EXHIBIT 3.1
DELAWARE
----------------
THE FIRST STATE
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "AVP, INC." FILED IN THIS OFFICE OF THE EIGHTEEN DAY OF AUGUST,
A.D. 2005, AT 5:45 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAD BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ Harriet Smith Windsor
------------------------------------------
Harriest Smith Windsor, Secretary of State
2402270 9100 [SEAL] AUTHENTICATION: 4102805
050684940 DATE: 08-19-05
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
AVP, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"corporation") is AVP, Inc.
2. The certificate of incorporation of the corporation is hereby
amended by striking out Article Fourth thereof and by substituting in lieu of
said Article the following new Article:
"FOURTH: The total number of shares of all the classes which the
Corporation is authorized to issue in Three Hundred Two Million
(302,000,000) shares, of which Three Hundred Million (300,000,000) shares,
par value $.001, shall be common stock, and Two Million (2,000,000)
shares, par value $.001 shall be preferred stock.
3. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the provisions of Section 242
if the General Corporation Law of the State of Delaware.
4. The amendment of the certificate of incorporation herein
certified has been duly adopted and written consent has been given in accordance
with the provisions of Sections 228 and 242 of the General Corporation Law of
the State of Delaware.
Signed on August 23, 2005.
/s/ Leonard Armato
------------------
Leonard Armato
CEO
State of Delaware
Office of the Secretary of State
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "MALONE ROAD INVESTMENTS, LTD." FILED IN THIS OFFICE ON THE
TWELFTH DAY OF MAY, A.D. 1994, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
/s/ William T. Quillen
-----------------------------------------
William T. Quillen, Secretary of State
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CERTIFICATE OF INCORPORATION
OF
MALONE ROAD INVESTMENTS, LTD.
(a Delaware corporation)
The undersigned, in order to form a corporation pursuant to the General
Corporation Law of the State of Delaware, does hereby certify as follows:
FIRST: The name of the Corporation is Malone Road Investments, Ltd.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is The Prentice-Hall Corporation System, Inc., 32 Loockerman
Square, Suite L-100, in the City of Dover, County of Kent 19901. The name of its
registered agent at the address is The Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for _ which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of all classes which the Corporation is
authorized to have outstanding is Twenty One Million (21,000,000) shares of
which stock Twenty Million (20,000,000) shares in the par value of $.001 each,
amounting in the aggregate of Twenty Thousand Dollars ($20,000) shall be common
stock and of which One Million (1,000,000) shares in the par value of $.001
each, amounting in the aggregate to One Thousand Dollars ($1,000) shall be
preferred stock. The board of directors is authorized, subject to limitations
prescribed by law, to provide for the issuance of the authorized shares of
preferred stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series and the qualifications,
limitations or restrictions thereof The authority of the board with respect to
each series shall include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on
shares of that series;
(c) Whether that series shall have voting rights, in addition to the
voting rights; provided by law, and, if so, the terms of such voting
rights;
(d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such event as the Board of
Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and,
if so, the terms and conditions of such redemption, including the
date or date upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may
vary under different conditions, and at different redemption rates;
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(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount
of such sinking fund;
(g) The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment
of shares of that series;
(h) Any other relative rights, preferences and limitations of that
series, unless otherwise provided by the certificate of
determination.
FIFTH: Election of directors at an annual or special meeting of
stockholders need not be by written ballot unless the bylaws of the corporation
shall otherwise provide. The number of directors of the corporation which shall
constitute the whole board of directors shall be such as from time to time shall
be fixed by or in the manner provided in the bylaws.
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, repeal, alter,
amend and rescind the bylaws of the corporation.
SEVENTH: A director of the corporation shall not be personally liable for
monetary damages to the corporation or its stockholders for breach of any
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derives an
improper personal benefit.
EIGHTH: A director or officer of the corporation shall not be disqualified
by his or her office from dealing or contracting with the corporation as a
vendor, purchaser, employee, agent or otherwise. No transaction, contract or act
of the corporation shall be void or voidable or in any way affected or
invalidated by reason of the fact that any director or officer of the
Corporation is a member of any firm, a stockholder, director or officer of any
corporation or trustee or beneficiary of any trust that is in any way interested
in such transaction, contract or act. No director or officer shall be
accountable or responsible to the corporation for or in respect to any
transaction, contract or act of the corporation or for any gain or profit
directly or indirectly realized by him or her by reason of the fact that he or
she or any firm in which he or she is a member or any corporation of which he or
she is a stockholder, director, or officer, or any trust of which he or she is a
trustee, or beneficiary, is interest in such transaction, contract or act;
provided the fact that such director or officer or such firm, corporation,
trustee or beneficiary of such trust, is so interest shall have been disclosed
or shall have been known to the members of the board of directors as shall be
present at any meeting at which action upon such contract, transaction or act
shall have been taken. Any director may be counted in determining the existence
of a quorum at any meeting of the board of directors which shall authorize or
take action in respect to any such contract, transaction or act, and may vote
thereat to authorize, ratify or approve any such contract, transaction or act,
and any officer of the corporation may take any action within the scope of his
or her authority, respecting such contract, transaction or act with like force
and effect as if he or she or any firm of which he or she is a member, or any
corporation of which he or she is a stockholder, director or officer, or any
trust of which he or she is a trustee or beneficiary, were not interested in
such transaction, contract or act. Without limiting or qualifying the foregoing,
if in any judicial or other inquiry, suit, cause or proceeding, the question of
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whether a director or officer of the corporation has acted in good faith is
material, and notwithstanding any statue or rule of law or equity to the
contrary (if any there be) his or her good faith shall be presumed in the
absence of proof to the contrary by clear and convincing evidence.
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NINTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors of class of creditors,
and/or the stockholders or class of stockholders of the corporation, as the case
may be, agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.
TENTH: The corporation reserves the right to amend and repeal any
provision contained in this certificate of incorporation in the manner
prescribed by the laws of the State of Delaware. All rights herein conferred are
granted subject to this reservation.
ELEVENTH: The incorporator is Jehu Hand whose mailing address is 25431
Cabot Road, Suite 207, Laguna Hills, California 92653.
I, the undersigned, being the incorporator, for the purpose of forming a
corporation under the laws of the State of Delaware do make, file and record
this Certificate of Incorporation, do certify that the facts herein stated are
true, and, accordingly, have hereunto set my hand this 8th day of May, 1994.
/s/ Jehu Hand
-------------
Jehu Hand,
Incorporator
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State of Delaware
Office of the Secretary of State
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DOMESTICATION OF NON U.S. CORPORATION OF "MALONE ROAD INVESTMENTS, LTD.", FILED
IN THIS OFFICE THE TWELFTH DAY OF MAY, A.D. 1994, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
/s/ William T. Quillen
-----------------------------------------
William T. Quillen, Secretary of State
CERTIFICATE OF DOMESTICATION OF
MALONE ROAD INVESTMENTS, LTD.
It is hereby certified as follows:
1. The Corporation (the "Corporation") was first formed, incorporated, or
otherwise came into being on August 6, 1990 in the jurisdiction of the Isle of
Man, and subsequently reincorporated in the Turks and Caicos Islands on April
21, 1992.
2. The name of the Corporation immediately prior to the filing of this
Certificate of Domestication pursuant to the provisions of Section 388 of the
General Corporation Law of the State of Delaware is Malone Road Investments,
Ltd.
3. The name of the Corporation set forth in this Certificate of
Incorporation to be filed concomitantly with this Certificate of Domestication
in accordance with subsection (b) of Section 388 of the General Corporation Law
of the State of Delaware is Malone Road Investments, Ltd.
4. The jurisdiction that constituted the seat, siege, social, or principal
place of business of central administration of the Corporation, or other
equivalent thereto under applicable law immediately prior to the filing of this
Certificate of Domestication pursuant to the provisions of Section 388 of the
General Corporation Law of the State of Delaware is the Turks and Caicos
Islands.
5. The undersigned is a Corporation officer, director, trustee, manager,
partner or other person performing functions equivalent to those of an officer
or director, however named or described, and is authorized to sign this
Certificate of Domestication on behalf of the Corporation.
Executed on May 8, 1994.
/s/ Jehu Hand
- --------------------------------------
Jehu Hand
Assistant Secretary
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State of Delaware
Office of the Secretary of State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "PL BRANDS, INC.", CHANGING ITS NAME FROM "PL BRANDS, INC." TO
"OTHNET, INC.", FILED IN THIS OFFICE ON THE TWENTY-THIRD DAY OF MARCH, A.D.
2001, AT 3 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ Harriet Smith Windsor
-----------------------------------------
Harriet Smith Windsor, Secretary of State
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PL BRANDS, INC.
We, the undersigned, President and S ecretary, respectively, of PL Brands,
Inc., a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware
DO HEREBY CERTIFY:
FIRST: That the name of the Corporation is PL Brands, Inc.
SECOND: That the FIRST Article of the Certificate of Incorporation be and
it hereby is amended to read in its entirety as follows:
"FIRST: The name of the Corporation is Othnet, Inc."
THIRD: That the total number of shares of all classes of stock which the
Corporation is authorized to have outstanding is Twenty-One Million (21,000,000)
shares of which stack Twenty Million (20,000,000) shares in the par value o f
$.001 each shall be common stock and of which One Million (1,000,000) shares in
the par value of $.001 each shall be preferred stock.
FOURTH: That the first sentence of the IOURTH Article of the Certificate
of Incorporation be and it hereby is amended to read in its entirety as follows:
"FOURTH: The total number of shares of all classes whichthe
Corporation is authorized to have outstanding is Forty-Two Million (42,000,000)
shares of which stock Forty Million (40,000,000) shares in the par value of
$.001 each, amounting in the aggregate of Forty Thousand Dollars ($40,000) shall
be common stock and of which Two Million (2,000,000) shares in the par value of
$.001 each, amounting in the aggregate to Two Thousand Dollars (S2,000) shall be
preferred stock."
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FIFTH: That the amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, we have hereunto signed this certificate this 22 01
day of March, 2001, and we affirm the statements contained he'ein as true under
penalties of perjury.
/s/ Richard A. Barbari
-----------------------------------------
Richard A. Barbari, President
Attest: /s/ David M. Kaye
--------------------------------
David M. Kaye, Secretary
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CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND LIMITATIONS OF SERIES A
CONVERTIBLE PREFERRED STOCK AND SERIES B
CONVERTIBLE PREFERRED STOCK OF OTHNET, INC.
Acting pursuant to Sections 151(a) and (g) of the Delaware General
Corporation Law, the undersigned, Jeffrey Wattenberg, the duly elected and
acting President of Othnet, Inc. (the "Company") hereby certifies that the Board
of Directors of the Company (the "Board") duly approved the following
Certificate of Designation of Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock of the Company on February 25, 2005, and that the
Certificate of Incorporation of the Company expressly authorizes the Board to so
designate and issue one or more series of preferred stock, par value $0.001 per
share, of the Company ("Preferred Stock"). The designations, powers, preferences
and relative, participating, optional or other special rights, and the
qualifications, limitations and restrictions thereof in respect of each of the
Series A and Series B Convertible Preferred Stock are as described in the
following resolution, duly adopted by the Board of Directors of the Company.
WHEREAS, the Certificate of Incorporation of the Company authorizes a
class (or classes) of up to two million (2,000,000) shares of Preferred Stock,
and provides that such Preferred Stock may be issued from time to time in one or
more Series and vests authority in the Board of Directors to fix or alter the
rights, preferences, privileges, restrictions and other matters granted to or
imposed upon any wholly unissued series of the Preferred Stock;
WHEREAS, the Company has not heretofore issued any Preferred Stock; and
WHEREAS, it is the desire of the Board of Directors to fix and determine
the rights, preferences, privileges, restrictions and other matters relating to
One Million (1,000,000) shares of Series A Convertible Preferred Stock and Two
Hundred Fifty Thousand (250,000) shares of Series B Convertible Preferred Stock
of the Company.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
fix and determine the rights, preferences, privileges, restrictions and other
matters relating to such One Million Two Hundred Fifty Thousand (1,250,000)
shares of Series A and Series B Convertible Preferred Stock:
A. Authorized Number. One Million (1,000,000) of the authorized shares of
preferred stock, par value $0.001 per share are hereby designated "Series A
Convertible Preferred Stock" ("Series A Stock") and Two Hundred Fifty Thousand
(250,000) of the authorized shares of preferred stock, par value $0.001per share
are hereby designated "Series B Convertible Preferred Stock" ("Series B Stock"
and, together with the Series A Stock, the "Convertible Preferred").
B. Designation. The rights, preferences, privileges, restrictions and
other matters relating to the Convertible Preferred are as follows:
1. Dividend Rights. Holders of Series B Stock shall be entitled to
receive, pari passu with holders of common stock, par value $.001 per share, of
the Company (the "Common Stock"), all cash or in-kind dividends or distributions
on an as converted basis from time to time at any time declared, set aside, or
paid by the Company in an amount that would have been received by the holders of
Series B Stock (assuming, for purposes of the calculation, that the holders of
Series B Stock had lawfully converted such Series B Stock into shares of Common
Stock immediately prior to the record date for determining the holders of Common
Stock entitled to receive such distribution at the then-applicable Series B
Stock Conversion Rate), in each case only when, as and if declared by the Board,
and, in the case of cash dividends, only out of funds that are legally available
therefor. Such dividends shall be non-cumulative.
2. Voting Rights.
(I) Until such time as the Company has amended its certificate of
incorporation to increase its authorized Common Stock to a minimum of
300,000,000 shares, the Convertible Preferred shall vote with the shares of
Common Stock of the Company on an as converted basis from time to time, and not
as a separate class, at any annual or special meeting of stockholders of the
Company, and may act by written consent in the same manner as holders of Common
Stock, in either case upon the following basis: each holder of shares of Series
B Stock shall be entitled to such number of votes as shall be equal to ten (10)
times the whole number of shares of Common Stock into which such holder's
aggregate number of shares of Series B Stock are convertible (pursuant to
Section 5 hereof) immediately after the close of business on the record date
fixed for such meeting or the effective date of such written consent.
(II) At all times, the Series A Stock, and subsequent to the filing of an
amendment to the Company certificate of incorporation with the Secretary of
State of the State of Delaware whereby the authorized Common Stock is increased
to a minimum of 300,000,000 shares, the Series B Stock shall vote with the
shares of Common Stock of the Company on an as converted basis from time to
time, and not as a separate class, at any annual or special meeting of
stockholders of the Company, and may act by written consent in the same manner
as holders of Common Stock, in either case upon the following basis: each holder
of shares of Series B Stock shall be entitled to such number of votes as shall
be equal to the whole number of shares of Common Stock into which such holder's
aggregate number of shares of Series B Stock are convertible (pursuant to
Section 5 hereof) immediately after the close of business on the record date
fixed for such meeting or the effective date of such written consent.
In addition, the Company shall not, without the prior approval of the holders of
at least a majority of the then issued and outstanding shares of either series
of Convertible Preferred, voting as a separate class:
(a) issue or create any series or class of equity securities with
rights in parity with or superior to such series or increase the rights or
preferences of any series or class of equity securities having rights or
preferences that are junior to such series so as to make the rights or
preferences of such series or class in parity with or senior to such; or (b)
amend, alter, or repeal the preferences, special rights, or other powers of the
such so as to adversely effect the holders of such series.
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3. Liquidation Rights.
(a) Upon any liquidation, dissolution, or winding up of the Company,
whether voluntary or involuntary, before any distribution or payment shall be
made to the holders of any other stock of the Company, the holders of Series B
Stock shall be entitled to be paid out of the assets of the Company, pari passu
with any other series of preferred stock equal to the Series B Stock, an amount
per share ("Issue Price") of Series B Stock equal to 25% of the price of a Unit
as set forth in the Association of Volleyball Professionals, Inc./Othnet, Inc.
Confidential Private Placement Memorandum (offering Units of Series B Stock and
Common Stock Purchase Warrants) (the "Offering Memorandum") (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like with
respect to such shares), plus all declared and unpaid dividends on such shares
of Series B Stock for each share of Series B Stock held by them.
(b) After the payment of the full liquidation preference of the
Series B Stock as set forth in Section 3(a) above, the remaining assets of the
Company legally available for distribution, if any, shall be distributed ratably
to the holders of any preferred stock junior to the Series B Stock, if any, and
to the holders of the Series A Stock and Common Stock, and the holders of Series
B Stock shall not participate in any such distribution.
(c) The following events shall be considered a "liquidation" for
purposes of this Section 3:
(i) any consolidation, merger, reorganization,
recapitalization or sale in one or more related transactions of the Company with
or into any other corporation or other entity or person, or any other corporate
reorganization or sale of securities of the Company, in which the stockholders
of the Company immediately prior to such consolidation, merger, reorganization
or sale, own less than fifty percent (50%) of the Company's voting power
immediately after such consolidation, merger, reorganization or sale, or any
transaction or series of related transactions in which in excess of fifty
percent (50%) of the Company's voting power is transferred (an "Acquisition");
or
(ii) a sale, lease or other disposition of all or
substantially all of the assets of the Company (an "Asset Transfer").
(d) If, upon any liquidation, distribution, or winding up, the
assets of the Company shall be insufficient to make payment in full to all
holders of Series B Stock of the liquidation preferences set forth in Section
3(a), then such assets shall be distributed among the holders of Series B Stock
and any holders of any other preferred stock equal to the Series B Stock at the
time outstanding, ratably in proportion to the full amounts to which they would
otherwise be respectively entitled.
4. Redemption. There shall be no obligation on the part of the
Company to redeem any shares of Series B Stock, however, the Company may redeem
the Series B Stock after the fifth anniversary of issuance on thirty (30) days
written notice to the holders of the Series B Stock at a price per share of
Series B Stock equal to the Issue Price (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares), plus all declared and unpaid dividends on such shares of Series B Stock
for each share of Series B Stock held by them. Notwithstanding the foregoing, in
the event that the Company does not have its authorized shares of common stock
increased to no less than 300,000,000 shares within 180 days of the final
closing of the Company's Series B Stock offering, each of the holders of the
Series B Stock shall be entitled to sell their respective shares of Series B
Stock to the Company at the Issue Price.
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5. Conversion Rights.
The holders of Convertible Preferred shall have the following rights with
respect to the conversion of Convertible Preferred into shares of Common Stock
(the "Conversion Rights"), except that Subsection (k) hereunder shall only be
applicable to the Series B Stock:
(a) Optional Conversion. Subject to and in compliance with the
provisions of this Section 5, any shares of Convertible Preferred may, at the
option of the holder, be converted at any time into fully-paid and
non-assessable shares of Common Stock. The number of shares of Common Stock to
which a holder of Convertible Preferred shall be entitled upon conversion shall
be as contemplated in the Offering Memorandum (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with respect to
such shares) (the "Convertible Preferred Conversion Rate").
(b) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of Convertible Preferred. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Convertible Preferred by a bolder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional share, the Company shall, in lieu of
issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board)
on the date of conversion.
(c) Reservation of Stock Issuable Upon Conversion. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Convertible Preferred, such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Convertible Preferred. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Convertible Preferred, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
(d) Notices. Any notice required by the provisions of this Section 5
shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed facsimile if
sent during normal business hours of the recipient; if not, then on the next
business day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All notices shall be
addressed to each holder of record at the address of such holder appearing on
the books of the Company.
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(e) Mechanics of Conversion. Each holder of Convertible Preferred
who converts the same into shares of Common Stock pursuant to this Section 5
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the Company or any transfer agent for Convertible Preferred, and shall
give written notice to the Company at such office that such holder elects to
convert the same. Such notice shall state the number of shares of Convertible
Preferred being converted. Thereupon, the Company shall promptly issue and
deliver at such office to such holder a certificate or certificates for the
number of shares of Common Stock to which such holder is entitled and shall
promptly pay in cash or, to the extent sufficient funds are not then legally
available therefor, in Common Stock (at the Common Stock's fair market value
determined by the Board as of the date of such conversion), any declared and
unpaid dividends on the shares of Convertible Preferred being converted. Such
conversion shall be deemed to have been made at the close of business on the
date of such surrender of the certificates representing the shares of
Convertible Preferred to be converted, and the person entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder of such shares of Common Stock on such date.
(f) Adjustment for Stock Splits and Combinations. If the Company
shall at any time or from time to time after the date that the first share of
Convertible Preferred is issued (the "Convertible Preferred Original Issue
Date") effect a subdivision of the outstanding Common Stock without a
corresponding subdivision of Convertible Preferred, the Convertible Preferred
Conversion Rate in effect immediately before that subdivision shall be
proportionately increased. Conversely, if the Company shall at any time or from
time to time after the Convertible Preferred Original Issue Date combine the
outstanding shares of Common Stock into a smaller number of shares without a
corresponding combination of Convertible Preferred, the Convertible PrefLiled
Conversion Rate in effect immediately before the combination shall be
proportionately decreased. Any adjustment under this Section 5(f) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(g) Adjustment for Common Stock Dividends and Distributions. If the
Company at any time or from time to time after the Convertible Preferred
Original Issue Date makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, in each such event the Convertible
Preferred Conversion Rate that is then in effect shall be increased as of the
time of such issuance or, in the event such record date is fixed, as of the
close of business on such record date, by multiplying the Convertible Preferred
Conversion Rate then in effect by a fraction (1) the numerator of which is the
total number of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record date, and
(2) the denominator of which is the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date plus the number of shares of Common Stock
issuable in payment of such dividend or distribution; provided, however, that if
such record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Convertible
Preferred Conversion Rate shall be recomputed accordingly as of the close of
business on such record date and thereafter the Convertible Preferred Conversion
Rate shall be adjusted pursuant to this Section 5(g) to reflect the actual
payment of such dividend or distribution.
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(h) Adjustments for Other Dividends and Distributions. If the
Company at any time or from time to time after the Convertible Preferred
Original Issue Date makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Company other than shares of Common Stock, in each
such event provision shall be made so that the holders of Convertible Preferred
shall receive upon conversion thereof, in addition to the number of shares of
Common Stock receivable thereupon, the amount of other securities of the Company
which they would have received had their Convertible Preferred been converted
into Common Stock on the date of such event and had they thereafter, during the
period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period,
subject to all other adjustments called for during such period under this
Section 5 with respect to the rights of the holders of Convertible Preferred or
with respect to such other securities by their terms.
(i) Adjustment for Reclassification, Exchange and Substitution. If
at any time or from time to time after the Series B Original Issue Date, Common
Stock issuable upon the conversion of Convertible Preferred is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than an Acquisition or
Asset Transfer as defined in Section 3(c) or a subdivision or combination of
shares or stock dividend or a reorganization, merger, consolidation or sale of
assets provided for elsewhere in this Section 5), in any such event each holder
of Convertible Preferred shall have the right thereafter to convert such stock
into the kind and amount of stock and other securities and property receivable
upon such recapitalization, reclassification or other change by holders of the
maximum number of shares of Common Stock into which such shares of Convertible
Preferred could have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as provided herein
or with respect to such other securities or property by the terms thereof.
(j) Reorganizations, Mergers, Consolidations or Sales of Assets. If
at any time or from time to time after the Series B Original Issue Date, there
is a capital reorganization of Common Stock (other than an Acquisition or Asset
Transfer as defined in Section 3(c) or a recapitalization, subdivision,
combination, reclassification, exchange or substitution of shares provided for
elsewhere in this Section 5), as a part of such capital reorganization,
provision shall be made so that the holders of Convertible Preferred shall
thereafter be entitled to receive upon conversion of Convertible Preferred the
number of shares of stock or other securities or property of the Company to
which a holder of the number of sharesof Common Stock deliverable upon
conversion would have been entitled on such capital reorganization, subject to
adjustment in respect of such stock or securities by the terms thereof. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 5 with respect to the rights of the holders of
Convertible Preferred after the capital reorganization to the end that the
provisions of this Section 5 (including adjustment of the Convertible Preferred
Conversion Price then in effect and the number of shares issuable upon
conversion of the Convertible Preferred) shall be applicable after that event
and be as nearly equivalent as practicable.
(k) Sale of Shares Below the Convertible Preferred Conversion Price.
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(i) If at any time or from time to time after the Convertible
Preferred Original Issue Date, the Company issues or sells, or is deemed by the
express provisions of this subsection (k) to have issued or sold, Additional
Shares of Common Stock (as hereinafter defined), other than as a dividend or
other distribution on any class of stock as provided in Section 5(h) above, and
other than a subdivision or combination of shares of Common Stock as provided in
Section 5(f) above, for an Effective Price (as hereinafter defined) per share
less than the quotient obtained by dividing the Issue Price by the Convertible
Preferred Conversion Rate ("Convertible Preferred Stock Conversion Price"), then
and in each such case the then existing Convertible Preferred Stock Conversion
Rate shall be increased, as of the opening of business on the date of such issue
or sale, to a price determined by dividing the Convertible Preferred Stock
Conversion Rate by a fraction (i) the numerator of which shall be (A) the number
of shares of Common Stock deemed outstanding (as defined below) immediately
prior to such issue or sale, plus (B) the number of shares of Common Stock which
the aggregate consideration received (as defined in subsection (k)(ii)) by the
Company for the total number of Additional Shares of Common Stock so issued
would purchase at such Convertible Preferred Stock Conversion Price, and (ii)
the denominator of which shall be the number of shares of Common Stock deemed
outstanding (as defined below) immediately prior to such issue or sale plus the
total number of Additional Shares of Common Stock so issued. For the purposes of
the preceding sentence, the number of shares of Common Stock deemed to be
outstanding as of a given date shall be the sum of (A) the number of shares of
Common Stock and actually outstanding, and (B) the number of shares of Common
Stock into which the then outstanding shares of Convertible Preferred could be
converted if fully converted on the day immediately preceding the given date.
(ii) For the purpose of making any adjustment required under this
Section 5(k), the consideration received by the Company for any issue or sale of
securities shall (A) to the extent it consists of cash, be computed at the gross
amount of cash received by the Company before deduction of any underwriting or
similar commissions, compensation or concessions paid or allowed by the Company
in connection with such issue or sale and before deduction of any expenses
payable by the Company, (B) to the extent it consists of property other than
cash, be computed at the fair value of that property as detennined in good faith
by the Board, and (C) if Additional Shares of Common Stock, Convertible
Securities (as hereinafter defined) or rights or options to purchase either
Additional Shares of Common Stock or Convertible Securities are issued or sold
together with other stock or securities or other assets of the Company for a
consideration which covers both, be computed as the portion of the consideration
so received that may be reasonably determined in good faith by the Board to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
rights or options.
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(iii) For the purpose of the adjustment required under this Section
5(k), if the Company issues or sells any rights or options for the purchase of,
or stock or other securities convertible into, Additional Shares of Common Stock
(such convertible stock or securities being herein referred to as "Convertible
Securities") and if the Effective Price of such Additional Shares of Common
Stock is less than the Convertible Preferred Stock Conversion Price, in each
case the Company shall be deemed to have issued at the time of the issuance of
such rights or options or Convertible Securities the maximum number of
Additional Shares of Common Stock issuable upon exercise or conversion thereof
and to have received as consideration for the issuance of such shares an amount
equal to the total amount of the consideration, if any, received by the Company
for the issuance of such rights or options or Convertible Securities, plus, in
the case of such rights or options, the maximum amounts of consideration, if
any, payable to the Company upon the exercise of such rights or options, plus,
in the case of Convertible Securities, the maximum amounts of consideration, if
any, payable to the Company upon the conversion thereof; provided that if in the
case of Convertible Securities the maximum amounts of such consideration cannot
be ascertained, but are a function of antidilution or similar protective
clauses, the Company shall be deemed to have received the maximum amounts of
consideration without reference to such clauses; provided further that if the
maximum amount of consideration payable to the Company upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by mason of
antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such amount of consideration is reduced; and provided further
that if the maximum amount of consideration payable to the Company upon the
exercise or conversion of such rights, options or Convertible Securities is
subsequently increased, the Effective Price shall be again recalculated using
the increased maximum amount of consideration payable to the Company upon the
exercise or conversion of such rights, options or Convertible Securities. No
further adjustment of the Convertible Preferred Stock Conversion Rate, as
adjusted upon the issuance of such rights, options or Convertible Securities,
shall be made as a result of the actual issuance of Additional Shares of Common
Stock on the exercise of . any such rights or options or the conversion of any
such Convertible Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall expire without
having been exercised, the Convertible Preferred Stock Conversion Rate as
adjusted upon the issuance of such rights, options or Convertible Securities
shall be readjusted to the Convertible Preferred Stock Conversion Rate which
would have been in effect had an adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional Shares of Common
Stock, if any, actually issued or sold on the exercise of such rights or options
or rights of conversion of such Convertible Securities, and such Additional
Shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise, plus the consideration, if
any, actually received by the Company for the granting of all such rights or
options, whether or not exercised, plus the consideration received for issuing
or selling the Convertible Securities actually converted, plus the
consideration, if any, actually received by the Company on the conversion of
such Convertible Securities, provided that such readjustment shall not apply to
prior conversions of Convertible Preferred.
(iv) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company or deemed to be issued pursuant to this
Section 5(k), whether or not subsequently reacquired or retired by the Company
other than (1) shares of Common Stock issued upon conversion of the Convertible
Preferred; (2) shares of Common Stock and/or options, warrants or other Common
Stock purchase rights thereafter (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like) issued to employees,
officers or directors of, or consultants, advisors, advisory board members or
committee members to, the Company pursuant to stock purchase or stock option
plans or other arrangements that are approved by the Board; (3) shares of Common
Stock issued pursuant to mergers, acquisitions or other similar transactions
approved by the Board; and (4) all issuances in connection with strategic
partnerships, strategic alliances, joint ventures, or any other similar
transaction approved by the Board. The "Effective Price" of Additional Shares of
Common Stock shall mean the quotient determined by dividing the total number of
Additional Shares of Common Stock issued or sold, or deemed to have been issued
or sold by the Company under this Section 5(k), into the aggregate consideration
received, or deemed to have been received by the Company for such issue under
this Section 5(k), for such Additional Shares of Common Stock.
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(l) Adjustments for Issuance of Additional Securities to Series A
Stock holders in Accordance with Agreement and Plan of Merger. If the Company at
any time or from time to time after the Convertible Preferred Stock Original
Issue Date issues or provides for the issuance of its securities to the Series A
Stock holders in accordance with Section 2.5(a)(iv) of the Agreement and Plan of
Merger among Othnet, Inc., Othnet Merger Sub, Inc. and Association of Volleyball
Professionals, Inc., dated as of June 29, 2004 ("Merger Agreement"), in such
event provision shall be made so that the holders of Convertible Preferred shall
receive upon conversion thereof, in addition to the number of shares of Common
Stock receivable thereupon, the amount of Common Stock or other securities
convertible into Common Stock, equal to their pro rata percentage of the
fully-diluted securities of the Company prior to any issuances to the Series A
Preferred Stockholders in accordance with the terms of the Merger Agreement,
subject to all other adjustments called for during such period under this
Section 5 with respect to the rights of the holders of Convertible Preferred or
with respect to such other securities by their terms.
(m) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Convertible Preferred Stock Conversion Price for the number
of shares of Common Stock or other securities issuable upon conversion of
Convertible Preferred, if Convertible Preferred is then convertible pursuant to
this Section 5, the Company, at its expense, shall compute such adjustment or
readjustment in accordance with the provisions hereof and prepare a certificate
showing such adjustment or readjustment, and shall mail such certificate, by
first class mail, postage prepaid, to each registered holder of Convertible
Preferred at the holder's address as shown in the Company's books. The
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (1) the consideration received or deemed to be received by the
Company for any Additional Shares of Common Stock issued or sold or deemed to
have been issued or sold, (2) the Convertible Preferred Stock Conversion Price
at the time in effect, (3) the number of Additional Shares of Common Stock and
(4) the type and amount, if any, of other property which at the time would be
received upon conversion of the Convertible Preferred.
(n) Notices of Record Date. Upon (i) any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, or (ii) any Acquisition (as defined in Section 3(c)) or other
capital reorganization of the Company, any reclassification or recapitalization
of the capital stock of the Company, any merger or consolidation of the Company
with or into any other corporation, or any Asset Transfer (as defined in Section
3(c)), or any voluntary or involuntary dissolution, liquidation or winding up of
the Company, the Company shall mail to each holder of Convertible Preferred at
least ten (10) days prior to the record date specified therein a notice
specifying (1) the date on which any such record is to be taken for the purpose
of such dividend or distribution and a description of such dividend or
distribution, (2) the date on which any such Acquisition, reorganization,
reclassification, transfer, consolidation, merger, Asset Transfer, dissolution,
liquidation or winding up is expected to become effective, and (3) the date, if
any, that is to be fixed as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock (or
other securities) for securities or other property deliverable upon such
Acquisition, reorganization, reclassification, transfer, consolidation, merger,
Asset Transfer, dissolution, liquidation or winding up.
9
6. Mandatory Conversion. At any time commencing one year after the
issuance of shares of Series B Stock the Company may send a notice of conversion
to the holders of the Series B Stock, provided: (i) all shares of Common Stock
underlying the Series B Stock have been registered for resale with the
Securities and Exchange Commission, and such registration statement is effective
at the time such notice of conversion is sent to the holders of the Series B
Stock, (ii) the Common Stock is quoted on the Over-The-Counter Bulletin Board
("OTCBB") or a similar electronic quotation system or stock exchange, (iii) the
closing price per share, or the average of the closing bid and ask price per
share of Common Stock, if applicable, has been at least twice. the quotient
obtained by dividing the redemption price of the Series B Stock by 100 (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares) for thirty (30) consecutive trading days
prior to a notice of conversion, and (iv) the average daily trading volume of
the Common Stock as reported on the OTCBB, or other electronic quotation system
or stock exchange as then listed, averages at least 2,000,000 shares of Common
Stock for each of the thirty (30) consecutive trading days prior to a notice of
conversion, the Company may send the holders a notice of conversion.
Upon the sending of such notice, all shares of Series B Stock shall be
converted into Common Stock at the Series B Conversion Rate then in effect (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares). Upon such automatic conversion, any
declared and unpaid dividends shall be paid in accordance with the provisions of
Section 5(g) above. Upon such automatic conversion, the outstanding shares of
Series B Stock shall be converted automatically without any further action by
the holders of such shares whether or not the certificates representing such
shares are surrendered to the Company or its transfer agent.
At such time as the Company has amended its certificate of incorporation
to increase its authorized Common Stock to no less than 300,000,000 shares, each
share of Series A Stock shall automatically be converted into a number of shares
of Common Stock equal to the then current Convertible Stock Conversion Rate, and
each Series A Stock certificate shall represent the number of whole shares of
Common Stock that shall equal the product obtained by multiplying the number of
shares of Series A Stock stated thereon by the Convertible Stock Conversion
Rate. Upon surrender of such certificate to the Company, the Company shall issue
certificates representing such whole number of shares of Common Stock and cash
in the amount of any fractional share as the holder of such certificate shall
lawfully direct.
7. No Reissuance of Convertible Preferred. No share or shares of
Convertible Preferred, or any other series of preferred stock authorized by the
Company, acquired by the Company by reason of redemption, purchase, conversion
or otherwise shall be reissued; and in addition, the Certificate of Designation
of Rights Preferences and Limitations of Convertible Preferred shall be
appropriately amended to effect the corresponding reduction in the Company's
authorized stock. If the Convertible Preferred shall not be issued as
contemplated in the Offering Memorandum, the Company shall file a certificate of
resolutions of the Company's board of directors to such effect in accordance
with Section 151 of the Delaware General Corporation Law.
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8. No Preemptive Rights. No stockholders of the Company, including,
without limitation, the holders of Convertible Preferred, shall have preemptive
rights.
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IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
of Series A and Series B Convertible Stock to be duly executed by its President
and attested to by its Secretary on this 25th day of February, 2005.
By: /s/ Jeffrey Wattenberg
-----------------------------------
President: Jeffrey Wattenberg
By: /s/ Jeffrey Wattenberg
-----------------------------------
President: Jeffrey Wattenberg
(SEAL)
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