EXHIBIT 4.1
MATERIAL TECHNOLOGIES, INC.
(a Delaware corporation)
CLASS A CONVERTIBLE PREFERRED STOCK
CERTIFICATE OF DESIGNATIONS
Material Technologies, Inc., organized and existing under Delaware General
Corporation Law (the "Corporation") by its President and Secretary, does hereby
certify that, pursuant to authority conferred on the Board of Directors (the
"Board") by Paragraph 4 of the Corporation's Certificate of Incorporation
authorizing a class of Nine Hundred Thousand (900,000) shares Preferred Stock
with a par value of one mill ($.001) per share, and pursuant to Section 151 of
the Delaware General Corporation Law, as amended, the Board duly adopted a
resolution providing as follows for the issuance out of such class the series of
up to three hundred fifty thousand (350,000) shares of Class A Convertible
Preferred Stock, and setting forth the designations and powers, preferences and
rights, including voting rights, if any, and the qualifications, limitations or
restrictions thereof:
WHEREAS, the Corporation's Certificate of Incorporation states, among other
things, that the Corporation is authorized to issue up to Nine Hundred Thousand
(900,000) shares of Preferred Stock, of the par value of one mill ($.001) per
share, and that the Board is granted the authority to fix, by resolution, the
designations and powers, preferences, and rights, including voting rights, if
any, and the qualifications, limitations or restrictions thereof, if any, of
such shares;
NOW, THEREFORE, BE IT RESOLVED that the Board does hereby designate Three
Hundred fifty Thousand (350,000) shares of its authorized but previously
unissued Preferred Stock as "Class A Convertible Preferred Stock" which may be
issued from time to time. The designations and the powers, preferences and
rights, including voting rights of the Class A Convertible Preferred Stock and
the qualifications, limitations and restrictions thereof, shall be as follows::
1. LIQUIDATION PREFERENCE
1.1 In the event of liquidation, dissolution or winding up of the
Corporation, whether such be voluntary or involuntary, the holders of
shares of Class A Convertible Preferred Stock (the "Shares") shall be
entitled to receive out of the Corporation's assets, an amount equal to
seventy-two cents ($.72) per Share (the "Liquidation Preference"). Such
amount shall be paid upon all outstanding Shares before any payment shall
be made or any assets distributed to the holders of shares of common stock
or any other stock of any other series or class ranking junior to the
Shares as to dividends or assets. The holders of Shares shall not be
entitled to any further payment.
1.2 A merger or consolidation of the Corporation with another corporation
shall not be deemed to be a liquidation, dissolution or winding up within
the meaning of this Section 1.
1.3 While the Shares are outstanding the Corporation shall not, without
the prior consent of the holders of a majority of the outstanding Shares,
issue any Preferred Stock which is senior to or parri passu with the Shares
with respect to liquidation preference.
2. CONVERSION
2.1 RIGHT TO CONVERT: CONVERSION PRICE Subject to and upon compliance
with this Section 2, at the option of the holder thereof, each outstanding
Share may at any time be converted into duly authorized, validly issued,
fully paid and nonassessable shares of the Corporation's common stock, par
value one Mil ($.001) per share ("Common Stock") at Seventy-two cents
($.72) per share (The "Initial Conversion Price") or, in case an adjustment
in the conversion price has taken place pursuant to Section 3 below, then
at the applicable conversion price as so adjusted (the "Conversion Price"),
upon surrender of the certificate
representing the Shares to be converted to the Corporation at any time
during usual business hours at the Corporation's principal executive,
accompanied by a written notice of election to convert as provided in
Section 2.2 below. All Shares surrendered for conversion shall be restored
to the status of authorized but unissued and undesignated shares of
Preferred Stock. The number of shares of Common Stock to be issued on
conversion shall be determined by dividing (i) an amount equal to the sum
of the aggregate Liquidation Preference of the converted Shares by (ii) the
Conversion Price as in effect on the date the Shares are surrendered for
conversion.
2.2 ISSUANCE OF COMMON STOCK ON CONVERSION. As promptly as practicable
after surrender of any Shares for conversion, the Corporation shall deliver
or cause to be delivered to, or upon the written order of, the holder of
surrendered Shares a certificate or certificates representing the number of
duly authorized, validly issued, fully paid, and nonassessable shares of
Common Stock into which such Shares have been converted in accordance with
this Section 2. Prior to delivery of such certificate or certificates, the
Corporation shall require written notice at its said office from the holder
of the Shares so surrendered stating that the holder irrevocably elects to
convert such shares. Such notice shall also state the name or names (with
address and social security or other taxpayer identification number) in
which said certificate or certificates are to be issued. Such conversion
shall be deemed to have been made at the time that such shares shall have
been surrendered for conversion and such notice shall have been received by
the Corporation (the "Conversion Date"). The Corporation shall have the
right to pay cash or to round up to the next whole share in lieu of issuing
fractional shares of Common Stock.
3. ADJUSTMENT OF CONVERSION PRICE. The kind of securities issuable upon
conversion of Shares and Conversion Price shall be subject to adjustment from
time to time upon the happening of certain events as follows:
3.1 RECLASSIFICATION, CONSOLIDATION OF MERGER. In case of any
reclassification or change of outstanding securities of the class of
securities which are issuable upon conversion of the Shares (other than as
a result of subdivision or combination or an increase or decrease in the
number of such securities outstanding) or in case of any consolidation or
merger of the Corporation with or into another corporation (other than a
merger with another corporation in which the Corporation is the surviving
corporation and which does not result in any reclassification or change,
other than a subdivision or combination of outstanding securities issuable
upon the conversion of Shares or an increase or decrease in the number of
such securities outstanding), or in case of any sale or transfer to another
corporation of all or substantially all of the Corporation's assets, the
holders of the Shares shall have the right to receive upon conversion, in
lieu of Common Stock issuable upon such conversion, the kind and amount of
shares of stock, other securities, money, or property receivable upon such
reclassification, change, consolidation, merger, sale, or transfer by the
holder of shares of Common Stock issuable upon conversion of such Shares
had such Shares been converted immediately prior to such reclassification,
change, consolidation, merger, sale, or transfer. The Corporation shall
not permit any such reclassification, change, consolidation, merger, sale,
or transfer to take place without adequate and lawful provisions to protect
the rights of the holders of Shares, including provisions assuring that
this Section 3 shall thereafter be applicable, as nearly as may be, with
respect to shares of stock, securities, or assets deliverable upon
conversion of the Shares. This Section 3.1 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales, and
transfers.
3.2 SUBDIVISION OR COMBINATION. If the Corporation at any time while
Shares are outstanding, shall subdivide or combine its outstanding
securities of the class of securities which are issuable upon conversion of
Shares, the conversion price shall be proportionately reduced, in case of
subdivision of such securities, as of the effective date of such
subdivision, or shall be proportionately increased, in the case of
combination of such securities, as of the effective date of such
combination.
3.3 STOCK DIVIDENDS. If the Corporation at any time while Shares are
outstanding shall pay a dividend or make any other distribution on its
Common Stock payable in shares of its common stock, then the conversion
price shall be adjusted, as of the date of such payment or other
distribution to that price determined by multiplying the conversion price
in effect immediately prior to such payment or other distribution by a
fraction (a) the numerator of which shall be the total number of shares of
Common Stock
2
outstanding immediately prior to such dividend or distribution, and
(b) the denominator of which shall be the total number of shares of Common
Stock outstanding immediately after such dividend or distribution.
3.4 NOTICE OF ADJUSTMENTS. Whenever the Conversion Price shall be
adjusted under Section 3 hereof, the Corporation shall make a certificate
signed by its president or a vice president and by its chief financial
officer, treasurer, assistant treasurer, secretary or assistant secretary
setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, and the conversion price after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (by
first class mail postage prepaid) to the holders of Shares promptly after
each adjustment. A determination of any adjustment to the Conversion Price
or the number or kind of shares or other securities issuable upon
conversion of Shares, by independent certified public accountants selected
by the Corporation, shall be final and binding on all parties.
4. VOTING RIGHTS. Each holder of Shares shall have the right to vote on all
matters on which the holders of Common Stock have the right to vote and to cast
that number of votes which the holder would have been entitled to cast had such
holder converted his Shares immediately prior to the record date for such vote
(or if there be no record date, immediately prior to the vote).
5. DIVIDENDS. The Shares shall participate in all dividends declared and paid
with respect to the Common Stock to the same extent as if the Shares had been
converted immediately prior to the record date for the payment of such dividend
(or if there be no record date, immediately prior to the dividend), except for
dividends or distributions on the Common Stock payable in shares of Common Stock
(to which Section 3.3 applies) and dividends or distributions in liquidation or
partial liquidation (to which Section 3.4 applies).
IN WITNESS WHEREOF, Material Technologies, Inc., has caused this certificate of
Designation to be signed by its President and attested by its Secretary on this
9th day of March, 1997, and each of such persons hereby affirms under penalty of
perjury that this Certificate of Designation is the act and deed of Material
Technologies, Inc. and that the facts stated herein are true and correct.
MATERIAL TECHNOLOGIES, INC.
By
------------------------------
Robert M. Bernstein, President
Attest:
- ---------------------------
Joel R. Freedman, Secretary
3