CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK
OF
GSV, INC.
***
GSV, Inc. (the "Corporation"), 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
Corporation (the "Board") by the Certificate of Incorporation (as amended) (the
"Certificate of Incorporation") of said corporation, the Board adopted a
resolution, which resolution is as follows:
RESOLVED, that a series of the Company's Preferred Stock consisting of
636,365 shares of Preferred Stock, be and hereby is, designated as "Series
A Convertible Preferred Stock", par value $.001 per share (the "Series A
Preferred Stock"), and that the Series A Preferred Stock shall have the
designations, powers, preferences, rights and qualifications, limitations
and restrictions as set forth in the Certificate of Designations,
Preferences and Rights of Series A Convertible Preferred Stock (the
"Series A Certificate") attached as Exhibit A.
That said Series A Certificate states that the Board does hereby fix and
herein state and express such designations, powers, preferences and relative and
other special rights and qualifications, limitations and restrictions thereof as
follows (all terms used herein which are defined in the Amended Certificate
shall be deemed to have the meanings provided therein).
1. Certain Definitions.. Unless the context otherwise requires, the terms
defined herein shall have the meanings herein specified.
(a) Change of Control Transaction. The term "Change of Control
Transaction" means the occurrence of any of (i) an acquisition after the date
hereof by an individual or legal entity or "group" (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Corporation, by
contract or otherwise) of in excess of 50% of the voting securities of the
Corporation (other than by a Holder (as hereinafter defined) of Series A
Preferred Stock), (ii) a replacement at one time or over time of more than
one-half of the members of the Corporation's board of directors which is not
approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as members
of the board of directors on any date whose nomination to the board of directors
was approved by a majority of the members of the board of directors who are
members on the date hereof), (iii) the merger of the Corporation with or into
another entity that is not wholly-owned by the Corporation (other than a Holder
of the Series A Preferred Stock), consolidation or sale of 50%
or more of the assets of the Corporation in one or a series of related
transactions (other than to a Holder of the Series A Preferred Stock), or (iv)
the execution by the Corporation of an agreement to which the Corporation is a
party or by which it is bound, providing for any of the events set forth above
in (i), (ii) or (iii).
(b) Common Stock. The term "Common Stock" shall mean the Common
Stock of the Corporation, $.001 par value per share.
(c) Common Stock Equivalent. The term "Common Stock Equivalent"
shall mean any equity or equity equivalent securities (including debt or any
other instrument that is at any time over the life thereof convertible into or
exchangeable for Common Stock) issued by the Corporation or a subsidiary thereof
that provide the holder thereof to receive shares of Common Stock. The
Corporation shall notify the Holder in writing, no later than the Trading Day
following the issuance of any Common Stock or Common Stock Equivalent subject to
this section, indicating therein the applicable issuance price, or of applicable
reset price, exchange price, conversion price and other pricing terms.
(d) Junior Stock. The term "Junior Stock" shall mean the Common
Stock and any class or series of stock of the Corporation, whether now or
hereafter authorized, that by the terms of the Certificate of Incorporation or
of an instrument of the Board of Directors, acting pursuant to authority granted
in the Certificate of Incorporation establishing such class or series shall be
subordinated to the Series A Preferred Stock in respect of the right to receive
dividends and in respect to the right to receive any assets upon liquidation,
dissolution or winding up of the affairs of the Corporation.
(e) Parity Stock. The term "Parity Stock" shall mean any class or
series of stock of the Corporation, whether now or hereafter authorized, that by
the terms of the Certificate of Incorporation or of an instrument of the Board
of Directors, acting pursuant to authority granted in the Certificate of
Incorporation establishing such class or series shall be pari passu to the
Series A Preferred Stock in respect of the right to receive dividends and in
respect to the right to receive any assets upon liquidation, dissolution or
winding up of the affairs of the Corporation.
(f) Purchase Agreement. The term "Purchase Agreement" shall mean the
Convertible Preferred Stock Purchase Agreement pursuant to which the Corporation
and the original Holders are parties, as amended, modified or supplemented from
time to time in accordance with its terms.
(g) Senior Stock. The term "Senior Stock" shall mean any class or
series of stock of the Corporation, whether now or hereafter authorized, that by
the terms of the Certificate of Incorporation or of an instrument of the Board
of Directors, acting pursuant to authority granted in the Certificate of
Incorporation establishing such class or series shall be senior to the Series A
Preferred Stock in respect of the right to receive dividends and in respect to
the right to receive any assets upon liquidation, dissolution or winding up of
the affairs of the Corporation.
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(h) Series A Preferred Stock. The term "Series A Preferred Stock"
shall mean the shares of the Series A Convertible Preferred Stock, $.001 par
value per share, authorized herein.
(i) Stock Market. The term "Stock Market" shall mean any of the
Nasdaq National Market, the New York Stock Exchange, the American Stock Exchange
or the Nasdaq SmallCap Market.
(j) Trading Day. The term "Trading Day" shall mean (a) a day on
which the Common Stock is traded on a Stock Market on which the Common Stock is
then listed or quoted, as the case may be, or (b) if the Common Stock is not
listed on a Stock Market, a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board ("OTC"), or (c)
if the Common Stock is not quoted on the OTC, a day on which the Common Stock is
quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding its
functions of reporting prices); provided, however, that in the event that the
Common Stock is not listed or quoted as set forth in (a), (b) and (c) hereof,
then Trading Day shall mean any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York are authorized or required by law or other government action to close.
2. Designation, Amount and Par Value. The series of preferred stock shall
be designated as its 12% Series A Convertible Preferred Stock (the "Preferred
Stock") and the number of shares so designated shall be 636,365 (which shall not
be subject to increase without the consent of the holders of the Series A
Preferred Stock (each, a "Holder" and collectively, the "Holders")). Each share
of Preferred Stock shall have a par value of $.001 per share and a stated value
equal to the sum of $1.10 plus all accrued and unpaid dividends to the date of
determination to the extent not previously paid in cash in accordance with the
terms hereof (the "Stated Value").
3. Voting. Each share of Series A Preferred Stock shall entitle the holder
thereof to such number of votes on each action to be taken by the shareholders
of the Corporation (other than the election of directors pursuant to Section 4
hereof) as shall equal the number of shares of Common Stock into which each
share of Series A Preferred Stock is then convertible pursuant to the terms
herein. Fractional votes by holders of Series A Preferred Stock shall not,
however be permitted, and any fractional voting rights (after aggregating all
shares into which shares of Series A Preferred Stock held by each Holder could
be converted) shall be rounded to the nearest whole number (with one-half being
rounded upward). Except as otherwise provided by law, as specifically set forth
in this Series A Certificate as amended from time to time, or pursuant to
contractual rights granted by the Corporation, the holders of the Series A
Preferred Stock shall vote together as a single class with the holders of the
Common Stock.
4. Dividends.
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(a) Subject to the preferences and other rights of any Senior Stock
and provided that dividends are simultaneously paid or declared on all Series A
Preferred Stock, the holders of the Series A Preferred Stock shall be entitled
to receive, out of funds legally available therefor, when and if declared by the
Board of Directors, dividends at the rate of 12% per annum (the "Series A
Accruing Dividends"); provided, however, if any portion of the dividend payable
to any holder of the Series A Preferred Stock shall be a fraction of a cent,
such dividend shall be rounded down to the nearest whole cent. Series A Accruing
Dividends shall accrue from day to day, whether or not earned or declared, and
shall be cumulative. Dividends shall be payable on the Conversion Date (as
defined herein) for such share and on each June 30 and December 31 for so long
as such share shall be outstanding, commencing June 30, 2001 (each of a
Conversion Date and such semi-annual dates are referred to herein as a "Dividend
Payment Date"), commencing on the earlier to occur of such Conversion Date and
June 30, 2001, in cash or shares of Common Stock. Subject to the terms and
conditions herein, the decision whether to pay dividends hereunder in Common
Stock or cash shall be at the discretion of the Holder. Each Holder shall
provide the Company written notice of its intention to cause the Company to pay
dividends in cash or shares of Common Stock not less than five (5) Trading Days
prior to each Dividend Payment Date for so long as shares of Series A Preferred
Stock are outstanding. Failure to timely provide such written notice shall be
deemed an election by such Holder to receive dividends for such period in cash.
Dividends on the Series A Preferred Stock shall be calculated on the basis of a
360-day year, shall accrue daily commencing on the date of the initial issuance
of the Series A Preferred Stock. Except as otherwise provided herein, if at any
time the Company pays less than the total amount of dividends then accrued on
account of the Series A Preferred Stock, such payment shall be distributed
ratably among the Holders based upon the number of shares of Series A Preferred
Stock held by each Holder.
(b) In no event, so long as any shares of the Series A Preferred
Stock shall be outstanding, shall any dividend whatsoever, whether in cash,
property or otherwise, be declared or paid, nor shall any distribution be made,
on any Junior Stock, nor shall any Junior Stock be purchased or redeemed by the
Corporation, nor shall any moneys be paid or made available for a sinking fund
for the purchase or redemption of any Junior Stock, while any shares of Series A
Preferred Stock remain outstanding. The provisions of the preceding sentence
shall not, however, apply to a dividend payable in shares of any class or series
of Junior Stock of the Corporation.
5. Election of Directors.
(a) So long as any shares of Series A Preferred Stock remain
outstanding, the Corporation shall not, without the written approval of Holders
of at least a majority of the then-outstanding shares of Series A Preferred
Stock, increase the maximum number of directors constituting the board of
directors to a number in excess of seven (7).
(b) So long as any shares of Series A Preferred Stock ever issued by
the Corporation remain outstanding, the holders of Series A Preferred Stock,
voting separately as a class, shall be entitled to designate and elect three (3)
of the members of the board of directors.
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For any meeting (or written consent in lieu thereof) held for the purpose of
electing directors, the presence in person or by proxy (or the written consent)
of the holders of at least a majority of the then outstanding shares of Series A
Preferred Stock shall constitute a quorum of the Series A Preferred Stock for
the election of directors to be elected solely by the holders of the Series A
Preferred Stock. A vacancy in any directorship elected by the holders of the
Series A Preferred Stock shall be filled only by vote or written consent of the
holders of at least a majority of the then outstanding shares of Series A
Preferred Stock.
6. Liquidation.
(a) Upon liquidation, dissolution or winding up of the Corporation
(each a "Liquidation Event"), whether voluntary or involuntary, the Holders
shall be entitled, before any distribution or payment is made to any holder of
Common Stock or any other Junior Stock, to be paid an amount equal to $1.10 per
share plus the Series A Accruing Dividends, if any, such amount payable with
respect to one share of Series A Preferred Stock being sometimes referred to as
the "Series A Liquidation Preference Payment" and with respect to all shares of
Series A Preferred Stock being sometimes referred to as the "Series A
Liquidation Preference Payments." If, upon any Liquidation Event, the net assets
of the Corporation distributable among the holders of all outstanding shares of
the Series A Preferred Stock shall be insufficient to permit the payment in full
to such Holders of all amounts to which such Holders shall be entitled upon a
Liquidation Event, then the entire net assets of the Corporation to be
distributed to the Holders, shall be distributed among the Holders ratably in
proportion to the full amounts to which they would otherwise be respectively
entitled in the event of a Liquidation Event.
(b) After the distributions described in Section 6(a) above have
been paid, subject to the rights of a series of Senior Stock or Parity Stock
that may from time to time come into existence, the remaining assets of the
Corporation available for distribution to the shareholders shall be distributed
among the holders of the Junior Stock in accordance with the Certificate of
Incorporation or an instrument of the Board of Directors, acting pursuant to
authority granted in the Certificate of Incorporation.
(c) Notwithstanding the provisions of Section 8(f), any
consolidation, merger, sale of all or substantially all of the Corporation's
assets or other similar transaction that has not been approved by the holders of
at least two-thirds of the Series A Preferred Stock then outstanding shall be
treated as a Liquidation Event, and the holders of the Series A Preferred Stock
shall be entitled in such event to receive stock, securities or assets on the
basis of (i) the provisions of Section 8(f) or (ii) the priorities set forth in
Section 6(a), whichever is greater. Any consolidation, merger, sale or all or
substantially all of the corporation's assets or other similar transaction that
has been approved by the holders of at least two-thirds of the Series A
Preferred Stock shall be subject to Section 8(f), and not this Section 6(c).
7. Redemption Upon Triggering Events
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(a) Upon the occurrence of a Triggering Event, each Holder shall (in
addition to all other rights it may have hereunder or under applicable law),
have the right, exercisable at the sole option of such Holder, to require the
Corporation to redeem all or a portion of the Series A Preferred Stock and such
shares of Common Stock as described below then held by such Holder for a
redemption price, in cash, equal to the sum of (i) 100% of the Stated Value of
each outstanding share of Series A Preferred Stock plus (ii) the product of (A)
the number of Underlying Shares issued in respect of conversions of shares of
Series A Preferred Stock and then held by the Holder and (B) 100% of the
Conversion Price (determined at the time of each such conversion) for each share
of common stock received upon conversion of the Series A Preferred Stock (such
sum, the "Redemption Price"). The Redemption Price shall be due and payable
within five Trading Days of the date (the "Redemption Date"),on which the notice
for the payment therefor is provided by a Holder. If the Corporation fails to
pay the Redemption Price hereunder in full pursuant to this Section on the date
such amount is due in accordance with this Section, the Corporation will pay
interest thereon at a rate of 18% per annum (or the lesser amount permitted by
applicable law), accruing daily from such date until the Redemption Price, plus
all such interest thereon, is paid in full. For purposes of this Section, a
share of Series A Preferred Stock is outstanding until such date as the Holder
shall have received Underlying Shares upon a conversion (or attempted
conversion) thereof that meets the requirements hereof.
A "Triggering Event" means any one or more of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body), without the prior consent of the Holders of a majority of the Series A
Preferred Stock:
(i) the Corporation shall be a party to any Change of Control
Transaction, shall agree to sell (in one or a series of related transactions)
all or substantially all of its assets or shall redeem more than a de minimis
number of Common Stock or other Junior Securities (other than redemptions of
Underlying Shares);
(ii) the Corporation shall fail to observe or perform any
other covenant, agreement or warranty contained in, or otherwise commit any
breach of the Purchase Agreement, and such failure or breach shall not, if
subject to the possibility of a cure by the Corporation, have been remedied
within ten calendar days after the date on which written notice of such failure
or breach shall have been given;
(iii) the failure of the Common Stock to be listed for trading
on any Stock Market or the suspension of the Common Stock from trading on a
Stock Market, in either case, for more than 20 Trading Days (which need not be
consecutive Trading Days);
(iv) the institution of any action, proceeding, application or
counterclaim by any party before any court or governmental regulatory or
administrative agency, authority or tribunal which challenges or seeks to
challenge, restrain or prohibit the issuance or
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sale of the Series A Preferred Stock or any of the transactions contemplated by
the Purchase Agreement;
(v) a default or event of default shall occur at any time
under the terms of any agreement involving borrowed money or the extension of
credit or any other indebtedness for borrowed money under which the Corporation
may be obligated as a borrower or guarantor, and such breach, default or event
of default consists of the failure to pay (beyond any period of grace permitted
with respect thereto, whether waived or not) any indebtedness when due (whether
at stated maturity, by acceleration or otherwise) or if such breach or default
permits or causes the acceleration of any indebtedness (whether or not such
right shall have been waived) or the termination of any commitment to lend;
(vi) any final judgment or order for the payment of money in
excess of $1,000,000;
(vii) a proceeding shall have been instituted in a court
having jurisdiction seeking a decree or order for relief in respect of the
Corporation in an involuntary case under any applicable bankruptcy, insolvency,
reorganization or other similar law now or hereafter in effect, or for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or similar official) of the Corporation for any part
of its property, or for the winding-up or liquidation of its affairs, and such
proceeding shall remain undismissed or unstayed and in effect for a period of
thirty (30) consecutive days or such court shall enter a decree or order
granting any of the relief sought in such proceeding;
(viii) the Corporation shall commence a voluntary case under
any applicable bankruptcy, insolvency, reorganization or other similar law now
or hereafter in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or other similar official) of itself or for any part
of its property or shall make a general assignment for the benefit of creditors,
or shall fail generally to pay its debts as they become due, or shall take any
action in furtherance of any of the foregoing;
(ix) the Corporation shall have incurred any indebtedness for
borrowed money in excess of $50,000;
(x) the Corporation shall have made or agreed to make any
capital expenditures in excess of $50,000;
(xi) there shall have occurred a material change in the
conduct of the business of the Corporation as conducted as of the date of the
initial issuance of the Series A Preferred Stock;
(xii) the issuance of any shares of any Senior Stock or Party
Stock;
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(xiii) the issuance of any shares of Series A Preferred Stock
other than pursuant to the Purchase Agreement; and
(xiv) the resignation, within the 45-day period immediately
following the date of the initial issuance of the Series A Preferred Stock, of
two or more members of the board of directors (other than those elected by the
Holders of the Series A Preferred Stock pursuant to Section 5(b) hereof).
(b) Redeemed or Otherwise Acquired Shares to be Retired. Any shares
of Series A Preferred Stock redeemed pursuant to this Section 6 or otherwise
acquired by the Corporation in any manner whatsoever shall be canceled and shall
not under any circumstances be reissued; and the Corporation may from time to
time take such appropriate corporate action as may be necessary to reduce
accordingly the number of authorized shares of Series A Preferred Stock.
8. Conversions. The holders of Series A Preferred Stock shall have the
following conversion rights:
(a) Right to Convert. Subject to the terms and conditions of this
Section 8, the Holder of any share or shares of Series A Preferred Stock shall
have the right, at its option at any time, to convert any such shares of Series
A Preferred Stock (except that upon any Liquidation Event of the Corporation
pursuant to Section 5, the right of conversion shall terminate at the close of
business on the business day prior to the business day fixed for payment of the
amount distributable on the Series A Preferred Stock). The date of determination
of the number of shares of Common Stock issued upon conversion of the Series A
Preferred Stock pursuant to this Section 8(a) shall be the date (the "Conversion
Date"), that the Conversion Notice and the certificate or certificates for the
shares so converted is received by the Corporation.
(b) Conversion Process. To effect conversions of Series A Preferred
Stock, Holders shall deliver to the Corporation at its principal office during
its usual business hours, the certificate or certificates for the shares so
converted, together with a duly completed and executed Conversion Notice, in the
form attached hereto as Exhibit A. As promptly as practicable thereafter, the
Corporation shall issue and deliver to such Holder a certificate or
certificates, registered in the name of such Holder, for the number of whole
shares of Common Stock to which such Holder is entitled upon such conversion,
together with any cash dividends and payment in lieu of fractional shares to
which such Holder may be entitled. Once delivered, a delivery of a Conversion
Notice shall be irrevocable.
(c) Conversion Price. Subject to the terms and conditions of this
Section 8, the Series A Preferred Stock shall convert into such number of fully
paid and non-assessable shares of Common Stock as is obtained by (i) multiplying
the number of shares of Series A Convertible Preferred Stock to be so converted
by $1.10 per share and (ii) dividing the result by the conversion price (which
shall initially be $1.10) per share or, in case an adjustment of such price has
taken place pursuant to the further provisions of Section 8(e), then by the
conversion price as
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last adjusted and in effect at the date any share or shares of Series A
Preferred Stock are surrendered for conversion pursuant to Section 8(a) (such
price, or such price as last adjusted, being referred to as the "Series A
Conversion Price").
(d) Fractional Shares. No fractional shares shall be issued upon
conversion of Series A Preferred Stock into Common Stock. If any fractional
shares of Common Stock would be delivered upon such conversion, the Corporation,
in lieu of delivering such fractional share, shall pay to the Holder
surrendering the Series A Preferred Stock for conversion an amount in cash equal
to the current fair market value of such fractional share as determined in good
faith by the Board of Directors of the Corporation.
(e) Adjustment of Price Upon Issuance of Common Stock. Except as
provided in Section 8(f), if and whenever the Corporation shall issue or sell,
or is, pursuant to Section 8(e)(i) through (vii), deemed to have offered, sold,
granted any option to purchase, or otherwise disposed of (or announced any
offer, sale, grant or any option to purchase or other disposition) any of shares
of Common Stock or Common Stock Equivalents at a price that is, at the issuance
thereof, or at any later time due to adjustment, reset, additional issuances or
otherwise, less than the Series A Conversion Price, then the Series A Conversion
Price shall be adjusted to equal the conversion, exchange or purchase price for
such Common Stock or Common Stock Equivalents (including any reset provisions
thereof) at issue. Such adjustment shall be made whenever such Common Stock or
Common Stock Equivalents are issued. If the holder of the Common Stock or Common
Stock Equivalent so issued shall at any time, whether by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights issued in connection
with such issuance, be entitled to receive shares of Common Stock at a price
less than the Series A Conversion Price, such issuance shall be deemed to have
occurred for less than the Series A Conversion Price. Notwithstanding the
foregoing the Series A Conversion Price shall not be reduced pursuant to this
Section 8(e) (other than by stock splits, recombinations or similar events) to a
price less than [ ](1) (the "Floor Conversion Price").
For purposes of this Section 8(e), the following subsections (i) to
(vii) shall also be applicable:
(i) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption in a
merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or to purchase any
stock or security convertible into or exchangeable, directly or indirectly, for
Common Stock (such warrants, rights or options being called "Options" and such
convertible or exchangeable stock or securities being called "Convertible
Securities") whether or not such Options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon the
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(1) 105% of the average of the per share market value of the common stock for
the five Trading Days immediately preceding the Closing Date.
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exercise of such Options or upon the conversion or exchange of such Convertible
Securities (determined by dividing (x) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the issue or
sale of such Convertible Securities and upon the conversion or exchange thereof,
by (y) the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than the Series A Conversion Price in effect immediately prior to the time of
the granting of such Options, then the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon the
exercise of such Options shall be deemed to have been issued for such price per
share as of the date of granting of such Options and thereafter shall be deemed
to be outstanding. Except as otherwise provided in subsection (iii), no
adjustment of the Series A Conversion Price shall be made upon the actual issue
of such Common Stock or of such Convertible Securities upon exercise of such
Options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by assumption in a
merger or otherwise) or sell any Convertible Securities, whether or not the
rights to exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon
such conversion or exchange (determined by dividing (x) the total amount
received or receivable by the Corporation as consideration for the issue or sale
of such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (y) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than the Series A Conversion Price in effect immediately prior to
the time of such issue or sale, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of all such Convertible
Securities shall be deemed to have been issued for such price per share as of
the date of the issue or sale of such Convertible Securities and thereafter
shall be deemed to be outstanding, provided that (a) except as otherwise
provided in subparagraph (iii), no adjustment of the Series A Conversion Price
shall be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities and (b) if any such issue or sale of
such Convertible Securities is made upon exercise of any Options to purchase any
such Convertible Securities for which adjustments of the Series A Conversion
Price have been or are to be made pursuant to other provisions of this Section
8(e), no further adjustment of the Series A Conversion Price shall be made by
reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if (1) the maximum number of
shares of Common Stock
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issuable in connection with any Option referred to in subparagraph (i), (2) the
purchase price provided for in any Option referred to in subparagraph (i), (3)
the additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities referred to in subparagraph (i) or (ii), or (4) the
rate at which Convertible Securities referred to in subparagraph (i) or (ii) are
convertible into or exchangeable for Common Stock, shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Series A Conversion Price in effect
at the time of such event shall forthwith be readjusted to the Series A
Conversion Price which would have been in effect at such time had such Options
or Convertible Securities still outstanding provided for such changed maximum
number of shares, changed purchase price, changed additional consideration or
changed conversion rate, as the case may be, at the time initially granted,
issued or sold, and on the termination of any Option or any such right to
convert or exchange Convertible Securities, the Series A Conversion Price then
in effect hereunder shall forthwith be increased to the Series A Conversion
Price which would have been in effect at the time of such termination had such
Option or Convertible Securities, to the extent outstanding immediately prior to
such termination, never been issued.
(iv) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation (other
than the Series A Preferred Stock) payable in Common Stock, Options or
Convertible Securities, then any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.
(v) Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith. In case
any Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such consideration
as determined in good faith by the Board of Directors of the Corporation.
(vi) Record Date. In case the Corporation shall take a record
of the holders of its Common Stock for the purpose of entitling them (x) to
receive a dividend or other distribution payable in Common Stock, Options or
Convertible Securities or (y) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date shall be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been
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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.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition of any such shares shall be
considered an issue or sale of Common Stock for the purpose of this Section
8(e).
(f) Reorganization or Reclassification. If any capital
reorganization, reclassification, recapitalization, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other similar
transaction (any such transaction being referred to herein as an "Organic
Change") shall be effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such Organic Change, lawful and
adequate provisions shall be made whereby each holder of a share or shares of
Series A Preferred Stock that remains outstanding thereafter shall thereupon
have the right to receive, upon the basis and upon the terms and conditions
specified herein and in lieu of or in addition to, as the case may be, the
shares of Common Stock immediately theretofore receivable upon the conversion of
such share or shares of Series A Preferred Stock, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Common Stock equal to the number of
shares of such Common Stock immediately theretofore receivable upon such
conversion had such Organic Change not taken place, and appropriate provisions
shall be made with respect to the rights and interests of each Holder to the end
that the provisions hereof (including without limitation provisions for
adjustments of the Series A Conversion Price) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such conversion rights.
9. Notices. Any and all notices or other communications or deliveries to
be provided by the Holders of the Series A Preferred Stock hereunder, including,
without limitation, any Conversion Notice, shall be in writing and delivered
personally, by facsimile or sent by a nationally recognized overnight courier
service, addressed to the attention of the Chief Executive Officer of the
Corporation addressed to 116 Newark Avenue, Jersey City, NJ 07302, Facsimile
No.: (201) 395-0076, Attention Chief Executive Officer, or to such other address
or facsimile number as shall be specified in writing by the Corporation for such
purpose. Any and all notices or other communications or deliveries to be
provided by the Corporation hereunder shall be in writing and delivered
personally, by facsimile or sent by a nationally recognized overnight courier
service, addressed to each Holder at the facsimile telephone number or address
of such Holder appearing on the books of the Corporation, or if no such
facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 6:30 p.m. (New
York City time) (with confirmation of transmission), (ii) the date after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile telephone number specified in this
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Section later than 6:30 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date (with confirmation of
transmission), (iii) upon receipt, if sent by a nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given.
10. Stock to be Reserved. The Corporation will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series A Preferred Stock as herein provided,
such number of shares of Common Stock as shall then be issuable upon the
conversion of all outstanding shares of Series A Preferred Stock.
11. Issue Tax. The issuance of certificates for shares of Common Stock
upon conversion of Series A Preferred Stock shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Series A Preferred Stock which is
being converted.
12. Status of Converted Shares. In case any shares of Series A Preferred
Stock shall be converted pursuant hereto, the shares of Series A Preferred Stock
so converted shall be canceled, shall not be re-issuable and shall cease to be
part of the authorized capital stock of the Corporation.
13. Amendments. Except where the vote or written consent of the holders of
a greater number of shares of the Corporation is required herein or by law, no
provision of this Series A Certificate which adversely affects the Series A
Preferred Stock may be amended, modified or waived without the written consent
or affirmative vote of the holders of at least a two-thirds of the then
outstanding shares of Series A Preferred Stock consenting or voting, as the case
may be, separately as a class.
14. Lost Certificates. Upon receipt of evidence reasonably satisfactory to
the Corporation of the loss, theft, destruction or mutilation of a stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity agreement reasonably satisfactory to the Corporation, or
in the case of any such mutilation upon surrender and cancellation of such stock
certificate, the Corporation will make and deliver a new stock certificate, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated stock
certificate at the Corporation's own expense.
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IN WITNESS WHEREOF, GSV, Inc. has caused this certificate to be signed by
its officers as of this 1st day of March, 2001.
GSV, INC.
By: /s/ Jeffrey Tauber
----------------------------------------
Name: Jeffrey Tauber
Title: Chief Executive Officer
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