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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 19, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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METRICOM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 77-0294597
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
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980 UNIVERSITY AVENUE
LOS GATOS, CALIFORNIA 95030-2375
(408) 399-8200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
TIMOTHY A. DREISBACH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
METRICOM, INC.
980 UNIVERSITY AVENUE, LOS GATOS, CALIFORNIA 95030-2375
(408) 399-8200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
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KENNETH L. GUERNSEY JEREMY W. DICKENS
CYDNEY S. POSNER WEIL, GOTSHAL & MANGES LLP
LAURA RANDALL WOODHEAD 767 FIFTH AVENUE
COOLEY GODWARD LLP NEW YORK, NEW YORK 10153
ONE MARITIME PLAZA, 20TH FLOOR (212) 310-8000
SAN FRANCISCO, CALIFORNIA 94111
(415) 693-2000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act, as
amended, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF SECURITIES PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE(2)
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Debt Securities(3).............................. (4) (4)
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Common Stock, $0.001 par value per share(5)..... (4) (4)
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Total................................... $1,200,000,000(6) $333,600
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(1) The proposed maximum aggregate offering price per class of security will be
determined from time to time by the registrant in connection with the
issuance by the registrant of the securities registered hereunder.
(2) Calculated pursuant to Rule 457(o) under the Securities Act.
(3) Subject to note 6 below, there is being registered hereunder an
indeterminate principal amount of debt securities of the registrant as may
be sold, from time to time, by us. If any debt securities are issued at an
original issue discount, then the offering price shall be in such greater
principal amount at maturity as shall result in aggregate gross proceeds to
the registrant not to exceed $1.2 billion less the gross proceeds
attributable to any securities previously issued pursuant to this
registration statement.
(4) Not required to be included in accordance with General Instruction II.D. of
Form S-3.
(5) Subject to note 6 below, there is being registered hereunder an
indeterminate number of shares of common stock of the registrant as may be
sold from time to time.
(6) In no event will the aggregate offering price of all securities issued from
time to time pursuant to this registration statement exceed $1.2 billion.
The securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and we are not soliciting offers to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 19, 1999
PROSPECTUS
$1,200,000,000
METRICOM, INC.
[LOGO]
COMMON STOCK
DEBT SECURITIES
We may offer shares of common stock and one or more series of debt
securities from time to time at prices and on terms to be determined by market
conditions at the time we make the offer. We will provide the specific terms of
each series of debt securities in supplements to this prospectus. Before you
invest in the securities, you should carefully read this prospectus and the
prospectus supplement related to the securities offered.
Metricom's common stock is traded on the Nasdaq National Market under the
symbol "MCOM." On November 18, 1999, the last reported sale price of the common
stock on the Nasdaq National Market was $54 1/8 per share.
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THE SECURITIES WE MAY OFFER INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 5.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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If we sell the securities through agents or underwriters, we will include
their names and the fees, commissions and discounts they will receive, as well
as the net proceeds to us, in the applicable prospectus supplement.
The date of this Prospectus is , 1999
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary.................. 3
Risk Factors........................ 5
Forward-Looking Information......... 5
Deficiency of Earnings to Fixed
Charges........................... 5
Use of Proceeds..................... 5
Description of Debt Securities...... 6
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Description of Capital Stock........ 14
Plan of Distribution................ 16
Legal Matters....................... 17
Experts............................. 17
Where You Can Get More
Information....................... 17
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No dealer, sales person or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the securities offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this prospectus is current only as of its date.
Metricom(R), Ricochet(R) and Ricochet(2) are our trademarks. Trade names
and trademarks of other companies appearing in this prospectus are the property
of their respective holders.
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PROSPECTUS SUMMARY
The following is a summary of our business. This summary highlights
selected information from this prospectus and does not contain all the
information that may be important to you. To understand the terms of the
securities, you should read this prospectus with the accompanying prospectus
supplement carefully. Together, these documents describe the specific terms of
the securities we are offering. You should also carefully read the section
entitled "Risk Factors" in this prospectus and the accompanying prospectus
supplement and the documents identified under the caption "Where You Can Get
More Information."
OVERVIEW
We provide wide area wireless data communications solutions. We design,
develop and market wireless network products and services that provide low-cost,
high performance, easy-to-use data communications that can be used in a broad
range of personal computer and industrial applications. Our primary service,
Ricochet, provides users of portable and desktop computers and hand-held
computing devices with fast, reliable, portable, wireless access to the
Internet, private intranets, local area networks, e-mail and on-line services
for a low, flat monthly subscription fee that permits unlimited usage.
We were incorporated in California in December 1985 and reincorporated in
Delaware in April 1992. Our principal office is located at 980 University
Avenue, Los Gatos, California 95030-2375. Our telephone number at that location
is (408) 399-8200, and our Web sites are located at www.metricom.com and
www.ricochet.net. Information contained on our Web sites does not constitute
part of this prospectus.
THE SECURITIES WE MAY OFFER
We may offer shares of our common stock and various series of debt
securities, with a total value of up to $1.2 billion, from time to time, under
this prospectus at prices and on terms to be determined by market conditions at
the time of offering. This prospectus provides you with a general description of
the securities we may offer. Each time we offer a type or series of securities,
we will provide a prospectus supplement that will describe the specific amounts,
prices and other important terms of the securities, including, to the extent
applicable:
- designation or classification;
- aggregate principal amount or aggregate offering price;
- maturity, if applicable;
- rates and times of payment of interest or dividends, if any;
- redemption, conversion or sinking fund terms, if any;
- voting or other rights, if any;
- conversion prices, if any; and
- important federal income tax considerations.
The prospectus supplement may also add, update or change information
contained in this prospectus or in documents we have incorporated by reference.
THIS PROSPECTUS MAY NOT BE USED TO COMPLETE ANY SALE OF SECURITIES UNLESS IT IS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
We may sell the securities directly to or through agents, underwriters or
dealers. We, and our agents or underwriters, reserve the right to accept or
reject all or part of any proposed purchase of securities. If we do offer
securities through agents or underwriters, we will include in the applicable
prospectus supplement:
- the names of those agents or underwriters;
- applicable fees, discounts and commissions, to be paid to them; and
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- the net proceeds to us.
Common Stock. We may issue shares of our common stock, from time to time.
Holders of common stock are entitled to one vote per share on all matters
submitted to a vote of stockholders, except those matters that are submitted
solely to a vote of the holders of preferred stock. Subject to any preferences
of outstanding shares of preferred stock, holders of common stock are entitled
to dividends when and if declared by the board of directors.
Debt Securities. We may offer debt securities from time to time, in one or
more series, as either senior or subordinated debt or as senior or subordinated
convertible debt. The senior debt securities will rank equally with all of our
other unsecured and unsubordinated debt. The subordinated debt securities will
be subordinate and junior in right of payment, to the extent and in the manner
described in the instrument governing the debt, to all of our senior
indebtedness. Convertible debt securities will be convertible into our common
stock. Conversion may be mandatory or at your option, and would be at prescribed
conversion rates.
The debt securities will be issued under indentures between us and the
party to be named as trustee in the prospectus supplement. In this prospectus,
we have summarized certain general features of the debt securities. We urge you,
however, to read the prospectus supplements related to the series of debt
securities being offered, as well as the complete indentures, which contain the
terms of the debt securities. The indentures have been filed as exhibits to the
registration statement of which this prospectus is a part or will be
incorporated by reference from reports we file with the SEC.
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RISK FACTORS
The prospectus supplement applicable to each type or series of securities
we offer will contain a discussion of risks applicable to an investment in our
company and to the particular types of securities that we are offering under
that supplement. Prior to making a decision about investing in our securities,
you should carefully consider the specific factors discussed under the caption
"Risk Factors" in the applicable prospectus supplement, together with all of the
other information contained in the prospectus supplement or appearing or
incorporated by reference in the registration statement of which this prospectus
is a part.
FORWARD-LOOKING INFORMATION
This prospectus contains forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, that are based on our current expectations about our
company and our industry. We use words such as "expect," "anticipate,"
"estimate," "believe," "intend," "plan" and other similar expressions to
identify some forward-looking statements, but not all forward-looking statements
include these words. All our forward-looking statements involve risks and
uncertainties. Our actual results may differ significantly from our expectations
and from the results expressed in or implied by these forward-looking
statements. The section captioned "Risk Factors" that appears in our annual
report on Form 10-K, as amended, for the year ended December 31, 1998 and our
current report on Form 8-K filed with the SEC on July 9, 1999, as well as the
section captioned "Risk Factors" that will appear in prospectus supplements
accompanying this prospectus describe some, but not necessarily all, of the
factors that could cause these differences. We urge you to read those sections
carefully. Except as may be required by law, we undertake no obligation to
publicly update any forward-looking statements for any reason, even if new
information becomes available or other events occur in the future.
DEFICIENCY OF EARNINGS TO FIXED CHARGES
Our earnings were insufficient to cover our fixed charges during each of
the periods described below. For the purpose of these calculations, "earnings"
consist of income before taxes, plus fixed charges, and "fixed charges" consist
of interest expense incurred and the portion of rental expense deemed by us to
be representative of the interest factor of rental payments under leases.
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NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
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1994 1995 1996 1997 1998 1998 1999
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(DOLLARS IN MILLIONS)
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Deficiency of earnings to fixed
charges.............................. $11.7 $23.5 $39.3 $59.3 $84.2 $45.9 $48.2
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USE OF PROCEEDS
Unless otherwise described in a prospectus supplement, the net proceeds
from the offering of the securities will be used for deployment and
commercialization of our networks and for other general corporate purposes,
principally working capital, capital expenditures and operating expenses. When
we offer a particular type or series of securities, the prospectus supplement
relating to those securities will describe our intended use of the net proceeds
we will receive from the sale of those securities. Pending application for
specific purposes, the net proceeds of any offering of securities may be
invested in short-term investments and marketable securities.
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DESCRIPTION OF DEBT SECURITIES
We may offer the debt securities from time to time as either senior or
subordinated debt or as senior or subordinated convertible debt. We will issue
senior debt securities under an indenture between us and the party to be named
as trustee in the prospectus supplement. We will issue subordinated debt
securities under another indenture between us and the party to be named as
trustee in the prospectus supplement. The terms of the indentures are also
governed by the provisions of the Trust Indenture Act. The following is a
summary of the material provisions of the debt securities; however, we urge you
to review the senior debt indenture and the subordinated debt indenture, which
are filed as exhibits to the registration statement of which this prospectus is
a part, in their entirety. See "Where You Can Find More Information." Unless the
context requires otherwise, whenever we refer to the indentures, we also are
referring to any supplemental indentures that specify the terms of a particular
series of debt securities.
GENERAL
The indentures allow us to issue debt securities in series up to the
aggregate amount we authorize from time to time for each series. We will
describe the following terms of the debt securities, to the extent those terms
are applicable, and other information that we consider relevant relating to a
particular series of debt securities in a prospectus supplement:
- the designation and title of the debt securities;
- the classification of those securities as senior or subordinated debt
securities;
- the aggregate principal amount, or principal amount at maturity, as
applicable, of the debt securities;
- the percentage of the principal amount, or principal amount at maturity,
as applicable, at which we will issue and sell the debt securities;
- the date or dates on which the debt securities will mature;
- the rate or rates per annum, if any, which may be fixed or variable, at
which the debt securities will bear or accrete interest, or the method
of determination of the interest rate or rates;
- the times and places at which the interest, if any, will be payable;
- provisions for sinking, purchase or other analogous funds, if any;
- the date or dates or particular events, if any, after which we may, or
must, redeem the debt securities, as well as the redemption price or
prices;
- the date or dates or particular events, if any, after which we must
offer to repurchase the debt securities from their holders, as well as
the repurchase price or prices;
- the date or the dates, if any, after which the holders may convert the
debt securities into shares of our common stock and the terms for that
conversion; and
- any other material terms of, including any covenants or defined terms
applicable to, the debt securities.
We will pay the principal, premium, if any, and interest, if any, on debt
securities by wire transfer of immediately available funds to the holder of any
debt securities held in global form and at the office of the trustee maintained
for that purpose with respect to any certificated notes. With respect to
certificated debt securities, we may pay interest, if any, at our option by
check mailed to the address of the person entitled to payment as it appears in
our security register or by wire transfer of immediately available funds in
accordance with instructions provided by the registered holders of certificated
debt securities. Debt securities will be transferable at the office of the
trustee maintained for that purpose.
We may issue debt securities in registered form and, unless otherwise
specified in the applicable prospectus supplement, only in denominations of
$1,000 and integral multiples of $1,000. We may also issue
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debt securities in book-entry form, without certificates. We will describe the
procedures relating to an issue of book-entry debt securities in the prospectus
supplement relating to those debt securities. We will not require a service
charge for any transfer or exchange of the debt securities, but we or the
trustee may require payment of a sum sufficient to cover any transfer tax or
other similar government charge payable in connection with a transfer or
exchange.
We may issue debt securities under the indentures at a substantial
discount from their stated principal amount at maturity. We will describe any
United States federal income tax consequences and other considerations
applicable to debt securities issued with "original issue discount" in the
prospectus supplement relating to those debt securities.
CONVERSION RIGHTS
The prospectus supplement will describe, if applicable, the terms on which
the holders may convert debt securities into common stock. The conversion may be
mandatory or may be at the option of the holder of debt securities. The
prospectus supplement will describe how the number of shares of common stock to
be received upon conversion would be calculated.
MERGER, CONSOLIDATION AND SALE OF ASSETS
Unless we provide otherwise in the prospectus supplement relating to a
particular series of debt securities, the indentures will not permit us to
consolidate with or merge into any other person or sell, convey, transfer or
lease all or substantially all of our properties and assets as an entirety to
any person, unless:
- the person formed by the consolidation or into which we are merged, or
the person that acquires our properties and assets by sale, conveyance
or transfer or which leases our properties and assets substantially as
an entirety:
- is a corporation, validly existing under the laws of the United States
of America, any state of the United States, or the District of
Columbia, and
- expressly assumes, by a supplemental indenture, executed and delivered
to the trustee, in form reasonably satisfactory to the trustee, our
obligations for the due and punctual payment of the principal of,
premium, if any, and interest on all the debt securities and the
performance and observance of every covenant of the indentures;
- immediately after giving effect to the transaction, no default or event
of default shall have occurred and be continuing with respect to the
applicable debt securities; and
- the person formed by the consolidation or surviving the merger or
acquiring or leasing our properties and assets delivers an officers'
certificate and an opinion of counsel to the trustee, each stating that
the consolidation, merger, conveyance, transfer or lease and the
supplemental indenture comply with these provisions of the indentures
and that all conditions precedent provided for under the indentures that
relate to the transaction have been satisfied.
These provisions apply only to a merger or consolidation in which we are
not the surviving corporation and to sales, conveyances, leases and transfers by
us as transferor or lessor. We use the term "person" to mean any individual,
corporation, partnership, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization or government or any
agency or political subdivision of a government entity.
The indentures also provide that, upon completion of any of the
transactions described above in accordance with the preceding paragraphs, the
person formed by the consolidation or surviving the merger or acquiring or
leasing our properties and assets will be substituted for us and will succeed
to, and may exercise, all of our rights and powers under the indentures with the
same effect as if that person had been named as the obligor under the
indentures. Also, upon completion of any of these transactions, except in the
case of a lease, we will be discharged from all our obligations and covenants
under the indentures and the debt securities.
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EVENTS OF DEFAULT
Unless we provide otherwise in the prospectus supplement relating to a
particular series of debt securities, the following will be events of default
under the indentures:
(1) default in the payment of interest on any debt securities when
the interest becomes due and payable, if the default continues for 30
days; or
(2) default in the payment of the principal of, or premium, if any,
on, any debt securities of that series at its maturity or upon any
redemption; or
(3) default in the deposit of any sinking fund payment when and as
due pursuant to the terms of the debt securities of that series and the
indentures and such default shall continue for a period of 30 days; or
(4) default in the performance, or breach, of any covenant or
warranty in the indentures, other than a default in the performance, or
breach, of a covenant or warranty that is specifically dealt with
elsewhere under this "events of default" section, if the default or breach
continues for 60 days after the trustee or the holders of at least 25% in
principal amount, or principal amount at maturity, as applicable, deliver
a written "notice of default" to us specifying the default or breach and
requiring it to be remedied; or
(5) the entry of a decree or order by a court with appropriate
jurisdiction adjudging us bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition with regard to us under the Federal Bankruptcy Code or any
other applicable federal or state law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator, or other similar official
with regard to us or any substantial part of our property, or ordering the
winding up or liquidation of our affairs, if such a decree or order
continues unstayed and in effect for a period of 60 consecutive days; or
(6) our institution of proceedings to be adjudicated bankrupt or
insolvent, or our consent to the institution of bankruptcy or insolvency
proceedings against us, or our filing of a petition or answer or consent
seeking reorganization or relief under the Federal Bankruptcy Code or any
other applicable federal or state law, or our consent, to the filing of
any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, or other similar official regarding us or
of any substantial part of our property, or our making of an assignment
for the benefit of creditors; or
(7) any other event of default provided with respect to debt
securities of that series.
In each case, "default" means any event which is, or after notice or
passage of time or both would be, an event of default.
Unless we provide otherwise in the prospectus supplement relating to a
particular series of debt securities, if an event of default described in clause
(1), (2), (3), (4) or (7) above occurs and is continuing, then in every case the
trustee or the holders of not less than 25% in principal amount, or principal
amount at maturity, as applicable, of the outstanding debt securities of that
series may declare the principal amount or, if the debt securities of that
series are original issue discount securities, the portion of the principal
amount as may be specified in the terms of that series, of all of the debt
securities of that series to be due and payable immediately, by a notice in
writing to us, and to the trustee if given by holders, and upon any declaration
the principal amount or specified portion of the principal amount will become
immediately due and payable. If an event of default described in clause (5) or
(6) above occurs and is continuing, then the principal amount of all the debt
securities will automatically be immediately due and payable without any
declaration or other act on the part of the trustee or any holder of those debt
securities.
At any time after a declaration of acceleration with respect to debt
securities of any series or all series, as applicable, has been made, the
holders of a majority in principal amount, or principal at maturity, as
applicable, of the outstanding debt securities of that series, or of all series,
as the case may be, by written notice to us and the trustee, may rescind and
annul the declaration and its consequences if the rescission would
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not conflict with any judgment or decree and if all existing events of default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of acceleration. Such a rescission will not affect any
subsequent default or impair any right consequent to a subsequent rescission.
Except as otherwise provided in each indenture, or any supplement thereto,
the holders of not less than a majority in principal amount, or principal amount
at maturity, as applicable, of the outstanding debt securities of any series
may, on behalf of the holders of all the debt securities of such series, waive
any past default, described in clause (1), (2), (3), (4) or (7) of the first
paragraph of this section, or, in the case of a default described in clause (5)
or (6) of the first paragraph of this section, the holders of not less than a
majority in principal amount, or principal amount at maturity, as applicable, of
all outstanding debt securities may waive any such past default, and its
consequences, except a default:
- in respect of the payment of the principal of, or premium, if any, on,
or interest on any debt security, or
- in respect of a covenant or provision which under the indentures cannot
be modified or amended without the consent of the holders of all or more
than a majority in principal amount, or principal amount at maturity, as
applicable, of the outstanding debt security of the affected series.
A default will cease to exist upon a waiver and any event of default
arising from that default will be deemed to have been cured for every purpose of
the indentures, but the waiver will not extend to any subsequent or other
default or event of default.
Except to enforce the right to receive payment of principal, premium, if
any, or interest on any debt security, no holder of any debt security of any
series will have any right to institute any proceeding, judicial or otherwise,
with respect to the indentures, or for the appointment of a receiver or trustee,
or for any other remedy thereunder, unless:
- that holder has previously given written notice to the trustee of a
continuing event of default with respect to the debt securities of that
series;
- the holders of not less than 25% in principal amount, or principal
amount at maturity, as applicable, of the outstanding debt securities of
that series in the case of any event of default under clause (1), (2),
(3), (4) or (7) of the first paragraph of this section, or, in the case
of any event of default described in clause (5) or (6) of the first
paragraph of this section, the holders of not less than 25% in principal
amount, or principal amount at maturity, as applicable, of all
outstanding debt securities delivers a written request to the trustee to
institute proceedings in respect of the event of default in its own name
as trustee under each of the indentures;
- that holder or holders offer the trustee reasonable indemnity against
the costs, expenses and liabilities to be incurred in compliance with
the request to institute proceedings;
- the trustee fails to institute a proceeding for 60 days after receiving
the notice, request and offer of indemnity; and
- no direction inconsistent with such written request has been given to
the trustee during such 60-day period by the holders of at least a
majority in principal amount, or principal amount at maturity, as
applicable, of the outstanding debt securities of that series in the
case of any default under clause (1), (2), (3), (4) or (7) of the first
paragraph of this section, or, in the case of any event of default
described in clause (5) or (6) of the first paragraph of this section,
by the holders of at least a majority in principal amount, or principal
amount at maturity, as applicable, of all outstanding debt securities.
During the existence of an event of default, the trustee must exercise the
rights and powers vested in it under either indenture in good faith. Subject to
the provisions of the indentures relating to the duties of the trustee, in case
an event of default occurs and is continuing, the trustee under the indentures
is not under any obligation to exercise any of its rights or powers under the
indentures at the request or direction of any of the holders unless these
holders offer the trustee reasonable indemnity. Subject to provisions of the
indentures
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concerning the rights of the trustee, with respect to the debt securities of any
series, the holders of not less than a majority in principal amount, or
principal amount at maturity, as applicable, of the outstanding debt securities
of that series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee, or exercising
any trust or power conferred on the trustee under the indentures.
Within 90 days after the occurrence of any default with respect to debt
securities of any series, the trustee will transmit notice of any default known
to it to the holders of the affected debt securities in the manner and to the
extent provided in Section 313(c) of the Trust Indenture Act, unless the default
is cured or waived; however, except in the case of a default in the payment of
the principal of, or premium, if any, on, or interest on any debt securities of
that series, or in the payment of any sinking fund installment with respect to
debt securities of that series, the trustee will be protected in withholding
that notice if and so long as the trustee in good faith determines that the
withholding of that notice is in the interest of the holders of debt securities
of that series.
We are required to deliver a brief certificate of our compliance with all
of the conditions and covenants under the indentures to the trustee within 120
days after the end of each fiscal year.
DEFEASANCE OR COVENANT DEFEASANCE
We may, at our option and at any time, terminate our obligations with
respect to the outstanding debt securities of any series, referred to as
"defeasance." Defeasance means that we will be deemed to have paid and
discharged the entire indebtedness represented by the outstanding debt
securities, except for the following provisions, which will survive until
otherwise terminated or discharged under the indentures:
- the rights of holders of the outstanding debt securities
- to receive, solely from the trust fund described in the indentures,
payments in respect of the principal of, and premium, if any, on, and
interest on those debt securities when those payments are due, and
- to receive shares of common stock or other securities from us upon
conversion of any convertible debt securities issued thereunder;
- our obligations to issue temporary debt securities, register the
transfer or exchange of any debt securities, replace mutilated,
destroyed, lost or stolen debt securities, maintain an office or agency
for payments in respect of the debt securities and, if we act as our own
paying agent, hold in trust, money to be paid to the persons entitled to
payment, and with respect to "additional amounts," if any, on those debt
securities as contemplated in the indentures;
- the rights, powers, trusts, duties and immunities of the trustee under
the indentures; and
- the defeasance provisions of the indentures.
In addition, we may, at our option and at any time, elect to terminate our
obligations with respect to selected covenants that are set forth in the
indentures and any omission to comply with those obligations will not constitute
a default or an event of default with respect to the debt securities, referred
to as "covenant defeasance."
In order to exercise either defeasance or covenant defeasance:
- we must irrevocably deposit or cause to be deposited with the trustee,
in trust, for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
holders of the applicable debt securities,
- money, or
- Government Obligations that mature not later than one day before the
due date of any payment of principal, premium, if any, and interest,
under the applicable debt securities, or
- a combination of money and Government Obligations as described
immediately above,
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<PAGE> 12
- the money or Government Obligations, or both, must in any case, be
sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay and discharge
- the principal of, and any premium and all installments of interest on,
the outstanding debt securities on the stated maturity date (or any
redemption date that we select, if applicable), and
- any mandatory sinking fund payments or analogous payments applicable
to the outstanding debt securities on the day on which those payments
are due and payable;
however, we must deliver to the trustee irrevocable instructions to
apply the money or the proceeds of the Government Obligations to the
payments required to be made with respect to those debt securities;
- the defeasance or covenant defeasance of the debt securities will not
result in a breach or violation of, or constitute a default under, the
indentures or any other material agreement or instrument to which we are
a party or by which we are bound;
- we must effect the defeasance or covenant defeasance of the debt
securities in compliance with any additional or substitute terms,
conditions or limitations set forth in the prospectus supplement
relating to a particular series of debt securities; and
- we must deliver an officers' certificate and an opinion of counsel to
the trustee, each stating that all conditions precedent under the
indentures to either defeasance or covenant defeasance, as the case may
be, have been satisfied.
"Government Obligations" means direct obligations, or certificates
representing an ownership interest in such obligations, of the United States,
including any agency or instrumentality of the United States, for the payment of
which the full faith and credit of the United States is pledged and which are
not callable or redeemable at the issuer's option.
Before we make a deposit to effect a defeasance or covenant defeasance of
the debt securities, we may give to the trustee, in accordance with the
redemption provisions in the indentures, a notice of our election to redeem all
or any portion of the outstanding debt securities at a future date in accordance
with the terms of the debt securities of that series and the redemption
provisions of the indentures, which notice must be irrevocable. If we deliver
such an irrevocable redemption notice, it will be given effect in applying the
foregoing.
With respect to subordinated debt securities, money and securities held in
trust pursuant to the defeasance and covenant defeasance provisions of the
indentures, will not be subject to the subordination provisions of the
subordinated indenture.
SATISFACTION AND DISCHARGE
The indentures will, upon a written request or order signed by one of our
designated officers and delivered to the trustee, cease to be of further effect
with respect to any series of debt securities, except as to any surviving rights
of registration of transfer or exchange or conversion of debt securities of that
series expressly provided for, and the trustee will be required to execute
proper instruments acknowledging satisfaction and discharge of such indenture as
to that series when either:
- we have delivered to the trustee for cancellation all debt securities of
that series previously authenticated and delivered, other than:
- debt securities that have been destroyed, lost or stolen and which
have been replaced or paid, as provided in the indentures, and
- debt securities for which money sufficient to make all payment on the
debt securities has previously been deposited in trust with the
trustee or any paying agent or segregated and held in
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<PAGE> 13
trust by us with any remaining amounts to thereafter be repaid to us,
as provided in the indentures, or
- all debt securities, other than convertible debt securities, of the
series:
- have become due and payable, or
- will become due and payable at their stated maturity within one year,
or
- if redeemable at our option, are to be called for redemption within
one year under arrangements reasonably satisfactory to the trustee for
the giving of notice of redemption by the trustee in the name, and at
our expense; and
we irrevocably deposit or cause to be deposited with the trustee as
trust funds in trust an amount of money or Government Obligations
sufficient to pay and discharge the entire indebtedness on those debt
securities not previously delivered to the trustee for cancellation,
including all principal of and any premium and installments of interest
to the date of such deposit in the case of debt securities which have
become due and payable or to the stated maturity or redemption date of
the debt securities, as applicable.
In addition, in order to satisfy and discharge the securities, we will be
required to:
- pay or cause to be paid all other sums payable under the debt securities
by us; and
- deliver an officers' certificate and an opinion of counsel to the
trustee, each stating that all conditions precedent provided for
relating to the satisfaction and discharge of the indentures as to such
series have been satisfied.
AMENDMENTS AND WAIVERS
Under the indentures, we and the trustee may at any time and from time to
time, without the consent of any holder of debt securities, enter into one or
more supplemental indentures to:
- cure ambiguities, defects or inconsistencies, or to make any other
provisions with respect to questions or matters arising under the
indentures;
- effect or maintain the qualification of the indentures under the Trust
Indenture Act;
- secure any debt securities;
- add covenants for the protection of the holders of debt securities;
- establish the forms or terms of debt securities of any series;
- make any other change that does not adversely affect in any material
respect the rights under such indenture of the holders of debt
securities thereunder;
- add a guarantee of our payment obligations under the indentures by a
subsidiary or other party;
- evidence the acceptance of appointment by a successor trustee; and
- to evidence the succession of another person to us and the assumption by
any such successor of our obligations in accordance with the indentures
and the debt securities.
Other amendments and modifications of the indentures or the debt securities may
be made by us and the trustee with the consent of the holders of not less than a
majority of the aggregate principal amount, or principal amount at maturity, as
applicable, of all of the then outstanding debt securities of the affected
series;
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<PAGE> 14
however, no such modification or amendment may, without the consent of the
holder of each outstanding debt security affected thereby,
- change the stated maturity of the principal of, or any installment of
interest on, any debt security;
- reduce the principal amount or the rate of interest or any premium
payable upon the redemption of any debt security;
- change any obligation of us to pay any "additional amounts" contemplated
by each indenture (except as contemplated and permitted by certain
provisions of the indentures);
- reduce the accreted amount of an original issue discount security that
would be due and payable upon a declaration of acceleration of the
maturity of the debt securities under the indentures or the amount of
the debt securities provable in bankruptcy pursuant to the indentures;
- adversely affect, after the event giving rise to any right of repayment
occurs, any right of repayment at the option of any holder of any debt
security, or change any place of payment described in the indentures
where any debt security or any premium or the interest thereon is
payable;
- impair the right to institute suit for the enforcement of any payment on
or after the stated maturity of the debt securities, or, in the case of
redemption or repayment of the debt securities, on or after the
redemption date or repayment date, as applicable;
- adversely affect any right to convert any debt securities as may be
provided under the indentures; or
- reduce the percentage in principal amount, or principal amount at
maturity, as applicable, of the outstanding debt securities of any
series, the consent of whose holders is required for any such
supplemental indenture, for any waiver of compliance with provisions of
the indentures or defaults thereunder and their consequences provided
for in the indentures.
SENIOR DEBT
The debt securities that will be senior debt securities will be issued
under the senior debt indenture and will rank on an equal basis with all of our
other unsecured and unsubordinated debt.
SUBORDINATED DEBT
The debt securities that will be subordinated debt securities will be
issued under the subordinated debt indenture and will be subordinate and junior
in right of payment, to the extent and in the manner set forth in the
subordinated debt indenture, to all of our "Senior Indebtedness." Unless we
provide otherwise in the prospectus supplement relating to a particular series
of debt securities, the subordinated debt indenture will define "Senior
Indebtedness" as obligations, or obligation guaranteed or assumed by us, for
borrowed money or evidenced by bonds, debentures, notes or other similar
instruments, and amendments, renewals, extensions, modifications and refundings
of any such indebtedness or obligations, other than nonrecourse obligations, the
subordinated debt securities or any other obligations specifically designated as
not constituting, or as being subordinate in right of payment to, Senior
Indebtedness.
In the event:
- of any insolvency or bankruptcy proceedings, or any receivership,
liquidation, reorganization or other similar proceedings in respect of
us or a substantial part of our property, or
- that a default occurs with respect to the payment of principal of, and
any premium or interest on, or other monetary amounts due and payable on
any Senior Indebtedness or
- that there occurs an event of default, other than a default in the
payment of principal, and any premium or interest, or other monetary
amounts due and payable, with respect to any Senior Indebtedness,
permitting the holder or holders of that Senior Indebtedness to
accelerate the maturity of that Senior Indebtedness, with notice or
lapse of time, or both, and such event of default continues
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<PAGE> 15
beyond the period of grace, if any, in respect of that default or event
of default, and the default or event of default is not cured or waived
or ceases to exist; or
- that the principal of and accrued interest on, or the accreted amount
of, the subordinated debt securities is declared due and payable as a
result of an event of default of the subordinated debt indenture and
that declaration is not rescinded and annulled as provided under the
subordinated debt indenture,
then the holders of all Senior Indebtedness will be entitled to receive
payment, in cash or cash equivalents, of the full amount unpaid on that
Senior Indebtedness first, or provision will be made for that payment in
money or money's worth, before the holders of any of the subordinated debt
securities are entitled to receive a payment on account of the principal
of, and any premium or interest on, the indebtedness evidenced by such
subordinated debt securities.
If this prospectus is being delivered in connection with a series of
subordinated debt securities, the accompanying prospectus supplement or the
information incorporated by reference will set forth the approximate amount of
Senior Indebtedness outstanding as of the end of the most recent fiscal quarter.
Moreover, that prospectus supplement will contain more specifically the
subordination provisions applicable to the particular series of subordinated
debt securities being offered.
GOVERNING LAW
The indentures and the debt securities will be governed by and construed
in accordance with the laws of the State of New York. The indentures are subject
to the provisions of the Trust Indenture Act that are required to be a part
thereof and will, to the extent applicable, be governed by such provisions.
DESCRIPTION OF CAPITAL STOCK
GENERAL
We have authorized capital stock of 150 million shares of common stock,
$0.001 par value per share, and 80 million shares of preferred stock, $0.001 par
value per share. As of November 16, 1999, there were 22,091,324 shares of our
common stock and 60 million shares of our preferred stock outstanding.
Our Restated Bylaws divide our board of directors into three classes as
nearly equal in size as possible with staggered three-year terms. The
classification of the board of directors could delay or deter a third party from
acquiring control of Metricom.
We are currently subject to the provisions of Section 203 of the Delaware
General Corporation Law regulating corporate takeovers. Section 203 prevents
certain Delaware corporations, including those whose securities are listed on
the Nasdaq National Market, from engaging, under certain circumstances, in a
"business combination," which includes a merger or sale of more than 10% of the
corporation's assets, with any interested stockholder for three years following
the date that the stockholder became an interested stockholder. An interested
stockholder is a stockholder who acquired 15% or more of the corporation's
outstanding voting stock without the prior approval of the corporation's board
of directors. At the annual meeting of stockholders held on October 15, 1999,
our stockholders elected not to be governed by Section 203. The election will
become effective 12 months after adoption of the election.
The following summaries of certain provisions of the common stock and
preferred stock do not purport to be complete and are subject to, and qualified
in their entirely, by the provisions of our Restated Certificate of
Incorporation and Amended and Restated Bylaws, which are incorporated by
reference into this registration statement of which this prospectus is a part.
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<PAGE> 16
COMMON STOCK
Subject to preferences that may apply to shares of preferred stock
outstanding at the time, the holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available for the payment of
dividends at the times and in the amounts that the board of directors may
determine from time to time. Except as disclosed below under the caption
"Preferred Stock," each stockholder is entitled to one vote for each share of
common stock held on all matters submitted to a vote of stockholders. Cumulative
voting for the election of directors is not provided for in our restated
certificate, which means that the holders of a majority of the shares voted can
elect all of the directors then standing for election (other than directors to
be elected solely by the holders of the series of preferred stock). The common
stock is not entitled to preemptive rights and is not subject to conversion or
redemption. Upon a liquidation, dissolution or winding-up of Metricom, the
assets legally available for distribution to stockholders are distributable
ratably among the holders of the common stock and any participating preferred
stock outstanding at that time after payment of liquidation preferences, if any,
on any outstanding preferred stock and payment of other claims of creditors.
Each outstanding share of common stock is, and all shares of common stock to be
outstanding upon completion of this offering will be validly issued, fully paid
and nonassessable.
The transfer agent and registrar for our common stock is Boston Equiserve.
PREFERRED STOCK
Our Restated Certificate authorizes 80 million shares of preferred stock,
of which 36 million shares are designated Series A1 preferred stock, 36 million
shares are designated Series A2 preferred stock and 8 million shares are not
currently designated. The material terms of the Series A1 and Series A2
preferred stock are summarized below. Our board of directors has the authority
to issue the remaining undesignated shares of preferred stock in additional
series and to fix the rights, preferences, privileges and restrictions of any
new series, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and the
number of shares constituting any series or the designation of such series,
without further vote or action by our stockholders, subject to rights of the
holders of outstanding preferred stock. The preferred stock may have the effect
of delaying, deferring or preventing a change in our control without further
action by our stockholders and may adversely affect the voting and other rights
of the holders of our common stock, including the loss of voting control of
others.
SERIES A1 AND A2 PREFERRED STOCK
Dividends. The holders of shares of each of the Series A1 preferred and
Series A2 preferred have the right to receive cumulative dividends payable, at
our option, in cash or additional shares of Series A1 preferred or Series A2
preferred, as the case may be, at the annual rate of 6.5% of the original issue
price of $10 per share, until November 15, 2002. Dividends payable to the
holders of Series A1 preferred stock will be prior and in preference to any
dividends payable to the holders of common stock.
Voting Rights. For so long as more than 7.5 million shares of each of the
Series A1 preferred and Series A2 preferred are outstanding, the affirmative
vote of the holders of at least a majority of the outstanding shares of each of
the Series A1 and Series A2 preferred will be required to:
- amend any provision of our restated certificate that changes the rights
and preferences of that series so as to adversely affect the rights of
the Series A1 preferred or Series A2 preferred, as the case may be, in a
manner different from other classes or series of stock;
- issue any new class or series of stock ranking senior in liquidation
preference or dividends to the Series A1 preferred or Series A2
preferred, as the case may be;
- issue any debt securities convertible into our equity securities at a
price lower than $10 per share, subject to adjustment for any stock
dividend, split, combination or other similar event;
- redeem or repurchase, under specified circumstances, any series of stock
junior to the Series A1 preferred or Series A2 preferred, as the case
may be; or
- declare or pay any dividend on outstanding common stock, subject to
specified exceptions.
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In addition, for so long as more than 7.5 million shares of either of the
Series A1 preferred or Series A2 preferred are outstanding, the holders of
shares of those series of preferred stock, voting as separate classes, will be
entitled to elect one member of our board of directors to represent each series.
Holders of outstanding shares of Series A1 preferred may waive this right from
time to time and instead designate an observer to attend meetings of the board
of directors.
Liquidation Rights. If we are liquidated, dissolved or wound up, the
holders of Series A1 preferred and holders of Series A2 preferred will be
entitled to be paid out of our assets, before any distribution to the holders of
common stock, an amount equal to the greater of the original issue price plus
accrued but unpaid dividends or the amount the holders would have received if
the shares had been converted to common stock. For this purpose, "liquidation"
includes:
- a consolidation, merger or other reorganization in which our
stockholders prior to the transaction own less than 50% of our voting
power after such transaction or other transaction or series of
transactions to which we are a party in which over 50% of our voting
power is transferred; or
- a sale, lease or other disposition of all or substantially all of our
assets.
Redemption. On November 15, 2009, we must redeem all outstanding shares of
Series A1 and Series A2 preferred. In the event of a change of control or major
acquisition by us, each holder of Series A1 and Series A2 preferred will have
the right to require us to redeem all, but not less than all, of the shares of
preferred stock held by that holder. For purposes of this provision, a "change
of control" means an event by which any person or group, other than Vulcan, MCI
WorldCom and their respective affiliates:
- becomes a beneficial owner of more than 30% of our outstanding equity
securities, or
- acquires the right to elect at least 30% of the board of directors.
For purposes of this provision, a "major acquisition" means the
acquisition by us of more than 50% of the outstanding equity securities or all
or substantially all of the assets of any entity, or our merger with another
entity in which we are the surviving entity, in each case, for equity
consideration exceeding 25% of our outstanding equity securities.
Conversion. Holders of each of the Series A1 and Series A2 preferred have
the right to convert their shares into common stock, subject to the limitation
that Series A1 preferred shares do not begin to become convertible until May
2002. Each share of Series A1 and Series A2 preferred is initially convertible
into one share of common stock. The conversion rates and prices for each of the
Series A1 and Series A2 preferred will be adjusted in the event of any stock
split or combination, dividend payment or distribution on the common stock,
reclassification or other change to the common stock, or reorganization, merger
or sale of assets. Each of the Series A1 and Series A2 preferred will
automatically be converted into shares of common stock in the event that shares
of either series are transferred by the original purchaser to a person other
than Vulcan, MCI WorldCom or their respective affiliates.
PLAN OF DISTRIBUTION
We may sell the securities being offered by this prospectus through
agents, underwriters or dealers.
Agents designated by us from time to time may solicit offers to purchase
the securities offered by this prospectus. Any agent involved in the offer or
sale of those securities may be deemed to be an underwriter under the Securities
Act and we will name that agent and describe any commissions payable by us to
that agent in a prospectus supplement. Any agent appointed by us will be acting
on a reasonable efforts basis for the period of its appointment or, if indicated
in the applicable prospectus supplement, on a firm commitment basis. We may be
obligated under agreements with these agents to indemnify them against civil
liabilities, including liabilities under the Securities Act. These agents may
also engage in transactions with or perform services for us in the ordinary
course of business.
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If we utilize any underwriters in any sale of the securities in respect of
which this prospectus is delivered, we will enter into an underwriting agreement
with those underwriters at the time of sale to them and the names of the
underwriters and the terms of the transaction will be set forth in the
prospectus supplement. That prospectus supplement will be used by the
underwriters to make resales of the securities in respect of which this
prospectus is delivered to the public. We may be obligated under the
underwriting agreements with these underwriters to indemnify them against civil
liabilities, including liabilities under the Securities Act. These underwriters
may also engage in transactions with or perform services for us in the ordinary
course of business.
If we utilize a dealer in any sale of the securities in respect of which
the prospectus is delivered, we will sell the securities to the dealer, as
principal. The dealer may then resell those securities to the public at varying
prices to be determined by the dealer at the time of resale. We may be obligated
under agreements with these dealers to indemnify them against civil liabilities,
including liabilities under the Securities Act. These dealers may also engage in
transactions with or perform services for us in the ordinary course of business.
If so indicated in the applicable prospectus supplement, we will authorize
agents, underwriters or dealers to solicit offers from purchasers to purchase
the securities from us at the public offering price set forth in the prospectus
supplement under delayed delivery contracts providing for payment and delivery
of those securities on a specified date in the future. These delayed delivery
contracts will be subject to only those conditions set forth in the prospectus
supplement, and we will set forth the commission payable for solicitation of
these offers in the prospectus supplement.
LEGAL MATTERS
Cooley Godward LLP, San Francisco, California will provide us with an
opinion as to the legality of the securities we are offering. Weil, Gotshal &
Manges LLP, New York, New York, will serve as counsel to underwriters, dealers
or agents purchasing any of the securities we are offering by this prospectus.
EXPERTS
The audited financial statements incorporated by reference in this
prospectus and the schedule included elsewhere in the registration statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
WHERE YOU CAN GET MORE INFORMATION
We are a reporting company and file annual, quarterly and current reports,
proxy statements and other information with the SEC. We have filed with the SEC
a registration statement on Form S-3 under the Securities Act with respect to
the shares of common stock and debt securities we are offering under this
prospectus. This prospectus does not contain all of the information set forth in
the registration statement and the exhibits to the registration statement. For
further information with respect to us and the securities we are offering under
this prospectus, we refer you to the registration statement and the exhibits and
schedules filed as a part of the registration statement. You may read and copy
the registration statement, as well as our reports, proxy statements and other
information at the SEC's public reference rooms at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as at the SEC's regional offices at 500
West Madison Street, Suite 1400, Chicago, Illinois, 60661 and at Seven World
Trade Center, New York, New York 10048. You can request copies of these
documents by writing to the SEC and paying a fee for the copying cost. Please
call the SEC at 1-800-SEC-0330 for more information about the operation of the
public reference rooms. Our SEC filings are also available at the SEC's web site
at "http://www.sec.gov." In addition, you can read and copy our SEC filings at
the office of the National Association of Securities Dealers, Inc at 1735 K
Street, N.W., Washington, D.C. 20006.
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The SEC allows us to "incorporate by reference" information that we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus. This prospectus and the information that
we file later with the SEC may update and supersede the information incorporated
by reference. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the termination of the offering of
all securities to which this prospectus relates:
- Annual Report on Form 10-K for the year ended December 31, 1998, as
amended;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
- Quarterly Report on Form 10-Q for the quarter ended June 30, 1999;
- Quarterly Report on Form 10-Q for the quarter ended September 30, 1999;
- Current Reports on Form 8-K filed with the SEC on July 9, 1999 and
November 5, 1999; and
- The description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on February 28, 1992.
You may request of copy of these filings at no cost, by writing or
telephoning us at the following address:
Corporate Secretary
Metricom, Inc.
980 University Avenue
Los Gatos, California 94030
(408) 399-8200
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated costs and expenses, other
than the underwriting discounts and commissions, payable by the registrant in
connection with the offering of the Securities being registered. All the amounts
shown are estimates, except for the registration fee.
<TABLE>
<S> <C>
SEC Registration Fee....................................... $333,600
*Accounting fees and expenses...............................
*Legal fees and expenses....................................
*Miscellaneous..............................................
--------
*Total................................................. $
========
</TABLE>
- ---------------
* To be provided by amendment.
Metricom will pay all fees and expenses associated with filing this
registration statement.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law, or the DGCL,
authorizes a court to award or a corporation's board of directors to grant
indemnification to directors and officers in terms sufficiently broad to permit
such indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. Our
Restated Certificate of Incorporation and Restated Bylaws provide for mandatory
indemnification of our directors and permissive indemnification of officers,
employees and other agents to the maximum extent permitted by the DGCL. We have
entered into indemnification agreements with our directors. The indemnification
agreements provide the registrant's directors with further indemnification to
the maximum extent permitted by the DGCL. We also have obtained directors and
officers insurance to insure our directors and officers against certain
liabilities, including liabilities under the securities laws.
The form of underwriting agreement filed as Exhibit 1.1 to the
registration statement provides for indemnification by the underwriters of the
registrant and its officers and directors for certain liabilities under the
Securities Act or otherwise.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement.*
4.1 Restated Certificate of Incorporation.
4.2 Form of Senior Debt Indenture to be entered into between
Metricom and a trustee to be named.*
4.3 Form of Subordinated Debt Indenture to be entered between
Metricom and a trustee to be named.*
5.1 Opinion of Cooley Godward llp.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).*
</TABLE>
II-1
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
24.1 Power of Attorney (included on signature page).
25.1 Statement of Eligibility and Qualification on Form T-1 of
trustee to act as trustee under indenture.*
</TABLE>
- ---------------
* To be filed by amendment or as an exhibit to a report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934.
ITEM 17. UNDERTAKINGS
The undersigned registrant undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 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 of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the provisions described in Item 15 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
Securities 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 Securities
Act and will be governed by the final adjudication of such issue.
The undersigned registrant undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
The undersigned registrant further undertakes that:
(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 of 1933,
(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. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of a
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
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;
II-2
<PAGE> 22
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Forms S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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; and
(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.
II-3
<PAGE> 23
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-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Gatos, State of California, on November 19,
1999.
Metricom, Inc.
By: /s/ TIMOTHY A. DREISBACH
------------------------------------
Timothy A. Dreisbach
President and Chief Executive
Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Timothy A. Dreisbach, Dale W. Marquart
and James E. Wall, and each or any one of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments and registration
statements filed pursuant to Rule 462 to this registration statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes or substitute, may lawfully
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 below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ TIMOTHY A. DREISBACH President and Chief November 19, 1999
- --------------------------------------------------- Executive Officer (Principal
Timothy A. Dreisbach Executive Officer) and
Director
/s/ JAMES E. WALL Chief Financial Officer November 19, 1999
- --------------------------------------------------- (Principal Financial and
James E. Wall Accounting Officer)
/s/ ROBERT S. CLINE Director November 19, 1999
- ---------------------------------------------------
Robert S. Cline
/s/ RALPH DERRICKSON Director November 18, 1999
- ---------------------------------------------------
Ralph Derrickson
/s/ ROBERT P. DILWORTH Director November 19, 1999
- ---------------------------------------------------
Robert P. Dilworth
/s/ JUSTIN L. JASCHKE Director November 19, 1999
- ---------------------------------------------------
Justin L. Jaschke
/s/ DAVID MOORE Director November 18, 1999
- ---------------------------------------------------
David Moore
/s/ WILLIAM D. SAVOY Director November 19, 1999
- ---------------------------------------------------
William D. Savoy
</TABLE>
II-4
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement.*
4.1 Restated Certificate of Incorporation.
4.2 Form of Senior Debt Indenture to be entered into between
Metricom and a trustee to be named.*
4.3 Form of Subordinated Debt Indenture to be entered between
Metricom and a trustee to be named.*
5.1 Opinion of Cooley Godward LLP.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).*
24.1 Power of Attorney (included on signature page).
25.1 Statement of Eligibility and Qualification on Form T-1 of
trustee to act as trustee under indenture.*
</TABLE>
- ---------------
* To be filed by amendment or as an exhibit to a report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934.
<PAGE> 1
EXHIBIT 4.1
RESTATED CERTIFICATE OF INCORPORATION
OF
METRICOM, INC.
Timothy A. Dreisbach and Dale W. Marquart hereby certify that:
ONE: The original name of this corporation is Metricom (Delaware), Inc.,
and the date of filing the original Certificate of Incorporation of this
corporation with the Secretary of State of the State of Delaware is October 24,
1991.
TWO: They are the duly elected and acting President and Secretary,
respectively, of Metricom, Inc., a Delaware corporation.
THREE: The Certificate of Incorporation of this corporation is hereby
amended and restated to read as follows:
I.
The name of the corporation is METRICOM, INC. (the "Corporation" or the
"Company").
II.
The address of the registered office of the Corporation in the State of
Delaware is 1013 Centre Road, City of Wilmington, County of New Castle, and the
name of the registered agent of the corporation in the State of Delaware at such
address is The Prentice-Hall Corporation System, Inc.
III.
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
IV.
A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the Corporation is authorized to issue is two hundred thirty
million (230,000,000) shares, one hundred fifty million (150,000,000) shares of
which shall be Common Stock (the "Common Stock") and eighty million (80,000,000)
shares of which shall be Preferred Stock (the "Preferred Stock"). The Preferred
Stock shall have a par value of one tenth of one cent ($0.001) per share and the
Common Stock shall have a par value of one tenth of one cent ($0.001) per share.
B. The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares of Common Stock then outstanding)
by the affirmative vote of the holders of a majority of the stock of the
Corporation (voting together on an as-if-converted basis).
1.
<PAGE> 2
C. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, within the limitations and
restrictions stated in this Restated Certificate of Incorporation, to fix or
alter the rights, preferences, privileges and restrictions granted to or imposed
upon 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 prior or 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.
D. Thirty-six million (36,000,000) of the authorized shares of Preferred
Stock are hereby designated "Series A1 Preferred Stock" (the "Series A1
Preferred") and thirty-six million (36,000,000) of the authorized shares of
Preferred Stock are hereby designated "Series A2 Preferred" (the "Series A2
Preferred").
E. The rights, preferences, privileges, restrictions and other matters
relating to the Series A1 Preferred are as follows:
1. DIVIDEND RIGHTS.
a. The holders of record of shares of Series A1 Preferred shall
be entitled to receive, when and as declared by the Board of Directors out of
funds legally available for the payment of dividends, cumulative dividends
payable, at the option of the Company, in cash or additional shares of Series A1
Preferred, at the annual rate per share of six and one-half percent (6.5%) of
the Original Issue Price of the Series A1 Preferred (as adjusted for any stock
dividend, split, combination or other similar event with respect to such
shares). Dividends shall be payable annually, in arrears, on the 15th day of
December in each year (each such date being referred to herein as a "Series A1
Preferred Dividend Payment Date"), commencing on the first Series A1 Preferred
Dividend Payment Date which is at least fifteen (15) days after the date that
the first share of Series A1 Preferred is issued. The rights of the holders of
Series A1 Preferred to additional cumulative dividends under this paragraph (a)
shall terminate on the third anniversary of the date that the first share of
Series A1 Preferred was issued (the "Series A1 Preferred Dividend Termination
Date"). The "Original Issue Price" of the Series A1 Preferred shall be ten
dollars ($10.00). Dividends payable to the holders of the Series A1 Preferred
shall be payable prior and in preference to any dividends to the holders of
Series A2 Preferred and Common Stock.
b. Dividends payable pursuant to paragraph (a) of this Section
1 shall begin to accrue on each share of Series A1 Preferred on a daily basis
and shall be cumulative from the date that the first share of Series A1
Preferred is issued (the "Series A1 Preferred Original Issue Date"), whether or
not earned or declared. The amount of dividends so payable shall be determined
on the basis of twelve (12) 30-day months and a 360-day year. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A1
Preferred 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 of the Series A1 Preferred at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of
2.
<PAGE> 3
Series A1 Preferred entitled to receive payment of a dividend declared thereon,
which record date shall be no more than sixty (60) days prior to the date fixed
for the payment thereof.
c. Unless accrued dividends payable pursuant to paragraph (a)
on all outstanding shares of Series A1 Preferred shall have been fully paid for
all past dividend periods and the full dividends thereon payable pursuant to
paragraph (a) for the dividend period current at the time shall have been paid
or declared and funds set apart therefor, no dividend shall be paid upon or
declared or set apart for the Series A2 Preferred or (except a dividend payable
in Common Stock) for the Common Stock (collectively, the "Junior Stock").
d. Following the Series A1 Preferred Dividend Termination Date,
dividends shall be payable on the Series A1 Preferred only when, as and if
declared by the Board of Directors. Except as otherwise set forth in this
Section 1, holders of Series A1 Preferred shall not be entitled to receive any
dividends, whether in cash or property.
2. VOTING RIGHTS.
a. GENERAL RIGHTS. The Series A1 Preferred shall not have any
voting rights, except as otherwise provided herein or as required by law.
b. SEPARATE VOTES OF SERIES A1 PREFERRED. For so long as more
than seven million five hundred thousand (7,500,000) shares of Series A1
Preferred (subject to adjustment for any stock dividend, split, combination or
other similar event with respect to such shares) remain outstanding, in addition
to any other vote or consent required herein or by law, the vote or written
consent of the holders of at least a majority of the outstanding Series A1
Preferred shall be necessary for effecting or validating the following actions:
(i) Any amendment, alteration, or repeal of any provision
of the Restated Certificate of Incorporation of the Company (including any
filing of a Certificate of Designation), that alters or changes the voting
powers, preferences, or other special rights or privileges, or restrictions of
the Series A1 Preferred so as to affect the Series A1 Preferred adversely in a
manner different from other classes or series of stock;
(ii) Any issuance of any new class or series of stock or any
other equity securities of the Company, in each case ranking senior to the
Series A1 Preferred in right of liquidation preference or dividends or any
issuance of debt securities of the Company convertible into equity securities of
the Company at a conversion price below the Original Issue Price of the Series
A1 Preferred (as adjusted for any stock dividend, split, combination or other
similar event with respect to such shares);
(iii) Any redemption or repurchase of Junior Stock, except
for (A) acquisitions of Junior Stock (not to exceed one percent (1%) per year of
the total of the then-outstanding Common Stock of the Company, determined on a
fully diluted basis) by the Company at cost (plus an interest factor not to
exceed ten percent (10%) per annum if applicable), pursuant to compensatory
plans or agreements which permit the Company to
3.
<PAGE> 4
repurchase such shares upon termination of services to the Company or (B)
redemptions of the Series A2 Preferred pursuant to the terms of Section F.5.
hereof; or
(iv) Any declaration or payment of any dividend on
outstanding Common Stock, unless funds legally available therefor are at least
equal to the net operating income of the Company reported in its audited
financial statements for its most recent fiscal year plus net operating income
of the Company reported in its unaudited financial statements for any subsequent
interim periods.
c. ELECTION OF BOARD OF DIRECTORS. For so long as more than
seven million five hundred thousand (7,500,000) shares of Series A1 Preferred
remain outstanding (as adjusted for any stock dividend, split, combination or
other similar event with respect to such shares) the holders of Series A1
Preferred, voting as a separate class, shall be entitled to elect one (1) member
of the Company's Board of Directors and to remove from office such director and
to fill any vacancy caused by the resignation, death or removal of such
director; provided, however, that the holders of the outstanding shares of
Series A1 Preferred may waive such right from time to time and instead may
designate an observer who shall have the right to receive reasonable notice of
and to attend all meetings of the Company's Board of Directors and the
Committees thereof, other than any committee or other meeting of the Independent
Directors (as defined in Section V.A. hereof) or any meeting at which the Board
or any Committee thereof may discuss or consider any matter for which attendance
of such observer would not be in the best interests of the stockholders of the
Company as determined by the Company's Chief Executive Officer.
3. LIQUIDATION RIGHTS.
a. Upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, before any distribution or payment
shall be made to the holders of any Junior Stock, the holders of Series A1
Preferred shall be entitled to be paid out of the assets of the Company an
amount per share of Series A1 Preferred equal to the greater of (i) the Series
A1 Preferred Original Issue Price, plus all accrued but unpaid dividends on the
Series A1 Preferred (as adjusted for any stock dividend, split, combination, or
other similar event with respect to such shares) or (ii) the amount such holder
would have received if such share had been converted to Common Stock pursuant to
Section 4 hereof, for each share of Series A1 Preferred held by such holders.
If, upon any such liquidation, distribution or winding up, the assets of the
Company shall be insufficient to make payment in full to all holders of Series
A1 Preferred of the liquidation preference set forth in this Section 3(a), then
such assets shall be distributed among the holders of Series A1 Preferred at the
time outstanding, ratably in proportion to the full amounts to which each such
holder would otherwise be entitled.
b. After the payment of the full liquidation preference of the
Series A1 Preferred as set forth in Section 3(a) above, the remaining assets of
the Company legally available for distribution, if any, shall be distributed to
the holders of Junior Stock in accordance with this Restated Certificate of
Incorporation.
c. The following events shall be considered a liquidation under
this Section:
4.
<PAGE> 5
(i) any consolidation or merger of the Company with or into
any other corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of the Company immediately prior to
such consolidation, merger or reorganization, own less than fifty percent (50%)
(on an as-converted basis, assuming conversion of all outstanding shares of
Series A1 and Series A2 Preferred) of the Company's voting power immediately
after such consolidation, merger or reorganization, or any transaction or series
of related transactions to which the Company is a party in which in excess of
fifty percent (50%) (on an as-converted basis, assuming conversion of all
outstanding shares of Series A1 and Series A2 Preferred) of the Company's voting
power is transferred, excluding any consolidation or merger effected exclusively
to change the domicile of the Company (an "Acquisition"); or
(ii) a sale, lease or other disposition of all or
substantially all of the assets of the Company (an "Asset Transfer").
(iii) In any of such events, if the consideration received
by the Company is other than cash, its value will be deemed its fair market
value as determined in good faith by the Board of Directors. Any securities
shall be valued as follows:
(a) Securities not subject to investment letter or
other similar restrictions on free marketability covered by paragraph (b) below:
(1) If traded on a securities exchange or through
the Nasdaq National Market, the value shall be deemed to be the average of the
closing prices of the securities on such quotation system over the 30-day period
ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the 30-day period ending three (3) days prior to
the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as determined by the Board of
Directors.
(b) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a stockholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in paragraphs (a)(1), (2) or (3) to reflect the
approximate fair market value thereof, as determined by the Board of Directors.
4. CONVERSION.
The Series A1 Preferred shall be subject to the following
provisions with respect to the conversion of the Series A1 Preferred into shares
of Common Stock:
a. VOLUNTARY CONVERSION. Subject to and in compliance with the
provisions of this Section 4, any shares of Series A1 Preferred may, at any
time, at the option of the holder, be converted into fully paid and
nonassessable shares of Common Stock, subject to
5.
<PAGE> 6
the following limitations: no shares of Series A1 Preferred shall be convertible
prior to the second anniversary of the Series A1 Preferred Original Issue Date.
Commencing on the date that is six (6) months following such second anniversary,
twenty-five percent (25%) of the shares of Series A1 Preferred issued on the
Series A1 Preferred Original Issue Date shall become convertible into Common
Stock and, on each 6-month anniversary thereafter, an additional twenty-five
percent (25%) shall become convertible into Common Stock, until all such shares
shall have become convertible into Common Stock. Such right to convert shall be
allocated among the holders of Series A1 Preferred ratably in accordance with
their holdings of Series A1 Preferred. Notwithstanding the above, the foregoing
limitations shall terminate and be of no further force or effect and all shares
of the Series A1 Preferred shall become immediately convertible at the option of
the holder immediately prior to the occurrence of a Change in Control of the
Company or a Major Acquisition by the Company (as defined elsewhere in this
Section 4). The number of shares of Common Stock to which a holder of Series A1
Preferred shall be entitled upon conversion shall be the product obtained by
multiplying the "Series A1 Preferred Conversion Rate" then in effect (determined
as provided in Section 4(b)) by the number of shares of Series A1 Preferred
being converted.
b. SERIES A1 PREFERRED CONVERSION RATE. The conversion rate in
effect at any time for conversion of the Series A1 Preferred (the "Series A1
Preferred Conversion Rate") shall be the quotient obtained by dividing the
Original Issue Price of the Series A1 Preferred by the "Series A1 Preferred
Conversion Price," calculated as provided in Section 4(c).
c. SERIES A1 PREFERRED CONVERSION PRICE. The conversion price
for the Series A1 Preferred shall initially be the Original Issue Price of the
Series A1 Preferred (the "Series A1 Preferred Conversion Price"). Such initial
Series A1 Preferred Conversion Price shall be adjusted from time to time in
accordance with this Section 4. All references to the Series A1 Preferred
Conversion Price herein shall mean the Series A1 Preferred Conversion Price as
so adjusted.
d. MECHANICS OF CONVERSION. Each holder of Series A1 Preferred
who desires to convert the same into shares of Common Stock pursuant to this
Section 4 shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Company or any transfer agent for the Series A1
Preferred, and shall give written notice to the Company at such office that such
holder elects to convert the same. Such notice shall state the number of shares
of Series A1 Preferred being converted. Thereupon, the Company shall promptly
issue and deliver at such office to such holder a certificate or certificates
for the number of shares of Common Stock to which such holder is entitled and
shall promptly pay (i) any accrued but unpaid dividends on the shares of Series
A1 Preferred being converted and (ii) the value of any fractional share of
Common Stock otherwise issuable to any holder of Series A1 Preferred in cash (at
the Common Stock's fair market value determined by the Board of Directors as of
the date of conversion). Such conversion shall be deemed to have been made at
the close of business on the date of such surrender of the certificates
representing the shares of Series A1 Preferred to be converted, and the person
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder of such shares of Common
Stock on such date.
6.
<PAGE> 7
e. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Company
shall at any time or from time to time after the Series A1 Preferred Original
Issue Date effect a subdivision of the outstanding Common Stock without a
corresponding subdivision of the Preferred Stock, the Series A1 Preferred
Conversion Price in effect immediately before that subdivision shall be
proportionately decreased. Conversely, if the Company shall at any time or from
time to time after the Original Issue Date combine the outstanding shares of
Common Stock into a smaller number of shares without a corresponding combination
of the Preferred Stock, the Series A1 Preferred Conversion Price in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this Section 4(e) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
f. ADJUSTMENT FOR COMMON STOCK DIVIDENDS AND DISTRIBUTIONS. If
the Company at any time or from time to time after the Original Issue 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, in each such event the Series A1 Preferred Conversion
Price that is then in effect shall be decreased as of the time of such issuance
or, in the event such record date is fixed, as of the close of business on such
record date, by multiplying the Series A1 Preferred Conversion Price then in
effect by a fraction (i) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and (ii) the denominator
of which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date plus the number of shares of Common Stock issuable in payment of
such dividend or distribution; provided, however, that if such record date is
fixed and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Series A1 Preferred Conversion Price shall
be recomputed accordingly as of the close of business on such record date and
thereafter the Series A1 Preferred Conversion Price shall be adjusted pursuant
to this Section 4(f) to reflect the actual payment of such dividend or
distribution.
g. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION.
If at any time or from time to time after the Original Issue Date, the Common
Stock issuable upon the conversion of the Series A1 Preferred is changed into
the same or a different number of shares of any class or classes of stock or
other securities or property, whether by recapitalization, reclassification or
otherwise (other than an Acquisition or Asset Transfer as defined in Section
3(c) or a subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided for elsewhere
in this Section 4), in any such event each holder of Series A1 Preferred shall
have the right thereafter to convert such stock into the kind and amount of
stock and other securities and property receivable upon such recapitalization,
reclassification or other change by holders of the maximum number of shares of
Common Stock into which such shares of Series A1 Preferred could have been
converted immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.
h. REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS.
If at any time or from time to time after the Series A1 Preferred Original Issue
Date, there is a
7.
<PAGE> 8
capital reorganization of the Common Stock or a merger or consolidation of the
Company with or into, or a sale of all or substantially all of the Company's
assets to, another person, corporation or other entity (other than an
Acquisition or Asset Transfer as defined in Section 3(c) or a recapitalization,
subdivision, combination, reclassification, exchange or substitution of shares
provided for elsewhere in this Section 4), as a part of such capital
reorganization, merger, consolidation or sale of assets, provision shall be made
so that the holders of the Series A1 Preferred shall thereafter be entitled to
receive upon conversion of the Series A1 Preferred the number of shares of stock
or other securities or property of the Company to which a holder of the number
of shares of Common Stock deliverable upon conversion would have been entitled
on such capital reorganization, subject to adjustment in respect of such stock
or securities by the terms thereof. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 4 with
respect to the rights of the holders of Series A1 Preferred after the capital
reorganization to the end that the provisions of this Section 4 (including
adjustment of the Series A1 Preferred Conversion Price then in effect and the
number of shares issuable upon conversion of the Series A1 Preferred) shall be
applicable after that event and be as nearly equivalent as practicable.
i. CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment of the Series A1 Preferred Conversion Price for the number of
shares of Common Stock or other securities issuable upon conversion of the
Series A1 Preferred, if the Series A1 Preferred is then convertible pursuant to
this Section 4, the Company, at its expense, shall compute such adjustment or
readjustment in accordance with the provisions hereof and prepare a certificate
showing such adjustment or readjustment, and shall mail such certificate, by
first class mail, postage prepaid, to each registered holder of Series A1
Preferred at the holder's address as shown in the Company's books. The
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (i) the Series A1 Preferred Conversion Price at the time in effect,
and (ii) the type and amount, if any, of other property which at the time would
be received upon conversion of the Series A1 Preferred.
j. NOTICES OF RECORD DATE. Upon (i) any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or (ii) any Acquisition (as defined in Section 3(c)) or
other capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any merger or
consolidation of the Company with or into any other corporation, or any Asset
Transfer (as defined in Section 3(c)), or any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the Company shall mail to
each holder of Series A1 Preferred at least ten (10) days prior to the earlier
of the record date specified therein or the date on which any such action is to
become effective (or such shorter period approved by a majority of the
outstanding Series A1 Preferred) a notice specifying (A) the date on which any
such record is to be taken for the purpose of such dividend or distribution and
a description of such dividend or distribution, (B) the date on which any such
Acquisition, reorganization, reclassification, transfer, consolidation, merger,
Asset Transfer, dissolution, liquidation or winding up is expected to become
effective, and (C) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities) shall be entitled to exchange
their shares of Common Stock (or other securities) for securities or
8.
<PAGE> 9
other property deliverable upon such Acquisition, reorganization,
reclassification, transfer, consolidation, merger, Asset Transfer, dissolution,
liquidation or winding up.
k. AUTOMATIC CONVERSION.
(i) Subject to Section 4(a), each share of Series A1
Preferred shall automatically be converted into shares of Common Stock, based on
the then-effective Series A1 Preferred Conversion Price, immediately upon the
transfer of such share by the original purchaser of such share from the Company
to a transferee that is not a Purchaser or an Affiliate of a Purchaser (as such
terms are defined in the Preferred Stock Purchase Agreement, dated as of June
20, 1999, between the Company and the Purchasers named therein). Upon such
automatic conversion, any accrued but unpaid dividends shall be paid in
accordance with the provisions of Section 4(d).
(ii) Subject to Section 4(a), upon the occurrence of the
event specified in Section 4(k)(i) above, the applicable shares of Series A1
Preferred shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the Company or its transfer agent; provided, however,
that the Company shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such conversion unless the certificates
evidencing such shares of Series A1 Preferred are either delivered to the
Company or its transfer agent as provided below, or the holder notifies the
Company or its transfer agent that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection with such certificates. Upon
the occurrence of such automatic conversion of the Series A1 Preferred, the
holders of Series A1 Preferred shall surrender the certificates representing
such shares at the office of the Company or any transfer agent for the Series A1
Preferred. Thereupon, there shall be issued and delivered to such holder
promptly at such office and in its name as shown on such surrendered certificate
or certificates, a certificate or certificates for the number of shares of
Common Stock into which the shares of Series A1 Preferred surrendered were
convertible on the date on which such automatic conversion occurred, and any
accrued but unpaid dividends shall be paid in accordance with the provisions of
Section 4(d).
l. FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon conversion of Series A1 Preferred. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Series A1 Preferred by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the issuance of
any fractional share. If, after the aforementioned aggregation, the conversion
would result in the issuance of any fractional share, the Company shall, in lieu
of issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board
of Directors) on the date of conversion.
m. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A1 Preferred,
9.
<PAGE> 10
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Series A1
Preferred. If at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all then outstanding
shares of the Series A1 Preferred, the Company will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
n. NOTICES. Any notice required by the provisions of this
Section 4 shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified, (ii) when sent by confirmed telex
or facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (iv)
one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All notices
shall be addressed to each holder of record at the address of such holder
appearing on the books of the Company.
o. PAYMENT OF TAXES. The Company will pay all taxes (other than
taxes based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Series A1 Preferred, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series A1
Preferred so converted were registered.
p. NO DILUTION OR IMPAIRMENT. Without the consent of the
holders of then outstanding Series A1 Preferred as required under Section 2(b),
the Company shall not amend its Restated Certificate of Incorporation or
participate in any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or take any other voluntary action, for
the purpose of avoiding or seeking to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company, but shall at
all times in good faith assist in carrying out all such action as may be
reasonably necessary or appropriate in order to protect the conversion rights of
the holders of the Series A1 Preferred against dilution or other impairment.
5. REDEMPTION.
a. The Company shall redeem, from any funds legally available
therefor, all of the outstanding shares of Series A1 Preferred on the date that
is the tenth anniversary of the Series A1 Preferred Original Issue Date (the
"Series A1 Preferred Redemption Date"). The Company shall effect such redemption
on the Series A1 Preferred Redemption Date by paying in cash, in exchange for
the shares of Series A1 Preferred to be redeemed, a sum equal to the Original
Issue Price per share of Series A1 Preferred (as adjusted for any stock
dividend, split, combination or other similar event with respect to such
shares), plus all accrued but unpaid dividends on such shares (the "Series A1
Preferred Redemption Price").
b. Within a reasonable time following a "Change in Control" of
the Company or a "Major Acquisition" by the Company, the Company shall provide
written notice
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<PAGE> 11
(the "A1 Offer Notice"), by first class mail, postage prepaid, to each holder of
record (at the close of business on the business day next preceding the day on
which notice is given) of Series A1 Preferred offering to redeem such shares at
the option of the holder thereof and specifying a date not less than twenty (20)
nor more than forty (40) days following the date of such notice on which the
shares of Series A1 Preferred shall be redeemed (the "Optional Series A1
Preferred Redemption Date"). Each holder of Series A1 Preferred shall thereafter
have the right to require the Company to redeem all, but not less than all, of
the shares of Series A1 Preferred then held by such holder. A holder may
exercise its right to require redemption of the Series A1 Preferred held by it
by notifying the Company in writing, within ten (10) days following the date of
the A1 Offer Notice by the Company, of its intent to exercise its right. The
Company shall redeem, on the Optional Series A1 Preferred Redemption Date, all
the shares of Series A1 Preferred of holders who have timely elected to
participate in the redemption. The Company shall effect such redemption on the
Optional Series A1 Preferred Redemption Date by paying in cash, in exchange for
the shares of Series A1 Preferred to be redeemed, a sum per share equal to one
hundred and one percent (101%) of the Original Issue Price of the Series A1
Preferred (as adjusted for any stock dividend, split, combination or other
similar event with respect to such shares), plus all accrued but unpaid
dividends on such shares (the "Optional Series A1 Preferred Redemption Price").
For the purposes hereof, a "Change of Control" of the Company shall mean an
event or series of related events as a result of which any "person" or "group"
(as such terms are used in Sections 13(d)(3) and 14(d) of the Securities
Exchange Act of 1934 as amended (the "Exchange Act")), other than Vulcan
Ventures Incorporated, MCI WorldCom, Inc. and their respective affiliates, (i)
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act) of more than thirty percent (30%) of the outstanding equity
securities of the Company (determined on a fully diluted basis) or (ii) acquires
the right to elect at least thirty percent (30%) of the Board of Directors of
the Company. For the purposes hereof, a "Major Acquisition" by the Company shall
mean the acquisition by the Company of more than fifty percent (50%) of the
outstanding equity securities or all or substantially all of the assets of any
corporation or other entity or the merger of the Company with another entity in
which the Company is the surviving entity, in each case, in consideration of the
issuance of equity securities of the Company which exceed, in the aggregate,
twenty-five percent (25%) of the outstanding equity securities of the Company,
determined on a fully diluted basis; provided, however, that a Major Acquisition
shall not include any acquisition of equity securities or assets of any entity
of which the Company owned, at the Series A1 Preferred Original Issue Date, at
least fifty percent (50%) of its outstanding equity securities or assets.
c. As used herein and in Sections 5(d) and 5(e) below, the term
"A1 Redemption Date" shall refer to each of "Series A1 Preferred Redemption
Date" and the "Optional Series A1 Preferred Redemption Date," and the term "A1
Redemption Price" shall refer to each of "Series A1 Preferred Redemption Price"
and the "Optional Series A1 Preferred Redemption Price." At least twenty (20)
but no more than forth (40) days prior to each Series A1 Preferred Redemption
Date, written notice shall be mailed, first class postage prepaid, to each
holder of record (at the close of business on the business day next preceding
the day on which notice is given) of the Series A1 Preferred to be redeemed, at
the address last shown on the records of the Company for such holder, notifying
such holder of the redemption to be effected, specifying the number of shares to
be redeemed from such holder, the A1 Redemption
11.
<PAGE> 12
Date, the A1 Redemption Price, the place at which payment may be obtained and
calling upon such holder to surrender to the Company, in the manner and at the
place designated, his certificate or certificates representing the shares to be
redeemed (the "A1 Redemption Notice"). Except as provided in Section 5(d), on or
after the A1 Redemption Date, each holder of Series A1 Preferred to be redeemed
shall surrender to the Company the certificate or certificates representing such
shares, in the manner and at the place designated in the A1 Redemption Notice or
A1 Offer Notice, and thereupon the A1 Redemption Price of such shares shall be
payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be
canceled. In the event less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.
d. From and after the A1 Redemption Date, unless there shall
have been a default in payment of the A1 Redemption Price, all rights of the
holders of shares of Series A1 Preferred designated for redemption in the A1
Redemption Notice as holders of Series A1 Preferred (except the right to receive
the A1 Redemption Price without interest upon surrender of their certificate or
certificates) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Company or be deemed to be
outstanding for any purpose whatsoever. If the funds of the Company legally
available for redemption of shares of Series A1 Preferred on any A1 Redemption
Date are insufficient to redeem the total number of shares of Series A1
Preferred to be redeemed on such date, those funds which are legally available
will be used to redeem the maximum possible number of such shares ratably among
the holders of such shares to be redeemed based upon their holdings of Series A1
Preferred. The shares of Series A1 Preferred not redeemed shall remain
outstanding and entitled to all the rights and preferences provided herein. If
any of the A1 Redemption Price shall remain unpaid on the A1 Redemption Date,
interest shall accrue on such unpaid amounts at the rate of eighteen percent
(18%) per annum or, if lower, at the highest rate permitted by law. At any time
thereafter when additional funds of the Company are legally available for the
redemption of shares of Series A1 Preferred, such funds will immediately be used
to redeem the balance of the shares which the Company has become obliged to
redeem on any A1 Redemption Date, but which it has not redeemed, and to pay any
interest thereon. No payment of the A2 Redemption Price or any interest thereon
shall be made so long as any of the A1 Redemption Price or any interest thereon
shall remain unpaid.
e. On or prior to each A1 Redemption Date, the Company shall
deposit the A1 Redemption Price of all shares of Series A1 Preferred designated
for redemption in the A1 Redemption Notice and not yet redeemed with a bank or
trust corporation having aggregate capital and surplus in excess of $100,000,000
as a trust fund for the benefit of the respective holders of the shares
designated for redemption and not yet redeemed, with irrevocable instructions
and authority to the bank or trust corporation to pay the A1 Redemption Price
for such shares to their respective holders on or after the A1 Redemption Date
upon receipt of notification from the Company that such holder has surrendered
his share certificate to the Company pursuant to Section 5(d) above. As of the
A1 Redemption Date, the deposit shall constitute full payment of the shares to
their holders, and from and after the A1 Redemption Date the shares so called
for redemption shall be redeemed and shall be deemed to be no longer
outstanding, and the holders thereof shall cease to be stockholders with respect
to such shares
12.
<PAGE> 13
and shall have no rights with respect thereto except the rights to receive from
the bank or trust corporation payment of the A1 Redemption Price of the shares,
without interest, upon surrender of their certificates therefor. Such
instructions shall also provide that any funds deposited by the Company pursuant
to this Section 5(e) for the redemption of shares thereafter converted into
shares of the Company's Common Stock pursuant to Section 4 hereof prior to the
A1 Redemption Date shall be returned to the Company forthwith upon such
conversion. The balance of any funds deposited by the Company pursuant to this
Section 5(e) remaining unclaimed at the expiration of two (2) years following
the A1 Redemption Date shall thereafter be returned to the Company upon its
request expressed in a resolution of its Board of Directors.
6. NO REISSUANCE OF SERIES A1 PREFERRED.
No share or shares of Series A1 Preferred acquired by the
Company by reason of redemption, purchase, conversion or otherwise shall be
reissued, and the Board of Directors is authorized pursuant to Section 243 of
the Delaware General Corporation Law to retire any such share or shares. The
retirement of any such share or shares shall not reduce the total authorized
number of shares of Preferred Stock.
F. The rights, preferences, privileges, restrictions and other matters
relating to the Series A2 Preferred are as follows:
1. DIVIDEND RIGHTS.
a. The holders of record of shares of Series A2 Preferred shall
be entitled to receive, when and as declared by the Board of Directors out of
funds legally available for the payment of dividends, cumulative dividends
payable, at the option of the Company, in cash or additional shares of Series A2
Preferred, at the annual rate per share of six and one-half percent (6.5%) of
the Original Issue Price of the Series A2 Preferred (as adjusted for any stock
dividend, split, combination or other similar event with respect to such
shares). Dividends shall be payable annually, in arrears, on the 15th day of
December in each year (each such date being referred to herein as a "Series A2
Preferred Dividend Payment Date"), commencing on the first Series A2 Preferred
Dividend Payment Date which is at least fifteen (15) days after the date that
the first share of Series A2 Preferred is issued. The rights of the holders of
Series A2 Preferred to additional cumulative dividends under this paragraph (a)
shall terminate on the third anniversary of the date that the first share of
Series A2 Preferred was issued (the "Series A2 Preferred Termination Date"). The
"Original Issue Price" of the Series A2 Preferred shall be ten dollars ($10.00).
Dividends payable to the holders of the Series A1 Preferred shall be prior and
in preference to any dividends payable to the holders of Series A2 Preferred,
and dividends payable to the holders of Series A2 Preferred shall be prior and
in preference to any dividends payable to the holders of Common Stock.
b. Dividends payable pursuant to paragraph (a) of this Section
1 shall begin to accrue on each share of Series A2 Preferred on a daily basis
and shall be cumulative from the date that the first share of Series A2
Preferred is issued (the "Series A2 Preferred Original Issue Date"), whether or
not earned or declared. The amount of dividends so payable shall be determined
on the basis of twelve (12) 30-day months and a 360-day year. Accrued but
13.
<PAGE> 14
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A2 Preferred 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 of the Series A2 Preferred at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A2 Preferred entitled to receive
payment of a dividend declared thereon, which record date shall be no more than
sixty (60) days prior to the date fixed for the payment thereof.
c. Unless accrued dividends payable pursuant to paragraph (a)
on all outstanding shares of Series A2 Preferred shall have been fully paid for
all past dividend periods and the full dividends thereon for the dividend period
current at the time shall have been paid or declared and funds set apart
therefor, no dividend (except a dividend payable in Common Stock) shall be paid
upon or declared or set apart for the Common Stock.
d. Following the Series A2 Preferred Dividend Termination Date,
dividends shall be payable on the Series A2 Preferred only when, as and if
declared by the Board of Directors. Except as otherwise set forth in this
Section 1, holders of Series A2 Preferred shall not be entitled to receive any
dividends, whether in cash or property.
2. VOTING RIGHTS.
a. GENERAL RIGHTS. The Series A2 Preferred shall not have any
voting rights, except as otherwise provided herein or as required by law.
b. SEPARATE VOTES OF SERIES A2 PREFERRED. For so long as more
than seven million five hundred thousand (7,500,000) shares of Series A2
Preferred (subject to adjustment for any stock dividend, split, combination or
other similar event with respect to such shares) remain outstanding, in addition
to any other vote or consent required herein or by law, the vote or written
consent of the holders of at least a majority of the outstanding Series A2
Preferred shall be necessary for effecting or validating the following actions:
(i) Any amendment, alteration, or repeal of any provision of
the Restated Certificate of Incorporation of the Company (including any filing
of a Certificate of Designation), that alters or changes the voting powers,
preferences, or other special rights or privileges, or restrictions of the
Series A2 Preferred so as to affect the Series A2 Preferred adversely in a
manner different from other classes or series of stock;
(ii) Any issuance of any new class or series of stock or any
other equity securities of the Company, in each case ranking senior to the
Series A2 Preferred in right of liquidation preference or dividends or any
issuance of debt securities convertible into the equity securities of the
Company at a conversion price below the Original Issue Price of the Series A2
Preferred (as adjusted for any stock dividend, split, combination or other
similar event with respect to such shares);
(iii) Any redemption or repurchase of Common Stock, except
for acquisitions of Common Stock (not to exceed one percent (1%) per year of the
total of the then-outstanding Common Stock of the Company, determined on a fully
diluted basis) by the
14.
<PAGE> 15
Company at cost (plus an interest factor not to exceed ten percent (10%) per
annum if applicable), pursuant to compensatory plans or agreements which permit
the Company to repurchase such shares upon termination of services to the
Company; or
(iv) Any declaration or payment of any dividend on
outstanding Common Stock, unless funds legally available therefor are at least
equal to the net operating income of the Company reported in its audited
financial statements for its most recent fiscal year plus net operating income
of the Company reported in its unaudited financial statements for any subsequent
interim periods.
c. ELECTION OF BOARD OF DIRECTORS. For so long as more than
seven million five hundred thousand (7,500,000) shares of Series A2 Preferred
remain outstanding (as adjusted for any stock dividend, split, combination or
other similar event with respect to such shares) the holders of Series A2
Preferred, voting as a separate class, shall be entitled to elect one (1) member
of the Company's Board of Directors and to remove from office such director and
to fill any vacancy caused by the resignation, death or removal of such
director.
3. LIQUIDATION RIGHTS.
a. Upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, before any distribution or payment
shall be made to the holders of any Common Stock, the holders of Series A2
Preferred shall be entitled to be paid out of the assets of the Company an
amount per share of Series A2 Preferred equal to the greater of (i) the Series
A2 Preferred Original Issue Price, plus all accrued but unpaid dividends on the
Series A2 Preferred (as adjusted for any stock dividend, split, combination, or
other similar event with respect to such shares) or (ii) the amount such holder
would have received if such share had been converted to Common Stock pursuant to
Section 4 hereof, for each share of Series A2 Preferred held by such holders.
If, upon any such liquidation, distribution or winding up, the assets of the
Company shall be insufficient to make payment in full to all holders of Series
A2 Preferred of the liquidation preference set forth in this Section 3(a), then
such assets shall be distributed among the holders of Series A2 Preferred at the
time outstanding, ratably in proportion to the full amounts to which each such
holder would otherwise be entitled.
b. After the payment of the full liquidation preference of the
Series A2 Preferred as set forth in Section 3(a) above, the remaining assets of
the Company legally available for distribution, if any, shall be distributed
ratably to the holders of Common Stock.
c. The following events shall be considered a liquidation under
this Section:
(i) an Acquisition; or
(ii) an Asset Transfer.
15.
<PAGE> 16
(iii) In any of such events, if the consideration received
by the Company is other than cash, its value will be deemed its fair market
value as determined in good faith by the Board of Directors. Any securities
shall be valued as follows:
(a) Securities not subject to investment letter or
other similar restrictions on free marketability covered by paragraph (b) below:
(1) If traded on a securities exchange or
through the Nasdaq National Market, the value shall be deemed to be the average
of the closing prices of the securities on such quotation system over the 30-day
period ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the 30-day period ending three (3) days prior to
the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as determined by the Board of
Directors.
(b) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a stockholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in paragraphs (a)(1), (2) or (3) to reflect the
approximate fair market value thereof, as determined by the Board of Directors.
4. CONVERSION.
The Series A2 Preferred shall be subject to the following
provisions with respect to the conversion of the Series A2 Preferred into shares
of Common Stock:
a. VOLUNTARY CONVERSION. Subject to and in compliance with the
provisions of this Section 4, any shares of Series A2 Preferred may, at any
time, at the option of the holder, be converted into fully paid and
nonassessable shares of Common Stock. The number of shares of Common Stock to
which a holder of Series A2 Preferred shall be entitled upon conversion shall be
the product obtained by multiplying the "Series A2 Preferred Conversion Rate"
then in effect (determined as provided in Section 4(b)) by the number of shares
of Series A2 Preferred being converted.
b. SERIES A2 PREFERRED CONVERSION RATE. The conversion rate in
effect at any time for conversion of the Series A2 Preferred (the "Series A2
Preferred Conversion Rate") shall be the quotient obtained by dividing the
Original Issue Price of the Series A2 Preferred by the "Series A2 Preferred
Conversion Price," calculated as provided in Section 4(c).
c. SERIES A2 PREFERRED CONVERSION PRICE. The conversion price
for the Series A2 Preferred shall initially be the Original Issue Price of the
Series A2 Preferred (the "Series A2 Preferred Conversion Price"). Such initial
Series A2 Preferred Conversion Price shall be adjusted from time to time in
accordance with this Section 4. All references to the
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<PAGE> 17
Series A2 Preferred Conversion Price herein shall mean the Series A2 Preferred
Conversion Price as so adjusted.
d. MECHANICS OF CONVERSION. Each holder of Series A2 Preferred
who desires to convert the same into shares of Common Stock pursuant to this
Section 4 shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Company or any transfer agent for the Series A2
Preferred, and shall give written notice to the Company at such office that such
holder elects to convert the same. Such notice shall state the number of shares
of Series A2 Preferred being converted. Thereupon, the Company shall promptly
issue and deliver at such office to such holder a certificate or certificates
for the number of shares of Common Stock to which such holder is entitled and
shall promptly pay (i) any accrued but unpaid dividends on the shares of Series
A2 Preferred being converted and (ii) the value of any fractional share of
Common Stock otherwise issuable to any holder of Series A2 Preferred in cash (at
the Common Stock's fair market value determined by the Board of Directors as of
the date of conversion). Such conversion shall be deemed to have been made at
the close of business on the date of such surrender of the certificates
representing the shares of Series A2 Preferred to be converted, and the person
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder of such shares of Common
Stock on such date.
e. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Company
shall at any time or from time to time after the Series A2 Preferred Original
Issue Date effect a subdivision of the outstanding Common Stock without a
corresponding subdivision of the Preferred Stock, the Series A2 Preferred
Conversion Price in effect immediately before that subdivision shall be
proportionately decreased. Conversely, if the Company shall at any time or from
time to time after the Original Issue Date combine the outstanding shares of
Common Stock into a smaller number of shares without a corresponding combination
of the Preferred Stock, the Series A2 Preferred Conversion Price in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this Section 4(e) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
f. ADJUSTMENT FOR COMMON STOCK DIVIDENDS AND DISTRIBUTIONS. If
the Company at any time or from time to time after the Original Issue 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, in each such event the Series A2 Preferred Conversion
Price that is then in effect shall be decreased as of the time of such issuance
or, in the event such record date is fixed, as of the close of business on such
record date, by multiplying the Series A2 Preferred Conversion Price then in
effect by a fraction (i) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and (ii) the denominator
of which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date plus the number of shares of Common Stock issuable in payment of
such dividend or distribution; provided, however, that if such record date is
fixed and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Series A2 Preferred Conversion Price shall
be recomputed accordingly as of the close of business on such record date
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<PAGE> 18
and thereafter the Series A2 Preferred Conversion Price shall be adjusted
pursuant to this Section 4(f) to reflect the actual payment of such dividend or
distribution.
g. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION.
If at any time or from time to time after the Original Issue Date, the Common
Stock issuable upon the conversion of the Series A2 Preferred is changed into
the same or a different number of shares of any class or classes of stock or
other securities or property, whether by recapitalization, reclassification or
otherwise (other than an Acquisition or Asset Transfer as defined in Section
3(c) or a subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided for elsewhere
in this Section 4), in any such event each holder of Series A2 Preferred shall
have the right thereafter to convert such stock into the kind and amount of
stock and other securities and property receivable upon such recapitalization,
reclassification or other change by holders of the maximum number of shares of
Common Stock into which such shares of Series A2 Preferred could have been
converted immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.
h. REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS.
If at any time or from time to time after the Series A2 Preferred Original Issue
Date, there is a capital reorganization of the Common Stock or a merger or
consolidation of the Company with, or a sale of all or substantially all of the
Company's assets to, another person, corporation or other entity (other than an
Acquisition or Asset Transfer as defined in Section 3(c) or a recapitalization,
subdivision, combination, reclassification, exchange or substitution of shares
provided for elsewhere in this Section 4), as a part of such capital
reorganization, merger, consolidation or sale of assets, provision shall be made
so that the holders of the Series A2 Preferred shall thereafter be entitled to
receive upon conversion of the Series A2 Preferred the number of shares of stock
or other securities or property of the Company to which a holder of the number
of shares of Common Stock deliverable upon conversion would have been entitled
on such capital reorganization, subject to adjustment in respect of such stock
or securities by the terms thereof. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 4 with
respect to the rights of the holders of Series A2 Preferred after the capital
reorganization to the end that the provisions of this Section 4 (including
adjustment of the Series A2 Preferred Conversion Price then in effect and the
number of shares issuable upon conversion of the Series A2 Preferred) shall be
applicable after that event and be as nearly equivalent as practicable.
i. CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment of the Series A2 Preferred Conversion Price for the number of
shares of Common Stock or other securities issuable upon conversion of the
Series A2 Preferred, if the Series A2 Preferred is then convertible pursuant to
this Section 4, the Company, at its expense, shall compute such adjustment or
readjustment in accordance with the provisions hereof and prepare a certificate
showing such adjustment or readjustment, and shall mail such certificate, by
first class mail, postage prepaid, to each registered holder of Series A2
Preferred at the holder's address as shown in the Company's books. The
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based, including a
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statement of (i) the Series A2 Preferred Conversion Price at the time in effect,
and (ii) the type and amount, if any, of other property which at the time would
be received upon conversion of the Series A2 Preferred.
j. NOTICES OF RECORD DATE. Upon (i) any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or (ii) any Acquisition (as defined in Section 3(c)) or
other capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any merger or
consolidation of the Company with or into any other corporation, or any Asset
Transfer (as defined in Section 3(c)), or any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the Company shall mail to
each holder of Series A2 Preferred at least ten (10) days prior to the earlier
of the record date specified therein or the date on which any such action is to
become effective (or such shorter period approved by a majority of the
outstanding Series A2 Preferred) a notice specifying (A) the date on which any
such record is to be taken for the purpose of such dividend or distribution and
a description of such dividend or distribution, (B) the date on which any such
Acquisition, reorganization, reclassification, transfer, consolidation, merger,
Asset Transfer, dissolution, liquidation or winding up is expected to become
effective, and (C) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities) shall be entitled to exchange
their shares of Common Stock (or other securities) for securities or other
property deliverable upon such Acquisition, reorganization, reclassification,
transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or
winding up.
k. AUTOMATIC CONVERSION.
(i) Each share of Series A2 Preferred shall automatically
be converted into shares of Common Stock, based on the then-effective Series A2
Preferred Conversion Price, immediately upon the transfer of such share by the
original purchaser of such share from the Company to a transferee that is not a
Purchaser or an Affiliate of a Purchaser (as such terms are defined in the
Preferred Stock Purchase Agreement, dated as of June 20, 1999, between the
Company and the Purchasers named therein). Upon such automatic conversion, any
accrued but unpaid dividends shall be paid in accordance with the provisions of
Section 4(d).
(ii) Upon the occurrence of the event specified in Section
4(k)(i) above, the applicable shares of Series A2 Preferred shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Company or its transfer agent; provided, however, that the Company shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon such conversion unless the certificates evidencing such shares of Series A2
Preferred are either delivered to the Company or its transfer agent as provided
below, or the holder notifies the Company or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with such certificates. Upon the occurrence of such automatic
conversion of the Series A2 Preferred, the holders of Series A2 Preferred shall
surrender the certificates representing such shares at the office of the Company
or any transfer agent for the Series A2 Preferred. Thereupon, there shall be
issued and delivered to such holder
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promptly at such office and in its name as shown on such surrendered certificate
or certificates, a certificate or certificates for the number of shares of
Common Stock into which the shares of Series A2 Preferred surrendered were
convertible on the date on which such automatic conversion occurred, and any
accrued but unpaid dividends shall be paid in accordance with the provisions of
Section 4(d).
l. FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon conversion of Series A2 Preferred. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Series A2 Preferred by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the issuance of
any fractional share. If, after the aforementioned aggregation, the conversion
would result in the issuance of any fractional share, the Company shall, in lieu
of issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board
of Directors) on the date of conversion.
m. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A2 Preferred, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series A2 Preferred. If at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the Series
A2 Preferred, the Company will take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose.
n. NOTICES. Any notice required by the provisions of this
Section 4 shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified, (ii) when sent by confirmed telex
or facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (iv)
one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All notices
shall be addressed to each holder of record at the address of such holder
appearing on the books of the Company.
o. PAYMENT OF TAXES. The Company will pay all taxes (other
than taxes based upon income) and other governmental charges that may be imposed
with respect to the issue or delivery of shares of Common Stock upon conversion
of shares of Series A2 Preferred, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series A2
Preferred so converted were registered.
p. NO DILUTION OR IMPAIRMENT. Without the consent of the
holders of then outstanding Series A2 Preferred as required under Section 2(b),
the Company shall not amend its Restated Certificate of Incorporation or
participate in any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or take any other voluntary
20.
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action, for the purpose of avoiding or seeking to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Company, but shall at all times in good faith assist in carrying out all such
action as may be reasonably necessary or appropriate in order to protect the
conversion rights of the holders of the Series A2 Preferred against dilution or
other impairment.
5. REDEMPTION.
a. The Company shall redeem, from any funds legally
available therefor, all of the outstanding shares of Series A2 Preferred on the
date that is the tenth anniversary of the Series A2 Preferred Original Issue
Date (the "Series A2 Preferred Redemption Date"). The Company shall effect such
redemption on the Series A2 Preferred Redemption Date by paying in cash, in
exchange for the shares of Series A2 Preferred to be redeemed, a sum equal to
the Original Issue Price per share of Series A2 Preferred (as adjusted for any
stock dividend, split, combination or other similar event with respect to such
shares), plus all accrued but unpaid dividends on such shares (the "Series A2
Preferred Redemption Price").
b. Within a reasonable time following a "Change in
Control" of the Company or a "Major Acquisition" by the Company, the Company
shall provide written notice (the "A2 Offer Notice"), by first class mail,
postage prepaid, to each holder of record (at the close of business on the
business day next preceding the day on which notice is given) of Series A2
Preferred offering to redeem such shares at the option of the holder thereof and
specifying a date not less than twenty (20) nor more than forth (40) days
following the date of such notice on which the shares of Series A2 Preferred
shall be redeemed (the "Optional Series A2 Preferred Redemption Date"). Each
holder of Series A2 Preferred shall thereafter have the right to require the
Company to redeem all, but not less than all, of the shares of Series A2
Preferred then held by such holder. A holder may exercise its right to require
redemption of the Series A2 Preferred held by it by notifying the Company in
writing, within ten (10) days following the date of the A2 Offer Notice by the
Company, of its intent to exercise its right. The Company shall redeem, on the
Optional Series A2 Preferred Redemption Date, all the shares of Series A2
Preferred of holders who have timely elected to participate in the redemption.
The Company shall effect such redemption on the Optional Series A2 Redemption
Date by paying in cash, in exchange for the shares of Series A2 Preferred to be
redeemed, a sum per share equal to one hundred and one percent (101%) of the
Original Issue Price of the Series A2 Preferred (as adjusted for any stock
dividend, split, combination or other similar event with respect to such
shares), plus all accrued but unpaid dividends on such shares (the "Optional
Series A2 Preferred Redemption Price"). For the purposes hereof, a "Change of
Control" of the Company shall mean an event or series of related events as a
result of which any "person" or "group" (as such terms are used in Sections
13(d)(3) and 14(d) of the Securities Exchange Act of 1934 as amended (the
"Exchange Act")), other than Vulcan Ventures, Incorporated, MCI WorldCom, Inc.
and their respective affiliates, (i) is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than thirty
percent (30%) of the outstanding equity securities of the Company (determined on
a fully diluted basis) or (ii) acquires the right to elect at least thirty
percent (30%) of the Board of Directors of the Company. For the purposes hereof,
a "Major Acquisition" by the Company shall mean the acquisition by the Company
of more than fifty percent (50%) of the outstanding equity securities
21.
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or all or substantially all of the assets of any corporation or other entity or
the merger of the Company with another entity in which the Company is the
surviving entity, in each case, in consideration of the issuance of equity
securities of the Company which exceed, in the aggregate, twenty-five percent
(25%) of the outstanding equity securities of the Company, determined on a fully
diluted basis; provided, however, that a Major Acquisition shall not include any
acquisition of equity securities or assets of any entity of which the Company
owned, at the Series A2 Preferred Original Issue Date, at least fifty percent
(50%) of its outstanding equity securities or assets.
c. As used herein and in Sections 5(d) and 5(e) below, the
term "A2 Redemption Date" shall refer to each of "Series A2 Preferred Redemption
Date" and the "Optional Series A2 Preferred Redemption Date," and the term "A2
Redemption Price" shall refer to each of "Series A2 Preferred Redemption Price"
and the "Optional Series A2 Preferred Redemption Price." At least twenty (20)
but no more than forty (40) days prior to each A2 Redemption Date, written
notice shall be mailed, first class postage prepaid, to each holder of record
(at the close of business on the business day next preceding the day on which
notice is given) of the Series A2 Preferred to be redeemed, at the address last
shown on the records of the Company for such holder, notifying such holder of
the redemption to be effected, specifying the number of shares to be redeemed
from such holder, the A2 Redemption Date, the A2 Redemption Price, the place at
which payment may be obtained and calling upon such holder to surrender to the
Company, in the manner and at the place designated, his certificate or
certificates representing the shares to be redeemed (the "A2 Redemption
Notice"). Except as provided in Section 5(d), on or after the A2 Redemption
Date, each holder of Series A2 Preferred to be redeemed shall surrender to the
Company the certificate or certificates representing such shares, in the manner
and at the place designated in the A2 Redemption Notice or A2 Offer Notice, and
thereupon the A2 Redemption Price of such shares shall be payable to the order
of the person whose name appears on such certificate or certificates as the
owner thereof and each surrendered certificate shall be canceled. In the event
less than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
d. From and after the A2 Redemption Date, unless there
shall have been a default in payment of the A2 Redemption Price, all rights of
the holders of shares of Series A2 Preferred designated for redemption in the A2
Redemption Notice as holders of Series A2 Preferred (except the right to receive
the A2 Redemption Price without interest upon surrender of their certificate or
certificates) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Company or be deemed to be
outstanding for any purpose whatsoever. If the funds of the Company legally
available for redemption of shares of Series A2 Preferred on any A2 Redemption
Date are insufficient to redeem the total number of shares of Series A2
Preferred to be redeemed on such date, those funds which are legally available
will be used to redeem the maximum possible number of such shares ratably among
the holders of such shares to be redeemed based upon their holdings of Series A2
Preferred. The shares of Series A2 Preferred not redeemed shall remain
outstanding and entitled to all the rights and preferences provided herein. If
any of the A2 Redemption Price shall remain unpaid on the A2 Redemption Date,
interest shall accrue on such unpaid amounts at the rate of eighteen percent
(18%) per annum or, if lower, at the highest rate permitted by law.
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At any time thereafter when additional funds of the Company are legally
available for the redemption of shares of Series A2 Preferred, such funds will
immediately be used to redeem the balance of the shares which the Company has
become obliged to redeem on any A2 Redemption Date, but which it has not
redeemed, and to pay any interest thereon. No payment of the A2 Redemption Price
or any interest thereon shall be made so long as any of the A1 Redemption Price
or any interest thereon shall remain unpaid.
e. On or prior to each A2 Redemption Date, the Company
shall deposit the A2 Redemption Price of all shares of Series A2 Preferred
designated for redemption in the A2 Redemption Notice and not yet redeemed with
a bank or trust corporation having aggregate capital and surplus in excess of
$100,000,000 as a trust fund for the benefit of the respective holders of the
shares designated for redemption and not yet redeemed, with irrevocable
instructions and authority to the bank or trust corporation to pay the A2
Redemption Price for such shares to their respective holders on or after the A2
Redemption Date upon receipt of notification from the Company that such holder
has surrendered his share certificate to the Company pursuant to Section 5(d)
above. As of the A2 Redemption Date, the deposit shall constitute full payment
of the shares to their holders, and from and after the A2 Redemption Date the
shares so called for redemption shall be redeemed and shall be deemed to be no
longer outstanding, and the holders thereof shall cease to be stockholders with
respect to such shares and shall have no rights with respect thereto except the
rights to receive from the bank or trust corporation payment of the A2
Redemption Price of the shares, without interest, upon surrender of their
certificates therefor. Such instructions shall also provide that any funds
deposited by the Company pursuant to this Section 5(e) for the redemption of
shares thereafter converted into shares of the Company's Common Stock pursuant
to Section 4 hereof prior to the A2 Redemption Date shall be returned to the
Company forthwith upon such conversion. The balance of any funds deposited by
the Company pursuant to this Section 5(e) remaining unclaimed at the expiration
of two (2) years following the A2 Redemption Date shall thereafter be returned
to the Company upon its request expressed in a resolution of its Board of
Directors.
6. NO REISSUANCE OF SERIES A2 PREFERRED.
No share or shares of Series A2 Preferred acquired by the Company
by reason of redemption, purchase, conversion or otherwise shall be reissued,
and the Board of Directors is authorized pursuant to Section 243 of the Delaware
General Corporation Law to retire any such share or shares. The retirement of
any such share or shares shall not reduce the total authorized number of shares
of Preferred Stock.
V.
For the management of the business and for the conduct of the affairs of
the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the
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whole Board of Directors shall be fixed exclusively by one or more resolutions
adopted from time to time by the Board of Directors.
The directors shall be divided into three classes designated as Class I,
Class II and Class III, respectively. Directors shall be assigned to each class
in accordance with a resolution or resolutions adopted by the Board of
Directors. At the first annual meeting of stockholders following the closing of
the Corporation's initial public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended, covering the offer and
sale of the Common Stock of the corporation (the "Initial Public Offering"), the
term of office of the Class I directors shall expire and Class I directors shall
be elected for a full term of three years. At the second annual meeting of
stockholders following the closing of the Initial Public Offering, the term of
office of the Class II directors shall expire and Class II directors shall be
elected for a full term of three years. At the third annual meeting of
stockholders following the closing of the Initial Public Offering, the term of
office of the Class III directors shall expire and Class III directors shall be
elected for a full term of three years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of three years to
succeed the directors of the class whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
Any vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other causes shall be filled by either (i) the
affirmative vote of the holders of a majority of the voting power of the
then-outstanding shares of voting stock of the corporation entitled to vote
generally in the election of directors (the "Voting Stock") voting together as a
single class; or (ii) by the affirmative vote of a majority of the remaining
directors then in office, even though less than a quorum of the Board of
Directors. Newly created directorships resulting from any increase in the number
of directors shall, unless the Board of Directors determines by resolution that
any such newly created directorship shall be filled by the stockholders, be
filled only by the affirmative vote of the directors then in office, even though
less than a quorum of the Board of Directors. Any director elected in accordance
with the preceding sentence shall hold office for the remainder of the full term
of the class of directors in which the new directorship was created or the
vacancy occurred and until such director's successor shall have been elected and
qualified. Notwithstanding the foregoing, in the event of any vacancy on the
Board of Directors resulting from the resignation, death, disability, removal or
disqualification of any director serving on the Board of Directors both prior to
and immediately after the closing of the transactions contemplated by the Common
Stock Purchase Agreement, dated October 10, 1997, between the Company and the
purchaser named therein, or any successor thereto, or successor of such
successor (an "Independent Director"), a committee of the Board of Directors
consisting of the remaining Independent Directors shall, pursuant to Section
141(a) of the Delaware General Corporation Law, fill such vacancy by a majority
vote of such directors. Any director so elected by such committee shall be an
"Independent Director" for purposes of this paragraph.
24.
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B. The Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then-outstanding shares of the Voting Stock. In
furtherance and not in limitation of the power conferred by statute, the Board
of Directors is expressly authorized to adopt, amend, supplement or repeal the
Bylaws.
C. The directors of the Corporation need not be elected by written ballot
unless the Bylaws so provide.
D. No action shall be taken by the stockholders of the Corporation except
at an annual or special meeting of stockholders called in accordance with the
Bylaws and no action shall be taken by the stockholders by written consent;
provided, however, that notwithstanding anything to the contrary contained
herein, the stockholders may act without a meeting, without prior notice and
without a vote solely in the election of directors to fill vacancies on the
Board of Directors (other than a vacancy resulting from the resignation, death,
disability, removal or disqualification of any Independent Director).
E. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
F. Any director, or the entire Board of Directors, may be removed from
office at any time (i) with cause by the affirmative vote of the holders of at
least a majority of the voting power of all of the then-outstanding shares of
the Voting Stock, voting together as a single class; or (ii) without cause by
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
Voting Stock.
VI.
A. The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent under applicable law.
B. The Corporation is authorized to provide indemnification of agents (as
defined in Section 145 of the Delaware General Corporation Law) for breach of
duty to the Corporation and its stockholders through bylaw provisions, through
agreements with the agents, and/or through stockholder resolutions, or
otherwise, in excess of the indemnification otherwise permitted by Section 145
of the Delaware General Corporation Law.
C. Any repeal or modification of this Article VI shall be prospective
only and shall not effect the rights under this Article VI in effect at the time
of the alleged occurrence of any action or omission to act giving rise to
liability or indemnification.
VII.
Notwithstanding any other provisions of this Certificate of Incorporation
or any provision of law which might otherwise permit a lesser vote or no vote,
but in addition to any affirmative vote of the holders of any particular class
or series of the Voting Stock required by law, this
25.
<PAGE> 26
Certificate of Incorporation or any Preferred Stock Designation, the affirmative
vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of
the voting power of all of the then-outstanding shares of the Voting Stock,
voting together as a single class, shall be required to alter, amend or repeal
Article V, Article VII or Article X.
VIII.
The Corporation is to have perpetual existence.
IX.
The Corporation elects not to be governed by Section 203 of the Delaware
General Corporation Law, as the same may be amended from time to time. This
election shall be effective as of the earliest date permitted by law.
X.
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, except as provided in Article VII of this
Certificate, and all rights conferred upon the stockholders herein are granted
subject to this right.
* * * *
FOUR: This Restated Certificate of Incorporation has been duly approved by
the Board of Directors of this Corporation.
FIVE: This Restated Certificate of Incorporation has been duly adopted in
accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware by the Board of Directors and the
stockholders of the Corporation.
26.
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IN WITNESS WHEREOF, METRICOM, INC. has caused this Restated Certificate of
Incorporation to be signed by the President and the Secretary in Los Gatos,
California this 18th day of October 1999.
METRICOM, INC.
By: /s/ TIMOTHY A. DREISBACH
------------------------------------
Timothy A. Dreisbach
President
ATTEST:
By: /s/ DALE W. MARQUART
------------------------------------
Dale W. Marquart
Secretary
27.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports dated
February 1, 1999 (except with respect to the matter discussed in Note 12, as to
which the date is November 17, 1999) included in the Metricom, Inc.'s Form
10-K/A for the year ended December 31, 1998, and to all references to our Firm
included in this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Jose, California
November 17, 1999
