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EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CATALOG.COM, INC.
CATALOG.COM, INC., a corporation organized and existing under the laws of
the State of Oklahoma (the "Corporation"), does hereby certify that:
FIRST: The name of this Corporation is Catalog.com, Inc., and the name
under which it originally incorporated is Ethos Communications Corp.
SECOND: The date of filing of this Corporation's original Certificate of
Incorporation with the Secretary of State of the State of Oklahoma was February
28, 1996. The dates of filing of this Corporation's Certificates of Amendment to
the Certificate of Incorporation with the Secretary of State of the State of
Oklahoma were May 28, 1997, and April 14, 1999.
THIRD: Pursuant to Sections 1077 and 1080 of the Oklahoma General
Corporation Act, this Amended and Restated Certificate of Incorporation
restates, integrates and amends the provisions of the Corporation's Certificate
of Incorporation as follows:
ARTICLE I
Name
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The name of this Corporation is: Catalog.com, Inc.
ARTICLE II
Registered Agent
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The address of the Corporation's registered office in the State of Oklahoma
is One Leadership Square, 211 N. Robinson, Suite 1700, Oklahoma City, Oklahoma
73102. The name of its registered agent at such address is Irwin H. Steinhorn.
ARTICLE III
Duration
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The duration of the Corporation is perpetual.
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ARTICLE IV
Purposes
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The objectives and purposes for which the Corporation is organized is for
any lawful act or activity for which a corporation may be organized under the
General Corporation Act of the State of Oklahoma, now or hereafter in effect.
ARTICLE V
Authorized Capital
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The total number of shares of all classes of stock which the Corporation
shall have the authority to issue is 21,000,000 shares, divided into classes
designated as follows: (i) 19,000,000 shares of common stock, par value $.0l per
share (the "Common Stock"); and (ii) 2,000,000 shares of preferred stock, par
value $.0l per share (the "Preferred Stock").
ARTICLE VI
Attributes of Stock
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The designations, powers, preferences and rights, and the qualifications,
limitations or restrictions thereof, for each class of stock of the Corporation
shall be as follows:
Common Stock: Each share of Common Stock shall be equal to each other share
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of Common Stock and, when issued, shall be fully paid and non-assessable, and
the personal property of shareholders shall not be liable for corporate debts.
Subject to any preferential rights of the holders of Preferred Stock, the
holders of Common Stock of the Corporation shall each be entitled to share in
any dividends of the Corporation ratably, if, as and when declared by the Board
of Directors.
Each holder of record of Common Stock shall have one vote for each share of
Common Stock outstanding in his name on the books of the Corporation and shall
be entitled to vote said stock.
Preferred Stock: Shares of Preferred Stock may be issued from time to time
---------------
in one or more series as determined by the Board of Directors. All shares of
Preferred Stock shall be of equal rank and shall be identical, except in respect
of the particulars fixed by the Board of Directors for each series as provided
herein. All shares of any one series shall be identical in all respects with all
the other shares of such series, except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon shall be
cumulative.
The Board of Directors is hereby authorized, by resolution or resolutions to
provide out of the unissued shares of Preferred Stock not then allocated to any
series of Preferred Stock, for one or more series of Preferred Stock. Before any
shares of any such series are issued, the Board of
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Directors shall fix and determine, and is hereby expressly authorized and
empowered to fix and determine, by resolution or resolutions, the powers,
designations, preferences and relative, participating, optional or other rights,
if any, and the qualifications, limitations or restrictions thereof, if any, and
in connection therewith, the Board of Directors is expressly authorized and
empowered to fix and determine any or all of the following provisions of the
shares of such series:
(i) the designation of such series and the number of shares which shall
constitute such series;
(ii) the annual dividend rate payable on shares of such series, expressed
in a dollar amount per share, and the date or dates from which such dividends
shall commence to accrue and shall be cumulative;
(iii) the price or prices at which and the terms and conditions, if any,
on which shares of such series may be redeemed;
(iv) the amounts payable upon shares of such series, in the event of the
voluntary or involuntary liquidation, distribution of assets (other than payment
of dividends), dissolution, or winding up of the affairs of the Corporation;
(v) the sinking funds or mandatory redemption provisions, if any, for
the redemption or purchase of shares of such series;
(vi) the extent of the voting powers, if any, of the shares of such
series;
(vii) the terms and conditions, if any, on which shares of such series may
be converted into shares of stock of the Corporation or any class or classes
thereof; and
(viii) any other preferences and relative, participating, optional or other
special rights, and any qualifications, limitations or restrictions of such
preferences or rights, of shares of such series.
The Amended and Restated Certificate of Designation for the Series B
Convertible Preferred Stock is attached hereto as Exhibit "A" and is hereby
incorporated in its entirety.
Rights or Options: At any time, or from time to time, the Corporation may
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grant rights or options to purchase from the Corporation any shares of its
capital stock of any class or series to run for such period of time, for such
consideration, upon such terms and conditions, and in such form as the Board of
Directors of the Corporation may determine. The rights and options may contain
provisions which, among other things, adjust the option price or number of
shares issuable under such rights or options in the event of an acquisition of
shares or a reorganization, merger, consolidation, sale of assets or other
occurrence involving the Corporation. The terms and conditions of such rights
or options may also include, without limitation, restrictions or conditions that
preclude or limit the exercise, transfer or receipt of such rights or options by
any
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person or persons owning or offering to acquire a specified number or percentage
of the outstanding Common Stock or other securities of the Corporation, or any
transferee or transferees of any such person or persons, or that invalidate or
void such rights or options held by any such person or persons or any such
transferee or transferees.
ARTICLE VII
Amendments
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The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation in
the manner now or hereinafter prescribed herein and by the laws of the State of
Oklahoma, and all rights conferred upon stockholders herein are granted subject
to this reservation.
Notwithstanding anything contained in this Amended and Restated Certificate
of Incorporation to the contrary, (i) the affirmative vote of the holders of at
least 66-2/3% of the combined voting power of all outstanding voting securities
of the Corporation entitled to vote generally in the election of directors of
the Board of Directors of the Corporation ("Voting Power"), voting together as a
single class, shall be required to amend, repeal or adopt any provision
inconsistent with Articles VI, VII, VIII, IX, X and XII of this Amended and
Restated Certificate of Incorporation, and (ii) the affirmative vote of the
holders of at least a majority of the outstanding shares of Common Stock shall
be required to amend ANY OTHER ARTICLE of this Amended and Restated Certificate
of Incorporation, provided that the number of authorized shares of any class or
classes of stock of the Corporation, including without limitation the Preferred
Stock and the Common Stock, may be increased or decreased, but not below the
number of shares thereof outstanding, by the affirmative vote of the holders of
a majority of the stock of the Corporation entitled to vote without regard to
class.
ARTICLE VIII
Board of Directors
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The Board of Directors shall be divided into three (3) classes, as nearly
equal in number as reasonably possible, with the term of office of the first
class to expire at the 2001 annual meeting of shareholders, the term of office
of the second class to expire at the 2002 annual meeting of shareholders and the
term of office of the third class to expire at the 2003 annual meeting of
shareholders. At each annual meeting of shareholders following such initial
classification and election, directors elected to succeed those directors whose
terms expire shall be elected for a term of office to expire at the third
succeeding annual meeting of shareholders after their election. The number of
directors which shall constitute the whole Board of Directors of the Corporation
and each class thereof shall be as specified pursuant to the Bylaws of the
Corporation and may be altered from time to time as may be provided therein,
provided, however, the number of directors which shall constitute the whole
Board of Directors shall be no less than three (3). Directors and officers need
not be shareholders. In case of vacancies in the
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Board of Directors, including vacancies occurring by reason of an increase in
the number of directors, a majority of the remaining members of the Board, even
though less than a quorum, may elect directors to fill such vacancies to hold
office until the next annual meeting of the shareholders.
ARTICLE IX
Amendment of Bylaws
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The Board of Directors of the Corporation is expressly authorized to adopt,
amend or repeal the Bylaws of the Corporation. The shareholders of the
Corporation may not adopt, amend or repeal the Bylaws of the Corporation other
than by the affirmative vote of 66-2/3% of the Voting Power, voting together as
a single class.
ARTICLE X
Exculpatory Provision
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No director of the Corporation shall be liable to the Corporation or any of
its shareholders for monetary damages for breach of fiduciary duty as a
director, provided that this provision does not eliminate the liability of the
director (i) for any breach of the director's duty of loyalty to the Corporation
or its shareholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 1053 of the Oklahoma General Corporation Act, or (iv) for any
transaction from which the director derived an improper personal benefit. For
purposes of the prior sentence, the term "damages" shall, to the extent
permitted by law, include without limitation, any judgment, fine, amount paid in
settlement, penalty, punitive damages, excise or other tax assessed with respect
to an employee benefit plan, or expense of any nature (including, without
limitation, counsel fees and disbursements). Each person who serves as a
director of the Corporation while this Article X is in effect shall be deemed to
be doing so in reliance on the provisions of this Article X, and neither the
amendment or repeal of this Article X, nor the adoption of any provision of this
Certificate of Incorporation inconsistent with this Article X, shall apply to or
have any effect on the liability or alleged liability of any director or the
Corporation for, arising out of, based upon, or in connection with any acts or
omissions of such director occurring prior to such amendment, repeal, or
adoption of an inconsistent provision. The provisions of this Article X are
cumulative and shall be in addition to and independent of any and all other
limitations on or eliminations of the liabilities of directors of the
Corporation, as such, whether such limitations or eliminations arise under or
are created by any law, rule, regulation, bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise.
If the Oklahoma General Corporation Act is amended to further limit or
eliminate liability of the Corporation 's directors for breach of fiduciary
duty, then a director of this Corporation shall not be liable for any such
breach to the fullest extent permitted by the Oklahoma General Corporation Act
as so amended. If the Oklahoma General Corporation Act is
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amended to increase or expand liability of the Corporation's directors for
breach of fiduciary duty, no such amendment shall apply to or have any effect on
the liability or alleged liability of any director of this Corporation for or
with respect to any acts or omissions of such director occurring prior to the
time of such amendment or otherwise adversely affect any right or protection of
a director of this Corporation existing at the time of such amendment.
ARTICLE XI
Compromise or Arrangement by
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Corporation With Creditors or Shareholders
------------------------------------------
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
shareholders or any class of them, any court of equitable jurisdiction within
the State of Oklahoma, on the application in a summary way of this Corporation
or of any creditor or shareholder thereof or on the application of any receiver
or receivers appointed for this Corporation under the provisions of Section 1106
of the Oklahoma General Corporation Act or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 1100 of the Oklahoma General Corporation Act, may
order a meeting of the creditors or class of creditors, and/or of the
shareholders or class of shareholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the shareholders or class of shareholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the compromise or arrangement and the said reorganization shall, if
sanctioned by the court to which the said application has been made, be binding
on all the creditors or class of creditors, and/or on all the shareholders or
class of shareholders, of this Corporation, as the case may be, and also on this
Corporation.
ARTICLE XII
Actions By Written Consent
--------------------------
No action that is required or permitted to be taken by the shareholders of
the Corporation at any annual or special meeting of shareholders may be effected
by written consent of shareholders in lieu of a meeting of shareholders, unless
the action to be effected by written consent of shareholders and the taking of
such action by such written consent have expressly been approved in advance by
the Board.
FOURTH: That each one share of common stock, $.01 par value ("Pre-Split
Common Stock"), of the Corporation issued and outstanding or held by the
Corporation as treasury stock, immediately prior to the time this Amended and
Restated Certificate of Incorporation is filed with the Secretary of State of
the State of Oklahoma, shall be and are hereby automatically reclassified and
changed (without any further act) into two (2) fully-paid and nonassessable
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shares of common stock, $.01 par value ("Post-Split Common Stock"), of the
Corporation. Neither certificates nor scrip for fractional shares of Post-Split
Common Stock will be issued, but the Corporation shall issue and deliver to the
holders of Pre-Split Common Stock, whole shares of Post-Split Common Stock
taking into account any fractional shares created by reason of such
reclassification by rounding up to the next highest number.
FIFTH: This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with Sections 1077 and 1080 of the Oklahoma General
Corporation Act, after being proposed by the directors and adopted by the
shareholders in the manner and by the written consent prescribed in Section
1073A of the Oklahoma General Corporation Act.
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
signed by its Chief Executive Officer and attested to by its Secretary this
____ day of October, 2000.
CATALOG.COM, INC.
By:
________________________________________
Robert W. Crull, Chief Executive Officer
ATTEST:
_____________________________
David D. Gaither, Secretary
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EXHIBIT "A"
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
OF CATALOG.COM
CATALOG.COM, INC. (the "Corporation"), a corporation organized and existing
under the Oklahoma General Corporations Act (the "Act"), DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Corporation's Certificate of Incorporation and pursuant to the provisions of the
Act, said Board of Directors unanimously adopted the following resolutions
providing for the amendment and restatement of the designations, amounts,
relative rights, preferences, qualifications, limitations and restrictions of
the Corporation's authorized preferred stock, $.01 par value, designated and
known as the "Series B Convertible Preferred Stock."
RESOLVED, that the Board of Directors, in accordance with the resolutions
of the June 7, 2000 Memorandum of Action of the shareholders of the Corporation,
hereby amends and restates the designations, amounts, relative rights,
preferences, qualifications, limitations and restrictions of the Series B
Preferred Stock as follows:
1. Number of Shares. The Series B Preferred Stock shall consist of
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800,000 shares. The term "Preferred Stock" used herein without reference to the
Series B Preferred Stock, shall mean all of the Series B Preferred Stock, share
for share alike, except as otherwise expressly provided or as the context
otherwise requires.
2. Voting.
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2A. General. Except as may be otherwise provided in these terms of
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the Series B Preferred Stock or by law; the Series B Preferred Stock shall vote
together with all other classes and series of stock of the Corporation entitled
to vote as a single class on all actions to be taken by the shareholders of the
Corporation. Each share of Series B Preferred Stock shall entitle the holder
thereof to such number of votes per share on each such action as shall equal the
number of shares of Common Stock (including fractions of a share) into which
each such share of Series B Preferred Stock is then convertible.
2B. Board Seat. The holders of the Series B Preferred Stock,
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voting together as a separate class, shall be entitled to elect two (2)
directors of the Corporation (the "Series B Directors"). The holders of the
Common Stock, voting as a separate class shall be entitled to elect three (3)
directors (the "Common Stock Directors") of the Corporation. At any meeting (or
in a written consent in lieu thereof) held for the purpose of electing
directors, the presence in person or by proxy (or the written consent) of the
holders of a majority of the shares of Series B Preferred Stock then outstanding
shall constitute a quorum of the Series B Preferred Stock for the election of
the Series B
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Directors. A vacancy in the Series B directorships shall be filled only by vote
or written consent of the holders of the Series B Preferred Stock; a vacancy in
any Common Stock Directorship shall be filled only by vote or written consent of
the holders of the Common Stock.
2C. Outside Director Approval. A majority of the Outside Directors
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(as hereinafter defined) shall approve: (i) any increase or decrease in the
number of directors; (ii) incurring debt exceeding $1.5 million for any single
purpose; (iii) changing the Corporation's primary line(s) of business; (iv)
registering any shares for public sale; and (v) the retention or termination or
material modification of duties of the officers of the Corporation (except as
may be agreed in voting trust agreements or the like). For the purposes of this
Certificate, the term "Outside Directors" shall mean directors who are not
employees of the Corporation.
3. Dividends.
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3A. Series B Preferred Stock. Dividends upon the Series B
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Preferred Stock shall be paid out of funds legally available therefore, annually
beginning on August 1, 2001, at the rate per annum of $.27 per share (annually
the "Mandatory Dividend") and collectively the "Mandatory Dividends"). In
addition, commencing on August 1, 2001, the holders of Series B Preferred Stock
shall be entitled to receive, out of funds legally available therefore,
additional annual dividends at the rate per annum of $.27 per share (the
"Elective Dividend" and collectively the "Elective Dividends"), when, as and if
declared by the Board of Directors. Elective and Mandatory Dividends (the
"Series B Accruing Dividends") shall accrue from day to day, whether or not
earned or declared, and shall be cumulative, from August 1, 2001.
3B. Common Stock. No dividends shall be declared or paid on the
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Common Stock: (i) at a rate in excess of the dividends declared and paid on the
Series B Preferred Stock, and (ii) unless all Series B Accruing Dividends have
been paid in full to the holders of the Series B Preferred Stock.
4. Liquidation.
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4A. Series B Liquidation Preference. Upon any liquidation,
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dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of the shares of Series B Preferred Stock shall first be entitled,
before any distribution or payment is made upon any stock ranking on liquidation
junior to the Series B Preferred Stock (including, without limitation, shares of
Common Stock), to be paid an amount equal to $9.00 per share (the "Series B Base
Liquidation Value") plus an amount equal to all Series B Accruing Dividends
unpaid thereon, computed to the date payment thereof is made available (such
amount payable with respect to one share of Series B Preferred Stock being
sometimes referred to as the "Series B Liquidation Preferred Payment"). If upon
such liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the holders of
Series B Preferred Stock shall be insufficient to permit payment in full to the
holders of Series B
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Preferred Stock of the Series B Liquidation Preference Payments, then the entire
assets of the Corporation to be so distributed shall be distributed ratably,
based upon Series B Liquidation Preference Payments, among the holders of Series
B Preferred Stock.
4B. Distribution to Holders of Common Stock. Upon any liquidation,
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dissolution or winding up of the Corporation, immediately after the holders of
Series B Preferred Stock shall have been paid in full the Series B Liquidation
Preference Payments, the remaining net assets of the Corporation available for
distribution shall be distributed ratably among the holders of Common Stock.
4C. Notice of Liquidation, Dissolution or Winding Up. Written notice
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of liquidation, dissolution or winding up, stating a payment date and the place
where said payments shall be made, shall be given by mail, postage prepaid, or
by telex to non-U.S. residents, not less than 20 days prior to the payment date
stated therein, to the holders of record of Preferred Stock, such notice to be
addressed to each such holder at its address as shown by the records of the
Corporation.
4D. Deemed Liquidation. For purposes of this paragraph 4, a
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liquidation, dissolution or winding up of the Corporation shall be deemed to
occur if the Corporation shall sell, convey or otherwise dispose of or encumber
all or substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly-owned subsidiary
corporation) or effect any other transaction or series of related transactions
in which more than fifty percent (50%) of the voting power of the Corporation is
disposed of; provided that this subparagraph 4D shall not apply to a merger
effected exclusively for the purpose of changing the domicile of the
Corporation. In the event of a deemed liquidation as described above, if the
consideration received by the Corporation is other than cash its value will be
deemed its fair market value. Any securities shall be valued as follows:
(i) Securities not subject to investment letter or other similar
restrictions on free marketability:
(A) If traded on a securities exchange of The Nasdaq Stock
Market, the value shall be deemed to be the average of the closing prices of the
securities on such exchange over the 30-day period ending three (3) days prior
to the closing;
(B) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the 30-day period ending three (3) days prior to the closing;
and
(C) If there is no active public market, the value shall be
the fair market value thereof, as mutually determined by the Corporation and the
holders of at least a majority of the Voting Power of all then outstanding
shares of Preferred Stock.
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4E. Notice of Liquidation, Dissolution or Winding Up. Written notice
------------------------------------------------
of liquidation, dissolution or winding up, stating a payment date and the place
where said payments shall be made, shall be given by mail, postage prepaid, or
by telex to non-U.S. residents, not less than 20 days prior to the payment date
stated therein, to the holders of record of Preferred Stock, such notice to be
addressed to each such holder at its address as shown by the records of the
Corporation.
5. Restrictions. At any time when shares of Preferred Stock are
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outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Certificate of Incorporation, and in addition to any other vote required by law
or by the Certificate of Incorporation, without the approval of the holders of
at least two-thirds of the then outstanding shares of Series B Preferred Stock,
given in writing or by vote at a meeting, consenting or voting (as the case may
be) together as a single series, the Corporation will not:
5A. Additional Classes of Stock. Create or authorize the creation of
---------------------------
any additional class or series of shares of stock unless the same ranks junior
to the Series B Preferred Stock with respect to voting, dividends, conversion or
upon liquidation, or increase the authorized amount of Series B Preferred Stock,
or increase the authorized amount of any additional class or series of shares of
stock unless the same ranks junior to the Series B Preferred Stock with respect
to voting, dividends, conversion or upon liquidation, or create or authorize any
obligation or security convertible into shares of Series B Preferred Stock
voting or into shares of any other class or series of stock unless the same
ranks junior to the Series B Preferred Stock with respect to voting, dividends,
conversion or upon liquidation, whether any such creation, authorization or
increase shall be by means of amendment to the Certificate of Incorporation or
by merger, consolidation or otherwise.
5B. Liquidation, Merger or Sale of Assets. Consent to any
-------------------------------------
liquidation, dissolution or winding up of the Corporation or consolidate or
merge into or with any other entity or entities or sell or transfer all or
substantially all its assets.
5C. Certificate of Incorporation and Bylaws. Amend, alter or repeal
---------------------------------------
its Certificate of Incorporation or Bylaws in a manner which materially
adversely affects the holders of Preferred Stock.
5D. Dividends and Distributions. Purchase or set aside any sums for
---------------------------
the purchase of, or pay any dividend or make any distribution on, any shares of
stock other than the Series B Preferred Stock, except for dividends or other
distributions payable on the Common Stock solely in the form of additional
shares of Common Stock and except for the purchase of shares of Common Stock
solely in the form of additional shares of Common Stock and except for the
purchase of shares of Common Stock from former employees of the Corporation who
acquired such shares directly from the Corporation, if each such purchase is
made pursuant to contractual rights held by the Corporation relating to the
termination of employment of such former employee and the purchase price does
not exceed the original issue price paid by such former employee to
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the Corporation for such shares. The restrictions contained in this subparagraph
shall not apply in circumstances where the Corporation is current in the payment
of all Elective Dividends and Mandatory Dividends and there are no unpaid Series
B Accruing Dividends.
5E. Redemption. Redeem or otherwise acquire any shares of Preferred
----------
Stock except as expressly authorized in paragraph 7 (provided that this
provision shall not apply to the Corporation's repurchase of Common Stock issued
pursuant to the terms of the Catalog.com, Inc. 1997 Stock Option Plan or the
Catalog.com, Inc. 1999 Stock Option Plan).
5F. Bankruptcy. Initiate a voluntary bankruptcy proceedings or
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consent to the appointment of a receiver or trustee.
6. Conversions. The holders of shares of Preferred Stock shall have
-----------
the following conversion rights:
6A. Right to Convert. Subject to the terms and conditions of
----------------
this paragraph 6, the holder of any shares of Preferred Stock shall have the
right, at its option at any time, to convert any such shares of Preferred Stock
(except that upon any liquidation of the Corporation the right of conversion
shall terminate at the close of business on the business day fixed for payment
of the amount distributable on the Preferred Stock) into such number of fully
paid and nonassessable shares of Common Stock as is obtained by (i) multiplying
the number of shares of Series B Preferred Stock so to be converted by $9.00 and
(ii) dividing the result by the conversion price of $9.00 per share or, in case
an adjustment of such price has taken place pursuant to the further provisions
of this paragraph 6, then by the conversion price as last adjusted and in effect
at the date any share or shares of Series B Preferred Stock are surrendered for
conversion. The conversion price set forth herein or such price as last
adjusted, is referred to herein as the "Conversion Price." Such right of
conversion shall be exercised by the holder thereof by giving written notice
that the holder elects to convert a stated number of shares of Preferred Stock
into Common Stock and by surrender of a certificate or certificates for the
shares so to be converted to the Corporation at its principal office (or such
other office or agency of the Corporation as the Corporation may designate by
notice in writing to the holders of the Preferred Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
6B. Issuance of Certificates; Time Conversion Effected. Promptly
--------------------------------------------------
after the receipt of the written notice referred to in subparagraph 6A and
surrender of the certificate or certificates for the share or shares of
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock issuable upon the conversion of such share or
shares of Preferred Stock. To the extent permitted by law,
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such conversion shall be deemed to have been effected and the Conversion Price
for such shares shall be determined as of the close of business on the date on
which such written notice shall have been received by the Corporation and the
certificate or certificates for such share or shares shall have been received by
the Corporation and the certificate or certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of share or shares of Preferred Stock shall cease, and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No fractional
------------------------------------------------
shares shall be issued upon conversion of Preferred Stock into Common Stock and
no payment or adjustment shall be made upon any conversion on account of any
cash dividends on the Common Stock issued upon such conversion. At the time of
each conversion, the Corporation shall pay, out of assets legally available
therefor, in cash an amount equal to all dividends (excluding Series B Accruing
Dividends) declared and unpaid on the shares of Preferred Stock surrendered for
conversion to the date upon which such conversion is deemed to take place as
provided in subparagraph 6B. In case the number of shares of Preferred Stock
represented by the certificate or certificates surrendered pursuant to
subparagraph 6A exceeds the number of shares converted, the Corporation shall,
upon such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Preferred Stock represented by the certificate or certificates surrendered which
are not to be converted. If any fractional share of Common Stock would, except
for the provisions of the first sentence of this subparagraph 6C, be delivered
upon such conversion, the Corporation, in lieu of delivering such fractional
share, shall pay to the holder surrendering the Preferred Stock for conversion
an amount in cash equal to the current market price of such fractional share as
determined in good faith by the Board of Directors of the Corporation.
6D. Adjustment of Price Upon Issuance of Common Stock. Except as
-------------------------------------------------
provided in subparagraph 6E, if and whenever the Corporation shall issue or
sell, or is, in accordance with subparagraphs 6D(1) through 6D(7), deemed to
have issued or sold, any shares of Common Stock for a consideration per share
less than the Conversion Price in effect immediately prior to the time of such
issue or sale, then, forthwith upon such issue or sale, such issue or sale, such
Conversion Price shall be reduced to the price determined by dividing (i) an
amount equal to the sum of (a) the number of shares of Common Stock outstanding
immediately prior to such issue or sale (including the number of shares of
Common Stock then issued or issuable upon Conversion Price and (b) the
consideration, if any, received by the Corporation upon such issue or sale, by
(ii) the total number of shares of Common Stock outstanding immediately after
such issue or sale (including the number of shares of Common Stock then issued
or issuable upon conversion of all issued and outstanding shares of Preferred
Stock).
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For purposes of this subparagraph 6D, the following subparagraphs
6D(1) to 6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any time the
-----------------------------
Corporation shall in any manner grant (whether directly or by assumption in a
merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock (such warrants,
rights or options being called "Options" and such convertible or exchangeable
stock or securities being called Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon the
exercise of such Options or upon the conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (ii) the
total maximum number of shares of all such Convertible Securities issuable upon
the exercise of such Options) shall be less than a Conversion Price in effect
immediately prior to the time of the granting of such Options, then the total
maximum number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such price per share as of the date of granting
of such Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding. Except as otherwise provided in subparagraph
6D(3), no adjustment of such Conversion Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise of
such Options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
6D(2) Issuance of Convertible Securities. In case the
----------------------------------
Corporation shall in any manner issue (whether directly or by assumption in a
merger or otherwise) or sell any Convertible Securities, whether or not the
rights to exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon
such conversion or exchange (determined by dividing (i) the total amount
received or receivable by the Corporation as consideration for the issue or sale
of such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than a Conversion Price in effect immediately prior to the time of
such issue or sale, then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities shall be
deemed to have been issued for such price per share as of the date of the issue
or sale of such Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (a) except as otherwise provided in subparagraph
6D(3), no adjustment of such Conversion Price shall be made upon the actual
issue of such Common Stock upon conversion or exchange of
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<PAGE>
such Convertible Securities and (b) if any such issue or sale of such
Convertible Securities is made upon exercise of any Options to purchase any such
Convertible Securities for which adjustments of a Conversion Price have been or
are to be made pursuant to other provisions of this subparagraph 6D, no further
adjustment of such Conversion Price shall be made by reason of such issue or
sale.
6D(3) Change in Option price or Conversion Rate. Upon the
-----------------------------------------
happening of any of the following events, namely, if the purchase price provided
for in any Option referred to in subparagraph 6D(1), the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subparagraph 6D(1) or 6D(2), or the rate
at which Convertible Securities referred to in subparagraph 6D(1) or 6D(2) are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Conversion Prices in effect at the
time of such event shall forthwith be readjusted to the Conversion Securities
still outstanding provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time initially
granted, issued or sold, but only if as a result of such adjustment the
Conversion Prices then in effect hereunder are thereby reduced; and on the
expiration of any such Option or the termination of any such right to convert or
exchange such Convertible Securities, the Conversion Prices then in effect
hereunder shall forthwith be increased to the Conversion Prices which would have
been in effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued.
6D(4) Stock Dividends. In case the Corporation shall declare a
---------------
dividend or make any other distribution upon any stock of the Corporation
payable in Common Stock (except for dividends or distributions upon the Common
Stock, adjustments for which are made under paragraph 6F), Options and
Convertible Securities, any Common Stock, Options or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
6D(5) Consideration for Stock. In case any shares of Common
-----------------------
Stock, Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith. In case
any Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral transaction in
which no
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specific consideration is allocated to such Options by the parties thereto, such
Options shall be deemed to have been issued for such consideration as determined
in good faith by the Board of Directors of the Corporation.
6D(6) Record Date. In case the Corporation shall take a record
-----------
of the holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options or
Convertible Securities or (ii) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
6D(7) Treasury Shares. The number of shares of Common Stock
---------------
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition of any such shares shall be
considered an issue or sale of Common Stock for the purpose of this subparagraph
6D.
6E. Certain Issues of Common Stock and Other Events Excepted.
--------------------------------------------------------
Anything herein to the contrary notwithstanding, the Corporation shall not be
required to make any adjustment of the Conversion Prices in the case of the
issuance by the Corporation or its predecessor of:
(i) up to an aggregate of 270,000 shares (appropriately adjusted to
reflect the occurrence of any event described in subparagraph 6F) of Common
Stock to directors, officers, employees or consultants of the Corporation in
connection with their service to the Corporation, including, but not limited to,
the issuance of shares of Common Stock upon the exercise of options granted or
to be granted under the Catalog.com, Inc. 1997 Stock Option Plan and the
Catalog.com, Inc. 1999 Stock Option Plan;
(ii) Capital stock, or options or warrants to purchase capital stock,
issued to financial institutions or lessors in connection with commercial credit
arrangements, equipment financings or similar transactions;
(iii) Shares of Common Stock or Preferred Stock issuable upon
exercise of warrants outstanding as of the date of this Certificate of
Designations;
(iv) Shares of Common Stock issued or issuable in a public offering
prior to or in connection with which all outstanding shares of Series B
Preferred Stock will be converted to Common Stock.
6F. Subdivision of Combination of Common Stock. In case the
------------------------------------------
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into greater number of shares,
the Conversion Prices in effect immediately prior to such subdivision shall be
proportionately reduced, and, conversely, in
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<PAGE>
case the outstanding shares of Common Stock shall be combined into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
6G. Reorganization or Reclassification. If any capital
----------------------------------
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a share or shares
of Preferred Stock shall thereupon have the right to receive, upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of
Common Stock immediately therefore receivable upon the conversion of such share
or shares of Preferred Stock, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such Common Stock
immediately therefore receivable upon such conversion had such reorganization or
reclassification not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of such holder to the end
that the provisions hereto (including without limitation provisions for
adjustments of the Conversion Price) shall thereafter be applicable, as nearly
as may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
6H. Notice of Adjustment. Upon any adjustment of a Conversion
--------------------
Price, then and in each such case the Corporation shall give written notice
thereof, by first class mail, postage prepaid, or by telex or telecopier to non-
U.S. residents, addressed to each holder of shares of Preferred Stock at the
address of such holder as shown on the books of the Corporation, which notice
shall state the Conversion Price resulting from such adjustment, setting forth
in reasonable detail the method upon which such calculation is based.
6I. Other Notices. In case at any time:
-------------
(1) the Corporation shall declare any dividend upon its
Common Stock payable in cash or stock or make any other distribution to the
holders of its Common Stock.
(2) the Corporation shall offer for subscription pro rata to
--- ----
the holders of its Common Stock any additional shares of stock of any class
or other rights.
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with or into, or a sale of all
or substantially all its assets to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by telex or telecopier to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at
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<PAGE>
least 20 days' prior written notice of the date on which the books of the
Corporation shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in respect
of any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least 20 days' prior written notice
of the date when the same shall take place. Such notice in accordance with the
foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto and such notice in accordance with the foregoing
clause (b) shall also specify the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may be.
6J. Stock to be Reserved. The Corporation will at all times reserve
--------------------
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Preferred Stock as herein provided, such number
of shares of Common Stock as shall then be issuable upon the conversion of all
outstanding shares of Preferred Stock. The Corporation covenants that all
shares of Common Stock which shall be so issued shall be duly and validly issued
and fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, and, without limiting the generality of the
foregoing, the Corporation covenants that it will from time to time take all
such action as may be requisite to assure that the par value per share of the
Common Stock is at all times equal to or less than the Conversion Prices in
effect at the time. The Corporation will take all such action as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any requirement of
any national securities exchange upon which the Common Stock may be listed. The
Corporation will not take any action which results in any adjustment of the
Conversion Prices of the total number of shares of Common Stock issued and
issuable after such action upon conversion of the Preferred Stock would exceed
the total number of shares of Common Stock then authorized by its Certificate of
Incorporation.
6K. No Reissuance of Preferred Stock. Shares of Preferred Stock
--------------------------------
which are converted into shares of Common Stock shall be made without charge to
the holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Preferred Stock which is being
converted.
6L. Issue Tax. The issuance of certificates for shares of Common
---------
Stock upon conversion of Preferred Stock shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Preferred Stock which is being
converted.
6M. Closing of Books. The Corporation will at no time close its
----------------
transfer books against the transfer of any Preferred Stock or of any shares of
Common Stock issued or issuable upon the conversion of any shares of Preferred
Stock in any manner which
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<PAGE>
interferes with the timely conversion of such Preferred Stock, except as may
otherwise be required to comply with applicable securities laws.
6N. Definition of Common Stock. As used in this paragraph 6, the
--------------------------
term "Common Stock" shall mean and include the Corporation's authorized Common
Stock, par value $.01 per share, as constituted on the date of filing of these
terms of the Preferred Stock, and shall also include any capital stock of any
class of the Corporation thereafter authorized which shall neither be limited to
a fixed sum or percentage of par value in respect of the rights of the holders
thereof to participate in dividends nor entitled to a preference in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that the shares of Common
Stock receivable upon conversion of shares of Preferred Stock shall include only
shares designated as Common Stock of the Corporation on the date of filing of
this instrument, or in case of any reorganization or reclassification of the
outstanding shares thereof, the stock, securities or assets provided for in
subparagraph 6G.
6O. Mandatory Conversion. If at any time the Corporation shall
--------------------
effect a firm commitment underwritten public offering of shares of Common Stock
in which (i) the aggregate price paid for such shares by the public (prior to
the deduction of underwriting commissions and expenses) is at least $8,000,000
and (ii) which results in the market equity capitalization of the Corporation
being equal to or in excess of $35,000,000 and the listing of the Corporation's
securities on a national securities exchange or on The Nasdaq National Market
System, then effective upon the closing of the sale of such shares by the
Corporation pursuant to such public offering, all outstanding shares of
Preferred Stock shall automatically and without any further action on the part
of the Corporation convert to shares of Common Stock.
6P. No Impairment. The corporation will not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this paragraph 6 and in the taking of all such action as
may be necessary or appropriate in order to protect the Conversion Rights of the
holders of Preferred Stock against impairment.
7. Redemption. The shares of Preferred Stock shall be redeemed as
----------
follows:
7A. Mandatory Redemption of Series B Preferred Stock. On July 31,
------------------------------------------------
2004 (the "Redemption Date"), the Corporation shall redeem any outstanding
shares of Series B Preferred Stock.
7B. Redemption Price and Payment. The shares of Series B Preferred
----------------------------
Stock to be redeemed on the Redemption Date shall be redeemed by paying for each
share in cash an amount equal to $9.00 per share plus an amount equal to all
dividends, declared but unpaid thereon, plus all Series B Accruing Dividends,
whether or not declared, computed to such Redemption Date, such amount being
referred to as the "Redemption Price." Such payment shall be made in full on
the Redemption Date to the holders entitled thereto.
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7C. Subdivision or Combination of Common Stock. In case the
------------------------------------------
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Redemption Price in effect immediately prior to such subdivision
shall be proportionately reduced, and, conversely, in case the outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
Redemption Price in effect immediately prior to such combination shall be
proportionately increased.
7D. Redemption Mechanics. At least 20 but not more than 30 days
--------------------
prior to the Redemption Date, written notice (the "Redemption Notice") shall be
given by the Corporation by delivery in person, certified or registered mail,
return receipt requested, telecopier or telex, to each holder of record (at the
close of business on the business day next preceding the day on which the
Redemption Notice is given) of shares of Preferred Stock notifying such holder
of the redemption and specifying the Redemption Price, such Redemption Date, the
number of shares of Preferred Stock to be redeemed from such holder (computed on
a pro rata basis in accordance with the number of such shares held by all
holders thereof) and the place where said Redemption Price shall be payable.
The Redemption Notice shall be addressed to each holder at his address as shown
by the records of the Corporation. From and after the close of business on the
Redemption Date, unless there shall have been a default in the payment of the
Redemption Price, all rights of holders of shares to be redeemed on such
Redemption Date, and such shares shall not thereafter be transferred on the
books of the Corporation or be deemed to be outstanding for any purpose
whatsoever. If the funds of the Corporation legally available for redemption of
shares of Preferred Stock on the Redemption Date are insufficient to redeem the
total number of shares of Preferred Stock to be redeemed on such Redemption
Date, the holders of such shares shall share ratably in any funds legally
available for redemption of such shares according to the respective amounts
which would be payable to them if the full number of shares to be redeemed on
such Redemption Date were actually redeemed. The shares of Preferred Stock
required to be redeemed but not so redeemed shall remain outstanding and
entitled to all rights and preferences provided herein. At any time thereafter
when additional funds of the Corporation are legally available for redemption of
such shares of Preferred Stock, such funds will be used, at the end of the next
succeeding fiscal quarter, to redeem the balance of such shares, or such portion
thereof for which funds are then legally available, on the basis set forth
above.
7E. Redeemed or Otherwise Acquired Shares to be Retired. Any shares
---------------------------------------------------
of Preferred Stock redeemed pursuant to this paragraph 7 or otherwise acquired
by the Corporation in any manner whatsoever shall be canceled and shall not
under any circumstances be reissued; and the Corporation may from time to time
take such appropriate corporate action as may be necessary to reduce accordingly
the number of authorized shares of Preferred Stock.
7F. Waiver of Redemption. For any redemption pursuant to
--------------------
subparagraph 7A, the holders of a majority of shares of Common Stock issuable
upon conversion of outstanding shares of the Series B Preferred Stock may, by
written notice given to the Company not later than ten (10) days preceding the
Redemption Date, waive the redemption to occur on such Redemption Date.
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8. Amendments. No provision of these terms of the Preferred Stock may be
----------
amended, modified or waived without the written consent or affirmative vote of
the holders of at least two-thirds of the issued and outstanding shares of
Preferred Stock.
14
