FORM OF
CERTIFICATE OF DESIGNATIONS,
PREFERENCES, RIGHTS AND LIMITATIONS OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
ORION ACQUISITION CORP. II
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Orion Acquisition Corp. II, a Delaware corporation (hereinafter called the
"Company"), hereby certifies that, pursuant to the authority expressly vested in
the Board of Directors of the Company by the Restated Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), and in
accordance with the provisions of Sections 103 and 151 of the General
Corporation Law of the State of Delaware, the Board of Directors has duly
adopted the following resolutions.
RESOLVED, that, pursuant to the Certificate of Incorporation (which
authorizes 1,000,000 shares of preferred stock, $.01 par value per share
("Preferred Stock")), the Board of Directors hereby fixes the powers,
designations, preferences and relative, participating, optional and other
special rights, and the qualifications, limitations and restrictions, of the
Series B Convertible Preferred Stock.
RESOLVED, that the Company is authorized to issue Series B Convertible
Preferred Stock on the following terms and with the provisions herein set forth:
(1). Designation and Number of Shares. Of the 1,000,000 shares of
Preferred Stock authorized pursuant to the Fourth Article of the Company's
Certificate of Incorporation, 685,000 shares are hereby designated as Series B
Convertible Preferred Stock (the "Series B Preferred Stock").
(2). Liquidation Preference. In the event of any liquidation, dissolution
or winding up of the Company, either voluntary or involuntary, subject to the
rights of other Series of Preferred Stock that are in existence or may, from
time to time, come into existence, the assets of the Company available for
distribution to shareholders shall be distributed among the holders of the
Series B Preferred Stock and among common stock, $0.01 par value per share
("Common Stock") on the basis of each share of Series B Preferred Stock
receiving an amount of cash or other distributable property that is the
Conversion Rate (as hereinafter defined) times the amount payable or
distributable for each share of Common Stock.
(3). Redemption. The Series B Preferred Stock does not have any redemption
rights.
(4). Dividends. The Series B Preferred Stock will not be entitled to
dividends unless the Company pays cash dividends or dividends in other property
to holders of outstanding shares of Common Stock, in which event, each
outstanding share of the Series B Preferred Stock will be entitled to receive
dividends of cash or property equivalent to that paid in respect of one share of
Common Stock times the Conversion Rate (as hereinafter defined). Any dividend
payable to the Series B Preferred Stock will have the same record and payment
date and terms as the dividend is payable on the Common Stock.
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(5). Mandatory Conversion.
(a). Conversion. In the event that the Company increases the number
of shares of authorized Common Stock to be equal to or in excess of
25,000,000 shares of Common Stock, then upon the filing and acceptance of
any change in the Certificate of Incorporation reflecting the increase in
capital, whether by amendment or restatement, all the outstanding shares
of Series B Preferred Stock will immediately and automatically convert
into shares of the Company's Common Stock without any notice required on
the part of the Company or the holder ("Mandatory Conversion"). In such
event, holders of Series B Preferred Stock will be entitled to receive
Common Stock at the conversion rate of ten (10) shares of fully paid and
non-assessable Common Stock for one (1) share of Series B Preferred Stock
("Conversion Rate").
(b). Obligation. The Company agrees that it shall in good faith take
and any all such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized shares of Common Stock to not less
than 25,000,000 and to expeditiously effect the conversion of (i) all
outstanding shares of the Series B Preferred Stock to shares of Common
Stock and (ii) permit the exercise of all options, warrants or rights to
purchase shares of Series B Preferred Stock pursuant to the terms of their
defining instruments, including, without limiting use its good faith best
efforts to obtain the requisite shareholder approval of any necessary
amendment to the Certificate of Incorporation to achieve the foregoing.
(c). Conversion Procedure. The Company shall use its reasonable best
efforts to issue or cause its transfer agent to issue the Common Stock
issuable upon a Mandatory Conversion within three (3) business days after
the Mandatory Conversion. The Company shall bear the cost associated with
the issuance of the Common Stock issuable upon the Mandatory Conversion.
The Common Stock and other securities issuable upon the Mandatory
Conversion shall be issued with a restrictive legend indicating that it
was issued in a transaction which is exempt from registration under the
Securities Act, and that it CANNOT BE transferred unless it is so
registered, or an exemption from registration is available, in the opinion
of counsel to the Company. The Common Stock issuable upon the Mandatory
Conversion shall be issued in the same name as the person who is the
holder of the Series B Preferred Stock unless, in the opinion of counsel
to the Company, such transfer can be made in compliance with applicable
securities laws. The person in whose name the certificates of Common Stock
are so recorded and other securities issuable upon the Mandatory
Conversion shall be treated as a common stockholder of the Company at the
close of business on the date of the Mandatory Conversion. The
certificates representing the Series B Preferred Stock shall be cancelled,
on the date of the Mandatory Conversion.
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(6). Adjustments to Conversion Rate and Reorganization. The Conversion
Rate for the number of shares of Common Stock into which the Series B Preferred
Stock shall be converted on a Mandatory Conversion shall be subject to
adjustment from time to time as hereinafter set forth:
(a) Stock Dividends - Recapitalization, Reclassification, Split-Ups.
If, prior to the date of Mandatory Conversion, the number of outstanding shares
of Common Stock is increased by a stock dividend on the Common Stock payable in
shares of Common Stock or by a split-up, recapitalization or reclassification of
shares of Common Stock or other similar event, then, on the effective date
thereof, the number of shares of Common Stock issuable on the Mandatory
Conversion of the Series B Preferred Stock shall be increased in proportion to
such increase in outstanding shares of Common Stock.
(b) Aggregation of Shares. If prior to the date of Mandatory
Conversion, the number of outstanding shares of Common Stock is decreased by a
consolidation, combination or reclassification of shares of Common Stock or
other similar event, then, upon the effective date thereof, the number of shares
of Common Stock issuable on the Mandatory conversion of the Series B Preferred
Stock shall be decreased in proportion to such decrease in outstanding shares.
(c) Change Resulting from Reorganization or Change in Par Value,
etc. In case of any reclassification or reorganization of the outstanding shares
of Common Stock which solely affects the par value of the shares of Common
Stock, or in the case of any merger or consolidation of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification
or reorganization of the outstanding shares of Common Stock), or in the case of
any sale or conveyance to another corporation or entity of the property of the
Company as an entirety or substantially as an entirety in connection with which
the Company is dissolved, the holders of the Series B Preferred Stock shall have
the right thereafter (until the Mandatory Conversion or its equivalent) to
receive upon the conversion of the Series B Preferred Stock the kind and amount
of shares of stock or other securities or property (including cash) receivable
upon such reclassification, reorganization, merger or consolidation, or upon a
dissolution following any such sale or other transfer, by a holder of the number
of shares of Common Stock into which the Series B Preferred Stock is convertible
immediately prior to such event; and if any reclassification also results in a
change in shares of Common Stock, then such adjustment also shall be made.
(d) Successive Changes. The provisions of this Section shall
similarly apply to successive reclassifications, reorganizations, mergers or
consolidations, sales or other transfers.
(7). Voting Rights. The holders of record of shares of Series B Preferred
Stock shall be entitled to the following voting rights:
(a) Those voting rights required by applicable law but excluding the
right to vote as a separate class (except as provided in Section (12)); and
(b) The right to vote together with the holders of the Common Stock
upon all matters submitted to such holders for a vote, the vote of each share of
Series B Preferred Stock to be equal to the then Conversion Rate.
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Notwithstanding Section (7)(b), so long as the Series B Preferred Stock is
outstanding, the holders of Series B Preferred Stock voting as a separate class
shall have the right to elect a simple majority in the number of the Board of
Directors of the Company, which directors shall be subject to removal only upon
the vote of the holders of a majority of the Series B Preferred Stock. For
clarification, if the Board of Directors consists of an odd number of persons,
the Series B Preferred Stock will have the right to nominate and vote upon the
fewest number of persons to permit them to elect the majority of the Board of
Directors (e.g., two of three, three of five, four of seven, etc.) and, if the
Board of Directors consists of an even number of persons the Series B Preferred
Stock will have the right to nominate and vote upon 50% plus one of the number
of persons (e.g., all of one or two, three of four, four of six, etc.). The
above voting rights are also subject to the Protective Rights contained in
Section (12) hereof.
(8). No Impairment. The Company will not, by amendment of its Certificate
of Incorporation or through any reorganization, recapitalization, 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
this section 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 Series B
Preferred Stock against impairment.
(9). No Fractional Shares and Certificate as to Adjustments. No fractional
shares shall be issued upon the conversion of any share or shares of the Series
B Preferred Stock, and the number of shares of Common Stock to be issued shall
be rounded to the nearest whole share. The number of shares issuable upon
conversion shall be determined on the basis of the total number of shares of
Series B Preferred Stock the holder is at the time converting into Common Stock
and the number of shares of Common Stock issuable upon such aggregate
conversion.
(10). Notices of Record Date. In the event of any taking by the Company of
a record 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) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or any other right, the Company shall mail to each
holder of Series B Preferred Stock, at least ten (10) days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.
(11). Notices. Any notice required by the provisions of this Certificate
of Designations to be given to the holders of shares of Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
Company.
(12). Protective Provisions. So long as any shares of Series B Preferred
Stock are outstanding, the Company shall not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least a sixty percent (60%) of the then outstanding shares of Series B Preferred
Stock, voting as a separate class:
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(a) create (by reclassification or otherwise) any new class or
series of shares having rights, preferences or privileges equal or senior to the
Series B Preferred Stock.
(b) alter or change the rights, preferences or privileges of the
Series B Preferred Stock.
(c) amend the Company's Certificate of Incorporation in a manner
that materially adversely affects the rights, preferences or privileges of the
holders of the Series B Preferred Stock.
(d) increase or decrease the authorized number of shares of
Preferred Stock of the Company;
(e) liquidate or wind-up the Company; or
(f) redeem, purchase or otherwise acquire (or pay into or set funds
aside for a sinking fund for such purpose) any share or shares of Preferred
Stock or Common Stock; provided, however, that this restriction shall not apply
to the repurchase of shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for the Company or any
subsidiary pursuant to agreements under which the Company has the option to
repurchase such shares at cost upon the occurrence of certain events, such as
the termination of employment, or through the exercise of any right of first
refusal.
(13). Return of Status as Authorized Shares. Upon a Mandatory Conversion
or any other redemption or extinguishment of the Series B Preferred Stock, the
shares converted, redeemed or extinguished will be automatically returned to the
status of authorized and unissued shares of preferred stock, available for
future designation and issuance pursuant to the terms of the Certificate of
Incorporation.
FURTHER RESOLVED, that the statements contained in the foregoing
resolutions creating and designating the said Series B Convertible Preferred
Stock and fixing the number, powers, preferences and relative, optional,
participating, and other special rights and the qualifications, limitations,
restrictions, and other distinguishing characteristics thereof shall, upon the
effective date of said series, be deemed to be included in and be a part of the
Certificate of Incorporation of the Company pursuant to the provisions of
Sections 104 and 151 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designation of the Series B Convertible Preferred Stock on this 23 day of June,
2004.
ORION ACQUISITION CORP. II
By:
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Name: Dyana Marlett
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Title: Secretary
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