Attached files
CERTIFICATE OF DESIGNATION,
PREFERENCES
AND RIGHTS OF SERIES B
CONVERTIBLE PREFERRED STOCK OF
BERLINER COMMUNICATIONS,
INC.
I, Rich
Berliner, being the President of BERLINER COMMUNICATIONS, INC.,
a corporation organized and existing under the laws of Delaware (the “Corporation”), DO HEREBY CERTIFY that, on
this 27th day of
January, 2010, pursuant to authority conferred upon the Board of Directors of
the Corporation (the “Board”) by the
Amended and Restated Certificate of Incorporation of the Corporation and Section
141(b) of the Delaware General Corporation Law, the Board, at a meeting held on
January 26, 2010, adopted the following resolution:
RESOLVED, that pursuant to
authority vested in the Board of Directors by Article Fourth of the Amended and
Restated Certificate of Incorporation of the Corporation, there is hereby
established a series of Preferred Stock designated as “Series B Convertible
Preferred Stock”; that the series shall consist of 682,398 shares, par value
$0.00002 per share, which series shall have the preferences and rights set forth
in a Certificate of Designation, Preferences and Rights of Series B Preferred
Stock of the Corporation, to be filed with the Delaware Secretary of State, as
the same may be amended and restated from time to time, as set forth
below:
SERIES
B CONVERTIBLE PREFERRED STOCK
Section
1. Series B
Convertible Preferred Stock.
1.1.
Designation. The
second series of Preferred Stock is designated and known as “Series B
Convertible Preferred Stock” (the “Series B Preferred
Stock”) and shall consist of 682,398 shares.
1.2.
Rank. The
Series B Preferred Stock shall, with respect to dividend rights, and rights on
liquidation, dissolution and winding up of the affairs of the Corporation, rank
senior to the Series A Convertible Preferred Stock, par value $0.00002 per
share, of the Corporation (the “Series A Preferred
Stock”) and the common stock, par value $0.00002 per share, of the
Corporation (the “Common Stock”), and
to all other classes and series of equity securities of the Corporation
hereafter issued that are not by their terms expressly senior to or on parity
with the Series B Preferred Stock with respect to dividend rights, and rights on
liquidation, dissolution and winding up of the affairs of the
Corporation.
Section
2. Dividends.
2.1.
Participation. The
Corporation shall not pay preferential dividends to the holders of the Series B
Preferred Stock. Notwithstanding the foregoing, in the event that the
Corporation declares or pays any dividends upon the Common Stock (whether
payable in cash, securities (including, without limitation, shares of Common
Stock) or other property), the Corporation shall also declare and pay to the
holders of the Series B Preferred Stock at the same time that
it declares and pays such dividends to the holders of the Common Stock, the
dividends which would have been declared and paid with respect to the Common
Stock issuable upon conversion of the Series B Preferred Stock had all of the
outstanding Series B Preferred Stock been converted pursuant to the provisions
of Section 5
(and as if the shares of Series B Preferred Stock were then convertible
pursuant to the provisions of Section 5) immediately prior to
the record date for such dividend, or if no record date is fixed, the date as of
which the record holders of Common Stock entitled to such dividends are to be
determined.
- 1
-
2.2.
Non-Cash
Dividends. Whenever a dividend provided for in this Section 2 shall be
payable in property other than cash, the value of such dividend shall be deemed
to be the fair market value of such property as determined by the Board in the
manner set forth in Section 3.3.
Section
3. Liquidation
Rights. In
the event of any liquidation, dissolution or winding up of the Corporation
(each, a “Liquidation”),
whether voluntary or involuntary:
3.1.
Series B Preferred
Stock. The
holders of shares of Series B Preferred Stock then outstanding shall be entitled
to receive, out of the assets of the Corporation legally available for
distribution (the “Available Assets”),
and prior and in preference to any payment or distribution of any Available
Assets on any shares of the Series A Preferred Stock or any shares of the Common
Stock (or any setting apart of any payment or distribution), an amount equal to
the greater of (i) $100.00 per share of Series B Preferred Stock (as adjusted
for stock splits, stock dividends, combinations or the like) plus any declared
but unpaid dividends on the Series B Preferred Stock, and (ii) the amount
payable with respect to such shares of Series B Preferred Stock as if they had
been converted pursuant to the provisions of Section 5 (and as if
the shares of Series B Preferred Stock were then convertible pursuant to
the provisions of Section 5) immediately prior to
such Liquidation, but without requiring any actual conversion (such greater
amount, the “Liquidation
Preference”). If upon any Liquidation, the Available Assets
shall be insufficient to permit the payment to holders of the Series B Preferred
Stock of their full preferential amount described in this Section 3.1, then the
entire Available Assets shall be distributed among the holders of the then
outstanding Series B Preferred Stock, pro rata based on the number of shares of
Series B Preferred Stock then held by such holder.
3.2.
Deemed
Liquidation. Any
of the following events (each, a “Deemed Liquidation”)
shall be treated as a Liquidation for all purposes hereunder, unless the holders
of a majority of the outstanding shares of Series B Preferred Stock, voting or
consenting as a separate class, determine that this Section 3.2 not apply
to such event (in which case Section 5.6 shall
apply):
(a) any
merger or consolidation or recapitalization transaction or series of
transactions, whether or not the Corporation is the surviving or continuing
corporation in such transaction; provided that such
transaction or series of related transactions shall not be a Deemed Liquidation
if the stockholders of the Corporation
or their respective affiliates immediately prior to such transaction or
transactions will, immediately after such transaction or transactions (by virtue
of securities issued as consideration for the transaction or otherwise) hold at
least 50% of the voting power of the surviving, continuing or purchasing entity
in substantially the same relative proportions and with the same relative rights
and economics as existed prior to such transaction or series of
transactions;
- 2
-
(b) any
transaction or series of related transactions to which the Corporation is a
party in which in excess of fifty percent (50%) of the Corporation’s voting
power is transferred; and
(c) any
sale, license, transfer or other disposition of all or substantially all of the
assets (tangible or intangible) of the Corporation (including the assets or
equity of any subsidiaries of the Corporation);
provided, that upon
receipt of the full amount of the Liquidation Preference by the holders of
Series B Preferred Stock with respect to either (i) a Liquidation (as described
in Section 3.1)
or (ii) if earlier, a Deemed Liquidation under this Section 3.2, all
rights of such holders of Series B Preferred Stock as stockholders of the
Corporation by reason of the ownership of such shares will cease, and such
shares shall not thereafter be transferred on the books of the Corporation or be
deemed to be outstanding for any purpose whatsoever.
3.3.
Non-Cash
Consideration. If
any assets of the Corporation distributed to stockholders in connection with any
Liquidation are in a form other than cash, then the value of such assets shall
be their fair market value as determined by the Board in good faith, except that
any securities to be distributed to stockholders in a Liquidation shall be
valued as follows:
(a) The
method of valuation of securities not subject to investment letter or other
similar restrictions on free marketability shall be as follows:
(i) if
the securities are then traded on a national securities exchange or listed on
the Nasdaq Market (or a similar national quotation system), then the value shall
be deemed to be the average of the closing prices of the securities on such
exchange or system over the thirty (30) day period ending three (3) days
prior to the distribution; and
(ii) if
clause (i) above does not apply but the securities are actively traded
over-the-counter, then, unless otherwise specified in a definitive agreement for
the acquisition of the Corporation, the value shall be deemed to be the average
of the closing bid prices over the thirty (30) calendar day period ending three
(3) trading days prior to the distribution; and
(iii) if
there is no active public market, then the value shall be the fair market value
thereof, as determined in good faith by the Board.
(b) The
method of valuation of securities subject to investment letter or other
restrictions on free marketability shall be to make an appropriate discount from
the
market value determined as above in clause (i), (ii) or (iii) of Section 3.3(a) to
reflect the approximate fair market value thereof, as determined by the
Board.
- 3
-
Section
4. Voting
Rights.
4.1.
Series B Preferred
Stock. Each
holder of shares of Series B Preferred Stock shall be entitled to the number of
votes equal to the number of whole shares of Common Stock into which such shares
of Series B Preferred Stock could be converted pursuant to the provisions of
Section 5 (and
as if the shares of Series B Preferred Stock were then convertible pursuant
to the provisions of Section 5) at the date such vote
is taken or any written consent of stockholders is solicited.
4.2.
Scope. Each
holder of Series B Preferred Stock shall have full voting rights and powers
equal to the voting rights and powers of the holders of Common Stock, and shall
be entitled to notice of any stockholder meeting in accordance with the bylaws
of the Corporation (as in effect at the time in question) and applicable law,
and shall be entitled to vote, together with the holders of Common Stock, with
respect to any question upon which holders of Common Stock have the right to
vote, except as may be otherwise provided herein or as required by applicable
law. Except as otherwise expressly provided herein or as required by
applicable law, the holders of Series B Preferred Stock and the holders of
Common Stock shall vote together and not as separate classes.
4.3.
Class Protective
Provisions. Without
the approval of the holders of at least a majority of the Series B Preferred
Stock then outstanding, voting or consenting as a separate class, the
Corporation shall not, and shall not cause or permit any of its subsidiaries, as
applicable, to:
(a) authorize,
create or issue (by reclassification or otherwise) any capital stock (or any
equity security which by its terms is convertible into or exercisable or
exchangeable for any capital stock) having rights, preferences or privileges
senior to or on parity with the Series B Preferred Stock; or
(b) amend,
alter or repeal any provision of the Corporation’s Certificate of Incorporation
or any of its subsidiaries’ certificates of incorporation, bylaws or similar
organizational and governing documents in a manner that adversely affects any
rights, preferences or privileges of the Series B Preferred Stock.
4.4.
Election and Removal
of Directors by Series B Preferred Stock. The
holders of record of the shares of Series B Preferred Stock, voting or
consenting as a separate class, shall be entitled to elect one (1) member of the
Board (the “Series B
Director”), until such time as the Series B Preferred Stock represents
less than five percent (5%) of the then-outstanding shares of Common Stock
(including the Preferred Stock voting on an as-converted basis) (and as if the
shares of Series B Preferred Stock were then convertible pursuant to the
provisions of Section 5),
at which time the Series B Preferred Stock shall at no time thereafter be
entitled to separately elect a member of the Board. At any meeting
held for the purpose of electing directors, the presence in person or by proxy
of the holders
of a majority of the shares of Series B Preferred Stock then outstanding shall
constitute a quorum of the Series B Preferred Stock for the purpose of electing
the Series B Director. A vacancy in such directorship shall be filled
only by vote or written consent in lieu of a meeting of the holders of the
Series B Preferred Stock. The Series B Director may be removed, with
or without cause, only by the holders of Series B Preferred Stock in the same
manner as such director may be elected hereunder.
- 4
-
Section
5. Conversion
Rights. The
outstanding shares of Series B Preferred Stock shall be convertible into Common
Stock as follows (provided, that no
such conversion rights shall be applicable until such time as the Corporation
has at least 200,000,000 authorized shares of Common Stock):
5.1.
Optional
Conversion.
(a) At
the option of the holder thereof, each share of Series B Preferred Stock may be
converted without the payment of additional consideration, at any time or from
time to time, into fully paid and nonassessable shares of Common Stock as
provided herein.
(b) Each
holder of shares of Series B Preferred Stock who elects to convert any such
shares into shares of Common Stock shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or any
transfer agent for the Series B Preferred Stock or Common Stock, or the holder
shall notify the Corporation or its transfer agent that such certificates have
been lost, stolen or destroyed and deliver an agreement reasonably satisfactory
to the Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates, and in each case shall give written notice to
the Corporation at such office that such holder elects to convert shares of
Series B Preferred Stock and shall state therein the number of such shares being
converted. Thereupon, the Corporation shall promptly issue and
deliver at such office to such holder a certificate or certificates for the
number of shares of Common Stock to which such holder is entitled upon such
conversion and, if applicable, a certificate or certificates for the balance of
such number of shares of Series B Preferred Stock not being
converted. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
certificate or certificates representing the shares of Series B Preferred Stock
to be converted, and the person entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock on such date. If a conversion
election under this Section 5.1 is made in
connection with an underwritten offering of the Corporation’s securities
pursuant to the Securities Act of 1933, as amended (the “Securities Act”), the
conversion may, at the option of the holder tendering shares of Series B
Preferred Stock for conversion, be conditioned upon the closing with the
underwriters of the sale of the Corporation’s securities pursuant to such
offering, in which event the holders making such election who are entitled to
receive Common Stock upon conversion of their Series B Preferred Stock shall not
be deemed to have converted such shares of Series B Preferred Stock until
immediately
prior to the closing of such sale of the Corporation’s securities in such
offering.
- 5
-
5.2.
Automatic
Conversion.
(a) Each
share of Series B Preferred Stock shall automatically be converted into
fully-paid and nonassessable shares of Common Stock, as provided herein, upon
the approval of the holders of a majority of the then outstanding shares of
Series B Preferred Stock, voting or consenting as a separate class.
(b) Upon
the occurrence of the event specified in Section 5.2(a), the
outstanding shares of Series B Preferred Stock shall be converted into Common
Stock automatically without the need for any further action by the holders of
such shares and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent; provided, however, that the
Corporation shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon such conversion unless the certificates evidencing
such shares of Series B Preferred Stock are either delivered to the Corporation
or its transfer agent as provided below, or the holder notifies the Corporation
or its transfer agent that such certificates have been lost, stolen or destroyed
and executes an agreement reasonably satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection with such
certificates. Upon the occurrence of such automatic conversion of the
Series B Preferred Stock, the holders of Series B Preferred Stock shall
surrender the certificates representing such shares at the office of the
Corporation or any transfer agent for the Series B Preferred Stock or Common
Stock. Thereupon, there shall be issued and delivered to such holder
promptly at such office and in its name as shown on such surrendered certificate
or certificates, a certificate or certificates for the number of shares of
Common Stock into which the shares of Series B Preferred Stock surrendered were
convertible on the date on which such automatic conversion
occurred.
5.3.
Conversion
Price. Each
share of Series B Preferred Stock shall be convertible in accordance with Section 5.1 or Section 5.2 into the number
of shares of Common Stock which results from dividing the Original Issue Price
by the conversion price that is in effect at the time of conversion or deemed
conversion (the “Conversion
Price”). As used herein, the term “Original Issue Price”
shall mean $50.00 per share of Series B Preferred Stock. The initial
Conversion Price shall be $1.00 per share of Series B Preferred
Stock. The Conversion Price shall be subject to adjustment from time
to time as provided below. Following each adjustment of the
Conversion Price, such adjusted Conversion Price shall remain in effect until a
further adjustment of such Conversion Price hereunder.
5.4.
Adjustment Upon Common
Stock Event. Upon the happening of a Common Stock Event (as
hereinafter defined), the Conversion Price shall, simultaneously with the
happening of such Common Stock Event, be adjusted by multiplying the Conversion
Price in effect immediately prior to such Common Stock Event by a
fraction:
- 6
-
(a) the numerator of which shall be
the number of shares of Common Stock issued and outstanding immediately prior to
such Common Stock Event, and
(b) the
denominator of which shall be the number of shares of Common Stock issued and
outstanding immediately after such Common Stock Event.
The
Conversion Price for the Series B Preferred Stock shall be readjusted in the
same manner upon the happening of each subsequent Common Stock
Event. As used herein, the term “Common Stock Event”
shall mean at any time or from time to time after the date on which the first
share of Series B Preferred Stock is issued by the Corporation (the “Original Issue
Date”), (i) a subdivision of the outstanding shares of Common Stock into
a greater number of shares of Common Stock or (ii) a combination of the
outstanding shares of Common Stock into a smaller number of shares of Common
Stock.
5.5.
Adjustment for
Reclassification, Exchange and Substitution. If
at any time or from time to time after the Original Issue Date the Common Stock
issuable upon the conversion of the Series B Preferred Stock is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than by a Common Stock
Event or a stock dividend, reorganization, merger or consolidation provided for
elsewhere in this Section 5), then in
any such event each holder of Series B Preferred Stock shall have the right
thereafter to convert such stock into the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other change by holders of the number of shares of Common Stock into which
such shares of Series B Preferred Stock could have been converted immediately
prior to such recapitalization, reclassification or change, all subject to
further adjustment as provided herein or with respect to such other securities
or property by the terms thereof.
5.6.
Reorganizations,
Mergers and Consolidations. If
at any time or from time to time after the Original Issue Date there is a
reorganization of the Corporation (other than a recapitalization, subdivision,
combination, reclassification or exchange of shares provided for elsewhere in
this Section 5)
or a merger or consolidation of the Corporation with or into another corporation
(except an event which is governed under Section 3.2 in which the
holders of Series B Preferred Stock have not elected to make Section 3.2 inapplicable),
then, as a part of such reorganization, merger or consolidation, provision shall
be made so that the holders of the Series B Preferred Stock thereafter shall be
entitled to receive, upon conversion of the Series B Preferred Stock, the number
of shares of stock or other securities or property of the Corporation, or of
such successor entity resulting from such reorganization, merger or
consolidation, to which a holder of Common Stock deliverable upon conversion
would have been entitled on such reorganization, merger or
consolidation. In any such case, appropriate adjustment shall be made
in the application of the provisions of this Section 5 with
respect to the rights of the holders of the Series B Preferred Stock after the
reorganization, merger or consolidation to the end that the provisions of this
Section 5
(including adjustment of the Conversion Price then in effect and the number of
shares issuable upon conversion of the Series B Preferred Stock) shall be
applicable after that event and be as nearly equivalent to the provisions hereof
as may be practicable. This Section 5.6 shall similarly
apply to successive reorganizations, mergers and
consolidations. Notwithstanding anything to the contrary contained in
this Section 5,
if any reorganization, merger or
consolidation is approved by the vote or consent of the holders of Series B
Preferred Stock required by any provision of Section 4.3, then such
transaction and the rights of the holders of Series B Preferred Stock pursuant
to such reorganization, merger or consolidation will be governed by the
documents entered into in connection with such transaction and not by the
provisions of this Section 5.6.
- 7
-
5.7.
Certificate of
Adjustment. In
each case of an adjustment or readjustment of the Conversion Price, the
Corporation, at its expense, shall cause its chief financial officer or
equivalent thereof to compute such adjustment or readjustment in accordance with
the provisions hereof and prepare a certificate showing such adjustment or
readjustment, and shall mail such certificate, by first class mail, postage
prepaid, to each registered holder of the Series B Preferred Stock at the
holder’s address as shown in the Corporation’s books.
5.8.
Fractional
Shares. No
fractional shares of Common Stock shall be issued upon any conversion of Series
B Preferred Stock. All shares of Common Stock (including fractions
thereof) issuable upon conversion of more than one share of Series B Preferred
Stock by a holder thereof shall be aggregated for purposes of determining
whether conversion would result in the issuance of any fractional
share. If, after the aforementioned aggregation, the conversion would
result in the issuance to any holder of a fractional share, then, in lieu of any
fractional share to which the holder would otherwise be entitled, the
Corporation shall pay the holder cash equal to the product of such fraction
multiplied by the Common Stock’s fair market value as determined in good faith
by the Board as of the date of conversion.
5.9.
Reservation of Stock
Issuable Upon Conversion. From
and after the date on which the shares of Series B Preferred Stock become
convertible in accordance with this Section 5, the Corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series B Preferred Stock, such number of shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series B Preferred Stock; and 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 the Series B Preferred Stock,
the Corporation will take such corporate action as may be necessary, in the
opinion of its counsel, to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such
purpose.
5.10.
No
Impairment. The
Corporation shall not avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
shall at all times in good faith assist in carrying out all such action as may
be reasonably necessary or appropriate in order to protect the conversion rights
of the holders of the Series B Preferred Stock against impairment.
Section
6. Replacement. Upon
receipt of evidence reasonably satisfactory to the Corporation (an affidavit of
the registered holder shall be satisfactory) of the ownership and the loss,
theft, destruction or mutilation of any certificate evidencing shares of Series
B Preferred Stock, and in the case of any such loss, theft or destruction, upon
receipt of an agreement reasonably satisfactory to the Corporation to indemnify
the Corporation from any loss incurred by it in connection with such
certificates, or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate
a new certificate of like kind representing the number of shares of Series B
Preferred Stock represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
- 8
-
Section
7. Notices. Any
notice required by the provisions of this Certificate of Designation to be given
to the holders of shares of the Series B Preferred Stock shall be deemed given
upon the earlier of actual receipt or deposit in the United States mail, by
certified or registered mail, return receipt requested, postage prepaid, or
delivery by a recognized express courier, fees prepaid, addressed to each holder
of record at the address of such holder appearing on the books of the
Corporation.
Section
8. Payment of
Taxes. The Corporation will pay all taxes (other than taxes
based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of the Series B Preferred Stock, excluding any tax or other charge
imposed in connection with any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in which the shares of the
Series B Preferred Stock so converted were registered.
Section
9. Amendment and
Waiver. No
amendment, modification, alteration, repeal or waiver of any provision hereof
shall be binding or effective without the approval of the Board and the approval
of the holders of a majority of the outstanding shares of Series B Preferred
Stock, voting or consenting as a separate class (and the approval of the
Corporation’s
Special Committee until such time as the Corporation’s Special
Committee ceases to exist in accordance with the terms of the Charter
Amendment); provided further that no
amendment, modification, alteration, repeal or waiver of the terms or relative
priorities of the Series B Preferred Stock may be accomplished by the merger,
consolidation or other transaction of the Corporation with another corporation
or entity unless the Corporation has obtained the approval of the Board and the
approval of the holders of a majority of the outstanding shares of Series B
Preferred Stock, voting or consenting as a separate class (and the approval of
the Corporation’s Special
Committee until such time as the Corporation’s Special
Committee ceases to exist).
Section
10. Miscellaneous.
10.1.
No Reissuance of
Preferred Stock. No
share or shares of Series B Preferred Stock acquired by the Corporation by
reason of purchase, conversion or otherwise shall be reissued, and all such
shares shall be cancelled, retired and eliminated from the shares which the
Corporation shall be authorized to issue.
10.2.
Redemption of
Preferred Stock. No
share or shares of Series B Preferred Stock shall be redeemable by the
Corporation at any time.
and be it
RESOLVED FURTHER, that
the Secretary of the Corporation be, and is hereby authorized, empowered and
directed, for and on behalf of the Corporation, to file the Certificate of
Designation with the Secretary of State of the State of Delaware, with any
amendments or modifications thereto as he shall deem necessary and proper, the
filing of the Certificate of Designation by such officer shall conclusively
evidence his authority therefor.
- 9
-
IN WITNESS WHEREOF, the
Corporation has caused this Certificate of Designation to be signed and duly
authorized as of the date first written above.
BERLINER
COMMUNICATIONS, INC.
/s/ Rich Berliner
Name:
Rich Berliner
Title:
President
Signature
Page to Certificate of Designation of
Series B
Convertible Preferred Stock