EXHIBIT 10.3
XYVISION ENTERPRISE SOLUTIONS, INC.
Series A Convertible Preferred Stock Purchase Agreement
This Agreement dated as of December 31, 1998 is entered into by and
between Xyvision Enterprise Solutions, Inc., a Delaware corporation (the
"Company"), and Tudor Trust (the "Purchaser").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. Authorization and Sale of Shares.
1.1. Authorization. The Company has duly authorized the sale and
issuance, pursuant to the terms of this Agreement, of 400,000 shares of its
Series A Convertible Preferred Stock, $.001 par value per share (the "Series A
Preferred"), having the rights, restrictions, privileges and preferences set
forth in the Certificate of Designations attached hereto as Exhibit A (the
"Certificate of Designations"). The Company has adopted and filed the
Certificate of Designations with the Secretary of State of the State of
Delaware.
1.2. Sale of Shares. Upon the execution of this Agreement, the Company
will sell and issue to the Purchaser, and the Purchaser will purchase, 400,000
shares of Series A Preferred for the purchase price of $2.50 per share. The
shares of Series A Preferred being sold under this Agreement are referred to as
the "Shares." To effect such sale and purchase of the Shares, the Company shall
deliver to the Purchaser a certificate for the Shares, registered in the name
of the Purchaser, against payment to the Company of the purchase price
therefor, by wire transfer, check or other method acceptable to the Company.
2. Representations of the Company. The Company hereby represents and
warrants to the Purchaser as follows:
2.1. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to conduct its business as
presently conducted and as proposed to be conducted by it and to enter into and
perform this Agreement and to carry out the transactions contemplated by this
Agreement.
2.2. Capitalization. The authorized capital stock of the Company
(immediately prior to the execution of this Agreement) consists of (i)
10,000,000 shares of common stock, $.001 par value per share (the "Common
Stock"), of which 2,800,000 shares are issued and outstanding and owned by
Xyvision, Inc. ("Xyvision"), and (ii) 5,000,000 shares of Preferred Stock,
$.001 par value per share, of which 400,000 shares have been designated as
Series A Preferred, none of which shares are issued or outstanding. All of the
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
2.3. Authority for Agreement; Issuance of Shares. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company.
Without limiting the generality of the foregoing, the issuance, sale and
delivery of the Shares in accordance with this Agreement, and the issuance and
delivery of the shares of Common Stock issuable upon conversion of the Shares,
have been duly authorized by all necessary corporate action on the part of the
Company. The Shares when so issued, sold and delivered against payment therefor
in accordance with the provisions of this Agreement, and the shares of Common
Stock issuable upon conversion of the Shares when issued upon such conversion,
will be duly and validly issued, fully paid and nonassessable. This Agreement
has been duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms.
2.4. SEC Reports. Xyvision has filed with the Securities and Exchange
Commission all reports and statements required to be filed by Xyvision under
Section 13 or 14 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since March 31, 1997 (such reports and statements are
collectively referred to herein as the "Xyvision Reports"). The Xyvision
Reports comply in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder. As of their respective dates, the
Xyvision Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
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necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
2.5. Absence of Material Adverse Change. Since September 30, 1998, there
has been no material adverse change in the business, results of operations or
financial condition of Xyvision, it being acknowledged that Xyvision has
continued to incur operating losses and utilize cash.
3. Representations of the Purchaser. The Purchaser represents and warrants
to the Company as follows:
3.1. Investment. The Purchaser is acquiring the Shares, and the shares
of Common Stock into which the Shares may be converted, for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and the Purchaser has no present or presently contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition thereof. The Purchaser is an "accredited investor" as defined
in Rule 501(a) under the Securities Act of 1933, as amended.
3.2. Authority. The execution, delivery and performance by the Purchaser
of this Agreement and the consummation by the Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Purchaser. This Agreement has been duly executed and delivered by
the Purchaser and constitutes a valid and binding obligation of the Purchaser
enforceable in accordance with its terms.
3.3. No Registration of Shares. The Purchaser acknowledges that the
Shares to be purchased by it have not been registered under the
Securities Act of 1933, as amended. Each certificate representing the
Shares shall bear a legend substantially in the following form: "The
shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be offered, sold or
otherwise transferred, pledged or hypothecated unless and until such
shares are registered under such Act or an opinion of counsel
satisfactory to the Company is obtained to the effect that such
registration is not required."
3.4. Experience. The Purchaser is familiar with the business, results of
operations, assets and liabilities of both Xyvision and the Company; the
officers of the Company have made available to the Purchaser any and all
information which it has requested and has answered to the Purchaser's
satisfaction all inquiries made by it; and the Purchaser has sufficient
knowledge and experience in investing in companies similar to the Company so as
to be able to evaluate the risks and merits of its investment in the Company
and is able financially to bear the risks thereof.
4. Miscellaneous.
4.1. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
4.2. Amendments and Waivers. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived only with the written consent of the
Company and the Purchaser.
4.3. Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original,
and all of which shall constitute one and the same document. This Agreement may
be executed by facsimile signatures.
4.4. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, exclusive of its choice of
law and conflicts of law rules.
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IN WITNESS WHEREOF, this Series A Convertible Preferred Stock Purchase
Agreement has been executed as of the date first above written.
XYVISION ENTERPRISE SOLUTIONS, INC.
By: /s Xxxxx X. Xxxxx
---------------------
Xxxxx Xxxxx
President
TUDOR TRUST
By: /s/ Xxxxxxx Xxxxxx
---------------------
Xxxxxxx Xxxxxx Trustee
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Exhibit A
CERTIFICATE OF DESIGNATIONS
OF THE
PREFERRED STOCK
OF
XYVISION ENTERPRISE SOLUTIONS, INC.
to be designated
Series A Convertible Preferred Stock
Xyvision Enterprise Solutions, Inc., a Delaware corporation (the
"Corporation"), pursuant to the authority conferred on the Board of Directors
of the Corporation by the Certificate of Incorporation, and in accordance with
the provisions of Section 151 of the General Corporation Law of Delaware,
hereby certifies that the Board of Directors of the Corporation, at a meeting
duly called and held, at which a quorum was present and acting throughout, duly
adopted the following resolution:
RESOLVED: That pursuant to the authority expressly granted to and vested
in the Board of Directors of the Corporation in accordance with the provisions
of its Certificate of Incorporation, a series of Preferred Stock of the
Corporation be and hereby is established, consisting of 400,000 shares to be
designated "Series A Convertible Preferred Stock" (hereinafter "Series A
Preferred Stock"); that the Board of Directors be and hereby is authorized to
issue such shares of Series A Preferred Stock from time to time and for such
consideration and on such terms as the Board of Directors shall determine; and
that subject to the limitations provided by law and by the Certificate of
Incorporation, the powers, designations, preferences and relative, optional or
other special rights of, and the qualifications, limitations or restrictions
upon, the Series A Preferred Stock shall be as follows:
Series A Preferred Stock.
A total of 400,000 shares of the authorized and unissued Preferred Stock
of the Corporation is hereby designated "Series A Preferred Stock" (the "Series
A Preferred Stock") with the following rights, preferences, powers, privileges,
restrictions, qualifications and limitations:
1. Dividends.
(a) Each holder of Series A Preferred Stock, in preference to the
holders of any other stock of the Corporation, shall be entitled to receive,
when and as declared by the Board of Directors, but only out of funds that are
legally available therefor, cash dividends at the rate of $0.15 per annum on
each outstanding share of Series A Preferred Stock (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with respect to
such shares). Such dividends shall be payable only when, as and if declared by
the Board of Directors and to the extent not so declared shall accrue without
interest thereon and be due upon liquidation as provided in Section 2, but
shall not accrue and be due upon any conversion pursuant to Section 5.
(a) So long as any shares of Series A Preferred Stock shall be
outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on any Common Stock, nor
shall any shares of any Common Stock of the Corporation be purchased, redeemed,
or otherwise acquired for value by the Corporation, until all dividends
declared or required to be declared under Section 1(a) on the Series A
Preferred Stock shall have been paid or declared and set apart.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (a "Liquidation"), and except to
the extent Section 5(k) below requires, the holders of the Series A Preferred
Stock then outstanding shall thereupon be entitled to be paid from the assets
of the Corporation available
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for distribution to its stockholders the following amount per share:
(i) The holders of Series A Preferred Stock shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders an amount with respect to each share of Series A Preferred Stock
(subject to appropriate proportionate adjustment for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares) the amount of $2.50 plus any dividends declared or accrued but unpaid
thereon (the "Series A Preferred Stock Liquidation Value"). If the assets of
the Corporation available for distribution are insufficient for the payment of
the foregoing liquidation preference amounts to the holders of Series A
Preferred Stock, the assets available for distribution to stockholders shall be
distributed pro rata among the holders of the Series A Preferred Stock based
upon the number of shares of Series A Preferred Stock held by each holder; and
(ii) After payment of all preferential amounts required to be paid to
the holders of Series A Preferred Stock and any other class or series of stock
of the Corporation ranking with respect to Liquidation on parity with the
Series A Preferred Stock, upon the Liquidation of the Corporation the holders
of shares of Series A Preferred Stock then outstanding shall not be entitled to
receive any of the remaining assets and funds of the Corporation available for
distribution to its stockholders.
(b) The sale, lease, license or other disposition of all or
substantially all of the Corporation's assets or the share exchange, merger or
consolidation of the Corporation with or into another corporation in which the
beneficial owners of the Corporation's voting stock immediately before the
share exchange, merger or consolidation own less than a majority of the
surviving or acquiring entity's voting stock immediately after the share
exchange, merger or consolidation, shall be deemed to be a Liquidation of the
Corporation for purposes of this Section 2.
(c) In the event the Corporation shall propose to take any action which
would constitute a Liquidation, the Corporation shall, within five days after
the date the Board of Directors approves such action, at least twenty days
prior to any stockholders' meeting called to approve such action, or at least
twenty days prior to the consummation or effectiveness of such action,
whichever is earlier, provide the holders of the Series A Preferred Stock with
written notice of the proposed action. Such written notice shall describe the
material terms and conditions and anticipated timing of such proposed action,
including a description of the stock, cash and/or property to be received by
the holders of the Series A Preferred Stock upon consummation of the proposed
action. The Corporation shall thereafter provide prompt notice of all material
changes to such information, as well as of the consummation or effectiveness of
the action. No such action shall in any event be consummated or take effect
sooner than twenty days after the Corporation has given the first such notice;
provided, however, that any of the foregoing notice periods may be amended by
vote or written consent of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting as a single class.
(d) In the event of any Liquidation involving the distribution of assets
other than cash, the amount of such distribution shall be deemed to be the fair
market value of such assets at the time of such distribution as determined in
good faith by the Board of Directors of the Corporation.
3. Voting Rights.
(a) General. Each holder of outstanding shares of Series A Preferred
Stock shall be entitled to the number of votes equal to the number of whole
shares of Common Stock into which the shares of Series A Preferred Stock held
by such holder are then convertible (as determined pursuant to Section 5
hereof) at each meeting of stockholders of the Corporation (and with respect to
written consents of stockholders in lieu of meetings) regarding any and all
matters presented to the stockholders of the Corporation for their action or
consideration. Except as provided by law, by the provisions of Section 3(b)
below, or by the provisions establishing any other series of Preferred Stock,
holders of Series A Preferred Stock and Common Stock shall vote together and
not as separate classes.
(b) Requirement for Series A Preferred Stock Class Vote or Consent. So
long as any shares of Series A Preferred Stock which are issued by the
Corporation remain outstanding, in addition to any other vote or consent
required herein or by law, the affirmative vote or consent of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock shall be
necessary for effecting or validating the following actions by the Corporation:
(i) any amendment, alteration, waiver or repeal of any provision of
the Certificate of Incorporation or Bylaws of the Corporation that affects
adversely the voting powers, preferences, or other special rights or
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privileges, qualifications, limitations or restrictions of the Series A
Preferred Stock;
(ii) any authorization or any designation, whether by
reclassification or otherwise, of any new class or series of stock or any other
securities convertible into equity securities of the Corporation ranking on a
parity with or senior to the Series A Preferred Stock in right of redemption,
liquidation preference, voting or dividends, or any increase in the authorized
or designated number of any such new class or series;
(iii) any declaration or payment of any dividends or any
distributions, whether in cash or property, with respect to any securities of
the Corporation, other than to the holders of the Series A Preferred Stock as
provided in Section 1;
(iv) any redemption, purchase or acquisition for value of any
securities of the Corporation, other than pursuant to redemption or conversion
of the Series A Preferred Stock as provided herein; and
(v) any liquidation, dissolution, winding up, sale, lease, license,
assignment, transfer or other disposition of all or substantially all of the
assets of the Corporation or of any subsidiary of the Corporation, or any share
exchange, consolidation or merger involving the Corporation or any subsidiary
of the Corporation, or any reclassification or other change of any stock or any
recapitalization of the Corporation, or any approval of any subsidiary of the
Corporation to issue or sell, or obligate itself t o issue or sell, except to
the Corporation or any wholly owned subsidiary of the Corporation, any stock of
such subsidiary.
4. Optional Redemptions.
(a) At any time and from time to time the Corporation, to the extent it
may lawfully do so, may call for redemption all or part of the shares of Series
A Preferred Stock then outstanding and not converted into Common Stock by
providing the holders with a written notice as provided in Section 4(c) below.
(b) The redemption price for the Series A Preferred Stock shall be the
Series A Preferred Stock Liquidation Value. In the event that fewer than all of
the then outstanding shares of the Series A Preferred Stock are redeemed, such
shares shall be redeemed on a pro rata basis among all holders of such shares
based on the number of shares of Series A Preferred Stock held by such holders
on the date of the written notice of redemption. a
(c) Except as otherwise provided herein, the Corporation shall mail a
written notice of each redemption of Series A Preferred Stock to each record
holder thereof not less than twenty days prior to the redemption date, which
notice shall set forth (i) the redemption price for the shares to be redeemed
and (ii) the place at which such holders may obtain payment of the redemption
price upon surrender of their share certificates. The holders of Series A
Preferred Stock to be redeemed shall in any event have the right to convert
their shares into Common Stock at any time prior to the close of business on
the date that is two days prior to the redemption date. In case fewer than the
total number of shares represented by any certificate are redeemed, a new
certificate representing the number of unredeemed shares shall be issued to the
holder thereof without cost to such holder. From and after the redemption date,
unless there shall have been a default in payment of the redemption price, all
rights of the holders of the shares of Series A Preferred Stock designated for
redemption in the redemption notice as holders of Series A Preferred Stock of
the Corporation (except the right to receive the redemption price without
interest upon surrender of their certificate or certificates) shall cease with
respect to such shares, and such shares shall not thereafter be transferred on
the books of the Corporation or be deemed to be outstanding for any purpose
whatsoever. Any shares of Series A Preferred Stock so redeemed shall
permanently be retired, shall no longer be deemed outstanding and shall not
under any circumstances be reissued, and the Corporation may from time to time
take such appropriate action as may be necessary to reduce the authorized
Series A Preferred Stock accordingly.
5. Conversion Rights. The holders of Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Optional Conversion. Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and without the
payment of additional consideration by the holder thereof, into such number of
shares of Common Stock as is determined by dividing $2.50 by the Conversion
Price (as hereinafter defined).
(b) Conversion Price. The conversion price for the Series A Preferred
Stock (the "Conversion Price") shall initially be $2.50. Such initial
Conversion Price shall be adjusted from time to time in accordance with this
Section 5. All references to the Conversion Price herein shall mean the
Conversion Price as so adjusted.
(c) Adjustment for Sale of Common Stock Below Conversion Price.
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(i) If at any time or from time to time after the date that the first
share of Series A Preferred Stock is issued (the "Original Series A Issue
Date"), the Corporation issues or sells, or in accordance with this Section
5(c) is deemed to have issued or sold, Additional Shares of Common Stock (as
hereinafter defined), and other than a subdivision, dividend or combination of
shares of Common Stock as provided in Section 5(d) below, for an Effective
Price (as hereinafter defined) less than the then effective Conversion Price,
then and in each such case the then existing Conversion Price shall be reduced,
as of the opening of business on the date of such issue or sale, to a price
determined by multiplying such Conversion Price by a fraction (i) the numerator
of which shall be (1) the number of shares of Common Stock and Preferred Stock
(calculated on an as-converted-to Common Stock basis) outstanding immediately
prior to such issue or sale plus (2) the number of shares of Common Stock which
the aggregate consideration received (as defined in subsection (c)(ii)) by the
Corporation for the total number of Additional Shares of Common Stock so issued
would purchase at such Conversion Price, and (ii) the denominator of which
shall be the number of shares of Common Stock and Preferred Stock (calculated
on an as-converted-to Common Stock basis) outstanding immediately prior to such
issue or sale plus the total number of Additional Shares of Common Stock so
issued.
(ii) For the purpose of making any adjustment required under this
Section 5(c), the consideration received by the Corporation for any issue or
sale of securities shall (A) to the extent it consists of cash, be computed at
the net amount of cash received by the Corporation after deduction of any
underwriting or similar commissions, compensation or concessions paid or
allowed by the Corporation in connection with such issue or sale but without
deduction of any expenses payable by the Corporation, (B) to the extent it
consists of property other than cash, be computed at the fair value of that
property as determined in good faith by the Board of Directors, and (C) if
Additional Shares of Common Stock, Convertible Securities (as hereinafter
defined) or rights or options to purchase either Additional Shares of Common
Stock or Convertible Securities are issued or sold together with other stock or
securities or other assets of the Corporation for consideration which covers
both, be computed as the portion of the consideration so received that may be
reasonably determined in good faith by the Board of Directors to be allocable
to such Additional Shares of Common Stock, Convertible Securities or rights or
options.
(iii) For the purpose of the adjustment required under this Section
5(c), if the Corporation issues or sells any rights or options for the purchase
of, or stock or other securities convertible into, Additional Shares of Common
Stock (such convertible stock or securities being herein referred to as
"Convertible Securities") and if the Effective Price of such Additional Shares
of Common Stock is less than the applicable Conversion Price, in each case the
Corporation shall be deemed to have issued at the time of the issuance of such
rights or options or Convertible Securities the maximum number of Additional
Shares of Common Stock issuable upon exercise or conversion thereof and to have
received as consideration for the issuance of such shares an amount equal to
the total amount of the consideration, if any, received by the Corporation for
the issuance of such rights or options or Convertible Securities, plus, in the
case of such rights or options, the minimum amounts of consideration, if any,
payable to the Corporation upon the exercise of such rights or options, plus,
in the case of Convertible Securities, the minimum amounts of consideration, if
any, payable to the Corporation (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) upon the conversion
thereof; provided, that, if in the case of Convertible Securities the minimum
amounts of such consideration are subject to adjustment by reason of
antidilution or similar protective clauses, the Corporation shall be deemed to
have received the minimum amounts of consideration without reference to such
clauses; provided further that if the minimum amount of consideration payable
to the Corporation upon the exercise or conversion of rights, options or
Convertible Securities is reduced over time or on the occurrence or
non-occurrence of specified events other than by reason of antidilution
adjustments, the Effective Price shall be recalculated using the figure to
which such minimum amount of consideration is reduced; provided further that if
the minimum amount of consideration payable to the Corporation upon the
exercise or conversion of such rights, options or Convertible Securities is
subsequently increased, the Effective Price shall be again recalculated using
the increased minimum amount of consideration payable to the corporation upon
the exercise or conversion of such rights, options or Convertible Securities.
No further adjustment of any Conversion Price, as adjusted upon the issuance of
such rights, options or Convertible Securities, shall be made as a result of
the actual issuance of Additional Shares of Common Stock or the exercise of any
such rights or options or the conversion of any such Convertible Securities. If
any such rights or options or the conversion privilege represented by any such
Convertible Securities shall expire without having been exercised, any
Conversion Price as adjusted upon the issuance of such rights, options or
Convertible Securities shall be readjusted to the Conversion Price which would
have been in effect had an adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional Shares of
Common Stock, if any, actually issued or sold on the exercise of such rights or
options or rights of conversion of such Convertible Securities, and such
Additional Shares of Common Stock, if any, were issued or sold for the
consideration actually received by the
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Corporation upon such exercise, plus the consideration, if any, actually
received by the Corporation for the granting of all such rights or options,
whether or not exercised, plus the consideration received for issuing or
selling the Convertible Securities actually converted, plus the consideration,
if any, actually received by the Corporation (other than by cancellation of
liabilities or obligations evidenced by such Convertible Securities) on the
conversion of such Convertible Securities, provided, that, such readjustment
shall not apply to prior conversions of Series A Preferred Stock.
(iv) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Corporation or deemed to be issued pursuant to this
Section 5(c), whether or not subsequently reacquired or retired by the
Corporation, other than (1) shares of Common Stock issued upon conversion of
the Series A Preferred Stock, (2) shares of Common Stock issued pursuant to the
exercise or conversion of options, warrants or convertible securities
outstanding as of the Original Series A Issue Date, and (3) shares of Common
Stock issued pursuant to the exercise of options subsequently granted to
employees, directors or consultants of the Corporation with respect to their
services to the Corporation. The "Effective Price" of Additional Shares of
Common Stock shall mean the quotient determined by dividing the total number of
Additional Shares of Common Stock issued or sold, or deemed to have been issued
or sold, by the Corporation under this Section 5(c), into the aggregate
consideration received, or deemed to have been received (as set forth in
subparagraph (iii) above), by the Corporation for such issue under this Section
5(c), for such Additional Shares of Common Stock.
(d) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time or from time to time after the Original Series A Issue Date
effect a subdivision of the outstanding Common Stock without a corresponding
subdivision of the Series A Preferred Stock or pay a Common Stock dividend on
the outstanding Common Stock without a corresponding proportionate dividend on
the outstanding Series A Preferred Stock, the Conversion Price in effect
immediately before that subdivision shall be proportionately decreased.
Conversely, if the Corporation shall at any time or from time to time after the
Original Series A Issue Date combine the outstanding shares of Common Stock
into a smaller number of shares without a corresponding combination of the
Series A Preferred Stock, the Conversion Price in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
Section 5(d) shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(e) No Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series A Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall issue such number of whole shares of Common Stock as is equal
to the number of shares otherwise issuable, rounded up or down to the nearest
whole number.
(f) Mechanics of Conversion.
(i) In order for a holder of Series A Preferred Stock to convert
shares of Series A Preferred Stock into shares of Common Stock, such holder
shall surrender the certificate or certificates for such shares of Series A
Preferred Stock at the principal office of the Corporation, together with
written notice that such holder elects to convert all or any number of the
shares of the Series A Preferred Stock represented by such certificate or
certificates. Such notice shall state such holder's name or the names of the
nominees in which such holder wishes the certificate or certificates for shares
of Common Stock to be issued.
(ii) Promptly after the receipt of the written notice referred to in
Section 5(f)(i) and surrender of the certificate or certificates for the share
or shares of Series A Preferred Stock to be converted, the Corporation shall
issue and deliver, or cause to be issued and delivered, to the holder or
holders, registered in such name or names as such holder or holders 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 Preferred
Stock. To the extent permitted by law, such conversion shall be deemed to have
been effected and the Conversion Rate shall be determined as of the close of
business on the date on which such written notice shall have been received by
the Corporation, and at such time the rights of the holder or holders of such
share or shares of Series A 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.
Shares of Series A Preferred Stock that are converted into shares of Common
Stock as provided herein shall not be reissued.
(iii) In case the number of shares of Series A Preferred Stock
represented by the certificate or certificates surrendered exceeds the number
of shares of Series A Preferred Stock converted, the Corporation shall upon
such conversion execute and deliver to the holder, at the expense of the
Corporation, a new certificate or
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certificates for the number of shares of Series A Preferred Stock represented
by the certificate or certificates surrendered that are not to be converted.
(g) Termination of Conversion Rights. In the event of a Liquidation the
Conversion Rights shall terminate at the close of business on the business day
preceding the date fixed for payment of any amounts distributable on the
Liquidation to the holders of Series A Preferred Stock.
(h) Reservation of Common Stock Issuable Upon Conversion. The
Corporation shall at all times when the Series A Preferred Stock shall be
outstanding, reserve, free from preemptive rights, out of its treasury stock or
its authorized but unissued shares of Common Stock, or both, solely for the
purpose of effecting the conversion of the Series A Preferred Stock, sufficient
shares to provide for the conversion of all outstanding shares of Series A
Preferred Stock.
(i) Registrations, Listings or Approvals. If any shares of Common Stock
to be reserved for conversion of the Series A Preferred Stock require
registration or listing with, or approval of, any governmental authority, stock
exchange or other regulatory body under any federal or state law or regulation
or otherwise, before such shares may be validly issued or delivered upon
conversion, the Corporation will in good faith and as expeditiously as possible
at its expense endeavor to secure such a registration, listing or approval, as
the case may be.
(j) Common Stock Issued Upon Conversion Fully Paid and Nonassessable.
All shares of Common Stock issued upon conversion of the Series A Preferred
Stock will upon issuance by the Corporation be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof. Such shares shall also be issued without charge to the
holders thereof for any cost incurred by the Corporation in connection with the
conversion and issuance of certificates for the Common Stock.
(k) Share Exchanges, Mergers or Consolidations; Other. In the event of,
and as a condition to, (i) any share exchange, consolidation or merger of the
Corporation in which the Common Stock is converted into or exchanged for
securities of the surviving or acquiring entity (other than a share exchange,
consolidation, merger or sale covered by Subsection 2(b)), (ii) the issuance by
reclassification of shares of Common Stock (including any such reclassification
in connection with a consolidation or merger), or (iii) the distribution to all
holders of Common Stock of evidences of indebtedness or assets (including any
such distribution in connection with a share exchange, consolidation or merger
in which the Corporation is the surviving corporation), the holder of each
share of Series A Preferred Stock may elect that the holder's Series A
Preferred Stock shall thereafter be convertible into the number of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock deliverable upon conversion of such Series A Preferred Stock
would have been entitled upon such share exchange, consolidation, merger, or
reclassification; and, in any such case, appropriate adjustment shall be made
in the application of the provisions herein set forth with respect to the
rights and interests thereafter of the holders of the Series A Preferred Stock
to the end that the provisions set forth herein shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
securities or property thereafter deliverable upon the conversion of the Series
A Preferred Stock.
(l) No Closing of Transfer Books. The Corporation will at no time close
its transfer books against the transfer of any Series A Preferred Stock or of
any shares of Common Stock issued or issuable upon the conversion of any shares
of Series A Preferred Stock in any manner that interferes with the timely
conversion of such Series A Preferred Stock, except as may otherwise be
required to comply with applicable securities laws.
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IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its President this ____ day of December, 1998.
XYVISION ENTERPRISE SOLUTIONS, INC.
By:________________________
Xxxxx X. Xxxxx
President
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