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Exhibit 3.3
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/10/1996
960167477 - 2352159
CERTIFICATE OF DESIGNATION
OF PREFERENCES OF SERIES B PREFERRED STOCK OF
THE CERPLEX GROUP, INC.
a Delaware Corporation
The undersigned, James T. Schraith and Frederic A. Randall, Jr.,
hereby certify that:
(a) They are the duly elected and acting President and Secretary,
respectively, of The Cerplex Group, Inc., a Delaware corporation (the
"Corporation").
(b) Pursuant to the authority conferred upon the Board of Directors
of the Corporation by paragraph B of Article IV of the Corporation's Certificate
of Incorporation (the "Certificate"), the Board of Directors of the Corporation
on June 7, 1996 adopted the following resolutions creating a series of preferred
stock designated as Series B Preferred Stock;
WHEREAS, the Certificate provides for a class of shares known as
Preferred Stock, issuable from time to time in one or more series; and
WHEREAS, the Board of Directors of the Corporation is authorized by
the Certificate to determine the powers, rights, preferences, qualifications,
limitations and restrictions granted to or imposed upon any wholly unissued
series of Preferred Stock, to fix the number of shares constituting any such
series, and to determine the designation thereof, or any of them;
WHEREAS, the Board of Directors of the Corporation desires, pursuant
to its authority as aforesaid, to determine and fix the powers, rights,
preferences, qualifications, limitations and restrictions relating to Series B
Preferred Stock and the number of shares constituting, and the designation of,
such series:
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority
vested in the Board of Directors of the Corporation in accordance with the
provisions of the Certificate, the series of Preferred Stock is hereby created,
and the Board of Directors hereby fixes and determines the designation of, the
number of shares constituting, and the rights, preferences, privileges and
restrictions relating to, such series of Preferred Stock as follows:
1. Designation. The series of Preferred Stock of the Corporation
shall be designated as "Series B Preferred Stock," $0.001 par value.
2. Authorized-Number. The number of shares constituting the Series B
Preferred Stock shall be Eight Thousand (8,000) shares. The Board of Directors
is authorized to decrease
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the number of shares of any series of preferred stock prior or subsequent to the
issue of that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status which they had
prior to the adoption of the resolution originally fixing the number of shares
of such series.
3. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Series B Preferred Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of the corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors. The Board of Directors shall not pay any dividend to
the holders of the Common Stock unless and until it has paid an equivalent
dividend, based upon the number of shares of Common Stock into which each share
of Series B Preferred Stock is convertible as of the record date for the payment
of the dividend, to the holders of the Series B Preferred Stock. In addition to
the foregoing, in the event the Corporation should fail to register the shares
of Common Stock into which the Series B Preferred Stock are convertible under
the Securities Act of 1933, as amended, within one hundred fifty (150) days
following the closing of that certain Stock Purchase Agreement dated June 10,
1996 by and between the Corporation and the holders of Series B Preferred Stock
(the "Original Issue Date"), as provided in that certain Fourth Amendment to
Registration Rights Agreement between the Corporation, the holders of Series B
Preferred Stock and certain other securityholders of the Corporation entered
into on the Original Issue Date, the holders of Series B Preferred Stock shall
be entitled to receive a dividend at the rate of $0.83 1/3 per share (as
adjusted for any stock dividends, combinations or splits with respect to such
shares) per day for each day after one hundred fifty (150) days following the
Original Issue Date during which the shares of Common Stock issuable upon
conversion of the shares of Series B Preferred Stock are not so registered,
which dividends shall accrue beginning one hundred fifty (150) days following
the Original Issue Date until such shares of Common Stock are so registered.
Such dividend shall be payable quarterly on the first day of each calendar
quarter commencing with the first calendar quarter ending after one hundred
fifty (150) days following the Original Issue Date. The foregoing
notwithstanding, (i) such dividends shall not be payable if the failure to
register the shares of Common Stock issuable upon conversion of the shares of
Series B Preferred Stock is a direct result of the actions of the holders of
Series B Preferred Stock, and (ii) the aggregate amount of dividends payable on
each share of Series B Preferred Stock pursuant to the foregoing shall not
exceed $500 per share (as adjusted for any stock dividends, combinations or
splits with respect to such shares).
4. Liquidation Preference.
(A) In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, subject to the rights of any
series of Preferred Stock which may from time to time come into existence, the
holders of the Series B Preferred Stock shall be entitled to receive, prior and
in preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock by reason of their ownership
thereof, the amount of $2,000 per share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) plus all accrued or declared
but unpaid
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dividends on such share (the "Liquidation Preference") for each share of Series
B Preferred Stock then held by such holder. If upon the occurrence of any such
event, the assets and funds thus distributed among the holders of Series B
Preferred Stock shall be insufficient to permit the payment to such holders of
the full aforesaid preferential amounts, then, subject to the rights of any
series of Preferred Stock which may from time to time come into existence,
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably upon the holders of Series B Preferred Stock in
proportion to the product of the Liquidation Preference of each such share and
the number of such shares owned by each such holder.
(B) After the distributions described in Section 4(A) above have
been paid, subject to the rights of any series of Preferred Stock which may from
time to time come into existence, the remaining assets of the Corporation
available or distribution to stockholders shall be distributed among the holders
of Common Stock pro rata based upon the number of shares of Common Stock held by
each stockholder.
(C) For purposes of this Section 4, (i) any acquisition of the
Corporation by means of merger or other form of corporate reorganization in
which outstanding shares of the Corporation are exchanged for securities or
other consideration issued, or caused to be issued, by the acquiring corporation
or its subsidiary (other than a mere reincorporation transaction) in which in
excess of 50% of the Corporation's voting power is transferred to a person or
persons different from those who held such prior to such transaction or (ii) a
sale of all or substantially all of the assets of the Corporation or (iii) any
other transaction or series of related transactions by the Corporation in which
in excess of 50% of the Corporation's voting power is transferred to a person or
persons different from those who held such securities prior to such transaction,
shall be treated as a liquidation, dissolution or winding up of the Corporation
and shall entitle the holders of Series B Preferred Stock to receive at the
closing in cash, securities of other property (valued as provided in Section
4(D) below) the Liquidation Preference.
(D) Whenever the distribution provided for in this Section 4
shall be payable in securities or property other than cash, the value of such
distribution shall be as follows:
(i) Securities not subject to investment letters or other
similar restrictions on free marketability;
(A) If traded on a securities exchange (which shall
include the Nasdaq National Market), the value shall be deemed to
be the average of the closing prices of the securities on such
exchange over the 30-day trading period ending three (3) days
prior to the closing,
(B) If traded over-the-counter, the value shall be deemed
to be the average of the closing bid or sale prices (whichever
are applicable) over the 30-day trading period ending three (3)
days prior to the closing as reported in pink sheets or other
publications reasonably selected by the Board of Directors; and
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(C) If there is no public market, the value shall be the
fair market value thereof, as determined in good faith by the
Board of Directors of the Corporation.
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other
than restrictions arising solely by virtue of a stockholder's status as
an affiliate or former affiliate) shall be to make an appropriate
discount from the market value determined as above in (i) (A), (B) or
(C) to reflect the approximate fair market value thereof, as determined
in good faith by the Board of Directors of the Corporation.
5. Redemption. Except as provided in Section 6(C) below, the Series
B Preferred Stock is not redeemable.
6. Conversion. The holders of Series B Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(A) Right to Convert. Each share of Series B Preferred Stock
shall be convertible into shares of Common Stock at any time commencing ninety
(90) days after the Original Issue Date subject to the following terms and
provisions:
(i) The Series B Preferred Stock shall be convertible in
minimum amounts of at least twenty-five (25) preferred shares.
(ii) Each share of Series B Preferred Stock shall be
convertible into the number of shares of Common Stock equal to
$1,000.00 (the "Original Issue Price") divided by the Conversion
Price (as defined below). The Conversion Price shall be the lower
of:
(1) 80% of the average closing bid price of the Common
Stock for the ten (10) trading days ending three (3) days
prior to the date of the notice of conversion delivered as
provided in Section 6(D) below; or
(2) $5.07 (as adjusted for any stock dividends,
combinations or splits with respect to such shares of Common
Stock).
(B) Automatic Conversion. Each share of Series B Preferred Stock
shall automatically be converted into the number of shares of Common Stock,
determined as provided in Section 6(A) above, upon the earlier to occur of (i)
five (5) years following the Original Issue Date, or (ii) five (5) days after
written notification to the holders of the Series B Preferred Stock by the
Corporation that the price of the Common Stock for thirty (30) consecutive
trading days has exceeded $19.13 per share, as adjusted for stock dividends,
combinations or splits. Such price shall be calculated as follows:
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(i) If traded on a securities exchange (which shall include
the Nasdaq National Market), the value shall be deemed to be the
closing sales price of the securities on such exchange for each
trading day during the applicable 30-day trading period; and
(ii) If traded over-the-counter, the value shall be deemed to
be the closing bid or sales price (whichever are applicable) for
each trading day during over the applicable 30-day trading period.
(C) Limitation on Conversion; Redemption.
(i) Anything hereunder to the contrary notwithstanding, the
Corporation shall not be required to issue upon conversion of the Series B
Preferred Stock more than an aggregate of 2,679,484 shares of Common Stock (the
"Nasdaq Cap"), if the issuance of a larger number of shares would constitute a
breach of the Corporation's obligations under its agreements with the National
Association of Securities Dealers, Inc. (the "NASD") or the Bylaws of the NASD.
Subject to the obligation of the Corporation to effect certain redemptions and
the exception as provided below, if further issuances of shares of Common Stock
upon the conversion of shares of Series B Preferred Stock would constitute a
breach of the Corporation's obligations under any applicable agreement with the
NASD or the NASD Bylaws because all of the shares permitted to be issued under
the Nasdaq Cap shall have been previously issued, and so long thereafter as such
limitation shall continue to be applicable, and any shares of Series B Preferred
Stock are submitted for conversion, such shares shall receive an amount equal to
the Liquidation Preference for such shares as provided in Section 4(A) above in
lieu of the shares of Common Stock which would otherwise be issued upon such
conversion. Payment of such cash amounts shall be made within five (5) business
days following the date of the notice of conversion as provided in Section 6(D)
below. In the event the Corporation for any reason should fail to make any such
payment within such five (5) day period, the unpaid amount shall bear interest
at the rate of 1/10 of one percent (0.1%) per day, or the maximum rate permitted
by law, whichever is lower. The amount of shares of Common Stock subject to the
Nasdaq Cap shall be adjusted for stock dividends, combinations or splits. In the
event the Nasdaq Cap should continue to be applicable to the issuance of shares
of Common Stock upon conversion of the shares of Series B Preferred Stock ninety
(90) days following the Original Issue Date, the Corporation shall redeem the
minimum number of shares of Series B Preferred Stock such that the Corporation's
agreements with the NASD or the Bylaws of the NASD regarding the Nasdaq Cap will
not be breached upon the conversion of the remaining shares of Series B
Preferred Stock outstanding following such redemption. In such event, the
redemption price to be paid by the Corporation shall be equal to the Liquidation
Preference as provided in Section 4(a) above. Any redemption effected pursuant
to the preceding provisions shall require no more than ten (10) days notice and
the redemption dates shall be on or before one hundred five (105) days following
the Original Issue Date. Any such redemption shall be effected pro rata among
the holders of Series B Preferred Stock. If the funds of the Corporation legally
available for redemption of Series B Preferred Stock are insufficient to redeem
the number of shares to be so redeemed as provided above, those funds which are
legally available will be used to redeem the maximum possible number of such
shares ratably among the holders of such shares to be redeemed. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of shares of Series B Preferred Stock, such funds will
immediately be used
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to redeem the balance of the shares which the Corporation has become obligated
to redeem as provided above but which have not been redeemed. If for any reason
any shares of Series B Preferred Stock are not redeemed on the date when such
shares were to have been so redeemed, as provided above, the unpaid redemption
price which should have been paid shall bear interest until fully paid at the
rate of 1/10 of one percent (0.1%) per day, or the maximum rate permissible by
law, whichever is lower.
(ii) Notwithstanding anything to the contrary in Section
6(C)(ii) above, if the redemption of any of the shares of Series B Preferred
Stock, or the payment of any Liquidation Preference in lieu of the delivery of
shares of Common Stock as provided above, would violate covenants of any
agreement of the Company with its secured lenders existing as of the Original
Issue Date, the shares of Series B Preferred Stock will not be redeemed unless
the lenders consent to the redemption or payment of the Liquidation Preference.
If for any reason the Corporation (A) (i) fails to issue and deliver shares of
Common Stock upon conversion, or (ii) fails to pay the Liquidation Preference in
lieu of issuing and delivering shares of Common Stock upon conversion; or (B)
fails to redeem shares of Series B Preferred Stock as a result of the Nasdaq Cap
remaining in effect one hundred five (105) days after the Original Issue Date as
provided above, then in either such event, anything herein to the contrary
notwithstanding, the Corporation shall issue and deliver shares of Common Stock
upon conversion of Series B Preferred Stock. The shares of Series B Preferred
Stock not redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein.
(D) Mechanics of Conversion. Before any holder of Series B
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, he shall give written notice (which may be by mail, postage prepaid or by
facsimile transmission) to the Corporation at its principal corporate office, of
the election to convert the same and shall state therein the number of shares to
be converted and the name or names in which the certificate or certificates for
shares of Common Stock are to be issued. Promptly thereafter the holder shall by
messenger or overnight delivery surrender the certificate or certificates
representing the shares to be converted, duly endorsed, at the office of the
Corporation or of any transfer agent for such shares, or at such other place
designated by the Corporation. The Corporation shall, as soon as practicable
after receipt of such notice, issue and deliver to or upon the order of such
holder of the Series B Preferred Stock, or to the nominee or nominees of such
holder, against delivery of the certificates representing the shares which have
been converted, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. The Corporation shall
use its best efforts to effect such issuance within 48 hours of the receipt of
the certificates representing the shares to be converted and shall transmit the
certificates by messenger or overnight delivery service to the address
designated by such holder. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date such notice of conversion
is given, or in the case of automatic conversion pursuant to Section 6(B), the
effective date of automatic conversion as provided in Section 6(B), 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.
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(E) Adjustments to Conversion Ratio for Stock Dividends and for
Combinations or Subdivisions of Common Stock. In the event that the Corporation
at any time or from time to time after the purchase date of the Series B
Preferred shall declare or pay, without consideration, any dividend on the
Common Stock payable in Common Stock or in any right to acquire Common Stock for
no consideration, or shall effect a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by stock split,
reclassification or otherwise than by payment of a dividend in Common Stock or
in any right to acquire Common Stock), or in the event the outstanding shares of
Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then the number of
shares of Common Stock into which the Series B Preferred Stock can be converted
shall be proportionately decreased or increased, as appropriate. In the event
that the Corporation shall declare or pay, without consideration, any dividend
on the Common Stock payable in any right to acquire Common Stock for no
consideration then the Corporation shall be deemed to have made a dividend
payable in Common Stock in an amount of shares equal to the maximum number of
shares issuable upon exercise of such rights to acquire Common Stock.
(F) Adjustments for Reclassification and Reorganization. If the
Common Stock issuable upon conversion of the Series B Preferred Stock shall be
changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares provided for in
Section 6(E) above or a merger or other reorganization referred to in Section
4(C) above), the number of shares of such other class or classes of stock into
which the Series B Preferred Stock shall be convertible shall, concurrently with
the effectiveness of such reorganization or reclassification, be proportionately
adjusted so that the Series B Preferred Stock shall be convertible into, in lieu
of the number of shares of Common Stock which the holders would otherwise have
been entitled to receive, a number of shares of such other class or classes of
stock equivalent to the number of shares of Common Stock that would have been
subject to receipt by the holders upon conversion of the Series B Preferred
Stock immediately before that change.
(G) Rights Offerings. In the event the Corporation shall issue
and distribute to all holders of Common Stock in any manner on or after the date
of the filing of this Certificate of Designation any rights to subscribe for, or
any rights or options to purchase, Common Stock or any stock or other securities
convertible into or exchangeable for Common Stock (such convertible or
exchangeable stock or securities being herein called "Convertible Securities"),
whether or not such rights or options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, which rights or options
do not result in any adjustment to the number of shares of Common or other
classes of stock into which the Series B Preferred Stock can be converted under
either Section 6(E) or Section 6(F) above, then the Corporation shall issue and
distribute such rights or options to the holders of Series B Preferred Stock to
the same extent as though they were holders, at the time of such distribution,
of that number of shares of Common Stock into which the shares of Series B
Preferred Stock held by each holder could be then be converted as of the record
date for the issuance of such Convertible Securities.
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(H) No Impairment. This 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 of the Series B Preferred Stock against impairment.
(I) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon conversion of
the Series B Preferred Stock, and the number of shares of Common Stock to be
issued shall be rounded to the nearest whole share. Whether or not fractional
shares are issuable upon such conversion shall be determined on the basis of the
total number of shares of Series B Preferred Stock the holder is then converting
into Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment
of the number of shares of Common Stock into which the Series B Preferred Stock
can be converted 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 of Series B Preferred Stock
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 of Series
B Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
conversion ratio 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 the Series B Preferred Stock.
(J) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Series B Preferred Stock, at least twenty (20) days
prior to the date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right.
(K) Reservation of Stock Issuable Upon Conversion. 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 Series B 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 B Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the
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conversion of all the then outstanding Series B Preferred Stock, in addition to
such other remedies as shall be available to the holder of such Series B
Preferred Stock, the 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.
(L) Notices. Any notice required by the provisions of this
Section 6 to be given to the holders of Series B Preferred Stock shall be deemed
given at the time deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
Corporation. Any notice to be given to the Corporation by a holder of Series B
Preferred Stock shall be given as provided in Section 6(D) above.
7. Voting Rights.
(A) Except as otherwise provided by law, each holder of shares of
Series B Preferred Stock shall be entitled to vote with the holders of Common
Stock on an as-converted basis (assuming for the purpose of this Section 7(A)
that the Conversion Price is determined according to Section 6(A)(ii)(2) above)
as a single class on all matters presented for stockholder vote, and shall be,
entitled to notice of any stockholders' meeting in accordance with the Bylaws of
the Corporation. Fractional votes, as determined on an aggregate conversion
basis for each holder, shall not, however, be permitted and any fractional
voting rights resulting from the conversion of Series B Preferred Stock into
Common Stock shall be rounded to the nearest whole number (with one-half being
rounded upward).
8. Protective Provisions. Notwithstanding anything to the contrary
in the foregoing provisions and for so long as at least 800 shares of Series B
Preferred Stock remain issued and 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 voting power of the then outstanding shares Series B
Preferred Stock, voting together as one class:
(A) alter or change the rights, preferences or privileges of the
shares of Series B Preferred Stock;
(B) create (by new authorization reclassification,
recapitalization, designation or otherwise) or issue any class or series of
stock or any other securities convertible into equity securities of the
Corporation having a preference over the Series B Preferred Stock with respect
to voting, dividends or upon liquidation;
(C) increase the authorized number of shares of the Series B
Preferred Stock; or,
(D) amend this Section 8.
9. Status of Converted Stock. In the event any Series B Preferred
Stock shall be converted pursuant to Section 6 hereof, the shares so converted
shall be promptly cancelled after the conversion thereof. All such shares shall
upon their cancellation become authorized but
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unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
RESOLVED FURTHER, that the Chairman of the Board, the Chief
Executive Officer, the President or any Vice President, and the Secretary, the
Chief Financial Officer, the Treasurer, or any Assistant Secretary or Assistant
Treasurer of this Corporation are each authorized to execute, verify, and file a
Certificate of Designation of Preferences in accordance with Delaware law.
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IN WITNESS WHEREOF, the undersigned have executed this certificate
and do affirm the foregoing as true under penalty of perjury this 7th day of
June, 1996.
___________________________________________
James T. Schraith, President
___________________________________________
Frederic A. Randall, Jr., Secretary
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