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EXHIBIT 3
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF
SERIES A CONVERTIBLE PREFERRED STOCK OF
THE FINANCIAL COMMERCE NETWORK, INC.
The Financial Commerce Network, Inc., a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Nevada (hereinafter the "CORPORATION"), in accordance with the provisions of
Section 78.315(2) thereof, DOES HEREBY CERTIFY that, by unanimous written
consent in lieu of a meeting of the Board of Directors of the Corporation dated
as of June 2, 1999:
FIRST: The following resolution was duly adopted by the Board of
Directors of the Corporation:
"RESOLVED: That pursuant to the authority vested in the Board of
Directors of the Corporation by Article 4 of the Corporation's restated
certificate of incorporation, as amended (the "CERTIFICATE OF INCORPORATION"), a
series of Preferred Stock of the Corporation be, and it hereby is, created out
of the authorized but unissued shares of the capital stock of the Corporation,
such series to be designated Series A 6% Convertible Preferred Stock (the
"SERIES A CONVERTIBLE PREFERRED STOCK"), to consist of 1,000,000 shares, par
value $0.001 per share, of which the preferences and relative and other rights,
and the qualifications, limitations or restrictions thereof, shall be as set
forth in the Certificate of Designations annexed hereto:
1. NUMBER OF SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK. Of the
10,000,000 shares of authorized but unissued Preferred Stock, $0.001 par value
("PREFERRED STOCK") of the Corporation, 1,000,000 shares shall be designated and
known as Series A 6% Convertible Preferred Stock, par value $0.001 per share
("SERIES A CONVERTIBLE PREFERRED STOCK").
2. VOTING.
(a) Unless required by law, no holder of any shares of Series
A Convertible Preferred Stock shall be entitled to vote at any meeting of
stockholders of the Corporation (or any written actions of stockholders in lieu
of meetings) with respect to any matters presented to the stockholders of the
Corporation for their action or consideration. Notwithstanding the foregoing,
the Corporation shall provide each holder of record of Series A Convertible
Preferred Stock with timely notice of every meeting of stockholders of the
Corporation and shall provide each holder with copies of all proxy materials
distributed in connection therewith.
(b) So long as shares of Series A Convertible Preferred Stock
are outstanding, the Corporation shall not, without first obtaining the approval
(by vote or written consent, as provided
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by the Nevada General Corporation Law) of the holders of at least 85% of the
then outstanding shares of Series A Convertible Preferred Stock:
(i) alter or change the rights, preferences or
privileges of the Series A Convertible Preferred Stock;
(ii) create any new class or series of capital stock
ranking on a parity with ("PARI PASSU SECURITIES") or a preference over the
Series A Convertible Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation ("SENIOR SECURITIES")
or alter or change the rights, preferences or privileges of any Senior
Securities so as to affect adversely the Series A Convertible Preferred Stock;
(iii) increase the authorized number of shares of
Series A Convertible Preferred Stock; or
(iv) do any act or thing not authorized or
contemplated by this Certificate of Designations which would result in taxation
of the holders of shares of the Series A Convertible Preferred Stock under
Section 305 of the Internal Revenue Code of 1986, as amended (or any comparable
provision of the Internal Revenue Code as hereafter from time to time amended).
In the event holders of at least 85% of the then outstanding
shares of Series A Convertible Preferred Stock agree to allow the Corporation to
alter or change the rights, preferences or privileges of the shares of Series A
Convertible Preferred Stock, pursuant to subsection (b) above, so as to affect
the Series A Convertible Preferred Stock, then the Corporation will deliver
notice of such approved change to the holders of the Series A Convertible
Preferred Stock that did not agree to such alteration or change (the "DISSENTING
HOLDERS") and Dissenting Holders shall have the right for a period of thirty
(30) days to convert any and all shares of then held Series A Convertible
Preferred Stock pursuant to the terms of this Certificate of Designations as in
effect prior to such alteration or change, or else to continue to hold their
shares of Series A Convertible Preferred Stock.
3. DIVIDENDS.
(a) Each holder of shares of shares of Series A Preferred
Stock shall be entitled to receive, for each share of Series A Preferred Stock
registered in his name on the stock transfer books of the Corporation, when and
if declared by the Corporation's Board of Directors out of assets legally
available for payment, a cumulative dividend at the rate of 6% per annum payable
in cash or shares of Common Stock having an equivalent Fair Market Value (as
hereinafter defined), at the option of the Corporation.
(b) "FAIR MARKET VALUE" of a share of Common Stock shall mean
the average of the closing bid and asked prices of the Common Stock for the ten
business days preceding such payment date. If there is no trading market during
such periods, then the Fair Market Value of a share of the Common Stock shall be
determined in good faith by the Corporation's Board of Directors, which shall
take into consideration factors such as the book value of the Common Stock, the
earnings of
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the Corporation and the market price of shares of other companies in similar
businesses in relation to the earnings of such companies.
(c) Dividends shall cease to accrue on shares of Series A
Preferred Stock that are redeemed pursuant to Section 7 hereof as of the date
fixed for such redemption.
(d) Accrued and unpaid dividends on Series A Preferred Stock
shall not bear interest.
(e) In case dividends on the Series A Preferred Stock for any
dividend period in which they are payable are not paid in full, all shares of
Series A Preferred Stock and all shares of any other series of Preferred Stock
ranking as to dividends on a parity with Series A Preferred Stock shall
participate ratably in the payment of dividends for such period in proportion to
the full amounts of dividends for such period to which they are respectively
entitled.
4. LIQUIDATION.
(a) If the Corporation shall commence a voluntary case under
the Federal bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or consent to the entry of an order for relief in an
involuntary case under any law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the
Corporation or of any substantial part of its property, or make an assignment
for the benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or if a decree or order for relief in
respect of the Corporation shall be entered by a court having jurisdiction in
the premises in an involuntary case under the Federal bankruptcy laws or any
other applicable Federal or state bankruptcy, insolvency or similar law
resulting in the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order shall be unstayed and in effect for a
period of thirty (30) consecutive days and, on account of any such event, the
Corporation shall liquidate, dissolve or wind up, or if the Corporation shall
otherwise liquidate, dissolve or wind up (each such event being considered a
"LIQUIDATING EVENT"), no distribution shall be made to the holders of any shares
of capital stock of the Corporation upon liquidation, dissolution or winding up
unless prior thereto, the holders of shares of Series A Convertible Preferred
Stock shall have received the Liquidation Preference (as defined in Article
4(c)) with respect to each share. If upon the occurrence of a Liquidation Event,
the assets and funds available for distribution among the holders of the Series
A Convertible Preferred Stock and holders of Pari Passu Securities shall be
insufficient to permit the payment to such holders of the preferential amounts
payable thereon, then the entire assets and funds of the Corporation legally
available for distribution to the Series A Convertible Preferred Stock and the
Pari Passu Securities shall be distributed ratably among such shares in
proportion to the ratio that that Liquidation Preference payable on each such
share bears to the aggregate Liquidation Preference payable on all such shares.
(b) At the option of each holder of the Series A Convertible
Preferred Stock, the sale, conveyance of disposition of all or substantially all
of the assets of the Corporation, the effectuation by the Corporation of a
transaction or series or related transactions in which more than 50% of the
voting power of the Corporation is disposed of, or the consolidation, merger or
other business
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combination of the Corporation with or into any other Person or Persons when the
Corporation is not the survivor shall be deemed to be a liquidation, dissolution
or winding up of the Corporation pursuant to which the Corporation shall be
required to distribute, upon consummation of and as a condition to such
transaction an amount equal to the Liquidation Preference with respect to each
outstanding share of Series A Convertible Preferred Stock held by such Holder in
accordance with and subject to the terms of this Article 4.
(c) The Liquidation Preference shall be the face value of $10
per share of Series A Convertible Preferred Stock (the "STATED VALUE").
5. OPTIONAL CONVERSION. The holders of shares of Series A
Convertible Preferred Stock shall have the following conversion rights:
(a) RIGHT TO CONVERT; CONVERSION PRICE. Subject to the terms,
conditions, and restrictions of this Paragraph 5, the holder of any shares of
Series A Convertible Preferred Stock shall have the right to convert each such
share of Series A Convertible 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 Series A Convertible Preferred Stock) into an amount of shares of Common
Stock equal to the Stated Value of such share or shares of Series A Convertible
Preferred Stock divided by (i) the average price at which a trade of the Common
Stock is executed, as reported by Bloomberg L.P., on the principal market for
the Corporation's Common Stock (the "PRINCIPAL MARKET") during the period of
five Trading Days ending with the last Trading Day prior to the date of
conversion (the "CONVERSION DATE") (the "MARKET PRICE"), after (ii) discounting
the Market Price by 25% to determine the conversion price (the "CONVERSION
PRICE"). To illustrate, if the Market Price as of the Conversion Date is $3.00
and 100 shares of Series A Convertible Preferred Stock are being converted, the
Stated Value for which would be $1,000, then the Conversion Price shall be $2.25
per share of Common Stock ($3.00 x .75), whereupon the Stated Value of $1,000 of
Series A Convertible Preferred Stock would entitle the holder thereof to convert
the 100 shares of Series A Convertible Preferred Stock into 445 shares of Common
Stock ($1,000 divided by $2.25 equals 445). However, in no event shall the
Conversion Price be less that $2.00 (the "MINIMUM CONVERSION PRICE") nor greater
than $10.00 per share (the "MAXIMUM CONVERSION PRICE"). Unless the Corporation
shall have obtained the approval of its voting stockholders to such issuance, if
required, under applicable law or, if required, in accordance with the rules of
Nasdaq or such other market on which the securities of the Corporation may
trade, as the case may be, the Corporation shall not issue shares of Common
Stock upon conversion of any shares of Series A Convertible Preferred Stock if
such issuance of Common Stock, when added to the number of shares of Common
Stock previously issued by the Corporation upon conversion of shares of the
Series A Convertible Preferred Stock, would result in the issuance of more than
the number of shares of Common Stock authorized by the Company's Certificate of
Incorporation, as the same may be amended as of the date of such conversion, or
would equal or exceed twenty percent (20%) of the number of shares of the
Corporation's Common Stock which were issued and outstanding on the Original
Issuance Date.
(b) CONVERSION DATE. (i) The holder of any shares of Series A
Convertible Preferred Stock may convert at anytime
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(ii) No shares of Series A Convertible Preferred Stock
may be converted into Common Stock, to the extent that, after giving effect to
the conversion and issuance of the Common Stock to be issued pursuant to the
applicable Conversion Notice, the total number of shares of Common Stock deemed
beneficially owned by the holder requesting conversion (other than by virtue of
the ownership of shares of Series A Convertible Preferred Stock or the ownership
of other securities that have limitations on a holder's rights to exchange,
convert or exercise similar to those limitations set forth herein), together
with all shares of Common Stock deemed beneficially owned by such holder's
Affiliates (as defined in Rule 405 of the Securities Act of 1933, as amended)
that would be aggregated for purposes of determining whether a group under
Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder, would exceed 5% of the total issued and outstanding
shares of Common Stock. If any court of competent jurisdiction shall determine
that the foregoing limitation is ineffective to prevent a holder from being
deemed the beneficial owner of more than 5% of the then outstanding shares of
Common Stock, then the Corporation shall redeem so many of such holder's shares
of Series A Convertible Preferred Stock pursuant to Paragraph 7(a) hereof as are
necessary to cause such holder to be deemed the beneficial owner of not more
than 5% of the then outstanding shares of Common Stock.
(c) NOTICE OF CONVERSION. The right of conversion shall be
exercised by the holder thereof by giving written notice (the "CONVERSION
NOTICE") to the Corporation, by facsimile or by registered mail or overnight
delivery service, with a copy by facsimile to the Corporation's then transfer
agent for its Common Stock, as designated by the Corporation from time to time,
that the holder elects to convert a specified number of shares of Series A
Convertible Preferred Stock representing a specified Stated Value thereof into
Common Stock and, if such conversion will result in the conversion of all of
such holder's shares of Series A Convertible Preferred Stock, 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 Series
A Convertible Preferred Stock) at any time during its usual business hours on
the date set forth in the Conversion 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. The Conversion Notice shall include therein the
Stated Value of shares of Series A Convertible Preferred Stock to be converted,
and a calculation (i) of the Market Price, (ii) the Conversion Price, and (iii)
the number of shares of Common Stock to be issued in connection with such
conversion.
(d) ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED. (i)
Promptly, but in no event more than three business days, after the receipt of
the Conversion Notice referred to in Subparagraph 5(c) (and surrender of the
certificate or certificates for the share or shares of Series A Convertible
Preferred Stock to be converted within three business days after the receipt of
the Conversion Notice), 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 into which such shares of Series A Convertible Preferred Stock
are converted. To the extent permitted by law, such conversion shall be deemed
to have been effected on the date on which such Conversion Notice shall have
been received by the Corporation and at the time specified stated in such
Conversion Notice, which must be during the
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calendar day of such notice, and at such time the rights of the holder of such
share or shares of Series A Convertible 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.
Issuance of shares of Common Stock issuable upon conversion which are requested
to be registered in a name other than that of the registered holder shall be
subject to compliance with all applicable federal and state securities laws.
(ii) The holder shall be entitled to exercise
its conversion privilege notwithstanding the commencement of any case under 11
U.S.C. Section 101 ET SEQ. (the "BANKRUPTCY CODE"). In the event the Corporation
is a debtor under the Bankruptcy Code, the Corporation hereby waives to the
fullest extent permitted any rights to relief it may have under 11 U.S.C.
Section 362 in respect of the holder's conversion privilege. The Corporation
hereby waives to the fullest extent permitted any rights to relief it may have
under 11 U.S.C. Section 362 in respect of the conversion of the Series A
Convertible Preferred Stock. The Corporation agrees, without cost or expense the
holder, to take or consent to any and all action necessary to effectuate relief
under 11 U.S.C. Section 362.
(e) FRACTIONAL SHARES. No fractional shares shall be issued
upon conversion of Series A Convertible Preferred Stock into Common Stock. All
fractional shares shall be rounded up to the nearest whole share.
(f) 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, or, in the case of any consolidation, merger or mandatory share exchange
of the Corporation into any other company, then, as a condition of such
reorganization, reclassification or exchange, lawful and adequate provisions
shall be made whereby each holder of a share or shares of Series A Convertible
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 theretofore receivable upon the conversion of such
share or shares of Series A Convertible 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 theretofore receivable upon such
conversion had such reorganization, reclassification or exchange 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 hereof
(including without limitation provisions for adjustments of the conversion
rights) 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.
(g) ADJUSTMENTS FOR SPLITS, COMBINATIONS, ETC. The Conversion
Price and the number of shares of Common Stock into which the Series A
Convertible Preferred Stock shall be convertible shall be adjusted for stock
splits, combinations, or other similar events. Additionally, an adjustment will
be made in the case of an exchange of Common Stock, consolidation or merger of
the Company with or into another corporation or sale of all or substantially all
of the assets of the
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Company in order to enable the holder of Series A Convertible Preferred Stock to
acquire the kind and the number of shares of stock or other securities or
property receivable in such event by a holder of the number of shares of Common
Stock that might otherwise have been issued upon the conversion of the Series A
Convertible Preferred Stock. No adjustment to the Conversion Price will be made
for dividends (other than stock dividends), if any, paid on the Common Stock or
for securities issued pursuant to exercise for fair value of options, warrants,
or restricted stock.
(h) ADJUSTMENTS TO CONVERSION RATIO. For so long as any shares
of Series A Convertible Preferred Stock are outstanding, but no later than one
year from the effective date of a registration statement registering for resale
by the holders the shares of Common Stock issuable upon conversion of the Series
A Convertible Preferred Stock, if the Corporation (i) issues and sells pursuant
to an exemption from registration under the Securities Act (A) Common Stock at a
purchase price on the date of issuance thereof that is lower than the Conversion
Price at such date, (B) warrants or options with an exercise price on the date
of issuance of the warrants or options that is lower than the Conversion Price
on such date, or (C) convertible, exchangeable or exercisable securities with a
right to convert, exchange or exercise at lower than the Conversion Price on the
date of issuance or conversion, as applicable, of such convertible, exchangeable
or exercisable securities; and (ii) grants the right to the purchaser(s) thereof
to demand that the Corporation register under the Securities Act such Common
Stock issued or the Common Stock for which such warrants or options may be
exercised or such convertible, exchangeable or exercisable securities may be
converted, exercised or exchanged, then the Conversion Price shall be reduced to
a rate equal to the lowest of any lower rates since the most recently received
Conversion Notice, and such Adjusted Conversion Price shall apply to any future
Conversion Notices received by the Corporation. The Adjusted Conversion Price as
it may exist from time to time shall not apply retroactively to any shares of
Series A Convertible Preferred Stock converted prior to the implementation of
such Adjusted Conversion Price.
6. MANDATORY CONVERSION.
(a) MANDATORY CONVERSION DATE. If on or after June 2, 2002
(such date as selected by the Corporation being the "MANDATORY CONVERSION
DATE"), there remain issued and outstanding any shares of Series A Convertible
Preferred Stock, then the Corporation shall be entitled to require all (but not
less than all) holders of shares of Series A Convertible Preferred Stock then
outstanding to convert their shares of Series A Convertible Preferred Stock into
shares of Common Stock. The Corporation shall provide written notice (the
"MANDATORY CONVERSION NOTICE") to the holders of shares of Series A Convertible
Preferred Stock of such mandatory conversion or such mandatory buy-out. The
Mandatory Conversion Notice shall include (i) the Stated Value of the shares of
Series A Convertible Preferred Stock to be converted or bought out, (ii) the
Conversion Price at the Mandatory Conversion Date, and (iii) the number of
shares of the Corporation's Common Stock to be issued (or the amount of cash to
be paid in the event of a buy-out) upon such mandatory conversion or such
mandatory buy-out at the then applicable Conversion Price. Notwithstanding the
foregoing, in no event shall the Corporation convert that portion of the Series
A Convertible Preferred Stock to the extent that the issuance of Common Stock
upon the conversion of such Series A Convertible Preferred Stock, when combined
with shares of Common Stock received upon other conversions of Series A
Convertible Preferred Stock by such holder and any
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other holders of Series A Convertible Preferred Stock, would exceed 19.99% of
the Common Stock outstanding on the Original Issuance Date, or as to any
individual holder, make such holder the beneficial owner of 5% or more of the
Company's then outstanding Common Stock.
(b) SURRENDER OF CERTIFICATES. On or before the Mandatory
Conversion Date, each holder of shares of Series A Convertible Preferred Stock
shall surrender his or its certificate or certificates for all such shares to
the Corporation at the place designated in such Mandatory Conversion Notice (or
an affidavit of lost certificate in form and content reasonably satisfactory to
the Corporation), and shall thereafter receive certificates for the number of
shares of Common Stock to which such holder is entitled or, in the event of a
buy-out by the Corporation, the amount of cash such holder is entitled within
three business days. On the Mandatory Conversion Date, all rights with respect
to the Series A Convertible Preferred Stock so converted, including the rights,
if any, to receive notices and vote, will terminate. All certificates evidencing
shares of Series A Convertible Preferred Stock that are required to be
surrendered for conversion in accordance with the provisions hereof, from and
after the Mandatory Conversion Date, shall be deemed to have been retired and
cancelled, notwithstanding the failure of the holder or holders thereof to
surrender such certificates on or prior to such date. The Corporation may
thereafter take such appropriate action as may be necessary to reduce the
authorized Series A Convertible Preferred Stock accordingly.
7. REDEMPTION OF SERIES A CONVERTIBLE PREFERRED STOCK.
(a) RIGHT TO REDEEM SERIES A CONVERTIBLE PREFERRED STOCK. At
any time, and from time to time, on and after the expiration of the earlier of
(i) six months from the Original Issuance Date or (ii) the closing of a
registered firm-commitment underwritten offering of equity securities by the
Corporation for cash, the Corporation may, in its sole discretion, but shall not
be obligated to, redeem, in whole or in part, the then issued and outstanding
shares of Series A Convertible Preferred Stock, at a price (the "REDEMPTION
PRICE") equal to the Stated Value of the Series A Convertible Preferred Stock
plus any accrued dividends.
(b) NOTICE OF REDEMPTION. The Corporation shall provide each
holder of record of the Series A Convertible Preferred Stock being redeemed with
written notice of redemption (the "REDEMPTION NOTICE") not less than 30 days
prior to any date stipulated by the Corporation for the redemption of the Series
A Convertible Preferred Stock (the "REDEMPTION DATE"). The Redemption Notice
shall contain (i) the Redemption Date, (ii) the number of shares of Series A
Convertible Preferred Stock to be redeemed from the holder to whom the
Redemption Notice is delivered, (iii) instructions for surrender to the
Corporation of the certificate or certificates representing the shares of Series
A Convertible Preferred Stock to be redeemed, and (iv) a procedure for the
holder to specify the number of shares of Series A Convertible Preferred Stock
to be converted into Common Stock pursuant to Paragraph 5.
(c) RIGHT TO CONVERT SERIES A CONVERTIBLE PREFERRED STOCK UPON
RECEIPT OF REDEMPTION Notice. Upon receipt of the Redemption Notice, the
recipient thereof shall have the option, at its sole election, to specify what
portion of the Series A Convertible Preferred Stock called for redemption in the
Redemption Notice shall be redeemed as provided in this Paragraph 7 or converted
into Common Stock in the manner provided in Paragraph 5. If the holder of the
Series A
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Convertible Preferred Stock called for redemption elects to convert any of such
shares, then such conversion shall take place on the Conversion Date specified
by the holder, but in no event after the Redemption Date, in accordance with the
terms of Paragraph 5.
(d) SURRENDER OF CERTIFICATES; PAYMENT OF REDEMPTION PRICE. On
or before the Redemption Date, each holder of the shares of Series A Convertible
Preferred Stock to be redeemed shall surrender the required certificate or
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and upon payment to the holder of
the Redemption Price, each such surrendered certificate shall be cancelled and
retired. If payment of such redemption price is not made in full by the
Redemption Date the Holder shall again have the right to convert the Series A
Convertible Preferred Stock as provided in Paragraph 5 hereof. If a certificate
is surrendered and all the shares evidenced thereby are not being redeemed, the
Corporation shall issue new certificates to be registered in the names of the
person(s) whose name(s) appear(s) as the owners on the respective surrendered
certificates and deliver such certificate to such person(s).
8. NOTICES. In case at any time:
(a) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other pro rata distribution to the
holders of its Common Stock; or
(b) 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; or
(c) 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
(d) 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 facsimile or by recognized overnight
delivery service to non-U.S. residents, addressed to each holder of any shares
of Series A Convertible Preferred Stock at the address of such holder as shown
on the books of the Corporation, (i) at least 10 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 and (ii) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, at least 10 days' prior written
notice of the date when the same shall take place. Such notice in accordance
with the foregoing clause (i) 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 (ii) 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
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deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, as the case may be.
9. STOCK TO BE RESERVED. The Corporation, upon the effective
date of this Certificate of Designations, has a sufficient number of shares of
Common Stock available to reserve for issuance upon the conversion of all
outstanding shares of Series A Convertible Preferred Stock. 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 Series A Convertible
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 Series A
Convertible Preferred . The Corporation covenants that all shares of Common
Stock which shall be so issued shall be duly and validly issued, fully paid and
non-assessable. The Corporation will take all such action as may be so taken
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 to
have a sufficient number of authorized but unissued shares of Common Stock to
issue upon conversion of the Series A Convertible Preferred Stock. The
Corporation will not take any action which results in any adjustment of the
conversion rights if the total number of shares of Common Stock issued and
issuable after such action upon conversion of the Series A Convertible Preferred
Stock would exceed the total number of shares of Common Stock then authorized by
the Corporation's Certificate of Incorporation, as amended.
10. NO REISSUANCE OF SERIES A CONVERTIBLE PREFERRED STOCK.
Shares of Series A Convertible Preferred Stock which are converted into shares
of Common Stock as provided herein shall not be reissued.
11. ISSUE TAX. The issuance of certificates for shares of Common
Stock upon conversion of Series A Convertible Preferred Stock shall be made
without charge to the holder for any United States 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
Series A Convertible Preferred Stock which is being converted.
12. CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Series A Convertible Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series A Convertible Preferred Stock in any manner which interferes
with the timely conversion of such Series A Convertible Preferred Stock, except
as may otherwise be required to comply with applicable securities laws.
13. DEFINITIONS. As used in this Certificate of Designations, the
term "COMMON STOCK" shall mean and include the Corporation's authorized Common
Stock, $0.01 par value, as constituted on the date of filing of these terms of
the Series A Convertible 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 Series A Convertible Preferred
Stock shall
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include only shares designated as Common Stock of the Corporation on the date of
filing of this instrument, or in case of any reorganization, reclassification,
or stock split of the outstanding shares thereof, the stock, securities or
assets provided for in Subparagraph 5(f) and (g). Any capitalized terms used in
this Certificate of Designations but not defined herein shall have the meanings
set forth in that certain Preferred Stock Purchase Agreement among the
Corporation and the other persons signatory thereto relating to the issuance and
sale of the Series A Convertible Preferred Stock to the holders of the Series A
Convertible Preferred Stock on the Original Issuance Date, a copy of which will
be provided to any stockholder of the Corporation upon request to the Secretary
of the Corporation, without charge.
14. LOSS, THEFT, DESTRUCTION OF PREFERRED STOCK. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of certificates representing shares of Series A Convertible Preferred
Stock and, in the case of any such loss, theft or destruction, upon receipt of
indemnity or security reasonably satisfactory to the Corporation, or, in the
case of any such mutilation, upon surrender and cancellation of the Series A
Convertible Preferred Stock certificate, the Corporation shall make, issue and
deliver, in lieu of such lost, stolen, destroyed or mutilated certificates for
Series A Convertible Preferred Stock, new certificates for Series A Convertible
Preferred Stock of like tenor. The Series A Convertible Preferred Stock shall be
held and owned upon the express condition that the provisions of this
Paragraph14 are exclusive with respect to the replacement of mutilated,
destroyed, lost or stolen shares of Series A Preferred Stock and shall preclude
any and all other rights and remedies notwithstanding any law or statue existing
or hereafter enacted to the contrary with respect to the replacement of
negotiable instruments or other securities without the surrender thereof.
15. WHO DEEMED ABSOLUTE OWNER. The Corporation may deem the
person in whose name the Series A Convertible Preferred Stock shall be
registered upon the registry books of the Corporation to be, and may treat it
as, the absolute owner of the Series A Convertible Preferred Stock for the
purpose of conversion of the Series A Convertible Preferred Stock and for all
other purposes, and the Corporation shall not be affected by any notice to the
contrary. All such payments and such conversion shall be valid and effectual to
satisfy and discharge the liability upon the Series A Convertible Preferred
Stock to the extent of the sum or sums so paid or the conversion so made.
16. REGISTER. The Corporation shall keep at its office located
at 181 Genesee Street, Utica, New York 13502, a register in which the
Corporation shall provide for the registration of the Series A Convertible
Preferred Stock. Upon any transfer of the Series A Convertible Preferred Stock
in accordance with the provisions hereof, the Corporation shall register such
transfer on the Series A Convertible Preferred Stock register.
17. WITHHOLDING. To the extent required by applicable law, the
Corporation may withhold amounts for or on account of any taxes imposed or
levied by or on behalf of any taxing authority in the United States having
jurisdiction over the Corporation from any payments made pursuant to the Series
A Convertible Preferred Stock.
18. HEADINGS. The headings of the Sections of this Certificate of
Designations are inserted for convenience only and do not constitute a part of
this Certificate of Designations."
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IN WITNESS WHEREOF, Ara Proudian, President of the Corporation, under
penalties of perjury, does hereby declare and certify that this is the act and
deed of the Corporation and the facts stated herein are true and accordingly has
signed this Certificate of Designations as of this 27th day of September 2000.
THE FINANCIAL COMMERCE NETWORK, INC.
By: /s/
__________________________
Ara Proudian
President
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