ARTICLES OF AMENDMENT
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
of
SERIES A CONVERTIBLE PREFERRED STOCK
of
WORLDWIDEWEB INSTITUTE.COM, INC.
WorldWideWeb Institute.com, Inc., a corporation organized and existing
under the laws of the State of Florida (the "Corporation"), hereby certifies
that the following resolutions were adopted by the Board of Directors of the
Corporation pursuant to the authority of the Board of Directors as required by
Section 607.0602 of the Florida Business Corporation Act (the "Business
Corporation Act").
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board of Directors" or the "Board")
in accordance with the provisions of its Certificate of Incorporation and
Bylaws, each as amended through the date hereof, the Board of Directors hereby
authorizes a series of the Corporation's previously authorized Preferred Stock,
par value $.001 per share (the "Preferred Stock"), and hereby states the
designation and number of shares, and fixes the relative rights, preferences,
privileges, powers and restrictions thereof as follows:
ARTICLE I.
DESIGNATION AND AMOUNT; DIVIDENDS
The designation of this series, which consists of 11,200 shares of
Preferred Stock, is the Series A Convertible Preferred Stock (the "Series A
Preferred Stock") and the stated value shall be One Thousand U.S. Dollars
($1,000.00) per share (the "Stated Value"). The Series A Preferred Stock will
bear no dividends, and the holders of the Series A Preferred Stock will not be
entitled to receive dividends on the Series A Preferred Stock.
ARTICLE II.
CERTAIN DEFINITIONS
The following terms shall have the following meanings:
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James M. Schneider, Esq., Florida Bar No. 214338
Atlas Pearlman, P.A.
350 East Las Olas Blvd., Suite 1700
Fort Lauderdale, Florida 33301
(954) 763-1200
A. "Closing Bid Price" means, for any security as of any date, the
closing bid price of such security on the principal United States securities
exchange or trading market where such security is listed or traded as reported
by Bloomberg Financial Markets (or a comparable reporting service of national
reputation selected by the Corporation and reasonably acceptable to holders of a
majority of the aggregate Stated Value represented by the then outstanding
Series A Preferred Stock ("Majority Holders") if Bloomberg Financial Markets is
not then reporting closing bid prices of such security) (collectively,
"Bloomberg"), or if the foregoing does not apply, the last reported sale price
of such security in the over-the-counter market on the Nasdaq Electronic
Bulletin Board (the "Bulletin Board") for such security as reported by
Bloomberg, or, if no sale price is reported for such security by Bloomberg, the
average of the bid prices of any market makers for such security as reported in
the "pink sheets" by the National Quotation Bureau, Inc., in each case for such
date or, if such date was not a trading date for such security, on the next
preceding date which was a trading date. If the Closing Bid Price cannot be
calculated for such security as of either of such dates on any of the foregoing
bases, the Closing Bid Price of such security on such date shall be the fair
market value as reasonably determined by an investment banking firm selected by
the Corporation and reasonably acceptable to the Majority Holders, with the
costs of such appraisal to be borne by the Corporation.
B. "Conversion Amount" means One Thousand Dollars ($1,000) and any
Remedy Amounts and amounts payable in connection therewith (to the extent the
Holders (as hereinafter defined) determine to take such payments in shares of
Common Stock), each as specified in the notice of conversion in the form
attached hereto (the "Notice of Conversion").
C. "Conversion Date" means, for any Optional Conversion (as defined
below), the date specified in the Notice of Conversion so long as the copy of
the Notice of Conversion is faxed (or delivered by other means resulting in
notice) to the Corporation at or before 11:59 p.m., New York City time, on the
Conversion Date indicated in the Notice of Conversion; provided, however, that
if the Notice of Conversion is not so faxed or otherwise delivered before such
time, then the Conversion Date shall be the date the holder faxes or otherwise
delivers the Notice of Conversion to the Corporation.
D. "Conversion Price" means $4.50, and shall be subject to adjustment
as provided herein.
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E. "Issue Date" means the date of the Closing under the Securities
Purchase Agreement by and among the Corporation and the purchasers named therein
(the "Securities Purchase Agreement") and the initial issuance of the Series A
Preferred Stock thereon.
F. "N" means the number of days from, but excluding, the Issue Date.
G. "Purchase Documents" means this Agreement, the Securities Purchase
Agreement, the Registration Rights Agreement (as defined hereinafter), the Stock
Purchase Warrants dated the date hereof and the Placement Agency Agreement
between the Corporation and The Zanett Securities Corporation dated the date
hereof.
ARTICLE III.
CONVERSION
A. Conversion at the Option of the Holder. Subject to the limitations
on conversions contained in Paragraph C of this Article III, each holder of the
Series A Preferred Stock (a "Holder") may, at any time and from time to time on
or after the Issue Date, convert (an "Optional Conversion") each of his shares
of Series A Preferred Stock into a number of fully paid and nonassessable shares
of Common Stock determined in accordance with the following formula:
Conversion Amount
-----------------
Conversion Price
B. Mechanics of Conversion. In order to effect an Optional Conversion,
a Holder shall: (x) fax (or otherwise deliver) a copy of the fully executed
Notice of Conversion to the Corporation for the Common Stock and (y) surrender
or cause to be surrendered certificates representing the Series A Preferred
Stock being converted (the "Preferred Stock Certificates"), duly endorsed, along
with a copy of the Notice of Conversion as soon as practicable thereafter to the
Corporation. Upon receipt by the Corporation of a facsimile copy of a Notice of
Conversion from a Holder, the Corporation shall immediately send, via facsimile,
a confirmation to such Holder stating that the Notice of Conversion has been
received, the date upon which the Corporation expects to deliver the Common
Stock issuable upon such conversion and the name and telephone number of a
contact person at the Corporation regarding the conversion. The Corporation
shall not be obligated to issue shares of Common Stock upon a conversion unless
either the Preferred Stock Certificates are delivered to the Corporation as
provided above, or the Holder notifies the Corporation that such certificates
have been lost, stolen or destroyed and delivers the documentation to the
Company required by Article XIII.G hereof.
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o Delivery of Common Stock Upon Conversion. Upon the
surrender of the Preferred Stock Certificates from a Holder of Series A
Preferred Stock accompanied by a Notice of Conversion, the Corporation shall, no
later than the later of (a) the second business day following the Conversion
Date and (b) the business day following the date of such surrender (or, in the
case of lost, stolen or destroyed certificates, after provision of indemnity
pursuant to Article XIII.G) (the "Delivery Period"), issue and deliver to the
Holder or its nominee (x) that number of shares of Common Stock issuable upon
conversion of such shares of Series A Preferred Stock being converted and (y) a
new certificate representing the number of shares of Series A Preferred Stock
not being converted, if any. If the Corporation's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, and so long as the certificates therefor do not bear a legend
and the Holder thereof is not then required to return such certificate for the
placement of a legend thereon, the Corporation shall cause its transfer agent to
electronically transmit the Common Stock issuable upon conversion to the Holder
by crediting the account of the Holder or its nominee with DTC through its
Deposit Withdrawal Agent Commission system ("DTC Transfer"). If the
aforementioned conditions to a DTC Transfer are not satisfied, the Corporation
shall deliver to the Holder physical certificates representing the Common Stock
issuable upon conversion. Further, a Holder may instruct the Corporation to
deliver to the Holder physical certificates representing the Common Stock
issuable upon conversion in lieu of delivering such shares by way of DTC
Transfer.
o Taxes. The Corporation shall pay any and all taxes which
may be imposed upon it with respect to the issuance and delivery of the shares
of Common Stock upon the conversion of the Series A Preferred Stock.
o No Fractional Shares. If any conversion of Series A
Preferred Stock would result in the issuance of a fractional share of Common
Stock, such fractional share shall be disregarded and the number of shares of
Common Stock issuable upon conversion of the Series A Preferred Stock shall be
the next higher whole number of shares.
o Conversion Disputes. In the case of any dispute with
respect to a conversion, the Corporation shall promptly issue such number of
shares of Common Stock as are not disputed in accordance with subparagraph (i)
above. If such dispute involves the calculation of the Conversion Price, the
Corporation shall submit the disputed calculations to an independent outside
accountant via facsimile within two business days of receipt of the Notice of
Conversion. The accountant, at the Corporation's sole expense, shall audit the
calculations and notify the Corporation and the Holder of the results no later
than two business days from the date it receives the disputed calculations. The
accountant's calculation shall be deemed conclusive, absent manifest error. The
Corporation shall then issue the appropriate number of shares of Common Stock in
accordance with subparagraph (i) above.
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C. Limitations on Conversions. The conversion of the Series A Preferred
Stock shall be subject to the following limitations (each of which limitations
shall be applied independently):
o Cap Amount. If Rule 4460(i) of the National Association of
Securities Dealers, Inc. ("NASD") applies to the Company ("Rule 4460(i)") and
notwithstanding the representations and warranties of the Company contained in
Section 3(c) of the Securities Purchase Agreement, if the Company is prohibited
by Rule 4460(i) or any successor or similar rule, or the rules or regulations of
any other securities exchange on which the Common Stock is then listed or
traded, from issuing a number of shares of Common Stock in excess of a
prescribed amount (the "Cap Amount"), then the Company shall not be required to
issue shares in excess of the Cap Amount; provided, however, that this
limitation in this Article III.C.(i) shall not apply and shall be of no further
force and effect after the date of the effectiveness of the shareholder approval
(the "Shareholder Approval Date") referred to in Section 4(n) of the Securities
Purchase Agreement. Assuming solely for purposes of this paragraph C that such
Rule 4460(i) is applicable. The Cap Amount shall be allocated pro rata to the
Holders of the Series A Preferred Stock as provided in Article XIII.D. In the
event the Corporation is prohibited from issuing shares of Common Stock as a
result of the operation of this subparagraph (i), the Corporation shall comply
with Article VI.
o No Five Percent Holders. Unless a Holder delivers a waiver
in accordance with the last sentence of this subparagraph, in no event shall a
Holder of the Series A Preferred Stock be entitled to receive shares of Common
Stock upon a conversion to the extent that the sum of (x) the number of shares
of Common Stock beneficially owned by the Holder and its affiliates (exclusive
of shares issuable upon conversion of the unconverted portion of the Series A
Preferred Stock or the unexercised or unconverted portion of any other
securities of the Corporation issued by the Corporation pursuant to the
Securities Purchase Agreement) subject to a limitation on conversion or exercise
analogous to the limitations contained herein) and (y) the number of shares of
Common Stock issuable upon the conversion of the Series A Preferred Stock with
respect to which the determination of this subparagraph is being made, would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock. For purposes of this
subparagraph, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13D-G thereunder, except as otherwise provided in clause (x) above. Except as
provided in the immediately succeeding sentence, the restriction contained in
this subparagraph (ii) shall not be altered, amended, deleted or changed in any
manner whatsoever unless the Holders of a majority of the outstanding shares of
Common Stock and Majority Holders shall approve such alteration, amendment,
deletion or change. In applying the foregoing, such limitation should be applied
in conjunction with the application of limitations on conversion or exercise
analogous to the foregoing limitation. Notwithstanding the foregoing, a Holder
may, by providing written notice to the Company (w) waive the limitation on
beneficial ownership set forth in this subparagraph upon sixty-one (61) days'
prior notice and (y) irrevocably waive the right to deliver a waiver in
accordance with this subparagraph.
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ARTICLE IV.
RESERVATION OF SHARES OF COMMON STOCK
A. Reserved Amount. On the Issue Date, the Corporation shall reserve
3,000,000 of the authorized but unissued shares of Common Stock for issuance
upon conversion of the Series A Preferred Stock and, thereafter the number of
authorized but unissued shares of Common Stock so reserved (the "Reserved
Amount") shall not be decreased and shall at all times be sufficient to provide
for the conversion of the Series A Preferred Stock outstanding at the then
Conversion Price thereof. The Reserved Amount shall be allocated to the Holders
of Series A Preferred Stock as provided in Article XIII.D.
ARTICLE V.
FAILURE TO SATISFY CONVERSIONS
A. Conversion Defaults; Adjustments to Conversion Price. The following
shall constitute a "Conversion Default": (i) following the submission by a
Holder of a Notice of Conversion, the Corporation fails for any reason (other
than because of an event described in clause (iii) below) to deliver, on or
prior to the fourth business day following the expiration of the Delivery Period
for such conversion, such number of freely tradeable, (provided a registration
statement, which includes the shares issuable upon conversion of the Series A
Preferred Stock, has been declared effective, or if no registration statement
has been declared effective by the Securities and Exchange Commission (the
"SEC")), such number of non-freely tradeable shares of Common Stock to which
such Holder is entitled upon such conversion, (ii) the Corporation provides
notice to any Holder of Series A Preferred Stock at any time of its intention
not to issue freely tradeable shares of Common Stock upon exercise by any Holder
of its conversion rights in accordance with the terms of the Series A Preferred
Stock (other than because of an event described in clause (iii) below), or (iii)
the Corporation is prohibited, at any time, from issuing shares of Common Stock
upon conversion of the Series A Preferred Stock to any Holder because the
Corporation (A) does not have available a sufficient number of authorized and
reserved shares of Common Stock or (13) such issuance would exceed the then
unissued portion of such Holder's Cap Amount. In the case of a Conversion
Default described in clauses (i), (ii) or (iii) above, the Conversion Price in
respect of any Series A Preferred Stock held by such Holder (including shares of
Series A preferred Stock submitted to the Corporation for conversion, but for
which shares of Common Stock have not been issued to such Holder) shall
thereafter be seventy percent (70%) of what the Conversion Price would otherwise
be on the date of the Conversion Default through and including the Default Cure
Date (as hereinafter defined). Following any adjustment to the Conversion Price
pursuant to this Article V.A, the Conversion Price shall thereafter be subject
to further adjustment for any events described in Article VIII. Upon the
occurrence of each reset of the Conversion Price pursuant to this Paragraph A,
the Corporation, at its expense, shall promptly compute the new Conversion Price
and prepare and furnish to each Holder of the Series A Preferred Stock a
certificate setting forth such new Conversion Price and showing in detail each
Conversion Price in effect during such reset period.
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"Default Cure Date" means (i) with respect to a Conversion Default
described in clause (i) of its definition, the date the Corporation effects the
conversion of all of the Series A Preferred Stock subject to a Notice of
Conversion, (ii) with respect to a Conversion Default described in clause (ii)
of its definition, the date the Corporation issues freely tradeable, (provided a
registration statement, which includes the shares issuable upon conversion of
the Series A Preferred Stock has been declared effective by the SEC), or if no
registration statement has been declared effective, such number of non-freely
tradeable shares of Common Stock in satisfaction of all conversions of the
Series A Preferred Stock in accordance with Article III.A, (iii) with respect to
a Conversion Default described in Clause (iii) of its definition, the date on
which the prohibition on issuances of Common Stock terminates, and (iv) with
respect to either type of a Conversion Default, the date on which the
Corporation redeems the Series A Preferred Stock held by such Holder pursuant to
paragraph C of this Article V.
B. Buy-In Cure. Unless the Corporation has notified the applicable
Holder in writing prior to the delivery by such Holder of a Notice of Conversion
that the Corporation is unable to honor conversions, if (i) (a) the Corporation
fails for any reason to deliver during the Delivery Period shares of Common
Stock to a Holder upon a conversion of the Series A Preferred Stock or (b) there
shall occur a Legend Removal Failure (as defined in Article VII.A(iv) below) and
(ii) thereafter, such Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to make delivery in satisfaction of a sale by
such Holder of the unlegended shares of Common Stock (the "Sold Shares") which
such Holder anticipated receiving upon such conversion (a "Buy-In"), the
Corporation shall pay such Holder (in addition to any other remedies available
to the Holder) the amount by which (x) such Holder's total purchase price
(including brokerage commissions, if any) for the unlegended shares of Common
Stock so purchased exceeds (y) the net proceeds received by such Holder from the
sale of the Sold Shares. For example, if a Holder purchases unlegended shares of
Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to shares of Common Stock it sold for $ 10,000, the Corporation will be
required to pay the Holder $ 1,000. A Holder shall provide the Corporation
written notification and supporting documentation indicating any amounts payable
to such Holder pursuant to this Paragraph B. The Corporation shall make any
payments required pursuant to this Paragraph B in accordance with and subject to
the provisions of Article IX.J.
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C. Penalty Right. If the Corporation fails, and such failure continues
uncured for five (5) business days after the Corporation has been notified
thereof in writing by the Holder (the "Cure Period"), for any reason (other than
because such issuance would exceed such Holder's allocated portion of the
Reserved Amount or Cap Amount, for which failures the Holders shall have the
remedies set forth in Articles IV and VI, respectively) to issue shares of
Common Stock within 10 business days after the expiration of the Delivery Period
with respect to any conversion of the Series A Preferred Stock, then the Holder
may elect at any time and from time to time prior to the Default Cure Date for
such Conversion Default, by delivery of a notice within five (5) business days
following the Cure Period (the "Penalty Notice") to the Corporation, to have the
Corporation pay such Holder the Penalty Amount (as defined below). If the
Corporation fails to pay such Penalty Amount within five business days after its
receipt of a Penalty Notice, then such Holder shall be entitled to the remedies
provided in Article VII.B.
D. Definition of Penalty Amount. The "Penalty Amount" means an amount
equal to the greater of:
o V x M
------------------
CP
and (ii) V x 118%
where:
"V" means the principal amount aggregate outstanding of the Series A
Preferred Stock being paid plus all amounts due and payable thereunder;
"CP" means the Conversion Price in effect on the date on which the
Corporation receives the Penalty Notice; and
"M" means with respect to all payments due hereunder, the highest
Closing Bid Price of the Corporation's Common Stock during the period beginning
on the date on which the Corporation receives the Penalty Notice and ending on
the date immediately preceding the date of payment of the Penalty Amount. For
purposes of this definition, "fair market value" shall be determined by the
mutual agreement of the Corporation and the Majority Holders, or if such
agreement cannot be reached within five business days prior to the date of
repayment, by an investment banking firm selected by the Corporation and
reasonably acceptable to Holders of the outstanding face amount of the
outstanding shares of Series A Preferred Stock, with the costs of such appraisal
to be borne by the Corporation.
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ARTICLE VI
INABILITY TO CONVERT DUE TO CAP AMOUNT
A. Obligation to Cure. If Rule 4460(i) applies to the Company and if at
any time prior to the Shareholder Approval Date the then unissued portion of any
Holder's Cap Amount is less than 135% of the number of shares of Common Stock
then issuable upon conversion of such Holder's Series A Preferred Stock (a
"Trading Market Trigger Event"), the Corporation shall immediately notify the
Holders of the Series A Preferred Stock of such occurrence and shall take
immediate action (including, if necessary, seeking the approval of its
shareholders to authorize the issuance of the full number of shares of Common
Stock which would be issuable upon the conversion of the Series A Preferred
Stock but for the Cap Amount) to eliminate any prohibitions under applicable law
or the rules or regulations of any stock exchange, interdealer quotation system
or other self regulatory organization with jurisdiction over the Corporation or
any of its securities on the Corporation's ability to issue shares of Common
Stock in excess of the Cap Amount ("Trading Market Prohibitions"). In the event
the Corporation fails to eliminate all such Trading Market Prohibitions within
ninety (90) days after the Trading Market Trigger Event, then each Holder of
Series A Preferred Stock shall thereafter have the option, exercisable in whole
or in part at any time and from time to time until such date that all such
Trading Market Prohibitions are eliminated, by delivery of a Default Notice (as
defined in Article VII.C) to the Corporation, to require the Corporation to
purchase for cash, at the Remedy Amount, a number of the Holder's shares of
Series A Preferred Stock such that, after giving effect to such repayment, the
then unissued portion of such Holder's Cap Amount exceeds 135% of the total
number of shares of Common Stock issuable upon conversion of such Holder's
Series A Preferred Stock. If the Corporation fails to pay the Remedy Amount
within five (5) business days after its receipt of a Remedy Notice, then such
Holder shall be entitled to the remedies provided in Articles VI.B and VII.C. On
or after the Shareholder Approval Date, the Corporation shall treat any such
Trading Market Prohibitions as eliminated.
B. Remedies. If the Corporation fails to redeem any shares of Series A
Preferred Stock pursuant to Article VI.A within five business days after its
receipt of such Remedy Notice, and thereafter the Corporation is prohibited, at
any time, from issuing shares of Common Stock upon conversion of the Series A
Preferred Stock to any Holder because such issuance would exceed the then
unissued portion of such Holder's Cap Amount because of applicable law or the
rules or regulations of any stock exchange, interdealer quotation system or
other self-regulatory organization with jurisdiction over the Corporation or its
securities, any Holder who is so prohibited from converting its Series A
Preferred Stock may elect, as an additional remedy, to require, with the consent
of the Majority Holders (including any Series A Preferred Stock held by the
requesting Holder), the Corporation to terminate the listing of its Common Stock
on the Nasdaq SmallCap Market (or any other stock exchange, interdealer
quotation system or trading market which has similar limitations) and to cause
its Common Stock to be eligible for trading on any quotation system reasonably
acceptable to such Holders that does not contain a similar limitation.
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C. Adjustment to Conversion Price. If the Corporation is prohibited, at
any time, from issuing shares of Common Stock upon conversion of the Series A
Preferred Stock to any Holder because such issuance would exceed the then
unissued portion of such Holder's Cap Amount because of applicable law or the
rules or regulations of any stock exchange, interdealer quotation system or
other self-regulatory organization with jurisdiction over the Corporation or its
securities then the Conversion Price in respect of any Series A Preferred Stock
held by any Holder (including Series A Preferred Stock submitted to the
Corporation for conversion, but for which shares of Common Stock have not been
issued) shall be adjusted as provided in Article V.A.
ARTICLE VII
REMEDIES
A. Remedies for the Holder. In the event (each of the events described
in clauses (i)-(vi) below after expiration of the applicable cure period (if
any) being a "Remedy Event"):
o the Registration Statement required to be filed by the
Corporation pursuant to Section 2(a) of that certain Registration Rights
Agreement by and among the Corporation and the other signatories thereto entered
into in connection with the Securities Purchase Agreement (the "Registration
Rights Agreement") has not been filed by the 75th day after the Closing Date (as
defined in the Securities Purchase Agreement), or such Registration Statement,
after being declared effective, cannot be utilized by the Holders of the Series
A Preferred Stock for the resale of all of their Registrable Securities (as
defined in the Registration Rights Agreement) for an aggregate of more than 30
days in any one calendar year, excluding any Disclosure Delay Period permitted
under the Registration Rights Agreement;
o the Corporation fails to remove any restrictive legend on
any certificate or any shares of Common Stock issued to the Holders of the
Series A Preferred Stock upon conversion of any of the Series A Preferred Stock
as and when required by this Certificate of Designation, the Securities Purchase
Agreement or the Registration Rights Agreement (a "Legend Removal Failure"), and
any such failure continues uncured for five business days after the Corporation
has been notified thereof in writing by the Holder, provided, however, that the
foregoing shall not apply if any changes in the rules or regulations of the
Securities Exchange Commission, occurring hereafter, would prevent the Company
from removing such legend;
o the Corporation provides notice to any Holder of the
Series A Preferred Stock, including by way of public announcement, at any time,
of its intention not to issue, or otherwise refuses to issue, shares of Common
Stock to any Holder of the Series A Preferred Stock upon conversion in
accordance with the terms of the Series A Preferred Stock (other than due to the
circumstances contemplated by Articles IV or VI for which the Holders shall have
the remedies set forth in such Articles);
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o the Corporation shall:
(a) sell, convey or dispose of all or substantially
all of its assets (the presentation of any such transaction for stockholder
approval being conclusive evidence that such transaction involves the sale of
all or substantially all of the assets of the Corporation);
(b) merge, consolidate or engage in any other
business combination with any other entity (other than pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Corporation and other than pursuant to a merger in which
the Corporation is the surviving or continuing entity and its capital stock is
unchanged and the Corporation has not sold or issued Common Stock (or securities
convertible into or exercisable for Common Stock) equal to 25% or more of the
Common Stock or 25% or more of the voting power outstanding before the
issuance); or
(c) have fifty percent (50%) or more of the voting
power of its capital stock owned beneficially by one person, entity or "group"
(as such term is used under Section 13(d) of the Securities Exchange Act of
1934, as amended); or
o the Corporation otherwise shall breach any representations
and warranties in the Securities Purchase Agreement or the Registration Rights
Agreement and such breach continues uncured for 10 business days after the
Corporation has been notified thereof in writing by any Holder;
then, upon the occurrence of any such Remedy Event, the Company shall pay to the
Holders the aggregate amount of One Million Dollars ($1,000,000.00) (the "Remedy
Amount"), on a pro rata basis, upon receipt by the Corporation of a Remedy
Notice (as defined in paragraph B below) by any Holder; provided, however, that
in case the Company breaches Section VII(A)(v) hereunder, the Holders' remedies
shall not be limited to the Remedy Amount and they shall be able to pursue any
and all remedies available under the Purchase Documents and at law or in equity;
provided, further, however, that the Corporation shall have the opportunity to
demonstrate that the monetary value of the Remedy Event is less than $1,000,000,
but in any event the monetary value of the Remedy shall not be calculated at
less than [$500,000]. For the avoidance of doubt, the occurrence of any event
described in clauses (i), (ii), (iii) or (iv) above shall immediately constitute
a Remedy Event and there shall be no cure period. Upon the Corporation's receipt
of a Remedy Notice hereunder (other than during the three trading day period
following the Corporation's delivery of a Remedy Announcement (as defined below)
to all of the Holders in response to the Corporation's initial receipt of a
Remedy Notice from a Holder), the Corporation shall immediately (and in any
event within one business day following such receipt) deliver a written notice
(a "Remedy Announcement") to each Holder stating the date upon which the
Corporation received such Remedy Notice.
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B. Remedy Penalties. If the Corporation fails to pay the Remedy Amount,
or the full value of their Penalty Amount, as the case may be, within ten (10)
business days after its receipt of a notice requiring such repayment (a "Remedy
Notice"), then the Holders shall be entitled to interest on their pro rata
portion of the Remedy Amount, or the full value of their Penalty Amount, as the
case may be, at a per annum. rate equal to the lower of twenty-four percent
(24%) and the highest interest rate permitted by applicable law from the date on
which the Corporation receives the Remedy Notice or Penalty Notice, as the case
may be, until the date of payment of the Remedy Amount or Penalty Amount, as the
case may be, hereunder.
ARTICLE VIII
ADJUSTMENTS TO THE CONVERSION PRICE
The Conversion Price shall be subject to adjustment from time to time
as follows:
A. Stock Splits, Stock Dividends, Etc. If, at any time on or after the
Closing Date, the number of outstanding shares of Common Stock is increased by a
stock split, stock dividend, combination, reclassification or other similar
event, the Conversion Price shall be proportionately reduced, or if the number
of outstanding shares of Common Stock is decreased by a reverse stock split,
combination or reclassification of shares, or other similar event, the
Conversion Price shall be proportionately increased. In such event, the
Corporation shall notify the Corporation's transfer agent of such change on or
before the effective date thereof.
B. Adjustment Due to Merger, Consolidation, Etc. If, at anytime after
the Closing Date, there shall be (i) any reclassification or change of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination), (ii) any consolidation or merger of the
Corporation with any other entity (other than a merger in which the Corporation
is the surviving or continuing entity and its capital stock is unchanged), (iii)
any sale or transfer of all or substantially all of the assets of the
Corporation or (iv) any share exchange pursuant to which all of the outstanding
shares of Common Stock are converted into other securities or property (each of
(i) - (iv) above being a "Corporate Change"), then the Holders of the Series A
Preferred Stock shall thereafter have the right to receive upon conversion, in
lieu of the shares of Common Stock otherwise issuable, such shares of stock,
securities and/or other property as would have been issued or payable in such
Corporate Change with respect to or in exchange for the number of shares of
Common Stock which would have been issuable upon conversion (without giving
effect to the limitations contained in Article III.C) had such Corporate Change
not taken place, and in any such case, appropriate provisions (in form and
substance reasonably satisfactory to the Holders of a majority of the face
amount of the Series A PreferTed Stock then outstanding) shall be made with
respect to the rights and interests of the Holders of the Series A Preferred
Stock to the end that the economic value of the Series A Preferred Stock is in
no way diminished by such Corporate Change and that the provisions hereof
including, without limitation, in the case of any such consolidation, merger or
sale in which the successor entity or purchasing entity is not the Corporation,
an immediate adjustment of the Conversion Price so that the Conversion Price
immediately after the Corporate Change reflects the same relative value as
compared to the value of the surviving entity's common stock that existed
between the Conversion Price and the value of the Corporation's Common Stock
immediately prior to such Corporate Change and shall thereafter be applicable,
as nearly as may be practicable in relation to any shares of stock
or securities thereafter deliverable upon the conversion thereof.
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The Corporation shall not effect any Corporate Change unless (i) each Holder of
the Series A Preferred Stock has received written notice of such transaction at
least 75 days prior thereto, but in no event later than 20 days prior to the
record date for the determination of shareholders entitled to vote with respect
thereto, and (ii) the resulting successor or acquiring entity (if not the
Corporation) assumes by written instrument (in form and substance reasonably
satisfactory to the Holders of a majority of the face amount of the Series A
Preferred Stock then outstanding) the obligations of the Series A Preferred
Stock. The above provisions shall apply regardless of whether or not there would
have been a sufficient number of shares of Common Stock authorized and available
for issuance upon conversion of the shares of Series A Preferred Stock
outstanding as of the date of such transaction, and shall similarly apply to
successive reclassifications, consolidations, mergers, sales, transfers or share
exchanges.
C. [Intentionally Omitted.]
D. Adjustment Due to Distribution. If, at any time after the Closing
Date, the Corporation shall declare or make any distribution of its assets (or
rights to acquire its assets) to Holders of Common Stock as a partial
liquidating dividend, by way of return of capital or otherwise (including any
dividend or distribution to the Corporation's shareholders in cash or shares (or
rights to acquire shares) of capital stock of a subsidiary (i.e. a spin- off))
(a "Distribution"), then the Holders of the Series A Preferred Stock shall be
entitled, upon any conversion of the Series A Preferred Stock after the date of
record for determining shareholders entitled to such Distribution, to receive
the amount of such assets which would have been payable to the Holder with
respect to the shares of Common Stock issuable upon such conversion (without
giving effect to the limitations contained in Article III.C) had such Holder
been the Holder of such shares of Common Stock on the record date for the
determination of shareholders entitled to such Distribution.
E. Issuance of Other Securities With Variable Conversion Price. If, at
any time after the Closing Date, the Corporation shall issue any securities in
one or more transactions, in excess of Two Hundred Fifty Thousand Dollars
($250,000), which are convertible into or exchangeable for Common Stock
("Convertible Securities") at a conversion or exchange rate based on a discount
to the market price of the Common Stock at the time of conversion or exercise,
then the Conversion Price in respect of any conversion of any outstanding shares
of Series A Preferred Stock after such issuance shall be adjusted to be the
lesser of (i) such other conversion price provided for in such Convertible
Securities, or (ii) the Conversion Price.
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F. Purchase Rights. If, at any time after the Closing Date, the
Corporation issues any Convertible Securities or rights to purchase stock,
warrants, securities or other property (the "Purchase Rights") pro rata to the
record Holders of any class of Common Stock, then the Holders of the Series A
Preferred Stock will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of shares of Common Stock acquirable
upon complete conversion of the outstanding shares of Series A Preferred Stock
(without giving effect to the limitations contained in Article III.C)
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record Holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.
G. Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this Article VIII, the
Corporation, at its expense, shall promptly compute such adjustment or
readjustment and prepare and furnish to each Holder of the Series A Preferred
Stock 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 the written request at any time of any Holder of the
Series A Preferred Stock, furnish to such Holder a like certificate setting
forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time
in effect and (iii) the number of shares of Common Stock and the amount, if any,
of other securities or property which at the time would be received upon
conversion of any shares of Series A Preferred Stock.
ARTICLE IX
RANK
The Series A Preferred Stock shall rank (i) prior to the Corporation's
Common Stock; (ii) prior to any class or series of capital stock of the
Corporation hereafter created that, by its terms, ranks junior to the Series A
Preferred Stock ("Junior Securities"); (iii) junior to any class or series of
capital stock of the Corporation hereafter created (with the consent of the
Holders of Series A Preferred Stock obtained in accordance with Article XIII
hereof) specifically ranking, by its terms, senior to the Series A Preferred
Stock ("Senior Securities"); and (iv) pari passu with any class or series of
capital stock of the Corporation hereafter created (with the consent of the
Holders of the Series A Preferred Stock obtained in accordance with Article XI
hereof) specifically ranking by its terms on parity with the Series A Preferred
Stock ("Pari Passu Securities"), in each case as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary.
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ARTICLE X
LIQUIDATION PREFERENCE
A. If the Corporation shall commence a voluntary case under the U.S.
Federal bankruptcy laws or any other applicable 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 U.S. Federal bankruptcy laws or any other
applicable 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 60 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,
including, but not limited to, the sale or transfer of all or substantially all
of the Corporation's assets in one transaction or in a series of related
transactions (a "Liquidation Event"), no distribution shall be made to the
Holders of any shares of capital stock of the Corporation (other than Senior
Securities and Pari Passu Securities) upon liquidation, dissolution or winding
up unless prior thereto the Holders of shares of Series A Preferred Stock shall
have received the Liquidation Preference 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 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
Preferred Stock and the Pari Passu Securities shall be distributed ratably among
such shares in proportion to the ratio that the Liquidation Preference payable
on each such share bears to the aggregate Liquidation Preference payable on all
such shares.
B. The purchase or redemption by the Corporation of stock of any class,
in any manner permitted by law, shall not, for the purposes hereof, be regarded
as a liquidation, dissolution or winding up of the Corporation. Neither the
consolidation or merger of the Corporation with or into any other entity nor the
sale or transfer by the Corporation of less than substantially all of its assets
shall, for the purposes hereof, be deemed to be a liquidation, dissolution or
winding up of the Corporation.
C. The "Liquidation Preference" with respect to a share of Series A
Preferred Stock means an amount equal to the Stated Value thereof, plus the
accrued Premium thereon through the date of final distribution. The Liquidation
Preference with respect to any Pari Passu Securities shall be as set forth in
the Certificate of Designation filed in respect thereof.
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ARTICLE XI
VOTING RIGHTS
The Holders of the Series A Preferred Stock have no voting power
whatsoever, except as otherwise provided by the Business Corporation Act and in
Article XII below.
Notwithstanding the above, the Corporation shall provide each Holder of
Series A Preferred Stock with prior notification of any meeting of the
shareholders (and copies of proxy materials and other information sent to
shareholders) at the same time such notice and materials are provided to the
Holders of Common Stock. If the Corporation takes a record of its shareholders
for the purpose of determining shareholders entitled to (a) receive payment of
any dividend or other distribution, any right to subscribe for, purchase or
otherwise acquire (including by way of merger consolidation or recapitalization)
any share of any class or any other securities or property, or to receive any
other right, or (b) to vote in connection with any proposed sale, lease or
conveyance of all or substantially all of the assets of the Corporation, or any
proposed merger, consolidation, liquidation, dissolution or winding up of the
Corporation, the Corporation shall mail a notice to each Holder, at least 20
days prior to the record date specified therein (but in no event earlier than
public announcement of such proposed transaction), of the date on which any such
record is to be taken for the purpose of such dividend, distribution, right or
other event, and a brief statement regarding the amount and character of such
dividend, distribution, right or other event to the extent known at such time.
To the extent that under the Business Corporation Act the vote of the
Holders of the Series A Preferred Stock, voting separately as a class or series,
as applicable, is required to authorize a given action of the Corporation, the
affirmative vote or consent of the Holders of at least a majority of the then
outstanding shares of the Series A Preferred Stock represented at a duly held
meeting at which a quorum is present or by written consent of the Holders of at
least a majority of the then outstanding shares of Series A Preferred Stock
(except as otherwise may be required under the Business Corporation Act) shall
constitute the approval of such action by the class. To the extent that under
the Business Corporation Act Holders of the Series A Preferred Stock are
entitled to vote on a matter with Holders of Common Stock, voting together as
one class, each share of Series A Preferred Stock shall be entitled to a number
of votes equal to the number of shares of Common Stock into which it is then
convertible (subject to the limitations contained in Article IV.C(ii)) using the
record date for the taking of such vote of shareholders as the date as of which
the Conversion Price is calculated.
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ARTICLE XII
PROTECTION PROVISIONS
So long as any shares of Series A Preferred Stock are outstanding, the
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by the Business Corporation Act) of a majority in interest
of the Holders of the then outstanding shares of Series A Preferred Stock:
o alter or change the rights, preferences or privileges of
the Series A Preferred Stock;
o alter or change the rights, preferences or privileges of
any previously issued shares of capital stock of the Corporation so as to affect
adversely the Series A Preferred Stock;
o create any new classes or series of capital stock, which
classes or series, in tli6 aggregate, have a face amount or stated value, in
excess of Two Hundred Fifty Thousand Dollars ($250,000), having a preference
over the Series A Preferred Stock as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation (as previously defined in Article
IX hereof, "Senior Securities");
o create any new class or series of capital stock ranking
pari passu with the Series A Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation (as previously defined
in Article IX hereof, "Pari Passu Securities");
o increase the authorized number of shares of Series A
Preferred Stock;
o issue any shares of Senior Securities;
o issue any shares of Series A Preferred Stock other than
pursuant to the Securities Purchase Agreement;
o redeem, or declare or pay any cash dividend or
distribution on, any Junior Securities; or
o increase the par value of the Common Stock.
Notwithstanding the foregoing, no change pursuant to this Article XII shall be
effective to the extent that, by its terms, it applies to less than all of the
Holders of shares of Series A Preferred Stock then outstanding.
ARTICLE XIII
MISCELLANEOUS
A. Failure or Indulgency Not Waiver. No failure or delay on the part of
any Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
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<PAGE>
B. Notices. Any notices required or permitted to be given under the
terms of this Series A Preferred Stock shall be sent by certified or registered
mail (return receipt requested) or delivered personally or by courier or by
confirmed telecopy, and shall be effective five days after being placed in the
mail, if mailed, or upon receipt or refusal of receipt, if delivered personally
or by courier or confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
If to the Corporation:
WORLDWIDEWEB INSTITUTE.COM, INC.
6245 N.W. 9th Avenue, Suite 201
Fort Lauderdale, FL 33309
Telecopy: (954) 776-3322
Attn: Smiley Sansoni
with a copy to:
Atlas Pearlman, P.A.
350 East Las Olas Boulevard, Suite 1700
Fort Lauderdale, Fl, 33301
Attention: James M. Schneider, Esquire
Telecopy: 954-766-7800
If to the Holder, to the address set forth under such Holder's name on
the signature page to the Securities Purchase Agreement executed by such Holder.
Each party shall provide notice to the other parties of any change in address.
C. Amendment Provision. This Certificate of Designation and any
provision hereof may only be amended by an instrument in writing signed by the
Corporation and all of the Holders. The term "Certificate of Designation" and
all references thereto, as used throughout this instrument, shall mean this
instrument as originally executed, or if later amended or supplemented, then as
so amended or supplemented.
D. Assignability; Allocation of Cap Amount and Reserved Amount. This
Certificate of Designation shall be binding upon the Corporation and its
successors and assigns and shall inure to the benefit of the Holder and its
successors and assigns. The initial Cap Amount and Reserved Amount shall be
allocated pro rata among the Holders of the Series A Preferred Stock based on
the aggregate principal amount of Series A Preferred Stock issued to each
Holder. Each increase to the Cap Amount and the Reserved Amount shall be
allocated pro rata among the Holders of Series A Preferred Stock based upon the
number of shares of Series A Preferred Stock held by each Holder at the time of
the increase in the Cap Amount or Reserved Amount. In the event a Holder shall
sell or otherwise transfer any of such Holder's Series A Preferred Stock, each
transferee shall be allocated a pro rata portion of such transferor's Cap Amount
and Reserved Amount. Any portion of the Cap Amount or Reserved Amount which
remains allocated to any person or entity which does not hold any Series A
Preferred Stock shall be allocated to the remaining Holders of Series A
Preferred Stock, pro rata based upon the number of shares of Series A Preferred
Stock then held by such Holders.
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<PAGE>
E. Governing Law; Jurisdiction. This Certificate of Designation shall
be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed in the State of New York.
The Corporation irrevocably consents to the jurisdiction of the United States
federal courts and the state courts located in New York, New York in any suit or
proceeding based on or arising under this Certificate of Designation and
irrevocably agrees that all claims in respect of such suit or proceeding may be
determined in such courts. The Corporation irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The
Corporation further agrees that service of process upon the Corporation mailed
by first class mail shall be deemed in every respect effective service of
process upon the Corporation in any such suit or proceeding. Nothing herein
shall affect the right of any Holder to serve process in any other manner
permitted by law. The Corporation agrees that a final non-appealable judgment in
any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
F. Denominations. At the request of Holder, upon surrender of this
Certificate of Designation, the Corporation shall promptly issue new shares of
Series A Preferred Stock in the aggregate outstanding principal amount hereof,
in the form hereof, in such denominations of at least $25,000 as Holder shall
request.
G. Lost or Stolen Certificate of the Series A Preferred Stock. Upon
receipt by the Corporation of (i) evidence of the loss, theft, destruction or
mutilation of any shares of Series A Preferred Stock and (ii) (y) in the case of
loss, theft or destruction, of indemnity (without any bond or other security)
reasonably satisfactory to the Corporation, or (z) in the case of mutilation,
upon surrender and cancellation of any shares of Series A Preferred Stock, the
Corporation shall execute and deliver a new shares of Series A Preferred Stock
of like tenor and date. However, the Corporation shall not be obligated to
reissue such lost or stolen shares of Series A Preferred Stock if the Holder
contemporaneously requests the Corporation to convert such shares of Series A
Preferred Stock.
H. Quarterly Statements of Available Shares. For each calendar quarter
beginning in the quarter in which the initial registration statement required to
be filed pursuant to Section 2(a) of the Registration Rights Agreement is
declared effective and thereafter so long as any shares of Series A Preferred
Stock are outstanding, the Corporation shall deliver (or cause its transfer
agent to deliver) to each Holder a written report notifying the Holders of any
occurrence which prohibits the Corporation from issuing Common Stock upon any
such conversion. The report shall also specify (i) the total number of shares of
Series A Preferred Stock outstanding as of the end of such quarter, (ii) the
total number of shares of Common Stock issued upon all conversions of shares of
Series A Preferred Stock prior to the end of such quarter, (iii) the total
number of shares of Common Stock which are reserved for issuance upon conversion
of the shares of Series A Preferred Stock as of the end of such quarter and (iv)
the total number of shares of Common Stock which may thereafter be issued by the
Corporation upon conversion of the shares of Series A Preferred Stock before the
Corporation would exceed the Cap Amount and the Reserved Amount. The Corporation
(or its transfer agent) shall deliver the report for each quarter to each Holder
prior to the tenth day of the calendar month following the quarter to which such
report relates. In addition, the Corporation (or its transfer agent) shall
provide, within 15 days after delivery to the Corporation of a written request
by any Holder, any of the information enumerated in clauses (i)-(iv) of this
Paragraph H as of the date of such request. Simultaneously with delivering such
quarterly statements or responding to such written request, the Corporation
shall issue a press release with substantially the same information.
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I. Payment of Cash; Defaults. Whenever the Corporation is required to
make any cash payment to a Holder under the Certificate of Designation(upon
redemption or otherwise), such cash payment shall be made to the Holder within
five business days after delivery by such Holder of a notice specifying that the
Holder elects to receive such payment in cash and the method (e.g., by check,
wire transfer) in which such payment should be made. If such payment is not
delivered within such five business day period, such Holder shall thereafter be
entitled to interest on the unpaid amount at a per annum. rate equal to the
lower of twenty-four percent (24%) and the highest interest rate permitted by
applicable law until such amount is paid in full to the Holder.
J. Restrictions on Shares. The shares of Common Stock issuable upon
conversion of the Series A Preferred Stock may not Pe sold or transferred unless
(i) they first shall have been registered under the Securities Act and
applicable state securities laws, (ii) the Corporation shall have been furnished
with an opinion of legal counsel (in form, substance and scope customary for
opinions in such circumstances) to the effect that such sale or transfer is
exempt from the registration requirements of the Securities Act or (iii) they
are sold under Rule 144 under the Act. Except as otherwise provided in the
Securities Purchase Agreement, each certificate for shares of Common Stock
issuable upon conversion of the Series A Preferred Stock that have not been so
registered and that have not been sold under an exemption that permits removal
of the legend, shall bear a legend, substantially in the following form, as
appropriate:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES. THE
SECURITIES REPRESENTED HEREBY MAY NOT BE
OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES
UNDER APPLICABLE SECURITIES LAWS UNLESS
OFFERED, SOLD OR TRANSFERRED UNDER AN
AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
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Upon the request of a Holder of a certificate representing any shares of Common
Stock issuable upon conversion of the Series A Preferred Stock, the Corporation
shall remove the foregoing legend from the certificate and issue to such Holder
new certificate therefor free of any transfer legend, if (i) with such request,
the Corporation shall have received either (A) an opinion of counsel, in form,
substance and scope customary for opinions in such circumstances, to the effect
that any such legend may be removed from such certificate, or (B) satisfactory
representations from Holder that Holder is eligible to sell such security under
Rule 144 or (ii) a registration statement under the Securities Act covering the
resale of such securities is in effect. Nothing in this Certificate of
Designation shall (i) limit the Corporation's obligation under the Registration
Rights Agreement, or (ii) affect in any way Holder's obligations to comply with
applicable securities laws upon the resale of the securities referred to herein.
K. Status as Shareholder. Upon submission of a Notice of Conversion by
a Holder of the Series A Preferred Stock, (i) shares covered thereby (other than
any portion of the Series A Preferred Stock, if any, which cannot be converted
because their conversion would exceed such Holder's allocated portion of the
Reserved Amount or Cap Amount) shall be deemed converted into shares of Common
Stock as of the Conversion Date and (ii) the Holder's rights as a Holder of such
Series A Preferred Stock shall cease and terminate (but only with respect to
that portion of the Series A Preferred Stock covered by such Notice of
Conversion), excepting only the right to receive certificates for such shares of
Common Stock and to any remedies provided herein or otherwise available at law
or in equity to such Holder because of a failure by the Corporation to comply
with the terms of the Series A Preferred Stock. In situations where Article V.B
is applicable, the number of shares of Common Stock referred to in clauses (i)
and (ii) of the immediately preceding sentence shall be determined on the date
on which such shares of Common Stock are delivered to the Holder.
Notwithstanding the foregoing, if a Holder has not received certificates for all
shares of Common Stock prior to the tenth business day after the expiration of
the Delivery Period with respect to a conversion of Series A Preferred Stock for
any reason, then (unless the Holder otherwise elects to retain its status as a
Holder of Common Stock by so notifying the Corporation within five business days
after the expiration of such 10 business day period) the portion of the
principal amount and interest thereon subject to such conversion shall be deemed
outstanding under the Series A Preferred Stock and the Corporation shall, as
soon as practicable, return the Series A Preferred Stock to the Holder. In all
cases, the Holder shall retain all of its rights and remedies (including,
without limitation, (i) the right to receive payments pursuant to Article V.C to
the extent required thereby for such Conversion Default and any subsequent
Conversion Default and (ii) the right to have the Conversion Price with respect
to subsequent conversions determined in accordance with Article V.A) for the
Corporation's failure to convert the Series A Preferred Stock.
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L. Remedies Cumulative. The remedies provided in this Certificate of
Designation shall be cumulative and in addition to all other remedies available
under this Certificate of Designation, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein
shall limit a Holder's right to pursue actual damages for any failure by the
Corporation to comply with the terms of this Certificate of Designation. The
Corporation acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holders of the Series A Preferred Stock and that
the remedy at law for any such breach may be inadequate. The Corporation
therefore agrees, in the event of any such breach or threatened breach, that the
Holders of the Series A Preferred Stock shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.
[REMAINDER Of PAGE INTENTIONALLY LEFT BLANK]
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The foregoing Certificate of Designation was adopted by the Board of
Directors of the Corporation acting by written consent dated March 28, 2000
pursuant to Section 607.0821 of the Florida Business Corporation Act. Therefore,
the number of votes cast for the amendment to the Corporation's Articles of
Incorporation was sufficient for approval.
IN WITNESS WHEREOF, Borrower has caused this Certificate of Designation
to be executed by its duly authorized officer.
WORLDWIDEWEB INSTITUTE.COM, INC.
By:_______________________________
S. J. Sansoni, President
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Exhibit I
---------
NOTICE OF CONVERSION
To: WorldWideWeb Institute, Inc.
6245 N.W. 9th Avenue, Suite 201
Fort Lauderdale, Florida 33309
Telecopy:_________________
Attention:_________________
The undersigned hereby irrevocably elects to convert $___________ of the face
amount of the Series A Preferred Stock (the "Conversion"), into shares of common
stock ("Common Stock") of WorldWideWeb Institute.com, Inc. (the "Corporation")
according to the conditions of the Series A Certificate of Designation dated as
of February 28, 2000 (the "Certificate") as of the date written below. If
securities are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto. No fee
will be charged to the Holder for any conversion, except for transfer taxes, if
any. A copy of the Certificate of the Series A Preferred Stock is attached
hereto (or evidence of loss, theft or destruction thereof).
The Corporation shall electronically transmit the Common Stock issuable pursuant
to this Notice of Conversion to the account of the undersigned or i 1 is nominee
(which is with DTC through its Deposit Withdrawal Agent Commission System ("DTC
Transfer").
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of the
Series A Preferred Stock shall be made pursuant to registration of the Common
Stock under the Securities Act or pursuant to an exemption from registration
under the Act.
In the event of partial exercise, please reissue an appropriate Series A Stock
Certificate(s) for the principal balance which shall not have been converted.
Check Box if Applicable:
o In lieu of receiving the shares of Common Stock issuable
pursuant to this Notice of Conversion by way of DTC Transfer,
the undersigned hereby requests that the Corporation issue and
deliver to the undersigned physical certificates representing
such shares of Common Stock.
Date of Conversion:_________________________________
Applicable Conversion Price:________________________
Amount of Remedy Default
Payments to be converted, if any:___________________
Number of Shares of
Common Stock to be Issued:__________________________
Signature:__________________________________________
Name:_______________________________________________
Address:____________________________________________
