EXHIBIT 3.1L
State of Delaware
Secretary of State
Division of Corporations
Delivered 02:18 PM 10/07/2004
FILES 02:10 PM 10/07/2004
SRV 040726647 - 2136195 FILE
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF
SERIES D REDEEMABLE PREFERRED STOCK
OF
DIRECT INSITE CORP.
DIRECT INSITE CORP., a corporation organized and existing under the laws of
the State of Delaware (the "Company"),
DOES HEREBY CERTIFY THAT:
Pursuant to authority conferred upon the Board of Directors of the Company (the
"Board of Directors") by the Certificate of Incorporation of the Company, at a
meeting duly held, the Board of Directors adopted resolutions (i) authorizing a
series of the Company's authorized preferred stock, par value $0.0001 per share
(the "Preferred Stock"), to be known as the Series D Redeemable Preferred Stock
(the "Series D Preferred Stock"), and (ii) providing for the designation,
preferences and relative, participating, optional or other rights, and the
qualifications, limitations or restrictions of the Series D Preferred Stock, as
follows:
RESOLVED, that the Company be, and hereby is, authorized, empowered and
directed to designate 1,500 shares of the Company's 2,000,000 shares of
authorized preferred stock, par value $0.0001 per share ("Preferred
Stock"), as Series D Redeemable Preferred Stock, par value $0.0001 per
share ("Series D Preferred Stock"), which shall have the powers,
designations, preferences and other special rights, as follows:
1. Certain Definitions. Except as otherwise expressly provided herein, the
following terms, as used herein, have the following meanings:
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day, other than a Saturday or Sunday or a day
on which banking institutions in The City of New York are authorized or
obligated by law or executive order to close.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company as amended to date and as the same may be further amended
from time to time hereafter.
"Common Stock" means the common stock, par value $0.0001 per share, of
the Company, including any capital stock of any class of the Company
thereafter authorized that shall not be limited to a fixed sum in respect
of the rights of the holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company.
"Dividend Payment Dates" means January 1, April 1, July 1 and October
1 of each year while any shares of Series D Preferred Stock are
outstanding, commencing April 1, 2006; provided, however, if any such date
occurs on a day that is not a Business Day, the applicable Dividend Payment
Date shall be the next following Business Day.
"Holder" means each Person in whose name any shares of Series D
Preferred Stock are issued and outstanding, at the time a determination is
made, including Persons to whom such shares are transferred pursuant to the
terms hereof.
"Issuance Date" means, with respect to any shares of Series D
Preferred Stock, the date of issuance of such shares.
"Liquidation Event" means any liquidation, dissolution, or winding up
of the Company whereby all equity securities of the Company then
outstanding are redeemed.
"Liquidation Preference" means $1,000.00 plus all accrued and unpaid
dividends per share of Series D Preferred Stock outstanding.
"Person" means any individual, company, corporation, partnership,
limited liability company, trust, division, governmental,
quasi-governmental or regulatory entity or authority or other entity.
"Redemption Price" means $1,000.00 per share of Series D Preferred
Stock plus all accrued and unpaid dividends and distributions thereon.
"Securities Act" shall mean the U. S. Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock of the Company, par value $0.0001 per share.
"Series B Preferred Stock" means the Series B Redeemable Preferred
Stock of the Company, par value $0.0001 per share.
"Series C Preferred Stock" means the Series C Redeemable Preferred
Stock of the Company, par value $0.0001 per share
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2. Dividends.
(a) The Holders of outstanding shares of Series D Preferred Stock
shall be entitled to receive dividends out of funds legally available for
the payment of dividends, which shall begin to accrue on and be cumulative
from and after the respective Issuance Dates for such shares, whether or
not such dividends have been declared and whether or not there shall be net
profits or net assets of the Company legally available for the payment of
such dividends. Dividends shall not be payable, however, until April 1,
2006. The amount of such dividends per share of Series D Preferred Stock
(the "Dividend Amount") shall be equal to the amount derived by multiplying
(i) the Liquidation Preference per share of such Series D Preferred Stock
(as prorated for fractional shares) plus the amount of all previously
accrued but unpaid dividends per such share by (ii) nine and one-half
percent (9-1/2 %) per annum. The Dividend Amount then accrued shall be
payable in cash on each Dividend Payment Date. So long as any shares of
Series D Preferred Stock are outstanding, no dividends shall be declared,
set apart or paid on, nor shall the Company purchase, redeem or otherwise
acquire, or sell to any subsidiary of the Company any Common Stock of the
Company or any capital stock of the Company that ranks junior to the Series
D Preferred Stock in respect of dividends, unless all Dividend Amounts
unpaid and accrued shall have first been paid or made available for payment
to the Holders of then outstanding shares of Series D Preferred Stock as
provided in this Section 2(a).
(b) The amount of dividends payable for any period shorter than a year
shall be determined on the basis of twelve 30-day months and a 360-day
year.
(c) Without limiting any of the foregoing, in the event that (i) all
dividends then accrued and payable hereunder shall not have been paid in
full or made available for payment to the Holders then entitled to receive
such dividends hereunder, and (ii) funds legally available for the payment
of dividends are insufficient to permit payment in full to all such Holders
of the full Dividend Amount to which such Holders are then entitled, then
the entire amount available for payment of dividends by the Company shall
be distributed ratably among all such Holders in proportion to the full
Dividend Amount to which they would otherwise be respectively entitled.
3. Liquidation.
(a) Upon the occurrence of any Liquidation Event, each Holder of
shares of Series D Preferred Stock then outstanding shall be paid the
Liquidation Preference per share immediately before the making of any
distributions of any kind in respect of any shares of Common Stock or any
other class of capital stock of the Company ranking junior to the Series D
Preferred Stock whether now existing or hereafter created.
(b) If, upon the occurrence of any Liquidation Event, the assets of
the Company available for distribution to the Holders are insufficient to
permit the payment in full of the Liquidation Preference per share then
outstanding, then the assets of the Company shall be ratably distributed
among the Holders, to the extent applicable. Written notice of a
Liquidation Event, stating the date established by the Board of Directors
for determining Holders of record and the date of the Liquidation Event,
the Liquidation Preference, the amount thereof payable per share and the
place where said sums shall be payable shall be given by mail, postage
prepaid, not less than thirty (30) or more than sixty (60) days prior to
the payment date stated therein, to each Holder of then outstanding shares
of Series D Preferred Stock at such Holder's mailing address as shown in
the books and records of the Company.
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4. Redemption.
(a) Right of Company to Redeem. The Company may elect to redeem shares
of Series D Preferred Stock, in whole or in part, at any time and from time
to time out of funds legally available therefor. Upon redemption of any
shares of Series D Preferred Stock, the participating Holders thereof shall
receive an amount equal to the Redemption Price for each share of
outstanding Series D Preferred Stock so redeemed.
(b) Redemption Procedures. Upon election by the Company to redeem the
Series D Preferred Stock in compliance with applicable law: The Company
shall give to each Holder, no later than 20 days prior to the Redemption
Date defined below, written notice of such redemption setting forth the
following information (each such notice, a "Redemption Notice"):
(i) the date established by the Board of Directors for
determining Holders of record entitled to payment of the Redemption
Price (the "Record Date");
(ii) the total number of shares of Series D Preferred Stock to be
redeemed by the Company, and, in the event of any partial redemption,
the pro rata number of shares of Series D Preferred Stock to be
redeemed;
(iii) the effective date of redemption, which date shall not be
less than twenty (20) nor more than sixty (60) calendar days following
the Record Date (the "Redemption Date"); and
(iv) the place for surrender by the Holders of certificates
evidencing shares of Series D Preferred Stock being redeemed.
(c) Special Procedures for Partial Redemptions. If the Company elects
to redeem only a portion of the then outstanding shares of Series D
Preferred Stock, then such redemption shall be effected pro rata among all
those who are Holders of such outstanding shares on the applicable record
date, and the Redemption Notice shall state, in addition to any other
information required to be stated therein by this Section 4, that (i) only
a portion of the total outstanding shares of Series D Preferred Stock are
being redeemed, (ii) the total number of such shares to be redeemed, and
(iii) the pro rata number of shares to be redeemed from each Holder.
If, in connection with a partial redemption, any Holder surrenders for
redemption one or more share certificates representing more than the number
of shares of Series D Preferred Stock to be redeemed from such Holder, the
Company shall, promptly after the applicable Redemption Date, remit to each
such Holder a certificate representing the number of shares of Series D
Preferred Stock equal to the difference between the total number of shares
thereof represented by the stock certificate(s) surrendered and the number
of such shares redeemed (such certificates, "Excess Share Certificates").
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(d) Remitting Redemption Price. No later than two (2) Business Days
after the applicable Redemption Date, the Company shall remit to the
Holders of shares of Series D Preferred Stock on the applicable Record Date
the Redemption Price of such shares being redeemed. Notwithstanding the
foregoing, the Company is not required to remit the Redemption Price to any
Holder until after receipt by the Company of such Holder's certificate for
shares of Series D Preferred Stock to be surrendered for cancellation in
connection with a redemption pursuant to this Section 4, or upon
satisfaction of other arrangements entered into by the Company with a
Holder for the surrender of such shares.
(e) Notices; Address for Payment, Etc. All notices to be given and
payments to be made by the Company under this Section 4 shall be in writing
and shall be deemed sent or given when given in person or when sent by
certified mail, postage prepaid, return receipt requested, to each Holder
on the applicable record date at such Holder's address as shown on the
Company's books and records. All Excess Share Certificates to be sent to
any Holder pursuant to this Section 4 shall be sent to such holder by mail,
postage prepaid, to such Holder's address as shown on the Company's books
and records. The Redemption Price payable to a Holder pursuant to this
Section 4 shall be sent to such Holder (i) at its address as shown on the
Company's books and records or (ii) sent by wire transfer to an account of
such Holder designated by such Holder (with all necessary wiring
information) by written notice given to the Company no later than two (2)
calendar days prior to the applicable Redemption Date.
5. Voting Rights. Except as otherwise required by applicable law or this
Certificate of Designation, the Holders shall have no voting rights in respect
of their shares of Series D Preferred Stock.
6. Principal Office; Notices. The address of the principal offices of the
Company is located at 80 Orville Drive, Bohemia, New York 11716. Any notice or
certificate required by the Certificate of Incorporation, or this Certificate of
Designation to be delivered to any Holder shall be deemed given when personally
delivered to such Holder or upon deposit in the United States Mail, certified
mail, return receipt requested and addressed to such Holder at his or its
address appearing on the books and records of the Company.
7. Cancellation of Series D Preferred Stock. In the event of redemption of
any shares of Series D Preferred Stock, the shares so redeemed shall be
canceled, shall return to the status of authorized, but unissued shares of
preferred stock of no designated series, and shall be issuable by the Company as
any series of Preferred Stock.
8. Amendments and Other Actions.
(a) For as long as any shares of Series D Preferred Stock are
outstanding, the Company shall not, without first obtaining the approval
(by vote or written consent) of the holders of all of the then outstanding
shares of Series D Preferred Stock, voting as a separate class in any
manner (i) alter or change the rights, preferences or privileges of the
Series D Preferred Stock so as to affect adversely the Series D Preferred
Stock; or (ii) create any new class or series of capital stock senior to or
pari passu with the Series D Preferred Stock with respect to the right to
payment and receipt of (A) dividends or (B) distributions upon a
Liquidation Event.
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(b) Notwithstanding the foregoing, when authorized by resolution of
the Board of Directors, the Company may amend or supplement this
Certificate without the consent of any holder of Series D Preferred Stock
to cure any ambiguity, defect or inconsistency herein or make any other
changes herein, provided that each such amendment or supplement shall not
adversely affect the interests of the Holders thereof and that prior to the
filing of any document reflecting any such changes, the Company provides
the Holders written notice of any such proposed changes.
9. Registration and Transfer
(a) The Company shall maintain at its principal offices (or at the
offices of its transfer agent or such other office or agency as it may
designate by notice to the holders of the Series D Preferred Stock) a stock
register for the Series D Preferred Stock in which the Company shall record
the names and addresses of the Holders.
(b) Prior to due presentment for registration of any Permitted
Transferee (as defined below) of any Series D Preferred Stock, the Company
may deem and treat the person in whose name any Series D Preferred Stock is
registered as the absolute owner of such Series D Preferred Stock and the
Company shall not be affected by notice to the contrary.
(c) Anything contained herein to the contrary notwithstanding, the
Company shall not register as a holder of any shares of Series D Preferred
Stock any proposed transferee thereof, and such proposed transferee shall
not be deemed a Holder for any purposes hereunder, unless: (i) such
proposed transferee (A) represents to the Company in writing that such
proposed transferee is an accredited investor, as such term is defined in
Rule 501 of Regulation D promulgated under the Securities Act and (B)
provides written certification to the Company of the basis of such
transferee's status as an accredited investor, which certification shall be
satisfactory to the Company in its sole discretion, exercised in good
faith; (C) agrees, in writing, to abide by the terms of, and to assume the
obligations of the initial Holder under any written agreement between the
Company and such initial Holder; and (D) is provided a copy of this
Certificate of Designation (as the same may be amended from time to time);
and (ii) the proposed transfer is made pursuant to an effective
registration statement under the Securities Act and applicable state
securities laws, or an exemption from such registration is available.
(d) Each certificate representing any shares of Series D Preferred
Stock shall contain the following legends placed prominently on the front
or back of the certificate:
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT.
DIRECT INSITE CORP. WILL FURNISH, WITHOUT CHARGE, TO EACH HOLDER OF
ITS SERIES D PREFERRED STOCK WHO SO REQUESTS A COPY OF THE CERTIFICATE
Of DESIGNATION SETTING FORTH THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF SUCH
STOCK AND ANY OTHER CLASS OR SERIES THEREOF AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
(e) No service charge shall be made to any Holder for any
registration, transfer or exchange.
10. Ranking. Except as otherwise provided herein or agreed to by the
Holders: with respect to the right to payment and receipt of dividends and the
right to receive distributions of assets upon a Liquidation Event The Series D
Preferred Stock shall rank (i) junior to the Series A, B and C Preferred Stock;
and (ii) senior to any and all other classes of capital stock of the Company,
whether now existing or hereafter created.
11. Action by Written Consent. Whenever, under this Certificate of
Designation or otherwise, the Holders of the Series D Preferred Stock are
required to take any action, such Holders may take action without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the Holders of more than
50% of the then outstanding shares of Series D Preferred Stock.
IN WITNESS WHEREOF, Direct Insite Corp. has caused this Certificate of
Designation to be signed by its Chief Financial Officer on this 7th day of
October, 2004.
DIRECT INSITE CORP.
By:/s/ Michael Beecher
---------------------------
Name: Michael Beecher
Title: Chief Financial Officer
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