Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
PALADYNE CORP.
The undersigned, for the purpose of organizing a
corporation pursuant to the provisions of the General Corporation
Law of the State of Delaware (the "DGCL"), does make and file
this Certificate of Incorporation and does hereby certify as
follows:
FIRST: NAME. The name of the corporation is Paladyne
Corp. (the "Corporation").
SECOND: REGISTERED OFFICE. The registered office of
the Corporation is to be located in the City of Wilmington,
County of New Castle, in the State of Delaware. The name of its
registered agent is the Corporation Service Company, whose
address is 1013 Centre Road, Wilmington, Delaware 19805.
THIRD: PURPOSE. The purpose of the Corporation is to
engage in any lawful act or activity for which corporations may
be organized under the DGCL.
FOURTH: CAPITAL STOCK.
A. AUTHORIZED. The total number of shares of stock
which the Corporation shall have authority to issue is Thirty-
Five Million (35,000,000), of which Twenty-Five Million
(25,000,000) shares shall be common stock, $.001 par value per
share (the "Common Stock"), and Ten Million (10,000,000) shares
shall be preferred stock, $.001 par value per share (the
"Preferred Stock").
B. PROVISIONS RELATING TO PREFERRED STOCK. Shares of
Preferred Stock may be issued from time to time in series, and
the Board of Directors of the Corporation is hereby authorized,
subject to the limitations provided by law, to establish and
designate one or more series of the Preferred Stock, to fix the
number of shares constituting each series, and to fix the
designations, powers, preferences and relative, participating,
optional or other special rights, and qualifications, limitations
or restrictions thereof, of each series and the variations and
the relative rights, preferences and limitations as between
series, and to increase and to decrease the number of shares
constituting each series. The authority of the Board of
Directors of the Corporation with respect to each series shall
include, but shall not be limited to, the authority to determine
the following:
(i) The designation of such series.
(ii) The number of shares initially constituting such
series.
(iii) The increase, and the decrease to a number not
less than the number of the outstanding shares of such series, of
the number of shares constituting such series theretofore fixed.
(iv) The rate or rates, and the conditions upon and
the times at which dividends on the shares of such series shall
be paid, the preference or relation which such dividends shall
bear to the dividends payable on any other class or classes or on
any other series of stock of the Corporation, and whether or not
such dividends shall be cumulative, and, if such dividends shall
be cumulative, the date or dates from and after which they shall
accumulate.
(v) Whether or not the shares of such series shall
be redeemable, and, if such shares shall be redeemable, the terms
and conditions of such redemption, including, but not limited to,
the date or dates upon or after which such shares shall be
redeemable and the amount per share which shall be payable upon
such redemption, which amount may vary under different conditions
and at different redemption dates.
(vi) The rights to which the holders of the shares of
such series shall be entitled upon the voluntary or involuntary
liquidation, dissolution or winding up of, or upon any
distribution of the assets of, the Corporation, which rights may
be different in the case of a voluntary liquidation, dissolution
or winding up than in the case of such an involuntary event.
(vii) Whether or not the shares of such series shall
have voting rights, in addition to the voting rights provided by
law, and, if such shares shall have such voting rights, the terms
and conditions thereof, including, but not limited to, the right
of the holders of such shares to vote as a separate class either
alone or with the holders of shares of one or more other series
of Preferred Stock and the right to have more than one vote per
share.
(viii) Whether or not a sinking fund or a purchase fund
shall be provided for the redemption or purchase of the shares of
such series, and, if such a sinking fund or purchase fund shall
be provided, the terms and conditions thereof.
(ix) Whether or not the shares of such series shall
be convertible into, or exchangeable for, shares of any other
class or classes or any other series of the same or any other
class or classes of stock of the corporation, and, if provision
be made for conversion or exchange, the terms and conditions of
conversion or exchange, including, but not limited to, any
provision for the adjustment of the conversion or exchange rate
or the conversion or exchange price.
(x) Any other relative rights, preferences and
limitations.
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C. PROVISIONS RELATING TO COMMON STOCK.
(i) DIVIDENDS. Subject to the preferential dividend
rights applicable to shares of the Preferred Stock pursuant to
Part D of this Article FOURTH and as determined by the Board of
Directors of the Corporation pursuant to the provisions of Part B
of this Article FOURTH, the holders of shares of the Common Stock
shall be entitled to receive such dividends as may be declared by
the Board of Directors of the Corporation.
(ii) LIQUIDATION. Subject to the preferential
liquidation rights pursuant to Part D of this Article FOURTH and
as determined by the Board of Directors of the Corporation
pursuant to the provisions of Part B of this Article FOURTH, in
the event of any voluntary or involuntary liquidation,
dissolution or winding up of, or any distribution of the assets
of, the Corporation, the holders of shares of the Common Stock
shall be entitled to receive all of the assets of the Corporation
available for distribution to its stockholders ratably in
proportion to the number of shares of the Common Stock held by
them.
(iii) VOTING. Except pursuant to Part D of this
Article FOURTH or as determined by the Board of Directors of the
Corporation pursuant to the provisions of Part B of this Article
FOURTH, the holders of shares of the Common Stock shall be
entitled to vote on all matters at all meetings of the
stockholders of the Corporation, and shall be entitled to one
vote for each share of the Common Stock entitled to vote at such
meeting, voting together with the holders of the Preferred Stock
who are entitled to vote thereon, and not as a separate class.
D. DESIGNATION OF SERIES A CONVERTIBLE PREFERRED
STOCK. One Hundred Thirty-Seven Thousand One Hundred Forty-Three
(137,143) authorized shares of Preferred Stock shall be issued in
and as a series to be designated Series A Convertible Preferred
Stock (the "Series A Preferred Stock") and shall have the powers,
preferences, rights, qualifications and limitations as set forth
in this Part D.
(i) DIVIDENDS. The holders of shares of Series A
Preferred Stock shall be entitled to receive, out of the net
profits of the Corporation, with funds that at the time are
legally available therefor, annual dividends at the rate of No
Dollars and Twenty-Nine Point Seventy-Five Cents ($0.2975) per
share. The calculation of net profits shall be taken from the
Corporation's financial reports. If net profits in any year are
not sufficient to pay this dividend, either in whole or in part,
then any unpaid portion of the dividend will become a charge
against the net profits of the Corporation and will be paid in
full out of the net profits of the Corporation in subsequent
years before any cash dividends are paid on the Common Stock of
the Corporation in those years. The Series A Preferred Stock
shall not be entitled to participate in the profits of the
Corporation beyond its fixed, preferential annual dividend.
(ii) VOTING PROVISIONS. The Series A Preferred Stock
shall be entitled to vote at meetings of the stockholders (or
consents in lieu of meetings) of the Corporation at the rate of
one vote per share on the same basis as the shares of the Common
Stock, and voting as a single class with the holders of the
Common Stock, and not as a separate class.
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(iii) LIQUIDATION PREFERENCE. (a) In the event of
any liquidation, dissolution or winding-up of the Corporation,
either voluntary or involuntary (a "Liquidation"), each holder of
shares of the Series A Preferred Stock then issued and
outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, from
any source, before any payment shall be made to the holders of
shares of the Common Stock or upon any other series of Preferred
Stock of the Corporation with a liquidation preference
subordinate to the liquidation preference of Series A Preferred
Stock, an amount per share equal to $1.18 together with any
accumulated dividends thereon. If, upon any Liquidation of the
Corporation, the assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the
holders of shares of the Series A Preferred Stock and the holders
of any other series of Preferred Stock with a liquidation
preference equal to the liquidation preference of the Series A
Preferred Stock the full amounts to which they shall respectively
be entitled, the holders of shares of the Series A Preferred
Stock and the holders of any other series of Preferred Stock with
liquidation preference equal to the liquidation preference of the
Series A Preferred Stock, after providing for any stock which may
rank prior to the Series A Preferred Stock, shall receive all of
the assets of the Corporation available for distribution and each
such holder of shares of the Series A Preferred Stock and the
holders of any other series of Preferred Stock with a liquidation
preference equal to the liquidation preference of the Series A
Preferred Stock shall share ratably in any distribution in
accordance with the amounts due such stockholders. After payment
shall have been made to the holders of shares of Series A
Preferred Stock of the full amount to which they shall be
entitled, as aforesaid, the holders of shares of the Series A
Preferred Stock shall be entitled to no further distributions
thereon, and the holders of shares of the Common Stock and of
shares of any other series of stock of the Corporation ranking
junior to the Series A Preferred Stock in respect of distribution
of assets, shall be entitled to share, according to their
respective rights and preferences, in all remaining assets of the
Corporation available for distribution to its stockholders.
(b) The Corporation shall not establish a
series of Preferred Stock with a liquidation preference senior to
that of the Series A Preferred Stock.
(c) The consolidation or merger of the
Corporation with any other corporation or corporations shall not
be deemed a Liquidation of the Corporation within the meaning of
this Sub-Part (iii).
(iv) CONVERSION PRIVILEGES. The holders of shares of
Series A Preferred Stock have conversion rights as follows (the
"Conversion Rights"):
(a) Each share of Series A Preferred Stock
shall be convertible, at the option of its holder, at any time,
into shares of Common Stock of the Corporation at zero point six
seven three six two (0.67362) shares of Common Stock for every
one (1) share of Series A Preferred Stock held (the "Conversion
Rate"), with a minimum of 13,714 shares of Series A Preferred
Stock convertible in any single transaction, unless the holder is
redeeming his remaining balance of Series A Preferred Stock.
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(b) In the event the Corporation:
(1) pays a dividend or makes a distribution on
its Common Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of Common
Stock into a greater number of shares;
(3) combines its outstanding shares of Common
Stock into a smaller number of shares;
(4) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock; or
(5) issues by reclassification of its Common
Stock any shares of its capital stock;
then the Conversion Rate in effect immediately prior to such
action shall be adjusted so that the holder may receive the
number of shares of capital stock of the Company which he would
have owned immediately following such action if he had converted
the Series A Preferred Stock immediately prior to such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and
immediately after the effective date in the case of a subdivision
combination or reclassification.
No adjustment in the Conversion Rate need be made
unless the adjustment would require an increase or decrease of at
least five (5%) percent in the Conversion Rate. Any adjustments
that are not made shall be carried forward and taken into account
in any subsequent adjustment.
If a conversion results in fractional shares of Common
Stock of the Corporation, such fractional share will be rounded
up or down to a whole share amount of Common Stock.
Whenever an adjustment is made in the Conversion Rate,
the Corporation shall promptly mail to the holders of the
Series A Preferred Stock a notice of adjustment.
If after an adjustment a holder of Series A Preferred
Stock upon conversion of it may receive shares of two or more
classes of capital stock of the Corporation, the Corporation
shall determine the allocation of the adjusted Conversion Rate
between the classes of capital stock. After such allocation, the
Conversion Rate of each class of capital stock shall thereafter
be subject to adjustment on terms comparable to those applicable
to Common Stock in this Section.
(c) In the event of any capital reorganization of
the Corporation, or any consolidation or merger of the
Corporation with or into another corporation, or any sale or
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conveyance to another corporation of all or substantially all of
the property of the Corporation, the holder of each share of
Series A Preferred Stock then outstanding 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, consolidation, merger, sale or conveyance by
a holder of the number of shares of Common Stock of the
Corporation into which such share of Series A Preferred Stock
might have been converted immediately prior to such
reorganization, consolidation, merger, sale or conveyance, and
shall have no further conversion rights under these provisions;
and any such resulting or surviving corporation, if it is a
reporting company under the Securities Exchange Act of 1934, as
amended, shall expressly assume the obligation to deliver, upon
the exercise of the conversion privilege, such shares, securities
or property as the holders of the Series A Preferred Stock shall
be entitled to receive pursuant to the provisions hereof. In
case securities or property other than Common Stock shall be
issuable or deliverable upon conversion as aforesaid, then all
references in this Paragraph (c) to Common Stock shall be deemed
to apply, so far as appropriate and as nearly as may be, to such
other securities or property.
(d) Upon the Corporation receiving a notice of
conversion for any shares of Series A Preferred Stock pursuant to
this Subpart, the shares covered by such notice of conversion
shall no longer be deemed outstanding and all rights with respect
to such shares shall cease and be canceled and such shares shall
return to the status of authorized but unissued Preferred Stock
of no designated class or series, and shall not be issuable by
the Corporation as Series A Preferred Stock.
(e) The Corporation shall have the option to require
a conversion of all or any part of the outstanding shares of
Series A Preferred Stock if the Common Stock (as presently
constituted) of the Corporation achieves a closing price average
per share for a consecutive sixty (60) day tracking period of
Five Dollars and Twenty-Five Cents ($5.25) (the "Mandatory
Conversion"). In the event the Corporation exercised its right
to require a conversion under this provision, it shall give the
holders of the Series A Preferred Stock written notification at
least thirty (30) days prior to the exercise of the Mandatory
Conversion.
(v) REDEMPTION. The Corporation shall not have the
right to redeem all or any part of the Series A Preferred Stock,
and the holders of the Holders of the Series A Preferred Stock
shall not have the right to require the Corporation to redeem
such Preferred Stock.
FIFTH: CLASSIFIED DIRECTORS.
A. CLASSIFICATION. The total number of directors
shall be divided into three classes, designated Class I, Class II
and Class III, with each class containing one-third of the total,
as near as may be possible. The term of office of directors of
one class shall expire at each meeting of stockholders. The
initial term of office of directors of Class I shall expire at
annual meeting of stockholders in 2000, that of class II shall
expire at the annual meeting of stockholders in 2001; and that of
Class III shall expire at the annual meeting of stockholders in
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2002; and in any cases as to each director until his successor
shall be elected and shall qualify or until his earlier
resignation, removal from office, death or disability.
Additional directorships resulting from an increase in the number
of directors shall be apportioned among the classes as equally as
possible. At each annual meeting of stockholders, the number of
directors equal to the number of directors of the class whose
term expires at such meeting (or, if less, the number of
directors properly nominated and qualified for election) shall be
elected to hold office until the third succeeding annual meeting
of stockholders after their election. Notwithstanding the
foregoing, whenever the holders of any one or more classes or
series of Preferred Stock of the Corporation shall have the
right, voting separately as a class, to elect a director or
directors, the director or directors so elected shall not be
classified pursuant to this Article FIFTH, and the term of the
director or directors so elected shall expire at the next
succeeding annual meeting of stockholders.
B. VOTE TO CHANGE. Notwithstanding any other
provision of this Certificate of Incorporation or the By-Laws of
the Corporation (and in addition to any other vote that may be
required by law, the Certificate of Incorporation or the By-Laws
of the Corporation), the affirmative vote of the holders of
sixty-six and two-thirds (66 2/3%) percent of all classes of
stock of the Corporation entitled to vote generally in election
of directors, considered for purposes of this Article FIFTH as
one class, shall be required to amend, alter, change, repeal or
adopt any provision inconsistent with, this Article FIFTH.
SIXTH: INCORPORATOR. The name and mailing address of
the incorporator is:
Name Mailing Address
---- ---------------
Bruce A. Rich Thelen Reid & Priest LLP
40 West 57th Street
New York, New York 10019
SEVENTH: COMPROMISE. Whenever a compromise or
arrangement is proposed between this Corporation and its
creditors or any class of them and/or between this Corporation
and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application
in a summary way of this Corporation or of any creditor or
stockholder thereof or on the application of any receiver or
receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code, order a meeting of
the creditors or class of creditors, and/or of the stockholders
or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or
class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization
of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the
said application has been made, be binding on all the creditors
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or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also
on this Corporation.
EIGHTH: BOARD OF DIRECTORS AND BY-LAWS. All corporate
powers shall be exercised by the Board of Directors, except as
otherwise provided by statute, by this Certificate of
Incorporation, by the By-Laws, or by any agreement among all of
the stockholders. The By-Laws may be adopted, amended or
repealed by the Board of Directors of the Corporation, except as
otherwise provided by law, but any by-law made by the Board of
Directors is subject to amendment or repeal by the stockholders
of the Corporation.
NINTH: LIMITED LIABILITY. A director of the
Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived any improper personal
benefit. If the DGCL is hereafter amended to authorize corporate
action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at
the time of such repeal or modification.
TENTH: INDEMNIFICATION. The Corporation shall
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or complete action, suit
or proceeding, whether civil, criminal, administrative or
investigative, or by or in the right of the Corporation to
procure judgment in its favor, by reason of the fact that he is
or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Corporation, in
accordance with and to the full extent permitted by statute.
Expenses (including attorneys' fees) incurred in defending any
civil, criminal, administrative or investigative action, suit or
proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by
the Corporation as authorized in this Article. The
indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking
indemnification may be entitled under this Certificate of
Incorporation or any agreement or vote of stockholders or
disinterested directors or otherwise, both as to action in his
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official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators
of such a person.
IN WITNESS WHEREOF, the undersigned, being the sole
incorporator hereinbefore named, hereby declares and certifies
that the facts herein stated are true, and accordingly have
hereunto set my hand this 8th day of January, 1999.
/s/ Bruce A. Rich
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Bruce A. Rich, Incorporator
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