State of Delaware PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "VSOURCE, INC.", FILED IN THIS OFFICE ON THE EIGHTH DAY OF
NOVEMBER, A.D. 2000, AT 9:15 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
[SEAL] /S/ EDWARD J. FREEL
----------------------
Edward J. Freel, Secretarey of State
3313408 8100 AUTHENTICATION: 0780796
001559071 DATE: 11-08-00
<PAGE>
CERTIFICATE OF INCORPORATION
OF
VSOURCE, INC.,
a Delaware corporation
ARTICLE 1
NAME
The name of this corporation is Vsource, Inc.
ARTICLE 2
REGISTERED OFFICE AND RESIDENT AGENT
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE 3
CORPORATE PURPOSES
The purpose of this corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE 4
CAPITAL STOCK
A. This corporation is authorized to issue two classes of stock to be
designated "Common Stock" and "Preferred Stock," respectively. The total number
of shares which this corporation is authorized to issue is 105,000,000. The
number of shares of Common Stock this corporation is authorized to issue is
100,000,000 shares, with a par value of $0.01, and the number of shares of
Preferred Stock this corporation is authorized to issue is 5,000,000 shares,
with a par value of $0.01.
B. The Preferred Stock shall be divided into series. The rights,
preferences, privileges, restrictions and other matters relating to the Series
1-A Convertible Preferred Stock, which series shall consist of 2,802,000 shares,
are as set forth below in the succeeding provisions of this Article 4. The
Board of Directors of this corporation is hereby authorized to fix or alter the
rights, preferences, privileges and restrictions granted to or imposed upon
-1-
<PAGE>
additional series of Preferred Stock, and the number of shares constituting any
such series and the designation thereof, or of any of them. Subject to
compliance with applicable protective voting rights that have been or may be
granted to the Preferred Stock or any series thereof in any Certificate of
Determination or the Corporation's Certificate of Incorporation ("Protective
Provisions"), but notwithstanding any other rights of the Preferred Stock or any
series thereof, the rights, privileges, preferences and restrictions of any such
additional series may be subordinated to, pari passu with (including, without
limitation, inclusion in provisions with respect to liquidation or acquisition
preferences, redemption and/or approval of matters by vote or written consent),
or senior to any of those of any present or future class or series of Preferred
or Common Stock. Subject to compliance with applicable Protective Provisions,
the Board of Directors is also authorized to increase or decrease the number of
shares of any series (other than Series 1-A Convertible Preferred Stock), prior
or subsequent to the issue of that series, but not below the number of shares of
such series then outstanding or reserved for issuance upon conversion of the
Series 1-A Convertible Preferred Stock. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution originally
fixing the number of shares of such series.
C. The rights, preferences, privileges, restrictions and other matters
relating to the Series 1-A Convertible Preferred Stock are as set forth below
(all references to paragraph and subparagraph numbers in this Section C are to
the paragraphs and subparagraphs of this Section C unless otherwise indicated):
1. Dividends
---------
The holders of shares of Series 1-A Convertible Preferred Stock shall
be entitled to receive, out of any assets legally available therefor, and when,
as and if declared by the Board of Directors, noncumulative dividends in an
amount equal to $0.20 cents per share annually. No dividend may be declared and
paid upon shares of Common Stock in any fiscal year of the Corporation unless
dividends of $0.20 per share has first been paid upon or declared and set aside
for payment to the holders of the shares of Series 1-A Convertible Preferred
Stock for such fiscal year of the Corporation. No undeclared or unpaid dividend
shall ever bear interest.
2. Liquidation Preference
-----------------------
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the Series 1-A
Convertible Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock by reason of their ownership
thereof, a preference amount for each outstanding share they hold equal to the
-2-
<PAGE>
sum of: (A) the price of $2.50 originally paid for such outstanding share of
Series 1-A Convertible Preferred Stock (the "Original Issue Price") and (B) an
amount equal to declared but unpaid dividends on such share, if any, but only to
the extent of the Corporation's retained earnings. If upon the occurrence of
such event, the assets and funds thus distributed among the holders of the
Series 1-A Convertible Preferred Stock and the Series 2-A Convertible Preferred
Stock shall be insufficient to permit the payment to such holders of the full
preferential amount each such holder is entitled to receive, then the entire
assets and funds of the Corporation legally available for distribution shall be
distributed among the holders of the Corporation's Series 1-A Convertible
Preferred Stock and Series 2-A Convertible Preferred Stock in proportion to the
full preferential amount each such holder is otherwise entitled to receive.
(b) After payment to the holders of the Series 1-A Convertible
Preferred Stock and the Series 2-A Convertible Preferred Stock of the amounts to
which they are entitled to be paid prior and in preference to any distribution
of any of the assets or surplus funds of the Corporation to the holders of the
Common Stock by reason of their ownership thereof, the remaining assets and
funds of the Corporation legally available for distribution, if any, shall be
distributed among the holders of the Common Stock, the Series 1-A Convertible
Preferred Stock and the Series 2-A Convertible Preferred Stock pro rata based on
the number of shares of Common Stock held by each (assuming conversion of all
such Series 1-A Convertible Preferred Stock pursuant to Paragraph 5 below and
all such Series 2-A Convertible Preferred Stock pursuant to paragraph 7 of the
Certificate of Designation creating the Series 2-A Convertible Preferred Stock).
(c) For purposes of this Paragraph 2, a liquidation, dissolution
or winding up of the Corporation shall be deemed to be occasioned by or to
include (i) the acquisition of the Corporation by another entity by means of any
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation but, excluding any merger effected
exclusively for the purpose of changing the domicile of the Corporation), or
(ii) a sale of all or substantially all of the assets of the Corporation; unless
the Corporation's stockholders of record as constituted immediately prior to
such acquisition or sale will, immediately after such acquisition or sale (by
virtue of securities issued as consideration for the Corporation's acquisition
or sale or otherwise) hold a majority of the voting power of the surviving or
acquiring entity. In any of such events, if the consideration received by the
Corporation received is other than cash, its value will be deemed its fair
market value. The fair market value of common stock which is publicly traded on
an exchange or the NASDAQ National Market System or Small Cap Market shall be
the average of the daily market prices of that stock over the 20 consecutive
trading days immediately preceding (and not including) the date the Corporation
or its stockholders receive such stock. The daily market price for each trading
day shall be: (A) the closing price on that day on the principal exchange on
-3-
<PAGE>
which such common stock is then listed or admitted to trading or on NASDAQ, as
applicable; or (B) if no sale takes place on that day on such exchange or
NASDAQ, the average of the official closing bid and asked prices for that stock.
Otherwise, the fair market value of such consideration shall be determined in
good faith by the Board of Directors and provided in writing by the Corporation
to the holders of the Series 1-A Convertible Preferred Stock within five (5)
days of the date of such determination; provided, however, that the fair market
value of such consideration shall be determined by appraisal in accordance with
the following provisions if the holders of at least two-thirds of then
outstanding Series 1-A Convertible Preferred Stock object in writing to the
Board of Director's determination within 15 days of their receipt of notice of
such determination by the Board of Directors. A single appraiser shall selected
jointly by the holders of a majority of the Series 1-A Convertible Preferred
Stock and the Corporation. If the holders of the Series 1-A Convertible
Preferred Stock and the Corporation are unable to agree on an appraiser within
twenty (20) days of the Board of Directors receiving notice of such holders'
objection to the Board of Directors' determination, each shall immediately
appoint an appraiser who shall determine such fair market value. If the lower
of the appraised fair market values is not less than ninety percent (90%) of the
higher appraised fair market value, the final fair market value of such
consideration shall be the average of the appraised values. If the lower of the
appraised values is less than ninety percent (90%) of the higher appraised
values, the original appraisers shall appoint a final appraiser who shall pick
one of the two prior values determined by the first two appraisers. All
appraisal reports shall be completed no later than sixty (60) days after the
appointment of the appraiser engaged to render such appraisal. All appraisal
fees and costs shall be paid by the Corporation; provided, however, that if the
final appraised value is no more than ten percent (10%) higher than that
determined by the Board, the appraisal fees and costs shall be subtracted from
the liquidation preference to be paid to the holders of the Series 1-A
Convertible Preferred Stock.
3. Redemption.
----------
(a) Redemption at the Option of the Corporation. The Corporation
--------------------------------------------
shall not have the right to call or redeem any shares of the Series 1-A
Convertible Preferred Stock.
(b) Redemption at the Option of the Holders. The holders of the
-----------------------------------------
Series 1-A Convertible Preferred Stock shall not have any right to require the
Corporation to redeem all or any part of the Series 1-A Convertible Preferred
Stock held by them.
4. Voting Rights. The holder of each share of Series 1-A Convertible
--------------
Preferred Stock shall have the right to one vote for each share of Common Stock
into which such Series 1-A Convertible Preferred Stock could then be converted
-4-
<PAGE>
(with any fractional share determined on an aggregate conversion basis being
rounded down to the nearest whole share), and with respect to such vote, such
holder shall have full voting rights and powers equal to the voting rights and
powers of the holders of Common Stock, and shall be entitled, notwithstanding
any provision hereof, to notice of any stockholders' meeting in accordance with
the bylaws of the Company, and shall be entitled to vote, together with holders
of Common Stock, with respect to any question upon which holders of Common Stock
have the right to vote.
5. Conversion. The holders of the Series 1-A Convertible Preferred
----------
Stock shall have conversion rights as follows (the "Conversion Rights"):
(a). Right to Convert. Each share of Series 1-A Convertible
------------------
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, at the office of the
Corporation or any transfer agent for such stock, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing the
Original Issue Price by the then applicable Conversion Price, determined as
hereinafter provided, in effect on the date the certificate evidencing such
share is surrendered for conversion. The initial Conversion Price per share for
Series 1-A Convertible Preferred Stock (the "Conversion Price") shall be the
Original Issue Price. Such initial Conversion Price shall be adjusted as
hereinafter provided.
(b). Automatic Conversion. Each share of Series 1-A Convertible
---------------------
Preferred Stock shall automatically be converted into shares of Common Stock at
the then effective Conversion Price as provided in Subparagraph 5a above,
immediately upon the closing of a public offering of the Corporation's Common
Stock with aggregate gross proceeds of at least $10,000,000 and a per share
price to the public of at least five dollars ($5.00), or at the election of the
holders of a majority of the outstanding shares of Series 1-A Convertible
Preferred Stock.
(c) Mechanics of Conversion. Before any holder of Series 1-A
-------------------------
Convertible Preferred Stock shall be entitled to convert the same into shares of
Common Stock, such holder shall surrender the certificate or certificates
thereof, duly endorsed, at the office of the Corporation or of any transfer
agent for such stock, and shall give written notice to the Corporation at such
office that it elects to convert the same and shall state therein the number of
shares to be converted and the name or names in which it wishes the certificate
or certificates for shares of Common Stock to be issued. The Corporation shall,
as soon as practicable thereafter, issue and deliver at such office to such
holder a certificate or certificates for the number of shares of Common Stock to
which such holder shall be entitled. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of surrender of
the shares of Series 1-A Convertible Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.
-5-
<PAGE>
(d) Conversion Price Adjustments. The Conversion Price shall be
-------------------------------
subject to the following adjustments:
(1) Adjustment for Stock Splits and Combinations. If the
-------------------------------------------------
Corporation at any time or from time to time after the first issuance
of Series 1-A Convertible Preferred Stock (the "Purchase Date")
effects a subdivision of the outstanding Common Stock, by stock split
or otherwise, the Conversion Price then in effect immediately before
that subdivision shall be proportionately decreased; and, conversely,
if the Corporation at any time or from time to time after the Purchase
Date combines the outstanding shares of Common Stock, by reverse stock
split or otherwise, the Conversion Price then in effect immediately
before that combination shall be proportionately increased. Any
adjustment under this Section d(1) shall become effective at the close
of business on the date the subdivision or combination becomes
effective.
(2) Adjustment for Certain Dividends and Distributions. In the
----------------------------------------------------
event the Corporation at any time or from time to time after the
Purchase Date either makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in additional shares of Common
Stock, then and in each such event the Conversion Price then in effect
shall be decreased as of the time of such issuance or, in the event
such a record date is fixed, as of the close of business on such
record date, by multiplying the Conversion Price then in effect by a
fraction (1) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance on the close of business on such record date, and (2)
the denominator of which shall be (i) the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus (ii)
the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, that if such record date
is fixed and such dividend is not fully paid or if such distribution
is not fully made on the date fixed therefor, the Conversion Price
shall be recomputed accordingly as of the close of business on such
record date or date fixed therefor and thereafter the Conversion Price
shall be adjusted pursuant to this Section d(2) as of the time of
actual payment of such dividend or distribution. For purposes of the
foregoing formula, "the total number of shares of Common Stock issued
and outstanding" on a particular date shall include shares of Common
Stock issuable upon conversion of stock or securities convertible into
Common Stock and the exercise of warrants, options or rights for the
purchase of Common Stock which are outstanding on such date.
-6-
<PAGE>
(3) Adjustments for Other Dividends and Distributions. In the
----------------------------------------------------
event the Corporation at any time or from time to time after the
Purchase Date makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other
distribution payable in securities of the Corporation other than
shares of Common Stock, then and in each such event, provision shall
be made so that each Holder of Series 1-A Convertible Preferred Stock
shall receive upon conversion thereof, in addition to the number of
shares of Common Stock receivable thereupon, the amount of securities
of the Corporation which it would have received had the Holder's
shares of Series 1-A Convertible Preferred Stock been converted into
Common Stock as of the date of such event and had it thereafter,
during the period from the date of such event to and including the
date of exercise, retained such securities receivable by it as
aforesaid during such period, subject to all other adjustments called
for during such period under this Section 5 with respect to the rights
of such Holder.
(4) Adjustment for Recapitalization, Reclassification, or
------------------------------------------------------------
Exchange. If the Common Stock issuable upon the conversion of the
--------
Series 1-A Convertible Preferred Stock is changed into the same or a
different number of shares of any class or classes of stock of the
Corporation, whether by recapitalization, reclassification or other
exchange (other than a subdivision or combination of shares, or a
stock dividend or a reorganization, merger, consolidation or sale of
assets, provided for elsewhere in this Section d), then and in any
such event each Holder of Series 1-A Convertible Preferred Stock shall
have the right thereafter to convert the Series 1-A Convertible
Preferred Stock into the kind and amount of stock and other securities
and property receivable upon such recapitalization, reclassification
or other exchange by holders of the number of shares of Common Stock
into which the number of shares of Series 1-A Convertible Preferred
Stock then by such Holder could be converted immediately prior to such
recapitalization, reclassification or other exchange, all subject to
further adjustment as provided herein.
(5) Reorganizations, Mergers, Consolidations or Sales of Assets.
-------------------------------------------------------------
If at any time or from time to time there is a capital reorganization
of the Common Stock (other than a subdivision or combination of shares
or a stock dividend or a recapitalization, reclassification or other
exchange of shares, provided for elsewhere in this Section d) or a
merger or consolidation of the Corporation with or into another
corporation, or the sale of all or substantially all of the
Corporation's assets to any other person, then, as a part of such
capital reorganization, merger, consolidation or sale, provision shall
be made so that each Holder of the Series 1-A Convertible Preferred
-7-
<PAGE>
Stock shall thereafter be entitled to receive upon conversion of the
Series 1-A Convertible Preferred Stock the number of shares of stock
or other securities or property of the Corporation, or of the
successor corporation resulting from such capital reorganization,
merger, consolidation or sale, to which a holder of the number of
shares of Common Stock deliverable upon such exercise would have been
entitled on such capital reorganization, merger, consolidation or
sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section d with respect to the
rights of each Holder of Series 1-A Convertible Preferred Stock after
the capital reorganization, merger, consolidation or sale to the end
that the provisions of this Section d (including the number of shares
deliverable upon conversion of the Series 1-A Convertible Preferred
Stock) shall continue to be applicable after that event and shall be
as nearly equivalent to the provisions hereof as may be practicable.
(6) Sale of Shares Below Conversion Price.
------------------------------------------
(A) If at any time or from time to time after the Purchase
Date, the Corporation issues or sells, or is deemed by the
express provisions of this Section d(6) to have issued or sold,
Additional Shares of Common Stock (as hereinafter defined), other
than as a dividend or other distribution on any class of stock as
provided in Section d(2) and other than upon a subdivision or
combination of shares of Common Stock as provided in Section
d(1), for an Effective Price (as hereinafter defined) less than
the then existing Conversion Price, then and in each such case
the then existing Conversion Price shall be reduced, as of the
opening of business on the date of such issue or sale, to a price
determined by multiplying that Conversion Price by a fraction the
numerator of which shall be (A) the number of shares of Common
Stock outstanding at the close of business on the day next
preceding the date of such issue or sale, plus (B) the number of
shares of Common Stock which the aggregate consideration received
(or by the express provisions hereof is deemed to have been
received) by the Corporation for the total number of Additional
Shares of Common Stock so issued would purchase at such
Conversion Price, plus (C) the number of shares of Common Stock
underlying Other Securities (as hereinafter defined) and the
denominator of which shall be (X) the number of shares of Common
Stock outstanding at the close of business on the date of such
issue after giving effect to such issue of Additional Shares of
Common Stock, plus (Y) the number of shares of Common Stock
underlying the Other Securities at the close of business on the
date of such issue or sale.
(B) For the purpose of making any adjustment required under
this Section d(6), the consideration received by the Corporation
for any issue or sale of securities shall (A) to the extent it
-8-
<PAGE>
consists of cash be computed at the amount of cash received by
the Corporation, (B) to the extent it consists of property other
than cash, be computed at the fair value of that property as
determined in good faith by the Board, and (C) if Additional
Shares of Common Stock, Convertible Securities (as hereinafter
defined) or rights or options to purchase either Additional
Shares of Common Stock or Convertible Securities are issued or
sold together with other stock or securities or other assets of
the Corporation for a consideration which covers both, be
computed as the portion of the consideration so received that may
be reasonably determined in good faith by the Board to be
allocable to such Additional Shares of Common Stock, Convertible
Securities or rights or options.
(C) For the purpose of the adjustment required under this
Section d(6), if the Corporation issues or sells any rights or
options for the purchase of, or stock or other securities
convertible into, Additional Shares of Common Stock (such
convertible stock or securities being hereinafter referred to as
"Convertible Securities") and if the Effective Price of such
Additional Shares of Common Stock is less than the Conversion
Price then in effect, then in each case the Corporation shall be
deemed to have issued at the time of the issuance of such rights
or options or Convertible Securities the maximum number of
Additional Shares of Common Stock issuable upon exercise or
conversion thereof and to have received as consideration for the
issuance of such shares an amount equal to the total amount of
the consideration, if any, received by the Corporation for the
issuance of such rights or options or Convertible Securities,
plus, in the case of such rights or options, the minimum amounts
of consideration, if any, payable to the Corporation upon the
exercise of such rights or options, plus, in the case of
Convertible Securities, the minimum amounts of consideration, if
any, payable to the Corporation (other than by cancellation of
liabilities or obligations evidenced by such Convertible
Securities) upon the conversion thereof. No further adjustment of
the Conversion Price, adjusted upon the issuance of such rights,
options or Convertible Securities, shall be made as a result of
the actual issuance of Additional Shares of Common Stock on the
exercise of any such rights or options or the conversion of any
such Convertible Securities. If any such rights or options or the
conversion privilege represented by any such Convertible
Securities shall expire without having been exercised, the
Conversion Price adjusted upon the issuance of such rights,
options or Convertible Securities shall be readjusted to the
Conversion Price which would have been in effect had an
adjustment been made on the basis that the only Additional Shares
-9-
<PAGE>
of Common Stock so issued were the Additional Shares of Common
Stock, if any, actually issued or sold on the exercise of such
rights or options or rights of conversion of such Convertible
Securities, and such Additional Shares of Common Stock, if any,
were issued or sold for the consideration actually received by
the Corporation upon such exercise, plus the consideration, if
any, actually received by the Corporation for the granting of all
such rights or options, whether or not exercised, plus the
consideration received for issuing or selling the Convertible
Securities actually converted, plus the consideration, if any,
actually received by the Corporation (other than by cancellation
of liabilities or obligations evidenced by such Convertible
Securities) on the conversion of such Convertible Securities.
(D) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Corporation after the
Purchase Date, whether or not subsequently reacquired or retired
by the Corporation, other than: (A) shares of Common Stock issued
upon conversion of the Series 1-A Convertible Preferred Stock or
any other options or warrants or convertible securities
outstanding or issuable on the Purchase Date; (B) shares of
Common Stock issuable or issued to the directors, officers and
employees of or consultants to the Corporation; (C) shares of
Common Stock issuable or issued as part of an acquisition by the
Corporation of all of or certain assets (including technology
rights) or shares of another company or entity whether through a
purchase, merger, exchange, reorganization or the like; (D)
shares of Common Stock issuable or issued pursuant to equipment
financing or leasing arrangements; or (E) shares issued in a
public offering of the Corporation's securities. The "Effective
Price" of Additional Shares of Common Stock shall mean the
quotient determined by dividing the total number of Additional
Shares of Common Stock issued or sold, or deemed to have been
issued or sold by the Corporation under this Section d(6), into
the aggregate consideration received, or deemed to have been
received by the Corporation for such issue under this Section
d(6), for such Additional Shares of Common Stock. "Other
Securities" with respect to an issue or sale of Additional Shares
of Common Stock shall mean (i) preferred stock, debentures and
notes convertible into Common Stock, and (ii) options or warrants
to purchase Common Stock at a price that is no greater than 95%
of the Effective Price of such issue or sale of Additional Shares
of Common Stock. The "number of shares of Common Stock underlying
Other Securities" on a particular date shall mean the number of
shares of Common Stock issuable upon the exercise or conversion,
as the case may be, of such Other Securities at the close of
business on such date but only to the extent that the holders
thereof have the fully vested legal right to exercise or convert
such Other Securities on such date and to retain the Common Stock
issued upon such exercise or conversion.
-10-
<PAGE>
(7) Upon the occurrence of each adjustment or readjustment of the
Conversion Price, the Corporation at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof, and
shall prepare and furnish to the holders of the Series 1-A Convertible
Preferred Stock a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment
is based.
(e) Notices of Record Date. In the event of any taking by the
-------------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any security or
right convertible into or entitling the holder thereof to receive or any right
to subscribe for, purchase or otherwise acquire any shares of stock of any class
or any other securities or property, or to receive any other right, the
Corporation shall mail to each holder of Series 1-A Convertible Preferred Stock
at least twenty (20) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution, security or right, and the amount and character of
such dividend, distribution, security or right.
(f) Reservation of Stock Issuable Upon Conversion. The
--------------------------------------------------
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series 1-A Convertible Preferred Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series 1-A Convertible
Preferred Stock and if at any time the number of authorized but unissued shares
of Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series 1-A Convertible Preferred Stock, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to this Articles of
Incorporation.
(g) Fractional Shares. No fractional share shall be issued upon
------------------
the conversion of any share or shares of Series 1-A Convertible Preferred Stock.
All shares of Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series 1-A Convertible Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a share of Common Stock, the Corporation shall, in lieu of issuing
any fractional share, pay the holder otherwise entitled to such fraction a sum
in cash equal to the fair market value of such fraction on the date of
conversion (determined as provided in Subparagraph 5c).
-11-
<PAGE>
(h) Notices. Any notice required by the provisions of this
-------
Paragraph 5 to be given to the holders of shares of Series 1-A Convertible
Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, return receipt requested, and addressed to each holder of
record at his address appearing on the books of the Corporation.
6. Amendment.
---------
Any term relating to the Series 1-A Convertible Preferred Stock may be
amended and the observance of any term relating to the Series 1-A Convertible
Preferred Stock may be waived (either generally or in a particular instance)
only with the vote or written consent of holders of a majority of the
outstanding shares of the Series 1-A Convertible Preferred Stock. Any amendment
so effected shall be binding upon the Corporation and any holder of the Series
1-A Convertible Preferred Stock.
7. Restrictions and Limitations.
------------------------------
So long as any shares of Series 1-A Convertible Preferred Stock remain
outstanding, the Corporation shall not, without the vote or written consent by
the holders of a majority of the outstanding shares of Series 1-A Convertible
Preferred Stock, voting together as a single class:
(a) Increase or decrease (other than by conversion) the total
number of authorized shares of Series 1-A Convertible Preferred Stock; or
(b) Amend the Articles of Incorporation of the Corporation to
change the rights, preferences, privileges or limitations of the Series 1-A
Convertible Preferred Stock.
8. No Reissuance of Series 1-A Convertible Preferred Stock.
--------------------------------------------------------------
No share or shares of Series 1-A Convertible Preferred Stock acquired
by the Corporation by reason of redemption, purchase, conversion or otherwise
shall be reissued, and all such shares shall be returned to the status of
undesignated shares of Preferred Stock.
-12-
<PAGE>
9. Residual Rights.
----------------
Holders of shares of Series 1-A Convertible Preferred Stock shall not
have any pre-emptive rights. All rights accruing to the outstanding shares of
the Company not expressly provided for to the contrary herein shall be vested in
the Common Stock.
ARTICLE 5
AMENDMENT OF BYLAWS AND ELECTION OF DIRECTORS
The board of directors is authorized to make, alter or repeal the
bylaws of this corporation. Election of directors need not be by written
ballot.
ARTICLE 6
INCORPORATOR
The name and mailing address of the incorporator is:
Sandford T. Waddell
5740 Ralston Street, Suite 110
Ventura, California 93003
ARTICLE 7
NO DIRECTOR LIABILITY
A. To the fullest extent permitted by the law of the State of Delaware
as it now exists or may hereafter be amended, no director or officer of the
Corporation shall be liable to the Corporation or its stockholders for monetary
damages arising from a breach of fiduciary duty owed by such director or
officer, as applicable, to the Corporation or its stockholders; provided,
--------
however, that liability of any director or officer shall not be eliminated or
-------
limited for acts or omissions which involve any breach of a director's or
officer's duty of loyalty to the Corporation or its stockholders, intentional
misconduct, fraud or a knowing violation of law, under Section 174 of the
General Corporation Law of the State of Delaware or for transaction from which
the officer or director derived an improper personal benefit.
B. The Corporation shall, to the maximum extent permitted from time to
time under the law of the State of Delaware, indemnify and hold harmless and
upon request shall advance expenses to any person (and heirs, executors or
administrators of such person) who is or was a party or is threatened to be made
a party to any threatened, pending or completed action, suit, proceeding or
claim, whether civil, criminal, administrative or investigative, by reason of
the fact that such person is or was or has agreed to be a director or officer of
the Corporation or while such a director or officer is or was serving at the
-13-
<PAGE>
request of the Corporation as a director, officer, partner, trustee, employee or
agent of another corporation or any partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, against
expenses (including attorneys' fees and expenses), judgments, fines, penalties
and amounts paid in settlement incurred in connection with the investigation,
preparation to defend or defense of such action, suit, proceeding or claim;
provided, however, that the foregoing shall not require the Corporation to
-------- -------
indemnify or advance expenses to any person in connection with any action, suit,
proceeding, claim or counterclaim initiated by or on behalf of such person.
Such indemnification shall not be exclusive of other indemnification rights
arising under any by-law, agreement, vote of directors or stockholders or
otherwise an shall inure to the benefit of the heirs and legal representatives
of such person. Any person seeking indemnification under this Article 7 shall
be deemed to have met the standard of conduct required for such indemnification
unless the contrary shall be established. Any repeal or modification of the
foregoing provisions of this Article 7 shall not adversely affect any right or
protection of a director or officer of the Corporation with respect to any acts
or omissions of such director or officer occurring prior to such repeal or
modification.
C. The Corporation may, by action of its Board of Directors, provide
indemnification to such of the employees and agents of the Corporation to such
extent and to such effect as the Board of Directors shall determine to be
appropriate and authorized by the law of the State of Delaware.
D. The Corporation shall have power to 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 expense, liability or loss
incurred by such person in any such capacity or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the law of the State of Delaware.
E. The rights and authority conferred in this Article 7 shall not be
exclusive of any other right which any person may otherwise have or hereafter
acquire.
F. Neither the amendment nor repeal of this Article 7, nor the adoption
of any provision of these Certificate of Incorporation or the Bylaws of the
Corporation, nor, to the fullest extent permitted by the law of the State of
Delaware any modification of law, shall eliminate or reduce the effect of this
Article 7 in respect of any acts or omissions occurring prior to such amendment,
repeal, adoption or modification.
-14-
<PAGE>
ARTICLE 8
DIRECTOR RELIANCE
A director shall be fully protected in relying in good faith upon the
books of account or other records of the Corporation or statements prepared by
any of its officers or by independent public accountants or by an appraiser
selected with reasonable care by the Board of Directors as to the value and
amount of the assets, liabilities and/or net profits of the Corporation, or any
other facts pertinent to the existence and amount of surplus or other funds from
which dividends might properly be declared and paid, or with which the
Corporation's capital stock might properly be purchased or redeemed.
I, THE UNDERSIGNED, for the purpose of forming a corporation pursuant
to the General Corporation Law of Delaware, do make, file and record this
certificate, and do certify that the facts herein stated are true; and I have
accordingly hereunto set my hand.
Dated: November 3, 2000
State of California
County of Ventura
/s/ Sandford T. Waddell
--------------------------
Sandford T. Waddell, Incorporator
-15-
<PAGE>
