CERTIFICATE OF THE DESIGNATIONS, POWERS,
PREFERENCES AND RIGHTS
OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
(Par Value $.01 Per Share)
of
CAMBIO INC.
--------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
--------------------
The undersigned duly authorized officers of Cambio Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "Corporation"),
DO HEREBY CERTIFY:
FIRST: That Article 4 of the Corporation's Restated Certificate of
Incorporation provides that the Corporation is authorized to issue 1,000,000
shares of preferred stock, $.01 par value per share, in any number of series,
with such designations, rights and preferences as may be determined from time to
time by the Board of Directors.
SECOND: That pursuant to such authority expressly vested in the Board
of Directors of the Corporation, said Board of Directors duly adopted the
resolution set forth below, providing for the designation and issuance of one
hundred thousand (100,000) shares of Series B Convertible Preferred Stock, $.01
par value per share:
RESOLVED, that this Board of Directors, pursuant to authority expressly
vested in it by the provisions of the Certificate of Incorporation of the
Corporation, hereby authorizes the issue from time to time of a series of
Preferred Stock of the Corporation (which series shall be in addition to any
other series of preferred stock of the Corporation otherwise authorized) and
hereby fixes the designations, preferences and the relative, participating,
optional or other rights, and the qualifications, limitations or restrictions
thereof, in addition to those set forth in said Certificate of Incorporation, to
be in their entirety as follows:
Section 1. Number of Shares and Designation. One hundred thousand
(100,000) shares of the preferred stock, $.01 par value, of the Corporation are
hereby constituted as a series of preferred stock of the Corporation designated
as "Series B Convertible Preferred Stock" (the "Series B Preferred Stock"). The
Series B Preferred Stock will rank senior in all respects to all other equity
securities of the Corporation.
Section 2. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of each share of Series B Preferred Stock outstanding
on the date of such liquidation, dissolution or winding up of the affairs of the
Corporation shall be entitled to receive, prior to and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Common Stock of the Corporation, par value $.01 per share (the
"Common Stock"), or any other class of Preferred Stock of the Corporation, by
reason of their ownership thereof, an amount equal to one hundred dollars
($100.00) per share (the "Liquidation Value") of each share of Series B
Preferred Stock
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held by the holders (subject to adjustment for stock splits, combinations,
reclassifications or similar events affecting such shares).
All of the preferential amounts to be paid to the holders of the Series
B Preferred Stock under this Section 2 shall be paid or set apart for payment
before the payment or setting apart for payment of any amount for, or the
distribution of any assets of the Corporation to, the holders of the Common
Stock or any other class or series of Preferred Stock in connection with such
liquidation, dissolution or winding up. After the payment or the setting apart
for payment to the holders of the Series B Preferred Stock of the preferential
amounts so payable to them and the preferential amounts payable to any other
classes or series of Preferred Stock, the holders of the Series B Preferred
Stock, shall be entitled to receive, pro rata with the Common Stock, as if the
Series A Preferred Stock and any such other applicable class or series of
Preferred Stock are converted into the number of shares of Common Stock into
which the Series B Preferred Stock, and other such class or series of Preferred
Stock, are then convertible pursuant to the Certificate of Incorporation of the
Corporation and the applicable Certificate of Designations, Powers, Preferences
and Rights of such Series of Preferred Stock (as amended, to the extent
applicable), all remaining assets of the Corporation. If the assets or surplus
funds to be distributed to the holders of the Series B Preferred Stock are
insufficient to permit the payment to such holders of their full preferential
amount, the assets and surplus funds legally available for distribution shall be
distributed ratably among the holders of the Series B Preferred Stock in
proportion to the full preferential amount each such holder is otherwise
entitled to receive.
Section 3. Merger, Consolidation, Sale of Assets. Any merger or
consolidation of the Corporation with or into another corporation in which the
Corporation shall not survive, or the sale or transfer of all or substantially
all of the assets of the Corporation to another entity, or a merger or
consolidation in which the Corporation is the survivor but its Common Stock is
exchanged for stock, securities or property of another entity shall be treated
as a liquidation, dissolution or winding up of the Corporation and shall entitle
the holder of Series B Preferred Stock to receive at the closing, in cash,
securities or other property, amounts as specified in Section 2.
Section 4. Conversion into Common Stock. The holder of any shares of
the Series B Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each share of Series B Preferred Stock shall be
convertible, without the payment of any additional consideration by the holder
thereof and at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or any transfer agent
for the Series B Preferred Stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the
Liquidation Value by the Conversion Price, determined as hereinafter provided,
with respect to such shares. The Conversion Price in effect initially shall be
$0.20 per share (subject to adjustment pursuant to Section 7.2 of that certain
Series B Convertible Preferred Stock Purchase Agreement, dated as of February 1,
1999 (the "Purchase Agreement"), by and among the Corporation and the Purchasers
named therein). Notwithstanding the foregoing, in the event that the
Corporation, within eighteen months from the Initial Closing (as such term is
defined in the Purchase Agreement), issues and sells not less than an aggregate
of $1 million of additional shares of Common Stock (or securities convertible
into Common Stock) other than Excluded Stock (as hereinafter defined) to
financial investors (whether individual or institutional) for a consideration
per share of Common Stock of less than $0.20, then and in such event, the
Conversion Price in effect with respect to the Series B Preferred Stock shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) equal to the consideration per share for which such additional shares are
issued and sold. As used in this Section 4(a), "Excluded Stock" shall mean (i)
shares of Common Stock (or securities convertible into Common Stock) or options
for the purchase of Common Stock issued, sold or granted by the Corporation to
any of its employees, directors or consultants pursuant to a bona fide employee
stock purchase, option or similar benefit plan or incentive program or other
compensation arrangement approved by the Board of Directors of the Corporation
or (ii) shares of Common Stock (or securities convertible into Common Stock)
issued, sold or granted to joint venturers, partnering entities or other
companies with which the Corporation has a relationship involving or pertaining
to product development, or the manufacturing, development, marketing or
repackaging of products or any analogous relationship. The Conversion Price at
which shares of Common Stock shall be deliverable upon conversion of Series B
Preferred Stock without the payment of any additional consideration by the
holder thereof, shall be subject to adjustment, in order to adjust the number of
shares of Common Stock into which the Series B Preferred Stock is convertible,
as provided in this Section 4.
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(b) Mechanics of Conversion. No fractional shares of Common Stock shall
be issued upon conversion of the Series B Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall round the share amount to the nearest whole share number.
Before any holder of Series B Preferred Stock shall be entitled to receive
certificates representing shares of Common Stock issuable upon conversion of the
Series B Preferred Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series B Preferred Stock, and shall give written notice
to the Corporation at such office in the manner specified in the Purchase
Agreement (which notice shall be irrevocable once tendered, unless otherwise
agreed to in writing by the Corporation) that such holder elects to convert the
same, and shall state therein such holder's name or the name or names of such
holder's nominees in which such holder wishes the certificate or certificates
for shares of Common Stock to be issued. The Corporation shall, as soon as
practicable after receipt of the certificate(s) representing Series B Preferred
Stock, issue and deliver at such office to such holder of Series B Preferred
Stock, or to such holder's nominee or nominees, a certificate or certificates
for the number of shares of Common Stock to which such holder shall be entitled
as aforesaid, together with cash in lieu of any fraction of a share, and a
certificate or certificates for such shares of Series B Preferred Stock as were
represented by the certificates surrendered and not converted. Conversions
pursuant to Section 4(a) shall be deemed to have been made immediately prior to
the close of business on the date of such surrender of the shares of Series B
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock as of
the close of business on such date.
(c) Adjustment to Conversion Price for Stock Splits, Combinations,
Dividends and Distributions.
(i) Stock Splits and Combinations. In the event the
Corporation shall at any time or from time to time effect a subdivision
of the outstanding Common Stock, the Conversion Price then in effect
immediately before that subdivision shall be proportionately decreased,
and, conversely, in the event the Corporation shall at any time or from
time to time combine the outstanding shares of Common Stock, the
Conversion Price then in effect immediately before the combination
shall be proportionately increased. Any adjustment pursuant to this
Section 4(c)(i) shall become effective at the close of business on the
date the subdivision or combination becomes effective.
(ii) Dividends and Distributions of Common Stock. 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
additional shares of Common Stock, then and in each such event the
Conversion Price then in effect shall be decreased as of the time of
such issuance or, in the event such a record date shall have been
fixed, as of the close of business on such record date, by multiplying
the Conversion Price then in effect by a fraction:
(x) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on
such record date, and
(y) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of
Common Stock issuable in payment of such dividend or
distribution;
provided, however, if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on
the date fixed therefor, the Conversion Price shall be recomputed
accordingly as of the close of business on such record date and
thereafter the Conversion Price shall be adjusted pursuant to this
Section 4(c)(ii) as of the time of actual payment of such dividends or
distributions.
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(iii) Other Dividends and 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, then
and in each such event provision shall be made so that the holders of
the Series B 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 that they would have
received had their Series B 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 conversion date,
retained such securities receivable by them as aforesaid during such
period giving application to all adjustments called for during such
period under this Section 4 with respect to the rights of holders of
the Series B Preferred Stock.
(d) Adjustment for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon the conversion of the Series B Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for in Section 4(c), or a reorganization, merger, consolidation or sale of
assets provided for in Section 3, then and in each such event the holder of each
share of Series B Preferred Stock shall have the right thereafter to convert
such share into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other change,
by holders of the number of shares of Common Stock into which such shares of
Series B Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided in this Section 4.
(e) No Impairment. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Section 4 by the Corporation
but shall at all times in good faith assist in the carrying out of all the
provisions of this Section 4 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of the Series B Preferred Stock that by its terms is convertible against
impairment.
(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of the Series B Preferred
Stock pursuant to this Section 4, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of the Series B Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of such Series B Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) the Conversion Price at the time in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the conversion of the
Series B Preferred Stock.
(g) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall mail to each
holder of Series B Preferred Stock, at least ten (10) days prior to the date
specified herein, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution.
(h) Common Stock Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Series B Preferred Stock, and all other shares of all classes or series of
Preferred Stock which are then convertible into Common Stock. If the Conversion
Price of the Series B Preferred Stock is at any time less than the par value of
the Common Stock, the Corporation shall cause to be taken such action (whether
by lowering the par value of the Common Stock, by converting the Common Stock
from par value to no par value, or otherwise) as will permit the conversion of
the Series B Preferred Stock without any additional
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payment by the holder thereof and the issuance of the Common Stock, which Common
Stock, upon issuance, will be fully paid and nonassessable.
Section 5. Redemption.
(a) Redemption at the Option of the Corporation. The Corporation, at
the option of the Board of Directors, may, at any time and from time to time
upon written notice (which notice shall specify the date and place of redemption
and the number of shares and the certificate numbers thereof which are to be
redeemed) given not less than twenty (20) nor more than ninety (90) days prior
to the date fixed for redemption, redeem all or any part of the outstanding
shares of the Series B Preferred Stock by paying therefor in cash the
Liquidation Value for each share, provided, however, that (i) the market price
of a share of Common Stock is equal to or greater than an amount equal to 500%
of the then applicable Conversion Price and (ii) the Common Stock has traded on
the principal market for the Common stock with an average daily volume in excess
of 50,000 shares for a period of 30 consecutive trading days. At least two
business days prior to the redemption date specified in such notice, each holder
of the Series B Preferred Stock may give the Corporation written instructions
with respect to the application of funds legally available for redemption of
such holder's shares of the Series B Preferred Stock.
(b) Redemption at the Option of the Holder. In the event (i) that the
Corporation breaches or fails to comply with its obligations under this
Certificate of Designations or the Purchase Agreement, which breach or failure
is material or has a material adverse effect on the business or prospects of the
Corporation, and such breach or failure of compliance continues for a period of
thirty (30) days after notice thereof has been given to the Corporation, (ii) of
a sale of all or substantially all of the assets of the Corporation, (iii) of an
occurrence which causes the Corporation to become insolvent or (iv) that the
Corporation goes "private," then each holder of shares of the Series B Preferred
Stock shall be entitled to compel the Corporation to redeem any or all of such
holder's shares of the Series B Preferred Stock; provided that such redeeming
holder shall have given written notice thereof to the Corporation at least
thirty (30) days prior to the requested date of redemption. Such notice shall
state the number of shares of the Series B Preferred Stock to be redeemed. On or
after the redemption date, as specified in such notice, the holder requesting
redemption shall surrender such holder's certificate for the number of shares to
be redeemed as stated in the notice to the Corporation. On such redemption date,
to the extent the Corporation shall have funds legally available therefor, the
Corporation shall redeem the shares of the Series B Preferred Stock requested to
be redeemed at the Liquidation Value. To the extent there are insufficient funds
legally available for redemption of all shares of Series B Preferred Stock
requested to be redeemed, legally available funds shall be applied to each
holder's shares of Series B Preferred Stock pro rata in accordance with the
number of shares requested to be redeemed by each holder of shares of Series B
Preferred Stock, and each holder's shares shall be redeemed in accordance with
the instructions received from such holder or, if no instructions are received
from a holder, such holder's shares of Series B Preferred Stock shall be
redeemed pro rata in accordance with the number of shares of Series B Preferred
Stock held by such holder. As soon as practicable, the Corporation shall give
written notice to each holder of shares of Series B Preferred Stock redeemed or
to be redeemed indicating the number of shares redeemed or to be redeemed and
the certificate numbers thereof. If less than all of the shares of Series B
Preferred Stock requested to be redeemed are redeemed, all unredeemed shares
shall remain outstanding and shall be entitled to all the rights and preferences
of outstanding shares of Series B Preferred Stock hereunder. In case less than
all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
(c) Legally Available Funds. For the purpose of determining whether
funds are legally available for redemption of shares of Series B Preferred Stock
as provided herein, the Corporation shall value its assets at the highest amount
permissible under applicable law. If on any redemption date funds of the
Corporation legally available therefor shall be insufficient to redeem all the
shares of the Series B Preferred Stock required to be redeemed as provided
herein, funds to the extent legally available shall be used for such purpose and
the Corporation shall apply such funds to each holder's shares of Series B
Preferred Stock pro rata according to the number of shares held by each holder
of Series B Preferred Stock, and each holder's shares shall be redeemed in
accordance with the instructions received from such holder or, if no
instructions are received from a holder, such holder's shares of Series B
Preferred Stock shall be redeemed pro rata in accordance with the number of
shares of Series B Preferred Stock held by such holder.
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(d) Termination of Conversion. In the event the Corporation has mailed
written notice of redemption to the holders of record of shares of the Series B
Preferred Stock in accordance with the terms of Section 5(a) hereof, the
holder's right to convert such shares called for redemption shall cease at the
close of business on the redemption date, unless the Corporation defaults in the
payment of the redemption price.
Section 6. Voting Rights. In addition to the voting rights required by
the laws of the State of Delaware and by Section 7, the holders of shares of
Series B Preferred Stock shall vote, as a single class with all other
stockholders of the Corporation, on all matters voted on by the stockholders of
the Corporation, with each such holder of Series B Preferred Stock entitled to
the number of votes equal to the number of shares of Common Stock into which
such holder's shares would then be convertible. Except as set forth herein or in
the Purchase Agreement, or as otherwise provided by law, holders of Series B
Preferred Stock shall have no special voting rights and their consent shall not
be required for taking any corporate action. These voting rights will apply
notwithstanding that an insufficient number of shares of Common Stock may be
reserved for issuance upon conversion of the Series B Preferred Stock.
Section 7. Covenants. So long as any of the shares of Series B
Preferred Stock authorized hereby shall be outstanding, the Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of not less than a majority of such outstanding shares of Series B
Preferred Stock:
(a) amend or repeal any provision of, or add any provision to,
the Corporation's Certificate of Incorporation or By-laws if such
action would alter or change the preferences, rights, privileges or
powers of, or the restrictions provided for the benefit of, the Series
B Preferred Stock;
(b) reclassify any Common Stock into shares having any
preference or priority as to assets superior to or on a parity with any
such preference or priority of the Series B Preferred Stock; or
(c) create or issue any securities of the Corporation which
have equity features and which rank on a parity with or senior to the
Series B Preferred Stock upon liquidation or other distribution of
assets.
Section 8. Status of Converted or Reacquired Stock. Any shares of
Series B Preferred Stock purchased, redeemed or otherwise acquired by the
Corporation in any manner whatsoever, and any shares of Series B Preferred Stock
converted pursuant to Section 4 hereof shall be retired and canceled promptly
after the acquisition or conversion thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein, in the Certificate of
Incorporation, or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock or as otherwise required by law.
Section 9. Preemptive Rights.
(a) Except (i) for issuances stock issued to employees,
officers or directors in connection with management options or
incentive plans approved by the Board of Directors and (ii) stock
issued in connection with any merger, acquisition or business
combination, the holders of the Series B Preferred Stock, in order to
enable such holders to maintain their fully diluted percentage
ownership of the Corporation, shall have preemptive rights, as
hereinafter set forth, to purchase any capital stock, including
warrants or securities convertible into capital stock, of the
Corporation hereafter issued by the Corporation so that a holder of the
Series B Preferred Stock shall hereafter be entitled to acquire a
percentage of capital stock which is hereafter issued equal to the same
percentage of the issued and outstanding Common Stock as is held
(directly or obtainable upon conversion of the Series B Preferred
Stock) by such holder of Series B Preferred Stock immediately prior to
the date on which the capital stock is to be issued on a fully diluted
basis.
(b) The Corporation shall, before issuing any additional
capital stock (other than the exceptions referred to in Section 9(a)
above), give written notice thereof to the holders of the Series B
Preferred Stock. Such notice shall specify what type of instrument the
Corporation intends to issue and the consideration which the
Corporation intends to receive therefor. For a period of twenty (20)
days following
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receipt of by the holders of the Series B Preferred Stock of such
notice, the Corporation shall be deemed to have irrevocably offered to
sell to the holders of the Series B Preferred Stock a sufficient number
of shares of such capital stock so that the holders of the Series B
Preferred Stock, if such holders elects to acquire such shares as
hereinafter set forth, shall be capable of acquiring the same
percentage of such shares as the percentage of Common Stock
beneficially owned (directly or obtainable upon conversion of the
Series B Preferred Stock) by such holders immediately prior to the
proposed issuance on a fully diluted basis. In the event any such offer
is accepted, in whole or in part, by the holders of the Series B
Preferred Stock, the Corporation shall sell such shares to the holders
of the Series B Preferred Stock for the consideration and on the
precise terms set forth in the Corporation's notice (given under the
first two sentences of this paragraph). In the event that one or more
holders of the Series B Preferred Stock elects not to, or fails to,
exercise its rights under this Section within the twenty (20) day
period, then the Corporation may issue the remaining shares of capital
stock to third persons but only for the same consideration set forth in
the Corporation's notice (given under the first two sentences of this
paragraph) and no later than ninety (90) days after the expiration of
such twenty day period. The closing for such transaction shall take
place as proposed by the Corporation with respect to the shares of
capital stock proposed to be issued at which closing the Corporation
shall deliver certificates for the shares of capital stock in the
respective names of the holders of he Series B Preferred Stock against
receipt of the consideration therefor.
(c) Notwithstanding any other provision hereof, the preemptive
rights granted to holders of Series B Preferred Stock by this Section
shall terminate with respect to a share of Series B Preferred Stock
upon the conversion or redemption of such share of Series B Preferred
Stock in accordance with the provisions hereof.
THIRD: That said determination of the designation, preferences and the
relative, participating, optional or other rights, and qualifications,
limitations or restrictions thereof, relating to said Series B Convertible
Preferred Stock, was duly made by the Board of Directors pursuant to the
provisions of the Certificate of Incorporation of the Corporation, as amended,
and in accordance with the provisions of Section 151 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, Cambio Inc. has caused this Certificate of the
Designations, Powers, Preferences and Rights of the Series B Convertible
Preferred Stock (par value $.01 per share) of Cambio Inc. to be executed and
attested this 5th day of May, 1999.
Cambio Inc.
By: /s/ Ali Al-Dahwi
----------------------
Name: Ali Al-Dahwi
Title: President and Chief
Executive Officer
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