Registration of Securities by a Small-Business Issuer — Form SB-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SB-2 Registration of Securities by a Small-Business 83 404K
Issuer
2: EX-3.1 Articles of Incorporation/Organization or By-Laws 5 31K
3: EX-3.2 Articles of Incorporation/Organization or By-Laws 5 23K
4: EX-3.3 Articles of Incorporation/Organization or By-Laws 6 28K
5: EX-3.4 Articles of Incorporation/Organization or By-Laws 3 13K
6: EX-3.5 Articles of Incorporation/Organization or By-Laws 16 61K
7: EX-3.6 Articles of Incorporation/Organization or By-Laws 13 46K
9: EX-10.13 Material Contract 23 84K
10: EX-10.14 Material Contract 8 36K
11: EX-10.16 Material Contract 8 38K
8: EX-10.3 Material Contract 2 12K
12: EX-23.1 Consent of Experts or Counsel 1 7K
13: EX-27 Financial Data Schedule (Pre-XBRL) 2 12K
EX-3.5 — Articles of Incorporation/Organization or By-Laws
Exhibit Table of Contents
Exhibit 3.5
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "LIQUOR.COM, INC.", FILED IN THIS OFFICE ON THE SEVENTH DAY OF
JANUARY, A.D. 2000, AT 9 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS.
3139246 8100 [SEAL] /s/ Edward J. Freel
------------------------------------
001011106 EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION: 0188176
DATE: 01-07-00
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 01/07/2000
001011106-3139246
CERTIFICATE OF DESIGNATION
OF SERIES A PREFERRED STOCK OF
LIQUOR.COM, INC.
LIQUOR.COM, INC. a Corporation organized and existing under the
laws of the State of Delaware (the "Corporation") does hereby certify that,
pursuant to the authority conferred on the Board of Directors of the
Corporation by the Certificate of Incorporation of the Corporation and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware (the "DGCL"), the Board of Directors of the Corporation adopted the
following resolution establishing a series of 422,222 shares of Preferred
Stock of the Corporation designated as "Series A Preferred Stock":
RESOLVED, that pursuant to the authority conferred on the Board of Directors
of this Corporation by the Certificate of Incorporation, a series of
Preferred Stock, par value $.00001 per share, of the Corporation is hereby
established and created, and that the designation and number of shares
thereof and the voting and other powers, preferences and relative,
participating, optional or other rights of the shares of such series and the
qualifications, limitations and restrictions thereof are as follows:
SERIES A PREFERRED STOCK
1. DESIGNATION AND AMOUNT. There shall be a series of Preferred Stock
designated as "Series A Convertible Preferred Stock" and the number of Shares
constituting such series shall be 422,222. Such series is referred to herein
as the "Series A Preferred Stock." Such number of shares may be increased or
decreased by resolution of the Board of Directors of the Corporation;
PROVIDED, HOWEVER, that no decrease shall reduce the number of shares of
Series A Preferred Stock to less than the number of shares then issued and
outstanding.
2. DIVIDENDS.
Out of the assets of the Corporation legally available for
dividends, the holders of the Series A Preferred Stock shall share equally in
any dividend, on an as converted basis, when and as declared by the Board of
Directors, to the holders of the Common Stock of the Corporation, which
dividend declaration must be approved by the Preferred Director, as defined
in Section 5 below.
3. LIQUIDATION PREFERENCE.
(a) In the event of the occurrence of any liquidation, dissolution or
winding up of this Corporation (or deemed occurrence of such event pursuant
to Section 3(c)), either voluntary or involuntary, the holders of Series A
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or funds of this Corporation to the holders
of the Common Stock by reason of their ownership thereof, an amount per share
determined by multiplying $1.1842111 (the "ORIGINAL ISSUE PRICE") times four
(4) (or, if the holders of Series A Preferred Stock have been paid all
amounts due under the Promissory Note dated as of January 6, 2000 between the
Corporation and the holders of Series A Preferred Stock, times three (3))
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for each outstanding share of Series A Preferred Stock (appropriately
adjusted for any recapitalizations, stock combinations, stock dividends,
stock splits and the like), plus an amount equal to all unpaid dividends on
the Series A Preferred Stock (collectively, the "LIQUIDATION AMOUNT"). If
upon the occurrence of a liquidation, dissolution or winding up, the assets
and funds of this Corporation legally available for distribution to
stockholders by reason of their ownership of the stock of this Corporation
shall be insufficient to permit the payment to such holders of Series A
Preferred Stock of the full Liquidation Amount, then the entire assets and
funds of this Corporation legally available for distribution shall be
distributed ratably among the holders of the Series A Preferred Stock in
proportion to the number of shares of Common Stock issuable to them upon
conversion of their respective shares of Series A Preferred Stock.
(b) After payment has been made to the holders of the Series A
Preferred Stock of the Liquidation Amount, the remaining assets and funds of
the Corporation available for distribution to stockholders shall be
distributed ratably among the holders of the Series A Preferred Stock and
Common Stock in proportion to the number of shares of Common Stock held by
them or issuable to them upon conversion of their respective shares of Series
A Preferred Stock.
(c) A consolidation or merger of this Corporation with or into any
other corporation or corporations where the holders of the Common Stock and
Series A Preferred Stock do not together continue to hold more than 50%
ownership interest in this Corporation, or a sale, conveyance or disposition
of all or substantially all of the assets of this Corporation, or the
effectuation by this Corporation of a transaction or series of related
transactions in which more than 50% of the voting power of this Corporation
is disposed of, shall be deemed to be a liquidation, dissolution or winding
up of the Corporation.
(d) If any of the assets of this Corporation are to be distributed
under this Section 3, or for any purpose, in a form other than cash, then the
Board of Directors shall promptly determine in good faith the value of the
assets to be distributed to the holders of Series A Preferred Stock or Common
Stock. This Corporation shall, upon receipt of such determination, give
prompt written notice of the determination to each holder of shares of Series
A Preferred Stock or Common Stock.
4. CONVERSION. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "CONVERSION RIGHTS"):
(a) RIGHT TO CONVERT. Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date
of issuance of such share, at the office of this Corporation or any transfer
agent for such Series A Preferred Stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the
Original Issue Price by the Conversion Price (as hereinafter defined) at the
time in effect for a share of Series A Preferred Stock. The "CONVERSION
PRICE" per share of Series A Preferred Stock initially shall be $1.1842111,
subject to adjustment from time to time as provided below.
(b) AUTOMATIC CONVERSION. Each share of Series A Preferred Stock
shall automatically be converted into shares of Common Stock at the
Conversion Price at the time immediately prior to the consummation of this
Corporation's sale so its Common Stock in a firm commitment underwriting by a
nationally recognized underwriter pursuant to a registration
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statement under the Securities Act of 1933, as amended (the "ACT"), the
aggregate gross proceeds of which are not less than $20,000,000, at a public
offering price of not less than four (4) times the Original Issue Price
(appropriately adjusted for any recapitalizations, stock dividends, stock
splits, and the like) (a "QUALIFIED PUBLIC OFFERING"). The holders of the
Series A Preferred Stock shall have the option to convert or retain their
shares of Series A Preferred Stock upon the completion of a public offering
which does not meet the qualifications set forth above.
(c) MECHANICS OF CONVERSION. Before any holder of Series A Preferred
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly
endorsed, at the office of this Corporation or of any transfer agent for the
Series A Preferred Stock, and shall give written notice by mail, postage
prepaid, to this Corporation at its principal corporate office, of the
election to convert the same, and shall state therein the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued; PROVIDED, HOWEVER, that in the event of a conversion pursuant to
Section 4(b) hereof, the outstanding shares of Series A Preferred Stock shall
be converted automatically without any further action by the holders of such
shares and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent; and PROVIDED FURTHER
that the Corporation shall not be obligated to issue certificates evidencing
the shares of Common Stock issuable upon such automatic conversion unless and
until the certificates evidencing such shares of Series A Preferred Stock
are either delivered to the Corporation or its transfer agent as provided
above, or the holder notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed, and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates. This Corporation shall,
as soon as practicable thereafter, issue and deliver at such office to such
holder of Series A Preferred Stock, or to the nominee or nominees of such
holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid, and a check
payable to the holder in the amount of any declared and unpaid dividends
payable to the holder hereunder, if any. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the shares of Series A Preferred Stock to be converted, or, in
the case of automatic conversion in connection with an underwritten public
offering of securities registered pursuant to such offering, immediately
prior to the closing of such sale of securities, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock as of such date.
(d) FRACTIONAL SHARES. In lieu of any fractional shares to which the
holder of the Series A Preferred Stock would otherwise be entitled, this
Corporation shall pay cash equal to such fraction multiplied by the Fair
Market Value of one share of Series A Preferred Stock as determined by the
Board of Directors of the Corporation pursuant to Section 4(e)(i)(4) below.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Series A 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.
(e) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price of the
Series A
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Preferred Stock shall be subject to adjustment from time to time as follows:
(i) SPECIAL DEFINITIONS. For purposes of this Section 4(e), the
following definitions shall apply:
(1) "OPTIONS" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(2) "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares or other securities convertible into or exchangeable for
Common Stock.
(3) "ADDITIONAL SHARES OF COMMON" shall mean all shares of
Common Stock issued (or, pursuant to Section 4(e)(iii), deemed to be issued)
by this Corporation after the Original Issue Date, other than shares of
Common Stock issued or issuable:
(A) to officers, directors or employees of, or consultants
to, the Corporation pursuant to a stock grant, stock option, restricted stock
purchase agreement, stock appreciation right, option plan, purchase plan or
other employee stock incentive program or agreement approved by a majority of
the Board of Directors of this Corporation, to the extent the total number of
such shares does not exceed 750,000 shares (as adjusted for stock splits and
the like);
(B) upon conversion of shares of the Series A Preferred
Stock;
(C) as a dividend or other distribution on the Series A
Preferred Stock;
(D) pursuant to a Qualified Public Offering;
(E) to persons or entities with whom this Corporation has
business relationships, including under equipment leasing arrangements, bank
or other institutional loans, acquisitions of companies or product lines or
other arrangements or transactions wherein the principal purpose of the
issuance of such Common Stock is for non-equity financing purposes, provided
that such arrangements are approved by a majority of the Board of Directors
of this Corporation, including the affirmative vote of the Preferred
Director, if any; and
(F) in a transaction described in Section 4(e)(vi).
(4) "FAIR MARKET VALUE" of one share of Common Stock or Series
A Preferred Stock as of a particular date shall be determined by the Board of
Directors of the Corporation as follows: (i) if traded on a securities
exchange or through the Nasdaq National Market or Small Cap Market, the value
shall be deemed to be the average of the closing prices of the Common Stock
or Series A Preferred Stock, as applicable, on such exchange or quotation
system over the thirty (30) day period ending three (3) days prior; (ii) if
traded over-the-counter, the value shall be deemed to be the average of the
closing bid or sale prices (whichever is applicable) over the thirty (30)
day period ending three (3) days prior; and (iii) if there is no
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active public market, the value shall be the fair market value thereof, as
determined in good faith by the Board of Directors of the Corporation,
including the affirmative vote of the Series A Preferred Director, if any.
(5) "ORIGINAL ISSUE DATE" shall mean the date on which the
first share of Series A Preferred Stock is issued.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment in the
Conversion Price shall be made in respect of the issuance of Additional
Shares of Common unless the consideration per share (determined pursuant to
Section 4(e)(v) hereof) for an Additional Share of Common issued or deemed to
be issued by this Corporation is less than the Conversion Price in effect on
the date of, and immediately prior to, such issue.
(iii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON. In the event the
Corporation at any time or from time to time after the Original Issue Date
shall issue any Options or Convertible Securities or shall fix a record date
for the determination of holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the maximum number
of shares (as set forth in the instrument relating thereto without regard to
any provisions contained therein for a subsequent adjustment of such number)
of Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the exercise of such Options and
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common issued as of the time of such issue or, in case
such a record date shall have been fixed, as of the close of business on such
record date, provided that Additional Shares of Common shall not be deemed to
have been issued unless the consideration per share (determined pursuant to
Section 4(e)(v) hereof) of such Additional Shares of Common would be less
than the Conversion Price in effect on the date of and immediately prior to
such issue, or such record date, as the case may be, and PROVIDED FURTHER
THAT in any such case in which Additional Shares of Common are deemed to be
issued:
(1) no further adjustment in the Conversion Price shall be made
upon the subsequent issue of Convertible Securities or shares of Common Stock
upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(2) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase or decrease
in the consideration payable to the Corporation, or increase or decrease in
the number of shares of Common Stock issuable, upon the exercise, conversion
or exchange thereof (other than under or by reason of provisions designed to
protect against dilution), the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase
or decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities;
(3) upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall not have
been exercised, the Conversion Price computed upon the original issue thereof
or upon the occurrence of a
5
record date with respect thereto, and any subsequent adjustments based
thereon, shall, upon such expiration, be recomputed as if:
(A) in the case of Convertible Securities or Options for
Common Stock, the only additional shares of Common Stock issued were shares
of Common Stock, if any, actually issued upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, and the
consideration received therefor was the consideration actually received by
the Corporation for the issue of all such Options, whether or not exercised,
plus the consideration actually received by the Corporation upon such
exercise, or for the issue of all such Convertible Securities, whether or not
converted or exchanged, plus the additional consideration, if any, actually
received by the Corporation upon such conversion or exchange; and
(B) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued upon the exercise thereof
were issued at the time of issue of such Options and the consideration
received by the Corporation for the Additional Shares of Common Stock deemed
to have been then issued was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised, plus
the consideration deemed to have been received by the Corporation upon the
issue of the Convertible Securities with respect to which such Options were
actually exercised;
(4) no readjustment pursuant to clauses (2) and (3) above shall
have the effect of increasing the Conversion Price to an amount which exceeds
the lower of (1) the Conversion Price on the original adjustment date and (2)
the Conversion Price that would have resulted from any issuance of Additional
Shares of Common between the original adjustment date and such readjustment
date; and
(5) in the case of any Option or Convertible Securities with
respect to which the maximum number of shares of Common Stock issuable upon
exercise or conversion or exchange thereof is not determinable, no adjustment
to the Conversion Price shall be made until such number becomes determinable.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF ADDITIONAL
SHARES OF COMMON. In the event this Corporation shall issue Additional Shares
of Common (including Additional Shares of Common deemed to be issued pursuant
to Section 4(e)(iii)) without consideration or for a consideration per share
less than the Conversion Price in effect on the date of and immediately prior
to such issue, then and in each such event such Conversion Price shall be
reduced, concurrently with such issue, to such lower price so long as such
price is not less than the par value per share of the Common Stock.
(v) DETERMINATION OF CONSIDERATION. For purposes of this Section
4(e), the consideration received by the Corporation for the issue of any
Additional Shares of Common shall be computed as follows:
(1) CASH AND PROPERTY. Such consideration shall:
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(A) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation before deducting any
commissions paid by the Corporation with respect to such issuance;
(B) insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of such issue, as determined
in good faith by the Board of Directors, including the affirmative vote of
the Series A Preferred Director, if any; and
(C) in the event Additional Shares of Common are issued (or,
pursuant to Section 4(e)(iii), deemed to be issued) together with other
shares or securities or other assets of the Corporation for consideration
which covers both, be the proportion of such consideration so received,
computed as provided in clauses (A) and (B) above, as determined in good
faith by the Board of Directors.
(2) OPTIONS AND CONVERTIBLE SECURITIES. The consideration per
share received by the Corporation for Additional Shares of Common deemed to
have been issued pursuant to Section 4(e)(iii), relating to Options and
Convertible Securities, shall equal the quotient determined by dividing:
(A) the total amount, if any, received or receivable by the
Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options
or the conversion or exchange of such Convertible Securities, or in the case
of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
(B) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(vi) OTHER ADJUSTMENTS TO CONVERSION PRICE. The Conversion Price
shall be subject to adjustments from time to time as follows:
(1) ADJUSTMENTS FOR SUBDIVISIONS OR COMBINATIONS OF COMMON
STOCK. In the event the outstanding shares of Common Stock shall be
subdivided by stock split, stock dividend or otherwise, into a greater number
of shares of Common Stock, the Conversion Price of each series of Preferred
Stock then in effect shall, concurrently with the effectiveness of such
subdivision, be proportionately decreased. In the event the outstanding shares
of Common Stock shall be combined or consolidated into a lesser number of
shares of Common Stock, the Conversion Price of each series of Preferred
Stock then in effect shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
(2) ADJUSTMENTS FOR STOCK DIVIDENDS AND OTHER DISTRIBUTIONS. In
the event the Corporation makes, or fixes a record date for the determination
of holders of Common Stock entitled to receive any distribution (excluding
repurchases of securities by the
7
Corporation not made on a pro rata basis) payable in property or in
securities of the Corporation other than shares of Common Stock, and other
than as otherwise adjusted for in this Section 4 or as provided in Section
2 in connection with a dividend, then and in each such event the holders of
the Series A Preferred Stock shall receive, at the time of such distribution,
the amount of property or the number of securities of the Corporation that
they would have received had their Series A Preferred Stock been converted
into Common Stock on the date of such event.
(3) ADJUSTMENTS FOR REORGANIZATIONS, RECLASSIFICATIONS OR
SIMILAR EVENTS. If the Common Stock shall be changed into the same or a
different number of shares of any other class or classes of stock or other
securities or property, whether by capital reorganization, reclassification
or otherwise, then each share of Series A Preferred Stock shall thereafter be
convertible into the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such shares of Series A Preferred
Stock shall have been entitled upon such reorganization, reclassification or
other event.
(vii) MISCELLANEOUS.
(1) All calculations under this Section 4(e) shall be made to
the nearest cent or to the nearest one hundredth (1/100) of a share, as the
case may be.
(2) No adjustment in the Conversion Price need be made if such
adjustment would result in a change in such Conversion Price of less than
$0.01. Any adjustment of less than $0.01 which is not made shall be carried
forward and shall be made at the time of and together with any subsequent
adjustment which, on a cumulative basis, amounts to an adjustment of $0.01 or
more in such Conversion Price.
(f) NO IMPAIRMENT. This Corporation will not, by amendment of this
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 this Corporation, but will at all times in good faith assist in
the carrying out of all the provisions of this Section 4 and in the taking of
all such actions as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A Preferred Stock against
impairment.
(g) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section
4, this Corporation, at its expense, shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish
to each holder of Series A Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. This Corporation shall, upon the written
request at any time of any holder of Series A Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (A)
such adjustment and readjustment, (B) the Conversion Price at the time in
effect, and (C) the number of shares of Common Stock and the amount, if any,
of other property that at the time would be received upon the conversion of
such holder's Series A Preferred Stock.
(h) NOTICES OF RECORD DATE. In the event that this Corporation shall
propose at
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any time:
(i) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights;
(iii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; or
(iv) to merge with or into any other Corporation (other than a
merger in which the holders of the outstanding voting equity securities of
this Corporation immediately prior to such merger hold more than fifty percent
(50%) of the voting power of the surviving entity immediately following such
merger), or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, this Corporation shall send to the
holders of the Series A Preferred Stock:
(1) at least five (5) days prior written notice of the date
on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which holders of the Common
Stock shall be entitled thereto) or for determining rights to vote in respect
of the matters referred to in (i) and (ii) above; and
(2) in the case of the matters referred to in (iii) and (iv)
above, at least ten (10) days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event).
(i) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This Corporation
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 the Series A Preferred Stock 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 A 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 A Preferred Stock, in addition to such other remedies as shall be
available to the holders of such Series A Preferred Stock, this Corporation
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 purposes.
(j) NOTICES. Any notice required by the provisions of this Section 4
to be given to the holders of shares of Series A Preferred Stock shall be
deemed given if delivered by confirmed facsimile or electronic transmission
(with duplicate original sent by United States mail) or three business days
after such notice is deposited in the United States mail, postage
9
prepaid, and addressed to each holder of record at his address appearing on
the books of this Corporation.
5. REDEMPTION.
(a) In the event that any holder (a "Redeeming Holder") of
outstanding Series A Preferred Stock gives written notice to this Corporation
of a demand for redemption of its Series A Preferred Stock at any time on or
after the second anniversary of the Original Issue Date, and the Corporation
has not satisfied its obligation to the holders of the Series A Preferred
Stock pursuant to the Promissory Note between the Corporation and the holders
of the Series A Preferred Stock dated January 6, 2000, this Corporation
shall, to the extent it may lawfully do so, redeem such shares at a price
equal to the Original Issue Price of the shares of Series A Preferred Stock,
plus any accrued but unpaid dividends. Such redemption shall occur in two
equal annual installments, each covering one-half of the shares then held by
the Redeeming Holder with the first installment to close within 60 days of
the redemption request.
(b) If the funds of this Corporation legally available for
redemption of shares of Series A Preferred Stock on any Redemption Date are
insufficient to redeem the total number of shares of Series A Preferred Stock
to be redeemed on such date, those funds which are legally available will be
used to redeem the maximum possible number of such shares in accordance with
the provisions of Section 5(a) above. The shares of Series A Preferred Stock
not redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein and the redemption price of each unredeemed share
shall bear interest at a rate of 10% per annum. At any time thereafter when
additional funds of this Corporation are legally available for the redemption
of shares of Series A Preferred Stock, such funds will immediately be used to
redeem the balance of the shares that this Corporation has become obligated
to redeem on any Redemption Date but which it has not redeemed plus the
interest specified above. In the event fewer than all the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(c) The shares of Series A Preferred Stock which are redeemed by the
Corporation pursuant to this Section 5 shall be cancelled by the Corporation
and shall not be eligible for re-issuance.
6. VOTING RIGHTS.
(a) GENERAL VOTING RIGHTS. Except as otherwise required by law or as
otherwise set forth below, each holder of Common Stock shall have one vote
for each share of Common Stock so held. In connection with any matter as to
which the holders of Common Stock are entitled to vote including, but not
limited to, the election of directors, each share of Preferred Stock issued
and outstanding as of the record date for such meeting shall have (and the
holder of record thereof shall be entitled to cast) the number of votes equal
to the number of votes such holder would have been entitled to cast had it
converted its shares of Preferred Stock into shares of Common Stock
immediately prior to the record date for the determination of stockholders
entitled to vote upon such matters. Except as provided below and except as
otherwise may be required by law or in this Certificate of Incorporation, the
holders of Common Stock and the holders of Preferred Stock shall be entitled
to notice of any meeting of stockholders and to vote together as a single
class.
10
(b) ELECTION OF SERIES A DIRECTORS.
(i) The holders of the Series A Preferred Stock, voting
separately as a single series, shall have the exclusive right, if
they so choose, acting by written consent given in accordance with
paragraph 6(b)(vi) below, or by vote at a meeting called for that
purpose, to elect the number of directors to the Corporation's Board
of Directors provided for by this Certificate of Incorporation,
which number shall initially be one (the "SERIES A PREFERRED
DIRECTOR"). In addition to any other rights and responsibilities
attributable to a Director of the Corporation under the DGCL or the
Certificate of Incorporation and Bylaws of the Corporation, the
Series A Preferred Director, if any, shall have the right, but not
the obligation, to serve as a member of any committee of the Board
of Directors that may be established from time to time.
(ii) The initial Series A Preferred Director, if any,
will be the person designated by written consent of the holders of
the Series A Preferred Stock given in accordance with paragraph
6(b)(vi) on the Issue Date.
(iii) At any meeting having as a purpose the election of
directors by holders of the Series A Preferred Stock, the presence,
in person or by proxy, of the holders of a majority of the shares
of the Series A Preferred Stock then outstanding shall be required
and be sufficient to constitute a quorum for the election of a
director by such holders. The Series A Preferred Director(s) to be
elected at such meeting shall be elected by a majority of the votes
of the shares of the Series A Preferred Stock present in person or
represented by proxy at such meeting and entitled to vote in the
election of such Series A Preferred Director(s) or by written
consent of the holders of such shares given in accordance with the
provisions of paragraph 6(b)(vi).
(iv) Except as provided in paragraph 6(b)(v), any vacancy
in the office of a Series A Preferred Director shall be filled by
the holders of the Series A Preferred Stock entitled to vote for
such Series A Preferred Director by vote of such holders as provided
in paragraph 6(b)(iii) above at a meeting called for such purpose or
by written consent of such holders given in accordance with
paragraph 6(b)(vi) below.
(v) A Series A Preferred Director, if any, may be
removed, with or without cause, by the vote or by written consent of
the holders of a majority of the outstanding shares of Series A
Preferred Stock. Any vacancy occurring as a result of such removal
shall be filled by the affirmative vote of the holders of a majority
of the Series A Preferred Stock as provided in paragraph 6(b)(iii),
such vote to be taken at the same meeting at which the removal of
such Series A Preferred Director was voted upon, or by written
consent of the holders of such Series A Preferred Stock given in
accordance with the provisions of paragraph 6(b)(vi). Any director
elected to fill a vacancy shall serve the same remaining term as
that of his or her predecessor and until his or her successor has
been chosen and has qualified.
11
(vi) With respect to actions by the holders of the Series
A Preferred Stock upon those matters on which such holders are
entitled to vote as a separate series, such actions may be taken
without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth action so taken,
shall be signed by the holders of outstanding shares of Series A
Preferred Stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at
which all shares of such Series A Preferred Stock entitled to vote
thereon were present and voted, and shall be delivered to the
Corporation as provided in the DGCL. Notice shall be given in
accordance with the applicable provisions of the DGCL of the taking
of corporate action without a meeting by less than unanimous written
consent.
7. PROTECTIVE PROVISIONS. This Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of
either (a) at least sixty-six and two-thirds percent (66 2/3%) of the
then-outstanding shares of Series A Preferred Stock voting together as a
single class, on an as-converted basis; or (b) a representative of the
holders of Series A Preferred Stock unanimously designated in writing by the
holders of Series A Preferred Stock as the person entitled to exercise such
approval (the "Series A Preferred Stock Representative"):
(a) sell, convey, or otherwise dispose of or encumber all or
substantially all of its assets, property or business or recapitalize,
reorganize or merge into or consolidate with any other corporation (other
than a wholly-owned subsidiary corporation) or effect any transaction or
series of related transactions in which more than fifty percent (50%) of the
voting power of this Corporation is disposed of;
(b) declare or pay any dividends on the Common Stock, or repurchase
any Preferred Stock or Common Stock (other than the redemption rights
provided by Section 5 herein or the exercise of repurchase rights pursuant to
any right of first refusal or restricted stock grant approved by a majority
of the Board of Directors, including the affirmative vote of the Preferred
Director, if any);
(c) make any loans or advances to officers, directors, employees or
consultants of this Corporation, except (i) in the ordinary course of
business as part of travel advances or other remuneration for services and
(ii) pursuant to secured promissory notes for the purchase of stock;
(d) make any guarantees, except in the ordinary course of business;
(e) mortgage, pledge or create any security interest in, or permit
any subsidiary corporation to mortgage, pledge or create any security interest
in, all or substantially all of the real, personal or intangible property of
this Corporation or any subsidiary Corporation, in an amount over $100,000
unless unanimously approved by the Board of Directors;
(f) own or permit any subsidiary corporation to own any securities
of any other corporation, partnership or other entity unless it is wholly
owned by this Corporation;
(g) create any new class or series of stock or any other securities
convertible into equity securities of the Corporation having a preference
over, or being on a parity with, the Series A Preferred Stock with respect to
voting, dividends or upon liquidation;
12
(h) amend, waive, or repeal any provision of, or add any provision
to, this Corporation's Certificate of Incorporation or Bylaws if such action
would change the preferences, rights, privileges or power of, or restrictions
provided for the benefit of, the Series A Preferred Stock;
(i) enter a business other than the development, marketing and
support of a web-site related to the sale of alcoholic beverages on the
internet and related e-commerce activities;
(j) increase or decrease the authorized number of shares of Common
Stock, Preferred Stock, or Series A Preferred Stock.
(k) increase the number of shares available for issuance under the
terms of any stock option or equity-based compensation plan to more than
750,000 shares, as adjusted for stock splits and the like.
(l) increase the Board of Directors to more than 5 members.
(m) make any payment on indebtedness to any shareholder.
8. PREEMPTIVE RIGHTS. If, prior to a Qualified Public Offering, the
Corporation shall issue Common Stock or other equity securities ("EQUITY
SECURITIES"), each holder of Series A Preferred Stock shall be entitled to
purchase the portion of such Common Stock or Equity Securities to be issued
necessary in order that the aggregate shares of Common Stock and Equity
Securities held by such holder constitute the same percentage of all Common
Stock (assuming the conversion, exercise or exchange of all Equity Securities)
after the issuance of such Common Stock or Equity Securities as before the
issuance thereof; provided, however, that such preeemptive right shall not
apply to (a) issuances of Common Stock or Equity Securities excluded from the
definition of "Additional Shares of Common" pursuant to Section
4(e)(i)(3)(A); (b) issuance of Common Stock or Equity Securities upon the
conversion, exercise or exchange of Equity Securities to which the preemptive
right was applicable; (c) issuance of Common Stock or Equity Securities in
connection with an exercise of the preemptive rights granted hereunder; (d)
issuances of shares pursuant to the Preferred Stock Purchase Agreement or
upon conversion of the Series A Preferred; or (e) issuances of Common Stock
in connection with a Qualified Public Offering. The price of securities which
each holder becomes entitled to purchase by reason hereof shall be the same
price at which such securities are offered to others. A holder may exercise
its right under this Section 7 to purchase Equity Securities by paying the
purchase price therefor at the principal office of the Corporation within ten
days after receipt of notice from the Corporation (which notice by the
Corporation shall be given at least 15 days before the issuance of the Equity
Securities) stating the number or amount of Equity Securities it intends to
issue, the price and characteristics thereof and the number of shares that
such holder is entitled to purchase. The holder shall pay such purchase price
in cash or by check or wire transfer; PROVIDED, HOWEVER, that if the
Corporation is indebted to such holder, the holder shall be entitled, at the
holder's sole option, to credit against the purchase price all or any portion
of the Corporation's indebtedness to such holder which is then due (accrued
but unpaid dividends on the Series A Preferred Stock shall not be deemed to be
indebtedness for purposes of such credit). A holder's contractual preemptive
rights hereunder shall be deemed to be exercised immediately prior to the
close of business on the day of payment of the purchase price in accordance
with the foregoing provisions, and at such time such holder shall be treated
for all purposes as the record
13
holder of the Equity Securities. As promptly as practicable (and in any event
within ten days) on or after the purchase date, the Corporation shall issue
and deliver at its principal office a certificate or certificates for the
number of full shares of Common Stock or the number of full shares or amount,
whichever is applicable, of Equity Securities together with cash for any
fraction of a share or portion of an Equity Security at the purchase price to
which the holder is entitled hereunder.
9. STATUS OF CONVERTED STOCK. In the event any shares of Series A
Preferred Stock shall be converted into Common Stock pursuant to Section 4 of
this Article IV, the shares of such Series A Preferred Stock so converted
shall be canceled and shall not be issuable by this Corporation. This
Certificate of Incorporation shall be appropriately amended to effect the
corresponding reduction in this Corporation's authorized stock.
14
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series A Preferred Stock to be signed by Steve Olsher, its
President, this 6th day of January, 2000.
LIQUOR.COM, INC.
/s/ Steve Olsher
--------------------------
Steve Olsher
President
15
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘SB-2’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 4/13/00 | | | | | | | None on these Dates |
| | 1/6/00 | | 2 | | 11 |
| List all Filings |
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