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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
March 15, 2000
Date of Report
(Date of Earliest Event Reported)
FINDEX.COM, INC.
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(Exact name of registrant as specified in its charter)
Nevada 88-0379462
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(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
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(Commission File Number)
11640 Arbor Street
Suite 201
Omaha, Nebraska 68144
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(Address of principal executive offices (zip code))
(402) 333-1900
(402) 778-5763 (fax)
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(Registrant's telephone number, including area code)
Reagan Holdings, Inc.
39 Broadway, Suite 2704
New York, New York 10006
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(Former Name and Former Address)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to a Share Exchange Agreement (the "Agreement") dated March 07,
2000, FindEx.com, Inc., a Nevada corporation ("FindEx.com" or the "Company"),
acquired all of the issued and outstanding capital stock of Reagan Holdings,
Inc. ("Reagan") from the shareholders of Reagan in a pro rata exchange for an
aggregate of 150,000 shares of FindEx.com's common stock, par value $0.001 per
share (the "Share Exchange"). There were seven shareholders of Reagan
immediately prior to the Share Exchange. They were MHE Projix LLC, a Florida
limited liability company, Mark Elenowitz, Louis Taubman, David Simonetti,
Thomas Bostic Smith, William Quigley, Jr., and Barry Labell, who held 5,000,000
shares of Reagan common stock in the aggregate. As a result of the Share
Exchange, 100% of the outstanding capital stock of Reagan is owned by FindEx.com
and Reagan became a wholly-owned subsidiary of FindEx.com. Prior to the Share
Exchange, FindEx.com had 9,441,346 shares of common stock issued and
outstanding. Following the Share Exchange, FindEx.com had 9,591,346 shares of
common stock issued and outstanding. A copy of the Agreement is filed as an
exhibit to this Form 8-K and is incorporated in its entirety herein. The
foregoing description is modified by such reference.
Upon effectiveness of the Share Exchange, pursuant to Rule 12g-3(a)
of the General Rules and Regulations of the Securities and Exchange Commission,
FindEx.com became the successor issuer to Reagan for reporting purposes under
the Securities Exchange Act of 1934 and elects to report under the Act effective
March 15, 2000.
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(b) The following table contains information regarding the shareholdings of the
Company's current directors and executive officers and those persons or entities
who beneficially own more than 5% of the Company's common stock:
<TABLE>
<CAPTION>
AMOUNT OF COMMON STOCK PERCENT OF COMMON STOCK
BENEFICIALLY OWNED BENEFICIALLY OWNED(1)
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<S> <C> <C>
Directors and Officers
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Joseph V. Szczepaniak 150,000 1.60%
William E. Terrill 50,000 less than 1%
5% or More Stockholders
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None.
</TABLE>
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(1) Based on 9,591,346 shares issued and outstanding after the Share Exchange.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration provided by the parties pursuant to the Agreement
was negotiated between FindEx.com and the former Reagan shareholders. In
evaluating the Share Exchange transaction, the former Reagan shareholders used
criteria such as the value of the assets of FindEx.com, FindEx.com's ability to
compete in its markets, the current and anticipated business operations of
FindEx.com. FindEx.com considered the value of Reagan's status as a publicly
reporting shell company and its ability to succeed to the reporting status of
Reagan.
BUSINESS
The Company - Background
FindEx.com, Inc. is a retail, wholesale, and Internet
(www.Quickverse.com) supplier of software products to business and religious
organizations and individuals. As the premier Bible study software provider, the
company develops and publishes church and Bible study software products designed
to simplify biblical research, streamline church office tasks, provide easy
access to Bible-related stories and enhance the user's understanding of the
Bible. FindEx.com also offers financial information and decision support
services online through its Web site, www.findex.com.
Bible Study Software Business
In May 1999, the Company determined to pursue a two-fold business plan
related to the development and sales of religious software products. The first
step is to be the premier provider of Bible study and related products and
content to the domestic and international markets through both acquiring
established companies and ongoing internal development of products and
Bible-related content. In July 1999, the Company completed an exclusive license
agreement with Mattel (MAT) Corporation for the Parsons Church Division of
Mattel. In so doing, FindEx.com obtained the exclusive right to market, sell,
and continue to develop several top-selling Bible study software products
including the Zondervan NIV Bible and QuickVerse. QuickVerse is the company's
flagship product with over 800,000 certified copies sold. Additionally, the
Company is extending the bible software category into more of a broad-based
"inspirational" category both at secular and Christian retail stores by
providing broader and deeper content. Examples include children's
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educational titles, Christian graphics programs, Sunday school teaching aides,
and inspirational commentaries and devotionals.
In addition to the exclusive License Agreement, the Company also
entered into an exclusive Distribution Agreement with Mattel whereby the Company
has the exclusive right to sell other Mattel software titles into the Christian
Bookseller Association (CBA) market and Mattel has the exclusive right to sell
FindEx.com products into the secular retail market. The Company also uses the
strength of Mattel's direct marketing group to market and sell its products
directly to the consumer. The potential market for inspirational and Bible study
software in the United States alone is substantial. A 1999 Gallup poll found 55
percent of Americans identified themselves as Protestant, while 28 percent
identified themselves as Catholic. The number who describe themselves as
born-again or evangelical Christians is at an all-time high of 47 percent.
Religious retailing is a $3 billion business according to the Christian
Booksellers Association (CBA). The 3,500-store segment has a few chains, Family
Christian Stores being the largest with 340 stores. The growth in religious
sales is being driven partly by churchgoer's increased spending power. According
to the CBA, the average Christian shopper is well-educated, aged 30 to 49 and
has a net income of more than $40,000.
As religious retailing increases, secular stores are offering more
religious products. For example, Wal-Mart is offering more shelf space to
religious products, while 70 percent of religious books are available at chains
such as Barnes and Noble. In an article entitled "Pennies from Heaven," from the
December 1999 issue of Chain Store Executive, Amazon.com is credited as
presently being the largest seller of Christian books and music on the Internet.
In the same article Jupiter Communications, an Internet commerce research
company predicts the online retail market for religious commerce will be $7
billion by 2003.
According to SOMA Communications, Inc. a Christian broadcast market
research firm utilizing data supplied by Simmons, over 70 percent of Christians
on the Internet have an annual income in excess of $40,000 and over 30 percent
of Christians on the Internet have annual income of over $75,000. According to
Christianity Today, Inc., a publisher of Christian periodicals, when compared to
the general U.S. population, Christians are approximately 25 percent more likely
to own a computer and approximately 15 percent more likely to own a modem.
The second step is to build upon the Company's existing financial
information products and services. The Company currently markets MEMBERSHIP PLUS
and MEMBERSHIP PLUS - CHURCH OFFICE. Both of these products provide church
database, financial management tools and church productivity tools. The Company
has sold this suite of products to over 25,000 church and para-church
ministries. As the Company continues to develop the financial information and
financial decision making tools through its Findex.com web site it has the
natural base of existing users to provide a broad range of products and
services. The Company believes that it can use a very strong brand and affinity
group marketing strategy to extend their products beyond the traditional Bible,
reference and inspirational productivity tools into a broader market base
including fund raising, debt management and building fund decision tools. The
first step in extending this market is providing this set of products and
services to the church and para-church ministries. The second step will be to
provide similar tools customized to the attendees of these churches.
Business Expansion
In order to implement the Company's business plan, the Company seeks to
acquire companies in the Bible Study, e-commerce and financial information
marketplace through merger, acquisition and strategic alliance. FindEx.com is in
serious discussions with three other strategic acquisition prospects in these
industries. The Company has not restricted the type of companies it may acquire.
The Company may acquire a business that only recently commenced operations, or a
developing company in need of additional funds to expand into new products or
markets, or an established business that may be experiencing financial or
operating difficulties and needs additional capital which is perceived to be
easier to raise by a public company. In some instances, a business opportunity
may involve acquiring or merging with a corporation which does not need
substantial additional cash but which desires to establish a public trading
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market for its common stock. The Company may purchase assets and establish
wholly-owned subsidiaries in various businesses or purchase existing businesses
as subsidiaries.
Because business opportunities may occur in many different industries
and at various stages of development, the task of comparative investigation and
analysis of such business opportunities will be extremely difficult and complex.
The Company will also incur significant legal and accounting costs in connection
with the acquisition of a business opportunity, including the legal fees for
preparing acquisition documentation, due diligence investigation costs and the
costs of preparing reports and filings with the Securities and Exchange
Commission.
The Company will seek potential business opportunities from all known
sources, but will rely principally on personal contacts of its officers and
directors as well as indirect associations between them and other business and
professional people. From time to time, the Company may engage the services of
consultants and or other outside professionals for their assistance in locating
and evaluating appropriate business opportunities.
The Company requires significant additional funding in order to
accomplish its business plan.
COMPETITION
The Company will continue to face competition in secular, CBA, direct
and Internet sales. However, Management feels that it's uniquely positioned to
continue to be the premier provider of Bible-study related software and that
FindEx.com is the only company in a position to evolve the "inspirational"
category in these markets. With the Company's exclusive agreement to market
Mattel products into CBA, the Company already offers many more titles to CBA and
therefore dominates the shelf space at CBA. Many of the Company's competitors
are limited to just a few software titles and have limited resources to expand
their product offerings. FindEx.com has the advantage of offering titles with
such brand names as American Greetings (i.e. American Greetings Spiritual
Expressions, American Greetings Sunday School Crafts and American Greetings
Scrapbooks and More). Additionally, FindEx.com offers the CBA Market educational
and family titles from Mattel that are synergistic to its current offering and
consistent with the desires of the CBA shopper. With its partnership with
Mattel, FindEx.com can offer more than 500 software titles to the CBA Market.
As with its competitors, FindEx.com faces the challenge of reaching the
mostly independent 3500 CBA stores on a consistent basis to keep them informed
of new releases, promotional offers, etc. In addition to advertising in trade
publications and maintaining a large presence at CBA Trade shows and events,
FindEx.com believes that it is critical to see each customer routinely in order
to stay ahead of the competition. In order to do this, FindEx.com engaged the
services of Genesis Marketing Group, the premier marketing and sales group to
the CBA in the country. With over 30 sales reps, Genesis sees each of the 3500
independent stores face to face at least once each calendar quarter and presents
them with the latest in FindEx.com products and promotions. This has already
proven to give Findex.com an edge over its competition, which relies more on
advertising to reach the CBA customers.
At secular retail, FindEx.com continues to be the top seller of Bible
study software and is developing additional product offerings and promotions to
grow its market share. Through its exclusive distribution agreement with Mattel,
FindEx.com enjoys the strength of a large secular retail sales force that its
competitors do not have. Mattel has been one of the top retail software sales
companies for the past five years and has a nationwide sales force.
In the direct sales market, FindEx.com uses the strength of Mattel's
direct marketing and sales force to sells its products directly to the consumer.
Mattel sends out several million catalogs, emails and direct offerings for
FindEx.com products annually and has a direct sales infrastructure of over 300
telephone sales reps to handle both inbound and outbound sales campaigns.
Additionally, over 12% of FindEx.com's direct sales come through its Internet
site www.quickverse.com, which is driven by Mattel's www.shopmattel.com.
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The Company will face extreme competition both in the identification
and acquisition of appropriate Findex businesses and in the operation of any
businesses acquired. There are many established management and financial
consulting companies and venture capital firms which have significantly greater
financial and personal resources, technical expertise and experience than the
Company. In view of the Company's limited financial resources and management
availability, the Company will continue to be at a significant competitive
disadvantage vis-a-vis the Company's competitors.
EMPLOYEES
The Company currently has 21 employees operating the software
publishing business. FindEx.com has engaged the services of several consulting
firms who are working full time for the company. The Company relies heavily on
its current officers and directors in operating its businesses including the
Company's executive officer resident in Omaha, Nebraska. These officers and
directors will devote as much time as the Board of Directors determines is
necessary to carry out the affairs of the Company.
TRADEMARKS AND PATENTS
The Company, through its license with Parsons Technology/Mattel, has
shared trademarks and but has not applied for any new patents or trademarks.
PROPERTY
The Company's principal executive offices are located at 11640 Arbor
St, Omaha, Nebraska. The Company subleases these corporate offices under a lease
agreement with Ervin & Smith Inc. The Company also leases warehouse space in
LaVista, Nebraska as the Company's distribution and fulfillment facility. The
Company leases office space in Cedar Rapids, Iowa for sales offices. The Company
leases office space for product development and editorial support in Naperville,
Illinois.
LITIGATION
There is no outstanding material litigation in which the Company is
involved and the Company is unaware of any pending actions or claims against it.
DESCRIPTION OF SECURITIES
The Company has an authorized capitalization of 50,000,000 shares of
common stock, $.001 par value per share ("Common Stock") and 5,000,000
authorized shares of preferred stock, $.001 par value per share. The Company's
Articles of Incorporation authorize the Company's Board of Directors to direct
the issuance of shares of preferred stock in one or more series from time to
time and to fix the designations, powers, preferences, rights, qualifications,
limitations and restrictions of each series of preferred stock. These may
include voting rights, dividend rates and whether dividends are cumulative,
terms and conditions of redemption or conversion, and rights upon liquidation.
Common Stock
Following the Share Exchange, there were 9,591,346 shares of the
Company's Common Stock issued and outstanding. The holders of the Company's
common stock are entitled to one non-cumulative vote for each share held of
record on all matters submitted to a vote of shareholders. Subject to
preferences that may be applicable to outstanding shares of preferred stock, if
any, the holders of common stock are entitled to receive ratably any dividends
that are declared by the Company's Board of Directors out of funds legally
available therefor and are entitled to share ratably in all of the assets of the
Company available for distribution to holders of Common Stock upon liquidation,
dissolution or winding up of the affairs of the Company. Holders of Company's
Common Stock have no preemptive, subscription or conversion rights and there are
no redemption or sinking fund provisions or rights applicable thereto.
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Preferred Stock
Following the Share Exchange, there were approximately 20,000 shares of
the Company's Series A Convertible Preferred Stock issued and outstanding at a
face price of $10.00 per share. The Series A Convertible Preferred Stock is
entitled to receive a dividend of $.50 per annum per share, and no more when, as
and if declared by the Board of Directors. The Series A Convertible Preferred
Stock has voting rights limited to one vote for each share held. The Series A
Convertible Preferred Stock may be redeemed by the Company at any time after
April 15, 2000 into fully paid and nonassessable shares of Common Stock and such
securities and property initially at the rate of 10 shares of Common Stock for
each full share of Convertible Preferred Stock plus an amount equal to the
dividends accrued and unpaid thereon to the conversion date.
Following the Share Exchange, there were approximately 67,500 shares of
the Company's Series B Convertible Preferred Stock issued and outstanding at a
face price of $20.00 per share. The Series B Convertible Preferred Stock is
entitled to receive a dividend of $1.60 per annum per share, and no more when,
as and if declared by the Board of Directors. The Series A Convertible Preferred
Stock has voting rights limited to one vote for each share held. The Series B
Convertible Preferred Stock shall be convertible into fully paid and
nonassessable shares of Common Stock and such securities and property initially
at the rate of 1 share of Common Stock for each full share of Convertible
Preferred Stock.
The Board of Directors, without shareholder approval, may issue
preferred stock with voting and conversion rights that could materially and
adversely affect the voting power of the holders of Common Stock. The issuance
of preferred stock could also decrease the amount of earnings and assets
available for distribution to holders of Common Stock. In addition, the issuance
of preferred stock may have the effect of delaying or preventing a change of
control of the Company. At present, the Company has no plans to issue any shares
of preferred stock.
Transfer Agent
The transfer agent for the Company's Common Stock is Atlas Stock
Transfer Corporation, 5899 South State ST., Salt Lake City, Utah 84107. The
Company serves as its own transfer agent and registrar for its Series A and
Series B preferred stock.
MARKET FOR FINDEX.COM'S SECURITIES
The Company's Common Stock is traded on the OTC Bulletin Board, a
service provided by the Nasdaq Stock Market Inc., under the symbol, "FIND". The
Nasdaq Stock Market has implemented a change in its rules requiring all
companies trading securities on the OTC Bulletin Board to become reporting
companies under the Securities Exchange Act of 1934. The Company was required to
become a reporting company by the close of business on April 19, 2000.
FindEx.com acquired all the outstanding shares of Reagan to become successor
issuer to it pursuant to Rule 12g-3 in order to comply with the reporting
company requirements implemented by the Nasdaq Stock Market.
The following table sets forth for the periods indicated the high and
low bid prices for the common stock as reported each quarterly period within the
last two fiscal years on the OTC Bulletin Board. The prices have been adjusted
to reflect the 20-to-1 reverse split of the Company's common stock effected in
July 1999. The prices are inter-dealer prices, do not include retail mark up,
mark down or commission and may not necessarily represent actual transactions.
Quarter Ended Open Price High Price Low Price Closing Price
June, 1999 4.75 19.00 4.75 10.81
September, 1999 11.00 12.44 5.75 8.94
December, 1999 8.63 12.88 4.38 10.50
March 14, 2000 8.94 9.00 8.63 8.75
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During the last two years, no dividends have been paid on the Company's
stock and the Company does not anticipate paying any cash dividends in the
foreseeable future. Although it is the Company's intention to utilize all
available funds for the development of the Company's business, no restrictions
are in place which would limit or restrict the ability of the Company to pay
dividends.
MANAGEMENT
Information as to the directors and officers of the Company is as follow:
Name Position
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Joseph V. Szczepaniak President, Secretary and Director
William E. Terrill Chief Technical Officer
Steven Malone Vice President of Sales
Joseph V. Szczepaniak. Joe Szczepaniak has over 17 years of management
experience in the computer software industry. He has headed up the Sales &
Marketing divisions of many leading companies, such as InfoUSA, Parson's
Technology Church Division, Software Publishing Corporation, Inc., DS
Technologies, Software Toolworks, Inc. and Grolier Electronic Publishing. As the
President of the Consumer/CD ROM Division of InfoUSA, Joe was responsible for
all functional areas of the company's division including marketing, sales,
operations, and finance. While serving as the Senior Vice President of Grolier,
retail sales increased over ten times during the first 24 months of his tenure.
Mr. Szczepaniak was one of the founders of DS Technologies, the software
publishing company that developed software utilities for Central Point
Software/Peter Norton/Symantec.
William E. Terrill. Bill Terrill has over nineteen years of experience in the
software publishing industry, serving various critical management and technical
roles. In Bill's most recent position, Vice President, Church Software Division
at Parsons Technology (a division of Mattel), he headed the leading Bible
reference software division responsible for award-winning products, such as
Quick Verse, Quick Verse Multimedia Life Application Bible, Zondervan Multimedia
NIV, Membership Plus, and The Book CD-ROM. As Senior Vice President at
Mindscape, Bill created, grew and managed the Reference Product Division for
Mindscape. Bill was one of the original founders of DS Technologies, the
software publishing company who developed software utilities for Central Point
Software/Peter Norton/Symantec.
Bill has also worked as an industry technology consultant for companies such as
The Learning Company, Grolier Interactive, Thomas Nelson Publishing, Software
Publishing Corporation, IBM Global Services, Common Wealth Edison and Nalco
Chemical.
Steven Malone. Steven Malone possesses over twelve years of experience in the
computer industry, with the last seven focused on software sales. As a National
Account Manager for Grolier Interactive, he was responsible for their largest
retail and distribution accounts, such as CompUSA, Staples and Tech Data. As
Director of Corporate Sales for Software Publishing Corporation (SPC), he was
responsible for the on-going sales growth of premiere corporate products, such
as the award winning Harvard Graphics, as well as the introduction of several
new products to the corporate marketplace. As Director of Sales for InfoUSA, he
was responsible for all sales and marketing of InfoUSA's products to retail,
distribution, OEM and corporate accounts. InfoUSA's products include ProCD's
SelectPhone, PhoneDisc's Powerfinder and Streets USA.
EXECUTIVE COMPENSATION
All of the Company's officers and/or directors currently receive
compensation for their services rendered to the Company.
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They also receive retirement, pension, profit sharing, stock option, or
insurance programs or other similar programs that have been adopted by the
Company for the benefit of its employees.
RELATED TRANSACTIONS
Transactions with Management and Related Transactions
FindEx.com and TM Capital Partners, LLC ("TMC") entered into a service
agreement on March 4, 2000. Under the terms of this agreement TMC agreed to (i)
assist FindEx.com in locating a reporting company for possible acquisition by
FindEx.com; (ii) provide advice to FindEx.com regarding the acquisition of such
company by FindEx.com; (iii) assist FindEx.com in maintaining its listing on the
OTCBB and (iv) assist FindEx.com with the preparation and filing of this Form
8-K with the Commission. TMC is a limited liability company owned by MHE, Inc.
and KT Ventures, LLC, who are also members of MHE Projix, LLC, the former
majority shareholder of Reagan Holdings, Inc. Additionally, Mark Elenowitz and
Louis Taubman, former shareholders, officers and directors of Reagan Holdings,
Inc. are indirect beneficial owners of TMC. In consideration for its services to
Findex.com, TMC will receive a consulting fee of $150,000. As a result of the
Share Exchange, Mark Elenowitz and Louis Taubman are shareholders of Findex.com.
Indebtedness of Management
No member of the management, officers, or directors is or has been
indebted to the Company. No director or officer is personally liable for the
repayment of amounts by any financing received by the Company.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Nevada law authorizes a Nevada corporation to indemnify its officers
and directors against claims or liabilities arising out of such person's conduct
as officers or directors if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
Company. The Articles of Incorporation provide for indemnification of the
directors of the Company. In addition, the Bylaws of the Company provide for
indemnification of the directors, officers, employees or agents of the Company.
In general, these provision provide for indemnification in instances when such
persons acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the Company.
ITEM 5. OTHER EVENTS
Successor Issuer Election
Pursuant to Rule 12g-3(a) of the General Rules and Regulations of the Securities
and Exchange Commission, upon effectiveness of the Share Exchange, the Company
became the successor issuer to Reagan for reporting purposes under the
Securities Exchange Act of 1934 and elects to report under the Act effective
March 15, 2000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) No financial statements are filed herewith. As of the date hereof it is
impractical for Registrant to provide the financial statements required by this
item. The Registrant shall file the required financial statements by amendment
hereto not later than 60 days after the date that this Current Report on Form
8-K must be filed.
(b) The Exhibits to this Report are listed in the Exhibit Index set forth below.
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ITEM 8. CHANGE IN FISCAL YEAR
FindEx.com has a December 31 fiscal year end. The fiscal year end of Reagan is
September 30. The Company will file a Transitional Report on Form 10-KSB, if
required.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FINDEX.COM, INC.
By: /s/ Joseph V. Szczepaniak
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Joseph V. Szczepaniak
President
March 15, 2000
EXHIBIT INDEX
2.1 Share Exchange Agreement between FindEx.com, Inc. and the shareholders
of Reagan Holdings Inc., dated March 07, 2000
3.1 Articles of Incorporation of FindEx.com, Inc.
3.2 By-Laws of FindEx.com, Inc.
16.1 Letter RE Change in Certifying Accountant
21.1 List of Subsidiaries
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Exhibit 2.1
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement ("Agreement") between Findex.com, Inc., a
Nevada corporation ("Findex"), and the persons listed in EXHIBIT A hereof
(collectively the "Shareholders"), being the owners of record of all of the
issued and outstanding stock of Reagan Holdings, Inc., a Delaware corporation
("Reagan"), is entered into as of March 7, 2000.
RECITALS
A. Reagan Holdings Inc., a Delaware corporation ("Reagan"), is a public
shell company with no active business and no material assets or liabilities.
B. The Shareholders own all of the issued and outstanding shares of
common stock, par value $0.0001 of Reagan (the "Reagan Shares").
C. The Shareholders have agreed to sell to Findex, and Findex has
agreed to purchase, the Reagan Shares from the Shareholders in exchange for
shares of Findex common stock, pursuant to the terms and conditions set forth in
this Agreement.
D. The Shareholders and Findex intend that the share exchange
transaction contemplated by this Agreement qualify as a reorganization within
the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended
In consideration of the mutual representations, warranties, covenants
and agreements contained in this Agreement, the parties agree as follows:
1. EXCHANGE OF STOCK
(a) The Shareholders agree to transfer to Findex, and Findex agrees to
purchase from the Shareholders, all of the Shareholders' right, title and
interest in the Reagan Stock, representing 100% of the issued and outstanding
stock of Reagan, free and clear of all mortgages, liens, pledges, security
interests, restrictions, encumbrances, or adverse claims of any nature.
(b) At the Closing (as defined in Section 2 below), upon surrender by
the Shareholders of the certificates evidencing the Reagan Stock duly endorsed
for transfer to Findex or accompanied by stock powers executed in blank by the
Shareholders, Findex will cause 150,000 shares (subject to adjustment for
fractionalized shares as set forth below) of the common voting stock, par value
$0.001 of Findex (the "Findex Stock") to be issued to the Shareholders, in full
satisfaction of any right or interest which each Shareholder held in the Reagan
Stock. The Findex Stock will be issued to the Shareholders on a pro rata basis,
in the same proportion as the percentage of their ownership interest in the
Reagan Stock, as set forth on EXHIBIT A. Any fractional shares that will result
due to such pro rata distribution will be rounded up to the next
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highest whole number. As a result of the exchange of the Reagan Stock in
exchange for the Findex Stock, Reagan will become a wholly-owned subsidiary of
Findex.
(c) Findex and the Shareholders have agreed that the Findex Stock to be
received by the Shareholders pursuant to this Agreement will be afforded certain
"piggyback" registration rights for a period of one year after the Closing.
2. CLOSING.
(a) The parties to this Agreement will hold a closing (the "Closing")
for the purpose of executing and exchanging all of the documents contemplated by
this Agreement and otherwise effecting the transactions contemplated by this
Agreement. The Closing will be held as soon as possible but not later than March
15, 2000, at the offices of Kogan & Taubman, LLC, 39 Broadway, Suite 2250, New
York, NY 10006, unless another place or time is mutually agreed upon by the
parties. All proceedings to be taken and all documents to be executed and
exchanged at the Closing will be deemed to have been taken, delivered and
executed simultaneously, and no proceeding will be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.
If agreed to by the parties, the Closing may take place through the exchange of
documents by fax and/or express courier.
(b) With the exception of any stock certificates which must be in their
original form, any copy, fax, e-mail or other reliable reproduction of the
writing or transmission required by this Agreement or any signature required
thereon may be used in lieu of an original writing or transmission or signature
for any and all purposes for which the original could be used, provided that
such copy, fax, e-mail or other reproduction is a complete reproduction of the
entire original writing or transmission or original signature.
3. REPRESENTATIONS AND WARRANTIES OF FINDEX.
Findex represents and warrants as follows:
(a) Findex is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Nevada and is licensed or qualified
as a foreign corporation in all states in which the nature of its business or
the character or ownership of its properties makes such licensing or
qualification necessary.
(b) The authorized capital stock of Findex consists of (i) 50,000,000
shares of common stock, $.001 par value per share, of which, based on the
records of Findex's stock transfer agent, 9,441,346 shares are issued and
outstanding as of March 7, 2000, and (ii) 5,000,000 shares of preferred stock,
$.001 par value per share, of which approximately 20,000 shares of Series A
preferred stock and 67,500 shares of Series B preferred tock are issued and
outstanding. To the knowledge of Findex, all issued and outstanding shares of
Findex's common and preferred stock are fully paid and nonassessable.
(c) Findex has one subsidiary, Findex.com, Inc., a Delaware
Corporation.
-2-
<PAGE> 3
(d) Execution of this Agreement and performance by Findex hereunder has
been duly authorized by all requisite corporate action on the part of Findex,
and this Agreement constitutes a valid and binding obligation of Findex, and
Findex's performance hereunder will not violate any provision of any charter,
bylaw, indenture, mortgage, lease, or agreement, or any order, judgment, decree,
or, to Findex's knowledge any law or regulation, to which any property of Findex
is subject or by which Findex is bound.
(e) Findex has full corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, and will deliver at the
Closing a certified copy of resolutions of its board of directors authorizing
execution of this Agreement by its officers and performance hereunder.
(f) Findex has provided all financial statements and financial
information in its possession as has been requested by the Shareholders.
(g) There is no litigation or proceeding pending, or to the Company's
knowledge threatened, against or relating to Findex, its properties or business.
(h) Findex is acquiring the Reagan shares to be transferred to it under
this Agreement for investment and not with a view to the sale or distribution
thereof.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant as
follows:
(a) Reagan is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and is licensed or
qualified as a foreign corporation in all states in which the nature of its
business or the character or ownership of its properties makes such licensing or
qualification necessary.
(b) The authorized capital stock of Reagan consists of (i) 120,000,000
shares of common stock, $0.0001 par value per share, of which 5,000,000 shares
are issued and outstanding (the "Reagan Shares"). Reagan there are no agreements
purporting to restrict the transfer of the Reagan Shares, nor any voting
agreements, voting trusts or other arrangements restricting or affecting the
voting of the Reagan Shares, other than certain lock up agreements that
terminate upon the Closing. The Reagan Shares held by the Shareholders are duly
and validly issued, fully paid and non-assessable, and issued in full compliance
with all federal, state, and local laws, rules and regulations. There are no
subscription rights, options, warrants, convertible securities, or other rights
(contingent or otherwise) presently outstanding, for the purchase, acquisition,
or sale of the capital stock of Reagan, or any securities convertible into or
exchangeable for capital stock of Reagan or other securities of Reagan, from or
by Reagan.
(c) The Shareholders have full right, power and authority to sell,
transfer and deliver the Reagan Shares, and upon delivery of the certificates
therefor as contemplated in this Agreement, the Shareholders will transfer to
Findex valid and marketable title to the Reagan Shares, including all voting and
other rights to the Reagan Shares, free and clear of all pledges,
-3-
<PAGE> 4
liens, security interests, adverse claims, options, rights of any third party,
or other encumbrances. Each of the Shareholders owns and holds that the number
of Reagan Shares which are listed opposite their name on Exhibit A attached
hereto.
(d) There is no litigation or proceeding pending, or to any
Shareholder's knowledge threatened, against or relating to Reagan or to the
Reagan Shares.
(e) Reagan is not a party to any material contract other than those
listed in Reagan's Form 10-SB or any subsequent periodic report as filed with
the Securities Exchange Commission.
(f) Reagan has no material assets and no liabilities whatsoever.
(g) Reagan has no employees.
(h) Reagan has filed in correct form all federal, state, and other tax
returns of every nature required to be filed by it and has paid all taxes as
shown on such returns and all assessments, fees and charges received by it to
the extent that such taxes, assessments, fees and charges have become due.
Reagan has also paid all taxes which do not require the filing of returns and
which are required to be paid by it. To the extent that tax liabilities have
accrued, but have not become payable, they have been adequately reflected as
liabilities on the books of Reagan.
(i) The current residence address or principal place of business (for
any non-individual shareholder) of the Reagan Shareholders is as listed on
EXHIBIT A attached hereto.
(j) Reagan is a publicly reporting company pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Act") and is in compliance
with all periodic reporting requirements of the Act. Reagan's Form 10-SB and any
other periodic filings made by Reagan as filed with the SEC, including all
exhibits, documents and attachments thereto, are true and correct in all
material respects and do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
any statement therein not materially misleading.
(k) The Reagan Shareholders have had the opportunity to perform all due
diligence investigations of Findex and its business as they have deemed
necessary or appropriate and to ask questions of Findex's officers and directors
and have received satisfactory answers to all of their questions. The
Shareholders have had access to all documents and information about Findex and
have reviewed sufficient information to allow them to evaluate the merits and
risks of the acquisition of the Findex Stock.
(l) The Shareholders are acquiring the Findex Stock for their own
account (and not for the account of others) for investment and not with a view
to the distribution therefor. The Shareholders will not sell or otherwise
dispose of the Findex Stock without registration under the Securities Act of
1933, as amended, or an exemption therefrom, and the certificate or certificates
representing the Findex Stock will contain a legend to the foregoing effect.
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<PAGE> 5
5. CONDUCT PRIOR TO THE CLOSING.
Findex and the Shareholders covenant that between the date of this
Agreement and the Closing as to each of them:
(a) No change will be made in the charter documents, by-laws, or other
corporate documents of Findex or Reagan.
(b) Findex and Reagan will each use its best efforts to maintain and
preserve its business organization, employee relationships, and goodwill intact,
and Reagan will not enter into any material commitment except in the ordinary
course of business. The Shareholders acknowledge that Findex is currently
engaged in a number of acquisition transactions and is pursuing such
transactions simultaneously with the transactions contemplated by this
Agreement.
(c) None of the Shareholders will sell, transfer, assign, hypothecate,
lien, or otherwise dispose or encumber the Reagan Shares owned by them.
6. CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS.
The Shareholder's obligation to complete the transactions contemplated
herein is subject to fulfillment on or before the Closing of each of the
following conditions, unless waived in writing by the Shareholders as
appropriate:
(a) The representations and warranties of Findex set forth herein will
be true and correct at the Closing as though made at and as of that date, except
as affected by transactions contemplated hereby.
(b) Findex will have performed all covenants required by this Agreement
to be performed by it on or before the Closing.
(c) This Agreement will have been approved by the Board of Directors of
Findex.
(d) Findex will have delivered to the Shareholders the documents set
forth below in form and substance reasonably satisfactory to counsel for the
Shareholders, to the effect that:
(i) Findex is a corporation duly organized, validly existing,
and in good standing;
(ii) Findex's authorized capital stock is as set forth herein;
(iii) Certified copies of the resolutions of the board of
directors of Findex authorizing the execution of this Agreement and the
consummation hereof;
(iv) Secretary's certificate of incumbency of the officers of
Findex; and
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<PAGE> 6
(vi) Any further document as may be reasonably requested by
counsel to the Shareholders in order to substantiate any of the
representations or warranties of Findex set forth herein.
(d) Findex will have executed and delivered to the Shareholders a
registration rights agreement reasonably satisfactory to the Shareholders
affording the Findex Shares received by the Shareholders "piggyback"
registration rights for a period of one year after Closing.
(e) There will have occurred no material adverse change in the
business, operations or prospects of Findex.
7. CONDITIONS TO OBLIGATIONS OF FINDEX.
Findex's obligation to complete the transaction contemplated herein
will be subject to fulfillment on or before the Closing of each of the following
conditions, unless waived in writing by the Findex, as appropriate:
(a) The representations and warranties of the Shareholders set forth
herein will be true and correct at the Closing as though made at and as of that
date, except as affected by transactions contemplated hereby.
(b) The Shareholders will have performed all covenants required by this
Agreement to be performed by them on or before the Closing.
(c) The Shareholders will have delivered to Findex the documents set
forth below in form and substance reasonably satisfactory to counsel for Findex,
to the effect that:
(i) Reagan is a corporation duly organized, validly existing,
and in good standing;
(ii) Reagan's authorized capital stock is as set forth herein;
(iii) Any further document as may be reasonably requested by
counsel to the Shareholders in order to substantiate any of the
representations or warranties of Findex set forth herein.
(d) There will have occurred no material adverse change in the
business, operations or prospects of Reagan.
8. ADDITIONAL COVENANTS.
(a) Between the date of this Agreement and the Closing, the
Shareholders, with respect to Reagan, and Findex, with respect to itself, will,
and will cause their respective representatives to, (i) afford the other party
and its representatives access to their personnel, properties, contracts, books
and records, and other documents and data, as reasonably requested
-6-
<PAGE> 7
by the other party; (ii) furnish the other party and its representatives with
copies of all such contracts, books and records, and other existing documents
and data as the other may reasonably request in connection with the transaction
contemplated by this Agreement; and (iii) furnish the other party and its
representatives with such additional financial, operating, and other data and
information as the other may reasonably request. The Shareholders will cause
Reagan to, and Findex will provide the Shareholders, with complete copies of all
material contracts and other relevant information on a timely basis in order to
keep the other party fully informed of the status of their respective business
and operations.
(b) Findex and the Reagan Shareholders will cooperate with each other
in the preparation of a Form 8-K to be filed with the SEC describing the
transaction contemplated by this Agreement and such other items as are required
by the SEC rules and regulations.
(c) Each of the Reagan Shareholders will deliver a written statement to
Findex resigning from all officer and director positions held by them at
Reagan.
(d) The Reagan Shareholders will deliver Reagan's corporate books and
records, including all records relating to Reagan's audited financial
statements, to Findex at Closing.
(e) The parties agree that they will not make, and the Shareholders
will not permit Reagan to make, any public announcements relating to this
Agreement or the transactions contemplated herein without the prior written
consent of the other party, except as may be required upon the written advice of
counsel to comply with applicable laws or regulatory requirements after
consulting with the other party hereto and seeking their consent to such
announcement.
9. TERMINATION.
This Agreement may be terminated (1) by mutual consent in writing; (2)
by either the Shareholders or Findex if there has been a material
misrepresentation or material breach of any warranty or covenant by any other
party that is not cured by March 15, 2000; or (3) by any of the Shareholders or
Findex if the Closing has not taken place within eight days following execution
of this Agreement, unless adjourned to a later date by mutual consent in
writing.
10. EXPENSES.
Whether or not the Closing is consummated, each of the parties will pay
all of his, her, or its own legal and accounting fees and other expenses
incurred in the preparation of this Agreement and the performance of the terms
and provisions of this Agreement.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Shareholders and Findex set
out in this Agreement will survive the Closing for a period of one year.
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<PAGE> 8
12. WAIVER.
Any failure on the part of either party hereto to comply with any of
its obligations, agreements, or conditions hereunder may be waived in writing by
the party to whom such compliance is owed.
13. BROKERS.
Each party agrees to indemnify and hold harmless the other party
against any fee, loss, or expense arising out of claims by brokers or finders
employed or alleged to have been employed by the indemnifying party. The parties
acknowledge that Findex and TM Capital Corp., LLC ("TMC") have entered into a
Service Agreement dated, on or about March 7, 2000, pursuant to which Findex is
obligated to pay TMC a fee in connection with services to be rendered by TMC to
Findex.
14. NOTICES.
All notices and other communications under this Agreement must be in
writing and will be deemed to have been given if delivered in person or sent by
prepaid first-class certified mail, return receipt requested, or recognized
commercial courier service, as follows:
If to Findex, to: Findex.com, Inc.
11640 Arbor Street
Suite 201
Omaha, Nebraska 68144
If to the Shareholders, to: MHE Projix, LLC
15245 Shady Grove Road, Suite 400
Rockville, MD 20850
Attention: Mark Elenowitz
Phone: (301) 947-8010
Fax: (301) 947-8087
15. GENERAL PROVISIONS.
(a) This Agreement will be governed by and under the laws of the State
of Delaware, USA without giving effect to conflicts of law principles. If any
provision hereof is found invalid or unenforceable, that part will be amended to
achieve as nearly as possible the same effect as the original provision and the
remainder of this Agreement will remain in full force and effect.
(b) Any dispute arising under or in any way related to this Agreement
will be submitted to binding arbitration before a single arbitrator by the
American Arbitration Association in accordance with the Association's commercial
rules then in effect. The arbitration will be conducted in the State of
Maryland. The decision of the arbitrator will set forth in reasonable detail the
basis for the decision and will be binding on the parties. The arbitration award
may be confirmed by any court of competent jurisdiction.
-8-
<PAGE> 9
(c) In any adverse action, the parties will restrict themselves to
claims for compensatory damages and/or securities issued or to be issued and no
claims will be made by any party or affiliate for lost profits, punitive or
multiple damages.
(d) This Agreement constitutes the entire agreement and final
understanding of the parties with respect to the subject matter hereof and
supersedes and terminates all prior and/or contemporaneous understandings and/or
discussions between the parties, whether written or verbal, express or implied,
relating in any way to the subject matter hereof. This agreement may not be
altered, amended, modified or otherwise changed in any way except by a written
agreement, signed by both parties.
(e) This Agreement will inure to the benefit of, and be binding upon,
the parties hereto and their successors and assigns; provided, however, that any
assignment by either party of its rights under this Agreement without the
written consent of the other party will be void.
(f) The parties agree to take any further actions and to execute any
further documents which may from time to time be necessary or appropriate to
carry out the purposes of this Agreement. The Shareholders specifically agree to
provide reasonable assistance to Findex in connection with Findex including
Reagan in its consolidated financial statements.
(g) The headings of the Sections, paragraphs and subparagraphs of this
Agreement are solely for convenience of reference and will not limit or
otherwise affect the meaning of any of the terms or provisions of this
Agreement. The references in this Agreement to Sections, unless otherwise
indicated, are references to sections of this Agreement.
(h) This Agreement may be executed in counterparts, each one of which
will constitute an original and all of which taken together will constitute one
document. This Agreement may be executed by delivery of a signed signature page
by fax to the other parties hereto and such fax execution and delivery will be
valid in all respects.
SIGNATURE PAGE FOLLOWS
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<PAGE> 10
EXECUTED:
FINDEX.COM, INC.
By: /s/ Joe Szczepaniak
---------------------------------
Joe Szczepaniak,
President, CEO
THE SHAREHOLDERS OF
REAGAN HOLDINGS, INC.:
MHE PROJIX, LLC
By: /s/ Mark Elenowitz
---------------------------------
Mark Elenowitz
Managing Director
/s/ Mark Elenowitz
------------------------------------
Mark Elenowitz
/s/ Louis Taubman
------------------------------------
Louis Taubman
/s/ David Simonetti
------------------------------------
David Simonetti
/s/ Thomas Bostic Smith
------------------------------------
Thomas Bostic Smith
/s/ William Quigley, Jr.
------------------------------------
William Quigley, Jr.
/s/ Barry Labell
------------------------------------
Barry Labell
-10-
<PAGE> 11
EXHIBIT A
Reagan Shareholders
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Name and Address Reagan Shares % Findex Shares
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MHE Projix, LLC 4,750,000 95% 142,500
516 NE 9th Avenue
Ft. Lauderdale, FL 33301-1218
- ----------------------------------------------------------------------------------------------------------------------
Mark Elenowitz 87,500 1.75% 2,625
15245 Shady Grove Road, Suite 400
Rockville, MD 20850
- ----------------------------------------------------------------------------------------------------------------------
Louis Taubman 87,500 1.75% 2,625
39 Broadway, Suite 2250
New York, NY 20006
- ----------------------------------------------------------------------------------------------------------------------
David Simonetti 25,000 0.5% 750
516 NE 9th Avenue
Ft. Lauderdale, FL 33301-1218
- ----------------------------------------------------------------------------------------------------------------------
Thomas Bostic Smith 25,000 0.5% 750
192 Lawton Road
Riverside, IL 60546
- ----------------------------------------------------------------------------------------------------------------------
William Quigley, Jr. 12,500 0.25% 375
22801 Howard Chapel Road
Brookeville, MD 20833
- ----------------------------------------------------------------------------------------------------------------------
Barry Labell 12,500 0.25% 375
9805 J Gable Ridge Terrace
Rockville, MD 20850
- ----------------------------------------------------------------------------------------------------------------------
Total 5,000,000 100% 150,000
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
-11-
<PAGE> 1
Exhibit 3.1
RESTATED ARTICLES OF INCORPORATION
OF
FINDEX.COM, INC.
This Restated Certificate of Incorporation of FINdex.com, Inc.,
originally incorporated in the State of Nevada on November 7, 1997 under the
name EJH Entertainment, Inc., has been duly adopted in accordance with the
provisions of Section 78.403 of the Nevada Revised Statutes to read as follows:
ARTICLE I
Name
The name of the Corporation is FINdex.com, Inc. (herein the
"Corporation").
ARTICLE II
Duration
The Corporation is to have perpetual existence.
ARTICLE III
Registered Office and Agent
The principal office of the Corporation in the Nevada is located at One
East First Street, Reno, Washoe County, Nevada 89501. The name and address of
its resident agent is The Corporation Trust Company of Nevada, One East First
Street, Reno, Nevada 89501.
ARTICLE IV
Purposes
The purpose for which the Corporation is organized is to transact all
lawful business for which corporations may be incorporated pursuant to the laws
of the State of Nevada. The Corporation shall have all the powers of a
corporation organized under the Nevada Revised Statutes.
- --------------------------------------------------------------------------------
Page 1
<PAGE> 2
ARTICLE V
Capital Stock
The aggregate number of shares of all classes of capital stock which
the Corporation has authority to issue is 55,000,000 of which 50,000,000 are to
be shares of common stock, $.001 par value per share, and of which 5,000,000 are
to be shares of serial preferred stock, $.001 par value per share. The shares
may be issued by the Corporation from time to time as approved by the board of
directors of the Corporation without the approval of the stockholders except as
otherwise provided in this Article V or the rules of a national securities
exchange if applicable. The consideration for the issuance of the shares shall
be paid to or received by the Corporation in full before their issuance and
shall not be less than the par value per share. The consideration for the
issuance of the shares shall be cash, services rendered, personal property
(tangible or intangible), real property, leases of real property or any
combination of the foregoing. In the absence of actual fraud in the transaction,
the judgment of the board of directors as to the value of such consideration
shall be conclusive. Upon payment of such consideration such shares shall be
deemed to be fully paid and nonassessable. In the case of a stock dividend, the
part of the surplus of the Corporation which is transferred to stated capital
upon the issuance of shares as a stock dividend shall be deemed to be the
consideration for their issuance.
A description of the different classes and series (if any) of the
Corporation's capital stock, and a statement of the relative powers,
designations, preferences and rights of the shares of each class and series (if
any) of capital stock, and the qualifications, limitations or restrictions
thereof, are as follows:
A. COMMON STOCK. Except as provided in this Certificate, the holders of
the common stock shall exclusively posses all voting power. Subject to the
provisions of this Certificate, each holder of shares of common stock shall be
entitled to one vote for each share held by such holders.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class or series of
stock having preference over the common stock as to the payment of dividends,
the full amount of dividends and sinking fund or retirement fund or other
retirement payments, if any, to which such holders are respectively entitled in
preference to the common stock, then dividends may be paid on the common stock,
and on any class or series of stock entitled to participate therewith as to
dividends, out of any assets legally available for the payment of dividends, but
only when and as declared by the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, after there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class having preference
over the common stock in any such event, the full preferential amounts to which
they are respectively entitled, the holders of the common stock and of any class
or series of stock entitled to participate therewith, in whole or in part, as to
distribution of assets shall be entitled, after payment or provision for payment
of all debts and liabilities of the Corporation, to receive the remaining assets
of the Corporation available for distribution, in cash or in kind.
- --------------------------------------------------------------------------------
Page 2
<PAGE> 3
Each share of common stock shall have the same relative powers,
preferences and rights as, and shall be identical in all respects with, all the
other shares of common stock of the Corporation.
B. SERIAL PREFERRED STOCK. Except as provided in this Certificate, the
board of directors of the Corporation is authorized, by resolution or
resolutions from time to time adopted, to provide for the issuance of serial
preferred stock in series and to fix and state the powers, designations,
preferences and relative, participating, optional or other special rights of the
shares of each such series, and the qualifications, limitation or restrictions
thereof, including, but not limited to determination of any of the following:
(1) the distinctive serial designation and the number of
shares constituting such series;
(2) the rights in respect of dividends, if any, to be paid on
the shares of such series, whether dividends shall be cumulative and,
if so, from which date or dates, the payment or date or dates for
dividends, and the participating or other special rights, if any, with
respect to dividends;
(3) the voting powers, full or limited, if any, of the shares
of such series;
(4) whether the shares of such series shall be redeemable and,
if so, the price or prices at which, and the terms and conditions upon
which such shares may be redeemed;
(5) the amount or amounts payable upon the shares of such
series in the event of voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
(6) whether the shares of such series shall be entitled to the
benefits of a sinking or retirement fund to be applied to the purchase
or redemption of such shares, and, if so entitled, the amount of such
fund and the manner of its application, including the price or prices
at which such shares may be redeemed or purchased through the
application of such funds;
(7) whether the shares of such series shall be convertible
into, or exchangeable for, shares of any other class or classes or any
other series of the same or any other class or classes of stock of the
Corporation and, if so convertible or exchangeable, the conversion
price or prices, or the rate or rates of exchange, and the adjustments
thereof, if any, at which such conversion or exchange may be made, and
any other terms and conditions of such conversion or exchange;
(8) the subscription or purchase price and form of
consideration for which the shares of such series shall be issued; and
(9) whether the shares of such series which are redeemed or
converted shall have the status of authorized but unissued shares of
serial preferred stock and whether such shares may be reissued as
shares of the same or any other series of serial preferred stock.
- --------------------------------------------------------------------------------
Page 3
<PAGE> 4
Each share of each series of serial preferred stock shall have the same
relative powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of the Corporation of the same series,
except the times from which dividends on shares which may be issued from time to
time of any such series may begin to accrue.
DESIGNATION OF SERIES A CONVERTIBLE PREFERRED STOCK
A series of Preferred Stock, $.001 par value, of the Corporation be and
hereby is established and created, and that the designation and number of shares
thereof and the voting and other powers, preferences and relative,
participating, optional or other rights of the shares of such series and the
qualifications, limitations and restrictions thereof are as follows:
Convertible Preferred Stock
1. DESIGNATION AND AMOUNT. There shall be a series of Preferred Stock
designated as "Series A Convertible Preferred Stock," and the number of shares
constituting such series shall be 20,000. Such series is referred to herein as
the "Convertible Preferred Stock."
2. STATED CAPITAL. The amount to be represented in stated capital at
all times for each share of Convertible Preferred Stock shall be $.001.
3. RANK. All shares of Convertible Preferred Stock all rank prior to
all of the Corporation's Common Stock, par value $.001 per share (the "Common
Stock"), now or hereafter issued, both as to payment of dividends and as to
distributions of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary.
4. DIVIDENDS. The holders of Convertible Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, Common
Stock (at the time legally available therefor) dividends based upon the market
value (as hereinafter defined) on the dividend payment date at the rate of $.50
per annum per share, and no more, which shall be fully cumulative, shall accrue
without interest from the date of first issuance and shall be payable quarterly
in arrears on March 15, June 15, September 15 and December 15 of each year
commencing June 1, 1999 (except that if any such date is a Saturday, Sunday or
legal holiday then such dividend shall be payable on the next day that is not a
Saturday, Sunday or legal holiday) to holders of record as they appear on the
stock books of the Corporation on such record dates, not more than 60 nor less
than 10 days preceding the payment dates for such dividends, as are fixed by the
Board of Directors. For purposes hereof, the term "legal holiday" shall mean any
day on which banking institutions are authorized to close in The City of New
York. Subject to the next paragraph of this Section 4, dividends on account of
arrears for any past dividend period may be declared and paid at any time,
without reference to any regular dividend payment date. The amount of dividends
payable per share of Convertible Preferred Stock for each quarterly dividend
period shall be computed by dividing the annual dividend amount by four. The
amount of dividends payable for the initial dividend period and any period
shorter than a full quarterly dividend period shall be computed on the basis of
a 360-day year of twelve 30-day months.
No dividends or other distributions, other than dividends payable
solely in shares of Common Stock or other capital stock of the Corporation
ranking junior as to dividends and as to liquidation rights to the Convertible
Preferred Stock, shall be declared, paid or set apart for payment on, and no
purchase, redemption or other acquisition shall be made by the Corporation of,
any shares of Common Stock or other capital stock of the Corporation ranking
junior as to dividends to the Convertible Preferred Stock (the "Junior Dividend
Stock") unless and until all accrued and unpaid dividends on the Convertible
Preferred Stock, including the full dividend for the then current quarterly
dividend period, shall have been paid or declared and set apart for payment.
If at any time any dividend on any capital stock of the Corporation
ranking senior as to dividends to the Convertible Preferred Stock (the "Senior
Dividend Stock") shall be in default, in whole or in part, then (except to the
extent allowed
- --------------------------------------------------------------------------------
Page 4
<PAGE> 5
by the terms of such Senior Dividend Stock) no dividend shall be paid or
declared and set apart for payment on the Convertible Preferred Stock, unless
and until all accrued and unpaid dividends with respect to the Senior Dividend
Stock, including the full dividends for the then-current dividend period, shall
have been paid or declared and set apart for payment, without interest. No full
dividends shall be paid or declared and set apart for payment on any class or
series of the Corporation's capital stock ranking, as to dividends, on a parity
with the Convertible Preferred Stock (the "Parity Dividend Stock") for any
period unless full cumulative dividends have been, or contemporaneously are,
paid or declared and set apart for such payment on the Convertible Preferred
Stock for all dividend payment periods terminating on or prior to the date of
payment of such full cumulative dividends. No full dividends shall be paid or
declared and set apart for payment on the Convertible Preferred Stock for any
period unless full cumulative dividends have been, or contemporaneously are,
paid or declared and set apart for payment on the Parity Dividend Stock for all
dividend periods terminating on or prior to the date of payment of such full
cumulative dividends. When dividends are not paid in full upon the Convertible
Preferred Stock and the Parity Dividend Stock, all dividends paid or declared
and set aside for payment upon shares of Convertible Preferred Stock and the
Parity Dividend Stock shall be paid or declared and set aside for payment pro
rata so that the amount of dividends paid or declared and set aside for payment
per share on the Convertible Preferred Stock and the Parity Dividend Stock shall
in all cases bear to each other the same ratio that accrued and unpaid dividends
per share on the shares of Convertible Preferred Stock and the Parity Dividend
Stock bear to each other.
Any reference to "distribution" contained in this Section 4 shall not
be deemed to include any distribution made in connection with any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.
5. LIQUIDATION PREFERENCE. In the event of a liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the holders
of Convertible Preferred Stock shall be entitled to receive out of the assets of
the Corporation, whether such assets are stated capital or surplus of any
nature, an amount equal to the dividends accrued and unpaid thereon to the date
of final distribution to such holders, whether or not declared, without
interest, and a sum equal to $10.00 per share, and no more, before any payment
shall be made or any assets distributed to the holders of Common Stock or any
other class or series of the Corporation's capital stock ranking junior as to
liquidation rights to the Convertible Preferred Stock (the "Junior Liquidation
Stock") PROVIDED, HOWEVER that such rights shall accrue to the holders of
Convertible Preferred Stock only in the event that the Corporation's payments
with respect to the liquidation preferences of the holders of capital stock of
the Corporation ranking senior as to liquidation rights to the Convertible
Preferred Stock (the "Senior Liquidation Stock") are fully met. The entire
assets of the Corporation available for distribution after the liquidation
preferences of the Senior Liquidation stock are fully met shall be distributed
ratably among the holders of the Convertible Preferred Stock 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 Convertible Preferred Stock in
proportion to the respective preferential amounts to which each is entitled (but
only to the extent of such preferential amounts). Neither a consolidation or
merger of the Corporation with another corporation nor a sale or transfer of all
or part of the Corporation's assets for cash, securities or other property will
be considered a liquidation, dissolution or winding up of the Corporation.
6. OPTIONAL REDEMPTIONS FOR CASH. Subject to the restrictions in
Section 4 above, shares of this Series shall be redeemable at the option of the
Corporation commencing April 15, 2000 at the redemption price of $10.00 per
share plus, in each case, an amount equal to the dividends accrued and unpaid
thereon to the redemption date.
Notwithstanding the foregoing, the Corporation may not redeem any
shares of Preferred Stock unless the last reported sales price of the Common
Stock in its principal trading market for the 15 consecutive trading days
immediately prior to the redemption date is at least $1.50 per share.
Not less than 20 nor more than 50 days prior to the date fixed for any
redemption of shares of this Series pursuant to this Section 6, a notice
specifying
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the time and place of such redemption and the number of shares to be
redeemed shall be given by first class mail, postage prepaid, to the holders of
record of the shares of this Series to be redeemed at their respective addresses
as the same shall appear on the books of the Corporation, calling upon each such
holder of record to surrender to the Corporation on the redemption date at the
place designated in such notice his certificate or certificates representing the
number of shares specified in such notice of redemption. Neither failure to mail
such notice, nor any defect therein or in the mailing thereof, to any particular
holder shall affect the sufficiency of the notice or the validity of the
proceedings for redemption with respect to the other holders. Any notice which
was mailed in the manner herein provided shall be conclusively presumed to have
been duly given whether or not the holder receives the notice. On or after the
redemption date each holder of shares of this Series to be redeemed shall
present and surrender his certificate or certificates for such shares to the
Corporation at the place designated in such notice and thereupon the redemption
price of such shares shall be paid to or on the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. In case less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
If a notice of redemption has been given pursuant to this Section 6 and
if, on or before the date fixed for redemption, the funds necessary for such
redemption shall have been set aside by the Corporation, separate and apart from
its other funds, in trust for the PRO RATA benefit of the holders of the shares
so called for redemption, then, notwithstanding that any certificates for such
shares have not been surrendered for cancellation, on the redemption date
dividends shall cease to accrue on the shares of cancellation, on the redemption
date dividends shall cease to accrue on the shares of this Series to be
redeemed, and at the close of business on the redemption date the holders of
such shares shall cease to be stockholders with respect to such shares and shall
have no interest in or claims against the Corporation by virtue thereof and
shall have no voting or other rights with respect to such shares, except the
right to receive the moneys payable upon such redemption, without interest
thereon, upon surrender (and endorsement, if required by the Corporation) of
their certificates, and the shares evidenced thereby shall no longer be
outstanding. Subject to applicable escheat laws, any moneys so set aside by the
Corporation and unclaimed at the end of two years from the redemption date shall
revert to the general funds of the Corporation, after which reversion the
holders of such shares so called for redemption shall look only to the general
funds of the Corporation for the payment of the redemption price. Any interest
accrued on funds so deposited shall be paid to the Corporation from time to
time.
If a notice of redemption has been given pursuant to this Section 6,
and any holder of shares of this Series shall, prior to the close of business on
the fifth day preceding the date fixed for redemption, give written notice to
the Corporation pursuant to Section 8 below of the conversion of any or all of
these shares to be redeemed held by such holder (accompanied by a certificate or
certificates for such shares, duly endorsed or assigned to the Corporation, and
any necessary transfer tax payment, as required by Section 8 below), then such
redemption shall not become effective as to such shares to be converted and such
conversion shall become effective as provided in Section 8 below and any funds
which have been deposited by the Corporation, or on its behalf, with a paying
agent or segregated and held in trust by the Corporation for the redemption of
such shares shall (subject to any right of the holder of such shares to receive
the dividend payable thereon as provided in Section 8 below) immediately upon
such conversion be returned to the Corporation or, if then held in trust by the
Corporation, shall be discharged from such trust.
In every case of redemption of less than all of the outstanding shares
of this Series pursuant to this Section 6, the shares to be redeemed shall be
selected either by lot or pro rata, as may be prescribed by resolution of the
Board of Directors of the Corporation, provided that only whole shares shall be
selected for redemption.
7. REDEMPTION AT OPTION OF HOLDERS. In the event (i) any person with
the defined meaning as used in Section 13(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), or any successor provision becomes the
beneficial owner (as defined in Rule 13d-3 under the 1934 Act, or any successor
provision) of more
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<PAGE> 7
than 50% of the Common Stock (a "Share Acquisition") or the Corporation is a
party to a business combination, including a merger or consolidation or the sale
of all or substantially all of its assets and (ii) either (a) as a result of
such a Share Acquisition or business combination, the Convertible Preferred
Stock thereafter is not convertible into common stock of the Corporation or of
the ultimate parent of the Corporation which common stock is traded on the New
York Stock Exchange, the American Stock Exchange or through the NASDAQ National
Market System or (b) all or substantially all of the consideration paid in such
Share Acquisition or business combination does not consist of common stock of
the ultimate parent of the Corporation which common stock is traded on the New
York Stock Exchange, the American Stock Exchange or the NASDAQ National Market
System, then each holder of Convertible Preferred Stock, subject to the
conditions of this Section 7, shall have the option to require the Corporation
to redeem all of the shares of Convertible Preferred Stock owned by such holder
at $10.00 per share plus accrued and unpaid dividends to the redemption date.
In the event of any Share Acquisition meeting the conditions specified
in clauses (i) and (ii) of the first paragraph of this Section 7, the
Corporation shall, on the date that is 45 days after the date of such Share
Acquisition, upon the written demand of any record holder of Convertible
Preferred Stock which so requests, redeem all of the shares of Convertible
Preferred Stock owned by such holder at $10.00 per share plus accrued and unpaid
dividends to such redemption date. Within 10 days after the Corporation has
knowledge that such Share Acquisition has occurred, it shall mail to each record
holder of Convertible Preferred Stock a form of written demand to be used by
such holder to exercise his right of redemption (a "Demand Form") and a notice
which shall disclose the occurrence of the Share Acquisition and the right of
such holder to require the Corporation to redeem such Convertible Preferred
Stock pursuant to this Section 7, and shall state the redemption date, the
redemption price, the place or places of payment, that payment will be made upon
presentation and surrender of the shares of Convertible Preferred Stock, the
date of which such holder must notify the Corporation if it elects to require
the Corporation to make such redemption, that on and after the redemption date,
dividends will cease to accumulate on such shares, the then-effective conversion
rate pursuant to Section 8, and that the right of holders to convert shall
terminate at the close of business on the fifth business day prior to the
redemption date. Within 15 days after the Corporation has knowledge that such
Share Acquisition has occurred, it also shall deposit in trust with a bank
having a combined capital and surplus in excess of $50,000,000, as trustee, for
the benefit of holders of Convertible Preferred Stock which elect to require the
Corporation to redeem such stock pursuant to this Section 7, funds sufficient to
redeem on the redemption date all of the Convertible Preferred Stock outstanding
on the date of delivery of the notice referred to above. Each record holder of
Convertible Preferred Stock that elects to require the Corporation to redeem on
the redemption date all of the shares of Convertible Preferred Stock that such
holder owns shall deliver to the Corporation not later than the redemption date
a completed Demand Form relating to the Convertible Preferred Stock to be
redeemed. After the redemption date, the Corporation shall be entitled to
receive from the funds which it deposited in trust for the redemption of
Convertible Preferred Stock on such redemption date an amount equal to that
portion of such funds which was deposited it respect of shares of Convertible
Preferred Stock which the holders thereof did not elect to have redeemed
pursuant to this Section 7. The term "redemption date," as used in connection
with a redemption resulting from a Share Acquisition, shall mean the close of
business on the 45th day after the date of the Share Acquisition.
In the event of any business combination meeting the conditions
specified in clauses (i) and (ii) of the first paragraph of this, Section 7, the
Corporation shall, immediately prior to the effectiveness of such business
combination, upon the demand of any record holder of Convertible Preferred Stock
that so requests, redeem all of the shares of Convertible Preferred Stock owned
by each such holder at $10.00 per share plus accrued and unpaid dividends to the
date on which such business combination occurs. Not later than 35 days prior to
the effectiveness of any such business combination, the Corporation shall mail
to each record holder of Convertible Preferred Stock a Demand Form and a notice
which shall disclose such business combination and the right of such holder of
Convertible Preferred Stock to require the Corporation to redeem such
Convertible Preferred Stock pursuant to this Section 7 and shall state the
anticipated redemption date, the redemption price, the
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<PAGE> 8
place or places of payment, that payment will be made upon presentation and
surrender of the shares of Convertible Preferred Stock, the date by which such
holder must notify the Corporation if it elects to require the Corporation to
make such redemption, that on and after the redemption date, dividends will
cease to accumulate on such shares, the then effective conversion rate pursuant
to Section 8, and that the right of holders to convert shall terminate at the
close of business on the fifth business day prior to the redemption date. Prior
to the effectiveness of such business combination, the Corporation also shall
deposit in trust with a bank having a combined capital and surplus in excess of
$50,000,000, as trustee, for the benefit of holders of Convertible Preferred
Stock which elect to require the Corporation to redeem such stock pursuant to
this Section 7, immediately available funds sufficient to redeem on the
redemption date all of the Convertible Preferred Stock which, pursuant to this
Section 7, holders have elected to require the Corporation to redeem. Each
record holder of Convertible Preferred Stock that elects to require the
Corporation to redeem on the redemption date all of the Convertible Preferred
Stock which it owns must submit to the Corporation not later than the redemption
date a completed Demand Form relating to the Convertible Preferred Stock to be
redeemed. The Corporation agrees that it will not complete any business
combination described in this Section 7 unless proper provision has been made to
satisfy its obligations under this Section 7. The term "redemption date," as
used in connection with a redemption upon the occurrence of a business
combination under this Section 7, shall mean the time immediately prior to the
effectiveness of such business combination referred to herein.
Any notice by the Corporation which is mailed as herein provided shall
be conclusively presumed to have been duly given whether or not the holder of
Convertible Preferred Stock receives such Notice; and failure to give such
notice by mail, or any defect in such notice, to the holders of any shares shall
not affect the validity of the proceedings for the redemption of any other
shares of Convertible Preferred Stock. An election by a holder of Convertible
Preferred Stock to have the Corporation redeem such stock pursuant to this
Section 7 shall become irrevocable on the relevant redemption date on or after
the date fixed for redemption as stated in any notice delivered by the
Corporation, each holder of the shares called for redemption shall surrender the
certificates evidencing such shares to the Corporation at the place designated
in such notice and shall thereupon be entitled to receive payment of the
relevant redemption price in accordance with the terms of this Section 7. If any
such certificates shall be so surrendered in connection with a redemption
required to be made as a result of any business combination described in the
first paragraph of this Section 7 and for whatever reason such business
combination will not become effective, then the Corporation shall cause such
certificates to be returned promptly to the respective holders thereof. If less
than all the shares represented by any such surrendered certificates are
redeemed, a new certificate shall be issued representing the unredeemed shares.
If, on the date fixed for redemption under any provision of this Section 7,
funds necessary for the redemption shall be available therefor and shall have
been deposited in trust as required by this Section 7, then in the case of any
shares of Convertible Preferred Stock to be redeemed as a result of a Share
Acquisition, after the close of business on the redemption date and, in the case
of any shares of Convertible Preferred Stock to be redeemed as a result of a
business combination described in the first paragraph of this Section 7, after
the effectiveness of the business combination, notwithstanding that the
certificates evidencing any shares which the holders thereof had elected to have
redeemed shall not have been surrendered, the dividends with respect to such
shares shall cease to accrue, such shares shall no longer be deemed outstanding,
the holders thereof shall cease to be stockholders, and all rights whatsoever
with respect to such shares (except the right of the holders to receive the
relevant redemption price without interest upon surrender of their certificates
therefor) shall terminate.
8. CONVERSION PRIVILEGE.
(a) CONVERSION AT OPTION OF HOLDERS.
(i) Each share of Convertible Preferred Stock shall
be convertible at the option of the holder thereof, at any
time prior to the close of business on the date fixed by the
Corporation for redemption or conversion of such share as
herein provided, into fully paid and nonassessable shares of
Common Stock and such other
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<PAGE> 9
securities and property as hereinafter provided, initially at
the rate of 10 shares of Common Stock for each full share of
Convertible Preferred Stock.
For the purpose of this Certificate of Designation, the term
"Common Stock" shall initially mean the class designated as
Common Stock, par value $.001 per share, of the Corporation as
of April 15, 1999, subject to adjustment as hereinafter
provided.
(ii) Any holder of shares of Convertible Preferred
Stock desiring to convert such shares into Common Stock shall
surrender the certificate or certificates for such shares of
Convertible Preferred Stock at the office of the transfer
agent for the Convertible Preferred Stock, which certificate
or certificates, if the Corporation shall so require, shall be
duly endorsed to the Corporation or in blank, or accompanied
by proper instruments of transfer to the Corporation or in
blank, accompanied by irrevocable written notice to the
Corporation that the holder elects so to convert such shares
of Convertible Preferred Stock and specifying the name or
names (with address) in which a certificate or certificates
for Common Stock are to be issued.
No adjustments in respect of any dividend on the Common Stock issued
upon conversion shall be made upon the conversion of any shares of Convertible
Preferred Stock.
Any unpaid dividends on shares surrendered for conversion shall be paid
upon the conversion of any shares of Convertible Preferred Stock by issuing
additional shares of Common Stock with an aggregate value (as defined below)
equal to all accrued and unpaid dividends on the shares of Convertible Preferred
Stock converted.
The Corporation will, as soon as practicable after such deposit of
certificates for Convertible Preferred Stock accompanied by the written notice
and, compliance with any other conditions herein contained, deliver at the
office of the transfer agent to the person for whose account such shares of
Convertible Preferred Stock were so surrendered, or to his nominee or nominees,
certificates for the number of full shares of Common Stock to which he shall be
entitled as aforesaid, together with a cash adjustment of any fraction of a
share as hereinafter provided. Subject to the following provisions of this
paragraph, such conversion shall be deemed to have been made as of the date of
such surrender of the shares of Convertible Preferred Stock to be converted, and
the person or person entitled to receive the Common Stock deliverable upon
conversion of such Convertible Preferred Stock shall be treated for all purposes
as the record holder or holders of such Common Stock on such date; provided,
however, that the Corporation shall not be required to convert any shares of
Convertible Preferred Stock while the stock transfer books of the Corporation
are closed for any purpose, but the surrender of Convertible Preferred Stock for
conversion during any period while such books are so closed shall become
effective for conversion immediately upon the reopening of such books as if the
surrender had been made on the date of such reopening, and the conversion shall
be at the conversion rate in effect on such date.
(b) CONVERSION AT OPTION OF CORPORATION. Shares of this Series
shall be convertible at the option of the Corporation commencing April
15, 2000 into fully paid and nonassessable shares of Common Stock and
such other securities and property as hereinafter provided, at the rate
of 10 shares of Common Stock for each full share of Convertible
Preferred Stock plus, in each case, an amount equal to the dividends
accrued and unpaid thereon to the conversion date.
Notwithstanding the foregoing, the Corporation may not convert any
shares of Preferred Stock unless the last reported sales price of the Common
Stock in its principal trading market for the 15 consecutive trading days
immediately prior to the conversion date is at least $1.50 per share.
Not less than 20 nor more than 50 days prior to the date fixed for any
conversion of shares of this Series pursuant to this Section 6, a notice
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<PAGE> 10
specifying the time and place of such conversion and the number of shares to be
converted shall be given by first class mail, postage prepaid, to the holders of
record of the shares of this Series to be converted at their respective
addresses as the same shall appear on the books of the Corporation, calling upon
each such holder of record to surrender to the Corporation on the conversion
date at the place designated in such notice his certificate or certificates
representing the number of shares specified in such notice of conversion.
Neither failure to mail such notice, nor any defect therein or in the mailing
thereof, to any particular holder shall affect the sufficiency of the notice or
the validity of the proceedings for conversion with respect to the other
holders. Any notice which was mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the holder receives
the notice. On or after the conversion date each holder of shares of this Series
to be converted shall present and surrender his certificate or certificates for
such shares to the Corporation at the place designated in such notice and
thereupon the conversion price of such shares shall be paid to or on the order
of the person whose name appears on such certificate or certificates as the
owner thereof and each surrendered certificate shall be canceled. In case less
than all the shares represented by any such certificate are converted, a new
certificate shall be issued representing the unconverted shares.
If a notice of conversion has been given pursuant to this Section 6 and
if, on or before the date fixed for conversion, the funds necessary for such
conversion shall have been set aside by the Corporation, separate and apart from
its other funds, in trust for the PRO RATA benefit of the holders of the shares
so called for conversion, then, notwithstanding that any certificates for such
shares have not been surrendered for cancellation, on the conversion date
dividends shall cease to accrue on the shares for cancellation, on the
conversion date dividends shall cease to accrue on the shares of this Series to
be converted, and at the close of business on the conversion date the holders of
such shares shall cease to be stockholders with respect to such shares and shall
have no interest in or claims against the Corporation by virtue thereof and
shall have no voting or other rights with respect to such shares, except the
right to receive the moneys payable upon such conversion, without interest
thereon, upon surrender (and endorsement, if required by the Corporation) of
their certificates, and the shares evidenced thereby shall no longer be
outstanding. Subject to applicable escheat laws, any moneys so set aside by the
Corporation and unclaimed at the end of two years from the conversion date shall
revert to the general funds of the Corporation, after which reversion the
holders of such shares so called for conversion shall look only to the general
funds of the Corporation for the payment of the conversion price. Any interest
accrued on funds so deposited shall be paid to the Corporation from time to
time.
If a notice of conversion has been given pursuant to this Section 6,
and any holder of shares of this Series shall, prior to the close of business on
the fifth day preceding the date fixed for conversion, give written notice to
the Corporation pursuant to Section 8 below of the conversion of any or all of
these hares to be converted held by such holder (accompanied by a certificate or
certificates for such shares, duly endorsed or assigned to the Corporation, and
any necessary transfer tax payment, as required by Section 8 below), then such
conversion shall not become effective as to such shares to be converted and such
conversion shall become effective as provided in Section 8 below and any funds
which have been deposited by the Corporation, or on its behalf, with a paying
agent or segregated and held in trust by the Corporation for the conversion of
such shares shall (subject to any right of the holder of such shares to receive
the dividend payable thereon as provided in Section 8 below) immediately upon
such conversion be returned to the Corporation or, if then held in trust by the
Corporation, shall be discharged from such trust.
In every case of conversion of less than all of the outstanding shares
of this Series pursuant to this Section 8, the shares to be converted shall be
selected either by lot or pro rata, as may be prescribed by resolution of
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the Board of Directors, provided that only whole shares shall be selected for
conversion.
(c) ADJUSTMENT OF CONVERSION RATE. The number of shares of
Common Stock and number or amount of any other securities and property
as hereinafter provided into which a share of Convertible Preferred
Stock is convertible (the "conversion rate") shall be subject to
adjustment from time to time as follows:
(i) In case the Corporation shall (1) pay a dividend
or make a distribution on its Common Stock that is paid or
made (A) in other shares of stock of the Corporation or (B) in
rights to purchase stock or other securities if such rights
are not separable from the Common Stock except upon the
occurrence of a contingency, (2) subdivide its outstanding
shares of Common Stock into a greater number of shares or (3)
combine its outstanding shares of Common Stock into a greater
number of shares, then in each such case the conversion rate
in effect immediately prior thereto shall be adjusted
retroactively as provided below so that the holder of any
shares of Convertible Preferred Stock thereafter surrendered
for conversion shall be entitled to receive the number of
shares of Common Stock of the Corporation and other shares and
rights to purchase stock or other securities (or, in the event
of the redemption of any such shares or rights, any cash,
property or securities paid in respect of such redemption)
which such holder would have owned or have been entitled to
receive after the happening of any of the events described
above had such shares of Convertible Preferred Stock been
converted immediately prior to the happening of such event. An
adjustment made pursuant to this subparagraph (i) shall become
effective immediately after the record date in the case of a
dividend or distribution and shall become effective
immediately after the effective date in the case of a
subdivision or combination.
(ii) In case the Corporation shall issue rights or
warrants to all holders of its Common Stock entitling them
(for a period expiring within 45 days after the date fixed for
determination mentioned below) to subscribe for or purchase
shares of Common Stock at a price per share less than the
current market price per share (determined as provided below)
of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, then
the conversion rate in effect at the opening of business on
the day following the date fixed for such determination shall
be increased by multiplying such conversion rate by a fraction
of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common
Stock so offered for subscription or purchase and the
denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number
of shares of Common Stock so offered for subscription or
purchase would purchase at such current market price, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination: provided, however, in the event that all the
shares of Common Stock offered for subscription or purchase
are not delivered upon the exercise of such rights or
warrants, upon the expiration of such rights or warrants the
conversion rate shall be readjusted to the conversion rate
which would have been in effect had the numerator and the
denominator of the foregoing fraction and the resulting
adjustment been made based upon the number of shares of Common
Stock actually delivered upon the exercise of such rights or
warrants rather than upon the number of shares of Common Stock
offered for subscription or purchase. For the purposes of this
subparagraph (ii), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury
of the Corporation.
(iii) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness, cash (excluding ordinary cash
dividends paid out of retained earnings of the Corporation),
other assets or rights or warrants to subscribe for or
purchase any security (excluding those referred to in
subparagraphs (i) and (ii) above), then in each such case the
conversion rate shall be adjusted
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<PAGE> 12
retroactively so that the same shall equal the rate determined
by multiplying the conversion rate in effect immediately prior
to the close of business on the date fixed for the
determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the
current market price per share (determined as provided below)
of the Common Stock on the date fixed for such determination
and the denominator shall be such current market price per
share of the Common Stock less the amount of cash and the then
fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a
resolution of the Board of Directors) of the portion of the
assets, rights or evidences of indebtedness so distributed
applicable to one share of Common Stock, such adjustment to
become effective immediately prior to the opening of business
on the day following the date fixed for the determination of
stockholders entitled to receive such distribution.
(iv) For the purpose of any computation under Section
4 or subparagraphs (ii) and (iii) of paragraph (c) of this
Section 8, the current market price per share of Common Stock
on any date shall be deemed to be the average of the daily
closing prices for the 30 consecutive trading days commencing
with the 45th trading day before the day in question. The
closing price for each day shall be the reported last sales
price regular way or, in case no such reported sale takes
place on such day, the average of the reported closing bid and
asked prices regular way, in either case on the market on
which the Common Stock trades in the following order: the New
York Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading (based on the aggregate dollar value of all securities
listed or admitted to trading, on the NASDAQ National Market
System, on the NASDAQ SmallCap Market, the average of the
closing bid and asked prices on the Over-the Counter Bulletin
Board, and the average of the closing bid and asked prices on
the over-the-counter market as furnished by National Quotation
Bureau, LLC, New York, New York, any New York Stock Exchange
member firm selected from time to time by the Corporation for
that purpose, or, if such prices are not available, the fair
market value set by, or in a manner established by, the Board
of Directors of the Corporation in good faith. "Trading day"
shall mean a day on which the market on which the market used
to determine the closing price is open for the transaction of
business or the reporting of trades or, if the closing price
is not so determined, a day on which the New York Stock
Exchange is open for the transaction of business.
(v) No adjustment in the conversion rate shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such rate; PROVIDED, HOWEVER, that
the Corporation may make any such adjustment its election; and
PROVIDED FURTHER, that any adjustments which by reason of this
subparagraph (v) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Section 8 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as
the case may be.
(vi) Whenever the conversion rate is adjusted as
provided in any provision of this Section 8:
(1) the Corporation shall compute the
adjusted conversion rate in accordance with this
Section 8 and shall prepare a certificate signed by
the principal financial officer of the Corporation
setting forth the adjusted conversion rate and
showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall
forthwith be filed with the transfer agent of the
Convertible Preferred Stock; and
(2) a notice stating that the conversion
rate has been adjusted and setting forth the adjusted
conversion rate shall forthwith be required, and as
soon as practicable after it is required, such notice
shall be mailed by the Corporation to all record
holders of Convertible Preferred Stock at then last
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addresses as they shall appear in the stock transfer
books of the Corporation.
(vii) In the event that at any time, as a result of
any adjustment made pursuant to this Section 8, the holder of
any shares of Convertible Preferred Stock thereafter
surrendered for conversion shall become entitled to receive
any shares of the Corporation other than shares of Common
Stock or to receive any other securities, the number of such
other shares or securities so receivable upon conversion of
any share of Convertible Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions contained
in this Section 8 with respect to the Common Stock.
(d) NO FRACTIONAL SHARES. No fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon
conversion of Convertible Preferred Stock. If more than one certificate
representing shares of Convertible Preferred Stock shall be surrendered
for conversion at one time by the same holder, the number of full
shares issuable upon conversion thereof shall be computed on the basis
of the aggregate number of shares of Convertible Preferred Stock so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of any shares of
Convertible Preferred Stock, the Corporation will pay a cash adjustment
in respect of such fractional interest in an amount equal to the same
fraction of the market price per share of Common Stock (as determined
by the Board of Directors or in any manner prescribed by the Board of
Directors, which, so long as the Common Stock is listed on an exchange
or on NASDAQ, shall be the reported last sale price on the such
exchange or NASDAQ) at the close of business on the day of conversion.
(e) RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE OF ASSETS.
In case of any reclassification of the Common Stock, any consolidation
of the Corporation with, or merger of the Corporation into, any other
person, any merger of another person into the Corporation (other than a
merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the
Corporation), any sale or transfer of all or substantially all of the
assets of the Corporation or any compulsory share exchange pursuant to
which share exchange the Common Stock is converted into other
securities, cash or other property, then lawful provision shall be made
as part of the terms of such transaction whereby the holder of each
share of Convertible Preferred Stock then outstanding shall have the
right thereafter, during the period such share shall be convertible, to
convert such share only into the kind and amount of securities, cash
and other property receivable upon such reclassification,
consolidation, merger, sale, transfer or share exchange by a holder of
the number of shares of Common Stock of the Corporation into which such
share of Convertible Preferred Stock might have been converted
immediately prior to such reclassification, consolidation, merger,
sale, transfer or share exchange assuming such holder of Common Stock
of the corporation (i) is not a person with which the Corporation
consolidated or into which the Corporation merged or which merged into
the Corporation, to which such sale or transfer was made or a party to
such share exchange, as the case may be ("constituent person"), or an
affiliate of a constituent person and (ii) failed to exercise his
rights of election, if any, as to the kind or amount of securities,
cast, and other property receivable upon such reclassification,
consolidation, merger, sale, transfer or share exchange (provided that
if the kind or amount of securities, cash and other property receivable
upon such reclassification, consolidation, merger, sale, transfer or
share exchange is not the same for each share of Common Stock of the
Corporation held immediately prior to such consolidation, merger, sale
or transfer by others than a constituent person or an affiliate thereof
and in respect of which such rights of election shall not have been
exercised ("non-electing share"), then the kind and amount of
securities, cash and other property receivable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange by each non-electing share shall be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing
shares). The Corporation, the person formed by such consolidation or
resulting from such merger or which acquires such assets or which
acquires the Corporation's shares, as the case maybe, shall
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make provisions in its certificate or articles of incorporation or
other constituent document to establish such right. Such certificate or
articles of incorporation or other constituent document shall provide
for adjustments which, for events subsequent to the effective date of
such certificate or articles of incorporation or other constituent
document, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 8. The above provisions shall
similarly apply to successive reclassifications, consolidations,
mergers, sales, transfers or share exchanges.
(f) RESERVATION OF SHARES; TRANSFER TAXES; ETC. The
Corporation shall at all times serve and keep available, out of its
authorized and unissued stock, solely for the purpose of effecting the
conversion of the Convertible Preferred Stock, such number of shares of
its Common Stock free of preemptive rights as shall from time to time
be sufficient to effect the conversion of all shares of Convertible
Preferred Stock from time to time outstanding. The Corporation shall
from time to time, in accordance with the laws of the State of Nevada,
increase the authorized number of shares of Common Stock if at any time
the number of shares of Common Stock not outstanding shall not be
sufficient to permit the conversion of all the then outstanding shares
of Convertible Preferred Stock.
If any shares of Common Stock required to be reserved for purposes of
conversion of the Convertible Preferred Stock hereunder require registration
with or approval of any governmental authority under any Federal or State law
before such shares may be issued upon conversion, the Corporation will in good
faith and as expeditiously as possible endeavor to cause such shares to be duly
registered or approved, as the case may be. If the Common Stock is listed on the
New York Stock Exchange or any other national securities exchange, the
Corporation will, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all shares of Common
Stock issuable upon conversion of the Convertible Preferred Stock.
The Corporation will pay any and all issue or other taxes that may be
payable in respect of any issue or delivery of shares of Common Stock on
conversion of the Convertible Preferred Stock. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of Common Stock (or other securities
or assets) in a name other than that which the shares of Convertible Preferred
Stock so converted were registered, and no such issue or delivery shall be made
unless and until the person requesting such issue has paid to the Corporation
the amount of such tax or has established, to the satisfaction of the
Corporation, that such tax has been paid.
Before taking any action which would cause an adjustment reducing the
conversion rate such that the effective conversion price (for all purposes an
amount equal to $10.00 divided by the conversion rate applicable to one share of
Convertible Preferred Stock as in effect at such time) would be below the then
stated value of the Common Stock, the Corporation will take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid and nonassessable shares of
Common Stock at the conversion rate as so adjusted.
(g) PRIOR NOTICE OF CERTAIN EVENTS. In case:
(i) The Corporation shall (1) declare any dividend
(or any other distribution) on its Common Stock, other than
(A) a dividend payable in shares of Common Stock or (B) a
dividend payable in cash out of its retained earnings other
than any special or nonrecurring or other extraordinary
dividend or (2) declare or authorize a redemption or
repurchase of in excess of 10% of the than-outstanding shores
of Common Stock; or
(ii) the Corporation shall authorize the granting to
the holders of Common Stock of rights or warrants to subscribe
for or purchase any shares of stock of any class or of any
other rights or warrants (other than any rights specified in
paragraph (c)(i)(1)(B) of this Section 8); or
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(iii) of any reclassification of Common Stock (other
than a subdivision or combination of the outstanding Common
Stock, or a change in par value, or from par value to no par
value, or from no par value to par value), or of any
consolidation or merger to which the Corporation is a party
and for which approval of any stockholders of the Corporation
shall be required, or of the sale or transfer of all or
substantially all of the assets of the Corporation or of any
compulsory share exchange whereby the Common Stock is
converted into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent
for the Convertible Preferred Stock, and shall cause to be mailed to
the holders of record of the Convertible Preferred Stock, at their last
address as they shall appear upon the stock transfer books of the
Corporation, at least 15 days prior to the applicable record date
hereinafter specified, a notice stating (x) the date on which a record
is to be taken for the purpose of such dividend, distribution,
redemption or granting of rights or warrants or, if a record is not to
be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, redemption, rights or
warrants are to be determined, or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up (but no failure to
mail such notice or any defect therein or in the mailing thereof shall
affect the validity of the corporate action required to be specified in
such notice).
(h) OTHER CHANGES IN CONVERSION RATE. The Corporation from
time to time may increase the conversion rate by any amount for any
period of time if the period is at least 20 days and if the increase is
irrevocable during the period whenever the conversion rate is so
increased, the Corporation shall mail to holders of record of the
Convertible Preferred Stock a notice of the increase at least 15 days
before the date the increased conversion rate takes effect, and such
notice shall state the increased conversion rate and the period it will
be in effect.
The Corporation may make such increases in the conversion rate, in
addition to those required or allowed by this Section 8, as shall be determined
by it, as evidenced by a resolution of the Board of Directors, to be advisable
in order to avoid or diminish any income tax to holders of Common Stock
resulting from any dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes.
9. VOTING RIGHTS.
(a) GENERAL. The holders of Convertible Preferred Stock will
not have any voting rights except as set forth below or as otherwise
from time to time required by law. In connection with any right to
vote, each holder of Convertible Preferred Stock will have one vote for
each share held.
(b) CLASS VOTING RIGHTS. So long as the Convertible Preferred
Stock is outstanding, the Corporation shall not, without the
affirmative vote or consent of the holders of at least a majority of
all outstanding Convertible Preferred Stock voting separately as a
class, (i) Amend, alter or repeal (by merger or otherwise) any
provision of the Articles of Incorporation or the By-Laws of the
Corporation, as amended, so as adversely to affect the relative rights,
preferences, qualifications, limitations or restrictions of the
Convertible Preferred Stock, (ii) authorize or issue, or increase the
authorized amount of, any additional class or series of stock, or any
security convertible into stock of such class or series, ranking prior
to the Convertible Preferred Stock in respect of the payment of
dividends or upon liquidation, dissolution or winding up of the
Corporation or (iii) effect any reclassification of the Convertible
Preferred Stock. A class vote on the
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part of the Convertible Preferred Stock shall, without limitation,
specifically not be deemed to be required (except as otherwise required
by law or resolution of the Corporation's Board of Directors) in
connection with: (a) the authorization, issuance or increase in the
authorized amount of any shares of any other class or series of stock
which ranks junior to, or on a parity with, the Convertible Preferred
Stock in respect of the payment of dividends and distributions upon
liquidation, dissolution or winding up of the Corporation; or (b) the
authorization, issuance or increase in the amount of any bonds,
mortgages, debentures or other obligations of the Corporation.
The affirmative vote or consent of the holders of a majority
of the outstanding Convertible Preferred Stock, voting or consenting
separately as a class, shall be required to (a) authorize any sale,
lease or conveyance of all or substantially all of the assets of the
Corporation, or (b) approve any merger, consolidation or compulsory
share exchange of the Corporation with or into any other person unless
(i) the terms of such merger, consolidation or compulsory share
exchange do not provide for a change in the terms of the Convertible
Preferred Stock and (ii) the Convertible Preferred Stock is, after such
merger, consolidation or compulsory share exchange on a parity with or
prior to any other class or series of capital stock authorized by the
surviving corporation as to dividends and upon liquidation, dissolution
or winding up other than any class or series of stock of the
Corporation prior to the Convertible Preferred Stock as may have been
created with the affirmative vote or consent of the holders of at least
66-2/3% of the Convertible Preferred Stock (or other than a class or
series into which such prior stock is converted as a result of such
merger, consolidation or share exchange).
10. OUTSTANDING SHARES. For purposes of this Certificate of
Designation, all shares of Convertible Preferred Stock shall be deemed
outstanding except (i) from the date fixed for redemption pursuant to Section 6
or 7 hereof, all shares of Convertible Preferred Stock that have been so called
for redemption under Section 6 or have been required to be redeemed by the
holder thereof under Section 7 if funds necessary for the redemption of such
shares are available and, in the case of a redemption under Section 7, have been
deposited in trust with a bank having a combined capital and surplus in excess
of $50,000,000, as trustee, for the benefit of the holders of such shares to be
redeemed for payment of the relevant redemption price; (ii) from the date of
surrender of certificates representing shares of Convertible Preferred Stock,
all shares of Convertible Preferred Stock converted into Common Stock; and (iii)
from the date of registration of transfer, all shares of Convertible Preferred
Stock held of record by the Corporation or any subsidiary of the Corporation.
11. SECURITIES NOT REGISTERED UNDER THE SECURITIES ACT OF 1933. Neither
the shares of Convertible Preferred Stock nor the Common Stock issuable upon
conversion thereof has been registered under the Securities Act of 1933 or the
laws of any state of the United States and may not be transferred without such
registration or an exemption from registration.
(a) RESTRICTIVE LEGENDS. Each share of Convertible Preferred
Stock and certificate for Common Stock issued upon the conversion of
any shares of Convertible Preferred Stock, and each preferred stock
certificate issued upon the transfer of any such shares of Convertible
Preferred Stock or Common Stock (except as otherwise permitted by this
Section 11), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The securities represented hereby have not been registered
under the Securities Act of 1933. Such securities may not be
sold or transferred in the absence of such registration or an
exemption therefrom under said Act."
(b) NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Except
as provided in paragraph (c) of this Section 11, prior to any transfer
of any such shares of Convertible Preferred Stock, or Common Stock, the
holder thereof will give written notice to the Corporation of such
holder's intention to effect such transfer and to comply in all other
respects with this Section 11. Each such notice (A) shall describe the
manner and
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circumstances of the proposed transfer in sufficient detail to enable
counsel to render the opinions referred to below, and (B) shall
designate counsel for the holder giving such notice (who may be house
counsel for such holder). The holder giving such notice will submit a
copy thereof to the counsel designated in such notice and the
Corporation will promptly submit a copy thereof to its counsel, and the
following provisions shall apply:
(i) If in the opinion of each such counsel the
proposed transfer of such shares of Convertible Preferred
Stock or Common Stock may be effected without registration
under the Act, the Corporation will promptly notify the holder
thereof and such holder shall thereupon be entitled to
transfer such shares of Convertible Preferred Stock or Common
Stock in accordance with the terms of the notice delivered by
such holder to the Corporation. Each share of Convertible
Preferred Stock or certificate, if any, issued upon or in
connection with such transfer shall bear the appropriate
restrictive legend set forth in paragraph (a) of this Section
11, unless in the opinion of each such counsel such legend is
no longer required to insure compliance with the Act. If for
any reason counsel for the Corporation (after having been
furnished with the information required to be furnished by
this paragraph (b)) shall fail to deliver an opinion of the
Corporation, or the Corporation shall fail to notify such
holder thereof as aforesaid, within 20 days after counsel for
such holder shall have delivered its opinion to such holder
(with a copy to the Corporation), then for all purposes of
this Certificate of Designation the opinion of counsel for the
Corporation shall be deemed to be the same as the opinion of
counsel for such holder.
(ii) If in the opinion of either or both of such
counsel the proposed transfer of such shares of Convertible
Preferred Stock or Common Stock may not be effected without
registration under the Act, the Corporation will promptly so
notify the holder thereof and thereafter such holder shall not
be entitled to transfer such share of Convertible Preferred
Stock or Common Stock until receipt of a further notice from
the Corporation under subparagraph (i) above or, in the case
of Common Stock, until registration of such Common stock under
the Act has become effective.
(c) PROPOSED TRANSFER TO INSTITUTIONS. Notwithstanding the
foregoing, any holder of such share of Convertible Preferred Stock or
Common Stock shall be permitted to transfer any such share of
Convertible Preferred Stock or Common Stock to a limited number of
Institutional Investors, provided that;
(i) Each such holder represents in writing that it is
acquiring such shares of Convertible Preferred Stock or Common
Stock for investment and not with a view to the distribution
thereof (subject, however, to any requirement of law that the
disposition thereof shall at all times be within the control
of such transferee);
(ii) Each such holder agrees in writing to be bound
by all the restrictions on transfer of such shares of
Convertible Preferred Stock or Common Stock contained in this
Section 11; and
(iii) Such holder delivers to the Corporation an
opinion of counsel who shall be satisfactory to counsel for
the Corporation, stating that such transfer may be effected
without registration under the Act.
12. PARTIAL PAYMENTS. If at any time the Corporation does not pay
amounts sufficient to redeem all Convertible Preferred Stock required to be
redeemed by the Corporation at such time pursuant to Section 7 hereof, then such
funds which are paid shall be applied to redeem such Convertible Preferred Stock
as the Corporation may designate by lot.
13. STATUS OF ACQUIRED SHARES. Shares of Convertible Preferred Stock
redeemed by the Corporation, received upon conversion Pursuant to Section 6 or
otherwise acquired by the Corporation will be restored to the status of
authorized
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but unissued shares of Preferred Stock, without designation as to class, and may
thereafter be issued, but not as shares of Convertible Preferred Stock.
14. PREEMPTIVE RIGHTS. The Convertible Preferred is not entitled to any
preemptive or subscription rights in respect of any securities of the
Corporation.
15. SEVERABILITY OF PROVISIONS. Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.
ARTICLE VI
Preemptive Rights
No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series of
stock or of other securities of the Corporation shall have any preemptive right
to purchase or subscribe for any unissued stock of any class or series, or any
unissued bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock or carrying any right to purchase
stock which may be issued pursuant to resolution of the board of directors of
the Corporation to such persons, firms, corporations or associations, whether or
not holders thereof, and upon such terms as may be deemed advisable by the board
of directors in the exercise of its sole discretion.
ARTICLE VII
Repurchase of Shares
The Corporation may from time to time, pursuant to authorization by the
board of directors of the Corporation and without action by the stockholders,
purchase or otherwise acquire shares of any class, bonds, debentures, notes,
scrip, warrants, obligations, evidences or indebtedness, or other securities of
the Corporation in such manner, upon such terms, and in such amounts as the
board of directors shall determine; subject, however, to such limitations or
restrictions, if any, as are contained in the express terms of any class of
shares of the Corporation outstanding at the time of the purchase or acquisition
in question or as are imposed by law.
ARTICLE VIII
Meetings of Stockholders; Cumulative Voting
A. ACTION BY WRITTEN CONSENT. No action that is required or permitted
to be taken by the stockholders of the Corporation at any annual or special
meeting of stockholders may be effected by written consent of stockholders in
lieu of a meeting of stockholders, unless the action to be effected by written
consent of stockholders and the taking of such action by such written consent
have expressly been approved in advance by the board of directors of the
Corporation.
B. SPECIAL MEETINGS. Special meeting of the stockholders of the
Corporation for any purpose or purposes may be called at any time by the board
of directors of the Corporation, or by a committee of the board of directors
which has been duly designated by the board of directors and whose powers and
authorities, as provided in a resolution of the board of directors or in the
bylaws of the Corporation, include the power and authority to call such meetings
but such special meetings may not be called by another person or persons.
C. CUMULATIVE VOTING. There shall be no cumulative voting by
stockholders of any class or series in the election of directors of the
Corporation.
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D. PLACE OF MEETINGS. Meetings of stockholders may be held at such
place as the bylaws may provide.
ARTICLE IX
Notice for Nominations and Proposals
A. NOMINATIONS AND PROPOSALS. Nominations for the election of directors
and proposals for any new business to be taken up at any annual or special
meeting of stockholders may be made by the board of directors of the Corporation
or by any stockholder of the Corporation entitled to vote generally in the
election of directors. In order for a stockholder of the Corporation to make any
such nominations and/or proposals at an annual meeting or such proposals at a
special meeting, he or she shall give notice thereof in writing, delivered or
mailed by first class United States mail, postage prepaid, to the Secretary of
the Corporation of less than thirty days nor more than sixty days prior to any
such meeting; provided, however, that if less than forty days' notice of the
meeting is given to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation not later than the
close of the tenth day following the day on which notice of the meeting was
mailed to stockholders. Each such notice given by a stockholder with respect to
nominations for the election of directors shall set forth (1) the name, age,
business address and, if known, residence address of each nominee proposed in
such notice, (2) the principal occupation or employment of each such nominee,
and (3) the number of shares of stock of the Corporation which are beneficially
owned by each such nominee. In addition, the stockholder making such nomination
shall promptly provide any other information reasonably requested by the
Corporation.
B. FORM OF NOTICE. Each such notice given by a stockholder to the
Secretary with respect to business proposals to bring before a meeting shall set
forth in writing as to each matter: (1) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at the meeting; (2) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business; (3) the class
and number of shares of the Corporation which are beneficially owned by the
stockholder; and (4) any material interest of the stockholder in such business.
Notwithstanding anything in this Restated Articles of Incorporation to the
contrary, no business shall be conducted at the meeting except in accordance
with the procedures set forth in this Article.
C. DETERMINATION OF ADEQUACY OF NOTICE. The Chairman of the annual or
special meeting of stockholders may, if the facts warrant, determine and declare
to such meeting that a nomination or proposal was not made in accordance with
the foregoing procedure, and, if he should so determine, he shall so declare to
the meeting and the defective nomination or proposal shall be disregarded and
laid over for action at the next succeeding adjourned, special or annual meeting
of the stockholders taking place thirty days or more thereafter. This provision
shall not require the holding of any adjourned or special meeting of
stockholders for the purpose of considering such defective nomination or
proposal.
ARTICLE X
Directors
A. NUMBER AND VACANCIES. The number of directors of the Corporation
shall be such number, not less than one nor more than 15 (exclusive of
directors, if any, to be elected by holders of preferred stock of the
Corporation), as shall be provided from time to time in a resolution adopted by
the board of directors, provided that no decrease in the number of directors
shall have the effect of shortening the term of any incumbent director, and
provided further that no action shall be taken to decrease or increase the
number of directors from time to time unless at least two-thirds of the
directors then in office shall concur in said action. Exclusive of directors, if
any, elected by holders of preferred stock, vacancies in the board of directors
of the Corporation, however caused, and newly created directorships shall be
filled by a vote of two-thirds of the directors then in office, whether or not a
quorum, and any director so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of the class to which the
director has been chosen expires and when the director's successor is
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elected and qualified. The board of directors shall be classified in accordance
with the provisions of Section B of this Article X.
B. CLASSIFIED BOARD. The board of directors of the Corporation (other
than directors which may be elected by the holders of preferred stock), shall be
divided into three classes of directors which shall be designated Class I, Class
II and Class III. The members of each class shall be elected for a term of three
years and until their successors are elected and qualified. Such classes shall
be as nearly equal in number as the then total number of directors constituting
the entire board of directors shall permit, exclusive of directors, if any,
elected by holders of preferred stock, with the terms of office of all members
of one class expiring each year. Should the number of directors not be equally
divisible by three, the excess director or directors shall be assigned to
Classes I or II as follows: (1) if there shall be an excess of one directorship
over the number equally divisible by three, such extra directorship shall be
classified in Class I; and (2) if there be an excess of two directorships over a
number equally divisible by three, one shall be classified in Class I and the
other in Class II. At the organizational meeting of the Corporation, directors
of Class I shall be elected to hold office for a term expiring at the first
annual meeting of stockholders, directors of Class II shall be elected to hold
office for a term expiring at the second succeeding annual meeting of
stockholders and directors of Class III shall be elected to hold office for a
term expiring at the third succeeding annual meeting thereafter. Thereafter, at
each succeeding annual meeting, directors of each class shall be elected for
three year terms. Notwithstanding the foregoing, the director whose term shall
expire at any annual meeting shall continue to serve until such time as his
successor shall have been duly elected and shall have qualified unless his
position on the board of directors shall have been abolished by action taken to
reduce the size of the board of directors prior to said meeting.
Should the number of directors of the Corporation be reduced, the
directorship(s) eliminated shall be allocated among classes as appropriate so
that the number of directors in each class is as specified in the position(s) to
be abolished. Notwithstanding the foregoing, no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. Should the number of directors of the Corporation be increased, other
than directors which may be elected by the holders of preferred stock, the
additional directorships shall be allocated among classes as appropriate so that
the number of directors in each class is as specified in the immediately
preceding paragraph.
Whenever the holders of any one or more series of preferred stock of
the Corporation shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the board of directors shall include said
directors so elected and not be in addition to the number of directors fixed as
provided in this Article X. Notwithstanding the foregoing, and except as
otherwise may be required by law, whenever the holders of any one or more series
of preferred stock of the Corporation elect one or more directors of the
Corporation, the terms of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of stockholders.
ARTICLE XI
Removal of Directors
Notwithstanding any other provision of this Restated Articles of
Incorporation or the bylaws of the Corporation, any director or all the
directors of a single class (but not the entire board of directors) of the
Corporation may be removed, at any time, but only for cause and only by the
affirmative vote of the holders of at least 75% of the voting power of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the stockholders called for that purpose.
Notwithstanding the foregoing, whenever the holders of any one or more series of
preferred stock of the Corporation shall have the right, voting separately as a
class, to elect one or more directors of the Corporation, the preceding
provisions of this Article XI shall not apply with respect to the director or
directors elected by such holders of preferred stock.
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ARTICLE XII
Acquisition of Capital Stock
A. DEFINITIONS. For the purpose of this Article:
(1) The term "Act" shall mean the Securities Exchange Act of
1934, as amended, and any successor statute.
(2) The term "acting in concert" shall mean (i) knowing
participation in a joint activity or conscious parallel action towards
a common goal whether or not pursuant to an express agreement, and (ii)
a combination or pooling of voting or other interest in the
Corporation's outstanding shares of capitol stock for a common purpose,
pursuant to any contract, understanding, relationship, agreement or
other arrangement, whether written or otherwise.
(3) The term "acquire," "acquisition" or "acquiring" with
respect to the acquisition of any security of the Corporation shall
refer to the acquisition of such security by any means whatsoever,
including without limitation, an acquisition of such security by gift,
by operation of law, by will or by intestacy, whether voluntarily or
involuntarily.
(4) The term "Code" means the Internal Revenue Code of 1986,
as amended, and any successor statute.
(5) The term "Common Stock" means all Common Stock of the
Corporation and any other securities issued by the Corporation (other
than the Warrants) which are treated as stock for purposes of Section
382 of the Code.
(6) The term "Fair Market Value" of the Common Stock shall
mean the average of the daily closing prices of the Common Stock for 15
consecutive trading days commencing 20 trading days before the date of
such computation The closing price is the last reported sale price on
the principal securities exchange on which the Common Stock is listed
or, if the Common Stock is not listed on any national securities
exchange, the NASDAQ National Marked System, or, if the Common Stock is
not designated for trading on the NASDAQ National Market System, the
average of the closing bid and asked prices as reported on NASDAQ or,
if not so reported, as furnished by the National Quotation Bureau
Incorporated. In the absence of such a quotation, the Corporation shall
determine the current market rice on a reasonable and appropriate basis
of the average of the daily closing prices for 15 consecutive trading
days commencing 20 trading days before the date of such computation.
(7) The term "own," "owing," "ownership" or "owning" refer to
the ownership of securities within the meaning of Section 382 of the
Code after taking into account the attribution rules of Section
382(l)(3) of the Code and the regulations promulgated hereunder (except
insofar as such attribution would be inconsistent with provisions of
this Article XII relating to Warrants).
(8) The term "Person" shall mean any individual, firm,
corporation, partnership, joint venture or other entity and shall
include any group composed of such person and any other person with
whom such person or any Affiliate or Associate (as those terms are
defined in Rule 12b-2 of the General Rules and Regulations under the
Act) of such person has any agreement, arrangement or understanding,
directly or indirectly, for the purposes of acquiring, holding, voting
or disposing of Common Stock or Warrants, and any other person who is a
member of such group.
(9) The term "Transfer Agent" shall mean the transfer agent
with respect to the Common Stock nominated and appointed by the Board
of Directors from time to time.
(10) The term "Warrant" shall mean any securities issued or
assumed by the Corporation, or any securities issuable by the
Corporation in respect to issued securities which are convertible into,
or which include the right
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to acquire, shares of Common Stock, whether or not the right to make
such conversion or acquisition is subject to any contingencies,
including, without limitation, warrants, options, calls, contracts to
acquire securities, convertible debt instruments or any other interests
treated as an option pursuant to Section 382(l)(3) of the Code.
(11) The term "Warrant Agent" shall mean any warrant agent for
any Warrants nominated and appointed by the Board of Directors from
time to time.
B. ACQUISITION OF CONTROL SHARES.
(1) If, at any time during the ten years from the effective
date of this Restated Articles of Incorporation, any Person shall
acquire the beneficial ownership (as determined pursuant to Rules 13d-3
and 13d-5 under the Act) of more than 20% of any class of Common Stock,
then the record holders of Common stock beneficially owned by such
acquiring Person shall have only the voting rights set forth in this
paragraph B on any matter requiring their vote or consent. With respect
to each vote in excess of 20% of the voting power of the outstanding
shares of Common Stock which such record holders would otherwise be
entitled to cast without giving effect to this paragraph B, the record
holders in the aggregate shall be entitled to cast only one-hundredth
of a vote. A Person who is a record owner of shares of Common Stock
that are beneficially owned simultaneously by more than one person
shall have, with respect to such shares, the right to cast the least
number of votes that such person would be entitled to cast under this
paragraph B by virtue of such shares being so beneficially owned by any
of such acquiring Persons. The effect of the reduction in voting power
required by this paragraph B shall be given effect in determination the
presence of a quorum for purposes of convening a meeting of the
stockholders of the Corporation.
(2) The limitation on voting rights prescribed by this
paragraph B shall terminate and be of no force and effect as of the
earliest to occur of:
(i) the date that any person becomes the beneficial
owner of shares of stock representing at least 75% of the
total number of votes entitled to be cast in respect of all
outstanding shares of stock, before giving effect to the
reduction in votes prescribed by this paragraph B; or
(ii) the date (the "Reference Date") one day prior to
the date on which, as a result of such limitation of voting
rights, the Common Stock will be delisted from (including by
ceasing to be temporarily or provisionally authorized for
listing with) the New York Stock Exchange (the "NYSE") or the
American Stock Exchange (the "AMEX"), or be no longer
authorized for inclusion (including by ceasing to be
provisionally or temporarily authorized for inclusion) on the
National Association of Securities Dealers, Inc. Automated
Quotation System/National Market System ("NASDAQ/NMS");
provided, however, that (a) such termination shall not occur
until the earlier of (x) the 90th day after the Reference Date
or (y) the first day on or after a Reference Date that there
is not pending a proceeding under the rules of the NYSE, the
AMEX or the NASDAQ/NMS or any other administrative or judicial
proceeding challenging such delisting or removal of
authorization of the Common Stock, an application for listing
of the Common stock with the NYSE or the AMEX or for
authorization for the Common Stock to be including on the
NASDAQ/NMS, or an appeal with respect to any such application,
and (b) such termination shall not occur by virtue of such
delisting or lack of authorization if on or prior to the
earlier of the 90th day after the Reference Date or the day on
which no proceeding, application or appeal of the type
described in (y) above is pending, the Common Stock is
approved for listing or continued listing on the NYSE or the
AMEX or authorized for inclusion or continued inclusion on the
NASDAQ/NMS (including any such approval or authorization which
is temporary or provisional). Nothing contained herein shall
be construed so as to prevent the Common Stock from continuing
to be listed with the NYSE or AMEX or continuing to be
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<PAGE> 23
authorized for inclusion on the NASDAQ/NMS in the event that
the NYSE, AMEX or NASDAQ/NMS, as the case may be, adopts a
rule or is governed by an order, decree, ruling or regulation
of the Securities and Exchange Commission which provides in
whole or in part that companies having Common Stock with
differential voting rights listed on the NYSE or the Amex or
authorized for inclusion on the NASDAQ/NMS may continue to be
so listed or included.
C. EXCEPTIONS. The restrictions contained in this Article XII shall not
apply to (1) any underwriter or member of an underwriting or selling group
involving a public sale or resale of securities of the Corporation or a
subsidiary thereof; provided, however, that upon completion of the sale or
resale of such securities, no such underwriter or member of such selling group
is a beneficial owner of more than 4.9% of any class of equity security of the
Corporation, (2) any revocable proxy granted pursuant to a proxy solicitation in
compliance with section 14 of the Act by a stockholder of the Corporation or (3)
any employee benefit plans of the Corporation. In addition, the Continuing
Directors of the Corporation, the officers and employees of the Corporation and
its subsidiaries, the directors of subsidiaries of the Corporation, the employee
benefit plans of the Corporation and its subsidiaries, entities organized or
established by the Corporation or any subsidiary thereof pursuant to the terms
of such plans and trustees and fiduciaries with respect to such plans acting in
such capacity shall not be deemed to be a group with respect to their beneficial
ownership of voting stock of the Corporation solely by virtue of their being
directors, officers or employees of the Corporation or a subsidiary thereof or
by virtue of the Continuing Directors of the Corporation, the officers and
employees of the Corporation and its subsidiaries and the directors of
subsidiaries of the Corporation being fiduciaries or beneficiaries of an
employee benefit plan of the Corporation or a subsidiary of the Corporation.
Notwithstanding the foregoing, no director, officer or employee of the
Corporation or any of its subsidiaries or group of any of them shall be exempt
from the provisions of this Article XII should any such person or group become a
beneficial owner of more than 20% of any class of equity security of the
Corporation.
D. CONSTRUCTION. A majority of the Continuing Directors, as defined in
Article XIII, shall have the power to construe and apply the provisions of
paragraphs B, C and D of this Article XII and to make all determinations
necessary or desirable to implement such provisions, including but not limited
to matters with respect to (1) the number of shares beneficially owned by any
person, (2) whether a person has an agreement, arrangement or understanding with
another as to the matters referred to in the definition of beneficial ownership,
(3) the application of any other definition or operative provision of this
Article XII to the given facts or (4) any other matter relating to the
applicability or effect of paragraphs B, C and D of this Article XII. Any
constructions, applications, or determinations made by the Continuing Directors
pursuant to paragraphs B, C and D of this Article XII in good faith and on the
basis of such information and assistance as was then reasonably available for
such purpose shall be conclusive and binding upon the Corporation and its
stockholders.
E. LEGEND ON CERTIFICATES. All certificates evidencing ownership of
Common Stock or ownership of Warrants of the Corporation shall bear a
conspicuous legend in compliance with the Nevada Revised Statutes describing the
restrictions on transfers set forth in this Article XII.
F. PARTIAL INVALIDITY. If any provision of this Article XII or any
application of any such provision is determined to be invalid by any federal or
state court having jurisdiction over the issues, the validity of the remaining
provisions shall not be affected and other applications of such provision shall
be affected only to the extent necessary to comply with the determination of
such court.
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ARTICLE XIII
Approval of Certain Business Combinations
The stockholder vote required to approve Business Combinations (as
hereinafter defined) shall be as set forth in this section.
A. REQUIRED AFFIRMATIVE VOTE.
(1) Except as otherwise expressly provided in this Article
XIII, and in addition to any other vote required by law, the
affirmative vote required by law, the affirmative vote of the holders
of (i) at least 75% of the voting power of the outstanding shares
entitled to vote thereon (and, if any class or series of shares is
entitled to vote thereon separately the affirmative vote of the holders
of at least 75% of the outstanding shares of each such class or
series), and (ii) at least a majority of the outstanding shares
entitled to vote thereon, not including shares deemed beneficially
owned by a Related Person (as hereinafter defined), shall be required
in order to authorize any of the following:
(a) any merger or consolidation of the Corporation or
a subsidiary of the Corporation with or into a Related person
(as hereinafter defined);
(b) any sale, lease, exchange, transfer or other
disposition, including without limitation, a mortgage or
pledge, of all or any Substantial Part (as hereinafter
defined) of the assets of the Corporation (including without
limitation any voting securities of a subsidiary) or of a
subsidiary, to a Related Person;
(c) any merger or consolidation of a Related Person
with or into the Corporation or a subsidiary of the
Corporation;
(d) any sale, lease, exchange, transfer or other
disposition of all or any Substantial Part of the assets of a
Related Person to the Corporation or a subsidiary of the
Corporation;
(e) the issuance of any securities of the Corporation
or a subsidiary of the Corporation to a Related Person other
than on a pro rata basis to all holders of capital stock of
the Corporation of the same class or classes held by the
Related person, pursuant to a stock split, stock dividend or
distribution or warrants or rights, and other than in
connection with the exercise or conversion of securities
exercisable for or convertible into securities of the
Corporation or any of its subsidiaries which securities have
been distributed pro rata to all holders of capital stock of
the Corporation;
(f) the acquisition by the Corporation or a
subsidiary of the Corporation of any securities of a Related
Person;
(g) any reclassification of the Common Stock of the
Corporation, or any recapitalization involving the Common
Stock of the Corporation or any similar transaction (whether
or not with or into or otherwise involving a Related Person)
that has the effect directly or indirectly, of increasing by
more than 1% the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any subsidiary that are directly or indirectly
owned by any Related Person; and
(h) any agreement, contract or other arrangement
providing for any of the transactions described in this
Article XIII.
(2) Such affirmative vote shall be required notwithstanding
any other provision of this Restated Articles of Incorporation, any
provision of law, or any agreement with any regulatory agency or
national securities exchange which might otherwise permit a lesser vote
or no vote; provided, however, that in no instance shall the provisions
of this Article XIII require the vote of greater than 85% of the voting
power of the outstanding shares entitled to vote thereon for the
approval of a Business Combination.
(3) The term "Business Combination" as used in this Article
XIII shall mean any transaction which is referred to in any one or more
of subparagraphs A(1)(a) through (h) above.
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<PAGE> 25
B. EXCEPTIONS. The provisions of paragraph A shall not be applicable to
any particular Business Combination, and such Business Combination shall require
only such affirmative vote as is required by any other provision of this
Restated Articles of Incorporation, any provision of law, or any agreement with
any regulatory agency or national securities exchange, if the Business
Combination shall have been approved in advance by a two-thirds vote of the
Continuing Directors (as hereinafter defined; provided, however, that such
approval shall only be effective if obtained at a meeting at which a continuing
Director Quorum (as hereinafter defined) is present.
C. DEFINITIONS. For the purposes of this Article XIII the following
definitions apply:
(1) The term "Related Person" shall mean and include (i) any
individual, corporation, partnership or other person or entity which
together with its "affiliates" or "associates" (as those terms are
defined in the Act) "beneficially owns" (as that there is defined in
the Act) in the aggregate 10% or more of the outstanding shares of the
Common Stock of the Corporation; and (ii) any "affiliate" or
"associate" (as those terms are defined in the Act) of any such
individual, Corporation, partnership or other person or entity;
provided, however, that the term "Related Person" shall not include the
Corporation, any subsidiary of the Corporation, any employee benefit
plan, employee stock plan of the Corporation or of any subsidiary of
the Corporation, or any trust established by the Corporation in
connection with the foregoing, or any person or entity organized,
appointed, established or holding shares of capital stock of the
Corporation for or pursuant to the terms of any such plan, nor shall
such term encompass shares of capital stock of the Corporation held by
any of the foregoing (whether or not held in a fiduciary capacity or
otherwise). Without limitation, any shares of the Common Stock of the
Corporation which any Related Person has the right to acquire pursuant
to any agreement, or upon exercise or conversion rights, warrants or
options, or otherwise, shall be deemed "beneficially owned" by such
Related Person.
(2) The term "Substantial Part" shall mean more than 25% of
the total assets of the entity at issue, as of the end of its most
recent fiscal year ending prior to the time the determination is made.
(3) The term "Continuing Director" shall mean any member of
the board of directors of the Corporation who is unaffiliated with and
who is not the Related Person and was a member of the board prior to
the time that the Related Person became a Related Person, and any
successor of a Continuing Director who is unaffiliated with and who is
not the Related Person and is recommended to succeed a Continuing
Director by a majority of Continuing Directors then on the board.
(4) The term "Continuing Director Quorum" shall mean
two-thirds of the Continuing Directors capable of exercising the powers
conferred on them.
ARTICLE XIV
Evaluation of Business Combinations
In connection with the exercise of its judgment in determining what is
in the best interests of the Corporation and of the stockholders, when
evaluating a Business Combination (as defined in Article XIII) or a tender or
exchange offer, the board of directors of the Corporation shall, in addition to
considering the adequacy of the amount to be paid in connection with any such
transaction, consider all of the following factors and any other factors which
it deems relevant; (A) the social and economic effects of the transaction on the
Corporation and its subsidiaries, employees and customers, creditors and other
elements of the communities in which the Corporation and its subsidiaries
operate or are located; (B) the business and financial condition and earnings
prospects of the acquiring person or entity, including, but not limited to, debt
service and other existing financial obligations, financial obligations to be
incurred in connection with the acquisition and other likely financial
obligations of the acquiring person or entity and the possible effect of such
conditions upon the Corporation and its subsidiaries and the
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<PAGE> 26
other elements of the communities in which the Corporation and its subsidiaries
operate or are located; and (C) the competence, experience, and integrity of the
acquiring person or entity and its or their management.
ARTICLE XV
Indemnification
Any person who was or is a party or is threatened to be made a party to
any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (whether or not by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, incorporator, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, incorporator,
employee, partner, trustee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise (including an employee benefit plan), shall
be entitled to be indemnified by the corporation to the full extent then
permitted by law against expenses (including counsel fees and disbursements),
judgments, fines (including excise taxes assessed on a person with respect to an
employee benefit plan), and amounts paid in settlement incurred by him in
connection with such action, suit, or proceeding. Such right of indemnification
shall inure whether or not the claim asserted is based on matters which antedate
the adoption of this Article XV. Such right of indemnification shall continue as
to a person who has ceased to be a director, officer, incorporator, employee,
partner, trustee, or agent and shall inure to the benefit of the heirs and
personal representatives of such a person. The indemnification provided by this
Article XV shall not be deemed exclusive of any other rights which may be
provided now or in the future under any provision currently in effect or
hereafter adopted of the bylaws, by any agreement, by vote of stockholders, by
resolution of disinterested directors, by provisions of law, or otherwise.
ARTICLE XVI
Limitations on Directors' Liability
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except: (A) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (B) for acts or omissions that are not
in good faith or that involve intentional misconduct or a knowing violation of
law, (C) under Section 174 of the Nevada Revised Statutes, or (D) for any
transaction from which the director derived any improper personal benefit. If
the Nevada Revised Statutes is amended after the date of filing of this Restated
Articles of Incorporation to further eliminate or limit the personal liability
of directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Nevada Revised
Statutes, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE XVII
Amendment of Bylaws
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the Corporation is expressly authorized to
adopt, repeal, alter, amend and rescind the bylaws of the Corporation by a vote
of two-thirds of the board of directors. Notwithstanding any other provision of
this Restated Articles of Incorporation or the bylaws of the Corporation, and in
addition to any affirmative vote required by law (and notwithstanding the fact
that some lesser percentage may be specified by law), the bylaws shall be
adopted, repealed, altered, amended or rescinded by the stockholders of the
Corporation only by the vote of the holders of not less than 75% of the voting
power of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the stockholders called for that purpose (provided
that notice of such proposed
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<PAGE> 27
adoption, repeal, alteration, amendment or rescission is included in the notice
of such meeting), or, as set forth above, by the board of directors.
ARTICLE XVIII
Amendment of Articles of Incorporation
Subject to the provisions hereof, the Corporation reserves the right to
repeal, alter, amend or rescind any provision contained in this Restated
Articles of Incorporation in the manner now or hereafter prescribed by law, and
all rights conferred on stockholders herein are granted subject to this
reservation. Notwithstanding the foregoing at any time and from time to time,
the provisions set forth in Articles VIII, IX, X, XI, XII, XIII, XIV, XV, XVI,
XVII and this Article XVIII may be repealed, altered, amended or rescinded in
any respect only if the same is approved by the affirmative vote of the holders
of not less than 75% of the voting power of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of directors
(considered for this purpose as a single class) cast at a meeting of the
stockholders called for that purpose (provided that notice of such proposed
adoption, repeal, alteration, amendment or rescission is included in the notice
of such meeting).
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation are 38,173,570; that the
above changes and amendment has been consented to and approved by a majority
vote of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
Joseph V. Szczepaniak is the President and Secretary of the Corporation
and has been authorized to execute the foregoing Restated Articles of
Incorporation by resolution of the board of directors, adopted at a meeting of
the directors duly called and that such meeting was held on the 7th day of May,
1999 and that the foregoing Restated Articles of Incorporation sets forth the
text of the Articles of Incorporation as amended to the date of the certificate.
Dated: June _____, 1999
FINDEX.COM, INC.
By: /s/ Joseph V. Szczepaniak
-----------------------------------
Joseph V. Szczepaniak, President
ATTEST:
By: /s/ Joseph V. Szczepaniak
-----------------------------------
Joseph V. Szczepaniak, Secretary
STATE OF ______________ )
) ss.
COUNTY OF ____________ )
I, ________________________________, a notary public, do hereby certify
that on this ___ day of June, 1999, personally appeared before me Joseph V.
Szczepaniak who being by me first duly sworn, declared that he is the President
and Secretary of the FINdex.com, Inc. and that he signed the foregoing document
as President and Secretary of the Corporation, and that the statements therein
contained are true.
- --------------------------------
Notary Public
(Notarial Seal)
My commission expires______________________
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Exhibit 3.2
FINdEX.COM, Inc.
A Nevada Corporation
RESTATED BY LAWS
ARTICLE I
Principal Executive Office
The principal executive office of FINdex.com, Inc. (the "Corporation" ) shall be
at 11640 Arbor Street, Suite 201, Omaha, Nebraska 68144. The Corporation may
also have offices at such other places within or without the State of Nevada as
the board of directors shall from time to time determine.
ARTICLE II
Stockholders
SECTION 1. PLACE OF MEETINGS. All annual and special meetings of
stockholders shall be held at the principal executive office of the Corporation
or at such other place within or without the State of Nevada as the board of
directors may determine and as designated in the notice of such meeting.
SECTION 2. ANNUAL MEETING. A meeting of the stockholders of the
Corporation for the election of directors and for the transaction of any other
business of the Corporation shall be held annually at such date and time as the
board of directors may determine.
SECTION 3. SPECIAL MEETINGS. Special meeting of the stockholders of the
Corporation for any purpose or purposes may be called at any time by the board
of directors of the Corporation, or by a committee of the board of directors
which has been duly designated by the board of directors and whose powers and
authorities, as provided in a resolution of the board of directors or in the
Restated By-Laws of the Corporation, include the power and authority to call
such meetings but such special meetings may not be called by another person or
persons.
SECTION 4. CONDUCT OF MEETINGS. Annual and special meetings shall be
conducted in accordance with these Restated By-Laws or as otherwise prescribed
by the board of directors. The chairman or the chief executive officer of the
Corporation shall preside at such meetings.
SECTION 5. NOTICE OF MEETING. Written notice stating the place, day and
hour of the meeting and the purpose or purposes for which the meeting is called
shall be mailed by the secretary or the officer performing his duties, not less
than ten days nor more than fifty days before the meeting to each stockholder of
record entitled to vote at such a meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail, addressed to
the stockholder at his address as it appears on the stock transfer books or
records of the Corporation as of the record date prescribed in Section 6, with
postage thereon prepaid. If a stockholder be present at a meeting, or in writing
waive notice thereof before or after the meeting, notice of the meeting to such
stockholder shall be unnecessary. When any stockholders' meeting, either annual
or special, is adjourned for thirty days or more, notice of the adjourned
meeting shall be given as in the case of an original meeting. It shall not be
necessary to give any notice of the time and place of any meeting adjourned for
less than thirty days or of the business to be transacted at such adjourned
meeting, other than an announcement at the meeting at which such adjournment is
taken.
SECTION 6. FIXING OF RECORD DATE. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders, or
any adjournment thereof, or stockholders entitled to receive payment of any
dividend, or in order to make a determination of stockholders for any other
proper purpose, the board of directors shall fix in advance a date as the record
date for any such determination of stockholders. Such date in any case shall be
not more than sixty
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days, and in case of a meeting of stockholders, not less than ten days prior to
the date on which the particular action, requiring such a determination of
stockholders, is to be taken.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
SECTION 7. VOTING LISTS. The officer or agent having charge of the
stock transfer books for shares of the Corporation shall make, at least ten days
before each meeting of stockholders, a complete record of the stockholders
entitled to vote at such meeting or any adjournment thereof, with the address of
and the number of shares held by each. The record, for a period of ten days
before such meeting, shall be kept on file at the principal executive office of
the Corporation, whether within or outside the State of Nevada, and shall be
subject to inspection by any stockholder for any purpose germane to the meeting
at any time during usual business hours. Such record shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any stockholder for any purpose germane to the meeting during the
whole time of the meeting. The original stock transfer books shall be prima
facie evidence as to who are the stockholders entitled to examine such record or
transfer books or to vote at any meeting of stockholders.
SECTION 8. QUORUM. One-fourth of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than one-fourth of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
SECTION 9. PROXIES. At all meetings of stockholders, a stockholder may
vote by proxy executed in writing by the stockholder or by his duly authorized
attorney in fact. Proxies solicited on behalf of the management shall be voted
as directed by the stockholder or, in the absence of such direction, as
determined by a majority of the board of directors. No proxy shall be valid
after eleven months from the date of its execution unless otherwise provided I
the proxy.
SECTION 10. VOTING. At each election for directors every stockholder
entitled to vote at such election shall be entitled to one vote for each share
of stock held. Unless otherwise provided by the Restated Certificate of
Incorporation, by statute, or by these By Laws, a majority of those votes cast
by stockholders at a lawful meeting shall be sufficient to pass on a transaction
or matter, except in the election of directors, which election shall be
determined by a plurality of the votes of the shares present in person or by
proxy at the meeting and entitled to vote on the election of directors.
SECTION 11. VOTING OF SHARES IN THE NAME OF TWO OR MORE PERSONS. When
ownership of stock stands in the name of two or more persons, in the absence of
written directions of the Corporation to the contrary, at any meeting of the
stockholders of the Corporation any one or more of such stockholders may cast,
in person or by proxy, all votes to which such ownership is entitled. In the
event an attempt is made to cast conflicting votes, in person or by proxy, by
the several persons in whose name shares of stock stand, the vote or votes to
which these persons are entitled shall be cast as directed by a majority of
those holding such stock and present in person or by proxy at such meeting, but
not votes shall be cast for such stock if a majority cannot agree.
SECTION 12. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation may be voted by any officer, agent or proxy as the
Restated By-Laws of such corporation may prescribe, or, in the absence of such
provision, as the board of directors of such corporation may determine. Shares
held by an administrator, executor, guardian or conservator may be voted by him,
either in person or by proxy, without a transfer of such shares into his name.
Shares standing in the name of a trustee may be voted by him, either in person
or by proxy, but no trustee shall be entitled to vote shares held by him without
a transfer of such shares into his name. Shares
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standing in the name of a receiver may be voted by such receiver, and shares
held by or under the control of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority to do so is contained in
an appropriate order of the court or other public authority by which such
receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the Corporation, nor
shares held by another corporation, if a majority of the shares entitled to vote
for the election of directors of such other corporation are held by the
Corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
SECTION 13. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the chairman of the board or the board of directors may appoint
any persons, other than nominees for office, as inspectors of election to act at
such meeting or any adjournment thereof. The number of inspectors shall be
either one or three. If the board of directors so appoints either one or three
inspectors, that appointment shall not be altered at the meeting. If inspectors
of election are not so appointed, the chairman of the board may make such
appointment at the meeting. In case any person appointed as inspector fails to
appear or fails or refuses to act, the vacancy may be filled by appointment in
advance of the meeting or at the meeting by the chairman of the board or the
president.
Unless otherwise prescribed by applicable law, the duties of such
inspectors shall include: determining the number of shares of stock and the
voting power of each share, the shares of stock represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies;
receiving votes, ballots or consents; hearing and determining all challenges and
questions in any way arising in connection with the right to vote; counting and
tabulating all votes or consents; determining the result; and such acts as may
be proper to conduct the election or vote with fairness to all stockholders.
SECTION 14. NOMINATING COMMITTEE. The board of directors or a committee
appointed by the board of directors shall act as nominating committee for
selecting the management nominees for election as directors. Except in the case
of a nominee substituted as a result of the death or other incapacity of a
management nominee, the nominating committee shall deliver written nominations
to the secretary at least twenty days prior to the date of the annual meeting.
Provided such committee makes such nominations, no nominations for directors
except those made by the nominating committee shall be voted upon at the annual
meeting unless other nominations by stockholders are made in writing and
delivered to the secretary of the Corporation in accordance with the provisions
of the Corporation's Restated Certificate of Incorporation.
SECTION 15. NEW BUSINESS. Any new business to be taken up at the annual
meeting shall be stated in writing and filed with the secretary of the
Corporation in accordance with the provisions of the Corporation's Restated
Certificate of Incorporation. This provision shall not prevent the consideration
and approval or disapproval at the annual meeting of reports of officers,
directors and committees, but in connection with such reports no new business
shall be acted upon at such annual meeting unless stated and filed as provided
in the Corporation's Restated Certificate of Incorporation.
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ARTICLE III
Board of Directors
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be under the direction of its board of directors. The chairman shall
preside at all meetings of the board of directors.
SECTION 2. NUMBER, TERM AND ELECTION. The number of directors of the
Corporation shall be such number, not less than one nor more than 15 (exclusive
of directors, if any, to be elected by holders of preferred stock of the
Corporation), as shall be provided from time to time in a resolution adopted by
the board of directors, provided that no decrease in the number of directors
shall have the effect of shortening the term of any incumbent director, and
provided further that no action shall be taken to decrease or increase the
number of directors from time to time unless at least two-thirds of the
directors then in office shall concur in said action. Exclusive of directors, if
any, elected by holders of preferred stock, vacancies in the board of directors
of the Corporation, however caused, and newly created directorships shall be
filled by a vote of two-thirds of the directors then in office, whether or not a
quorum, and any director so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of the class to which the
director has been chosen expires and when the director's successor is elected
and qualified. The board of directors shall be classified in accordance with the
provisions of Section 3 of this Article III.
SECTION 3. CLASSIFIED BOARD. The board of directors of the Corporation
(other than directors which may be elected by the holders of preferred stock),
shall be divided into three classes of directors which shall be designated Class
I, Class II and Class III. The members of each class shall be elected for a term
of three years and until their successors are elected and qualified. Such
classes shall be as nearly equal in number as the then total number of directors
constituting the entire board of directors shall permit, exclusive of directors,
if any, elected by holders of preferred stock, with the terms of office of all
members of one class expiring each year. Should the number of directors not be
equally divisible by three, the excess director or directors shall be assigned
to Classes I or II as follows: (1) if there shall be an excess of one
directorship over the number equally divisible by three, such extra directorship
shall be classified in Class I; and (2) if there be an excess of two
directorships over a number equally divisible by three, one shall be classified
in Class I and the other in Class II. At the organizational meeting of the
Corporation, directors of Class I shall be elected to hold office for a term
expiring at the first annual meeting of stockholders, directors of Class II
shall be elected to hold office for a term expiring at the second succeeding
annual meeting of stockholders and directors of Class III shall be elected to
hold office for a term expiring at the third succeeding annual meeting
thereafter. Thereafter, at each succeeding annual meeting, directors of each
class shall be elected for three year terms. Notwithstanding the foregoing, the
director whose term shall expire at any annual meeting shall continue to serve
until such time as his successor shall have been duly elected and shall have
qualified unless his position on the board of directors shall have been
abolished by action taken to reduce the size of the board of directors prior to
said meeting.
Should the number of directors of the Corporation be reduced, the
directorship(s) eliminated shall be allocated among classes as appropriate so
that
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the number of directors in each class is as specified in the position(s) to
be abolished. Notwithstanding the foregoing, no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. Should the number of directors of the Corporation be increased, other
than directors which may be elected by the holders of preferred stock, the
additional directorships shall be allocated among classes as appropriate so that
the number of directors in each class is as specified in the immediately
preceding paragraph.
Whenever the holders of any one or more series of preferred stock of
the Corporation shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the board of directors shall include said
directors so elected and not be in addition to the number of directors fixed as
provided in this Article III. Notwithstanding the foregoing, and except as
otherwise may be required By Law, whenever the holders of any one or more series
of preferred stock of the Corporation elect one or more directors of the
Corporation, the terms of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of stockholders.
SECTION 4. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held at such time and place as shall be determined by
resolution of the board of directors without other notice than such resolution.
SECTION 5. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the chairman, the chief executive officer
or one-third of the directors. The person calling the special meetings of the
board of directors may fix any place as the place for holding any special
meeting of the board of directors called by such persons.
Members of the board of the directors may participate in special
meetings by means of telephone conference or similar communications equipment by
which all persons participating in the meeting can hear each other. Such
participation shall constitute presence in person.
SECTION 6. NOTICE. Written notice of any special meeting shall be given
to each director at least two days previous thereto delivered personally or by
telegram or at least seven days previous thereto delivered by mail at the
address at which the director is most likely to be reached. Such notice shall be
deemed to be delivered when deposited in the United States mail so addressed,
with postage thereon prepaid if mailed or when delivered to the telegraph
company if sent by telegram. Any director may waive notice of any meeting by a
writing filed with the secretary. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting 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 meeting of the board of
directors need be specified in the notice or waiver of notice of such meeting.
SECTION 7. QUORUM. A majority of the number of directors fixed by
Section 2 shall constitute a quorum for the transaction of business at any
meeting of the board of directors, but if less than such majority is present at
a meeting, a majority of the directors present may adjourn the meeting from time
to time. Notice of any adjourned meeting shall be given in the same manner as
prescribed by Section 5 of this Article III.
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SECTION 8. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by these By Laws, the
Restated Certificate of Incorporation, or the Nevada Revised Statutes.
SECTION 9. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken by the board of directors at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors.
SECTION 10. RESIGNATION. Any director may resign at any time by sending
a written notice of such resignation to the home office of the Corporation
addressed to the chairman. Unless otherwise specified therein such resignation
shall take effect upon receipt thereof by the chairman.
SECTION 11. VACANCIES. Any vacancy occurring on the board of directors
shall be filled in accordance with the provisions of the Corporation's Restated
Certificate of Incorporation. Any directorship to be filled by reason of an
increase in the number of directors may be filled by the affirmative vote of
two-thirds of the directors then in office or by election at an annual meeting
or at a special meeting of the stockholders held for that purpose. The term of
such director shall be in accordance with the provisions of the Corporation's
Restated Certificate of Incorporation.
SECTION 12. REMOVAL OF DIRECTORS. Any director or the entire board of
directors may be removed only in accordance with the provisions of the
Corporation's Restated Certificate of Incorporation.
SECTION 13. COMPENSATION. Directors, as such, may receive compensation
for service on the board of directors. Members of either standing or special
committees may be allowed such compensation as the board of directors may
determine.
SECTION 14. AGE LIMITATION. No person 70 years or more of age shall be
eligible for election, reelection, appointment or reappointment to the board of
the Corporation. No director shall serve as such beyond the annual meeting of
the Corporation immediately following the director becoming 70 years of age.
This age limitation does not apply to an advisory director.
ARTICLE IV
Committees of the Board of Directors
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, as they may determine to be
necessary or appropriate for the conduct of the business of the Corporation, and
may prescribe the duties, constitution and procedures thereof. Each committee
shall consist of one or more directors of the Corporation appointed by the
chairman. The chairman 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.
The chairman shall have power at any time to change the members of, to
fill vacancies in, and to discharge any committee of the board. Any member of
any such committee may resign at any time by giving notice to the Corporation;
provided, however, that notice to the board, the chairman of the board, the
chief executive
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officer, the chairman of such committee, or the secretary shall be deemed to
constitute notice to the Corporation. Such resignation shall take effect upon
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, acceptance of such resignation shall not be
necessary to make it effective. Any member of any such committee may be removed
at any time, either with or without cause, by the affirmative vote of a majority
of the authorized number of directors at any meeting of the board called for
that purpose.
ARTICLE V
Officers
SECTION 1. POSITIONS. The officers of the Corporation shall be a
chairman, a president, one or more vice presidents, a secretary and a treasurer,
each of whom shall be elected by the board of directors. The board of directors
may designate one or more vice presidents as executive vice president or senior
vice president. The board of directors may also elect or authorize the
appointment of such other officers as the business of the Corporation may
require. The officers shall have such authority and perform such duties as the
board of directors may from time to time authorize or determine. In the absence
of action by the board of directors, the officers shall have such powers and
duties as generally pertain to their respective offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the Corporation
shall be elected annually by the board of directors at the first meeting of the
board of directors held after each annual meeting of the stockholders. If the
election of officers is not held at such meeting, such election shall be held as
soon thereafter as possible. Each officer shall hold office until his successor
shall have been duly elected and qualified or until his death or until he shall
resign or shall have been removed in the manner hereinafter provided. Election
or appointment of an officer, employee or agent shall not of itself create
contract rights. The board of directors may authorize the Corporation to enter
into an employment contract with any officer in accordance with state law; but
no such contract shall impair the right of the board of directors to remove any
officer at any time in accordance with Section 3 of this Article V.
SECTION 3. REMOVAL. Any officer may be removed by vote of two-thirds of
the board of directors whenever, in its judgment, the best interests of the
Corporation will be served thereby, but such removal, other than for cause,
shall be without prejudice to the contract rights, if any, of the person so
removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
SECTION 5. REMUNERATION. The remuneration of the officers shall be
fixed from time to time by the board of directors, and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
SECTION 6. AGE LIMITATION. No person 70 or more years of age shall be
eligible for election, reelection, appointment or reappointment as an officer of
the
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Corporation. No officer shall serve beyond the annual meeting of the
Corporation immediately following the officer becoming 70 or more years of age.
ARTICLE VI
Contracts, Loans, Checks and Deposits
SECTION 1. CONTRACTS. To the extent permitted by applicable law, and
except as otherwise prescribed by the Corporation's Restated Certificate of
Incorporation or these Restated By-Laws with respect to certificates for shares,
the board of directors or the executive committee may authorize any officer,
employee, or agent of the Corporation to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation. Such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by the board of directors. Such authority may be general or confined
to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by one or more officers, employees or
agents of the Corporation in such manner, including in facsimile form, as shall
from time to time be determined by resolution of the board of directors.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in any of its duly authorized depositories as the board of directors may select.
ARTICLE VII
Certificates for Shares and Their Transfer
SECTION 1. CERTIFICATES FOR SHARES. The shares of the Corporation shall
be represented by certificates signed by the chairman of the board of directors
or the president or a vice president and by the treasurer or an assistant
treasurer or the secretary or an assistant secretary of the Corporation, and may
be sealed with the seal of the Corporation or a facsimile thereof. Any or all of
the signatures upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar, other than the
Corporation itself or an employee of the Corporation. If any officer who has
signed or whose facsimile signature has been placed upon such certificate shall
have ceased to be such officer before the certificate is issued, it may be
issued by the Corporation with the same effect as if he were such officer at the
date of its issue.
SECTION 2. FORM OF SHARE CERTIFICATES. All certificates representing
shares issued by the Corporation shall set forth upon the face or back that the
Corporation will furnish to any stockholder upon request and without charge a
full statement of the designations, preferences, limitations, and relative
rights of the shares of each class authorized to be issued, the variations in
the relative rights
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and preferences between the shares of each such series so far as the same have
been fixed and determined, and the authority of the board of directors to fix
and determine the relative rights and preferences of subsequent series.
Each certificate representing shares shall state upon the face thereof:
that the Corporation is organized under the laws of the State of Nevada; the
name of the person to whom issued; the number and class of shares, the
designation of the series, if any, which such certificate represents; the par
value of each share represented by such certificate, or a statement that the
shares are without par value. Other matters in regard to the form of the
certificates shall be determined by the board of directors.
SECTION 3. PAYMENT FOR SHARES. No certificate shall be issued for any
share until such share is fully paid.
SECTION 4. FORM OF PAYMENT FOR SHARES. The consideration for the
issuance of shares shall be paid in accordance with the provisions of the
Corporation's Restated Certificate of Incorporation.
SECTION 5. TRANSFER OF SHARES. Transfer of shares of capital stock of
the Corporation shall be made only on its stock transfer books. Authority for
such transfer shall be given only to the holder of record thereof or by his
legal representative, who shall furnish proper evidence of such authority, or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the Corporation. Such transfer shall be made only on surrender for
cancellation of the certificate for such shares. The person in whose name shares
of capital stock stand on the books of the Corporation shall be deemed by the
Corporation to be the owner thereof for all purposes.
SECTION 6. LOST CERTIFICATES. The board of directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. When authorizing such issue of a new certificate,
the board of directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen, or destroyed
certificate, or his legal representative, to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen,
or destroyed.
ARTICLE VIII
Fiscal Year; Annual Audit
The fiscal year of the Corporation shall end on the last day of
December of each year. The Corporation shall be subject to an annual audit as of
the end of its fiscal year by independent public accountants appointed by and
responsible to the board of directors.
ARTICLE IX
Dividends
Dividends upon the stock of the Corporation, subject to the provisions
of the Restated Certificate of Incorporation, if any, may be declared by the
board of
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directors at any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property or in the Corporation's own stock.
ARTICLE X
Corporation Seal
The corporate seal of the Corporation shall be in such form as the
board of directors shall prescribe.
ARTICLE XI
Amendments
In accordance with the Corporation's Restated Certificate of
Incorporation, these Restated By-Laws may be repealed, altered, amended or
rescinded by the stockholders of the Corporation only by vote of not less than
75% of the voting power of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (considered
for this purpose as one class) cast at a meeting of the stockholders called for
that purpose (provided that notice of such proposed repeal, alteration,
amendment or rescission is included in the notice of such meeting). In addition,
the board of directors may repeal, alter, amend or rescind these Restated
By-Laws by vote of two-thirds of the board of directors at a legal meeting held
in accordance with the provisions of these By Laws.
CERTIFICATE OF DESIGNATION
of
SERIES B CONVERTIBLE PREFERRED STOCK
of
FINDEX.COM, INC.
(formerly EJH Entertainment, Inc.)
Pursuant to Section 78.195 of the
Revised Statutes of the State of Nevada
FINDEX.COM, INC., a corporation organized and existing under the laws
of the State of Nevada (the "Corporation"), does hereby certify that, pursuant
to the authority conferred on its board of directors (the "Board of Directors")
by its articles of incorporation (the "Articles of Incorporation"), as amended,
and in accordance with Section 78.195 of the Revised Statutes of the State of
Nevada ("NRS"), the Board of Directors (or, as to certain matters allowed by
law, a duly authorized committee thereof) adopted the following resolution
establishing a series of 350,000 shares of Preferred Stock of the Corporation
designated as "Series B Convertible Preferred Stock."
RESOLVED, that pursuant to the authority conferred on the
Board of Directors of this Corporation (the "Corporation") by the
Articles of Incorporation, a series of Preferred Stock, $.001 par
value, of the Corporation be and hereby is established and created, and
that the designation and number of shares thereof and the voting and
other powers, preferences and relative, participating, optional or
other rights of the shares of such series and the qualifications,
limitations and restrictions thereof are as follows:
Convertible Preferred Stock
1. DESIGNATION AND AMOUNT. There shall be a series of Preferred Stock
designated as "Series B Convertible Preferred Stock," and the number of shares
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constituting such series shall be 350,000. Such series is referred to herein as
the "Convertible Preferred Stock."
2. STATED CAPITAL. The amount to be represented in stated capital at
all times for each share of Convertible Preferred Stock shall be $.001.
3. RANK. All shares of Convertible Preferred Stock rank prior to all of
the Corporation's Common Stock, par value $.001 per share (the "Common Stock"),
and preferred stock, par value $.001 per share, now or hereafter issued, both as
to payment of dividends and as to distributions of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.
4. DIVIDENDS. The holders of Convertible Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, Common
Stock (at the time legally available therefor) dividends based upon the market
value (as hereinafter defined) on the dividend payment date at the rate of $1.20
per annum per share, and no more, which shall be fully cumulative, shall accrue
without interest from the date of first issuance and shall be payable quarterly
in arrears on March 15, June 15, September 15 and December 15 of each year
commencing September 15, 1999 (except that if any such date is a Saturday,
Sunday or legal holiday then such dividend shall be payable on the next day that
is not a Saturday, Sunday or legal holiday) to holders of record as they appear
on the stock books of the Corporation on such record dates, not more than 60 nor
less than 10 days preceding the payment dates for such dividends, as are fixed
by the Board of Directors. For purposes hereof, the term "legal holiday" shall
mean any day on which banking institutions are authorized to close in The City
of New York. Subject to the next paragraph of this Section 4, dividends on
account of arrears for any past dividend period may be declared and paid at any
time, without reference to any regular dividend payment date. The amount of
dividends payable per share of Convertible Preferred Stock for each quarterly
dividend period shall be computed by dividing the annual dividend amount by
four. The amount of dividends payable for the initial dividend period and any
period shorter than a full quarterly dividend period shall be computed on the
basis of a 360-day year of twelve 30-day months.
No dividends or other distributions, other than dividends payable
solely in shares of Common Stock or other capital stock of the Corporation
ranking junior as to dividends and as to liquidation rights to the Convertible
Preferred Stock, shall be declared, paid or set apart for payment on, and no
purchase, redemption or other acquisition shall be made by the Corporation of,
any shares of Common Stock or other capital stock of the Corporation ranking
junior as to dividends to the Convertible Preferred Stock (the "Junior Dividend
Stock") unless and until all accrued and unpaid dividends on the Convertible
Preferred Stock, including the full dividend for the then current quarterly
dividend period, shall have been paid or declared and set apart for payment.
If at any time any dividend on any capital stock of the Corporation
ranking senior as to dividends to the Convertible Preferred Stock (the "Senior
Dividend Stock") shall be in default, in whole or in part, then (except to the
extent allowed by the terms of such Senior Dividend Stock) no dividend shall be
paid or declared and set apart for payment on the Convertible Preferred Stock,
unless and until all accrued and unpaid dividends with respect to the Senior
Dividend Stock, including the full dividends for the then-current dividend
period, shall have been paid or declared and set apart for payment, without
interest. No full dividends shall be paid or declared and set apart for payment
on any class or series of the Corporation's capital stock ranking, as to
dividends, on a parity with the Convertible Preferred Stock (the "Parity
Dividend Stock") for any period unless full cumulative dividends have been, or
contemporaneously are, paid or declared and set apart for such payment on the
Convertible Preferred Stock for all dividend payment periods terminating on or
prior to the date of payment of such full cumulative dividends. No full
dividends shall be paid or declared and set apart for payment on the Convertible
Preferred Stock for any period unless full cumulative dividends have been, or
contemporaneously are, paid or declared and set apart for payment on the Parity
Dividend Stock for all dividend periods terminating on or prior to the date of
payment of such full cumulative dividends. When dividends are not paid in full
upon the Convertible Preferred Stock and the Parity Dividend Stock, all
dividends paid or declared and set aside for
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payment upon shares of Convertible Preferred Stock and the Parity Dividend Stock
shall be paid or declared and set aside for payment pro rata so that the amount
of dividends paid or declared and set aside for payment per share on the
Convertible Preferred Stock and the Parity Dividend Stock shall in all cases
bear to each other the same ratio that accrued and unpaid dividends per share on
the shares of Convertible Preferred Stock and the Parity Dividend Stock bear to
each other.
Any reference to "distribution" contained in this Section 4 shall not
be deemed to include any distribution made in connection with any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.
5. LIQUIDATION PREFERENCE. In the event of a liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the holders
of Convertible Preferred Stock shall be entitled to receive out of the assets of
the Corporation, whether such assets are stated capital or surplus of any
nature, an amount equal to the dividends accrued and unpaid thereon to the date
of final distribution to such holders, whether or not declared, without
interest, and a sum equal to $20.00 per share, and no more, before any payment
shall be made or any assets distributed to the holders of Common Stock or any
other class or series of the Corporation's capital stock ranking junior as to
liquidation rights to the Convertible Preferred Stock (the "Junior Liquidation
Stock") PROVIDED, HOWEVER that such rights shall accrue to the holders of
Convertible Preferred Stock only in the event that the Corporation's payments
with respect to the liquidation preferences of the holders of capital stock of
the Corporation ranking senior as to liquidation rights to the Convertible
Preferred Stock (the "Senior Liquidation Stock") are fully met. The entire
assets of the Corporation available for distribution after the liquidation
preferences of the Senior Liquidation stock are fully met shall be distributed
ratably among the holders of the Convertible Preferred Stock 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 Convertible Preferred Stock in
proportion to the respective preferential amounts to which each is entitled (but
only to the extent of such preferential amounts). Neither a consolidation or
merger of the Corporation with another corporation nor a sale or transfer of all
or part of the Corporation's assets for cash, securities or other property will
be considered a liquidation, dissolution or winding up of the Corporation.
6. OPTIONAL REDEMPTIONS FOR CASH. Subject to the restrictions in
Section 4 above, shares of this Series shall be redeemable at the option of the
Corporation at any time at the redemption price of $20.00 per share plus, in
each case, an amount equal to the dividends accrued and unpaid thereon to the
redemption date.
Notwithstanding the foregoing, the Corporation may not redeem any
shares of Preferred Stock unless the current market value of the Corporation's
Common Stock, as defined in Section 8(c)(iv), immediately prior to the
redemption date is not less than $18.00 per share. The Corporation, at its
option, may at any time the current market value is not less than said amount,
redeem in whole at any time, or from time to time in part, the Convertible
Preferred Stock on any date set by the Board of Directors
Not less than 20 nor more than 50 days prior to the date fixed for any
redemption of shares of this Series pursuant to this Section 6, a notice
specifying the time and place of such redemption and the number of shares to be
redeemed shall be given by first class mail, postage prepaid, to the holders of
record of the shares of this Series to be redeemed at their respective addresses
as the same shall appear on the books of the Corporation, calling upon each such
holder of record to surrender to the Corporation on the redemption date at the
place designated in such notice his certificate or certificates representing the
number of shares specified in such notice of redemption. Neither failure to mail
such notice, nor any defect therein or in the mailing thereof, to any particular
holder shall affect the sufficiency of the notice or the validity of the
proceedings for redemption with respect to the other holders. Any notice which
was mailed in the manner herein provided shall be conclusively presumed to have
been duly given whether or not the holder receives the notice. On or after the
redemption date each holder of shares of this Series to be redeemed shall
present and surrender his certificate or certificates for such shares to the
Corporation at the place designated in such notice and thereupon the redemption
price of such shares shall be paid to or on the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. In case less than
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all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
If a notice of redemption has been given pursuant to this Section 6 and
if, on or before the date fixed for redemption, the funds necessary for such
redemption shall have been set aside by the Corporation, separate and apart from
its other funds, in trust for the PRO RATA benefit of the holders of the shares
so called for redemption, then, notwithstanding that any certificates for such
shares have not been surrendered for cancellation, on the redemption date
dividends shall cease to accrue on the shares of cancellation, on the redemption
date dividends shall cease to accrue on the shares of this Series to be
redeemed, and at the close of business on the redemption date the holders of
such shares shall cease to be stockholders with respect to such shares and shall
have no interest in or claims against the Corporation by virtue thereof and
shall have no voting or other rights with respect to such shares, except the
right to receive the moneys payable upon such redemption, without interest
thereon, upon surrender (and endorsement, if required by the Corporation) of
their certificates, and the shares evidenced thereby shall no longer be
outstanding. Subject to applicable escheat laws, any moneys so set aside by the
Corporation and unclaimed at the end of two years from the redemption date shall
revert to the general funds of the Corporation, after which reversion the
holders of such shares so called for redemption shall look only to the general
funds of the Corporation for the payment of the redemption price. Any interest
accrued on funds so deposited shall be paid to the Corporation from time to
time.
If a notice of redemption has been given pursuant to this Section 6,
and any holder of shares of this Series shall, prior to the close of business on
the fifth day preceding the date fixed for redemption, give written notice to
the Corporation pursuant to Section 8 below of the conversion of any or all of
these shares to be redeemed held by such holder (accompanied by a certificate or
certificates for such shares, duly endorsed or assigned to the Corporation, and
any necessary transfer tax payment, as required by Section 8 below), then such
redemption shall not become effective as to such shares to be converted and such
conversion shall become effective as provided in Section 8 below and any funds
which have been deposited by the Corporation, or on its behalf, with a paying
agent or segregated and held in trust by the Corporation for the redemption of
such shares shall (subject to any right of the holder of such shares to receive
the dividend payable thereon as provided in Section 8 below) immediately upon
such conversion be returned to the Corporation or, if then held in trust by the
Corporation, shall be discharged from such trust.
In every case of redemption of less than all of the outstanding shares
of this Series pursuant to this Section 6, the shares to be redeemed shall be
selected either by lot or pro rata, as may be prescribed by resolution of the
Board of Directors of the Corporation, provided that only whole shares shall be
selected for redemption.
7. REDEMPTION AT OPTION OF HOLDERS.
(a) In the event (i) any person with the defined meaning as
used in Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), or any successor provision becomes the
beneficial owner (as defined in Rule 13d-3 under the 1934 Act, or any
successor provision) of more than 50% of the Common Stock (a "Share
Acquisition") or the Corporation is a party to a business combination,
including a merger or consolidation or the sale of all or substantially
all of its assets and (ii) either (1) as a result of such a Share
Acquisition or business combination, the Convertible Preferred Stock
thereafter is not convertible into common stock of the Corporation or
of the ultimate parent of the Corporation which common stock is listed
or admitted to trading on a national securities exchange, quoted on the
NASDAQ Stock Market (either National Market System or Small Cap
Market), or sales are reported on the electronic bulletin board by
Bloomberg Financial Markets or the over-the-counter market by the
National Quotation Bureau, LLC, or (2) all or substantially all of the
consideration paid in such Share Acquisition or business combination
does not consist of common stock of the ultimate parent of the
Corporation which common stock is listed or admitted to trading on a
national securities exchange, quoted on the NASDAQ Stock Market (either
National Market System or Small Cap Market), or sales are reported on
the
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electronic bulletin board by Bloomberg Financial Markets or the
over-the-counter market by the National Quotation Bureau, LLC, then
each holder of Convertible Preferred Stock, subject to the conditions
of this Section 7, shall have the option to require the Corporation to
redeem all of the shares of Convertible Preferred Stock owned by such
holder at $20.00 per share plus accrued and unpaid dividends to the
redemption date.
In the event of any Share Acquisition meeting the conditions
specified in clauses (i) and (ii) of the first paragraph of this
Section 7, the Corporation shall, on the date that is 45 days after the
date of such Share Acquisition, upon the written demand of any record
holder of Convertible Preferred Stock which so requests, redeem all of
the shares of Convertible Preferred Stock owned by such holder at
$20.00 per share plus accrued and unpaid dividends to such redemption
date. Within 10 days after the Corporation has knowledge that such
Share Acquisition has occurred, it shall mail to each record holder of
Convertible Preferred Stock a form of written demand to be used by such
holder to exercise his right of redemption (a "Demand Form") and a
notice which shall disclose the occurrence of the Share Acquisition and
the right of such holder to require the Corporation to redeem such
Convertible Preferred Stock pursuant to this Section 7, and shall state
the redemption date, the redemption price, the place or places of
payment, that payment will be made upon presentation and surrender of
the shares of Convertible Preferred Stock, the date of which such
holder must notify the Corporation if it elects to require the
Corporation to make such redemption, that on and after the redemption
date, dividends will cease to accumulate on such shares, the
then-effective conversion rate pursuant to Section 8, and that the
right of holders to convert shall terminate at the close of business on
the fifth business day prior to the redemption date. Within 15 days
after the Corporation has knowledge that such Share Acquisition has
occurred, it also shall deposit in trust with a bank having a combined
capital and surplus in excess of $50,000,000, as trustee, for the
benefit of holders of Convertible Preferred Stock which elect to
require the Corporation to redeem such stock pursuant to this Section
7, funds sufficient to redeem on the redemption date all of the
Convertible Preferred Stock outstanding on the date of delivery of the
notice referred to above. Each record holder of Convertible Preferred
Stock that elects to require the Corporation to redeem on the
redemption date all of the shares of Convertible Preferred Stock that
such holder owns shall deliver to the Corporation not later than the
redemption date a completed Demand Form relating to the Convertible
Preferred Stack to be redeemed. After the redemption date, the
Corporation shall be entitled to receive from the funds which it
deposited in trust for the redemption of Convertible Preferred Stock on
such redemption date an amount equal to that portion of such funds
which was deposited it respect of shares of Convertible Preferred Stock
which the holders thereof did not elect to have redeemed pursuant to
this Section 7. The term "redemption date," as used in connection with
a redemption resulting from a Share Acquisition, shall mean the close
of business on the 45th day after the date of the Share Acquisition.
In the event of any business combination meeting the
conditions specified in clauses (i) and (ii) of the first paragraph of
this, Section 7, the Corporation shall, immediately prior to the
effectiveness of such business combination, upon the demand of any
record holder of Convertible Preferred Stock that so requests, redeem
all of the shares of Convertible Preferred Stock owned by each such
holder at $20.00 per share plus accrued and unpaid dividends to the
date on which such business combination occurs. Not later than 35 days
prior to the effectiveness of any such business combination, the
Corporation shall mail to each record holder of Convertible Preferred
Stock a Demand Form and a notice which shall disclose such business
combination and the right of such holder of Convertible Preferred Stock
to require the Corporation to redeem such Convertible Preferred Stock
pursuant to this Section 7 and shall state the anticipated redemption
date, the redemption price, the place or places of payment, that
payment will be made upon presentation and surrender of the shares of
Convertible Preferred Stock, the date by which such holder must notify
the Corporation if it elects to require the Corporation to make such
redemption, that on and after the redemption date, dividends will cease
to accumulate on such shares, the then
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effective conversion rate pursuant to Section 8, and that the right of
holders to convert shall terminate at the close of business on the
fifth business day prior to the redemption date. Prior to the
effectiveness of such business combination, the Corporation also shall
deposit in trust with a bank having a combined capital and surplus in
excess of $50,000,000, as trustee, for the benefit of holders of
Convertible Preferred Stock which elect to require the Corporation to
redeem such stock pursuant to this Section 7, immediately available
funds sufficient to redeem on the redemption date all of the
Convertible Preferred Stock which, pursuant to this Section 7, holders
have elected to require the Corporation to redeem. Each record holder
of Convertible Preferred Stock that elects to require the Corporation
to redeem on the redemption date all of the Convertible Preferred Stock
which it owns must submit to the Corporation not later than the
redemption date a completed Demand Form relating to the Convertible
Preferred Stock to be redeemed. The Corporation agrees that it will not
complete any business combination described in this Section 7 unless
proper provision has been made to satisfy its obligations under this
Section 7. The term "redemption date," as used in connection with a
redemption upon the occurrence of a business combination under this
Section 7, shall mean the time immediately prior to the effectiveness
of such business combination referred to herein.
Any notice by the Corporation which is mailed as herein
provided shall be conclusively presumed to have been duly given whether
or not the holder of Convertible Preferred Stock receives such Notice;
and failure to give such notice by mail, or any defect in such notice,
to the holders of any shares shall not affect the validity of the
proceedings for the redemption of any other shares of Convertible
Preferred Stock. An election by a holder of Convertible Preferred Stock
to have the Corporation redeem such stock pursuant to this Section 7
shall become irrevocable on the relevant redemption date on or after
the date fixed for redemption as stated in any notice delivered by the
Corporation, each holder of the shares called for redemption shall
surrender the certificates evidencing such shares to the Corporation at
the place designated in such notice and shall thereupon be entitled to
receive payment of the relevant redemption price in accordance with the
terms of this Section 7. If any such certificates shall be so
surrendered in connection with a redemption required to be made as a
result of any business combination described in the first paragraph of
this Section 7 and for whatever reason such business combination will
not become effective, then the Corporation shall cause such
certificates to be returned promptly to the respective holders thereof.
If less than all the shares represented by any such surrendered
certificates are redeemed, a new certificate shall be issued
representing the unredeemed shares. If, on the date fixed for
redemption under any provision of this Section 7, funds necessary for
the redemption shall be available therefor and shall have been
deposited in trust as required by this Section 7, then in the case of
any shares of Convertible Preferred Stock to be redeemed as a result of
a Share Acquisition, after the close of business on the redemption date
and, in the case of any shares of Convertible Preferred Stock to be
redeemed as a result of a business combination described in the first
paragraph of this Section 7, after the effectiveness of the business
combination, notwithstanding that the certificates evidencing any
shares which the holders thereof had elected to have redeemed shall not
have been surrendered, the dividends with respect to such shares shall
cease to accrue, such shares shall no longer be deemed outstanding, the
holders thereof shall cease to be stockholders, and all rights
whatsoever with respect to such shares (except the right of the holders
to receive the relevant redemption price without interest upon
surrender of their certificates therefor) shall terminate.
(b) In the event (i) the Common Stock of the Corporation (as
defined in paragraph (a) of Section 8) is not registered as required by
paragraph (b) of Section 10, (ii) Common Stock of the Corporation is
not listed or admitted to trading on a national securities exchange,
quoted on the NASDAQ Stock Market (either National Market System or
Small Cap Market), or sales are reported on the electronic bulletin
board by Bloomberg Financial Markets or the over-the-counter market by
the National Quotation Bureau, LLC, or (iii) the Corporation has not
fixed a date for redemption of the Convertible Preferred Stock, prior
to one year after the date of first issuance, then
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each holder of Convertible Preferred Stock, subject to the conditions
of this Section 7, shall have the option to require the Corporation to
redeem all of the shares of Convertible Preferred Stock owned by such
holder in the manner provided in Section 6.
(c) In the event of failure by the Corporation for 30 days
after notice to it to comply with provisions of this Certificate of
Designation or, without such notice; if any of the representations or
warranties of the Company made in or in connection with the offering
and sale of the Convertible Preferred Stock (including those
representations and warranties incorporated by reference therein) are
untrue in any respect, the result of which could reasonably be expected
to have, singly or in the aggregate, a material adverse effect upon the
financial condition of the Corporation; the holders of at least a
majority of the then outstanding Convertible Preferred Stock may
require the Corporation to redeem all of the shares of Convertible
Preferred Stock in the manner provided in Section 6.
8. CONVERSION PRIVILEGE.
(a) RIGHT OF CONVERSION. Each share of Convertible Preferred
Stock shall be convertible at the option of the holder thereof, at any
time prior to the close of business on the date fixed by the
Corporation for redemption of such share as herein provided, into fully
paid and nonassessable shares of Common Stock and such other securities
and property as hereinafter provided, initially at the rate of one (1)
share of Common Stock for each full share of Convertible Preferred
Stock.
For the purpose of this Certificate of Designation, the term
"Common Stock" shall initially mean the class designated as Common
Stock, par value $.001 per share, of the Corporation as of June 1,
1999, subject to adjustment as hereinafter provided.
(b) CONVERSION PROCEDURE. Any holder of shares of Convertible
Preferred Stock desiring to convert such shares into Common Stock shall
surrender the certificate or certificates for such shares of
Convertible Preferred Stock at the office of the transfer agent for the
Convertible Preferred Stock, which certificate or certificates, if the
Corporation shall so require, shall be duly endorsed to the Corporation
or in blank, or accompanied by proper instruments of transfer to the
Corporation or in blank, accompanied by irrevocable written notice to
the Corporation that the holder elects so to convert such shares of
Convertible Preferred Stock and specifying the name or names (with
address) in which a certificate or certificates for Common Stock are to
be issued.
No adjustments in respect of any dividend on the Common Stock issued
upon conversion shall be made upon the conversion of any shares of Convertible
Preferred Stock.
Any unpaid dividends on shares surrendered for conversion shall be paid
upon the conversion of any shares of Convertible Preferred Stock by issuing
additional shares of Common Stock with an aggregate value (as defined below)
equal to all accrued and unpaid dividends on the shares of Convertible Preferred
Stock converted.
The Corporation will, as soon as practicable after such deposit of
certificates for Convertible Preferred Stock accompanied by the written notice
and, compliance with any other conditions herein contained, deliver at the
office of the transfer agent to the person for whose account such shares of
Convertible Preferred Stock were so surrendered, or to his nominee or nominees,
certificates for the number of full shares of Common Stock to which he shall be
entitled as aforesaid, together with a cash adjustment of any fraction of a
share as hereinafter provided. Subject to the following provisions of this
paragraph, such conversion shall be deemed to have been made as of the date of
such surrender of the shares of Convertible Preferred Stock to be converted, and
the person or person entitled to receive the Common Stock deliverable upon
conversion of such Convertible Preferred Stock shall be treated for all purposes
as the record holder or holders of such Common Stock on such date; provided,
however, that the Corporation shall not be
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required to convert any shares of Convertible Preferred Stock while the stock
transfer books of the Corporation are closed for any purpose, but the surrender
of Convertible Preferred Stock for conversion during any period while such books
are so closed shall become effective for conversion immediately upon the
reopening of such books as if the surrender had been made on the date of such
reopening, and the conversion shall be at the conversion rate in effect on such
date.
(c) ADJUSTMENT OF CONVERSION RATE. The number of shares of
Common Stock and number or amount of any other securities and property
as hereinafter provided into which a share of Convertible Preferred
Stock is convertible (the "conversion rate") shall be subject to
adjustment from time to time as follows:
(i) In case the Corporation shall (1) pay a dividend
or make a distribution on its Common Stock that is paid or
made (A) in other shares of stock of the Corporation or (B) in
rights to purchase stock or other securities if such rights
are not separable from the Common Stock except upon the
occurrence of a contingency, (2) subdivide its outstanding
shares of Common Stock into a greater number of shares or (3)
combine its outstanding shares of Common Stock into a greater
number of shares, then in each such case the conversion rate
in effect immediately prior thereto shall be adjusted
retroactively as provided below so that the holder of any
shares of Convertible Preferred Stock thereafter surrendered
for conversion shall be entitled to receive the number of
shares of Common Stock of the Corporation and other shares and
rights to purchase stock or other securities (or, in the event
of the redemption of any such shares or rights, any cash,
property or securities paid in respect of such redemption)
which such holder would have owned or have been entitled to
receive after the happening of any of the events described
above had such shares of Convertible Preferred Stock been
converted immediately prior to the happening of such event. An
adjustment made pursuant to this subparagraph (i) shall become
effective immediately after the record date in the case of a
dividend or distribution and shall become effective
immediately after the effective date in the case of a
subdivision or combination.
(ii) In case the Corporation shall issue rights or
warrants to all holders of its Common Stock entitling them
(for a period expiring within 45 days after the date fixed for
determination mentioned below) to subscribe for or purchase
shares of Common Stock at a price per share less than the
current market price per share (determined as provided below)
of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, then
the conversion rate in effect at the opening of business on
the day following the date fixed for such determination shall
be increased by multiplying such conversion rate by a fraction
of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common
Stock so offered for subscription or purchase and the
denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number
of shares of Common Stock so offered for subscription or
purchase would purchase at such current market price, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination: provided, however, in the event that all the
shares of Common Stock offered for subscription or purchase
are not delivered upon the exercise of such rights or
warrants, upon the expiration of such rights or warrants the
conversion rate shall be readjusted to the conversion rate
which would have been in effect had the numerator and the
denominator of the foregoing fraction and the resulting
adjustment been made based upon the number of shares of Common
Stock actually delivered upon the exercise of such rights or
warrants rather than upon the number of shares of Common Stock
offered for subscription or purchase. For the purposes of this
subparagraph (ii), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury
of the Corporation.
(iii) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness,
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cash (excluding ordinary cash dividends paid out of retained
earnings of the Corporation), other assets or rights or
warrants to subscribe for or purchase any security (excluding
those referred to in subparagraphs (i) and (ii) above), then
in each such case the conversion rate shall be adjusted
retroactively so that the same shall equal the rate determined
by multiplying the conversion rate in effect immediately prior
to the close of business on the date fixed for the
determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the
current market price per share (determined as provided below)
of the Common Stock on the date fixed for such determination
and the denominator shall be such current market price per
share of the Common Stock less the amount of cash and the then
fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a
resolution of the Board of Directors) of the portion of the
assets, rights or evidences of indebtedness so distributed
applicable to one share of Common Stock, such adjustment to
become effective immediately prior to the opening of business
on the day following the date fixed for the determination of
stockholders entitled to receive such distribution.
(iv) For the purpose of any computation under Section
4, Section 6 or subparagraphs (ii) and (iii) of paragraph (c)
of this Section 8, the current market price per share of
Common Stock on any date shall be deemed to be the average of
the daily closing prices for the 30 consecutive trading days
commencing with the 45th trading day before the day in
question. The closing price for each day shall be the reported
last sales price regular way or, in case no such reported sale
takes place on such day, the average of the reported closing
bid and asked prices regular way, in either case on the market
on which the Common Stock trades in the following order: the
New York Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading (based on the aggregate dollar value of all securities
listed or admitted to trading, on the NASDAQ National Market
System, on the NASDAQ Small Cap Market, the average of the
closing bid and asked prices on the Over-the Counter Bulletin
Board, and the average of the closing bid and asked prices on
the over-the-counter market as furnished by National Quotation
Bureau, LLC, New York, New York, any New York Stock Exchange
member firm selected from time to time by the Corporation for
that purpose, or, if such prices are not available, the fair
market value set by, or in a manner established by, the Board
of Directors of the Corporation in good faith. "Trading day"
shall mean a day on which the market on which the market used
to determine the closing price is open for the transaction of
business or the reporting of trades or, if the closing price
is not so determined, a day on which the New York Stock
Exchange is open for the transaction of business.
(v) No adjustment in the conversion rate shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such rate; PROVIDED, HOWEVER, that
the Corporation may make any such adjustment its election; and
PROVIDED FURTHER, that any adjustments which by reason of this
subparagraph (v) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Section 8 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as
the case may be.
(vi) Whenever the conversion rate is adjusted as
provided in any provision of this Section 8:
(1) the Corporation shall compute the
adjusted conversion rate in accordance with this
Section 8 and shall prepare a certificate signed by
the principal financial officer of the Corporation
setting forth the adjusted conversion rate and
showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall
forthwith be filed with the transfer agent of the
Convertible Preferred Stock; and
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(2) a notice stating that the conversion
rate has been adjusted and setting forth the adjusted
conversion rate shall forthwith be required, and as
soon as practicable after it is required, such notice
shall be mailed by the Corporation to all record
holders of Convertible Preferred Stock at then last
addresses as they shall appear in the stock transfer
books of the Corporation.
(vii) In the event that at any time, as a result of
any adjustment made pursuant to this Section 8, the holder of
any shares of Convertible Preferred Stock thereafter
surrendered for conversion shall become entitled to receive
any shares of the Corporation other than shares of Common
Stock or to receive any other securities, the number of such
other shares or securities so receivable upon conversion of
any share of Convertible Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions contained
in this Section 8 with respect to the Common Stock.
(d) NO FRACTIONAL SHARES. No fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon
conversion of Convertible Preferred Stock. If more than one certificate
representing shares of Convertible Preferred Stock shall be surrendered
for conversion at one time by the same holder, the number of full
shares issuable upon conversion thereof shall be computed on the basis
of the aggregate number of shares of Convertible Preferred Stock so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of any shares of
Convertible Preferred Stock, the Corporation will pay a cash adjustment
in respect of such fractional interest in an amount equal to the same
fraction of the market price per share of Common Stock (as determined
by the Board of Directors or in any manner prescribed by the Board of
Directors, which, so long as the Common Stock is listed on an exchange
or on NASDAQ, shall be the reported last sale price on the such
exchange or NASDAQ) at the close of business on the day of conversion.
(e) RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE OF ASSETS.
In case of any reclassification of the Common Stock, any consolidation
of the Corporation with, or merger of the Corporation into, any other
person, any merger of another person into the Corporation (other than a
merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the
Corporation), any sale or transfer of all or substantially all of the
assets of the Corporation or any compulsory share exchange pursuant to
which share exchange the Common Stock is converted into other
securities, cash or other property, then lawful provision shall be made
as part of the terms of such transaction whereby the holder of each
share of Convertible Preferred Stock then outstanding shall have the
right thereafter, during the period such share shall be convertible, to
convert such share only into the kind and amount of securities, cash
and other property receivable upon such reclassification,
consolidation, merger, sale, transfer or share exchange by a holder of
the number of shares of Common Stock of the Corporation into which such
share of Convertible Preferred Stock might have been converted
immediately prior to such reclassification, consolidation, merger,
sale, transfer or share exchange assuming such holder of Common Stock
of the corporation (i) is not a person with which the Corporation
consolidated or into which the Corporation merged or which merged into
the Corporation, to which such sale or transfer was made or a party to
such share exchange, as the case may be ("constituent person"), or an
affiliate of a constituent person and (ii) failed to exercise his
rights of election, if any, as to the kind or amount of securities,
cast, and other property receivable upon such reclassification,
consolidation, merger, sale, transfer or share exchange (provided that
if the kind or amount of securities, cash and other property receivable
upon such reclassification, consolidation, merger, sale, transfer or
share exchange is not the same for each share of Common Stock of the
Corporation held immediately prior to such consolidation, merger, sale
or transfer by others than a constituent person or an affiliate thereof
and in respect of which such rights of election shall not have been
exercised ("non-electing share"), then the kind and amount of
securities, cash and other property receivable upon such
reclassification,
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consolidation, merger, sale, transfer or share exchange by each
non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). The
Corporation, the person formed by such consolidation or resulting from
such merger or which acquires such assets or which acquires the
Corporation's shares, as the case maybe, shall make provisions in its
certificate or articles of incorporation or other constituent document
to establish such right. Such certificate or articles of incorporation
or other constituent document shall provide for adjustments which, for
events subsequent to the effective date of such certificate or articles
of incorporation or other constituent document, shall be as nearly
equivalent as may be practicable to the adjustments provided for in
this Section 8. The above provisions shall similarly apply to
successive reclassifications, consolidations, mergers, sales, transfers
or share exchanges.
(f) RESERVATION OF SHARES; TRANSFER TAXES; ETC. The
Corporation shall at all times serve and keep available, out of its
authorized and unissued stock, solely for the purpose of effecting the
conversion of the Convertible Preferred Stock, such number of shares of
its Common Stock free of preemptive rights as shall from time to time
be sufficient to effect the conversion of all shares of Convertible
Preferred Stock from time to time outstanding. The Corporation shall
from time to time, in accordance with the laws of the State of Nevada,
increase the authorized number of shares of Common Stock if at any time
the number of shares of Common Stock not outstanding shall not be
sufficient to permit the conversion of all the then outstanding shares
of Convertible Preferred Stock.
If any shares of Common Stock required to be reserved for purposes of
conversion of the Convertible Preferred Stock hereunder require registration
with or approval of any governmental authority under any Federal or State law
before such shares may be issued upon conversion, the Corporation will in good
faith and as expeditiously as possible endeavor to cause such shares to be duly
registered or approved, as the case may be. If the Common Stock is listed on the
New York Stock Exchange or any other national securities exchange, the
Corporation will, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all shares of Common
Stock issuable upon conversion of the Convertible Preferred Stock.
The Corporation will pay any and all issue or other taxes that may be
payable in respect of any issue or delivery of shares of Common Stock on
conversion of the Convertible Preferred Stock. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of Common Stock (or other securities
or assets) in a name other than that which the shares of Convertible Preferred
Stock so converted were registered, and no such issue or delivery shall be made
unless and until the person requesting such issue has paid to the Corporation
the amount of such tax or has established, to the satisfaction of the
Corporation, that such tax has been paid.
Before taking any action which would cause an adjustment reducing the
conversion rate such that the effective conversion price (for all purposes an
amount equal to $20.00 divided by the conversion rate applicable to one share of
Convertible Preferred Stock as in effect at such time) would be below the then
stated value of the Common Stock, the Corporation will take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid and nonassessable shares of
Common Stock at the conversion rate as so adjusted.
(g) PRIOR NOTICE OF CERTAIN DEFAULTS. In case:
(i) The Corporation shall (1) declare any dividend
(or any other distribution) on its Common Stock, other than
(A) a dividend payable in shares of Common Stock or (B) a
dividend payable in cash out of its retained earnings other
than any special or nonrecurring or other extraordinary
dividend or (2) declare or authorize a redemption or
repurchase of in excess of 10% of the then-outstanding shares
of Common Stock; or
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(ii) the Corporation shall authorize the granting to
the holders of Common Stock of rights or warrants to subscribe
for or purchase any shares of stock of any class or of any
other rights or warrants (other than any rights specified in
paragraph (c)(i)(1)(B) of this Section 8); or
(iii) of any reclassification of Common Stock (other
than a subdivision or combination of the outstanding Common
Stock, or a change in par value, or from par value to no par
value, or from no par value to par value), or of any
consolidation or merger to which the Corporation is a party
and for which approval of any stockholders of the Corporation
shall be required, or of the sale or transfer of all or
substantially all of the assets of the Corporation or of any
compulsory share exchange whereby the Common Stock is
converted into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer
agent for the Convertible Preferred Stock, and shall cause to be mailed to the
holders of record of the Convertible Preferred Stock, at their last address as
they shall appear upon the stock transfer books of the Corporation, at least 15
days prior to the applicable record date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption or granting of rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, redemption, rights or warrants are
to be determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
(h) OTHER CHANGES IN CONVERSION RATE. The Corporation from
time to time may increase the conversion rate by any amount for any
period of time if the period is at least 20 days and if the increase is
irrevocable during the period whenever the conversion rate is so
increased, the Corporation shall mail to holders of record of the
Convertible Preferred Stock a notice of the increase at least 15 days
before the date the increased conversion rate takes effect, and such
notice shall state the increased conversion rate and the period it will
be in effect.
The Corporation may make such increases in the conversion rate, in
addition to those required or allowed by this Section 8, as shall be determined
by it, as evidenced by a resolution of the Board of Directors, to be advisable
in order to avoid or diminish any income tax to holders of Common Stock
resulting from any dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes.
9. VOTING RIGHTS.
(a) GENERAL. The holders of Convertible Preferred Stock will
not have any voting rights except as set forth below or as otherwise
from time to time required by law. In connection with any right to
vote, each holder of Convertible Preferred Stock will have one vote for
each share held.
(b) ELECTION OF DIRECTOR.
(i) So long as any shares of this Series are
outstanding, the holders of shares of this Series, voting as a
class, shall be entitled to elect one director to fill one
directorships. Such right to vote as a single class to elect
one Director shall continue so long as any shares of this
Series are outstanding and, when all such shares are no longer
outstanding, such right to elect one Director separately as a
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class shall cease. As soon as such right to elect one Director
as a class shall have so vested, unless a majority of the
holders of such shares have notified the Corporation in
writing of the person to be elected a Director, the
Corporation shall call a special meeting of the holders of
such shares to fill such newly-created directorship for the
election of a Director. Such special meeting shall be held
within 30 days after the right to so elect is vested at the
place and upon the notice provided by law and in the By-laws
of the Corporation, as amended from time to time (the
"By-laws"), provided that the Corporation shall not be
required to call such a special meeting if such right is
vested less than 60 days before the date fixed for the next
ensuing annual meeting of stockholders of the Corporation, at
which meeting such director may be elected by the holders of
such shares of this Series.
(ii) So long as any shares of this Series are
outstanding, the By-laws shall contain provisions ensuring
that the number of Directors of the Corporation shall at all
times be such that the exercise, by the holders of shares of
this Series of the right to elect a Director under the
circumstances provided in paragraph (i) of this subclause (b)
will not contravene any provisions of the Corporation's
Certificate of Incorporation or By-laws.
(iii) Any Director elected pursuant to paragraph (i)
of this subclause (b) shall serve until the earlier of (A) the
next annual meeting of the stockholders of the Corporation and
the election (by the holders of shares of this Series) and
qualification of their respective successors or (B) the date
upon which all the shares of this Series shall have been
redeemed and are no longer outstanding. If, prior to the end
of the term of any Director elected as aforesaid, a vacancy in
the office of such Director shall occur while any shares of
this Series are outstanding by reason of death, resignation or
disability, such vacancy shall be filled for the unexpired
term by election as aforesaid of a new Director for the
unexpired term of such former Director.
(c) CLASS VOTING RIGHTS. So long as the Convertible Preferred
Stock is outstanding, the Corporation shall not, without the
affirmative vote or consent of the holders of at least a majority of
all outstanding Convertible Preferred Stock voting separately as a
class, (i) amend, alter or repeal (by merger or otherwise) any
provision of the Articles of Incorporation or the By-Laws of the
Corporation, as amended, so as adversely to affect the relative rights,
preferences, qualifications, limitations or restrictions of the
Convertible Preferred Stock, (ii) authorize or issue, or increase the
authorized amount of, any additional class or series of stock, or any
security convertible into stock of such class or series, ranking prior
to the Convertible Preferred Stock in respect of the payment of
dividends or upon liquidation, dissolution or winding up of the
Corporation or (iii) effect any reclassification of the Convertible
Preferred Stock. A class vote on the part of the Convertible Preferred
Stock shall, without limitation, specifically not be deemed to be
required (except as otherwise required by law or resolution of the
Corporation's Board of Directors) in connection with: (i) the
authorization, issuance or increase in the authorized amount of any
shares of any other class or series of stock which ranks junior to, or
on a parity with, the Convertible Preferred Stock in respect of the
payment of dividends and distributions upon liquidation, dissolution or
winding up of the Corporation; or (ii) the authorization, issuance or
increase in the amount of any bonds, mortgages, debentures or other
obligations of the Corporation.
The affirmative vote or consent of the holders of a majority of the
outstanding Convertible Preferred Stock, voting or consenting separately as a
class, shall be required to (a) authorize any sale, lease or conveyance of all
or substantially all of the assets of the Corporation, or (b) approve any
merger, consolidation or compulsory share exchange of the Corporation with or
into any other person unless (i) the terms of such merger, consolidation or
compulsory share exchange do not provide for a change in the terms of the
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Convertible Preferred Stock and (ii) the Convertible Preferred Stock is, after
such merger, consolidation or compulsory share exchange on a parity with or
prior to any other class or series of capital stock authorized by the surviving
corporation as to dividends and upon liquidation, dissolution or winding up
other than any class or series of stock of the Corporation prior to the
Convertible Preferred Stock as may have been created with the affirmative vote
or consent of the holders of at least 66-2/3% of the Convertible Preferred Stock
(or other than a class or series into which such prior stock is converted as a
result of such merger, consolidation or share exchange).
10. REGISTRATION RIGHTS.
(a) DEFINITIONS. As used in this Section 10:
(i) The terms "register," "registered" and
"registration" refer to a registration effected by preparing
and filing with the Securities and Exchange Commission (the
"SEC") a registration statement pursuant to the Securities Act
of 1933, as amended (the "Act"), and the declaration or order
of effectiveness of such registration statement.
(ii) The term "Registerable Securities" means shares
of (A) Common Stock issuable upon conversion of the
Convertible Preferred Stock, (B) stock or debt securities
issued in conversion of the Registerable Securities or in lieu
of the Registerable Securities in any reorganization which
have not been sold to the public and (iii) stock issued in
respect of the stock referred in (A) and (B) as a result of a
stock split, stock dividend, recapitalization or combination,
which have not been sold to the public.
(iii) The term "Holder" means the present or and
future holder of Convertible Preferred Stock
(b) REGISTRATION OBLIGATION.
(i) The Corporation shall, subject to the provisions
of this Section 10, file a registration statement under the
Act covering the registration of the Registerable Securities
then outstanding or issuable upon conversion and effect the
registration under the Act of all Registerable Securities not
later than one year after the date of issuance of the
Convertible Preferred Stock.
(ii) The Holder proposing to distribute its
Registerable Securities through an underwriting together with
the Corporation shall enter into an underwriting agreement in
customary form with the managing underwriter selected for such
underwriting, by the Holder and, reasonably acceptable to the
Corporation. Notwithstanding any other provision of this
paragraph (b), if the managing underwriter advises the Holder
in writing that marketing factors require a limitation of the
number of securities to be underwritten, the Holder shall so
advise all owners of Registerable Securities, and the number
of shares of Registerable Securities that may be included in
the registration statement and underwriting shall be allocated
among all owners thereof in proportion, as nearly as
practicable, to the respective amounts of Registerable
Securities which would otherwise be entitled to inclusion in
such registration held by such owners at the time of filing
the registration statement. If any owner of Registerable
Securities disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom, by written notice to
the Corporation, the managing underwriter and, unless
otherwise provided, the Holder. Any Registerable Securities
excluded or, withdrawn from the underwriting by reason of the
managing underwriter's marketing limitation shall be included
in such registration statement but the sale thereof may be
deferred up to 180 days after the effective date thereof at
the request of tire managing underwriter. If the managing
underwriter has not limited the number of Registerable
Securities to be underwritten, the Corporation my include
securities for its own
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account in such registration if the managing underwriter so
agrees and if the number of Registerable Securities which
would otherwise have been included in such registration and
underwriting will not thereby be limited.
(iii) The Corporation is obligated to effect only one
(1) registration pursuant to this paragraph (b).
(c) REGISTRATION PROCEDURES. The Corporation will advise the
Holder in writing as to the effective date of the registration and as
to the completion thereof. At its expense the Corporation will:
(i) keep the registration effective for a period of
days or until the Holder has completed the distribution
described in the registration statement relating thereto,
whichever first occurs; and
(ii) furnish such number of prospectuses and any
other documents incident thereto as the Holder from time to
time may reasonably request.
(d) INDEMNIFICATION.
(i) To the extent permitted by law, the Corporation
will indemnify the Holder against all claims, losses,
expenses, damages and liabilities (or actions in respect
thereto) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any
related registration statement, notification or the like)
incident to any such registration, or based on any omission
(or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made, or any violation by the
Corporation of any rule or regulation promulgated under the
Act or any state securities law applicable to the Corporation
in connection with any such registration, and will reimburse
the Holder for any reasonable legal and any other expenses
incurred in connection with investigating, defending or
settling any such claim, loss, damage, liability or action,
provided that the indemnity contained in this Section shall
not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if such settlement is
effected without the consent of the Corporation (which consent
will not be reasonably withheld) and provided further that the
Corporation will not be liable in any such case to the extent
that any such claim, loss, damage or liability arises out of
or is based on any untrue statement or omission based upon
written information furnished to the Corporation by the Holder
relating to Holder.
(ii) The Holder will indemnify the Corporation, each
of its directors and officers, each legal counsel and
independent accountant of the Corporation, each person who
controls the Corporation within the meaning of the Act, and
each of its officers, directors and partners against all
claims, losses, expenses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus
offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading in light of the circumstances in which they
were made, and will reimburse the Corporation, such directors,
officers, partners or persons for any reasonable
investigating, defending, or settling any such claim, loss,
damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) relating
to Holder is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in
conformity with written information
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furnished to the Corporation by such Holder specifically for
use therein; and provided further that the indemnity contained
in this paragraph (d) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or
action if such settlement is effected without the consent of
the Holder (which consent will not be unreasonably withheld).
(iii) Each party entitled to indemnification under
this paragraph (d) (the "Indemnified Party") shall give notice
to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval
shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and
provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, unless such
failure resulted in actual detriment to the Indemnifying
Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect
to such claim or litigation.
(iv) To provide for just and equitable contribution
in circumstances under which the indemnity contemplated by
this paragraph (d) is for any reason not available under the
circumstances provided in this paragraph (d) for such
indemnity, the parties entitled to indemnification by the
terms thereof shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement incurred by the
Corporation, any seller of Registerable Securities and one or
more of the underwriters, except to the extent that
contribution is not permitted under Section 11(f) of the Act.
In determining the amount of contribution to which the
respective parties shall be entitled, there shall be
considered the relative benefits received by each party from
the offering of the Registerable Securities (taking into
account the portion of the proceeds of the offering realized
by each), the parties, relative knowledge and access to
information concerning the matter with respect to which the
claim was asserted, the opportunity to correct and prevent any
statement or omission and any other equitable considerations
appropriate under the circumstances. For purposes of this
subsection (iv) each person, if any, who controls an
underwriter within the meaning of Section 15 of the Act shall
have the same rights to contribution as such underwriter, and
each director and each officer of the Corporation who signed
the registration statement, and each person, if any, who
controls the Corporation or a seller of Registerable
Securities within the meaning of Section 15 of the Act shall
have the same rights to contribution as the Corporation or a
seller of Registerable Securities, as the case may be.
(e) INFORMATION BY HOLDER. The Holder shall promptly furnish
to the Corporation in writing such information regarding the Holder as
the Corporation may request in writing and as shall be required in
connection with any registration referred to herein.
(f) RULE 144 REPORTING. With a view to making available to
Holder the benefits of certain rules and regulations of the SEC which
may permit the sale of the Registerable Securities to the public
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without registration, the Corporation agrees at all times during the
period commencing on the date hereof and ending upon the termination of
the registration rights of Holder pursuant to paragraph (h), to:
(i) make and keep public information available, as
those terms are understood and defined in SEC Rule 144(c);
(ii) use its best efforts to file with the SEC in a
timely manner all reports and other documents required of the
Corporation under the Securities Exchange Act of 1934, as
amended; and
(iii) so long as Holder owns any Registerable
Securities, to furnish to each Holder forthwith upon Holder's
request a written statement by the Corporation as to its
compliance with the reporting requirements of said Rule 144, a
copy of the most recent annual or quarterly report of the
Corporation, and such other reports and documents so filed by
the Corporation as each Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing
Holder to sell any such securities without registration.
(g) "MARKET STANDOFF" AGREEMENT. Holder agrees that, if
requested by the Corporation and an underwriter of Securities (or other
securities) of the Corporation, not to sell or otherwise transfer or
dispose of any Securities (or other securities) of the Corporation held
by Holder during a period of up to 120 days as agreed to between the
Corporation and the underwriters following the effective date of a
registration statement of the Corporation filed under the Act covering
the offer and sale of common stock or other securities of the
Corporation. The Corporation may impose stock transfer restrictions
with respect to the Registerable Securities until the end of said
120-day period, provided that:
(i) such agreement shall only apply to the first
registration statement of the Corporation including Securities
(or other securities) to be sold on its behalf to the public
in an underwritten offering; and
(ii) all officers and directors of the Corporation
enter into similar agreements.
Such agreement shall be confirmed in writing in the form
satisfactory to the Corporation and such underwriter. The Corporation
may impose stop-transfer instructions with respect to the Securities
(or other securities) subject to the foregoing restriction until the
end of said lock-up period.
(h) TERMINATION OF REGISTRATION RIGHTS. The registration
rights granted pursuant to this Section 10 shall terminate as to each
Holder at such time as all Registerable Securities of the Holder can,
in the opinion of counsel to the Corporation (which opinion shall be
concurred in by counsel to the Holders), be sold within a given
three-month period pursuant to Rule 144 or other applicable exemption.
(i) DELAY OF REGISTRATION. No Holder shall have any right to
take any action to restrain, enjoin or otherwise delay any registration
as the result of any controversy that may arise with respect to the
interpretation or implementation of this Section 10.
(j) PROSPECTUS REQUIREMENTS. Holder hereby covenants with the
Corporation that he will promptly advise the Corporation of any changes
in the information concerning Holder contained in a registration
statement filed hereunder and that Holder will not make any sale of
Registerable Securities pursuant to any registration statement without
complying with the prospectus delivery requirements of the 1933 Act.
Holder acknowledges that occasionally there may be times when the
Corporation must temporarily suspend the use of the prospectus forming
a part of any such registration statement until such time as an
amendment to such registration statement has been filed by the
Corporation and declared effective by the SEC, the relevant prospectus
supplemented by the Corporation or until such time as the Corporation
has filed an appropriate report with the SEC pursuant to the 1934 Act.
During any period in which sales are suspended and upon notice of such
suspension
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from the Corporation, Holder agrees not to sell any such Registerable
Securities pursuant to any such prospectus. Holder covenants that he
will not sell Registerable Securities pursuant to any such prospectus
during the period commencing at the time at which the Corporation gives
Holder notice of the suspension of the use of said prospectus and
ending at the time the Corporation gives notice that Holder may
thereafter effect sales pursuant to said prospectus.
(k) ASSIGNMENT. The provisions of this Section 10 shall inure
to the benefit of any subsequent transferee or assignee of the
Securities covered by this Section.
11. COVENANTS OF THE CORPORATION. So long as any of the Convertible
Preferred Stock remains outstanding, the Corporation covenants to the holders of
outstanding Convertible Preferred Stock as follows:
(a) FINANCIAL STATEMENTS AND REPORTS. The Corporation will
maintain, a system of accounting established and administered in
accordance with sound business practices to permit preparation of
financial statements in conformity with GAAP. The Corporation will
deliver to each holder the financial statements described below:
(i) QUARTERLY FINANCIALS. As soon as available and in
any event within thirty (30) days after the end of each
calendar quarter ending after the date of first issuance of
the Convertible Preferred Stock, the Corporation will deliver:
(1) copies of the internal financial reports, with respect to
the results of operations for such quarter and balance sheet
balances at the end of such quarter, delivered to members of
the Corporation's management and filed with the Securities and
Exchange Commission setting forth in comparative form the
corresponding figures for the corresponding periods of the
previous fiscal year (to the extent available) and the
corresponding figures from the consolidated plan and financial
forecast for the current fiscal year, to the extent prepared
on a monthly basis, (2) a schedule of the outstanding
Indebtedness for borrowed money of the Corporation describing
in reasonable detail each such debt issue or loan outstanding
and the principal amount (excluding original issue discount)
and amount of accrued and unpaid interest with respect to each
such debt issue or loan, and (3) in the case of such financial
statements, a certificate of an officer of the Corporation
stating that such financial statements fairly present the
financial position of the Corporation as of the dates
indicated and the results of their operations, shareholders'
equity and its cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior
years (except as otherwise disclosed in such financial
statements);
(ii) YEAR-END FINANCIALS. As soon as available and in
any event within ninety (90) days after the end of each fiscal
year, the Corporation will deliver: (1) the balance sheet of
the Corporation as at the end of such year and the related
statements of income, shareholders' equity and cash flows of
the Corporation for such fiscal year, setting forth in each
case in comparative form the corresponding figures for the
previous fiscal year and the corresponding figures from the
plan and financial forecast delivered pursuant to subsection
11(a)(iii), all in reasonable detail and certified by the
chief financial officer of the Corporation that they fairly
present the financial condition of the Corporation as at the
dates indicated and the results of their operations and their
cash flows for the periods indicated, (2) a narrative report,
if any, describing the operations of the Corporation in the
form prepared for presentation to senior management for such
fiscal year, (3) a schedule of the outstanding Indebtedness
for borrowed money of the Corporation describing in reasonable
detail each such debt issue or loan outstanding and the
principal amount (excluding original issue discount) of
accrued and unpaid interest with respect to each such debt
issue or loan, and (4) in the case of such financial
statements, a certificate of a certified public accounting
firm acceptable to a majority of the holders of Convertible
Preferred Stock, which report shall be unqualified, including
with respect to the Corporation's ability to continue as a
going concern, and shall state that such financial statements
fairly present the financial position of the
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Corporation as of the dates indicated and the results of their
operations, shareholders' equity and its cash flows for the
periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in
such financial statements) and that the examination by such
accountants in connection with such financial statements has
been made in accordance with United States generally accepted
auditing standards;
(iii) As soon as available and in any event within
thirty (30) days prior to the end of each fiscal year, the
Corporation will deliver a plan and financial forecast for the
succeeding fiscal year;
(iv) Promptly upon receipt thereof, copies of all
reports submitted to the management of the Corporation by
independent public accountants, in connection with each
annual, interim or special audit or review of the consolidated
financial statements of the Corporation made by such
accountants, including the management letter submitted by such
accountants to management in connection with their annual
audit;
(v) Copies of any financial or other report or notice
delivered to, or received from, any holders of Indebtedness
not otherwise delivered to the holders pursuant to this
Section 11;
(vi) Promptly notify the holders of the nature and
content of all material reports, letters and other
correspondence from local, state or Federal regulatory or
other agencies relating to business, licenses or operating
contracts of the Corporation;
(vii) Written or oral notice as appropriate for the
circumstances, to each holder of (1) any violation of or
noncompliance with any environmental laws which is known to
the Corporation and that could reasonably be expected to have,
singly or in the aggregate, a material adverse effect, (2) any
communication (written or oral) or environmental claim,
whether from a governmental authority, citizens group,
employee or otherwise, alleging that the Corporation is not in
compliance with any environmental law or asserting liability
of the Corporation for contamination from or as a result
(directly or indirectly) of any materials of environmental
concern, which noncompliance or liability could reasonably be
expected to have, singly or in the aggregate, a material
adverse effect, or (3) any releases or threatened releases
(including any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, on site or off site) of any
materials of environmental concern which is known to the
Corporation and for which the Corporation could be held
liable, either in fact or by law, which releases could
reasonably be expected to have, singly or in the aggregate, a
material adverse effect;
(viii) Copies of such other information and data with
respect to the Corporation as from time to time may be
reasonably requested by any holder;
(ix) Each financial statement delivered pursuant to
subsections (a)(i) and (ii) of this Section 11 shall be in the
form prepared by the Corporation pursuant to the terms of
Section 11(a) and, in the case of financial statements
delivered pursuant to subsection (a)(ii), shall be accompanied
by a brief narrative description of business and financial
trends and developments material to the Corporation and
significant transactions that have occurred in the appropriate
period for which the financial statement was prepared;
(x) COMPLIANCE CERTIFICATE. The Corporation shall
deliver to the holders, within 30 days after the end of each
quarter and within 90 days after the end of each fiscal year,
a certificate of an officer of the Corporation stating that a
review of the activities of the Corporation during the
preceding quarter or fiscal year, as the case may be, has been
made under the supervision of the signing officer with a view
to determining whether the Corporation have kept, observed,
performed and fulfilled their respective obligations under
this Certificate of Designation, and further stating, as to
each such officer signing such certificate, that to his or her
knowledge, no default or event of default shall have occurred
(or, if a default or event of
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default shall have occurred, describing all such defaults or
events of default of which he or she may have knowledge) and
that to his or her knowledge no event has occurred and remains
in existence by reason of which payments on account of the
dividends, if any, on the Convertible Preferred Stock are
prohibited or if such event has occurred, a description of the
event. The certificate of the officer shall set forth all
financial calculations for such quarter or fiscal year
necessary to demonstrate compliance with the covenants
contained in this Section 11;
(xi) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, the financial statements delivered pursuant to
Sections 11(a)(ii) shall be accompanied by a written statement
of Harper & Pearson Corporation or other independent certified
public accountants of recognized national standing selected by
the Corporation that in making the examination necessary for
certification of such financial statements nothing has come to
their attention which would lead them to believe that the
Corporation or any of its Subsidiaries has violated any
provisions of this Certificate of Designation or, if any such
violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants
shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation; and
(xii) The Corporation will deliver to the holders,
forthwith upon becoming aware of (1) any default or default of
default or (2) any default or event of default under any other
loan agreement, mortgage, indenture or instrument to which the
Corporation is a party, an certificate of the officer
specifying in reasonable detail such default, default of
default or default or event of default and the nature of any
remedial or corrective action the Corporation proposes to take
with respect thereto.
(b) LIMITATION ON RESTRICTED PAYMENTS AND INVESTMENTS. The
Corporation shall not,
(i) declare or pay any dividends, either in cash or
property, on, or make any distribution to the holders (as
such) in respect of, any class of capital stock in the
Corporation (other than dividends or distributions payable in
capital stock of the Corporation or dividends or distributions
payable to the Corporation);
(ii) purchase, redeem or otherwise acquire or retire
for value any capital stock of the Corporation or any other
Affiliate of the Corporation;
(iii) purchase, redeem, defease or otherwise acquire
or retire for value any securities (other than the Convertible
Preferred Stock) that is PARI PASSU with or subordinated to
the Convertible Preferred Stock; or
(iv) make any material investment in securities (all
such payments and other actions set forth in clauses (i)
through (iv) hereof being collectively referred to as
"Restricted Payments").
(c) LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF
STOCK. The Corporation shall not, directly or indirectly, create,
incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to (collectively, "incur") any
Indebtedness or issue any Parity Dividend Stock or Senior Liquidation
Stock, PROVIDED that the foregoing restrictions shall not apply to:
(i) Indebtedness created or incurred in connection
with the acquisition by the Corporation of certain assets from
Mattel, Inc.
(ii) the issuance of the Convertible Preferred Stock;
(iii) the incurrence by the Corporation as borrower
of refinancing any Indebtedness in exchange for, or the net
proceeds of which are used to extend, refinance, renew,
replace, defease or refund other Indebtedness of the
Corporation referred to in subparagraph (v);
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(iv) Hedging Obligations that are incurred by the
Corporation in the ordinary course of business for the purpose
of fixing or hedging interest rate risk with respect to any
floating rate Indebtedness that is permitted by the terms of
this Certificate of Designation to be outstanding; and
(v) Indebtedness of the Corporation in an amount not
to exceed $1,000,000 at any time outstanding representing (x)
a capitalized lease obligation or (y) incurred solely for the
purchase or financing of fixed or capital assets (other than
assets owned by the Corporation on the date of issuance)
directly related to the business of the Corporation on the
date of issuance provided that (1) (A) such Indebtedness is
secured by purchase money liens on such assets and (B) such
liens do not extend to or cover any other asset of the
Corporation, (2) such liens secure the obligation to pay the
purchase price of such asset and interest thereon only, (3)
such Indebtedness is incurred within nine months after the
acquisition of such assets (with recourse only against such
assets) and (4) the fair market value of the assets so secured
is at least equal to the amount of Indebtedness secured
thereby (Indebtedness set forth in this clause (y), "Purchase
Money Indebtedness").
For the purpose of this paragraph (c) "Indebtedness" means, with
respect to the Corporation, the aggregate amount of, without duplication, the
following:
(i) all obligations for borrowed money;
(ii) all obligations evidenced by bonds, debentures,
notes or other similar instruments;
(iii) all obligations to pay the deferred purchase
price of property or services (except trade payables, accrued
commissions and other similar accrued current liabilities in
respect of such obligations, in any case, arising in the
ordinary course of business);
(iv) all capitalized lease obligations;
(v) all obligations or liabilities of others secured
by a lien on any asset owned by the Corporation whether or not
such obligation or liability is assumed;
(vi) all obligations of the Corporation, contingent
or otherwise, in respect of any letters of credit or bankers'
acceptances;
(d) LIMITATION ON TRANSACTIONS WITH AFFILIATES. The
Corporation shall not sell, lease, transfer or otherwise dispose of any
of its properties or assets to or purchase any property or assets from,
or enter into any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, an Affiliate (an "Affiliate
Transaction"), unless (1) such Affiliate Transaction is on terms that
are no less favorable to the Corporation than those that could have
been obtained in a comparable transaction by the Corporation from an
unrelated person and (2) with respect to any Affiliate Transaction (or
series of related Affiliate Transactions) involving or having a
potential value of more than $500,000), in addition to compliance with
subparagraph (1), such Affiliate Transaction shall also be approved by
a majority of the disinterested members of the Board of Directors of
the Corporation after determining, in their reasonable good faith
judgment, that (A) such transaction is in the best interest of the
Corporation based on full disclosure of all relevant facts and
circumstances and (B) such transaction is on fair and reasonable terms
competitive with those that could be obtained from an unrelated third
party (such approval and determination to be evidenced by a resolution
of such disinterested directors of the Board of Directors of the
Corporation), and (3) with respect to any Affiliate Transaction (or
series of related Affiliate Transactions) involving or having a
potential value of more than $500,000, in addition to compliance with
subparagraphs (1) and (2), the Board of Directors of the Corporation
shall have obtained an opinion of a nationally recognized investment
banking firm or appraiser to the effect that such transaction is fair,
from a financial point of view, to the Corporation.
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(e) RESTRICTIONS ON LIENS. The Corporation shall not create or
suffer to exist any liens upon any assets of the Corporation, in each
case now owned or hereafter acquired; PROVIDED, HOWEVER, that this
Section 11 shall not prohibit the creation or continuing existence of
any lien created in connection with the acquisition from Mattel, Inc.
(f) LIMITATION ON SALE OF ASSETS. The Corporation shall not
make any asset sale unless: (1) no default or default of default exists
and is continuing or is created by such disposition and (2) in the case
of any asset sale involving (A) assets for net proceeds in excess of
$500,000 or with a fair market value in excess of $500,000 or (B)
assets for net proceeds (whether in cash or property) or with a fair
market value (when aggregated with the net proceeds or fair market
value of all other assets subject to any asset sales during the same
fiscal year) in excess of $1,000,000:
(i) the Corporation receive consideration at the time
of such asset sale at least equal to the fair market value of
such assets;
(ii) at least 85% of the consideration therefor
received by the Corporation shall be in the form of cash;
PROVIDED, HOWEVER, that for the purposes of this subparagraph
(ii), the following are deemed to be cash: (x) any liabilities
(as shown on the Corporation's most recent balance sheet or in
the notes thereto) of the Corporation that are assumed by the
transferee in connection with the asset sale (other than
liabilities that are incurred in connection with or in
anticipation of such asset sale); and (y) securities received
by the Corporation from such transferee that are immediately
converted into cash at the face amount or fair market value
thereof by the Corporation; and
(iii) upon the consummation of an asset sale, the Corporation
shall apply the Net Proceeds (it being understood that the entire Net
Proceeds and not just the portion in excess of the amounts set forth in
subparagraphs (x) and (y) of clause (ii) above shall be subject to this
subparagraph (iii)) of such asset sale within 60 days of the
consummation of an asset sale (the "Commitment Date") either: (x) to
prepay any Indebtedness outstanding; (y) to offer to each holder the
right to require the Corporation to redeem the maximum amount of
Convertible Preferred Stock that may be redeemed with such excess
proceeds, in accordance with the terms and provisions of Section 7, or
(z) to reinvest in assets for use in the Corporation's business as of
the date hereof. Any Net Proceeds from an asset sale which are not
applied or reinvested as provided in this subparagraph (iii) of
paragraph (f) of Section 11 constitute excess proceeds and shall be
held in cash or cash equivalents.
(g) FISCAL YEARS. The Corporation shall not change its fiscal
year from a fiscal year ending on December 31st.
(h) SAME BUSINESS. For so long as any Convertible Preferred
Stock is outstanding, the Corporation will engage only in the software
business and the business of electronic commerce and activities related
thereto.
(i) TAXES. The Corporation shall pay or discharge or cause to
be paid or discharged, before the same shall become delinquent, (1) all
taxes levied or imposed upon the Corporation or upon the income,
profits or property of the Corporation and (2) all lawful claims
(excluding indebtedness), whether for labor, materials, supplies,
services or anything else, which, if unpaid, would or may by law become
a lien upon the property of the Corporation PROVIDED, HOWEVER, that the
Corporation shall not be required to pay or discharge or cause to be
paid or discharged any such tax, the applicability or validity of which
is being contested in good faith by appropriate proceedings which will
prevent the forfeiture or sale of any property of the Corporation or
such Subsidiary, as the case may be, and for which disputed amounts
reserves have been established in accordance with GAAP, in an amount
which the Corporation or such subsidiary, as the case may be, believes
in good faith is adequate.
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(j) INVESTMENT CORPORATION ACT. The Corporation shall not
become an investment company subject to registration under the
Investment Corporation Act of 1940, as amended.
(k) OWNERSHIP OF SUBSIDIARIES. The Corporation may create or
cause to exist any Subsidiary provided such creation is consistent with
the business of the Corporation as of the date of issuance.
(l) INSURANCE. The Corporation shall maintain liability,
casualty and other insurance with a reputable insurer or insurers in
such amounts and against such risks as is carried by responsible
companies engaged in similar business and owning similar assets.
(m) EMPLOYEE PLANS. The Corporation shall not directly or
indirectly, (1) terminate any employee pension benefit plan subject to
Title IV of ERISA if as a result of such termination the Corporation
would incur a liability with respect to such plan in excess of $100,000
in the aggregate, or (2) make a complete or partial withdrawal (within
the meaning of Section 4201 of ERISA) from any multiemployer plan if as
a result of such withdrawal (within the meaning of Section 4201 of
ERISA), the Corporation would incur a liability with respect to such
plan in excess of $100,000 in the aggregate.
As used in this paragraph (m), the terms "employee pension
benefit plan" and "multiemployer plan" shall have the meanings assigned
to such terms in Section 3 of ERISA.
(n) ERISA NOTICES. Promptly, but in any event within 15 days,
the Corporation shall deliver to the holders, if and when the
Corporation (1) gives or is required to give notice to the Pension
Benefit Guaranty Corporation (the "PBGC") of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any employee pension
benefit plan sponsored, maintained or required to be contributed to by
the Corporation or, to the best knowledge of the officers or directors
of the Corporation, any entity which is a member of the same controlled
group as the Corporation, which "reportable event" might reasonably
constitute grounds for a termination of such plan under Title IV of
ERISA or the imposition of a tax under section 4971 of the Code, or
knows that the plan administrator of any such plan has given or is
required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the
PBGC, (2) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any multiemployer plan to which
the Corporation or, to the best knowledge of the officers or directors
of the Corporation, any entity which is a member of the same controlled
group as the Corporation contributes or is obligated to contribute is
in reorganization or has been terminated, a copy of such notice, (3)
receives notice from the PBGC under Title IV of ERISA of an intent to
terminate or appoint a trustee to administer any employee pension
benefit plan sponsored, maintained or required to be contributed to by
the Corporation or, to the best knowledge of the officers or directors
of the Corporation, any entity which is a member of the same controlled
group as the Corporation, a copy of such notice, (4) applies for a
waiver of the minimum funding standard under section 412 of the Code, a
copy of such application, (5) gives notice of intent to terminate any
employee pension benefit plan sponsored, maintained or required to be
contributed to by the Corporation or, to the best knowledge of the
officers or directors of the Corporation, any entity which is a member
of the same controlled group as the Corporation under Title IV of
ERISA, a copy of such notice and other information filed with the PBGC,
(6) fails to make any payment or contribution to any employee pension
benefit plan (or multiemployer plan or in respect of any benefit
arrangement) or makes any amendment to any employee benefit plan or
benefit arrangement which could reasonably result in the imposition of
a lien or the posting of a bond or other security, a certificate of the
Chief Executive Officer of the Corporation setting forth details as to
such occurrence and action, if any, which the Corporation is required
or proposes to take, (7) adopts, establishes, maintains or enters into
any obligation to make contributions that are material with respect to
the Corporation to any new employee benefit plan or multiemployer plan,
a certificate of the Chief Executive Officer of the Corporation setting
forth details as to such obligation, (8) modifies any existing employee
benefit plan maintained by the Corporation or, to the best knowledge of
the officers or directors of the Corporation, any entity which is a
member of the same controlled group as the
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Corporation (other than any modification to medical, dental or other
employee welfare benefit plans in the ordinary course of business) so
as to increase its obligations thereunder, a certificate of the Chief
Executive Officer of the Corporation setting forth details as to such
modification or (9) materially increases a contribution obligation to
any multiemployer plan to which the Corporation or, to the best
knowledge of the officers or directors of the Corporation, any entity
which is a member of the same controlled group as the Corporation
contributes or is obligated to contribute, a certificate of the Chief
Executive Officer of the Corporation setting forth details as to such
increase.
As used in this paragraph (n), the terms "employee pension
benefit plan," "multiemployer plan" and "employee benefit plan" shall
have the meanings assigned to such terms in Section 3 of ERISA, and the
term "controlled group" shall have the meaning assigned to such term in
section 414 of the Code.
(o) INCONSISTENT AGREEMENTS. The Corporation shall not (1)
enter into any agreement or arrangement which is inconsistent with the
ability of the Corporation to fulfill the obligations of the
Corporation under this Certificate of Designation, or (2) supplement,
amend or otherwise modify the terms of its respective Charter Documents
if the effect thereof would be materially adverse to the holders.
(p) COMPLIANCE WITH LAWS; MAINTENANCE OF LICENSES. The
Corporation shall comply with all statutes, ordinances, governmental
rules and regulations, judgments, orders and decrees (including all
Environmental Laws) to which any of them is subject, and maintain,
obtain and keep in effect all licenses, permits, franchises and other
governmental authorizations necessary to the ownership or operation of
its properties or the conduct of its business, except to the extent
that the failure to so comply or maintain, obtain and keep in effect
could not, singly or in the aggregate, reasonably be expected to have,
singly or in the aggregate, a material adverse effect.
(q) INFORMATION TO PROSPECTIVE PURCHASERS. The Corporation
shall, upon the request of any original holder or subsequent holder,
deliver to such holder and any prospective purchaser designated by such
holder promptly following the request of such holder or such
prospective purchaser such information which such holder or such
prospective purchaser may reasonably request in order to comply with
the information requirements of Rule 144A.
(r) PRIVATE PLACEMENT NUMBER. If required by applicable law or
to the extent necessary to fulfill any of the holders or prospective
holders contractual or legal obligations, the Corporation consents to
the filing of copies of this Certificate of Designation with Standard &
Poor's Corporation to obtain a private placement number and with the
National Association of Insurance Commissioners.
(s) LIMITATION ON CAPITAL EXPENDITURES. The Corporation shall
not make or incur capital expenditures in any fiscal year in an
aggregate amount for the Corporation in excess of the amount set forth
below alongside the applicable fiscal year:
Maximum Aggregate Amount
Fiscal Year of Capital Expenditures
----------- -----------------------
1999 and thereafter $1,000,000
PROVIDED, HOWEVER, that the maximum amount of capital expenditure
permitted to be made by the Corporation and its subsidiaries in any
fiscal year shall be increased by the amount of any capital expenditure
that the Corporation were permitted to make in the immediately
preceding fiscal year and did not previously expend (without giving
effect to any carry over amounts from prior fiscal years).
(t) FIXED CHARGE COVERAGE RATIO. The Corporation shall not, as
of the end of any fiscal quarter during any period set forth below,
permit the ratio of (1) EBITDA for the period of four (4) consecutive
fiscal quarters ending on such fiscal quarter end less Capital
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Expenditures during such period to (2) Fixed Charge for such period of
four (4) consecutive fiscal quarters, to be less than the corresponding
ratio set forth below:
PERIOD RATIO
------ -----
1999 and thereafter 2.5 to 1.0
(u) MINIMUM EBITDA. As of the end of any fiscal quarter during
any period set forth below, permit EBITDA for the period of four (4)
consecutive fiscal quarters ending on such fiscal quarter end to be
less than the corresponding amount set forth below:
PERIOD AMOUNT
------ ------
1999 and thereafter $500,000
12. OUTSTANDING SHARES. For purposes of this Certificate of
Designation, all shares of Convertible Preferred Stock shall be deemed
outstanding except (i) from the date fixed for redemption pursuant to Section 6
or 7 hereof, all shares of Convertible Preferred Stock that have been so called
for redemption under Section 6 or have been required to be redeemed by the
holder thereof under Section 7 if funds necessary for the redemption of such
shares are available and, in the case of a redemption under Section 7, have been
deposited in trust with a bank having a combined capital and surplus in excess
of $50,000,000, as trustee, for the benefit of the holders of such shares to be
redeemed for payment of the relevant redemption price; (ii) from the date of
surrender of certificates representing shares of Convertible Preferred Stock,
all shares of Convertible Preferred Stock converted into Common Stock; and (iii)
from the date of registration of transfer, all shares of Convertible Preferred
Stock held of record by the Corporation or any subsidiary of the Corporation.
13. SECURITIES NOT REGISTERED UNDER THE SECURITIES ACT OF 1933. Neither
the shares of Convertible Preferred Stock nor the Common Stock issuable upon
conversion thereof (prior to the effective date of the registration statement
described in Section 10) has been registered under the Securities Act of 1933 or
the laws of any state of the United States and may not be transferred without
such registration or an exemption from registration.
(a) RESTRICTIVE LEGENDS. Each share of Convertible Preferred
Stock and certificate for Common Stock issued upon the conversion of
any shares of Convertible Preferred Stock, and each preferred stock
certificate issued upon the transfer of any such shares of Convertible
Preferred Stock or Common Stock (except as otherwise permitted by this
Section 13), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The securities represented hereby have not been registered
under the Securities Act of 1933. Such securities may not be
sold or transferred in the absence of such registration or an
exemption therefrom under said Act."
(b) NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Except
as provided in paragraph (c) of this Section 13, prior to any transfer
of any such shares of Convertible Preferred Stock, or Common Stock, the
holder thereof will give written notice to the Corporation of such
holder's intention to effect such transfer and to comply in all other
respects with this Section 13. Each such notice (A) shall describe the
manner and circumstances of the proposed transfer in sufficient detail
to enable counsel to render the opinions referred to below, and (B)
shall designate counsel for the holder giving such notice (who may be
house counsel for such holder). The holder giving such notice will
submit a copy thereof to the counsel designated in such notice and the
Corporation will promptly submit a copy thereof to its counsel, and the
following provisions shall apply:
(i) If in the opinion of each such counsel the
proposed transfer of such shares of Convertible Preferred
Stock or Common Stock may be effected without registration
under the Act, the Corporation will promptly notify the holder
thereof and such holder shall thereupon be entitled to
transfer such shares of Convertible Preferred Stock or Common
Stock in accordance with the terms of the notice delivered by
such holder to the Corporation. Each share of
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Convertible Preferred Stock or certificate, if any, issued
upon or in connection with such transfer shall bear the
appropriate restrictive legend set forth in paragraph (a) of
this Section 13, unless in the opinion of each such counsel
such legend is no longer required to insure compliance with
the Act. If for any reason counsel for the Corporation (after
having been furnished with the information required to be
furnished by this paragraph (b)) shall fail to deliver an
opinion of the Corporation, or the Corporation shall fail to
notify such holder thereof as aforesaid, within 20 days after
counsel for such holder shall have delivered its opinion to
such holder (with a copy to the Corporation), then for all
purposes of this Certificate of Designation the opinion of
counsel for the Corporation shall be deemed to be the same as
the opinion of counsel for such holder.
(ii) If in the opinion of either or both of such
counsel the proposed transfer of such shares of Convertible
Preferred Stock or Common Stock may not be effected without
registration under the Act, the Corporation will promptly so
notify the holder thereof and thereafter such holder shall not
be entitled to transfer such share of Convertible Preferred
Stock or Common Stock until receipt of a further notice from
the Corporation under subparagraph (i) above or, in the case
of Common Stock, until registration of such Common stock under
the Act has become effective.
(c) PROPOSED TRANSFER TO INSTITUTIONS. Notwithstanding the
foregoing, any holder of such share of Convertible Preferred Stock or
Common Stock shall be permitted to transfer any such share of
Convertible Preferred Stock or Common Stock to a limited number of
Institutional Investors, provided that;
(i) Each such holder represents in writing that it is
acquiring such shares of Convertible Preferred Stock or Common
Stock for investment and not with a view to the distribution
thereof (subject, however, to any requirement of law that the
disposition thereof shall at all times be within the control
of such transferee);
(ii) Each such holder agrees in writing to be bound
by all the restrictions on transfer of such shares of
Convertible Preferred Stock or Common Stock contained in this
Section 13; and
(iii) Such holder delivers to the Corporation an
opinion of counsel who shall be satisfactory to counsel for
the Corporation, stating that such transfer may be effected
without registration under the Act.
14. PARTIAL PAYMENTS. If at any time the Corporation does not pay
amounts sufficient to redeem all Convertible Preferred Stock required to be
redeemed by the Corporation at such time pursuant to Section 7 hereof, then such
funds which are paid shall be applied to redeem such Convertible Preferred Stock
as the Corporation may designate by lot.
15. STATUS OF ACQUIRED SHARES. Shares of Convertible Preferred Stock
redeemed by the Corporation pursuant to Section 6 or Section 7, received upon
conversion pursuant to Section 8 or otherwise acquired by the Corporation will
be restored to the status of authorized but unissued shares of Preferred Stock,
without designation as to class, and may thereafter be issued, but not as shares
of Convertible Preferred Stock.
16. PREEMPTIVE RIGHTS. The Convertible Preferred is not entitled to any
preemptive or subscription rights in respect of any securities of the
Corporation.
17. SEVERABILITY OF PROVISIONS. Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or
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shortened or a particular percentage were increased or decreased, then such
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
IN WITNESS WHEREOF, FINdex.com, Inc. has caused this certificate to be
signed by its President, and its corporate seal to be hereunto affixed and
attested by its Secretary, as of the ___ day of June, 1999.
FINDEX.COM, INC.
By: /s/ Joseph V. Szczepaniak
--------------------------------
Joseph V. Szczepaniak, President
Attest:
FINDEX.COM, INC.
[LOGO]
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Exhibit 3.2
[FINDEX LOGO]
FINDEX.COM, INC.
A NEVADA CORPORATION
RESTATED BY LAWS
ARTICLE I
PRINCIPAL EXECUTIVE OFFICE
The principal executive office of FINdex.com, Inc. (the "Corporation")
shall be at 11640 Arbor Street, Suite 201, Omaha, Nebraska 68144. The
Corporation may also have offices at such other places within or without the
State of Nevada as the board of directors shall from time to time determine.
ARTICLE II
STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All annual and special meetings of
stockholders shall be held at the principal executive office of the Corporation
or at such other place within or without the State of Nevada as the board of
directors may determine and as designated in the notice of such meeting.
SECTION 2. ANNUAL MEETING. A meetings of the stockholders of the
Corporation for the election of directors and for the transaction of any other
business of the Corporation shall be held annually at such date and time as the
board of directors may determine.
SECTION 3. SPECIAL MEETINGS. Special meeting of the stockholders of the
Corporation for any purpose or purposes may be called at any time by the board
of directors of the Corporation, or by a committee of the board of directors
which as been duly designated by the board of directors and whose powers and
authorities, as provided in a resolution of the board of directors or in the
Restated By-Laws of the Corporation, include the power and authority to call
such meetings but such special meetings may not be called by another person or
persons.
SECTION 4. CONDUCT OF MEETINGS. Annual and special meetings shall be
conducted in accordance with these Restated By-Laws or as otherwise prescribed
by the board of directors. The chairman or the chief executive officer of the
Corporation shall preside at such meetings.
SECTION 5. NOTICE OF MEETING. Written notice stating the place, day and
hour of the meeting and the purpose or purposes for which the meeting is called
shall be mailed by the secretary or the officer performing his duties, not less
than ten days nor more than fifty days before the meeting to each stockholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail, addressed to the
stockholder at his address as it appears on the stock transfer books or records
of the Corporation as of the record date prescribed in Section 6, with postage
thereon prepaid. If a stockholder be present at a meeting, or in writing waive
notice thereof before or after the meeting, notice of the meeting to such
stockholder shall be unnecessary. When any stockholders' meeting, either annual
or special, is adjourned for thirty days or more, notice of the adjourned
meeting shall be given as in the case of an original meeting. It shall not be
necessary to give any notice of the time and place of any meeting adjourned for
less than thirty days or of the business to be transacted at such adjourned
meeting, other than an announcement at the meeting at which such adjournment is
taken.
1
<PAGE> 2
SECTION 6. FIXING OF RECORD DATE. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders, or
any adjournment thereof, or stockholders entitled to receive payment of any
dividend, or in order to make a determination of stockholders for any other
proper purpose, the board of directors shall fix in advance a date as the record
date for any such determination of stockholders. Such date in any case shall be
not more than sixty days, and in case of a meeting of stockholders, not less
than ten days prior to the date on which the particular action, requiring such
determination of stockholders, is to be taken.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
SECTION 7. VOTING LISTS. The officer or agent having charge of the
stock transfer books for shares of the Corporation shall make, at least ten days
before each meeting of stockholders, a complete record of the stockholders
entitled to vote at such meeting or any adjournment thereof, with the address of
and the number of shares held by each. The record, for a period of ten days
before such meeting, shall be kept on file at the principal executive office of
the Corporation, whether within or outside the State of Nevada, and shall be
subject to inspection by any stockholder for any purpose germane to the meeting
at any time during usual business hours. Such record shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any stockholder for any purpose germane to the meeting during the
whole time of the meeting. The original stock transfer books shall be prima
facie evidence as to who are the stockholders entitled to examine such record or
transfer books or to vote at any meeting of stockholders.
SECTION 8. QUORUM. One-fourth of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than one-fourth of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
SECTION 9. PROXIES. At all meetings of stockholders, a stockholder may
vote by proxy executed in writing by the stockholder or by his duly authorized
attorney in fact. Proxies solicited on behalf of the management shall be voted
as directed by the stockholder or, in the absence of such direction, as
determined by a majority of the board of directors. No proxy shall be valid
after eleven months from the date of its execution unless otherwise provided in
the proxy.
SECTION 10. VOTING. At each election for directors every stockholder
entitled to vote at such election shall be entitled to one vote for each share
of stock held. Unless otherwise provided by the Restated Certificate of
Incorporation, by statute, or by these By Laws, a majority of those votes cast
by stockholders at a lawful meeting shall be sufficient to pass on a transaction
or matter, except in the election of directors, which election shall be
determined by a plurality of the votes of the shares present in person or by
proxy at the meeting and entitled to vote on the election of directors.
SECTION 11. VOTING OF SHARES IN THE NAME OF TWO OR MORE PERSONS. When
ownership of stock stands in the name of two or more persons, in the absence of
written directions to the Corporation to the contrary, at any meeting of the
stockholders of the Corporation any one or more of such stockholders may cast,
in person or by proxy, all votes to which such ownership is entitled. In the
event an attempt is made to cast conflicting votes, in person or by proxy, by
the several persons in whose name shares of stock stand, the vote or votes to
which these persons are entitled shall be cast as directed by a majority of
those holding such stock and present in person or by proxy at such meeting, but
no votes shall be cast for such stock if a majority cannot agree.
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SECTION 12. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation may be voted by any officer, agent or proxy as the
Restated By-Laws of such corporation may prescribe, or, in the absence of such
provision, as the board of directors of such corporation may determine. Shares
held by an administrator, executor, guardian or conservator may be voted by him,
either in person or by proxy, without a transfer of such shares into his name.
Shares standing in the name of a trustee may be voted by him, either in person
or by proxy, but no trustee shall be entitled to vote shares held by him without
a transfer of such shares into his name. Shares standing in the name of a
receiver may be voted by such receiver, and shares held by or under the control
of a receiver may be voted by such receiver without the transfer thereof into
his name if authority to do so is contained in an appropriate order of the court
or other public authority by which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the Corporation, nor
shares held by another corporation, if a majority of the shares entitled to vote
for the election of directors of such other corporation are held by the
Corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
SECTION 13. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the chairman of the board or the board of directors may appoint
any persons, other than nominees for office, as inspectors of election to act at
such meeting or any adjournment thereof. The number of inspectors shall be
either one or three. If the board of directors so appoints either one or three
inspectors, that appointment shall not be altered at the meeting. If inspectors
of election are not so appointed, the chairman of the board may make such
appointment at the meeting. In case any person appointed as inspector fails to
appear or fails or refuses to act, the vacancy may be filled by appointment in
advance of the meeting or at the meeting by the chairman of the board or the
president.
Unless otherwise prescribed by applicable law, the duties of such
inspectors shall include: determining the number of shares of stock and the
voting power of each share, the shares of stock represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies;
receiving votes, ballots or consents; hearing and determining all challenges and
questions in any way arising in connection with the right to vote; counting and
tabulating all votes or consents; determining the result; and such acts as may
be proper to conduct the election or vote with fairness to all stockholders.
SECTION 14. NOMINATING COMMITTEE. The board of directors or a committee
appointed by the board of directors shall act as nominating committee for
selecting the management nominees for election as directors. Except in the case
of a nominee substituted as a result of the death or other incapacity of a
management nominee, the nominating committee shall deliver written nominations
to the secretary at least twenty days prior to the date of the annual meeting.
Provided such committee makes such nominations, no nominations for directors
except those made by the nominating committee shall be voted upon at the annual
meeting unless other nominations by stockholders are made in writing and
delivered to the secretary of the Corporation in accordance with the provisions
of the Corporation's Restated Certificate of Incorporation.
SECTION 15. NEW BUSINESS. Any new business to be taken up at the annual
meeting shall be stated in writing and filed with the secretary of the
Corporation in accordance with the provisions of the Corporation's Restated
Certificate of Incorporation. This provision shall not prevent the consideration
and approval or disapproval at the annual meeting of reports of officers,
directors and committees, but in connection with such reports no new business
shall be acted upon at such annual meeting unless stated and filed as provided
in the Corporation's Restated Certificate of Incorporation.
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ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be under the direction of its board of directors. The chairman shall
preside at all meetings of the board of directors.
SECTION 2. NUMBER, TERM AND ELECTION. The number of directors of the
Corporation shall be such number, not less than one nor more than 15 (exclusive
of directors, if any, to be elected by holders of preferred stock of the
Corporation), as shall be provided from time to time in a resolution adopted by
the board of directors, provided that no decrease in the number of directors
shall have the effect of shortening the term of any incumbent director, and
provided further that no action shall be taken to decrease or increase the
number of directors from time to time unless at least two-thirds of the
directors then in office shall concur in said action. Exclusive of directors, if
any, elected by holders of preferred stock, vacancies in the board of directors
of the Corporation, however caused, and newly created directorships shall be
filled by a vote of two-thirds of the directors then in office, whether or not a
quorum, and any director so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of the class to which the
director has been chosen expires and when the director's successor is elected
and qualified. The board of directors shall be classified in accordance with the
provisions of Section 3 of this Article III.
SECTION 3. CLASSIFIED BOARD. The board of directors of the Corporation
(other than directors which may be elected by the holders of preferred stock),
shall be divided into three classes of directors which shall be designated Class
I, Class II and Class III. The members of each class shall be elected for a term
of three years and until their successors are elected and qualified. Such
classes shall be as nearly equal in number as the then total number of directors
constituting the entire board of directors shall permit, exclusive of directors,
if any, elected by holders of preferred stock, with the terms of office of all
members of one class expiring each year. Should the number of directors not be
equally divisible by three, the excess director or directors shall be assigned
to Classes I or II as follows: (1) if there shall be an excess of one
directorship over the number equally divisible by three, such extra directorship
shall be classified in Class I; and (2) if there be an excess of two
directorships over a number equally divisible by three, one shall be classified
in Class I and the other in Class II. At the organizational meeting of the
Corporation, directors of Class I shall be elected to hold office for a term
expiring at the first annual meeting of stockholders, directors of Class II
shall be elected to hold office for a term expiring at the second succeeding
annual meeting of stockholders and directors of Class III shall be elected to
hold office for a term expiring at the third succeeding annual meeting
thereafter. Thereafter, at each succeeding annual meeting, directors of each
class shall be elected for three year terms. Notwithstanding the foregoing, the
director whose term shall expire at any annual meeting shall continue to serve
until such time as his successor shall have been duly elected and shall have
qualified unless his position on the board of directors shall have been
abolished by action taken to reduce the size of the board of directors prior to
said meeting.
Should the number of directors of the Corporation be reduced, the
directorship(s) eliminated shall be allocated among classes as appropriate so
that the number of directors in each class is as specified in the position(s) to
be abolished. Notwithstanding the foregoing, no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. Should the number of directors of the Corporation be increased, other
than directors which may be elected by the holders of preferred stock, the
additional directorships shall be allocated among classes as appropriate so that
the number of directors in each class is as specified in the immediately
preceding paragraph.
Whenever the holders of any one or more series of preferred stock of
the Corporation shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the board of directors shall include said
directors so elected and not be in addition to the number of directors fixed as
provided in this Article III. Notwithstanding the foregoing, and except as
otherwise may be required By Law, whenever the holders of any one
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or more series of preferred stock of the Corporation elect one or more directors
of the Corporation, the terms of the director or directors elected by such
holders shall expire at the next succeeding annual meeting of stockholders.
SECTION 4. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held at such time and place as shall be determined by
resolution of the board of directors without other notice than such resolution.
SECTION 5. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the chairman, the chief executive officer
or one-third of the directors. The person calling the special meetings of the
board of directors may fix any place as the place for holding any special
meeting of the board of directors called by such persons.
Members of the board of the directors may participate in special
meetings by means of telephone conference or similar communications equipment by
which all persons participating in the meeting can hear each other. Such
participation shall constitute presence in person.
SECTION 6. NOTICE. Written notice of any special meeting shall be given
to each director at least two days previous thereto delivered personally or by
telegram or at least seven days previous thereto delivered by mail at the
address at which the director is most likely to be reached. Such notice shall be
deemed to be delivered when deposited in the United States mail so addressed,
with postage thereon prepaid if mailed or when delivered to the telegraph
company if sent by telegram. Any director may waive notice of any meeting by a
writing filed with the secretary. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting 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 meeting of the board of
directors need be specified in the notice or waiver of notice of such meeting.
SECTION 7. QUORUM. A majority of the number of directors fixed by
Section 2 shall constitute a quorum for the transaction of business at any
meeting of the board of directors, but if less than such majority is present at
a meeting, a majority of the directors present may adjourn the meeting from time
to time. Notice of any adjourned meeting shall be given in the same manner as
prescribed by Section 5 of this Article III.
SECTION 8. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by these By Laws, the
Restated Certificate of Incorporation, or the Nevada Revised Statutes.
SECTION 9. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken by the board of directors at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors.
SECTION 10. RESIGNATION. Any director may resign at any time by sending
a written notice of such resignation to the home office of the Corporation
addressed to the chairman. Unless otherwise specified therein such resignation
shall take effect upon receipt thereof by the chairman.
SECTION 11. VACANCIES. Any vacancy occurring on the board of directors
shall be filled in accordance with the provisions of the Corporation's Restated
Certificate of Incorporation. Any directorship to be filled by reason of an
increase in the number of directors may be filled by the affirmative vote of
two-thirds of the directors then in office or by election at an annual meeting
or at a special meeting of the stockholders held for that purpose. The term of
such director shall be in accordance with the provisions of the Corporation's
Restated Certificate of Incorporation.
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SECTION 12. REMOVAL OF DIRECTORS. Any director or the entire board of
directors may be removed only in accordance with the provisions of the
Corporation's Restated Certificate of Incorporation.
SECTION 13. COMPENSATION. Directors, as such, may receive compensation
for service on the board of directors. Members of either standing or special
committees may be allowed such compensation as the board of directors may
determine.
SECTION 14. AGE LIMITATION. No person 70 years or more of age shall be
eligible for election, reelection, appointment or reappointment to the board of
the Corporation. No director shall serve as such beyond the annual meeting of
the Corporation immediately following the director becoming 70 years of age.
This age limitation does not apply to an advisory director.
ARTICLE IV
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, as they may determine to be
necessary or appropriate for the conduct of the business of the Corporation, and
may prescribe the duties, constitution and procedures thereof. Each committee
shall consist of one or more directors of the Corporation appointed by the
chairman. The chairman 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.
The chairman shall have power at any time to change the members of, to
fill vacancies in, and to discharge any committee of the board. Any member of
any such committee may resign at any time by giving notice to the Corporation;
provided, however, that notice to the board, the chairman of the board, the
chief executive officer, the chairman of such committee, or the secretary shall
be deemed to constitute notice to the Corporation. Such resignation shall take
effect upon receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, acceptance of such resignation shall not be
necessary to make it effective. Any member of any such committee may be removed
at any time, either with or without cause, by the affirmative vote of a majority
of the authorized number of directors at any meeting of the board called for
that purpose.
ARTICLE V
OFFICERS
SECTION 1. POSITIONS. The officers of the Corporation shall be a
chairman, a president, one or more vice presidents, a secretary and a treasurer,
each of whom shall be elected by the board of directors. The board of directors
may designate one or more vice presidents as executive vice president or senior
vice president. The board of directors may also elect or authorize the
appointment of such other officers as the business of the Corporation may
require. The officers shall have such authority and perform such duties as the
board of directors may from time to time authorize or determine. In the absence
of action by the board of directors, the officers shall have such powers and
duties as generally pertain to their respective offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the Corporation
shall be elected annually by the board of directors at the first meeting of the
board of directors held after each annual meeting of the stockholders. If the
election of officers is not held at such meeting, such election shall be held as
soon thereafter as possible. Each officer shall hold office until his successor
shall have been duly elected and qualified or until his death or until he shall
resign or shall have been removed in the manner hereinafter provided. Election
or appointment of an officer, employee or agent shall not of itself create
contract rights. The board of directors may authorize the Corporation to
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enter into an employment contract with any officer in accordance with state law;
but no such contract shall impair the right of the board of directors to remove
any officer at any time in accordance with Section 3 of this Article V.
SECTION 3. REMOVAL. Any officer may be removed by vote of two-thirds of
the board of directors whenever, in its judgment, the best interests of the
Corporation will be served thereby, but such removal, other than for cause,
shall be without prejudice to the contract rights, if any, of the person so
removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
SECTION 5. REMUNERATION. The remuneration of the officers shall be
fixed from time to time by the board of directors, and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
SECTION 6. AGE LIMITATION. No person 70 or more years of age shall be
eligible for election, reelection, appointment or reappointment as an officer of
the Corporation. No officer shall serve beyond the annual meeting of the
Corporation immediately following the officer becoming 70 or more years of age.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. To the extent permitted by applicable law, and
except as otherwise prescribed by the Corporation's Restated Certificate of
Incorporation or these Restated By-Laws with respect to certificates for shares,
the board of directors or the executive committee may authorize any officer,
employee, or agent of the Corporation to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation. Such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by the board of directors. Such authority may be general or confined
to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by one or more officers, employees or
agents of the Corporation in such manner, including in facsimile form, as shall
from time to time be determined by resolution of the board of directors.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in any of its duly authorized depositories as the board of directors may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. The shares of the Corporation shall
be represented by certificates signed by the chairman of the board of directors
or the president or a vice president and by the treasurer or an assistant
treasurer or the secretary or an assistant secretary of the Corporation, and may
be sealed with the seal of the Corporation or a facsimile thereof. Any or all of
the signatures upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar, other than the
Corporation itself or an employee of
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the Corporation. If any officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such officer before
the certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of its issue.
SECTION 2. FORM OF SHARE CERTIFICATES. All certificates representing
shares issued by the Corporation shall set forth upon the face or back that the
Corporation will furnish to any stockholder upon request and without charge a
full statement of the designations, preferences, limitations, and relative
rights of the shares of each class authorized to be issued, the variations in
the relative rights and preferences between the shares of each such series so
far as the same have been fixed and determined, and the authority of the board
of directors to fix and determine the relative rights and preferences of
subsequent series.
Each certificate representing shares shall state upon the face thereof:
that the Corporation is organized under the laws of the State of Nevada; the
name of the person to whom issued; the number and class of shares, the
designation of the series, if any, which such certificate represents; the par
value of each share represented by such certificate, or a statement that the
shares are without par value. Other matters in regard to the form of the
certificates shall be determined by the board of directors.
SECTION 3. PAYMENT FOR SHARES. No certificate shall be issued for any
share until such share is fully paid.
SECTION 4. FORM OF PAYMENT FOR SHARES. The consideration for the
issuance of shares shall be paid in accordance with the provisions of the
Corporation's Restated Certificate of Incorporation.
SECTION 5. TRANSFER OF SHARES. Transfer of shares of capital stock of
the Corporation shall be made only on its stock transfer books. Authority for
such transfer shall be given only to the holder of record thereof or by his
legal representative, who shall furnish proper evidence of such authority, or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the Corporation. Such transfer shall be made only on surrender for
cancellation of the certificate for such shares. The person in whose name shares
of capital stock stand on the books of the Corporation shall be deemed by the
Corporation to be the owner thereof for all purposes.
SECTION 6. LOST CERTIFICATES. The board of directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. When authorizing such issue of a new certificate,
the board of directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen, or destroyed
certificate, or his legal representative, to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen,
or destroyed.
ARTICLE VIII
FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Corporation shall end on the last day of
December of each year. The Corporation shall be subject to an annual audit as of
the end of its fiscal year by independent public accountants appointed by and
responsible to the board of directors.
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ARTICLE IX
DIVIDENDS
Dividends upon the stock of the Corporation, subject to the provisions
of the Restated Certificate of Incorporation, if any, may be declared by the
board of directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property or in the Corporation's own stock.
ARTICLE X
CORPORATION SEAL
The corporate seal of the Corporation shall be in such form as the
board of directors shall prescribe.
ARTICLE XI
AMENDMENTS
In accordance with the Corporation's Restated Certificate of
Incorporation, these Restated By-Laws may be repealed, altered, amended or
rescinded by the stockholders of the Corporation only by vote of not less than
75% of the voting power of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (considered
for this purpose as one class) cast at a meeting of the stockholders called for
that purpose (provided that notice of such proposed repeal, alteration,
amendment or rescission is included in the notice of such meeting). In addition,
the board of directors may repeal, alter, amend or rescind these Restated
By-Laws by vote of two-thirds of the board of directors at a legal meeting held
in accordance with the provisions of these By Laws.
FINdex.com, INC.
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Exhibit 16.1
LETTER RE CHANGE IN CERTIFYING ACCOUNT
Cohen & Kameny CPA's PLLC
3530 Henry Hudson Parkway, Suite B
Riverdale, NY 10463
(718) 548-7200 Fax (718) 796-0184
Eli Cohen, CPA
David Kameny, CPA
- ------------------
FindEx.com, Inc.
11640 Arbor Street, Suite 201
Omaha, Nebraska 68144
Attention: Board of Directors
Re: Reagan Holdings, Inc.
Dear Sirs:
We have been advised that Reagan Holdings, Inc. ("Reagan") has been acquired by
FindEx.com, Inc. ("FindEx.com"). We have been further advised that as a result
of such acquisition, FindEx.com will use its own auditors, Grant Thorton, LLP,
as the Company's principal independent accountant for the fiscal year ended
December 31, 1999.
This letter shall confirm that our report on Reagan's financial statements for
the past fiscal year did not contain an adverse opinion or disclaimer of
opinion and was not modified as to uncertainty, audit scope, or accounting
principles. Further, there were no disagreements with us, whether or not
resolved, on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedures, which if not resolved
would have caused us to make reference to the subject matter of the
disagreement(s) in connection with our report.
COHEN & KAMENY CPA'S PLLC
/s/
----------------------------------
Riverdale, New York
March 15, 2000
<PAGE> 1
Exhibit 21.1
LIST OF SUBSIDIARIES OF FINDEX.COM, INC.
FindEx.com, Inc., a Delaware Corporation
