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CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF DESIGNATION, PREFERENCE
AND RIGHTS OF SERIES B CONVERTIBLE
PREFERRED STOCK OF eVENTURES GROUP, INC.
I, STUART J. CHASANOFF, being the Vice President and Secretary of
eVENTURES GROUP, INC., a corporation organized and existing under the laws of
Delaware (the "Corporation"), DO HEREBY CERTIFY that, pursuant to authority
conferred upon the Board of Directors by the Amended Certificate of
Incorporation and pursuant to Section 242 of the Delaware General Corporation
Law, the Board of Directors, at a special meeting held on the 15th day of
December, 1999 and all the holders of the Series B Convertible Preferred Stock
by written consent, adopted the following resolution:
RESOLVED, that the Certificate of Designation, Preference and Rights of
Series B Convertible Preferred Stock of eVentures Group, Inc. filed
with the Delaware Secretary of State on November 16, 1999 shall be
amended to read in its entirety as follows:
SERIES B CONVERTIBLE PREFERRED STOCK
1. Dividends. The holders of the Series B Stock shall have no
rights to the payment of dividends on the Series B Stock (regardless of whether
the Corporation declares or pays dividends on any other class of preferred stock
or common stock of the Corporation).
2. Redemption.
2.1. Optional Redemption. The Corporation may, at any time and
from time to time, pursuant to a resolution of its Board of Directors, redeem
all or any of the outstanding shares of Series B Stock in the manner prescribed
in this Section 2; provided that the Corporation shall not redeem less than 750
shares of Series B Stock pursuant to any single Redemption Notice.
2.2. Redemption Notice. At any time that the Corporation
elects to redeem shares of Series B Stock pursuant to Section 2.1, the
Corporation shall mail by certified or registered mail, return receipt
requested, to each holder of any shares of Series B Stock as shown on the books
and records of the Corporation (each, a "Registered Holder") at the address
shown on the Corporation's records, a written notice (a "Redemption Notice"),
stating: (i) the number of shares of Series B Stock held of record by such
Registered Holder which the Corporation proposes to redeem; (ii) the date on
which the Corporation proposes to redeem such shares (the "Redemption Date");
(iii) that in consideration for such shares, the Corporation will pay to such
holder the Liquidation Value (as defined below) of each such share (the
"Redemption Price"); and (iv) the place at which the shares to be redeemed may
be surrendered in exchange for the Redemption Price for such shares. Upon the
mailing of a Redemption Notice, the Corporation shall become obligated to redeem
the shares of Series B Stock specified in such notice on the
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Redemption Date. Each Redemption Notice shall be mailed at least 10 days prior
to the Redemption Date stated therein.
2.3. Determination of Number of Each Holder's Shares to be
Redeemed. At any time that the Corporation elects to redeem shares of Series B
Stock pursuant to Section 2.1, the number of shares of Series B Stock that the
Corporation shall redeem from each holder of Series B Stock shall be equal to
the product of (i) the total number of shares of Series B Stock to be redeemed
(the "Redeemed Shares"), and (ii) a fraction, the numerator of which shall be
the total number of shares of Series B Stock held by such holder on the
Redemption Date, and the denominator of which shall be the total number of
shares of Series B Stock outstanding on the Redemption Date.
2.4. Status of Redemption Obligation; Payment of Redemption
Price.
(a) Payment of the Redemption Price with respect to each share
of Series B Stock subject to a Redemption Notice shall be deemed to
become "due" on the Redemption Date regardless of whether the
Corporation shall be able or legally permitted to make such payments on
the Redemption Date.
(b) Each holder of Series B Stock shall be entitled to receive
on or at any time after any Redemption Date the aggregate Redemption
Price for the Redeemed Shares held by such holder upon surrender by
such holder at the place specified in the Redemption Notice of the
certificate representing such Redeemed Shares duly endorsed in blank or
accompanied by an appropriate form of assignment duly endorsed in
blank. Payment of the Redemption Price shall be made promptly following
any holder's surrender of certificates for Redeemed Shares in the
manner set forth in Section 4.2. Upon payment of the Redemption Price
with respect to any Redeemed Shares, all rights of the holder of such
Redeemed Shares shall cease and terminate with respect to such Redeemed
Shares. Unless all of the shares of Series B Stock evidenced by any
certificate delivered shall have been redeemed, the Corporation shall
within a 15 day period prepare a new certificate, substantially
identical to that surrendered, representing the balance of the shares
of Series B Stock formerly represented by the certificate which shall
not have been redeemed and shall within such 15 day period deliver such
certificate to the Registered Holder thereof.
2.5. Redeemed Shares to be Canceled. The Corporation shall
cancel each share of Series B Stock which it shall redeem or for any other
reason acquire, and no share of Series B Stock which shall be redeemed or
otherwise acquired by the Corporation shall thereafter be reissued, sold, or
transferred by the Corporation to any person. The number of shares of Series B
Stock which the Corporation shall be authorized to issue shall be deemed to be
reduced by the number of shares of Series B Stock which the Corporation shall
redeem or otherwise acquire.
2.6. Allocation of Partial Redemption Payments Among Holders
of Series B Stock. If any time the Corporation shall not be able to pay the full
Redemption Price for all Series B Stock which the Corporation shall have become
obligated to redeem at or prior to such time pursuant to this Section 2, each
holder of shares of Series B Stock shall have the right to require the
Corporation to redeem a number of such holder's shares of Series B Stock equal
to the
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product of (i) the total number of shares of Series B Stock which the
Corporation shall be able to redeem at such time, and (ii) a fraction, the
numerator of which shall be the total number of shares of Series B Stock which
the Corporation shall have become obligated to redeem from such holder at or
prior to such time (but which the Corporation shall not have redeemed at or
prior to such time), and the denominator of which shall be the total number of
shares of Series B Stock which the Corporation shall have become obligated to
redeem at or prior to such time (but which the Corporation shall not have
redeemed at or prior to such time).
3. Liquidation.
3.1. Rights of Holders of Series B Stock. In the event of any
voluntary or involuntary liquidation (whether complete or partial), dissolution
or winding up of the Corporation (a "Dissolution"), the holders of shares of
Series B Stock shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders, whether from capital, surplus or
earnings and pari passu with the holders of any outstanding shares of Series A
Convertible Preferred Stock, par value $0.00002 per share, of the Corporation
(the "Series A Stock"), an amount in cash equal to the sum of one thousand
dollars ($1,000) per share (the "Liquidation Value").
3.2. Allocation of Liquidation Payments Among Holders of
Stock. If upon any Dissolution, the assets of the Corporation available for
distribution to holders of shares of Series A Stock and Series B Stock (the
"Total Amount Available") shall be insufficient to pay the holders of
outstanding shares of Series A Stock and Series B Stock the full amounts to
which they shall be entitled under Section 3.1 and the Certificate of
Designation with respect to the Series A Stock, each holder of shares of Series
B Stock shall be entitled to receive an amount equal to the product derived by
multiplying the Total Amount Available times a fraction the numerator of which
shall be the number of shares of Series B Stock held by such holder and the
denominator of which shall be the total number of shares of Series A Stock and
Series B Stock then outstanding.
4. Additional Provisions Governing Preferred Stock.
4.1. Voting Rights. (a) Except as otherwise provided herein,
by the Certificate of Incorporation or by applicable law, the shares of
Series B Stock shall have no voting rights.
(b) No change in the provision of this Certificate of
Designation affecting any interests of the holders of any shares of
Series B Stock shall be binding or effective unless such change shall
have been approved in writing by the holders of at least 66 2/3% of the
shares of Series B Stock outstanding at the time such change shall be
made.
4.2. Method of Payment.
(a) Payments. Any payment at any time due with respect to any
share of Series B Stock (including but not limited to the payment of
the Redemption Price for such share, and any payment due with respect
to such share under Section 3) shall be made by means of a check (drawn
upon funds which are immediately available not later than the
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due date of the payment being made by such check) to the order of the
Registered Holder of such share which check shall be mailed by United
States certified or registered mail, return receipt requested, to the
address for such Registered Holder shown on the Corporation's records.
(b) When Payment Deemed to Have Been Made. Any payment at any
time due with respect to any share of Series B Stock (including but not
limited to payment of the Redemption Price for such share and any
payment due on such share under Section 3) shall be deemed to have been
paid by the Corporation at the time the Corporation shall have received
a receipt for from the U.S. postal service.
4.3. Registration and Transfer
(a) The Corporation will keep at its principal office a
register for the registration of the shares of Series B Stock.
(b) The Corporation will record a transfer in such register of
any share or shares of Series B Stock and all rights evidenced thereby
upon the request of the Registered Holder thereof in person or by duly
authorized attorney upon the surrender of the certificate(s)
representing such share of Series B Stock with the form of assignment
set forth on the reverse of such certificate properly completed and
executed, properly endorsed at the Corporation's principal office. For
so long as such certificate bears any legend to such effect, prior to
any registration of transfer of any shares of Series B Stock, the
Corporation shall have received an appropriate investment
representation for purposes of confirming the availability of an
exemption from applicability of the registration provisions of the
Securities Act of 1933, as amended, signed by the Registered Holder of
such shares of Series B Stock.
(c) Upon the surrender of any certificate representing shares
of Series B Stock at the Corporation's principal office, the
Corporation will, at the request of the registered holder of such
certificate, execute and deliver, at the Corporation's expense, a new
certificate or certificates in exchange representing the number of
shares of Series B Stock represented by the surrendered certificate.
Each such new certificate shall be registered in the name of such
Registered Holder or, if any such shares are to be transferred to
another person in compliance with this Section 4.3, such other person
and shall represent such number of shares of Series B Stock as shall be
requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate,
provided that that if the certificate is to be issued in a name other
than that of a Registered Holder, the Corporation shall not be required
to issue or deliver any such certificate unless and until the person
requesting the issuance thereof shall have paid to the Corporation the
amount of any tax that may be payable with respect to any transfer
involved in the issuance and delivery of such certificate or has
established to the satisfaction of the Corporation that such tax has
been paid.
4.4. Replacement Certificates. Upon receipt by the Corporation
of evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of
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any certificate evidencing one or more shares of Series B Stock (an affidavit of
the Registered Holder, shall be satisfactory) the Corporation at its expense
will execute and deliver in lieu of such certificate, a new certificate of like
kind, representing the number of shares of Series B Stock which shall have been
represented by such lost, stolen, destroyed, or mutilated certificate. If
required by the Corporation, an indemnity bond sufficient in the judgment of the
Corporation to protect itself from any loss which it may suffer if a certificate
is replaced must be delivered. The Corporation may charge such Registered Holder
for reasonable expenses directly related to replacing the certificate.
5. Interpretation of this Instrument.
5.1. Definitions. As used in this Certificate of Designation,
each term defined in this Section 5.1 has the meaning set forth below:
(a) Business Day. The term "Business Day" means any day except
Saturday, Sunday and any day which shall be in New York or Texas a
legal holiday or a day on which banking institutions are authorized or
required by law or other government action to close.
(b) Common Stock. The term "Common Stock" designates and
includes the Corporation's common stock, par value $0.00002 per share.
(c) Conversion Price. The term "Conversion Price" means the
Initial Conversion Price of $13.80, as such price may be adjusted from
time to time pursuant to the provisions of Section 7 hereof.
(d) Conversion Share. The term "Conversion Share" means one
share of the Corporation's authorized Common Stock, provided that if
under the provisions hereof, there shall be a change in the class of
securities purchasable hereunder or such that the securities
purchasable hereunder shall be issued by an entity other than the
Corporation. The term "Conversion Share" shall mean one share of the
security purchasable upon the exercise of the rights granted hereunder
if such security shall be issuable in shares or shall mean the smallest
unit in which such security shall be issuable if such security shall
not be issuable in shares.
(e) Market Value. The term "Market Value" means the average
closing bid price of the Common Stock for the 10 preceding days.
(f) Trading Day. The term "Trading Day" means any Business
Day in which the Common Stock may be traded in a securities market or
exchange in the United States.
6. Conversion Rights. Each share of Series B Stock shall be
convertible into 72.46377 shares (subject to adjustment in Section 7) of Common
Stock as set forth in this Section 6.
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(a) Conversion Rights.
(i) Optional Conversion by the Holder. At any time or
from time to time prior to the earlier to occur of (x) the
Corporation Conversion Date (as defined below), (y) the
Mandatory Conversion Date (as defined below), or (z) the
Redemption Date (as defined below) with respect to all
outstanding shares of Series B Stock, each Registered Holder
shall have the right to convert any or all of such Registered
Holder's shares of Series B Stock into the number of shares of
fully paid and nonassessable Common Stock derived by dividing
the Liquidation Value of each such share by the Conversion
Price by delivering the certificate representing such shares
to the Corporation, duly endorsed in blank or accompanied by
an appropriate form of assignment duly endorsed in blank,
together with a written notice stating that the Registered
Holder is converting such shares;
(ii) Mandatory Conversion. On the date following (i)
the completion by the Corporation of an underwritten offering
with proceeds of no less than $50 million at a price per share
of no less than $27.60 and (ii) the date upon which the
trading volume for shares of common stock of the Corporation
for the preceding three consecutive calendar months has
equaled or exceeded 700,000 shares per month (the "Mandatory
Conversion Date"), each share of Series B Stock shall,
automatically and without further action on the part of any
Registered Holder of Series B Stock, be converted into the
number of shares of fully paid and nonassessable Common Stock
derived by dividing the Liquidation Value of each such share
by the Conversion Price. Upon such conversion, each share of
Series B Stock shall be canceled and not subject to
reissuance. On or prior to the twentieth (20th) Business Day
prior to the Mandatory Conversion Date, the Corporation may
mail by certified or registered mail, return receipt
requested, to each Registered Holder of any shares of Series B
Stock at the address shown on the Corporation's records, a
written notice (the "Mandatory Conversion Notice"), stating
that the Corporation (x) does not intend to exercise the
redemption option provided for in Section 3 hereof, and (y)
does intend to allow the shares of Series B Stock to
automatically convert pursuant to this Section 6.1(a)(ii).
Notwithstanding the delivery of any Mandatory Conversion
Notice, the Corporation shall not be deemed to have waived its
right to redeem the Series B Stock pursuant to Section 2
hereof by virtue of the issuance of the Mandatory Conversion
Notice;
(iii) Optional Conversion by the Corporation. At any
time that (i) any shares of the Series B Stock are outstanding
and (ii) the trading volume for shares of common stock of the
Corporation has equaled or exceeded 700,000 shares per month
for three consecutive calendar months, on the tenth (10th)
Business Day (the "Corporation Conversion Date") immediately
following the last of any five consecutive Trading Days (the
"Trigger Date") on which the Market Price of the Common Stock
equals or exceeds an amount equal to 2.5 multiplied by the
Conversion Price per share (the "Target Price"), the
Corporation may (but has no obligation to) elect to convert
each outstanding share of Series B Stock
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(automatically and without further action on the part of any
holder of outstanding shares of Series B Stock) into the
number of shares of fully paid and nonassessable Common Stock
derived by dividing the Liquidation Value of each such share
by the Conversion Price. Upon such conversion, each share of
Series B Stock shall be canceled and not subject to
reissuance. On or before the fifth (5th) Business Day
following any Trigger Date, the Corporation may provide
written notice (the "Corporation Conversion Notice") to the
holders of shares of Series B Stock that the Corporation has
elected to convert the outstanding shares of Series B Stock
pursuant to this Section 6.1(a)(iii). The immediately
preceding sentence notwithstanding, the Corporation shall not
be deemed to have waived its right to redeem the Series B
stock pursuant to Section 2 hereof by virtue of the issuance
of the Corporation Conversion Notice. The failure of the
Corporation to elect to convert the shares of Series B Stock
following any particular Trigger Date shall not prejudice in
any manner the Corporation's rights under this paragraph
6.1(a)(iii) with respect to any other Trigger Date or under
Section 2 hereof. .
(b) Delivery of Series B Certificates. Following a conversion
pursuant to Section 6(a)(ii) or (iii), each holder of Series B Stock
shall be entitled to receive a certificate or certificates representing
the shares of Common Stock into which such holder's Series B Stock was
converted upon surrender by such holder at the place specified in the
Mandatory Conversion Notice or Corporate Conversion Notice of the
certificate representing such shares of Series B Stock, duly endorsed
in blank or accompanied by an appropriate form of assignment duly
endorsed in blank. Each share of Series B Stock surrendered pursuant to
Section 6(a)(i) or this Section 6(b) shall constitute payment of the
Conversion Price equal to the Liquidation Value of such share
surrendered.
(c) Delivery of Certificates for Conversion Shares.
Certificates for Conversion Shares shall be issued and delivered to the
Registered Holder of the converted shares of Series B Stock within 15
days after the delivery of the certificates representing the shares of
Series B Stock to be converted. Unless all of the shares of Series B
Stock evidenced by any certificate delivered shall have been converted,
the Corporation shall within a 15 day period prepare a new certificate,
substantially identical to that surrendered, representing the balance
of the shares of Series B Stock formerly represented by the certificate
which shall not have been converted and shall within such 15 day period
deliver such certificate to the Registered Holder thereof.
(d) Fractional Shares. The Corporation may, if it so elects,
issue fractional shares of Common Stock or scrip representing
fractional shares upon the conversion of shares of Series B Stock. If
the Corporation does not elect to issue fractional shares, the
Corporation shall pay to the holder of the shares of Series B Stock
which were converted a cash adjustment in respect of such fractional
shares in an amount equal to the same fraction of the market price per
share of the Common Stock (as determined in a reasonable manner
prescribed by the Board of Directors) at the close of business on the
day of such conversion. The determination as to whether or not any
fractional shares are issuable shall be based upon the total number of
shares of Series B Stock being converted
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at any one time by any holder thereof, not upon each share of Series B
Stock being converted.
(e) Authorization and Issuance. The Corporation covenants
and agrees that:
(i) the Conversion Shares issuable upon any
conversion of any shares of Series B Stock shall be deemed to
have been issued to the Registered Holder of such shares of
Series B Stock at the time of such conversion, such Registered
Holder shall be deemed for all purposes to have become the
Registered Holder of such Conversion Shares at such time, and
all rights of such Registered Holder with respect to such
Redeemed Shares (other than the right to surrender the
certificates therefor and receive in exchange certificates for
Conversion Shares) shall cease and terminate;
(ii) all Conversion Shares which may be issued upon
any conversion of any shares of Series B Stock will, upon
issuance, be fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof;
(iii) The Corporation will take all such action as
may be necessary to assure that all Conversion Shares issuable
upon conversion of Series B Stock may be issued without
violation of any applicable law or regulation or of any
requirements of any domestic securities exchange upon which
securities of the same class may be listed. The Corporation
will not take any action which would result in any adjustment
of the Conversion Price if the total number of shares of
Common Stock issuable after such action upon conversion of all
Series B Stock together with all shares of Common Stock then
outstanding and all shares of Common Stock then issuable upon
the exercise of all outstanding options, warrants, conversion
and other rights, would exceed the total number of shares of
Common Stock then authorized by the Corporation's Certificate
of Incorporation;
(iv) the issuance of certificates for shares of
Common Stock issuable upon conversion shall be made without
charge to the Registered Holder; provided, however, that if
any certificate is to be issued in a name other than that of
the Registered Holder of the shares being converted, the
Corporation shall not be required to issue or deliver any such
certificate unless and until the person requesting the
issuance thereof shall have paid to the Corporation the amount
of any tax that may be payable with respect to any transfer
involved in the issuance and delivery of such certificate or
has established to the satisfaction of the Corporation that
such tax has been paid;
(v) The Corporation will at no time close its
transfer books against the transfer of the Series B Stock or
of any Conversion Share issued or issuable upon the conversion
of the Series B Stock in any manner which interferes with the
timely conversion of the Series B Stock; and
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(vi) The Corporation shall at all times reserve and
keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of issuance upon
conversion of the outstanding shares of Series B Stock, such
number of shares of Common Stock as shall be issuable upon the
conversion of all such shares of Series B Stock then
outstanding.
7. Anti-dilution Provisions.
7.1. Adjustment of Number of Shares. In order to prevent
dilution of the rights granted hereunder, the Conversion Price shall be subject
to adjustment from time to time in accordance with this Section 7. At any given
time the Conversion Price, whether as the Initial Price of Thirteen and 80/100
dollars ($13.80) per share or as last adjusted, shall be that dollar (or part of
a dollar) amount the payment of which shall be sufficient at the given time to
acquire one Conversion Share. Upon each adjustment of the Conversion Price
pursuant to this Section 7, the Registered Holder of the shares of Series B
Stock shall thereafter be entitled to acquire upon exercise, at the Conversion
Price resulting from such adjustment, the number of Conversion Shares obtainable
by multiplying the Conversion Price in effect immediately prior to such
adjustment by the number of Conversion Shares acquirable immediately prior to
such adjustment and dividing the product thereof by the Conversion Price
resulting from such adjustment.
7.2. Liquidating Dividends. In the event the Corporation shall
declare a dividend upon the Common Stock (other than a dividend payable in
Common Stock) payable otherwise than out of earnings or earned surplus,
determined in accordance with generally accepted accounting principles,
including the making of appropriate deductions for minority interests, if any,
in subsidiaries (herein referred to as "Liquidating Dividends"), then as soon as
possible after the conversion of any shares of Series B Stock the Corporation
shall pay to the person converting such shares of Series B Stock an amount equal
to the aggregate value at the time of such exercise of all Liquidating Dividends
(including but not limited to the Common Stock which would have been issued at
the time of such earlier exercise and all other securities which would have been
issued with respect to such Common Stock by reason of stock splits, stock
dividends, mergers or reorganizations, or for any other reason). For the
purposes of this Section 7.2, a dividend other than in cash shall be considered
payable out of earnings or earned surplus only to the extent that such earnings
or earned surplus is charged an amount equal to the fair value of such dividend.
7.3. Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide (other than by means of a dividend
payable in Common Stock) its outstanding shares of Common Stock into a greater
number of shares, the Conversion Price in effect immediately prior to such
subdivision shall be appropriately reduced, and, conversely, in case the
outstanding shares of Common Stock of the Corporation shall be combined into a
smaller number of shares, the Conversion Price in effect immediately prior to
such combination shall be proportionately increased.
7.4. Reorganization, Reclassification, Consolidation, Merger
or Sale. If any capital reorganization or reclassification of the capital stock
of the Corporation, or consolidation or merger of the Corporation with another
corporation, or the sale of all or substantially all of its
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assets to another corporation shall be effected in such a way that holders of
Common Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the Registered Holders of the shares of
Series B Stock shall thereafter have the right to acquire and receive upon
conversion of the shares of Series B Stock such shares of stock, securities or
assets as would have been issuable or payable (as part of the reorganization,
reclassification, consolidation, merger or sale) with respect to or in exchange
for such number of outstanding shares of the Corporation's Common Stock as would
have been received upon conversion of the Series B Stock immediately before such
reorganization, reclassification, consolidation, merger or sale and the number
of shares of Common Stock that would have been so received), and in any such
case appropriate provisions shall be made with respect to the rights and
interests of the holders of the Series B Stock to the end that the provisions
hereof (including without limitation provisions for adjustments of the
Conversion Price and of the number of Conversion Shares acquirable and
receivable upon the conversion of the Series B Stock) shall thereafter be
applicable, in relation to any shares of stock, securities or assets thereafter
deliverable upon the conversion of the Series B Stock. In the event of a merger
or consolidation of the Corporation with or into another corporation or the sale
of all or substantially all of its assets as a result of which a number of
shares of Common Stock of the surviving or purchasing corporation, greater or
lesser than the number of shares of Common Stock of the Corporation outstanding
immediately prior to such merger, consolidation or purchase are issuable to
holders of Common Stock of the Corporation, then the Conversion Price in effect
immediately prior to such merger, consolidation or purchase shall be adjusted in
the same manner as though there were a subdivision or combination of the
outstanding shares of Common Stock of the Corporation.
7.5. Notices. In the event that:
(a) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with, or sale of all or
substantially all of its assets to, another corporation; or
(b) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in connection with such event, the Corporation shall give to the
Registered Holders of the shares of Series B Stock at least twenty (20) days
prior written notice of the date when the same shall take place.
Such notice shall also specify the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger or sale, dissolution, liquidation or winding up, as the
case may be. Each such written notice shall be given by first class mail,
postage prepaid, address to the Registered Holders of the Series B Stock.
7.6. Certain Events. If any event occurs as to which, in the
opinion of the Board of Directors of the Corporation, the provisions of this
Section 7 are not strictly applicable or if strictly applicable would not fairly
protect the rights of the holders of the Series B Stock in accordance with the
essential intent and principles of such provisions, then the Board of Directors
shall make an adjustment in the application of such provision, in accordance
with such essential intent and principles, so as to protect such rights as
aforesaid, but in no event shall any adjustment have the effect of increasing
the Conversion Price as otherwise determined pursuant to any of the provisions
of this Section 7 except in the case of a combination of shares of a type
contemplated in Section 7.3.
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IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of
December, 1999, and we hereby affirm that the foregoing Certificate is my act
and deed and the act and deed of the Corporation and that the facts stated
therein are true.
/s/ STUART J. CHASANOFF
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Stuart J. Chasanoff,
Vice President and Secretary