EXHIBIT 4.2
CERTIFICATE OF DESIGNATIONS,
RIGHTS AND PREFERENCES
OF
SERIES H CONVERTIBLE PREFERRED STOCK
OF
eGLOBE, INC.
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Pursuant to Section 151
of the General Corporation Law
of the State of Delaware
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The undersigned DOES HEREBY CERTIFY that, pursuant to the
authority contained in Article IV of the Restated Certificate of Incorporation
of eGlobe, Inc., a Delaware corporation (the "Corporation"), and in accordance
with Section 151 of the General Corporation Law of the State of Delaware, the
Board of Directors of the Corporation has authorized the creation of Series H
Convertible Preferred Stock having the designations, rights and preferences as
are set forth in Exhibit A hereto and made a part hereof and that the following
resolution was duly adopted by the Board of Directors of the Corporation:
RESOLVED, that a series of authorized Preferred
Stock, par value $.001 per share, of the Corporation be, and it hereby
is, created; that the shares of such series shall be, and they hereby
are, designated as "Series H Convertible Preferred Stock;" that the
number of shares constituting such series shall
be, and it hereby is, 500,000; and that the designations, rights and
preferences of the shares of such series are as set forth in Exhibit A
attached hereto and made a part hereof.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate to be signed by its President and Chief
Executive Officer and attested to by its Secretary this 3rd day of August, 1999.
eGLOBE, INC.
By: /s/ Christopher J. Vizas
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[SEAL] Name: Christopher J. Vizas
Title: President and Chief Executive Officer
ATTEST:
/s/ Graeme S.R. Brown
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Name: Graeme S.R. Brown
Title: Assistant Secretary
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EXHIBIT A
SERIES H CONVERTIBLE PREFERRED STOCK
The following sections set forth the powers, rights and
preferences, and the qualifications, limitations and restrictions thereof, of
the Corporation's Series H Convertible Preferred Stock, par value $.001 per
share ("Series H Preferred").
Capitalized terms used herein are defined in Section 6 below.
Section 1. Voting Rights.
Except as otherwise provided herein or as required by law, the
Series H Preferred shall vote with the shares of the Common Stock of the
Corporation (and each other class of stock so voting), and not as a separate
class, at any annual or special meeting of stockholders of the Corporation, and
may act by written consent in the same manner as the Common Stock, in either
case upon the following basis: each holder of shares of Series H Preferred shall
be entitled to such number of votes as shall be equal to 25% of the number of
shares of Common Stock into which such holder's aggregate number of shares of
Series H Preferred are convertible pursuant to Section 5 below immediately after
the close of business on the record date fixed for such meeting or the effective
date of such written consent, rounded up to the nearest whole number.
Section 2. No Redemption.
Series H Preferred shall not be redeemable.
Section 3. Dividend Rights.
Except as otherwise provided herein or as required by law,
holders of Series H Preferred shall be entitled to receive dividends only when
and as declared by the Corporation's Board of Directors with respect to Series H
Preferred, only out of funds that are legally available therefor and only in the
event that the Corporation at the same time declares or pays any dividends upon
the Common Stock (whether payable in cash, securities or other property). In the
event that the Corporation declares or pays any dividends upon the Common Stock
(whether payable in cash, securities or other property) on or prior to the
Adjustment Date, other than dividends payable solely in shares of Common Stock,
the Corporation shall also declare and pay to the holders of the Series H
Preferred, at the same time that it declares and pays such dividends to the
holders of the Common Stock, the dividends which would have been declared and
paid with respect to the Common Stock issuable upon conversion of the Series H
Preferred had all of the outstanding Series H Preferred been converted
immediately prior to the record date for such
dividend, or if no record date is fixed, the date as of which the record holders
of Common Stock entitled to such dividends are to be determined.
Section 4. Liquidation Rights.
Upon any Liquidation, after the payment of the full
liquidation preference of any series of preferred stock senior to the Series H
Preferred, the holders of Series H Preferred shall be entitled to participate in
distributions to holders of the Common Stock (along with each other class of
stock with similar rights) such that the holders of Series H Preferred receive
aggregate distributions equal to the amounts that such holders would have
received if the Series H Preferred Stock had been converted into Common Stock
immediately prior to such Liquidation.
Section 5. Conversion.
The holders of the Series H Preferred shall have the following
rights with respect to the conversion of the Series H Preferred into shares of
Common Stock:
5A. Series H Conversion Rate.
(i) Conversion Rate Formula. The conversion rate in
effect at any time for conversion of the Series H Preferred (the "Series H
Conversion Rate") shall be the product of (i) seven and a half (7.5), multiplied
by (ii) the quotient obtained by dividing $6.00 by the applicable "Series H
Market Factor" (determined as provided in Section 5B(ii)).
(ii) Series H Market Factor. The Series H Market
Factor shall mean the following: (A) if the Market Price is less than or equal
to $3.33-1/3 as of the Adjustment Date, the Series H Market Factor shall equal
$3.33-1/3; (B) if the Market Price is greater than $3.33-1/3 but less than $6.00
as of the Adjustment Date, the Series H Market Factor shall equal the Market
Price; and (C) if the Market Price is greater than or equal to $6.00 as of the
Adjustment Date, the Series H Market Factor shall equal $6.00; provided,
however, that notwithstanding clauses (A), (B) and (C) of this Section 5A(ii),
if Series H Preferred is converted prior to the Adjustment Date (whether by the
holder or automatically pursuant to 5F(i)), the Series H Market Factor shall
equal $6.00.
(iii) Adjustment. The Series H Conversion Rate shall
be subject to adjustment pursuant to Section 5C.
5B. Adjustment for Stock Splits and Combinations, Common Stock
Dividends and Distributions. If the Corporation shall at any time or from time
to time after the date of the initial issuance of Series H Preferred (the
"Original Series
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H Issue Date") effect a subdivision of the outstanding Common Stock, the Series
H Conversion Rate in effect immediately before that subdivision shall be
proportionately increased. Conversely, if the Corporation shall at any time or
from time to time after the Original Series H Issue Date combine the outstanding
shares of Common Stock into a smaller number of shares, the Series H Conversion
Rate in effect immediately before the combination shall be proportionately
decreased. Any adjustment under this Section 5C shall become effective at the
close of business on the date the subdivision or combination becomes effective.
If the Corporation at any time or from time to time after the
Original Series H Issue Date makes, or fixes a record date for the determination
of holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, in each such event the Series H
Conversion Rate that is then in effect shall be increased as of the time of such
issuance or, in the event such record date is fixed, as of the close of business
on such record date, by multiplying the Series H Conversion Rate then in effect
by a fraction (1) the numerator of which is the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance or
the close of business on such record date plus the number of shares of Common
Stock issuable in payment of such dividend or distribution, and (2) the
denominator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date; provided, however, that if such record date is
fixed and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Series H Conversion Rate shall be
recomputed accordingly as of the close of business on such record date and
thereafter the Series H Conversion Rate shall be adjusted pursuant to this
Section 5B to reflect the actual payment of such dividend or distribution.
5C. Reorganizations, Mergers or Consolidations. If at any time
or from time to time after the Original Series H Issue Date, the Common Stock is
converted into other securities or property, whether pursuant to a
reorganization, merger, consolidation or otherwise (other than a
recapitalization, subdivision, combination, reclassification, exchange or
substitution of shares provided for elsewhere in this Section 5), as a part of
such transaction, provision shall be made so that the holders of the Series H
Preferred shall thereafter be entitled to receive upon conversion of the Series
H Preferred the number of shares of stock or other securities or property of the
Corporation to which a holder of the number of shares of Common Stock
deliverable upon conversion would have been entitled in connection with such
transaction, subject to adjustment in respect of such stock or securities by the
terms thereof. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 5 with respect to the rights of
the holders of Series H Preferred after such transaction to the end that the
provisions of this Section 5 (including adjustment of the Series H Conversion
Rate then in effect and the number of shares issuable upon conversion of the
Series H Preferred) shall be applicable after that event and be as nearly
equivalent as
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practicable. In the case of any reorganization, merger or consolidation in which
the Corporation is not the surviving entity, the Corporation shall not
consummate the transaction unless the entity surviving such transaction assumes
all of the Corporation's obligations hereunder.
If at any time or from time to time after the Original Series
H Issue Date, the Common Stock issuable upon the conversion of the Series H
Preferred is changed into the same or a different number of shares of any class
or classes of stock, whether by recapitalization, reclassification or otherwise
(other than a subdivision or combination of shares or stock dividend or a
reorganization, merger or consolidation provided for elsewhere in this Section
5), in any such event each holder of Series H Preferred shall have the right
thereafter to convert such stock into the kind and amount of stock and other
securities and property receivable in connection with such recapitalization,
reclassification or other change with respect to the maximum number of shares of
Common Stock into which such shares of Series H Preferred could have been
converted immediately prior to such recapitalization, reclassification or
change, all subject to further adjustments as provided herein or with respect to
such other securities or property by the terms thereof.
5D. Notices.
(i) Immediately upon any adjustment of the Series H
Conversion Rate, the Corporation shall give written notice thereof to all
holders of Series H Preferred, setting forth in reasonable detail and certifying
the calculation of such adjustment.
(ii) Upon (A) any taking by the Corporation of a record of
the holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other distribution,
or (B) any reorganization, any reclassification or recapitalization of the
capital stock of the Corporation, any merger or consolidation of the Corporation
with or into any other corporation, or any Liquidation, the Corporation shall
mail to each holder of Series H Preferred at least twenty (20) days prior to the
record date specified therein a notice specifying (1) the date on which any such
record is to be taken for the purpose of such dividend or distribution and a
description of such dividend or distribution, (2) the date on which any such
reorganization, reclassification, transfer, consolidation, merger or Liquidation
is expected to become effective, and (3) the date, if any, that is to be fixed
for determining the holders of record of Common Stock (or other securities) that
shall be entitled to exchange their shares of Common Stock (or other securities)
for securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger or Liquidation.
5E. Automatic Conversion. Each share of Series H Preferred
shall automatically be converted into shares of Common Stock, based on the
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then-effective Series H Conversion Rate, on the earliest to occur of (i) the
first date as of which the Market Price is $6.00 or more for any 15 consecutive
trading days during any period in which Series H Preferred is outstanding and
(ii) the Adjustment Date. The number of shares of Common Stock to which a holder
of Series H Preferred shall be entitled upon conversion shall be the product
obtained by multiplying the "Series H Conversion Rate" then in effect
(determined as provided in Section 5A) by the number of shares of Series H
Preferred being converted.
5F. Mechanics of Conversion. Upon the occurrence of the event
specified in Section 5E, the outstanding shares of Series H Preferred shall be
converted into Common Stock automatically without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent; provided,
however, that the Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless the
certificates evidencing such shares of Series H Preferred are either delivered
to the Corporation or its transfer agent as provided below, or the holder
notifies the Corporation or its transfer agent that such certificates have been
lost, stolen or destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates. Upon surrender by any holder of the
certificates formerly representing shares of Series H Preferred at the office of
the Corporation or any transfer agent for the Series H Preferred, there shall be
issued and delivered to such holder promptly at such office and in its name as
shown on such surrendered certificate or certificates, a certificate or
certificates for the number of shares of Common Stock into which the shares of
Series H Preferred surrendered were convertible on the date on which such
automatic conversion occurred. Until surrendered as provided above, each
certificate formerly representing shares of Series H Preferred shall be deemed
for all corporate purposes to represent the number of shares of Common Stock
resulting from such automatic conversion.
5G. Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of Series H Preferred. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Series H Preferred by a holder thereof shall be aggregated for purposes
of determination whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional share, the Corporation shall, in lieu
of issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board)
on the date of conversion. Notwithstanding the foregoing, in the event that any
holder converts shares of Series H Preferred ten times within any one year
period, the Corporation shall not be obligated to pay any cash amount for
fractional shares upon any subsequent conversion(s) by such holder during such
year, but may withhold the
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fractional share(s) and aggregate such fractional share(s) with any additional
fractional share(s) issuable to such holder during such year, and pay the cash
(if any) required by this section for any fractional shares remaining after such
aggregation at the end of such year.
5H. Reservation of Shares. 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 the conversion of the shares of
Series H Preferred, such number of shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares of the
Series H Preferred. All shares of Common Stock which are so issuable shall, when
issued, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges. If at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then-outstanding shares of the Series H Preferred, the Corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
5I. Payment of Taxes. The issuance of certificates for shares
of Common Stock upon conversion of Series H Preferred shall be made without
charge to the holders of such Series H Preferred for any issuance tax in respect
thereof or other cost incurred by the Corporation in connection with such
conversion and the related issuance of shares of Common Stock, excluding any tax
or other charge imposed in connection with any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that in which the
shares of Series H Preferred so converted were registered.
Section 6. Definitions.
"Adjustment Date" means January 31, 2000.
"Closing Price" of each share of Common Stock or other
security means the composite closing price of the sales of the Common Stock or
such other security on all securities exchanges on which such security may at
the time be listed (as reported in The Wall Street Journal), or, if there has
been no sale on any such exchange on any day, the average of the highest bid and
lowest asked prices of the Common Stock or such other security on all such
exchanges at the end of such day, or, if such security is not so listed, the
closing price (or last price, if applicable) of sales of the Common Stock or
such other security in the Nasdaq National Market (as reported in The Wall
Street Journal) on such day, or if such security is not quoted in the Nasdaq
National Market but is traded over-the-counter, the average of the highest bid
and lowest asked prices on such day in the over-the-counter market as reported
by the National Quotation Bureau Incorporated, or any similar successor
organization.
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"Common Stock" means, collectively, the Corporation's common
stock, par value $.001 per share; and if there is a change such that the
securities issuable upon conversion of Series H Preferred are issued by an
entity other than the Corporation or there is a change in the class of
securities so issuable, then the term "Common Stock" shall mean the shares of
the security issuable upon conversion of Series H Preferred if such security is
issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
"Corporation" means eGlobe, Inc. a Delaware corporation.
"IDX" means IDX International, Inc., a Virginia corporation.
"Liquidation" means the liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary; provided, however, that
neither the consolidation or merger of the Corporation into or with any other
entity or entities, nor the sale or transfer by the Corporation of all or any
part of its assets, nor the reduction of the capital stock of the Corporation,
shall be deemed to be a Liquidation.
"Market Price" means (i) if the Common Stock is listed on any
securities exchange, quoted in the Nasdaq National Market, or quoted in the
over-the-counter market throughout the period of 15 consecutive trading days
consisting of the day as of which the Market Price is being determined and the
14 consecutive trading days prior to such day (the "Pricing Period"), the
Closing Price of the Common Stock averaged over the 15 consecutive trading days
constituting the Pricing Period, or (ii) if the Common Stock is not listed on
any securities exchange, quoted in the Nasdaq National Market, or quoted in the
over-the-counter market throughout the Pricing Period, the fair value of the
Common Stock determined by agreement between the Corporation and the holders of
a majority of the outstanding Series H Preferred or, if they are unable to reach
agreement within a reasonable period of time, the fair value of the Common Stock
as determined by an independent appraiser selected by the Corporation (which
appraiser may be the Corporation's investment banker, and the fees and expenses
of such appraiser shall be borne by the Corporation), which determination shall
be final and binding upon the Corporation and the holders of the outstanding
Series H Preferred.
"Series H Preferred" means the Corporation's Series H
Convertible Preferred Stock, par value $.001 per share.
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Section 7. Amendment and Waiver.
No amendment, modification or waiver of any of the terms or
provisions of the Series H Preferred shall be binding or effective without the
prior approval (by vote or written consent) of the holders of a majority of the
Series H Preferred then outstanding. Any amendment, modification or waiver of
any of the terms or provisions of the Series H Preferred with such approval,
whether prospective or retroactively effective, shall be binding upon all
holders of Series H Preferred.
Section 8. Registration of Transfer.
The Corporation shall keep at its principal office a register
for the registration of Series H Preferred. Upon the surrender of any
certificate representing Series H Preferred at such place, the Corporation
shall, at the request of the record holder of such certificate, execute and
deliver (at the Corporation's expense) a new certificate or certificates in
exchange therefor representing in the aggregate the number of Series H Preferred
shares represented by the surrendered certificate. Each such new certificate
shall be registered in such name and shall represent such number of Series H
Preferred shares as is requested by the holder of the surrendered certificate
and shall be substantially identical in form to the surrendered certificate.
Section 9. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of Series H Preferred, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is a financial institution or other
institutional investor, its own agreement shall be satisfactory), or, in the
case of any such mutilation upon surrender of such certificate, the Corporation
shall (at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of Series H Preferred shares
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
Section 10. Notices.
Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be deemed effectively given:
(i) upon personal delivery to the party to be notified, (ii) when sent by
confirmed telex or facsimile if sent during normal business hours of the
recipient; if not, then on the next business day, (iii) five (5) days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (iv) one (1) day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written
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verification of receipt. All notices shall be addressed (i) if to the
Corporation, to its principal executive offices, and (ii) if to stockholders, to
each holder of record at the address of such holder appearing on the books of
the Corporation.
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