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EXHIBIT 3.1
POPMAIL.COM, INC.
CERTIFICATE OF DESIGNATION OF
SERIES F CONVERTIBLE PREFERRED STOCK
Pursuant to Section 401(3)(b) of the Minnesota Business Corporation Act
(the "MBCA"), PopMail.com, inc. (the "Company"), a corporation organized and
existing under the MBCA, does hereby certify that pursuant to the authority
conferred upon the Board of Directors of the Company by the Articles of
Incorporation of the Company, and in accordance with the provisions of Section
401(3)(a) of the MBCA, the Board of Directors of the Company, as of January 19,
2000, adopted the following resolution creating a series of preferred stock
designated as Series F Convertible Preferred Stock:
RESOLVED: That pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of its Articles of
Incorporation, as amended, a series of preferred stock, $.01 par value, to be
titled the "Series F Convertible Preferred Stock" (the "Preferred Shares") of
the Company is hereby created and designated. The number of shares of Preferred
Shares shall be 425,000 shares. The voting powers, preferences and relative,
participating, optional and other special rights of the Preferred Shares, and
the qualifications, limitations and restrictions thereof, are as follows:
1. Designation. The series of preferred stock established hereby shall
be designated the "Series F Convertible Preferred Stock" (and shall be referred
to herein as the "Preferred Shares") and the authorized number of Preferred
Shares shall be 425,000.
2. Voting Rights. Along with the holders of common stock, each holder
of Preferred Shares shall have one vote on all matters submitted to the holders
of common stock for each share of common stock into which such Preferred Shares
would be converted if converted as of the date of such vote. In addition,
without the affirmative vote of the holders (acting together as a class) of at
least a majority of Preferred Shares at the time outstanding given in person or
by proxy at any annual or special meeting, or, if permitted by law, in writing
without a meeting, the Company shall not (i) alter, change or amend the
preferences or rights of the Preferred Shares, (ii) alter, change or amend its
Articles of Incorporation or Bylaws, or (iii) authorize or issue shares of any
class or series of stock having any preference or priority over the Preferred
Shares with respect to dividends or upon liquidation or change of control.
3. Dividends. In the event that the Company declares or pays any
dividends upon the common stock (whether payable in cash, securities or other
property), other than dividends payable solely in shares of common stock, the
Company shall also declare and pay to the holders of the Preferred Shares at the
same time that it declares and pays such dividends to the holders of the common
stock, the dividends which would have been declared and paid with respect to the
common stock issuable upon conversion of the Preferred Shares had all of the
outstanding Preferred Shares been converted immediately prior to the record date
for such dividend or, if no record date is fixed, the date as of which the
record holders of common stock entitled to such dividends are to be determined.
4. Liquidation Right and Preference. In the event of the liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary, the
holders of Preferred Shares shall be entitled to receive in cash, out of the
assets of the Company, an amount per share for each outstanding Preferred Share
equal to $125.26 (herein, "Liquidation Value"), before any payments shall be
made or any assets distributed to the holders of common stock or any other class
of shares of the Company. In the event the shareholders of the Company approve
the Merger and the issuance of the shares of Common Stock issuable upon
conversion of the Preferred Shares, the Liquidation Value shall be reduced to an
amount per Preferred Share equal to $69.59. If, upon any liquidation,
dissolution or winding up of the Company,
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the assets of the Company are insufficient to pay the Liquidation Value, the
holders of such Preferred Shares shall share pro rata in any such distribution
in proportion to the full amounts to which they would otherwise be respectively
entitled. Following payment of the Liquidation Value to the holders of Preferred
Shares upon such liquidation, dissolution or a winding up of the Company, the
holders of common stock and Preferred Shares shall then share ratably in all the
assets of the Company thereafter remaining. For purposes of this joint
distribution of assets to the holders of common stock and the holders of
Preferred Shares, each holder of Preferred Shares should be regarded as owning
that number of common stock into which such Preferred Shares would then be
convertible. A merger or consolidation of the Company which results in a change
of control or a sale of substantially all of the assets of the Company (other
than a sale of the Company's assets relating to its restaurant operations) shall
be treated as a liquidation event for purposes of this Section 4.
5. Conversion Rights.
(a) Conversion Ratio and Optional Conversion. A holder of Preferred
Shares shall initially be entitled to convert at any time any or all of such
Preferred Shares into common stock at the rate of 12.977 shares of common stock
per Preferred Share (the "Conversion Ratio"). The Conversion Ratio shall be
adjusted to 25.66 shares of Popmail Common Stock for each Preferred Share at
such time as the Company's shareholders approve the Merger and the issuance of
the shares of Common Stock issuable upon conversion of the Preferred Shares. The
Conversion Ratio shall be subject to adjustment pursuant to Sections 9(a) and
(b).
(b) Automatic Conversion. The Preferred Shares shall automatically
be converted into shares of common stock of the Company at the then applicable
Conversion Ratio (i) at such time as (1) the Company's shareholders have
approved the Merger and the issuance of the shares of Common Stock issuable upon
conversion of the Preferred Shares, (2) the Company shall have closed a private
Common Stock equity financing with proceeds to the Company of at least $6.0
million, and (3) the closing sales price of the Common Stock as reported by the
Nasdaq Small Cap Market for the five consecutive trading days preceding the date
of automatic conversion shall result in a valuation of the Company of no less
than $100 million (which valuation shall be calculated by multiplying the price
per share of Common Stock on each such trading day by the total number of shares
of Common Stock outstanding or issuable upon conversion of all outstanding
Preferred Shares (at the adjusted Conversion Ratio)) or (ii) upon the exercise
of the conversion privilege of at least 50 percent of the outstanding Preferred
Shares. The Conversion Ratio shall be subject to adjustment pursuant to Sections
9(a) and (b).
(c) Conversion Mechanics. In order to exercise the conversion
privilege, a holder of Preferred Shares shall (1) notify the Company in writing
of such holder's intent to convert a specified portion of such shares (the
"Conversion Notice" and the date of such notice which shall be the same or later
than the date notice is given, the "Conversion Notice Date") and (2) provide, on
or prior to the Conversion Notice Date, to the Company at its principal office
the certificate evidencing the Preferred Shares being converted, duly endorsed
to the Company and accompanied by written notice to the Company that the holder
elects to convert a specified portion or all of such Shares. Preferred Shares
converted at the option of the Holder shall be deemed to have been converted on
the day of receipt by the Company of the certificate representing such shares
for conversion in accordance with the foregoing provisions (the "Conversion
Date"), and at such time the rights of the holder of such Preferred Shares other
than the right to receive shares of common stock upon conversion of the
Preferred Shares pursuant to the terms hereof, as such holder, shall cease and
such holder shall be treated for all purposes as the record holder of common
stock issuable upon conversion. Preferred Shares converted automatically in
connection with an underwritten public offering or private placement of
securities shall be conditioned upon the closing of such offering, in which
event the person(s) entitled to receive the Common Stock issuable upon such
conversion of the Preferred Stock shall not be deemed to have converted such
Preferred Stock until immediately prior to the closing of such transaction. As
promptly as practicable on or after the Conversion Date, the Company shall issue
and mail or deliver to such holder a
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certificate or certificates for the number of shares of common stock issuable
upon conversion, computed to the nearest full share, and a certificate or
certificates for the balance of Preferred Shares surrendered, if any, not so
converted into common stock.
6. Registration Rights. Holders of the Preferred Shares shall have the
rights with respect to registration of such shares pursuant to the Securities
Act of 1933, as amended, and related state and Exchange registrations, as set
forth in a Registration Rights Agreement to be entered into by and between the
Company and such holders.
7. Preemptive Rights. Holders of Preferred Shares shall have no
preemptive rights with respect to any future issuances of securities by the
Company.
8. Tax Treatment. It is intended that a reduction in the Liquidation
Value pursuant to Section 4 hereof, and a concurrent increase in the Conversion
Ratio pursuant to Section 5(a) hereof, when taken together, qualify as a
recapitalization within the meaning of Internal Revenue Code Section
368(a)(1)(E) for federal income tax purposes.
9. Other Terms of Series F Convertible Preferred Shares.
(a) Stock Split, Stock Dividend, Recapitalization, etc. If the
Company, at any time while any Preferred Shares are outstanding, (a) shall pay a
stock dividend or otherwise make a distribution or distributions payable in
shares of its capital stock (whether payable in shares of its common stock or of
capital stock of any class), (b) subdivide outstanding shares of common stock
into a larger number of shares, (c) combine outstanding shares of common stock
into a smaller number of shares, or (d) issue by reclassification of shares of
common stock any shares of capital stock of the Company, the Conversion Ratio in
effect immediately prior thereto shall be adjusted so that the holder of any
Preferred Shares thereafter surrendered for conversion shall be entitled to
receive the number of shares of common stock which such holder would have owned
or have been entitled to receive after the happening of any of the events
described above had such Preferred Shares been converted immediately prior to
the happening of such event or the record date therefor, whichever is earlier.
Any adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of shareholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
(b) No Impairment. Unless approved in accordance with paragraph (2)
hereof the Company will not, by amendment of its Articles of Incorporation or
this Certificate of Designation or through any reorganization, transfer of
assets, 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 hereunder by the Corporation but will at all times
in good faith assist in the carrying out of all the provisions of this paragraph
9(a) 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 Preferred Shares
against impairment.
(c) Notices of Record Date. In the event that this Company shall
propose at any time:
(i) to declare any dividend or distribution upon
its Common Stock, whether in cash, property, stock or other securities, whether
or not a regular cash dividend and whether or not out of earnings or earned
surplus (for avoidance of doubt, the foregoing phrase does not include any stock
split or reverse stock split which results in an automatic adjustment of the
Conversion Ratio purchase to Section 9(a) above);
(ii) to offer for subscription pro rata to the
holders of any class or series of its stock any additional shares of stock of
any class or series or other rights;
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(iii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or
(iv) to merge with or into any other corporation
(other than a merger in which the holders of the outstanding voting equity
securities of the Company immediately prior to such merger hold more than fifty
percent (50%) of the voting power of the surviving entity immediately following
such merger), or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, this Company shall send to the holders
of the Preferred Stock:
(1) at least ten (10) days' prior written
notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for determining rights to
vote in respect of the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in
(iii) and (iv) above, at least ten (10) days' prior written notice of the date
when the same shall take place (and specifying the date on which the holders of
Common Stock shall be entitled to exchange their Common Stock for securities or
other property deliverable upon the occurrence of such event).
Each such written notice shall be given by first class mail, postage
prepaid, addressed to the holders of Preferred Shares at the address for each
such holder as shown on the books of this Company and shall be deemed given when
so mailed.
(d) Reservation of Shares 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 shares of the Preferred Shares, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Preferred Shares; 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 Preferred Shares, the Company will take 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.
(e) Status of Converted Stock. In the event any Preferred Shares
shall be converted pursuant to paragraph 5 hereof, the shares so converted shall
be canceled and shall not be issuable by the Company.
IN WITNESS WHEREOF, PopMail.com, inc. has caused this Certificate to be
duly executed in its corporate name on this 7th day of February, 2000.
POPMAIL.COM, INC.
By: /s/ Stephen D. King
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Its: Chief Executive Officer
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