Exhibit 3.1(d)
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
Epixtar Corp.
P 94000045741
(Document Number of Corporation (if known)
Pursuant to the provisions of Section 607.1006, Florida Statutes, this Florida
profit corporation adopts the following articles of amendment to its articles of
incorporation:
FIRST: Amendment adopted: Article III, Authorized Shares, has been amended by
adding a new Section III( c) A) as follows:
Article III
A. Series A Preferred Stock
1. DESIGNATION. A series of preferred stock designated as Series A Convertible
Preferred Stock (hereinafter referred to as the "Series A Shares") which shall
have rights, privileges, restrictions and conditions set forth hereinafter.
2. AMOUNT. There shall be 250,000 sharesof Series A Shares authorized, having a
par value of $.001 per share.
3. LIQUIDATION
(a) Liquidation Payments. The following amounts ("Series A Liquidation
Payments") shall be payable with respect to Series A Shares upon the occurrence
of a Liquidation Event, subject to the other terms set out below:
1 Upon the occurrence of a Liquidation Event, the holders of any Series A
Shares shall be entitled in preference to the holders of Common Shares or any
shares ranking junior to the Series A Shares, and pari passu in respect of the
holders of any other series of Class A Preferred Shares, to be paid first out of
the assets of the Corporation available for distribution to holders of the
Corporation's capital stock of all classes an amount equal to two (2) times the
Original Series A Issue Price for each Series A Share held by them (such amount
to be proportionately adjusted for stock splits, stock dividends, stock
combinations, stock recapitalizations and similar events), together with all
declared but unpaid dividends thereon.
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2 If all assets of the Corporation shall be insufficient to permit the
payment in full to the holders of Class A Preferred Shares of all amounts so
distributable to them, then the entire assets of the Corporation available for
such distribution shall be distributed rateably among the holders of Class A
Preferred Shares, pari passu, in proportion to the full preferential amount each
such holder is otherwise entitled to receive.
3 After the payment referred to in Section 3 (a) (1) has been made in full
to such holders of Series A Shares, or funds necessary for such payment have
been set aside by the Corporation in trust for the exclusive benefit of such
holder so as to be available for such payment, any assets remaining available
for distribution will be distributed ratably among the holders of Class A
Preferred Shares and Common Shares.
4 After conversion of any Series A Shares into Common Shares pursuant to
the rights attaching to such Series A Shares as set out in the Articles, the
holder of such Series A Shares shall not be entitled to the preferential payment
or distribution which is described in this Subsection but shall share ratably in
any distribution of the assets of the Corporation among the holders of Common
Shares
(b) Distribution Other than Cash. Whenever the distributions provided for
in this Section 1.1 shall be payable in property other than cash, the value of
such distribution shall (i) in the case of publicly traded securities, be equal
to the average of the closing sale price of such securities on their principal
exchange over the thirty (30) business days immediately preceding the effective
date of the Liquidation Event, or (ii) in all other cases, be the fair market
value of such property as determined in good faith by the Board of Directors of
the Corporation.
(c) Sale of Assets as Liquidation, Etc. Except as may be approved by the
holders of Series A Shares as provided in Section 6 he sale of all or
substantially all of the Corporation's property and assets or the acquisition of
the Corporation by another entity (including, without limitation, any
reorganization, merger or consolidation) resulting in the exchange of all of the
outstanding shares of the Corporation for securities issued or other
consideration paid, by the acquiring entity or any affiliate thereof (except for
a merger or consolidation after the consummation of which the shareholders of
the Corporation own at least 51% of the voting securities of the surviving
corporation or its parent corporation) shall be deemed to be a Liquidation Event
for purposes of this Section 3.
(d) Notice. Written notice of any proposed Liquidation Event stating an
estimated payment date, the amount of the Series A Share Liquidation Payments
and the place where such Series A Share Liquidation Payments shall be payable,
shall be delivered to the holders of Series A Shares not less than 30 days prior
to the proposed date of such proposed Liquidation Event.
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4. CONVERSION. GENERAL
The holders of Series A Shares shall have conversion rights as follows (the
"Series A Conversion Rights"):
(a) Optional Conversion. Each Series A Share shall be convertible, without
the payment of any additional consideration by the holder thereof and at the
option of the holder thereof, at any time after the Original Series A Issue Date
at the office of the Corporation or any transfer agent for the Series A Shares,
and after a registration statement for the Common Shares issued upon conversion
is effected by the Securities Exchange Commission into such number of fully paid
and non-assessable Common Shares as is determined by making the following
calculation: each Series A Share shall be converted into that number of fully
paid and non-assessable Common Shares determined by multiplying each such share
by the ratio determined by dividing the Original Series A Issue Price by the
Series A Conversion Price determined as hereinafter provided, in effect at the
time of conversion plus the Dividend Factor. The Series A Conversion Price at
which Common Shares will be deliverable upon conversion of Series A Shares
without the payment of any additional consideration by the holder thereof shall
initially be US $ 3.50 per Common Share.
(b) Adjustments to Series A Conversion Price. The Series A Conversion
Price shall be subject to the following adjustments:
the anti-dilution adjustments prescribed by Subsection hereof adjusting
the Series A Conversion Price described below and
the adjustment prescribed by Subsection 5 (h).
to account for any unpaid dividends on the Series A Shares, as such dividends
may be declared pursuant to Subsection 5 n hereof;
(c) Mechanics of Optional Conversions.
(1) Before any holder of Series A Shares shall be entitled to convert the
same into Common Shares, the holder shall give written notice ,which may be made
by fax, to the Corporation at such office that the holder elects to convert the
same and shall state therein the holder's name or the name or, subject to any
legal or contractual restrictions on transfer thereof, names of the holder's
nominees in which the holder wishes the certificate or certificates for Common
Shares to be issued ( "Conversion Notice " ). On the date of conversion ("
Conversion Date" ), all rights with respect to the Series A Shares so converted
shall terminate, except for any of the rights of the holder thereof, upon
surrender of the holder's certificate or certificates therefore, to receive
certificates for the number of Common Shares into which such Series A Shares
have been converted. . No fractional Common Share shall be issued upon the
optional conversion of Series A Shares. In lieu of any fractional share to which
the holder would otherwise be entitled, the Corporation shall pay cash equal to
such fraction multiplied by the Series A Conversion Price or at its option round
off to the nearest whole share. The Corporation shall, as soon as practicable
after surrender of the certificate or certificates for conversion, issue and
deliver at such office to such holder of Series A Shares, or, subject to any
legal or contractual restrictions on transfer thereof, to the holder's nominee
or nominees, a certificate or certificates for the number of Common Shares to
which the holder shall be entitled as aforesaid. Such conversion shall be deemed
to have been made immediately prior to the close of business on the Conversion
Date, and the person or persons entitled to receive the Common Shares issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such Common Shares on such date.
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(2) The following provisions shall apply when the Common Shares may
be sold pursuant the Registration Rights Agreement ; provided the penalities in
such agreement shall not be modified or limited by the provisions set forth
below.
(i) The Company will deliver to the Holder not later than three (3) trading days
after a particular Conversion Date, a certificate or certificates, which shall
be free of restrictive legends and trading restrictions for the number of shares
of Common Stock issuable upon such conversion. In lieu of delivering physical
certificates for the shares of Common Stock issuable upon any conversion of
Series A Stock provided the Company's transfer agent is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of the Holder, the Company shall use commercially
reasonable efforts to cause its transfer agent electronically to transmit such
shares issuable upon conversion to the Holder (or its designee), by crediting
the account of the Holder's (or such designee's) broker with DTC through its
Deposit Withdrawal Agent Commission system (provided that the same time periods
herein as for stock certificates shall apply). If in the case of any conversion
hereunder, such shares are not delivered to or as directed by the Holder by the
third trading day after the applicable Conversion Date, the Holder shall be
entitled by written notice to the Company at any time on or before its receipt
of such shares, to rescind such conversion, in which event the Company shall
immediately return the certificate for the Series A Shares to the Holder if the
Holder has tendered it to the Company in connection with such conversion. If the
Holder notifies the Company that the Holder has not received such shares within
three trading days after a particular Conversion Date (each, a "holder Share
Notice") and the Holder does not receive such shares (free of any restrictions
on transfer or legends except as within two trading days after giving such
Holder Share Notice, then, in addition to any other liability the Company may
have, the Company shall pay to the Holder, in cash, an amount, computed at the
rate of 2% of the Series A Purchase Price for the period such failure continues
(the "Conversion Delay Payments"), without duplication of any remedy pursuit to
Registration Rights Agreement. A Holder Share Notice may be given by telephone
or e-mail to the Company's Chief Executive Officer, Chief Financial Officer or
Corporate Counsel. The Company's obligation to issue and deliver such shares of
Common Stock upon conversion shall be absolute and unconditional, irrespective
of the absence of any action by the Holder to enforce the same, of any waiver or
consent with respect to any provision hereof, the recovery of any judgment
against any Person or any other obligation of the Company to the Holder, or any
setoff, counterclaim, recoupment, limitation or termination, or any breach or
alleged breach by the Holder or any other Person of any obligation to the
Company or any violation or alleged violation of law by the Holder or any other
Person, and irrespective of any other circumstance which might otherwise limit
such obligation of the Company to the Holder in connection with such exercise.
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(ii). If in any case the Company shall fail to issue and deliver the shares of
Common Stock to the Holder pursuant to on the due date therefore, in addition to
any other liabilities the Company may have hereunder and under applicable law
(A) the Company shall pay or reimburse the Holder on demand for all reasonable
out-of-pocket expenses, including, without limitation, reasonable failure, so
long as the Holder shall have given the Company a Holder Share Notice with
respect to such shares of Common Stock, (B) if as a result of such failure the
Holder shall suffer any direct damages or liabilities from such failure
(including, without limitation, margin interest and the cost of purchasing
securities to cover a sale (whether by the Holder or the Holder's securities
broker) or borrowing of shares of Common Stock by the Holder for purposes of
settling any trade involving a sale of shares of Common Stock made by the Holder
during the period beginning on the Issuance Date ending on the date the Company
delivers or causes to be delivered to Holder such shares of Common Stock, then
the Company shall upon demand of the Holder pay to the Holder an amount equal to
the actual, direct out of pocket damages and liabilities suffered by the Holder
by reason thereof why the Holder documents to the reasonable satisfaction of the
Company, so as the Holder shall have given the Company a Holder Share Notice
with respect to such shares of Common Stock, and (C) the Holder may by written
notice (which may be given by mail, courier, personal service or telephone line
facsimile transmission) or oral notice (promptly confirmed in writing), given at
any time prior to delivery to the Holder of the shares of Common Stock issuable
in connection with any conversion by reason of which such shares are
deliverable, rescind such conversion in whole or in part, in which case the
Holder shall thereafter be entitled toconvert with respect to that portion of
Series A Shares as to which such conversion is so rescinded and to exercise its
other rights and remedies with respect to such failure by the Company.
Notwithstanding the foregoing and Subsection 4 ( c) (2) (i) (x) the Company
shall not be liable to the Holder under clauses (A) and (B) of the immediately
preceding sentence or (y) for Conversion Delay Payments, in either such case of
the preceding clauses (x) or (y) to the extent the failure of the Company to
deliver or to cause to be delivered such shares of Common Stock results from
fire, flood, storm, earthquake, shipwreck, strike, war, acts of terrorism, crash
involving facilities of a common carrier, acts of God, or any similar event
outside the control of the Company (it being understood that the action or
failure to act of the Company's Transfer Agent shall not be deemed an event
outside the control of the Company except to the extent resulting from fire,
flood, storm, earthquake, shipwreck, strike, war, acts of terrorism, crash
involving facilities of a common carrier, acts of God, or any similar event
outside the control of such Transfer Agent or the bankruptcy, liquidation or
reorganization of such Transfer Agent under any bankruptcy, insolvency or other
similar law). The Holder shall notify the Company in writing (or by telephone
conversation, confirmed in writing) as promptly as practicable following the
third trading day after the due date for delivery to it of shares of Common
Stock subject to any conversion if the Holder becomes aware that such shares of
Common Stock so issuable have not been received as provided herein, but any
failure so to give such notice shall not affect the Holder's rights hereunder or
otherwise. If pursuant to this Section 4 (c) (2)(ii) the Company is relieved of
its obligation to make Conversion Delay Payments, then the shares for which a
Conversion Notice has been given and for which the Company has not issued the
shares of Common Stock within the period provided herein shall continue accrue
dividends from the applicable Conversion Date to the date the Company so issues
such shares of Common Stock.
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(d) Automatic Conversion. Each Series A Share shall be converted
automatically into Common Shares
(1) At the then effective Series A Conversion Price determined
Immediately prior to or contemporaneously with the closing of an offering or
offerings (a "Qualified PO") pursuant to a registration statement filed pursuant
to the Securities Act or similar document filed under other applicable
securities laws in the United States, covering the offer and sale to the public
of Common Shares into which the Series A Shares may be converted and/or for the
account of the Corporation in which:
(i) the Common Shares are listed on , the New York Stock
Exchange, or the American Stock Exchange, or quoted on NASDAQ or any combination
thereof;
(ii) the minimum gross proceeds to the Corporation from such
offering or offerings is/are not less than US $50,000,000; and
(iii) the offering price of the Common Shares in such offering
shall be not less than US $10.00 per Common Share (as adjusted for any stock,
split, stock dividend, stock combinations, stock recapitalization and similar
events); or
(2) at the then series A conversion price at the election of the
holders of at least a majority of the Series A Shares, acting collectively as a
single series.
(e) Mechanics of Automatic Conversions. Upon the occurrence of an event
specified in Subsections or all the Series A Shares shall be converted
automatically without any further action by the holders of the Series A Shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent; provided, however, that all holders of
Series A Shares being converted shall be given written notice of the occurrence
of an event specified in Subsection 4(d) including the date such event occurred
(the "Automatic Conversion Date"), and the Corporation shall not be obligated to
issue certificates evidencing the Common Shares issuable upon such conversion
unless certificates evidencing such Series A Shares being converted are either
delivered to the Corporation or its transfer agent, or the holder notifies the
Corporation or any transfer agent that such certificates have been lost, stolen,
or destroyed and executes an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection therewith
and, if the Corporation so elects, provides an appropriate indemnity bond. On
the Automatic Conversion Date, all rights with respect to the Series A Shares so
converted shall terminate, except for any of the rights of the holder thereof,
upon surrender of the holder's certificate or certificates therefore, to receive
certificates for the number of Common Shares into which such Series A Shares
have been converted. Upon the automatic conversion of the Series A Shares, the
holders of such Series A Shares shall surrender the certificates representing
such shares at the office of the Corporation or of its transfer agent. If so
required by the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
by the holder's attorney duly authorized in writing. Upon surrender of such
certificates, the Corporation shall promptly issue and deliver to such holder,
in such holder's name as shown on such surrendered certificate or certificates,
a certificate or certificates for the number of Common Shares into which the
Series A Shares surrendered were convertible on the Automatic Conversion Date.
No fractional Common Share shall be issued upon the automatic conversion of
Series A Shares. In lieu of any fractional share to which the holder would
otherwise be entitled, the Corporation shall pay cash equal to such fraction
multiplied by the then effective Series A Conversion Price or at its election
round the fraction into a whole share. Such conversion shall be deemed to have
been made upon the occurrence of any event described in Subsection 4(d), and the
person or persons entitled to receive the Common Shares issuable upon conversion
shall be treated for all purposes as the record holder or holders of such Common
Shares at such time.
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5. ADJUSTMENTS TO SERIES A CONVERSION PRICE.
(a) Special Definitions. For purposes of this Section 5, the following
definition shall apply:
"Additional Common Shares" shall mean all Common Shares issued (or,
pursuant to Subsection, deemed to be issued) by the Corporation after the
Original Series A Issue Date, other than:
(i) Common Shares issued or issuable upon conversion of any
Convertible Securities or exercise pursuant to any agreement related directly or
indirectly to the offering pursuant to which the Series A Preferred Shares were
sold of any Options or warrants outstanding on the Original Series A Issue Date
or proposed to be issued pursuant to an agreement in effect on that date;
(ii) any Common Shares allotted for issuance, issued or issuable
pursuant to the existing stock purchase or option plans of the Corporation as at
the Original Series A Issue Date or pursuant to any increase thereof, or any new
employee equity incentive plan, approved thereafter by the Board of Directors of
the Corporation.;
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(iii) any Common Shares issued in connection with a merger or
acquisition ;
(iv) any common shares issued pursuant to a lease line or line of
credit
(b) No Adjustment of Series A Conversion Price. No adjustment in the
number of Common Shares into which the Series A Shares is convertible shall be
made by the adjustment of the Series A Conversion Price thereof: (i) unless the
Consideration Per Share (as defined herein) for an Additional Common Share
issued or deemed to be issued by the Corporation is less than the Series A
Conversion Price for the Series A Share in effect immediately prior to the
issuance of such Addition Common Shares, or (ii) if prior to such issuance, the
Corporation receives written notice from the holders of at least 50 %of the then
outstanding Series A Shares, agreeing that no such adjustment shall be made as
the result of the issuance or deemed issuance of such Additional Common Shares.
(c) Deemed Issue of Additional Common Shares.
(1) Options and Convertible Securities.
(i) In the event the Corporation at any time or from time to time
after the Original Series A Issue Date shall issue any Options or Convertible
Securities or shall fix a record date for the determination of holders of any
class or series of securities entitled to receive any such Options or
Convertible Securities (other than as contemplated by Subsection 5(a) hereof),
then the maximum number of Common Shares (as set forth in the instrument
relating thereto without regard to any provisions contained therein for a
subsequent adjustment of such number) issuable upon the exercise of such Options
or, in the case of Convertible Securities and Options therefor, the conversion
or exchange of such Convertible Securities, shall be deemed to be Additional
Common Shares issued as of the time of issue of such Options or Convertible
Securities or, in case such a record date shall have been fixed, as of the close
of business on such record date, provided that in any such case in which
Additional Common Shares are deemed to be issued:
(ii) no further adjustment of the Series A Conversion Price shall be
made upon the subsequent issue of Convertible Securities or Common Shares upon
the exercise of such Options or conversion or exchange of such Convertible
Securities;
(iii) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
Consideration (as defined in Subsection payable to the Corporation, or decrease
in the number of Common Shares issuable, upon the exercise, conversion or
exchange thereof, the Series A Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or decrease
becoming effective, be recomputed to reflect such increase or decrease insofar
as it affects such Options or the rights of conversion or exchange under such
Convertible Securities;
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(iv) upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall not have
been exercised, the Series A Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration, be recomputed
as if:
(A) in the case of the Convertible Securities or Options for
Common Shares, the only Additional Common Shares issued were the Common Shares,
if any, actually issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the Consideration received therefore
was the Consideration actually received by the Corporation for the issue of all
such Options, whether or not exercised, plus the Consideration actually received
by the Corporation upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the additional
Consideration, if any, actually received by the Corporation upon such conversion
or exchange; and
(B) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued upon the exercise thereof
were issued at the time of issue of such Options, and the Consideration received
by the Corporation for the Additional Common Shares deemed to have been then
issued was the Consideration actually received by the Corporation for the issue
of all such Options, whether or not exercised, plus the Consideration deemed to
have been received by the Corporation upon the issue of the Convertible
Securities with respect to which such Options were actually exercised;
(v) no readjustment pursuant to Subsections 5(c)(1)(iii) and (iv)
above shall have the effect of increasing the Series A Conversion Price to an
amount which exceeds the lower of (i) the Series A Conversion Price on the
original adjustment date; or (ii) the Series A Conversion Price that would have
resulted from any issue of Additional Common Shares between the original
adjustment date and such readjustment date;
(vi) in the case of any Options which expire by their terms not more
than 30 days after the date of issue thereof, no adjustment of the Series A
Conversion Price shall be made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in the same manner as provided
in subsection 5 ( c) (1 ) (iii) A above
(vii) if such record date shall have been fixed and such Options or
Convertible Securities are not issued on the date fixed therefore, the
adjustment previously made in the Series A Conversion Price which became
effective on such record date shall be cancelled as of the close of business on
such record date, and thereafter the Series A Conversion Price shall be adjusted
as provided above.
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(2) Stock Dividends, Stock Distribution and Subdivisions. In the
event the Corporation at any time or from time to time after the Original Series
A Issue Date shall declare or pay any dividend or make any other distribution on
the Common Shares payable in Common Shares or effect a subdivision of the
outstanding Common Shares (by reclassification or otherwise other than by
payment of a dividend in Common Shares), then and in any such event, Additional
Common Shares shall be deemed to have been issued:
(i) in the case of any such dividend or distribution, immediately
after the close of business on the record date for the determination of holders
of any class or series of securities entitled to receive such dividend or
distribution; or
(ii) in the case of any such subdivision, at the close of business
on the date immediately prior to the date upon which such corporate action
becomes effective.
(iii) If such record date shall have been fixed and no part of such
dividend shall have been paid on the date fixed therefore, the adjustment
previously made in the Series A Conversion Price which became effective on such
record date shall be cancelled as of the close of business on such record date,
and thereafter the Minimum Conversion Price shall be adjusted pursuant to this
Subsection 5 (c)as of the time of actual payment of such dividend.
(d) Adjustment of the Series A Conversion Price Upon Issue of Additional
Common Shares.
In the event that at any time or from time to time after the Original
Series A Issue Date and prior to mandatory conversion the Corporation shall
issue Additional Common Shares (including, without limitation, Additional Common
Shares deemed to be issued pursuant to Subsection 5( c )but excluding Additional
Common Shares deemed to be issued pursuant to 5(c ) (2) which event is dealt
with in 5(f,) without consideration or for a Consideration Per Share which is
less than the Series A Conversion Price, then and in such event, such Series A
Conversion Price shall be reduced, concurrently with such issue, to the lowest
consideration per share received by the Corporation for any such Additional
Common Shares.
(e) Determination of Consideration. For purposes of this Section 5 the
consideration (the "Consideration") received or receivable by the Corporation
for the issue of any Additional Common Shares shall be computed as follows:
1 Cash and Property. Such Consideration shall:
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(i) insofar as it consists of cash, be computed at the aggregate amounts
of cash received or receivable by the Corporation excluding amounts paid or
payable for accrued interest or accrued dividends;
(ii) insofar as it consists of property other than cash, be computed at
the fair value thereof at the time of such issue, as determined in good faith by
the Board of Directors; and
(iii) in the event Additional Common Shares are issued together with other
shares, securities or other assets of the Corporation for consideration which
covers the Additional Common Shares and the other shares, securities or other
assets, be the proportion of such consideration so received or receivable,
computed as provided above, allocable to such Additional Common Shares as
determined in good faith by the Board of Directors.
2 Additional Common Shares other than Options and Convertible Securities.
The Consideration per share (the "Consideration Per Share") for the issue of any
Additional Common Shares other than Options and Convertible Securities shall be
the Consideration for the issue of any Additional Common Shares other than
Options or Convertible Securities, divided by the total number of such
Additional Common Shares issued by the Corporation in exchange therefore.
3 Options and Convertible Securities. The Consideration per share (also
the "Consideration Per Share", as the context requires) for Additional Common
Shares deemed to have been issued pursuant to Subsection 5c1relating to Options
and Convertible Securities, shall be computed by dividing (x) the Consideration
for the issue of such Options or Convertible Securities, plus the aggregate
amount of additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such Consideration), payable to the Corporation upon the exercise
of such Options or the conversion or exchange of such Convertible Securities, or
in the case of Options for Convertible Securities, the exercise of such Options
for Convertible Securities and the conversion or exchange of such Convertible
Securities, by (y) the number of Additional Common Shares (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible Securities.
(f) Adjustment of the Series AConversion Price for Dividends,
Distributions, Subdivisions, Combinations or Consolidations of Common Shares.
(1) Stock Dividends, Distributions or Subdivisions. In the event the
Corporation shall be deemed to have issued Additional Common Shares pursuant to
Subsection 5c2in a stock dividend, stock distribution or subdivision, the
Minimum Conversion Price in effect immediately before such deemed issue shall,
concurrently with the effectiveness of such deemed issue, be proportionately
decreased.
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(2) Combinations or Consolidations. In the event the outstanding
shares of Common Shares shall be combined or consolidated, by reclassification
or otherwise, into a lesser number of shares of Common Shares, the Series A
Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(3) Adjustment for Reclassification, Exchange or Substitution. In
the event that at any time or from time to time after the Original Series A
Issue Date, the Common Shares issuable upon the conversion of Series A Shares
shall be changed into the same or a different number of shares of any class or
series of stock, whether by capital reorganization, reclassification, or
otherwise other than a merger, consolidation, or sale of assets provided for in
Subsection 3 c above, then and in each such event the holder of any Series A
Shares shall have the right thereafter to convert such shares into the kind and
amount of shares of stock and other securities and property receivable upon such
reorganization, reclassification, or other change, by the holder of a number of
Common Shares equal to the number of Common Shares into which such Series A
Shares might have been converted immediately prior to such reorganization,
reclassification, or change, all subject to further adjustment as provided
herein.
(g) No Impairment. The Corporation shall not, by amendment of its Articles
or through any reorganization, transfer of assets, consolidation, amalgamation,
merger, dissolution, issue or sale of securities or any other voluntary action,
including, without limitation, voluntary bankruptcy proceedings, avoid or seek
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation but shall at all times in good faith
assist in the carrying out of all the provisions of this Section 1.2 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Series A Conversion Rights under this Section 1.2 against impairment.
(h) Adjustment of Series A Conversion Price based upon Performance.
The Series A Conversion Price shall be reduced based on the Corporation's net
income as set forth in the financial statements set forth in its annual report
on Form 10k or 10ksb for 2003 and 2004 as set forth below:
CONVERSION
YEAR NET INCOME PRICE
---- ---------- -----
2003 less than $5,000,000 $2.00
$5,000,000 - $7,500,000 $3.00
above $7,500,000 $3.50
2004 less than $10,000,000 $2.00
$10,000,000-$12,500,000 $3.00
over $12,500,000 $3.50
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Such adjustment shall be effective on the earlier of April 15 of the year
of filing of the applicable report or the actual date of filing. At all times,
the Series A Conversion Price immediately after such adjustment shall be at
least 5% below the price of the Common Stock on date of adjustment but the
Series A Conversion Price shall not be less than $2 per share.
(i) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment pursuant to this Section 5 the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each affected holder of Series A Shares a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any affected holder of Series A Shares,
furnish or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments; (ii) the number of Common Shares and the
amount, if any, of other property which at the time would be received upon the
conversion of each Series A Share; (iii) any amendment to the Articles of the
Corporation that may adversely affect the rights of the holders of the Series A
Shares; and (iv) the Series A Conversion Price at the time in effect.
(j) Notices of Record Date. In the event of any taking by the Corporation
of a record of the holders of any class or series of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall deliver to each
holder of Series A Shares at least twenty (20) days prior to such record date a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend or distribution.
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(k) Common Shares Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued Common Shares such number of Common
Shares as shall from time to time be sufficient to effect conversion of the
Series A Shares, as adjusted from time to time.
(l) Certain Taxes. The Corporation shall pay any issue or transfer taxes
duly payable by the Corporation in connection with the conversion of Series A
Shares, provided, however, that the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer to a name other than that of
the holder of the Series A Shares.
(m) Closing of Books. The Corporation shall at no time close its transfer
books against the transfer of any Series A Shares or any Common Shares issued or
issuable upon the conversion of any Series A Shares in any manner that
interferes with the timely conversion or transfer of any Series A Shares or
Common Shares.
6 VOTING RIGHTS
(a) Voting Rights. In addition to the rights of holders of Series A Shares
to vote as a separate series or as a member of the separate class of Class A
Preferred Shares in accordance with applicable law, each holder of outstanding
Series A Shares shall be entitled to notice of any meeting of shareholders and
shall be entitled to the number of votes equal to the number of whole Common
Shares into which each such Series A Share held by such holder could be
converted on the date for determination of shareholders entitled to vote at the
meeting or on the date of any written consent. Except as otherwise required by
law, holder of the Series A Shares and any other outstanding series of Class A
Preferred Shares shall vote together with the holders of Common Shares as a
single class upon any matter submitted to the shareholders for a vote.
(b) Change of Rights, Etc. Attaching to Series A Shares. The Corporation
shall not add to, change or remove any right, privilege, restriction or
condition attaching to the Series A Shares as a class without a resolution
signed by the holders of at least a majority of the Series A Shares or passed by
the affirmative vote of at least a majority of the votes cast by holders of
Series A Shares voting separately as a class at a meeting of the holders of the
Series A Shares duly called for that purpose.
(c) Consents and Approvals. In addition to any other rights provided by
law, for so long as any Series A Shares are outstanding, the Corporation shall
not, without the prior written consent or affirmative vote of the holders of not
less than majority of the then outstanding Series A Shares, voting as a separate
class:
1 effect or obligate itself to effect, any merger, sale, lease,
assignment, transfer or other conveyance of all or substantially all of the
assets of the Corporation (which shall include any effective transfer of assets
regardless of the structure of any such transaction as a license or otherwise),
or any consolidation, amalgamation, merger or other reorganization involving the
Corporation resulting the shareholder of the Corporation owning less than fifty
percent (50%) of the voting securities of the surviving corporation or its
parent corporation;
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2 authorize or issue any new or existing class or classes or series of
shares having any preference or priority as to dividends or liquidation
preferences superior to or on a parity with any such preference or priority of
the Series A Shares, or authorize or issue shares or any bonds, debentures,
notes or other obligations convertible into or exchangeable for, any share of
the Corporation having any preference or priority as to dividends or
liquidations preferences superior to or on a parity with any such preference or
on a parity with any such preference or priority of the Series A Shares;
3 increase or decrease the authorized number of shares of Series A Shares;
or
4 declare or pay any dividend on any security of the Corporation or redeem
or purchase any of its shares, except pursuant to an agreement to repurchase
Common Shares held by an employee, director or consultant of the Corporation
upon termination of their employment or services with the Corporation.
5 engaging in any business other than the business engaged in or
contemplated by the Company at the time of Closing. .
(d) Board Representation. The holders of record of Series A Shares, voting
as a separate class, shall be entitled to elect one (1) director of the
Corporation. At any meeting held for the purpose of electing directors, the
presence in person or by proxy of the holders of a majority of the Series A
Shares shall constitute a quorum of such Series A Shares. A vacancy in any
directorship elected solely by the holders of Series A Shares shall be filled
only by vote or written action in lieu of meeting of the holders of Series A
Shares.
(e) Formalities of Shareholder Meeting. The formalities to be observed
with respect to the giving of notice of any such meeting or any adjourned
meeting, the quorum required therefore and the conduct thereof shall be those
from time to time prescribed by the by-laws of the Corporation with respect to
meetings of shareholders, or if not so prescribed, as required by the Act as in
force at the time of the meeting. On every poll taken at every meeting of the
holders of the Class A Preferred Shares as a class, or at any joint meeting of
the holders of two or more series of Class A Preferred Shares, each holder of
Series A Shares entitled to vote thereat shall have one vote in respect of each
Series A Share held. Nothing herein shall prevent the holders of Series A Shares
from taking any action by a signed consent of the holders of the required number
of Series A Shares.
7. DIVIDENDS
The holders of outstanding Series A Shares shall be entitled to receive
equally, share for share, as and when declared by the Board of Directors and out
of the funds legally available therefore, cumulative dividends at an annual rate
equal to (i) 0.08 multiplied by (ii) the Original Series A Issue Price. Such
dividends shall be payable annually on each anniversary of the Original Series A
Issuance Date No dividends shall be declared or paid to the holders of Common
Shares unless a dividend at the rate specified in this section 7is declared on
the Series A Shares and the holders of Series A Shares have been paid in full
all of the cumulative dividends to which they are entitled including dividends
which have not been declared.
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8. OPTIONAL REDEMPTION
(a) From and after the date one (1) year plus one (1) day after the
Original Series A Issue Date, the Corporation may, at its entire discretion,
repurchase all, but not less that all, of the issued and outstanding Series A
Shares from the holders thereof at a purchase price for each such Series A Share
equal to $ 200 ($200dollars) per share (the "Redemption Price") plus the
Dividend Factor.. Such election may be made only by delivering to the holders of
the then outstanding Series A Shares a written notice signed by an authorized
officer of the Corporation (the "Redemption Notice").
(b) The holders of Series A Shares shall have thirty (30) days from their
receipt of a Redemption Notice to effectuate a conversion of their Series A
Shares into Common Shares and not participate in the redemption.
(c) Within forty five (45) days of its delivery of the Redemption Notice,
the Corporation shall redeem all the Series A Shares from the remaining holders
of Series A Shares out of funds legally available for such purpose by paying to
the holder an amount per Series A Share equal to the number of Series A Shares
held by the holder multiplied by the Redemption Price. Concurrent with the
payment of the Redemption Price, the holders shall deliver their Series A Share
certificates to the Corporation.
9. NOTICES
All notices, requests, consents, demands and other communications required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given, made and received (a) when delivered against receipt; (b) upon
transmitter's confirmation of the receipt of a facsimile transmission, which
shall be followed by an original sent otherwise in accordance with this Section
9; (c) upon confirmed delivery by a standard overnight carrier; or (d) upon
expiration of 5 business days after the date when deposited in the mail, first
class postage prepaid, addressed to the Corporation at its registered office or
at such other address of which the Corporation may notify the holders of Series
A Shares from time to time, or if to a holder of Series A Shares or Common
Shares, to such holder's address as shown by the records of the Corporation.
10. Defined Terms
As used herein the following terms shall have the definitions set forth below:
) "Act" means the Florida General Corporation Act
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"Articles" means the articles of incorporation of the Corporation, as amended
from time to time;
Class A Preferred Shares" means the Class A Preferred Shares of any series in
the capital of the Corporation;
"Common Shares" means the common shares in the capital of the Corporation;
"Convertible Securities" shall mean any evidences of indebtedness, shares of
capital stock (other than Common Shares) or other securities directly or
indirectly convertible into or exchangeable for Common Shares other than Series
A Shares and other than any Convertible Security referred to in subsection 5 c
above;
"Consideration" has the meaning set out in Subsection 5 (e);
"Consideration Per Share" has the meaning, as the context requires, set out in
Subsections 5 e I and 5e2.
"Corporation" means Epixtar Corp. or its successors, including without
limitation, a successor created by amalgamation, merger or court order;
"Dividend Factor "on any given date shall be an amount equal to the difference
between (A) the product of (1)$8.00 times the (2)quotion obtained by dividing
the number of days elapsing between issuance of the Series A Shares and the date
of such determination by 360 less the amount of dividends paid.
"NASDAQ" means the NASDAQ Market either small cap or national;
"Option" shall mean rights, options or warrants to subscribe for, purchase or
otherwise acquire either Common Shares or Convertible Securities other than any
Option referred to in Subsection 5 a above;
sociation, joint venture, governmental agency or other entity;
"Series A Conversion Price" means, initially, $3.50 per share, as such price may
be adjusted from time to time in accordance with Subsections hereof;
"Series A Shares" means the Class A, Series A Preferred Shares in the capital of
the Corporation.
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SECOND: The date of each amendment's adoption: May 30, 2003
THIRD: Adoption of Amendments
The amendment(s) was/were adopted by the board of directors without shareholder
action and shareholder action was not required.
Signed this ________day of ____________________, ________
Signature:_______________________________________________
Martin Miller, Chairman of the Board