Conformed Copy to the
Certificate of Incorporation,
as amended on July 17, 2000
CERTIFICATE OF INCORPORATION
OF
CHANGE TECHNOLOGY PARTNERS, INC.
The undersigned incorporator, in order to form a corporation
under the General Corporation Law of the State of Delaware (the "General
Corporation Law"), certifies as follows:
1. NAME. The name of the corporation is Change Technology Partners, Inc.
(the "Corporation").
2. ADDRESS; REGISTERED OFFICE AND AGENT. The address of the Corporation's
registered office is 9 East Loockerman Street, City of Dover, County of Kent,
State of Delaware; and its registered agent at such address is National
Corporate Research Ltd.
3. PURPOSES. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law.
4. NUMBER OF SHARES; DESIGNATIONS AND POWERS, PREFERENCES AND RIGHTS AND
QUALIFICATIONS, LIMITATIONS AND QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
THEREOF.
4.1 NUMBER OF SHARES. The total number of shares of stock that the
Corporation shall have authority to issue is: five hundred five million
(505,000,000), five hundred million (500,000,000) of which shall be shares of
Common Stock of the par
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value of one cent ($.01) each and five million (5,000,000) of which shall be
shares of Preferred Stock of par value of ten cents ($.10) each.
4.2 The designation, relative rights, preferences and limitations
of the shares of each class are as follows:
4.2.1 The shares of Preferred Stock may be issued from time
to time in one or more series of any number of shares, provided that the
aggregate number of shares issued and not cancelled of any and all such series
shall not exceed the total number of shares of Preferred Stock hereinabove
authorized, and with distinctive serial designations, all as shall hereafter be
stated and expressed in the resolution or resolutions providing for the issue of
such shares of Preferred Stock from time to time adopted by the Board of
Directors of the Corporation (the "Board") pursuant to authority so to do which
is hereby vested in the Board. Each series of shares of Preferred Stock (a) may
have such voting powers, full or limited, or may be without voting powers; (b)
may be subject to redemption at such time or times and at such prices; (c) may
be entitled to receive dividends (which may be cumulative or non-cumulative) at
such rate or rates, on such conditions and at such times, and payable in
preference to, or in such relation to, the dividends payable on any other class
or classes or series of stock; (d) may have such rights upon the dissolution of,
or upon any distribution of the assets of, the Corporation; (e) may be made
convertible into or exchangeable for, shares of any other class or classes or of
any other series of the same or any other class or classes of shares of the
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Corporation at such price or prices or at such rates of exchange and with such
adjustments; (f) may be entitled to the benefit of a sinking fund to be applied
to the purchase or redemption of shares of such series in such amount or
amounts; (g) may be entitled to the benefit of conditions and restrictions upon
the creation of indebtedness of the Corporation or any subsidiary, upon the
issue of any additional shares (including additional shares of such series or of
any other series) and upon the payment of dividends or the making of other
distributions on, and the purchase, redemption or other acquisition by the
Corporation or any subsidiary of, any outstanding shares of the Corporation and
(h) may have such other relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof; all as shall be
stated in said resolution or resolutions providing for the issue of such shares
of Preferred Stock. Any of the voting powers, designations, preferences, rights
and qualifications, limitations or restrictions of any such series of Preferred
Stock may be made dependent upon facts ascertainable outside of the resolution
or resolutions providing for the issue of such Preferred Stock adopted by the
Board pursuant to the authority vested in it by this Section 4.2.1, provided
that the manner in which such facts shall operate upon the voting powers,
designations, preferences, rights and qualifications, limitations or
restrictions of such series of Preferred Stock is clearly and expressly set
forth in the resolution or resolutions providing for the issue of such Preferred
Stock. The term "facts" as used in the next preceding sentence shall have the
meaning given to it in section 151(a) of the General Corporation
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Law. Shares of Preferred Stock of any series that have been redeemed (whether
through the operation of a sinking fund or otherwise) or that if convertible or
exchangeable, have been converted into or exchanged for shares of any other
class or classes shall have the status of authorized and unissued shares of
Preferred Stock of the same series and may be reissued as a part of the series
of which they were originally a part or may be reclassified and reissued as part
of a new series of shares of Preferred Stock to be created by resolution or
resolutions of the Board or as part of any other series of shares of Preferred
Stock, all subject to the conditions or restrictions on issuance set forth in
the resolution or resolutions adopted by the Board providing for the issue of
any series of shares of Preferred Stock.
4.2.2 Subject to the provisions of any applicable law or of
the By-laws of the Corporation, as from time to time amended, with respect to
the closing of the transfer books or the fixing of a record date for the
determination of stockholders entitled to vote and except as otherwise provided
by law or by the resolution or resolutions providing for the issue of any series
of shares of Preferred Stock, the holders of outstanding shares of Common Stock
shall exclusively possess voting power for the election of directors and for all
other purposes, each holder of record of shares of Common Stock being entitled
to one vote for each share of Common Stock standing in his or her name on the
books of the Corporation. Except as otherwise provided by the resolution or
resolutions providing for the issue of any series of shares of Preferred Stock,
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the holders of shares of Common Stock shall be entitled, to the exclusion of the
holders of shares of Preferred Stock of any and all series, to receive such
dividends as from time to time may be declared by the Board. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment shall have been made to the holders of shares of
Preferred Stock of the full amount to which they shall be entitled pursuant to
the resolution or resolutions providing for the issue of any series of shares of
Preferred Stock, the holders of shares of Common Stock shall be entitled to
share, ratably according to the number of shares of Common Stock held by them,
in all remaining assets of the Corporation available for distribution to its
stock holders.
4.2.3 Subject to the provisions of this Certificate of
Incorporation and except as otherwise provided by law, the stock of the
Corporation, regardless of class, may be issued for such consideration and for
such corporate purposes as the Board may from time to time determine.
4.2.4 The Corporation shall hereby create a series of
Preferred Stock which series shall be designated as "Series A Preferred Stock"
(the "Series A Preferred Stock"). The number of shares initially constituting
the Series A Preferred Stock shall be three hundred thousand (300,000). The
rights, preferences, privileges and restrictions granted to and imposed on the
Series A Preferred Stock are as set forth below in paragraphs (a) through (f).
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(a) DIVIDENDS. Shares of Series A Preferred
Stock shall be entitled to cumulative cash dividends out of any funds legally
available therefor, as and when declared and paid thereon in the discretion of
the Board at the rate of $0.06 per share (adjusted to take into account stock
splits, combinations and other similar transactions affecting the Series A
Preferred Stock), payable annually on May 31 commencing on May 31, 2000. Such
dividends shall accrue on each share from the date of its original issue and
shall accrue from day to day, whether or not earned or declared. Such dividends
shall be cumulative so that if such dividends in respect of any previous or
current annual dividend period, at the annual rate specified above, shall not
have been paid or declared and a sum sufficient for the payment thereof set
apart, the deficiency shall first be fully paid or set apart before any dividend
shall be paid on or declared and set apart for the Common Stock or any other
series of preferred stock heretofore or hereafter issued. Any accumulation of
dividends on the Series A Preferred Stock shall not bear interest. In the event
that dividends declared are not sufficient to satisfy the stated cumulative
dividend on the Series A Preferred Stock (or on the Series A Preferred Stock and
any other series of preferred stock of the Corporation heretofore or hereafter
issued having a stated dividend), the holders of the Series A Preferred Stock
will share ratably in the dividend (in the case of two or more series having a
stated dividend on the basis of its relative stated dividend). Notwithstanding
anything herein to the contrary, holders of the Series A Preferred Stock shall
not be entitled to payment of any accrued
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but unpaid dividends existing at the time of a voluntary conversion of the
Series A Preferred Stock pursuant to the terms of Section 4.2.4(d)(i) hereunder,
and the right of the holders of Series A Preferred Stock to such accrued but
unpaid dividends shall be extinguished at such time.
(b) LIQUIDATED PREFERENCE. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation ("Liquidation"), the holders of Series A Preferred Stock shall be
entitled to receive out of the assets of the Corporation, whether such assets
are capital or surplus of any nature, before any payment shall be made or any
assets distributed to the holders of Common Stock, an amount equal to $1.00 per
share (adjusted to take into account stock splits, combinations and other
similar transactions affecting the Series A Preferred Stock) plus any declared
or accrued but unpaid dividends to the holders of Series A Preferred Stock, and
no more. If upon any Liquidation the assets of the Corporation to be distributed
are insufficient to permit the payment to all holders of Series A Preferred
Stock and any other series of Preferred Stock heretofore or hereafter issued of
their full preferential amounts, the entire assets of the Corporation to be
distributed shall be distributed ratably among the holders of Series A Preferred
Stock and any other such series in accordance with each holder's liquidation
preference. A consolidation or merger of the Corporation with or into any other
corporation or corporations or a sale of the Corporation's assets shall not be
deemed
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to be a liquidation, dissolution or winding up of the Corporation as those terms
are used in this paragraph.
(c) VOTING RIGHTS. Except as otherwise provided
by the laws of the State of Delaware or as hereinafter specifically set forth,
each share of the Series A Preferred Stock shall have one vote which may be cast
on all matters to come before the shareholders of the Corporation, as provided
by the laws of the State of Delaware, the Certificate of Incorporation and/or
the bylaws of the Corporation. Except as otherwise provided by the laws of the
State of Delaware or as hereinafter specifically set forth, the holders of the
outstanding shares of Series A Preferred Stock shall vote with the holders of
all outstanding shares of capital stock, and not as a separate class or series.
(d) CONVERSION. The holders of the Series A
Preferred Stock shall have the following conversion rights (the "Conversion
Rights"):
(i) RIGHT TO CONVERT. Each share of
Series A Preferred Stock shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such shares, at the office of
the Corporation or any transfer agent for the Corporation, into one fully paid
and nonassessable share of Common Stock.
(ii) CONVERSION PRICE. Each share of
Series A Preferred Stock shall be convertible into one share of Common Stock
(hereinafter "Conversion Ratio"). The Initial Conversion Price shall be subject
to adjustment from time to time as provided herein.
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(iii) MECHANICS OF VOLUNTARY CONVERSION.
Before any holder of Series A Preferred Stock shall be entitled to voluntarily
convert the same into shares of Common Stock, he shall surrender the
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series A Preferred Stock or Common Stock, and shall give
written notice to the Corporation at such office that he elects to convert the
same and shall state therein the number of shares of Series A Preferred Stock
being converted. Thereupon the Corporation shall promptly issue and deliver to
such holder of Series A Preferred Stock or his designees by first class mail at
the address of such holder as set forth on the books of the Corporation's
transfer agent a certificate or certificates for the number of shares of Common
Stock to which he shall be entitled to as aforesaid and a certificate or
certificates for any shares of Series A Preferred Stock that 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, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(iv) ADJUSTMENT FOR STOCK SPLITS AND
COMBINATIONS. If the Corporation shall at any time or from time to time effect a
subdivision of the outstanding Common Stock, the Conversion Ratio then in effect
immediately before that
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subdivision shall be proportionately decreased, and conversely, if the
Corporation shall at any time or from time to time combine the outstanding
shares of Common Stock, the Conversion Ratio then in effect immediately before
the combination shall be proportionately increased. Any adjustment under this
subparagraph (d) shall become effective at the close of business on the date of
the subdivision or combination becomes effective.
(v) ADJUSTMENT FOR CERTAIN DIVIDENDS AND
DISTRIBUTIONS. In the event of the Corporation at any time, or from time to time
shall make or issue, or fix a record date for the determination of holders of
Common Stock or holders of any other stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock or stock
convertible into or exchangeable for Common Stock then and in each such event
the Conversion Ratio then in effect shall be decreased as of the time of such
issuance or, in the event such a record date shall have been fixed, as of the
close of business on such record date, or by multiplying the Conversion Ratio
then in effect by a fraction:
(1) the numerator of which shall be the total
number of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on such
record date, and
(2) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding immediately
prior to the time of
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such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend
or distribution and/or the number of shares of Common Stock issuable
upon conversion or exchange of stock issuable in payment of such
dividend or distribution; provided, however, if such record date shall
have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Ratio shall be recomputed accordingly as of the close of
business on such record date and thereafter the Conversion Ratio shall
be adjusted pursuant to this Section 4.2.4(d)(v) as of the time of
actual payment of such dividends or distributions.
(vi) ADJUSTMENTS FOR OTHER DIVIDENDS AND
DISTRIBUTIONS. In the event the Corporation at any time or from time to time
after the Commitment Date shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in securities of the Corporation other than shares of
Common Stock or shares of stock convertible into or exchangeable for Common
Stock, then and in each such event provision shall be made so that the holders
of Series A Preferred Stock shall receive upon conversion thereof in addition to
the number of shares of Common Stock receivable thereupon, the amount of
securities of the Corporation which they would have received had their Series A
Preferred Stock been converted into Common Stock on the date of such event and
had thereafter,
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during the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during such
period, giving application to all adjustments with respect to such securities as
are called for during such period under this Section 4.2.4(d)(v) with respect to
the rights of the holders of the Series A Preferred Stock.
(vii) ADJUSTMENT FOR REORGANIZATION,
RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common Stock issuable upon
the conversion of the Series A Preferred Stock shall be changed into the same or
different number of shares of any class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend provided for above, or a reorganization,
merger, consolidation or sale of assets provided for elsewhere in this Section
4.2.4(d)(v)), then and in each such event the holder of each share of Series A
Preferred Stock shall have the right thereafter to convert such share into the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification or other change, by holders of the
number of shares of Common Stock into which such shares of Series A Preferred
Stock might have been converted immediately prior to such reorganization,
reclassification or change, giving application to all adjustments with respect
to such securities as are called for under this Section 4.2.4(d)(v) with respect
to the rights of the holders of the Series A Preferred Stock.
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(viii) MERGERS, CONSOLIDATIONS OR SALE OF
ASSETS. If at any time or from time to time there shall be a merger or
consolidation of the Corporation with or into another corporation, or the sale
of all or substantially all of the Corporation's properties and assets to any
other person, then, as a part of such merger, consolidation or sale, 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 of the successor corporation resulting from such merger or
consolidation or sale, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such merger, consolidation, or sale. In
any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4.2.4(d) (including adjustment of the Conversion
Ratio then in effect and the number of shares purchasable upon conversion of the
Series A Preferred Stock) shall be applicable after that event as nearly
equivalent as may be practicable.
(ix) FRACTIONAL SHARES. No fractional
shares of Common Stock shall be issued upon conversion of Series A Preferred
Stock. In lieu of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to the product of such fraction
multiplied by the fair market value of one share of the Corporation's Common
Stock on the date of conversion, as determined in good faith by the Board of
Directors.
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(x) RESERVATION OF STOCK ISSUABLE UPON
CONVERSION. The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of Series A Preferred Stock, such number
of its shares of Common Stock as shall from time to time be sufficient to effect
the conversion or all outstanding shares of the Series A Preferred Stock, and if
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding shares of the
Series A Preferred Stock, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(xi) CERTIFICATE OF ADJUSTMENT. Whenever
the amount of common shares or other securities deliverable upon the conversion
of shares of Series A Preferred Stock shall be adjusted pursuant to the
provisions hereof, the Corporation shall deliver to each holder of Series A
Preferred Stock, not later than 30 days after the date of such adjustment, a
certificate signed by the President or one of the Vice Presidents of the
Corporation, and by the Treasurer or one of the Assistant Treasurers of the
Corporation, stating the adjusted amount of its common shares or other
securities deliverable per share of Series A Preferred Stock calculated to the
nearest one one-hundredth and setting forth in reasonable detail the method of
calculation and the facts requiring such adjustment and
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upon which such calculation is based. Each adjustment shall remain in effect
until a subsequent adjustment hereunder is required.
(e) REDEMPTION. Holder of Series A Preferred
Stock shall not be entitled to demand redemption of any of the shares so held.
(f) PROTECTIVE LIMITATION.
(i) SENIOR SERIES. So long as any shares
of Series A Preferred Stock shall remain unredeemed and outstanding the
Corporation shall not, without the advance affirmative vote or written consent
of the holders of at least 66 2/3% of the then outstanding shares of Series A
Preferred Stock, taken together as a class, issue any other class of preferred
or special shares having any preference or priority as to dividends or assets
senior to such preference or priority of the Series A Preferred Stock, or
authorize or issue shares of any class of stock or any bonds, debentures, notes
or other obligations convertible into or exchangeable for, or having option
rights to purchase, any shares of any class of stock of this Corporation having
any preference or priority as to dividends or assets senior to such preference
or priority of the Series A Preferred Stock.
(ii) CHANGES. So long as any shares of
Series A Preferred Stock shall remain unredeemed and outstanding, the
Corporation shall not, without the advance affirmative vote or written consent
of the holders of at least 66 2/3% of the then outstanding shares of Series A
Preferred Stock, adversely change any of the rights and preferences of the
Series A Preferred Stock.
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4.2.5 The Corporation shall hereby create a series
of Preferred Stock which series shall be designated as "Series B Preferred
Stock" (the "Series B Preferred"). The number of shares initially constituting
the Series B Preferred Stock shall be four million (4,000,000). The rights,
preferences, privileges and restrictions granted to and imposed on the Series B
Preferred are as set forth below in paragraphs (a) through (h).
(a) DIVIDENDS. The holders of the Series B
Preferred shall be entitled to receive, out of any funds legally available
therefor, such dividends as may be declared from time to time by the Board of
the Corporation provided that no dividend or distribution shall be declared or
paid on any shares of the Common Stock unless at the same time an equivalent
dividend or distribution is declared or paid, as the case may be, on all
outstanding shares of Series B Preferred and provided further that any dividend
or distribution on Series B Preferred shall be payable at the same rate per
share as would be payable on the shares of Common Stock which the holder of the
Series B Preferred would be entitled to receive if he had converted the shares
of Series B Preferred into Common Stock pursuant to Section 4.2.5(d) hereof
immediately prior to the record date of such dividend or distribution.
(b) LIQUIDATION PREFERENCE. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation (each a "Distribution Event"):
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(i) SERIES B PREFERRED PREFERENCE. The
holders of the Series B Preferred shall be entitled to receive with respect to
such Distribution Event pro rata in accordance with the shares of Series B
Preferred then held by them, prior and in preference to any distribution of any
of the assets or surplus funds of the Corporation to the holders of the Common
Stock by reason of their ownership of such shares, an amount equal to the
greater of (x) the aggregate of the Original Issue Price (as defined below) for
all such shares of Series B Preferred plus an amount equal to all declared but
unpaid dividends on such shares of Series B Preferred and (y) the amount that
the holders of Series B Preferred would be entitled to receive if all such
shares of Series B Preferred had been converted into Common Stock pursuant to
Section 4.2.5(d) hereof immediately prior to the record date for the
distributions relating to the Distribution Event. If the assets and funds thus
distributed among the holders of the Series B Preferred 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 among the holders of the Series B Preferred
pro rata in accordance with the shares of Series B Preferred then held by them.
The "Original Issue Price" of the Series B Preferred shall be $10.00 per share
(as adjusted for any stock dividend, stock splits, recapitalization,
reorganizations and other similar transactions with respect to the Series B
Preferred).
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(ii) REORGANIZATION, MERGER OR SALE OF
ASSETS. Neither a consolidation or a merger of the Corporation with or into any
other corporation or corporations nor the sale of all or substantially all of
the assets of the Corporation shall be deemed to be a liquidation, dissolution
or winding up within the meaning of this Section 4.2.5(b).
(c) VOTING RIGHTS. Except as otherwise provided
herein or required by law, each share of Series B Preferred shall be entitled to
the number of votes equal to the number of shares of Common Stock into which the
Series B Preferred could be converted pursuant to Section 4.2.5(d) hereof as of
the record date for the determination of the stockholders entitled to vote on
such matter or, if no record date is established, as of the date such vote is
taken, and the holders of Series B Preferred shall vote share for share with the
holders of the Common Stock without distinction as to class and shall not be
entitled to vote separately as a class or series of a class. Nothing set forth
in this Section 4.2.5(c) shall be construed as a waiver of the right of the
holders of the Series B Preferred to vote as a class when specifically entitled
to do so pursuant to Section 6 herein. The voting rights of the Series B
Preferred shall include, but not be limited to, the right to vote on the Charter
Amendment (as hereinafter defined).
(d) CONVERSION. The holders of the Series B
Preferred have conversion rights as follows (the "Conversion Rights"):
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(i) RIGHT TO CONVERT. Each share of
Series B Preferred shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share at the office of the
Corporation or any transfer agent for the Series B Preferred, into such number
of fully paid and nonassessable shares of Common Stock (the "Conversion Rate")
as is determined by dividing the Original Issue Price by the Conversion Price,
determined as hereinafter provided, in effect at the time of the conversion. The
price at which shares of Common Stock shall be deliverable upon conversion (the
"Conversion Price") for the Series B Preferred shall initially be $0.25 per
share of Common Stock. Such initial Conversion Price shall be subject to
adjustment as hereinafter provided.
(ii) AUTOMATIC CONVERSION. Each share of
Series B Preferred shall automatically be converted into shares of Common Stock
at the then effective Conversion Rate of such stock (x) immediately prior to the
closing of the first firmly underwritten public offering of Common Stock of the
Corporation that occurs after March 20, 2000 and that is pursuant to a
registration statement filed with, and declared effective by, the Securities and
Exchange Commission (or any other federal agency at the time administering the
Securities Act of 1933, as amended (the "Act")) under the Act, covering the
offer and sale of Common Stock to the public at a public offering price per
share (before deductions for underwriter commissions and expenses) of not less
than four times the then prevailing Conversion Price and that results in
proceeds to the Corporation
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(before deduction for underwriter commissions and expenses) of at least
$10,000,000 (a "Qualified Offering"), and (y) upon the conversion of a number of
shares of Series B Preferred which when added to all shares of Series B
Preferred previously converted at any time equals at least 60% of the number of
shares of Series B Preferred issued pursuant to a Securities Purchase Agreement
(the "Securities Purchase Agreement") dated March 9, 2000 between the
Corporation and Pangea Internet Advisors LLC. Upon such automatic conversion,
any declared but unpaid dividends shall be paid in accordance with the
provisions of Section 4.25(d)(iii). In the event of the automatic conversion of
the Series B Preferred upon a Qualified Offering, the person(s) entitled to
receive the Common Stock issuable upon such conversion of Series B Preferred
shall not be deemed to have converted such Series B Preferred until immediately
prior to the closing of such sale of securities. Notwithstanding the foregoing
provisions of this Section 4.2.5(d)(ii), no automatic conversion of the Series B
Preferred shall be effected unless and until such conversion will not violate
any laws, rules, regulations, orders or other legal requirements of any
governing body or until the Charter Amendment shall have occurred, and such
automatic conversion shall be held in abeyance pending compliance with any such
requirements, provided that the holders of Series B Preferred will use their
best efforts to comply with such requirements.
(iii) MECHANICS OF CONVERSION. Before any
holder of Series B Preferred shall be entitled to convert the same into full
shares of Common Stock
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and to receive certificates therefor, such holder shall surrender the
certificate or certificates for such Series B Preferred, duly endorsed, at the
office of the Corporation or of any transfer agent for the Series B Preferred,
and shall give written notice to the Corporation at such office that such holder
elects to convert the same. In the event of an automatic conversion pursuant to
Section 4.2.5(d)(ii), the outstanding shares of Series B Preferred shall be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent. The Corporation is not obligated to issue
certificates evidencing the shares of Common Stock issuable upon such automatic
conversion unless the certificates evidencing such shares of Series B Preferred
are either delivered to the Corporation or its transfer agent as provided above,
or the holder notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates. The Corporation shall, as
soon as practicable after such delivery, or such agreement and indemnification
in the case of a lost certificate, issue and deliver at such office to such
holder of Series B Preferred, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as aforesaid and a
check payable to the holder in the amount of any cash amounts payable as the
result of a conversion into fractional shares of Common Stock. Thereupon, the
Corporation shall promptly pay in cash or, to the extent sufficient funds
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are not then legally available therefor, in Common Stock (at the Common Stock's
fair market value determined by the Board of Directors as of the date of such
conversion), any declared but unpaid dividends on the shares of Series B
Preferred being 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 B Preferred to be converted, or in the case of automatic
conversion on the date of closing of a Qualified Offering or the date on which
more than 60% of the originally issued Series B Preferred have been converted
into Common Stock and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date.
(iv) FRACTIONAL SHARES. In lieu of any
fractional shares to which the holder of Series B Preferred would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the then effective Conversion Price. Whether or not fractional shares are
issuable upon such conversion shall be determined on the basis of the total
number of shares of Series B Preferred of each holder at the time converting
into Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
(v) ADJUSTMENT OF CONVERSION PRICE. The
Conversion Price of the Series B Preferred shall be subject to adjustment from
time to time as follows:
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(A) If the number of shares of
Common Stock outstanding at any time after the date hereof is increased by a
stock dividend payable in shares of Common Stock or by a subdivision or split-up
of shares of Common Stock, then, on the date such payment is made or such change
is effective, the Conversion Price of the Series B Preferred shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of any shares of the Series B Preferred shall be increased in
proportion to such increase of outstanding shares.
(B) If the number of shares of
Common Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, on the effective date of
such combination, the Conversion Price of the Series B Preferred shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of any shares of the Series B Preferred shall be decreased in
proportion to such decrease in outstanding shares.
(C) In case, at any time after
the date hereof, of any capital reorganization, or any reclassification of the
stock of the Corporation (other than as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or merger
of the Corporation with or into another person (other than a consolidation or
merger in which the Corporation is the continuing entity and which does not
result in any change in the Common Stock), the shares of the Series B Preferred
shall, after such reorganization, reclassification, consolidation, merger, sale
or other disposition,
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be convertible into the kind and number of shares of stock or other securities
or property of the Corporation or otherwise to which such holder would have been
entitled if immediately prior to such reorganization, reclassification,
consolidation, merger, sale or other disposition such holder had converted its
shares of the Series B Preferred into Common Stock.
(D) In case any event shall
occur as to which the other provisions of this Section 4.2.5(d)(v) are not
strictly applicable but the failure to make any adjustment would not fairly
protect the conversion rights of the holders of Series B Preferred set forth in
this Section 4 in accordance with the essential intent and principles hereof,
then, in each such case, the Corporation at its expense shall appoint a firm of
independent public accountants of recognized national standing (which may be the
regular auditors of the Corporation), which shall give its opinion as to the
adjustment, if any, on a basis consistent with the essential intent and
principles established in this Section 4.2.5(d), necessary to preserve, without
dilution, the conversion rights of the holders of Series B Preferred set forth
in this Section 4.2.5(d). Upon receipt of such opinion, the Corporation will
promptly mail a copy thereof to the holders of Series B Preferred and shall make
the adjustments described therein.
(E) The provisions of Sections
4.2.5(d)(v)(A), (B), (C) and (D) shall similarly apply to successive events of
the type described therein.
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All calculations under this Section 4.2.5(d)(iv) shall be made to the nearest
cent or to the nearest one hundredth (1/100) of a share, as the case may be.
(vi) MINIMAL ADJUSTMENTS. No adjustment
in the Conversion Price for any Series B Preferred need be made if such
adjustment would result in a change in the Conversion Price of less than 1%. Any
adjustment of less than 1% which is not made shall be carried forward and shall
be made at the time of and together with any subsequent adjustment which, on a
cumulative basis, amounts to an adjustment of 1% or more in the Conversion
Price.
(vii) NO IMPAIRMENT. The Corporation will
not 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
Section 4.2.5(d) 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 Series B
Preferred against impairment. This provision shall not restrict the
Corporation's right to amend its Certificate of Incorporation with the requisite
shareholder consent.
(viii) CERTIFICATE AS TO ADJUSTMENTS. Upon
the occurrence of each adjustment or readjustment of the Conversion Rate for
Series B Preferred pursuant to this Section 4.2.5(d), the Corporation at its
expense shall promptly compute
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such adjustment or readjustment in accordance with the terms hereof and prepare
and furnish to each holder of Series B Preferred a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon written request
at any time of any holder of Series B Preferred, furnish or cause to be
furnished to such holder a like certificate setting forth (A) all such
adjustments and readjustments, (B) the Conversion Rate at the time in effect,
and (C) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of such
holder's shares of Series B Preferred.
(ix) NOTICES OF RECORD DATE AND PROPOSED
LIQUIDATION DISTRIBUTION. In the event of any taking by the Corporation of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property or to receive any other right, the Corporation shall mail to each
holder of Series B Preferred at least 30 days prior to such record date, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend or distribution or right, and the amount and character
of such dividend, distribution or right. In the event of a liquidation
distribution pursuant to Section 4.2.5(b) hereof, the Corporation shall mail to
each holder of Series B Preferred at least 30 days prior to the
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record date applicable to such distribution a notice (A) certifying as to (i)
the anticipated aggregate proceeds available for distribution to holders of
Series B Preferred and Common Stock, (ii) the amount expected to be distributed
pursuant to Section 4.2.5(b) in respect of each share of each outstanding series
of Series B Preferred and each share of Common Stock and (iii) the amount
expected to be distributed pursuant to Section 4.2.5(b) in respect of each share
of outstanding Series B Preferred if the holder of Series B Preferred converted
such share of Series B Preferred into Common Stock immediately prior to the
liquidation distribution and (B) stating that in connection with such
liquidation distribution the holders of shares of Series B Preferred may prior
to such liquidation distribution convert their shares of Series B Preferred into
Common Stock at the applicable Conversion Rate.
(x) NOTICES. Any notice required by the
provisions of this Section 4.2.5(d) to be given to the holder of shares of the
Series B Preferred shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at such holder's address
appearing on the Corporation's books.
(xi) PAYMENT OF TAXES. The Corporation
will pay all taxes (other than taxes based upon income) and other governmental
charges that may be imposed with respect to the issue or delivery of shares of
Common Stock upon conversion of shares of Series B Preferred, excluding any tax
or other charge imposed in connection with any transfer involved in the issue
and delivery of shares of Common
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Stock in a name other than that in which shares of Series B Preferred so
converted were registered.
(e) REDEMPTION.
(i) OPTIONAL REDEMPTION BY CORPORATION.
The shares of the Series B Preferred are redeemable at the option of the
Corporation in whole or in part at any time and from time to time after March
26, 2001, at a redemption price of $10.00 per share plus an amount equal to the
dividends accrued and unpaid (including interest, if any) thereon to the
redemption date. In case only a part of the Series B Preferred Stock at the time
outstanding is to be redeemed, the shares selected shall be allocated among all
of the holders of the Series B Preferred at the time outstanding in proportion
to their respective holdings. At least 30 days in advance of the date designated
for any redemption pursuant to this paragraph (a), the Corporation shall mail or
deliver notices of such redemption to the holders of record of the shares so to
be redeemed at their respective addresses as shown on the books of the
Corporation.
(ii) REDEMPTION AT OPTION OF HOLDERS. If
the Charter Amendment has not occurred prior to December 31, 2000, then at any
time after December 31, 2000 and prior to the Charter Amendment the Corporation
shall, upon the written request (a "Redemption Request") of the holders of at
least 50% of the shares of Series B Preferred issued pursuant to the Securities
Purchase Agreement, redeem all of the then outstanding shares of the Series B
Preferred at the redemption price of $10.00
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per share, plus all dividends accrued and unpaid (including interest, if any) on
such Series B Preferred up to the date fixed for redemption, upon giving the
notice hereinafter provided. "Charter Amendment" means an amendment to the
Corporation's Certificate of Incorporation providing for an increase in the
number of shares of Common Stock that the Corporation is authorized to issue so
that the number thereof is at least equal to the sum of (A) the number of shares
of Common Stock that were outstanding or reserved for issuance immediately prior
to the issuance of any share of Series B Preferred pursuant to the Securities
Purchase Agreement plus (B) the number of shares of Common Stock that would be
required to be issued immediately after the issuance of all shares of Series B
Preferred issued pursuant to the Securities Purchase Agreement if all such
shares of Series B Preferred were converted at such time plus (C) the number of
shares of Common Stock issuable pursuant to the terms of all warrants referred
to in the Securities Purchase Agreement. Not less than 30 days after receipt of
a Redemption Request, a notice specifying the time and place fixed for
redemption of the Series B Preferred shall be given by mail or delivered to the
holders of record of the shares of Series B Preferred Stock selected for
redemption at their respective addresses as shown on the books of the
Corporation. The time so fixed for redemption shall be not less than 30 days
after the date of such notice.
(iii) EFFECT OF REDEMPTION. Upon such date
as the Board of Directors shall designate for payment of the redemption price
(unless the Corporation
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shall default in the payment of the redemption price set forth in the Redemption
notice), the shares of Series B Preferred redeemed shall cease to be deemed
outstanding and the holders of certificates therefor shall have no voting or
other rights with respect to such shares except the right to receive the moneys
payable upon such redemption from the Corporation, without interest thereon,
upon surrender (and endorsement, if required by the Corporation) of their
applicable stock certificates. Upon redemption of the Series B Preferred in the
manner set forth herein, the Series B Preferred Stock so redeemed by the
Corporation shall be cancelled, shall not be reissued and shall cease to be a
part of the authorized shares of the Corporation.
(iv) LIMITATION ON REDEMPTION AND
DIVIDENDS. The option and obligation of the Corporation to redeem shares of the
Series B Preferred Stock under Sections 4.2.5(e)(i) and (ii) hereof, shall be
subject to the restrictions imposed by applicable law or any provision of any
agreement now or hereafter existing relating to the indebtedness of the
Corporation for borrowed money, unless such provision shall be waived. In the
event that the Corporation shall fail to redeem any shares of Series B Preferred
Stock required to be redeemed under Section 4.2.5(e)(ii) hereof, then, until
such shares are redeemed, dividends shall accrue on all shares at a rate equal
to 10% compounded semi-annually from the date such redemption price is required
to be paid to the date payment is made.
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(f) COVENANTS. In addition to any other rights
provided by law, so long as any shares of Series B Preferred shall be
outstanding, the Corporation shall not, without first obtaining the affirmative
vote or written consent of the holders of not less than a majority of such
outstanding shares of Series B Preferred:
(i) CERTIFICATE AND BYLAWS. Amend or
repeal any provision of, or add any provision to, this Corporation's Certificate
of Incorporation or Bylaws if such action would adversely alter or change the
preferences, rights, privileges or powers of, or the restrictions provided for
the benefit of, such shares of Series B Preferred;
(ii) AUTHORIZED SHARES. Increase the
authorized number of shares of Series B Preferred or increase or decrease the
authorized number of shares of preferred stock of the Corporation;
(iii) SENIOR SECURITIES. Make any
authorization or any designation, whether by reclassification or otherwise, of
any new class or series of stock or any other securities convertible into equity
securities of the Corporation ranking senior to the Series B Preferred in right
of redemption, liquidation preference, voting or dividends or any increase in
the authorized or designated number of any such class or series; or
(iv) DISTRIBUTION. Redeem or repurchase
any shares of Common Stock (except for acquisitions of Common Stock by the
Corporation pursuant to
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agreements which permit the Corporation to repurchase such shares upon
termination of services to the Corporation or its affiliates).
(g) STATUS OF CONVERTED STOCK. In the event any
shares of Series B Preferred shall be converted pursuant to Section 4.2.5(b)(iv)
hereof, the shares so converted shall be cancelled and shall not be issuable by
the Corporation, and any declared but unpaid dividends with respect to such
converted shares shall be cancelled. The Certificate of Incorporation of the
Corporation may be appropriately amended from time to time to effect the
corresponding reduction in the Corporation's authorized capital stock.
(h) ABSENCE OF CHARTER AMENDMENT. To the extent
that the rights of the holders of Series B Preferred set forth in Sections
4.2.5(b)(i), (ii) and (iii) depend upon or relate to the number of shares of
Common Stock into which the Series B Preferred may be converted from time to
time, such rights shall be construed as if the Corporation has at all times a
sufficient number of shares of Common Stock authorized and reserved for issuance
to satisfy such conversion rights notwithstanding the fact that a sufficient
number of such shares of Common Stock may not be authorized and reserved because
of the failure of the Charter Amendment to have been effected or for any other
reason.
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5. NAME AND MAILING ADDRESS OF INCORPORATOR. The name
and mailing address of the incorporator are: Sophia Lee, Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019-6064.
6. ELECTION OF DIRECTORS. Members of the Board may be
elected either by written ballot or by voice vote.
7. LIMITATION OF LIABILITY. No director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director, provided that
this provision shall not eliminate or limit the liability of a director (a) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) under section 174 of
the General Corporation Law or (d) for any transaction from which the director
derived any improper personal benefits.
Any repeal or modification of the foregoing provision shall
not adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
8. INDEMNIFICATION.
8.1 To the extent not prohibited by law, the Corporation
shall indemnify any person who is or was made, or threatened to be made, a party
to any
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threatened, pending or completed action, suit or proceeding (a "Proceeding"),
whether civil, criminal, administrative or investigative, including, without
limitation, an action by or in the right of the Corporation to procure a
judgment in its favor, by reason of the fact that such person, or a person of
whom such person is the legal representative, is or was a director or officer of
the Corporation, or, at the request of the Corporation, is or was serving as a
director or officer of any other corporation or in a capacity with comparable
authority or responsibilities for any partnership, joint venture, trust,
employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees, disbursements and other
charges). Persons who are not directors or officers of the Corporation (or
otherwise entitled to indemnification pursuant to the preceding sentence) may be
similarly indemnified in respect of service to the Corporation or to an Other
Entity at the request of the Corporation to the extent the Board at any time
specifies that such persons are entitled to the benefits of this Section 8.
8.2 The Corporation shall, from time to time, reimburse
or advance to any director or officer or other person entitled to
indemnification hereunder the funds necessary for payment of expenses, including
attorneys' fees and disbursements, incurred in connection with any Proceeding,
in advance of the final disposition of such Proceeding; PROVIDED, HOWEVER, that,
if required by the General Corporation Law, such expenses incurred by or on
behalf of any director or officer or other person may be paid
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in advance of the final disposition of a Proceeding only upon receipt by the
Corporation of an undertaking, by or on behalf of such director or officer (or
other person indemnified hereunder), to repay any such amount so advanced if it
shall ultimately be determined by final judicial decision from which there is no
further right of appeal that such director, officer or other person is not
entitled to be indemnified for such expenses.
8.3 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, this Certificate of Incorporation, the
By-laws of the Corporation (the "By-laws"), any agreement, any vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office.
8.4 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall continue as to a person who has ceased to be a director or officer (or
other person indemnified hereunder) and shall inure to the benefit of the
executors, administrators, legatees and distributees of such person.
8.5 The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of
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the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of an Other Entity, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of this Section 8, the By-laws or under section 145 of the General
Corporation Law or any other provision of law.
8.6 The provisions of this Section 8 shall be a contract
between the Corporation, on the one hand, and each director and officer who
serves in such capacity at any time while this Section 8 is in effect and any
other person entitled to indemnification hereunder, on the other hand, pursuant
to which the Corporation and each such director, officer, or other person intend
to be, and shall be, legally bound. No repeal or modification of this Section 8
shall affect any rights or obligations with respect to any state of facts then
or theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
8.7 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall be enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be
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on the Corporation. Neither the failure of the Corporation (including its Board,
its independent legal counsel and its stockholders) to have made a determination
prior to the commencement of such action that such indemnification or
reimbursement or advancement of expenses is proper in the circumstances nor an
actual determination by the Corporation (including its Board, its independent
legal counsel and its stockholders) that such person is not entitled to such
indemnification or reimbursement or advancement of expenses shall constitute a
defense to the action or create a presumption that such person is not so
entitled. Such a person shall also be indemnified for any expenses incurred in
connection with successfully establishing his or her right to such
indemnification or reimbursement or advancement of expenses, in whole or in
part, in any such proceeding.
8.8 Any director or officer of the Corporation serving in
any capacity of (a) another corporation of which a majority of the shares
entitled to vote in the election of its directors is held, directly or
indirectly, by the Corporation or (b) any employee benefit plan of the
Corporation or any corporation referred to in clause (a) shall be deemed to be
doing so at the request of the Corporation.
8.9 Any person entitled to be indemnified or to
reimbursement or advancement of expenses as a matter of right pursuant to this
Section 8 may elect to have the right to indemnification or reimbursement or
advancement of expenses interpreted on the basis of the applicable law in effect
at the time of the occurrence of the event or
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events giving rise to the applicable Proceeding, to the extent permitted by law,
or on the basis of the applicable law in effect at the time such indemnification
or reimbursement or advancement of expenses is sought. Such election shall be
made, by a notice in writing to the Corporation, at the time indemnification or
reimbursement or advancement of expenses is sought; PROVIDED, HOWEVER, that if
no such notice is given, the right to indemnification or reimbursement or
advancement of expenses shall be determined by the law in effect at the time
indemnification or reimbursement or advancement of expenses is sought.
9. ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS. The
Board may from time to time adopt, amend or repeal the By-laws of the
Corporation; PROVIDED, HOWEVER, that any By-laws adopted or amended by the Board
may be amended or repealed, and any By-laws may be adopted, by the stockholders
of the Corporation by vote of a majority of the holders of shares of stock of
the Corporation entitled to vote in the election of directors of the
Corporation.
WITNESS the signature of this Certificate this ____ day of
April, 2000.
/s/ Sophia Lee
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Sophia Lee
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