Exhibit 3.2
NOVATEL WIRELESS, INC.
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION
SERIES A CONVERTIBLE PREFERRED STOCK
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
NOVATEL WIRELESS, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), DOES HEREBY CERTIFY THAT, pursuant to Section 151 of the General
Corporation Law of the State of Delaware (the "DGCL"), the following resolution
was duly adopted and approved by a committee of the Board of Directors of the
Corporation, duly designated pursuant to Section 141(c)(2) of the DGCL, at a
meeting duly called and held on March 12, 2003 and this Certificate of
Designation was approved by the affirmative vote of at least a majority of the
outstanding stock entitled to vote thereon at a meeting duly called and held on
May 2, 2003, including the affirmative vote of at least a majority of the
outstanding shares of Series A Preferred Stock as a separate class:
NOVATEL WIRELESS, INC.
SERIES A CONVERTIBLE PREFERRED STOCK
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by Article IV of the Corporation's Amended and
Restated Certificate of Incorporation, a series of Preferred Stock of the
Corporation be, and it hereby is, created out of the authorized but unissued
shares of the capital stock of the Corporation, such series to be designated
Series A Preferred Stock (the "Series A Preferred Stock"), to consist of 3,700
shares, par value $.001 per share, of which the preferences and relative and
other rights, and the qualifications, limitations or restrictions thereof, shall
be (in addition to those set forth in the Corporation's Amended and Restated
Certificate of Incorporation) as follows:
SECTION 1. DIVIDENDS. The holders of Series A Preferred Stock shall be
entitled to receive, from funds legally available therefor, a cumulative
dividend at the rate per annum of 6.5% of the purchase price paid per share of
Series A Preferred Stock held by such holder, payable, subject to any applicable
contractual restrictions, upon any liquidation, dissolution or winding up of the
affairs of the Corporation, as described in Section 2, upon any redemption
described in Section 5, or otherwise quarterly in arrears when and as declared
by the Board of Directors each January 1, April 1, July 1 and October 1 of the
applicable year. Notwithstanding the foregoing, no dividends shall be declared,
or paid to the holders of the Series A Preferred Stock (other than in-kind in
connection with the conversion of the Series A Preferred Stock pursuant to
Section 3 hereof) or any series of preferred stock having dividend rights pari
passu with those of the Series A Preferred Stock, unless the holders of Series B
Preferred Stock and any other series of preferred stock created after the date
hereof having preferential dividend and liquidation rights vis-a-vis the Series
A Preferred Stock (such Series B Preferred Stock and any other series of
Preferred Stock with such preferential rights, the "Senior Preferred Stock")
shall have been paid in full all of the dividends to which they are entitled. No
dividends shall be declared, or paid to the holders of common stock, par value
$.001 per share, of the Corporation (the "Common Stock"), unless the holders of
Series A Preferred Stock and any other series of preferred stock having dividend
and liquidation rights pari passu with those of the Series A Preferred Stock
("Pari Passu Preferred Stock") have been paid in full all of the dividends to
which they are entitled. The Series A Preferred Stock shall also participate in
any dividend or distribution, other than a liquidating distribution, declared or
paid on the Common Stock, pro rata, on the basis of the number of shares of
Common Stock (as determined on an as-converted basis for the Series A Preferred
Stock) into which such Series A Preferred Stock is then convertible.
Subject to this Section 1, dividends may be declared and paid on Common
Stock from funds lawfully available therefor as and when determined by the Board
of Directors of the Corporation.
SECTION 2. LIQUIDATION RIGHTS.
(a) In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the holders of
each share of Series A Preferred Stock shall be entitled to be paid out of the
assets of the Corporation available for distribution to
-2-
holders of the Corporation's capital stock of all classes, after satisfaction of
all preferential liquidation rights of the Senior Preferred Stock, and subject
to the rights of any Pari Passu Preferred Stock, an amount equal to $1,000 per
share of Series A Preferred Stock (the "Liquidation Preference"), plus all
dividends accrued but unpaid thereon, to and including the date full payment
shall be tendered to the holders of the Series A Preferred Stock with respect to
such liquidation, dissolution or winding up. Neither the consolidation or merger
of the Corporation into or with another corporation or corporations, nor the
sale, lease, transfer or conveyance of all or substantially all of the assets of
the Corporation to another corporation or any other entity shall be deemed to be
a liquidation, dissolution or winding up of the affairs of the Corporation
within the meaning of this Section 2(a).
After payment in full of the Liquidation Preference to which the
holders of the Series A Preferred Stock are entitled, such holders will not be
entitled to any further participation in the distribution of assets of the
Corporation.
Upon conversion of shares of Series A Preferred Stock into shares of
Common Stock pursuant to Section 3, the holders of such Common Stock shall not
be entitled to any preferential payment or distribution in case of any
liquidation, dissolution or winding up, but shall share ratably in any
distribution of the assets of the Corporation among the holders of Common Stock.
(b) Distributions Other than Cash. Whenever the distributions provided
for in this Section 2 shall be payable in property other than cash, the value of
such distributions shall be the fair market value of such property as determined
in good faith by the Board of Directors of the Corporation.
(c) Notice. Written notice of any proposed liquidation, dissolution or
winding up of the affairs of the Corporation, stating a payment date, the amount
of the Liquidation Preference and the place where such Liquidation Preference
shall be payable, shall be delivered to the holders of Series A Preferred Stock
not less than 45 days prior to the proposed date of such proposed liquidation,
dissolution or winding up.
SECTION 3. CONVERSION. The holders of Series A Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Optional Conversion: Series A Conversion Price. Subject to Section
3(b), each share of Series A Preferred Stock shall be convertible, without the
payment of any additional consideration by the holder thereof and at the option
of the holder thereof, at any time after the date such share was issued, at the
office of the Corporation or any transfer agent for the Series A Preferred
Stock, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing the Liquidation Preference plus an amount equal to
all accrued and unpaid dividends by the Series A Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. From and after the
date of filing of this Amended and Restated Certificate of Designation ("Filing
Date"), the conversion price at which shares of Common Stock shall be
deliverable upon conversion of Series A Preferred Stock without the payment of
any additional consideration by the holder thereof (the "Series A Conversion
Price") shall initially be $11.55 per share of Common Stock. Such Series A
Conversion Price shall be subject
-3-
to further adjustment, in order to adjust the number of shares of Common Stock
into which the Series A Preferred Stock is convertible, as hereinafter provided.
(b) Mechanics of Optional Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, the holder shall surrender the certificate or certificates therefor at
the office of the Corporation or of any transfer agent for Series A Preferred
Stock, shall give written notice to the Corporation at such office that the
holder elects to convert the same and shall state therein the holder's name or
the name or, subject to any legal or contractual restrictions on transfer
thereof, names of the holder's nominees in which the holder wishes the
certificate or certificates for shares of Common Stock to be issued and shall
pay any transfer or similar tax, if required. The date on which the holder
satisfies all these requirements is the "Conversion Date". On the Conversion
Date, all rights with respect to the Series A Preferred Stock so converted shall
terminate, except for any of the rights of the holder thereof, upon surrender of
the holder's certificate or certificates therefor, to receive certificates for
the number of shares of Common Stock into which such Series A Preferred Stock
has been converted. If so required by the Corporation, certificates surrendered
for conversion shall be endorsed or accompanied by written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or by the holder's attorney duly authorized in writing.
No fractional share of Common Stock shall be issued upon the conversion of
Series A Preferred Stock. In lieu of any fractional share to which the holder
would otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the applicable Series A Conversion Price then in effect.
Within five business days after the Conversion Date, the Corporation shall issue
and deliver to such holder of Series A Preferred Stock, or, subject to any legal
or contractual restrictions on transfer thereof, to the holder's nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which the holder shall be entitled as aforesaid. The person or persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on the Conversion Date. Notwithstanding anything to the contrary
contained in Sections 3(a) and 3(b), the holder of any shares of Series A
Preferred Stock which are selected for redemption by the Corporation in
accordance with Section 5 shall not be entitled to convert such shares into
Common Stock unless the Conversion Date with respect to such shares is at least
two business days prior to the Redemption Date (as defined below).
(c) Adjustments to the Conversion Price.
(i) Special Definition. For purposes of this Section 3(c), the
following definition shall apply:
(1) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Corporation after the Filing Date by reason of stock
dividends, distributions payable in common stock, stock splits, reverse stock
splits, recapitalizations, reclassifications, combinations or exchanges of
shares, separations, reorganizations, liquidations or other similar event, other
than:
(a) securities issued or issuable as a dividend or distribution
on the Series A Preferred Stock;
-4-
(b) any securities issued or issuable as a result of an
adjustment of the Series A Conversion Price made pursuant to this Section 3(c);
(c) any shares of capital stock of the Corporation, not to exceed
one-half of one percent of the total issued and outstanding capital stock of the
Corporation on an "as converted to Common Stock" basis, the issuance of which is
approved by vote of a majority of the Board of Directors of the Corporation,
including the affirmative vote of a majority of the directors designated for
election by the holders of the Series A Preferred Stock; and
(d) not more than ten shares of capital stock of the Corporation
on an "as converted to Common Stock" basis, the issuance of which resulted from
mathematical or other error or inadvertence, provided that the transaction in
which such shares were issued was approved at the time by vote of a majority of
the Board of Directors of the Corporation, including the affirmative vote of a
majority of the directors designated for election by the holders of the Series A
Preferred Stock.
(ii) Adjustment of the Series A Conversion Price for Dividends,
Distributions, Subdivisions, Combinations or Consolidations of Common Stock.
(1) Stock Dividends, Distributions or Subdivisions. In the event
the Corporation shall be deemed to have issued Additional Shares of Common Stock
in a stock dividend, stock distribution or subdivision, the Series A Conversion
Price and the number of shares of Common Stock issuable upon conversion of each
share of Series A Preferred Stock in effect immediately prior to such deemed
issuance shall, concurrently with the effectiveness of such deemed issuance, be
proportionately decreased or increased, as appropriate.
(2) Combinations or Consolidations. In the event the outstanding
shares of Common Stock shall be combined, consolidated or otherwise changed, by
recapitalizations, reclassifications, stock splits, reverse stock splits,
exchanges of shares, separations, reorganizations, liquidations or otherwise,
the Series A Conversion Price and the number of shares of Common Stock issuable
upon conversion of each share of Series A Preferred Stock in effect immediately
prior to any such combination, consolidation or other event shall, concurrently
with the effectiveness of such event, be proportionately decreased or increased,
as appropriate.
(d) Adjustments for Certain Dividends and Distributions. In the event
that at any time or from time to time after the Filing Date, the Corporation
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
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 Series A
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 A Preferred Stock
been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including the
actual conversion date, retained such securities receivable by them as aforesaid
during such period, giving application during such period to all adjustments
called for herein.
-5-
(e) Adjustment for Reclassification, Exchange or Substitution. In the
event that at any time or from time to time after the Filing Date, the Common
Stock issuable upon the conversion of Series A 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 in Section
3(c)(ii) above, or a merger, consolidation, or sale of assets provided for in
Section 3(f) below) then and in each such event the holder of any share or
shares of Series A Preferred Stock shall have the right thereafter to convert
such shares into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other change,
by the holder of a number of shares of Series A Preferred Stock might have been
converted immediately prior to such reorganization, reclassification, or change,
all subject to further adjustment as provided herein.
(f) Adjustment for Merger, Consolidation or Sale of Assets. In the
event that at any time or from time to time after the Filing Date, the
Corporation shall sell all or substantially all of its assets or merge or
consolidate with or into another entity, each share of Series A 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 Series A Preferred Stock
would have been entitled to receive 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 set forth
in this Section 3 with respect to the rights and interest thereafter of the
holders of Series A Preferred Stock, to the end that the provisions set forth in
this Section 3 (including provisions with respect to changes in and other
adjustments of the Series A 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 A Preferred
Stock.
(g) No Impairment. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, including, without limitation, voluntary bankruptcy
proceedings, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Corporation but shall at all
times in good faith assist in the carrying out of all the provisions of this
Section 3 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 A Preferred Stock under this Section 3 against impairment.
(h) Certificate as to Adjustment. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price pursuant to this
Section 3, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to each affected
holder of Series A Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment is
based; provided, however, that the Corporation shall not be required to provide
each holder with such a certificate more than one time per calendar quarter. The
Corporation shall, upon the written request at any time of any affected holder
of Series A Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Series A Conversion Price in effect at the time, and (iii) the number of shares
of Common
-6-
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of each share of Series A Preferred Stock.
(i) Notices of Record Date. In the event of any taking by the
Corporation of a record date 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 which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall deliver to each
holder of Series A Preferred Stock at least twenty days prior to such record
date a notice specifying the date on which any such record is to be taken for
the purpose of such dividend or distribution.
(j) Common Stock Reserve. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Series A Preferred Stock.
(k) Certain Taxes. The Corporation shall pay any issue or transfer
taxes payable in connection with the conversion of Series A Preferred Stock,
provided, however, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer to a name other than that of the
holder of the Series A Preferred Stock.
(l) Closing of Books. The Corporation shall at no time close its
transfer books against the transfer of any Series A Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Series A Preferred Stock in any manner which interferes with the timely
conversion or permitted transfer of such Series A Preferred Stock or Common
Stock.
SECTION 4. VOTING RIGHTS.
(a) Except as otherwise provided herein or as required by law, the
holders of the Series A Preferred Stock shall be entitled to notice of any
meeting of stockholders and shall vote upon any matter submitted to the
stockholders for a vote as a single class together with the holders of the
Common Stock, Series B Preferred Stock and any other series of preferred stock
entitled to vote generally on matters presented to the stockholders for a vote.
Holders of Series A Preferred Stock shall have that number of votes per share as
is equal to the number of whole shares of Common Stock into which each such
share of Series A Preferred Stock held by such holder could be converted on the
date for determination of stockholders entitled to vote at the meeting or on the
date of any written consent.
(b) Notwithstanding any other provision of this Section 4, in the event
that it is determined by Nasdaq (after full process, including any appeal
process available to the Corporation) that the voting provisions set forth in
this Section 4 violate or conflict with Nasdaq Marketplace Rule 4351, the number
of votes to which each share of Series A Preferred Stock is entitled shall be
reduced to the extent required to comply with such rule.
(c) Except as required by law, (i) the holders of the Series A
Preferred Stock shall not be entitled to vote as a separate class upon any
matter submitted to the stockholders for a vote, and (ii) the holders of the
Series A Preferred Stock shall have no right to vote with respect to the
-7-
creation or issuance of a series of preferred stock having rights, preferences
and priviliges pari passu with, or senior to those of the Series A Preferred
Stock.
SECTION 5. REDEMPTION.
(a) Redemption at Option of the Holder.
(i) On or at any time following a Change of Control (as defined
below), each holder of Series A Preferred Stock may elect to have the
Corporation redeem from it, to the extent the Corporation has funds legally
available for such purpose, and subject to Section 5(a)(iii), any or all shares
of Series A Preferred Stock held by such holder; provided, however, if a Change
of Control occurs as a result of the acquisition by a holder of Series A
Preferred Stock or such holder's "affiliates" (as such term is defined in Rule
405 under the Securities Act of 1933, as amended) of beneficial ownership of
securities of the Corporation representing more than 50% of the voting power of
the Corporation (whether such acquisition is made by such holder or such
holder's affiliates, individually or as a member of a "group" (as described in
Rule 13d-5(b)(1) promulgated under the Securities Exchange Act of 1934)), such
holder shall not be entitled, as a result of such Change of Control, to require
the Corporation to redeem its Series A Preferred Stock pursuant to this Section
5(a). Such election may be made only by delivering to the Corporation (x) a
written notice signed by such holder specifying the number of shares of Series A
Preferred Stock so to be redeemed, and (y) certificates for the shares of the
Series A Preferred Stock so to be redeemed, together with stock powers therefor
duty executed by such holder in blank (such written election, certificates and
stock powers being referred to collectively as "Redemption Notice").
(ii) The Corporation shall redeem from holders of Series A Preferred
Stock from whom the Corporation received a Redemption Notice, within 30 days of
its receipt of such Redemption Notice, all the shares of the Series A Preferred
Stock as to which Redemption Notices have been given, to the extent the
Corporation has funds legally available for such purpose, and subject to Section
5(a)(iii), by paying to the respective holders the amount equal to (x) the
number of shares of Series A Preferred Stock submitted for redemption multiplied
by (y)(i) the Liquidation Preference, plus (ii) all accrued but unpaid dividends
thereon to and including the date of such redemption, whether or not declared.
(iii) Notwithstanding anything to the contrary in this Section 5,
(x) in no event shall the Corporation redeem any share of Series A Preferred
Stock pursuant to Section 5(a) unless and until (x) a number of shares of Series
B Preferred Stock equal to or greater than 80% of the sum of the total number of
shares of Series B Preferred Stock (1) issued upon conversion of the Tranche I
Notes (as defined in that certain Securities Purchase Agreement, dated as of
March [__], 2003, by and between the Corporation and certain purchasers
("Securities Purchase Agreement")), and (2) issued and, as of the date of such
Change of Control, issuable under the Sanmina Notes (as defined in the
Securities Purchase Agreement), and (3) without duplication, any other shares of
Series B Preferred Stock issued in connection with the Third Closing (as defined
in the Securities Purchase Agreement) and any other shares of Series B Preferred
Stock issued on the Series B Original Issue Date (as defined in the Certificate
of Designation of Series B Convertible Preferred Stock (the "Series B
Certificate")), have been either (1) redeemed, (2) submitted for redemption
pursuant to a redemption notice under Section
-8-
5 of the Series B Certificate and/or (3) converted into Common Stock pursuant to
Section 3 of the Series B Certificate, and (y) the Corporation has actually
redeemed all shares of Series B Preferred Stock as to which a redemption notice
has been submitted to the Corporation. In addition, notwithstanding anything to
the contrary in this Section 5, any redemption of the Series A Preferred Stock
pursuant to this Section 5(a) shall be subject to the redemption rights of any
Pari Passu Preferred Stock. In addition, if the funds of the Corporation legally
available for redemption of shares of Series A Preferred Stock are insufficient
to redeem the total number of shares of Series A Preferred Stock submitted for
redemption pursuant to Redemption Notices, those funds which are legally
available will be used to redeem (subject to the rights of any Pari Passu
Preferred Stock) the maximum possible number of whole shares ratably among the
holders of such shares who have submitted Redemption Notices as of such date of
determination. Any shares of Series A Preferred Stock not redeemed as described
in this Section 5(a)(iii) shall remain outstanding and, notwithstanding anything
herein to the contrary, shall remain entitled to all rights and preferences
otherwise provided herein.
(b) Redemption at the Option of the Corporation.
(i) The Corporation may redeem at any time, in whole or in part, the
Series A Preferred Stock at a redemption price per share equal to the
Liquidation Preference plus all accrued and unpaid dividends through the
Redemption Date (the "Redemption Price"); provided, however, in no event shall
the Corporation redeem any shares of Series A Preferred Stock while any shares
of Senior Preferred Stock are outstanding. Any redemption effected pursuant to
this Section (5)(b)(i) shall be made on a pro rata basis among the holders of
the Series A Preferred Stock in proportion to the number of shares of Series A
Preferred Stock then held by them.
(ii) The Corporation shall provide written notice (the "Corporation
Notice") by first class mail postage prepaid, to each holder of record
(determined at the close of business on the business day next preceding the day
on which the Corporation Notice is given) of the Series A Preferred Stock to be
redeemed, at the address last shown on the records of this Corporation for such
holder, notifying such holder of the redemption to be effected, specifying the
number of shares to be redeemed from such holder, specifying the date of
redemption (the "Redemption Date"), the Redemption Price, the place at which
payment may be obtained and calling upon such holder to surrender to the
Corporation, in the manner and at the place designated, his, her or its
certificate or certificates representing the shares to be redeemed; provided
that the Redemption Date shall be not less than 10 days from the date of the
Corporation Notice. Except as provided in Section (5)(b)(iii), on or after the
Redemption Date, each holder of Series A Preferred Stock to be redeemed shall
surrender to the Corporation the certificate or certificates representing such
shares, in the manner and at the place designated in the Corporation Notice, and
thereupon the Redemption Price of such shares shall be payable to the order of
the person whose name appears on such certificate or certificates as the owner
thereof and each surrendered certificate shall be cancelled. In the event less
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(iii) From and after the Redemption Date, unless there shall have
been a default in payment of the Redemption Price, all rights of the holders of
shares of Series A
-9-
Preferred Stock designated for redemption in the Corporation Notice as holders
of Series A Preferred Stock (except the right to receive the Redemption Price
without interest upon surrender of their certificate or certificates) shall
cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever. If the funds of the Corporation legally available for
redemption of shares of Series A Preferred Stock on any Redemption Date are
insufficient to redeem the total number of shares of Series A Preferred Stock to
be redeemed on such date, 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 based upon their holdings of Series A Preferred
Stock. The shares of Series A Preferred Stock not redeemed shall remain
outstanding and entitled to all the rights and preferences provided herein. At
any time thereafter when additional funds of the Corporation are legally
available for the redemption of shares of Series A Preferred Stock, such funds
will immediately be used to redeem the balance of the shares which the
Corporation has become obliged to redeem on any Redemption Date but which it has
not redeemed.
(iv) "Change of Control" shall mean: (i) the acquisition by any
person or "group" (as described in Rule 13d-5(b)(1) promulgated under the
Securities Exchange Act of 1934), of beneficial ownership of securities of the
Corporation representing more than 50% of the voting power of the Corporation;
or (ii) a merger or consolidation of the Corporation or a sale of all or
substantially all of the assets of the Corporation in one or a series of related
transactions, unless following such transaction or series of transactions, the
holders of the Corporation's securities prior to the first such transaction
continue to hold at least a majority of the voting power of the surviving entity
or acquirer of such assets. Notwithstanding anything to the contrary herein, in
no event shall the transactions consummated pursuant to the Securities Purchase
Agreement (including without limitation, the issuance of secured convertible
notes, the issuance of warrants and the issuance of Series B Preferred Stock and
the subsequent exercise of warrants or conversion of convertible notes or Series
B Preferred Stock) constitute a "Change of Control" for purposes of this Section
5.
SECTION 6. NOTICES. All notices, requests, consents, demands and other
communications required or permitted under this Amended and Restated Series A
Preferred Stock Certificate of Designation shall be in writing and shall be
deemed to have been duly given, made and received (a) when delivered against
receipt, (b) upon transmitter's confirmation of the receipt of a facsimile
transmission, which shall be followed by an original sent otherwise in
accordance with this Section 6, (c) upon confirmed delivery by a standard
overnight carrier, or (d) if to a U.S. resident, upon expiration of three
business days after the day when deposited in the U.S. mail, first class postage
prepaid, addressed to the Corporation at its principal executive office, or at
such other address of which the Corporation may notify the holders of Series A
Preferred Stock from time to time, or if to a holder of Series A Preferred Stock
or Common Stock, to such holder's address as shown by the records of the
Corporation.
SECTION 7. STATUS OF REACQUIRED SHARES. Shares of Series A Preferred
Stock which have been issued and converted, redeemed or reacquired in any manner
shall (upon compliance with any applicable provisions of the laws of the State
of Delaware) have the status of authorized and unissued Preferred Stock
undesignated as to series and may be redesignated and reissued.
-10-
IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated
Certificate of Designation this 9th day of May 2003.
/s/ Peter Leparulo
--------------------
Peter Leparulo
Chief Executive Officer
-11-