EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SEACHANGE TECHNOLOGY, INC.
SEACHANGE TECHNOLOGY, INC., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby certifies as
follows:
1. The name of the Corporation is SeaChange Technology, Inc.
2. The Corporation's original Certificate of Incorporation was filed
with the Secretary of State of the State of Delaware on July 9, 1993 under the
name "Seaview, Inc.".
3. The Amended and Restated Certificate of Incorporation of the
Corporation in the form attached hereto as Exhibit A was duly adopted by written
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consent of the directors and stockholders of the Corporation in accordance with
the applicable provisions of Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware and written notice of such action by
written consent of stockholders has been given in accordance with said Section
228.
4. The text of the Corporation's Amended and Restated Certificate of
Incorporation as so adopted is set forth as Exhibit A attached hereto and is
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incorporated herein by this reference.
IN WITNESS WHEREOF, SeaChange Technology, Inc. has caused this Amended
and Restated Certificate of Incorporation to be signed by William C. Styslinger,
III, its President, and attested by George W. Lloyd, its Assistant Secretary,
this 20th day of May, 1994
SEACHANGE TECHNOLOGY, INC.
By: /s/ William C. Styslinger, III
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President
ATTEST
By: /s/ George W. Lloyd
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Assistant Secretary
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Exhibit A
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AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SEACHANGE TECHNOLOGY, INC.
* * * * * * * *
FIRST. The name of the corporation is SeaChange Technology, Inc.
SECOND. The address of its registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware
19801. The name of its registered agent at such address is The Corporation Trust
Company.
THIRD. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of all classes of capital stock
which the corporation shall have authority to issue is 130,000, of which (i)
100,000 shares shall be Common Stock, par value $.01 per share ("Common Stock");
and (ii) 30,000 shares of undesignated preferred stock, par value $0.01 per
share (the "Preferred Stock").
The following is a statement of the designations, preferences, voting
powers, qualifications, special or relative rights and privileges of the
authorized capital stock of the Corporation.
I. PREFERRED STOCK
The Preferred Stock may be issued from time to time in one or more
classes or series. The Board of Directors of the Corporation shall have
authority to the fullest extent permitted under the Delaware General Corporation
Law to adopt by resolution from time to time one or more certificates of
designation providing for the designation of one or more classes or series of
Preferred Stock and the voting powers, whether full, limited or no voting
powers, and such designations, preferences and relative, participating, optional
or other special rights, and qualifications, or restrictions thereof, and to
fix, alter or reduce the number of shares comprising any such class or series,
subject to any requirements of the Delaware General Corporation Law and this
certificate of incorporation, as amended from time to time.
The authority of the Board of Directors with respect to each such class
or series shall include, without limiting the generality of the foregoing, the
right to determine and fix the
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following preferences and powers, which may vary as between different classes or
series of Preferred Stock:
(a) the distinctive designation of such class or series and the number
of shares to constitute such class or series;
(b) the rate at which dividends on the shares of such class or series
shall be declared and paid, or set aside for payment, whether dividends at the
rate so determined shall be cumulative or accruing, and whether the shares of
such class or series shall be entitled to any participating or other dividends
in addition to dividends at the rate so determined, and if so, on what terms;
(c) the right or obligation, if any, of the Corporation to redeem
shares of the particular class or series of Preferred Stock and, if redeemable,
the price, terms and manner of such redemption;
(d) the special and relative rights and preferences, if any, and the
amount or amounts per share, which the shares of such class or series of
Preferred Stock shall be entitled to receive upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
(e) the terms and conditions, if any, upon which shares of such class
or series shall be convertible into, or exchangeable for, shares of capital
stock of any other class or series, including the price or prices or the rate or
rates of conversion or exchange and the terms of adjustment, if any;
(f) the obligation, if any, of the Corporation to retire, redeem or
purchase shares of such class or series pursuant to a sinking fund or fund of a
similar nature or otherwise, and the terms and conditions of such obligation;
(g) voting rights, if any, including special voting rights with
respect to the election of directors and matters adversely affecting any class
or series of Preferred Stock;
(h) limitations, if any, on the issuance of additional shares of such
class or series or any shares of any other class or series of Preferred Stock;
and
(i) such other preferences, powers, qualifications, special or
relative rights and privileges thereof as the Board of Directors of the
Corporation, by the action of at least a majority of the members of the Board of
Directors then in office acting in accordance with this certificate of
incorporation, or any certificate of designation with respect to any Preferred
Stock, may deem advisable and are not inconsistent with law, the provisions of
this certificate of incorporation or the provisions of any such certificate of
designation.
II. COMMON STOCK
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1. Priority. All preferences, voting powers, relative, participating,
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optional or other special rights and privileges, and qualifications, limitations
or restrictions of the Common Stock are expressly made subject to and
subordinate to those that may be fixed with respect to the Preferred Stock.
2. Voting Rights. Each holder of record of Common Stock shall be
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entitled to one vote for each share of Common Stock standing in his name on the
books of the Corporation. Except as otherwise provided by this certificate of
incorporation or by law, the holders of Common Stock and the holders of
Preferred Stock shall vote together as a single class on all matters as to which
the Common Stock is entitled to vote.
3. Dividends. Subject to provisions of law, this certificate of
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incorporation and the rights of any Preferred Stock, the holders of Common Stock
shall be entitled to receive dividends out of funds legally available therefor
at such times and in such amounts as the Board of Directors may determine in
their sole discretion.
4. Liquidation. Upon any liquidation, dissolution or winding up of the
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Corporation, whether voluntary or involuntary, after the payment or provision
for payment of all debts and liabilities of the Corporation and all preferential
amounts to which the holders of the Preferred Stock are entitled with respect to
the distribution of assets in liquidation, the holders of Common Stock shall be
entitled to share ratably in the remaining assets of the Corporation available
for distribution.
III. SERIES A CONVERTIBLE PREFERRED STOCK
1. Designation. The series of Preferred Stock designated and known as
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"Series A Convertible Preferred Stock" shall consist of 30,000 shares of the
authorized Preferred Stock of the Corporation (the "Series A Convertible
Preferred Stock").
2. Voting. Except as otherwise may be required by law or the
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provisions of this Certificate of Incorporation, the Series A Convertible
Preferred Stock shall vote together with all other classes and series of stock
of the Corporation as a single class on all actions to be taken by the
stockholders of the Corporation. Each share of Series A Convertible Preferred
Stock shall entitle the holder thereof to such number of votes per share on each
such action as shall equal the number of shares of Common Stock (including
fractions of a share) into which each share of Series A Convertible Preferred
Stock is then convertible. For this purpose, without limiting the generality of
the foregoing, the authorization or issuance of any series of Preferred Stock
with preference or priority over, or on parity with, the Series A Convertible
Preferred Stock or the Common Stock as to the right to receive either dividends
or amounts distributable upon liquidation, dissolution or winding up of the
Corporation, shall not be deemed to affect adversely the Series A Convertible
Preferred Stock or Common Stock.
3. Dividends. The holders of the outstanding shares of Series A
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Convertible Preferred Stock shall be entitled to receive, out of funds legally
available therefore, when, as and if declared by the Board of Directors,
dividends at the same rate as dividends (other than
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dividends paid in additional shares of Common Stock) are paid with respect to
the Common Stock (treating each share of Series A Convertible Preferred Stock as
being equal to the number of shares of Common Stock (including fractions of a
share) into which it is then convertible).
4. Liquidation. Upon any liquidation, dissolution or winding up of the
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Corporation, whether voluntary or involuntary, the holders of the shares of
Series A Convertible Preferred Stock shall be entitled, before any distribution
or payment is made upon any stock ranking on liquidation junior to the Series A
Convertible Preferred Stock, to be paid an amount equal to the greater of (a)
$35.00 per share (which amount shall be subject to equitable adjustment whenever
there shall occur a stock split, combination, reclassification or other similar
event involving the Series A Convertible Preferred Stock) plus all dividends
declared but unpaid thereon, computed to the date payment thereof is made
available and (b) such amount per share as would have been payable had each such
share been converted into Common Stock immediately prior to such liquidation,
dissolution or winding up. If upon such liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the assets to be
distributed among the holders of Series A Convertible Preferred Stock shall be
insufficient to permit payment to the holders of Series A Convertible Preferred
Stock of the amount distributable as aforesaid, then the entire assets of the
Corporation to be so distributed shall be distributed ratably among the holders
of Series A Convertible Preferred Stock.
Upon any such liquidation, dissolution or winding up of the Corporation,
after the holders of Series A Convertible Preferred Stock shall have been paid
in full the amounts to which they are entitled, the remaining net assets of the
Corporation may be distributed to holders of stock ranking on liquidation junior
to the Series A Convertible Preferred Stock.
The consolidation or merger of the Corporation into or with any other
entity or entities which results in the exchange of outstanding shares of the
Corporation for securities or other consideration issued or paid or caused to be
issued or paid by any such entity or affiliate thereof (other than a merger to
reincorporate the Corporation in a different jurisdiction), and the sale or
transfer by the Corporation of all or substantially all its assets, shall be
deemed to be a liquidation, dissolution or winding up of the Corporation within
the meaning of the provisions of this paragraph 4. For purposes hereof, Common
stock shall rank on liquidation junior to the Series A Convertible Preferred
Stock.
5. Conversions. The holders of shares of Series A Convertible
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Preferred Stock shall have the following conversion rights:
5A. Right to Convert. Subject to the terms and conditions of this
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paragraph 5, the holder of any share or shares of Series A Convertible Preferred
Stock shall have the right, at its option at any time, to convert any such
shares of Series A Convertible Preferred Stock (except that upon any liquidation
of the Corporation the right of conversion shall terminate at the close of
business on the business day fixed for payment of the amount distributable on
the Series A Convertible Preferred Stock) into one fully paid and nonassessable
share of Common Stock for each share of Series A Convertible Preferred Stock.
Such rights of conversion shall be exercised by the holder thereof by giving
written notice that the holder elects to convert a stated
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number of shares of Series A Convertible Preferred Stock into Common Stock and
by surrender of a certificate or certificates for the shares so to be converted
to the Corporation at its principal office (or such other office or agency of
the Corporation as the Corporation may designate by notice in writing to the
holders of the Series A Convertible Preferred Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
5B. Issuance of Certificates; Time Conversion Effected. Promptly
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after the receipt of the written notice referred to in subparagraph 5A and
surrender of the certificate or certificates for the share or shares of Series A
Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Series A Convertible Preferred Stock. To the extent
permitted by law, such conversion shall be deemed to have been effected as of
the close of business on the date on which such written notice shall have been
received by the Corporation and the certificate or certificates for such share
or shares shall have been surrendered as aforesaid, and at such time the rights
of the holder of such share or shares of Series A Convertible Preferred Stock
shall cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby.
5C. Fractional Shares; Dividends; Partial Conversion. Fractional
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shares may be issued upon conversion of Series A Convertible Preferred Stock
into Common Stock, but no payment or adjustment shall be made upon any
conversion on account of any cash dividends on the Common Stock issued upon such
conversion. At the time of each conversion, the Corporation shall pay in cash
an amount equal to all dividends accrued and unpaid on the shares of Series A
Convertible Preferred Stock surrendered for conversion to the date upon which
such conversion is deemed to take place as provided in subparagraph 5B. In case
the number of shares of Series A Convertible Preferred Stock represented by the
certificate or certificates surrendered pursuant to subparagraph 5A exceeds the
number of shares converted, the Corporation shall, upon such conversion, execute
and deliver to the holder, at the expense of the Corporation, a new certificate
or certificates for the number of shares of Series A Convertible Preferred Stock
represented by the certificate or certificates surrendered which are not to be
converted.
5D. Subdivision or Combination of Common Stock. In case the
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Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) or combine its outstanding shares of Common Stock into a greater or
smaller number of shares, the number of shares of Common stock into which the
Series A Convertible Preferred Stock may be converted shall be adjusted on an
equitable basis to protect the holders of Series A Convertible Preferred Stock
against dilution or impairment.
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5E. Reorganization or Reclassification. If any capital
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reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a share or shares
of Series A Convertible Preferred Stock shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of the shares of Common Stock immediately theretofore receivable upon
the conversion of such share or shares of Series A Convertible Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock immediately theretofore
receivable upon such conversion had such reorganization or reclassification not
taken place, and in any such case appropriate provisions shall be made with
respect to the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the number of shares of Common Stock into which the shares of Series A
Convertible Preferred Stock may be converted) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such conversion rights.
5F. Stock to be Reserved. The Corporation will at all times
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reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Series A Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series A Convertible
Preferred Stock. The Corporation covenants that all shares of Common Stock
which shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the effective conversion price of the Series A
Convertible Preferred Stock in effect at the time. The Corporation will take
all such action as may be necessary to assure that all such shares of Common
Stock may be so issued without violation of any applicable law or regulation, or
of any requirement of any national securities exchange upon which the Common
Stock may be listed. The Corporation will not take any action which results in
any adjustment of the number of shares of Common Stock into which the shares of
Series A Convertible Preferred Stock may be converted if the total number of
shares of Common Stock issued and issuable after such action upon conversion of
the Series A Convertible Preferred Stock would exceed the total number of shares
of Common Stock then authorized by the Certificate of Incorporation.
5G. Reissuance of Series A Convertible Preferred Stock. Shares of
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Series A Convertible Preferred Stock that are converted into shares of Common
Stock as provided herein shall assume the status of authorized but unissued
Preferred Stock.
5H. Mandatory Conversion. If at any time the Corporation shall
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effect a firm commitment underwritten public offering of shares of Common Stock
in which (i) the aggregate
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price paid for such shares by the public shall be at least $5,000,000 and (ii)
the price paid by the public for such shares shall be at least $100 per share
(appropriately adjusted to reflect the occurrence of any event described in
subparagraph 5D), then, effective upon the closing of the sale of such shares by
the Corporation pursuant to such public offering, all outstanding shares of
Series A Convertible Preferred Stock shall automatically convert to shares of
Common Stock on the basis set forth in this paragraph 5. Holders of shares of
Series A Convertible Preferred Stock so converted may deliver to the Corporation
at its principal office (or such other office or agency of the Corporation as
the Corporation may designate by notice in writing to such holders) during its
usual business hours, the certificate or certificates for the shares so
converted. As promptly as practicable thereafter, the Corporation shall issue
and deliver to such holder a certificate or certificates for the number of
shares of Common Stock to which such holder is entitled. Until such time as a
holder of shares of Series A Convertible Preferred Stock shall surrender his or
its certificates therefor as provided above, such certificates shall be deemed
to represent the shares of Common Stock to which such holder shall be entitled
upon the surrender thereof.
6. Amendments. No provision of these terms of the Series A
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Convertible Preferred Stock may be amended, modified or waived without the
written consent or affirmative vote of the holders of a majority of the then
outstanding shares of Series A Convertible Preferred Stock.
FIFTH. The corporation is to have perpetual existence.
SIXTH. In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the board of directors of the corporation
is expressly authorized to adopt, amend or repeal the by-laws of the
corporation.
SEVENTH. Elections of directors need not be by written ballot unless
the by-laws of the corporation shall so provide. The books of the corporation
may be kept (subject to any provisions contained in the statutes) at such place
within or without the State of Delaware as the by-laws of the corporation may
provide or as may be designated from time to time by the board of directors of
the corporation.
EIGHTH. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as a consequence of
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such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
NINTH. The corporation eliminates the personal liability of each member
of its board of directors to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that the foregoing
shall not eliminate the liability of a director (i) for any breach of such
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware
Code or (iv) for any transaction from which such director derived an improper
personal benefit.
TENTH. The corporation reserves the right to amend or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon a stockholder
herein are granted subject to this reservation.
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
SEACHANGE TECHNOLOGY, INC., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of SeaChange Technology, Inc., at a
meeting held on May 26, 1995, duly adopted a resolution setting forth the
proposed amendment as follows:
RESOLVED: That the Certificate of Incorporation of the Corporation be amended
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by changing the first sentence of the Article thereof numbered
"FOURTH" so that, as amended, the first sentence of that Article
shall be and read as follows:
"The total number of shares of all classes of capital stock which
the corporation shall have authority to issue is 7,030,000, of which
(i) 7,000,000 shares shall be common stock, par value $.01 per share
("Common Stock"); and (ii) 30,000 shares of preferred stock, par
value $.01 per share, all of which arc designated as 'Series A
Convertible Preferred Stock' (the "Preferred Stock")."
SECOND: That thereafter, the stockholders, in accordance with Section 228
of the General Corporation Law of the State of Delaware voted in favor of the
amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
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IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by William Styslinger, III, its President, and attested by Edward
McGrath, its Secretary, this 31st day of July, 1995.
SEACHANGE TECHNOLOGY, INC.
By: /s/ William Styslinger, III
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William Styslinger, III
President
ATTEST:
By: /s/ Edward McGrath
--------------------
Edward McGrath
Secretary
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
SEACHANGE TECHNOLOGY, INC., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of SeaChange Technology, Inc., by
written consent in accordance with Section 141 of the General Corporation Law of
the State of Delaware, duly adopted a resolution to be filed with the minutes of
the Board of Directors. The resolution setting forth the proposed amendment is
as follows:
RESOLVED: That the Directors propose and declare it advisable that the
Corporation's Certificate of Incorporation be amended by deleting
the entire Article numbered Fourth and replacing it with a new
Article Fourth in place thereof so that the said Article reads in
its entirety in the form attached hereto as Exhibit A (the
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"Amended Charter").
SECOND: That thereafter, the stockholders, in accordance with Section 228
of the General Corporation Law of the State of Delaware voted in favor of the
amendment.
THIRD: That said amendment was duty adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
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IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by William Styslinger, III, its President, and attested by Edward
McGrath, its Secretary, this 26th day of October, 1995.
SEACHANGE TECHNOLOGY, INC.
By: /s/ William Styslinger, III
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William Styslinger, III
President
ATTEST:
By: /s/ Edward McGrath
--------------------
Edward McGrath
Secretary
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Exhibit A
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FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 11,000,000, of which (i)
10,000,000 shares shall be Common Stock, par value of One Cent ($.01) per share
("Common Stock"); and (ii) 1,000,000 shares shall be of preferred stock, par
value One Cent ($0.01) per share (the "Preferred Stock"), of which 30,000 shares
are designated as Series A Preferred Stock, 650,487 shares are designated as
Series B Preferred Stock, and 319,513 shares are undesignated Preferred Stock.
The following is a statement of the designations, preferences, voting
powers, qualifications, special or relative rights and privileges of the
authorized capital stock of the Corporation.
I. PREFERRED STOCK
The Preferred Stock may be issued from time to time in one or more classes
or series. The Board of Directors of the Corporation shall have authority to
the fullest extent permitted under the Delaware General Corporation Law to adopt
by resolution from time to time one or more certificates of designation
providing for the designation of one or more classes or series of Preferred
Stock and the voting powers, whether full, limited or no voting powers, and such
designations, preferences and relative, participating, optional or other special
rights, and qualifications, or restrictions thereof, and to fix, alter or reduce
the number of shares comprising any such class or series, subject to any
requirements of the Delaware General Corporation Law and this certificate of
incorporation as amended from time to time.
The authority of the Board of Directors with respect to each such class or
series shall include, without limiting the generality of the foregoing, the
right to determine and fix the following preferences and powers, which may vary
as between different classes or series of Preferred Stock:
(a) the distinctive designation of such class or series and the number
of shares to constitute such class or series;
(b) the rate at which dividends on the shares of such class or series
shall be declared and paid, or set aside for payment, whether dividends at the
rate so determined shall be cumulative or accruing, and whether the shares of
such class or series shall be entitled to any in addition to dividends at the
rate so determined, and if so, on what terms.
(c) the right or obligation, if any, of the Corporation to redeem
shares of the particular class or series of Preferred Stock and, if redeemable,
the price, terms and manner of such redemption;
(d) the special and relative rights and preferences, if any, and the
amount or amounts per share, which the shares of such class or series of
Preferred Stock shall be entitled to
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receive upon any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation;
(e) the terms and conditions, if any, upon which shares of such class
or series shall be convertible into, or exchangeable for, shares of capital
stock of any other class or series, including the price or prices or the rate or
rates of conversion or exchange and the terms of adjustment, if any;
(f) the obligation, if any, of the Corporation to retire, redeem or
purchase shares of such class or series pursuant to a sinking fund or fund of a
similar nature or otherwise, and the terms and conditions of such obligation;
(g) voting rights, if any, including special voting rights with
respect to the election of directors and matters adversely affecting any class
or series of Preferred Stock;
(h) limitations, if any, on the issuance of additional shares of such
class or series or any shares of any other class or series of Preferred Stock;
and
(i) such other preferences, powers, qualifications special or relative
rights and privileges thereof as the Board of Directors of the Corporation, by
the action of at least a majority of the members of the Board of Directors then
in office acting in accordance with this certificate of incorporation, or any
certificate of designation with respect to any Preferred Stock, may deem
advisable and are not inconsistent with law, the provisions of this certificate
of incorporation, or the provisions of any such certificate of designation.
II. COMMON STOCK
1. Priority. All preferences, voting powers, relative, participating,
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optional or other special rights and privileges, and qualifications, limitations
or restrictions of the Common Stock are expressly made subject to and
subordinate to those that may be fixed with respect to the Preferred Stock.
2. Voting Rights. Each holder of record of Common Stock shall be entitled
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to one vote for each share of Common Stock standing in his name on the books of
the Corporation. Except as otherwise provided by this certificate of
incorporation or by law, the holders of Common Stock and the holders of
Preferred Stock shall vote together as a single class on all matters as to which
the Common Stock is entitled to vote.
3. Dividends. Subject to provisions of law, this certificate of
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incorporation and the rights of any Preferred Stock, the holders of Common Stock
shall be entitled to receive dividends out of funds legally available therefor
at such times and in such amounts as the Board of Directors may determine in
their sole discretion.
4. Liquidation. Upon any liquidation, dissolution or winding up of the
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Corporation, whether voluntary or involuntary, after the payment or provisions
for payment of all debts and
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liabilities of the Corporation and all preferential amounts to which the holders
of the Preferred Stock are entitled with respect to the distribution of assets
in liquidation, the holders of Common Stock shall be entitled to share ratably
in the remaining assets of the Corporation available for distribution.
III. SERIES A AND B CONVERTIBLE PREFERRED STOCK
1. Designation. The series of 30,000 shares of Series A Convertible
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Preferred Stock, par value $.01 per share, shall be designated the "The Series A
Preferred Stock", and the series of 650,487 shares of Series B Convertible
Preferred Stock, par value $.01 per share, shall be designated the "Series B
Preferred Stock." The Series A Preferred Stock and the Series B Preferred Stock
sometimes are referred to hereinafter collectively as the "Preferred Stock" and
shall have the following rights, terms and privileges:
2. Dividends.
---------
(a) Dividends. The holders of the then outstanding Preferred Stock shall
---------
be entitled to receive, out of funds legally available therefore, when, as and
if declared by the Board of Directors, dividends at the same rate as dividends
are paid with respect to the Common Stock (including fractions of a share) into
which it is convertible.
(b) Dividends in Kind. No dividend in kind shall be paid until after the
-----------------
adjustment to the Applicable Conversion Value required under Section 5(d)(i) is
made. Thereafter, in the event the Corporation shall make or issue, or shall
fix a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution with respect to the Common Stock
payable in (i) securities of the Corporation other than shares of Common Stock
or (ii) assets, then and in each such event the holders of Preferred Stock shall
receive, at the same time such distribution is made with respect to Common
Stock, the number of securities or such other assets of the Corporation which
they would have received had their Preferred Stock been converted into Common
Stock immediately prior to the record date for determining holders of Common
Stock entitled to receive such distribution.
3. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) Treatment at Liquidation, Dissolution or Winding Up. In the event of
---------------------------------------------------
any liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, before any distribution may be made with respect to the Common
Stock or any other series of capital stock which is junior to the Preferred
Stock, holders of each share of the Preferred Stock shall be entitled to be paid
out of the assets of the Corporation available for distribution to holders of
the Corporation's capital stock of all classes, whether such assets are capital,
surplus, or capital earnings, the greater of (i) (x) in the case of the Series A
Preferred Stock $35.00 per share (subject to adjustment in the event of a stock
split, combination, reclassification or other similar event (any such event
referred to as a "Recapitalization") occurring after October 25, 1995) and (y)
in the case of the Series B Preferred Stock, an amount equal $7.802 (the
"Original Blended Price") per share of Preferred Stock (subject to adjustment in
the event of a
-17-
Recapitalization occurring after October 25, 1995) plus a dividend at the rate
of six percent (6%) of the Original Blended Price, compounded annually, from the
date of issuance through the date of such liquidation, dissolution or winding
up, less all dividends theretofore paid with respect to the Series B Preferred
Stock under Section 2 and minus the amount per share which the holders of the
Series B Preferred Stock would have received upon such liquidation, dissolution
or winding up with respect to any shares of Common Stock which may be purchased
from Messrs. William C. Styslinger, III and Edward McGrath in January, 1996, had
they retained ownership of all such shares as of the date of such liquidation,
dissolution or winding up, or (ii) such amount per share of Preferred Stock as
would have been payable had each such share been converted into Common Stock
immediately prior to such event of liquidation, dissolution or winding up
pursuant to the provisions of Section 5. The amount payable with respect to the
Series A Preferred Stock and Series B Preferred Stock pursuant to this Section
3(a) is referred to herein as the "Liquidation Amount".
If the assets of the Corporation available for distribution to its
shareholders shall be insufficient to pay all the holders of shares of Series A
Preferred Stock and Series B Preferred Stock the full amount of the Liquidation
Amount to which they shall be entitled, the holders of shares of Series A
Preferred Stock and the holders of Shares of Series B Preferred Stock shall
share ratably in an distribution of assets in proportion to the amounts which
they would have received with respect to their Series A or Series B Preferred
Stock had all amounts payable on or with respect to said shares been paid in
full.
After the payment of the Liquidation Amount shall have been made in full to
the holders of the Preferred Stock or funds necessary for such payment shall
have been set aside by the Corporation in trust for the account of holders of
the Preferred Stock so as to be available for such payments, the holders of the
Preferred Stock shall be entitled to no further participation in the
distribution of the assets of the Corporation, and the remaining assets of the
Corporation legally available for distribution to its shareholders shall be
distributed among the holders of other classes of securities of the Corporation
in accordance with their respective terms.
(b) Treatment of Reorganizations. Any Reorganization (as such term is
----------------------------
defined in Section 5(g)), shall be regarded as a liquidation, dissolution or
winding up of the affairs of the Corporation within the meaning of this Section
3; provided, however, that each holder of the Preferred Stock shall have the
-------- -------
right to elect the benefits of the provisions of Section 5(g) hereof, if
applicable, in lieu of receiving payment of amounts payable upon liquidation,
dissolution or winding up of the Corporation pursuant to this Section 3.
(c) Distributions in Cash. The Liquidation Amount shall in all events be
---------------------
paid in cash.
4. Voting Power. Except as otherwise expressly provided in Section 8
------ -----
hereof, or as required by law, each holder of Preferred Stock shall be entitled
to vote on all matters and shall be entitled to that number of votes equal to
the largest number of whole shares of Common Stock into which such holder's
shares of Preferred Stock could be converted, pursuant to the provisions of
Section 5 hereof, at the record date for the determination of shareholders
entitled to vote on such matter or, if no such record date is established, at
the date such vote is taken or any written
-18-
consent of shareholders is solicited. Notwithstanding the foregoing, for
purposes of determining the voting of the Series B Preferred Stock, it shall be
assumed that the Applicable Conversion Value of the Series B Preferred Stock is
$6.293 until the adjustment thereto required under Section 5(d)(i) is made.
Except as otherwise expressly provided herein or as required by law, the holders
of shares of Series A Preferred Stock, Series B Preferred Stock and Common Stock
shall vote together as a single class on all matters.
5. Conversion Rights for the Preferred Stock. The holders of the
-----------------------------------------
Preferred Stock shall have the following rights with respect to the conversion
of the Preferred Stock into shares of Common Stock:
(a) General. Subject to and in compliance with the provisions of this
-------
Section 5, any share of the Preferred Stock may, at the option of the holder, be
converted at any time into fully-paid and non-assessable shares of Common Stock;
provided, that the Series B Preferred Stock may not be converted until the first
to occur of (i) Reorganization, liquidation, dissolution or winding up of the
Corporation, (ii) the sale of securities of the Corporation pursuant to a
registration statement filed under the Securities Act of 1933, as amended (the
"Act") or (iii) an adjustment to the Applicable Conversion Value under Section
5(d)(i). The number of shares of Common Stock to which a holder of Preferred
Stock shall be entitled upon conversion shall be the product obtained by
multiplying the Applicable Conversion Rate (determined as provided in Section
5(b)) by the number of shares of Preferred Stock being converted.
(b) Applicable Conversion Rate. The conversion rate in effect at any time
--------------------------
(the "Applicable Conversion Rate") shall be the quotient obtained by dividing
(i) in the case of the Series A Preferred Stock, $35.00, and (ii) in the case of
the Series B Preferred Stock $6.293 by the respective Applicable Conversion
Value, calculated as provided in Section 5(c).
(c) Applicable Conversion Value. The Applicable Conversion Value shall be
---------------------------
(i) in the case of the Series A Preferred Stock, $0.35, and (ii) in the case of
the Series B Preferred Stock $3.597 provided that such amounts shall be adjusted
from time to time in accordance with this Section 5. Notwithstanding the
foregoing, if prior to January 31, 1996 the Corporation redeems 416,100 shares
of Common Stock (subject to appropriate adjustment in the event of a
Recapitalization occurring after October 25, 1995) pursuant to Section 1.4(b) of
the Series B Preferred Stock Purchase Agreement dated as of October 26, 1995
(the "Purchase Agreement"), such redemption hereinafter referred to as the
"Redemption", the initial Applicable Conversion Value for the Series B Preferred
Stock shall automatically be increased to $3.834, subject to the other
adjustment thereto as herein provided.
(d) Adjustments to Applicable Conversion Value.
------------------------------------------
(i) Adjustment to Series B Preferred Stock Based Upon 1996 Earnings Per
-------------------------------------------------------------------
Share.
- -----
(1) The Applicable Conversion Value of the Series B Preferred Stock shall
be adjusted as set forth on Annex 1 attached hereto. Such adjustment
-------
shall be made
-19-
not later than the first to occur of (i) April 1, 1997, and (ii) ten
(10) days after receipt by the Company of audited financial statements
for the year ending December 31, 1996.
(2) In the event of a Reorganization or consummation of a sale of Common
Stock of the Corporation to the public pursuant to a registration
statement filed under the Act, which Reorganization or sale occurs
prior to December 31, 1996, the Applicable Conversion Value shall be
adjusted based on the Consideration Per Share (as herein defined)
payable with respect to such transaction. The term "Consideration Per
Share" shall mean, in the case of a public offering of Common Stock,
the price paid by the public for such shares, and in the case of a
Reorganization, the amount payable with respect to a share of Common
Stock calculated on a fully converted basis. In the event of a
Reorganization or public sale of Common Stock, the Applicable
Conversion Value of the Series B Preferred Stock shall be adjusted so
as to equal the number set forth opposite the Applicable Consideration
Per Share figure set forth on Annex 2 attached hereto; provided that
-------
if the Consideration Per Share shall be less than $7.844 (or, if the
Redemption is completed, $8.295), the Applicable Conversion Value
shall be adjusted assuming a Consideration Per Share of $7.844 (or, if
the Redemption is completed, $8.295), and if the Consideration Per
Share is greater than $15.706 (or, if the Redemption is completed,
$16.612), the Applicable Conversion Value shall be adjusted assuming a
Consideration Per Share of $15.706 (or, if the Redemption is
completed, $16.612). In the event the Consideration Per Share falls
between two consecutive figures on Annex 2, the appropriate Applicable
-------
Conversion Value shall be determined on a straight line interpolation
basis.
(3) No adjustment required under the following provisions of this
subparagraph 5(d) shall be made to Applicable Conversion Value of the
Series B Preferred Stock until the adjustment required by this Section
5(d)(i) has been made; thereafter, any adjustment so delayed shall be
made as if the initial Applicable Conversion Value of the Series B
Preferred Stock had been that as adjusted pursuant to Section 5(d).
(4) Following adjustment of the Applicable Conversion Sale under this
Section 5(d)(i), the Certificate of Incorporation shall be amended to
as to delete such section and Annexes 1 and 2.
(ii)(A) Upon Sale of Common Stock. If the Corporation shall, while
-------------------------
there are any shares of Preferred Stock outstanding, issue or sell shares of its
Common Stock without consideration or at a price per share less than the
Applicable Conversion Values in effect immediately prior to such issuance or
sale, then in each such case such Applicable Conversion Values for the Preferred
Stock, upon each such issuance or sale, except as hereinafter provided, shall be
lowered so as to be equal to an amount determined by multiplying the relevant
Applicable Conversion Values by a fraction:
-20-
(1) the numerator of which shall be (a) the number of shares of
Common Stock outstanding immediately prior to the issuance of such additional
shares of Common Stock, plus the number of shares of Common Stock issuable upon
exercise of the options described in Section 5(d)(ii)(E), plus (b) the number of
shares of Common Stock which the net aggregate consideration if any, received by
the Corporation for the total number of such additional shares of Common Stock
so issued would purchase at the Applicable Conversion Value in effect
immediately prior to such issuance, plus (c) in the case of the Applicable
Conversion Value of the Series B Preferred Stock only, the number of shares of
Common Stock issuable upon conversion of the Series A Preferred Stock, and
(2) the denominator of which shall be (a) the number of shares of
Common Stock outstanding immediately prior to the issuance of such additional
shares of Common Stock, plus the number of shares of Common Stock issuable upon
exercise of the options described in Section 5(d)(ii)(E), plus (b) the number of
such additional shares of Common stock so issued, plus (c) in the case of the
Applicable Conversion Value of the Series B Preferred Stock only, the number of
shares of Common Stock issuable upon conversion of the Series A Preferred Stock.
(B) Upon Issuance of Warrants, Options and Rights to Common
-------------------------------------------------------
Stock.
- -----
(1) For the purposes of this Section 5(d)(ii), the issuance of any
warrants, options, subscriptions, or purchase rights with respect to shares of
Common Stock and the issuance of any securities convertible into or exchangeable
for shares of Common Stock (or the issuance of any warrants, options or any
rights with respect to such convertible or exchangeable securities) shall be
deemed an issuance of such Common Stock at such time if the Net Consideration
Per Share (as hereinafter determined) which may be received by the Corporation
for such Common Stock shall be less than the Applicable Conversion Value at the
time of such issuance. Any obligation, agreement, or undertaking to issue
warrants, options, subscriptions, or purchase rights at any time in the future
shall be deemed to be an issuance at the time such obligation, agreement or
undertaking is made or arises. No adjustment of the Applicable Conversion Value
shall be made under this Section 5(d)(ii) upon the issuance of any shares of
Common Stock which are issued pursuant to the exercise of any warrants, options.
subscriptions, or purchase rights or pursuant to the exercise of any conversion
or exchange rights in any convertible securities if any adjustment shall
previously have been made or deemed not required hereunder, upon the issuance of
any such warrants, options, or subscription or purchase rights or upon the
issuance of any convertible securities (or upon the issuance of any warrants,
options or any rights therefor) as above provided.
Should the Net Consideration Per Share of any such warrants, options,
subscriptions, or purchase rights or convertible securities be decreased from
time to time, then, upon the effectiveness of each such change, the Applicable
Conversion Value shall be adjusted to such Applicable Conversion Value as would
have obtained (1) had the adjustments made upon the issuance of such warrants,
options, rights, or convertible securities been made upon the basis of the
decreased Net Consideration per share of such securities, and (2) had
adjustments made to the Applicable Conversion Value since the date of issuance
of such securities been made to the Applicable Conversion Value as adjusted
pursuant to (1) above. Any adjustment of the
-21-
Applicable Conversion Value with respect to this paragraph which relates to
warrants, options, subscriptions, purchase rights or convertible securities with
respect to shares of Common Stock shall be disregarded if, as, when and to the
extent such warrants, options, subscriptions, purchase rights or convertible
securities expire or are canceled without being exercised or converted, so that
the Applicable Conversion Value effective immediately upon such cancellation or
expiration shall be equal to the Applicable Conversion Value in effect at the
time of the issuance of the expired or canceled warrants, options,
subscriptions, purchase rights, or convertible securities with such additional
adjustments as would have been made to that Applicable Conversion Value had the
expired or canceled warrants, options, subscription, purchase rights or
convertible securities not been issued.
(2) For purposes of this paragraph, the "Net Consideration Per Share"
which may be received by the Corporation shall be determined as follows:
(a) The "Net Consideration Per Share" shall mean the amount equal to
the total amount of consideration, if any, received by the Corporation for
the issuance of such warrants, options, subscriptions, or other purchase
rights or convertible or exchangeable securities, plus the minimum amount
of consideration, if any, payable to the Corporation upon exercise or
conversion thereof, divided by the aggregate number of shares of Common
Stock that would be issued if all such warrants, options, subscriptions, or
other purchase rights or convertible or exchangeable securities were
exercised, exchanged of converted.
(b) The "Net Consideration Per Share" which may be received by the
Corporation shall be determined in each instance as of the date of issuance
of warrants, options, subscriptions, or other purchase rights or
convertible or exchangeable securities without giving effect to any
possible future upward price adjustments or rate adjustments which may be
applicable with respect to such warrants, options, subscriptions, or other
purchase rights or convertible or exchangeable securities.
(C) Stock Dividends. In the event the Corporation shall make or
---------------
issue dividend or other distribution payable in Common Stock or securities of
the Corporation convertible into or otherwise exchangeable for the Common Stock
of the Corporation, then such Common Stock or other securities issued in payment
of such dividend shall be deemed to have been issued without consideration
(except for dividends payable in shares of Common Stock payable pro rata to
--- ----
holders of Preferred Stock and to holders of any other class of stock).
(D) Consideration Other than Cash. For purposes of this Section
-----------------------------
5(d), if a part or all of the consideration received by the Corporation in
connection with the issuance of shares of the Common Stock or the issuance of
any of the securities described in this Section 5(d) consists of property other
than cash, such consideration shall be deemed to have a fair market value as is
reasonably determined in good faith by the Board of Directors of the
Corporation.
(E) Exceptions. This Section 5(d)(ii) shall not apply under any of
----------
the circumstances which would constitute an Extraordinary Common Stock Event (as
hereinafter
-22-
defined in Section 5(d)(ii)). Further, the provisions of this Section 5(d) shall
not apply to (i) shares of Common Stock issued upon conversion of the Preferred
Stock, or (ii) options (and the shares issuable upon exercise thereof) to
purchase up to an aggregate of 468,500 shares of Common Stock (including options
outstanding on the date hereof) issued to employees, officers or consultants of
the Corporation, pursuant to options granted under a stock option plan approved
by the Compensation Committee of the Corporation's Board of Directors. The
number of shares in this Section (E) shall be proportionately adjusted to
reflect any Recapitalization occurring after October 25, 1995.
(iii) Upon Extraordinary Common Stock Event. Upon the happening of an
-------------------------------------
Extraordinary Common Stock Event (as hereinafter defined), the Applicable
Conversion Values for the Preferred Stock shall, simultaneously with the
happening of such Extraordinary Common Stock Event, be adjusted by multiplying
the then effective Applicable Conversion Values with respect to the Preferred
Stock by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such Extraordinary Common Stock
Event and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such Extraordinary Common Stock Event, and the
product so obtained shall thereafter be the Applicable Conversion Values. The
Applicable Conversion Values for the Preferred Stock shall be readjusted in the
same manner upon the happening of any successive Extraordinary Common Stock
Event or Events.
"Extraordinary Common Stock Event" shall mean (i) the issue of additional
shares of Common Stock as a dividend or other distribution on outstanding
Common Stock or on any class or series of preferred stock, unless made pro
---
rata to holders of Preferred Stock, (ii) a subdivision of outstanding
----
shares of Common Stock into a greater number of shares of Common Stock, or
(iii) a combination of outstanding shares of the Common Stock into a
smaller number of shares of Common Stock.
(e) Dividends. In the event the Corporation shall make or issue, or
---------
shall fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution with respect to the Common
Stock payable in (i) securities of the Corporation other than shares of Common
Stock or (ii) assets, then and in each such event the holders of Preferred Stock
shall receive, at the same time such distribution is made with respect to Common
Stock, the number of securities or such other assets of the Corporation which
they would have received had their Preferred Stock been converted into Common
Stock immediately prior to the date of such distribution.
(f) Capital Reorganization Reclassification. If the Common Stock
---------------------------------------
issuable upon the conversion of the Preferred Stock shall be changed into the
same or different number of shares of any class or classes of stock, whether by
capital reorganization, reclassification or otherwise (other than a subdivision
or combination of shares or stock dividend provided for elsewhere in this
Section 5 or by a Reorganization), then and in each such event, the holder of
each share of Preferred Stock shall have the right thereafter to convert such
share into the kind and amount of shares of stock and other securities and
property receivable upon such capital reorganization, reclassification or other
change by holders of the number of shares of Common Stock into which
-23-
such shares of Preferred Stock might have been converted immediately prior to
such capital reorganization, reclassification or other change.
(g) Capital Reorganization, Merger or Sale of Assets. If at any time or
------------------------------------------------
from time to time there shall be a capital reorganization of the Common Stock
(other than a subdivision, combination, reclassification or exchange of shares
provided for elsewhere in this Section 5) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation's properties and assets to any other
person, any of which events is herein referred to as a "Reorganization'), then
as a part of such Reorganization, provision shall be made so that the holders of
the Preferred Stock shall thereafter be entitled to receive upon conversion of
the Preferred Stock, the number of shares of stock or other securities or
property of the Corporation, or of the successor corporation resulting from such
Reorganization, to which such holder would have been entitled if such holder had
converted its shares of Preferred Stock immediately prior to such
Reorganization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 5 with respect to the rights of
the holders of the Preferred Stock after the Reorganization, to the end that the
provisions of this Section 5 (including adjustment of the Applicable Conversion
Value then in effect and the number of shares issuable upon conversion of the
Preferred Stock) shall be applicable after that event in as nearly equivalent a
manner as may be practicable.
Except as otherwise provided in Section 3(b), upon the occurrence of a
Reorganization, under circumstances which make the preceding paragraph
applicable, each holder of Preferred Stock shall have the option of electing
treatment for his shares of Preferred Stock under either this Section 5(g) or
Section 3 hereof, notice of which election shall be submitted in writing to the
Corporation at its principal offices no later than five (5) business days before
the effective date of such event.
(h) Certificates as to Adjustments; Notice by Corporation. In each case
-----------------------------------------------------
of an adjustment or readjustment of the Applicable Conversion Rate, the
Corporation at its expense will furnish each holder of Preferred Stock with a
certificate, executed by the president and chief financial officer (or in the
absence of a person designated as the chief financial officer, by the treasurer)
showing such adjustment or readjustment, and stating in detail the facts upon
which such adjustment or readjustment is based.
(i) Exercise of Conversion Privilege. To exercise its conversion
--------------------------------
privilege, a holder of Preferred Stock shall surrender the certificate or
certificates representing the shares being converted to the Corporation at its
principal office, and shall give written notice to the Corporation at that
office that such holder elects to convert such shares. Such notice shall also
state the name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock issuable upon such conversion shall be
issued. The certificate or certificates for shares of Prefaced Stock
surrendered for conversion shall be accompanied by proper assignment thereof to
the Corporation or in blank. The date when such written notice is received by
the Corporation, together with the certificate or certificates representing the
shares of Preferred Stock being converted, shall be the "Conversion Date." As
promptly as practicable after the Conversion Date, the Corporation shall issue
and shall deliver to the holder of the shares
-24-
of Preferred Stock being converted, or on its written order, such certificate or
certificates as it may request for the number of whole shares of Common Stock
issuable upon the conversion of such shares of Preferred Stock in accordance
with the provisions of this Section 5, and cash, as provided in Section 5(j), in
respect of any fraction of a share of Common Stock issuable upon such
conversion. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the Conversion Date, and at such time the
rights of the holder as holder of the converted shares of Preferred Stock shall
cease and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares of
Common Stock represented thereby. The Corporation shall pay any taxes payable
with respect to the issuance of Common Stock upon conversion of the Preferred
Stock, other than any taxes payable with respect to income by the holders
thereof.
Cash in Lieu of Fractional Shares. The Corporation may, if it so elects,
---------------------------------
issue fractional shares of Common Stock of scrip representing fractional shares
upon the conversion of shares of Preferred Stock. If the Corporation does not
elect to issue fractional shares, the Corporation shall pay to the holder of the
shares of Preferred Stock which were converted a cash adjustment in respect of
such fractional shares in an amount equal to the same fraction of the market
price per share of the Common Stock (as determined in a reasonable manner
prescribed by the Board of Directors) at the close of business on the Conversion
Date. The determination as to whether or not any fractional shares are issuable
shall be based upon the total number of shares of Preferred Stock being
converted at any one time by any holder thereof, not upon each share of
Preferred Stock being converted.
(k) Partial Conversion. In the event some but not all of the shares of
------------------
Preferred Stock represented by a certificate or certificates surrendered by a
holder are converted, the Corporation shall execute and deliver to or on the
order of the holder, at the expense of the Corporation, a new certificate
representing the number of shares of Preferred Stock which were not converted.
(1) Reservation Common Stock. The Corporation 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
Preferred Stock, 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
Preferred Stock, and 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 Preferred Stock, the Corporation shall take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
(m) Minimum Adjustment. Any provision of this Section 5 to the contrary
------------------
notwithstanding, no adjustment in the Applicable Conversion Values shall be made
if the amount of such adjustment would be less than 1 % of the Applicable
Conversion Values then in effect, but any such amount shall be carried forward
and an adjustment with respect thereto shall be made at the time of and together
with any subsequent adjustment which, together with all
-25-
amounts so carried forward, aggregates 1 % or more of the Applicable Conversion
Values then in effect.
6. Mandatory Conversion. If any time the Corporation shall effect a
--------------------
Qualified Public Offering, then effective upon the closing of the sale of shares
of stock of Corporation pursuant to such Qualified Public Offering, all
outstanding shares of Preferred Stock shall automatically convert into shares of
Common Stock on the basis set forth in Section 5. For purposes of this Section
6, the term "Qualified Public Offering" shall mean a firm commitment
underwritten public offering of shares of Common Stock in which (a) in the case
of Series A Preferred Stock, the aggregate price paid for such shares by the
public shall be at least $5,000,000 and (b) in the case if the Series B
Preferred Stock, the aggregate purchase price paid for such shares by the public
shall be at least $15,000,000 and the price paid to the public for such shares
shall be at least twice the then Applicable Conversion Value per share. Holders
of shares of Preferred Stock subject to conversion shall deliver to the
Corporation at its principal office of (or such other office or agency of the
Corporation may designate by notice in writing) during its usual business hours,
the certificate or certificates for the shares of Preferred Stock being
converted, and the Corporation shall issue and deliver to such holders
certificates for the number of shares of Common Stock to which such holders are
entitled. Until such time as holders of shares of Preferred Stock shall
surrender those certificates therefor as provided above, such certificates shall
be deemed to represent the shares of Common Stock which the holders shall be
entitled upon the surrender thereof.
7. No Reissuance of Preferred Stock. No share or shares of Series B
--------------------------------
Preferred Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue. The Corporation may from time to time take such
appropriate corporate action as may be necessary to reduce the authorized number
of shares of the Series B Preferred Stock accordingly.
8. Restrictions and Limitations.
----------------------------
(a) Corporate Action. Except as expressly provided herein or as required
----------------
by law, so long is any shares of Series A Preferred Stock remain outstanding,
the Corporation shall not, and shall not permit any subsidiary (which shall mean
any corporation, association or other business entity which the Corporation
and/or any of its other subsidiaries directly or indirectly owns at the time
more than fifty percent (50%) of the outstanding voting shares of such
corporation or trust, other than directors' qualifying shares) to, without the
approval by vote or written consent by the holders of at least 51 % of the then
outstanding shares of Series A Preferred Stock, voting as a separate class:
(i) authorize or issue, or obligate itself to authorize or issue,
additional shares of Series A Preferred Stock;
-26-
(ii) authorize, increase the authorized number of shares of, or
issue, or obligate itself to authorize or issue, any equity security senior to
the Series A Preferred Stock as to liquidation preference, dividend right,
redemption right or voting right;
(iii) amend, restate, modify or alter the Certificate of
Incorporation or by-laws of the corporation in any way which alters or changes
the rights, preferences or privileges of the Series A Preferred Stock so as to
affect such stock adversely.
(b) Corporate Action. Except as expressly provided herein or as required
----------------
by law, so long as any shares of Series B Preferred Stock remain outstanding,
the Corporation shall not, and shall not permit any subsidiary (which shall mean
any corporation, association or other business entity which the Corporation
and/or any of its other subsidiaries directly or indirectly owns at the time
more than fifty percent (50%) of the outstanding voting shares of such
corporation or trust, other than directors' qualifying shares) to, without the
approval by vote or written consent by the holders of at least 51 % of the then
outstanding shares of Series B Preferred Stock, voting as a separate class:
(i) authorize or issue, or obligate itself to authorize or issue,
additional shares of Series B Preferred Stock;
(ii) authorize, increase the authorized number of shares of, or
issue, or obligate itself to authorize or issue, any equity security senior to
the Series B Preferred Stock as to liquidation preference, dividend right,
redemption right or voting right;
(iii) amend, restate, modify or alter the Certificate of
Incorporation or by-laws of the Corporation in any way which alters or changes
the rights, preferences or privileges of the Series B Preferred Stock so as to
affect such stock adversely.
9. No Dilution or Impairment. The Corporation will not, by amendment of
-------------------------
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of the Preferred Stock set forth herein, but will at all times
in good faith assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate in order to protect the
rights of the holders of the Preferred Stock against dilution or other
impairment. Without limiting the generality of the foregoing, the Corporation
(a) will not increase the par value of any shares of stock receivable on the
conversion of the Preferred Stock above the amount payable therefor on such
conversion, (b) will take all such action as may be necessary or appropriate in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of stock on the conversion of all Preferred Stock from time
to time outstanding, or (c) will not consolidate with or merge into any other
person or permit any such person to consolidate with or merge into the
Corporation (if the Corporation is not the surviving person), unless such other
person shall expressly assume in writing and will be bound by all of the terms
of the Preferred Stock set forth herein.
-27-
10. Notices of Record Date. In the event of
----------------------
(a) any taking by the Corporation 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 any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Corporation, any reclassification or
recapitalization of the capital stock of the Corporation, any merger of the
Corporation, or any transfer of all or substantially all of the assets of the
Corporation to any other corporation, or any other entity or person, or
(c) any voluntary or involuntary dissolution, liquidation or winding up of
the Corporation, then and in each such event the Corporation shall mail or cause
to be mailed to each holder of Series B Preferred Stock a notice specifying (i)
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right and a description of such dividend, distribution
or right, (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, merger, dissolution, liquidation or winding up is
expected to become effective and (iii) the time, 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 reorganization,
reclassification, recapitalization, transfer, merger, dissolution, liquidation
or winding up. Such notice shall be mailed at least ten (10) business days
prior to the date specified in such notice on which such action is to be taken.
-28-
ANNEX 1
-------
The Applicable Conversion Value of the Series B Preferred Stock shall be
subject to adjustment by application of the following formula:
Applicable Conversion Value =(13.2I)) - 5,075,000
---------------------
(1.2398S) - CI
----------
310,114.9
where
(1) I = the audited consolidated net income of the Corporation and its
subsidiaries for the year ending December 31, 1996, as determined by the
Corporation's independent public accountants using generally accepted accounting
principles applied on a basis consistent with prior periods ("1996 Net Income");
provided, however, that if and to the extent that the Corporation's audited net
income for the year ending December 31, 1995 (determined on the same basis as
for 1996) is less than $1,483,200, then the amount of such shortfall shall be
deducted from income for 1996 for the purpose of calculating 1996 Net Income.
(2) S = the number of "Fully Diluted Shares Outstanding" which term shall
mean, without duplication, and calculated as of December 31, 1996, (i) 7,370,550
shares (which number, and the other numbers in this clause 2 shall be subject to
adjustment in the event of a Recapitalization occurring after October 25, 1995);
plus (ii) 416,100 shares less that number of shares of Common Stock redeemed
- ----
prior to January 31, 1996 pursuant to Section 1.4(b) of the Purchase Agreement;
plus (iii) that number of shares of Common Stock issued after the date of the
Purchase Agreement, other than upon conversion of the Preferred Stock or upon
exercise of options to purchase up to 468,500 shares of Common Stock; and minus
-----
(iv) that number of shares of Common Stock redeemed by the Corporation after
January 31, 1996. For purposes of this definition, shares of Common Stock which
are held by the Corporation as treasury stock shall not be deemed to be
outstanding.
(3) C = 155,964 (which number represents the number of shares of Common
Stock which may be purchased directly by holders of Series B Preferred Stock and
which number shall be subject to appropriate adjustment in the event of a
Recapitalization occurring after October 25, 1995).
Notwithstanding, the application of the foregoing formula, in no event
shall the Applicable Conversion Value be adjusted pursuant to the foregoing
formula to equal an amount in excess of $8.349; provided, however, that if the
initial Applicable Conversion Value of the Series B Preferred Stock shall be
adjusted to $3.834 pursuant to the last sentence of Section 5(c), then the
Applicable Conversion Value may be adjusted pursuant to the foregoing formula to
an amount not in excess of $8.996; and provided further than such numbers shall
be subject to appropriate adjustment to reflect any Recapitalization occurring
after October 25, 1995.
-29-
ANNEX 2
-------
- ---------------------------------------------------------------------------
Consideration Per Share Adjusted Applicable Conversion Value
----------------------- ------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
$7.844 $3.597
- ---------------------------------------------------------------------------
$8.000 $3.679
- ---------------------------------------------------------------------------
$8.250 $3.810
- ---------------------------------------------------------------------------
$8.295 $3.834
- ---------------------------------------------------------------------------
$8.500 $3.943
- ---------------------------------------------------------------------------
$8.750 $4.077
- ---------------------------------------------------------------------------
$9.000 $4.212
- ---------------------------------------------------------------------------
$9.250 $4.349
- ---------------------------------------------------------------------------
$9.500 $4.486
- ---------------------------------------------------------------------------
$9.750 $4.625
- ---------------------------------------------------------------------------
$10.000 $4.765
- ---------------------------------------------------------------------------
$10.250 $4.907
- ---------------------------------------------------------------------------
$10.500 $5.049
- ---------------------------------------------------------------------------
$10.750 $5.193
- ---------------------------------------------------------------------------
$11.000 $5.339
- ---------------------------------------------------------------------------
$11.250 $5.485
- ---------------------------------------------------------------------------
$11.500 $5.633
- ---------------------------------------------------------------------------
$11.750 $5.783
- ---------------------------------------------------------------------------
$12.000 $5.934
- ---------------------------------------------------------------------------
$12.250 $6.086
- ---------------------------------------------------------------------------
$12.500 $6.240
- ---------------------------------------------------------------------------
$12.750 $6.395
- ---------------------------------------------------------------------------
$13.000 $6.552
- ---------------------------------------------------------------------------
$13.250 $6.710
- ---------------------------------------------------------------------------
$13.500 $6.870
- ---------------------------------------------------------------------------
$13.750 $7.031
- ---------------------------------------------------------------------------
$14.000 $7.194
- ---------------------------------------------------------------------------
$14.250 $7.358
- ---------------------------------------------------------------------------
$14.500 $7.524
- ---------------------------------------------------------------------------
$14.750 $7.692
- ---------------------------------------------------------------------------
$15.000 $7.862
- ---------------------------------------------------------------------------
$15.250 $8.033
- ---------------------------------------------------------------------------
$15.500 $8.206
- ---------------------------------------------------------------------------
$15.706 $8.349
- ---------------------------------------------------------------------------
$15.750 $8.380
- ---------------------------------------------------------------------------
$16.000 $8.556
- ---------------------------------------------------------------------------
$16.250 $8.735
- ---------------------------------------------------------------------------
$16.500 $8.915
- ---------------------------------------------------------------------------
-30-
- ---------------------------------------------------------------------------
Consideration Per Share Adjusted Applicable Conversion Value
----------------------- ------------------------------------
- ---------------------------------------------------------------------------
$16.612 $8.996
- ---------------------------------------------------------------------------
Note: The foregoing figures shall be subject to appropriate adjustment in the
event of any Recapitalization occurring after October 25, 1995.
-31-
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
SEACHANGE TECHNOLOGY, INC., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of SeaChange Technology, Inc., by
written consent in accordance with Section 141 of the General Corporation Law of
the State of Delaware, duly adopted resolutions to be filed with the minutes of
the Board of Directors. The resolutions setting forth the proposed amendment
are as follows:
RESOLVED: That the Certificate of Incorporation of this Corporation be
amended by changing the Article thereof numbered "FIRST" so that,
as amended, said Article shall be and read as follows:
"The name of the corporation is SeaChange International, Inc."
RESOLVED: That, upon the approval of such change by the Corporation's
stockholders, the officers of the Corporation are hereby authorized
and directed to file with the Secretary of State of the State of
Delaware a Certificate of Amendment to the Certificate of
Incorporation of the Corporation to such effect.
SECOND: That the stockholders of said corporation duly approved such
proposed amendment by written consent in accordance with the provisions of
Section 228 of the General Corporation Law of the State of Delaware, and written
notice of the adoption of such resolution has been given as provided for in
Section 228(d) of the General Corporation Law of the State of Delaware to every
stockholder entitled to such notice.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
-32-
IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by William C. Styslinger, III, its President, and attested by Edward
McGrath, its Secretary, this 31st day of March, 1996.
SEACHANGE TECHNOLOGY, INC.
By: /s/ William C. Styslinger, III
---------------------------------
William C. Styslinger, III
President
ATTEST:
By /s/ Edward McGrath
-------------------------
Edward McGrath
Secretary