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EXHIBIT 3(a)(5)
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AMENDED ARTICLES OF INCORPORATION
OF
FRONTSTEP, INC.
FIRST: The name of the corporation shall be Frontstep, Inc.
SECOND: The place in Ohio where the principal office of the corporation
is to be located is in the City of Columbus, County of Franklin.
THIRD: The purpose for which the corporation is formed is to engage in
any lawful act or activity for which corporations may be formed under Sections
1701.01 to 1701.98 of the Ohio Revised Code.
FOURTH: The authorized number of shares of the corporation shall be
21,000,000, of which 20,000,000 shares shall be common shares, each without par
value, and 1,000,000 shares shall be preferred shares, each without par value.
Each outstanding common share and each outstanding preferred share
shall entitle the holder thereof to one vote on each matter properly submitted
to the shareholders for their vote, consent, waiver, release or other action. No
shareholder of the corporation shall have, as a matter of right, the right to
cumulate his voting power.
1. Number and Designation. 566,933 preferred shares of the corporation
shall be designated as Series A Convertible Participating Preferred Shares (the
"SERIES A PREFERRED SHARES").
2. Rank. The Series A Preferred Shares shall, with respect to the
dividend rights specified herein and rights on liquidation, dissolution and
winding up, rank prior to all classes the Corporation's capital stock, including
the Corporation's common shares, no par value (the "COMMON SHARES"). All equity
securities of the Corporation to which the Series A Preferred Shares rank prior
(whether with respect to dividends or upon liquidation, dissolution, winding up
or otherwise), including the Common Shares, are collectively referred to herein
as the "JUNIOR SECURITIES." All equity securities of the Corporation with which
the Series A Preferred Shares ranks on a parity (whether with respect to
dividends or upon liquidation, dissolution or winding up) are collectively
referred to herein as the "PARITY SECURITIES." The respective definitions of
Junior Securities and Parity Securities shall also include any rights or options
exercisable for or convertible into any of the Junior Securities and Parity
Securities, as the case may be. The Series A Preferred Shares shall be subject
to the creation of Junior Securities.
3. Voting Rights. Except as otherwise provided herein or as otherwise
provided by applicable law, the Holders of the Series A Preferred Shares (i)
shall be entitled to vote with the Holders of the Common Shares, voting together
as a single class, on all matters submitted for a vote of Holders of Common
Shares, (ii) shall be entitled to one vote per Series A Preferred Share held;
provided that upon amendment of the corporation's articles of incorporation to
permit the corporation's authorized preferred shares to have more than one vote
per share as permitted under the Act, the Holders of the Series A Preferred
Shares shall have a number of votes equal to the number of votes to which Common
Shares issuable upon conversion of such Series A Preferred Shares would have
been entitled if such Common Shares had been outstanding at the time of the
applicable vote and related record date and (iii) shall be entitled to notice of
any shareholders' meeting in accordance with the articles of incorporation and
regulations of the corporation.
4. Liquidation Rights. If the corporation shall be voluntarily or
involuntarily liquidated, dissolved or wound up (each a "LIQUIDATION EVENT") at
any time when any of the Series A Preferred Shares shall be outstanding, the
Holders of the then outstanding Series A Preferred Shares shall have a
preference against the assets of the corporation available for distribution to
the Holders of the corporation's
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equity Securities equal to the greater of (a) $24 per Series A Preferred Shares
(as adjusted for any share dividends, combinations or splits with respect to the
Series A Preferred Shares), plus accumulated, but unpaid, dividends, if any (the
"PREFERENCE AMOUNT") or (b) the amount that would be received by a Holder of the
number of Common Shares underlying the Series A Preferred Shares (subject to
anti-dilution adjustments described below) in such liquidation or winding up if
all of the Series A Preferred Shares were converted into Common Shares
immediately prior to the liquidation or winding up. Notwithstanding the
foregoing, at the election of the Holders of 75% or more of the Series A
Preferred Shares then outstanding, (i) the consolidation or merger of the
corporation into or with any other entity or entities which results in the
exchange of outstanding shares of the corporation for securities or other
consideration issued or paid or caused to be issued or paid by any such entity
or Affiliate thereof (other than (x) a merger solely for the purpose of
reincorporating the corporation in a different jurisdiction or (y) a
consolidation or merger in which the corporation is the surviving entity and in
which the corporation's Voting Shares outstanding immediately prior to such
merger or consolidation are exchanged or converted into or constitute more than
50% of the corporation's Voting Stock after such consolidation or merger); (ii)
the sale or transfer by the corporation of all or substantially all of its
assets otherwise than to one or more Subsidiaries; or (iii) a transaction or
series of transactions in which a person or group of persons (as defined in Rule
13d-5(b)(1) of the Exchange Act), acquires beneficial ownership (as determined
in accordance with Rule 13d-3 of the Exchange Act) of more than 50% of the
voting power of the corporation, shall be deemed to be a Liquidation Event
within the meaning of the provisions of Section 3 (each of the events specified
in clauses (i), (ii) and (iii) of Section 3 being referred to herein as a
"CHANGE-IN-CONTROL LIQUIDATION EVENT"). Notwithstanding the foregoing, no
reduction of the authorized or issued Shares of the corporation of any class,
whether now or hereafter authorized shall be deemed to be a Liquidation Event
within the meaning of any of the provisions of Section 3.
Upon any such Liquidation Event, after the Holders of Series A
Preferred Shares shall have been paid in full their preferential amounts to
which they shall be entitled as provided in this Section 4, the remaining
Property of the corporation may be distributed to the Holders of any other
equity Securities of the corporation, including, without limitation, Junior
Securities whether now or hereafter authorized, in connection with such
Liquidation Event. Written notice of such Liquidation Event, stating a payment
date, the preferential amount and the place where said preferential amount shall
be payable, shall be delivered in person, mailed by certified or registered
mail, return receipt requested, or sent by telecopier or telex, not less than 20
days prior to the payment date stated therein, to the Holders of record of
Series A Preferred Shares, such notice to be addressed to each such Holder at
its address as shown by the records of the corporation. If, upon any Liquidation
Event, the corporation's assets available for distribution to its shareholders
are insufficient to permit payment in full to the Holders of the Series A
Preferred Shares of the aggregate amount which such Holders shall be entitled
under this Section 4, then the entire assets available for distribution to
shareholders of the corporation shall be distributed among the Holders of the
Series A Preferred Shares pro rata based upon the number of Series A Preferred
Shares held by each such Holder.
After payment in full to a Holder of the Series A Preferred Shares of
the preferential amount which such Holder shall be entitled as set forth in this
Section 4, the Series A Preferred Shares held by such Holder shall be deemed to
be no longer outstanding and such Holder no longer shall have any rights as a
shareholder of the corporation.
5. Dividends. (a) Each Holder of Series A Preferred Shares shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
funds legally available for the payment of dividends, cash dividends
contemporaneously with cash dividends when, as and if declared by the Board of
Directors with respect to Common Shares in an amount equal to the product of the
cash dividend payable per Common Share times the Conversion Rate (as hereinafter
defined) for the Series A Preferred Shares then in effect. Such dividends shall
be payable on the dates specified by the Board of Directors as the dates for
payment of dividends in respect of Common Shares (each of such dates being a
"DIVIDEND PAYMENT DATE") (unless such day is not a business day, in which event
on the next succeeding business day). Such dividends shall be paid to the
holders of record at the close of business on the date specified by the Board of
Directors of the corporation at the time such dividend is declared, provided,
however, that such date shall not be more than 60 days nor less than 10 days
prior to the respective Dividend Payment Date.
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(b) In addition, if at any time the corporation is in
material breach of its registration obligations under Article 5 of the Investor
Rights Agreement, the Holders of Series A Preferred Shares shall be entitled to
receive for and during the period the corporation continues in breach of the
Investor Rights Agreement, when, as and if declared by the Board of Directors,
out of funds legally available for the payment of dividends, cash dividends at
an annual rate of $3.36 per share. Such dividends shall be payable in arrears in
equal amounts quarterly on June 30, September 30, December 31, and March 31 of
each year unless such day is not a business day, in which event on the next
succeeding business day). The amount of such dividends and any accumulations
shall be pro rated and calculated on the basis of the actual days elapsed from
the date of such material breach by the corporation. Such dividends shall be
cumulative from the date of default to the date of cure, whether or not in any
dividend period or periods there shall be funds of the corporation legally
available for the payment of such dividends. Such dividends shall be payable to
Holders of the Series A Preferred Shares at the close of business on the record
date specified by the Board of Directors at the time such dividends are
declared, which record date shall not be more than 60 days prior to the Dividend
Payment Date. No such cumulative dividends shall be declared or become payable
or be deemed to have accrued with respect to any Series A Preferred Shares
(including, without limitation, upon any liquidation, dissolution or winding up
of the corporation, or upon any redemption of any such shares) unless a Dividend
Payment Date occurs while such share is outstanding.
(c) So long as any Series A Preferred Shares are outstanding,
no dividends, except as described in the next succeeding sentence, shall be
declared or paid or set apart for payment on Junior Securities, for any period
unless full cumulative dividends if required pursuant to the preceding paragraph
(b) have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Series A
Preferred Shares for all dividend periods terminating on or prior to the date of
payment of the dividend on such class or series of Junior Securities. When
dividends are not paid in full or a sum sufficient for such payment is not set
apart, as aforesaid, all dividends declared upon the Series A Preferred Shares
and all dividends declared upon any Parity Securities shall be declared ratably
in proportion to the respective amounts of dividends accumulated and unpaid on
the Series A Preferred Shares and accumulated and unpaid on such Parity
Securities.
6. Optional Redemption. The Series A Preferred Shares shall not be
redeemable by the corporation prior to the fourth anniversary of the date of
issuance of the Series A Preferred Shares. Within 30 days after the fourth
anniversary of the date of issuance of the Series A Preferred Shares, the
corporation may elect to redeem all, but not less than all, of the Series A
Preferred Shares outstanding on the date of redemption as determined by the
Board of Directors (the "REDEMPTION DATE") which date shall not be more than 60
days after such fourth anniversary date.
(a) PREFERENCE AMOUNT AND PAYMENT. The Series A Preferred Shares shall
be redeemed by paying for each share an amount in cash equal to $30.72, plus
accumulated, but unpaid, dividends, if any (the "REDEMPTION PRICE"). Such
payment shall be made in full on the Redemption Date to the Holders entitled
thereto.
(b) REDEMPTION MECHANICS. At least 20 but not more than 30
days prior to any Redemption Date, written notice (the "REDEMPTION NOTICE")
shall be given by the corporation by delivery in person, certified or registered
mail, return receipt requested, telecopier or telex, to each Holder (at the
close of business on the Business Day next preceding the day on which the
Redemption Notice is given) of Series A Preferred Shares notifying such Holder
of the redemption and specifying the Redemption Price, the Redemption Date and
the place where the Redemption Price shall be payable. The Redemption Notice
shall be addressed to each Holder at its address as shown by the records of the
corporation. From and after the close of business on the Redemption Date, unless
there shall have been a default in the payment of the Redemption Price, all
rights of Holders of shares of Series A Preferred Shares (except the right to
receive the Redemption Price) shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of the corporation or be
deemed to be outstanding for any purpose whatsoever. If the funds of the
corporation legally available for redemption of Series A Preferred Shares on the
Redemption Date are insufficient to redeem the total number of outstanding
Series A Preferred Shares, the Holders of Series A Preferred Shares shall share
ratably in any funds legally available for redemption of such shares according
to the respective amounts which would be payable with respect to the full number
of
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shares owned by them if all such outstanding shares were redeemed in full. The
Series A Preferred Shares not redeemed shall remain outstanding and entitled to
all rights and preferences provided herein. At any time thereafter when
additional funds of the corporation are legally available for the redemption of
such Series A Preferred Shares, such funds will be used, at the end of the next
succeeding fiscal quarter, to redeem the balance of such shares, or such portion
thereof for which funds are then legally available, on the basis set forth
above.
(c) REDEEMED OR OTHERWISE ACQUIRED SHARES TO BE RETIRED. Any
Series A Preferred Shares redeemed pursuant to this Section 6 or otherwise
acquired by the corporation in any manner whatsoever shall be cancelled and
shall not under any circumstances be reissued; provided that each such share,
after being retired and cancelled, shall be restored to the status of an
authorized but unissued Preferred Share without designation as to series and may
thereafter be issued as a Preferred Share not designated as a Series A Preferred
Share unless such reissuance shall violate Section 10 hereof or any other
provision of these articles of incorporation .
7. Conversion. (a) The Series A Preferred Shares shall be
convertible at any time, in whole or in part, at the option of the Holder
thereof and upon notice to the corporation as set forth below, into fully paid
and nonassessable Common Shares at the Conversion Rate. The Series A Preferred
Shares shall be convertible initially at the rate of two Common Shares for each
full Series A Preferred Share and shall be subject to adjustment as provided
herein. The initial base conversion price per Common Share is $12.00 and shall
be subject to adjustment as provided herein (the "CONVERSION PRICE"). For
purposes of this Article FOURTH, the "CONVERSION RATE" applicable to a Series A
Preferred Share shall be the number of Common Shares into which a Series A
Preferred Share is then convertible and shall be equal to the product of (i) two
multiplied by (ii) the quotient resulting from dividing the then existing
Conversion Price into $12.00.
(b) The Conversion Price (and the corresponding Conversion
Rate) shall be subject to adjustment from time to time as follows:
(i) In case the corporation shall (A) pay a dividend in
Common Shares or make a distribution in Common Shares, (B) subdivide its
outstanding Common Shares, (C) combine its outstanding Common Shares into a
smaller number of Common Shares or (D) issue by reclassification of its Common
Shares other securities of the corporation, then in each such case the
Conversion Rate in effect immediately prior thereto shall be adjusted so that
the Holder of any Series A Preferred Shares thereafter surrendered for
conversion shall be entitled to receive the kind and number of Common Shares or
other securities of the corporation which such Holder would have owned or would
have been entitled to receive immediately after the happening of any of the
events described above had such Series A Preferred Shares been converted
immediately prior to the happening of such event or any record date with respect
thereto. Any adjustment made pursuant to this subsection (i) shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(ii) In case the corporation shall issue or sell any
Common Shares (other than Common Shares issued (1) pursuant to the corporation's
non-qualified stock option plans for officers, directors or key employees, or
pursuant to any similar Common Share related employee compensation plan of the
corporation approved by the corporation's Board of Directors, (2) in connection
with a merger or consolidation with or other acquisition of, another Person or
the acquisition of the assets of another Person, other than any such transaction
that constitutes a Change in Control Liquidation Event or (3) upon exercise or
conversion of any security the issuance of which caused an adjustment under
Section 7(b)(iii) or (iv) hereof) without consideration or for a consideration
per share less than the Conversion Price (the "ISSUE PRICE"), the Conversion
Price to be in effect after such issuance or sale shall be determined by
multiplying the Conversion Price in effect immediately prior to such issuance or
sale by a fraction, the numerator of which shall be the sum of (x) the number of
Common Shares outstanding immediately prior to the time of such issuance or sale
multiplied by the Issue Price and (y) the aggregate consideration, if any, to be
received by the corporation upon such issuance or sale, and the denominator of
which shall be the product of the aggregate number of Common Shares outstanding
immediately after such issuance or sale and the Conversion Price. In case any
portion of the consideration to be received by the corporation shall be in a
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form other than cash, the fair market value of such noncash consideration shall
be utilized in the foregoing computation. Such fair market value shall be
determined by the Board of Directors; provided that if Holders of 75% or more of
the outstanding Series A Preferred Shares shall object to any such
determination, the Board of Directors shall retain an independent appraiser
reasonably satisfactory to a majority of such Holders to determine such fair
market value. Such Holders shall be notified promptly of any consideration other
than cash to be received by the corporation and furnished with a description of
the consideration and the fair market value thereof, as determined by the Board
of Directors.
(iii) In case the corporation shall fix a record date for
the issuance of rights, options or warrants to the Holders of Common Shares or
other securities entitling such Holders to subscribe for or purchase for a
period expiring within 60 days of such record date Common Shares (or securities
convertible into Common Shares) at a price per Common Share (or having a
conversion price per Common Share, if a security convertible into Common Shares)
less than the Conversion Price on such record date, the maximum number of Common
Shares issuable upon exercise of such rights, options or warrants (or conversion
of such convertible securities) shall be deemed to have been issued and
outstanding as of such record date and the Conversion Price shall be adjusted
pursuant to paragraph (b)(ii) hereof, as though such maximum number of Common
Shares had been so issued for an aggregate consideration payable by the Holders
of such rights, options, warrants or convertible securities prior to their
receipt of such Common Shares. In case any portion of such consideration shall
be in a form other than cash, the fair market value of such noncash
consideration shall be determined as set forth in Section 7(b)(ii) hereof. Such
adjustment shall be made successively whenever such record date is fixed; and in
the event that such rights, options or warrants are not so issued or expire
unexercised, or in the event of a change in the number of Common Shares to which
the Holders of such rights, options or warrants are entitled (other than
pursuant to adjustment provisions therein comparable to those contained in this
Section 7(b)), the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such record date had not been fixed, in
the former event, or the Conversion Price which would then be in effect if such
Holder had initially been entitled to such changed number of Common Shares, in
the latter event.
(iv) In case the corporation shall issue rights, options
(other than options issued pursuant to a plan described in Section 7(b)(ii)) or
warrants entitling the holders thereof to subscribe for or purchase Common
Shares (or securities convertible into Common Shares) or shall issue convertible
securities, and the price per Common Share of such rights, options, warrants or
convertible securities (including, in the case of rights, options or warrants,
the price at which they may be exercised) is less than the Conversion Price, the
maximum number of Common Shares issuable upon exercise of such rights, options
or warrants or upon conversion of such convertible securities shall be deemed to
have been issued and outstanding as of the date of such sale or issuance, and
the Conversion Price shall be adjusted pursuant to Section 7(b)(ii) hereof as
though such maximum number of Common Shares had been so issued for an aggregate
consideration equal to the aggregate consideration paid for such rights,
options, warrants or convertible securities and the aggregate consideration
payable by the Holders of such rights, options, warrants or convertible
securities prior to their receipt of such Common Shares. In case any portion of
such consideration shall be in a form other than cash, the fair market value of
such noncash consideration shall be determined as set forth in Section 7(b)(ii)
hereof. Such adjustment shall be made successively whenever such rights,
options, warrants or convertible securities are issued; and in the event that
such rights, options or warrants expire unexercised, or in the event of a change
in the number of Common Shares to which the Holders of such rights, options,
warrants or convertible securities are entitled (other than pursuant to
adjustment provisions therein comparable to those contained in this Section
7(b)), the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such rights, options, warrants or convertible
securities had not been issued, in the former event, or the Conversion Price
which would then be in effect if such Holders had initially been entitled to
such changed number of Common Shares, in the latter event. No adjustment of the
Conversion Price shall be made pursuant to this Section 7(b)(iv) to the extent
that the Conversion Price shall have been adjusted pursuant to Section 7(b)(iii)
upon the setting of any record date relating to such rights, options, warrants
or convertible securities and such adjustment fully reflects the number of
Common Shares to which the Holders of such rights, options, warrants or
convertible securities are entitled and the price payable therefor.
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(v) In case the corporation shall fix a record date for
the making of a dividend or distribution to Holders of Common Shares (including
any such distribution made in connection with a consolidation or merger in which
the corporation is the continuing corporation) of evidences of indebtedness,
cash, assets or other property (other than dividends payable in Common Shares or
rights, options or warrants referred to in, and for which an adjustment is made
pursuant to, Section 7(b)(iii) hereof), the Conversion Price to be in effect
after such record date shall be determined by multiplying the Conversion Price
in effect immediately prior to such record date by a fraction, the numerator of
which shall be the Current Market Price Per Common Share on such record date,
less the fair market value (determined as set forth in Section 7(b)(ii) hereof)
of the portion of the cash, assets, other property or evidence of indebtedness
so to be distributed which is applicable to one Common Share, and the
denominator of which shall be such Current Market Price Per Common Share. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such record date had not been fixed.
(vi) If the average (weighted by daily trading volume) of
the Daily Prices (as defined below) per Common Share for the 40 consecutive
trading days immediately preceding the fourth anniversary of the date of
issuance of the Series A Preferred Shares (the "AVERAGE WEIGHTED PRICE") is less
than $12.00, then the Conversion Price then in effect shall be reduced to the
Average Weighted Price, such adjustment to be effective as of the close of
business 30 days after the fourth anniversary of the date of issuance of the
Series A Preferred Shares unless the corporation has previously delivered a
Redemption Notice in accordance with Section 6(b) hereof. If the corporation
shall at any time after the date of issuance of the Series A Preferred Shares
pay any dividend on Common Shares payable in Common Shares or effect a
subdivision or combination of the outstanding Common Shares (by
reclassification, stock split or otherwise) into a greater or lesser number of
Common Shares, then the share price referred to in the first sentence of this
7(b)(vi) shall be adjusted upon the earlier of the public announcement or the
occurrence of any such event by multiplying the share price by a fraction of
which the numerator is the number of Common Shares outstanding immediately after
such event and of which the denominator is the number of Common Shares that were
outstanding immediately prior to such event.
(vii) For the purpose of any computation under Section
7(b) hereof, on any determination date, the "CURRENT MARKET PRICE PER COMMON
SHARE" shall be deemed to be the average (weighted by daily trading volume) of
the Daily Prices (as defined below) per Common Share for the 20 consecutive
trading days immediately prior to such date. "DAILY PRICE" means (1) if the
Common Shares then are listed and traded on the New York Stock Exchange, Inc.
("NYSE"), the closing price per share on such day as reported on the NYSE
Composite Transactions Tape; (2) if the Common Shares then are not listed and
traded on the NYSE, the closing price per share on such day as reported by the
principal national securities exchange on which the shares are listed and
traded; (3) if the Common Shares then are not listed and traded on any such
securities exchange, the last reported sale price per share on such day on the
NASDAQ National Market; or (4) if the shares of such class of Common Shares then
are not traded on the NASDAQ Stock Market, the average of the highest reported
bid and lowest reported asked price per share on such day as reported by NASDAQ.
If on any determination date the Common Shares are not quoted by any such
organization, the Current Market Price Per Common Share shall be the fair market
value per share of such shares on such determination date as determined by the
Board of Directors. If Holders of 75% or more of the outstanding Series A
Preferred Shares shall object to any determination by the Board of Directors of
the Current Market Price Per Common Share, the Current Market Price Per Common
Share shall be the fair market value per Common Share as determined by an
independent appraiser retained by the corporation at its expense and reasonably
acceptable to such Holders. For purposes of any computation under this Section
7(b), the number of Common Shares outstanding at any given time shall not
include shares owned or held by or for the account of the corporation.
(viii) All calculations under this Section 7(b) shall be
made to the nearest one tenth of a cent or to the nearest hundredth of a share,
as the case may be.
(ix) In the event that, at any time as a result of the
provisions of this Section 7(b), the Preferred Holders upon subsequent
conversion of the Series A Preferred Shares shall become
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entitled to receive any capital shares of the corporation other than Common
Shares, the number of such other shares so receivable upon conversion of the
Series A Preferred Shares shall thereafter be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions contained herein.
(x) If the Corporation shall take a record of the Holders
of Common Shares for the purpose of entitling them to receive a dividend or
other distribution (which results in an adjustment to the Conversion Price under
the terms hereof) and shall, thereafter and before such dividend or distribution
is paid or delivered to shareholders entitled thereto, legally abandon its plan
to pay or deliver such dividend or distribution, then any adjustment made to the
Conversion Price and number of Common Shares purchasable upon conversion of the
Series A Preferred Shares by reason of the taking of such record shall be
reversed, and any subsequent adjustments, based thereon, shall be recomputed.
8. Mandatory Conversion. (a) If at any time after the second
anniversary of the date of issuance of the Series A Preferred Shares the Daily
Price for a Common Share for each and every day of any period of 40 consecutive
trading days exceeds $24.00, then each outstanding Series A Preferred Share
shall be automatically converted, at the Conversion Rate then in effect pursuant
to Section 7 as of the close of business on the last trading day of the 40
trading day period (a "MANDATORY CONVERSION EVENT") into Common Shares (or other
securities or property into which the Series A Preferred Shares are then
convertible). Any Series A Preferred Shares so converted shall be treated as
having been surrendered by the Holder thereof for conversion pursuant to Section
7 as of the close of business on the last trading day of the 40 trading day
period.
(b) If the corporation shall at any time after the date of
issuance of the Series A Preferred Shares pay any dividend on Common Shares
payable in Common Shares or effect a subdivision or combination of the
outstanding Common Shares (by reclassification, stock split or otherwise) into a
greater or lesser number of Common Shares, then the Daily Price referred to in
clause (a) above shall be adjusted upon the earlier of the public announcement
or the occurrence of any such event by multiplying the Daily Price by a fraction
of which the numerator is the number of Common Shares outstanding immediately
after such event and of which the denominator is the number of Common Shares
that were outstanding immediately prior to such event.
9. Consolidation, Merger, or Sale of Assets. Subject to the provisions
of Section 4 hereof, in case of any consolidation of the corporation with, or
merger of the corporation into, any other Person, any merger of another Person
into the corporation (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding Common
Shares) or any sale or transfer of all or substantially all of the assets of the
corporation or of the Person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, the Preferred Holders
shall have the right thereafter to convert the Series A Preferred Shares into
the kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a Holder of the number of Common
Shares into which the Series A Preferred Shares may have been converted
immediately prior to such consolidation, merger, sale or transfer, assuming (i)
such Holder of Common Shares is not a Person with which the corporation
consolidated or into which the corporation merged or which merged into the
corporation or to which such sale or transfer was made, as the case may be
("CONSTITUENT PERSON"), or an Affiliate of a Constituent Person and (ii) in the
case of a consolidation, merger, sale or transfer which includes an election as
to the consideration to be received by the Holders, such Holder of Common Shares
failed to exercise its rights of election, as to the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer (provided that if the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer is
not the same for each Common Share held immediately prior to such consolidation,
merger, sale or transfer by other than a Constituent Person or an Affiliate
thereof and in respect of which such rights of election shall not have been
exercised ("NON-ELECTING SHARE"), then for the purpose of this Section 9 the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares). Adjustments for events subsequent to the effective date of
such a consolidation, merger and sale of assets shall be as nearly equivalent as
may be practicable to the
<PAGE> 9
adjustments provided for herein. In any such event, effective provisions shall
be made in the certificate or articles of incorporation of the resulting or
surviving corporation, in any contract of sale, conveyance, lease or transfer,
or otherwise so that the provisions set forth herein for the protection of the
rights of the Preferred Holders shall thereafter continue to be applicable; and
any such resulting or surviving corporation shall expressly assume the
obligation to deliver, upon exercise, such Shares, other securities, cash and
property. The provisions of this Section 9 shall similarly apply to successive
consolidations, mergers, sales, or transfers.
10. Protective Provisions. So long as any Series A Preferred Shares
shall be outstanding, except where the vote or written consent of the Holders of
a greater number of shares of the corporation is required by law or by these
articles of incorporation, and in addition to any other vote required by law or
these articles of incorporation, without the approval of the Holders of seventy
five percent (75%) of then outstanding Series A Preferred Shares, given in
writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a series, the corporation will not:
(a) Create or authorize the creation of any additional class or
series of Shares other than Junior Securities, or increase the authorized amount
of the Series A Preferred Shares or increase the authorized amount of any
additional class or series of shares other than Junior Securities, or create or
authorize any obligation or Security convertible into shares of Series A
Preferred Shares or into shares of any other class or series of shares other
than Junior Securities, whether any such creation, authorization or increase
shall be by means of amendment or restatement of these articles of incorporation
or by merger, consolidation or otherwise;
(b) To the extent it materially adversely affects the rights of the
Series A Preferred Shares, amend, alter, restate or repeal the corporation's
articles of incorporation, or the corporation's code of regulations, other than
any amendment solely to authorize or create any additional class or series of
Junior Securities or increase the authorized amount of any Junior Securities;
(c) Redeem or otherwise acquire any shares of Junior Securities
other than Common Shares pursuant to Stock Restriction Agreements.
11. Definitions. As used in this Article FOURTH, the following terms
have the following meanings:
"AFFILIATE" shall mean any entity controlling, controlled by or
under common control with a designated Person. For the purposes of this
definition, "control" shall have the meaning specified for that word in Rule 405
promulgated by the Securities and Exchange Commission under the Securities Act.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
corporation.
"BUSINESS DAY" means a day, except Saturday, Sunday or a public or
bank holiday or the equivalent for banks generally under the laws of the State
of New York, on which banks are not required or authorized to close in New York,
New York.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended prior or after the date hereof, or any federal statute or statutes which
shall have been enacted to take the place of such Act, together with all rules
and regulations promulgated thereunder.
"HOLDERS" shall mean the Persons who shall, from time to time, own
of record any Security. The term "HOLDER" shall mean one of the Holders.
"INVESTOR RIGHTS AGREEMENT" shall mean the Investor Rights
Agreement dated as of May 10, 2000 among the corporation and the shareholders
listed therein.
<PAGE> 10
"PERSON" shall mean an individual, a corporation, a partnership, a
limited liability company, a trust, an unincorporated organization or a
government organization or an agency or political subdivision thereof.
"PREFERRED HOLDERS" shall mean the Persons, who shall from time to
time, own of record any Series A Preferred Shares. The term "PREFERRED HOLDER"
shall mean one of the Preferred Holders.
"PROPERTY" shall mean any interest in any kind of property or
assets, whether real, personal or mixed, or tangible or intangible.
"SECURITIES" shall mean any debt or equity securities of the
corporation, whether now or hereafter authorized, and any instrument convertible
into or exchangeable for Securities or a Security. The term "SECURITY" shall
mean one of the Securities.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended
prior to or after the date hereof, or any federal statute or statutes which
shall be enacted to take the place of such Act, together with all rules and
regulations promulgated thereunder.
"SHARES" shall include any and all shares, interests or other
equivalents (however designated) of, or participation in, capital stock.
"STOCK RESTRICTION AGREEMENTS" shall mean any agreement entered
into between the corporation and an employee, consultant, director, officer or
agent or any former employee, consultant, director, officer or agent of the
corporation or a Subsidiary under the terms of each of which the corporation is
permitted or obligated to purchase Securities from such Person in connection
with his or her offering the Securities to another Person or the termination of
his or her relationship with the corporation or a Subsidiary.
"SUBSIDIARY" shall mean any corporation, more than 50% of whose
outstanding Voting Shares shall at the time be owned directly or indirectly by
the corporation or by one or more Subsidiaries or by the corporation and one or
more Subsidiaries.
"VOTING SHARES" as applied to the Shares of any corporation shall
mean Shares of any class or classes (however designated) having ordinary voting
power for the election of a majority of the members of the board of directors
(or other governing body) of such corporation, other than Shares having such
power only by reason of the happening of a contingency.
The directors of the corporation may adopt an amendment to the articles
in respect of any unissued or treasury shares of any class and thereby fix or
change: the division of such shares into series and the designation and
authorized number of shares of each series; the dividend or distribution rate;
the dates of payment of dividends of distributions and the dates from which they
are cumulative; liquidation price; redemption rights and price; sinking fund
requirements; conversion rights; and restrictions on the issuance of shares of
any class or series.
FIFTH: The directors of the corporation shall have the power to cause
the corporation from time to time and at any time to purchase, hold, sell,
transfer or otherwise deal with (A) shares of any class or series issued by
it, (B) any security or other obligation of the corporation which may confer
upon the holder thereof the right to convert the same into shares of any class
or series authorized by the articles of incorporation, and (C) any security or
other obligation which may confer upon the holder thereof the right to
purchase shares of any class or series authorized by the articles of
incorporation. The corporation shall have the right to repurchase, if and when
any shareholder desires to sell, or on the happening of any event is required
to sell, shares of any class or series issued by the corporation. The
authority granted in this Article Fifth of these articles shall not limit the
plenary authority of the directors to purchase, hold, sell, transfer or
otherwise deal with shares of any class or series, securities, or other
obligations issued by the corporation or authorized by its articles.
<PAGE> 11
SIXTH: A director or officer of the corporation shall not be
disqualified by his office from dealing or contracting with the corporation as
vendor, purchaser, employee, agent or otherwise. No contract or transaction
shall be void or voidable with respect to the corporation for the reason that
it is between the corporation and one or more of its directors or officers, or
between the corporation and any other person in which one or more of its
directors or officers are directors, trustees or officers, or have a financial
or personal interest, or for the reason that one or more interested directors
or officers participated in or voted at the meeting of the directors or a
committee thereof which authorized such contract or transaction, if in any
such case (A) the material facts as to the relationship or interest of such
director, officer or other person and as to the contract or transaction are
disclosed or are known to the directors or the committee, or such members
thereof as shall be present at any meeting at which action upon any such
contract or transaction shall be taken, and the directors or committee, in
good faith reasonably justified by such facts, authorized the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors constitute less than a
quorum; or (B) the material facts as to the relationship or interest of such
director, officer or other person and as to the contract or transaction are
disclosed or known to the shareholders entitled to vote thereon and the
contract or transaction is specifically approved at a meeting of the
shareholders held for such purpose by the affirmative vote of the holders of
shares entitling them to exercise a majority of the voting power of the
corporation held by persons not interested in the contract or transaction; or
(C) the contract or transaction is fair as to the corporation as of the time
it is authorized or approved by the directors, a committee thereof, or the
shareholders. Common or interested directors may be counted in determining the
presence of a quorum at any meeting of the directors, or of a committee
thereof, which authorizes the contract or transaction.
SEVENTH: No shareholder of the corporation shall have, as a matter or
right, the pre-emptive right to purchase or subscribe for shares of any class,
now or hereafter authorized, or to purchase or subscribe for securities or
other obligations convertible into or exchangeable for such shares or which by
warrants or otherwise entitle the holders thereof to subscribe for or purchase
any such share.
EIGHTH: Section 1701.831 of the Ohio Revised Code does not apply to
control share acquisitions of the corporation.
NINTH: Chapter 1704. of the Ohio Revised Code does not apply to the
corporation.
TENTH: These Amended Articles supersede the Second Amended Articles of
Micro Manufacturing Systems, Inc. existing at the effective date of these
Amended Articles.
