder's shares of Series B
Convertible Preferred Stock (or a notice of loss, theft or destruction and
an indemnification instrument in lieu thereof) at the place designated in
such Redemption Notice and shall thereupon be entitled to receive payment
of the redemption price on the date fixed for redemption. Anything in this
Section 12 to the contrary notwithstanding, any Redemption Notice delivered
in accordance with this Section 12 shall be deemed null, void and of no
effect upon the occurrence, at any time during the twenty day period prior
to the Redemption Date, of any one or more of the following events: (i) the
issuance of any stop order suspending the qualification of the Common Stock
for sale in any jurisdiction, (ii) the issuance of any stop order
suspending the effectiveness of the Registration Statement, (iii) the
suspension of trading of the Common Stock by the Securities and Exchange
Commission, the NASDAQ or the NASD, or the delisting of the Common Stock
from the NASDAQ, or (iv) the occurrence of any material breach by the
Corporation of any of its obligations in respect of the Series B
Convertible Preferred Stock hereunder.
At least fifteen (15) days prior to the Redemption Date, the
Corporation shall deposit with any bank or trust company, as a trust fund,
a sum sufficient to redeem all shares of Series B Convertible Preferred
Stock called for redemption which have not therefore been surrendered for
conversion, with irrevocable instructions and authority to the bank or
trust company to pay, on or after the date fixed for redemption, the
redemption price of such shares to their respective holders upon the
surrender of such holder's share certificates at the place designated in
the Redemption Notice. From and after the Redemption Date, provided that
the deposit referred to in the immediately preceding sentence has been made
by the Corporation, the shares of Series B Convertible Preferred Stock
shall no longer be outstanding, and the holders thereof shall cease to be
shareholders with respect to such shares, and shall have no rights with
respect thereto except the right to receive from the bank or trust company
payment of the redemption price of such shares without interest upon
surrender of their certificates therefor. Any interest accrued on any fund
so deposited shall be the property of, and paid to, the Corporation .
Section 13. Notice of Adjustment. Upon the occurrence of any of the
------- -- ------ -- ----------
events specified in Section 5, then and in each such case, the Corporation
shall give written notice to each holder of such shares subject to
conversion under Section 4 hereof, which notice shall describe in
reasonable detail such event and the resulting adjustment and shall set
forth in reasonable detail the method by which such adjustment was
determined.
Section 14. Other Notices. In case at any time:
------- -- ----- -------
<PAGE>
(i) the Corporation shall declare any dividend upon its Common
Stock payable in cash, stock or convertible securities or make any other
distribution to the holders of its Common Stock;
(ii) the Corporation shall offer for subscription pro rata to the
--- ----
holders of its Common Stock any additional shares of stock of any class,
any convertible securities, or other rights;
(iii) there shall be any capital reorganization or reclassification
of the capital stock of the Corporation, or a consolidation or merger of
the Corporation with or into, or a sale of all or substantially all its
assets to, another entity or entities; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give to each
holder of any shares of Series B Convertible Preferred Stock (a) at least
ten (10) days' prior written notice of the date on which the books of the
Corporation shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in
respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up and (b) in the case of
any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least twenty (20) days' prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause (a) shall also specify, in the case of
any such dividend, distribution or subscription rights, the date on which
the holders of Common Stock shall be entitled thereto and such notice in
accordance with the foregoing clause (b) shall also specify the date on
which the holders of Common Stock shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. The Corporation shall
simultaneously make public disclosure of all such information delivered to
the holders of Series B Convertible Preferred Stock.
Section 15. Notice Requirements. Unless otherwise provided herein,
------- -- ------ ------------
notices and other deliveries to be made hereunder shall be made by hand or
registered or certified mail, postage and charges prepaid, or by express
overnight delivery, or by telecopy or telex (in which cases, the original
notice shall be sent by means reasonably intended to result in delivery of
the original notice to the recipient thereof on the next business day).
Such notices and other deliveries shall be addressed, in the case of the
Corporation, to the Corporation at its principal place of business, and in
the case of any holder of one or more shares of Series B Convertible
Preferred Stock, to such holder at the address of such holder appearing on
the books of the Corporation or given by such holder to the Corporation for
the purpose of notice, or, if no such address appears or is so given, at
the
<PAGE>
last known address of such holder. Notices are deemed delivered upon
receipt in accordance with any of the foregoing methods.
(e) On all matters submitted to a vote of the holders of the corporation's
Common Stock, each share of Common Stock shall entitle the holder thereof to one
(1) vote.
FOURTH: Any action required or permitted to be taken by the stockholders
of this corporation must be effected at a duly called annual or special meeting
of such holders and may not be effected by any consent in writing by such
holders. At any annual meeting or special meeting of stockholders of this
corporation, only such business shall be conducted as shall have been brought
before such meeting in the manner provided by the bylaws of this corporation.
FIFTH: The Board of Directors shall have the power to make, alter, amend
and repeal the bylaws of this corporation (except insofar as the bylaws of this
corporation adopted by the stockholders shall otherwise provide). Any bylaws
made by the directors under the powers conferred hereby may be altered, amended
or repealed by the directors or by the stockholders.
SIXTH: This corporation expressly elects not to be governed by Section 203
of the Delaware General Corporation Law.
SEVENTH: (a) Elimination of Certain Liability of Directors. A director
---------------------------------------------
of this 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 Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
(b) Indemnification and Insurance.
-----------------------------
(1) Right to Indemnification. Each person who was or is made a
------------------------
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines,
<PAGE>
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
-------- -------
subparagraph (2) hereof, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the corporation. The right to indemnification conferred in
this paragraph (b) shall be a contract right and shall include the right to be
paid by the corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that, if the Delaware
-------- -------
General Corporation Law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this paragraph (b) or otherwise. The corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
(2) Right of Claimant to Bring Suit. If a claim under subparagraph
-------------------------------
(1) of this paragraph (b) is not paid in full by the corporation within thirty
days after a written claim has been received by the corporation, the claimant
may at any time thereafter bring suit against the corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to payment of the expense of prosecuting such claim. It shall
be a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the corporation. Neither the failure of the
corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(3) Non-Exclusivity of Rights. The right to indemnification and the
-------------------------
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this paragraph (b) shall not be exclusive of any other
right which any person may have or
<PAGE>
hereafter acquire under any statute, provision of the Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise.
(4) Insurance. The corporation may maintain insurance, at its
---------
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
EIGHTH: (a) Number. The business and affairs of the corporation shall be
------
managed under the direction of the Board of Directors, the number of which,
subject to any right of the holders of any series of preferred stock then
outstanding to elect additional directors under specified circumstances, shall
be fixed from time to time by the Board of Directors pursuant to the bylaws of
this corporation.
(b) Terms. The directors, other than those who may be elected by the
-----
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, shall be divided into three classes,
as nearly equal in number as possible, with the term of office of the first
class to expire at the 1990 Annual Meeting of Stockholders, the term of office
of the second class to expire at the 1991 Annual Meeting of Stockholders, and
the term of office of the third class to expire at the 1992 Annual Meeting of
Stockholders. At each Annual Meeting of Stockholders following such initial
classification, directors elected to succeed those directors whose terms expire
shall be elected for a term of office to expire at the third succeeding Annual
Meeting of Stockholders after their election.
(c) Stockholder Nomination of Director Candidates. Advance notice of
---------------------------------------------
stockholder nominations for the election of directors shall be given in the
manner provided in the bylaws of the corporation.
(d) Newly Created Directorships and Vacancies. Subject to the rights of
-----------------------------------------
the holders of any series of preferred stock then outstanding, newly created
directorships resulting from any increase in the authorized number of directors
or any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
by a majority vote of the directors then in office, although less than a quorum,
or by a sole remaining director, or by the shareholders to fill any vacancy not
filed by the directors and directors so chosen shall hold office for a term
expiring at the Annual Meeting of Stockholders at which the term of the class to
which they have been elected expires. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
(e) Removal. Subject to the rights of the holders of any series of
-------
preferred stock then outstanding, any director, or the entire Board of
Directors, may be removed from office at any time, with or without cause by the
affirmative vote of the holders of at least a majority of the
<PAGE>
voting power of all of the shares of the corporation entitled to vote generally
in the election of directors, voting together as a single class.
NINTH: The address of the corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the corporation's registered
agent at such address is The Corporation Trust Company.
<PAGE>
EXHIBIT 4.2
BYLAWS
OF
BORLAND INTERNATIONAL, INC.
ARTICLE I
CORPORATE OFFICES
-----------------
1. Principal Office
----------------
The principal executive office of the corporation shall be located at such
place as the Board of Directors may from time to time authorize. If the
principal executive office is located outside the State of Delaware, and the
corporation has one or more business offices in the State of Delaware, the Board
of Directors shall fix and designate a principal business office in the State of
Delaware.
2. Other Offices
-------------
Additional offices of the corporation shall be located at such place or
places, within or outside the State of Delaware, as the Board of Directors may
from time to time authorize.
3. Registered Agent in State
-------------------------
The corporation shall have and maintain in the State of Delaware a
registered agent, which agent may be either an individual resident in the State
whose business office is identical with the corporation's registered office, or
a domestic corporation (which may be itself), or a foreign corporation
authorized to transact business in the State, having a business office identical
with such registered office.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
4. Place of Meetings
-----------------
Meetings of stockholders shall be held at any place, within or outside the
State of Delaware, designated by the Board of Directors. In the absence of any
such designation, stockholders' meetings shall be held at the registered office
of the corporation.
<PAGE>
5. Annual Meeting
--------------
The Annual Meeting of Stockholders shall be held each year on a date and at
a time designated by the Board of Directors. At the meeting, directors shall be
elected and any other proper business may be transacted.
At any annual meeting of Stockholders of the corporation, only such
business shall be conducted as shall have been brought before the meeting (x) by
or at the direction of the Board of Directors or (y) by any stockholder of the
corporation who complies with the procedures set forth in this Section 5. For
business properly to be brought before the annual meeting by a stockholder, the
stockholder must have given timely notice thereof in proper written form to the
Secretary of the corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received by the Secretary of the corporation not less
than thirty (30) days prior to the meeting; provided, however, that in the event
that less than forty (40) days' notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by the stockholder to be
timely must be received not later than the close of business on the 10th day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made. To be in properly written form, a
stockholder's notice to the Secretary shall set forth in writing as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the corporation's books, of the stockholder proposing
such business, (c) the class and number of shares of the corporation which are
beneficially owned by the stockholder and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the bylaws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 5.
The chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 5, and if he should so
determine, he shall so declare to the meeting, and any such business not
properly brought before the meeting shall not be transacted.
6. Quorum
------
The holders of a majority of the stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the certificate of incorporation.
If, however, such quorum is not present or represented at any meeting of the
stockholders, then the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present or represented. At such adjourned meeting at which a quorum is
<PAGE>
present or represented, any business may be transacted that might have been
transacted at the meeting as originally noticed.
The affirmative vote of the majority of shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders. Where a separate vote by class is
required, the affirmative vote of the majority of shares of such class present
in person or represented by proxy at the meeting shall be the act of such class.
7. Special Meetings
----------------
Special meetings of the stockholders, for any purpose or purposes, may be
called by the Board of Directors, the Chairman of the Board or the President.
8. Notice of Meetings
------------------
Except as otherwise may be required by law, written notice of each meeting
of stockholders shall be given to each stockholder entitled to vote at that
meeting, by the Secretary, assistant secretary or other person charged with that
duty, not less than ten (10) nor more than sixty (60) days before such meeting.
Notice of any meeting of stockholders shall state the date, place and hour
of the meeting; and
(a) in the case of a special meeting, the general nature of the
business to be transacted, and no other business may be
transacted at such meeting; and
(b) in the case of an annual meeting, the general nature of matters
which the Board of Directors, at the time of the mailing of the
notice, intends to present for action by the stockholders.
At a special meeting, notice of which has been given in accordance with
this Section 8, action may not be taken with respect to business, the general
nature of which has not been stated in such notice. At an annual meeting,
action may be taken with respect to business stated in the notice of such
meeting, given in accordance with this Section 8 and with respect to any other
business as may properly come before the meeting.
9. Manner of Giving Notice; Affidavit of Notice
--------------------------------------------
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the Secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
<PAGE>
10. Adjourned Meeting; Notice
-------------------------
When a meeting is adjourned to another time or place, unless these bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business that
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
11. Voting
------
The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 14 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners
of stock and to voting trusts and other voting agreements).
Except as otherwise provided in the certificate of incorporation, each
stockholder shall be entitled to one vote for each share of capital stock held
by such stockholder. All elections of directors shall be by written ballot,
unless otherwise provided in the certificate of incorporation.
12. Waiver of Notice
----------------
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
13. Stockholder Action
------------------
Any action required or permitted to be taken by the stockholders of the
corporation must be effected at a duly called annual or special meeting of such
holders and may not be effected by any consent in writing by such holders.
<PAGE>
14. Record Date for Stockholder Notice; Voting; Giving Consents
-----------------------------------------------------------
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the Board of Directors does not so fix a record date:
(i) The record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held.
(ii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
15. Proxies
-------
Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the Secretary of the corporation, but no such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(c) of the General Corporation Law of Delaware.
16. List of Stockholders Entitled to Vote
-------------------------------------
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the
<PAGE>
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at
a place within the city where the meeting is to be held, which place shall be
specified in the notice of meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
17. Inspectors of Election
----------------------
Before any meeting of stockholders, the Board of Directors may appoint any
persons, other than nominees for office, to act as inspectors of election at the
meeting or its adjournment. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of any stockholder or a
stockholder's proxy shall, appoint inspectors of election at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at a meeting on the request of one or more stockholders or proxies,
the majority of shares represented in person or proxy shall determine whether
one (1) or three (3) inspectors are to be appointed. If any person appointed as
inspector fails to appear or fails or refuses to act, the chairman of the
meeting may, and upon the request of any stockholder or a stockholder's proxy
shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) determine the number of shares outstanding and the voting power
of each, the shares represented at the meeting, the existence of
a quorum, and the authenticity, validity, and effect of proxies;
(b) receive votes or ballots;
(c) hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) count and tabulate all votes;
(e) determine when the polls shall close;
(f) determine the result; and
(g) do any other acts that may be proper to conduct the election or
vote with fairness to all stockholders.
<PAGE>
ARTICLE III
DIRECTORS
---------
18. Powers
------
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the Board of Directors.
19. Number of Directors
-------------------
The authorized number of directors of the corporation shall be seven (7),
and shall be subject to change as set from time to time pursuant to a resolution
approved by a majority of the Board of Directors then in office.
No reduction of the authorized number of directors shall remove any
director prior to the expiration of such director's term of office.
19.1 Notification of Nominations
---------------------------
Subject to the rights of holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation,
nominations for the election of directors may be made by the Board of Directors
or a proxy committee appointed by the Board of Directors or by any stockholder
entitled to vote in the election of directors generally. However, any such
stockholder may nominate one or more persons for election as directors at a
meeting only if such stockholder has given timely notice in proper written form
of his intent to make such nomination or nominations. To be timely, a
stockholder's notice must be delivered to or mailed and received by the
Secretary of the corporation not later than thirty (30) days prior to such
meeting; provided, however, that in the event that less than forty (40) days'
notice or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the 10th day following the date on which such
notice of the date of such meeting was mailed or such public disclosure was
made. To be in proper written form, a stockholder's notice to the Secretary
shall set forth: (a) the name and address of the stockholder who intends to
make the nomination and of the person or persons to be nominated; (b) a
representation that the stockholder is a holder of record of stock of the
corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (d) such other
<PAGE>
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had the nominee been nominated, or
intended to be nominated, by the Board of Directors; and (e) the consent of
each nominee to serve as a director of the corporation if so elected. The
chairman of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedure.
20. Election of Directors; Term
---------------------------
The directors, other than those who may be elected by the holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, shall be divided into three classes, as nearly
equal in number as possible, with the term of office of the first class to
expire at the 1990 Annual Meeting of Stockholders, the term of office of the
second class to expire at the 1991 Annual Meeting of Stockholders and the term
of office of the third class to expire at the 1992 Annual Meeting of
Stockholders. At each Annual Meeting of Stockholders following such initial
classification, directors elected to succeed those directors whose terms expire
shall be elected for a term of office to expire at the third succeeding Annual
Meeting of Stockholders after their election. Directors need not be
stockholders of the corporation.
21. Resignations
------------
Any directors of the corporation may resign effective upon giving written
notice to the Chairman of the Board, the Chief Executive Officer, the President,
the Secretary or the Board of Directors of the corporation, unless the notice
specifies a later time for the effectiveness of such resignation. If the
resignation specifies effectiveness at a future time, a successor may be elected
pursuant to Section 23 of these bylaws to take office on the date that the
resignation becomes effective.
22. Removal
-------
Subject to the rights of the holders of any series of preferred stock then
outstanding, any director, or the entire Board of Directors, may be removed from
office at any time, with or without cause by the affirmative vote of the holders
of at least a majority of the voting power of all of the shares of the
corporation entitled to vote generally in the election of directors, voting
together as a single class.
23. Vacancies
---------
Subject to the rights of the holders of any series of preferred stock then
outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled by a majority vote of the directors then in
office,
<PAGE>
although less than a quorum, or by a sole remaining director, or by the
shareholders to fill any vacancy not filled by directors, and directors so
chosen shall hold office for a term expiring at the Annual Meeting of
Stockholders at which the term of the class to which they have been elected
expires. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
24. Annual Meeting
--------------
The Board of Directors shall meet for the purpose of organization, the
election of officers and the transaction of other business, as soon as
practicable after each Annual Meeting of Stockholders, on the same day and at
the same place where such annual meeting shall be held. Notice of such meeting
need not be given. In the event such annual meeting is not so held, the annual
meeting of the Board of Directors may be held at such place, either within or
without the State of Delaware, on such date and at such time as shall be
specified in a notice thereof given as hereinafter provided in Section 26 of
this Article III or in a waiver of notice thereof.
25. Regular Meetings
----------------
Regular meetings of the Board of Directors may be held at such places
within or without the State of Delaware at such date and time as the Board of
Directors may from time to time determine and, if so determined by the Board of
Directors, notices thereof need not be given.
26. Special Meetings
----------------
Special meetings of the Board of Directors for any purpose may be called by
the Chairman of the Board, the Chief Executive Officer, the President, or the
Secretary of the corporation or any two (2) directors.
27. Quorum
------
At all meetings of the Board of Directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum is not present at any meeting of the Board of Directors, then the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present. The
vote of the directors present shall be the act of the Board of Directors unless
the certificate of incorporation or the bylaws shall require a vote of a greater
number.
28. Waiver of Notice
----------------
<PAGE>
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
29. Telephonic Meetings
-------------------
Unless otherwise restricted by the certificate of incorporation, members of
the Board of Directors of the corporation, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or
such committee, as the case may be, by conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant to this
Section 29 shall constitute presence in person at such meeting.
30. Board Action By Written Consent Without A Meeting
-------------------------------------------------
Unless otherwise restricted by the certificate of incorporation or these
bylaws, any action required or permitted to be taken at any meeting of the Board
of Directors, or of any committee thereof, may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
31. Fees
----
Each director may receive such fees and other compensation, along with
reimbursement of expenses incurred on behalf of the corporation or in connection
with attendance at meetings, as the Board of Directors may from time to time
determine. No such payment of fees or other compensation shall preclude any
director from serving the corporation in any other capacity and receiving fees
and compensation for such services.
<PAGE>
32. Interested Directors
--------------------
No contract or transaction between the corporation and one or more of its
directors or officers, or between the corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the
directors or officers are present at or participate in the meeting of the Board
of Directors or the committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such purpose
if: (i) the material facts as to his or their relationship or interest and as
to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (ii) the material facts as to his or their
relationship or interest and as to the contract or transaction is specifically
approved in good faith by vote of the shareholders; or (iii) the contract or
transaction is fair as to the corporation as of the time it is authorized,
approved or ratified by the Board of Directors, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
33. Committees of Directors
-----------------------
The Board of Directors may, by resolution passed by a majority of the whole
board, designate one or more committees, with each committee to consist of one
or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors or in the bylaws of the corporation, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board of Directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of
<PAGE>
stock of the corporation), (ii) adopt an agreement of merger or consolidation
under Sections 251 or 252 of the General Corporation Law of Delaware, (iii)
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, (iv) recommend to
the stockholders a dissolution of the corporation or a revocation of a
dissolution, or (v) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
General Corporation Law of Delaware. Each committee shall keep regular minutes
of its meetings and report the same to the Board of Directors when required.
ARTICLE IV
OFFICERS
--------
34. Executive Officers
------------------
The executive officers of the corporation shall be a Chief Executive
Officer, President, a Chief Financial Officer and a Secretary who shall have the
duty, among other things, to record the proceedings of the meetings of
stockholders and directors in a book kept for that purpose. The corporation may
also have such other executive officers, including a Treasurer, Controller and
one or more Vice Presidents, as the Board may in its discretion appoint. The
Board of Directors, if it so determines, may appoint a Chairman of the Board and
a Vice Chairman of the Board from among its members. Any number of offices may
be held by the same person.
35. Election, Term of Office and Remuneration
-----------------------------------------
The executive officers of the corporation shall be elected annually by the
Board of Directors at a regular meeting thereof. Each such officer shall hold
office until his successor is elected and qualified, or until his earlier death,
resignation or removal. The remuneration of all officers of the corporation
shall be fixed by the Board of Directors. Any vacancy in any office shall be
filled in such manner as the Board of Directors shall determine.
36. Subordinate Officers
--------------------
In addition to the executive officers enumerated in Section 34, the
corporation may have such subordinate officers, agents and employees as the
Board of Directors may deem necessary, each of whom shall hold office for such
period as the Board of Directors may from time to time determine. The Board of
Directors may delegate to any executive officer the power to appoint and to
remove any such subordinate officers, agents or employees.
<PAGE>
37. Removal
-------
Except as otherwise delegated to an executive officer with respect to
subordinate officers, any officer may be removed, with or without cause, at any
time, by resolution adopted by the Board of Directors. Such removal shall be
without prejudice to the contractual rights of such officer, if any, with the
corporation.
38. Resignations
------------
Any officer may resign at any time by giving written notice to the Board of
Directors (or to a principal officer if the Board of Directors has delegated to
such principal officer the power to appoint and to remove such officer). The
resignation of any officer shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
39. Powers and Duties
-----------------
The Chief Executive Officer shall, subject to the direction and control of
the Board of Directors, be the general manager of, and supervise and direct, the
business and affairs of the corporation and the conduct of the officers of the
corporation. The other officers of the corporation shall have such powers and
perform such duties incident to each of their respective offices and such other
duties as may from time to time be conferred upon or assigned to them by the
Board of Directors or the Chief Executive Officer.
40. Approval of Loans to Officers
-----------------------------
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or any other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
<PAGE>
ARTICLE V
STOCK
-----
41. Form of Certificates
--------------------
Every holder of stock in the corporation shall be entitled to have a
certificate signed, in the name of the corporation (i) by the Chief Executive
Officer, (ii) by the Chairman of the Board of Directors or the President and
(iii) by the Secretary or an assistant secretary of the corporation, certifying
the number of shares owned by him in the corporation.
42. Signatures
----------
Any, or all, of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
43. Lost Certificates
-----------------
The corporation may issue a new certificate to be issued in place of any
certificate theretofore issued by the corporation, alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate to be lost, stolen or destroyed. The corporation may,
in its discretion and as a condition precedent to the issuance of such new
certificate, require the owner of such lost, stolen, or destroyed certificate,
or his legal representative, to give the corporation a bond (or other security)
sufficient to indemnify it against any claim that may be made against the
corporation (including any expense or liability) on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
44. Transfers
---------
Stock of the corporation shall be transferable in the manner prescribed by
law and in these bylaws or in any agreement with the stockholder making the
transfer. Transfers of stock shall be made on the books of the corporation only
by the person named in the certificate or by his attorney lawfully constituted
in writing and upon the surrender of the certificate therefor, which shall be
canceled before a new certificate shall be issued.
45. Registered Owners
-----------------
<PAGE>
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise required by law.
ARTICLE VI
GENERAL PROVISIONS
------------------
46. Insurance
---------
The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of Delaware.
47. Dividends
---------
Subject to limitations contained in the General Corporation Law of the
State of Delaware and the certificate of incorporation, the Board of Directors
may declare and pay dividends upon the shares of capital stock of the
corporation, which dividends may be paid either in cash, securities of the
corporation or other property.
48. Fiscal Year
-----------
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.
49. Corporate Seal
--------------
The corporation may have a corporate seal in such form as prescribed by the
Board of Directors.
50. Amendments
----------
Subject to the provisions of the certificate of incorporation, these bylaws
may be altered, amended or repealed at any regular meeting of the stockholders
(or at any special meeting thereof duly called for that purpose) by a majority
vote of the shares represented and entitled to vote at such meeting; provided
that in the notice of such special meeting, notice of such purpose shall be
given.
<PAGE>
Subject to the laws of the State of Delaware, the certificate of incorporation
and these bylaws, the Board of Directors may by majority vote of those present
at any meeting at which a quorum is present amend the bylaws, or enact such
other bylaws as in their judgment may be advisable for the regulation of the
conduct of the affairs of the corporation.
51. Voting of Stock Owned by the Corporation
----------------------------------------
The Board of Directors may authorize any person, on behalf of the
corporation, to attend, vote and grant proxies to be used at any meeting of
stockholders of any corporation (except this corporation) in which the
corporation may hold stock.
52. Construction and Definitions
----------------------------
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the General Corporation Law of the State of
Delaware shall govern the construction of these bylaws.
ARTICLE VII
INDEMNIFICATION
---------------
53. Indemnifications
----------------
The corporation, to the maximum extent permitted by the Delaware General
Corporation Law, shall have the power to indemnify any of its agents against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding or potential proceeding
arising out of the relationship and, to the maximum extent permitted by law, the
corporation shall have the power to advance the agent's reasonable defense
expenses in any such proceeding.
<PAGE>
EXHIBIT 5
[LETTERHEAD OF GRAY CARY WARE & FREIDENRICH LLP]
400 Hamilton Avenue, Palo Alto, CA 94301-1825
Phone: 650-328-6561 Fax: 650-327-3699 www.gcwf.com
August 12, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
As legal counsel for Inprise Corporation, a Delaware corporation (the
"Company"), we are rendering this opinion in connection with the registration
under the Securities Act of 1933, as amended, of up to 2,700,000 shares of the
Common Stock, $0.01 par value, of the Company which may be issued pursuant to
the exercise of options and purchase rights granted under the Inprise
Corporation 1997 Stock Option Plan, 1997 Employee Stock Purchase Plan, and 1998
Nonstatutory Stock Option Plan (the "Plans").
We have examined all instruments, documents and records which we deemed relevant
and necessary for the basis of our opinion hereinafter expressed. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies. We are admitted to
practice only in the State of California and we express no opinion concerning
any law other than the law of the State of California, the corporation laws of
the State of Delaware and the federal law of the United States. As to matters
of Delaware corporation law, we have based our opinion solely upon our
examination of such laws and the rules and regulations of the authorities
administering such laws, all as reported in standard, unofficial compilations.
We have not obtained opinions of counsel licensed to practice in jurisdictions
other than the State of California.
Based on such examination, we are of the opinion that the 2,700,000 shares of
Common Stock which may be issued upon exercise of options and purchase rights
granted under the Plans are duly authorized shares of the Company's Common
Stock, and, when issued against receipt of the consideration therefor in
accordance with the provisions of the Plans, will be validly issued, fully paid
and nonassessable. We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement referred to above and the use of our name
wherever it appears in said Registration Statement.
Respectfully submitted,
/s/ GRAY CARY WARE & FREIDENRICH LLP
- ------------------------------------
GRAY CARY WARE & FREIDENRICH LLP
<PAGE>
EXHIBIT 23.2
CONSENT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated January 28, 1998, except
for the first and fifth paragraphs of Note 14 which are as of February 27, 1998
appearing on page 30 of Inprise Corporation's Annual Report on Form 10-K for the
period ended December 31, 1997.
PricewaterhouseCoopers LLP
San Jose, California
August 12, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 pertaining to the Inprise Corporation 1997 Stock Option Plan, 1997
Employee Stock Purchase Plan and 1998 Nonstatutory Stock Option Plan of our
report dated March 27, 1996 (except as to the fourth paragraph of Note 1, as to
which the date is October 4, 1996) with respect to the consolidated financial
statements of Open Environment Corporation for the year ended December 31, 1995
(not separately presented) included in Inprise Corporation's Annual Report (Form
10-K) for the period ended December 31, 1997, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Boston, Massachusetts
August 12, 1998
