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EXHIBIT 3.2
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES E CONVERTIBLE PREFERRED STOCK
OF
EFAX.COM
eFax.com (formerly known as eFax.com, Inc.) (the "COMPANY"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, does hereby certify that, pursuant to authority conferred
upon the Board of Directors of the Company by the Certificate of Incorporation,
as amended, of the Company, and pursuant to Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors of the Company
at a meeting duly held, adopted resolutions (i) authorizing a series of the
Company's previously authorized preferred stock, par value $.01 per share, and
(ii) providing for the designations, preferences and relative, participating,
optional or other rights, and the qualifications, limitations or restrictions
thereof, of One Thousand Four Hundred Forty-Seven (1,447) shares of Series E
Convertible Preferred Stock of the Company, as follows:
RESOLVED, that the Company is authorized to issue 1,447 shares of
Series E Convertible Preferred Stock (the "PREFERRED SHARES"), par value
$.01 per share, which shall have the following powers, designations,
preferences and other special rights:
(1) Dividends. Subject to Section 4(c), the Preferred Shares
shall bear dividends ("DIVIDENDS") at a rate per annum equal to the Dividend
Rate (as defined below), which shall be cumulative, accrue daily from the
Issuance Date (as defined below) and be payable on each of May 13, 2001, if
after the Issuance Date, and May 13, 2002 (subject to Section 4(c), each a
"DIVIDEND DATE"). If a Dividend Date is not a Business Day (as defined below)
then the Dividend shall be due and payable on the Business Day immediately
following the Dividend Date. Dividends shall be payable in cash or, at the
option of the Company, in shares of Common Stock based on the Dividend
Conversion Price (as defined below) on the Dividend Date, provided that the
Dividends which accrued during any period shall be payable in shares of Common
Stock only if the Company provides written notice ("DIVIDEND ELECTION NOTICE")
to each holder of Preferred Shares at least five (5) Business Days prior to the
Dividend Date. Notwithstanding the foregoing, the Company shall not be entitled
to pay Dividends in shares of Common Stock and shall be required to pay such
Dividends in cash if any event constituting a Triggering Event (as defined in
Section 3(b)), or an event that solely with the passage of time would constitute
a Triggering
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Event if not cured, has occurred and is continuing on the date of the Company's
Dividend Election Notice or on the Dividend Date, unless otherwise consented to
in writing by the holder of Preferred Shares entitled to receive such Dividend.
Any accrued and unpaid dividends which are not paid (in stock or cash as
applicable) within seven (7) Business Days of such accrued and unpaid dividends'
Dividend Date shall bear interest at the rate of 18.0% per annum from such
Dividend Date until the same is paid (the "DEFAULT INTEREST").
(2) Conversion of Preferred Shares. Preferred Shares shall be
convertible into shares of the Company's common stock, par value $.01 per share
(the "COMMON STOCK"), on the terms and conditions set forth in this Section 2.
(a) Certain Defined Terms. For purposes of this
Certificate of Designations, the following terms shall have the following
meanings:
(i) "ADDITIONAL AMOUNT" means, on a per share
basis, the result of the following formula: (the Dividend Rate)(N/365)(the
Stated Value).
(ii) "BUSINESS DAY" means a day on which the
Principal Market or, if the Principal Market is not the principal trading market
for the Common Stock, the principal trading market for the Common Stock is open
for general trading of securities.
(iii) "CLOSING BID PRICE" means, for any security
as of any date, the last closing bid price for such security on the Principal
Market (as defined below) as reported by Bloomberg Financial Markets
("BLOOMBERG"), or, if the Principal Market begins to operate on an extended
hours basis and does not designate the closing bid price, then the last bid
price of such security prior to 4:00:00 p.m., Eastern Time, as reported by
Bloomberg, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the last closing bid price of such security
on the principal securities exchange or trading market where such security is
listed or traded as reported by Bloomberg, or if the foregoing do not apply, the
last closing bid price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no
closing bid price is reported for such security by Bloomberg, the last closing
trade price of such security as reported by Bloomberg, or, if no last closing
trade price is reported for such security by Bloomberg, the average of the bid
prices of any market makers for such security as reported in the "pink sheets"
by the National Quotation Bureau, Inc. If the Closing Bid Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Closing Bid Price of such security on such date shall be the fair market value
as mutually determined by the Company and the holders of Preferred Shares. If
the Company and the holders of Preferred Shares are unable to agree upon the
fair market value of the Common Stock, then such dispute shall be resolved
pursuant to Section 2(d)(iii) below with the term "Closing Bid Price" being
substituted for the term "Market Price." All such determinations to be
appropriately adjusted for any stock dividend, stock split or other similar
transaction during such period.
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(iv) "CLOSING SALE PRICE" means, for any security
as of any date, the last closing trade price for such security on the Principal
Market as reported by Bloomberg, or, if the Principal Market begins to operate
on an extended hours basis and does not designate the closing trade price, then
the last trade price of such security prior to 4:00:00 p.m., Eastern Time, as
reported by Bloomberg, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last closing trade
price of such security on the principal securities exchange or trading market
where such security is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the last closing trade price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no last closing trade price is reported for such
security by Bloomberg, the last closing ask price of such security as reported
by Bloomberg, or, if no last closing ask price is reported for such security by
Bloomberg, the average of the ask prices of any market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the
Closing Sale Price cannot be calculated for such security on such date on any of
the foregoing bases, the Closing Sale Price of such security on such date shall
be the fair market value as mutually determined by the Company and the holders
of Preferred Shares. If the Company and the holders of the Preferred Shares are
unable to agree upon the fair market value of the Common Stock, then such
dispute shall be resolved pursuant to Section 2(d)(iii) below with the term
"Closing Sale Price" being substituted for the term "Market Price". All such
determinations to be appropriately adjusted for any stock dividend, stock split
or other similar transaction during such period.
(v) "CONVERSION AMOUNT" means the sum of (A) the
Additional Amount and (B) the Stated Value.
(vi) "CONVERSION PRICE" means (A) as of any
Conversion Date (as defined in Section 2(d)) or other date of determination
prior to the date which is May 13, 2002, the Fixed Conversion Price in effect on
such date and subject to adjustment as provided herein (including, without
limitation, pursuant to Section 2(f)), and (B) on and after May 13, 2002, the
Market Price as of such date, each in effect as of such date and subject to
adjustment as provided herein.
(vii) "DIVIDEND CONVERSION PRICE" means, as of any
Dividend Date, the average of the Closing Bid Prices of the Common Stock for the
five consecutive Business Days immediately preceding such Dividend Date.
(viii) "DIVIDEND RATE" means, with respect to any
Preferred Share, 8.0%.
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(ix) "EXCHANGE AGREEMENT" means that certain
exchange agreement, dated July 13, 2000, between the Company and the initial
holders of the Preferred Shares.
(x) "FIXED CONVERSION PRICE" means $12.6825,
subject to adjustment as provided herein as if Preferred Shares were outstanding
at the time of any such adjustment.
(xi) "ISSUANCE DATE" means, with respect to each
Preferred Share, the date of issuance of the applicable Preferred Share.
(xii) "MATURITY DATE" means May 13, 2002.
(xiii) "MARKET PRICE" means, with respect to any
security for any period, that price which shall be computed as the arithmetic
average of the Closing Bid Prices for such security on each of the 20
consecutive Business Days immediately preceding such date of determination. All
such determinations to be appropriately adjusted for any stock dividend, stock
split or other similar transaction during such period.
(xiv) "N" means the number of days from, but
excluding, the Issuance Date or the last Dividend Date with respect to which
Dividends, along with any Default Interest, has been paid by the Company on the
applicable Preferred Share through and including the Conversion Date for the
Preferred Shares for which conversion is being elected or such other date with
respect to which this determination is being made.
(xv) "PERSON" means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(xvi) "PRINCIPAL MARKET" means the Nasdaq National
Market.
(xvii) "SERIES A WARRANTS" means the warrants to
acquire Common Stock issued by the Company pursuant to the securities purchase
agreement, dated May 7, 1999, between the Company and the Buyers set forth
therein on the Schedule of Buyers.
(xviii) "STATED VALUE" means the difference of (A)
the Conversion Amount (as defined in the Series D Certificate of Designations
(as defined in the Exchange Agreement)) of the Series D Preferred Share (as
defined in the Exchange Agreement), which was exchanged for the Preferred Share
pursuant to the Exchange Agreement, immediately prior to such exchange on the
Issuance Date of such Preferred Share, minus (B) $2,500.
(b) Holder's Conversion Right. Subject to the provisions
of Section 5, at any time or times on or after the Issuance Date, any
holder of Preferred Shares shall be entitled to convert any whole number
of Preferred Shares into fully paid and nonassessable shares of Common
Stock in accordance with Section 2(d) at the Conversion Rate (as defined
below). The Company shall not issue any fraction of a share of Common
Stock upon any conversion. All shares of Common Stock (including
fractions thereof) issuable upon conversion of more than one Preferred
Share by a holder thereof shall be aggregated
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for purposes of determining whether the conversion would result in the
issuance of a fraction of a share of Common Stock. If, after the
aforementioned aggregation, the issuance would result in the issuance of
a fraction of a share of Common Stock, the Company shall round such
fraction of a share of Common Stock up or down to the nearest whole
share.
(c) Conversion Rate. The number of shares of Common Stock
issuable upon conversion of each Preferred Share pursuant to Section
2(b) shall be determined according to the following formula (the
"CONVERSION RATE"):
Conversion Amount
-----------------
Conversion Price
(d) Mechanics of Conversion. The conversion of Preferred
Shares shall be conducted in the following manner:
(i) Holder's Delivery Requirements. To convert
Preferred Shares into shares of Common Stock on any date (the "CONVERSION
DATE"), the holder thereof shall (A) transmit by facsimile (or otherwise
deliver), for receipt on or prior to 11:59 p.m., Central Time on such date, a
copy of a fully executed notice of conversion in the form attached hereto as
Exhibit I (the "CONVERSION NOTICE") to the Company with a copy thereof to the
Company's designated transfer agent (the "TRANSFER AGENT") and (B) if required
by Section 2(d)(viii), surrender to a common carrier for delivery to the Company
as soon as practicable, but in no event later the five (5) Business Days,
following such date the original certificates representing the Preferred Shares
being converted (or an indemnification undertaking with respect to such shares
in the case of their loss, theft or destruction) (the "PREFERRED STOCK
CERTIFICATES").
(ii) Company's Response. Upon receipt by the
Company of a copy of a Conversion Notice, the Company, on or before the second
Business Day following the date of receipt (the "SHARE DELIVERY DATE"), (A)
issue and deliver to the address as specified in the Conversion Notice, a
certificate, registered in the name of the holder or its designee, for the
number of shares of Common Stock to which the holder shall be entitled, or (B)
provided the Transfer Agent is participating in The Depository Trust Company
("DTC") Fast Automated Securities Transfer Program, upon the request of the
holder, credit such aggregate number of shares of Common Stock to which the
holder shall be entitled to the holder's or its designee's balance account with
DTC through its Deposit Withdrawal Agent Commission system. If the number of
Preferred Shares represented by the Preferred Stock Certificate(s) physically
submitted for conversion is greater than the number of Preferred Shares being
converted, then the Company shall, as soon as practicable and in no event later
than five Business Days after receipt of the Preferred Stock Certificate(s) (the
"PREFERRED STOCK DELIVERY DATE") and at its own expense, issue and deliver to
the holder a new Preferred Stock Certificate representing the number of
Preferred Shares not converted.
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(iii) Dispute Resolution. In the case of a dispute
as to the determination of the Market Price or the arithmetic calculation of the
Conversion Rate, the Company shall instruct the Transfer Agent to issue to the
holder the number of shares of Common Stock that is not disputed and promptly
shall submit the disputed determinations or arithmetic calculations to the
holder via facsimile. If such holder and the Company are unable to agree upon
the determination of the Market Price or arithmetic calculation of the
Conversion Rate within one (1) Business Day of such disputed determination or
arithmetic calculation being submitted to the holder, then the Company promptly
shall submit via facsimile (A) the disputed determination of the Market Price to
an independent, reputable investment bank selected by the Company and approved
by the holders of a majority of the Preferred Shares then outstanding or (B) the
disputed arithmetic calculation of the Conversion Rate to the Company's
independent, outside accountant. The Company shall use its reasonable best
efforts to cause the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the holder
of the results no later than ten (10) Business Days from the time it receives
the disputed determinations or calculations. Such investment bank's or
accountant's determination or calculation, as the case may be, shall be binding
upon all parties absent manifest error.
(iv) Record Holder. The person or persons entitled
to receive the shares of Common Stock issuable upon a conversion of Preferred
Shares shall be treated for all purposes as the record holder or holders of such
shares of Common Stock on the Conversion Date.
(v) Company's Failure to Timely Convert.
(A) Cash Damages. If within five (5)
Business Days after the Company's receipt of the facsimile copy of a Conversion
Notice the Company shall fail to issue a certificate to a holder or credit such
holder's balance account with DTC for the number of shares of Common Stock to
which such holder is entitled upon such holder's conversion of Preferred Shares
or to issue a new Preferred Stock Certificate representing the number of
Preferred Shares to which such holder is entitled pursuant to Section 2(d)(ii),
in addition to all other available remedies which such holder may pursue
hereunder and under the Exchange Agreement (including indemnification pursuant
to Section 8 thereof), the Company shall pay additional damages to such holder
for each date after the Share Delivery Date such conversion is not timely
effected and/or each date after the Preferred Stock Delivery Date such Preferred
Stock Certificate is not delivered in an amount equal to 0.5% of the product of
(I) the sum of the number of shares of Common Stock not issued to the holder on
or prior to the Share Delivery Date and to which such holder is entitled and, in
the event the Company has failed to deliver a Preferred Stock Certificate to the
holder on or prior to the Preferred Stock Delivery Date, the number of shares of
Common Stock issuable upon conversion of the Preferred Shares represented by
such Preferred Stock Certificate, as of the Preferred Stock Delivery Date, and
(II) the Closing Bid Price of the Common Stock on the Share Delivery Date, in
the case of the failure to deliver Common Stock, or the Preferred Stock Delivery
Date, in the case of failure to deliver a Preferred Stock Certificate.
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(B) Void Conversion Notice; Adjustment to
Conversion Price. If for any reason a holder has not received all of the shares
of Common Stock prior to the tenth (10th) Business Day after the Share Delivery
Date with respect to a conversion of Preferred Shares, then the holder, upon
written notice to the Company, with a copy to the Transfer Agent, may void its
Conversion Notice with respect to, and retain or have returned, as the case may
be, any Preferred Shares that have not been converted pursuant to such holder's
Conversion Notice; provided that the voiding of a holder's Conversion Notice
shall not affect the Company's obligations to make any payments which have
accrued prior to the date of such notice pursuant to Section 2(d)(v)(A) or
otherwise.
(C) Redemption. If for any reason, other
than a Force Majeure Event (as defined below) a holder has not received all of
the shares of Common Stock on or prior to the tenth (10th) Business Day after
the Share Delivery Date with respect to a conversion of Preferred Shares (a
"CONVERSION FAILURE"), then the holder, upon written notice to the Company, may
require that the Company redeem all Preferred Shares previously submitted for
conversion and with respect to which the Company has not delivered shares of
Common Stock, in accordance with Section 3; provided that no holder shall be
entitled to require the Company to redeem Preferred Shares pursuant to this
Section 2(d)(v)(C) to the extent the failure of the Company to deliver such
shares of Common Stock results from fire, flood, storm, earthquake, shipwreck,
strike, war, acts of terrorism, crash involving facilities of a common carrier,
act of God or any similar event outside the control of the Company (it being
understood that the actions or failure to act of the Transfer Agent shall not be
deemed an event outside the control of the Company except to the extent
resulting from fire, flood, storm, earthquake, shipwreck, strike, war, acts of
terrorism, crash involving the facilities of a common carrier, acts of God, the
bankruptcy, liquidation or reorganization of the Transfer Agent under any
bankruptcy, insolvency or other similar law or any similar event outside the
control of the Transfer Agent) (a "FORCE MAJEURE EVENT").
(vi) Pro Rata Conversion and Redemption. In the
event the Company receives a Conversion Notice from more than one holder of
Preferred Shares for the same Conversion Date and the Company can convert some,
but not all, of such Preferred Shares, the Company shall convert from each
holder of Preferred Shares electing to have Preferred Shares converted at such
time a pro rata amount of such holder's Preferred Shares submitted for
conversion based on the number of Preferred Shares submitted for conversion on
such date by such holder relative to the number of Preferred Shares submitted
for conversion on such date.
(vii) Mandatory Conversion or Redemption at
Maturity. If any Preferred Shares remain outstanding on the Maturity Date, then
all such Preferred Shares, at the Company's option, either (i) shall be
converted as of such date in accordance with this Section 2 as if the holders of
such Preferred Shares had given the Conversion Notice on the Maturity Date (a
"MATURITY DATE MANDATORY CONVERSION") or (ii) shall be redeemed as of such date
for an amount in cash per Preferred Share (the "MATURITY DATE REDEMPTION PRICE")
equal to the Liquidation Preference as of such date (a "MATURITY DATE MANDATORY
REDEMPTION"); provided, however, that if the Company has elected a Maturity Date
Mandatory Conversion and a Triggering Event has occurred and is continuing on
the Maturity Date or any event shall have occurred and be continuing on the
Maturity Date which solely with the passage of time and the
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failure to cure would result in a Triggering Event, then the Company shall,
within 30 Business Days following the Maturity Date (unless otherwise notified
in writing by the holder of its request to have the Preferred Shares converted
into Common Stock), pay to each holder of Preferred Shares then outstanding, in
immediately available funds, an amount equal to the Maturity Date Redemption
Price. The Company shall be deemed to have elected a Maturity Date Mandatory
Redemption unless it delivers written notice to each holder of Preferred Shares
at least 30 Business Days prior to the Maturity Date of its election to effect a
Maturity Date Mandatory Conversion. If the Company elects a Maturity Date
Mandatory Redemption, then on the Maturity Date the Company shall pay to each
holder of Preferred Shares outstanding on the Maturity Date, by wire transfer of
immediately available funds, an amount per Preferred Share equal to the Maturity
Date Redemption Price. All holders of Preferred Shares shall thereupon surrender
all Preferred Stock Certificates, duly endorsed for cancellation, to the
Company, provided that the Company has complied with its obligations under this
Section 2(d)(vii). Notwithstanding the foregoing, if the Company has elected a
Maturity Date Mandatory Conversion, then, if applicable, the Maturity Date shall
be extended for any Preferred Shares for as long as the conversion of such
Preferred Shares would violate the provisions of Section 5; provided that the
holder of such Preferred Shares shall use its reasonable best efforts after May
13, 2002 to convert sell shares of Common Stock in such a manner so as to permit
the conversion of all Preferred Shares held by such holder as soon as
practicable after such date; provided, further, that Dividends shall stop
accruing on the Preferred Shares after May 13, 2002.
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(viii) Book-Entry. Notwithstanding anything to the
contrary set forth herein, upon conversion of Preferred Shares in accordance
with the terms hereof, the holder thereof shall not be required to physically
surrender the certificate representing the Preferred Shares to the Company
unless the full number of Preferred Shares represented by the certificate are
being converted. The holder and the Company shall maintain records showing the
number of Preferred Shares so converted and the dates of such conversions or
shall use such other method, reasonably satisfactory to the holder and the
Company, so as not to require physical surrender of the certificate representing
the Preferred Shares upon each such conversion. In the event of any dispute or
discrepancy, such records of the Company shall be controlling and determinative
in the absence of manifest error. Notwithstanding the foregoing, if Preferred
Shares represented by a certificate are converted as aforesaid, the holder may
not transfer the certificate representing the Preferred Shares unless the holder
first physically surrenders the certificate representing the Preferred Shares to
the Company, whereupon the Company will forthwith issue and deliver upon the
order of the holder a new certificate of like tenor, registered as the holder
may request, representing in the aggregate the remaining number of Preferred
Shares represented by such certificate. The holder and any assignee, by
acceptance of a certificate, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of any Preferred Shares, the
number of Preferred Shares represented by such certificate may be less than the
number of Preferred Shares stated of the face thereof. Each certificate for
Preferred Shares shall bear the following legend:
ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE
TERMS OF THE COMPANY'S CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF THE PREFERRED SHARES REPRESENTED BY THIS
CERTIFICATE, INCLUDING SECTION 2(d)(viii) THEREOF. THE NUMBER OF
PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN
THE NUMBER OF PREFERRED SHARES STATED ON THE FACE HEREOF PURSUANT
TO SECTION 2(d)(viii) OF THE CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS.
(e) Taxes. The Company shall pay any and all taxes that
may be payable with respect to the issuance and delivery of Common Stock
upon the conversion of Preferred Shares.
(f) Intentionally omitted.
(g) Adjustments to Conversion Price -- Dilution and Other
Events. The Conversion Price will be subject to adjustment from time to
time as provided in this Section 2(g).
(i) Adjustment of Fixed Conversion Price upon
Issuance of Common Stock. If and whenever on or after May 13, 1999, the Company
issues or sells, or in
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accordance with this Section 2(g) is deemed to have issued or sold, any shares
of Common Stock (including the issuance or sale of shares of Common Stock owned
or held by or for the account of the Company, but excluding shares of Common
Stock deemed to have been issued by the Company in connection with an Approved
Stock Plan (as defined below) or Excluded Securities (as defined below) or upon
conversion of the Preferred Shares or exercise of the Series A Warrants) for a
consideration per share less than a price (the "APPLICABLE PRICE") equal to the
Closing Sale Price of the Common Stock on the date of such issue or sale, then
immediately after such issue or sale, the Fixed Conversion Price that would be
in effect if Preferred Shares were outstanding at such time shall be reduced to
an amount equal to the product of (x) the Fixed Conversion Price, and (y) the
quotient of (1) the sum of (I) the product of the Applicable Price multiplied by
the number of shares of Common Stock Deemed Outstanding (as defined below)
immediately prior to such issue or sale and (II) the consideration, if any,
received by the Company upon such issue or sale, divided by (2) the product of
(I) the Applicable Price multiplied by (II) the number of shares of Common Stock
Deemed Outstanding immediately after such issue or sale. Notwithstanding
anything to the contrary in this Section 2(g)(i), no adjustment to the Fixed
Conversion Price shall be required to be made pursuant to this Section 2(g)(i)
unless such adjustment would result in a decrease in the Fixed Conversion Price
of at least $0.32; provided that any adjustments which by reason of this
sentence are not required to be made at a certain time shall be carried forward
and taken into account and applied in any subsequent adjustment. For purposes of
determining the adjusted Fixed Conversion Price under this Section 2(g)(i), the
following shall be applicable:
(A) Issuance of Options. If the Company in
any manner grants or sells any Options and the lowest price per share for which
one share of Common Stock is issuable upon the exercise of any such Option or
upon conversion or exchange of any Convertible Securities issuable upon exercise
of such Option is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for such price per
share. For purposes of this Section 2(g)(i)(A), the "lowest price per share for
which one share of Common Stock is issuable upon the exercise of any such Option
or upon conversion or exchange of any Convertible Securities issuable upon
exercise of such Option" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one share of Common Stock upon granting or sale of the Option, upon exercise of
the Option and upon conversion or exchange of any Convertible Security issuable
upon exercise of such Option. No further adjustment of the Fixed Conversion
Price shall be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities. Notwithstanding the foregoing, no adjustment shall be made pursuant
to this Section 2(g)(i)(A) to the extent that such adjustment is based solely on
the fact that the Convertible Securities issuable upon exercise of such Option
are convertible into or exchangeable for Common Stock at a price which varies
with the market price of the Common Stock.
(B) Issuance of Convertible Securities. If
the Company in any manner issues or sells any Convertible Securities and the
lowest price per share for which one share of Common Stock is issuable upon such
conversion or exchange thereof is less than the
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Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
issuance of sale of such Convertible Securities for such price per share. For
the purposes of this Section 2(g)(i)(B), the "price per share for which one
share of Common Stock is issuable upon such conversion or exchange" shall be
equal to the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common Stock upon the
issuance or sale of the Convertible Security and upon the conversion or exchange
of such Convertible Security. No further adjustment of the Fixed Conversion
Price shall be made upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustment of the Fixed Conversion Price had been or are to be made
pursuant to other provisions of this Section 2(g)(i), no further adjustment of
the Fixed Conversion Price shall be made by reason of such issue or sale.
Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 2(g)(i)(B) to the extent that such adjustment is based solely on the
fact that such Convertible Securities are convertible into or exchangeable for
Common Stock at a price which varies with the market price of the Common Stock.
(C) Change in Option Price or Rate of
Conversion. If the purchase price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion or exchange of any
Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock changes at any time, the Fixed
Conversion Price in effect at the time of such change shall be adjusted to the
Fixed Conversion Price which would have been in effect at such time had such
Options or Convertible Securities provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold. For purposes of this Section 2(g)(i)(C),
if the terms of any Option or Convertible Security that was outstanding as of
the date of issuance of the Preferred Shares are changed in the manner described
in the immediately preceding sentence, then such Option or Convertible Security
and the Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such change. No
adjustment shall be made if such adjustment would result in an increase of the
Fixed Conversion Price then in effect.
(D) Calculation of Consideration Received.
In case any Option is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated transaction in
which no specific consideration is allocated to such Options by the parties
thereto, the Options will be deemed to have been issued for a consideration of
$.01. If any Common Stock, Options or Convertible Securities are issued or sold
or deemed to have been issued or sold for cash, the consideration received
therefor will be deemed to be the net amount received by the Company therefor.
If any Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other than cash
received by the Company will be the fair value of such consideration, except
where such consideration consists of securities, in which case the amount of
consideration received by the Company will be the Market Price of such
securities on the date of receipt. If any Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount
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of consideration therefor will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such Common Stock, Options or Convertible Securities, as the case may be. The
fair value of any consideration other than cash or securities will be determined
jointly by the Company and the holders of a majority of the Preferred Shares
then outstanding. If such parties are unable to reach agreement within 10 days
after the occurrence of an event requiring valuation (the "VALUATION EVENT"),
the fair value of such consideration will be determined within five Business
Days after the tenth (10th) day following the Valuation Event by an independent,
reputable appraiser jointly selected by the Company and the holders of a
majority of the Preferred Shares then outstanding. The determination of such
appraiser shall be deemed binding upon all parties absent manifest error and the
fees and expenses of such appraiser shall be borne by the Company.
(E) Record Date. If the Company takes a
record of the holders of Common Stock for the purpose of entitling them (1) to
receive a dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (2) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(F) Certain Definitions. For purposes of
this Section 2(g)(i), the following terms have the respective meanings set forth
below:
(I) "APPROVED STOCK PLAN" shall mean
any employee benefit plan which has been approved, or after the Issuance Date is
approved, by the Board of Directors of the Company, pursuant to which the
Company's securities may be issued to any employee, officer, director or
consultant for services provided to the Company.
(II) "COMMON STOCK DEEMED
OUTSTANDING" means, at any given time, the number of shares of Common Stock
actually outstanding at such time, plus the number of shares of Common Stock
issuable upon conversion or exercise of outstanding Options and Convertible
Securities regardless of whether the Options or Convertible Securities are
actually exercisable at such time, but excluding any shares of Common Stock
owned or held by or for the account of the Company.
(III) "OPTIONS" means any rights,
warrants or options to subscribe for or purchase Common Stock or Convertible
Securities.
(IV) "CONVERTIBLE SECURITIES" means
any stock or securities (other than Options) directly or indirectly convertible
into or exchangeable for Common Stock.
(V) "EXCLUDED SECURITIES" means any
of the following (a) any issuance by the Company of securities in connection
with a strategic partnership or joint venture (the primary purpose of which is
not to raise equity capital), (b) shares of
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Common Stock issued by the Company in a firm commitment, underwritten public
offering and (c) any issuance by the Company of securities as consideration for
a merger or consolidation or the acquisition of a business, product, license or
other assets of another person or entity.
(ii) Adjustment of Fixed Conversion Price upon
Subdivision or Combination of Common Stock. If the Company at any time after May
13, 2000 subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Fixed Conversion Price that would be in effect if
Preferred Shares were outstanding immediately prior to such subdivision will be
proportionately reduced. If the Company at any time after May 13, 2000 combines
(by combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Fixed
Conversion Price that would be in effect if Preferred Shares were outstanding
immediately prior to such combination will be proportionately increased.
(iii) Other Events. If any event occurs of the type
contemplated by the provisions of this Section 2(g) but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the holders of the Preferred
Shares; provided that no such adjustment will increase the Conversion Price or
the Initial Fixed Conversion Price as otherwise determined pursuant to this
Section 2(g).
(v) Notices.
(A) Promptly after any adjustment of the
Conversion Price, the Company will give written notice thereof to each holder of
Preferred Shares, setting forth in reasonable detail, and certifying, the
calculation of such adjustment.
(B) The Company will give written notice to
each holder of Preferred Shares at least ten (10) days prior to the date on
which the Company closes its books or takes a record (I) with respect to any
dividend or distribution upon the Common Stock, (II) with respect to any pro
rata subscription offer to holders of Common Stock or (III) for determining
rights to vote with respect to any Organic Change, dissolution or liquidation,
provided that such information shall be made known to the public prior to or in
conjunction with such notice being provided to such holder; provided that if
such information has not been made known to the public and in the good faith
opinion of the Board of Directors of the Company it is not in the best interest
of the Company to disclose such information, then the Company shall not be
required to give the notice provided for in this Section 2(g)(v)(B) until the
earlier of the date on which the Company publicly releases such information and
the date on which the Board of Directors no longer believes that in the good
faith opinion of the Board of Directors such information should not be
disclosed.
(C) The Company will also give written
notice to each holder of Preferred Shares at least ten (10) days prior to the
date on which any Organic Change,
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dissolution or liquidation will take place, provided that such information shall
be made known to the public prior to or in conjunction with such notice being
provided to such holder; provided that if such information has not been made
known to the public and in the good faith opinion of the Board of Directors of
the Company it is not in the best interest of the Company to disclose such
information, then the Company shall not be required to give the notice provided
for in this Section 2(g)(v)(C) until the earlier of the date on which the
Company publicly releases such information and the date on which the Board of
Directors no longer believes that in the good faith opinion of the Board of
Directors such information should not be disclosed.
(3) Redemption at Option of Holders.
(a) Redemption Option Upon Triggering Event. In addition
to all other rights of the holders of Preferred Shares contained herein,
after a Triggering Event (as defined below), each holder of Preferred
Shares shall have the right, at such holder's option, to require the
Company to redeem all or a portion of such holder's Preferred Shares at
a price per Preferred Share equal to (I) in the case of a Triggering
Event under subparagraphs (i) or (ii) of Section 3(b), the sum of (w)
125% of the Stated Value, plus (x) the Additional Amount for such
Preferred Share, and (II) in the case of a Triggering Event under
subparagraphs (iii) or (iv), the greater of (i) the sum of (y) 125% of
the Stated Value, plus (z) the Additional Amount for such Preferred
Share, and (ii) the product of (A) the Conversion Rate in effect at such
time as such holder delivers a Notice of Redemption at Option of Buyer
(as defined below) and (B) the Closing Bid Price of the Common Stock on
the date immediately preceding such Triggering Event on which the
Principal Market, or the market or exchange where the Common Stock is
then traded, is open for trading ("REDEMPTION PRICE").
(b) "Triggering Event". A "TRIGGERING EVENT" shall be
deemed to have occurred at such time as any of the following events:
(i) prior to May 13, 2001, on any day there shall
not be available adequate current public information with respect to the Company
as determined in accordance with Rule 144(c) under the Securities Act of 1933,
as amended, or any successor rule thereto;
(ii) the suspension from trading or failure of the
Common Stock to be listed on the Nasdaq National Market, The Nasdaq SmallCap
Market, The New York Stock Exchange, Inc. or The American Stock Exchange, Inc.
for a period of 10 consecutive Business Days or for more than an aggregate of 20
Business Days in any 365-day period;
(iii) a Conversion Failure (as defined in Section
2(d)(v)(C)), provided that such Conversion Failure shall only constitute a
Triggering Event with respect to the Preferred Shares submitted for conversion;
or
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(iv) upon the Company's receipt of a Conversion
Notice the Company shall not be obligated to issue shares of Common Stock upon
such conversion due to the provisions of Section 16.
(c) Mechanics of Redemption at Option of Buyer. Within one
(1) Business Day after the occurrence of a Triggering Event, the Company
shall deliver written notice thereof via facsimile ("NOTICE OF
TRIGGERING EVENT") to each holder of Preferred Shares. At any time (i)
after the earlier of a holder's receipt of a Notice of Triggering Event
and such holder becoming aware of a Triggering Event, but (ii) prior to
the later of (A) the date which is 15 days after such holder's receipt
of the Notice of Triggering Event and (B) such holder's receipt of
written notice from the Company that such Triggering Event has been
cured, any holder of Preferred Shares then outstanding may require the
Company to redeem all of the Preferred Shares by delivering written
notice thereof via facsimile ("NOTICE OF REDEMPTION AT OPTION OF BUYER")
to the Company, which Notice of Redemption at Option of Buyer shall
indicate (i) the number of Preferred Shares that such holder is electing
to redeem and (ii) the applicable Redemption Price, as calculated
pursuant to Section 3(a) above.
(d) Payment of Redemption Price. Upon the Company's
receipt of a Notice(s) of Redemption at Option of Buyer from any holder
of Preferred Shares, the Company shall immediately notify each holder of
Preferred Shares by facsimile of the Company's receipt of such notices
and each holder which has sent such a notice shall promptly submit to
the Transfer Agent such holder's Preferred Stock Certificates which such
holder has elected to have redeemed. The Company shall deliver the
applicable Redemption Price to such holder within 20 Business Days after
the Company's receipt of a Notice of Redemption at Option of Buyer;
provided that a holder's Preferred Stock Certificates shall have been so
delivered to the Transfer Agent. If the Company is unable to redeem all
of the Preferred Shares submitted for redemption, the Company shall (i)
redeem a pro rata amount from each holder of Preferred Shares based on
the number of Preferred Shares submitted for redemption by such holder
relative to the total number of Preferred Shares submitted for
redemption by all holders of Preferred Shares and (ii) in addition to
any remedy such holder of Preferred Shares may have under this
Certificate of Designations and the Exchange Agreement, pay to each
holder interest at the rate of 1.5% per month (prorated for partial
months) in respect of each unredeemed Preferred Share until paid in
full.
(e) Void Redemption. In the event that the Company does
not pay the Redemption Price within the time period set forth in Section
3(d), at any time thereafter and until the Company pays such unpaid
applicable Redemption Price in full, a holder of Preferred Shares shall
have the option (the "VOID OPTIONAL REDEMPTION OPTION") to, in lieu of
redemption, require the Company to promptly return to such holder any or
all of the Preferred Shares that were submitted for redemption by such
holder under this Section 3 and for which the applicable Redemption
Price (together with any interest thereon) has not been paid, by sending
written notice thereof to the Company via facsimile (the "VOID OPTIONAL
REDEMPTION NOTICE"). Upon the Company's receipt of such Void Optional
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Redemption Notice, (i) the Notice of Redemption at Option of Buyer shall
be null and void with respect to those Preferred Shares subject to the
Void Optional Redemption Notice and (ii) the Company shall immediately
return any Preferred Shares subject to the Void Optional Redemption
Notice.
(f) Disputes; Miscellaneous. In the event of a dispute as
to the determination of the Closing Bid Price or the arithmetic
calculation of the Redemption Price, such dispute shall be resolved
pursuant to Section 2(d)(iii) above with the term "Closing Bid Price"
being substituted for the term "Market Price" and the term "Redemption
Price" being substituted for the term "Conversion Rate". A holder's
delivery of a Void Optional Redemption Notice and exercise of its rights
following such notice shall not effect the Company's obligations to make
any payments which have accrued prior to the date of such notice. In the
event of a redemption pursuant to this Section 3 of less than all of the
Preferred Shares represented by a particular Preferred Stock
Certificate, the Company shall promptly cause to be issued and delivered
to the holder of such Preferred Shares a preferred stock certificate
representing the remaining Preferred Shares which have not been
redeemed.
(4) Other Rights of Holders
(a) Reorganization, Reclassification, Consolidation,
Merger or Sale. Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
to another Person or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as "ORGANIC CHANGE." Prior to
the consummation of any (i) sale of all or substantially all of the Company's
assets to an acquiring Person or (ii) other Organic Change following which the
Company is not a surviving entity, the Company will secure from the Person
purchasing such assets or the successor resulting from such Organic Change (in
each case, the "ACQUIRING ENTITY") a written agreement (in form and substance
reasonably satisfactory to the holders of a majority of the Preferred Shares
then outstanding) to deliver to each holder of Preferred Shares in exchange for
such shares, a security of the Acquiring Entity evidenced by a written
instrument substantially similar in form and substance to the Preferred Shares,
including, without limitation, having a stated value and liquidation preference
equal to the Stated Value and the Liquidation Preference of the Preferred Shares
held by such holder, and reasonably satisfactory to the holders of a majority of
the Preferred Shares then outstanding. Prior to the consummation of any other
Organic Change, the Company shall make appropriate provision (in form and
substance reasonably satisfactory to the holders of a majority of the Preferred
Shares then outstanding) to insure that each of the holders of the Preferred
Shares will thereafter have the right to acquire and receive in lieu of or in
addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the conversion of such holder's
Preferred Shares such shares of stock, securities or assets that would have been
issued or payable in such Organic Change with respect to or in exchange for the
number of shares of Common Stock which would have been acquirable and receivable
upon the conversion of such
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holder's Preferred Shares as of the date of such Organic Change (without taking
into account any limitations or restrictions on the convertibility of the
Preferred Shares).
(b) Optional Redemption Upon Major Corporate Event. In
addition to the rights of the holders of Preferred Shares under Section 4(a),
upon a Major Corporate Event (as defined below) of the Company each holder of
Preferred Shares shall have the right, at such holder's option, to require the
Company to redeem all or a portion of such holder's Preferred Shares at a price
per Preferred Share equal to the sum of (i) 125% of the Stated Value, plus (ii)
the Additional Amount for such Preferred Share ("MAJOR CORPORATE EVENT
REDEMPTION PRICE"). No sooner than 30 days nor later than five (5) days prior to
the consummation of a Major Corporate Event, but not prior to the public
announcement of such Major Corporate Event, the Company shall deliver written
notice thereof via facsimile (a "NOTICE OF MAJOR CORPORATE EVENT") to each
holder of Preferred Shares. At any time during the period beginning after
receipt of a Notice of Major Corporate Event (or, in the event a Notice of Major
Corporate Event is not delivered at least five (5) days prior to a Major
Corporate Event, at any time on or after the date which is five (5) days prior
to a Major Corporate Event) and ending on the date of such Major Corporate
Event, any holder of the Preferred Shares then outstanding may require the
Company to redeem all or a portion of the holder's Preferred Shares then
outstanding by delivering written notice thereof via facsimile (a "NOTICE OF
REDEMPTION UPON MAJOR CORPORATE EVENT") to the Company, which Notice of
Redemption Upon Major Corporate Event shall indicate (i) the number of Preferred
Shares that such holder is submitting for redemption, and (ii) the applicable
Major Corporate Event Redemption Price, as calculated pursuant to this Section
4(b). Upon the Company's receipt of a Notice(s) of Redemption Upon Major
Corporate Event from any holder of Preferred Shares, the Company shall promptly,
but in no event later than one (1) Business Day following such receipt, notify
each holder of Preferred Shares by facsimile of the Company's receipt of such
Notice(s) of Redemption Upon Major Corporate Event. The Company shall deliver
the applicable Major Corporate Event Redemption Price simultaneous with the
consummation of the Major Corporate Event; provided that, if required by Section
2(d)(viii), a holder's Preferred Stock Certificates shall have been so delivered
to the Company. For purposes of this Section 4(b), "MAJOR CORPORATE EVENT" means
(i) the consolidation, merger or other business combination of the Company with
or into another Person (other than (A) a consolidation, merger or other business
combination in which holders of the Company's voting power immediately prior to
the transaction continue after the transaction to hold, directly or indirectly,
the voting power of the surviving entity or entities necessary to elect a
majority of the members of the board of directors (or their equivalent if other
than a corporation) of such entity or entities, or (B) pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company), (ii) the sale or transfer of all or substantially
all of the Company's assets, or (iii) a purchase, tender or exchange offer made
to and accepted by the holders of more than the 50% of the outstanding shares of
Common Stock.
(5) Limitations on Conversion. The Company shall not effect any
conversion of Preferred Shares and no holder of Preferred Shares shall have the
right to convert any Preferred Shares pursuant to Section 2(b) to the extent
that after giving effect to such conversion such Person (together with such
Person's affiliates) would have acquired, through conversion of Preferred Shares
or otherwise, beneficial ownership of a number of shares of Common Stock
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during the 60-day period ending on and including such Conversion Date (the "60
DAY PERIOD"), that, when added to the number of shares of Common Stock
beneficially owned by such Person (together with such Person's affiliates) at
the beginning of the 60 Day Period, exceeds 10.00% of the number of shares of
Common Stock outstanding immediately after giving effect to such conversion. For
purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by a Person and its affiliates shall include the number of
shares of Common Stock issuable upon conversion of the Preferred Shares with
respect to which the determination of such sentence is being made, but shall
exclude the number of shares of Common Stock which would be issuable upon (i)
conversion of the remaining, nonconverted Preferred Shares beneficially owned by
such Person and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
(including, without limitation, warrants) subject to a limitation on conversion
or exercise analogous to the limitation contained herein beneficially owned by
such Person and its affiliates. Except as set forth in the preceding sentence,
for purposes of this Section 5(a), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Section 5, in determining the number of
outstanding shares of Common Stock a holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-Q or Form 10-K, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its
transfer agent setting forth the number of shares of Common Stock outstanding.
For any reason at any time, upon the written or oral request of any holder, the
Company shall within two (2) Business Days confirm orally and in writing to any
such holder the number of shares Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion of Preferred Shares by such holder since the date as of
which such number of outstanding shares of Common Stock was reported.
(6) Conversion at the Company's Election. At any time after June
13, 2001, the Company shall have the right, in its sole discretion, to require
that any or all of such outstanding Preferred Shares be converted ("CONVERSION
AT COMPANY'S ELECTION") at the Conversion Rate; provided that the Conditions to
Conversion at the Company's Election (as set forth below) are satisfied. The
Company shall exercise its right to Conversion at Company's Election by
providing each holder of Preferred Shares written notice by facsimile ("NOTICE
OF CONVERSION AT COMPANY'S ELECTION") by 5:00 p.m., Central Time, on the
Business Day selected by the Company for conversion ("COMPANY'S ELECTION
CONVERSION DATE"). If the Company elects to require conversion of some, but not
all, of such Preferred Shares, the Company shall convert an amount from each
holder of Preferred Shares equal to such holder's pro rata amount (based on the
number of such Preferred Shares held by such holder relative to the number of
such Preferred Shares outstanding on the Company's Election Conversion Date) of
all Preferred Shares the Company is requiring to be converted. The Notice of
Conversion at Company's Election shall indicate (x) the number of Preferred
Shares the Company has selected for conversion, (y) confirmation of the
Company's Election Conversion Date, which date shall be the Business Day on
which each holder received such notice prior to 5:00 p.m., Central Time, on such
date, and (z) each holder's pro rata share of outstanding Preferred Shares. All
Preferred Shares selected for conversion in accordance with the provision of
this Section 6 shall be converted as
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of the Company's Election Conversion Date in accordance with Section 2 as if the
holders of such Preferred Shares selected by the Company to be converted had
given the Conversion Notice on the Company's Election Conversion Date. All
holders of Preferred Shares shall thereupon and within two Business Days after
the Company's Election Conversion Date surrender all Preferred Stock
Certificates selected for conversion, duly endorsed for cancellation, to the
Company. "CONDITIONS TO CONVERSION AT THE COMPANY'S ELECTION" means the
following conditions: (i) on each day during the period beginning 20 days prior
to the Company's Election Conversion Date and ending on and including the
Company's Election Conversion Date, the Common Stock is designated for quotation
on the Nasdaq National Market or The Nasdaq SmallCap Market or listed on The New
York Stock Exchange, Inc. and is not suspended from trading; (ii) on each day
during the 20 consecutive Business Days ending on and including the Company's
Election Conversion Date, the Closing Bid Price of the Common Stock is at least
$42.255 (subject to adjustment for stock splits, stock dividends, stock
combinations and other similar transactions after May 13, 1999); and (iii) the
Company has satisfied its obligations in all material respects and is not in
default in any material respect under this Certificate of Designations, the
Exchange Agreement and the Series A Warrants. Notwithstanding the above, any
holder of Preferred Shares may convert such shares (including Preferred Shares
selected for conversion) into Common Stock pursuant to Section 2(b) on or prior
to the date immediately preceding the Company's Election Conversion Date.
(7) Redemption at the Company's Election Upon Change of Control. At any
time or times on or after the date the Company publicly discloses a Change of
Control Transaction (as defined below) after the Issuance Date, the Company
shall have the right, in its sole discretion, to require that all of the
outstanding Preferred Shares be redeemed ("REDEMPTION AT COMPANY'S ELECTION") at
a price per Preferred Share equal to the sum of (a) 125% of the Stated Value,
plus (b) the Additional Amount for such Preferred Share ("COMPANY'S ELECTION
REDEMPTION PRICE"); provided that the Conditions to Redemption at the Company's
Election (as set forth below) are satisfied. The Company shall exercise its
right to Redemption at Company's Election by providing each holder of Preferred
Shares written notice ("NOTICE OF REDEMPTION AT COMPANY'S ELECTION") after the
public disclosure of a Change of Control Transaction and at least 20 Business
Days prior to the date of consummation of the Change of Control Transaction
("COMPANY'S ELECTION REDEMPTION DATE"). The Notice of Redemption at Company's
Election shall indicate the anticipated Company's Election Redemption Date. If
the Company has exercised its right of Redemption at Company's Election and the
conditions to such Redemption at Company's Election have been satisfied, then
all Preferred Shares outstanding at the time of the consummation of the Change
of Control Transaction shall be redeemed as of the Company's Election Redemption
Date by payment by the Company to each holder of Preferred Shares of the
Company's Election Redemption Price concurrent with the closing of the Change of
Control Transaction. All holders of Preferred Shares shall thereupon and within
two (2) Business Days after the Company's Election Redemption Date, or such
earlier date as the Company and each holder of Preferred Shares mutually agree,
surrender all outstanding Preferred Stock Certificates, duly endorsed for
cancellation, to the Company. If the Company fails to pay the full Company's
Election Redemption Price with respect to any Preferred Shares concurrently with
the closing of the Change of Control Transaction, then the Redemption at
Company's Election shall be null and void
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with respect to such Preferred Shares and the holder of such Preferred Shares
shall be entitled to all the rights of a holder of outstanding Preferred Shares
set forth in this Certificate of Designations. "CONDITIONS TO REDEMPTION AT THE
COMPANY'S ELECTION" means the following conditions: the Company has satisfied
its obligations in all material respects and is not in default in any material
respect under this Certificate of Designations, the Exchange Agreement and the
Series A Warrants. Notwithstanding the above, any holder of Preferred Shares may
convert such shares (including Preferred Shares selected for redemption) into
Common Stock pursuant to Section 2(a) on or prior to the date immediately
preceding the Company's Election Redemption Date. For purposes of this Section
7, "CHANGE OF CONTROL TRANSACTION" means the consolidation, merger or other
business combination of the Company with or into another Person (other than (A)
a consolidation, merger or other business combination in which holders of the
Company's voting power immediately prior to the transaction continue after the
transaction to hold, directly or indirectly, the voting power of the surviving
entity or entities necessary to elect a majority of the members of the board of
directors (or their equivalent if other than a corporation) of such entity or
entities or (B) pursuant to a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company).
(8) Redemption at the Company's Election Upon a Qualified Offering. At
any time after June 13, 2001, the Company shall have the right, in its sole
discretion, to require that all of the outstanding Preferred Shares be redeemed
("COMPANY'S OFFERING REDEMPTION") concurrent with the closing of a Qualified
Offering (as defined below); provided that the Conditions to a Company's
Offering Redemption (as set forth below) are satisfied. The redemption price per
Preferred Share upon a Company's Offering Redemption shall be equal to the
Company's Offering Redemption Price (as defined below). The Company shall
exercise its right to Company's Offering Redemption by providing each holder of
Preferred Shares written notice ("NOTICE OF COMPANY'S OFFERING REDEMPTION") at
least 20 days prior to the Company's Offering Redemption Date, but in no event
prior to the filing of the registration statement for the Qualified Public
Offering (as defined below), in the case of a Qualified Public Offering, or the
public announcement of the Qualified Private Placement (as defined below), in
the case of a Qualified Private Placement. The Notice of Company's Offering
Redemption shall indicate the anticipated Company's Public Redemption Date and
the name of the managing underwriters of the proposed Qualified Public Offering
or placement agent, if any, of the Qualified Private Placement, as the case may
be. The date of the consummation of the Company's Offering Redemption (the
"COMPANY'S OFFERING REDEMPTION DATE") shall be the date of the closing of the
Qualified Offering. If the Company has exercised its right of Company's Offering
Redemption and the conditions to such Company's Offering Redemption have been
satisfied, then all Preferred Shares outstanding at the time of the consummation
of the Qualified Offering shall be redeemed as of the Company's Offering
Redemption Date by payment by the Company to each holder of Preferred Shares
then outstanding of the Company's Offering Redemption Price concurrent with the
closing of the Qualified Offering. All holders of Preferred Shares shall
thereupon and within two (2) Business Days after the Company's Offering
Redemption Date, or such earlier date as the Company and each holder of
Preferred Shares mutually agree, surrender all outstanding Preferred Stock
Certificates, duly endorsed for cancellation, to the Company. If the Company
fails to pay the full Company's Offering Redemption Price with respect to any
Preferred Shares concurrently
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with the closing of the Qualified Offering, then the Company's Offering
Redemption shall be null and void with respect to such Preferred Shares and the
holder of such Preferred Shares shall be entitled to all the rights of a holder
of outstanding Preferred Shares set forth in this Certificate of Designations.
"CONDITIONS TO COMPANY'S OFFERING REDEMPTION" means the following conditions:
(i) on each day during the period beginning 30 days prior to the date of the
Company's Notice of Company's Offering Redemption and ending on and including
the Company's Offering Redemption Date, the Common Stock is designated for
quotation on the Nasdaq National Market or The Nasdaq SmallCap Market or listed
on The New York Stock Exchange, Inc. and is not suspended from trading; and (ii)
the Company has satisfied its obligations in all material respects and is not in
default in any material respect under this Certificate of Designations, the
Exchange Agreement and the Series A Warrants. Notwithstanding the above, any
holder of Preferred Shares may convert such shares (including Preferred Shares
selected for redemption) into Common Stock pursuant to Section 2(a) on or prior
to the date immediately preceding the Company's Offering Redemption Date. For
purposes of this Section 8, "QUALIFIED OFFERING" means a Qualified Public
Offering or a Qualified Private Placement, as applicable. For purposes of this
Section 8, "QUALIFIED PUBLIC OFFERING" means a firm commitment, underwritten
public offering of Common Stock by the Company which (a) is being underwritten
by one or more the underwriters agreed to in writing by the Company and the
purchasers of the Preferred Shares on May 13, 1999 and (b) is an offering which
generates aggregate gross proceeds to the Company (as reflected in the
preliminary prospectus and the final prospectus for such offering) of at least
$25,000,000. For purposes of this Section 8, "QUALIFIED PRIVATE PLACEMENT" means
a private placement by the Company of Common Stock or securities convertible
into or exercisable for Common Stock which generates aggregate gross proceeds to
the Company (as reflected in the private placement memorandum or other offering
circular, if any, for such private placement) of at least $25,000,000. For
purposes of this Section 8, "COMPANY'S OFFERING REDEMPTION PRICE" means the
Company's Public Offering Redemption Price, in the case of a Qualified Public
Offering, or the Company's Private Placement Redemption Price, in the case of a
Qualified Private Placement (each as defined below). For purposes of this
Section 8, "COMPANY'S PUBLIC OFFERING REDEMPTION PRICE" means that price equal
to the sum of (a) the Stated Value, plus (b) the product of (i) the Stated
Value, multiplied by (ii) the greater of (A) 0.15 and (B) the product of (I)
0.30, multiplied by (I) the quotient of (x) the number of days during the period
beginning on, but excluding, the May 13, 1999 and ending on and including the
Company's Public Offering Redemption Date (as defined below), divided by (y)
365, plus (c) the Additional Amount for such Preferred Share on the Company's
Offering Redemption Date. For purposes of this Section 8, "COMPANY'S PRIVATE
PLACEMENT REDEMPTION PRICE" means the price equal to the sum of (a) the Stated
Value, plus (b) the product of (i) the Stated Value, multiplied by (ii) the
Company's Redemption Percentage (as defined below), plus (c) the Additional
Amount for such Preferred Share on the Company's Offering Redemption Date. For
purposes of this Section 8, "COMPANY'S REDEMPTION PERCENTAGE" means (A) 0.00, if
the Closing Bid Price of the Common Stock on the date of the receipt by each
holder of Preferred Shares of the Notice of Redemption at Company's Election is
less than $7.50 (subject to adjustment for stock splits, stock dividends, stock
combinations and other similar transactions after May 13, 1999), (B) 0.10, if
the Closing Bid Price of the Common Stock on the date of the receipt by each
holder of Preferred Shares of the Notice of Redemption at Company's Election is
greater than or equal to $7.50 and less than
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$10.00 (each such price subject to adjustment for stock splits, stock dividends,
stock combinations and other similar transactions after May 13, 1999), (C) 0.25,
if the Closing Bid Price of the Common Stock on the date of the receipt by each
holder of Preferred Shares of the Notice of Redemption at Company's Election is
greater than or equal to $10.00 and less than $15.00 (each such price subject to
adjustment for stock splits, stock dividends, stock combinations and other
similar transactions after May 13, 1999), and (D) 1.0, if the Closing Bid Price
of the Common Stock on the date of the receipt by each holder of Preferred
Shares of the Notice of Redemption at Company's Election is greater than or
equal to $15.00 (subject to adjustment for stock splits, stock dividends, stock
combinations and other similar transactions after May 13, 1999).
(9) Purchase Rights. If at any time the Company grants, issues or
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "PURCHASE RIGHTS"), then the holders of Preferred Shares then
outstanding will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of Common Stock acquirable
upon complete conversion of the Preferred Shares (without taking into account
any limitations or restrictions on the convertibility of the Preferred Shares)
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.
(10) Reservation of Shares; Authorized Shares.
(a) Reservation. The Company shall, so long as any of the
Preferred Shares are outstanding, take all action necessary to reserve
and keep available out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the Preferred
Shares, such number of shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all of the Preferred Shares
then outstanding (without regard to any limitations on conversions) (the
"REQUIRED RESERVE AMOUNT). The initial number of shares of Common Stock
reserved for conversions of the Preferred Shares and each increase in
the number of shares so reserved shall be allocated pro rata among the
holders of the Preferred Shares based on the number of Preferred Shares
held by each holder at the time of issuance of the Preferred Shares or
increase in the number of reserved shares, as the case may be. In the
event a holder shall sell or otherwise transfer any of such holder's
Preferred Shares, each transferee shall be allocated a pro rata portion
of the number of reserved shares of Common Stock reserved for such
transferor. Any shares of Common Stock reserved and allocated to any
Person which ceases to hold any Preferred Shares shall be allocated to
the remaining holders of Preferred Shares, pro rata based on the number
of Preferred Shares then held by such holders.
(b) Insufficient Authorized Shares. If at any time while
any of the Preferred Shares remain outstanding the Company does not have
a sufficient number of authorized and unreserved shares of Common Stock
to satisfy its obligation to reserve for issuance upon conversion of the
Preferred Shares at least a number of shares of Common
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Stock equal to the Required Reserve Amount (an "AUTHORIZED SHARE
FAILURE"), then the Company shall immediately take all action necessary
to increase the Company's authorized shares of Common Stock to an amount
sufficient to allow the Company to reserve the Required Reserve Amount
for the Preferred Shares then outstanding. Without limiting the
generality of the foregoing sentence, as soon as practicable after the
date of the occurrence of an Authorized Share Failure, but in no event
later than 75 days after the occurrence of such Authorized Share
Failure, the Company shall hold a meeting of its stockholders for the
authorization of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the Company shall provide
each stockholder with a proxy statement and shall use its best efforts
to solicit its stockholders' approval of such increase in authorized
shares of Common Stock and to cause its board of directors to recommend
to the stockholders that they approve such proposal.
(11) Voting Rights. Holders of Preferred Shares shall have no
voting rights, except as required by law, including but not limited to the
General Corporation Law of the State of Delaware, and as expressly provided in
this Certificate of Designations.
(12) Liquidation, Dissolution, Winding-Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the holders of the Preferred Shares shall be entitled to receive in cash out of
the assets of the Company, whether from capital or from earnings available for
distribution to its stockholders (the "LIQUIDATION FUNDS"), before any amount
shall be paid to the holders of any of the capital stock of the Company of any
class junior in rank to the Preferred Shares in respect of the preferences as to
the distributions and payments on the liquidation, dissolution and winding up of
the Company, an amount per Preferred Share equal to the sum of (i) the Stated
Value and (ii) the Additional Amount for such Preferred Share (such sum being
referred to as the "LIQUIDATION PREFERENCE"); provided that, if the Liquidation
Funds are insufficient to pay the full amount due to the holders of Preferred
Shares and holders of shares of other classes or series of preferred stock of
the Company that are of equal rank with the Preferred Shares as to payments of
Liquidation Funds (the "PARI PASSU SHARES"), then each holder of Preferred
Shares and Pari Passu Shares shall receive a percentage of the Liquidation Funds
equal to the full amount of Liquidation Funds payable to such holder as a
liquidation preference, in accordance with their respective Certificate of
Designations, Preferences and Rights, as a percentage of the full amount of
Liquidation Funds payable to all holders of Preferred Shares and Pari Passu
Shares. The purchase or redemption by the Company of stock of any class, in any
manner permitted by law, shall not, for the purposes hereof, be regarded as a
liquidation, dissolution or winding up of the Company. Neither the consolidation
or merger of the Company with or into any other Person, nor the sale or transfer
by the Company of less than substantially all of its assets, shall, for the
purposes hereof, be deemed to be a liquidation, dissolution or winding up of the
Company. No holder of Preferred Shares shall be entitled to receive any amounts
with respect thereto upon any liquidation, dissolution or winding up of the
Company other than the amounts provided for herein; provided that a holder of
Preferred Shares shall be entitled to all amounts previously accrued with
respect to amounts owed hereunder.
(13) Preferred Rank. All shares of Common Stock shall be of
junior rank to all Preferred Shares in respect to the preferences as to
distributions and payments upon the
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liquidation, dissolution and winding up of the Company. The rights of the shares
of Common Stock shall be subject to the preferences and relative rights of the
Preferred Shares. Without the prior express written consent of the holders of
not less than two-thirds (2/3) of the then outstanding Preferred Shares, the
Company shall not hereafter authorize or issue additional or other capital stock
that is of senior rank to the Preferred Shares in respect of the preferences as
to distributions and payments upon the liquidation, dissolution and winding up
of the Company. Without the prior express written consent of the holders of not
less than two-thirds (2/3) of the then outstanding Preferred Shares, the Company
shall not hereafter authorize or make any amendment to the Company's Certificate
of Incorporation or bylaws, or file any resolution of the board of directors of
the Company with the Secretary of State of the State of Delaware or enter into
any agreement containing any provisions, which would adversely affect or
otherwise impair the rights or relative priority of the holders of the Preferred
Shares relative to the holders of the Common Stock or the holders of any other
class of capital stock.
(14) Participation. The holders of the Preferred Shares shall, as
holders of Preferred Stock, be entitled to such dividends paid and distributions
made to the holders of Common Stock to the same extent as if such holders of
Preferred Shares had converted the Preferred Shares into Common Stock (without
regard to any limitations on conversion herein or elsewhere) and had held such
shares of Common Stock on the record date for such dividends and distributions.
Payments under the preceding sentence shall be made concurrently with the
dividend or distribution to the holders of Common Stock.
(15) Restriction on Redemption and Cash Dividends. After the
first Issuance Date and until all of the Preferred Shares have been converted or
redeemed as provided herein, the Company shall not, directly or indirectly,
declare or pay any cash dividend or distribution on, its Common Stock without
the prior express written consent of the holders of not less than two- thirds
(2/3) of the then outstanding Preferred Shares. Until all of the Preferred
Shares have been converted or redeemed as provided herein, the Company shall
not, directly or indirectly, redeem, purchase or buy-back any of its Common
Stock unless at least 10 Business Days prior to the first such redemption,
purchase or buy-back the Company offers in writing each holder of Preferred
Shares the right to require the Company to redeem up to a number of Preferred
Shares equal to such holder's pro rata amount (based on the number of Preferred
Shares then outstanding) of a number of Preferred Shares having an aggregate
Stated Value equal to the dollar amount of shares of Common Stock redeemed,
purchased or bought-back by the Company. Redemption of Preferred Shares pursuant
to the immediately preceding sentence shall be at a price equal to the
Liquidation Preference (as defined in Section 12) of such Preferred Shares.
(16) Limitation on Number of Conversion Shares. The Company shall
not be obligated to issue any shares of Common Stock upon conversion of the
Preferred Shares if the issuance of such shares of Common Stock would exceed
that number of shares of Common Stock which the Company may issue upon
Conversion of the Preferred Shares (the "EXCHANGE CAP") without breaching the
Company's obligations under the rules or regulations of the Principal Market, or
the market or exchange where the Common Stock is then traded, except that such
limitation shall not apply in the event that the Company (a) obtains the
approval of its stockholders as required by the applicable rules of the
Principal Market, or the market or exchange where the
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Common Stock is then traded, (or any successor rule or regulation) for issuances
of Common Stock in excess of such amount or (b) obtains a written opinion from
outside counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the holders of a majority of the Preferred
Shares then outstanding. Until such approval or written opinion is obtained, no
purchaser of Preferred Shares pursuant to the Exchange Agreement (the
"PURCHASERS") shall be issued, upon conversion of Preferred Shares, shares of
Common Stock in an amount greater than the product of (i) the Exchange Cap
amount multiplied by (ii) a fraction, the numerator of which is the number of
Series D Preferred Shares issued to such Purchaser pursuant to the Exchange
Agreement and the denominator of which is the aggregate amount of all the Series
D Preferred Shares issued to the Purchasers pursuant to the Exchange Agreement
(the "CAP ALLOCATION AMOUNT"). In the event that any Purchaser shall sell or
otherwise transfer any of such Purchaser's Preferred Shares, the transferee
shall be allocated a pro rata portion of such Purchaser's Cap Allocation Amount.
In the event that any holder of Preferred Shares shall convert all of such
holder's Preferred Shares into a number of shares of Common Stock which, in the
aggregate, is less than such holder's Cap Allocation Amount, then the difference
between such holder's Cap Allocation Amount and the number of shares of Common
Stock actually issued to such holder shall be allocated to the respective Cap
Allocation Amounts of the remaining holders of Preferred Shares on a pro rata
basis in proportion to the number of Preferred Shares then held by each such
holder.
(17) Vote to Change the Terms of Preferred Shares. The
affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting, of the holders of not less than two-thirds (2/3) of
the then outstanding Preferred Shares, shall be required for any change to this
Certificate of Designations or the Company's Certificate of Incorporation which
would amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Preferred Shares.
(18) Lost or Stolen Certificates. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Preferred Stock Certificates representing the Preferred
Shares, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the holder to the Company in customary form and, in the case of
mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver new preferred stock
certificate(s) of like tenor and date; provided, however, the Company shall not
be obligated to re-issue preferred stock certificates if the holder
contemporaneously requests the Company to convert such Preferred Shares into
Common Stock.
(19) Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Certificate of Designations
shall be cumulative and in addition to all other remedies available under this
Certificate of Designations, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designations. The Company covenants to each holder of Preferred Shares that
there shall be no characterization concerning this
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instrument other than as expressly provided herein. Amounts set forth or
provided for herein with respect to payments, conversion and the like (and the
computation thereof) shall be the amounts to be received by the holder thereof
and shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the holders of the Preferred Shares and that the remedy at law for any such
breach may be inadequate. The Company therefore agrees that, in the event of any
such breach or threatened breach, the holders of the Preferred Shares shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
(20) Specific Shall Not Limit General; Construction. No specific
provision contained in this Certificate of Designations shall limit or modify
any more general provision contained herein. This Certificate of Designations
shall be deemed to be jointly drafted by the Company and all Buyers and shall
not be construed against any person as the drafter hereof.
(21) Failure or Indulgence Not Waiver. No failure or delay on the
part of a holder of Preferred Shares in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
(22) Restriction on Transfer of Preferred Shares. In addition to
any restrictions on transfer in the Exchange Agreement, no holder of Preferred
Shares may transfer such Preferred Shares except to a Permitted Transferee (as
defined below) or with the prior consent of the Company, which consent shall not
be unreasonably withheld, to a person which is not a Permitted Transferee.
Notwithstanding anything to the contrary contained in this Section 22, a holder
of Preferred Shares shall be entitled to pledge such Preferred Shares in
connection with a bona fide margin account or other loan secured by such
Preferred Shares. For purposes of this Section 22, a "PERMITTED TRANSFEREE"
shall mean (i) an Investor (as defined in the Exchange Agreement), (ii) an
Affiliate (as that term is defined in Rule 501(b) under the 1933 act) of an
Investor, (iii) any holder of Preferred Shares or Series A Warrants and (iv) any
Affiliate of a holder of Preferred Shares or Series A Warrants.
* * * * * * *
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IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be signed by Todd J. Kenck, its Chief Financial Officer, as of
the 13th day of July, 2000.
EFAX.COM
By: /s/ TODD J. KENCK
-------------------------------
Name: Todd J. Kenck
Its: Chief Financial Officer
28
EXHIBIT I
EFAX.COM
CONVERSION NOTICE
Reference is made to the Certificate of Designations, Preferences and Rights of
Series E Convertible Preferred Stock (the "CERTIFICATE OF DESIGNATIONS"). In
accordance with and pursuant to the Certificate of Designations, the undersigned
hereby elects to convert the number of shares of Series E Convertible Preferred
Stock, par value $.01 per share (the "PREFERRED SHARES"), of eFax.com (formerly
known as eFax.com, Inc.), a Delaware corporation (the "COMPANY"), indicated
below into shares of Common Stock, par value $.01 per share (the "COMMON
STOCK"), of the Company as of the date specified below.
Date of Conversion:
--------------------------------------------------
Number of Preferred Shares to be converted:
-------------------------
Stock certificate no(s). of Preferred Shares to be converted:
----------
Please confirm the following information:
Conversion Price:
--------------------------------------------------
Number of shares of Common Stock to be issued:
-------------------------
Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:
Issue to:
----------------------------------------
----------------------------------------
Facsimile Number:
----------------------------------------
Authorization:
------------
By:
-------------------------------------
Title:
----------------------------------
Dated:
------------
Account Number (if electronic book entry transfer):
--------------------
Transaction Code Number (if electronic book entry transfer):
-----------
[NOTE TO HOLDER -- THIS FORM MUST BE SENT CONCURRENTLY TO
TRANSFER AGENT]
29
ACKNOWLEDGMENT
The Company hereby acknowledges this Conversion Notice and hereby
directs [TRANSFER AGENT] to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated _______ ___, 2000
from the Company and acknowledged and agreed to by [TRANSFER AGENT].
EFAX.COM
By:
-------------------------------------
Name
-----------------------------------
Title:
---------------------------------