EXHIBIT 3.1(b)
CERTIFICATE OF THE DESIGNATIONS, POWERS,
PREFERENCES AND RIGHTS
OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
(par value $.001 per share)
of
PrintOnTheNet.com, Inc.
a Delaware Corporation
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Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors (the "Board of Directors") of
PrintOnTheNet.com, Inc., a Delaware corporation (the "Corporation"), on May 30,
2000:
RESOLVED, that there be, and hereby is, created out of the class of
10,000,000 shares of preferred stock of the Corporation, $.001 par value per
share, a series of preferred stock with the following designations, powers,
preferences and relative, participating, optional or other special rights,
qualifications, limitations or restrictions (this instrument hereinafter
referred to as the "Designation"):
1. Number of Shares and Designations. 5,500,000 shares of the preferred
stock, $.001 par value, of the Corporation are hereby constituted as a series of
preferred stock of the Corporation designated as Series B Convertible Preferred
Stock (the "Series B Preferred Stock").
2. Dividend Provisions. Subject to the rights of the holders of the
Series A Convertible Preferred Stock (the "Series A Preferred Stock") and any
other series of Preferred Stock that may from time to time come into existence,
the holders of shares of Series B Preferred Stock shall be entitled to receive
dividends, out of any assets legally available therefor, ratably with any
declaration or payment of any dividend with holders of the Common Stock or other
junior securities of the Corporation, when, as and if declared by the Board of
Directors, based on the number of shares of Common Stock into which each share
of Series B Convertible Preferred Stock is then convertible.
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3. Rank. The Series B Preferred Stock shall rank: (i) junior to the
Series A Preferred Stock and any other class or series of capital stock of the
Corporation hereafter created specifically ranking by its terms senior to the
Series B Preferred Stock (the "Senior Securities"); (ii) prior to all of the
Corporation's common stock, $.001 par value per share (the "Common Stock");
(iii) prior to any class or series of capital stock of the corporation hereafter
created not specifically ranking by its terms senior to or on parity with the
Series B Preferred Stock (collectively, with the Common Stock, "Junior
Securities"); and (iv) on parity with any class or series of capital stock of
the Corporation hereafter created specifically ranking by its terms on parity
with the Series B Preferred Stock (the "Parity Securities"), in each case as to
the distribution of assets upon liquidation, dissolution or winding up of the
Corporation.
4. Liquidation Preference.
(a) Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary ("Liquidation"), the holders of
record of the shares of the Series B Preferred Stock shall be entitled to
receive, before and in preference to any distribution or payment of assets of
the Corporation or the proceeds thereof may be made or set apart for the holders
of Junior Securities, but after any distribution or payment of assets of the
Corporation or the proceeds thereof may be made or set apart for the holders of
Senior Securities, an amount in cash equal to $2.00 per share (subject to
adjustment in the event of stock splits, combinations or similar events). If,
upon such Liquidation, the assets of the Corporation available for distribution
to the holders of Series B Preferred Stock and any Parity Securities shall be
insufficient to permit payment in full to the holders of the Series B Preferred
Stock and Parity Securities, then the entire assets and funds of the Corporation
legally available for distribution to such holders and the holders of the Parity
Securities then outstanding shall be distributed ratably among the holders of
the Series B Preferred Stock and Parity Securities based upon the proportion the
total amount distributable on each share upon Liquidation bears to the aggregate
amount available for distribution on all shares of the Series B Preferred Stock
and of such Parity Securities, if any.
(b) Upon the completion of the distributions required by
subparagraph (a) of this Paragraph 4, if assets remain in the Corporation, they
shall be distributed to holders of Junior Securities in accordance with the
Corporation's Certificate of Incorporation and any certificate(s) of
designation, powers, preferences and rights.
(c) For purposes of this Paragraph 4, a merger or
consolidation or a sale of all or substantially all of the assets of the
Corporation shall be considered a Liquidation except in the event that in such a
transaction, the holders of the Series B Preferred Stock receive securities of
the surviving corporation having substantially similar rights as the Series B
Preferred Stock and the stockholders of the Corporation immediately prior to
such transaction are holders of at least a majority of the voting securities of
the surviving corporation immediately thereafter. Notwithstanding Paragraph 7
hereof, such provision may be waived in writing by a majority of the holders of
the then outstanding Series B Preferred Stock.
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5. Redemption. The Series A Preferred Stock is not redeemable.
6. Automatic Conversion. The holders of the Series B Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
(a) From and after the Conversion Date (as defined in Section
6(b)), each share of Series B Preferred Stock shall automatically, without any
further action of the holders thereof or the Corporation being required, be
converted (the "Conversion") into and be deemed and treated for all purposes to
represent ownership of twenty (20) fully paid and nonassessable shares of Common
Stock. The number of shares of Common Stock into which each share of Series B
Preferred Stock is convertible is hereinafter referred to as the "Conversion
Rate." The Corporation hereby irrevocably agrees to take any action that may be
required to be taken by law in order to cause the Conversion to occur on the
Conversion Date.
(b) For the purposes hereof, "Conversion Date" means the close
of business on the date that the Corporation files with the Secretary of State
of the State of Delaware an amendment to the Corporation's Certificate of
Incorporation increasing the authorized number of shares of Common Stock to at
least two hundred million (200,000,000) shares.
(c) After the Conversion Date, each certificate representing
Series B Preferred Stock (i) shall automatically represent the number of shares
of Common Stock into which such Series B Preferred Stock has been converted
pursuant to the provisions of Section 6(a), and (ii) at the option of the holder
thereof, may be surrendered for exchange for a certificate or certificates for
that number of shares of Common Stock into which such Series B Preferred Stock
has been converted pursuant to the provisions of Section 6(a).
(d) Each certificate for Series B Preferred Stock so
surrendered shall be accompanied by written notice to the Corporation stating
the name or names (with addresses) in which the certificate or certificates for
Common Stock issuable pursuant to such exchange shall be issued and shall,
unless the Common Stock issuable on exchange are to be issued in the same name
as the registration of such certificate, be duly endorsed by, or be accompanied
by stock powers, duly endorsed for transfer in form satisfactory to the
Corporation duly executed by the holder. The Corporation shall, as soon as
practicable thereafter, issue and deliver to such holder of Series B Preferred
Stock, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled as aforesaid.
(e) In case of any reorganization, reclassification or change
of the Common Stock (including any such reorganization, reclassification or
change in connection with a consolidation or merger in which the Corporation is
the continuing entity), or any consolidation of the Corporation with, or merger
of the Corporation with or into, any other entity (other than a
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consolidation or merger in which the Corporation is the continuing entity), or
of any sale of the properties and assets of the Corporation as, or substantially
as, an entirety to any other person or entity, prior to the Conversion Date,
each share of Series B Preferred Stock then outstanding shall thereafter be
convertible into the kind and amount of stock or other securities or property
receivable upon such reorganization, reclassification, change, consolidation,
merger or sale by a holder of the number of shares of Common Stock into which
such shares of Series B Preferred Stock would have been converted had the
Conversion Date occurred. The provisions of this Section 6(e) shall similarly
apply to successive reorganizations, reclassifications, changes, consolidations,
mergers or sales immediately prior to such reorganization, reclassification,
change, consolidation, merger or sale.
(f) In case the Corporation shall, prior to the conversion of
all the Series B Preferred Stock, (a) issue Common Stock as a dividend or
distribution on all shares of Common Stock of the Corporation, (b) split or
otherwise subdivide its outstanding Common Stock, (c) combine the outstanding
Common Stock into a smaller number of shares, or (d) issue by reclassification
of its Common Stock (except in the case of a merger, consolidation or sale of
all or substantially all of the assets of the Corporation) any shares of the
capital stock of the Corporation, the Conversion Rate in effect on the record
date for any stock dividend or the effective date of any such other event shall
be appropriately adjusted (as determined by the Board of Directors) so that the
holder of each share of the Series B Preferred Stock shall thereafter be
entitled to receive, upon the conversion of such share, the number of shares of
Common Stock or other capital stock which it would own or be entitled to receive
immediately after the happening of any of the events mentioned above had such
share of the Series B Preferred Stock been converted immediately prior to the
close of business on such record date or effective date. The adjustments herein
provided shall become effectively immediately following the record date for any
such stock dividend or the effective date of any such other events. There shall
be no adjustment in the Conversion Rate in the event that the Corporation pays a
cash dividend.
(g) (i) No fractional shares or scrip representing fractional
shares of Common Stock shall be issued upon the conversion of the
Series B Preferred Stock. In lieu of any fractional shares to which a
holder would otherwise be entitled, the Corporation shall pay cash,
equal to such fraction multiplied by the closing price (determined as
provided in subparagraph (ii) of this Paragraph 6(g) of the Common
Stock on the day of conversion.
(ii) For the purposes of any computation under
subparagraph 6(g)(i), the current market price per share of Common
Stock on any date shall be deemed to be the average of the daily
closing prices for the 30 consecutive business days prior to the day in
question. The closing price for each day shall be the last sales price
regular way or in case no sale takes place on such day, the average of
the closing high bid and low asked prices regular way, in either case
(a) as officially quoted by the Nasdaq SmallCap Market or the Nasdaq
National Market or such other market on which the Common Stock is then
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listed for trading, or (b) if, in the reasonable judgment of the Board
of Directors of the Corporation, the Nasdaq SmallCap Market or the
Nasdaq National Market is no longer the principal United States market
for the Common Stock, then as quoted on the principal United States
market for the Common Stock, as determined by the Board of Directors of
the Corporation, or (c) if, in the reasonable judgment of the Board of
Directors of the Corporation, there exists no principal United States
market for the Common Stock, then as reasonably determined by the Board
of Directors of the Corporation.
(h) The Corporation will pay any taxes that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
shares of the Series B Preferred Stock. However, the Corporation shall not be
required to pay any tax which may be payable in respect to any transfer involved
in the issue and delivery of shares of Common Stock upon conversion in a name
other than that in which the shares of the Series B Preferred Stock so converted
were registered, and no such issue or delivery shall be made unless and until
the person requesting such issue or delivery has paid to the Corporation the
amount of any such tax, or has established, to the satisfaction of the
Corporation, that such tax has been paid.
(i) The Corporation will not, by amendment of its Certificate
of Incorporation, as amended, or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 6 and in the taking of all such action as may
be necessary or appropriate in order to protect the conversion rights of the
holders of the Series B Preferred Stock against impairment.
(j) No shares of Series B Preferred Stock which have been
converted to Common Stock shall be reissued by the Corporation, provided,
however, that any such share, upon being converted and canceled, shall be
restored to the status of an authorized but unissued share of preferred stock
without designation as to series, rights or preferences and may thereafter be
issued as a share of preferred stock not designated as Series B Preferred Stock.
7. Voting Rights.
(a) In addition to any other rights provided for herein or by
law, the holders of Series B Preferred Stock shall be entitled to vote, together
with the holders of Common Stock as one class, on all matters as to which
holders of Common Stock shall be entitled to vote, in the same manner and with
the same effect as such Common Stock holders. In any such vote each share of
Series B Preferred Stock shall entitle the holder thereof to the number of votes
per share that equals the number of whole shares of Common Stock into which each
such share of Series B Preferred Stock is then convertible, calculated to the
nearest whole share.
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(b) So long as any shares of the Series B Preferred Stock
remain outstanding, the consent of the holders of a majority of the then
outstanding Series B Preferred Stock, voting as one class, either expressed in
writing or at a meeting called for that purpose, shall be necessary to permit,
effect or validate the creation and issuance of any series of preferred stock or
other security of the Corporation which is senior to the Series B Preferred
Stock as to liquidation and/or dividend rights.
(c) So long as any shares of the Series B Preferred Stock
remain outstanding, the consent of a majority of the holders of the then
outstanding Series B Preferred Stock, voting as one class, either expressed in
writing or at a meeting called for that purpose, shall be necessary to repeal,
amend or otherwise change this Designation or the Certificate of Incorporation
of the Corporation, as amended, in a manner which would alter or change the
powers, preferences, rights privileges, restrictions and conditions of the
Series B Preferred Stock so as to adversely affect the Series B Preferred Stock.
(d) Each share of the Series B Preferred Stock shall entitle
the holder thereof to one vote on all matters to be voted on by the holders of
the Series B Preferred Stock, as set forth in subsections (b) and (c) above.
(e) In the event that the holders of the Series B Preferred
Stock are required to vote as a class on any other matter, the affirmative vote
of holders of not less than fifty percent (50%) of the outstanding shares of
Series B Preferred Stock shall be required to approve each such matter to be
voted upon, and if any matter is approved by such requisite percentage of
holders of Series B Preferred Stock, such matter shall bind all holders of
Series B Preferred Stock.
8. Miscellaneous.
(a) There is no sinking fund with respect to the Series B
Preferred Stock.
(b) The shares of the Series B Preferred Stock shall not have
any preferences, voting powers or relative, participating, optional, preemptive
or other special rights except as set forth above in this Designation and in the
Certificate of Incorporation of the Corporation, as amended.
(c) The holders of the Series B Preferred Stock shall be
entitled to receive all communications sent by the Corporation to the holders of
the Common Stock.
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IN WITNESS WHEREOF, PrintOnTheNet.com, Inc. has caused this Designation
to be executed this 30th day of May, 2000.
PrintOnTheNet.com, Inc.
By: /s/ Benjamin Rogatinsky
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Name: Benjamin Rogatinsky
Title: Chief Executive Officer
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