EXHIBIT 3.1
ARTICLES OF INCORPORATION
-------------------------
OF
--
ONLINE SYSTEM SERVICES, INC.
----------------------------
The undersigned incorporator, being a natural person of the age of eighteen
years or more hereby establishes a corporation pursuant to the statutes of the
State of Colorado and adopts the following Articles of Incorporation:
ARTICLE I
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NAME
----
The name of the corporation shall be Online System Services, Inc.
ARTICLE II
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PERIOD OF DURATION
------------------
This Corporation shall exist in perpetuity, from and after the date of
filing these Articles of Incorporation with the Secretary of State of the State
of Colorado unless dissolved according to law.
ARTICLE III
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PURPOSES
--------
The purpose for which this corporation is organized is to engage in any
lawful act or activity for which corporations may be organized under the laws of
the State of Colorado.
In furtherance of the foregoing purposes, the Corporation shall have and
may exercise all of the rights, powers and privileges now or hereafter conferred
upon corporations organized under the laws of the State of Colorado. In
addition, it may do `everything necessary, suitable or proper for the
accomplishment of any of its corporate purposes.
ARTICLE IV
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CAPITAL
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1. Authorized Shares. The aggregate number of shares which this
corporation shall have authority to issue is 10,000 shares, all of one class,
Common Stock, having no par value.
2. Restrictions. The Corporation shall have the right to impose
restrictions on the transfer of shares of the Corporation.
3. Dividends. The Board of Directors may from time to time distribute to
shareholders in partial liquidation, or out of stated capital or capital surplus
of the Corporation, a portion of its assets, in cash or property, subject to the
limitations contained within the statutes of the State of Colorado.
4. Distribution in Liquidation. Upon any liquidation, dissolution or
winding up of the Corporation, and after paying or adequately providing for the
payment of all its obligations, the remainder of the assets of the Corporation
shall be distributed, either in cash or in kind, pro rata to the holders of the
Common Stock.
ARTICLE V
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VOTING BY SHAREHOLDERS
----------------------
1. Voting Rights; No Cumulative Voting. Each outstanding share of Common
Stock is entitled to the vote and each fractional share of Common Stock is
entitled to a corresponding fractional vote on each matter submitted to a vote
of shareholders. Cumulative voting shall not be allowed in the election of
directors of the Corporation and every shareholder entitled to vote at such
election shall have the right to vote the number of shares owned by him for as
many persons as there are directors to be elected, and for whose election he has
a right to vote.
2. Denial of Preemptive Rights. No shareholder of the Corporation,
whether now or hereafter authorized, shall have any preemptive or similar right
to acquire any additional unissued or treasury shares of stock or securities of
any class or rights, warrants or options to purchase stock or scrip or
securities in any kind, including shares or securities convertible into shares
or carrying stock purchase warrants or privileges.
3. Majority Vote. A quorum for the purpose of stockholder meetings will
consist of a majority of the shares issued and outstanding and entitled to vote
at the meeting.
When a quorum is present, and when the statute requires a vote of two-
thirds of the shares entitled to vote to take action, the affirmative vote of a
majority of the shares issued and outstanding and entitled to vote on the
subject matter shall be the act of the stockholders.
2
ARTICLE VI
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BOARD OF DIRECTORS
------------------
The initial Board of Directors shall consist of three (3) directors, and
the names and addresses of the persons who shall serve as directors until the
first annual meeting of the shareholders or until their successors are elected
and shall qualify are:
NAME MAILING ADDRESS
- ---- ---------------
R. Steven Adams 1800 Glenarm Place, Suite 700
Denver, Colorado 80202
Craig A. Snapp 9063 S. Bermuda Run Circle
Highlands Ranch, CO 80126
Thomas D. Smart 1700 Broadway, Suite 1800
Denver, CO 80290
The number of directors shall be prescribed by the Bylaws except that there
need be only as many directors as there are shareholders in the event that the
outstanding shares are held of record by fewer than two persons.
ARTICLE VII
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RIGHT OF DIRECTORS TO CONTRACT WITH CORPORATION
-----------------------------------------------
The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Corporation, and the same are in
furtherance of and not in limitation of the powers conferred by law.
1. No contract or other transaction between this Corporation and one or
more of its directors or any other corporation, firm, association, or entity in
which one or more of its directors are directors or officers or are financially
interested shall be either void or voidable solely because of such relationship
or interest or solely because such directors are present at the meeting of the
Board of Directors or a committee thereof which authorizes, approves, or
ratifies such contract or transaction or solely because their votes are counted
for such purpose if:
(a) The material facts as to such relationship or interest and as to the
contract or transaction are disclosed or are otherwise known to the Board of
Directors or committee and the board or committee authorizes, approves, or
ratifies such contract or transaction by the affirmative vote of a majority of
the disinterested directors, even though the directors are less than a quorum;
or
3
(b) The material facts of such relationship or interest and as to the
contract of transaction are disclosed or otherwise known to the shareholders
entitled to vote thereon and they authorize, approve, or ratify such contract or
transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable to the Corporation.
2. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
ARTICLE VIII
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CORPORATE OPPORTUNITY
---------------------
The officers, directors and other members of management of this Corporation
shall be subject to the doctrine of "corporate opportunities" only insofar as it
applies to business opportunities in which this Corporation has expressed an
interest as determined from time to time by this Corporation's Board of
Directors as evidenced by resolutions appearing in the Corporation's minutes.
Once such areas of interest are delineated, all such business opportunities
within such areas of interest which come to the attention of the officers,
directors, and other members of management of this Corporation shall be offered
first to the Corporation. In the event the Corporation declines to pursue any
or all such business opportunities, the officers, directors and other members.
of management of this Corporation shall be free to engage in such areas of
interest on their own and this doctrine shall not limit the right of any
officer, director or other member of management of this Corporation (other than
an officer, director, or member of management) from any duties which he may have
to this Corporation.
ARTICLE IX
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INDEMNIFICATION OF OFFICERS,
----------------------------
DIRECTORS AND OTHERS
--------------------
1. To the full extent permitted by the Colorado Corporation Code, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal (other than an action by or in the right of the Corporation)
by reason of the fact that he is or was a Director, Officer, employee, fiduciary
or agent of the Corporation, or is or was serving at the request of the
Corporation as a Director, Officer, employee, fiduciary or agent of another
corporation,
4
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he conducted himself in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
2. The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a Director, Officer, employee, fiduciary or
agent of the Corporation, or is or was serving at the request of the Corporation
as a Director, Officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Corporation unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
3. To the extent that a Director, Officer, employee, fiduciary or agent of
the Corporation has been wholly successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in paragraphs 1 and 2 of this
Article, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
5
4. Any indemnification under paragraphs 1 and 2 of this Article (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the Director,
Officer, employee, fiduciary or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in paragraphs 1 and 2.
Such determination shall be made (1) by the Board of Directors by a majority
vote of a quorum consisting of Directors who were not parties to such action,
suit or pending, or (2) if such a quorum is not attainable, or, even if
obtainable a quorum of disinterested Directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders.
5. Expenses (including attorneys' fees) incurred in defending a civil or
criminal action, suit or pending may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized in the
manner provided in paragraph 4 of this Article upon receipt of an undertaking by
or on behalf of the Director, Officer, employee, fiduciary or agent to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this section.
6. The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a Director, Officer, employee, fiduciary or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against any
liability asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
section.
7. In addition to the foregoing, the Corporation shall have the power to
indemnify current or former directors, officers, employees and agents to the
fullest extent provided by the laws of the State of Colorado.
ARTICLE X
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DIRECTOR LIABILITY
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To the fullest extent permitted by the Colorado Corporation Code, as the
same exists or may hereafter be amended, a director of this Corporation shall
not be liable to the Corporation or its shareholders for monetary damages for
breach of fiduciary duty as a director.
6
ARTICLE XI
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REGISTERED OFFICE AND REGISTERED AGENT
--------------------------------------
The address of the initial registered office of the Corporation is 1800
Glenarm Place, Suite 700, Denver, Colorado 80202 and the name of the initial
registered agent at such address is R. Steven Adams. Either the registered
office or the registered agent may be changed in the manner permitted by law.
ARTICLE XII
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INCORPORATOR
------------
The name and address of the incorporator is as follows:
NAME MAILING ADDRESS
- ---- ---------------
Kim P. Castillo 1800 Glenarm Place, Suite 700
Denver, Colorado 80202
IN WITNESS WHEREOF, the above-named incorporator has signed these Articles
of Incorporation this 22nd day of March 1994.
/s/ Kim P. Castillo
--------------------------------------
Kim P. Castillo
STATE OF COLORADO )
ss.
COUNTY OF DENVER )
I, the undersigned, a Notary Public, hereby certify that on the 22nd
day of March 1994, personally appeared before me, Kim P. Castillo, who being by
me first duly sworn, severally declared that she is the person who signed the
foregoing document as incorporator, and the statements therein contained are
true.
WITNESS my hand and official seal
[SEAL]
/s/ Colleen K. Overocker
--------------------------------------
Notary Public
My Commission Expires: May 17, 1995
-------------
7
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
ONLINE SYSTEM SERVICES, INC.
The undersigned, R. Steven Adams, President of Online System Services,
Inc., a Colorado corporation (the "Corporation"), DOES HEREBY CERTIFY that the
number of votes cast for the following amendment by each voting group entitled
to vote separately on the amendment was sufficient for approval by that group,
in that the sole shareholder of the Corporation approved and adopted the
amendment in all respects:
ARTICLE IV of the Articles of Incorporation of the Corporation is amended
and replaced in its entirety to read as follows:
ARTICLE IV
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CAPITAL
-------
1. Authorized Shares. The aggregate number of shares that the
Corporation has authority to issue is 15,000,000. The shares are classified in
two classes, consisting of 10,000,000 shares of Common Stock , no par value, and
5,000,000 shares of Preferred Stock, with such par value as the Board of
Directors of the Corporation may designate. The Board of Directors of the
Corporation is authorized to establish one or more series of Preferred Stock,
setting forth the designation of each such series, and fixing the preferences,
limitations and relative rights of each such series of Preferred Stock.
2. Transfer Restrictions. The Corporation shall have the right to impose
restrictions on the transfer of shares of the Corporation.
3. Dividends. The Board of Directors of the Corporation may from time to
time distribute to shareholders in partial liquidation, or out of stated capital
or capital surplus of the Corporation, a portion of its assets, in cash or
property, subject to the limitations contained within the statutes of the State
of Colorado.
4. Distributions in Liquidation. Upon any liquidation, dissolution or
winding up of the Corporation, and after paying or adequately providing for the
payment of all its obligations, the remainder of the assets of the Corporation
shall be distributed, either in cash or in kind, and subject to any preferences
of any series of Preferred Stock, to the shareholders of the Corporation.
I FURTHER CERTIFY that the foregoing amendment was approved and adopted by
the Corporation's sole shareholder effective as of the 17th day of March, 1995.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment this 31st day of July, 1995.
/s/ R. Steven Adams
--------------------------
R. Steven Adams, President
8
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
ONLINE SYSTEM SERVICES, INC.
The undersigned, Thomas S. Plunkett, Chief Financial Officer of Online
System Services, Inc., a Colorado corporation (the "Corporation"), DOES HEREBY
CERTIFY that pursuant to actions taken by the Board of Directors on December 16,
1997 in accordance with Sections 7-106-101, 7-106-102 and 7-110-102 of the
Colorado Business Corporation Act, the following amendment was duly adopted by
the Board of Directors without shareholder approval as permitted by Section 7-
106-102(4) of the Colorado Business Corporation Act:
ARTICLE IV of the Articles of Incorporation of the Corporation, as amended,
is further amended by adding a new Section 5, the text of which is set forth on
Exhibit A attached hereto.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment this 30th day of December, 1997.
/s/ Thomas S. Plunkett
-------------------------
Thomas S. Plunkett, Chief
Financial Officer
9
Exhibit A
5. Designation of 10% Preferred Stock. The Corporation shall establish
and reserve for issuance from its 5,000,000 authorized shares of Preferred Stock
a class of preferred stock consisting of 500,000 shares to be known as the 10%
Preferred Stock (the "10% Preferred Stock"). The 10% Preferred Stock shall have
a stated value of $10.00 per share. The preferences, limitations and relative
rights of the 10% Preferred Stock shall be as provided in this Section 5.
A. Voting Rights.
(1) Each outstanding share of the 10% Preferred Stock is
entitled to one vote on each matter submitted to a vote of
shareholders. The holders of the 10% Preferred Stock shall be entitled
to vote on all matters voted upon by the holders of the Corporation's
Common Stock. Unless otherwise required by law, the holders of the
Common Stock and the holders of the 10% Preferred Stock shall vote as a
single class on all matters submitted to a vote of shareholders.
(2) The holders of the 10% Preferred Stock shall not be
entitled to any rights of cumulative voting with respect to their
shares.
B. Preemptive Rights. No holder of the 10% Preferred Stock shall have
any preemptive or similar right to acquire any additional unissued or treasury
shares of stock or securities of any class or rights, warrants or options to
purchase stock or scrip or securities in any kind, including shares or
securities convertible into shares or carrying stock purchase warrants or
privileges.
C. Dividends.
(1) Dividends shall accrue on the 10% Preferred Stock at the
rate of ten percent (10%) per annum on the stated value of the 10%
Preferred Stock and shall be paid quarterly on the first of each
January, April, July and October, beginning July 1, 1998, to the record
holder thereof on the 15th of the previous month, subject to the
limitations contained within the statutes of the State of Colorado.
Dividends not paid in any quarter shall accumulate until paid, with
interest on the unpaid balance, if any, accruing simple interest at the
rate stated above. Subject to the foregoing limitations, dividends may
be paid out of any funds legally available for such purpose.
(2) Dividends on the 10% Preferred Stock shall be declared and
paid before dividends of any kind may be declared and paid on the
Common Stock or any inferior class or series of stock and before
distribution or any liquidation or distribution of any kind may be made
upon the issued and outstanding Common Stock or any inferior class of
stock.
(3) Upon any redemption or conversion of the 10% Preferred
Stock pursuant to paragraphs G and H below, the Corporation shall pay
all accrued but unpaid dividends on the 10% Preferred Stock called for
redemption or converted, as the case may be. The Corporation may pay
such accrued but unpaid dividends either (i) in cash or (ii) by issuing
shares of Common Stock at a price per share equal to the lesser of (a)
$10.00 or (b) if a redemption or a conversion occurring with respect to
shares of the 10% Preferred Stock for which the Corporation has given a
Notice of Redemption (as that term is defined in subparagraph G(2),
below), the Average Per Share Closing Bid Price (as defined below) for
the five trading days immediately preceding the date on which the
Notice of Redemption was first given to the holders of the 10%
Preferred Stock called for redemption, or, if a conversion occurring
with respect to shares of the 10% Preferred Stock for which the
Corporation has not given a Notice of Redemption, the Average Per Share
Closing Bid Price for the five trading days immediately preceding the
date on
10
which the Conversion Notice (as that term is defined in subparagraph
H(3), below) was first given to the Corporation.
(4) Upon payment by the Corporation of dividends on the basis
described in subparagraphs C(1)-C(3), the holders of the 10% Preferred
Stock shall have no further right to dividends and shall not
participate in any manner in dividends declared and paid or other
distributions on the Common Stock or any inferior class or series of
stock.
D. Liquidation Preference. In the event of the liquidation, dissolution
or winding up of the affairs of the Corporation, whether voluntary or
involuntary, the holders of the 10% Preferred Stock shall be entitled to
receive, after payment by the Corporation of its debts and liabilities, the
stated value of all shares of the 10% Preferred Stock in cash plus any all
accrued but unpaid dividends out of the assets of the Corporation before any
payment shall be made or any assets distributed to the holders of the Common
Stock or any other inferior class or series of stock. If sufficient assets are
not available to pay all holders of the 10% Preferred Stock in full, the
available assets shall be distributed to the holders of the 10% Preferred Stock
on a pro rata basis. Except as provided in this paragraph D, the holders of the
10% Preferred Stock shall not be entitled to receive any other payments from the
Corporation in the event of the liquidation, dissolution or winding up of the
affairs of the Corporation.
E. Other Securities, Obligations.
(1) Subject to any limitations contained in these Articles of
Incorporation, the Board of Directors of the Corporation reserves the
right to establish additional classes and/or series of capital stock of
the Corporation and to designate the preferences, limitations and
relative rights of any such classes and/or series; provided, however,
that no such class and/or series may have preferences, limitations and
relative rights which are superior to or senior to the preferences,
limitations and relative rights granted to the holders of the 10%
Preferred Stock.
(2) At any time during which any shares of the 10% Preferred
Stock are outstanding, the Corporation shall not incur any obligation
or liability other than trade payables and other short-term
indebtedness incurred in the ordinary course of business that is
superior to or senior to the 10% Preferred Stock in any respects,
including liquidation preferences.
F. Capital Reorganization. If the Corporation shall at any time
hereafter subdivide or combine its outstanding shares of Common Stock, declare a
dividend payable in Common Stock, or in case of any capital reorganization or
reclassification of the shares of Common Stock of the Corporation, the number of
shares and stated value of the 10% Preferred Stock shall be adjusted
appropriately to allow the holders of the 10% Preferred Stock, as nearly as
reasonably possible, to maintain (i) the aggregate stated value of their 10%
Preferred Stock and (ii) their pro rata interest in the Corporation and in the
Common Stock upon conversion of the 10% Preferred Stock, that they had prior to
any such subdivision, combination, stock dividend, reorganization or
reclassification.
G. Redemption.
(1) The 10% Preferred Stock may be redeemed by the
Corporation, in whole or in part, at any time for $10.00 per share (the
"Redemption Price"). It is the Corporation's intent to use its best
efforts to raise sufficient capital to both fund its operations and to
permit it to redeem the 10% Preferred Stock as soon as is reasonably
possible. In addition, if the Corporation completes a public offering
of its securities that raises net proceeds of at least $5,000,000 (the
"Public Offering") within nine months from the date on which the
initial closing of the offering of the 10% Preferred Stock occurs (the
"Closing Date"), then the Corporation shall redeem all of the
outstanding 10% Preferred Stock.
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(2) The Corporation shall give not more than sixty (60) nor
less than thirty (30) days notice (the "Notice of Redemption") of the
date fixed for any redemption (as fixed, the "Redemption Date") of the
10% Preferred Stock by mailing the Notice of Redemption to the record
holders of the 10% Preferred Stock to such holder's address as it
appears on the records of the Corporation; provided, however, that the
Corporation shall not be required to give notice of any redemption of
the 10% Preferred Stock that occurs within nine months from the Closing
Date. In the case of a partial redemption of the 10% Preferred Stock,
the shares to be redeemed shall be selected in any manner the
Corporation may determine. The Notice of Redemption shall be deemed
given when it is deposited in the United States mail with sufficient
postage affixed or when it is delivered to the record holder at such
holder's address as it appears on the records of the Corporation.
(3) On the Redemption Date, all rights of the holders of the
10% Preferred Stock called for redemption shall cease and terminate
with respect to such shares except (i) the right to receive the
Redemption Price upon surrender of the certificates representing the
shares of the 10% Preferred Stock called for redemption and (ii) the
right to receive payment of all dividends with respect to the shares of
10% Preferred Stock called for redemption which are accrued but unpaid
on the Redemption Date.
H. Conversion.
(1) If the 10% Preferred Stock is not redeemed within nine
months from the Closing Date, each share of the outstanding 10%
Preferred Stock shall become convertible, at the election of the holder
thereof (the "Conversion Right"), into the number of shares of Common
Stock of the Corporation equal to $10.00 divided by the lesser of (i)
$10.00 or (ii) 80% of the Average Per Share Closing Bid Price of the
Corporation's Common Stock as calculated pursuant to the next sentence
The "Average Per Share Closing Bid Price" shall be (a) if the
conversion occurs with respect to shares of the 10% Preferred Stock for
which the Corporation has given a Notice of Redemption, the average per
share closing bid price for the Corporation's Common Stock for the five
trading days immediately preceding the date on which the Notice of
Redemption was first given to the holders of the 10% Preferred Stock
called for redemption or (b) if the conversion occurs with respect to
shares of the 10% Preferred Stock for which the Corporation has not
given a Notice of Redemption, the average closing bid price for the
five trading days immediately preceding the date on which the holder
gives the Conversion Notice (as that term is defined in subparagraph
H(3), below) to the Corporation. The Closing Bid Price for the Common
Stock at any date shall be (i) the Closing Bid Price of the Common
Stock as reported in The Wall Street Journal (or, if not so reported,
as otherwise reported by The Nasdaq Stock Market or, (ii) in the event
that the Common Stock is listed on a stock exchange or on the Nasdaq
National Market (or other national market), the Closing Bid Price shall
be the closing price on the exchange or the Nasdaq National Market (or
other national market), as the case may be, as reported in The Wall
Street Journal (or, if not so reported, as otherwise reported by the
stock exchange, Nasdaq or other national market). In the event that
there is no reported Closing Bid Price or sale price, as the case may
be, for a given day, the Closing Bid Price or sale price, as the case
may be, for that day shall be deemed to be the Closing Bid Price or
sale price, as the case may be, for the first day preceding such day
for which there was a reported Closing Bid Price or sale price, as the
case may be.
(2) The Conversion Right shall expire and terminate five (5)
days prior to the Redemption Date. In the case of a partial redemption
of the 10% Preferred Stock, the Conversion Right shall so expire and
terminate only with respect to the shares of the 10% Preferred Stock
called for redemption.
(3) In order to exercise the Conversion Right, the holder of
the 10% Preferred Stock to be converted shall give written notice (the
"Conversion Notice") to the
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Corporation at its principal office or, at the option of the
Corporation, at the offices of a conversion agent which the Corporation
may designate from time to time by giving written notice of such
designation to the holders of the 10% Preferred Stock, that the holder
elects to convert such shares. The Conversion Notice shall be
accompanied by the certificate or certificates representing the shares
of the 10% Preferred Stock to be converted, duly endorsed to the
Corporation. The Conversion Notice shall be deemed given when it is
deposited in the United States mail with sufficient postage affixed or
when it is delivered to the Corporation at its principal office (or to
the offices of such conversion agent, if one be designated).
(4) As soon as practicable after the receipt of the Conversion
Notice and the certificates representing the shares of the 10%
Preferred Stock to be converted, the Corporation shall issue and shall
deliver to the record holder of the shares so surrendered for
conversion by mail to the address of such record holder as it appears
on the records of the Corporation, a certificate or certificates for
the number of shares of Common Stock issuable upon conversion of the
shares of the 10% Preferred Stock and a residual certificate for shares
of the 10% Preferred Stock, if any, not converted. Such conversion
shall be deemed to have been effected on the date on which the
Corporation (or the conversion agent, if one be designated), shall have
received the Conversion Notice and the certificate or certificates
representing shares of the 10% Preferred Stock to be converted, and the
record holder shall be deemed to have become on such date the holder of
record of the shares of Common Stock to be received upon conversion;
provided, however, that any such surrender on any date when the stock
transfer books of the Corporation shall be closed in accordance with
the bylaws of the Corporation shall not be deemed to constitute the
record holder as the holder of shares of Common Stock to be received
upon conversion for any purpose until the close of business on the day
succeeding the day on which such stock transfer books shall become
open.
(5) The Corporation shall not be required to issue fractional
shares of Common Stock upon conversion of shares of the 10% Preferred
Stock. If any fractional interest in a share of Common Stock would be
deliverable upon conversion of any shares of the 10% Preferred Stock,
the Corporation shall make an adjustment therefor in cash at the
current market value thereof, computed on the basis determined by the
Corporation in its sole discretion.
13
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
ONLINE SYSTEM SERVICES, INC.
The undersigned, Thomas S. Plunkett, Chief Financial Officer of Online
System Services, Inc., a Colorado corporation (the "Corporation"), DOES HEREBY
CERTIFY that pursuant to actions taken by the Board of Directors on May 7, 1998
in accordance with Sections 7-106-101, 7-106-102 and 7-110-102 of the Colorado
Business Corporation Act, the following amendment was duly adopted by the Board
of Directors without shareholder approval as permitted by Section 7-106-102(4)
of the Colorado Business Corporation Act:
ARTICLE IV of the Articles of Incorporation of the Corporation, as amended,
is further amended by adding a new Section 6, the text of which is set forth on
Exhibit A attached hereto.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment this 22nd day of May, 1998.
/s/ Thomas S. Plunkett
-----------------------
Thomas S. Plunkett
Chief Financial Officer
14
EXHIBIT A
6. Designation of Preferred Stock. The Corporation shall establish and
reserve for issuance from its 5,000,000 authorized shares of Preferred Stock a
class of convertible preferred stock consisting of 3,000 shares to be designated
as the 5% Preferred Stock (the "5% Preferred Stock"). The 5% Preferred Stock
shall have a stated value of the Liquidation Preference (as hereinafter
defined). Except as otherwise expressly stated in this Section 6, all shares of
the 5% Preferred Stock shall be identical to the shares of 10% Preferred Stock,
and the holders of 5% Preferred Stock shall be entitled to the same preferences,
limitations and relative rights as the holders of 10% Preferred Stock.
A. Dividends.
(1) Holders of the 5% Preferred Stock shall be entitled to
receive, out of funds legally available therefor, dividends at a rate
equal to 5% (the "Dividend Rate") of the Liquidation Preference per
share per annum (subject to appropriate adjustments in the event of any
stock dividend, stock split, combination or other similar
recapitalization affecting such shares), and no more, payable in
accordance with the provisions of this Section 6. Notwithstanding the
foregoing sentence of this Subsection A(1), in the event the
Registration Statement (as hereinafter defined) is not declared
effective by the Securities and Exchange Commission (the "Commission")
within 90 days following the Initial Closing Date (as defined in that
certain Securities Purchase Agreement (the "Securities Purchase
Agreement"), dated as of May 22, 1998, among the Corporation, the
purchasers named therein and West End Capital LLC), then the Dividend
Rate shall increase to 18% until the Registration Statement is declared
effective; provided, however, that if the Commission conducts a review
of the Registration Statement, the Dividend Rate shall not increase
unless it is not declared effective by the Commission within 120 days
following the Initial Closing Date, at which time the Dividend Rate
shall increase to 18% until the Registration Statement is declared
effective.
(2) At the election of the Corporation, each dividend on 5%
Preferred Stock shall be paid either in shares of Common Stock or in
cash on the Delivery Date (as defined in Subsection H(2)(a) of this
Section 6) with respect to any shares of 5% Preferred Stock which are
the subject of a Notice of Conversion (as defined in Subsection H(2)(a)
of this Section 6). Dividends paid in shares of Common Stock shall be
paid (based on an assumed value of $1,000 per share) in full shares
only, with a cash payment equal to the value of any fractional shares.
Each dividend paid in cash shall be mailed to the holders of record of
the 5% Preferred Stock as their names and addresses appear on the share
register of the Corporation or at the office of the transfer agent on
the corresponding dividend payment date. Holders of 5% Preferred Stock
will receive written notification from the Corporation or the transfer
agent if a dividend is paid in kind, which notification will specify
the number of shares of Common Stock paid as a dividend and the
recipient's aggregate holdings of Common Stock as of that dividend
payment date and after giving effect to the dividend. All holders of
shares of Common Stock issued as dividends shall be entitled to all of
the rights and benefits relating to shares of Common Stock as set forth
in the Corporation's Articles of Incorporation, as amended, and
By-laws.
(3) Holders of the 5% Preferred Stock shall be entitled to
payment of any dividends in preference and priority to any payment of
any cash dividend on Common Stock or any other class or series of
capital stock of the Corporation other than any other class or series
of stock ranking senior ("Senior Preferred Stock") to the 5% Preferred
Stock in respect of dividends, when and as declared by the Board of
Directors of the Corporation. The rights of the holders of 5% Preferred
Stock and 10% Preferred Stock to receive any dividends shall be equal
in preference and priority. Dividends on the 5% Preferred Stock shall
accrue with respect to each share of the 5% Preferred Stock from the
date on which such share is issued and outstanding and thereafter shall
be deemed to accrue from day to day whether or not earned or declared
and whether or not there exists
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profits, surplus or other funds legally available for the payment of
dividends, and shall be cumulative so that if such dividends on the 5%
Preferred Stock shall not have been paid, or declared and set apart for
payment, the deficiency shall be fully paid or declared and set apart
for payment before any dividend shall be paid or declared or set apart
for any Common Stock or other class or series of capital stock ranking
junior to the 5% Preferred Stock (such stock being collectively
referred to herein as the "Junior Stock") and before any purchase or
acquisition of any Junior Stock is made by the Corporation, except the
repurchase of Junior Stock from employees of the Corporation upon
termination of employment. At the earlier of: (1) the redemption or
conversion of the 5% Preferred Stock or (2) the liquidation of the
Corporation, any accrued but undeclared dividends shall be paid to the
holders of record of outstanding shares of the 5% Preferred Stock in
accordance with the provisions of this Section 6. No accumulation of
dividends on the 5% Preferred Stock shall bear interest.
B. Liquidation, Dissolution or Winding Up.
(1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of
the 5% Preferred Stock then outstanding shall be entitled to be paid
out of the assets of the Corporation available for distribution to its
stockholders, after and subject to the payment in full of all amounts
required to be distributed to the holders of any Senior Preferred Stock
ranking on liquidation prior and in preference to the Preferred Stock,
but before any payment shall be made to the holders of Junior Stock by
reason of their ownership thereof, an amount equal to $1,000 per share
of 5% Preferred Stock (the "Liquidation Preference") plus any accrued
but unpaid dividends (whether or not declared). The rights of the
holders of 5% Preferred Stock and 10% Preferred Stock to receive any
such distributions shall be equal in preference and priority. If upon
any such liquidation, dissolution or winding up of the Corporation the
remaining assets of the Corporation available for distribution to its
shareholders shall be insufficient to pay the holders of shares of the
5% Preferred Stock the full amount to which they shall be entitled, the
holders of shares of the 5% Preferred Stock shall share ratably in any
distribution of the remaining assets and funds of the Corporation in
proportion to the respective amounts which would otherwise be payable
in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.
(2) After the payment of all preferential amounts required to
be paid to the holders of the 5% Preferred Stock and the 10% Preferred
Stock upon the dissolution, liquidation, or winding up of the
Corporation, all of the remaining assets and funds of the Corporation
available for distribution to its shareholders shall be distributed
ratably among the holders of the 5% Preferred Stock and the Junior
Stock, with each share of 5% Preferred Stock being deemed, for such
purpose, to be equal to the number of shares of Common Stock, including
fractions of a share, into which such share of 5% Preferred Stock is
convertible immediately prior to the close of business on the business
day fixed for such distribution.
C. Voting.
(1) Each holder of outstanding shares of 5% Preferred Stock
shall be entitled, at each meeting of shareholders of the Corporation
(and with respect to written consents of shareholders in lieu of
meetings) with respect to any and all matters presented to the
shareholders of the Corporation for their action or consideration, to
the number of votes equal to the number of whole shares of Common Stock
into which the shares of 5% Preferred Stock held by such holder are
convertible (as adjusted from time to time pursuant to Subsection H
hereof) immediately after the close of business on the record date
fixed for such meeting or the effective date of such written consent.
Except as provided by law, by the provisions of Section J below, or by
the provisions
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establishing any other series of preferred stock, holders of 5%
Preferred Stock shall vote together with the holders Common Stock as a
single class.
(2) The holders of the 5% Preferred Stock shall not be
entitled to any rights of cumulative voting with respect to their
shares.
D. Preemptive Rights. No holder of Preferred Stock shall have any
preemptive or similar right to acquire any additional unissued or treasury
shares of stock or securities of any class or rights, warrants or options to
purchase stock or scrip or securities in any kind, including shares or
securities convertible into shares or carrying stock purchase warrants or
privileges.
E. Other Securities. Subject to any limitations contained in these
Articles of Incorporation, the Board of Directors of the Corporation reserves
the right to establish additional classes and/or series of capital stock of the
Corporation and to designate the preferences, limitations and relative rights of
any such classes and/or series; provided, however, that no such class and/or
series may have preferences, limitations and relative rights which are superior
to or senior to the preferences, limitations and relative rights granted to the
holders of the 5% Preferred Stock.
F. Capital Reorganization. If the Corporation shall at any time
hereafter subdivide or combine its outstanding shares of Common Stock, declare a
dividend payable in Common Stock, or in case of any capital reorganization or
reclassification of the shares of Common Stock of the Corporation, the number of
shares of the 5% Preferred Stock and the stated value of the 5% Preferred Stock
shall be adjusted appropriately to allow the holders of the 5% Preferred Stock,
as nearly as reasonably possible, to maintain (i) the aggregate stated value of
the 5% Preferred Stock and (ii) their pro rata interest in the Corporation and
in the Common Stock upon conversion of the 5% Preferred Stock, that each holder
had prior to any such subdivision, combination, stock dividend, reorganization
or reclassification.
G. Optional Redemption
(1) At any time within the 120 days following the Initial
Closing Date, the Corporation may, at its option, redeem all or any
portion of the shares of 5% Preferred Stock then outstanding upon not
less than ten (10) days' notice at a redemption price per share equal
to (A) the quotient of (i) the Liquidation Preference per share of 5%
Preferred Stock plus all accrued but unpaid dividends on such shares of
5% Preferred Stock and (ii) the Conversion Price as if the 5% Preferred
Stock has been converted on the 5% Preferred Stock Redemption Date (as
hereinafter defined) multiplied by (B) the average Closing Bid Price
(as hereinafter defined) of shares of Common Stock for the five (5)
trading days immediately preceding the 5% Preferred Stock Redemption
Date. Notwithstanding the foregoing, a redemption shall not occur
pursuant to this Subsection G(1) with respect to any 5% Preferred Stock
for which a holder has previously submitted a Notice of Conversion
pursuant to Subsection H of this Section 6. For purposes of this
Section 6, the term "Closing Bid Price" means, for any security as of
any date, the closing bid price on the principal securities exchange or
trading market where the Common Stock is listed or traded as reported
by Bloomberg, L.P. ("Bloomberg") or, if applicable, the closing bid
price of the Common Stock 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 the Common Stock by
Bloomberg, then 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 of the Common Stock
cannot be calculated on such date on any of the foregoing bases, the
Closing Bid Price of the Common Stock on such date shall be the fair
market value as mutually determined by the Corporation and holders of a
majority of the outstanding shares of 5% Preferred Stock being
converted for which the calculation of the Closing Bid Price is
required in order to determine the Conversion Price of such shares.
"Trading day" shall mean any day on which the Corporation's Common
Stock is traded for any period on the principal
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securities exchange or other securities market on which the Common
Stock is then being traded.
(2) Upon receipt of a notice given pursuant to Subsection
G(1), each holder of 5% Preferred Stock shall accept its ratable
portion (based on its holdings of 5% Preferred Stock as compared to the
aggregate number of shares of 5% Preferred Stock then outstanding) of
such offer by tendering such holder's shares to the Corporation for
redemption, at an address to be set forth in such notice, at any time
prior to 5:00 p.m. New York time on the 11th day following the mailing
of such notice (the "5% Preferred Stock Redemption Date"). Upon receipt
of a notice given pursuant to Subsection G(1) of this Section 6, the 5%
Preferred Stock which is the subject of such notice may not thereafter
be converted in accordance with Subsection H(1)(a) of this Section 6,
unless a Notice of Conversion relating to such 5% Preferred Stock had
previously been submitted. Within three (3) business days after the 5%
Preferred Stock Redemption Date, the Corporation shall remit the
applicable redemption price, calculated pursuant to Subsection G(1) of
this Section 6, by wire transfer to each holder of the 5% Preferred
Stock to the most recent address of each holder as set forth on the
records of the Corporation or its transfer agent.
(3) Any shares of 5% Preferred Stock redeemed pursuant to this
Subsection G or otherwise acquired by the Corporation in any manner
whatsoever shall be canceled and shall not under any circumstances be
reissued. 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 the Corporation's capital stock.
H. Conversion.
(1) Subject to Subsection G(2) of this Section 6, the holders
of the 5% Preferred Stock shall have conversion rights as follows (the
"5% Preferred Stock Conversion Rights"):
(a) Each share of 5% Preferred Stock shall be
convertible, at the option of the holder thereof, at any time
and from time to time, into such number of fully paid and
nonassessable shares of Common Stock as is determined by
dividing $1,000, plus the amount of any accrued and unpaid
dividends the Corporation elects to pay in Common Stock, by
the Conversion Price in effect at the time of conversion. The
Conversion Price at which shares of Common Stock shall be
deliverable upon conversion of 5% Preferred Stock without the
payment of additional consideration by the holder thereof (the
"Conversion Price") shall be the lower of (i) $16.33 or (ii)
86% of the average Closing Bid Price of the shares of Common
Stock for the five (5) trading days immediately preceding the
5% Preferred Stock Conversion Date (as hereinafter defined).
(b) At any time that the number of shares of Common
Stock issued (A) upon conversion of the 5% Preferred Stock and
(B) in lieu of dividend payments on the 5% Preferred Stock,
shall equal 574,281 (a "Common Stock Redemption Event"), the
Corporation shall (x) redeem, at a price determined in
accordance with Subsection G(1) of this Section 6, all of the
outstanding 5% Preferred Stock in accordance with the
provisions of Subsection G(2) or (y) call a special meeting of
its shareholders for the purpose of approving the transactions
contemplated by the Securities Purchase Agreement, including
the issuance of the 5% Preferred Stock on the terms set forth
therein, together with any other approvals that shall be
required so as to cause the transactions contemplated by the
Securities Purchase Agreement to remain in compliance with the
Rules and Regulations of The Nasdaq Stock Market (including
Rule 4320 of Nasdaq's Non-Qualitative Designation Criteria in
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connection with conversions of 5% Preferred Stock; such
approvals are referred to herein as the "Required Approvals").
The Corporation shall determine within five (5) business days
following the receipt of a Notice of Conversion which of such
actions it shall take, and shall promptly furnish notice to
each of the holders of 5% Preferred Stock as to such
determination, including, if applicable, a notice of
redemption. In no event shall the Corporation issue shares of
Common Stock upon conversion of, or in lieu of interest
payments on, the 5% Preferred Stock, after the occurrence of a
Common Stock Redemption Event until the Required Approvals, if
any, are obtained.
(c) If the Corporation elects to call a special
meeting of its shareholders pursuant to Subsection H(1)(b) of
this Section 6 to obtain the Required Approvals, the
Corporation shall use its best efforts to obtain such Required
Approvals within one hundred twenty (120) days of the Initial
Closing Date (such one hundred twenty (120) day period is
referred to herein as an "Approval Period"). If the
Corporation does not obtain the Required Approvals within the
Approval Period and the Corporation receives a Notice of
Conversion after the termination of the Approval Period, the
Corporation must redeem, in accordance with this Subsection H
of this Section 6, any shares of 5% Preferred Stock
outstanding after the Corporation has issued in excess of
574,281 shares of Common Stock in connection with conversions
of the 5% Preferred Stock.
(d) If the Corporation elects, pursuant to this
Subsection H, to redeem the 5% Preferred Stock on the
occurrence of a Common Stock Redemption Event, it shall redeem
such 5% Preferred Stock at the price determined in accordance
with Subsection G(1) of this Section 6. If the Corporation
shall have elected, pursuant to this Subsection H(1), to
obtain the Required Approvals but shall not have done so by
the later of the occurrence of the Common Stock Redemption
Event or the expiration of the Approval Period, it shall
furnish a redemption notice to the Purchasers within three (3)
business days after the expiration of the Approval Period.
(2) The 5% Preferred Stock Conversion Rights shall be
exercised as follows:
(a) The Corporation will permit each holder of 5%
Preferred Stock to exercise its right to convert the 5%
Preferred Stock by faxing an executed and completed notice of
conversion (the "Notice of Conversion") to the Corporation,
and delivering within three (3) business days thereafter, the
original Notice of Conversion (and the certificates
representing the related shares of 5% Preferred Stock) to the
Corporation by hand delivery or by express courier, duly
endorsed. Each date on which a Notice of Conversion is faxed
to and received in accordance with the provisions hereof shall
be deemed a "5% Preferred Stock Conversion Date." The
Corporation will transmit the certificates representing the
Common Stock issuable upon conversion of the 5% Preferred
Stock (together with certificates representing the related
shares of 5% Preferred Stock not so converted and, if
applicable, a check representing any fraction of a share not
converted) to such holder via express courier as soon as
practicable, but in all events no later than the later to
occur of (the "Delivery Date") (i) three (3) business days
after the 5% Preferred Stock Conversion Date, or (ii) three
(3) business days after receipt by the Corporation of the
original Notice of Conversion (and the certificates
representing the related shares of 5% Preferred Stock). For
purposes of this Section 6, such conversion of the 5%
Preferred Stock shall be deemed to have been made immediately
prior to the close of business on the 5% Preferred Stock
Conversion Date.
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(b) In lieu of delivering physical certificates
representing the Common Stock issuable upon the conversion of
the 5% Preferred Stock, provided that the Corporation's
transfer agent is participating in the Depository Trust
Corporation ("DTC") Fast Automated Securities Transfer
program, on the written request of a holder of 5% Preferred
Stock who shall have previously instructed such holder's prime
broker to confirm such request to the Corporation's transfer
agent, the Corporation shall use commercially reasonable
efforts to cause its transfer agent to electronically transmit
such Common Stock to such holder by crediting the account of
the holder's prime broker with DTC through its Deposit
Withdrawal Agent Commission system no later than the
applicable Delivery Date.
(c) The Corporation will at all times have authorized
and reserved for the purpose of issuance a sufficient number
of shares of Common Stock to provide for the conversion of the
5% Preferred Stock. The Corporation will use its best efforts
at all times to maintain a number of shares of Common Stock so
reserved for issuance that is no less than one and one-half
(1.5) times the number that is then actually issuable upon the
conversion of the 5% Preferred Stock, the exercise of the
Warrants issued pursuant to the Securities Purchase Agreement
and the maximum number of shares of Additional Common Stock
(as defined in the Securities Purchase Agreement) which may be
issued in accordance with the Securities Purchase Agreement.
Before taking any action which would cause an adjustment
reducing the Conversion Price below the established par value
of the shares of Common Stock issuable upon conversion of the
5% Preferred Stock, the Corporation will take any corporate
action which may, in the opinion of its counsel, be necessary
in order that the Corporation may validly and legally issue
fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.
(d) All shares of 5% Preferred Stock, which shall
have been surrendered for conversion as herein provided shall
no longer be deemed to be outstanding, and all rights with
respect to such shares, including the rights, if any, to
receive dividends, notices and to vote, shall immediately
cease and terminate on the 5% Preferred Stock Conversion Date,
except only the right of the holders thereof to receive shares
of Common Stock in exchange therefor. Any shares of 5%
Preferred Stock so converted shall be retired and canceled and
shall not be reissued, and the Corporation may from time to
time take such appropriate action as may be necessary to
reduce the number of shares of authorized 5% Preferred Stock
accordingly.
(3) In the event of a liquidation of the Corporation, the 5%
Preferred Stock Conversion Rights shall terminate at the close of
business on the first full day preceding the date fixed for the payment
of any amounts distributable on liquidation to the holders of the 5%
Preferred Stock.
(4) If the conversion is in connection with an underwritten
offer of securities registered pursuant to the Securities Act of 1933,
as amended, the conversion may, at the option of any holder tendering
5% Preferred Stock for conversion, be conditioned upon the closing with
the underwriter of the sale of securities pursuant to such offering, in
which event the person(s) entitled to receive the Common Stock issuable
upon such conversion of the 5% Preferred Stock shall not be deemed to
have converted such 5% Preferred Stock until immediately prior to the
closing of the sale of securities.
(5) At no time shall any holder of the 5% Preferred Stock
convert such amount of 5% Preferred Stock as shall result in such
Purchaser's ownership, after such conversion, exceeding 9.9% of the
Corporation's outstanding Common Stock.
20
(6) No fractional shares of Common Stock shall be issued upon
conversion of the Preferred Stock. In lieu of fractional shares, the
Corporation shall pay cash equal to such fraction multiplied by the
then effective and applicable Conversion Price.
(7) The Corporation will not, by amendment of its Articles of
Incorporation or through any reorganization, 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 under this
Subsection H by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Subsection H
and in the taking of all such action as may be necessary or appropriate
in order to protect the 5% Preferred Stock Conversion Rights of the
holders of the 5% Preferred Stock against impairment.
(8) In the event (a) that the Corporation declares a dividend
(or any other distribution) on its Common Stock payable in Common Stock
or other securities of the Corporation, (b) that the Corporation
subdivides or combines its outstanding shares of Common Stock, (c) of
any reclassification of the Common Stock of the Corporation (other than
a subdivision or combination of its outstanding shares of Common Stock
or a stock dividend or stock distribution thereon), (d) of any
consolidation or merger of the Corporation into or with another
corporation, (e) of the sale of all or substantially all of the assets
of the Corporation, or (f) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation, then the Corporation
shall cause to be filed at its principal office or at the office of the
transfer agent of the Preferred Stock, and shall cause to be mailed to
each holder of the Preferred Stock at their last address as shown on
the records of the Corporation or such transfer agent, at least ten
(10) days prior to the record date specified in (i) below or twenty
(20) days before the date specified in (ii) below, a notice stating
(i) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be
taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution,
subdivision or combination are to be determined, or
(ii) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or
winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or
winding up.
I. Sinking Fund. There shall be no sinking fund for the payment of
dividends, or liquidation preferences on the 5% Preferred Stock or the
redemption of any shares thereof.
J. Amendment. This Section 6 constitutes an agreement between the
Corporation and the holders of the 5% Preferred Stock. The Corporation shall not
amend this Section 6 or alter or repeal the preferences, rights, powers or other
terms of the 5% Preferred Stock so as to affect adversely the 5% Preferred
Stock, without the written consent or affirmative vote of the holders of at
least sixty-six and two-thirds percent (662/3%) of the then outstanding shares
of 5% Preferred Stock, given in writing or by vote at a meeting, consenting or
voting (as the case may be) separately as a class.
21
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
ONLINE SYSTEM SERVICES, INC.
The undersigned, Thomas S. Plunkett, Chief Financial Officer of Online
System Services, Inc., a Colorado corporation (the "Corporation"), DOES HEREBY
CERTIFY that pursuant to actions taken in accordance with Section 7-110-103 of
the Colorado Business Corporation Act, the amendment set forth below was duly
adopted by the shareholders of the Corporation on July 30, 1998. The
undersigned further certifies that the number of votes cast for the amendment by
each voting group entitled to vote separately on the amendment was sufficient
for approval by that voting group.
ARTICLE IV, Section 1 of the Articles of Incorporation of the Corporation
is amended and replaced in its entirety to read as follows:
1. Authorized Shares. The aggregate number of shares that the
Corporation has authority to issue is 25,000,000. The shares are
classified in two classes, consisting of 20,000,000 shares of Common Stock,
no par value, and 5,000,000 shares of Preferred Stock, with such par value
as the Board of Directors of the Corporation may designate. The Board of
Directors of the Corporation is authorized to establish one or more series
of Preferred Stock, setting forth the designation of each such series, and
fixing the preferences, limitations and relative rights of each such series
of Preferred Stock.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment this 19th day of August, 1998.
/s/ Thomas S. Plunkett
-----------------------
Thomas S. Plunkett
Chief Financial Officer
22
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
ONLINE SYSTEM SERVICES, INC.
The undersigned, Thomas S. Plunkett, Chief Financial Officer of Online
System Services, Inc., a Colorado corporation (the "Corporation"), DOES HEREBY
CERTIFY that pursuant to actions taken by the Board of Directors on November 9,
1998 in accordance with Sections 7-106-101, 7-106-102 and 7-110-102 of the
Colorado Business Corporation Act, the following amendment was duly adopted by
the Board of Directors without shareholder approval as permitted by Section 7-
106-102(4) of the Colorado Business Corporation Act:
ARTICLE IV of the Articles of Incorporation of the Corporation, as amended,
is further amended by adding a new Section 7, the text of which is set forth on
Exhibit A attached hereto.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment this 10th day of November, 1998.
/s/ Thomas S. Plunkett
-----------------------
Thomas S. Plunkett
Chief Financial Officer
23
EXHIBIT A
7. Designation of Preferred Stock. The Corporation shall establish and
reserve for issuance from its 5,000,000 authorized shares of Preferred Stock a
class of convertible preferred stock consisting of 1,400 shares to be designated
as the Series A Preferred Stock (the "Series A Preferred Stock"). The Series A
Preferred Stock shall have a stated value of the Liquidation Preference (as
hereinafter defined). Except as otherwise expressly stated in this Section 7,
all shares of the Series A Preferred Stock shall be identical to the shares of
5% Preferred Stock and 10% Preferred Stock, and the holders of Series A
Preferred Stock shall be entitled to the same preferences, limitations and
relative rights as the holders of 5% Preferred Stock and 10% Preferred Stock.
A. Dividends.
(1) Holders of the Series A Preferred Stock shall be entitled
to receive, out of funds legally available therefor, dividends at a
rate equal to 5% (the "Dividend Rate") of the Liquidation Preference
per share per annum (subject to appropriate adjustments in the event of
any stock dividend, stock split, combination or other similar
recapitalization affecting such shares), and no more, payable in
accordance with the provisions of this Section 7.
(2) At the election of the Corporation, each dividend on
Series A Preferred Stock shall be paid either in shares of Common Stock
or in cash on the Delivery Date (as defined in Subsection H(2)(a) of
this Section 7) with respect to any shares of Series A Preferred Stock
which are the subject of a Notice of Conversion (as defined in
Subsection H(2) of this Section 7). Dividends paid in shares of Common
Stock shall be paid (based on an assumed value of $1,000 per share) in
full shares only, with a cash payment equal to the value of any
fractional shares. Each dividend paid in cash shall be mailed to the
holders of record of the Series A Preferred Stock as their names and
addresses appear on the share register of the Corporation or at the
office of the transfer agent on the corresponding dividend payment
date. Holders of Series A Preferred Stock will receive written
notification from the Corporation or the transfer agent if a dividend
is paid in kind, which notification will specify the number of shares
of Common Stock paid as a dividend and the recipient's aggregate
holdings of Common Stock as of that dividend payment date and after
giving effect to the dividend. All holders of shares of Common Stock
issued as dividends shall be entitled to all of the rights and benefits
relating to shares of Common Stock as set forth in the Corporation's
Articles of Incorporation, as amended, and By-laws.
(3) Holders of the Series A Preferred Stock shall be entitled
to payment of any dividends in preference and priority to any payment
of any cash dividend on Common Stock or any other class or series of
capital stock of the Corporation other than any other class or series
of stock ranking senior ("Senior Preferred Stock") to the Series A
Preferred Stock in respect of dividends, when and as declared by the
Board of Directors of the Corporation. The rights of the holders of
Series A Preferred Stock, 5% Preferred Stock and 10% Preferred Stock to
receive any dividends shall be equal in preference and priority.
Dividends on the Series A Preferred Stock shall accrue with respect to
each share of the Series A Preferred Stock from the date on which such
share is issued and outstanding and thereafter shall be deemed to
accrue from day to day whether or not earned or declared and whether or
not there exists profits, surplus or other funds legally available for
the payment of dividends, and shall be cumulative so that if such
dividends on the Series A Preferred Stock shall not have been paid, or
declared and set apart for payment, the deficiency shall be fully paid
or declared and set apart for payment before any dividend shall be paid
or declared or set apart for any Common Stock or other class or series
of capital stock ranking junior to the Series A Preferred Stock (such
stock being collectively referred to herein as the "Junior Stock") and
before any purchase or acquisition of any Junior Stock is made by the
Corporation, except the repurchase of Junior Stock from employees of
the Corporation upon termination of employment. At
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the earlier of: (1) the redemption or conversion of the Series A
Preferred Stock or (2) the liquidation of the Corporation, any accrued
but undeclared dividends shall be paid to the holders of record of
outstanding shares of the Series A Preferred Stock in accordance with
the provisions of this Section 7. No accumulation of dividends on the
Series A Preferred Stock shall bear interest.
B. Liquidation, Dissolution or Winding Up.
(1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of
the Series A Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to
its stockholders, after and subject to the payment in full of all
amounts required to be distributed to the holders of any Senior
Preferred Stock ranking on liquidation prior and in preference to the
Preferred Stock, but before any payment shall be made to the holders of
Junior Stock by reason of their ownership thereof, an amount equal to
$1,000 per share of Series A Preferred Stock (the "Liquidation
Preference") plus any accrued but unpaid dividends (whether or not
declared). The rights of the holders of Series A Preferred Stock, 5%
Preferred Stock and 10% Preferred Stock to receive any such
distributions shall be equal in preference and priority. If upon any
such liquidation, dissolution or winding up of the Corporation the
remaining assets of the Corporation available for distribution to its
shareholders shall be insufficient to pay the holders of shares of the
Series A Preferred Stock the full amount to which they shall be
entitled, the holders of shares of the Series A Preferred Stock shall
share ratably in any distribution of the remaining assets and funds of
the Corporation in proportion to the respective amounts which would
otherwise be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to such shares
were paid in full.
(2) After the payment of all preferential amounts required to
be paid to the holders of the Series A Preferred Stock, 5% Preferred
Stock and the 10% Preferred Stock upon the dissolution, liquidation, or
winding up of the Corporation, all of the remaining assets and funds of
the Corporation available for distribution to its shareholders shall be
distributed ratably among the holders of the Series A Preferred Stock,
5% Preferred Stock and the Junior Stock, with each share of Series A
Preferred Stock being deemed, for such purpose, to be equal to the
number of shares of Common Stock, including fractions of a share, into
which such share of Series A Preferred Stock and 5% Preferred Stock are
convertible immediately prior to the close of business on the business
day fixed for such distribution.
C. Voting.
(1) Each holder of outstanding shares of Series A Preferred
Stock shall be entitled, at each meeting of shareholders of the
Corporation (and with respect to written consents of shareholders in
lieu of meetings) with respect to any and all matters presented to the
shareholders of the Corporation for their action or consideration, to
the number of votes equal to the number of whole shares of Common Stock
into which the shares of Series A Preferred Stock held by such holder
are convertible (as adjusted from time to time pursuant to Subsection H
hereof) immediately after the close of business on the record date
fixed for such meeting or the effective date of such written consent.
Except as provided by law, by the provisions of Section J below, or by
the provisions establishing any other series of preferred stock,
holders of Series A Preferred Stock shall vote together with the
holders Common Stock as a single class.
(2) The holders of the Series A Preferred Stock shall not be
entitled to any rights of cumulative voting with respect to their
shares.
D. Preemptive Rights. No holder of Preferred Stock shall have any
preemptive or similar right to acquire any additional unissued or treasury
shares of stock or securities of any
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class or rights, warrants or options to purchase stock or scrip or securities in
any kind, including shares or securities convertible into shares or carrying
stock purchase warrants or privileges.
E. Other Securities. Subject to any limitations contained in these
Articles of Incorporation, the Board of Directors of the Corporation reserves
the right to establish additional classes and/or series of capital stock of the
Corporation and to designate the preferences, limitations and relative rights of
any such classes and/or series; provided, however, that no such class and/or
series may have preferences, limitations and relative rights which are superior
to or senior to the preferences, limitations and relative rights granted to the
holders of the Series A Preferred Stock.
F. Capital Reorganization. If the Corporation shall at any time
hereafter subdivide or combine its outstanding shares of Common Stock, declare a
dividend payable in Common Stock, or in case of any capital reorganization or
reclassification of the shares of Common Stock of the Corporation, the number of
shares of the Series A Preferred Stock and the stated value of the Series A
Preferred Stock shall be adjusted appropriately to allow the holders of the
Series A Preferred Stock, as nearly as reasonably possible, to maintain (i) the
aggregate stated value of the Series A Preferred Stock and (ii) their pro rata
interest in the Corporation and in the Common Stock upon conversion of the
Series A Preferred Stock, that each holder had prior to any such subdivision,
combination, stock dividend, reorganization or reclassification.
G. Optional Redemption
(1) At any time within the 90 days following November 9, 1998,
the Corporation may, at its option, redeem all or any portion of the
shares of Series A Preferred Stock then outstanding upon not less than
thirty (30) days' written notice at a redemption price per share equal
to the Liquidation Preference of the Series A Preferred Stock plus any
accrued but unpaid dividends (whether or not declared); provided, that
if at the time of the notice of any such redemption, the Registration
Statement to be filed by the Corporation pursuant to Section 2(a) of
that certain Registration Rights Agreement dated November 9, 1998,
between the Corporation and Archer Investors LLC has not been declared
effective by the Securities and Exchange Commission and remains
effective until the Series A Preferred Stock Redemption Date, the
redemption price per share shall be equal to 115% of the Liquidation
Preference of the Series A Preferred Stock plus any accrued but unpaid
dividends (whether or not declared). Notwithstanding the foregoing, a
redemption shall not occur pursuant to this Subsection G(1) with
respect to any Series A Preferred Stock for which a holder has
previously submitted a Notice of Conversion pursuant to Subsection H of
this Section 7. For purposes of these Articles of Amendment, the term
"Closing Bid Price" means, for any security as of any date, the closing
bid price on the principal securities exchange or trading market where
the Common Stock is listed or traded as reported by Bloomberg, L.P.
("Bloomberg") or, if applicable, the closing bid price of the Common
Stock 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 the Common Stock by Bloomberg, then 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 of the Common Stock can not be calculated on such date on any of
the foregoing bases, the Closing Bid Price of the Common Stock on such
date shall be the fair market value as mutually determined by the
Corporation and the holders of a majority of the outstanding shares of
Series A Preferred Stock being converted for which the calculation of
the Closing Bid Price is required in order to determine the Conversion
Price of such shares. "Trading day" shall mean any day on which the
Corporation's Common Stock is traded for any period on the principal
securities exchange or other securities market on which the Common
Stock is then being traded.
(2) Upon receipt of a notice given pursuant to Subsection
G(1), each holder of Series A Preferred Stock shall have thirty days to
decide whether to accept its ratable portion (based on its holdings of
Series A Preferred Stock as compared to the
26
aggregate number of shares of Series A Preferred Stock then
outstanding) of such offer by tendering such holder's shares to the
Corporation for redemption, at an address to be set forth in such
notice, at any time prior to 5:00 p.m. New York time on the 30th day
following the mailing of such notice (the "Series A Preferred Stock
Redemption Date") or to convert all or a portion of the Series A
Preferred Stock. Notwithstanding the foregoing, nothing herein shall
limit the rights of the holders of the Series A Preferred Stock to
convert the Series A Preferred Stock in whole or in part, prior to the
Series A Preferred Stock Redemption Date. Within three (3) business
days after the Series A Preferred Stock Redemption Date, the
Corporation shall remit the applicable redemption price, calculated
pursuant to Subsection G(1) of this Section 7, by wire transfer to each
holder of the Series A Preferred Stock to the most recent address of
each holder as set forth on the records of the Corporation or its
transfer agent.
(3) Any shares of Series A Preferred Stock redeemed pursuant
to this Subsection G or otherwise acquired by the Corporation in any
manner whatsoever shall be canceled and shall not under any
circumstances be reissued. 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 the Corporation's
capital stock.
H. Conversion.
(1) Subject to Subsection G(2) of this Section 7, the holders
of the Series A Preferred Stock shall have conversion rights as follows
(the "Series A Preferred Stock Conversion Rights"):
(a) Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time
and from time to time, into such number of fully paid and
nonassessable shares of Common Stock as is determined by
dividing $1,000, plus the amount of any accrued and unpaid
dividends the Corporation elects to pay in Common Stock, by
the Conversion Price in effect at the time of conversion. The
Conversion Price at which shares of Common Stock shall be
deliverable upon conversion of Series A Preferred Stock
without the payment of additional consideration by the holder
thereof (the "Conversion Price") shall be the lower of (i)
105% of the average Closing Bid Price of the shares of Common
Stock for the five (5) trading days between November 2 through
November 6 ($5.71) or (ii) 80% of the average Closing Bid
Price of the shares of Common Stock for any five (5)
consecutive trading days during the twenty (20) consecutive
trading days immediately preceding the Series A Preferred
Stock Conversion Date (as hereinafter defined).
(b) At any time that the number of shares of Common
Stock issued (A) upon conversion of the Series A Preferred
Stock and (B) in lieu of dividend payments on the Series A
Preferred Stock, shall equal 630,000 (a "Common Stock
Redemption Event"), the Corporation shall (x) redeem, at a
price determined in accordance with Subsection G(1) of this
Section 7, all of the outstanding Series A Preferred Stock in
accordance with the provisions of Subsection G(2) or (y) call
a special meeting of its shareholders for the purpose of
approving the transactions contemplated by the Securities
Purchase Agreement, including the issuance of the Series A
Preferred Stock on the terms set forth therein, together with
any other approvals that shall be required so as to cause the
transactions contemplated by the Securities Purchase Agreement
to remain in compliance with the Rules and Regulations of The
Nasdaq Stock Market (including Rule 4320 of Nasdaq's Non-
Qualitative Designation Criteria in connection with
conversions of Series A Preferred Stock; such approvals are
referred to herein as the "Required Approvals"). The
Corporation shall determine within five (5) business days
following the receipt of a Notice of Conversion which of such
actions it shall take, and shall promptly furnish notice
27
to each of the holders of Series A Preferred Stock as to such
determination, including, if applicable, a notice of
redemption. In no event shall the Corporation issue shares of
Common Stock upon conversion of, or in lieu of interest
payments on, the Series A Preferred Stock, after the
occurrence of a Common Stock Redemption Event until the
Required Approvals, if any, are obtained.
(c) If the Corporation elects to call a special
meeting of its shareholders pursuant to Subsection H(1)(b) of
this Section 7 to obtain the Required Approvals, the
Corporation shall use its best efforts to obtain such Required
Approvals within thirty (30) days of the Common Stock
Redemption Event (such thirty (30) day period is referred to
herein as an "Approval Period"). If the Corporation does not
obtain the Required Approvals within the Approval Period and
the Corporation receives a Notice of Conversion after the
termination of the Approval Period, the Corporation must
redeem, in accordance with this Subsection H of this Section
7, any shares of Series A Preferred Stock outstanding after
the Corporation has issued in excess of 630,000 shares of
Common Stock in connection with conversions of the Series A
Preferred Stock.
(d) If the Corporation elects, pursuant to this
Subsection H, to redeem the Series A Preferred Stock on the
occurrence of a Common Stock Redemption Event, it shall redeem
such Series A Preferred Stock at the price determined in
accordance with Subsection G(1) of this Section 7. If the
Corporation shall have elected, pursuant to this Subsection
H(1), to obtain the Required Approvals but shall not have done
so by the later of the occurrence of the Common Stock
Redemption Event or the expiration of the Approval Period, it
shall furnish a redemption notice to the Purchasers within
three (3) business days after the expiration of the Approval
Period.
(2) The Series A Preferred Stock Conversion Rights shall be
exercised as follows:
(a) The Corporation will permit each holder of Series
A Preferred Stock to exercise its right to convert the Series
A Preferred Stock by faxing an executed and completed notice
of conversion (the "Notice of Conversion") to the Corporation,
and delivering within three (3) business days thereafter, the
original Notice of Conversion (and the certificates
representing the related shares of Series A Preferred Stock)
to the Corporation by hand delivery or by express courier,
duly endorsed. Each date on which a Notice of Conversion is
faxed to and received in accordance with the provisions hereof
shall be deemed a "Series A Preferred Stock Conversion Date."
The Corporation will transmit the certificates representing
the Common Stock issuable upon conversion of the Series A
Preferred Stock (together with certificates representing the
related shares of Series A Preferred Stock not so converted
and, if applicable, a check representing any fraction of a
share not converted) to such holder via express courier as
soon as practicable, but in all events no later than the later
to occur of (the "Delivery Date") (i) three (3) business days
after the Series A Preferred Stock Conversion Date, or (ii)
three (3) business days after receipt by the Corporation of
the original Notice of Conversion (and the certificates
representing the related shares of Series A Preferred Stock).
For purposes of this Section 7, such conversion of the Series
A Preferred Stock shall be deemed to have been made
immediately prior to the close of business on the Series A
Preferred Stock Conversion Date.
(b) In lieu of delivering physical certificates
representing the Common Stock issuable upon the conversion of
the Series A Preferred Stock, provided that the Corporation's
transfer agent is participating in the Depository
28
Trust Corporation ("DTC") Fast Automated Securities Transfer
program, on the written request of a holder of Series A
Preferred Stock who shall have previously instructed such
holder's prime broker to confirm such request to the
Corporation's transfer agent, the Corporation shall use
commercially reasonable efforts to cause its transfer agent to
electronically transmit such Common Stock to such holder by
crediting the account of the holder's prime broker with DTC
through its Deposit Withdrawal Agent Commission system no
later than the applicable Delivery Date.
(c) The Corporation will at all times have authorized
and reserved for the purpose of issuance a sufficient number
of shares of Common Stock to provide for the conversion of the
Series A Preferred Stock. The Corporation will use its best
efforts at all times to maintain a number of shares of Common
Stock so reserved for issuance that is no less than one and
one-half (1.5) times the number that is then actually issuable
upon the conversion of the Series A Preferred Stock and the
exercise of the Warrants issued pursuant to that certain
Securities Purchase Agreement (the "Securities Purchase
Agreement") dates as of November 9, 1998, between the
Corporation and the purchasers named therein. Before taking
any action which would cause an adjustment reducing the
Conversion Price below the established par value of the shares
of Common Stock issuable upon conversion of the Series A
Preferred Stock, the Corporation will take any corporate
action which may, in the opinion of its counsel, be necessary
in order that the Corporation may validly and legally issue
fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.
(d) All shares of Series A Preferred Stock, which
shall have been surrendered for conversion as herein provided
shall no longer be deemed to be outstanding, and all rights
with respect to such shares, including the rights, if any, to
receive dividends, notices and to vote, shall immediately
cease and terminate on the Series A Preferred Stock Conversion
Date, except only the right of the holders thereof to receive
shares of Common Stock in exchange therefor. Any shares of
Series A Preferred Stock so converted shall be retired and
canceled and shall not be reissued, and the Corporation may
from time to time take such appropriate action as may be
necessary to reduce the number of shares of authorized Series
A Preferred Stock accordingly.
(3) In the event of a liquidation of the Corporation, the
Series A Preferred Stock Conversion Rights shall terminate at the close
of business on the first full day preceding the date fixed for the
payment of any amounts distributable on liquidation to the holders of
the Series A Preferred Stock.
(4) If the conversion is in connection with an underwritten
offer of securities registered pursuant to the Securities Act of 1933,
as amended, the conversion may, at the option of any holder tendering
Series A Preferred Stock for conversion, be conditioned upon the
closing with the underwriter of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common
Stock issuable upon such conversion of the Series A Preferred Stock
shall not be deemed to have converted such Series A Preferred Stock
until immediately prior to the closing of the sale of securities.
(5) At no time shall any holder (including any of its
affiliates) of the Series A Preferred Stock convert such amount of
Series A Preferred Stock as shall result in such Purchaser's (together
with its affiliate's) ownership, after such conversion, exceeding 9.9%
of the Corporation's outstanding Common Stock.
29
(6) No fractional shares of Common Stock shall be issued upon
conversion of the Preferred Stock. In lieu of fractional shares, the
Corporation shall pay cash equal to such fraction multiplied by the
then effective and applicable Conversion Price.
(7) The Corporation will not, by amendment of its Articles of
Incorporation or through any reorganization, 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 under this
Subsection H by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Subsection H
and in the taking of all such action as may be necessary or appropriate
in order to protect the Series A Preferred Stock Conversion Rights of
the holders of the Series A Preferred Stock against impairment.
(8) In the event (a) that the Corporation declares a dividend
(or any other distribution) on its Common Stock payable in Common Stock
or other securities of the Corporation, (b) that the Corporation
subdivides or combines its outstanding shares of Common Stock, (c) of
any reclassification of the Common Stock of the Corporation (other than
a subdivision or combination of its outstanding shares of Common Stock
or a stock dividend or stock distribution thereon), (d) of any
consolidation or merger of the Corporation into or with another
corporation, (e) of the sale of all or substantially all of the assets
of the Corporation, or (f) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation, then the Corporation
shall cause to be filed at its principal office or at the office of the
transfer agent of the Preferred Stock, and shall cause to be mailed to
each holder of the Preferred Stock at their last address as shown on
the records of the Corporation or such transfer agent, at least ten
(10) days prior to the record date specified in (i) below or twenty
(20) days before the date specified in (ii) below, a notice stating
(i) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be
taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution,
subdivision or combination are to be determined, or
(ii) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or
winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or
winding up.
I. Sinking Fund. There shall be no sinking fund for the payment of
dividends, or liquidation preferences on the Series A Preferred Stock or the
redemption of any shares thereof.
J. Amendment. This Section 7 constitutes an agreement between the
Corporation and the holders of the Series A Preferred Stock. The Corporation
shall not amend this Section 7 or alter or repeal the preferences, rights,
powers or other terms of the Series A Preferred Stock so as to affect adversely
the Series A Preferred Stock, without the written consent or affirmative vote of
the holders of at least sixty-six and two- thirds percent (662/3%) of the then
outstanding shares of Series A Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a class.
30