AMENDED ARTICLES OF AMENDMENT
TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
CAVION TECHNOLOGIES, INC.
SETTING FORTH THE
AMENDED STATEMENT OF DESIGNATION OF SERIES
AND DETERMINATION OF RIGHTS AND PREFERENCES
OF CONVERTIBLE PREFERRED STOCK, SERIES A
TO THE SECRETARY OF STATE OF THE STATE OF COLORADO:
Pursuant to Article 106-102 of the Colorado Business Corporation Act,
CAVION TECHNOLOGIES, INC., a Colorado corporation (the "Corporation"),
submits the following articles of amendment to its Second Amended and
Restated Articles of Incorporation setting forth the statement of
designation of series and determination of rights and preferences of its
Convertible Preferred Stock, Series A.
FIRST: The name of the corporation is Cavion Technologies, Inc., a
Colorado corporation.
SECOND: The Board of Directors of the Corporation, by unanimous
written consent in lieu of a meeting pursuant to Section 108-202 of the
Colorado Business Corporation Act, duly adopted the following resolution
on February 1, 1999. No shareholder action was required.
WHEREAS, the Second Amended and Restated Articles of Incorporation of
the Corporation (the "Articles of Incorporation") authorize a class of
preferred stock, consisting of 10,000,000 shares, par value $.0001 per
share (the "Preferred Stock"), issuable from time to time in one or more
series; and
WHEREAS, the Board of Directors of the Corporation is authorized,
subject to limitations prescribed by law and by the provisions of Article
THIRD of the Articles of Incorporation, to authorize the issuance of one
or more series of Preferred Stock and may determine the preferences,
limitations and relative rights of any such series in accordance with
Section 106-102 of the Colorado Business Corporation Act; and
WHEREAS, the Board of Directors of the Corporation has determined
that a series of 770,000 shares of Convertible Preferred Stock, Series A
should be reserved for issuance subject to the designation, preferences,
limitations and relative rights set forth below.
NOW THEREFORE BE IT RESOLVED that pursuant to Article THIRD of the
Articles of Incorporation, there is hereby established a new series of
770,000 shares of Convertible Preferred Stock of the Corporation, to have
the designation, preferences, limitations and relative rights set forth
below; and be it further
RESOLVED, that pursuant to Article THIRD of the Articles of
Incorporation and Section 106-102 of the Colorado Business Corporation
Act, the Articles of Incorporation be, and they hereby are, amended by the
addition of the following as the Statement of Designation, Preferences,
Limitations and Relative Rights of the Convertible Preferred Stock, Series
A.
A. The Convertible Preferred Stock, Series A, shall rank in
priority on a parity with the Parity Securities as to payment of dividends
and as to distributions on liquidation and, to the extent provided herein,
ahead of the Junior Securities (as the same may be adjusted from time to
time to reflect stock splits, stock dividends, recapitalizations,
combinations and the like) and shall be subject to the following rights,
preferences, priorities, conditions, limitations and restrictions:
1. DESIGNATION. The shares of such series shall be designated
"Convertible Preferred Stock, Series A" (hereinafter referred to as the
"Series A Preferred").
2. DIVIDENDS. The holders of record of the Series A Preferred
shall be entitled to receive, as and when declared by the Board of
Directors, dividends as follows:
(a) from and after the date of issuance of the Series A
Preferred, the holders of the Series A Preferred shall be entitled to
receive cumulative preferential dividends at the rate of 5% per annum,
such dividends to accrue and be cumulative from said date and to be
payable quarterly on the last day of March, June, September and December
of each year, commencing March 31, 1999, such dividend rate to be based on
the offering price of $3.00 per share of Series A Preferred (the "Offering
Price"), and
(b) such dividends may, at the option of the Corporation,
be paid in Class A Common Stock of the Company or in cash, with any
payment in Class A Common Stock being in that number of shares of Class A
Common Stock that is calculated by dividing the amount of cash that would
be payable if such dividend were paid in cash by the market value of a
share of Class A Common Stock of the Corporation on the date such dividend
is payable (as determined in good faith by the Directors). The market
value determined by the Directors for this purpose shall be no higher than
the most recent price per share of Class A Common Stock issued by the
Corporation.
Such dividends shall be cumulative and no dividend shall be
declared, paid or set apart for payment upon the Junior Securities unless
all then unpaid and accumulated dividends on the Series A Preferred up to
and including the dividend payment for the last completed period for which
such dividends shall be payable shall have been declared and paid or set
apart for payment.
The mailing of checks or of certificates for shares of
Class A Common Stock, as applicable, shall satisfy such dividends to the
extent of the sum or sums represented thereby. Each dividend on the
Series A Preferred shall be paid to the registered holders appearing on
the register at the close of business on such day (which shall not be more
than thirty (30) days preceding the date fixed for payment of such
dividend) as may be determined from time to time by the Directors.
3. LIQUIDATION. In the event of the liquidation, dissolution
or winding-up of the Corporation or other distribution of assets of the
Corporation among stockholders for the purpose of winding up its affairs,
or in the event of the merger of the Corporation into any entity as a
result of which the Corporation is not the surviving corporation or the
sale of all or substantially all of the assets of the Corporation, the
holders of the Series A Preferred shall, before any amount shall be paid
to or any property or assets of the Corporation distributed among the
holders of Junior Securities, be entitled to receive a sum equal to two
times the Offering Price per share, together with all accrued and unpaid
dividends (which for such purpose shall be calculated as if such dividends
were accruing from day to day for the period from the expiration of the
last period for which dividends have been paid up to and including the
date of distribution). If, upon any such liquidation, dissolution,
distribution, winding up, merger or sale of all or substantially all of
the assets of the Corporation, the liquidation preferences with respect to
the Series A Preferred and any Parity Securities are not paid in full, the
holders of the Series A Preferred and such Parity Securities will share
ratably in any distribution of assets of the Corporation in proportion to
the full liquidation preferences to which each is entitled. After payment
to the holders of the Series A Preferred of the amounts so payable to
them, they shall not be entitled to share in any further distribution of
the property or assets of the Corporation.
4. VOTING. Except as required by law, the holders of the
Series A Preferred shall not be entitled to vote such shares on any other
matter to be voted on by the stockholders of the Corporation.
5. CONVERSION.
(a) Subject to and upon compliance with the provisions of
this Paragraph A.5, shares of the Series A Preferred shall be convertible,
at the option of the holder, into fully paid and non-assessable shares of
Class A Common Stock as determined by dividing the amount of the Offering
Price by the conversion price provided in Paragraph A.5(e) below, as such
conversion price may be adjusted in Paragraph A.5(f) below.
(b) A holder of Series A Preferred may exercise the
conversion right provided hereby by surrendering the certificate or
certificates representing the shares of Series A Preferred which are to be
converted, together with a written notice requesting such conversion, to
the Corporation at any time during usual business hours. If only a
portion of the shares represented by any such certificates is to be
converted, upon such conversion the Corporation shall issue and deliver a
new certificate or certificates for the remainder of the shares to the
holder thereof at the expense of the Corporation.
(c) As promptly as practicable after the surrender, as
herein provided, of the shares of Series A Preferred for conversion, the
Corporation shall deliver or cause to be delivered, to or upon the written
order of the holder, a certificate representing fully paid and non-
assessable shares of Class A Common Stock into which such shares may be
converted in accordance with this Paragraph A.5. Subject to the
provisions of this Paragraph A.5(c) and Paragraph A.5(f), such conversion
shall be deemed to have been immediately prior to the close of business on
the date (the "Conversion Date") that such shares shall have been
surrendered for conversion, accompanied by written notice of election to
exercise the conversion right provided hereby, so that the right of the
holder of such shares of Series A Preferred as holder thereof shall cease
with respect to such shares of Series A Preferred being converted at such
time, and the person or persons entitled to receive the shares of Class A
Common Stock upon conversion shall be treated for all purposes as having
become the record holder or holders thereof at such time and shall be
entitled to rank equally with the registered holders of all other Common
Stock in respect of all dividends payable to holders of Class A Common
Stock of record on any date after the date of conversion.
(d) The amount of accrued and unpaid dividends, if any, as
of the Conversion Date, with respect to any shares of Series A Preferred
being converted, shall be paid in cash or in shares of Class A Common
Stock by the Corporation (calculated as provided in Paragraph A.2), and a
check or share certificate representing such accrued and unpaid dividends
shall be forwarded to the holder together with the certificate
representing the shares of Class A Common Stock into which such shares
have been converted.
(e) The initial conversion price (the "Conversion Price")
at which shares of Class A Common Stock shall be issuable upon conversion
of shares of Series A Preferred shall be the amount equal to the Offering
Price per share of Class A Common Stock with each share of Series A
Preferred having a value equal to the Offering Price for this purpose.
(f) The Conversion Price shall be subject to adjustment
from time to time as follows:
(i) In case the Corporation shall (A) pay a dividend
or make a distribution on its shares of Common Stock in shares of its
capital stock, (B) subdivide or reclassify its outstanding shares of
Common Stock into a greater number of shares of Common Stock or, (C)
combine or reclassify its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, the Conversion Price in effect
at the time of the record date for such dividend or distribution or the
effective date of such subdivision, combination or reclassification shall
be appropriately adjusted so that the holder of any share of Series A
Preferred shall be entitled to receive, upon any conversion of Series A
Preferred thereafter, the number of shares of Common Stock, or the number
and kind of other shares of capital stock of the Corporation, which the
holder would have owned or been entitled to receive after the happening of
any of the events described above had such share of Series A Preferred
been converted immediately prior to any such event.
(ii) In case the Corporation shall issue shares of
Common Stock without consideration or for a consideration less than two
times the Conversion Price in effect immediately prior to any such
issuance, other than as covered in subparagraph (i) above (a "Price
Protection Offering"), the Conversion Price shall be adjusted so that the
same shall equal one-half of the price per share at which Common Stock is
issued in such Price Protection Offering. Such adjustment shall be made
upon the closing with respect to the Price Protection Offering. However,
the foregoing provisions of this subparagraph (ii) shall not apply to any
issuance of shares of Common Stock in connection with a Strategic Partner
Transaction. In case the Corporation shall issue shares of Common Stock
in a Strategic Partner Transaction for consideration which has a Fair
Market Value per share that is less than the Conversion Price in effect
immediately prior to any such issuance, the Conversion Price shall be
adjusted so that the same shall equal the Fair Market Value per share at
which the Common Stock is issued in such Strategic Partner Transaction.
(iii) In case the Corporation shall issue any
securities convertible into shares of Common Stock (or any rights,
warrants or options to subscribe for or purchase securities convertible
into shares of Common Stock), other than as covered in subparagraph (i)
above, and the total consideration per share of Common Stock for the
issuance and exercise of such convertible securities, rights, warrants or
options (including the conversion price per share of Common Stock under
the convertible securities purchasable upon exercise any such rights,
warrants or options) (the "Total Consideration") is less than two times
the Conversion Price in effect immediately prior to any such issuance, the
Conversion Price shall be adjusted so that the same shall equal one-half
of the Total Consideration. However, the foregoing provisions of this
subparagraph (iii) shall not apply to any Strategic Partner Transaction.
In case the Corporation shall issue any securities convertible into shares
of Common Stock (or any rights, warrants or options to subscribe for or
purchase securities convertible into shares of Common Stock) in a
Strategic Partner Transaction, and the sum of the Fair Market Value per
share of Common Stock of the total consideration for the issuance and
exercise of such convertible securities, rights, warrants or options
(including the conversion price per share of Common Stock under the
convertible securities purchasable upon exercise of any such rights,
warrants or options) (the "Total Value") is less than the Conversion Price
in effect immediately prior to any such issuance, the Conversion Price
shall be adjusted so that the same shall equal the Total Value.
(iv) In case the Corporation shall distribute to all
holders of its shares of Common Stock any evidences of its indebtedness or
any assets (excluding cash dividends or distributions, and dividends or
distributions referred to in subparagraph (i) above), then in each such
case the Conversion Price in effect thereafter shall be adjusted so that
the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior thereto by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding on
the record date referred to below multiplied by the Conversion Price in
effect immediately prior to such distribution, from which shall then be
deducted the fair market value (as determined by the Corporation) of said
evidences of indebtedness or assets so distributed, and the denominator of
which shall be the total number of shares of Common Stock outstanding on
the record date referred to below multiplied by the Conversion Price in
effect immediately prior to such distribution. Such adjustment shall be
made whenever any such distribution is made and shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such distribution; provided however that nothing in
this subparagraph (iv) shall be interpreted to permit any distribution
prohibited by paragraph A.12.
(v) In any case in which this Paragraph A.5(f) shall
require that an adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until the occurrence
of such event (A) issuing to the holder thereof, if shares of Series A
Preferred are converted after such record date and before the occurrence
of such event, the additional shares of Class A Common Stock or other
securities issuable upon such conversion by reason of the adjustment
required by such event over and above the shares of Class A Common Stock
issuable upon such conversion before giving effect to such adjustment and
(B) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Paragraph A.5(h); provided, however, that the Corporation
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares or other
securities and such cash upon the occurrence of the event requiring such
adjustment.
(vi) No adjustment in the Conversion Price shall be
required (A) with respect to shares of Class A Common Stock issued upon
conversion of shares of Series A Preferred or (B) unless such adjustment
would require an increase or decrease in the Conversion Price of at least
$.05; provided, however, that any adjustments which by reason of this
subparagraph (vi) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Paragraph A.5 shall be made to the nearest $.01.
(vii) No adjustment in the Conversion Price shall be
required under subparagraph (ii) or (iii) above with respect to (A) the
grant or exercise of stock options or the award of stock grants, stock
appreciation rights or similar instruments to directors or employees of
the Corporation or advisors providing bona fide services to the
Corporation, as approved by the Directors, or (B) any issuance of
securities of the Corporation in connection with acquisition by the
Corporation of assets or securities of any other entity.
(viii) Whenever the Conversion Price is adjusted as
herein provided, the Corporation shall promptly mail or cause to be mailed
a notice of such adjustment to the holders of Series A Preferred at such
holder's last address as the same appears on the Corporation's records.
(g) In case of 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 covered by (f)(i) above), or in
case of any consolidation of the Corporation with, or merger of the
Corporation with or into, another person (other than a consolidation or
merger in which the Corporation is the continuing entity and which does
not result in any reclassification or change of the outstanding shares of
Common Stock), or in case of any conveyance or transfer to another person
of all or substantially all of the property of the Corporation, the
holders of Series A Preferred shall have the right to convert such shares
into the kind and amount of shares of beneficial interest and other
securities and property which would have been receivable by such holder
upon such reclassification, change, consolidation, merger, conveyance or
transfer if such shares of Series A Preferred had been converted into
shares of Class A Common Stock immediately prior thereto.
(h) No fractional shares or scrip representing fractional
shares shall be issued upon the conversion of shares of Series A
Preferred. If any conversion results in a fraction, an amount equal to
such fraction multiplied by the Conversion Price then in effect shall be
paid to such holder in cash by the Corporation.
(i) The issue of certificates on conversions of shares of
Series A Preferred shall be made without charge to the converting holder
for any tax in respect of the issue thereof. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Class A Common
Stock in any name other than that of the holder of the shares being
converted and the Corporation shall not be required to issue or deliver
any certificate in respect of shares of Class A Common Stock unless and
until the person or persons requesting the issue thereof shall have paid
to the Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid.
(j) The Corporation covenants that all shares of Class A
Common Stock which may be issued upon conversion of shares of Series A
Preferred will upon issue be fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issue thereof. The
Corporation does hereby reserve out of its authorized but unissued Class A
Common Stock 1,000,000 shares of Class A Common Stock for the conversion
of Series A Preferred and shall at all times hereafter retain a sufficient
number of shares of authorized but unissued Class A Common Stock to
satisfy the conversion privilege of all of the issued shares of Series A
Preferred.
(k) In case at any time the Corporation shall propose:
(i) to pay any dividend on its shares of Common Stock
in shares of its capital stock or to make any distribution (other than a
regular cash dividend) to the holders of its shares of Common Stock; or
(ii) to offer for subscription pro rata to the holders
of its shares of Common Stock any additional shares of beneficial interest
of any Class or any other rights or warrants; or
(iii) to consolidate or merge with or into another
person;
(iv) to effect any reorganization, reclassification,
liquidation, dissolution or winding-up of the Corporation; or
(v) to effect any conveyance or transfer to another
person of all or substantially all of the property of the Corporation;
Then and in any one or more of such cases, the
Corporation shall cause at least ten days notice thereof to be given to
the holders of Series A Preferred of the date on which (x) the Corporation
shall close, or cause a record to be taken, for such dividend on shares of
Common Stock, distribution, or offering of rights or warrants or (y) such
consolidation, merger, reorganization, reclassification, liquidation,
dissolution, winding-up, conveyance or transfer shall be effective, as the
case may be.
6. AUTOMATIC CONVERSION. Each share of Series A Preferred
shall automatically be converted into shares of Class A Common Stock at
the Conversion Price then in effect on the earlier to occur of (i)
consummation of a public offering of any of the Common Stock of the
Corporation; or (ii) the date specified in a notice thereof delivered by
the Corporation at any time after January 1, 2004.
7. NO PREEMPTIVE RIGHTS. The holders of the Series A
Preferred shall not, as such, be entitled to any preemptive rights or
other rights to subscribe for or purchase any issue of shares, bonds,
debentures or other securities of the Corporation or any part thereof.
8. INCREASES IN AUTHORIZED CAPITAL. Except as herein
expressly provided, nothing herein contained shall be deemed to limit the
right of the Corporation from time to time to increase its capital stock
or to subdivide, consolidate, change, classify or reclassify any shares
now or hereafter authorized upon compliance with the then applicable laws.
9. PAYMENTS. All payments to be made hereunder in cash on or
in respect of the Series A Preferred whether on account of capital,
dividends or otherwise, shall be made in U.S. funds.
10. NO SENIOR PREFERRED STOCK. The Corporation shall not while
any of the shares of the Series A Preferred remain outstanding issue any
series of preferred stock, the terms of which provide that such series has
priority over the Series A Preferred as to the payment of dividends or as
to repayment of capital.
11. NO REDEMPTION OF JUNIOR SECURITIES. So long as any shares
of Series A Preferred are outstanding, the Corporation shall not, and
shall not permit any subsidiary to, redeem, purchase or otherwise acquire
any shares of any Junior Securities, except (i) from directors, employees
or advisors of the Corporation pursuant to the terms of stock option,
stock purchase or similar agreements with such directors, employees or
advisors providing for purchase of or right of first refusal with respect
to such Junior Securities, or (ii) payments (including settlement
payments) made with respect to claims of statutory dissenters' rights.
12. LIMITATION ON DIVIDENDS AND DISTRIBUTIONS. Until all of
the Series A Preferred has been converted into Class A Common Stock,
except for cash dividends of amounts approved by the Directors payable in
any year out of the Net Cash Flow earned by the Corporation in such year,
the Corporation shall not distribute to any holders of Junior Securities
any evidences of its indebtedness or assets (excluding dividends or
distributions referred to in subparagraph A.5(f)(i) above), unless the
holders of a majority of the Series A Preferred consent to the
distribution. However, no consent shall be required with respect to any
distribution in connection with (i) a liquidation, dissolution or winding-
up of the Corporation, or (ii) a conveyance or transfer to another person
of all or substantially all of the property of the Corporation.
B. DEFINITIONS. The following words and phrases whenever used
herein shall, unless there be something in the context inconsistent
therewith, have the following meanings:
"Common Stock" means the Class A and Class B common stock of the
Corporation, par value $.0001 per share.
"Directors" means the Board of Directors of the Corporation for
the time being, and reference to an action by the Directors shall
mean action by the Directors as a Board or by any authorized
Committee thereof.
"Fair Market Value" of any non-cash consideration shall mean the
fair market value of such non-cash consideration as determined in
good faith by the Directors.
"Junior Securities" means the Common Stock of the Corporation
and any series of preferred stock subsequently issued by the
Corporation, the terms of which specifically provide that such series
is subordinate to the Series A Preferred as to payment of dividends
and as to repayment of capital and any other Class of shares of the
Corporation at any time which ranks after or is subordinate to the
Series A Preferred as to payment of dividends and as to repayment of
capital.
"Net Cash Flow" means the Corporation's cash flow from
operations after deducting all overhead, general and administrative
expenses, salaries and bonuses to all officers and employees of the
Corporation, taxes, debt service, payment of principal amounts due on
any indebtedness and dividends on the Series A Preferred.
"Parity Securities" means any series of preferred stock
subsequently issued by the Corporation, the terms of which either
specifically provide that such series will rank on a parity with the
Series A Preferred or fail to specify the ranking of such series
relative to the Series A Preferred.
"Strategic Partner Transaction" means any transaction undertaken
to create a strategic business liaison between the Company and the
investor and which may either enhance revenues to the Company or
reduce Company costs.
"U.S. Funds" or sums of money referred to by "$" or "dollars"
shall mean United States dollars.
Words importing the singular number only shall include the
plural and vice versa and words importing the masculine gender shall
include the feminine gender and vice versa and words importing
persons shall include firms, associations and corporations and vice
versa.
IN WITNESS WHEREOF, Cavion Technologies, Inc., a Colorado
corporation, has caused this Amendment to be signed by its President, this
26th day of February, 1999.
CAVION TECHNOLOGIES, INC.
By:/s/David J. Selina
Name: David J. Selina
Title: President