Exhibit 4.1
CERTIFICATE OF DESIGNATION OF
RIGHTS AND PREFERENCES OF
SERIES C PREFERRED STOCK OF
CHADMOORE WIRELESS GROUP, INC.
The undersigned duly authorized officer of CHADMOORE
WIRELESS GROUP, INC., a company organized and existing under the Corporation
Laws of the State of Colorado (the "Company"), DOES HEREBY CERTIFY:
That the Certificate of Incorporation of the Company
authorized the creation of up to forty million (40,000,000) shares of the
Company's preferred stock (the "Preferred Stock"); and
That pursuant to the authority conferred upon the Board of
Directors (the "Board") by the Articles of incorporation of the Company, on
April 30, 1998, the Board adopted a resolution creating Series C Preferred Stock
consisting of ten million one hundred nineteen thousand six hundred fourteen
(10,119,614) shares of Preferred Stock, the preferences, limitations, and
relative rights of which are set forth below:
A. Designation. There shall be a series of Preferred Stock designated as
"Series C Preferred Stock" (the "Series C Preferred Stock"). The number
of shares initially constituting the Series C Preferred Stock shall be
ten million one hundred nineteen thousand six hundred fourteen
(10,119,614).
B. Rank. The Series C Preferred Stock shall, with respect to dividend and
other distribution rights, and rights on liquidation, dissolution and
winding up, rank (I) pari passu with any class or series of capital stock
hereafter created which expressly provides that it ranks pari passu with
the Series C Preferred Stock as to dividends, other distributions,
liquidation preference and/or otherwise (collectively, the "Series C
Parity Securities"), (ii) senior to the Series A Convertible Preferred
Stock, the Series B Convertible Preferred Stock, the Common Stock and any
other class or series of capital stock hereafter created which does not
expressly provide that it ranks senior to or pari passu with the Series C
Preferred Stock as to dividends, other distributions, liquidation
preference and/or otherwise (collectively, the "Series C Junior
Securities") and (iii) junior to any other class or series of capital
stock hereafter created which expressly provides that it ranks senior to
the Series C Preferred Stock as to dividends, other distributions,
liquidation preference and/or otherwise (collectively, the "Series C
Senior Securities"). The terms "Series C Parity
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Securities," "Series C Junior Securities" and "Series C Senior
Securities" as used herein with respect to any class or series of capital
stock shall only be deemed to refer to such class or series to the extent
it ranks (I) pari passu with, (ii) not senior to or pari passu with, as
applicable, or (iii) senior to, the Series C Preferred Stock with respect
to dividends, other distributions, liquidation preferences or otherwise.
C. Dividends.
1. When, as and if declared by the Board, to the extent funds are legally
available therefor in accordance with the Business Corporation Act,
dividends will be payable at the Dividend Rate on each share of Series C
Preferred Stock, in cash, as provided herein. Dividends on shares of
Series C Preferred Stock will be payable at a rate per annum equal to 4%
of the Stated Value thereof (the "Dividend Rate"). To the extent
declared, such dividends shall be payable semi-annually on June 30 and
December 31 of each year, commencing on June 30, 1998 (each such date
hereinafter referred to as a "Dividend Payment Date" and each such
dividend period hereinafter referred to as a "Dividend Period"), except
that if such date is not a Business Day, then such dividend shall be
payable on the next succeeding Business Day, to the holders of record as
they appear on the register of the Corporation for the shares of Series C
Preferred Stock five (5) Business Days prior to such Dividend Payment
Date.
2. Dividends on the shares of Series C Preferred Stock shall be
accumulating and shall accrue from the Issue Date, without
interest, whether or not such dividends have been declared. Unpaid
dividends, whether or not declared, shall compound annually at the
Dividend Rate from the Dividend Payment Date on which such dividend
was payable as herein provided until payment of such dividend.
Dividends payable on the Series C Preferred Stock shall be computed
on the basis of a 360-day year and the actual number of days
elapsed in such period.
3. For so long as any shares of Series C Preferred Stock shall be
outstanding, no dividend or distribution, whether in cash, stock or other
property, shall be paid, declared and set apart for payment or made on
any date on or in respect to any Series C Junior Security as to dividends
or distributions of assets upon liquidation, dissolution or winding up,
and no payment on account of the redemption, purchase or other
acquisition or retirement for value by the Corporation shall be made on
any date of any Series C Junior Security unless, in each case, (A) the
full amount of unpaid dividends accrued on all outstanding shares of
Series C Preferred Stock shall have been paid or contemporaneously are
declared and paid and (B) if an event shall have occurred requiring the
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Corporation to redeem any or all of the Series C Preferred Stock, all
shares of Series C Preferred Stock tendered for redemption shall have
been redeemed in accordance with the terms thereof.
4. If the Corporation pays any dividend on the Series C Preferred
Stock which is less than the total amount of accrued and unpaid
dividends on such series, such payment will be distributed ratably
among the holders of such series based on the aggregate accrued but
unpaid dividends on the shares of such series held by each such
holder.
D. Preference on Liquidation.
1. In the event that the Corporation shall liquidate, dissolve or wind
up, whether voluntarily or involuntarily, no distribution shall be made
to the holders of shares of Common Stock or other Series C Junior
Securities (and no monies shall be set apart for such purpose) unless
prior thereto, the holders of shares of Series C Preferred Stock shall
have received an amount per share equal to the sum of the Stated Value of
the Series C Preferred Stock plus all accrued and unpaid dividends
thereon through the date of distribution (the "Liquidation Preference").
2. If, upon any such liquidation, dissolution or other winding up of the
affairs of the Corporation, the assets of the Corporation shall be
insufficient to permit the payment in full of the Liquidation Preference
for each share of Series C Preferred Stock then outstanding and the full
liquidating payments on all Series C Parity Securities, then the assets
of the Corporation remaining after the distribution to holders of all
Series C Senior Securities, if any, of the full amounts to which they may
be entitled shall be ratably distributed among the holders of Series C
Preferred Stock and of any Series C Parity Securities in proportion to
the full amounts to which they would otherwise be respectively entitled
if all amounts thereon were paid in full.
3. Neither the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or
substantially all the property or assets of the Corporation nor the
consolidation, merger or other business combination of the
Corporation with or into one or more corporations or other entities
shall be deemed to be a liquidation, dissolution or winding-up,
voluntary or involuntary, of the Corporation for purposes of this
Section D.
E. Voting; Consents.
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1. Except as required by law, and except as otherwise specifically
provided in this Section E, the holders of the Series C Preferred Stock
shall not be entitled to vote on any matter.
2. So long as any shares of Series C Preferred Stock shall be
outstanding, the Corporation shall not, without the affirmative written
consent of at least a majority in number of shares of Series C Preferred
Stock then outstanding, (I) amend, alter or repeal any of the provisions
of the Articles of Incorporation so as to affect adversely the
preferences, special rights or powers of the Series C Preferred Stock,
(ii) issue any Series C Senior Securities or Series C Parity Securities
(other than in connection with options, the grant of which was approved
by the holders of the Series C Preferred Stock), (iii) issue shares of
Preferred Stock, (iv) increase or decrease the aggregate number of
authorized shares of Preferred Stock or Common Stock, or increase or
decrease the par value of the Corporation's Preferred Stock, (v)
consummate a Sale of the Corporation unless the consideration received
per share of Series C Preferred Stock pursuant to such Sale of the
Corporation is at least equal to the Liquidation Preference or (vi) make
a payment of dividends or other distribution to holders of Series C
Junior Securities: provided, however, that the Corporation may issue
shares of "New Preferred Stock" in accordance with the terms of the
"First Warrant," as such terms are defined in the Investment Agreement,
dated as of May 1, 1998, between Recovery Equity Investors II, L.P. and
the Corporation.
F. Redemption.
1. Redemption by Corporation. To the extent funds are legally available
therefor at any time and from time to time, from and after the earlier of
(I) May 1, 2003 and (ii) the occurrence of a Redemption Event, each
holder of Series C Preferred Stock then outstanding shall have the right
to require the Corporation to purchase all or a part of such holder's
shares of Series C Preferred Stock at the Redemption Price by giving
written notice to the Corporation specifying the number of shares to be
redeemed and the Redemption Date (as defined below) therefor. The
Corporation shall give prompt notice, and in any event within three days,
of the occurrence of a Redemption Event to each holder of Series C
Preferred Stock. The date on which shares are redeemed pursuant to this
Section F is referred to herein as a "Redemption Date." If on a
Redemption Date there shall be insufficient funds of the Corporation
legally available for such redemption, such amount of the funds as is
legally available shall be used for the redemption requirement. Such
redemption requirement shall be cumulative so that if such requirement
shall not be fully discharged for any reason, funds
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legally available therefor shall immediately be applied thereto upon
receipt by the Corporation until such requirement is discharged.
2. Payment of Redemption Price. On a Redemption Date, the Corporation
shall pay to the holder of each share being redeemed, upon
surrender by such holder at the Corporation's principal executive
office of the certificate representing such share, duly endorsed in
blank or accompanied by an appropriate form of assignment, the
Redemption Price.
3. Redeemed or Otherwise Acquired Shares Not to be Reissued. All shares
redeemed pursuant to this Section F or otherwise acquired by the
Corporation shall be retired and shall not thereafter be reissued as
shares of such series. In case less than all the shares represented by
any certificate are redeemed, a new certificate representing the
unredeemed shares shall be issued to the holder thereof without cost to
such holder.
4. Determination of Number of Each Holder's Shares to be Redeemed. If
less than all of the outstanding shares of any Series C Preferred
Stock are to be redeemed pursuant to this Section F, the
Corporation shall determine, as nearly as practicable on a pro rata
basis, the shares held by each holder to be redeemed.
G. Definitions. The following terms shall have the respective meanings set
forth below:
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling (including but not
limited to all directors and officers of such Person), controlled
by, or under direct or indirect common control with such Person.
For purposes of this definition, "controlling" (including with its
correlative meanings, the terms "controlled by" and "under common
control with") as used with respect to any Person shall mean the
possession, directly or indirectly, of the power (I) to vote or
direct the vote of 10% or more of the securities having ordinary
voting power for the election of directors of such corporation or
(ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of
securities, by contract of otherwise.
"Business Day" means any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be
closed in either the State of California or the State of Nevada.
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"Issue Date" means as to any shares of Series C Preferred
Stock, the date of issuance thereof by the Corporation.
"National Securities Exchange" means the New York Stock
Exchange, American Stock Exchange, other national or regional
securities exchange or National Association of Securities Dealers
Automated Quotations System, but does not include the NASD
Electronic Bulletin Board.
"Person" means any natural person, corporation, general
partnership, limited partnership, limited liability company or
partnership, proprietorship, other business organization, trust,
union, association or governmental or regulatory authority.
"Redemption Event" means (I) the listing of the
Corporation's Common Stock on a National Securities Exchange or
(ii) an equity financing by the Corporation that results in gross
proceeds in excess of $2 million.
"Redemption Price" means, with respect to each share of
Series C Preferred Stock, the Stated Value thereof, plus all
accrued and unpaid dividends thereon through the Redemption Date.
"Sale of the Corporation" means the sale of the Corporation
(whether by merger, consolidation, recapitalization,
reorganization, sale of securities, sale of assets or otherwise) in
one transaction or series of related transactions to any Person or
Persons pursuant to which such Person or Persons (together with its
Affiliates) acquires (I) securities representing at least a
majority of the voting power of all securities of the Corporation,
assuming the conversion, exchange or exercise of all securities
convertible, exchangeable or exercisable for or into voting
securities, or (ii) all or a material portion of the Corporation's
assets on a consolidated basis.
"Series A Convertible Preferred Stock" means the series of
Preferred Stock designated "Series A Convertible Preferred Stock"
by the Board on April 1, 1997.
"Series B Convertible Preferred Stock" means the series of
Preferred Stock designated "Series B Convertible Preferred Stock"
by the Board on December 9, 1997.
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"Stated Value" means $1.00 per share of Series C Preferred
Stock (subject to appropriate adjustment for stock splits, reverse
stock splits and similar events affecting the Series C Preferred
Stock).
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IN WITNESS WHEREOF, Chadmoore Wireless Group, Inc. has caused this
Certificate to be signed by its President, and attested to by its Treasurer,
this 30th day of April, 1998.
CHADMOORE WIRELESS GROUP, INC.
By:___________________________________
Robert W. Moore, President
Attest:
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Jan S. Zwaik, Treasurer