Attached files
Exhibit
3.4
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*150101*
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ROSS
MILLER
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Secretary
of State
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204
North Carson Street, Suite 1
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Carson
City, Nevada 89701-4520
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(775)
684 5708
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Website:
www.nvsos.gov
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(PURSUANT
TO NRS 78.1955)
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USE
BLACK INK ONLY - DO NOT HIGHLIGHT
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ABOVE
SPACE
IS FOR OFFICE USE ONLY
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Certificate
of Designation For
Nevada
Profit Corporations
(Pursuant
to NRS 78.1955)
1. Name
of corporation:
AMBICOM
HOLDINGS, INC.
2. By
resolution of the board of directors pursuant to a provision in the articles of
incorporation this certificate establishes the following regarding the voting
powers, designations, preferences, limitations, restrictions and relative rights
of the following class or series of stock.
CERTIFICATE
OF DESIGNATION, RIGHTS AND PREFERENCES
OF
6%
SERIES B CONVERTIBLE, REDEEMABLE PREFERRED
STOCK
OF
AMBICOM
HOLDINGS, INC.
1.
Designation. The designation of the series of preferred stock created hereby
shall be "6% SERIES B CONVERTIBLE, REDEEMABLE"
(the "Series B Preferred Stock") and the number of shares constituting the
Series A Preferred Stock shall be 9,400,000 shares, par value $0.001 per
share.
(balance
attached)
3. Effective
date of filing: (optional)
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(must
not be later than 90 days after the certificate is
filed)
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4. Signature:
(required)
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X
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Signature
of Officer
Filing
Fee: $175.00
IMPORTANT: Failure to include
any of the above information and submit with the proper fees may cause this
filing to be rejected.
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This
form must be accompanied by appropriate fees.
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Nevada
Secretary of State Stock Designation
Revised:
3-6-09
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CERTIFICATE
OF DESIGNATION, RIGHTS AND PREFERENCES
OF
6%
SERIES B CONVERTIBLE, REDEEMABLE PREFERRED STOCK
OF
AMBICOM
HOLDINGS, INC.
(Continued)
2.
Certain Definitions.
For the purposes of the Certificate of Designation, Preferences and Rights which
embodies this resolution, unless the context otherwise requires, capitalized
terms used and not otherwise defined in such Certificate of Designation,
Preferences and Rights shall have the following meanings (with terms defined in
the singular having comparable meanings when used in the plural):
“Additional
Shares of Common Stock” shall mean all shares (including treasury shares) of
common stock issued or sold by the Company after the date hereof, whether or not
subsequently reacquired or retired by the Company, other than (i) shares of
common stock issued upon conversion of the Series B Preferred Stock or (ii)
shares of common stock issued concurrently with the issuance of the Series B
Preferred Stock.
“Business
Day” shall mean any day on which banks are open for business in New York, New
York (other than a Saturday or Sunday), provided that any reference to “days”
(unless Business Days are specified) shall mean calendar days.
“Closing”
shall mean the consummation of the Company’s Agreement and Plan of Share
Exchange with AmbiCom Acquisition Corp., and the transactions related
thereto.
“Commission”
shall mean the Securities and Exchange Commission or any successor federal
agency having similar powers.
“Common
Stock” shall mean the common stock of the Company, par value $.001 per share,
and any stock into which such stock shall have been converted or changed or any
stock resulting from any reclassification of such stock and all other stock of
any class or classes (however designated) of the Company, the holders of which
shall have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to
preference.
“Company”
shall mean AmbiCom Holdings, Inc., a Nevada corporation.
“Conversion
Rate” shall mean the conversion rate set forth in Section 5.
“Convertible
Security” shall mean with respect to the Company any evidence of indebtedness,
shares of stock (other than Common Stock) or other securities directly or
indirectly convertible into or exchangeable for Additional Shares of Common
Stock.
“Holder”
shall mean a holder of the Series B Preferred Stock.
“Options”
shall mean rights, options or warrants subscribe for, purchase or otherwise
acquire Additional Shares of Common Stock or Convertible
Securities.
1
“Other
Securities” shall mean, when referring to the Company, any stock (other than
Company Common Stock) and any other securities of the Company or any other
Person (corporate or otherwise) which the holder of Series B Preferred Stock
shall at any time be entitled to receive, or shall have received, upon
conversion of Series B Preferred Stock, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities.
“Securities
Act” shall mean the Securities Act of 1933, as amended.
“Stated
Value” of any share of Series B Preferred Stock shall mean $1.00.
“Trading
Day” means a day on which the New York Stock Exchange is open for
trading.
“VWAP”
means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the Trading Market on which the Common
Stock is then listed or quoted for trading as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time); (b) if the OTC Bulletin Board is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
quoted for trading on the OTC Bulletin Board and if prices for the Common Stock
are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported; or (d) in
all other cases, the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by a Majority in Interest and
reasonably acceptable to the Company, the fees and expenses of which shall be
paid by the Company.
3.
Dividends and
Distributions. Each share of Series B Preferred Stock shall be
entitled to receive, cumulative annual dividends at the rate of 6.0% per annum
on the Stated Value thereof. Such dividends shall be due and payable annually on
the last day of January of each year (the “Dividend Payment Date”) in a number
of shares of the Company’s fully paid and non-assessable Common Stock equal to
the amount of the dividend payment divided by the Stated Value (the “Dividend
Shares”). The Dividend Shares so payable will be paid to the person in whose
name the applicable shares of Series B Preferred Stock (or one or more
predecessor shares) are registered on the records of the Corporation (the
“Series B Preferred Stock Register” ). Upon delivery of the Dividend Shares, the
Company shall deliver a written notice to the recipient of any such shares
setting forth the calculation of the Dividend Shares.
4.
Voting
Rights:
(a) Holders
of the Series B Preferred Stock shall vote, on an “as converted” basis together
with the Common Stock, as a single class on all matters to which shareholders of
the Company are entitled to vote, but, notwithstanding anything else contained
herein, such right to vote shall be provided in any case only to the extent
required by law.
(b) Whenever
holders of the Series B Preferred Stock are required or permitted to take any
action by vote, such action may be taken without a meeting on written consent,
setting forth the action so taken and signed by the holders of the Series B
Preferred Stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. When voting as a
separate class, each share of the Series B Preferred Stock shall entitle the
holder thereof to one vote.
2
(c) Holders
of the Series B Preferred Stock shall vote together as a separate class on all
matters which impact the rights, value, or ranking of the Common Stock or Series
B Preferred Stock, subject to the limitations provided herein.
(d) Except
as set forth in this Certificate of Designations, the Series B Preferred Stock
shall have no other voting rights or other rights to consent to any matter to
which stockholders of the Company may vote upon or consent to.
5.
Conversion. The
Holder of the Series B Preferred Stock shall have the following conversion
rights (the “Conversion Rights”):
(a) Initial
Conversion. The Holders of any shares of Series B Preferred
Stock may, at such holder’s option, without any further consideration, at any
time (the “Initial Conversion”), subject to the limitations set forth herein,
elect to convert all or any portion of the shares of Series B Preferred Stock
held by such person, together with any and all accrued and unpaid dividends,
into a number of fully paid and nonassessable shares of Common Stock on the
basis one share of Common Stock per each share of Series B Preferred Stock
converted (the “Initial Conversion Rate”). In the event of a
liquidation, dissolution or winding up of the Company, the Conversion Rights
shall terminate at the close of business on the last full day preceding the date
fixed for the payment of any such amounts distributable on such event to the
holders of Series B Preferred Stock.
(b) Anniversary
Conversion. At any time following the second anniversary of
the Closing, the Holders of any shares of Series B Preferred Stock may
thereafter, at such holder’s option, without any further consideration, at any
time (the “Anniversary Conversion”), subject to the limitations set forth
herein, elect to convert all or any portion of the shares of Series B Preferred
Stock held by such person into a number of fully paid and nonassessable shares
of Common Stock equal to the Stated Value of the number of shares of Series B
being converted, together with any and all accrued and unpaid dividends, divided
by the greater of :(i) forty cents ($0.40); or (ii) seventy percent (70%) of the
VWAP of the twenty Trading Days immediately preceding the Conversion Date (as
that term is defined herein) (the “Anniversary Conversion Rate”). In the event
of a liquidation, dissolution or winding up of the Company, the Conversion
Rights shall terminate at the close of business on the last full day preceding
the date fixed for the payment of any such amounts distributable on such event
to the holders of Series B Preferred Stock.
(c) The
conversion of the Series B Preferred Stock shall be conducted in the following
manner:
(i)
Holder’s Delivery Requirements. To convert the Series B Preferred Stock into
full shares of Common Stock on any date, the holder thereof shall transmit by
overnight carrier (or otherwise deliver), for receipt on or prior to 5:00 p.m.,
New York time on such date, to the Company at its then principal offices,
Attention: Chief Financial Officer, the original certificates representing the
shares of Series B Preferred Stock being converted (the “Preferred
Stock Certificates”) and the original, fully-executed notice of conversion in
the form attached hereto as Exhibit A (the “Conversion Notice”).
(ii)
Company’s Response. Upon receipt by the Company of the Conversion Notice and the
Preferred Stock Certificates (the “Conversion Date”), the Company shall
immediately send, via facsimile, a confirmation of receipt of such Conversion
Notice to such holder and the Company or its designated transfer agent (the
“Transfer Agent”), as applicable, shall, within five (5) business days following
the date of receipt by the Company of the fully executed Conversion Notice and
Preferred Stock Certificates, issue and deliver to the Holder, certificates
registered in the name of the Holder or its designee, representing the number of
shares of Common Stock to which the holder shall be entitled. If the number of
shares of Series B Preferred Stock represented by the Preferred Stock
Certificate(s) submitted for conversion is greater than the number of shares of
Series B Preferred Stock being converted, then the Company shall, as soon as
practicable and in no event later than five (5) business days after receipt of
the Preferred Stock Certificate(s) and at the Company’s expense, issue and
deliver to the holder a new Preferred Stock Certificate representing the number
of shares of Series B Preferred Stock not converted.
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(iii)
Record Holder.
The person or persons entitled to receive the shares of Common Stock issuable
upon a conversion of the Series B Preferred Stock shall be treated for all
purposes as the record holder or holders of such shares of Common Stock from and
after the Conversion Date.
(d) Reservation of Common
Stock. The Company shall reserve out of its authorized but unissued
shares of Common Stock that number of its shares of Common Stock as shall be
sufficient to effect the conversion of all outstanding shares of the Series B
Preferred Stock.
(e) Termination of Rights on
Conversion. All shares of the Series B Preferred Stock converted as
herein provided shall no longer be deemed to be outstanding, and all rights with
respect to such shares, including the rights, if any, to receive dividends,
notices and to vote, shall immediately cease and terminate on conversion, except
only the right of the holders thereof to receive shares of Common Stock in
exchange therefor. Any shares of Series B Preferred Stock so converted shall be
retired and canceled and shall not be reissued, and the Company may from
time-to-time take such appropriate action as may be necessary to reduce the
number of shares of authorized Series B Preferred Stock
accordingly.
(f) Adjustment for
Reclassification, Exchange, or Substitution. If the Common Stock issuable
upon the conversion of the Series B Preferred Stock shall be changed into the
same or a different number of shares of any class or classes of stock, whether
by capital reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation, change of control, share exchange or sale of assets
provided for below), then and in each such event the holder of each share of
Series B Preferred Stock shall have the right thereafter to convert such share
into the kind and amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification, or other change, by
holders of the number of shares of Common Stock into which such shares of Series
B Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(g) Adjustment for Merger,
Reorganization, Change of Control, etc. In case of any consolidation,
merger or share exchange of the Company with or into another corporation or the
sale of all or substantially all of the assets of the Company to another
corporation or in the event that there is a Change of Control (as defined
below), then each share of Series B Preferred Stock shall thereafter be
convertible into the kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock of the
Company deliverable upon conversion of such Series B Preferred Stock would have
been entitled upon such consolidation, merger or sale; and, in such case,
appropriate adjustment (as determined in good faith by the Board of Directors)
shall be made in the application of the provisions in this Section 5 set forth
with respect to the rights and interest thereafter of the holders of the Series
B Preferred Stock, to the end that the provisions set forth in this Section 5
(including provisions with respect to changes in and other adjustments of the
Series B Conversion Rate) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Series B Preferred
Stock.
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(h) Adjustment to Conversion
Price Due to Stock Split, Stock Dividend, etc. If, prior to the
Conversion of all of the Series B Preferred Stock, (A) the number of outstanding
shares of Common Stock is increased by a stock split, a stock dividend on the
Common Stock, a reclassification of the Common Stock, or the distribution to
holders of Common Stock of rights or warrants entitling them to subscribe for or
purchase Common Stock at less than the then current market price thereof (based
upon the subscription or exercise price of such rights or warrants at the time
of the issuance thereof), the Conversion Price shall be
proportionately reduced, or (B) the number of outstanding shares of Common Stock
is decreased by a reverse stock split, combination or reclassification of
shares, the Conversion Price shall be
proportionately increased. In such event, the Corporation
shall notify the Transfer Agent of such change on or before the effective date
thereof.
(i)
No Impairment. The
Company will not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, share exchange,
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 5 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 B Preferred Stock against
impairment.
(j)
Certificate as to
Adjustments. Upon the occurrence of each adjustment or readjustment of
the Conversion Rate pursuant to this Section 5, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each Holder a certificate setting forth such adjustment
and showing in detail the facts upon which such adjustment or readjustment is
based and shall file a copy of such certificate with its corporate records. The
Company shall, upon the written request at any time of any holder of Series B
Preferred Stock, furnish or cause to be furnished to such holder a similar
certificate setting forth (1) such adjustments and readjustments, (2) the
Conversion Rate then in effect, and (3) the number of shares of Common Stock and
the amount, if any, of other property which then would be received upon the
conversion of Series B Preferred Stock. Despite such adjustment or readjustment,
the form of each or all stock certificate representing Series B Preferred Stock,
if the same shall reflect the initial or any subsequent Conversion Rate, need
not be changed in order for the adjustments or readjustments to be valued in
accordance with the provisions of this Certificate of Designation, Preferences
and Rights which shall control.
(k) Notice to
Shareholders. If:
(1) the
Company shall declare a dividend (or any other distribution) on its Common
Stock; or
(2) the
Company shall declare a special nonrecurring cash dividend or a redemption of
its Common Stock; or
(3) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; or
(4) the
approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock of the Company (other than a
subdivision or combination of the outstanding shares of Common Stock), any
consolidation or merger to which the Company is a party, any sale or transfer of
all or substantially all of the assets of the Company, or any compulsory share
exchange whereby the Common Stock is converted into other securities, cash or
property; or
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(5) the
Company shall authorize the voluntary or involuntary dissolution, liquidation or
winding-up of the affairs of the Company;
Then the
Company shall cause to be filed at each office or agency maintained for the
purpose of conversion of Series B Preferred Stock, and shall cause to be mailed
to the Holders of the Series B Preferred Stock at their last address as they
shall appear upon the stock books of the Company, at least twenty (20) calendar
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding-up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding-up; provided, however, that the failure to
mail such notice or any defect therein or in the mailing thereof shall not
affect the validity of the corporate action required to be specified in such
notice.
(l)
Curative
Provision. If at any time conditions shall arise by reason of action
taken by the Company which in the opinion of the Board of Directors are not
adequately covered by the other provisions hereof and which might materially and
adversely affect the rights of the holders of Series B Preferred Stock
(different than or distinguished from the effect generally on rights of holders
of any class of the Company’s capital stock) or if at any time any such
conditions are expected to arise by reason of any action contemplated by the
Company, the Company shall mail a written notice briefly describing the action
contemplated and the material adverse effects of such action on the rights of
the holders of Series B Preferred Stock at least thirty (30) calendar days prior
to the effective date of such action, and an appraiser selected by the holders
of a majority in interest of the Series B Preferred Stock shall give its opinion
as to the adjustment, if any (not inconsistent with the standards established in
this Section 5) of the Conversion Rate (including, if necessary, any adjustment
as to the securities into which shares of Preferred Stock may thereafter be
convertible) and any distribution which is or would be required to preserve
without diluting the rights of the holders of shares of Series B Preferred
Stock; provided, however, that the Company, after receipt of the determination
by such appraiser, shall have the right to select an additional appraiser, in
which case the adjustment shall be equal to the average of the adjustments
recommended by each such appraiser. The Board of Directors shall make the
adjustment recommended forthwith upon the receipt of such opinion or opinions or
the taking of any such action contemplated, as the case may be.
(m) Issuance Taxes. The
issuance of certificates for shares of Common Stock on any conversion of Series
B Preferred Stock shall be made without charge to the holders thereof for any
documentary stamp or similar taxes that may be payable in respect of the issue
or delivery of such certificate, provided that the Company shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate upon conversion in a name other
than that of the holder of such shares of Series B Preferred Stock so converted
and the Company shall not be required to issue or deliver such certificates or
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
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(n) Prohibition of Certain
Actions. The Company will not, by amendment of its articles 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 this Section 5 and in
the taking of all such action as may reasonably be requested by the Holder in
order to protect the conversion privilege of such Holder against dilution or
other impairment, consistent with the tenor and purpose of this Section 5.
Without limiting the generality of the foregoing, the Company (A) will not
increase the par value of any shares of any series of Common Stock receivable
above the par value of the Series B Preferred Stock then in effect, (B) will
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the conversion of all Series B from time to time outstanding,
(C) will not take any action which results in any adjustment of the Conversion
Rate if the total number of shares of Common Stock or Other Securities issuable
after the action upon the conversion of all shares of Series B Preferred Stock
would exceed the total number of shares of Common Stock or Other Securities then
authorized by the Company’s Articles of Incorporation and available for the
purpose of issue upon such conversion, and (D) will not issue any capital stock
of any class which has the right to more than one vote per share or any capital
stock of any class which is preferred as to dividends or as to the distribution
of assets upon voluntary or involuntary dissolution, liquidation or winding-up,
unless the rights of the holders thereof shall be limited to a fixed sum or
percentage (or floating rate related to market yields) of par value or stated
value in respect of participation in dividends and a fixed sum or percentage of
par value or stated value in any such distribution of assets.
6.
Redemption. The
shares of the Series B Preferred Stock shall be subject to redemption in
accordance with the provisions of this Section 6.
(a) Optional Redemption.
The Company shall have the right to redeem the Series B Preferred Stock in whole
or in part, at any time or from time to time (the “Optional Redemption”), at a
cash redemption price equal to the Stated Value of the Series B Preferred Stock
being redeemed (the “Optional Redemption Amount”) plus an amount of Common Stock
equal to the amount of the accrued and unpaid dividend thereon. In the event
that fewer than all the outstanding Series B Preferred Stock are to be redeemed,
the number of Series B Preferred Stock to be redeemed shall be determined by the
Board of Directors, and the shares to be redeemed shall be determined by lot or
pro rata as may be
determined by the Board of Directors or by any other method as may be determined
by the Board of Directors, in its sole discretion to be equitable, provided that
such method satisfies any applicable requirements of any securities exchange (if
any) on which the Series B Preferred Stock are then listed. In the event the
Company elects to redeem the Series B Preferred Stock on or before the second
anniversary of the Closing, the Company shall deliver a written notice to the
Holder of the Series B Preferred Stock at the Holder’s last known address as set
forth in the Series B Preferred Stock Register, advising the Holder of the
Company’s Optional Redemption (the “Optional Redemption Notice”). Upon delivery
by the Company of the Optional Redemption Notice, the Holder shall have twenty
(20) days to convert all, but not less than all, of the Series B Preferred Stock
into a number of shares of Common Stock equal to the Stated Value divided by
Forty Cents ($0.40), plus the amount of the accrued and unpaid dividend thereon.
In such instance, the Series B Preferred Stock shall be converted pursuant tot
he mechanics set forth in Section5(c) above.
(b) Mandatory
Redemption. All outstanding shares of Series B Preferred Stock
shall be redeemed by the Company on December 31, 2015 (the “Mandatory Redemption
Date”), at a per share redemption price equal to the Stated Value, payable in
cash out of funds legally available therefor (the “Mandatory Redemption”) plus
an amount of Common Stock equal to the amount of the accrued and unpaid dividend
thereon. At least ten (10) but no more than thirty (30) days prior to
the Mandatory Redemption Date, the Company shall deliver written notice to each
Holder of the Series B Preferred Stock to be redeemed, at the address last shown
on the Series B Preferred Stock Register, notifying the Holder of the redemption
to be effected, specifying the number of shares to be redeemed from such holder,
the Mandatory Redemption Date, the Stated Value, the place at which payment may
be obtained and calling upon such holder to surrender to the Company, in the
manner and at the place designated, his, her or its certificate or certificates
representing the shares to be redeemed (the “Mandatory Redemption Notice”). Once
delivered, a Mandatory Redemption Notice is irrevocable. On or after the
Mandatory Redemption Date, each holder of the Series B Preferred Stock to be
redeemed shall surrender to the Company the certificate or certificates
representing such shares, in the manner and at the place designated in the
Mandatory Redemption Notice, and thereupon the Stated Value of such shares shall
be payable to the person whose name appears on such certificate or certificates
as the owner thereof and each surrendered certificate shall be
cancelled.
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(c) The
Corporation shall not redeem or set aside funds for the redemption of any stock
of the Corporation ranking on parity with the Series B Preferred Stock as to
dividends or amounts upon liquidation unless prior to or contemporaneously
therewith it redeems, or sets aside funds for the redemption of, a number of
shares of Series B Preferred Stock whose liquidation preference bears the same
relationship to the aggregate liquidation preference of all shares of Series B
Preferred Stock then outstanding as the liquidation preference of such parity
stock to be redeemed bears to the aggregate liquidation preference of all parity
stock then outstanding.
7.
Ranking. For purposes
of the Certificate of Designation, Preferences and Rights embodying this
resolution, any stock of any class or series of the Company shall be deemed to
rank:
(a) prior
to shares of the Series B Preferred Stock, either as to dividends or upon
liquidation, if the holders of stock of such class or series shall be entitled
by the terms thereof to the receipt of dividends or of amounts distributable
upon liquidation, dissolution or winding up, as the case may be, in preference
or priority to the Holder of shares of the Series B Preferred
Stock;
(b) on
a parity basis with shares of the Series B Preferred Stock, either as to
dividends or upon liquidation if the holders of stock of such class or series
shall be entitled by the terms thereof to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority of one over the other as between the holders of such
stock and the Holder of shares of the Series B Preferred Stock.
8.
Liquidation, Dissolution or
Winding Up.
(a) Liquidation
Preference. In the event of a liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary (a "Liquidation"), the holders of
the Series B Preferred Stock then outstanding shall be entitled to receive out
of the available assets of the Company, whether such assets are stated capital
or surplus of any nature, an amount on such date equal to $2,500,000 (the
"Liquidation Preference") to be distributed pro rata in accordance with each
Holder’s ownership of the Series B Preferred Stock. Such payment shall be made
before any payment shall be made or any assets distributed to the holders of any
class or series of the Common Stock, the holders of the Series A Convertible
Preferred Stock or any other class or series of the Company's capital stock
ranking junior as to liquidation rights to the Series B Preferred
Stock. After the Liquidation Preference has been paid in full
pursuant to this Section 8, the holders of the Series A Convertible Preferred
Stock shall be entitled to receive their liquidation preference as set in the
Certificate of Designation of the Series A Convertible Preferred Stock.
Following payment, first, to the holders of the Series B Preferred Stock of the
full preferential amounts described in the first sentence of this Section 8 and,
second, to the holders of the Series A Convertible Preferred Stock of the full
amounts described in the Certificate of Designation of the Series A Convertible
Preferred Stock, the remaining assets (if any) of the Company available for
distribution to stockholders of the Company shall be distributed, subject to the
rights of the holders of shares of any other series of Preferred Stock ranking
prior to the Common Stock as to distributions upon liquidation, pro rata among
(i) the holders of the then outstanding shares of Series B Preferred Stock(as if
the Series B Preferred Stock had been converted into Common Stock as of the date
immediately prior to the date fixed for determination of stockholders entitled
to receive such distribution) and (ii) the holders of the Common Stock and any
other shares of capital stock of the Company ranking on a parity with the Common
Stock as to distributions upon Liquidation. If upon any Liquidation the assets
available for payment of the Liquidation Preference are insufficient to permit
the payment to the holders of the Series B Preferred Stock of the full
preferential amounts described in this paragraph, then all the remaining
available assets shall be distributed among the holders of the then outstanding
Series B Preferred Stock pro rata in accordance with each Holder’s ownership of
the Series B Preferred Stock held by each holder thereof.
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(b) Liquidation Value.
Each share of the Series B Preferred Stock shall be deemed converted into shares
of Common Stock pursuant to the applicable Conversion Rate set forth in Section
5 hereof and shall participate pari passu with the Common Stock and Series B
Preferred Stock of the Company in the proceeds available to the Company’s
shareholders upon the liquidation, dissolution, or winding up of the
Company.
(c) Business
Combinations. Neither the consolidation, merger or other business
combination of the Company with or into any other Person or Persons nor the sale
of all or substantially all of the assets of the Company shall be deemed to be a
liquidation, dissolution or winding up of the Company for purposes of this
Section 6.
9.
Miscellaneous
Provisions.
(a) Shares Restricted.
Neither the shares of Series B Preferred Stock nor the shares of Common Stock
into which they are convertible have been registered under the United States
Securities Act of 1933, as amended, or applicable state securities laws. Such
securities have been offered, sold and issued pursuant to exemptions from such
laws.
(b) Closing of Books. The
Company will at no time close its transfer books against the transfer of any
shares of Series B Preferred Stock or of any share of the Common Stock issued or
issuable upon the conversion of Series B Preferred Stock in any manner which
interferes with the timely conversion of such Series B Preferred
Stock.
(c) Headings of
Subdivisions. The headings of the various Sections and other subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
(d) Severability of
Provisions. If any voting powers, preferences and relative,
participating, optional and other special rights of the Series B Preferred Stock
and qualifications, limitations and restrictions thereon set forth in the
Certificate of Designation, Preferences and Rights embodying this resolution is
invalid, unlawful or incapable of being enforced by reason of any rule of law or
public policy, all other powers, preferences and relative, participating,
optional and other special rights of Series B Preferred Stock and
qualifications, limitations and restrictions thereon set forth therein which can
be given effect without the invalid, unlawful or unenforceable voting powers,
preferences and relative, participating, optional and other special rights of
Series B Preferred Stock and qualifications, limitations and restrictions
thereon shall, nevertheless, remain in full force and effect, and no voting
powers, preferences and relative, participating, optional or other special
rights of Series B Preferred Stock and qualifications, limitations and
restrictions thereon herein set forth shall be deemed dependent upon any other
such voting powers, preferences and relative, participating, optional or other
special rights of Series B Preferred Stock and qualifications, limitations and
restrictions thereon unless so expressed herein.
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