EXHIBIT 3.1
CORRECTED CERTIFICATE OF DESIGNATION
SERIES A CONVERTIBLE PREFERRED STOCK
OF
NOVATEL WIRELESS, INC.
It is hereby certified that:
1. The name of the corporation is Novatel Wireless, Inc. (the
"Corporation").
2. The Corporation was formed under the laws of the State of
Delaware on April 26, 1996.
3. The Certificate of Designation of Series A Convertible Preferred
Stock (the "Certificate of Designation") of the Corporation which
was filed in the Office of the Secretary of State of Delaware on
December 20, 2001, requires correction as permitted by Section
103(f) of the Delaware General Corporation Law, because of
clerical errors in Section 5(b)(i) of the Certificate of
Designation.
4. The Certificate of Designation in corrected form is attached
hereto as Exhibit A.
IN WITNESS WHEREOF, the undersigned has executed this Corrected
Certificate to the Certificate of Designation this 20th day of December 2001.
/s/ John Major
______________________________
John Major
Chief Executive Officer
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 10:00 AM 12/20/2001
010660395 - 2614230
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 30,000
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; provided, however, that until such time as the Corporation
obtains the stockholder approval required by Rule 4350(i)(1)(D)(ii) of The
Nasdaq Stock Market applicable to the issuance of the Series A Preferred Stock
(the "Stockholder Approval"), the holders of Series A Preferred Stock shall be
entitled to cumulative dividends as set forth in this Section 1 at the rate of
8.0% per annum. Notwithstanding the foregoing, in the event that (i) the
Corporation does not file with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 under the Securities Act of 1933, as
amended, with respect to the Common Stock issuable upon conversion of the Series
A Preferred Stock (the "Registration Statement") on or before the 30th day
following the Series A Original Issue Date, or (ii) if such Registration
Statement is not declared effective on or before the 90th day after the
Registration Statement is filed with the SEC, then the holders of Series A
Preferred Stock shall be entitled to cumulative dividends as set forth in this
Section 1 at the rate of 8.0% per annum until such time as such Registration
Statement is filed or declared effective, as applicable. Following the filing of
the Registration Statement and the effective date of the Registration Statement,
as applicable, the holders of Series A Preferred Stock shall be entitled to
receive dividends in accordance with the first sentence of this Section 1.
Dividends shall accrue on each share of Series A Preferred Stock commencing on
the date on which such share of Series A Preferred Stock was issued, and shall
accrue daily and compound quarterly, whether or not such dividends are earned or
declared. 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 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 preferentially to be
paid first out of the assets of the Corporation available for distribution to
holders of the Corporation's capital stock of all classes an amount equal to
$1,000.00 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
Sections 3(b) and 3(m), 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
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accrued and unpaid dividends by the Series A Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. 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 $0.77 per
share of Common Stock. Such initial Series A Conversion Price shall be subject
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(b) 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 first date on which a
share of Series A Preferred Stock was issued (the "Series A Original Issue
Date") by reason of stock dividends,
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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;
(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;
(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; and
(e) any issuance of Common Stock to Sanmina
Corporation that does not exceed 10% of the Common Stock outstanding immediately
prior to the Series A Original Issue Date.
(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 Series A Original Issue Date,
the Corporation shall make or
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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.
(e) Adjustment for Reclassification, Exchange or Substitution. In the
event that at any time or from time to time after the Series A Original Issue
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 Series A Original Issue
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.
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(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. 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 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.
(m) Limitation on Number of Common Shares Issuable Upon Conversion.
Notwithstanding any other provision hereof to the contrary, the Corporation
shall not be obligated to issue, in the aggregate, more than 10,868,831 shares
of Common Stock as constituted as of the date hereof (the "Nasdaq Cap") upon (1)
conversion of the Series A Preferred Stock and (2) exercise of the Warrants (as
defined below) if issuance of a larger number of shares would constitute a
breach of the Corporation's obligations under its agreements with The Nasdaq
Stock Market.
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SECTION 4. VOTING RIGHTS.
(a) Series A Preferred Stock and Common Stock. Subject to Section
4(c) hereof, the holders of Series A Preferred Stock shall be entitled to notice
of any meeting of stockholders and shall vote together with the holders of
Common Stock as a single class upon any matter submitted to the stockholders for
a vote, on the following basis:
(i) Holders of Common Stock shall have one vote per share; and
(ii) 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) Limitation on Voting Rights. Notwithstanding any provision hereof
to the contrary, (i) until the Corporation has obtained the Stockholder
Approval, holders of Series A Preferred Stock shall have that number of votes
per share as is equal to the product of (x) 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 is convertible and (y)
a fraction, the numerator of which is equal to the Nasdaq Cap less the sum of
(A) the total number of shares of Common Stock issued to date upon conversion of
Series A Preferred Stock pursuant to Section 3 hereof plus (B) the total number
of shares of Common Stock issued to date upon exercise of the Warrants, and the
denominator of which is equal to the total number of shares of Common Stock
issuable upon conversion of all shares of Series A Preferred Stock issued to
date, and (ii) holders of Series A Preferred Stock shall have no right to vote
such Series A Preferred Stock in connection with any meeting of stockholders or
solicitation of stockholders consents to obtain the Stockholder Approval.
SECTION 5. REDEMPTION.
(a) Redemption at Option of the Holder.
(i) On or at any time following the earliest of:
(A) a Change of Control (as defined below);
(B) the seventh anniversary of the Series A Original
Issue Date; and
(C) the occurrence of the Latest Stockholder Approval
Date (as defined below) if the Corporation has not obtained the Stockholder
Approval by such date,
then 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, that in the case of a
redemption pursuant to clause (C) above, the Corporation shall be required to
redeem from such holder only those shares of Series A Preferred Stock that may
not
7
then be converted into shares of Common Stock pursuant to Section 3 hereof; and
provided, further, 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) 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 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. The shares of Series A Preferred Stock not redeemed 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) On or at any time following the Registration Effective
Date (as defined below), the Corporation may redeem, 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, that the Corporation may not
exercise such right of redemption unless: (i) the Registration Statement (as
defined below) is effective, (ii) the average of the closing prices of the
Common Stock as reported by The Nasdaq Stock Market over the twenty consecutive
trading-day period ending not more than five business days prior to the date of
the Corporation Notice (as defined below) is greater than or equal to the
product of (x) the Series A Conversion Price in effect on the last day of such
twenty consecutive trading-day period and (y) 2.50, and (iii) during the period
beginning on the date of the Corporation Notice (as defined below) and ending on
the Redemption Date (as defined below) (1) the Corporation shall not have
received any request from the SEC or any
8
other federal or state governmental authority for amendments or supplements to
the Registration Statement or related prospectus or for additional information;
(2) no stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose shall have been issued by the
SEC or any other federal or state governmental authority; (3) the Corporation
shall not have received any notification with respect to the suspension of the
qualification or exemption from qualification of the Common Stock for sale in
any jurisdiction or the initiation of any proceeding for such purpose; and (4)
there shall not have occurred any event or circumstance which would necessitate
the making of any changes in the Registration Statement or related prospectus,
or any document incorporated or deemed to be incorporated therein by reference,
so that, in the case of the Registration Statement, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the related prospectus, it will not contain
any untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. 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 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
9
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) Definitions. The following definitions shall apply:
(A) "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.
(B) "Latest Stockholder Approval Date" shall mean (i)
if the SEC does not review the Corporation's preliminary proxy statement on
Schedule 14A related to the Stockholder Approval, the 30th day following the day
that the Corporation may first distribute definitive proxy statements to
stockholders under Rule 14a-6 of the Exchange Act, and (ii) if the SEC reviews
the Corporation's preliminary proxy statement, the 90th day following the
notification by the SEC of such review.
(C) "Registration Effective Date" shall mean the first
date on which the Registration Statement has been declared effective.
(D) "Registration Statement" shall mean the
Corporation's registration statement on Form S-3 under the Securities Act of
1933, as amended, covering the registration of (a) the shares of Common Stock
issuable upon conversion of the Series A Preferred Stock and (b) the shares of
Common Stock issuable upon exercise of the Warrants (as defined).
(E) "Warrants" shall mean, collectively, those Common
Stock Purchase Warrants to purchase shares of Common Stock to be issued pursuant
to the Preferred Stock and Warrant Purchase Agreement by and among the
Corporation and the other parties thereto.
SECTION 6. NOTICES. All notices, requests, consents, demands and other
communications required or permitted under this Series A Preferred Stock
Certificate of Incorporation 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,
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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.
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