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EXHIBIT 3.1(c)
CERTIFICATE OF DESIGNATION
of
SERIES A CONVERTIBLE PREFERRED STOCK
of
TELEMONDE, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
TELEMONDE, INC., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in its Certificate of
Incorporation, and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, its Board of Directors (the
"Board of Directors") has adopted the following resolution creating a series of
its Preferred Stock, $.01 par value per share designated as Series A Convertible
Preferred Stock:
RESOLVED, that a series of the Corporation's authorized preferred
stock, $.01 par value per share, hereby is authorized and created, and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount.
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The shares of such series shall be designated as the "Series A
Convertible Preferred Stock" (the "Series A Preferred Stock") and the number of
shares initially constituting such series shall be 5,000,000, which number may
be decreased (but not increased) by the Board of Directors without a vote of
stockholders; provided, however, that such number may not be decreased below the
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number of then-outstanding shares of Series A Preferred Stock.
Section 2. Voting Rights.
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Each holder of shares of the Series A Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which such shares of Series A Preferred Stock could be converted in
accordance with Section 6 and shall have voting rights and powers equal to the
voting rights and powers of the Common Stock (except as otherwise expressly
provided herein or as required by law, voting together with the Common Stock as
a single class) and shall be entitled to notice of any stockholders' meeting in
accordance with the Bylaws of the Corporation. Fractional votes shall not,
however, be permitted and any fractional voting rights resulting from the above
formula (after aggregating all shares into which
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shares of Series A Preferred Stock and held by each holder could be converted)
shall be rounded to the nearest whole number (with one-half being rounded
upward).
Section 3. Certain Restrictions.
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So long as any share or shares of Series A Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote of holders
of at least 66 2/3% of the shares of Series A Preferred Stock at the time
outstanding, take any of the following actions:
(a) create or authorize any class or series of capital stock
ranking prior to the Series A Preferred Stock with respect of the payment of
dividends or the distribution of assets upon a Liquidation, or create or
authorize any rights, options or warrants exercisable for, or securities
convertible into or exchangeable for, shares of any such class or series of
capital stock;
(b) amend the Corporation's Certificate of Incorporation or Bylaws
or this Certificate of Designation if such amendment would materially and
adversely affect the Series A Preferred Stock or increase the authorized number
of shares of Series A Preferred Stock; or
(c) merge or consolidate the Corporation with or into any other
Person if the effect of such merger or consolidation would be to alter or affect
adversely any rights, preferences or powers of the holders of Preferred Stock.
Section 4. Dividends and Distributions.
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When, as and if declared by the Board of Directors of the
Corporation out of funds of the Corporation legally available for the payment of
dividends to holders of shares of Common Stock (as that term is defined in
Section 7) or any other series or class of Junior Stock (as that term is defined
in Section 7), the holders of shares of Series A Preferred Stock will fully
participate in such dividends:
(a) in the case of dividends declared in respect of Common Stock,
on the basis of the number of shares of Common Stock that they then would have
the right to acquire upon conversion of the shares of the Series A Preferred
Stock then held by such holder in accordance with Section 6;
(b) in the case of dividends declared in respect of Junior Stock
other than Common Stock, on a common-share equivalent basis, calculated by (i)
converting the dividend paid or to be paid on each share of such Junior Stock
into a number equal to that portion of the dividend attributable to a share of
Common Stock, assuming conversion of such share of Junior Stock into that number
of shares of Common Stock that the holder of such share of Junior Stock would
have the right to acquire upon conversion of such share of Junior Stock, and
(ii) multiplying the result of the calculation set forth in (i) above by the
number of shares of Common Stock that the holders of shares of Series A
Preferred Stock then would have the right to acquire upon conversion of the
shares of the Series A Preferred Stock then held by such holder in accordance
with Section 6.
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Section 5. Liquidation, Dissolution or Winding Up.
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(a) Preference. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary:
(i) The holders of the Series A Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of the Common Stock or
any other Junior Stock by reason of their ownership thereof, an amount per share
equal to the "Liquidation Preference" set forth in (b) or (c) below (as adjusted
for any stock dividends, combinations or splits with respect to such shares). If
upon the occurrence of such event, the assets and funds thus distributed among
the holders of the Series A Preferred Stock and any other classes or series of
preferred stock ranking as to assets pari passu thereto shall be insufficient to
permit the payment to such holders of the full aforesaid preferential amount,
then the entire assets and funds of the Corporation legally available for
distribution shall be distributed ratably among the holders of the Series A
Preferred Stock and such other classes or series of preferred stock ranking as
to assets pari passu thereto in proportion to the preferential amount each such
holder is otherwise entitled to receive.
(ii) After the payment of all amounts required to be paid to
the holders of the Series A Preferred Stock and any other classes or series of
preferred stock ranking as to assets pari passu thereto pursuant to (i) above
and then all amounts required to be paid to the holders of shares of Junior
Stock other than Common Stock then outstanding, the holders of shares of Common
Stock then outstanding shall share ratably in the distribution of the remaining
assets and funds of the Corporation legally available for distribution in
proportion to the number of shares of Common Stock then held by them until
proceeds have been distributed to such holders in an amount per share equal to
(A) the amount per share of Series A Preferred Stock distributed to the holders
of the Series A Preferred Stock pursuant to (i) above, divided by (B) the number
of shares of Common Stock into which each share of Series A Preferred Stock then
is convertible. For the purposes of this (ii), holders of shares of Junior Stock
that are convertible into Common Stock shall be treated as if such holders had
converted such shares of Junior Stock to Common Stock immediately prior to such
event.
(iii) After payment to the holders of shares of Common Stock
then outstanding and the holders of shares of Junior Stock other than Common
Stock then outstanding of all amounts to be paid to them pursuant to (ii) above,
the entire remaining assets and funds of the Corporation legally available for
distribution shall be distributed among the holders of the Common Stock and the
Series A Preferred Stock in proportion to the number of shares of Common Stock
then held by them and the shares of Common Stock which they then would have the
right to acquire upon conversion of the shares of the Series A Preferred Stock
then held by the holders thereof in accordance with Section 6.
(b) Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the Corporation, the "Liquidation Preference" shall
be $0.805 (as adjusted for any stock dividends, combinations or splits with
respect to such shares in the same manner as the Conversion Price is adjusted
pursuant to Section 6(e)).
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(c) Reorganization. For purposes of this Section 5, any
Reorganization shall entitle the holders of Series A Preferred Stock to receive
at the closing thereof in cash, securities or other property (valued as provided
in (d) below) the greater of (x) the amounts specified in (a) above or (y) the
cash, securities or other property paid by any acquiring person or entity in
connection such Reorganization, distributed among the holders of the Common
Stock and the Series A Preferred Stock in proportion to the number of shares of
Common Stock then held by them and the shares of Common Stock which they then
would have the right to acquire upon conversion of the shares of the Series A
Preferred Stock then held by the holders thereof in accordance with Section 6. A
"Reorganization" shall occur if the Corporation effects:
(i) any corporate transaction or a series of related
corporate transactions (including, without limitation, any reorganization,
merger or consolidation) which will result in the Corporation's stockholders
immediately prior to such transaction not holding (by virtue of such shares or
securities issued solely with respect thereto) at least 50% of the voting
securities of the surviving or continuing entity or of a parent party of such
surviving or continuing entity; or
(ii) a sale of all of substantially all of the assets of the
Corporation, unless the Corporation's stockholders immediately prior to such
sale will, as a result of such sale, hold (by virtue of securities issued as
consideration for the Corporation's sale) at least 50% of the voting securities
of the purchasing entity or of a parent party of such purchasing entity; or
(iii) a sale to any "person" (as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934) in any transaction or a series of
related transactions in any 180 day period by the Corporation's stockholders of
outstanding voting securities comprising at least 50% of the voting securities
immediately following consummation of such sale or series of related sales.
(d) Value of Assets Other than Cash. Whenever the distribution
provided for in this Section 5 shall be payable in securities or property other
than cash, the value of such distribution shall be the fair market value of such
securities or other property as determined in good faith by the Corporation's
Board of Directors.
Section 6. Conversion.
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(a) Convertibility. Subject to the second sentence of this (a), at
any time after issuance, each share of the Series A Preferred Stock may be
converted, at the option of the holder thereof, into that number of the fully
paid and nonassessable shares of Common Stock determined in accordance with the
provisions of (d) and (e) below. Notwithstanding the foregoing sentence of this
(a), no shares of the Series A Preferred Stock may be converted prior to the
earliest to occur of (i) May 30, 2001, (ii) the first annual meeting of the
Corporation's shareholders held after the filing of this Certificate of
Designation, and (iii) the commencement of any tender offer, or any other offer
made to two or more of the Corporation's stockholders, to purchase an aggregate
of 5.00% or more of the Corporation's issued and outstanding shares of stock.
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(b) Mandatory Conversion. At any time after issuance, each share of
the Series A Preferred Stock shall be converted, at the written request of the
holders of a number of shares of Series A Preferred Stock equal to at least
66 2/3% of the number of shares of Series A Preferred Stock then outstanding and
without further action by the Corporation or the holder of such share, into that
number of the fully paid and nonassessable shares of Common Stock determined in
accordance with the provisions of (d) and (e) below.
(c) Mechanics of Conversion.
(i) A holder of shares of Series A Preferred Stock may elect
to convert shares of the Series A Preferred Stock into shares of Common Stock by
surrendering the certificate or certificates therefor, duly endorsed, at the
office of the Corporation, together with written notice (the "Conversion
Notice") to the Corporation stating that it elects to convert the same and
setting forth the number of shares of Series A Preferred Stock being converted
and the name or names in which the holder wishes the certificate or certificates
for Common Stock to be issued.
(ii) If the conversion is being effected as a result of the
receipt by the Corporation of the written request of the holders of at least
66 2/3% of the Series A Preferred Stock then outstanding (which shall occur
automatically and without further action on the part of such holders), each
holder thereof shall promptly surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or to the transfer
agent for the Series A Preferred Stock or the Common Stock (or submit an
affidavit and indemnity acceptable to the Corporation if such certificate or
certificates have been lost).
(iii) As soon as practicable after the surrender of the
certificate or certificates evidencing shares of Series A Preferred Stock for
conversion at the office of the Corporation or the transfer agent for the Series
A Preferred Stock or the Common Stock, the Corporation shall issue to each
holder of such shares a certificate or certificates evidencing the number of
shares of Common Stock (and any other securities and property) to which such
holder shall be entitled and, in the event that only a part of the shares
evidenced by such certificate or certificates are converted, a certificate
evidencing the number of shares of Series A Preferred Stock which are not
converted. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of Series A
Preferred Stock to be converted or, if the conversion is being effected as a
result of the receipt by the Corporation of the written request of the holders
of 66 2/3% of the Series A Preferred Stock then outstanding, such conversion
shall occur on the date of receipt by the Corporation of such notice, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock at such date and shall, with respect to
such shares, thereafter have only those rights of a holder of Common Stock of
the Corporation.
(iv) The Corporation shall pay all taxes and other
governmental charges (other than any income or other taxes imposed upon the
profits realized by the recipient) that may be imposed in respect of the issue
or delivery of shares of Common Stock or other securities or property upon
conversion of shares of Series A Preferred Stock, including without limitation,
any tax or other charge (other than any transfer tax) imposed in connection with
the
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issue and delivery of shares of Common Stock or other securities at the time of
such conversion in a name other than that in which the shares of Series A
Preferred Stock so converted were registered.
(v) All certificates representing Series A Preferred Stock
surrendered for conversion or redemption shall be appropriately canceled on the
books of the Corporation, and the shares so converted represented by such
certificates shall be restored to the status of authorized but unissued shares
of undesignated preferred stock of the Corporation, but may not be reissued as
part of the Series A Preferred Stock.
(d) Conversion Price. Each share of Series A Preferred Stock shall
be convertible into that number of shares of Common Stock which results from
dividing the Conversion Price (as hereinafter defined) per share in effect at
the time into $0.805. The conversion price per share for the Series A Preferred
Stock initially shall be $0.175 (the "Conversion Price,") and shall be subject
to adjustment from time to time as provided herein.
(e) Adjustments to Conversion Prices for Certain Recapitalizations
Stock-Splits and Dividends.
(i) If the outstanding shares of Common Stock of the
Corporation shall be subdivided into a greater number of shares, or a dividend
in Common Stock or other securities of the Corporation convertible into or
exchangeable for Common Stock (in which latter event the number of shares of
Common Stock issuable upon the conversion or exchange of such securities shall
be deemed to have been distributed) shall be paid in respect of the Common Stock
of the Corporation, the Conversion Price in effect immediately prior to such
subdivision or at the record date of such dividend shall, simultaneously with
the effectiveness of such subdivision or immediately after the record date of
such dividend, be proportionately reduced, and conversely, if the outstanding
shares of Common Stock of the Corporation shall be combined into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination shall, simultaneously with the effectiveness of such combination, be
proportionately increased. Any adjustment to the Conversion Price under this
(e)(i) shall become effective at the close of business on the date the
subdivision or combination referred to herein becomes effective.
(ii) If at any time or from time to time there shall be a
recapitalization of the Common Stock (other than a subdivision or combination
provided for in (i) above) or a merger, consolidation or reorganization of the
Corporation, a provision shall be made so that the holders of the Series A
Preferred Stock shall thereafter be entitled to receive, upon conversion of the
Series A Preferred Stock, the number of shares of stock or other securities or
property of the Corporation or otherwise, to which a holder of that number of
shares of Common Stock, deliverable upon conversion of the Series A Preferred
Stock, as applicable, immediately prior to such transaction, would have been
entitled in connection with such transaction. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 6
with respect to the rights of the holders of the Series A Preferred Stock, as
applicable, after the transaction, to the end that the provisions of this
Section 6 (including adjustment of the Conversion Prices then in effect and the
number of shares issuable upon conversion of the Series A Preferred Stock) shall
be applicable after that event as nearly equivalent as may be practicable.
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(f) Notice of Adjustments. In each case of an adjustment or
readjustment of the Conversion Prices or the number of shares of Common Stock or
other securities issuable upon conversion of the Series A Preferred Stock, if
the change is greater than 1% from the previous price or number, the
Corporation, or independent public accountants selected by the Corporation,
shall compute such adjustment or readjustment in accordance with this
Certificate and prepare a certificate showing such adjustment or readjustment,
and shall mail such certificate, by first-class mail, postage prepaid, to each
registered holder of the Series A Preferred Stock at the holder's address as
shown on the Corporation's stock transfer books. The certificate shall set forth
such adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (i) the
appropriate Conversion Price then in effect, and (ii) the type and amount, if
any, of other property which at the time would be received upon conversion of
the Series A Preferred Stock.
Section 7. Definitions.
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For the purposes of the Certificate of Designation of Cumulative
Series A Preferred Stock which embodies this resolution:
"Common Stock" means the Corporation's common stock, $.001 par
value.
"Junior Stock" means any stock of the Corporation ranking junior to
the Series A Preferred Stock with respect to the payment of dividends and the
distribution of assets, whether upon liquidation or otherwise.
"Liquidation" means any liquidation, dissolution or winding up of
the affairs of the Corporation; provided, however, that a merger or
consolidation of the Corporation into or with another corporation or a sale or
conveyance of all or any part of the assets of the Corporation (which shall not
in fact result in the liquidation of the Corporation and the distribution of
assets to its stockholders) shall not be deemed to constitute a liquidation,
dissolution or winding up of the affairs of the Corporation for purposes of this
definition.
"Person" shall mean any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a corporation, a
partnership, a trust or other entity. A Person, together with such Person's
Affiliates and Associates (as those terms are defined in Rule 12b-2 under the
Exchange Act), and any Persons acting as a partnership, limited partnership,
joint venture, association, syndicate or other group (whether or not formally
organized), or otherwise acting jointly or in concert or in a coordinated or
consciously parallel manner (whether or not pursuant to any express agreement),
for the purpose of acquiring, holding, voting or disposing of securities of the
Corporation with such Person, shall be deemed a single "Person".
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series A Convertible Series A Preferred Stock to be duly executed
by its President and attested to by its Secretary and has caused its corporate
seal to be affixed hereto, this 14th day of December, 2000.
TELEMONDE, INC.
By: /s/ Adam N. Bishop
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Its: President
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ATTEST:
By: /s/ Gottfried Graf von Bismarck
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Its: Secretary
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