EXHIBIT 10.53
Stock Subscription and Stockholders' Agreement
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Agreement made as of the 29th day of November, 1999 between
Educational Video Conferencing, Inc., a Delaware corporation with offices at 00
Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxx, XX 00000 ("EVCI"), Visiocom
Worldwide, S.A., a Belgian corporation with offices at 00/00 Xxxxxx Xxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxx 0000 ("Visio"), the individuals whose names and
residence addresses are set forth in Exhibit A hereto (each, an "Investor" and
collectively, the "Investors") and Visiocom USA Incorporated, a Delaware
corporation that was incorporated on October 1, 1999 (the "Company"). EVCI and
Visio are collectively referred to as the "Founders". EVCI, Visio and the
Investors are sometimes each referred to as a "Subscriber" or "Stockholder" and
collectively referred to as the "Subscribers" or the "Stockholders".
W I T N E S S E T H:
- - - - - - - - - -
EVCI delivers accredited college courses and degree programs, and
professional development, corporate training and other programs, to
corporations, government organizations and others by means of interactive video
conferencing systems.
Visio provides business employees with "one-on-one" training, via the
Internet and video conferencing, on how to use business software programs and,
using the same teaching methods, Visio also provides business employees with
language courses (the "Training Business").
EVCI and Visio desire to finance, from their own resources and from
the resources of the Investors, and operate the Company.
The Investors desire to participate in the financing of the Company.
The parties desire to formalize their agreement with respect to the
initial financing, management and other matters affecting the Company and also
with respect to the transfer or other disposition of their shares of the
Company.
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and obligations hereinafter set forth, EVCI, Visio and the Investors
agree as follows:
1. Business and Offices of the Company. (a) The Company will engage in
the Training Business in North America, including the co-marketing activities
referred to in Section 8.
(b) The principal office of the Company shall be located in Fairfield
County, Connecticut, or Westchester County, New York. The Company shall have
such other office or offices as its Board of Directors ("Board") shall
determine.
2. Stock Subscription and Issuance. (a) EVCI and Visio each hereby
subscribes for the number of shares of the Company's Series A Preferred Stock,
("Series A Preferred"), the terms of which are set forth in the Certificate of
Designations attached hereto as Exhibit B, and common stock, $.0001 par value
per share ("Common Stock"), for the aggregate price set forth below:
EVCI VISIO
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No. and aggregate price of shares 10,000 10,000
of Series A Preferred $250,000 $250,000
No. and aggregate price of shares 150,000 150,000
of Common Stock $15 $15
(b) Each Investor hereby subscribes for the number of shares of Series
A Preferred (for a total of 40,000 shares by all the Investors) for the
aggregate price ($25 per share) set forth opposite such Investor's name in
Exhibit A to this Agreement.
(c) The certificates for the Series A Preferred and Common Stock
subscribed for above shall be issued and delivered promptly after receipt by the
Company of full payment of the applicable subscription price, which could be
occurring simultaneously with the execution and delivery of this Agreement.
(d) The form of promissory note referred to in Section 8(e) of Exhibit
B hereto is attached hereto as Exhibit B-1.
3. Subscriber Representations and Warranties.
Each of the Subscribers severally represents and warrants to the other
and the Company:
(a) The Subscriber understands that none of the shares of Series A
Preferred (or underlying Common Stock) or the Common Stock (collectively, the
"Securities") has been registered under the Securities Act of 1933, as amended
("Securities Act"), or any state securities laws in reliance on exemptions for
private offerings; although federal securities laws will not prevent the resale
of the Securities, the Securities cannot be resold or otherwise disposed of
unless they are subsequently registered under the Securities Act and applicable
state securities laws or an exemption from registration is available, and the
certificates representing the Securities will bear a restrictive legend to such
effect; there may be no public market for the Securities and there is no
assurance one will develop in the future; the Subscriber may have to hold the
Securities indefinitely and it may not be possible for the Subscriber to
liquidate the Subscriber's investment in the Company; and the Subscriber should
not purchase the Securities unless the Subscriber can afford a complete loss of
the Subscriber's investment and can bear the burden of owning the Securities for
an indefinite period of time.
(b) The Subscriber is subscribing for the Securities solely for the
Subscriber's own account for investment and not with a view to or for the
resale, assignment, distribution, subdivision or fractionalization thereof. No
other person has a direct or indirect beneficial interest in the Securities.
(c) The Subscriber understands that the purchase of the Securities is
a speculative investment which involves a high degree of risk of loss.
(d) The Subscriber is an "accredited investor" as that term is defined
under Rule 501(a) of Regulation D promulgated under the Securities Act because
the Subscriber:
(i) is a natural person whose individual net worth, or joint net
worth with the Subscriber's spouse, exceeds $1,000,000; or
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(ii) is a natural person who had individual income exceeding
$200,000 in each of the two most recent calendar years or joint income with the
Subscriber's spouse exceeding $300,000 in each of those years and the Subscriber
has a reasonable expectation of reaching the same level of income in the current
year; or
(iii) is a corporation, Massachusetts or similar business trust
or a partnership, limited liability company or similar entity not formed for the
specific purpose of acquiring the Securities, with total assets exceeding
$5,000,000; or
(iv) is an entity in which all of the equity owners are
accredited investors; or
(v) is an accredited investor for another reason that has been
disclosed to the Company in writing.
(e) The Subscriber, alone, or together with the Subscriber's purchaser
representative, if any, has such knowledge and experience in financial matters,
including investments in securities that are restricted as to their
transferability, that, the Subscriber is capable of evaluating the risks and
merits of an investment in the Securities and of making an informed investment
decision.
(f) The address set forth above or in Exhibit A hereto is the
Subscriber's correct home address or, if the Subscriber is other than an
individual, the correct address of the Subscriber's principal office, and the
Subscriber has no present intention of changing such address.
(g) If a corporation, partnership or other entity, the Subscriber is
duly authorized to purchase and hold the Securities.
(h) All documents, records and other materials pertaining to an
investment in the Company which were requested by the Subscriber have been made
available or delivered to the Subscriber.
(i) The Subscriber has read and understands Exhibit C hereto regarding
the disqualifications under the Connecticut "blue sky" law and has no knowledge
of any disqualification, after giving effect to the transactions contemplated by
this Agreement, with respect to the Company or any of the Company's directors,
officers, beneficial owners of 10 percent or more of any class of the Company's
equity securities, or any promoters (including the Founders) connected with the
Company in any capacity.
4. The Company's Representations and Warranties. The Company hereby
represents and warrants to the Subscribers as follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the corporate
power to conduct the business which it proposes to conduct. A conformed copy of
the Company's certificate of incorporation, prior to filing the Certificate of
Designations, is attached as Exhibit D-1 hereto and a copy of the Company's
bylaws is attached as Exhibit D-2 hereto.
(b) All corporate action required to authorize the execution, delivery
and performance of this Agreement has been duly taken.
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(c) The Securities have been duly and validly authorized and, when
issued, paid for and delivered in accordance with the terms of this Agreement,
will be duly and validly issued, fully paid and nonassessable. After giving
effect to the issuance of the Securities, (i) the Company's outstanding capital
stock will consist of 60,000 shares of Series A Preferred and 300,000 shares of
Common Stock, (ii) the Company will not have any obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity securities
except as provided in the Certificate of Designation, (iii) except for 300,000
shares of Common Stock reserved for issuance upon conversion of the Series A
Preferred and 66,668 shares of Common Stock reserved for issuance upon the
exercise of options granted to Xxxxxxx Xxxxxxx and Xxxxxxx Dessein (to each
purchase 33,334 shares), the Company will not have any shares of its capital
stock reserved for issuance, and (iv) except for the Series A Preferred and the
joint venture contemplated by this Agreement, there will be no outstanding
subscriptions, options, warrants, rights, calls or convertible securities, stock
appreciation rights (phantom or otherwise), joint venture, partnership or other
commitments of any nature relating to shares of the capital stock of the
Company. As of the date hereof, the Company has no liability or indebtedness for
dividends or other distributions declared or accumulated but unpaid with respect
to any shares of stock.
(d) This Agreement is a legal, valid and binding agreement of the
Company enforceable in accordance with its terms except as enforceability may be
limited by bankruptcy, insolvency or other laws affecting the rights of
creditors generally or by equitable principles.
5. Board; Committees; Officers. (a) The Board shall consist of nine
members. Of the nine directors, three shall be designated by EVCI, three shall
be designated by Visio and three shall be designated by the Investors. Each of
the Stockholders agrees to vote its shares of the Company to elect the designees
of the other; provided, however, that each Stockholder shall have a right to
approve the designees of the other Stockholders, which approval shall not be
unreasonably withheld or delayed. In the event a vacancy occurs on the Board by
reason of resignation, death, disability, or any other reason, the
Stockholder(s) who designated the director who has vacated his or her position
shall likewise be entitled to designate his or her replacement, and the
Stockholders shall vote as stockholders, or cause their designees on the Board
to vote as directors, to so fill any such vacancy as promptly as possible.
(b) The Board shall hold at least one meeting per calendar quarter.
The presence of five directors shall be necessary to constitute a quorum of the
Board for the transaction of business. Except as provided below in this Section
5(b), the affirmative vote of five directors shall likewise be necessary for the
passage of any resolution or the taking of any action at meetings of the Board.
The bylaws of the Company shall provide that the following matters shall require
the affirmative vote of at least seven members of the Board:
(i) The merger, reorganization, consolidation, sale or other
disposition of substantially all the assets or dissolution and liquidation of
the Company.
(ii) The amendment of the certificate of incorporation or bylaws
of the Company.
(iii) Subject to Section 5(c), the election of officers of the
Company and the assignment of authority and duties to any officer who is
required to act solely in accordance with the authority and duties, if any,
assigned to such officer from time to time by the Board.
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(iv) The approval, or modification by more than $25,000, of any
Budget (defined in Section 6(b)).
(v) The incurrence or assumption by the Company of any liability
for money borrowed, or the guarantee by the Company of any obligation of any
person, firm or corporation, in each case in excess of the greater of $25,000 or
an amount designated for such purpose in the current Budget.
(vi) The establishment and maintenance of bank accounts and the
designation of authorized signatories on such accounts otherwise than in
accordance with Section 9(b) or in the event the Finance Committee of the Board
is unwilling or unable to act with respect thereto.
(vii) Any loan made by the Company.
(viii) The issuance or repurchase of any shares of any class of
the Company.
(ix) The establishment, modification or termination or any
employee stock grant or option agreement or plan or any other benefit, pension,
profit sharing, fringe benefit or similar plan.
(x) The declaration of any dividend in any form.
(xi) The approval of any employment arrangement with any employee
providing for compensation, including fringe benefits, in excess of $50,000 per
annum; provided, however, such approval shall not be required if the
compensation level and the position the employee is being hired to fill has been
included in a Budget approved pursuant to Section 5(b)(iv).
(xii) The institution, or consenting to the institution, of any
bankruptcy, insolvency, reorganization, readjustment of debt or similar
proceeding relating to the Company under the law of any jurisdiction; an
assignment for the benefit of creditors; or an application for or consenting to
the appointment of any receiver, trustee or similar officer for any or all of
the property of the Company.
(xiii) Any material change in the principal business of the
Company or the establishment of a new line of business or class of product or
service.
(xiv) The entering into of any transaction with a Stockholder or
any of a Stockholder's affiliates.
(xv) The designation or change of any committee of the Board.
(xvi) The engagement or discharge of legal counsel or independent
auditors.
(xvii) The dissolution and liquidation of the Company.
(xviii) As required by Section 12(a).
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(xix) Any Board determination or selection (including the
selection of an independent appraiser) required pursuant to the terms of the
Series A Preferred set forth in the Company's certificate of incorporation.
(xx) The discharge of any officer of the Company whose employment
was approved pursuant to Section 5(b)(xi).
(c) The officers of the Company shall be as set forth in the Company's
bylaws. The Chairman of the Board and the Chief Executive Officer of the Company
shall be designated by EVCI and the Vice Chairman of the Board and Chief
Operating Officer of the Company shall be designated by Visio. Initially, the
Chairman of the Board shall be Xx. Xxxx X. Xxxxxxxx, the Vice Chairman of the
Board shall be Xxxxxxx Xxxx, the Chief Executive Officer shall be Xxxxxxx
Xxxxxxx and the Chief Operating Officer shall be Xxxxxxx Dessein. The Board
shall elect such officers to serve in accordance with the Company's bylaws. In
addition to presiding at meetings of stockholders or the Board in the absence of
the Chairman of Board, the authority and duties of the Vice Chairman of the
Board shall be limited to the specific authority and duties, if any, assigned to
him or her by the Board in accordance with Section 5(b)(iii). The Stockholders
shall each cause their respective designees on the Board to vote for the
election of persons so designated as officers pursuant to this Section 5(c);
provided, however, that any person designated by a Stockholder who is not named
above shall be approved by the other Stockholders, which approval shall not be
unreasonably withheld or delayed.
6. Financial Statements; Budgets; Finance Committee. (a) In order to
keep the Board currently apprised of the financial condition and results of
operations of the Company, there shall be delivered to each Board member (i)
until the Company has audited financial statements showing at least one year of
net income, monthly financial statements containing a balance sheet, statement
of operations and statement of cash flows which shall be unaudited but shall be
prepared in accordance with generally accepted accounting principles followed in
the United States ("GAAP") and delivered to Board members within 10 business
days after the end of the month to which they relate, (ii) thereafter, quarterly
financial statements which containing a balance sheet, statement of operations
and statement of cash flows which shall be unaudited but shall be prepared in
accordance with GAAP and delivered to Board members within 45 days after the end
of the calendar quarter to which they relate. Each quarterly financial statement
shall also include a statement of operations for the year to date. In addition
to the monthly and quarterly financial statements provided for above, the Board
shall retain independent auditors (initially authorized at the Board's first
meeting following the date of this Agreement), to audit the annual financial
statements of the Company and to prepare and deliver to the Board, within 90
days after the end of each fiscal year of the Company, their formal report and
opinion with respect thereto.
(b) There shall be delivered to the Board for its review and approval,
at least 45 days prior to the end of each fiscal year of the Company, a budget
and business plan for the next succeeding year (collectively, the "Budget"). The
Budget shall also set forth in reasonable detail, on a monthly basis, the
expected results of operations of the Company for the succeeding year.
(c) The Board of Directors shall designate a Finance Committee
consisting of three members of the Board. Each of EVCI, Visio and the Investors
shall have the right to designate one member of the Finance Committee from among
the members of the Board. The Stockholders shall cause their designees
on the Board to vote as directors to appoint EVCI's, Visio's and the
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Investors' designees and their successors as members of the Finance Committee.
The Finance Committee's duties and authority shall include the requirement that
it authorize, in advance, any single or related expenditures (including under an
agreement requiring periodic payments) of from $5,000 to $25,000, which has or
have not been included in a Budget that has been authorized by the Board
pursuant to Section 5(b)(iv).
7. Visio Royalty. Visio shall be entitled to receive royalties from
the Company in accordance with the provisions, that are consistent with the Term
Sheet dated October 19, 1999, of an agreement to be authorized by the
affirmative vote of at least seven members of the Board at its first meeting.
8. Co-Marketing Agreement. EVCI and VUSA shall provide co-marketing
services and receive compensation therefor in accordance with the provisions,
that are consistent with the Term Sheet dated October 19, 1999, of an agreement
to be authorized by the affirmative vote of at least seven members of the Board
at its first meeting.
9. Books and Records; Bank Accounts.(a) All books and records of the
Company shall be reasonably available for inspection at the offices of the
Company during normal business hours by the Stockholders or their
representatives. The Company shall maintain its books in accordance with GAAP.
(b) The Company shall maintain three bank accounts at a bank selected
by the Finance Committee that is proximate to the Company's principal offices.
One account shall be designated "Operating Account" and shall contain enough
funds to permit the Company to operate for one calendar quarter under the
current Budget. The second account shall be designated "Payroll Account" and
shall be funded from the Operating Account as required to pay payroll. The third
account shall be designated "Treasury Account" and shall contain the balance of
the Company's cash resources except to the extent such funds are invested in
short-term, interest-bearing, investment grade obligations. The signatories on
the Operating and Payroll Accounts shall be the Company's Chief Executive and
Chief Operating Officers and the signatories on the Treasury Account shall be
the Company's Chief Financial Officer and two members of the Finance Committee.
10. Restrictions on Transferability of Stock. (a) None of the shares
of the Company owned by the Stockholders shall be sold, assigned, donated,
mortgaged, pledged, hypothecated or in any other way disposed of or encumbered
by a Stockholder (each a "Transfer") without the prior written consent of the
other Stockholders, except as provided in this Agreement and the Company's
Certificate of Incorporation, as amended.
(b) Subject to the remaining provisions of this Section 10, the
restrictions on Transfer of Section 10(a) shall not apply to (A) any Transfer
among Stockholders or by a Stockholder to a Related Transferee (defined below)
of another Stockholder, or (B) any Transfer by a Stockholder who is an
individual (an "Individual Stockholder"): (i) to or among such Individual
Stockholder's spouse, children, grandchildren or other living descendants, or to
a trust or family partnership of which there are no principal (i.e., corpus)
beneficiaries or partners other than the grantor or one or more of such
Individual Stockholder, spouse, children, grandchildren or other living
descendants and, provided, in the case of a trust, that the existing
beneficiaries and/or trustee(s) and/or grantor(s) of such trust have the power
to act with respect to the trust's assets without court approval and, in the
case of a family partnership, that the partners thereof have the power to act
with respect to the partnership's assets without court approval and the
partnership is not permitted to (x)
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distribute assets to persons who are not among the relatives listed above or (y)
have partners who are not among the relatives listed above and (ii) to a legal
representative of such Individual Stockholder in the event such Individual
Stockholder becomes mentally incompetent or to such Individual Stockholder
becomes mentally incompetent or to such Individual Stockholder's personal
representative following the death of such Individual Stockholder, or (C) any
Transfer by any Stockholder that is an entity to its members, managers,
officers, directors, stockholders or employers or to an affiliate of such
Stockholder. An "affiliate" of a Stockholder is a person or entity that directly
or indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with, the Stockholder. Transferees to whom Transfers
are permitted pursuant to this Section 10(b) are referred to herein as "Related
Transferees". References in this Agreement to a Founder or the Investors shall
be deemed to include their Related Transferees.
(c) No Transfer to a Related Transferee or pursuant to Section 11(d)
shall be effective unless the transferee shall execute and deliver to the
Company an appropriate document in form and substance satisfactory to the
Company in its reasonable judgment, confirming that the transferee takes such
shares subject to all the provisions of this Agreement to the same extent as its
transferor was bound by and entitled to the benefits of such provisions.
(d) In connection with an initial public offering of the Company's
equity securities ("IPO"), each Stockholder agrees to be subject to a lockup for
such period of time recommended by the underwriters, as the Board shall approve.
During such period, each Stockholder agrees not to Transfer any shares of the
Company without the prior written consent of the underwriter(s). This provision
is self-operating but each Stockholder agrees to execute and deliver a lockup
agreement in such form requested by the underwriter(s).
(e) In addition to the restrictive legend referred to in Section 3(a),
all certificates representing shares of the Company owned by the Stockholders
shall be inscribed with the following legend:
"Sale, assignment, pledge, encumbrance or other
disposition of any of the shares represented by this
Certificate is also limited and restricted in accordance
with the terms of a Subscription and Stockholders'
Agreement dated as of November 29, 1999, among Educational
Video Conferencing, Inc., Visiocom Worldwide S.A. and
other stockholders of the Company, a copy of which is on
file at the principal office of the Company."
11. Rights of First Refusal and Tag-Along Option. (a) If, at any time
after the second anniversary of the date of this Agreement, a Stockholder
receives an irrevocable and unconditional bona fide written offer (the "Bona
Fide Offer") from a financially responsible unaffiliated person (the "Bona Fide
Offeror") to purchase all or a portion of such Stockholder's shares of the
Company (the "Offered Shares"), then such Stockholder (the "Selling
Stockholder") shall give written notice thereof (the "Offering Notice") to the
other Stockholders (the "Remaining Stockholders"). The Offering Notice shall be
accompanied by a copy of the Bona Fide Offer, shall set forth the name and
address of the Bona Fide Offeror and shall offer to sell all such Offered Shares
to the Remaining Stockholders at the same price and on the same terms per share
set forth in the Bona Fide Offer. Any such Bona Fide Offer must also apply to
the purchase of not less than all of the Remaining Stockholder's shares of the
Company, if any, which become included in the "Offered
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Shares" under Section 11(c), at the same price and on the same terms per share
set forth in the Offering Notice.
(b) Each Remaining Stockholder shall have the right to purchase all or
any portion of its pro rata portion of the Offered Shares (determined according
to ownership of the Company's shares assuming conversion of the Series A
Preferred into Common Stock) by giving written notice of exercise to the Selling
Stockholder by the 30th day following the date the Offering Notice is given.
However, nothing contained herein shall prohibit the Remaining Stockholders from
agreeing among themselves or with the Bona Fide Offeror as to the number of
Offered Shares to be purchased by each of them.
(c) A Remaining Stockholder shall have the right to have a proportion
of its shares of the Company (determined according to ownership of the Company's
shares assuming conversion of the Series A Preferred into Common Stock) included
in the Offered Shares for sale to the Bona Fide Offeror at the same price and on
the same terms per share set forth in the Offering Notice by giving written
notice of exercise of such right by the 30th day following the date the Offering
Notice is given.
(d) In the event the Remaining Stockholders have not duly exercised
their rights to purchase a portion of the Offered Shares, the Selling
Stockholder shall be free to sell such portion of the Offered Shares for a
period of 40 days after the expiration of the period for such exercise but only
to the Bona Fide Offeror in accordance with the terms described in the Offering
Notice; provided that, in the event any Remaining Stockholder has not elected to
have all of its shares included in the Offered Shares and, subject to Section
16, as a condition of such sale, the Bona Fide Offeror shall agree that the
Offered Shares shall continue to be subject to the terms of this Agreement
following their transfer to the Bona Fide Offeror by executing and delivering
such instruments and documents as counsel for the Company shall deem necessary
and appropriate in order to make the Bona Fide Offeror a party to this
Agreement, for all purposes, in lieu of the Selling Stockholder. In addition,
the certificate representing such shares shall be inscribed with the legend
referred to in Section 10.
(e) The Offered Shares (including any Shares which become part of
the Offered Shares under Section 11(c)), if any, to be purchased by the
Remaining Stockholders or the Bona Fide Offeror shall be sold at a closing that
takes place at the offices of the attorneys for the Company within 10 business
days after the 30th day referred to above in Section 11(b). The purchaser shall
not receive valid title to any of such shares until all of them are purchased in
accordance with the terms of the Offering Notice. The purchase price for the
Offered Shares shall be paid against receipt of the certificate(s) representing
the Offered Shares being purchased endorsed in blank or accompanied by stock
powers endorsed in blank, in either case with signature guaranteed, together
with such other documents as counsel for the Company shall deem necessary to
permit the transfer of such shares.
12. Drag-Along Right. (a) If either of the Founders or any of the
Investors (the "Proposing Stockholder(s)") propose(s) to make a bona fide sale
of all of their shares of the Company held by the Proposing Stockholder(s) to a
non-affiliated party (the "Proposed Transferee"), pursuant to any sale or other
disposition of such shares, including, without limitation, a stock sale, merger,
recapitalization, consolidation, reorganization, restructuring or similar
transaction or series of transactions that has been approved by at least seven
of nine members of the Board at a meeting duly called and held for such purpose
(an "Exit Transaction"), then the Proposing Stockholder(s) shall have the right
(a "Drag-Along Right"), exercisable upon 30 days' prior written notice to the
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other Stockholders, to require the other Stockholders to sell all of their
shares of the Company and, at the election of the Proposing Stockholder(s),
options to purchase or any other award or right to receive or acquire shares of
Common Stock (whether vested or unvested) issued pursuant to employment
agreements, management agreements of otherwise ("Options"), to the Proposed
Transferee on the same terms and conditions and at the same price as the
Stockholders exercising the Drag-Along Right. In the case of Series A Preferred
or the Options, the purchase price of each share of Series A Preferred and
Option shall be equal to the purchase price attributable to the number of shares
of Common Stock issuable upon conversion of such Series A Preferred or exercise
of such Option less, in the case of the Option, the exercise price thereof.
(b) Each Stockholder selling shares of the Company in an Exit
Transaction (a "Drag-Along Seller"), agrees to cooperate in consummating the
Exit Transaction, including, without limitation, by becoming a party to the sale
agreement and all other appropriate related agreements, delivering at the
consummation of the Exit Transaction, stock certificates and other instruments
for such shares of Common Stock, Series A Preferred or Options duly endorsed for
transfer, free and clear of all liens and encumbrances, and voting or consenting
in favor of such Exit Transaction (to the extent a vote or consent is required)
and taking any other necessary or appropriate action in furtherance thereof,
including the execution and delivery of any other appropriate agreements,
certificates, instruments and other documents. The Proposing Stockholders shall
be responsible for all of the expenses of the Exit Transaction incurred by the
Proposing Stockholder(s) and the Drag Along Sellers (including the reasonable
fees and disbursements of one separate counsel for the Drag Along Sellers, as a
group).
13. Restriction on Competition. (a) So long as a Stockholder maintains
a stock interest in the Company,and, for a period of 12 months thereafter, such
Stockholder and its affiliates shall not, directly or indirectly,
(i) as a stockholder, partner, investor, lender, or otherwise,
participate or have any interest in the ownership, management, operation, or
control of any person, firm, corporation or enterprise, other than the Company,
which is a competitor of the Company in the business conducted by the Company
anywhere in North America; provided, however, such Stockholder and its
affiliates may own, as a group, up to one percent of the equity securities of a
corporation if the class of such equity securities is registered under Section
13(b) or 12(g) of the Securities Exchange Act of 1934 or,
(ii) hire an employee of the Company or a Founder, or solicit or
induce, or authorize any other person to solicit or induce any employee of the
Company or a Founder to leave such employment during the period of such
employee's employment with the Company or a Founder or within six months after
such employment terminates; provided, however, nothing herein shall prohibit a
Founder from continuing or resuming the employment of any person who left the
Founder's employment to become an employee of the Company or remained an
employee of the Founder while an employee of the Company, as long as employment
by the Founder is not prohibited by any contract between such person and the
Company.
(b) For the purposes of Section 13(a)(i), the Investors shall not be
deemed to be affiliates of one another solely because they are Investors
provided they are not acting in concert.
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14. Limits of Joint Venture. The applicable provisions of this
Agreement shall be construed and deemed to be a joint venture for the sole
purposes set forth therein. Nothing herein shall be construed to create a
general partnership among the parties for any purpose.
15. Confidential Information. (a) In connection with the business of
the Company and the performance of this Agreement, it is anticipated that EVCI
and Visio will disclose to the Company and one another, and that the Company
will disclose to the Investors, various technical information, know-how,
proprietary data, and other confidential information. In order to protect the
rights of each Founder and the Company to its confidential information, it is
agreed that, during the term of this Agreement and any period thereafter that a
Stockholder is bound by the non-compete provisions of Xxxxxxx 00, xxxx of the
Stockholders nor their respective officers, directors, employees or agents shall
disclose or use any confidential information of the other, acquired in
connection with the business of the Company, other than for the purpose of
furthering the business of the Company. If requested by either Founder or by the
Company, the other Stockholders shall cause each of its officers, directors,
employees and agents having access to such confidential information to enter
into an appropriate secrecy and non-disclosure agreement, the form and content
of which shall be reasonably satisfactory to counsel for the parties.
Confidential information does not include (i) information that is or becomes
publicly available through no wrongful act of the recipient, (ii) information
obtained from third parties without a breach of any other non-disclosure
agreement, (iii) information that is independently developed by a recipient
without reference to the confidential information or, (iv) information that a
Stockholder is legally compelled to disclose, pursuant to any subpoena, court
order or similar process issued by a court or governmental body.
(b) A Stockholder shall give the Company prompt notice of any attempt
to legally compel the Stockholder to disclose Confidential Information so that
the Company can seek a protective order or waive the Stockholder's compliance
with the provisions of Section 13(a).
16. Termination. This Agreement shall terminate the earlier of (i) the
date written consent thereto is given by (x) the Founders and (y) Investors
owning 70 percent of outstanding Series A Preferred and Common Stock into which
the Series A Preferred has been converted; or (ii) the closing of an IPO; or
(iii) the closing of an Exit Transaction; or (iv) the date the Founders and the
Investors collectively cease to own a majority of the outstanding shares of
Series A Preferred and Common Stock.
17. Specific Performance. The parties hereto acknowledge that there
would be no adequate remedy at law if any party fails to perform any of its
obligations hereunder and, accordingly, agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of the other party
under this Agreement in accordance with the terms and conditions of this
Agreement.
18. Titles. The titles, captions or headings of the Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
19. Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given upon receipt if personally delivered,
receipt acknowledged (which shall include Federal Express or similar service);
when transmitted if transmitted by telecopy, receipt confirmed; and upon
11
receipt if sent by certified or registered mail, return receipt requested. In
each case notice shall be sent:
If to EVCI: Educational Video Conferencing, Inc.
00 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxxxxx, Chairman
Facsimile: (000) 000-0000
with a copy to: Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Visio: Visiocom Worldwide, S.A.
00/00 Xxxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 1160
Attn: Xxxxxxx Xxxx, President
Facsimile: 000-000-000-0000
with a copy to: Xxxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Investors: L&L Capital Partners LLC
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: X. Xxxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxxx P.C.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
20. Jointly Drafted Agreement. The parties acknowledge that each of
them, and their attorneys, have had the opportunity to draft and comment upon
this Agreement, and have in fact done so, and that this Agreement is the joint
product of negotiations between them. The parties agree that in construing this
Agreement each term shall be given its ordinary meaning. Each party waives
application of the doctrine of construction against the drafter and acknowledges
that the parties shall jointly be considered to be the drafters of this
Agreement.
21. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective permitted
transferees of their shares of the
12
Company. If any Stockholder or any such transferee shall acquire any shares of
the Company, in any manner, whether by operation of law or otherwise, such
shares shall be held subject to all of the terms of this Agreement and, by
taking and holding such shares, such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement.
22. Governing Law. This Agreement shall be governed and construed and
enforced in accordance with the laws of the State of Delaware, without regard to
the principles of conflicts of law.
23. Severability. If any term or provision of this Agreement shall to
any extent be invalid or unenforceable, the remainder of this Agreement shall
not be affected thereby, and each other term and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law. Upon the
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect their original intent as closely as possible to the
end that transactions contemplated hereby are fulfilled to the extent possible.
24. No Third Party Beneficiaries. The provisions of this Agreement
shall be only for the benefit of the parties to this Agreement and no other
person or entity shall have any third party beneficiary or other right
hereunder.
25. Entire Agreement; Amendments and Waivers. This Agreement, together
with all exhibits hereto, constitutes the entire agreement between the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. No amendment, supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the party to be bound thereby,
except that all of the Investors shall be bound if Investors owning 70 percent
of the Common Stock owned by all of the Investors, assuming for such purpose
that the Series A Preferred has been converted into Common Stock in accordance
with its terms. No waiver of any provision of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall any waiver constitute a continuing waiver unless otherwise
expressly provided therein.
26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
27. Dispute Resolution. Any and all disputes, claims or controversies
arising out of or relating to this Agreement that are not resolved within 10
business days may be submitted to final and binding arbitration in New York City
before J-A-M-S, or its successor, pursuant to the United States Arbitration Act,
9 U.S.C. Sec. 1 et seq. A party may commence the arbitration process called for
in this Agreement by filing a written demand for arbitration with J-A-M-S, with
a copy to all persons and entities entitled to notices hereunder. The
arbitration will be conducted in accordance with the provisions of J-A-M-S'
Streamlined Arbitration Rules and Procedures in effect at the time of filing of
the demand for arbitration. The parties to the arbitration will cooperate with
J-A-M-S and with one another in selecting an arbitrator from J-A-M-S' panel of
neutrals, and in scheduling the arbitration proceedings so that a final
determination can be made within 30 days after submission to arbitration. The
parties to the arbitration covenant that they will participate in the
arbitration in good faith, and that they will share equally in its costs.
However, once an award is entered, the losing
13
party shall be responsible for paying all of the winner's costs and expenses of
the arbitration, including attorneys' fees. The provisions of this Section 27
may be enforced by any Court of competent jurisdiction, and the party seeking
enforcement shall be entitled to an award of all costs, fees and expenses,
including attorneys' fees, to be paid by the party against whom enforcement is
ordered.
28. Survival. The provisions of 13, 15, 17, 18, 19, 20, 21, 22, 23, 27
and 28 shall survive the termination of this Agreement.
29. Expenses. The Company shall pay or reimburse all reasonable fees
and disbursements of legal counsel to EVCI, Visio and the Investors upon receipt
of appropriate invoices and all of the proceeds of the sale of the Securities
under this Agreement (the "Closing").
30. Consulting Fees. Promptly after the Closing, the Company shall pay
Alfus Financial Services LLC $30,000 and L&L Capital Partners, LLC $112,050 for
services rendered in connection with the transactions contemplated by this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date and year first above written.
EDUCATIONAL VIDEO CONFERENCING, INC. VISIOCOM WORLDWIDE, S.A.
By:/s/ Xxxx X. Xxxxxxxx By:/s/ Xxxxxxx Xxxx
--------------------------------------- -----------------------------
Xxxx X. Xxxxxxxx, Chairman Xxxxxxx Xxxx, President
VISIOCOM USA INCORPORATED
By:/s/ Xxxx X. Xxxxxxxx By:/s/ X. Xxxxxxxx Xxxxxxxx
--------------------------------------- -----------------------------
Xxxx X. Xxxxxxxx, Chairman X. Xxxxxxxx Xxxxxxxx
XXXXXX INVESTMENTS, LLC
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxx
-------------------------------------------- ----------------------------
Xxxxxxx Xxxxxx Xxxxx X. Xxxxx
Authorized Signatory
L&L CAPITAL PARTNERS, LLC SOUTH SHORE CAPITAL FUND LTD.
By: /s/ X. Xxxxxxxx Xxxxxxxx By: /s/ Xxxxx X. Sing
--------------------------------------- ----------------------------
X. Xxxxxxxx Xxxxxxxx Xxxxx X. Xxxx
Authorized Signatory Authorized Signatory
Navigator Management Ltd.
Director
14
The undersigned hereby agree to be bound by the provisions of
Section 12 of the foregoing Subscription and Stockholder's Agreement and to also
be bound by, and to be deemed a Stockholder for all purposes under such
Agreement with respect to of any shares of Common Stock acquired by him upon
exercise of stock options or otherwise.
/s/ Xxxxxxx Xxxxxxx
--------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxxxx Dessein
--------------------------------
Xxxxxxx Dessein
15
Exhibit A
INVESTORS IN VISIOCOM USA INCORPORATED
--------------------------------------
No. of Shares of Series A
Preferred Total
Name Address Purchased Purchase Price
---- ------- ------------------------- --------------
X. Xxxxxxxx Xxxxxxxx L&L Capital Partners, LLC 3,000 $75,000
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
L&L Capital Partners, LLC c/o Xxxxxxx X. Xxxxxxxxx 1,000 25,000
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Nakoma Investments, LLC c/o Xxxxx X. Xxxxx 12,000 300,000
0000 Xxxx Xxxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Southshore Capital Fund LTD c/o Xxxxxx Xxxxxxx 6,000 150,000
Southridge Capital
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxxx 000 Xxxxxx Xxxx Xxxx 18,000 450,000
------ ----------
Xxxxxx, XX 00000
40,000 $1,000,000
====== ==========
Exhibit B
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PREFERRED STOCK
(Pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware)
VISIOCOM USA INCORPORATED, a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), does hereby certify that
pursuant to authority conferred upon the Board of Directors of the Corporation
(the "Board") by Article FOURTH of the Certificate of Incorporation of the
Corporation (the "Certificate of Incorporation") and Section 151(g) of the
General Corporation Law of the State of Delaware (the "DGCL"), the Board has
duly adopted the following resolutions, which are not in conflict with any
provisions of the Certificate of Incorporation or the Corporation's Bylaws.
RESOLVED, that the Board hereby fixes and determines the designation
of, the number of shares constituting, and the rights, preferences, privileges,
and restrictions relating to, a series of Preferred Stock, as follows:
1. Designation; Amount; Stated Value.
---------------------------------
From the Corporation's 100,000 authorized shares of Preferred Xxxxx,
x.0000 par value, 60,000 shares are hereby designated Series A Preferred Stock
("Series A Preferred") with the rights, preferences, privileges and restrictions
specified herein. Each share of Series A Preferred shall have a stated value of
$25.00 (the "Stated Value") and all shares of Series A Preferred shall have an
aggregate Stated Value of $1,500,000.
2. Dividends.
---------
(a) The holders of record of the Series A Preferred shall be
entitled to receive dividends upon the occurrence of the first to occur of (i) a
liquidation pursuant to Section 3, (ii) an automatic conversion pursuant to
Section 5 and (iii) a redemption pursuant to Section 8, out of any surplus
legally available therefor, at a rate per annum equal to nine percent (9%) of
the Stated Value. Dividends shall accrue from the initial date of issuance of
the Series A Preferred (the "Original Issue Date") and shall be cumulative and
compounded annually.
(b) Shares of Series A Preferred that are automatically converted
pursuant to Section 5 or redeemed pursuant to Section 8 shall not accrue
dividends following the date the conversion or redemption is deemed effected. In
the case of conversion, all accrued and unpaid dividends shall be paid, either
in cash or by issuance to the record holder thereof a number of shares of the
Corporation's Common Stock, $.0001 par value (the "Common Stock"), which, when
multiplied by the Conversion Price, equals the aggregate amount of the dividend
to be paid. The Board shall determine, in its sole discretion, whether dividends
are to be paid in cash or by the issuance of shares of Common Stock. In the case
of redemption, all accrued and unpaid dividends shall be paid in cash.
(c) No dividends or other distributions shall be paid, or set
apart for payment, on any shares of Common Stock or other capital stock of the
Corporation ranking junior as to dividends to the Series A Preferred, unless and
until all accrued and unpaid dividends on the Series A Preferred shall have been
paid or set apart for payment.
3. Liquidation Preference. Subject to Section 5, in the event of a
liquidation or dissolution and winding up of the Corporation, whether voluntary
or involuntary, the holders of record of the Series A Preferred shall be
entitled to receive ratably in full, out of lawfully available assets of the
Corporation, whether such assets are stated capital or surplus of any nature, an
amount in cash per outstanding share of Series A Preferred equal to the sum of
the Stated Value and all dividends (whether or not declared) accrued and unpaid
thereon, as of the date of final distribution hereunder to such holders, before
any payment shall be made or any assets distributed to the holders of the Common
Stock or other capital stock of the Corporation ranking junior as to liquidation
to the Series A Preferred. If, upon any liquidation, dissolution and winding up,
the amount available for such payment to the holders of Series A Preferred shall
not be sufficient to pay in full the amounts payable on the Series A Preferred,
the holders of the Series A Preferred, and any other class or series of the
Corporation's capital stock which may hereafter be created having parity as to
liquidation rights with the Series A Preferred, shall share in the distribution
of the amount available in proportion to the respective preferential amounts to
which each is entitled.
4. Voting Rights. Each share of a Series A Preferred shall entitle the
holder thereof to such number of votes per share on matters requiring the vote
or consent of the holders of Common Stock as shall equal the number (with
fractions being rounded to the nearest whole number) of shares of Common Stock
into which each share of Series A Preferred is convertible at the record date
for the determination of stockholders entitled to vote on such matters or, if no
such record date is established, at the date such vote is taken or any written
consent of stockholders is solicited. The holders of shares of Series A
Preferred and the holders of Common Stock shall at all times vote as one class,
together with the holders of any other class of stock of the Corporation
accorded such general class voting right. In addition, the approval of any
action either (i) altering the rights, preferences or privileges of the Series A
Preferred or (ii) creating any new class or series of shares having rights,
preference or privileges senior to or on parity with the Series A Preferred,
shall require the consent of a majority in interest of the outstanding shares of
Series A Preferred.
5. Automatic Conversion.
--------------------
(a) All outstanding shares of Series A Preferred shall be
automatically converted into fully paid and non-assessable shares of Common
Stock, in the event of (i) an initial public offering of equity securities of
the Corporation, (ii) a liquidation or dissolution and winding up of the
Corporation, or (iii) the sale of the Corporation pursuant to a stock sale,
merger, consolidation, recapitalization, reorganization, restructuring, sale of
all or substantially all of the assets of the Corporation or similar transaction
or series of transactions (each of (i), (ii) and (iii) being a "Liquidity
Transaction"), and provided the Corporation's value in such Liquidity
Transaction is not less than $7,050,000. Such conversion shall be at the rate of
one share of Common Stock for each $5.00, subject to adjustment as provided in
Section 6 (the "Conversion Price") of an amount equal to the sum of (x) the
Stated Value of the Series A Preferred duly surrendered for conversion and (y)
any accrued and unpaid dividends thereon that the Corporation has elected to pay
in Common Stock. Written notice of such automatic conversion shall be given by
the Corporation to the holders of Series A
B-2
Preferred at least 10 days prior to the closing of the Liquidity Transaction
(the "Liquidity Transaction Closing"), unless the Corporation reasonably
believes a holder of Series A Preferred has actual knowledge of such automatic
conversion.
(b) In order to receive certificates for shares of Common Stock
into which Series A Preferred shall have been automatically converted, a holder
of record of Series A Preferred shall surrender the certificate(s) representing
such shares, endorsed in blank or accompanied by stock powers endorsed in blank,
in either case with signature guaranteed, at the principal office of the
Corporation or the Corporation's transfer agent for its Common Stock, or at such
other office as the Corporation may designate, and shall give written notice to
the Corporation, that sets forth the name or names in which the certificate or
certificates for shares of Common Stock are to be issued; provided, however,
that nothing in this Certificate of Designations shall be deemed to permit any
holder of Series A Preferred to designate another person to be the holder of
Common Stock issuable upon conversion of the Series A Preferred if the issuance
to such other person would violate Federal or state securities laws or any
agreement a holder of Series A Preferred has with the Corporation regarding
restrictions on transferability of any securities of the Corporation held by
such holder. Within 10 business days after surrender of the certificate(s)
representing the Series A Preferred and payment by the holder of any applicable
transfer or similar taxes, the Corporation shall issue and deliver (i) a
certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, in the name or names and to the address or addresses
specified in the Conversion Notice, subject to any such restrictions on
transferability, and (ii) a check in payment for any fractional shares pursuant
to Section 10 and any accrued and unpaid dividends, if any, that the Corporation
has elected to pay in cash pursuant to Section 2(b).
(c) The conversion of the Series A Preferred shall be deemed to
have been effected simultaneously with the consummation of the Liquidity
Transaction Closing. Whereupon, each holder shall cease to be a stockholder with
respect to the Series A Preferred and all rights whatsoever with respect to such
shares shall terminate (except the rights of the holder to receive shares of
Common Stock and cash in respect of fractional shares pursuant to Section 10 and
to receive accrued and unpaid dividends pursuant to Section 2(b)), and the
person or persons in whose name any certificate(s) for Common Stock are issuable
upon such conversion shall be deemed to have become the holder of record of the
shares represented thereby.
6. Adjustment of Conversion Price.
------------------------------
(a) In the event the Corporation (i) declares any dividend on the
Common Stock in shares of its capital stock, (ii) subdivides the outstanding
shares of the Common Stock into a larger number of shares, (iii) combines the
outstanding shares of the Common Stock into a smaller number of shares, or (iv)
issues by reclassification of the Common Stock any shares of its capital stock,
then the Conversion Price in effect on the record date for such dividend or on
the effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the record holder of any shares of Series A
Preferred
B-3
converted after such date shall be entitled to receive the kind and amount of
shares which such holder would have owned or have been entitled to receive had
such shares of Series A Preferred been converted immediately prior to such date.
Such adjustment shall be made successively whenever any event listed above shall
occur. If, as a result of an adjustment made hereunder, the holder of any shares
of Series A Preferred shall become entitled to receive shares of two or more
classes of capital stock or shares of Common Stock and other capital stock of
the Corporation, the Board shall determine the allocation of the adjusted
Conversion Price between shares of such classes of capital stock or shares of
Common Stock and other capital stock.
(b) After each adjustment of the Conversion Price pursuant to
this Section 6, the Corporation will promptly prepare a certificate signed by
the Chief Financial Officer of the Corporation setting forth the Conversion
Price as so adjusted, and a brief statement of the facts accounting for such
adjustment. The Company will promptly cause a brief summary thereof to be sent
by ordinary first class mail to each record holder of Series A Preferred at such
holder's last address as it shall appear on the registry books of the
Corporation or its transfer agent, unless the Corporation reasonably believes a
holder of Series A Preferred has actual notice of the adjusted Conversion Price
and the facts accounting for such adjustment. No failure to mail such notice nor
any defect therein or in the mailing thereof shall affect the validity thereof
except to the extent a holder of Series A Preferred shall have suffered actual
damages as a result thereof. The affidavit of the Secretary or an Assistant
Secretary of the Corporation that such notice has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.
(c) As used in this Section 6, the term "Common Stock" shall mean
and include the Corporation's Common Stock authorized on the Original Issue Date
and shall also include any capital stock of any class of the Corporation
thereafter authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the holders thereof to participate in dividends and in
the distribution of assets upon the voluntary liquidation, dissolution or
winding up of the Corporation; provided, however, that the shares issuable upon
conversion of the Series A Preferred shall include only shares of such class
designated in the Corporation's Certificate of Incorporation as Common Stock on
the Original Issue Date or, in the case of any reclassification of the character
referred to in Section 6(a), such shares of Common Stock as so reclassified or
changed.
(d) Any determination as to whether an adjustment in the
Conversion Price in effect is required pursuant to this Section 6, or as to the
amount of any such adjustment, if required, shall be binding upon the holders of
the Series A Preferred and the Corporation if made in good faith by the Board.
7. Reservation of Shares; Payment of Taxes.
---------------------------------------
(a) The Corporation covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issue upon conversion of the Series A Preferred, such number of shares of Common
Stock as shall then be issuable upon the conversion of all outstanding Series A
Preferred. The Corporation covenants that all shares of Common Stock which shall
be issuable upon conversion of the Series A Preferred shall, at the time of
delivery, be duly and validly issued, fully paid, nonassessable and free from
all taxes,
B-4
liens and charges with respect to the issue thereof (other than those which the
Corporation shall promptly pay or discharge, subject to Section 7(b)).
(b) The Corporation shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed with respect to the
issuance of the Series A Preferred, or the issuance or delivery of any shares of
Common Stock upon conversion of the Series A Preferred; provided, however, that,
if the shares of Common Stock are to be delivered in a name other than the name
of the holder of record of the certificate representing any Series A Preferred
being converted, then no such delivery shall be made unless the person
requesting the same has paid to the Corporation the amount of transfer taxes or
charges incident thereto, if any.
8. Optional Redemption; Right of First Refusal.
-------------------------------------------
(a) Subject to Section 8(c), and in the event that a conversion
has not occurred pursuant to Section 5, the Series A Preferred shall be
redeemable at the sole option of the holder of Series A Preferred (the
"Redeeming Holder"), exercisable during the period of 90 days immediately
following the fourth anniversary of the Original Issue Date at a price per share
equal to the sum of the Stated Value and all dividends (whether or not declared)
accrued and unpaid thereon through the date the Redemption Notice is given
pursuant to Section 8(b) (the "Redemption Price").
(b) The holder of shares of Series A Preferred may exercise such
redemption right by giving notice to the Corporation (the "Redemption Notice"),
within such 90 day period, of such holder's intent to surrender to the
Corporation for redemption all or a specified portion of the Series A Preferred
(the "Redemption Shares"), at the principal office of the Corporation or the
Corporation's transfer agent, accompanied by the certificate(s) representing the
Redemption Shares being so surrendered for redemption endorsed in blank or
accompanied by stock powers endorsed in blank, in either case with signature
guaranteed.
(c) Within five days after receipt of the Redemption Notice and
such certificate(s), the Corporation shall transmit a copy of the Redemption
Notice to the Corporation's remaining stockholders (the "Remaining
Stockholders"). Each Remaining Stockholder shall have the right to purchase all
or any portion of its pro rata portion of the Redemption Shares (determined
according to ownership of the Corporation's shares, assuming conversion of
Series A Preferred into Common Stock), at a price per share equal to the higher
of the Per Share Market Price and the Redemption Price, by giving written notice
of exercise to the Redeeming Holder and the Corporation by the 45th day
following the date the Corporation transmits a copy of the Redemption Notice to
each Remaining Stockholder. "Per Share Market Price" means the price determined
by an independent appraiser selected by the Board. Nothing contained herein
shall prohibit the Remaining Stockholders from agreeing among themselves or with
the Redeeming Holder as to the number of Redemption Shares to be purchased by
each of them.
(d) The Redemption Shares to be purchased, if any, by the
Remaining Stockholders shall be sold at a closing that takes place at the
offices of the attorneys for the Corporation within 10 business days after the
45th day referred to in Section 8(c). The purchaser shall not receive valid
title to any of such shares until all of them are purchased. The purchase
B-5
price (either the Redemption Price or the Per Share Market Price) for the
Redemption Shares shall be paid against receipt of the certificate(s)
representing the Redemption Shares being purchased endorsed in blank or
accompanied by stock powers endorsed in blank, in either case with signature
guaranteed, together with such other documents as counsel for the Company shall
deem necessary to permit the transfer of such shares.
(e) In the event the Remaining Stockholders have not duly
exercised their rights to purchase a portion of the Offered Shares, the
Corporation shall redeem such portion of shares (the "Redemption Shares") at the
Redemption Price. Payment of the Redemption Price shall be made, out of surplus
legally available therefor, in three equal installments, of which the first
shall be due the first day of the month next following the expiration of the 45
day period referred in Section 8(c) and the other two installments shall be due
on the first and second anniversary dates thereof. The obligation to pay the
Redemption Price shall be evidenced by a promissory note of the Corporation and
shall be secured by the Redemption Shares. The Corporation shall, simultaneously
with such first installation payment, issue and deliver to the Redeeming Holder
a Certificate for the shares of Series A Preferred, if any, owned by such
Redeeming Holder and not included in the Redemption Shares.
9. Status of Reacquired Shares. The shares of Series A Preferred which
have been issued and reacquired in any manner by the Corporation shall have the
status of authorized and unissued shares of Preferred Stock and may be
reclassified and reissued as a part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board.
10. No Fractional Shares. The Corporation shall not be required to
issue fractional shares of Common Stock upon any conversion of Series A
Preferred but shall pay, in lieu thereof, an amount in cash equal to the same
fraction of a share of Common Stock outstanding after a conversion multiplied by
the Conversion Price.
11. Determination of the Board. Whenever this Certificate of
Designations requires determination to be made by the Board, such determination
shall be conclusive and shall be set forth in a Board resolution.
12. Notices. Any notice required by these provisions to be given to
the holders of Series A Preferred shall be deemed given on the third business
day after mailing, first class mail, postage prepaid, or on the day of delivery
if sent by overnight courier, receipt confirmed, in each instance in an envelope
address to each holder of record of Series A Preferred at such holder's address
appearing on the books of the Corporation.
RESOLVED, FURTHER, that the Chairman of the Board, the Vice Chairman
of the Board and the Secretary of the Corporation are each hereby authorized and
directed to prepare and file a Certificate of Designations in accordance with
this resolution and as required by law.
B-6
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designations on behalf of Visiocom USA Incorporated and does affirm the
foregoing as true under the penalties of perjury this 29th day of November,
1999.
VISIOCOM USA INCORPORATED
By:____________________________
Xx. Xxxx X. Xxxxxxxx
Chairman of the Board
B-7
Exhibit B-1
FORM OF
COLLATERAL INSTALLMENT PROMISSORY NOTE
--------------------------------------
$____________________ , 20__
FOR VALUE RECEIVED, Visiocom USA Incorporated, a Delaware corporation,
("Maker"), hereby promises to pay to the order of [insert name of Redeeming
Holder] ("Payee") at [insert address to which payment is to be sent] the
principal sum of $ in lawful money of the United State of America. The first
installment shall be due on [ ] and the remaining two installments shall be due
the first and second anniversary date respectively of the due date of the first
installment. Each such installment shall be deemed to include interest at a rate
necessary to avoid the imputation of interest under applicable provisions of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder. When ever any installment falls due on a Saturday, Sunday or
business holiday in New York City, such installment shall be paid on the
immediately succeeding business day with interest calculated to that date.
This Note may be prepaid at the option of Maker in whole, but not in
part, without premium or penalty.
In the event that Maker shall fail to pay any installment of this Note
when due, and such failure shall continue for 10 days after written notice
thereof shall have been given to Maker by the holder of this Note, the holder of
this Note, by further written notice to Maker, may at any time declare the
entire unpaid principal balance of this Note to be immediately due and payable
without demand, protest or notice, all of which are hereby waived. Past due
installment payments shall bear interest at nine percent (9%) per annum,
compounded annually, computed from the date of this Note.
As collateral for this Note, Maker has pledged, assigned and
transferred, and by this instrument and delivery of the stock Certificate No(s).
[ ] for [ ] shares of Makers [ ] (the "Shares") does hereby pledge, assign and
transfer, the Shares to Payee and to every subsequent holder of the Note (the
Shares and certificates and any property, including cash, hereafter distributed
as dividends paid or other distributions made upon or in respect of the Shares
or in exchange for any or all the Shares or property, being hereinafter
collectively called the "Pledged Shares"). Payee acknowledges receipt of
Certificate No(s). [ ] representing all of the Pledged Shares accompanied by
duly executed stock power(s).
The holder of this Note shall not be entitled to exercise any voting
and/or consensual powers pertaining to Pledged Shares or any part thereof until
Maker shall default in any payment of this Note as and when the same shall
become due and payable, whereupon the holder of the Note shall immediately, and
without notice to Maker, be entitled to exercise such powers.
Upon default in the payment by Maker of this Note, subject to
applicable securities laws, the holder of the Note shall have the rights and
remedies provided in the Uniform Commercial Code then in force in the State of
New York.
Maker agrees to pay all costs and expenses, including reasonable
attorney's fees, incurred in connection with the collection of any of the
indebtedness evidenced hereby.
This Note and all the rights hereunder shall be governed in all
respects by the law of the State of New York.
VISIOCOM USA INCORPORATED
By:___________________________
Authorized Signatory
B-1-2
Exhibit C
CONNECTICUT BLUE SKY DISQUALIFICATION PROVISIONS
------------------------------------------------
(D) (1) The exemption hereunder shall not be available to an issuer if the
issuer, any of the issuer's predecessors, any affiliated issuer, any of the
issuer's directors, officers, general partners, beneficial owners of ten percent
(10%) or more of any class of the issuer's equity securities, any of the
issuer's promoters presently connected with the issuer in any capacity, any
underwriter of the securities to be offered, or any partner, director, or
officer of such underwriter:
(a) Within the last five years, has filed a registration statement which is the
subject of a currently effective registration stop order entered by any state
securities administrator or the Securities and Exchange Commission;
(b) Within the last five years, has been convicted of any criminal offense in
connection with the offer, purchase or sale of any security, or involving fraud
or deceit;
(c) Is currently subject to any state or federal administrative enforcement
order or judgment, entered within the last five years, finding fraud or deceit
in connection with the purchase or sale of any security; or
(d) Is currently subject to any order, judgment or decree of any court of
competent jurisdiction, entered with the last five years, temporarily,
preliminarily or permanently restraining or enjoining such party from engaging
in or continuing to engage in any conduct or practice involving fraud or deceit
in connection with the purchase or sale of any security.
Exhibit D-1
CERTIFICATE OF INCOROPORATION
OF
VISIOCOM USA INCORPORATED
(Under Section 102 of the General Corporation Law of the State of Delaware)
FIRST: The name of the corporation is VISIOCOM USA INCORPORATED (the
"Corporation").
SECOND: The registered office of Corporation is located at 0 Xxxx
Xxxxxxxxxx Xxxxxx, in the City of Dover, in the County of Kent, in the State of
Delaware. The name of its registered agent at the address is National Registered
Agents, Inc..
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 1,100,000 shares, consisting of
1,000,000 shares of common stock, par value $0.0001; and 100,000 shares of
preferred stock, par value $0.0001.
The Board of Directors of the Corporation is expressly authorized to
fix by resolution or resolutions the designations and the powers (including
voting powers), preferences, and rights, and the qualifications, limitations, or
restrictions permitted by Section 151 of the General Corporation Law of the
State of Delaware in respect of any class or classes of stock or any series of
any class of stock of the Corporation which may be desired but which shall not
be fixed by this Certificate of Incorporation. Such grant of authority includes
the power to specify the number of shares in any series.
FIFTH: The name and mailing address of the sole incorporator is
Xxxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX
00000.
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized to
make, alter or repeal all or any of the provisions of the bylaws of the
Corporation.
SEVENTH: A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any amendment,
modification or repeal of the foregoing sentence shall not adversely affect any
right
or protection of a director of the Corporation hereunder in respect of any act
or omission occurring prior to the time of such amendment, modification or
repeal.
EIGHTH: (a) The Corporation shall, to the extent and in the manner
permitted by the General Corporation Law of the State of Delaware, as the same
now exists or may hereafter be amended, indemnify any person against expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred in connection with any threatened, pending or
completed action, suit, or proceeding in which such person was or is a party or
is threatened to be made a party by reason of the fact that such person is or
was a director or officer of the Corporation. For purposes of such
indemnification, a "director" or "officer" of the Corporation shall mean any
person (i) who is or was a director or officer of the Corporation, (ii) who is
or was serving at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise or
(iii) who was a director or officer of a corporation which was a predecessor
corporation of the Corporation or of another enterprise at the request of such
predecessor Corporation.
The Corporation shall not be required to indemnify a director or
officer in connection with any action, suit, or proceeding (or part thereof)
initiated by such director or officer unless the initiation of such action,
suit, or proceeding (or part thereof) by the director or officer and such
indemnification was authorized by the Board of Directors of the Corporation.
The Corporation shall pay the expenses (including attorney's fees)
incurred by a director or officer of the Corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Article Eighth in advance of its final disposition; provided, however, that
payment of expenses incurred by a director or officer of the Corporation in
advance of the final disposition of such action, suit or proceeding shall be
made only upon receipt of an undertaking by the director or officer to repay all
amounts advanced in the event that it should ultimately be determined that the
director or officer is not entitled to be indemnified under this Article Eighth
or otherwise.
The rights conferred on any person by this section (a) of Article
Eighth shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Corporation's bylaws or
any agreement, vote of the stockholders or disinterested directors or other
action provided that the same conforms to the provisions of this Certificate of
Incorporation, as the same may be amended from time to time, and the laws of the
State of Delaware.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
(b) The Corporation shall have the power, to the extent and in the
manner permitted by the General Corporation Law of the State of Delaware, as the
same now exists or may hereafter be amended, to indemnify any person, in
addition to directors and officers, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with any threatened, pending or completed action, suit,
or
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proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such person is or was an employee or agent of
the Corporation. For purposes of this section (b) of Article Eighth, an
"employee" or "agent" of the Corporation (other than a director or officer)
shall mean any person (i) who is or was an employee or agent of the Corporation
or (ii) who is or was serving at the request of the Corporation as an employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise including a predecessor corporation of the Corporation or another
enterprise at the request of such predecessor corporation.
(c) The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of the General
Corporation Law of Delaware.
NINTH: The Corporation reserves the right to amend, alter, change, or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors, and officers are subject to this reserved
power.
TENTH: The Corporation expressly elects not to be governed by Section
203 of the General Corporation Law of the State of Delaware.
I, THE UNDERSIGNED, to form a corporation for the purposes hereinabove
stated, under and pursuant to the provisions of the General Corporation Law of
the State of Delaware, do hereby certify that the facts stated herein are true
and hereunto set my hand this 30th day of September, 1999.
/s/ Xxxxxxx Xxxxxx
-----------------------------
Xxxxxxx Xxxxxx, Incorporator
D-1-3
Exhibit D-2
BYLAWS*
OF
VISIOCOM USA INCORPORATED
ARTICLE I
---------
Stockholders
------------
Section 1.1. Annual Meetings. An annual meeting of stockholders shall
be held for the election of directors on such date and at such place as shall be
fixed from time to time by the Board of Directors. Any other proper business may
be transacted at the annual meeting.
Section 1.2. Special Meetings. Special meetings of stockholders for
any purpose or purposes may be called at any time by the Board of Directors.
Special meetings may not be called by any other person or persons.
Section 1.3. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given that shall state the place, date and hour of the meeting and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the certificate of incorporation or
these bylaws, the written notice of any meeting shall be given not less than 10
nor more than 60 days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
Section 1.4. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. Any business which might have been transacted at the original meeting may
be transacted at the adjourned meeting. If the adjournment is for more than
thirty days or, if after the adjournment a new record date is fixed for the
adjourned meeting, notice, pursuant to Section 1.3 of these bylaws, of the
adjourned meeting shall be given to each stockholder of record entitled to vote
at the meeting.
Section 1.5. Quorum. Except as otherwise provided by law, the
certificate of incorporation or these bylaws, at each meeting of stockholders
the presence in person or by
---------------------
*As of November 29, 1999.
proxy of the holders of shares of stock having 70 percent of the votes which
could be cast by the holders of all outstanding shares of stock entitled to vote
at the meeting shall be necessary and sufficient to constitute a quorum. In the
absence of a quorum, the stockholders present may, by majority vote, adjourn the
meeting from time to time in the manner provided in Section 1.4 of these bylaws
until a quorum shall attend.
Section 1.6. Organization. Meetings of stockholders shall be presided
over by the Chairman of the Board, or, in his or her absence, by the Vice
Chairman of the Board, if any, or in his or her absence by the Chief Executive
Officer, or in his or her absence, by the Chief Operating Officer, or in the
absence of the foregoing persons by a chairman designated by the Board of
Directors or, in the absence of such designation, by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his or her
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting.
Section 1.7. Voting; Proxies. Except as otherwise provided by the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
such stockholder which has voting power upon the matter in question.
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such stockholder by proxy, but no
such proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. A proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient by law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or by delivering
a proxy in accordance with applicable law bearing a later date to the Secretary
of the corporation.
Voting at meetings of stockholders need not be by written ballot and,
unless otherwise required by law, need not be conducted by inspectors of
election unless so determined by the holders of shares of stock having a
majority of the votes which could be cast by the holders of all outstanding
shares of stock entitled to vote thereon which are present in person or by proxy
at such meeting.
All elections including the election of directors and questions shall,
unless otherwise provided by law, be decided by the vote of the holders of
shares of stock having 70 percent of the votes which could be cast by the
holders of all shares of stock outstanding and entitled to vote thereon.
Section 1.8. Fixing Date for Determination of Stockholders of Record. In
order that the corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors and which record date: (1) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than 60 nor less
than 10 days before the date of such meeting; (2) in the case of determination
of stockholders entitled to express consent to corporate action in writing
D-2-2
without a meeting, shall not be more than 10 days from the date upon which the
resolution fixing the record date is adopted by the Board of Directors; and (3)
in the case of any other action, shall not be more than 60 days prior to such
other action.
If no record date is fixed: (1) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the business day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held; (2) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action of the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (3) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 1.9 List of Stockholders Entitled to Vote. The Secretary shall
prepare and make, at least 10 days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
Upon the willful neglect or refusal of the Board of Directors to
produce such a list at any meeting for the election of directors, they shall be
ineligible for election to any office at such meeting.
The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list of stockholders or
the books of the corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 1.10. Action By Consent of Stockholders. Any action required
or permitted to be taken at any annual or special meeting of the stockholders
may be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the
D-2-3
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered by hand or by certified or registered
mail, return receipt requested) to the corporation by delivery to its registered
office in the State of Delaware, its principal place of business, or an officer
or agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
Section 1.11. Conduct of Meetings. The Board of Directors of the
corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of stockholders shall have the right and
authority to prescribe such rules, regulations and procedures and to do all such
acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (1) the establishment of an agenda
or order of business for the meeting; (2) rules and procedures for maintaining
order at the meeting and the safety of those present; (3) limitations on
attendance at or participation in the meeting to stockholders of record of the
corporation, their duly authorized and constituted proxies or such other persons
as the chairman of the meeting shall determine; (4) restrictions on entry to the
meeting after the time fixed for the commencement thereof; and (5) limitations
on the time allotted to questions or comments by participants. Unless and to the
extent determined by the Board of Directors or the chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with the
rules of parliamentary procedure.
ARTICLE II
----------
Board of Directors
------------------
Section 2.1. Number; Qualifications. The Board of Directors shall
consist of nine members.
Section 2.2. Election; Resignation; Removal; Vacancies. At each annual
meeting of stockholders, the stockholders shall elect directors each of whom
shall hold office for a term of one year or until his or her successor is
elected and qualified. Any director may resign at any time upon written notice
to the corporation.
Any vacancy occurring in the Board of Directors for any cause may be
filled by the vote of seven members of the Board of Directors, or by the vote of
the stockholders, and each director so elected shall hold office until the
expiration of the term of office of the director whom he or she has replaced or
until his or her successor is elected and qualified.
Section 2.3. Regular Meetings. Regular meetings of the Board of
Directors shall be held at least quarterly at such places within or without the
State of Delaware and at such times as the
D-2-4
Board of Directors may from time to time determine, and if so determined notices
thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, Vice Chairman of the
Board, if any, or any three members of the Board of Directors. Notice of a
special meeting of the Board of Directors shall be given by the person or
persons calling the meeting at least forty-eight hours before the special
meeting.
Section 2.5. Telephonic Meetings Permitted. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting thereof by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear and be heard by each other, and participation in a meeting
pursuant to this bylaw shall constitute presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of the
Board of Directors five members of the whole Board of Directors shall constitute
a quorum for the transaction of business. The vote of five directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors except that the following actions shall require the affirmative vote
of seven directors at a meeting at which at least seven directors are present:
(a) The merger, reorganization, consolidation, sale or other
disposition of substantially all the assets, recapitalization, reorganization of
the corporation, or similar transaction or series of transactions.
(b) The amendment of the certificate of incorporation or bylaws
of the corporation.
(c) The election of officers of the corporation and the
assignment of authority and duties to any officer who is required to act solely
in accordance with the authority and duties to any officer who is required to
act solely in accordance with the authority and duties, if any, assigned to such
officer from time to time by the Board of Directors.
(d) The approval, or modification by more than $25,000, of an
annual budget ("Budget").
(e) The incurrence or assumption by the corporation of any
liability for money borrowed or the guarantee by the corporation of any
obligation, of any person, firm or corporation, in each case in excess of the
greater of $25,000 or an amount in the current Budget.
(f) The establishment and maintenance of bank accounts and the
designation of authorized signatories on such accounts in the event the Finance
Committee of the Board is unwilling or unable to act with respect thereto.
(g) Any loan made by the corporation.
(h) The issuance or repurchase of any shares of any class of the
corporation.
D-2-5
(i) The establishment, modification or termination or any
employee stock grant or option agreement or plan or any other benefit, pension,
profit sharing, fringe benefit or similar plan.
(j) The declaration of any dividend in any form.
(k) The approval of any employment arrangement with any employee
providing for compensation, including fringe benefits, in excess of $50,000 per
annum; provided, however, such approval shall not be required if the
compensation level and the position the employee is being hired to fill has been
included in a Budget approved pursuant to Section 2.6(d).
(l) The institution, or consenting to the institution, of any
bankruptcy, insolvency, reorganization, readjustment of debt or similar
proceeding relating to the corporation under the law of any jurisdiction; an
assignment for the benefit of creditors; or application for or consenting to the
appointment for of any receiver, trustee or similar officer for any or all of
the property of the corporation.
(m) Any material change in the principal business of the
corporation or the establishment of a new line of business or class of product
or service.
(n) The entering into of any transaction with a stockholder of
the corporation or any of a stockholder's affiliates.
(o) The designation or change of any committee of the Board of
Directors.
(p) The engagement or discharge of legal counsel or independent
auditors.
(q) The dissolution and liquidation of the corporation.
(r) As required by Section 12(a) of the Stock Subscription and
Stockholders' Agreement dated November , 1999, as amended.
(s) Any Board determination or selection (including the selection
of an independent appraiser) required pursuant to the terms of the corporation's
Series A Preferred Stock.
(t) The discharge of any officer of the corporation whose
employment was approved pursuant to Section 2.6(k).
Section 2.7. Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, or, in his or her absence by the
Vice Chairman of the Board, if any, or in their absence by a chairman chosen at
the meeting. The Secretary shall act as secretary of the meeting but, in his
absence, the chairman of the meeting may appoint any person to act as secretary
of the meeting.
Section 2.8. Informal Action by Directors. Unless otherwise restricted
by the certificate of incorporation or these bylaws, any action required or
permitted to be taken at any meeting of
D-2-6
the Board of Directors, or of any committee thereof, may be taken without a
meeting if all members of the Board of Directors or such committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board of Directors or such committee.
ARTICLE III
-----------
Committees
----------
Section 3.1. Committees. The Board of Directors may designate one or
more committees, each committee to consist of one or more of the directors of
the corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of a
member of the committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member.
Any such committee, to the extent permitted by law and to the extent
provided by resolution of the Board of Directors, shall have and may exercise
all the powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
Section 3.2. Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may make, alter
and repeal rules for the conduct of its business. In the absence of such rules
each committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these bylaws.
ARTICLE IV
----------
Officers
--------
Section 4.1. Executive Officers; Election; Term of Office;
Resignation; Removal; Vacancies. The Board of Directors shall elect a Chairman
of the Board from among its members, a Chief Executive Officer, a Chief
Operating Officer, a Chief Financial Officer and a Secretary, and it may, if it
so determines, choose a Vice Chairman of the Board from among its members. In
addition to presiding at meetings of the stockholders or the Board of Directors
in the absence of the Chairman of the Board, the authority and duties of Vice
Chairman of the Board shall be limited to the specific authority and duties, if
any, assigned to him or her by the Board of Directors from time to time pursuant
to Section 2.6 (c) of these bylaws. The Board of Directors may also choose a
President, one or more Vice Presidents, one or more Assistant Secretaries, a
Treasurer and one or more Assistant Treasurers. Any number of offices may be
held by the same person.
Each such officer shall hold office until the first meeting of the
Board of Directors after the annual meeting of stockholders next succeeding his
election, and until his successor is elected and qualified or until his earlier
resignation or removal.
D-2-7
Any officer may resign at any time upon written notice to the
corporation.
The Board of Directors may remove any officer with or without cause at
any time, but such removal shall be without prejudice to the contractual rights
of such officer, if any, with the corporation.
Any vacancy occurring in any office of the corporation by death,
resignation, removal or otherwise may be filled for the unexpired portion of the
term by the Board of Directors at any regular or special meeting of the Board of
Directors.
Section 4.2. Powers and Duties of Executive Officers. The officers of
the corporation shall have such powers and duties in the management of the
corporation as may be prescribed in a resolution by the Board of Directors or
any employment agreements approved by resolution of the Board of Directors and,
to the extent not so provided, as generally pertain to their respective offices,
subject to the control of the Board of Directors. The Board of Directors may
require any officer, agent or employee to give security for the faithful
performance of his or her duties.
ARTICLE V
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Stock
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Section 5.1. Certificates. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the corporation by the Chairman
of the Board or Vice Chairman of the Board, if any, or the Chief Executive
Officer, or the Chief Operating Officer, or a Vice President, and by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary,
of the corporation certifying the number of shares owned by such stockholder in
the corporation. Any of or all the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates. The corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the corporation may require the owner of the lost,
stolen or destroyed certificate, or such owner's legal representative, to give
the corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
D-2-7
ARTICLE VI
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Miscellaneous
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Section 6.1. Fiscal Year. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
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Section 6.2. Seal. The corporate seal shall have the name of the
corporation inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.
Section 6.3. Waiver of Notice of Meetings of Stockholders, Directors
and Committees. Any written waiver of notice, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
Section 6.4. Interested Directors; Quorum. No contract or transaction
between the corporation and one or more of its directors or officers, or between
the corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (1) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, and the Board of Directors or committee in
good faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (2) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (3) the
contract or transaction is fair as to the corporation as of the time it is
authorized, approved or ratified, by the Board of Directors, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
Section 6.5. Form of Records. Any records maintained by the
corporation in the regular course of its business, including its stock ledger,
books of account, and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs, or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time.
Section 6.6. Amendment of Bylaws. These bylaws may be altered or
repealed, and new bylaws made, by the Board of Directors, but, the stockholders
may make additional bylaws and may alter and repeal any bylaws whether adopted
by them or otherwise.
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