EXHIBIT 4.1
FORM OF
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES A-1 CONVERTIBLE PREFERRED STOCK
AND
SERIES A-2 CONVERTIBLE PREFERRED STOCK
OF
AUTO DATA NETWORK, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Auto Data Network, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), hereby certifies that, pursuant to the
authority vested in the Board of Directors of the Company (the "Board") by the
Certificate of Incorporation of the Company (the "Certificate of
Incorporation"), as amended, the following resolution was adopted as of July 18,
2003 by the Board pursuant to Section 141 of the Delaware General Corporation
Law:
RESOLVED, that pursuant to the authority granted to and vested in the Board in
accordance with the provisions of the Certificate of Incorporation, as amended,
there shall be created a series of Preferred Stock, $0.001 par value, which
series shall have the following designations and number thereof, powers,
preferences, rights, qualifications, limitations and restrictions:
1. Designation and Number of Shares. There shall hereby be created and
established a series of Preferred Stock designated as "Series A-1 Convertible
Preferred Stock" (the "Series A-1 Preferred Stock") and a series of Preferred
Stock designated as "Series A-2 Convertible Preferred Stock (the "Series A-2
Preferred Stock"). The authorized number of shares of Series A-1 Preferred Stock
shall be 500,000. The authorized number of shares of Series A-2 Preferred Stock
shall be 5,000,000.
2. Conversion.
(a) Right to Convert. Each share of Series A-1 Preferred Stock and Series A-2
Preferred Stock shall be convertible into a number of shares of Common Stock
equal to the applicable Liquidation Amount (as defined in Section 5 herein)
divided by the then applicable Conversion Price (as defined herein) upon the
earlier to occur of (i) the election of the holder to convert (an "Optional
Conversion"), in whole or in part, at any time, or from time to time, commencing
with date of the issuance of Series A-1 Preferred Stock or the Series A-2
Preferred Stock (the "A-1 Issuance Date" or the "A-2 Issuance Date", as
applicable; each one, an "Issuance Date") or (ii) the earliest to occur of the
following dates (an "Automatic Conversion"): (A) the date, at any time after the
one year anniversary of the applicable Issuance Date, upon which both (x) the
average of the Market Price (as defined herein) for a share of Common Stock for
thirty consecutive Trading Days (as defined herein) exceeds $8.00 (subject to
adjustment in the event of stock splits, reverse stock splits, stock dividends,
recapitalizations or similar events) and (y) the average of the trading volume
for the Common Stock during such period exceeds 200,000 shares per day (subject
to adjustment in the event of stock splits, reverse stock splits, stock
dividends, recapitalizations or similar events) shares per Trading Day; (B) with
respect to the Series A-1 Preferred Stock, upon the affirmative vote of the
holders of a majority of the then outstanding shares of Series A-1 Preferred
Stock; (C) with respect to the Series A-2 Preferred Stock, upon the affirmative
vote of a majority of the then outstanding shares of Series A-2 Preferred Stock;
or (D) immediately prior to the closing of an underwritten public offering of
the Company's Common Stock for aggregate gross proceeds of not less than Fifteen
Million Dollars ($15,000,000).
(b) As used herein, "Market Price" means, with respect to the shares of Common
Stock,
(i) if the shares are listed or admitted for trading on any national securities
exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market,
the last reported sales price as reported on such exchange or market; (ii) if
the shares are not listed or admitted for trading on any national securities
exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market,
the average of the last reported closing bid and asked quotation for the shares
as reported on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or a similar service if NASDAQ is not reporting such
information; or (iii) if the shares are not listed or admitted for trading on
any national securities exchange or included in The Nasdaq National Market or
Nasdaq SmallCap Market or quoted by NASDAQ or a similar service, the average of
the last reported bid and asked quotation for the shares as quoted by a market
maker in the shares (or if there is more than one market maker, the bid and
asked quotation shall be obtained from two market makers and the average of the
lowest bid and highest asked quotation) (such applicable trading market to be
referred to the "Trading Market"). In the absence of any available public
quotations for the Common Stock, the Board shall determine in good faith the
fair value of the Common Stock, which determination shall be set forth in a
certificate by the Secretary of the Company. As used herein, "Trading Day" means
a day on which the principal Trading Market with respect to the Common Stock is
open for the transaction of business.
(c) Effecting a Conversion. Immediately upon the occurrence of an Automatic
Conversion, each holder's shares of Series A-1 Preferred Stock or Series A-2
Preferred Stock, as applicable, shall be deemed to have been converted into the
applicable number of shares of the Company's Common Stock in accordance with the
then applicable Conversion Price, and certificates evidencing such shares of
Common Stock shall be issued to such holder promptly after receipt of the
applicable certificates evidencing such holder's shares of Series A-1 Preferred
Stock or Series A-2 Preferred Stock, as applicable, together with other
customary documentation (including delivery instructions). The holder shall
effect any Optional Conversion by surrendering the certificate or certificates
representing the shares of Series A-1 Preferred Stock or Series A-2 Preferred
Stock, as applicable, to be converted to the Company, together with written
notice of its election to convert and specifying the name or names (with
address) in which a certificate or certificates for shares of Common Stock are
to be issued (a "Stockholder Conversion Notice"). Each Stockholder Conversion
Notice shall specify the number of shares of Series A-1 Preferred Stock or
Series A-2 Preferred Stock to be converted and the date on which such conversion
is to be effected, which date may be neither prior to, nor more than 10 days
after, the date the holder delivers such Stockholder Conversion Notice. If no
conversion date is specified in a Stockholder Conversion Notice, the conversion
date shall be the date that the Stockholder Conversion Notice is delivered. Each
Stockholder Conversion Notice, once given, shall be irrevocable. A holder of
Series A-1 Preferred Stock or Series A-2 Preferred Stock may only convert shares
of Series A-1 Preferred Stock or Series A-2 Preferred Stock in blocks equal to
not less than the lesser of (i) the number of shares of Series A-1 Preferred
Stock or Series A-2 Preferred Stock, as applicable, convertible into 5,000
shares of Common Stock and (ii) all shares of Series A-1 Preferred Stock or
Series A-2 Preferred Stock then held by the stockholder. If the holder is
converting less than all shares of Series A-1 Preferred Stock or Series A-2
Preferred Stock, as applicable, represented by the certificate or certificates
tendered by the holder with the Stockholder Conversion Notice, the Company shall
convert the number of shares of Series A-1 Preferred Stock or Series A-2
Preferred Stock so specified and shall promptly deliver (but not more than ten
business days later) to such holder a certificate for such number of shares as
have not been converted. Upon an Automatic Conversion, the Company shall notify
each holder thereof and each holder shall surrender the certificate or
certificates representing all of the shares of Series A-1 Preferred Stock and
Series A-2 Preferred Stock owned by such holder and each holder of shares of
Series A-1 Preferred Stock or Series A-2 Preferred Stock shall be deemed to be
the holder of record of the Common Stock issued upon such Automatic Conversion.
All fractional shares resulting from the conversion of the Series A-1 Preferred
Stock or Series A-2 Preferred Stock shall be rounded up to the next highest
whole share. All certificates representing shares of Series A-1 Preferred Stock
and Series A-2 Preferred Stock surrendered for conversion shall be delivered to
the Company for cancellation and canceled by it. As promptly as practicable (but
no more than ten business days) after the surrender of any shares of Series A-1
Preferred Stock or Series A-2 Preferred Stock, the Company shall (subject to
compliance with the applicable provisions of federal and state securities laws)
deliver to the holder of such shares so surrendered certificate(s) representing
the number of fully paid and nonassessable shares of Common Stock into which
such shares are entitled to be converted. Upon a conversion, any accrued and
unpaid dividends shall be paid either in cash, to the extent funds are legally
available therefore, or shares of Common Stock valued at the Market Price, in
the sole discretion of the Company.
(d) Conversion Price. The initial conversion price per share of the Series A-1
Preferred Stock or Series A-2 Preferred Stock, as applicable (the "Conversion
Price"), shall be equal to $1.25 per share of Common Stock into which such
number of share of Series A-1 Preferred Stock or Series A-2 Preferred Stock is
convertible, subject to adjustment as provided in Section 3.
(e) Reservation of Shares. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued Common Stock
solely for the purpose of issuance upon conversion of Series A-1 Preferred Stock
and Series A-2 Preferred Stock, as herein provided, free from preemptive rights
or any other actual contingent purchase rights of persons other than the holders
of Series A-1 Preferred Stock or Series A-2 Preferred Stock pursuant to this
clause, not less than such number of shares of Common Stock as shall be issuable
upon the conversion of all outstanding shares of Series A-1 Preferred Stock and
Series A-2 Preferred Stock. The Company covenants that all shares of Common
Stock that shall be so issuable shall, upon issue, be duly and validly
authorized, issued and fully paid, nonassessable and freely tradeable. If at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of Series A-1
Preferred Stock and Series A-2 Preferred Stock, in addition to such other
remedies as shall be available to the holders of such Series A-1 Preferred Stock
and Series A-2 Preferred Stock, the Company will take such corporate action
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes.
(f) Issue Taxes. The Company shall pay all issue taxes, if any, incurred in
respect of the issue of shares of Common Stock on conversion. If a holder of
shares of Series A-1 Preferred Stock or Series A-2 Preferred Stock specifies
that the shares of Common Stock to be issued on Automatic Conversion are to be
issued in a name or names other than the name or names in which such Series A-1
Preferred Stock or Series A-2 Preferred Stock stand or the names of affiliates
of the initial holder of such shares, then the Company shall not be required to
pay any additional transfer or other taxes incurred by reason of the issuance of
such shares of Common Stock to the name of another, and if the appropriate
transfer taxes shall not have been paid to the Company or the transfer agent for
the Series A-1 Preferred Stock or Series A-2 Preferred Stock, as applicable, at
the time of Automatic Conversion of the Series A-1 Preferred Stock or Series A-2
Preferred Stock, as applicable, the shares of Common Stock issued upon
conversion thereof may be registered in the name or names in which the Series
A-1 Preferred Stock or Series A-2 Preferred Stock, as applicable, were
registered, despite the instructions to the contrary.
3. Adjustment of Conversion Price.
(a) Definition of Additional Stock. For purposes of this Section 3, "Additional
Shares of Common Stock" includes all shares of Common Stock issued by the
Company after the Series A-1 Issuance Date, other than:
(i) Up to 5,000,000 shares of Series A-2 Preferred Stock, all of which shares
are to be issued by the Company at no less than $2.50 per share (subject to
appropriate adjustment for any stock dividend, stock split, combination or other
similar recapitalization affecting such shares), and the Shares of Common Stock
issued upon conversion of shares of Series A-1 Preferred Stock or Series A-2
Preferred Stock;
(ii) Shares of Common Stock (subject to appropriate adjustment for any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares) issuable or issued to the Company's employees, directors or
consultants pursuant to a stock option plan or restricted stock plan approved by
the Board;
(iii) Shares of Common Stock issued or issuable pursuant to subsection 3(d)
below;
(iv) Shares of Common Stock or Preferred Stock issuable upon exercise of
options, warrants or upon conversion of convertible securities or other rights
outstanding as of the applicable Issuance Date; and
(v) Shares of capital stock or options or warrants to purchase capital stock
issued
(a) to financial institutions or lessors in connections with commercial credit
agreements, equipment financings or similar transactions or (b) to other
corporations, persons or entities in connection with acquisitions, mergers or
similar business combinations, partnership arrangements, strategic alliances,
licensing arrangements or similar non-capital raising transactions approved by
the Board. The number and kind of securities issuable upon the conversion of the
Series A-1 Preferred Stock and the Series A-2 Preferred Stock and the Conversion
Price shall be subject to adjustment from time to time in accordance with the
following provisions:
(b) Subdivision or Combination of Shares. In the event that the Company shall at
any time or from time to time, prior to conversion of shares of Series A-1
Preferred Stock or Series A-2 Preferred Stock (x) subdivide the outstanding
shares of Common Stock into a larger number of shares or (y) combine the
outstanding shares of Common Stock into a smaller number of shares, then, and in
each such case, the Conversion Price in effect immediately prior to such event
shall be adjusted (and any other appropriate actions shall be taken by the
Company) so that the holder of any share of Series A-1 Preferred Stock or Series
A-2 Preferred Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock or other securities of the Company
that such holder would have owned or would have been entitled to receive upon or
by reason of any of the events described above, had such share of Series A-1
Preferred Stock or Series A-2 Preferred Stock been converted immediately prior
to the occurrence of such event. An adjustment made pursuant to this Section
3(b) shall become effective retroactively in the case of any such subdivision or
combination, to the close of business on the day upon which such corporate
action becomes effective.
(c) Stock Dividends. In case Additional Shares of Common Stock are issued as a
dividend or other distribution on the Common Stock (or such dividend is
declared), the Conversion Price shall be reduced, as of the date a record is
taken of the holders of Common Stock for the purpose of receiving such dividend
or other distribution (or if no such record is taken, as at the earliest of the
date of such declaration, payment or other distribution), to the Conversion
Price determined by multiplying the Conversion Price in effect immediately prior
to such declaration, payment or other distribution by a fraction (i) the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to the declaration or payment of such dividend or other
distribution, and (ii) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after the declaration or payment
of such dividend or other distribution. In the event that the Company shall
declare or pay any dividend on the Common Stock payable in any right to acquire
Common Stock for no consideration, then the Company shall be deemed to have made
a dividend payable in Common Stock in an amount of shares equal to the maximum
number of shares issuable upon exercise of such rights to acquire Common Stock.
(d) Recapitalization or Reclassification of Common Stock. In case of any (i)
capital reorganization or any reclassification (other than a change in par
value) of the capital stock of the Company, or (ii) exchange or conversion of
the Common Stock for or into securities of another corporation or other entity,
or (iii) consolidation or merger of the Company with or into any other person
(other than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock) or (iv) sale,
lease or other conveyance of all or substantially all of the assets of the
Company, then in each instance referred to in the preceding clauses (i) through
(iv), except, in the event of a "Change in Control Redemption Event" (as such
term is hereinafter defined in Section 11), if the holders of Series A-1
Preferred Stock or Series A-2 Preferred Stock, as the case may be, shall not
waive their respective redemption right, then the Board and the person formed by
such consolidation or resulting from such capital reorganization,
reclassification or merger or which acquires (by sale, lease or other
conveyance) such assets, as the case may be, shall make provision such that the
Series A-1 Preferred Stock and the Series A-2 Preferred Stock shall thereafter
be convertible for the kind and amount of shares of stock, other securities,
cash and other property receivable upon such capital reorganization,
reclassification, consolidation, merger, sale, lease or other conveyance, as the
case may be, by a holder of shares of Common Stock equal to the number of shares
of Common Stock underlying the Series A-1 Preferred Stock or Series A-2
Preferred Stock, as applicable, issuable upon the conversion of the Series A-1
Preferred Stock or Series A-2 Preferred Stock immediately prior to the effective
date of such capital reorganization, reclassification, merger, consolidation,
sale, lease or other conveyance and, in each instance referred to in the
preceding clauses (i) through (iv) (each, a "Transaction"), appropriate
adjustment (as reasonably determined in good faith by the Board) shall be made
in the application of the provisions herein set forth with respect to rights and
interests thereafter of the holders of the Series A-1 Preferred Stock and Series
A-2 Preferred Stock, to the end that the provisions set forth herein (including
the specified changes in and other adjustments of the number of shares
underlying the Series A-1 Preferred Stock and Series A-2 Preferred Stock) shall
thereafter be applicable, as near as reasonably may be, in relation to any such
shares of stock or other securities or other property thereafter deliverable
upon conversion of the Series A-1 Preferred Stock and Series A-2 Preferred
Stock. The Company shall not enter into any Transaction unless effective
provision shall be made so as to give effect to the provisions set forth in this
subsection (d). The Company shall not effect any transaction described in this
subsection 3(d) unless (i) it first gives twenty (20) days' prior written notice
of such merger, consolidation, exchange of shares, recapitalization,
reorganization or other similar event or sale of assets (during which time the
holders of Series A-1 Preferred Stock and Series A-2 Preferred Stock shall be
entitled to convert the Series A-1 Preferred Stock or Series A-2 Preferred
Stock) and (ii) the resulting successor or acquiring entity (if not the Company)
assumes by written instrument the obligations of this subsection 3(d). The
provisions of this subsection 3(d) shall similarly apply to successive
consolidations, reorganizations, reclassifications, exchanges, conversions,
mergers, sales, leases and other conveyances. (e) Issuance of Stock at Less than
Conversion Price. If the Company shall issue any Additional Shares of Common
Stock after the applicable Issuance Date (other than as provided in the
foregoing subsections 3(b) through 3(d)), for no consideration or for a
consideration per share less than the Conversion Price in effect on the date of
and immediately prior to such issue, then in such event, the Conversion Price
shall be reduced, concurrently with such issue, as follows:
(i) if such event shall occur during the period from the applicable Issuance
Date until the later of (x) December 31, 2003 and (y) five (5) business days
following the retirement, cancellation, repayment or conversion to equity in
full of the Company's outstanding debts, as of the applicable Issuance Date, to
HSBS Holdings and MAM Software, then the Conversion Price for the Series A-1
Preferred Stock and the Series A-2 Preferred Stock shall be reduced, as of the
close of business on the date of such issue or sale, to the Effective Price (as
such term is defined in subsection 3(g)(v)) at which such Additional Shares of
Common Stock are so issued or sold; and (ii) if such event shall occur
thereafter, then the Conversion Price shall be reduced to a price equal to the
quotient obtained by dividing:
(A) an amount equal to (x) the total number of shares of Common Stock
outstanding immediately prior to such issuance or sale multiplied by the
Conversion Price in effect immediately prior to such issuance or sale, plus (y)
the Aggregate Consideration Received (as such term is defined in subsection
3(g)(v)) or deemed to be received by the Company upon such issuance or sale, by
(B) the total number of shares of Common Stock outstanding immediately after
such issuance or sale.
(f) Issuance of Options and Convertible Securities Deemed Issuance of Additional
Shares of Common Stock. If the Company, at any time or from time to time after
the applicable Issuance Date, shall issue any options, warrants or rights to
purchase Common Stock (collectively, "Options") or securities that, by their
terms, directly or indirectly, are convertible into or exchangeable for shares
of Common Stock ("Convertible Securities") or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares of Common
Stock (as set forth in the instrument relating thereto without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefore, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common Stock issued under this
Certificate as of the time of such issue or, in case such a record date shall
have been fixed, as of the close of business on such record date, provided that
in any such case in which Additional Shares of Common Stock are deemed to be
issued:
(i) no further adjustment in the Conversion Price shall be made upon the
subsequent issue of Convertible Securities or shares of Common Stock upon the
exercise of such Options or conversion or exchange of such Convertible
Securities and, upon the expiration of any such Option or the termination of any
such right to convert or exchange such Convertible Securities, the Conversion
Price then in effect hereunder shall forthwith be increased to the Conversion
Price which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued, and the
Common Stock issuable thereunder shall no longer be deemed to be outstanding;
(ii) if such Options or Convertible Securities by their terms provide, with the
passage of time or otherwise, for any increase in the consideration payable to
the Company, or decrease in the number of shares of Common Stock issuable, upon
the exercise, conversion or exchange thereof, the Conversion Price computed upon
the original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities, provided that no readjustment
pursuant to this clause (B) shall have the effect of increasing the Conversion
Price to an amount which exceeds the lower of (i) the Conversion Price on the
original adjustment date, or (ii) the Conversion Price that would have resulted
from any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date; and (iii) if such Options or
Convertible Securities by their terms provide, with the passage of time or
otherwise, for any decrease in the consideration payable to the Company, or
increase in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such decrease or
increase becoming effective, be recomputed to reflect such decrease or increase
insofar as it affects such Options or the rights of conversion or exchange under
such Convertible Securities, provided that no readjustment pursuant to this
clause (C) shall have the effect of decreasing the Conversion Price to an amount
which exceeds the lower of (i) the Conversion Price on the original adjustment
date, or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date.
(g) Other Provisions Applicable to Adjustment Under this Section 3. The
following provisions shall be applicable to the adjustments in the Conversion
Price as provided in this Section 3. (i) Treasury Shares. The number of shares
of Common Stock at any time outstanding shall not include any shares thereof
then directly or indirectly owned or held by or for the account of the Company.
(ii) Other Action Affecting Common Stock. If the Company shall take any action
affecting the outstanding number of shares of Common Stock other than an action
described in any of the foregoing subsections 3(b) through 3(f) hereof,
inclusive, which would have an inequitable effect on the holders of the Series
A-1 Preferred Stock or the Series A-2 Preferred Stock, then the Conversion Price
shall be adjusted in such manner and at such times as the Board on the advice of
the Company's independent public accountants may in good faith determine to be
equitable in the circumstances.
(iii) Minimum Adjustment. No adjustment of the Conversion Price shall be made if
the amount of any such adjustment would be an amount less than one percent (1%)
of the Conversion Price then in effect, but any such amount shall be carried
forward and an adjustment in respect thereof shall be made at the time of and
together with any subsequent adjustment which, together with such amount and any
other amount or amounts so carried forward, shall aggregate an increase or
decrease of one percent (1%) or more. (iv) Certain Adjustments. The Conversion
Price shall not be adjusted upward except in the event of a combination of the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock. (v) Determination of Consideration. (A) For purposes of subsection 3(e),
the "Effective Price" of Additional Shares of Common Stock shall mean the
quotient determined by dividing (x) the Aggregate Consideration Received, or
deemed to have been received, by the Company under
this subsection 3(e), for the issue of such Additional Shares of.- 9 - Common
Stock, by (y) the total number of Additional Shares of Common Stock issued or
sold, or deemed to have been issued or sold, by the Company under subsection
3(e). (B) For purposes of this Subsection 3(f), the Aggregate Consideration
Received by the Company for the issue of any Additional Shares of Common Stock
shall be computed as follows: (A) Cash and Property: Such consideration shall:
(1) insofar as it consists of cash, be computed at the aggregate gross amount of
cash received by the Company before deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Company in
connection with such issue or sale and without deduction of any expenses payable
by the Company and excluding amounts paid or payable for accrued interest or
accrued dividends;
(2) insofar as it consists of property other than cash, be computed at the fair
market value thereof at the time of such issue, as determined in good faith by
the Board; and in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the Company for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (1) and (2) above, as determined in
good faith by the Board.
(B) Options and Convertible Securities. The consideration per share received by
the Company for Additional Shares of Common Stock deemed to have been issued
pursuant to subsection 3(f)(ii), relating to Options and Convertible Securities,
shall be determined by dividing
(1) the total amount, if any, received or receivable by the Company as
consideration for the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the Company upon
the exercise of such Options or the conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion or exchange of
such Convertible Securities, by (2) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(i) No Impairment. The Company will 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,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company but will at all times in good
faith assist in the carrying out of all the provisions of Section 3 and in the
taking of all such action as may be necessary or appropriate in order to protect
the conversion rights of the holders of the Series A-1 Preferred Stock and the
Series A-2 Preferred Stock against impairment.
(j) Notices of Adjustments. Whenever the Conversion Price is adjusted as herein
provided, the Chief Financial Officer (or other senior executive officer in the
absence of such person) of the Company shall, in good faith, compute the
adjusted Conversion Price in accordance with the foregoing provisions and shall
prepare a written certificate setting forth such adjusted Conversion Price and
showing in detail the facts upon which such adjustment is based, and such
written instrument shall promptly be delivered to each record holder of the
Series A-1 Preferred Stock and Series A-2 Preferred Stock.
4. Ranking. The Series A-1 Preferred Stock and the Series A-2 Preferred Stock
shall rank, as to dividends, rights upon liquidation, dissolution or winding up,
pari passu to each other, and shall rank senior and prior to (i) the Common
Stock and (ii) each other class or series of capital stock of the Company
hereafter created which does not expressly rank pari passu with or senior to the
Series A-1 Preferred Stock or the Series A-2 Preferred Stock, as applicable.
(All equity securities of the Company to which the Series A-1 Preferred Stock
and the Series A-2 Preferred Stock ranks senior to, whether with respect to
dividends, rights upon liquidation, dissolution, winding up or otherwise,
including the Common Stock, are collectively referred to herein as "Junior
Securities," all equity securities of the Company to which the Series A-1
Preferred Stock or the Series A-2 Preferred Stock ranks on a parity with,
whether with respect to dividends or upon liquidation, dissolution, winding up
or otherwise, are collectively referred to herein as "Parity Securities" and all
equity securities of the Company to which the Series A-1 Preferred Stock and the
Series A-2 Preferred Stock ranks junior, whether with respect to dividends or
upon liquidation, dissolution, winding up or otherwise are collectively referred
to herein as "Senior Securities").
5. Liquidation Rights.
(a) Liquidation Preference. Upon a voluntary or involuntary liquidation, under
applicable bankruptcy or reorganization legislation, or dissolution or winding
up of the Company (each a "Liquidation"), before any distribution of assets
shall be made to the holders of Junior Securities, the holder of each share of
Series A-1 Preferred Stock and Series A-2 Preferred Stock then outstanding shall
be paid out of the assets of the Company legally available for distribution to
its stockholders (the "Available Assets") an amount per share equal to the
"Liquidation Amount." For purposes of a Liquidation, the Liquidation Amount
shall mean the original issue price per share of the Series A-1 Preferred Stock
and Series A-2 Preferred Stock ($2.50, as adjusted for stock splits, dividends,
combinations or other recapitalization of the Series A-1 Preferred Stock and
Series A-2.11Preferred Stock) plus all dividends accrued but unpaid on such
share (whether or not declared) up to the date of the Liquidation (the
"Liquidation Preference"). Upon the completion of the distribution required by
this subsection 4(a), and any other distribution to any other class or series of
Senior Securities, if assets remain in the Company, the remaining assets of the
Company available for distribution to stockholders shall be distributed among
the holders of shares of any other series of preferred stock in accordance with
their respective terms, then to the holders of Common Stock pro rata based on
the number of shares of the Common Stock actually outstanding and held by
holders of shares of Common Stock..
(b) Priority. If the Available Assets are insufficient to pay the holders of
Series A-1 Preferred Stock and Series A-2 Preferred Stock the full amount of the
Liquidation Amount, the holders of Series A-1 Preferred Stock and Series A-2
Preferred Stock, in the aggregate, will share ratably in the distribution of the
Available Assets in proportion to the respective amounts that would otherwise be
payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.
(c) Notice. The Company will send a written notice of a Liquidation to the
holders of record of the Series A-1 Preferred Stock and Series A-2 Preferred
Stock, stating a payment date, the Liquidation Amount and the place where the
Liquidation Amount will be paid, using any of the following delivery methods:
(i) in person; (ii) mailed by certified or registered mail, return receipt
requested; or (iii) sent by national courier, not less than 25 days prior to the
payment date stated therein. The notice will be addressed to each holder at its
address as shown by the records of the Company.
6. Appraisal. If a majority in interest of the holders of the Series A-1
Preferred Stock, or a majority in interest of the holders of the Series A-2
Preferred Stock, or both, as the case may be, reasonably disagree(s) with any of
the Board's determinations referred to in Section 2, Section 3 or Section 5
above (each, a "Determination"), then the Company and the majority in interest
of such Series A-1 Preferred Stock holders or Series A-2 Preferred Stock
Holders, or both, as applicable (each majority in interest, the
"Representative"; together, the "Representatives") shall use good faith efforts
to mutually agree upon the designation of a single Qualified Appraiser (as
defined below) within seven (7) business days of such event requiring a
Determination. The date of such event requiring a Determination shall be
referred to as the "Determination Date." If such a single Qualified Appraiser is
designated, that person shall make a Determination. If the Company and the
Representative(s) do not so agree upon the designation of a single Qualified
Appraiser within such period, then within five (5) business days following the
end of such period, each of the Company, by written notice to the
Representative(s), and the Representative(s), by written notice to the Company,
shall designate a Qualified Appraiser (or if any party fails to select a
Qualified Appraiser within the time period specified, the person selected by the
other party shall be the Qualified Appraiser), with two such Qualified
Appraisers being so designated in total, and the two Qualified Appraisers so
designated shall within ten (10) business days of their designation jointly
designate a third Qualified Appraiser and solely such third Qualified Appraiser
so designated shall independently make a Determination. The designated Qualified
Appraiser shall make the Determination not later than ten (10) business days
following the Determination Date. The Determination made by the Qualified
Appraiser shall be final, conclusive and binding on the parties hereto. None of
the Qualified Appraisers shall be affiliated with any of the Company or the
Representative(s) or another Qualified Appraiser. If the amount of Determination
by the Qualified Appraiser deviates by more than 10% from the determination by
the Company and is more favorable to the Series A-1 Preferred Stock or the
Series A-2 Preferred Stock, as applicable, then the Company shall pay the fees
and expenses of the Qualified Appraiser(s). Otherwise, the Representative(s)
shall pay the fees and expenses of the Qualified Appraiser(s). (By way of
example, if the Company determined that the Aggregate Consideration Received in
non-cash property for Additional Shares of Common Stock was $10 per share, the
Company will pay the fees and expenses of the Qualified Appraiser(s) only if the
Determination is that the Aggregate Consideration Received for such property was
$11.01 or more. For the purposes of this Agreement, "Qualified Appraiser" shall
mean an individual who is engaged on a regular basis (although not necessarily
full time) in valuing securities or arrangements similar to this Agreement, as
the case may be, and may include (but shall not be limited to) professional
business appraisers, investment bankers or accountants.
7. Dividends. Dividends shall accrue on each outstanding share of Series A-1
Preferred Stock and on each outstanding share of Series A-2 Preferred Stock at
the rate equal to 5% per annum (pro rated in the first annual period if the
initial applicable Issuance Date is after the commencement of the initial
quarterly payment period) of the initial Liquidation Preference per share of
Series A-1 Preferred Stock or Series A-2 Preferred Stock, as applicable, whether
or not declared by the Board. Such dividends shall accrue and, if declared,
shall be payable quarterly in arrears on the 30 th day of January, April, July
and October of each year (each such date, a "Dividend Payment Date"). Dividends
shall begin to accrue on the Series A-1 Preferred Stock and on the Series A-2
Preferred Stock as of the applicable Issuance Date, provided that the dividends
due in respect of the initial quarterly period shall be pro rated if such
Issuance Date is after the commencement of such quarterly period. Dividends
payable on shares of Series A-1 Preferred Stock and Series A-2 Preferred Stock
shall be cumulative; therefore, if a full or partial dividend on the shares of
Series A-1 Preferred Stock and Series A-2 Preferred Stock with respect to any
quarter is not declared by the Board, the Company shall remain obligated to pay
a full dividend with respect to that quarter, provided, however, that any unpaid
dividends shall not bear interest. At the election of the Company, any accrued
but unpaid dividends may be paid in cash at any time.
At the election of the Company, each dividend on the Series A-1 Preferred Stock
or the Series A-2 Preferred Stock may be paid in shares of Common Stock.
Dividends paid in shares of Common Stock shall be paid in full shares only, with
a cash payment equal to the value of any fractional shares. The issuance of such
shares of Common Stock shall be valued at the average of the per share Market
Price for the ten Trading Day period immediately preceding the date on which the
dividend becomes due. Each dividend paid in capital stock shall be mailed to the
holders of record of the Series A-1 Preferred Stock and the Series A-2 Preferred
Stock as their names and addresses appear on the share register of the Company
or at the office of the transfer agent on the corresponding dividend payment
date. Holders of Series A-1 Preferred Stock and Series A-2 Preferred Stock will
receive written notification from the Company or the transfer agent if a
dividend is paid in kind, which notification will specify the number of shares
of Common Stock paid as a dividend. All holders of shares of Common Stock issued
as dividends shall be entitled to all of the rights and benefits relating to
shares of Common Stock as set forth in the Company's Certificate of
Incorporation. After payment of setting aside of the payment of dividends
described in this Section 7, any additional dividends (other dividends on Common
Stock payable solely in Common Stock) declared or paid in any fiscal year shall
be declared or paid among the holders of Series A-1 Preferred Stock, Series A-2
Preferred Stock and Common Stock then outstanding in proportion to the nearest
whole number of shares of Common Stock which would be held by each such holder
if all holders of Series A-1 Preferred Stock and Series A-2 Preferred Stock were
converted at the then-effective Conversion Rate.
8. Voting Rights. Each holder of outstanding shares of Series A-1 Preferred
Stock and Series A-2 Preferred Stock is entitled to the number of votes equal to
the number of whole shares of Common Stock into which the shares of Series A-1
Preferred Stock or Series A-2 Preferred Stock held of record by such holder are
convertible at each meeting of stockholders of the Company (and written actions
of stockholders in lieu of meetings) with respect to any and all matters
presented to the stockholders of the Company for their action or consideration.
Except as provided by law and by the provisions of Section 9 below, the holders
of shares of Series A-1 Preferred Stock and Series A-2 Preferred Stock shall
vote together with the holders of Common Stock as a single class.
Notwithstanding the above, the Company shall provide each holder of Series A-1
Preferred Stock and Series A-2 Preferred Stock with prior written notification
of any meeting of the stockholders (and copies of proxy materials and other
information sent to stockholders). In the event of any undertaking by the
Company of a record of its stockholders for the purpose of determining
stockholders who are entitled to receive payment of any dividend or other
distribution, any right to subscribe for, purchase or otherwise acquire
(including by way of merger, consolidation or recapitalization) any share of any
class or any other securities or property, or to receive any other right, or for
the purpose of determining stockholders who are entitled to vote in connection
with any proposed sale, lease or conveyance of all or substantially all of the
assets of the Company, or any proposed liquidation, dissolution or winding up of
the Company, the Company shall mail a notice to each holder, at least ten (10)
days prior to the record date specified therein (or twenty (20) days prior to
the consummation of any transaction or event, whichever is earlier), of the date
on which any such record is to be taken for the purpose of such dividend,
distribution, right or other event, and a brief statement regarding the amount
and character of such dividend, distribution, right or other event to the extent
known at such time. To the extent that under the Delaware General Corporation
Law ("DGCL") holders of the Series A-1 Preferred Stock and Series A-2 Preferred
Stock are entitled to vote on a matter with holders of Common Stock, voting
together as one class, each share of Series A-1 Preferred Stock and Series A-2
Preferred Stock shall entitle the holder thereof to cast that a number of votes
per share as is equal to the number of shares of Common Stock into which it is
then convertible using the record date for determining the stockholders of the
Company eligible to vote on such matters as the date as of which the Conversion
Price is calculated. Whenever the holders of the Series A-1 Preferred Stock and
the holders of the
Series A-2 Preferred Stock are required under the DGCL or this Certificate of
Designations or the Company's Certificate of Incorporation to vote separately
from the holders Common Stock, rather than voting together with the holders of
the Common Stock as one class, then, except as set forth in the next succeeding
paragraph, the holders of the Series A-1 Preferred Stock and the holders of the
Series A-2 Preferred Stock shall vote together as a single class, and the
affirmative vote of a majority of the shares of the holders of the Series A-1
Preferred Stock and the Series A-2 Preferred Stock, in the aggregate,
represented at a duly held meeting at which a quorum is present or by written
consent of a majority of the shares of Series A-1 Preferred Stock and Series A-2
Preferred Stock, taken together in the aggregate, shall constitute the approval
of such action by the holders of the Series A-1 Preferred Stock and the holders
of the Series A-2 Preferred Stock.
However, whenever the holders of the Series A-1 Preferred Stock and the holders
of the Series A-2 Preferred Stock are required under the DGCL or this
Certificate of Designations or the Company's Certificate of Incorporation to
vote separately from the holders of the Common Stock, rather than voting
together with the holders of the Common Stock as one class, and, under the DGCL
or this Certificate of Designations or the Company's Certificate of
Incorporation, the holders of the Series A-1 Preferred Stock and the holders of
the Series A-2 Preferred Stock are required to vote as separate series or
classes, and not jointly, then the affirmative vote of a majority of the shares
of the Series A-1 Preferred Stock, or the affirmative vote of a majority of the
shares of the Series A-2 Preferred Stock, as applicable, voting separately as a
class, represented at a duly held meeting at which a quorum is present or by
written consent of a majority of the shares of Series A-1 Preferred Stock or a
majority of the shares of Series A-2 Preferred Stock, as applicable, shall
constitute the approval of such action by the holders of the Series A-1
Preferred Stock or the holders of the Series A-2 Preferred Stock, as applicable.
Holders of the Series A-1 Preferred Stock and Series A-2 Preferred Stock shall
be entitled to written notice of all stockholder meetings or written consents
(and copies of proxy materials and other information sent to stockholders) with
respect to which they would be entitled by vote, which notice would be provided
pursuant to the Company's bylaws and the DGCL).
9. Protective Provisions.
(a) So long as the shares of Series A-1 Preferred Stock or Series A-2 Preferred
Stock are outstanding, the Company shall not, take, approve or otherwise ratify
any of the following actions without the consent of at least a majority of the
aggregate of the then outstanding shares of Series A-1 Preferred Stock and the
Series A-2 Preferred Stock, voting together and not as separate series:
(i) authorize, issue or agree to authorize or issue any new class or series of
Parity Securities or securities or rights of any kind convertible into or
exercisable or exchangeable for any such Parity Securities, or offer, sell or
issue any Parity Securities or securities or rights of any kind convertible into
or exercisable or exchangeable for any such Parity Securities; (ii) purchase,
repurchase or redeem shares of (i) Common Stock, (ii) securities or rights of
any kind convertible into or exercisable or exchangeable for Common Stock or
(iii) other securities of the Company, (except in the case of a termination of
an employee, at which the Company may repurchase or redeem such shares of Common
Stock at cost and pursuant to any agreement under which such shares of Common
Stock were issued); (iii) effect any merger, combination, reorganization of the
Company, or any sale or license of all or substantially all of the Company's
assets, in either case other than a merger, combination or reorganization or
other transaction (or series of such transactions) in which 50% or more of the
voting power of the Company is disposed of or in which the stockholders of the
Company immediately prior to such merger, reorganization or consolidation own
less than 50% of the Company's voting power immediately after; or (iv) declare
or pay dividends or any other distribution on shares of Common Stock or any
other capital stock of the Company except as contemplated herein; or (b) So long
as the shares of Series A-1 Preferred Stock or Series A-2 Preferred Stock are
outstanding, the Company shall not, take, approve or otherwise ratify any of the
following actions without the consent of at least a majority of the then
outstanding shares of Series A-1 Preferred Stock, voting as a separate series,
and a majority of the then outstanding shares of Series A-2 Preferred Stock,
voting as a separate series:
(i) authorize, issue or agree to authorize or issue any new class or series of
Senior Securities or securities or rights of any kind convertible into or
exercisable or exchangeable for any such Senior Securities, or offer, sell or
issue any Senior Securities or securities or rights of any kind convertible into
or exercisable or exchangeable for any such Senior Securities; (ii) increase the
authorized number of shares of Series A-1 Preferred Stock or Series A-2
Preferred Stock; or (iii) amend the Certificate of Incorporation or the
Certificate of Designations or Bylaws of the Company, or alter or change the
rights, preferences or privileges of the Series A-1 Preferred Stock or Series
A-2 Preferred Stock or any Parity Securities or Senior Securities or Junior
Securities, by merger, consolidation or otherwise, in each case so as to affect
adversely the rights, preferences or privileges of the Series A-1 Preferred
Stock or Series A-2 Preferred Stock.
10. Preemptive Right.
(a) The Company shall not issue or sell any shares of Common Stock or securities
convertible into or exercisable or exchangeable for shares of Common Stock (the
securities issued in such transactions being referred to as the "Newly Issued
Securities"), other than any such issuance or sale (i) which is made pursuant to
a public offering pursuant to a registration statement declared effective by the
Securities and Exchange Commission, (ii) pursuant to a stock option plan or
similar plan or agreement approved by the Board, (iii) in exchange, at fair
market value, for assets or equipment to be used by the Company in the ordinary
course of business, or (iv) pursuant to any of the purchase agreements or the
documents executed, filed or delivered in connection therewith, unless prior to
the issuance or sale of such Newly Issued Securities each holder of Series A-1
Preferred Stock and Series A-2 Preferred Stock shall have been given the
opportunity (such opportunity being herein referred to as the "Preemptive
Right") to purchase (on the same terms as such Newly Issued Securities are
proposed to be sold) the same proportion of such Newly Issued Securities being
issued or offered for sale by the Company as (x) the number of shares of Common
Stock (calculated solely on account of outstanding Series A-1 Preferred Stock
and Series A-2.
Preferred Stock on an as converted basis) held by such holder on the day
preceding the date of the Preemptive Notice (as defined below) bears to (y) the
total number of shares of Common Stock (calculated on a fully diluted basis with
respect to the Series A-1 Preferred Stock and Series A-2 Preferred Stock and any
other Common Stock equivalents which are "in the money") outstanding on the day
preceding the date of the Preemptive Notice (as defined below). (b) At least
thirty (30) days prior to the issuance by the Company of any Newly Issued
Securities, the Company shall give written notice thereof (the "Preemptive
Notice") to each holder of Series A-1 Preferred Stock and Series A-2 Preferred
Stock. The Preemptive Notice shall specify (i) the name and address of the bona
fide investor to whom the Company proposes to issue or sell Newly Issued
Securities, (ii) the total amount of capital to be raised by the Company
pursuant to the issuance or sale of Newly Issued Securities, (iii) the number of
such Newly Issued Securities proposed to be issued or sold, (iv) the price and
other terms of their proposed issuance or sale, (v) the number of such Newly
Issued Securities which such holder is entitled to purchase (determined as
provided in subsection (a) above), and (vi) the period during which such holder
may elect to purchase such Newly Issued Securities, which period shall extend
for at least thirty (30) days following the receipt by such holder of the
Preemptive Notice (the "Preemptive Acceptance Period"). Each holder of Series
A-1 Preferred Stock or Series A-2 Preferred Stock who desires to purchase Newly
Issued Securities shall notify the Company within the Preemptive Acceptance
Period of the number of Newly Issued Securities he wishes to purchase, as well
as the number, if any, of additional Newly Issued Securities such holder would
be willing to purchase in the event that all of the Newly Issued Securities
subject to the Preemptive Right are not subscribed for by the other holders of
Series A-1 Preferred Stock and Series A-2 Preferred Stock.
(c) After the conclusion of the Preemptive Acceptance Period, any Newly Issued
Securities which none of the holders elect to purchase in accordance with the
provisions of this Section 10, may be sold by the Company, within a period of
four (4) months after the expiration of the Preemptive Acceptance Period, to any
other person or persons at not less than the price and upon other terms and
conditions not less favorable to the Company than those set forth in the
Preemptive Notice.
(d) The term "Newly Issued Securities" shall not include:
(i) Shares of Common Stock issued upon conversion of shares of Series A-1
Preferred Stock or Series A-2 Preferred Stock; (ii) Shares of Common Stock
(subject to appropriate adjustment for any stock dividend, stock split,
combination or other similar recapitalization affecting such shares) issuable or
issued to the Company's employees, directors or consultants pursuant to a stock
option plan or restricted stock plan approved by the Board; (iii) Shares of
Common Stock issued or issuable pursuant to subsection 3(d); (iv) Shares of
Common Stock or Preferred Stock issuable upon exercise of options, warrants or
upon conversion of convertible securities or other rights outstanding as of the
A-1 Issuance Date; (v) Shares of capital stock or options or warrants to
purchase capital stock, issued to financial institutions or lessors in
connections with commercial credit agreements, equipment financings or similar
transactions or to other corporations, persons or entities in connection with
acquisitions, mergers or similar business combinations, partnership
arrangements, strategic alliances, licensing arrangements or similar non-capital
raising transactions approved by the Board; (vi) Shares of Common Stock issued
in connection with any stock split, stock dividend or recapitalization of the
Company; and (vii) Securities that are issued by the Company pursuant to a
registration statement filed under the Securities Act.
11. Mandatory Redemption
(a) On the date which is five (5) years after the A-1 Issuance Date or the A-2
Issuance Date, as applicable (such fifth anniversary, the "Mandatory Redemption
Date"), the Company shall redeem each then outstanding share of the Series A-1
Preferred Stock and Series A-2 Preferred Stock for an amount per share equal to
the applicable Liquidation Amount. (b) Upon a Change of Control Redemption
Event, the Company shall redeem each then outstanding share of the Series A-1
Preferred Stock and Series A-2 Preferred Stock for an amount per share equal to
101% of the Liquidation Amount. For purposes of this Section 11, a "Change of
Control Redemption Event" shall be deemed to have occurred upon a merger,
combination or reorganization of the Company in which more than 50% of the
voting power of the Company is disposed of, or in which the stockholders of the
Company immediately prior to such merger, reorganization or consolidation own
less than 50% of the Company's voting power immediately after, unless (i)
waived, with respect to shares of Series A-1 Preferred Stock, by a majority in
interest of the holders of the Series A-1 Preferred Stock, or (ii) waived, with
respect to shares of Series A-2 Preferred Stock, by a majority in interest of
the holders of the Series A-2 Preferred Stock. (b) From and after the latest to
occur of (i) the Mandatory Redemption Date or a Change of Control Redemption
Event, and (ii) the date upon which the Company irrevocably deposits the
aggregate Liquidation Amount or 101% of the aggregate Liquidation Amount, as
applicable, in respect of the shares of Series A-1 Preferred Stock or Series A-2
Preferred Stock being redeemed in an account for disbursement to holders of
shares of Series A-1 Preferred Stock or Series A-2 Preferred Stock, as
applicable, upon receipt of certificates evidencing their respective shares and
other customary documentation for such redemption, no holder of such Series A-1
Preferred Stock or Series A-2 Preferred Stock shall have any rights in respect
of such shares other than to receive the applicable Liquidation Amount per share
in respect of such holder's shares.
12. No Reissuance of Series A-1 Preferred Stock or Series A-2 Preferred Stock.
No share or shares of Series A-1 Preferred Stock or Series A-2 Preferred Stock
acquired by the Company by reason of redemption, purchase, conversion or
otherwise shall be reissued, and all such shares of Series A-1 Preferred Stock
and Series A-2 Preferred Stock shall be cancelled, retired and eliminated from
the shares of Series A-1 Preferred Stock or Series A-2 Preferred Stock, as
applicable, which the Company shall be authorized to issue. Any such shares of
Series A-1 Preferred Stock or Series A-2 Preferred Stock acquired by the Company
shall have the status of authorized and unissued shares of Preferred Stock
issuable in undesignated Series and may be redesignated and reissued in any
series other than as Series A-1 Preferred Stock or Series A-2 Preferred Stock.
13. Registered Holders. A holder of Series A-1 Preferred Stock or Series A-2
Preferred Stock registered on the Company's stock transfer books as the owner of
shares of Series A-1
Preferred Stock or Series A-2 Preferred Stock, as applicable, shall be treated
as the owner of such shares of all purposes. All notices and all payments
required to be mailed to a holder of shares of Series A-1 Preferred Stock or
Series A-2 Preferred Stock shall be mailed to such holder's registered address
on the Company's stock transfer books, and all dividends and redemption payments
to a holder of Series A-1 Preferred Stock or Series A-2 Preferred Stock made
hereunder shall be deemed to be paid in compliance hereof on the date such
payments are deposited into the mail addressed to such holder at such holder's
registered address on the Company's stock transfer books.
14. Certain Remedies. Any registered holder of shares of Series A-1 Preferred
Stock or Series A-2 Preferred Stock shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Certificate of
Designations and to enforce specifically the terms and provisions of this
Certificate of Designations in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
such holder may be entitled at law or in equity.
15. Headings of Subdivisions. The headings of the various subdivisions hereof
are for convenience of reference only and shall not affect the interpretation of
any of the provisions hereof.
16. Severability of Provisions. If any right, preference or limitation of the
Series A-1 Preferred Stock or Series A-2 Preferred Stock set forth herein (as
may be amended) from time to time is invalid, unlawful or incapable of being
enforced by reason of any rule of law or public policy, such right, preference
or limitation (including, without limitation, the dividend rate) shall be
enforced to the maximum extent permitted by law and all other rights,
preferences and limitations set forth herein (as so amended) which can be given
effect without the invalid, unlawful or unenforceable right, preference or
limitation herein set forth shall be deemed dependent upon any other such right,
preference or limitation unless so expressed herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.].
IN WITNESS WHEREOF, the undersigned, being the President of the Company, has
executed this Certificate of Designations as of July 18, 2003.
AUTO DATA NETWORK, INC.
By:
Name: Christopher R Glover
Title: