SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
CHECK THE APPROPRIATE BOX:
[x]PRELIMINARY INFORMATION STATEMENT [ ]CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14C-5(D)(2))
[ ]DEFINITIVE INFORMATION STATEMENT
EMAGISOFT TECHNOLOGIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
Paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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EMAGISOFT TECHNOLOGIES, INC.
405 CENTRAL AVENUE
SECOND FLOOR
ST. PETERSBURG, FLORIDA 33701
NOTICE OF ACTION BY SHAREHOLDERS WITHOUT A MEETING
PURSUANT TO SECTION 607.0704
OF THE FLORIDA BUSINESS CORPORATION ACT
To the Shareholders of
Emagisoft Technologies, Inc.
Notice is hereby given that the Board of Directors and the holders of a
majority of the outstanding shares of voting capital stock of Emagisoft
Technologies, Inc., a Florida corporation (the "Company"), have adopted Amended
and Restated Articles of Incorporation (the "Amended Articles") for the Company.
Among other things, the Amended Articles (i) increase the authorized shares of
common stock from 50,000,000 shares to 140,109,550 shares, (ii) provide certain
anti - takeover, and other provisions typically provided in articles of
incorporation of public companies, and (iii) provide for other general matters
consistent with corporations formed under the corporate laws of the State of
Florida.
The Board of Directors of the Company approved the Amended Articles as of
October 30, 2000 by written consent. Holders of over a majority of the
outstanding shares of voting capital stock of the Company approved the Amended
Articles as of December , 2000 by written consent in lieu of a meeting in
--
accordance with the provisions of Section 607.0704 of the Florida Business
Corporation Act. Accordingly, your consent is not required and is not being
solicited in connection with the adoption of the Amended Articles. You are
being provided with this notice of such action pursuant to Section 607.0704
of the FBCA.
The record date for determining shareholders entitled to receipt of this
notice is November 10, 2000. This notice is first being mailed to such
shareholders on or about December 11, 2000. The Amended Articles will not be
filed with the Secretary of State of the State of Florida or become effective
until at least 20 calendar days after such mailing.
Our preliminary information statement filed November 14, 2000 provided
notification of a reverse stock split of our common stock adopted and approved
by our Board of Directors on October 30, 2000. By unanimous written consent
dated as of November 29, 2000, our Board of Directors approved and adopted a
revocation of such reverse stock split as it deemed that such reverse stock
split would not be in the best interests of our Company and our shareholders
at this time. Accordingly, our common stock will not be subject to a reverse
stock split at this time.
By Order of the Board of Directors
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Kyle E. Jones
Chairman and Chief Executive Officer
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EMAGISOFT TECHNOLOGIES, INC.
405 CENTRAL AVENUE
SECOND FLOOR
ST. PETERSBURG, FLORIDA 33701
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY, AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
GENERAL
This Information Statement is being furnished to the shareholders of
Emagisoft Technologies, Inc., a Florida corporation (the "Company" or
"Emagisoft" or "we" or "us"), in connection with the approval and adoption of
Amended and Restated Articles of Incorporation of the Company (the "Amended
Articles") by the written consent of the Board of Directors and the holders of a
majority in interest of the Company's voting capital stock ("Voting Capital
Stock") consisting of the Company's outstanding common stock, par value $.0001
per share ("Common Stock"), and the Company's outstanding Series A preferred
stock, par value $.0001 per share (the "Voting Preferred Stock").
Effective as of October 30, 2000, the Company's Board of Directors approved
and recommended that the Company's Articles of Incorporation be amended and
restated in order to (i) increase the shares of Common Stock authorized for
issuance by the Company from 50,000,000 shares to 140,109,550 shares, (ii)
provide certain anti-takeover and other provisions typical in the articles of
incorporation of public companies, and (iii) provide for other general matters
consistent with corporations formed under the corporate laws of the State of
Florida. The form of Amended Articles is attached to this information statement
as Exhibit A. The Amended Articles will become effective upon the filing of the
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Amended Articles with the Secretary of State of the State of Florida. The
Company anticipates that the filing of the Amended Articles will occur on or
About January 2, 2000. If the Amended Articles were not adopted by written
consent, such matters would have been required to be considered by the Company's
shareholders at a special shareholders' meeting convened for the specific
purpose of approving the Amended Articles.
Kyle E. Jones, Roger Tichenor, Lee Meier, Peter VanSon and the Geneva-Roth
Investment Trust (collectively, the "Majority Shareholders"), who beneficially
own, in the aggregate, 7,349,180 shares of Common Stock, representing
approximately 50.3% of the outstanding Voting Capital Stock of the Company, gave
their written consent to the adoption of the Amended Articles described in this
information statement as of December , 2000. The date on which this
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information statement will be sent to the shareholders is on or about December
11, 2000. The record date established by the Company for purposes of
determining the number of outstanding shares of Voting Capital Stock is November
10, 2000 (the "Record Date").
The elimination of the need for a special meeting of shareholders to
approve the Amended Articles is authorized by Section 607.0704 of the Florida
Business Corporation Act (the "Florida Act") which provides that the written
consent of the holders of outstanding shares of voting capital stock, having not
less than the minimum number of votes which would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted, may be substituted for such a special meeting. A majority of
the outstanding shares of voting capital stock entitled to vote thereon is
required in order to amend the Company's Articles of Incorporation. In order to
eliminate the costs and management time involved in holding a special meeting
and in order to effect the Amended Articles as early as possible in order to
accomplish the purposes of the Company as hereafter described, the Board of
Directors of the Company voted to utilize the written consent of the holders of
a majority in interest of the Voting Capital Stock of the Company.
Pursuant to Section 607.0704 of the Florida Act, within ten days of
obtaining authorization by written consent of the actions described in this
information statement, the Company is required to provide notice of the taking
of the corporate action without a meeting to shareholders who have not consented
in writing to such action. Inasmuch as the Company will have provided to its
shareholders of record this information statement, the Company will notify its
shareholders at the time of distribution of its next Annual Report on Form
10-KSB of the effective date of the Amended Articles. No additional action will
be undertaken pursuant to such written consents. No action by the other holders
of our Common Stock or our Voting Preferred Stock is required to approve the
Amended Articles. Florida law does not provide rights of appraisal or similar
rights of dissenters with respect to the Company's adoption of the Amended
Articles.
This Information Statement is being provided for your information purposes
only.
OUTSTANDING VOTING STOCK OF THE COMPANY
As of the Record Date, there were 13,031,000 shares of Common Stock
outstanding and 1,575,887 shares of Voting Preferred Stock outstanding. The
Common Stock and the Voting Preferred Stock constitute the sole classes of
voting securities of the Company. Each share of Common Stock entitles the
holder thereof to one vote on all matters submitted to shareholders. Each share
of Voting Preferred Stock entitles the holder thereof to one vote on all matters
submitted to shareholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of November 10,
2000, with respect to the beneficial ownership of Common Stock by: (i) each
shareholder known by the Company to be the beneficial owner of more than 5% of
the Common Stock; (ii) each director and executive officer; and (iii) all
executive officers and directors as a group.
<TABLE>
<CAPTION>
<S> <C> <C>
NUMBER OF SHARES PERCENT OF CLASS
NAME OF BENEFICIAL OWNER(1)(2) BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------------------ ------------------ ------------------
Kyle E. Jones (3) 5,756,073 43.5%
Daniel T. Whitcher (4) 50,000 *
Peter VanSon (5) 371,320 2.8%
Jamie E. Jalazo (6) 50,280 *
Gregory Shlopak (7) 271,667 2.1%
Edward Rosenberg (8) 124,967 1.0%
Roger Tichenor (9) 937,340 7.2%
Stephen Guarino 750,000 5.8%
All officers and directors
as a group (6 persons) 6,624,307 49.2%
</TABLE>
* Less than one percent.
(1) Unless otherwise noted, the address of each person or entity listed is
Emagisoft Technologies, Inc., 450 Central Avenue, Second Floor, St.
Petersburg, Florida 33701.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock subject
to options, warrants or convertible securities that are currently
exercisable, or exercisable within 60 days of November 10, 2000, are deemed
outstanding for computing the percentage of the person holding such
options, warrants or convertible securities but are not deemed outstanding
for computing the percentage of any other person. Except as indicated by
footnote and subject to community property laws where applicable, the
persons named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them.
(3) Includes 5,552,260 shares held by the Betterment Trust of which Mr. Jones
is the sole trustee and exercises sole voting and dispositive power over
such shares. Includes 203,813 shares issuable to Mr. Jones personally
pursuant to options currently exercisable or exercisable within 60 days of
November 10, 2000.
(4) All such shares are issuable pursuant to options currently exercisable or
exercisable within 60 days of November 10, 2000.
(5) Includes an aggregate of 15,000 shares held in three separate trusts owning
5,000 shares each, of which Mr. VanSon is the sole trustee and exercises
sole voting and dispositive power. Includes 10,000 shares held solely by Mr.
VanSon's spouse. Includes 102,860 shares issuable pursuant to options
currently exercisable or exercisable within 60 days of November 10, 2000.
(6) All 50,280 shares are issuable pursuant to options currently exercisable or
exercisable within 60 days of November 10, 2000, 280 shares of which are not
subject to the Stock Split.
(7) Includes 16,667 shares issuable pursuant to options currently exercisable
or exercisable within 60 days of November 10, 2000.
(8) Includes 16,667 shares issuable pursuant to options currently exercisable
or exercisable within 60 days of November 10, 2000.
(9) Includes 51,560 shares issuable pursuant to options currently exercisable
or exercisable within 60 days of November 10, 2000, 1,560 shares of which
are not subject to the Stock Split.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
Effective as of October 30, 2000 and December , 2000, our Board of
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Directors and the Majority Shareholders, respectively, voted by written consent
to authorize and approve an amendment and restatement of our Articles of
Incorporation. The Amended Articles (i) increase the number of shares of Common
Stock authorized for issuance from 50,000,000 shares to 140,109,550 shares, (ii)
provide certain anti-takeover and other provisions typically contained in the
articles of incorporation of public companies, and (iii) provide for other
general matters consistent with corporations formed under the corporate laws of
the State of Florida. The Amended Articles will become effective upon the filing
of the Amended Articles with the Secretary of State of the State of Florida, but
our Board of Directors reserves the right to not make such filing if it deems it
appropriate not to do so.
INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
Our Board of Directors originally adopted and approved a 2.802191-for-1
reverse stock split of the Common Stock by unanimous written consent dated
as of October 30, 2000. By unanimous written consent dated as of November 28,
2000, our Board of Directors then, also by adopted and approved a revocation of
such reverse stock split as it deemed such revocation to be in the best
interests of the Company and the shareholders at this particular time.
In contemplation of a reinstatement of such reverse stock split during the
first fiscal quarter of 2001, our Board of Directors deems it advisable and in
the best interests of the Company and its shareholders to increase the number of
shares of Common Stock authorized for issuance by the Company from 50,000,000
shares to 140,109,550 shares. Such increase affords the Company the flexibility
with respect to its capitalization it anticipates will be required in order to
effectuate the contemplated reverse stock split in the first quarter of
2001.
ANTI-TAKEOVER PROVISIONS
Prior to the Amended Articles, the Company's Articles of Incorporation
specifically opted out of certain anti-takeover protections afforded to public
corporations under Florida law. The Board of Directors believes it is in the
best interests of the Company and the shareholders to amend and restate the
Company's Articles of Incorporation to afford itself of such anti-takeover
protections provided under Florida law. The Amended Articles delete the
provisions of the Company's Articles of Incorporation that expressly elected not
to be governed by Sections 607.0901 and 607.0902 of the Florida Act.
AFFILIATED TRANSACTIONS
Section 607.0901, also known as the "Affiliated Transactions Statute,"
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested shareholder" unless (i) the transaction is approved by a majority of
disinterested directors before the person becomes an interested shareholder,
(ii) the interested shareholder has owned at least 80% of the corporation's
outstanding voting shares for at least five years, and (iii) the transaction is
approved by the holders of at least two-thirds of the corporation's voting
shares other than those owned by the interested shareholder. An "interested
shareholder" is defined as a person who, together with affiliates and
associates, beneficially owns more than 10% of the corporation's outstanding
voting shares.
The Affiliated Transactions Statute protects shareholders because it
increases the difficulty and expense for a potential acquirer seeking to gain
control of the Company by freezing out certain minority shareholders in a
two-step merger transaction. Thus, the Affiliated Transactions Statute serves
to protect shareholders from the inequitable results of certain transactions
between a corporation and an interested shareholder. Given the protections to
shareholders afforded by Section 607.0901 of the Florida Act, the Board of
Directors believes it is in the best interests of the Company and its
shareholders to be subject to such section and not to opt out of such section in
its Articles of Incorporation.
CONTROL SHARE ACQUISITIONS
Section 607.0902, also known as the "Control Share Statute," prohibits an
acquiring person who makes a "control share acquisition" of shares of an
"issuing public corporation" from exercising voting rights for any "control
shares" unless (i) the corporation's articles of incorporation or bylaws provide
that the Control Share Statute does not apply to control share acquisitions of
the corporation's shares, (ii) the acquisition is consummated under certain
circumstances, including an acquisition of shares approved by the issuing public
corporation's board of directors, or (iii) such voting rights are conferred by
the affirmative vote of a majority of the issuing public corporation's
disinterested shareholders at a meeting or by written consent of such
shareholders. A "control share acquisition" is defined as the acquisition,
directly or indirectly, by any person of ownership of, or the power to direct
the exercise of voting power with respect to, issued and outstanding control
shares. "Control shares" are shares that, except for the Control Share Statute,
would have voting power with respect to shares of an issuing public corporation
that, when added to all other shares of the issuing public corporation owned by
a person or in respect to which that person may exercise or direct the exercise
of the voting power, would entitle that person, immediately after the
acquisition of the shares, directly or indirectly, alone or as part of a group,
to exercise or direct the exercise of the voting power of the issuing public
corporation in the election of directors within any of the following ranges of
voting power: (a) 20% or more but less than 33-1/3% of all voting power, (b)
33-1/3% of more but less than a majority of all voting power, and (c) a majority
or more of all voting power. All shares, the beneficial ownership of which is
acquired within 90 days before or after the date of acquisition of beneficial
ownership of shares which would result in a control share acquisition, and all
shares the beneficial ownership of which is acquired pursuant to a plan to make
a control share acquisition, are deemed to have been acquired in the same
acquisition. An "issuing public corporation" means a corporation that has (1)
its principal place of business, principal office or substantial assets in
Florida, (2) 100 or more shareholders, and (3) either (x) more than 10% of its
shareholders resident in Florida, (y) more than 10% of its shares owned by
residents of Florida, or (z) 1,000 shareholders resident in Florida. The
Company qualifies as an issuing public corporation.
The Company's Board of Directors believes that the Control Share Statute
was enacted to protect Florida corporations and their shareholders from a person
seeking to acquire a substantial block of shares of a public company and to
limit such person's ability to control the corporation. Without the protections
of the Control Share Statute, a person could acquire a controlling block of the
Company's stock through periodic purchases at then current market prices without
paying a premium to shareholders for such control. The Control Share Statute
also encourages a person interested in acquiring control of a public corporation
to negotiate with its board of directors. Our Board of Directors believes that
the ability to negotiate with a potential acquirer is significantly greater than
that of the shareholders individually. While a bidder may make an offer that is
higher than the current market price, without negotiations with the
corporation's board of directors, the premium may not compensate for the
long-term prospects and other factors affecting the corporation's value. The
Board of Directors is also in a better position to discuss and evaluate other
aspects of the offer with the acquirer, such as the acquirer's experience,
future strategies for the corporation, financial resources and other matters
that can affect the value of the offer.
The Board of Directors also believes that the Control Share Statute is also
intended to give shareholders of Florida corporations the opportunity to make
the final decision regarding the appropriateness of a takeover transaction. The
Control Share Statute protects shareholders by putting them on a more level
playing field with a potential acquirer by providing them the opportunity to
decide whether a change in corporate control is desirable and nullifying the
voting power of the "control shares" acquired by those who may seek to acquire
the Company without first approaching the Board of Directors. The Board of
Directors believes that not opting out of this statute provides an effective
means to protect the interests of the Company's shareholders.
The Amended Articles do not contain provisions electing not to be governed
by Sections 607.0901 and 607.0902 of the Florida Act, as the Board of Directors
believes that such provisions provide the Company anti-takeover protections that
are in the best interests of the Company and its shareholders.
By Order of the Board of Directors
/s/Kyle E. Jones
----------------------------------------
Kyle E. Jones, Chairman of the Board and
Date: November 29, 2000 Chief Executive Officer
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EXHIBITS
EXHIBIT A Amended and Restated Articles of Incorporation.
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EXHIBIT A
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FORM OF
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
EMAGISOFT TECHNOLOGIES, INC.
Kyle E. Jones, being the Chairman of the Board, Chief Executive Officer and
President of EMAGISOFT TECHNOLOGIES, INC., a Florida corporation (the
"Corporation"), hereby certifies that:
1. The name of the Corporation is Emagisoft Technologies, Inc. The
Corporation was originally incorporated on February 24, 1993 under the name
Manatee-American Corp.
2. The Articles of Incorporation of the Corporation were duly amended
on July 6, 1993, April 23, 1997, October 27, 1999, March 24, 2000 and June 5,
2000.
3. These Amended and Restated Articles of Incorporation restate and
integrate and further amend the provisions of the Corporation's Articles of
Incorporation, as amended.
4. The terms and provisions of these Amended and Restated Articles of
Incorporation were adopted by sole director of the Corporation pursuant to a
written action without a meeting of directors executed as of October 30, 2000.
The terms and provisions of these Amended and Restated Articles were approved
and adopted by the majority shareholders of the Corporation pursuant to a
written action without a meeting of the shareholders executed as of December ,
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2000. The number of votes cast for the Amended and Restated Articles of
Incorporation by the shareholders was sufficient for approval.
5. Pursuant to Sections 607.0704, 607.1003 and 607.1007 of the Florida
Business Corporation Act, the text of the Articles of Incorporation of the
Corporation, as amended, is hereby amended and restated to read in its entirety
as follows:
"ARTICLE I - NAME
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The name of the corporation is Emagisoft Technologies, Inc. (hereinafter
called the "Corporation" or "Emagisoft").
ARTICLE II - PURPOSE
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The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the Florida Business Corporation
Act.
ARTICLE III - PRINCIPAL OFFICE
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The principal place of business and mailing address of the Corporation is
405 Central Avenue, Second Floor, St. Petersburg, Florida 33701.
ARTICLE IV - REGISTERED OFFICE AND AGENT
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The address of the registered office of the Corporation in the State of
Florida is 2709 Rocky Point Drive, Suite 102, Tampa, Florida 33607. The name of
its registered agent at that address is Edwin B. Kagan.
ARTICLE V - CAPITAL STOCK
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A. AUTHORIZED CAPITAL STOCK.
--------------------------
(1) The maximum aggregate number of shares of common stock, par value of
$.0001 per share (the "Common Stock"), that this Corporation shall have
authority to issue is 140,109,550 shares.
(2) The maximum aggregate number of shares of preferred stock, par value
$.0001 per share (the "Preferred Stock"), that this Corporation shall have
authority to issue is 10,000,000 shares.
(3) No fractional shares shall be issued.
(4) No shareholder of any stock of the Corporation shall have preemptive
rights.
B. PREFERRED STOCK.
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(1) Authority is hereby vested in the Board of Directors of the Corporation
to provide from time to time for the issuance of Preferred Stock in one or more
series and, in connection therewith, to fix by resolution providing for the
issue of such series the number of shares to be included and such of the
designations, powers, preferences and relative participating, optional or other
special rights and the qualifications, limitations and restrictions of such
series, including, without limitation, voting rights or limitations, rights of
redemption or conversion into Common Stock, to the fullest extent now or
hereafter permitted by the Florida Business Corporation Act.
(2) Shares of any series of Preferred Stock that shall be issued and
thereafter acquired by the Corporation through purchase, redemption (whether
through the operation of a sinking fund or otherwise), conversion, exchange or
otherwise shall, upon appropriate filing and recording to the extent required by
law, have the status of authorized and unissued shares of Preferred Stock and
may be reissued as part of such series or as part of any other series of
Preferred Stock. Unless otherwise provided in the resolution or resolutions of
the Board of Directors providing for the issuance thereof, the number of
authorized shares of stock of any series of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by
resolution or resolutions of the Board of Directors and appropriate filing and
recording to the extent required by law. In case the number of shares of any
such series of Preferred Stock shall be decreased, the shares representing such
decrease shall, unless otherwise provided in the resolution or resolutions of
the Board of Directors providing for the issuance thereof, resume the status of
authorized but unissued shares of Preferred Stock, undesignated as to series.
(3) Series A Preferred Stock
---------------------------
The Series A Preferred Stock shall have the following powers, preferences
and rights, and qualifications, limitations and restrictions:
Section 1. Dividends.
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(a) General Obligation. Only when, as and if declared by the
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Corporation's Board of Directors and to the extent permitted under the Florida
Business Corporation Act, the holders of the Series A Preferred Stock (the
"Series A Preferred") shall be entitled to receive in any fiscal year
non-cumulative dividends at a rate of 10% per annum of the original issue price,
as adjusted, in preference to any payment to the holders of all other class of
stock of the Corporation, as provided in this Section 1. The date on which the
Corporation initially issues any share of Series A Preferred shall be deemed to
be its "date of issuance" regardless of the number of times transfer of such
share of Series A Preferred is made on the stock records maintained by or for
the Corporation and regardless of the number of certificates which may be issued
to evidence such share of Series A Preferred.
(b) Common Stock Dividends. Only after all dividends have been
------------------------
declared and paid in full for a given calendar year to the holders of the Series
A Preferred under this Section 1, the Corporation may then declare and pay a
dividend upon each share of Common Stock up to an amount equal to the per share
dividend paid to each holder of the Series A Preferred (such amount shall be
referred to as the "Common Stock Dividend"). After the Common Stock Dividend
has been paid in full to all holders of Common Stock, the Corporation shall then
pay to the holders of the Series A Preferred at the time of payment of any
additional dividends to the holders of Common Stock those dividends which would
have been paid on the shares of Conversion Stock had such Series A Preferred
been converted immediately prior to the date on which a record is taken for such
Common Stock dividends, or, if no record is taken, the date as of which the
record holders of Common Stock entitled to such dividends are to be determined.
(c) Distribution of Partial Dividend Payments. Except as otherwise
---------------------------------------------
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Series A Preferred, such payment
shall be distributed pro rata among the holders thereof based upon the number of
shares of Series A Preferred held by each such holder.
Section 2. Liquidation.
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Upon any liquidation, dissolution or winding up of the Corporation (whether
voluntary or involuntary), each holder of shares of Series A Preferred shall be
entitled to be paid, before any distribution or payment is made upon any Common
Stock, an amount in cash equal to the aggregate Liquidation Value of all shares
of Series A Preferred held by such holder (plus all accrued and unpaid dividends
thereon). After the total Liquidation Value of all shares of Series A Preferred
(plus all accrued and unpaid dividends thereon) is paid to the holders of the
Series A Preferred, any remaining assets available to be distributed to the
Corporation's stockholders shall be first distributed pro rata to the holders of
Common Stock until such holders of Common Stock have received, in the aggregate,
an amount equal to the aggregate Liquidation Value (plus all accrued and unpaid
dividends) of the Series A Preferred, then any remaining assets of the
Corporation shall be distributed pro rata among all the holders of the shares of
Series A Preferred and Common Stock based upon the shares of Series A Preferred
and Common Stock held by each such holder. If upon any such liquidation,
dissolution or winding up of the Corporation the Corporation's assets to be
distributed among the holders of shares of Series A Preferred are insufficient
to permit payment to such holders of the aggregate amount which they are
entitled to be paid under this Section 2, then the entire assets available to be
distributed to the Corporation's stockholders shall be distributed pro rata
among the holders of shares of Series A Preferred based upon the aggregate
Liquidation Value (plus all accrued and unpaid dividends) of the Series A
Preferred held by each such holder. Prior to the liquidation, dissolution or
winding up of the Corporation, the Corporation shall pay all accrued and unpaid
dividends with respect to the Series A Preferred, but only to the extent of
funds of the Corporation legally available for the payment of dividends. Not
less than sixty (60) days prior to the payment date stated therein, the
Corporation shall mail written notice of any such liquidation, dissolution or
winding up to each record holder of the Series A Preferred, setting forth in
reasonable detail the amount of proceeds to be paid with respect to each share
of Series A Preferred and each share of Common Stock in connection with such
liquidation, dissolution or winding up. A consolidation or merger of the
Corporation with or into any other corporation or corporations, other corporate
reorganization in which the Corporation is not the surviving entity (unless the
shareholders of the Corporation hold more than 50% of the voting power of the
surviving corporation), or a sale of all or substantially all of the assets of
the Corporation, shall be deemed to be a liquidation, dissolution or winding up
of the Corporation.
Section 3. Voting Rights.
--------------
(a) General Voting Rights. The holders of the Series A Preferred shall
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be entitled to notice of all stockholders meetings in accordance with the
Corporation's bylaws, and as otherwise required by applicable law. Except as
otherwise set forth below, the holders of the Series A Preferred shall be
entitled to vote on all matters submitted to the stockholders for a vote,
together with the holders of Common Stock, voting together as a single class
with each share of Common Stock entitled to one vote per share, each share of
the Series A Preferred Stock entitled to one vote for each share of Common Stock
issuable upon conversion of the Series A Preferred Stock as of the record date
for such vote or, if no record date is specified, as of the date of such vote.
(b) Special Voting Rights. Notwithstanding anything else herein to the
---------------------
contrary and except as otherwise required by law, so long as at least half of
the Series A Preferred is outstanding, the Corporation will not, without the
affirmative vote or written consent of the holders of at least a majority of
such Series A Preferred then outstanding: (1) create or designate, or authorize
the issuance of, any new class or series of stock (i) ranking senior or having a
preference over, or being on parity with the Series A Preferred with respect to
any rights of the Series A Preferred, or (ii) convertible into any such class or
series of stock; (2) merge or consolidate (where the Corporation's stockholders
retain less than 50% of the voting power) or sell all or substantially all of
the assets or stock of the Corporation, whether in one transaction or a series
of transactions, or whether by outright sale or by merger; (3) liquidate or
dissolve the Corporation, or (4) amend the articles of incorporation or bylaws
that materially and adversely change the rights of the Series A Preferred in a
manner different than other classes of stock.
Section 4. Conversion.
----------
(a) Conversion Procedure.
---------------------
(i) At any time and from time to time, any holder of the Series A
Preferred may convert all or any portion of the Series A Preferred (including
any fraction of a share of Series A Preferred) held by such holder into a number
of shares of Conversion Stock computed by multiplying the number of shares of
Series A Preferred to be converted by $1.30 (plus all accrued and unpaid
dividends) and dividing the result by the Conversion Price then in effect.
(ii) Except as otherwise provided herein, each conversion of the
Series A Preferred shall be deemed to have been effected as of the close of
business on the date on which the certificate or certificates representing the
Series A Preferred to be converted have been surrendered for conversion at the
principal office of the Corporation. At the time any such conversion has been
effected, the rights of the holder of the shares of Series A Preferred converted
as a holder of the Series A Preferred shall cease and the Person or Persons in
whose name or names any certificate or certificates for shares of Conversion
Stock are to be issued upon such conversion shall be deemed to have become the
holder or holders of record of the shares of Conversion Stock represented
thereby.
(iii) The Corporation may at any time require the automatic
conversion of all of the automatic outstanding shares of Series A Preferred if:
(i) the Corporation is at such time effecting a Qualified Public Offering; or
(ii) at any time the holders of a majority of the then outstanding shares of
Series A Preferred elect to convert their shares of Series A Preferred into
Common Stock. Any such mandatory conversion shall only be effected at the time
of and subject to: (1) as to conversion under subsection (i) above, the closing
of the sale of such shares pursuant to such Qualified Public Offering; or (2) as
to conversion under subsection (ii) above, the surrender for conversion at the
principal office of the Corporation of the certificate or certificates
representing the Series A Preferred to be converted, and upon written notice of
such mandatory conversion delivered to all holders of the Series A Preferred at
least ten (10) days prior to such closing or surrender.
(iv) Notwithstanding any other provision hereof, if a conversion
of the Series A Preferred is to be made in connection with a Qualified Public
Offering, the conversion of any shares of the Series A Preferred may, at the
election of the holder thereof, be conditioned upon the consummation of such
transaction, in which case such conversion shall not be deemed to be effective
until such transaction has been consummated.
(v) As soon as possible after a conversion has been effected (but
in any event within five (5) business days in the case of subsection (1) below),
the Corporation shall deliver to the converting holder:
(1) a certificate or certificates representing the number of
shares of Conversion Stock issuable by reason of such conversion in such name or
names and such denomina-tion or denominations as the converting holder has
specified;
(2) payment in an amount equal to all accrued dividends with
respect to each share of Series A Preferred converted which have not been paid
prior thereto, plus the amount payable under subsection (x) below with respect
to such conversion; and
(3) a certificate representing any shares of the Series A
Preferred which were represented by the certificate or certificates delivered to
the Corporation in connection with such conversion but which were not converted.
(vi) If for any reason the Corporation is unable to pay any
portion of the accrued and unpaid dividends on the Series A Preferred being
converted, such dividends may, at the converting holder's option, be converted
into an additional number of shares of Conversion Stock determined by dividing
the amount of the unpaid dividends to be applied for such purpose, by the
Conversion Price then in effect.
(vii) The issuance of certificates for shares of Conver-sion Stock
upon conversion of the Series A Preferred shall be made without charge to the
holders of such Series A Preferred for any issuance tax in respect thereof or
other cost incurred by the Corporation in connection with such conversion and
the related issuance of shares of Conversion Stock. Upon conversion of each
share of the Series A Preferred, the Corporation shall take all such actions as
are necessary in order to insure that the Conversion Stock issuable with respect
to such conversion shall be validly issued, fully paid and nonassessable, free
and clear of all taxes, liens, charges and encumbrances with respect to the
issuance thereof.
(viii) The Corporation shall not close its books against the
transfer of the Series A Preferred or of Conversion Stock issued or issuable
upon conversion of the Series A Preferred in any manner which interferes with
the timely conversion of the Series A Preferred. The Corporation shall assist
and cooperate with any holder of shares of Series A Preferred required to make
any governmental filings or obtain any governmental approval prior to or in
connection with any conversion of shares of Series A Preferred hereunder
(including, without limitation, making any filings required to be made by the
Corporation).
(ix) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Conversion Stock, solely for the
purpose of issuance upon the conversion of the Series A Preferred, such number
of shares of Conversion Stock issuable upon the conversion of all of the
outstanding Series A Preferred. All shares of Conversion Stock which are so
issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance). The Corporation shall not take any action which would cause the
number of authorized but unissued shares of Conversion Stock to be less than the
number of such shares required to be reserved hereunder for issuance upon
conversion of the Series A Preferred.
(x) If any fractional interest in a share of Conversion Stock
would, except for the provisions of this subparagraph, be delivered upon any
conversion of the Series A Preferred, the Corporation, in lieu of delivering the
fractional share therefor, shall pay an amount to the holder thereof equal to
the Market Price of such fractional interest as of the date of conversion.
(xi) If the shares of Conversion Stock issuable by reason of
conversion of the Series A Preferred are convertible into or exchangeable for
any other stock or securities of the Corporation, the Corporation shall, at the
converting holder's option, upon surrender of the shares of Series A Preferred
to be converted by such holder as provided herein together with any notice,
statement or payment required to effect such conversion or exchange of
Conversion Stock, deliver to such holder or as otherwise specified by such
holder a certifi-cate or certificates representing the stock or securities into
which the shares of Conversion Stock issuable by reason of such conversion are
so convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such holder has specified.
(b) Conversion Price.
-----------------
(i) The initial Conversion Price shall be $1.30. In order to
prevent dilution of the conversion rights granted under this Section 4, the
Conversion Price shall be subject to adjustment from time to time pursuant to
this Section 4(b).
(ii) If and whenever on or within twelve (12) months after the
original date of issuance of the Series A Preferred the Corporation issues or
sells, or in accordance with Section 4(c) is deemed to have issued or sold, any
share of Common Stock or other capital stock or any other equity security (the
"Dilutive Security") for a consideration per share less than the Conversion
Price in effect immediately prior to such time, then immediately upon such issue
or sale or deemed issue or sale the Conversion Price shall be reduced to the
lowest net price per share at which any Dilutive Security has been issued or
sold or is deemed to have been issued or sold.
(iii) If and whenever on or after twelve (12) months after the original
date of issuance of the Series A Preferred the Corporation issues or sells, or
in accordance with Section 4(c) is deemed to have issued or sold, any Dilutive
Security for a consideration per share less than the Conversion Price in effect
immediately prior to such time, then immediately upon such issue or sale or
deemed issue or sale the Conversion Price shall be reduced to an amount equal to
the existing Conversion Price multiplied by a fraction (1) the numerator of
which is the sum of (A) the total number of shares of Common Stock issue and
outstanding, plus (B) the number of Dilutive Securities that can be purchased at
the existing Conversion Price for the total consideration received for the
issuance of the Dilutive Securities and (2) the denominator of which is the
total number of shares of Common Stock issued and outstanding plus the number of
Dilutive Securities issued or deemed issued in the new issuance or deemed
issuance. For purposes of the foregoing sentence, the total number of shares of
Common Stock issued and outstanding shall be deemed to include the number of
shares of Common Stock that would be outstanding if all outstanding Convertible
Securities were exercised, exchanged or converted, and all securities
exercisable or exchangeable for or convertible into Convertible Securities were
exercised, exchanged or converted, as applicable, and then exercised, exchanged
or converted, as applicable.
(iv) Notwithstanding the foregoing, there shall be no adjustment
to the Conversion Price hereunder with respect to the issuance or sale by the
Corporation of: (1) Other Securities to employees, officers or directors of the
Corporation or consultants to the Corporation; (2) Other Securities in
connection with any merger or consolidation; (3) Other Securities in connection
with any equipment leasing and/or debt financing; (4) Conversion Stock; and (5)
Other Securities issued or reserved for issuance by the Corporation for which
adjustment is made under this Section 4 with respect to Conversion Stock (A) as
a stock dividend payable in shares of Common Stock or Other Securities for which
the Series A Preferred is convertible or (B) upon any subdivision or split-up of
the outstanding shares of Common Stock or Other Securities for which the Series
A Preferred is convertible.
(c) Effect on Conversion Price of Certain Events. For purposes of
-------------------------------------------------
determining the adjusted Conversion Price under Section 4(b), and subject to the
exclusions set forth in Section 4(b)(iv), the following shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
---------------------------------
manner grants or sells any Option and the lowest price per share for which any
one share of Common Stock is issuable upon the exercise of any such Option, or
upon conversion or exchange of any Convertible Security issuable upon exercise
of any such Option, is less than the Conversion Price in effect immediately
prior to the time of the granting or sale of such Option, then such share of
Common Stock shall be deemed to be outstanding and to have been issued and sold
by the Corporation at the time of the granting or sale of such Option for such
price per share. For purposes of this paragraph, the "lowest price per share
for which any one share of Common Stock is issuable" shall be equal to the sum
of the lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock upon the granting or
sale of the Option, upon exercise of the Option and upon conversion or exchange
of any Convertible Security issuable upon exercise of such Option. No further
adjustment of the Conversion Price shall be made upon the actual issue of such
Common Stock or such Convertible Security upon the exercise of such Options or
upon the actual issue of such Common Stock upon conversion or exchange of such
Convertible Security.
(ii) Issuance of Convertible Securities. If the Corporation in
-------------------------------------
any manner issues or sells any Convertible Security and the lowest price per
share for which any one share of Common Stock is issuable upon conversion or
exchange thereof is less than the Conversion Price in effect immediately prior
to the time of such issue or sale, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Corporation at
the time of the issuance or sale of such Convertible Securities for such price
per share. For the purposes of this paragraph, the "lowest price per share for
which any one share of Common Stock is issuable" shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock upon the issuance or
sale of the Convertible Security and upon the conversion or exchange of such
Convertible Security. No further adjustment of the Conversion Price shall be
made upon the actual issue of such Common Stock upon conversion or exchange of
any Convertible Security, and if any such issue or sale of such Convertible
Security is made upon exercise of any Options for which adjustments of the
Conversion Price had been or are to be made pursuant to other provisions of this
Section 4, no further adjustment of the Conversion Price shall be made by reason
of such issue or sale.
(iii) Calculation of Consideration Received. If any Common Stock
--------------------------------------
or shares of other capital stock, Option or Convertible Security is issued or
sold or deemed to have been issued or sold for cash, the consideration received
therefor shall be deemed to be the amount received by the Corporation therefor
before deducting any reasonable discounts, commissions or expenses. If any
Common Stock or shares of other capital stock, Option or Convertible Security is
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation shall be the fair
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the
Corporation shall be the Market Price thereof as of the date of receipt. The
fair value of any consideration other than cash and securities shall be
determined in good faith by the Board of Directors of the Corporation.
(iv) Record Date. If the Corporation takes a record of the
------------
holders of Common Stock for the purpose of entitling them: (1) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities; or (2) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or upon the making of such
other distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(d) Subdivision of Common Stock. If the Corporation at any time
------------------------------
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater
number of shares, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced.
(e) Notices.
-------
(i) Immediately upon any adjustment of the Conversion Price, the
Corporation shall give written notice thereof to all holders of the Series A
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders of
the Series A Preferred at least twenty (20) days prior to the date on which the
Corporation closes its books or takes a record: (1) with respect to any
dividend or distribution upon Common Stock; or (2) with respect to any pro rata
sub-scription offer to holders of Common Stock.
Section 5. Registration of Transfer.
--------------------------
The Corporation shall keep at its principal office a register for the
registration of the Series A Preferred. Upon the surrender of any certificate
representing the Series A Preferred at such place, the Corporation shall, at the
request of the record holder of such certificate, execute and deliver (at the
Corporation's expense) a new certificate or certificates in exchange there-for
representing in the aggregate the number of shares of Series A Preferred
represented by the surrendered certificate. Each such new certificate shall be
registered in such name and shall represent such number of shares of Series A
Preferred as is requested by the holder of the surrendered certificate and shall
be substantially identical in form to the surrendered certificate, and dividends
shall accrue on the Series A Preferred represented by such new certificate from
the date to which dividends have been fully paid on such Series A Preferred
repre-sented by the surrendered certificate.
Section 6. Replacement.
-----------
Upon receipt of evidence reasonably satisfactory to the Corporation (an
affidavit of the registered holder shall be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing shares
of the Series A Preferred, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corpora-tion (provided that if the holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Corporation shall
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares of Series A Preferred
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate, and dividends
shall accrue on the Series A Preferred represented by such new certificate from
the date to which dividends have been fully paid on such lost, stolen, destroyed
or mutilated certificate.
Section 7. Definitions.
-----------
"Common Stock" means, collectively, the Corporation's common stock, par
value $0.01, and any capital stock of any class of the Corporation hereafter
authorized which is not limited to a fixed sum or percentage of par or stated
value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
"Conversion Stock" means shares of the Corporation's Common Stock issuable
upon conversion of the Series A Preferred; provided that if there is a change
such that the securities issuable upon conversion of the Series A Preferred are
issued by an entity other than the Corpora-tion or there is a change in the type
or class of securities so issuable, then the term "Conversion Stock" shall mean
one share of the security issuable upon conversion of the Series A Preferred if
such security is issuable in shares, or shall mean the smallest unit in which
such security is issuable if such security is not issuable in shares.
"Convertible Securities" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock.
"Liquidation Value" of any share of Series A Preferred as of any particular
date shall be equal to $1.30, as adjusted.
"Market Price" of any security means the average of the closing prices of
such security's sales on all securities exchanges on which such security may at
the time be listed, or, if there has been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of twenty-one (21) days consisting of
the day as of which "Market Price" is being determined and the twenty (20)
consecutive business days prior to such day. If at any time such security is
not listed on any secu-rities exchange or quoted in the NASDAQ System or the
over-the-counter market, the "Market Price" shall be the fair value thereof
determined jointly by the Corporation and the holders of a majority of the
Series A Preferred. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an independent
appraiser experienced in valuing securities jointly selected by the Corporation
and the holders of a majority of the Series A Preferred. The determination of
such appraiser shall be final and binding upon the parties, and the Corporation
shall pay the fees and expenses of such appraiser.
"Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
"Other Securities" means any capital stock or other equity securities of
the Corporation, except for the Series A Preferred.
"Person" means an individual, a partnership, a corpora-tion, a limited
liability company, a limited liability, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Qualified Public Offering" means any offering by the Corporation of its
capital stock or equity securities to the public pursuant to an effective
registration state-ment under the Securities Act of 1933, as then in effect, or
any comparable statement under any similar federal statute then in force, in
which the price paid by the public for each share of capital stock or equity
security is at least $10.00 (adjusted for stock splits or stock dividends) and
the aggregate gross proceeds to the Corporation from the sale of all such shares
is not less than $15 million. A Qualified Public Offering shall be deemed to
have occurred upon the effectiveness of the registration statement filed with
respect to such offering, subject to such Qualified Public Offering having been
deemed to have occurred and being reversed and nullified if the closing of the
sale of such shares pursuant to such offering does not occur within ten (10)
business days after such effectiveness.
Section 8. Amendment and Waiver.
----------------------
No amendment, modification or waiver shall be binding or effective with
respect to any provision of Sections 1 to 9 hereof without the prior written
consent of the holders of a majority of the Series A Preferred outstanding at
the time such action is taken; provided that no such action shall change: (a)
the manner in which dividends on the Series A Preferred accrue or the times at
which such dividends become payable or the amount payable on redemption of the
Series A Preferred or the times at which redemption of the Series A Preferred is
to occur, without the prior written consent of the holders of at least
two-thirds of the Series A Preferred then outstanding; (b) the Conversion Price
of the Series A Preferred or the number of shares or class of stock into which
the Series A Preferred is convertible, without the prior written consent of the
holder of at least two-thirds of the Series A Preferred then outstanding; or (c)
the percentage required to approve any change described in clauses (a) and (b)
----------- ---
above, without the prior written consent of the holders of at least two-thirds
of the Series A Preferred then outstanding; and provided further that no change
in the terms hereof may be accomplished by merger or consolidation of the
Corporation with another corporation or entity unless the Corporation has
obtained the prior written consent of the holders of the applicable percentage
of the Series A Preferred then outstanding.
Section 9. Notices.
-------
Except as otherwise expressly provided hereunder, all notices referred to
herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested and postage prepaid, or by reputable overnight
courier service, charges prepaid, and shall be deemed to have been given when so
mailed or sent (i) to the Corporation, at its principal executive offices and
(ii) to any stockholder, at such holder's address as it appears in the stock
records of the Corporation (unless otherwise indicated by any such holder).
C. PROVISIONS RELATING TO THE COMMON STOCK.
--------------------------------------------
(1) Dividends, Liquidating Distributions and Voting. The Common Stock shall
------------------------------------------------
be subject to the express terms of the Preferred Stock, if any, and any class or
series thereof. Subject to the preferential dividend rights applicable to
shares of any series of Preferred Stock, the holders of shares of Common Stock
shall be entitled to receive when, as and if declared by the Board, out of funds
legally available therefor, dividends and other distributions payable in cash,
property, stock (including shares of any class or series of the Corporation,
whether or not shares of such class or series are already outstanding) or
otherwise. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, and after the holders of the
Preferred Stock shall have been paid in full the amounts to which they shall be
entitled, if any, or a sum sufficient for such payment in full shall have been
set aside, the holders of shares of the Common Stock shall be entitled to
receive all of the remaining assets of the Corporation available for
distribution to its shareholders, ratably in proportion to the number of shares
of the Common Stock held by them. Each share of Common Stock shall have one (1)
vote on all matters that are submitted to shareholders for vote.
(2) Mergers and Consolidations. In the event of a merger, consolidation or
--------------------------
combination of the Corporation with another entity (whether or not the
Corporation is the surviving entity), the holders of Common Stock shall be
entitled to receive their respective pro rata share of the consideration
received in respect of that transaction.
(3) Sales and Repurchases. The Board shall have the power to cause the
-----------------------
Corporation to issue and sell shares of Common Stock to such individuals,
partnerships, joint ventures, limited liability companies, associations,
corporations, trusts or other legal entities (collectively, "persons") and for
such consideration as the Board shall from time to time in its dis-cretion
determine, and as otherwise permitted by law. The Board shall have the power to
cause the Corporation to purchase, out of funds legally available therefor,
shares of Common Stock from such persons and for such consideration as the Board
shall from time to time in its discretion determine, and as otherwise permitted
by law.
ARTICLE VI - BYLAWS
-------------------
The Bylaws of the Corporation may be altered, amended or repealed or new
Bylaws may be adopted at any meeting of the Board of Directors at which a quorum
is present, by the affirmative vote of a majority of the directors present at
such meeting; provided, however, that, notwithstanding the foregoing, the
affirmative vote of at least a majority of the directors or the holders of at
least 66-2/3% of the voting power of the Corporation's voting stock is required
to alter, amend or repeal, or adopt any provision inconsistent with the Bylaw
provisions described in Article Two, Sections 3, 6, 16 and 17 thereof.
ARTICLE VII - INDEMNIFICATION
-----------------------------
The Corporation shall, to the fullest extent permitted by the laws of
Florida, including, but not limited to, Section 607.0850 of the Florida Business
Corporation Act, as the same may be amended and supplemented from time to time,
indemnify any and all directors and officers of the Corporation and may, in the
discretion of the Board of Directors of the Corporation, indemnify any and all
other persons whom it shall have power to indemnify under said Section or
otherwise under Florida law, from and against any and all of the liabilities,
expenses or other matters referred to or covered by said Section. The
indemnification provisions contained in the Florida Business Corporation Act
shall not be deemed exclusive of any other rights of which those indemnified may
be entitled under any bylaw, agreement, resolution of shareholders or
disinterested directors, or otherwise. No provision of these Amended and
Restated Articles of Incorporation is intended by the Corporation to be
construed as limiting, prohibiting, denying or abrogating any of the general or
specific powers or rights conferred under the Florida Business Corporation Act
upon the Corporation, upon its shareholders, bondholders and security holders,
or upon its directors, officers and other corporate personnel, including, in
particular, the power of the Corporation to furnish indemnification to
directors, officers, employees and agents (and their heirs, executors and
administrators) in the capacities defined and prescribed by the Florida Business
Corporation Act and the defined and prescribed rights of said persons to
indemnification as the same are conferred under the Florida Business Corporation
Act.
ARTICLE VIII - AMENDMENT
------------------------
This Corporation reserves the right to amend or repeal any provisions
contained in these Amended and Restated Articles of Incorporation, or any
amendment hereto, and any right conferred upon the shareholders is subject to
this reservation. Notwithstanding the foregoing, the affirmative vote of at
least a majority of the directors or the holders of at least 66-2/3% of the
voting power of the Corporation's voting stock is required to alter, amend or
repeal, or adopt any provision inconsistent with the provisions described in
Article VI or Article VII."
5
<PAGE>
IN WITNESS WHEREOF, the undersigned has made and subscribed these Amended
and Restated Articles of Incorporation as of the ____ day of December, 2000.
EMAGISOFT TECHNOLOGIES, INC.
By:
----------------------------------------------
Kyle E. Jones
Chairman of the Board, Chief Executive Officer
and President
6
<PAGE>
