Attached files
Exhibit 3.1(a)
AMENDED
AND RESTATED ARTICLES OF INCORPORATION OF
DOLPHIN
ENTERTAINMENT, INC.
(Conformed copy
incorporating all amendments through September 14,
2017)
ARTICLE I.
Name,
Principal Place of Business and Registered Agent and
Office
The
name of the Corporation is DOLPHIN
ENTERTAINMENT, INC. The principal place of business and
mailing address of this Corporation shall be 2151 Le Jeune Road,
Suite 150-Mezzanine, Coral Gables, Florida 33134.
The
street address of the registered office of this Corporation is
Dolphin Entertainment, Inc., 2151 Le Jeune Road, Suite
150-Mezzanine, Coral Gables, Florida 33134. The name of the
registered agent of this Corporation at such address is Mirta A.
Negrini.
ARTICLE II.
Purpose
and Powers
The
purpose for which the Corporation is organized is to engage in or
transact any and all lawful activities or business for which a
corporation may be incorporated under the laws of the State
of Florida. The
Corporation shall have all of the corporate powers enumerated in
the Florida Business Corporation Act.
ARTICLE III.
Capital
Stock
A.
AUTHORIZED
SHARES
The
total number of shares of all classes of stock that the Corporation
shall have the authority to issue is Two Hundred Ten Million
(210,000,000) shares, of which Two Hundred Million (200,000,000)
shares shall be Common Stock, par value $0.015 per share
(“Common Stock”) and Ten Million (10,000,000) shares
shall be Preferred Stock, having a par value of $0.001 per share
(“Preferred Stock”). The Board of Directors is
expressly authorized to provide for the classification and
reclassification of any unissued shares of Common Stock or
Preferred Stock and the issuance thereof in one or more classes or
series without the approval of the stockholders of the Corporation.
Of the Preferred Stock, 50,000 shares have been designated Series C
Convertible Preferred Stock, par value $0.001 per
share.”
On the
close of business on May 10, 2016 (the “Effective
Date”), each twenty (20) shares of Common Stock issued and
outstanding or held by the Corporation in treasury stock
immediately prior to the Effective Date, automatically and without
any action on the part of the respective holders thereof or the
Corporation, was combined and converted into one (1) share of
Common Stock, subject to the treatment of fractional share
interests as described below (the “Reverse Stock
Split”). No fractional shares of Common Stock were issued in
connection with the Reverse Stock Split. Rather, fractional shares
created as a result of the Reverse Stock Split were rounded up to
the next whole number, such that,
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in lieu
of fractional shares, each shareholder who would have otherwise
been entitled to receive a fractional share of Common Stock as a
result of the Reverse Stock Split was instead entitled to receive a
whole share of Common Stock in respect thereof.
On the close of
business on September 14, 2017, (the “Second Effective
Date”), each two (2) shares of Common Stock issued and
outstanding or held by the Corporation in treasury stock
immediately prior to the Second Effective Date shall, automatically
and without any action on the part of the respective holders
thereof or the Corporation, be combined and converted into one (1)
share of Common Stock, subject to the treatment of fractional share
interests as described below (the “Second Reverse Stock
Split”). No fractional shares of Common Stock shall be issued
in connection with the Second Reverse Stock Split. Rather,
fractional shares created as a result of the Second Reverse Stock
Split shall be rounded up to the next whole number, such that, in
lieu of fractional shares, each shareholder who would have
otherwise been entitled to receive a fractional share of Common
Stock as a result of the Second Reverse Stock Split shall instead
be entitled to receive a whole share of Common Stock in respect
thereof.
B.
PROVISIONS
RELATING TO COMMON STOCK
1. Relative Rights. The Common
Stock shall be subject to all of the rights, privileges,
preferences and priorities of the Preferred Stock as set forth in
the certificate of designations filed to establish the respective
series of Preferred Stock. Except as provided in this Article
III.B, each share of Common Stock shall have the same relative
rights and shall be identical in all respects as to all
matters.
2. Voting Rights. Each holder of
shares of Common Stock shall be entitled to attend all special and
annual meetings of the shareholders of the Corporation. On all
matters upon which shareholders are entitled or permitted to vote,
every holder of Common Stock shall be entitled to cast one (1) vote
in person or by proxy for each outstanding share of Common Stock
standing in such holder’s name on the transfer books of the
Corporation. Holders of Common Stock shall not possess cumulative
voting
rights.
Except as otherwise provided in these Articles of Incorporation or
by applicable law, the holders of shares of Common Stock shall vote
subject to any voting rights which may be granted to holders of
Preferred Stock.
3. Dividends. Whenever there shall
have been paid, or declared and set aside for payment, to the
holders of shares of any class of stock having preference over the
Common Stock as to the payment of dividends, the full amount of
dividends and of sinking fund or retirement payments, if any, to
which such holders are respectively entitled in preference to the
Common Stock, then the holders of record of the Common Stock and
any class or series of stock entitled to participate therewith as
to dividends, shall be entitled to receive dividends, when, as, and
if declared by the Board of Directors, out of any assets legally
available for the payment of dividends thereon.
4. Dissolution, Liquidation, Winding
Up. In the event of any dissolution, liquidation or winding
up of the Corporation, whether voluntary or involuntary, the
holders of record of the Common Stock then outstanding, and all
holders of any class or series of stock entitled to participate
therewith, in whole or in part, as to distribution of assets, shall
become entitled to participate equally on a per share basis in the
distribution of any assets of the Corporation remaining after the
Corporation shall have paid or provided for payment of all debts
and liabilities of the Corporation, and shall have paid, or set
aside for payment, to the holders of any class of stock having
preference over the Common Stock in the event of dissolution,
liquidation or winding up, the full preferential amounts (if any)
to which they are entitled.
C.
PROVISIONS
RELATING TO PREFERRED STOCK
1. Issuance, Designations, Powers,
etc. The Board of Directors expressly is authorized, subject
to limitations prescribed by the Florida Business Corporation Act
and the provisions of these Articles of Incorporation, to provide,
by resolution for the issuance from time to time of the shares of
Preferred Stock in one or more series, to establish from time to
time the number of shares to be included in each such series, and
to fix the designation, powers, preferences and other rights of the
shares of each such series and to fix the qualifications,
limitations and restrictions thereon, including, but without
limiting the generality of the foregoing, the
following:
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(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 events 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 dates 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
dates;
(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; and
(h) Any other relative
powers, preferences, and rights of that series, and qualifications,
limitations or restrictions on that series.
2. Dissolution, Liquidation, Winding
Up. In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the
holders of Preferred Stock of each series shall be entitled to
receive only such amount or amounts as shall have been fixed by the
resolution or resolutions of the Board of Directors providing for
the issuance of such series.
D.
PROVISIONS
RELATING TO SERIES C CONVERTIBLE PREFERRED STOCK
1. Designation; Amount Limitation of
Issuances. There shall be a series of Preferred Stock that
shall be designated as “Series C Convertible Preferred
Stock,” and the number of shares constituting such
series shall be 50,000. The number of shares constituting the
Series C Convertible Preferred Stock may be increased or decreased
by resolution of the Board of Directors; provided, however, that no decrease shall
reduce the number of shares of Series C Convertible Preferred Stock
to less than the number of shares then issued and outstanding plus
the number of shares issuable upon exercise of outstanding rights,
options or warrants or upon conversion of outstanding securities
issued by the Corporation.
The
Corporation may issue shares of Class C Preferred Stock only to an
Eligible Class C Preferred Stock Holder, who may transfer such
shares only to another Eligible Class C Preferred Stock
Holder.
2.
Definitions.
Unless
the context otherwise requires, each of the terms defined in this
Section 2 shall have, for all purposes of this Certificate of
Designation, the meaning herein specified (with terms defined in
the singular having comparable meanings when used in the
plural):
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“Articles of
Incorporation” means the Corporation’s Articles of
Incorporation, as in effect on the date of this Certificate of
Designation.
“Board of
Directors” means the Board of Directors of the
Corporation.
“Business
Day” means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or
required by law to close.
“By-Laws”
means the Corporation’s By-Laws, as amended, as in effect on
the date of this Certificate of Designation.
“Capital
Stock” means any and all shares, interests, participations or
other equivalents in the equity interest (however designated) in
the Corporation.
“Common Share
Equivalents” means securities, options, warrants,
derivatives, debt instruments or other rights convertible into, or
exercisable or exchangeable for, or entitling the holder thereof to
receive directly or indirectly, Common Stock.
“Common
Stock” means the common stock, $0.015 par value per share, of
the Corporation or any other Capital Stock into which such shares
of common stock shall be reclassified or changed.
“Common Stock
Transfer Agent” has the meaning set forth in Section 6(c)
hereof. “Conversion Number” has the meaning set forth
in Section 6(a) hereof. “Conversion Shares” has the
meaning set forth in Section 6(a) hereof.
“Converted
Shares” has the meaning set forth in Section 6(c) hereof.
“Converting Shares” has the meaning set forth in
Section 6(c) hereof.
“Corporation’s
Organizational Documents” means the Articles of
Incorporation, this Certificate of Designations, any other
certificate of designations issued pursuant to the Articles of
Incorporation, and the By-Laws.
“Dilutive
Issuance” has the meaning set forth in Section 6(i)
hereof.
“Eligible
Class C Preferred Stock Holder” means any of (i) Dolphin
Entertainment, Inc., for so long as William O’Dowd continues
to beneficially own at least 90% and serves at the board of
directors or other governing entity, (ii) any other entity that
William O’Dowd beneficially owns more than 90%, or a trust
for the benefit of others, for which William O’Dowd serves as
trustee and (iii) William O’Dowd individually.
“Holders”
means the record holders of the shares of Series C Convertible
Preferred Stock, as shown on the books and records of the
Corporation.
“Junior
Stock” has the meaning set forth in Section 3
hereof.
“Liquidation
Event” means (i) any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, (ii) the consummation
of a merger or consolidation in which the shareholders of
the
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Corporation prior
to such transaction own less than a majority of the voting
securities of the entity surviving such transaction, or (iii) the
sale, distribution or other disposition of all or substantially all
of the Corporation’s assets.
“Liquidation
Preference” has the meaning set forth in Section 5(a)
hereof.
“Market
Price” means the last reported sale price of the Common Stock
on the primary U.S. national securities exchange, automated
quotation system or inter-dealer quotation system upon which the
Common Stock is then traded or quoted.
“Optional
Conversion Threshold” shall mean that the Corporation has
accomplished, as determined by the vote of the majority of the
independent directors of the Board in its sole discretion, any of
the following (i) EBITDA of more than $3.0 million in any calendar
year, (ii) production of two feature films, (iii) production and
distribution of at least three web series, (iv) theatrical
distribution in the United States of one feature film, or (v) any
combination thereof that is subsequently approved by the majority
of the independent directors of the Board based on the strategic
plan approved by the Board.
“Parity
Stock” has the meaning set forth in Section 3
hereof.
“Person”
includes all natural persons, corporations, business trusts,
limited liability companies, associations, companies, partnerships,
joint ventures and other entities, as well as governments and their
respective agencies and political subdivisions.
“Senior
Stock” has the meaning set forth in Section 3
hereof.
“Series C
Convertible Preferred Stock” has the meaning set forth in
Section 1 hereof.
“Stated
Value” means $0.001 per share of Series C Convertible
Preferred Stock, as may be adjusted for any stock split, reverse
stock split, dividend or similar event relating to the Series C
Convertible Preferred Stock.
“Transfer
Agent” means the entity designated from time to time by the
Corporation to act as the registrar and transfer agent for the
Series C Convertible Preferred Stock or, if no entity has been so
designated to act in such capacity, the Corporation.
3.
Ranking.
The
Series C Convertible Preferred Stock shall, with respect to rights
on the liquidation, winding- up and dissolution of the Corporation
(as provided in Section 5 below), rank (a) senior to all classes of
Common Stock and to each other class of Capital Stock or series of
Preferred Stock established hereafter by the Board of Directors the
terms of which expressly provide that such class ranks junior to
the Series C Convertible Preferred Stock as to rights on the
liquidation, winding-up and dissolution of the Corporation
(collectively referred to as the “Junior Stock”), (b) on a
parity with each other class of Capital Stock or series of
Preferred Stock established hereafter by the Board of Directors as
to rights on the liquidation, winding-up and dissolution of the
Corporation (collectively referred to as the “Parity Stock”) and (c)
junior to any future class of Preferred Stock established hereafter
by the Board of Directors, the terms of which expressly provide
that such class ranks senior to the Series C Convertible Preferred
Stock as to rights on the liquidation, winding-up and dissolution
of the Corporation (collectively referred to as the
“Senior
Stock”).
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The
Series C Convertible Preferred Stock shall, with respect to rights
to dividends (as provided in Section 4 below), rank on a parity
with each class of Common Stock.
4.
Dividends.
The
Corporation shall not declare, pay or set aside any dividends on
shares of Common Stock (other than dividends on shares of Common
Stock payable solely in shares of Common Stock) unless (in addition
to the obtaining of any consents required elsewhere in the
Corporation’s Organizational Documents) the Holders
simultaneously receive a dividend on each outstanding share of
Series C Convertible Preferred Stock in an amount equal to that
dividend per share of Series C Convertible Preferred Stock as would
equal the product of the dividend payable on each share of Common
Stock and the number of shares of Common Stock then issuable upon
conversion of one share of Series C Convertible Preferred Stock, in
each case calculated on the record date for determination of
holders entitled to receive such dividend and without regard to any
limitation on conversion set forth in Section 6(b)
hereof.
5.
Liquidation
Preference.
(a) Except as otherwise
provided in Section 6(h), upon any Liquidation Event, each Holder
shall be entitled to be paid out of the assets of the Corporation
available for distribution to its shareholders, on account of each
share of Series C Convertible Preferred Stock held by such Holder,
(i) prior to the holders of any class or series of Common Stock and
Junior Stock, (ii) pro rata with the holders of any Parity Stock
and (iii) after the holders of any Senior Stock, an amount (such
amount, the “Liquidation Preference”)
equal to the Stated Value.
(b) Except as otherwise
provided in Section 6(h), upon any Liquidation Event, after the
payment of the Liquidation Preference the remaining assets of the
Corporation available for distribution to its shareholders shall be
distributed first to satisfy any preference of any other Preferred
Stock that was junior to the Series C Convertible Preferred Stock
and then among the Holders and the holders of the shares of Capital
Stock, pro rata, based on the number of shares held by each such
holder, treating for this purpose all such securities as if they
had been converted to Common Stock pursuant to the terms of this
Certificate of Designation (or any other applicable certificate of
designation) immediately prior to such Liquidation Event without
regard to any limitation on conversion set forth in Section 6(b)
hereof.
6.
Conversion.
(a) Holder’s Right to
Convert. Upon the Board’s determination that an
Optional Conversion Threshold has been met, subject to the
provisions of Section 6(c) hereof, each Holder shall have the
right, upon the delivery of a written notice to the Corporation, to
convert any share of Series C Convertible Preferred Stock held by
it into that number of fully paid and nonassessable shares of
Common Stock (“Conversion Shares”) equal
to the Conversion Number at the time in effect. Any Holder may
convert all or less than all of the shares of Series C Convertible
Preferred Stock held by it at any time after such determination.
Any Holder’s conversion of shares of Series C Convertible
Preferred Stock under this Section 6(a) shall not be effective
unless such Holder has also complied with the provisions set forth
in Section 6(c) hereof at the time of delivery of its aforesaid
written notice to the Corporation. The initial “Conversion Number” per
share of Series C Convertible Preferred Stock shall be one (1);
provided, however, that the Conversion Number in effect from time
to time shall be subject to adjustment as provided
hereinafter.
(b) Automatic Conversion. The Class
C Preferred Stock shall automatically be converted upon the
occurrence of any of the following events:
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(i) Each outstanding
share of Class C Preferred Stock which is transferred to any holder
other than an Eligible Class C Preferred Stock Holder shall
automatically convert into that number of fully paid and
nonassessable Conversion Shares equal to the Conversion Number at
the time in effect.
(ii) If
the aggregate number of shares of Common Stock plus Conversion
Shares (issuable upon conversion of the Class B Convertible
Preferred Stock and the Class C Convertible Preferred Stock) held
by the Eligible Class C Preferred Stock Holders in the aggregate
constitute 10% or less of the sum of (x) the outstanding shares of
Common Stock of the Corporation plus (y) all Conversion Shares held
by the Eligible Class C Preferred Stock Holders, then each
outstanding Class C Convertible Preferred Stock then outstanding
will automatically convert into that number of fully paid and
nonassessable Conversion Shares equal to the Conversion Number at
the time in effect.
(iii) At
such time as a Holder of Class C Preferred Stock ceases to be an
Eligible Class C Preferred Stock Holder, each share of Class C
Preferred Stock held by such person or entity shall immediately
convert into that number of fully paid and nonassessable Conversion
Shares equal to the Conversion Number at the time in
effect.
(c) Conversion Procedures. Each
conversion of shares of Series C Convertible Preferred Stock into
shares of Common Stock shall be effected by the surrender of the
certificate(s) evidencing the shares of Series C Convertible
Preferred Stock to be converted (the “Converting Shares”) at
the principal office of the Corporation (or such other office or
agency of the Corporation as the Corporation may designate by
notice in writing to the Holders of the Series C Convertible
Preferred Stock) at any time during its usual business hours,
together with written notice by the holder of such Converting
Shares, (i) stating that the Holder desires to convert the
Converting Shares, or a specified number of such Converting Shares,
evidenced by such certificate(s) into shares of Common Stock (the
“Converted
Shares”), and (ii) giving the name(s) (with addresses)
and denominations in which the Converted Shares should either be
registered with the Corporation’s transfer agent and
registrar for the Common Stock (the “Common Stock Transfer
Agent”) on its records in book-entry form under The
Direct Registration System or certificated, and, in either case,
instructions for the delivery of a statement evidencing book-entry
ownership of the Converted Shares or the certificates evidencing
the Converted Shares. Upon receipt of the notice described in the
first sentence of this Section 6(c), together with the
certificate(s) evidencing the Converting Shares, the Corporation
shall be obligated to, and shall, cause to be issued and delivered
in accordance with such instructions, as applicable, either (x) a
statement from the Common Stock Transfer Agent evidencing ownership
of the Converted Shares, registered in the name of the Holder or
its designee on the Common Stock Transfer Agent’s records in
book-entry form under The Direct Registration System or (y)
certificate(s) evidencing the Converted Shares and, if applicable,
a certificate (which shall contain such applicable legends, if any,
as were set forth on the surrendered certificate(s)) representing
any shares which were represented by the certificate(s) surrendered
to the Corporation in connection with such conversion but which
were not Converting Shares and, therefore, were not converted. All
or some Converted Shares so issued whether in book-entry form under
the Direct Registration System or in certificated form may be
subject to restrictions on transfer as required by applicable
federal and state securities laws. Any such Converted Shares
subject to restrictions on transfer under applicable federal and
state securities laws shall be encumbered by stop transfer orders
and restrictive legends (or equivalent encumbrances). Such
conversion, to the extent permitted by law, shall be deemed to have
been effected as of the close of business on the date on which such
certificate(s) shall have been surrendered and such written notice
shall have been received by the Corporation unless a later date has
been specified by such Holder, and at such time the rights of the
Holder of such Converting Shares as such Holder shall cease, and
the Person(s) in whose name or names the Converted Shares are to be
issued either in book-entry form or certificated form, as
applicable, upon such conversion shall be deemed to have become the
holder(s) of record of the Converted Shares.
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(d) Effect of Conversion. Upon the
issuance of the Converted Shares in accordance with Section 6, such
shares shall be deemed to be duly authorized, validly issued, fully
paid and non- assessable.
(e) Adjustments for Common Stock Dividends
and Distributions. If the Corporation at any time or from
time to time 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 Conversion Number 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 Conversion Number then in effect by a fraction (i)
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 plus the
number of shares of Common Stock issuable in payment of such
dividend or distribution and (ii) 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. To the extent an adjustment is made
in respect of the foregoing pursuant to Section 6(f) or the Holder
actually receives the dividend to which any such adjustment
relates, an adjustment shall not be made pursuant to this Section
6(e).
(f) Conversion Number Adjustments for
Subdivisions, Combinations or Consolidations of Common Stock.
(i) In the event the
Corporation should at any time or from time to time fix a record
date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders
of shares of Common Stock entitled to receive a dividend or other
distribution payable in additional Common Share Equivalents,
without payment of any consideration by such holder for additional
Common Share Equivalents (including the additional Common Stock
issuable upon conversion, exchange or exercise thereof), then, as
of such record date (or the date of such dividend, distribution,
split or subdivision if no record date is fixed), the Conversion
Number then in effect shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion of each
such share of such Series C Convertible Preferred Stock shall be
increased in proportion to such increase of outstanding shares of
Common Stock and shares issuable with respect to Common Share
Equivalents.
(ii) If
the number of shares of Common Stock outstanding at any time is
decreased by a combination, consolidation, reclassification or
reverse stock split of the outstanding shares of Common Stock or
other similar event, then, following the record date of such
combination, the Conversion Number then in effect shall be
appropriately decreased so that the number of shares of Common
Stock issuable on conversion of each such share of such Series C
Convertible Preferred Stock shall be decreased in proportion to
such decrease in outstanding shares of Common Stock.
(g) Recapitalizations. If at any
time or from time to time there shall be a recapitalization of the
Common Stock (other than a subdivision, combination, merger or sale
of assets transaction provided for elsewhere in this Section 6),
provision shall be made so that the Holders shall thereafter be
entitled to receive upon conversion of the Series C Convertible
Preferred Stock the number of shares of Capital Stock or other
securities or property of the Corporation to which a holder of
Common Stock would have been entitled on recapitalization. In any
such case, appropriate adjustment shall be made in the application
of the provisions of this Section 6 with respect to the rights of
the Holders after the recapitalization to the end that the
provisions of this Section 6 (including adjustment of the
Conversion Number then in effect and the number of shares issuable
upon conversion of the Series C Convertible Preferred Stock) shall
be applicable after that event as nearly equivalent as may be
practicable.
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(h) Mergers and Other
Reorganizations. If at any time or from time to time there
shall be a reclassification of the Common Stock (other than a
subdivision, combination, reclassification or exchange of shares
provided for elsewhere in this Section 6) or a merger or
consolidation of the Corporation with or into another entity or the
sale of all or substantially all of the Corporation’s
properties and assets to any other Person, then, as a part of and
as a condition to the effectiveness of such reclassification,
merger, consolidation or sale, lawful and adequate provision shall
be made so that the Holders shall thereafter be entitled to receive
upon conversion of the Series C Convertible Preferred Stock the
number of shares of Capital Stock or other securities or property,
if any, of the Corporation or of the successor entity resulting
from such reclassification, merger or consolidation or sale, to
which a holder of Common Stock deliverable upon conversion would
have been entitled in connection with such reclassification,
merger, consolidation or sale. In any such case, appropriate
provision shall be made with respect to the rights of the Holders
after the reclassification, merger, consolidation or sale to the
end that the provisions of this Section 6 (including, without
limitation, provisions for adjustment of the Conversion Number and
the number of shares purchasable upon conversion of the Series C
Convertible Preferred Stock) shall thereafter be applicable, as
nearly as may be, with respect to any shares of Capital Stock,
securities or property to be deliverable thereafter upon the
conversion of the Series C Convertible Preferred
Stock.
Each
Holder, upon the occurrence of a reclassification, merger or
consolidation of the Corporation or the sale of all or
substantially all its assets and properties, as such events are
more fully set forth in the first paragraph of this Section 6(h),
shall have the option of electing treatment of its shares of Series
C Convertible Preferred Stock under either this Section 6(h) or
Section 5 hereof, notice of which election shall be submitted in
writing to the Corporation at its principal offices no later than
ten (10) days before the effective date of such event, provided
that any such notice of election shall be effective if given not
later than fifteen (15) days after the date of the
Corporation’s notice pursuant to Section 6(i) hereof with
respect to such event, and, provided, further, that if any Holder
fails to give the Corporation such notice of election, the
provisions of this Section 6(h) shall govern the treatment of such
Holder’s shares of Series C Convertible Preferred Stock upon
the occurrence of such event.
(i) Issuances of Common Stock. If
the Corporation, prior to the fifth (5th) anniversary of the
issuance of the first share of Series C Convertible Preferred Stock
issues shares of Common Stock (but not upon the issuance of Common
Stock Equivalents) either (i) upon the conversion or exercise of
any instrument currently or hereafter issued (but not upon the
conversion of the Series C Convertible Preferred Stock), (ii) upon
the exchange of debt for shares of common stock or (iii) in a
private placement (a “Dilutive Issuance”), then
the Conversion Number shall be adjusted to equal the sum of the
amounts created by each individual Dilutive Issuance, wherein for
each Dilutive Issuance the amount is determined from the result
of:
1)
The Product of the
number of shares of Common Stock owned by the Eligible Series C
Preferred Holder upon the issuance of the first share of Series C
Convertible Preferred Stock divided by the aggregate number of
shares of Common Stock outstanding upon the issuance of the first
share of Series C Convertible Preferred Stock;
2)
Then this Product
Multiplied by the
individual Dilutive Issuance;
3)
Then this Product
Divided by the amount
created when the percentage created in step one is Subtracted from 100
percent;
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4)
Then this Product
Divided by the number of
shares of Series C Convertible Preferred Stock then
outstanding.
(j) Notices of Record Date. In the
event (i) the Corporation fixes a record date to determine the
holders of Common Stock who are entitled to receive any dividend or
other distribution, or
(ii)
there occurs any capital reorganization of the Corporation, any
reclassification or recapitalization of the Common Stock of the
Corporation, any merger or consolidation of the Corporation, or any
voluntary or involuntary dissolution, liquidation or winding up of
the Corporation, the Corporation shall mail to each Holder at least
ten (10) days prior to the record date specified therein, a notice
specifying (a) the date of such record date for the purpose of such
dividend or distribution and a description of such dividend or
distribution, (b) the date on which any such reorganization,
reclassification, consolidation, merger, dissolution, liquidation
or winding up is expected to become effective, and (c) the time, 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 reorganization,
reclassification, consolidation, merger, dissolution, liquidation
or winding up.
(k) No Impairment. The Corporation
will not, by amendment of its Certificate of Incorporation or
through any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 6
and in the taking of all such actions as may be necessary or
appropriate in order to protect the conversion rights of the
Holders against impairment.
(l) Fractional Shares and Certificate as
to Adjustments. In lieu of any fractional shares to which a
Holder would otherwise be entitled upon conversion, the Corporation
shall pay cash equal to such fraction multiplied by the Market
Price of one share of Common Stock, as determined in good faith by
the Board of Directors. Whether or not fractional shares are
issuable upon such conversion shall be determined on the basis of
the total number of shares of Series C Convertible Preferred Stock
of each Holder at the time converting into Common Stock and the
number of shares of Common Stock issuable upon such aggregate
conversion.
Upon
the occurrence of each adjustment or readjustment of the Conversion
Number of any share of Series C Convertible Preferred Stock
pursuant to this Section 6, the Corporation, at its expense, shall
promptly compute such adjustment or readjustment in accordance with
the terms hereof and prepare and furnish to each Holder 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 Holder, furnish or cause to be furnished
to such Holder a like certificate setting forth (A) such adjustment
and readjustment, (B) the Conversion Number at the time in effect,
and (C) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the
conversion of such Holder’s shares of Series C Convertible
Preferred Stock. The provisions of Section 6(e), (f), (g), (h) and
(i) shall apply to any transaction and successively to any series
of transactions that would require any adjustment pursuant
thereto.
(m) Reservation of Stock Issuable Upon
Conversion. The Corporation shall at all times reserve and
keep available out of its authorized but unissued Common Stock,
solely for the purpose of effecting the conversion of the shares of
the Series C Convertible Preferred Stock(taking into account the
adjustments required by this Section 6), such number of its shares
of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Series C
Convertible Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares
of the Series C Convertible Preferred
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Stock,
in addition to such other remedies as shall be available to the
Holders, the Corporation will, as soon as is reasonably
practicable, take all such 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 purposes.
7. Voting Rights. Upon the
Board’s determination that an Optional Conversion Threshold
has been met, each Holder, except as otherwise required under the
FBCA or as set forth herein, shall be entitled or permitted to vote
on all matters required or permitted to be voted on by the holders
of Common Stock of the Corporation and shall be entitled to that
number of votes equal to three votes for the number of Conversion
Shares into which such Holder’s shares of the Series C
Convertible Preferred Stock could then be converted, pursuant to
the provisions of Section 6 hereof, at the record date for the
determination of shareholders entitled to vote on such matter or,
if no such record date is established, at the date such vote is
taken or any written consent of shareholders is solicited. Except
as otherwise expressly provided herein or as otherwise required by
law, the Series C Convertible Preferred Stock and the Common Stock
shall vote together (or render written consents in lieu of a vote)
as a single class on all matters upon which the Common Stock is
entitled to vote.
8.
Reissuance of Shares of Series C
Convertible Preferred Stock.
Shares
of Series C Convertible Preferred Stock that have been issued and
reacquired in any manner, including shares purchased, redeemed,
converted or exchanged, shall (upon compliance with any applicable
provisions of the FBCA) be permanently retired or cancelled and
shall not under any circumstances be reissued. The Corporation
shall from time to time take such appropriate action as may be
required by applicable law to reduce the authorized number of
shares of Series C Convertible Preferred Stock by the number of
shares that have been so reacquired.
9.
Notices.
Any and
all notices, consents, approval or other communications or
deliveries required or permitted to be provided under this
Certificate of Designation shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of receipt, if
such notice, consent, approval or other communication is delivered
by hand (with written confirmation of receipt) or via facsimile to
the Corporation or the Holders, as applicable, at the facsimile
number specified in the register of Holders of Series C Convertible
Preferred Stock maintained by the Transfer Agent prior to 5:00 p.m.
(New York City time) on a Business Day, (b) the next Business Day
after the date of receipt, if such notice, consent, approval or
other communication is delivered via facsimile to the Corporation
or the Holder, as applicable, at the facsimile number specified in
the register of Holders of Series C Convertible Preferred Stock
maintained by the Transfer Agent on a day that is not a Business
Day or later than 5:00 p.m. (New York City time) on any Business
Day, or (c) the third Business Day following the date of deposit
with a nationally recognized overnight courier service for next
Business Day delivery and addressed to the Corporation or the
Holder, as applicable, at the address specified in the register of
Holders of Series C Convertible Preferred Stock maintained by the
Transfer Agent.
10.
Headings.
The
headings of the various sections and subsections hereof are for
convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
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11.
Severability of
Provisions.
If any
powers, preferences and relative, participating, optional and other
special rights of the Series C Convertible Preferred Stock and the
qualifications, limitations and restrictions thereof set forth in
this Certificate of Designation (as it may be amended from time to
time) is invalid, unlawful or incapable of being enforced by reason
of any rule or law or public policy, all other powers, preferences
and relative, participating, optional and other special rights of
the Series C Convertible Preferred Stock and the qualifications,
limitations and restrictions thereof set forth in this Certificate
of Designation (as so amended) which can be given effect without
the invalid, unlawful or unenforceable powers, preferences and
relative, participating, optional and other special rights of the
Series C Convertible Preferred Stock and the qualifications,
limitations and restrictions thereof shall, nevertheless, remain in
full force and effect, and no powers, preferences and relative,
participating, optional or other special rights of the Series C
Convertible Preferred Stock and the qualifications, limitations and
restrictions thereof herein set forth shall be deemed dependent
upon any other such powers, preferences and relative,
participating, optional or other special rights of Preferred Stock
and qualifications, limitations and restrictions thereof unless so
expressed herein.
ARTICLE IV.
Existence
The
Corporation shall exist perpetually unless sooner dissolved
according to law.
ARTICLE V.
Management
of the Corporation
The
following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for
further definition, limitation and regulation of the powers of the
Corporation and of its directors and shareholders:
A.
BOARD
OF DIRECTORS
The
business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the
powers and authority expressly conferred upon them by Statute or by
these Articles of Incorporation or the Bylaws of the Corporation,
the directors are hereby empowered to exercise all such powers and
do all such acts and things as may be exercised or done by the
Corporation. A director shall hold office until the annual meeting
of the shareholders or until his successors shall be elected and
qualified, subject, however, to the director’s prior death,
resignation, retirement, disqualification or removal from
office.
B.
SPECIAL
MEETINGS CALLED BY BOARD OF DIRECTORS OR SHAREHOLDERS
Special
Meetings of Shareholders of the Corporation may be called by the
Board of Directors pursuant to a resolution adopted by a majority
of the total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at the
time any such resolution is presented to the Board for adoption)
(the “Full Board”), or by the holders of not less than
forty percent (40%) of all the votes entitled to be cast on any
issue at the proposed special meeting if such holders of stock
sign, date and deliver to the Corporation’s Secretary one or
more written demands for the meeting describing the purpose or
purposes for which the special meeting is to be held. The Bylaws of
the Corporation shall fully set forth the manner in which Special
Meetings of Shareholders of the Corporation may be
called.
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ARTICLE VI.
Number
of Directors
The
number of directors may be either increased or diminished from time
to time in the manner provided in the Bylaws, but shall never be
less than one (1).
ARTICLE VII.
Indemnification
Provided the person
proposed to be indemnified satisfies the requisite standard of
conduct for permissive indemnification by a corporation as
specifically set forth in the applicable provisions of the Florida
Business Corporation Act (currently, Section 607.0850(7) of the
Florida Statutes), as the same may be amended from time to time,
the Corporation shall indemnify its officers and directors, and may
indemnify its employees and agents, to the fullest extent provided,
authorized, permitted or not prohibited by the provisions of the
Florida Business Corporation Act and the Bylaws of the Corporation,
as the same may be amended and supplemented, from and against any
and all of the expenses or liabilities incurred in defending a
civil or criminal proceeding, or other matters referred to in or
covered by said provisions, including advancement of expenses prior
to the final disposition of such proceedings and amounts paid in
settlement of such proceedings, both as to action in his or her
official capacity and as to action in another capacity while an
officer, director, employee or other agent. The indemnification
provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any bylaw,
agreement, vote of shareholders or Disinterested Directors or
otherwise. Such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent, and shall
inure to the benefit of the heirs and personal representatives of
such a person. Except as otherwise required by law, an adjudication
of liability shall not affect the right to indemnification for
those indemnified.
ARTICLE VIII.
Amendment
The
Corporation reserves the right to amend or repeal any provision
contained in these Articles of Incorporation in the manner
prescribed by the laws of the State of Florida and all rights
conferred upon shareholders are granted subject to this
reservation.
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