Exhibit 4.1
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CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES B CONVERTIBLE PREFERRED STOCK
OF
GSV, INC.
GSV, Inc. (the "Corporation"), a corporation organized and existing
under the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors of
the Corporation (the "Board") by the Certificate of Incorporation (as amended)
(the "Certificate of Incorporation") of said corporation, the Board adopted a
resolution, which resolution is as follows:
RESOLVED, that a series of the Company's Preferred Stock consisting of
1,500,000 shares of Preferred Stock, be and hereby is, designated as
"Series B Convertible Preferred Stock", par value $.001 per share (the
"Series B Preferred Stock"), and that the Series B Preferred Stock
shall have the designations, powers, preferences, rights and
qualifications, limitations and restrictions as set forth in the
Certificate of Designations, Preferences and Rights of Series B
Convertible Preferred Stock (the "Series B Certificate").
That said Series B Certificate states that the Board does hereby fix
and herein state and express such designations, powers, preferences and relative
and other special rights and qualifications, limitations and restrictions
thereof as follows.
1. Certain Definitions. Unless the context otherwise requires, the terms
defined herein shall have the meanings herein specified.
(a) Common Stock. The term "Common Stock" shall mean the Common Stock
of the Corporation, $.001 par value per share.
(b) Junior Stock. The term "Junior Stock" shall mean the Common Stock
and any class or series of stock of the Corporation, whether now or hereafter
authorized, that by the terms of the Certificate of Incorporation or of an
instrument of the Board of Directors, acting pursuant to authority granted in
the Certificate of Incorporation establishing such class or series shall be
subordinated to the Series B Preferred Stock in respect of the right to receive
dividends and in respect to the right to receive any assets upon liquidation,
dissolution or winding up of the affairs of the Corporation. The Series A
Preferred Stock will be Junior Stock.
(c) Parity Stock. The term "Parity Stock" shall mean any class or
series of stock of the Corporation, whether now or hereafter authorized, that by
the terms of the Certificate of Incorporation or of an instrument of the Board
of Directors, acting pursuant to authority granted in the Certificate of
Incorporation establishing such class or series shall be pari passu to the
Series B Preferred Stock in respect of the right to receive dividends and in
respect to the right to receive any assets upon liquidation, dissolution or
winding up of the affairs of the Corporation.
(d) Senior Stock. The term "Senior Stock" shall mean any class or
series of stock of the Corporation, whether now or hereafter authorized, that by
the terms of the Certificate of Incorporation
or of an instrument of the Board of Directors, acting pursuant to authority
granted in the Certificate of Incorporation establishing such class or series
shall be senior to the Series B Preferred Stock in respect of the right to
receive dividends and in respect to the right to receive any assets upon
liquidation, dissolution or winding up of the affairs of the Corporation.
(e) Series A Preferred Stock. The term "Series A Preferred Stock"
shall mean the shares of the Series A Convertible Preferred Stock, $.001 par
value per share, currently outstanding.
(f) Series B Preferred Stock. The term "Series B Preferred Stock"
shall mean the shares of Series B Convertible Preferred Stock, $.001 par value
per share, authorized herein.
2. Designation, Amount and Par Value. The series of preferred stock
shall be designated as its Series B Convertible Preferred Stock (the "Series B
Preferred Stock") and the number of shares so designated shall be 1,500,000
(which shall not be subject to increase without the consent of the holders of
the Series B Preferred Stock (each, a "Holder" and collectively the "Holders")).
Each share of Series B Preferred Stock shall have a par value of $.001 per
share.
3. Voting. Except as set forth in Section 5 below and except as to
matters on which the holders of Series B Preferred Stock may otherwise be
entitled to vote as a matter of law, no holder of Series B Preferred Stock shall
be entitled to vote for any matter.
4. Dividends. Except as set forth in the following sentence, no
dividends shall be payable on the Series B Preferred Stock. In the event any
dividends are declared with respect to the Common Stock, each holder of shares
of the Series B Preferred Stock shall be entitled to receive an amount equal to
the amount of dividends that would have been paid on the shares of Common Stock
issuable upon conversion of such shares of Series B Preferred Stock had such
shares of Series B Preferred Stock been converted into Common Stock immediately
before such dividend was declared.
5. Election of Directors.
(a) So long as any shares of Series B Preferred Stock remain
outstanding, the Corporation shall not, without the written approval of Holders
of at least a majority of the then-outstanding shares of Series B Preferred
Stock, increase the maximum number of directors constituting the board of
directors to a number in excess of seven (7).
(b) So long as any shares of Series B Preferred Stock are outstanding,
the holders of Series B Preferred Stock, voting separately as a class, shall be
entitled to designate and elect three (3) of the members of the board of
directors. For any meeting (or written consent in lieu thereof) held for the
purpose of electing directors, the presence in person or by proxy (or the
written consent) of the holders of at least a majority of the then outstanding
shares of Series B Preferred Stock shall constitute a quorum of the Series B
Preferred Stock for the election of directors to be elected solely by the
holders of the Series B Preferred Stock. A vacancy in any directorship elected
by the holders of the Series B Preferred Stock shall be filled only by vote or
written consent of the holders of at least a majority of the then outstanding
shares of Series B Preferred Stock.
6. Liquidation.
(a) Upon liquidation, dissolution or winding up of the Corporation
(each a "Liquidation Event"), whether voluntary or involuntary, the Holders
shall be entitled, before any distribution or payment is made to any holder of
Common Stock or any other Junior Stock, to be paid an amount equal to $1.00 per
share plus the amount of any declared and unpaid dividends thereon, if any,
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such amount payable with respect to one share of Series B Preferred Stock being
sometimes referred to as the "Series B Liquidation Preference Payment" and with
respect to all shares of Series B Preferred Stock being sometimes referred to as
the "Series B Liquidation Preference Payments." If, upon any Liquidation Event,
the net assets of the Corporation distributable among the holders of all
outstanding shares of the Series B Preferred Stock shall be insufficient to
permit the payment in full to such Holders of all amounts to which such Holders
shall be entitled upon a Liquidation Event, then the entire net assets of the
Corporation to be distributed to the Holders shall be distributed among the
Holders ratably in proportion to the full amounts to which they would otherwise
be respectively entitled in the event of a Liquidation Event.
(b) After the distributions described in Section 6(a) above have been
paid, subject to the rights of a series of Senior Stock or Parity Stock that may
from time to time come into existence, the remaining assets of the Corporation
available for distribution to the stockholders shall be distributed among the
holders of the Junior Stock in accordance with the Certificate of Incorporation
or an instrument of the Board of Directors, acting pursuant to authority granted
in the Certificate of Incorporation.
(c) Notwithstanding the provisions of Section 7(f), any consolidation,
merger, sale of all or substantially all of the Corporation's assets or other
similar transaction that has not been approved by the holders of at least
two-thirds of the Series B Preferred Stock then outstanding shall be treated as
a Liquidation Event, and the holders of the Series B Preferred Stock shall be
entitled in such event to receive stock, securities or assets on the basis of
(i) the provisions of Section 7(f) or (ii) the priorities set forth in Section
6(a), whichever is greater. Any consolidation, merger, sale of all or
substantially all of the Corporation's assets or other similar transaction that
has been approved by the holders of at least two-thirds of the Series B
Preferred Stock shall be subject to Section 7(f), and not this Section 6(c).
7. Conversions. The holders of Series B Preferred Stock shall have the
following conversion rights:
(a) Right to Convert. Subject to the terms and conditions of this
Section 7, the Holder of any share or shares of Series B Preferred Stock shall
have the right, at its option at any time, to convert any such shares of Series
B Preferred Stock (except that upon any Liquidation Event of the Corporation
pursuant to Section 6, the right of conversion shall terminate at the close of
business on the business day prior to the business day fixed for payment of the
amount distributable on the Series B Preferred Stock). The date of determination
of the number of shares of Common Stock issued upon conversion of the Series B
Preferred Stock pursuant to this Section 7(a) shall be the date (the "Conversion
Date"), that the Conversion Notice and the certificate or certificates for the
shares so converted is received by the Corporation.
(b) Conversion Process. To effect conversions of Series B Preferred
Stock, Holders shall deliver to the Corporation at its principal office during
its usual business hours, the certificate or certificates for the shares so
converted, together with a duly completed and executed Conversion Notice, in the
form attached hereto as Exhibit A. As promptly as practicable thereafter, the
Corporation shall issue and deliver to such Holder a certificate or
certificates, registered in the name of such Holder, for the number of whole
shares of Common Stock to which such Holder is entitled upon such conversion,
together with any cash dividends and payment in lieu of fractional shares to
which such Holder may be entitled. Once delivered, a delivery of a Conversion
Notice shall be irrevocable.
(c) Conversion Price. Subject to the terms and conditions of this
Section 7, the Series B Preferred Stock shall convert into such number of fully
paid and non-assessable shares of Common Stock as is obtained by (i) multiplying
the number of shares of Series B Convertible Preferred Stock to be so converted
by $1.00 per share and (ii) dividing the result by the conversion price (which
shall initially
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be $1.00) per share or, in case an adjustment of such price has taken place
pursuant to the further provisions of Section 7(e), then by the conversion price
as last adjusted and in effect at the date any share or shares of Series B
Preferred Stock are surrendered for conversion pursuant to Section 7(a) (such
price, or such price as last adjusted, being referred to as the "Series B
Conversion Price").
(d) Fractional Shares. No fractional shares shall be issued upon
conversion of Series B Preferred Stock into Common Stock. If any fractional
shares of Common Stock would be delivered upon such conversion, the Corporation,
in lieu of delivering such fractional share, shall pay to the Holder
surrendering the Series B Preferred Stock for conversion an amount in cash equal
to the current fair market value of such fractional share as determined in good
faith by the Board of Directors of the Corporation.
(e) Adjustment of Price Upon Issuance of Common Stock. Except as
provided in Section 7(f), if and whenever the Corporation shall issue or sell,
or is, pursuant to Section 7(e)(i) through (vii), deemed to have offered, sold,
granted any option to purchase, or otherwise disposed of (or announced any
offer, sale, grant or any option to purchase or other disposition) any shares of
Common Stock ("Additional Stock") at a price that is, at the issuance thereof,
or at any later time due to adjustment, reset, additional issuances or
otherwise, less than the Series B Conversion Price, then the Series B Conversion
Price shall be adjusted to a price equal to the quotient obtained by dividing
the total computed under clause (x) below by the total computed under clause (y)
below as follows:
(x) an amount equal to the sum of:
(1) the product obtained by multiplying (a) the total
number of shares of Common Stock outstanding
immediately prior to such issuance (including, without
limitation, any shares of Common Stock deemed to have
been issued prior to such issuance) by (b) the Series B
Conversion Price in effect immediately prior to such
issuance, plus
(2) the aggregate consideration, if any, received by the
Corporation in connection with such issuance of the
Additional Stock;
(y) the total number of shares of Common Stock outstanding
immediately after such issuance (including, without
limitation, any Common Stock deemed to have been issued
prior to, or in connection with, such issuance).
For purposes of this Section 7(e), the following subsections (i) to (vii) shall
also be applicable:
(i) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption in a
merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or to purchase any
stock or security convertible into or exchangeable, directly or indirectly, for
Common Stock (such warrants, rights or options being called "Options" and such
convertible or exchangeable stock or securities being called "Convertible
Securities") whether or not such Options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by dividing
(x) the total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Corporation upon the exercise
of all such Options, plus, in the case
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of such Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the Corporation upon the
issue or sale of such Convertible Securities and upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common Stock issuable upon
the exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than the Series B Conversion Price in effect immediately prior to the time of
the granting of such Options, then the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon the
exercise of such Options shall be deemed to have been issued for such price per
share as of the date of granting of such Options and thereafter shall be deemed
to be outstanding. Except as otherwise provided in subsection (iii), no
adjustment of the Series B Conversion Price shall be made upon the actual issue
of such Common Stock or of such Convertible Securities upon exercise of such
Options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately exercisable,
and the price per share for which Common Stock is issuable upon such conversion
or exchange (determined by dividing (x) the total amount received or receivable
by the Corporation as consideration for the issue or sale of such Convertible
Securities plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange thereof, by (y)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities) shall be less than the Series B
Conversion Price in effect immediately prior to the time of such issue or sale,
then the total maximum number of shares of Common Stock issuable upon conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued for such price per share as of the date of the issue or sale of such
Convertible Securities and thereafter shall be deemed to be outstanding,
provided that (a) except as otherwise provided in subparagraph (iii), no
adjustment of the Series B Conversion Price shall be made upon the actual issue
of such Common Stock upon conversion or exchange of such Convertible Securities
and (b) if any such issue or sale of such Convertible Securities is made upon
exercise of any Options to purchase any such Convertible Securities for which
adjustments of the Series B Conversion Price have been or are to be made
pursuant to other provisions of this Section 7(e), no further adjustment of the
Series B Conversion Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if (1) the maximum number of
shares of Common Stock issuable in connection with any Option referred to in
subparagraph (i), (2) the purchase price provided for in any Option referred to
in subparagraph (i), (3) the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in subparagraph
(i) or (ii), or (4) the rate at which Convertible Securities referred to in
subparagraph (i) or (ii) are convertible into or exchangeable for Common Stock,
shall change at any time (including, but not limited to, changes under or by
reason of provisions designed to protect against dilution), the Series B
Conversion Price in effect at the time of such event shall forthwith be
readjusted to the Series B Conversion Price that would have been in effect at
such time had such Options or Convertible Securities still outstanding provided
for such changed maximum number of shares, changed purchase price, changed
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold, and on the termination of any Option or
any such right to convert or exchange Convertible Securities, the Series B
Conversion Price then in effect hereunder shall forthwith be increased to the
Series B Conversion Price that would have been in effect at the time of such
termination had such Option or Convertible Securities, to the extent outstanding
immediately prior to such termination, never been issued.
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(iv) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation (other
than the Series B Preferred Stock) payable in Common Stock, Options or
Convertible Securities, then any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.
(v) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith. In case
any Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such consideration
as determined in good faith by the Board of Directors of the Corporation.
(vi) Record Date. In case the Corporation shall take a record of
the holders of its Common Stock for the purpose of entitling them (x) to receive
a dividend or other distribution payable in Common Stock, Options or Convertible
Securities or (y) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition of any such shares shall be
considered an issue or sale of Common Stock for the purpose of this Section
7(e).
(f) Reorganization or Reclassification. If any capital reorganization,
reclassification, recapitalization, consolidation, merger, sale of all or
substantially all of the Corporation's assets or other similar transaction (any
such transaction being referred to herein as an "Organic Change") shall be
effected in such a way that holders of Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for Common Stock,
then, as a condition of such Organic Change, lawful and adequate provisions
shall be made whereby each holder of a share or shares of Series B Preferred
Stock that remains outstanding thereafter shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of or in addition to, as the case may be, the shares of Common Stock
immediately theretofore receivable upon the conversion of such share or shares
of Series B Preferred Stock, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such Common Stock
immediately theretofore receivable upon such conversion had such Organic Change
not taken place, and appropriate provisions shall be made with respect to the
rights and interests of each Holder to the end that the provisions hereof
(including without limitation provisions for adjustments of the Series B
Conversion Price) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights.
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(g) Employee Reserved Shares. Anything to the contrary contained in
this Section 7 notwithstanding, no adjustment shall be made in the Conversion
Price as a result of or pursuant to the granting of any Option, or the issuance
of Common Stock or Common Stock Equivalents, to officers, employees or directors
of, or consultants to, the Corporation, pursuant to any agreement, plan or
arrangement approved by a majority of the Corporation's board of directors.
8. Notices. Any and all notices or other communications or deliveries to be
provided by the Holders of the Series B Preferred Stock hereunder, including,
without limitation, any Conversion Notice, shall be in writing and delivered
personally, by facsimile or sent by a nationally recognized overnight courier
service, addressed to the attention of the Chief Executive Officer of the
Corporation addressed to 191 Post Road West, Westport, CT, 06880, Facsimile No.:
(203) 221-2691 Attention Chief Executive Officer, or to such other address or
facsimile number as shall be specified in writing by the Corporation for such
purpose. Any and all notices or other communications or deliveries to be
provided by the Corporation hereunder shall be in writing and delivered
personally, by facsimile or sent by a nationally recognized overnight courier
service, addressed to each Holder at the facsimile telephone number or address
of such Holder appearing on the books of the Corporation, or if no such
facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 6:30 p.m. (New
York City time) (with confirmation of transmission), (ii) the date after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile telephone number specified in this Section later than 6:30 p.m.
(New York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date (with confirmation of transmission), (iii) upon receipt, if
sent by a nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.
9. Stock to be Reserved. The Corporation will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issuance
upon the conversion of Series B Preferred Stock as herein provided, such number
of shares of Common Stock as shall then be issuable upon the conversion of all
outstanding shares of Series B Preferred Stock.
10. Issue Tax. The issuance of certificates for shares of Common Stock upon
conversion of Series B Preferred Stock shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Series B Preferred Stock that is being
converted.
11. Status of Converted Shares. In case any shares of Series B Preferred
Stock shall be converted pursuant hereto, the shares of Series B Preferred Stock
so converted shall be canceled, shall not be re-issuable and shall cease to be
part of the authorized capital stock of the Corporation.
12. Amendments. Except where the vote or written consent of the holders of
a greater number of shares of the Corporation is required herein or by law, no
provision of this Series B Certificate that adversely affects the Series B
Preferred Stock may be amended, modified or waived without the written consent
or affirmative vote of the holders of at least a two-thirds of the then
outstanding shares of Series B Preferred Stock consenting or voting, as the case
may be, separately as a class.
13. Lost Certificates. Upon receipt of evidence reasonably satisfactory to
the Corporation of the loss, theft, destruction or mutilation of a stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity agreement reasonably satisfactory to the Corporation, or
in the case of any such mutilation upon surrender and cancellation of such stock
certificate, the Corporation will
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make and deliver a new stock certificate, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated stock certificate at the Corporation's own
expense.
IN WITNESS WHEREOF, GSV, Inc. has caused this certificate to be signed by
its officers as of this 18th day of July, 2003.
GSV, INC.
By:/s/ Gilad Gat
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Name: Gilad Gat
Title: Chief Executive Officer
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