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EXHIBIT 3.1
CERTIFICATE OF MERGER
OF
AMTEC, INC.
Pursuant to Section 252 of the General
Corporation Law of the State of Delaware
AmTec, Inc., a Delaware corporation, does hereby certify:
FIRST: The name and state of incorporation of each of the constituent
corporations to the Merger (as defined below) are as follows:
Terremark Holdings, Inc. - Florida
AmTec, Inc. - Delaware
SECOND: An Agreement and Plan of Merger, dated as of November 24, 1999
has been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the Business Corporation Law of the
State of Florida and Section 252(c) of the General Corporation Law of the State
of Delaware.
THIRD: Pursuant to such Agreement and Plan of Merger, Terremark
Holdings, Inc. will be merged with and into AmTec, Inc. (the "MERGER") , with
AmTec, Inc. being the surviving corporation in the Merger (the "SURVIVING
CORPORATION"). The Merger shall be effective on April 28, 2000.
FOURTH: The Certificate of Incorporation of AmTec, Inc. shall be the
Certificate of Incorporation of the Surviving Corporation; PROVIDED, HOWEVER,
that:
(i) Article 1 of such Certificate of Incorporation shall be amended
upon the filing of this Certificate of Merger to read in its entirety as
follows:
FIRST: The name of the corporation is Terremark Worldwide, Inc.; and
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(ii) The first paragraph of Article 4 of such Certificate of
Incorporation is deleted in its entirety and replaced by the following:
1. The total number of shares of stock which the Corporation shall have
authority to issue is Three Hundred Ten Million (310,000,000) shares, consisting
of Three Hundred Million (300,000,000) shares of Common Stock, par value $0.001
per share (the "Common Stock"), and Ten Million (10,000,000) shares of Preferred
Stock, par value $0.001 per share (the "Preferred Stock").
FIFTH: The executed Agreement and Plan of Merger is on file at an
office of the Surviving Corporation, at 599 Lexington Avenue, 44th Floor, in the
City of New York, State of New York. A copy of such agreement will be provided,
upon request and without cost, to any stockholder of either constituent
corporation.
SIXTH: The authorized capital stock of Terremark Holdings, Inc.
consisted of five million (5,000,000) shares of common stock, and four million
one hundred seventy six thousand six hundred and ninety three (4,176,693) shares
of preferred stock, each having a par value of $1.00 per share.
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IN WITNESS WHEREOF, AmTec, Inc. has caused this Certificate of Merger
to be executed in its corporate name as of the 28th day of April, 2000.
AMTEC, INC.
By: /s/ Joseph R. Wright
----------------------------------
Joseph R. Wright, Chairman of the
Board of Directors and Chief
Executive Officer
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CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
CHINA TELECOMMUNICATIONS AND TECHONOLOGIES, INC.
INTO
AVIC GROUP INTERNATIONAL, INC.
AVIC Group International, Inc. ("AVIC" or "Corporation"), a corporation
organized and existing under the laws of Delaware, DOES HEREBY CERTIFY:
FIRST: That this Corporation was incorporated on the 20th day of June,
1996, pursuant to the General Corporation Law of the State of Delaware.
SECOND: That this Corporation owns all of the outstanding shares of the
stock of China Telecommunications and Technologies, Inc. ("China"), a
corporation incorporated on the 13th day of May, 1997, pursuant to the General
Corporation Law of the State of Delaware.
THIRD: That this Corporation, by the following resolutions of its Board
of Directors, duly adopted at a meeting held on the 26th day of February, 1997,
determined to merge into itself said China:
RESOLVED: That AVIC merge, and it hereby does merge into
itself said China and assumes all of its obligations; and it
is
RESOLVED FURTHER: That the merger shall become effective upon
filing with the Delaware Secretary of State; and it is
RESOLVED FURTHER: That the proper officer of this Corporation
be and he or she is hereby directed to make and execute a
Certificate of Ownership and Merger setting forth a copy of
the resolutions to merge China and assume its liabilities and
obligations, and the date of adoption thereof, and to cause
the same to be filed with the Secretary of State and to do all
acts and things whatsoever, whether within or without the
State of Delaware, which may be in anyway necessary or proper
to effect said merger; and it is
RESOLVED FURTHER: That this Corporation change its corporate
name in connection with the merger, by
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amending Article FIRST of the Restated Certificate of
Incorporation of this Corporation to read as follows:
"FIRST": The name of the corporation is AmTec, Inc."
FOURTH: Anything herein or elsewhere to the contrary notwithstanding,
this merger may be amended or terminated and abandoned by the Board of Directors
of AVIC at any time prior to the date of filing the merger with the Secretary of
State.
IN WITNESS WHEREOF, said AVIC has caused this Certificate to be signed
by Joseph R. Wright, Jr., its Chairman, Chief Executive Officer and President,
this 14th day of May, 1997.
AVIC GROUP INTERNATIONAL, INC.
By: /s/ Joseph R. Wright, Jr.
--------------------------
Joseph R. Wright, Jr.
Chairman, Chief Executive
Officer and President
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RESTATED
CERTIFICATE OF INCORPORATION
OF
AVIC GROUP INTERNATIONAL, INC.
This Restated Certificate of Incorporation (the "Certificate") of AVIC
Group International, Inc. (the "Corporation"), was duly adopted by the Board of
Directors and the stockholders of the Corporation, as set forth below, in
accordance with Sections 242 and 245 of the General Corporation Law of the State
of Delaware. The original Certificate of Incorporation was filed on June 20,
1996.
The foregoing Restated Certificate of Incorporation was adopted by a
majority of the issued and outstanding stock of each class of stockholders of
the Corporation entitled to vote thereon as a class.
This Restated Certificate of Incorporation restates and integrates and
further amends the original Certificate of Incorporation of this Corporation to
read in its entirety as follows:
FIRST: The name of the corporation is AVIC Group International, Inc.
SECOND: The address of the registered office of the Corporation in the
State of Delaware shall be at Corporation Trust Center, 1209 Orange Street, City
of Wilmington, County of New Castle, Delaware 19801. The name and address of the
Corporation's registered agent in the State of Delaware is The Corporation Trust
Company, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware
19801.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may now or hereafter be organized under the
General Corporation Law of the State of Delaware.
FOURTH: 1. The total number of shares of stock which the Corporation
shall have authority to issue is One Hundred Ten Million (110,000,000) shares,
consisting of One Hundred Million (100,000,000) shares of Common Stock, par
value $0.001 per share (the "Common Stock"), and Ten Million (10,000,000) shares
of Preferred Stock, par value $0.001 per share (the "Preferred Stock").
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2. Shares of Preferred Stock may be issued from time to time
in one or more series as may be established from time to time by resolution of
the Board of Directors of the Corporation (the "Board of Directors"), each of
which series shall consist of such number of shares and have such distinctive
designation or title as shall be fixed by resolution of the Board of Directors
prior to the issuance of any shares of such series. Each such class or series of
Preferred Stock shall have such voting powers, full or limited, or no voting
powers, and such preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof, as
shall be stated in such resolution of the Board of Directors providing for the
issuance of such series of Preferred Stock. The Board of Directors is further
authorized to increase or decrease (but not below the number of shares of such
class or series then outstanding) the number of shares of any series subsequent
to the issuance of shares of that series.
FIFTH: In furtherance and not in limitation of the powers conferred by
statute and subject to Article Sixth hereof, the Board of Directors is expressly
authorized to adopt, repeal, rescind, alter or amend in any respect the Bylaws
of the Corporation (the "Bylaws") of the Corporation (the "Bylaws").
SIXTH: Notwithstanding Article Fifth hereof, the Bylaws may be adopted,
rescinded, altered or amended in any respect by the stockholders of the
Corporation, but only by the affirmative vote of the holders of not less than 66
2/3% of the voting power of all outstanding shares of voting stock regardless of
class and voting together as a single voting class; PROVIDED, HOWEVER, that
where such action is approved by a majority of the continuing directors the
affirmative vote of a majority of the voting power of all outstanding shares of
voting stock, regardless of class and voting together as a single voting class,
shall be required for approval of such action.
SEVENTH: The business and affairs of the Corporation shall be managed
by and under the direction of the Board of Directors. Except as may otherwise be
provided pursuant to Section 2 of Article Fourth hereof in connection with
rights to elect additional directors under specified circumstances which may be
granted to the holders of any series of Preferred Stock, the exact number of
directors of the Corporation shall be determined from time to time by a Bylaw or
Amendment thereof provided that the number of directors shall not be reduced to
less than three (3), except that there need be only as many directors as there
are stockholders in the event that the outstanding shares are held of record by
fewer than three (3) stockholders.
Elections of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
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EIGHTH: Each director shall serve until his successor is elected and
qualified or until his death, resignation or removal; no decrease in the
authorized number of directors shall shorten the term of any incumbent director;
and additional directors, elected pursuant to Section 2 of Article Fourth hereof
in connection with rights to elect such additional directors under specified
circumstances which may be granted to the holders of any series of Preferred
Stock, shall not be included in any class, but shall serve for such term or
terms and pursuant to such other provisions as are specified in the resolution
of the Board of Directors establishing such series.
NINTH: Except as may otherwise be provided pursuant to Section 2 of
Article Fourth hereof in connection with rights to elect additional directors
under specified circumstances which may be granted to the holders of any series
of Preferred Stock, newly created directorships resulting from any increase in
the number of directors, or any vacancies on the Board of Directors resulting
from death, resignation, removal or other causes, shall be filled solely by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified or until such director's death, resignation or
removal, whichever first occurs.
TENTH: Except for such additional directors as may be elected by the
holders of any series of Preferred Stock pursuant to the terms thereof
established by a resolution of the Board of Directors pursuant to Article Fourth
hereof, any director may be removed from office with or without cause and only
by the affirmative vote of the holders of not less than 66 2/3% of the voting
power of all outstanding shares of voting stock entitled to vote in connection
with the election of such director regardless of class and voting together as a
single voting class; PROVIDED, HOWEVER, that where such removal is approved by a
majority of the continuing directors, the affirmative vote of a majority of the
voting power of all outstanding shares of voting stock entitled to vote in
connection with the election of such director, regardless of class and voting
together as a single voting class, shall be required for approval of such
removal.
ELEVENTH: Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called Annual Meeting
or at a special meeting of stockholders of the Corporation, unless such action
requiring or permitting stockholder approval is approved by a majority of the
continuing directors, in which case such action may be authorized or taken by
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the written consent of the holders of outstanding shares of voting stock having
not less than the minimum voting power that would be necessary to authorize or
take such action at a meeting of stockholders at which all shares entitled to
vote thereon were present and voted, provided, all other requirements of
applicable law and this Certificate have been satisfied. Except as specifically
set forth in this Article Eleventh, no action may be taken by stockholders by
written demand.
TWELFTH: Meetings of stockholders of the Corporation may be held within
or without the State of Delaware, as the Bylaws may provide. The books of the
Corporation may be kept (subject to any provision of applicable law) outside the
State of Delaware at such place or places as may be designated from time to time
by the Board of Directors or in the Bylaws.
THIRTEENTH: For the purposes of this Restated Certificate of
Incorporation, the following definitions shall apply:
(a) "continuing director" means: (i) any member of the Board of
Directors who (A) is not an interested stockholder or an
affiliate or associate of an interested stockholder and (B)
was a member of the Board of Directors prior to the time that
an interested stockholder became an interested stockholder;
and (ii) any person who is elected or nominated to succeed a
continuing director, or to join the Board of Directors, by a
majority of the continuing directors.
(b) The terms "affiliate," "associate," "control," "interested
stockholder," "owner," "person" and "voting stock" shall have
the meanings set forth in Section 203(c) of the Delaware
General Corporation Law.
FOURTEENTH: The provisions set forth in this Article Fourteenth and in
Articles Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth and Eleventh hereof
may not be repealed, rescinded, altered or amended in any respect, and no other
provision or provisions may be adopted which impair(s) in any respect the
operation or effect of any such provision, except by the affirmative vote of the
holders of not less than 66 2/3% of the voting power of all o outstanding shares
of voting stock regardless of class and voting together as a single voting
class, and, where such action is proposed by an interested stockholder or by any
associate or affiliate of an interested stockholder or by any associate or
affiliate of an interested stockholder, the affirmative vote of the holders of a
majority of the voting power of all outstanding shares of voting stock,
regardless of class and voting together as a single class, other than shares
held by the interested stockholder which proposed (or the affiliate or associate
of which proposed) such action, or any affiliate or associate of such interested
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stockholder; PROVIDED, HOWEVER, that where such action is approved by a majority
of the continuing directors, the affirmative vote of a majority of the voting
power of all outstanding shares of voting stock, regardless of class and voting
together as a single voting class, shall be required for approval of such
action.
FIFTEENTH: The Corporation reserves the right to adopt, repeal,
rescind, alter or amend in any respect any provision contained in this
Certificate in the manner now or hereafter prescribed by applicable law, and all
rights conferred on stockholders herein are granted subject to this reservation.
Notwithstanding the preceding sentence, the provisions set forth in Articles
Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleven and Fourteenth may
not be repealed, rescinded, altered or amended in any respect, and no other
provision or provisions may be adopted which impair(s) in any respect the
operation or effect of any such provision, unless such action is approved as
specified in Article Fourteenth hereof.
SIXTEENTH: No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (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 Delaware General Corporation Law,
or (d) for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law hereafter is amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of a director of the Corporation, in addition to the
limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Delaware General Corporation Law. Any
repeal or modification of this Section by the stockholders of the Corporation
shall be prospective only and shall not adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of such
repeal or modification.
SEVENTEENTH: No contract or other transaction of the Corporation with
any other person, firm or corporation, or in which this corporation is
interested, shall be affected or invalidated by: (a) the fact that any one or
more of the directors or officers of the Corporation is interested in or is a
director or officer of such other firm or corporation; or, (b) the fact that any
director or officer of the Corporation, individually or jointly with others, may
be a party to or may be interested in any such contract or transaction, so long
as the contract or transaction is authorized, approved or ratified at a meeting
of the Board of Directors by sufficient vote thereon by directors not interested
therein, to which such fact of relationship or interest has been disclosed, or
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the contract or transaction has been approved or ratified by vote or written
consent of the stockholders entitled to vote, to whom such fact of relationship
or interest has been disclosed, or so long as the contract or transaction is
fair and reasonable to the Corporation. Each person who may become a director or
officer of the Corporation is hereby relieved from any liability that might
otherwise arise by reason of his contracting with the Corporation for the
benefit of himself or any firm or corporation in which he may in any way be
interested.
EIGHTEENTH: The Corporation hereby provides for a series of Preferred
Stock designated as the Series A Convertible Preferred Stock, as follows:
1. DEFINITIONS. For purposes of this Article, the following
definitions shall apply:
"COMMON STOCK" shall mean the common stock, par value $0.001
per share, of the Corporation.
"DEFAULTED DIVIDENDS" shall mean dividends for any full
calendar annual period which, as of the date of conversion or redemption, have
not been declared by the Board of Directors or shall remain accrued and unpaid
as of such date.
"LIQUIDATION PREFERENCE" shall mean $3.00 per share, subject
to adjustment from time to time as provided in Section 2(b)(1)(C) of this
Article.
"PREFERRED STOCK" shall mean the preferred stock, par value
$0.001 per share, of the Corporation.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any successor act.
"SERIES A PREFERRED STOCK" shall mean the series of Preferred
Stock designated as the Series A Convertible Preferred Stock by the
Corporation's Board of Directors.
2. DETERMINATION OF PREFERENCES OF SERIES A PREFERRED STOCK.
The rights, preferences, privileges, restrictions and other matters related to
the Series A Preferred Stock in this Article are as follows:
(a) DIVIDEND PROVISIONS.
(1) The holders of the Series A Preferred
Stock shall be entitled to receive a cumulative preferential dividend of $0.18
per share PER ANNUM, payable in cash, out of funds legally available therefor,
once annually, on December 31 of each year (the "Dividend Payment Date"),
commencing December 31, 1996, (or, if any such Dividend Payment Date shall be a
weekend or a bank holiday, on the next business day thereafter), in arrears, to
each holder of record of Series A Preferred Stock on the Corporation's books on
each December 15, commencing December 15, 1996 (the "Record Date").
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(2) The rate of dividends payable with
respect to the Series A Preferred Stock shall be adjusted from time to time in
connection with any stock split, reverse stock split or reclassification of the
Series A Preferred Stock which would result in an adjustment of the Conversion
Base for such class of stock under Section 2(c)(4) of this Article.
(3) CUMULATIVE RIGHTS. To the extent, if
any, that dividends at the rate set forth in Section 2(a)(1) above shall not be
paid or set apart in full for the Series A Preferred Stock, the aggregate
deficiency shall be cumulated and must be fully paid or set apart for payment
before any dividends may be paid upon or set apart for the Common Stock of the
Corporation or before the Corporation may purchase any of its Common Stock or
otherwise make any distribution on account of its Common Stock or any other
class of capital stock now or hereafter authorized or issued by the Corporation
which ranks on a parity with or junior to the Series A Preferred Stock (other
than (a) a dividend payable in Common Stock, or (b) by conversion into or
exchange for capital stock of the Corporation ranking junior to the Series A
Preferred Stock as to dividends).
(4) NO INTEREST ON ACCRUED DIVIDENDS. Any
accumulations of dividends on the Series A Preferred Stock shall not bear
interest.
(5) DECLARATION. Dividends on the Series A
Preferred Stock shall be declared if, when and as the Board of Directors of the
Corporation shall in its sole discretion deem advisable, and only from the
surplus of the Corporation as such shall be fixed and determined by the Board of
Directors. The determination of the Board of Directors at any time of the amount
of surplus available for the payment of dividends shall be binding and
conclusive on the holders of the shares of Series A Preferred Stock then
outstanding. If dividends are not paid in full upon the Series A Preferred Stock
and any other Preferred Stock ranking on a parity as to the dividends with the
Series A Preferred Stock, all dividends declared upon shares of Series A
Preferred Stock and upon such other shares of Preferred Stock shall bear the
same ratio to each other that the accumulated dividends per share on the shares
of the Series A Preferred Stock and such other shares of Preferred Stock bear to
each other. The holders of the Series A Preferred Stock shall not be entitled to
receive any dividends thereon other than the dividends provided for in the
preceding provisions of this Section.
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(b) LIQUIDATION PREFERENCE.
(1) PREFERENCE. In the event of any
voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Corporation, after payment or provision for payment of the debts and
other liabilities of the Corporation, each holder of the Series A Preferred
Stock shall be entitled to receive, out of the remaining net assets of the
Corporation legally available for distribution to its shareholders, before any
payment or distribution shall be made on the Common Stock, or on any other class
of stock of the Corporation ranking junior to the shares of Series A Preferred
Stock upon liquidation, the amount of the Liquidation Preference, plus all
Defaulted Dividends, as of the date of such dissolution, liquidation or winding
up.
(2) PROPORTIONATE DISTRIBUTION WHERE ASSETS
INSUFFICIENT. In the event the assets of the Corporation available for
distribution to the holders of shares of Series A Preferred Stock upon
dissolution, liquidation or winding up of the Corporation whether voluntary or
involuntary, shall be sufficient to pay in full all amounts to which such
holders are entitled pursuant to paragraph (1) of this Section, no such
distribution shall be made on account of any shares of any class of capital
stock of the Corporation ranking on a parity with the shares of Series A
Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares of
Series A Preferred Stock, ratably, in proportion to the full distributable
amounts for which holders of all such parity shares are respectively entitled
upon such dissolution, liquidation or winding up.
(3) NONPARTICIPATION RIGHT. After the
payment to the holders of the shares of Series A Preferred Stock of the full
preferential amounts provided for in either paragraph (1) or (2) of this
Section, as applicable, the holders of Series A Preferred Stock such shall have
no right or claim to any of the remaining assets of the Corporation.
(4) REORGANIZATION. For the purposes of this
Article, a liquidation, dissolution or winding up of the affairs of the
Corporation shall not be deemed to be occasioned by or to include the sale of
all or substantially all of the assets of the Corporation or the acquisition of
the Corporation by another entity by means of a merger, consolidation or other
reorganization.
(5) ADJUSTMENTS TO LIQUIDATION PREFERENCE.
The Liquidation Preference shall be adjusted from time to time in connection
with any stock split, reverse stock split or reclassification of the Series A
Preferred Stock which would result in an adjustment to the Conversion Base for
such class of stock under Section 2(c)(4) of this Article.
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(c) CONVERSION AND REDEMPTION RIGHTS. The
holders of the Series A Preferred Stock shall have conversion rights (the
"Conversion Rights") and redemption rights ("Redemption Rights"), respectively
as follows:
(1) OPTIONAL CONVERSION.
(A) Each shares of the Series A
Preferred Stock shall be convertible, at the option of the holder thereof at any
time after January 1, 1997, in accordance with Section 2(c)(2) of this Article.
(B) In order to convert shares of
the Series A Preferred Stock into shares of Common Stock, the holder thereof
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or its transfer agent, together with written notice
(the "Conversion Notice") to the Corporation stating that it elects to convert
the same and setting forth the name or names in which it wishes the certificate
or certificates for Common Stock to be issued, and the number of shares of
Series A Preferred Stock being converted.
(C) The Corporation shall, as soon
as practicable after the surrender of the certificate or certificates evidencing
shares of Series A Preferred Stock for conversion, issue to the holder of such
shares a certificate or certificates evidencing the number of shares of Common
Stock (and any other securities and property) to which it shall be entitled and,
in the event that only a part of the shares evidenced by such certificate or
certificates are converted, a certificate evidencing the number of shares of
Series A Preferred Stock, as the case may be, which are not converted. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Series A Preferred Stock
to be converted, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock at such date and
shall, with respect to such shares, thereafter have only the rights of a holder
of Common Stock; PROVIDED, HOWEVER, that if, at the date of such notice and
surrender, the transfer books for the Common Stock or other class of stock
purchasable upon the exercise of such conversion rights shall be closed, the
certificate or certificates for the shares of Common Stock in respect of which
such conversion rights are then exercised shall be issuable as of the date on
which such books shall next be opened, and until such date the Corporation shall
be under no duty to deliver any certificate for such shares of Common Stock; and
PROVIDED, FURTHER, that the transfer books of record, unless otherwise required
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by law, shall not be closed at any one time for a period longer than twenty (20)
days. The rights of purchase represented by the foregoing conversion rights
shall be exercisable, at the election of the holder, either in full or from time
to time in part.
(D) With respect to the issue of
shares of Common Stock upon conversion of the Series A Preferred Stock and the
transfer of such shares of Common Stock:
(i) The holder and any
transferee of the shares of Common Stock issuable upon the
exercise of the foregoing conversion rights agree that,
notwithstanding anything in this Certificate to the contrary,
during such period as delivery of a prospectus or like
document with respect to such Common Stock may be required by
the securities laws of any applicable jurisdiction, no public
distribution of such Common Stock will be made in a manner or
on terms different from those set forth in, or without
delivery of, a prospectus or other document then meeting the
requirements of such laws. The holder and any such transferee
further agree that if any distribution of any of such Common
Stock is proposed to be made to them or by them otherwise than
by delivery of such a prospectus or other document meeting the
requirements of the securities laws of all applicable
jurisdictions, such action shall be taken only after
submission to the Corporation of an opinion of counsel,
reasonably satisfactory in form and substance to the
Corporation's counsel, to the effect that the proposed
distribution will not be in violation of such securities laws.
(ii) It shall be a condition to
the transfer of such Common Stock that any transferee of such
Common Stock deliver to the Corporation his or its written
agreement to accept and be bound by all of the terms and
conditions of this Certificate.
(2) NUMBER OF SHARES.
(A) Each share of the Series A Preferred Stock shall
be convertible, subject to adjustment from time to time in connection with any
stock split, reverse stock split or reclassification of the Series A Preferred
Stock which would result in an adjustment to the Conversion Base for such class
of stock under Section 2(c)(4) of this Article, into duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock, calculated as to
each conversion to the greater number of full shares of Common Stock,
disregarding fractions, with a cash adjustment for fractional shares as
hereinafter provided, at any time after January 1, 1997 (the "Conversion
Period"), into one share of Common Stock (the "Conversion Base"); PROVIDED,
HOWEVER, that the holder shall be entitled to convert the aggregate of any
eligible shares of Series A Preferred Stock, previously not so elected to be
converted, during the Conversion Period; and PROVIDED, FURTHER, that such right
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of conversion shall only be exercisable at such time as: (i) the exercise of
such right of conversion and the delivery of such shares of Common Stock are
lawful under federal securities laws and the securities laws of the jurisdiction
of residence of all persons to whom such shares of Common Stock are otherwise
deliverable, and (ii) only if a current prospectus, as set forth in Section
2(c)(2) of this Article, relating to the underlying shares of Common Stock is
then in effect and only if such shares of Common Stock are qualified for sale
under the securities laws of the jurisdiction or jurisdictions in which the
holder resides.
(B) No fractional shares of Common Stock or scrip
shall be issued upon conversion of the Series A Preferred Stock. If more than
one share of Series A Preferred Stock shall be surrendered for conversion at any
one time by the same holder, the number of full shares of Common Stock issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of shares of Series A Preferred Stock so surrendered. If the computation for
determining the number of shares of Common Stock issuable upon conversion of
Series A Preferred Stock shall result in other than a whole number, the
Corporation shall issue to such shareholder, in respect of the aggregate number
of shares of Series A Preferred Stock held by any shareholder, one share of
Common Stock in respect of any fractional shares of Common Stock otherwise
issuable to such shareholder.
(3) OPTIONAL REDEMPTION.
(A) The Series A Preferred Stock at any time
outstanding may be redeemed by the Corporation, in whole or in part, at any time
or from time to time after January 1, 1997, at the option of the Board of
Directors upon not less than thirty (30) days' prior written notice (the
"Redemption Notice") to the holders of record of the shares of Series A
Preferred Stock to be redeemed, upon payment to the holders of the Series A
Preferred Stock of the Liquidation Preference, plus the Defaulted Dividends, as
of the redemption date (the "Redemption Price"), and no penalty shall become due
as a result of such redemption. If less than all of the outstanding shares of
Series A Preferred Stock are to be redeemed, the redemption may be made either
by lot or PRO RATA or by such other method as the Board of Directors in its
discretion may determine. If such notice of redemption shall have been duly
given and if, on or before the redemption date specified in such notice, all
funds necessary for such redemption shall have been set aside so as to be
available therefor, then notwithstanding that any certificate for shares of
Series A Preferred Stock so called for redemption shall not have been
surrendered for cancellation, all dividends on such shares of Series A Preferred
Stock shall forthwith on such redemption date cease and terminate, except only
the right of holders thereof to receive the amount payable upon redemption
thereof, but without interest.
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<PAGE> 17
(B) SURRENDER OF SHARES. The Corporation shall, as
soon as practicable after the surrender of the certificate or certificates
evidencing shares of Series A Preferred Stock for redemption, issue to the
holder of such shares, in the event that only a part of the shares evidenced by
such certificate or certificates are redeemed, a certificate evidencing the
number of shares of Series A Preferred Stock which are not redeemed. Such
redemption shall be deemed to have become effective immediately prior to the
close of business on the date of such surrender of the shares of Series A
Preferred Stock to be redeemed. On or after the date fixed for redemption, each
holder of Series A Preferred Stock called for redemption shall, unless such
holder shall have previously exercised such holder's option to convert the
Series A Preferred Stock into Common Stock in the manner set forth in Section
2(c)(i) above, surrender such holder's certificates for such shares of Series A
Preferred Stock to the Corporation at the place designated in the Redemption
Notice and shall thereupon be entitled to receive the Redemption Price. Should
less than all the shares of Series A Preferred Stock represented by any
surrendered certificate be redeemed, a new certificate for the unredeemed shares
shall be issued to the holder of record of such unredeemed shares.
Notwithstanding anything to the contrary, the holder of Series A Preferred Stock
shall not be obligated to exercise the conversion rights hereunder, if the
Corporation calls the Series A Preferred Stock for redemption, during such time
as the holder may be liable for damages or penalties with respect to the
conversion of such shares pursuant to Section 16 of the Securities Exchange Act
of 1934, as amended, only with respect to an event occurring prior to the date
of the Redemption Notice. However, in such event, the holder of Series A
Preferred Stock shall provide the Corporation with an opinion of qualified
United States securities counsel to the effect that the conversion of the Series
A Preferred Stock shall subject the holder to such damages or penalties for such
reasons and shall set forth the inclusive dates during which such damages or
penalties shall accrue and terminate. Upon the termination date of such
inclusive dates, the holder shall have ten (10) days to elect to convert the
shares of Series A Preferred Stock into shares of Common Stock, or shall
otherwise be subject to call for redemption pursuant to the terms and conditions
of the previously delivered Redemption Notice.
(C) CESSATION OF RIGHTS AS SHAREHOLDER. From and
after the redemption date (unless default shall be made by the Corporation is
duly paying the Redemption Price in which case all rights of the holders of
Series A Preferred Stock shall continue), the holders of the shares of the
Series A Preferred Stock called for redemption shall cease to have any rights as
shareholders of the Corporation except the right to receive, without interest,
the Redemption Price thereof upon surrender of the certificate(s) representing
the shares of Series A Preferred Stock being redeemed, and such shares shall not
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<PAGE> 18
thereafter be transferred (except with the consent of the Corporation) on the
books of the corporation and shall not be deemed outstanding for any purpose
whatsoever.
(D) CANCELLATION OF REDEEMED SHARES. All shares of
Series A Preferred Stock that are redeemed shall be cancelled and such shares
shall be restored to the status of authorized but unissued shares of Preferred
Stock.
(4) STOCK SPLITS AND REVERSE STOCK SPLITS. If outstanding
shares of Common Stock shall be subdivided into a greater number of shares, or a
dividend in Common Stock or other securities of the Corporation convertible into
or exchangeable for Common Stock (in which latter event the number of shares of
Common Stock issuable upon the conversion or exchange of such securities shall
be deemed to have been distributed) shall be paid in respect of the Common
Stock, the Conversion Base in effect immediately prior to such subdivision or at
the record date of such dividend shall each, simultaneously with the
effectiveness of such subdivision or immediately after the record date of such
dividend, be proportionately reduced, and conversely, if outstanding shares of
the Common Stock shall be combined into a smaller number of shares, the
Conversion Base in effect immediately prior to such combination shall each,
simultaneously with the effectiveness of such combination, be proportionately
increased.
Any adjustments to the Conversion Base under this Section 2 (c)(4) of
this Article shall become effective at the close of business on the date the
subdivision or combination referred to herein becomes effective.
(5) CERTAIN DISTRIBUTIONS. In the event 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 entitled to receive a dividend or
other distribution payable in securities of the Corporation other than shares of
Common Stock or securities convertible into or exchangeable for Common Stock,
then and in each such event, provision shall be made so that the holders of the
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, during the period from the date of such event to and including
the date of conversion, retained such securities receivable by them as aforesaid
during such period, giving application to all adjustments called for during such
period under this Section 2(c)(6) of this Article with respect to the rights of
the holders of Series A Preferred Stock.
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<PAGE> 19
(6) CERTAIN REORGANIZATIONS. In the event of any capital
reorganization, any reclassification of the Common Stock (other than a change in
par value or as a result of a stock dividend, subdivision, split-up or
combination of shares), the consolidation or merger of the Corporation with or
into another person, or the sale or other disposition of all or substantially
all of the properties of the Corporation as an entirety to another person
(collectively referred to hereinafter as a "Reorganization"), the holders of the
Series A Preferred Stock shall thereafter be entitled to receive, and provision
shall be made therefor in any agreement relating to a Reorganization, upon
conversion of the Series A Preferred Stock, the kind and number of shares of
Common Stock or other securities or property (including cash) of the
Corporation, or the other corporation resulting from such consolidation or
surviving such merger, which the Series A Preferred Stock entitled the holder
thereof to convert to immediately prior to such Reorganization; and in any such
case appropriate adjustment shall be made in the application of the provisions
herein set forth with respect to the rights and interests thereafter of the
holders of the Series A Preferred Stock to the end that the provisions set forth
herein shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares, to such other securities or property thereafter
receivable upon conversion of the Series A Preferred Stock. The provisions of
this Section 2(c)(6) of this Article shall similarly apply to successive
Reorganizations.
(7) NOTICE OF ADJUSTMENT. In each case of an adjustment
or readjustment of the Conversion base or the number of shares of Common Stock
or other securities issuable upon conversion of the Series A Preferred Stock,
the Corporation, at its expense, shall prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first-class
mail, postage prepaid, to each holder of the Series A Preferred Stock which is
the subject of adjustment. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (A) the Conversion Base at the
time in effect for the Series A Preferred Stock, and (B) the number of shares of
Common Stock and the type and amount, if any, of other property which at the
time would be received upon conversion of such Series A Preferred Stock.
(8) RESERVATION OF SHARES. 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 or the issuance
or dividends in respect of the shares of Series A Preferred Stock, such number
of shares of Common Stock as shall from time to time be sufficient to effect a
conversion or the issuance of dividends in respect of the shares of Series A
Preferred Stock, such number of the shares of Common Stock as shall from time to
time be sufficient to effect a conversion or the issuance of dividends in
respect of 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 or the issuance of dividends in respect of
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<PAGE> 20
all then outstanding shares of the Series A Preferred Stock, the Corporation
shall promptly seek 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. In the event of
the consolidation or merger of the Corporation with another corporation,
effective provision shall be made in the certificate or articles of
incorporation, documents of merger or consolidation, or otherwise, of the
surviving corporation so that such corporation will at all times reserve and
keep available a sufficient number of shares of Common Stock or other securities
or property to provide for the conversion or issuance of dividends in respect of
the Series A Preferred Stock in accordance with the provisions of this Section
2(c) of this Article.
(9) TAXES. The Corporation shall pay all taxes and other
governmental charges (other than any income or other taxes imposed upon the
profits realized by the recipient) that may be imposed in respect of the issue
or delivery of shares of Common Stock or other securities or property upon
conversion or issuance of dividends in respect of shares of Series A Preferred
Stock, including without limitation, any tax or other charge (other than any
transfer tax) imposed in connection with the issue and delivery of shares of
Common Stock or other securities at the time of such conversion or issuance of
dividends in a name other than that in which the shares of Series A Preferred
Stock so converted or otherwise held were registered.
(10) CANCELLATION OF CERTIFICATES. All certificates
representing Series A Preferred Stock surrendered for conversion or redemption
shall be appropriately canceled on the books, and the shares so converted or
redeemed represented by such certificates shall be restored to the status of
authorized but unissued shares of undesignated Preferred Stock, but may not be
reissued as part of the Series A Preferred Stock.
(11) NO AVOIDANCE. The Corporation shall not amend the
Corporation's Articles of Incorporation or participate in any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, for the purpose of avoiding or
attempting to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation.
(d) VOTING RIGHTS. The holders of the Series A Preferred Stock
shall have one vote per share. In the event that the outstanding shares of
Common Stock shall be adjusted from time to time in connection with any stock
split, reverse stock split or reclassification of the Common Stock pursuant to
which the outstanding shares of Common Stock shall be subdivided into a greater
number of shares of combined into a smaller number of shares, and which would
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<PAGE> 21
result in an adjustment of the Conversion Base under Section 2(c)(4) of this
Article, the number of votes per share of Series A Preferred Stock shall be
proportionately increased simultaneously with the effectiveness of such
subdivision or reduced simultaneously with the effectiveness of such
combination.
(e) ADDITIONAL SERIES OF PREFERRED STOCK. Except for the
Series A Preferred Stock, the Board of Directors of the Corporation is
authorized to fix the number of shares of any additional series of Preferred
Stock and to determine the designation of any such series. The Board of
Directors is also authorized to determine or alter the rights, preferences,
privileges and restrictions granted to or imposed upon any wholly unissued
series of Preferred Stock and, within the limits and restrictions stated in any
resolution or resolutions of the Board of Directors originally fixing the number
of shares constituting any series, to increase or decrease (but not below the
number of shares of any such series then outstanding) the number of shares of
any series subsequent to the issue of shares of that series. The Corporation
expressly reserves the right to issue additional series of Preferred Stock from
time to time which may rank on a parity with or junior to the Series A Preferred
Stock with respect to any distributions upon dissolution, liquidation or winding
up, or of dividends pursuant to Sections 2(a) and 2(b) of this Article,
respectively, without the prior authorization of the holders of the Series A
Preferred Stock.
(f) MISCELLANEOUS.
(1) NOTICES. All notices, requests,
consents and other communications required hereunder shall be in writing and by
overnight, registered or certified mail, postage prepaid, return receipt
requested, and shall be deemed to have been duly made when deposited in the
mails upon mailing or by overnight, registered or certified mail, postage
prepaid, return receipt requested: if addressed to the holder at the last
ladders of such holder on the books of the Corporation; if addressed to the
Corporation, at 599 Lexington Avenue, 44th Floor, New York, New York 10022 or
such other address as the Corporation may designate in writing.
(2) HOLDERS. For purposes of this
Article, the "holder" of any share of Common Stock or Series A Preferred Stock
shall be the holder of record of such share as set forth in the stock register
of the Corporation, and the Corporation shall be entitled to treat the holder as
the owner of such securities for all purposes.
NINETEENTH: The Corporation hereby provides for a series of Preferred
Stock designated as the Series B Convertible Preferred Stock, as follows:
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<PAGE> 22
1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series B Convertible Preferred Stock" (the "Series B Preferred
Stock") and the number of shares constituting the Series B Preferred Stock shall
be 100. Such number of shares may be increased or decreased by resolution of the
Board of Directors; provided, that no decrease shall reduce the number of shares
of Series B Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series B
Preferred Stock.
2. BANK. The Series B Preferred Stock shall rank: (i) prior to
all of the Corporation's Common Stock, par value $0.001 per share ("Common
Stock"); (ii) prior to any class or series of capital stock of the Corporation
hereafter created (collectively, with the Common Stock, "Junior Securities");
(iii) 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 ("Parity Securities") in each case as to dividends, premium,
conversion, redemption, voting rights, and distributions of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary (all such distributions being referred to collectively as
"Distributions"); and (iv) junior to the Series A Preferred Stock ("Senior
Securities") in terms of Distributions.
3. DIVIDENDS. The Series B Preferred Stock will bear no
dividends, and the holders of the Series B Preferred Stock shall not be entitled
to receive dividends on the Series B Preferred Stock.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, the holders of
shares of Series B Preferred Stock shall be entitled to receive, immediately
after any distributions to Senior Securities required by the Corporation's
Articles of Incorporation or any statement of designation of preferences, and
prior and in preference to any distribution to Junior Securities but in parity
with any distribution of Parity Securities, an amount per share equal to the sum
of (i) $25,000 for each outstanding share of Series B Preferred Stock (the
"Original Series B Issue Price") and (ii) an amount equal to 8% of the Original
Series B Issue Price per annum for the period that has passed since the date of
issuance of any Series B Preferred Stock (such amount being referred to herein
as the "Premium"). If upon the occurrence of such event, the assets and funds
thus distributed among the holders of the Series B Preferred Stock and Parity
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<PAGE> 23
Securities shall be insufficient to permit the payment to such holders of the
full preferential amounts due to the holders of the Series B Preferred Stock and
the Parity Securities, respectively, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed among the
holders of the Series B Preferred Stock and the Parity Securities, pro rata,
based on the respective liquidation amounts to which each such series of stock
is entitled by the Corporation's Articles of Incorporation and any statement(s)
of designation of preference.
(b) Upon the completion of the distribution required by
subsection 4(a), if assets remain in this Corporation, they shall be distributed
to holders of Parity Securities (unless holders of Parity Securities have
received distributions pursuant to subsection (a) above) and Junior Securities
in accordance with the Corporation's Articles of Incorporation including any
duly adopted certificate(s) of designation of preferences.
(c) A Consolidation or merger of the Corporation with or
into any other corporation or corporations, or a sale, conveyance or disposition
of all or substantially all of the assets of the Corporation or the effectuation
by the Corporation of a transaction or series of related transactions in which
more than 50% of the voting power of the Corporation is disposed of, shall not
be deemed to be a liquidation, dissolution or winding up within the meaning of
this Section 4, but shall instead be treated pursuant to Section 7 hereof.
5. CONVERSION.
The record holders of the Series B Preferred Stock shall have conversion rights
as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. The record holder of the Series B
Preferred Stock shall be entitled, as set forth below, and, subject to the
Company's right of redemption set forth in Section 6(a) and the restrictions on
conversion set forth in Section 5(b) below, at the office of the Company or any
transfer agent for he Series B Preferred Stock, to convert the shares of Series
B Preferred Stock held by such holder into that number of fully-paid and
nonassessable shares of the Company's Common Stock at the Conversion Rate as set
forth below. The number of shares of Common Stock into which this Series B
Preferred Stock may be converted is hereinafter referred to as the "Conversion
Rate" for such Series B Preferred Stock, and is computed as follows:
Number of shares issued upon conversion of one share of Preferred Stock
equals
[(.08) (N/365) (Issue Price)] + Issue Price
-------------------------------------------
Conversion Price
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<PAGE> 24
where
*N = the number of days between (i) the date that, in
connection with the consummation of the initial purchase of
this Series B Preferred Stock from the Company, the escrow
agent first had in its possession funds representing full
payment for the Series B Preferred Stock for which conversion
is being elected, and (ii) the applicable date of conversion
for the Series B Preferred Stock for which conversion is being
elected.
*Issue Price = the Original Series B Issue Price, as defined
in Section 4(a), and
*Conversion Price = the lesser of (x) the Fixed Conversion
Price, as may be adjusted pursuant to Section 5(e) below, or
(y) the price which is the lesser of (i) 85% of the average
Closing Bid Price of the Company's Common Stock on each of the
five (5) trading days immediately preceding he Date of
Conversion, as defined below, or (ii) 85% of the average of
the Daily Low Trading Price of the Company's Common Stock on
each of the five (5) trading days immediately preceding the
Date of Conversion, as defined below.
For purposes hereof, (i) the "Fixed Conversion Price" shall
equal 110% of the Index Price, provided, however, that if on
the date that is 180 calendar days after the termination of
the offering of the Series B preferred Stock, the average
Closing Bid Price for the prior 20 business days has declined
25% or more from the Index Price, then the Fixed Conversion
Price shall be reset to equal 110% of that 20-day average
Closing Bid Price, (ii) the "Index Price" shall be $5.40, and
(iii) the terms "Closing Bid Price" and "Daily Low Trading
Price" shall mean the closing bid price and daily low trading
price, respectively, of the Company's Common Stock as reported
by NASDAQ (or, if not reported by NASDAQ, as reported by such
other exchange or market where traded) on the applicable date.
(b) MECHANICS OF CONVERSION. No fractional shares of
Common Stock shall be issued upon conversion of this Series B Preferred Stock.
In lieu of any fractional share to which the holder would otherwise be entitled,
the number of shares of Common Stock to be received shall be rounded up to the
next whole number of shares. In the case of a dispute as to the calculation of
the Conversion Rate, the Company's calculation shall be deemed conclusive absent
manifest error. In order to convert Series B Preferred Stock into full shares of
Common Stock, the holder shall surrender the certificate or certificates
therefor, duly endorsed, by either overnight courier or 2-day courier, to the
office of the Company or of any transfer agent for the Series B Preferred Stock,
and shall give written notice ("Notice of Conversion") to the Company at such
office that he elects to convert the same, the number of shares of Series B
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<PAGE> 25
Preferred Stock so converted and a calculation of the Conversion Rate (with an
advance copy of the certificate(s) and the notice by facsimile). Once the Notice
of Conversion has been so delivered, the conversion set forth therein shall be
irrevocable, and the certificate(s) indicated for conversion shall be cancelled
on the Company's books; provided, however, that the company shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon such conversion unless either the certificates evidencing such Series B
Preferred Stock are delivered to the Company or its transfer agent as provided
above, or the holder notifies the Company or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with such certificates.
The Company shall issue and deliver within three (3) business days
after delivery to the Company of such certificates, or after such agreement and
indemnification, to such holder of Series B Preferred Stock at the address of
the holder on the books of the Company, a certificate or certificates for the
number of shares of Common Stock to which the holder shall be entitled as
aforesaid. The date on which conversion occurs (the "Date of Conversion") shall
be deemed to be the date set forth in such Notice of Conversion, provided that
the advance copy of the Notice of Conversion is faxed to the Company before
midnight, New York City time, on the Date of Conversion.
(c) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Company 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 Series B Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
then outstanding shares of Series B 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 Series B Preferred
Stock, the Company will take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(d) AUTOMATIC CONVERSION. Each share of Series B
Preferred Stock outstanding on June 7, 1998 automatically shall be converted
into Common Stock on such date at the Conversion Price then in effect and June
7, 1998 shall be deemed the Date of Conversion with respect to such Conversion.
(e) ADJUSTMENT TO FIXED CONVERSION PRICE.
In computing the Fixed Conversion Price for purposes
of Section 5(a):
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<PAGE> 26
(i) If, prior to the conversion of all of
the Series B Preferred Stock, the number of outstanding shares
of Common Stock is increased by a stock split, stock dividend,
or other similar event, the Fixed Conversion Price shall be
proportionately reduced, or if the number of outstanding
shares of Common Stock is decreased by a combination or
reclassification of shares, or other similar event, the Fixed
Conversion Price shall be proportionately increased.
(ii) If, prior to the conversion of all
Series B Preferred Stock, there shall be any merger,
consolidation, exchange of shares, recapitalization,
reorganization, or other similar event, as a result of which
shares of Common Stock of the Company shall be changed into
the same or a different number of shares of the same or
another class or classes of stock or securities of the Company
or another entity, then the holders of Series B Preferred
Stock shall thereafter have the right to purchase and receive
upon conversion of Series B Preferred Stock, upon the basis
and upon the terms and conditions specified herein and in lieu
of the shares of Common Stock immediately theretofore issuable
upon conversion, such shares of stock and/or securities as may
be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore
purchasable and receivable upon the conversion of Series B
Preferred Stock held by such holders had such merger,
consolidation, exchange of shares, recapitalization or
reorganization not taken place, and in any such case
appropriate provisions shall be made with respect to the
rights and interests of the holders of the Series B Preferred
Stock to the end that the provisions hereof (including,
without limitation, provisions for adjustment of the Fixed
Conversion Price and of the number of shares issuable upon
conversion of the Series B Preferred Stock) shall thereafter
be applicable, as nearly as may be practicable in relation to
any shares of stock or securities thereafter deliverable upon
the exercise hereof. The Company shall not effect any
transaction described in this subsection 5(e) unless the
resulting successor or acquiring entity (if not the Company)
assumes by written instrument the obligation to deliver to the
holders of the Series B Preferred Stock such shares of stock
and/or securities as, in accordance with the foregoing
provisions, the holders of the Series B Preferred Stock may be
entitled to purchase.
(iii) If any adjustment under this Section
5(e) would create a fractional share of Common Stock or a
right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares
of Common Stock issuable upon conversion shall be the next
higher number of shares.
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<PAGE> 27
(f) FORCED CONVERSION OPTION. At any time after one year
from the termination of the offering of the Series B Preferred Stock, the
Company may, at its option, elect to force conversion of the Series B Preferred
Stock into Common Stock. In order to do so, the Company must give sixty days
prior written notice, delivered by facsimile with hard copy by courier, to the
holders of the Series B Preferred Stock of the Company's election to force
conversion. The notice must state the effective date of the forced conversion.
Prior to the effective date of the forced conversion, the holders of the Series
B Preferred Stock may exercise any rights they may have under this Certificate
or applicable law. In the event of a forced conversion, notwithstanding anything
to the contrary herein, the conversion formula applicable to the shares of
Series B Preferred Stock that are the subject of the forced conversion shall be
as follows:
Number of shares issued upon conversion of one share of Preferred Stock
equals
[(.08 + FORCED CONVERSION PREMIUM) (N/365) (ISSUE PRICE)] + ISSUE PRICE
-----------------------------------------------------------------------
Conversion Price
where the term "Forced Conversion Premium" means six percent (6% or
0.06) for the thirteenth month after the Final Closing Date, declining
by one-half of one percent (0.5%) each month thereafter until it equals
zero the end of the twenty-third month after the Final Closing Date,
and the terms "N", "Issue Price" and "Conversion Price" have the
meanings set forth in 5(a) above.
6. REDEMPTION BY COMPANY UPON CONVERSION.
(a) RIGHT TO REDEEM. In the event the Conversion Price
per share shall be less than or equal to 75% of the Index Price, the Company
shall have the right, in its sole discretion, upon receipt of a Notice of
Conversion pursuant to Section 5, to redeem in whole or in part any Series B
Preferred Stock submitted for conversion, immediately prior to conversion, at
the Redemption Price on Conversion (as defined below). If the Company elects to
redeem some, but not all, of the Series B Preferred Stock submitted for
conversion, the Company shall redeem from among the Series B Preferred Stock
submitted by the various shareholders for conversion on the applicable date, a
pro-rata amount from each shareholder so submitting Series B Preferred Stock for
conversion.
(b) MECHANICS OF REDEMPTION. Any shareholder considering
submitting Preferred Stock for conversion at such time as the Company's right of
redemption under Section 6(a) is or may be in effect may provide notice to the
Company of his possible desire to convert and ask the Company to determine
whether or not the Company would exercise its right of redemption if the
Preferred Stock were submitted for conversion. The Company shall respond within
two business days of the date of that notice, and state whether it would redeem
the shares, in whole or in part, or allow conversion into shares without
redemption, which election will be applicable to conversion by such shareholder
within the next five business days after the date of the Company's response.
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<PAGE> 28
Failure of the Company to respond within the two-day period shall be deemed an
election by the Company not to redeem the shares covered by that notice if
submitted for conversion within the next five business days. If the shareholder
does not provide advance notice of intention to convert as contemplated in this
section (ii), the Company shall effect such redemption of shares submitted for
conversion by giving notice of its election to redeem, by facsimile within 2
business days following receipt of a Notice of Conversion from a holder, with a
copy by 2-day courier, to (A) the holder of Series B Preferred Stock submitted
for conversion at the address and facsimile number of such holder appearing in
the Company's register for the Series B Preferred Stock and (B) the Company's
Transfer Agent. Such redemption notice shall indicate whether the Company will
redeem all or part of the Series B Preferred Stock submitted for conversion and
the applicable redemption price. The Company shall not be entitled to exercise
its right to redeem shares submitted for conversion under this Section 6(a)
unless it has (x) the full amount of the redemption price, in cash, available in
a demand or other immediately available account in a bank or similar financial
institution or (y) immediately available credit facilities, in the full amount
of the redemption price, with a bank or similar financial institution on the
date the redemption notice is sent to shareholders.
(c) REDEMPTION PRICE. In the case of a redemption under
this Section 6(a), the redemption price ("Redemption Price on Conversion") shall
equal:
[[(.08) (N/365) (ISSUE PRICE)] + ISSUE PRICE] [CLOSING BID PRICE]
----------------------------------------------------------------
Conversion Price
where "N," "Issue Price," "Closing Bid Price" and "Conversion Price"
have the meanings set forth in Section 5.
The Redemption Price on Conversion shall be paid to the holder of Series B
Preferred Stock redeemed within 10 business days of the delivery of the notice
of such redemption to such holder; provided, however, that the Company shall not
be obligated to delivery any portion of such Redemption Price on Conversion
unless either the certificates evidencing the Series B Preferred Stock redeemed
are delivered to the Company or its transfer agent as provided in Section 4(b),
or the holder notifies the Company or its transfer agent that such certificates
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have been lost, stolen or destroyed and executes an agreement satisfactory to
the Company to indemnify the Company from any loss incurred by it in connection
with such certificates.
7. CORPORATE CHANGE. In the event of a merger, reorganization,
recapitalization or similar event of or with respect to the Company (a
"Corporate Change") (other than a Corporate Change in which or substantially all
of the consideration received by the holders of the Company's equity securities
upon such Corporate Change consists of cash or assets other than securities
issued by the acquiring entity or any affiliate thereof), this Series B
Preferred Stock shall be assumed by the acquiring entity and thereafter this
Series B Preferred Stock shall be convertible into such class and type of
securities as the holder would have received had the holder converted this
Series B Preferred Stock immediately prior to such Corporate Change.
8. PROTECTIVE PROVISIONS. So long as shares of Series B Preferred Stock
are outstanding, the Corporation shall not without first obtaining the approval
(by vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Series B Preferred Stock:
(a) alter or change the rights, preferences or privileges
of the shares of Series B Preferred Stock or any Senior Securities so as to
affect adversely the Series B Preferred Stock;
(b) create any new class or series of stock having a
rights preferential to or equal to those of the Series B Preferred Stock with
respect to conversion, redemption or voting rights or privileges, or with
respect to Distributions (as defined in Section 2 above); or
(c) do any act or thing not authorized or contemplated by
this Designation which would result in taxation of the holders of shares of the
Series B Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
9. STATUS OF REDEEMED OR CONVERTED STOCK. In the event any shares of
Series B Preferred Stock shall be redeemed or converted pursuant to Section 5 or
Section 6 hereof, the shares so converted or redeemed shall be cancelled, shall
return to the status of authorized but unissued Preferred Stock of no designated
series, and shall not be issuable by the Corporation as Series B Preferred
Stock.
10. MISCELLANEOUS. As used herein, the term "business day" means a
business day in the City of New York.
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IN WITNESS WHEREOF AVIC GROUP INTERNATIONAL, INC. has caused this
Restated Certificate of Incorporation to be executed by its President and to be
attested to by its Secretary as of June 24, 1996.
AVIC GROUP INTERNATIONAL, INC.
By: /s/ JOSEPH R. WRIGHT, JR.
------------------------------
Joseph R. Wright, Jr.
Chief Executive Officer
By: /s/ TIMOTHY P.F. CROWLEY
------------------------------
Timothy P.F. Crowley
Secretary
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