Exhibit 4.5
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CERTIFICATE OF DETERMINATION
OF PREFERENCES OF
SERIES B PREFERRED STOCK
OF SYNBIOTICS CORPORATION
a California corporation
Paul A. Rosinack and Michael K. Green hereby certify that:
A. They are the President and Secretary, respectively, of Synbiotics
Corporation, a California corporation (the "Corporation").
B. Pursuant to the authority given by the Corporation's Articles of
Incorporation, as amended to date, the Board of Directors of the Corporation has
duly adopted the resolution attached as Exhibit "A."
C. The authorized number of shares of Preferred Stock of the Corporation
is 25,000,000, none of which has been issued. The authorized number of shares of
Series B Preferred Stock of the Corporation is 4,000, none of which has been
issued.
IN WITNESS WHEREOF, the undersigned certify under penalty of perjury that
they have read the foregoing Certificate of Determination and know the contents
thereof, and that the statements therein are true and correct of their own
knowledge.
Executed in San Diego, California on January 3, 2002.
/s/ Paul A. Rosinack
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Paul A. Rosinack
President
/s/ Michael K. Green
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Michael K. Green
Secretary
Exhibit A
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NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
provide for the issue of a series of Preferred Stock of the Corporation
consisting of Four Thousand (4,000) shares designated as "Series B Preferred
Stock," and does hereby fix the rights, preferences, privileges, and
restrictions and other matters relating to said Series B Preferred Stock as
follows:
Series B Preferred Stock
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Article 1. Number of Shares; Designation
The series of Preferred Stock established hereby shall be designated the
"Series B Preferred Stock" and the authorized number of shares of Series B
Preferred Stock shall be 4,000.
Article 2. Dividends
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Section 2.1 The holders of the shares of the Series B Preferred Stock
shall be entitled to receive, out of the assets of the Corporation legally
available therefor and as and when declared by the Board of Directors, cash
dividends at the rate of $75.00 per share per year (subject to appropriate
adjustments in the event of any stock dividend, stock split, combination or
other similar recapitalization affecting such shares), payable quarterly on the
last day of the months of January, April, July and October in each year. Such
dividends shall accrue and be cumulative (whether or not in any quarterly
dividends period there shall be funds of the Corporation legally available for
the payment of such dividends), from the date of the last quarterly dividend
date to which dividends were declared and paid on the Series B Preferred Stock
of the Corporation. Each such dividend shall be paid to the holders of record of
shares of Series B Preferred Stock as they appear on the stock register of the
Corporation on the 15th day of the month next preceding the payment date
thereof. Dividends on account of arrears for any past dividend periods may be
declared and paid at any time, without reference to any regular dividend payment
date, to holders on such date, not exceeding 45 days preceding the payment date
thereof, as may be fixed by the Board of Directors.
Section 2.2 Dividends payable on the Series B Preferred Stock for each full
quarterly dividends period shall be computed by dividing the annual rate by
four. Dividends payable on the Series B Preferred Stock for any period less than
a full quarterly dividend period and for the initial dividend period, shall be
computed on the basis of a 360-day year of four 90-day quarters and the actual
number of days elapsed on the period for which payable, including the date of
payment.
Article 3. Liquidation, Dissolution or Winding Up
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Section 3.1 In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series B
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its shareholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other class or series of stock of the Corporation ranking on
liquidation prior
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and in preference to the Series B Preferred Stock, but before any payment shall
be made to the holders of any other class or series of stock of the Corporation
ranking junior on liquidation to the Series B Preferred Stock by reason of their
ownership thereof, an amount equal to $1,000 per share of Series B Preferred
Stock plus any accrued but unpaid dividends (whether or not declared), and no
more. If upon any such liquidation, dissolution or winding up of the Corporation
the remaining assets of the Corporation available for distribution to its
shareholders shall be insufficient to pay the holders of shares of Series B
Preferred Stock the full amount to which they shall be entitled, the holders of
shares of Series B Preferred Stock and any class or series of stock ranking on
liquidation on a parity with the Series B Preferred Stock shall share ratably in
any distribution of the remaining assets and funds of the Corporation in
proportion to the respective amounts which would otherwise be payable in respect
of the shares held by them upon such distribution if all amounts payable on or
with respect to such shares were paid in full.
Section 3.2 The merger or consolidation of the Corporation into or with
another corporation which results in the exchange of outstanding shares of the
Corporation for securities or other consideration issued or paid or caused to be
issued or paid by such other corporation or an affiliate thereof (except if such
merger or consolidation does not result in the transfer of more than 50 percent
of the voting securities of the Corporation), or the sale of all or
substantially all the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Article 3, unless the holders of sixty-six and two-thirds percent of the Series
B Preferred Stock then outstanding vote otherwise. The amount deemed distributed
to the holders of Series B Preferred Stock upon any such merger or consolidation
shall be the cash or the value of the property, rights and/or securities
distributed to such holders by the acquiring person, firm or other entity. The
value of such property, rights or other securities shall be determined in good
faith by the Board of Directors of the Corporation.
Article 4. Voting
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Section 4.1 Each holder of outstanding shares of Series B Preferred Stock
shall be entitled to the number of votes equal to the number of whole shares of
Common Stock into which the shares of Series B Preferred Stock held by such
holder are convertible (as adjusted from time to time pursuant to Article 5
below), at each meeting of shareholders of the Corporation (and written actions
of shareholders in lieu of meetings) with respect to any and all matters
presented to the shareholders of the Corporation for their action or
consideration. The voting rights granted in the immediately preceding sentence
to the holders of Series B Preferred Stock shall apply even if, at the record
date, meeting date and/or effective date of such action, the Corporation does
not have sufficient authorized but unissued shares of Common Stock to permit the
conversion in full, as of any such date, of the Series B Preferred Stock into
Common Stock (as provided in Article 5 below). Except as provided by law, with
respect to votes to be taken exclusively by the holders of Series B Preferred
Stock as provided herein, by the provisions of Section 4.1, Section 4.2 or
Section 4.3 below, or by the provisions establishing any other series of
Preferred Stock, holders of Series B Preferred Stock and of any other
outstanding series of Preferred Stock shall vote together with the holders of
Common Stock as a single class.
Section 4.2 The Corporation shall not amend, alter or repeal preferences,
rights, powers or other terms of the Series B Preferred Stock so as to affect
adversely the Series B Preferred Stock, without the written consent or
affirmative vote of the holders of at least sixty-six
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and two-thirds percent of the then outstanding shares of Series B Preferred
Stock, given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a class. For this purpose, without limiting the
generality of the foregoing, the authorization or issuance of any series of
Preferred Stock which is on a parity with or has preference or priority over the
Series B Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed to affect adversely the Series B Preferred Stock.
Section 4.3 Unless the consent of the holders of not less than sixty-six
and two-thirds percent of the outstanding Series B Preferred Stock, voting
separately as a single class, in person or by proxy, either in writing without a
meeting or at a special or annual meeting of shareholders called for the
purpose, is obtained:
(A) the Corporation shall not sell all or substantially all of the
Corporation's assets or effect a merger or consolidation or any other
transaction resulting in the acquisition of a majority of the then outstanding
voting stock of the Corporation by another corporation or entity;
(B) except as set forth in Article 6, neither the Corporation nor
any of its subsidiaries or affiliates shall declare, agree to declare, pay or
agree to pay dividends or make any other distribution on (other than 100% to the
Corporation), or redeem, any shares of any class or series of its equity
securities other than with respect to the Series B Preferred Stock, unless all
dividends accrued on shares of the Series B Preferred Stock shall have been
declared and paid;
(C) no amendment to the terms of the Series B Preferred Stock as
set forth herein shall be effected; and
(D) the Corporation shall not, by amendment of its Articles of
Incorporation or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, take any action which adversely affects (directly or
indirectly) the rights of the holders of the Series B Preferred Stock.
Article 5. Conversion
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The holders of the Series B Preferred Stock shall have conversion rights as
follows (the "Conversion Rights"):
Section 5.1 Each share of Series B Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the Common Increase Date (as
defined below) and from time to time thereafter, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing $1,000.00
by the Conversion Price (as defined below) in effect at the time of conversion.
The Conversion Price at which shares of Common Stock shall be deliverable upon
conversion of Series B Preferred Stock without the payment of additional
consideration by the holder thereof (the "Conversion Price") shall initially be
$0.139. Such initial Conversion Price, and the rate at which shares of Series B
Preferred Stock may be converted into shares of Common Stock, shall be subject
to adjustment as provided below.
The "Common Increase Date" is the day the Corporation's Articles of
Incorporation are amended to increase the authorized number of shares of Common
Stock to at least 70,000,000.
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The Corporation covenants to use its best efforts to cause the Common Increase
Date to occur by no later than July 31, 2002.
In the event of a liquidation of the Corporation, the Conversion Rights
shall terminate at the close of business on the first full day preceding the
date fixed for the payment of any amounts distributable on liquidation to the
holders of Series B Preferred Stock.
Section 5.2 No fractional shares of Common Stock shall be issued upon
conversion of the Series B Preferred Stock. In lieu of fractional shares, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.
Section 5.3 Mechanics of Conversion.
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(A) In order to convert shares of Series B Preferred Stock into
shares of Common Stock after the Common Increase Date, the holder shall
surrender the certificate or certificates for such shares of Series B
Preferred Stock at the office of the transfer agent (or at the principal
office of the Corporation if the Corporation serves as its own transfer
agent), together with written notice that such holder elects to convert all
or any number of the shares represented by such certificate or
certificates. Such notice shall state such holder's name or the names of
the nominees in which such holder wishes the certificate or certificates
for shares of Common Stock to be issued. If required by the Corporation,
certificates surrendered for conversion shall be endorsed or accompanied by
a written instrument or instruments of transfer, in form satisfactory to
the Corporation, duly executed by the registered holder or his or its
attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent or the Corporation shall be
the conversion date ("Conversion Date"). The Corporation shall, as soon as
practicable after the Conversion Date, issue and deliver at such office to
such holder, or to his nominees, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share.
(B) The Corporation shall at all times after the Common Increase
Date during which the Series B Preferred Stock shall be outstanding,
reserve and keep available out of its authorized but unissued stock, for
the purpose of effecting the conversion of the Series B Preferred Stock,
such number of its duly authorized shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding
Series B Preferred Stock.
(C) Upon any such conversion, no adjustment to the Conversion
Price shall be made for any accrued and unpaid dividends on the Series B
Preferred Stock surrendered for conversion or on the Common Stock delivered
upon conversion. All accrued but unpaid dividends through the Conversion
Date will be paid by the Corporation to the holder at the same time that
certificates representing the Common Stock are delivered upon conversion.
(D) All shares of Series B Preferred Stock, which shall have been
surrendered for conversion as herein provided shall no longer be deemed to
be outstanding and all rights with respect to such shares, including the
rights, if any, to receive dividends
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(except for accrued but unpaid dividends through the Conversion Date),
notices and to vote, shall immediately cease and terminate on the
Conversion Date, except only the right of the holders thereof to receive
shares of Common Stock in exchange therefor and accrued but unpaid
dividends through the Conversion Date. Any shares of Series B Preferred
Stock so converted shall be retired and cancelled and shall not be
reissued, and the Corporation may from time to time take such appropriate
action as may be necessary to reduce the number of shares of authorized
Series B Preferred Stock accordingly.
(E) If the conversion is in connection with an underwritten offer
of securities registered pursuant to the Securities Act of 1933, the
conversion may, at the option of any holder tendering Series B Preferred
Stock for conversion, be conditioned upon the closing with the underwriter
of the sale of securities pursuant to such offering, in which event the
person(s) entitled to receive the Common Stock issuable upon such
conversion of the Series B Preferred Stock shall not be deemed to have
converted such Series B Preferred Stock until immediately prior to the
closing of the sale of securities.
Section 5.4 Adjustments to Conversion Price.
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(A) Special Definitions. For purposes of this Section 5.4, the
following definitions shall apply:
(1) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities, excluding rights or options granted to
employees, directors or consultants of the Corporation pursuant to an
option plan adopted by the Board of Directors to acquire up to that
number of shares of Common Stock as is equal to ten (10%) percent of
the Common Stock outstanding (provided that, for purposes of this
Section 5.4(A)(1), all shares of Common Stock issuable upon (1)
exercise of options granted or available for grant under plans
approved by the Board of Directors or (2) conversion of shares of
Preferred Stock shall be deemed to be outstanding).
(2) "Original Issue Date" shall mean the date on which the
first share of Series B Preferred Stock is first issued.
(3) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(4) "Additional Shares of Common Stock" shall mean all shares
of Common Stock issued (or, pursuant to Section 5.4(C) below, deemed
to be issued) by the Corporation after the Original Issue Date and
other than shares of Common Stock issued or issuable:
(i) as a dividend or distribution on Series B Preferred
Stock;
(ii) by reason of a dividend, stock split, split-up or
other distribution on shares of Common Stock, subject to
Section Section 5.5 or
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Section 5.6 or excluded from the definition of Additional Shares of
Common Stock by the foregoing clause (i);
(iii) upon the exercise of options excluded from the definition
of "Option" in Section 5.4(A)(1);
(iv) upon exercise of Options which were outstanding on the
Original Issue Date, the conversion of Convertible Securities which
were outstanding on the Original Issue Date, or in lieu of cash stay
bonuses which were granted before 2001;
(v) in connection with equipment leases, loans, acquisitions
of businesses, strategic alliances, or licenses or acquisitions of
technology or marketing rights; or
(vi) upon conversion of shares of Preferred Stock.
(5) "Rights to Acquire Common Stock" (or "Rights") shall mean all
rights issued by the Corporation to acquire common stock whatever by
exercise of a warrant, option or similar call or conversion of any existing
instruments, in either case for consideration fixed, in amount or by
formula, as of the date of issuance.
(B) No Adjustment of Conversion Price. No adjustment in the number of
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shares of Common Stock into which the Series B Preferred Stock is convertible
shall be made, by adjustment in the applicable Conversion Price thereof: (a)
unless the consideration per share (determined pursuant to Section 5.4(E)) below
for an Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the applicable Conversion Price in effect on the date
of, and immediately prior to, the issue of such additional shares, or (b) if
prior to such issuance, the Corporation receives written notice from the holders
of at least sixty-six and two-thirds percent of the then outstanding shares of
Series B Preferred Stock agreeing that no such adjustment shall be made as the
result of the issuance of Additional Shares of Common Stock.
(C) Issue of Securities Deemed Issue of Additional Shares of Common Stock.
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If the Corporation at any time or from time to time after the Original Issue
Date shall issue any Options or Convertible Securities or other Rights to
Acquire Common Stock, then the maximum number of shares of Common Stock (as set
forth in the instrument relating thereto without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options, Rights or, in the case of Convertible Securities, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue, provided
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section 5.4(E)
hereof) of such Additional Shares of Common Stock would be less than the
applicable Conversion Price in effect on the date of and immediately prior to
such
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issue, or such record date, as the case may be, and provided further that
in any such case in which Additional Shares of Common Stock are deemed to
be issued:
(1) No further adjustment in the Conversion Price shall be made
upon the subsequent issue of shares of Common Stock upon the exercise
of such Options or Rights or conversion or exchange of such
Convertible Securities;
(2) Upon the expiration or termination of any unexercised Option
or Right, the Conversion Price shall be readjusted as if such Option
or Right had never been issued; and
(3) In the event of any change in the number of shares of Common
Stock issuable upon the exercise, conversion or exchange of any
Option, Right or Convertible Security, including, but not limited to,
a change resulting from the anti-dilution provisions thereof, the
Conversion Price then in effect shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustment that was
made upon the issuance of such Option, Right or Convertible Security
not exercised or converted prior to such change been made upon the
basis of such change, but no further adjustment shall be made for the
actual issuance of Common Stock upon the exercise or conversion of any
such Option, Right or Convertible Security.
(D) Adjustment of Conversion Price upon Issuance of Additional Shares
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of Common Stock. If the Corporation shall at any time after the Original
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Issue Date issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section 5.4(C), but
excluding shares issued as a dividend or distribution as provided in
Section 5.6 or upon a stock split or combination as provided in Section
5.5), without consideration or for a consideration per share less than the
applicable Conversion Price in effect on the date of and immediately prior
to such issue, then and in such event, such Conversion Price shall be
reduced, concurrently with such issue to a price (calculated to the nearest
cent) determined by multiplying such Conversion Price by a fraction, (a)
the numerator of which shall be (1) the number of shares of Common Stock
outstanding immediately prior to such issue plus (2) the number of shares
of Common Stock which the aggregate consideration received by the
Corporation for the total number of Additional Shares of Common Stock so
issued would purchase at such Conversion Price; and (b) the denominator of
which shall be (1) the number of shares of Common Stock outstanding
immediately prior to such issue plus (2) the number of such Additional
Shares of Common Stock so issued. Notwithstanding the foregoing, the
applicable Conversion Price shall not be reduced if the amount of such
reduction would be an amount less than $.005, but any such amount shall be
carried forward and reduction with respect thereto made at the time of and
together with any subsequent reduction which, together with such amount and
any other amount or amounts so carried forward, shall aggregate $.005 or
more. For purposes of this Section 5.4(D), all shares of Common Stock
issuable upon conversion of Preferred Stock shall be deemed to be
outstanding.
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(E) Determination of Consideration. For purposes of this
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Section 5.4, the consideration received by the Corporation for the issue of
any Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property: Such consideration shall:
(i) insofar as it consists of cash, be computed at
the aggregate of cash received by the Corporation, without
reduction for amounts paid or payable for accrued interest
or accrued dividends;
(ii) insofar as it consists of property other than
cash, be computed at the fair market value thereof at the
time of such issue, as determined in good faith by the Board
of Directors; and
(iii) in the event Additional Shares of Common Stock
are 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 (i) and (ii) above, as
determined in good faith by the Board of Directors.
(2) Options, Rights and Convertible Securities. The
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consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued
pursuant to Section 5.4(C), relating to Options, Rights and
Convertible Securities, shall be determined by dividing
(i) the total amount, if any, received or receivable
by the Corporation as consideration for the issue of such
Options, Rights 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 Rights or the conversion or
exchange of such Convertible Securities, by
(ii) 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 Rights or the conversion or exchange of such
Convertible Securities.
Section 5.5 Adjustment for Stock Splits and Combinations. If the
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Corporation shall at any time or from time to time after the Original Issue Date
effect a subdivision of the outstanding Common Stock, the Conversion Price then
in effect immediately before that subdivision shall be proportionately
decreased. If the Corporation shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock, the
Conversion Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph shall become
effective at the close of business on the record date for the subdivision or
combination.
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Section 5.6 Adjustment for Certain Dividends and Distributions. In the
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event the Corporation at any time, or from time to time after the Original Issue
Date shall make or issue, a dividend or other distribution payable in Additional
Shares of Common Stock, then and in each such event the Conversion Price shall
be decreased as of the time of such issuance, by multiplying the Conversion
Price by a fraction:
(A) 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, and
(B) 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 plus the number of shares of Common Stock issuable in payment
of such dividend or distribution.
Section 5.7 Adjustments for Other Dividends and Distributions. In the
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event the Corporation at any time or from time to time after the Original Issue
Date shall make or issue a dividend or other distribution payable in securities
of the Corporation other than shares of Common Stock, then and in each such
event provision shall be made so that the holders of shares of the Series B
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Series B Preferred Stock
been converted into Common Stock on the date of such event and had 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 paragraph with respect to the rights of the holders of the Series B
Preferred Stock.
Section 5.8 Adjustment for Reclassification, Exchange, or Substitution. If
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the Common Stock issuable upon the conversion of the Series B Preferred Stock
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation, or sale of
assets provided for below), then and in each such event the holder of each share
of Series B Preferred Stock shall have the right thereafter to convert such
share into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other change,
by holders of the number of shares of Common Stock into which such shares of
Series B Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
Section 5.9 Adjustment for Merger or Reorganization, etc. In case of any
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consolidation or merger of the Corporation (except mergers not involving any
change in or any issuance of securities of the Corporation) with or into another
corporation or the sale of all or substantially all of the assets of the
Corporation to another corporation (other than a consolidation, merger or sale
which is treated as a liquidation pursuant to Article 3),
(A) if the surviving entity shall consent in writing to the
following provisions, then each share of Series B Preferred Stock shall
thereafter be convertible into the kind and amount 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
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such Series B Preferred Stock would have been entitled upon such
consolidation, merger or sale; and, in such case, appropriate adjustment
(as determined in good faith by the Board of Directors) shall be made in
the application of the provisions in this Article 5 set forth with respect
to the rights and interest thereafter of the holders of the Series B
Preferred Stock, to the end that the provisions set forth in this Article 5
(including provisions with respect to changes in and other adjustments of
the Conversion Price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Series B Preferred Stock;
or
(B) if the surviving entity shall not so consent, then each
holder of Series B Preferred Stock may, after receipt of notice specified
in Section 5.12, elect to convert such Stock into Common Stock as provided
in this Article 5 or to accept the distributions to which he would have
been entitled under Article 3 if such consolidation, merger or sale had
been treated as a liquidation pursuant to such Article 3.
Section 5.10 No Impairment. The Corporation will not, by amendment of its
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Articles of Incorporation or through any reorganization, 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
Article 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment.
Section 5.11 Certificate as to Adjustments. Upon the occurrence of each
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adjustment or readjustment of the Conversion Price pursuant to this Article 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder, if
any, 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 and shall file a copy of such certificate with its
corporate records. 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 similar certificate setting forth (1) such adjustments and
readjustments, (2) the Conversion Price then in effect, and (3) the number of
shares of Common Stock and the amount, if any, of other property which then
would be received upon the conversion of Series B Preferred Stock. Despite such
adjustment or readjustment, the form of each or all Series B Preferred Stock
Certificates, if the same shall reflect the initial or any subsequent conversion
price, need not be changed in order for the adjustments or readjustments to be
valued in accordance with the provisions hereof, which shall control.
Section 5.12 Notice of Record Date. In the event:
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(A) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other
securities of the Corporation;
(B) that the Corporation subdivides or combines its outstanding
shares of Common Stock;
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(C) of any reclassification of the Common Stock of the Corporation
(other than a subdivision or combination of its outstanding shares of
Common Stock or a stock dividend or stock distribution thereon), or of any
consolidation or merger of the Corporation into or with another corporation
(except mergers not involving any change in or any issuance of securities
of the Corporation), or of the sale of all or substantially all of the
assets of the Corporation; or
(D) of the involuntary or voluntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series B Preferred Stock, and shall cause to
be mailed to the holders of the Series B Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the record date specified in (1) below or twenty days before the
date specified in (2) below, a notice stating:
(1) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, subdivision or
combination are to be determined, or
(2) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale,
dissolution or winding up.
Article 6. Repurchase of Shares.
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Each holder of any outstanding shares of Series B Preferred Stock shall be
deemed to have consented, for purposes of Sections 502, 503 and 506 of the
California Corporations Code, to distributions made by the Corporation in
connection with the repurchase of shares of Common Stock issued to or held by
the employees, officers, directors, consultants or other persons performing
services for the Corporation upon termination of their employment or services
pursuant to agreements between the Corporation and such persons providing for
the Corporation's right of such repurchase.
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