CERTIFICATE OF DESIGNATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
THERMOGENESIS CORP.
Pursuant to Section 151(g) of the General Corporation Law
of the State of Delaware
THERMOGENESIS CORP., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in its Certificate of
Incorporation and in accordance with the provisions of Section 151(g) of
the General Corporation Law of the State of Delaware, its Board of
Directors (the "Board of Directors") has adopted the following resolution
creating a series of its Preferred Stock, $.001 par value, designating a
segment thereof as Series A Convertible Preferred Stock;
WHEREAS, the Certificate of Incorporation of the Corporation presently
authorizes the issuance of 2,000,000 shares of Preferred Stock, $.001 par
value, in one or more series upon terms and conditions that are to be
designated by the Board of Directors;
WHEREAS, in order to accommodate a business purpose deemed proper by
the Board of Directors, i.e., to facilitate a private placement of
securities, the Board of Directors does hereby seek to provide for the
designation of a segment of the Company's Preferred Stock as "Series A
Convertible Preferred Stock";
WHEREAS, the Board of Directors desires, pursuant to the authority
granted, to fix rights, preferences, privileges and restrictions relating
to such series, and the number of shares constituting the designation of
such series as provided in this Certificate of Designation.
NOW THEREFORE, be it:
RESOLVED, that a series of the class of authorized Preferred Stock,
$.001 par value, of the Corporation hereinafter designated "Series A
Convertible Preferred Stock," is hereby created, and that the designation
and amount thereof and the voting powers, preferences and relative
participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are as
follows:
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SECTION 1. DESIGNATION AND AMOUNT.
The shares of such series shall be designated as Series A Convertible
Preferred Stock, par value $.001 per share (the "Series A Convertible
Preferred Stock") and the initial number of shares constituting such series
shall be 1,200,000.
SECTION 2. DIVIDEND RIGHTS.
The holders of shares of Series A Convertible Preferred Stock shall be
entitled to receive out of any funds legally available noncumulative
dividends at the same rate and at the same time as any dividends declared
on the Corporation's Common Stock, when, as and if declared by the Board of
Directors; provided that, for the purposes of this Section 2 only, the
holders of the Series A Convertible Preferred Stock shall be deemed to own
the number of shares of Common Stock into which such shares of Series A
Convertible Preferred Stock are convertible at the time such dividend is
declared.
SECTION 3. VOTING RIGHTS.
(a) GENERAL. Except as otherwise required by law or expressly
provided in this Section 3, the holders of Series A Convertible Preferred
Stock shall be entitled to notice of any shareholders' meeting and to vote
upon any matter submitted to shareholders for a vote, at any time on the
following basis:
(i) Each holder of Series A Convertible Preferred Stock shall be
entitled for each share of Series A Convertible Preferred Stock held by
such holder to the number of votes equal to the highest number of full
shares of Common Stock to which each share of Series A Convertible
Preferred Stock is convertible pursuant to Section 5 hereof at the record
date for the determination of shareholders entitled to vote on such
matters; and
(ii) Except as otherwise required by law or expressly provided herein,
the holders of Series A Convertible Preferred Stock and Common Stock shall
vote together and not as separate classes.
(b) RIGHT TO ELECT DIRECTORS.
(i) So long as in excess of 35% of the Aggregate Original Amount (as
defined in Section 9) of Series A Convertible Preferred Stock remains
outstanding, the holders of the Series A Convertible Preferred Stock shall
be entitled, voting as a separate class, to elect one (1) director, who
shall be one (1) of the authorized number of directors of the Corporation.
In the case of a vacancy in the office of the director elected by the
holders of Series A Convertible Preferred Stock, a successor shall be
elected to hold office for the unexpired term of such director by the
affirmative vote of the holders of a majority of the Series A Convertible
Preferred Stock given at a special meeting of such shareholders duly called
for that purpose, or by written consent of the holders of record of a
majority of the Series A Convertible Preferred Stock. Any director who
shall have been elected by the holders of the Series A k given at a special
meeting of such shareholders duly called for that purpose, or by written
consent of the holders of record of a majority of the Series A Convertible
Preferred Stock. Any vacancy created thereby may be filled by the holders
of Series A Convertible Preferred Stock represented at such meeting or by
written consent by holders of a majority of the Series A Convertible
Preferred Stock.
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(c) SERIES A CONVERTIBLE PREFERRED STOCK - SPECIAL VOTING RIGHTS.
Provided that at least 35% of the Aggregate Original Amount of the Series A
Convertible Preferred Stock remains outstanding, the Corporation shall not
without first obtaining the approval (by vote or written consent) of the
holders of at least a majority of the shares of the Series A Convertible
Preferred Stock from time to time outstanding:
(i) take any action that would result in (A) a sale, conveyance or
other disposition or distribution of all or substantially all of the assets
of the Corporation or (B) merger, consolidation, or similar transaction
with any other corporation or entity where the Corporation is not the
survivor.
(ii) declare any dividends or any other distributions on, or redeem or
repurchase any, Equity Securities (as defined in Section 9) of the
Corporation of any nature (except for any dividends, redemptions or
repurchases required by the terms of the governing instrument for the
related equity securities which have been approved by the holders of the
Series A Convertible Preferred Stock pursuant to Section 3(c)(iii) below);
(iii) issue or authorize the issuance of any shares of Preferred Stock
or any warrant, right, option, convertible security or other security which
has liquidation, redemption or dividend preference rights which are senior
to or on a parity with the preferences or rights afforded to the Series A
Convertible Preferred Stock, or which has redemption, repurchase, put or
similar rights;
(iv) amend the Corporation's Certificate of Incorporation or Bylaws;
or
(v) make or hold any direct or indirect investment in any corporation,
investment in the debt or equity securities of any corporation, or loans or
guaranties to one or more corporations in excess of $1,000,000 in the
aggregate.
SECTION 4.LIQUIDATION PREFERENCE.
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Corporation (any such event a
"Liquidation Event") then, and in that event, the holders of Series A
Convertible Preferred Stock shall be entitled to receive with respect to
any such Liquidation Event prior and in preference to any distribution of
any of the assets of the Corporation to the holders of Common Stock or to
the holders of any other series of preferred stock by reason of their
ownership thereof, an amount in cash or equivalent value in securities or
other consideration equal to the "liquidation preference" herein. If the
amount of such distribution is insufficient to permit full payment of the
"liquidation preference" herein, then such distribution shall be
distributed ratably to the holders of the Series A Convertible Preferred
Stock on the basis of the number of shares of Series A Convertible
Preferred Stock held. After payment in full of the "liquidation
preference" owed to the holders of the Series A Convertible Preferred
Stock, the holders of the Common Stock shall be entitled, to the exclusion
of the holders of the Series A Convertible Preferred Stock, to share in all
remaining assets of the Corporation in accordance with their respective
interests.
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For the purposes this Section 4, the term "liquidation preference"
shall mean, with respect to the Series A Convertible Preferred Stock, an
amount equal to $6.25 per share (the Basic Preference Amount") which Basic
Preference Amount shall increase at the rate of eight percent (8%) per
share per year, compounded annually on each subsequent anniversary of the
Series A Original Issue Date (in the event of a Liquidation Event between
any such anniversaries, the Basic Preference Amount increase for such year
shall be prorated accordingly);
SECTION 5. CONVERSION RIGHTS.
(a) RIGHT TO CONVERT SERIES A CONVERTIBLE PREFERRED STOCK. Each share
of Series A Convertible Preferred Stock shall be convertible, without the
payment of any additional consideration and at the option of the holder
thereof, at any time after the Series A Originock) into shares of Common
Stock at the then effective Series A Conversion Rate (as defined in Section
5(c) hereof) and adjusted on a per share basis giving effect to any
adjustments required by Section 5 hereof.
(b) AUTOMATIC CONVERSION. Each share of Series A Convertible
Preferred Stock may, at the option of the Corporation, be converted into
shares of Common Stock at the then effective Series A Conversion Rate (as
defined in Section 5(c) hereof) and adjusted on a per share basis giving
effect to any adjustments required by Section 5 hereof provided that the
shares of the Corporation's Common Stock trade at an Average Price equal to
or greater than $5.00 per share (subject to any adjustments for events set
forth in Section 5(e) through (i)) for 30 consecutive trading days. The
Corporation shall give at least 20 days prior written notice to the holders
of the Series A Convertible Preferred Stock as to any automatic conversion
pursuant to this Section 5(b), such conversion being effective no later
than the twenty (20) days following receipt by the holders of the Series A
Convertible Preferred Stock of such notice; provided, however, that nothing
shall prohibit holders of the Series A Convertible Preferred Stock at any
time, including after such time as the Corporation has given notice under
this Section 5(b), to convert their Series A Convertible Preferred Stock
into shares of Common Stock pursuant to Section 5(a).
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(c) SERIES A CONVERSION RATE. Subject to the adjustments provided in
subsections (e) through (i) of this Section 5, each share of Series A
Convertible Preferred Stock shall be convertible into five (5) shares of
Common Stock
(d) MECHANICS OF CONVERSION. Before any holder of Series A
Convertible Preferred Stock shall be entitled to convert the same into full
shares of Common Stock pursuant to Section 5(a) hereof, the holder shall
surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any transfer agent for the Series A
Convertible Preferred Stock and shall give written notice to the
Corporation at such office that such holder elects to convert the same and
shall state therein such holder's name or the name or names of the
nominees in which such holder wishes the certificate or certificates for
shares of Common Stock to be issued. The Corporation shall, as soon as
practicable thereafter but in no event later than four (4) business days
after the Corporation receives all documents, including notice and
certificates, necessary to effect the conversion or, with respect to
conversion pursuant to Section 5(b) on the date specified in the notice
(unless converted earlier), issue and deliver at the address of such holder
on the books and records of the Corporation, or to such holder's nominee or
nominees, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid, together with
cash in lieu of any fractional shares. Except as otherwise set forth in
Section 5(b) above, such conversion shall be deemed to occur immediately
prior to the close of business on the date of surrender of the shares of
Series A Convertible Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or
holders of such shares ontained herein, if any holder of Series A
Convertible Preferred Stock elects to convert such holder's shares at any
time prior to the record date for any vote, dividend, redemption,
liquidation, dissolution or winding up, or other actions for which a record
date is set and the holder receives prior notice pursuant to Section 7, or
prior to the effective date of any such event for which either no record
date is set or respecting which notice pursuant to Section 7 is not
received, then for all purposes such conversion shall be treated as having
occurred prior to such date or effective date and the holder shall be
treated as the owner of the Common Stock into which such Series A
Convertible Preferred Stock is convertible for all purposes.
(e) ADJUSTMENTS FOR SUBDIVISIONS AND COMBINATIONS. If the Corporation
shall at any time, or from time to time after the Series A Original Issue
Date, effect a subdivision of the outstanding Common Stock, the Series A
Conversion Rate then in effect immediately before such subdivision shall be
proportionately increased, and conversely, if the Corporation shall at any
time or from time to time after the Series A Original Issue Date combine
the outstanding shares of Common Stock, the Series A Conversion Rate then
in effect immediately before such combination shall be proportionately
decreased. Any adjustment under this Section 5(e) shall become effective at
the close of business on the date such subdivision or combination becomes
effective.
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(f) ADJUSTMENTS FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the
event the Corporation at any time, or from time to time after the Series A
Original Issue Date, shall make or issue or fix 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, then and
in each such event the Series A Conversion Rate then in effect shall be
increased as of the time of such issuance or, in the event such a record
date shall have been fixed, as of the close of business on such record
date, by multiplying the Series A Conversion Rate then in effect by a
fraction:
(i) the numerator of which shall be 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 shall be 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; provided, however,
if such record date shall have been fixed and such dividend is not fully
paid or if such distribution is not fully made on the date fixed therefor,
the Series A Conversion Rate shall be recomputed accordingly as of the
close of business on such record date and thereafter the Series A
Conversion Rate shall be adjusted pursuant to this Section 5(f) as of the
time of actual payment of such dividends or distributions.
(g) ADJUSTMENT FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the event
the Corporation at any time, or from time to time after the Series A
Original Issue Date shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution pay, then and in each such event provisions shall be
made so that the holders of Series A Convertible Preferred Stock shall
receive upon conversion thereof, in addition to the number of shares of
Common Stock receivable thereupon, the amount and type of securities of the
Corporation that they would have received on a per share basis had their
Series A Convertible Preferred Stock been converted into Common Stock on
the date of such event and had such holders thereafter, during the period
from the date of such event to and including the conversion date, retained
such securities receivable by them as aforesaid during such period giving
application to all adjustments called for during such period under this
Section 5 with respect to the rights of the holders of the Series A
Convertible Preferred Stock.
(h) ADJUSTMENTS FOR RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. If
the Common Stock issuable upon the conversion of the Series A Convertible
Preferred Stock shall be changed into the same or a different number of
shares of any class or classes of stock of the Corporation, whether by
capital reorganization, reclassification or otherwise (other than by a
subdivision, a combination or a stock dividend as provided for elsewhere in
this Section 5), then and in each event the holder of each share of Series
A Convertible Preferred Stock shall have the right thereafter to convert
such share into the kind and amount of shares of stock or other securities
and property receivable upon such reorganization, reclassification or other
change by the holders of the number of shares of Common Stock into which
each such share of Series A Convertible Preferred Stock might have been
converted immediately prior to such reorganization, reclassification or
other change, all subject to further adjustment as provided elsewhere in
this Section 5.
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(i) SALE OF SHARES BELOW DILUTION PRICE. For purposes of this Section
5(i), the Dilution Price shall be initially equal -five cents ($1.25)..
(a) If at any time after the Series A Original Issue Date, the
Corporation shall issue for cash or other consideration shares of Common
Stock or any security convertible into or exchangeable or exercisable for
shares of Common Stock at a price per share of Common Stock calculated by
including the aggregate proceeds per share to the Corporation upon issuance
and any additional consideration per share payable to the Corporation upon
any such conversion, exchange or exercise (in each case before deduction of
any per share discounts, commissions, fees and other expenses of issuance
and marketing), (the "New Issue Price), that is less than the Dilution
Price then in effect, the Dilution Price shall be automatically adjusted
down to the new Issue Price and the aggregate number of shares of Common
Stock issuable upon the conversion of each share of Series A Preferred
Stock shall be automatically adjusted to equal the result obtained by
dividing the initial Purchase Price of $6.25 for each share of Series A
Preferred Stock by the New Issue Price. In the event that this Section 5(i)
applies, the Series A Conversion Rates shall determined by this Section
5(i)(a).
For example, assume that (i) the Series A Conversion Rate was five (5)
shares of Common Stock for each share of Preferred Stock; (ii) the initial
Purchase Price was $6.25 per share, and (iii) the Purchaser had acquired
100 shares of Series A Preferred Stock for an aggregate purchase price of
$625.00. If the New Issue Price is $.50 per share, the new Dilution Price
would be $.50 per share and each share of Series A Preferred Stock would be
convertible into 12.5 shares of Common Stock.
(b) For the purpose of this Section 5(i), the issuance by the
Corporation of securities convertible into or exchangeable or exercisable
for Common Stock shall be deemed to involve the immediate issuance of the
maximum number of shares of Common Stock issuable upon the conversion,
exchimum aggregate consideration receivable by the Corporation upon such
conversion, exchange or exercise. In the event that securities are issued
by the Corporation that result in an adjustment to the Series A Conversion
Rate pursuant to this Section 5(i) and such securities are not converted,
exchanged or exercised prior to the expiration of the right of the holders
of such securities to effect any such action, then immediately upon such
expiration of the right of the holders of such securities to effect any
such action, the Series A Conversion Rate and Dilution Price shall be
recomputed (but such redetermination shall not affect the Series A
Conversion Rate of any shares of Series A Preferred Stock that have been
converted prior to such expiration) and effective immediately upon such
expiration the Dilution Price and Series A Conversion Rate shall be
increased to the ratio which it would have been (but reflecting and other
adjustments in the Series A Conversion Rate made pursuant to other
provisions of this Section 5 after the issuance of such securities) had
such adjustments to the Series A Conversion Rate and Dilution Price not
been made.
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(j) ISSUE TAXES. The Corporation shall pay any and all issue and
other taxes that maybe payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of Series A Convertible
Preferred Stock, excluding any tax or other charge imposed in connection
with any transfer involved in the issue and delivery of shares of Common
Stock in a name other than that in which the shares of Series A Convertible
Preferred Stock so converted were registered, which tax or charge shall be
borne by the transferor.
(k) RESERVATION OF STOCK. The 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 Convertible Preferred Stock one and one-half times the number
of its shares of Common Stock as shall from time to time be sufficient to
effect any conversion of any or all outstanding shares of the Series A
Convertible Preferred Stock. 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 Convertible
Preferred Stock, the Corporation shall take such corporate action as may,
in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
(l) FRACTIONAL SHARES. No fractional share shall be issued upon the
conversion of any share or shares of Series A Convertible Preferred Stock.
All shares of Common Stock (including fractions) issuable upon conversion
of more than one share of Series A Convertible Preferred Stock by a holder
of such stock shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share, if, after
aggregation, the conversion would result in the issuance of a fractional
share of Common Stock, the Corporation shall, in lieu of issuing any
fractional share, pay the holder otherwise entitled to such fraction a sum
in cash equal to the fair market value of such fraction on the date of
conversion (as determined in good faith by the Board of Directors).
(m) SUCCESSIVE CHANGES. The above provisions of this Section 5 shall
similarly apply to successive combinations, subdivisions, dividends and
distributions on or of the Common Stock after the Series A Original Issue
Date.
(n) SUBSEQUENT EVENTS. On the Series A Original Issue Date, and
thereafter, from time to time, within ten (10) Business Days of the
occurrence of any event which would have the result of changing the Series
A Conversion Rate, the Corporation shall notify the holders of the
Seriesting from such change and the calculation in reasonable detail.
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SECTION 6. REPURCHASE.
(a) REPURCHASE AT THE OPTION OF THE HOLDERS.
(i) At the date five years after the Series A Original Issue Date, and
at any time thereafter, the Corporation shall repurchase the shares of
Series A Convertible Preferred Stock, in whole or in part, upon the written
request of any holder of the Series A Convertible Preferred Stock,
specifying the amount of shares to be repurchased from such holder. The
Corporation shall effect the repurchase within 30 days of such written
request, to the extent not prohibited by applicable law. The repurchase
price for each share of Series A Convertible Preferred Stock shall be
payable, at the option of the Corporation, in cash or a three-year, 8%
interest bearing note. Alternatively, the Corporation may elect to redeem
not less than one-third of the shares of Series A Convertible Preferred
Stock specified in such notice in that year and each of the two succeeding
years. The repurchase price for each share of Series A Convertible
Preferred Stock shall be the liquidation preference as set forth in Section
4.
SECTION 7. NOTICES OF RECORD DATE.
In the event of (i) any taking by the Corporation of a record of the
holders of any class or series of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution or (ii) any reclassification or recapitalization of the
capital stock of the Corporation or any voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Corporation,
the Corporation shall send by (1) personal delivery to such holder, (2)
first class mail addressed, postage prepaid, and addressed to the holder at
the address appearing on the books of the Corporation, or (3) facsimile to
such holder at the facsimile number provided by such holder to the
Secretary of the Corporation, at least ten (10) days prior to the record
date specified therein, a notice specifying (A) the date on which any such
record is to be taken for the purpose of such dividend or other
distribution and a description of such dividend or distribution, (B) the
date on which any such reorganization, reclassification, dissolution,
liquidation or winding up is expected to become effective, and (C) the
time, if any is to be fixed, as to when the holders of record of Series A
Convertible Preferred Stock shall be entitled to exchange their Series A
Convertible Preferred Stock for securities or other property deliverable
upon such reorganization, reclassification, dissolution, liquidation or
winding up. For purposes of this notice provision, notice shall be deemed
to have been given (1) the next day in the case of notice by a national
courier service, or (2) in the case of facsimile, upon sending the
facsimile.
SECTION 8. REACQUIRED SHARES.
Any shares of Series A Convertible Preferred Stock converted,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof, and,
if necessary to provide for the lawful purchase of such shares, the capital
represented by such shares shall be reduced in accordance with the General
Corporation Law of the State of Delaware. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock,
$.001 par value, of the Corporation and may be reissued as part of another
series of Preferred Stock, $.001 par value, of the Corporation.
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SECTION 9. Certain Definitions.
Under the context otherwise required for the purposes of this
resolution, the terms defined in this Section 9 shall have the meanings
herein specified.
"Series A Original Issue Date" means the effective date of a written
agreement by the Corporation for the initial sale of the Series A
Convertible Preferred Stock.
"Aggregate Original Amount" means the aggregate number of shares of
Series A Convertible Preferred Stock issued on the Series A Original Issue
Date plus any amount of shares issued pursuant to subsequent sales of
Series A Convertible Preferred Stock by the Corporation, from and after the
date of issuance thereof all such shares as adjusted pursuant to this
Certificate of Designation.
"Equity Securities" means any and all shares of corporate stock,
including each class or series of common or preferred stock.
"Average Price" with respect to Common Stock means, on any day, the
trade weighted average of the sales prices for such shares as reported on
Bloomberg News Services (i) on the largest national securities exchange
(based on the aggregate dollar value of securities listed) on which such
shares are listed or traded or (ii) if such shares are not listed on any
national securities exchange, then the prices ares shall not be listed
thereon, the trade weighted average of all transactions in Common Stock in
an over-the-counter market.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations of Series A Convertible Preferred Stock to be duly executed by
its President and attested to by its Secretary and has caused its corporate
seal to be affixed hereto, this 22nd day of December, 1998.
THERMOGENSIS CORP.
By: James H. Godsey, President
ATTEST:
By: David C. Adams, Secretary
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