Exhibit F
CERTIFICATE OF DESIGNATION
CERTIFICATE OF DESIGNATION OF
SERIES A PREFERRED STOCK OF
COMPUTER MARKETPLACE, INC.
Acting pursuant to Sections 151(a) and (g) of the Delaware General
Corporation Law, the undersigned hereby certifies that the Board of Directors of
Computer Marketplace, Inc. (the "Corporation") duly approved the following
Certificate of Designation of Series A Preferred Stock of the Corporation, and
that the Certificate of Incorporation of the Corporation expressly authorizes
the Board to so designate and issue one or more series of preferred stock. The
designations, powers, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations and restrictions thereof in
respect of the Preferred Stock are as follows:
1. NUMBER OF SHARES; PAR VALUE. The Corporation shall be
authorized to issue 400,000 shares of Series A Preferred Stock, par value $.0001
per share (the "Preferred Stock").
2. DIVIDEND PROVISIONS.
The holders of shares of Preferred Stock shall not be entitled to receive any
dividends, except when and as lawfully declared by the Company's Board of
Directors.
3. LIQUIDATION PREFERENCE. (a) In the event of any liquidation,
dissolution or winding up of the Corporation, either voluntary or involuntary,
subject to the rights of series of preferred stock that may from time to time
come into existence, the holders of Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any of the assets of the
Corporation to the holders of Common Stock by reason of their ownership thereof,
an amount per share equal to the sum of Ten Dollars ($10.00) for each
outstanding share of Preferred Stock (the "Original Issue Price"). If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Preferred Stock shall be insufficient to permit the payment to
such holders of the full aforesaid preferential amounts, then, subject to the
rights of series of preferred stock that may from time to time come into
existence, the entire assets and funds of the Corporation legally available for
distribution shall be distributed ratably among the holders of the Preferred
Stock in proportion to the amount of such stock owned by each such holder.
(b) Upon completion of the distribution required by subsection (a) of this
Section 3 and any other distribution that may be required with respect to a
series of preferred stock that may from time to time come into existence, all of
the remaining assets of the Corporation available for distribution to
stockholders shall be distributed among the holders of Common Stock pro rata
based on the number of shares of Common Stock held by each (assuming full
conversion of all such Preferred Stock).
(i) For purposes of this Section 3, a liquidation, dissolution or winding
up of the Corporation shall be deemed to be occasioned by, or to include (unless
the holders of at least a majority of the Preferred Stock then outstanding shall
determine otherwise), (A) the acquisition of the Corporation by another entity
by means of any transaction or series of related transactions (including,
without limitation, any reorganization, merger or consolidation) that results in
the transfer of fifty percent (50%) or more of the outstanding voting power of
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the Corporation (other than the transactions contemplated by that certain Stock
Purchase Agreement dated as of April 21, 1999 among the Corporation and the
stockholders of E-Taxi, Inc.); or (B) a sale of all or substantially all of the
assets of the Corporation.
(ii) In any of such events, if the consideration received by the Corporation
is other than cash, its value will be deemed its fair market value. Any
securities shall be valued as follows:
(A) Securities not subject to investment letter or other similar
restrictions on free marketability are covered by (B) below:
(1) If traded on a securities exchange or through the
Nasdaq market, the value shall be deemed to be
the average of the closing prices of the
securities on such exchange or system over the
thirty (30) day period ending three (3) days
prior to the closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing
bid or sale prices (whichever is applicable) over
the thirty (30) day period ending three (3) days
prior to the closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as
mutually determined by the Corporation and the
holders of at least a majority of the voting
power of all then outstanding shares of Preferred
Stock.
(B) The method of valuation of securities subject to investment letter or
other restrictions on free marketability (other than restrictions arising solely
by virtue of a stockholder's status as an affiliate or former affiliate) shall
be to make an appropriate discount from the market value determined as above in
(A) (1), (2) or (3) to reflect the approximate fair market value thereof, as
mutually determined by the Corporation and the holders of at least a majority of
the voting power of all then outstanding shares of such Preferred Stock.
(iii) In the event the requirements of this subsection 3(b) are not complied
with, the Corporation shall forthwith either:
(A) cause such closing to be postponed until such time as the requirements
of this Section 3 have been complied with; or
(B) cancel such transaction, in which event the right., preferences and
privileges of the holders of the Preferred Stock shall revert to and be the same
as such rights, preferences and privileges existing immediately prior to the
date of the first notice referred to in Subsection 3(b) (iv) hereof.
(iv) The Corporation shall give each holder of record of Preferred Stock
written notice of such impending transaction not later than twenty (20) days
prior to the stockholders' meeting called to approve such transaction, or twenty
(20) days prior to the closing of such transaction, whichever is earlier, and
shall also notify such holders in writing of the final approval of such
transaction. The first of such notices shall describe the material terms and
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conditions of the impending transaction and the provisions of this Section 3,
and the Corporation shall thereafter give such holders prompt notice of any
material changes. The transaction shall in no event take place sooner than
twenty (20) days after the Corporation has given the first notice provided for
herein or sooner than ten (10) days after the Corporation has given notice of
any material changes provided for herein; provided, however, that such periods
may be shortened upon the written consent of the holders of Preferred Stock that
are entitled to such notice rights or similar notice rights and that represent
at least a majority of the voting power of all then outstanding shares of such
Preferred Stock.
4. CONVERSION. The holders of Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share or Preferred Stock shall be convertible,
at the option of the holder thereof, at any time after the date of issuance of
such share at the office of the Corporation or any transfer agent for such
stock, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing the Original Issue Price by the Conversion Price
applicable to such share, determined as hereafter provided, in effect on the
date the certificate is surrendered for conversion. The initial Conversion Price
per share for shares of Preferred Stock shall be Two and 50/100 Dollars ($2.50);
provided, however, that the Conversion Price for the Preferred Stock shall be
subject to adjustment as set forth in subsection 4(d).
(b) AUTOMATIC CONVERSION. Each share of Preferred Stock shall automatically
be converted into shares of Common Stock at the Conversion Price three (3)
business days following the date on which the Common Stock has a Fair Market
Value (as hereinafter defined) of three dollars and seventy-five cents ($3.75).
"Fair Market Value" shall mean the average closing price for the Common Stock
for three (3) consecutive days as reported by the OTC Bulletin Board, the NASDAQ
Stock Market or any stock exchange.
(c) MECHANICS OF CONVERSION. Before any holder of Preferred Stock shall be
entitled to convert the same into shares of Common Stock, he or she shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Corporation or of any transfer agent for the Preferred Stock, and shall
give written notice to the Corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Preferred Stock, or to the nominee or nominees of such
holder, a certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled am aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date.
(d) CONVERSION PRICE ADJUSTMENT FOR CERTAIN SPLITS AND COMBINATIONS. The
Conversion Price of the Preferred Stock shall be subject to adjustment from time
to time as follows:
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(i) In the event the Corporation should at any time or from time to time
after the issuance date fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock, additional shares of Common Stock
(hereinafter referred to as "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock, then, as
of such record date (or the date of such dividend distribution, split or
subdivision if no record date is fixed), the Conversion Price of the Preferred
Stock shall be appropriately decreased so that the number of shares of Common
Stock issuable on conversion of each share of such series shall be increased in
proportion to such increase of the aggregate of shares of Common Stock
outstanding.
(ii) If the number of shares of Common Stock outstanding at any time after
the issuance date is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date of such combination, the
Conversion Price for the Preferred Stock shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each share
of such series shall be decreased in proportion to such decrease in outstanding
shares.
(e) OTHER DISTRIBUTIONS. In the event the Corporation shall declare a
distribution payable in securities of other entities, evidences of indebtedness
issued by the Corporation or other entities, assets (excluding cash dividends)
or options or rights not referred to in subsection 3 (d), then, in each such
case for the purpose of this subsection 4(e), the holders of the Preferred Stock
shall be entitled to a proportionate share of any such distribution as though
they were the holders of the number of shares of common stock of the Corporation
into which their shares of Preferred Stock are convertible as of the record date
fixed for the determination of the holders of Common Stock of the Corporation
entitled to receive such distribution.
(f) RECAPITALIZATIONS. If at any time or from time to time there shall be a
recapitalization of the Common Stock (other than a subdivision, combination or
merger or sale of assets transaction provided for elsewhere in this Section 4 or
Section 3) provision shall be made so that the holders of the Preferred Stock
shall thereafter be entitled to receive upon conversion of the Preferred Stock
the number of shares of stock or other securities or property of the corporation
or otherwise, to which a holder of Common Stock deliverable upon conversion
would have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 4
with respect to the rights of the holders of the Preferred Stock after the
recapitalization to the end that the provisions of this Section 4 (including
adjustment of the conversion price then in effect and the number of shares
purchasable upon conversion of the Preferred Stock) shall be applicable after
that event as nearly equivalent as may be practicable
(g) NO IMPAIRMENT. The Corporation will not, by amendment of its
certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
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Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 3 and in the taking of all such action as may
be necessary or appropriate in order to protect the conversion rights of the
holders of the Preferred Stock against impairment.
(h) NO FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
(i) No fractional shares shall be issued upon the conversion of any share
or shares of the Preferred Stock, and the number of shares of Common Stock to be
issued shall be rounded to the nearest whole share. Whether or not fractional
shares are issuable upon such conversion shall be determined on the basis of the
total number of shares of Preferred Stock the holder is at the time converting
into Common Stock and the number of shares of Common Stock issuable Upon such
aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of the
Conversion Price of Preferred Stock pursuant to this Section 4, the Corporation,
at its expense, shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each holder of
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time or any holder of
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price for such series of Preferred Stock at the time in effect, and
(C) the number of shares of Common Stock and the amount, if any, of other
property that at the time would be received upon the conversion of a share of
Preferred Stock.
(i) NOTICES OF RECORD DATE. In the event of 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 (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Corporation shall
mail to each holder of Preferred Stock, at least ten (10) days prior to the date
specified therein, a notice specifying the date an which any such record is to
be taken far the purpose of such dividend, distribution or right, and the amount
and character of ouch dividend, distribution or right.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. 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 effecting the conversion of the
shares of the Preferred Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock, 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 he sufficient for such
purposes.
(k) NOTICES. Any notice required by the provisions of this Section 4 to be
given to the holders of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his or her address appearing on the books of the
Corporation.
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5. VOTING RIGHTS. Except as otherwise required by law, holders of
the Preferred Stock shall have no voting rights.
6. REDEMPTION. The Corporation shall redeem, from any source of
funds legally available therefor, the Preferred Stock on such date as is three
years from the date of issuance of the Preferred Stock (the "Series A Redemption
Date"). The Corporation shall effect such redemption on the Original Redemption
Date by paying in cash in exchange for the shares of Preferred Stock to be
redeemed as sum equal to Original Issue Price (as adjusted for any stock
dividends, combinations or splits with respect to such shares).
7. PROTECTIVE PROVISIONS. Subject to the rights of a series of
preferred stock that may from time to time come into existence, so long as any
shares of Preferred Stock are outstanding, the Corporation shall not without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least a majority of the then outstanding shares of Preferred
Stock:
(a) alter or change the rights, preferences or privileges or the shares of
Preferred Stock so as to affect adversely the shares;
(b) increase or decrease (other than by redemption or conversion) the total
number of authorized shares of Preferred Stock;
8. STATUS OF REDEEMED OR CONVERTED STOCK. In the event any shares
of Preferred Stock shall be converted pursuant to Section 4 hereof, the shares
so redeemed or converted may, in the discretion of the Company's Board of
Directors, be canceled or issued by the Corporation.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Designation this 23rd day of April, 1999.
COMPUTER MARKETPLACE, INC.
By: /s/ L. WAYNE KILEY
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Name: L. Wayne Kiley
Title: President
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