Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Ecommercial - Amendment #1 69 340K
2: EX-2.1 Agreement and Plan of Merger Between Mindarrow and 7 23K
Ecommercial
3: EX-3.1 Certificate of Incorporation of the Registrant 3 11K
4: EX-3.2 Bylaws of Registrant 18 93K
5: EX-4.1 Investor Rights Agreement 15 68K
6: EX-4.2 Form of Registrant's Common Stock Certificate 2 11K
7: EX-4.3 Form of Series B Preferred Stock Certificate 2 11K
8: EX-4.5 Certificate of Designation - Series B Preferred 10 44K
9: EX-4.6 Certificate of Designation - Series C Preferred 10 45K
10: EX-10.11 Sublease Agreement - Cupertino, Ca 1 7K
11: EX-23.1 Consent of Experts 1 6K
EX-4.6 — Certificate of Designation – Series C Preferred
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EXHIBIT 4.6
CERTIFICATE OF DESIGNATION
OF RIGHTS, PREFERENCES AND PRIVILEGES OF
SERIES C PREFERRED STOCK
OF
MINDARROW SYSTEMS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is:
MindArrow Systems, Inc.
2. The articles of incorporation of the Corporation authorize the issuance
of Ten Million (10,000,000) shares of Preferred Stock, par value $.001 per share
and expressly vests in the Board of Directors of the Corporation the authority
provided therein to issue any and all of said shares, the designations,
preferences and relative, participating, optional, or other special rights, or
qualifications, limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions of the Board of Directors of the
Corporation.
3. The Board of Directors of the Corporation, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating Series C Preferred Stock:
RESOLVED THAT:
The Corporation's Board of Directors hereby establishes a class of
Preferred Stock authorized to be issued by the Corporation as above stated, with
the designations and amounts thereof with the preferences, conversion and other
rights, and relative participating, optional and other special rights of each
series, and the qualifications, limitations or restrictions thereof, to be as
follows:
1. Designations and Amounts. Three Million (3,000,000) shares of the
Corporation's authorized Preferred Stock are designated as Series C Preferred
Stock.
2. Definitions.
For the purposes of this Resolution the following definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Common Stock" shall refer to the Corporation's common stock with
a par value of $.001 per share.
(c) "Purchase Price" shall be $25.00.
(d) "Subsidiary" shall mean any corporation at least 51% of whose
outstanding voting stock shall at the time be owned directly or indirectly by
the Corporation or by one or more subsidiaries of the Corporation.
3. Dividends. The holder of each issued and outstanding share of Series C
Preferred Stock shall be entitled to receive dividends when and if declared by
the Board, out of funds legally available for such purpose. No dividends (other
than those payable solely in shares of Common Stock) may be declared or paid
with respect to shares of Common Stock during any fiscal year of the Corporation
until dividends in the aggregate amount of not less than $2.25 per share (the
"Series C Dividend Preference Rate") of Series C Preferred Stock (as adjusted as
provided herein) have been paid or declared and set aside with respect to the
Series C Preferred Stock during such fiscal year. If the Corporation shall (a)
pay a distribution in shares of Series C Preferred Stock, (b) subdivide its
outstanding shares of Series C Preferred Stock into a greater number of shares,
(c) combine its outstanding shares of Series C Preferred Stock into a smaller
number of shares, or (d) issue by reclassification of its shares of Series C
Preferred Stock any shares of Series C Preferred Stock, the Series C Dividend
Preference Rate shall be ratably adjusted to an amount equal to the Series C
Dividend Preference Rate in effect immediately prior to such action multiplied
by the number of shares of Series C Preferred Stock outstanding immediately
prior to such action divided by the number of shares of Series C Preferred Stock
outstanding immediately after such action.
4. Redemption. Shares of Series C Preferred Stock are not redeemable by
the Corporation.
5. Liquidation and Dissolution. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the affairs of the
Corporation, the holders of the issued and outstanding Series C Preferred Stock
shall be entitled to receive for each share of Series C Preferred Stock, before
any distribution of the assets of the Corporation shall be made to the holders
of any other capital stock, an amount per share equal to the Purchase Price (the
"Series C Liquidation Rate"), plus all accrued and unpaid dividends and
distributions declared thereon, without interest. If the Corporation shall (a)
pay a distribution in shares of Series C Preferred Stock, (b) subdivide its
outstanding shares of Series C Preferred Stock into a greater number of shares,
(c) combine its outstanding shares of Series B and Series C Preferred Stock into
a smaller number of shares, or (d) issue by reclassification of its shares of
Series C Preferred Stock any shares of Series C Preferred Stock, the Liquidation
Rate shall be ratably adjusted to an amount equal to the Series C Liquidation
Rate in effect immediately prior to such action multiplied by the number of
shares of Series C Preferred Stock outstanding immediately prior to such action
divided by the number of shares of Series C Preferred Stock outstanding
immediately after such action. After such payment shall have been made in full
to the holders of the issued and outstanding Series B and Series C Preferred
Stock, or funds necessary for such payment shall have been set aside in trust
for the account of the holders of the issued and outstanding Series C Preferred
Stock so as to be and continue to be available therefor, then the remaining
assets of the Corporation shall be divided and distributed ratably among the
holders of the Common Stock, the Corporations' Series B Preferred Stock (the
"Series B Preferred Stock"), if any, and the Series C Preferred Stock as if
such Preferred Stock had been converted to Common Stock on the date of such
distribution. If, upon such liquidation, dissolution, or winding up, the assets
of the Corporation distributable among the holders of the Series B and Series C
Preferred Stock shall be insufficient to permit the payment to them of said
amount, the entire assets shall be distributed ratably among the holders of the
Series B and Series C Preferred Stock in such a manner that the amount to be
distributed to each holder of Series B Preferred and Series C Preferred shall
equal the amount obtained by multiplying the entire assets and funds of the
corporation legally available for distribution hereunder by a fraction, the
numerator of which shall be the sum of the products obtained by multiplying the
number of shares of Series B Preferred and Series C Preferred then held by the
holder by the respective liquidation preference of each of such series of
Preferred Stock, and the denominator of which
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shall be the sum of the products obtained by multiplying the respective
liquidation preference of each of such series of Preferred Stock. A
consolidation, merger or reorganization of the Corporation with or into another
corporation or entity in which the holders of the Corporation's outstanding
capital stock do not retain a majority of the voting power in the surviving
corporation immediately thereafter or (ii) a sale, conveyance or disposition of
all or substantially all of the Corporation's assets shall be regarded as a
"liquidation, dissolution, or winding up of the affairs of the Corporation"
within the meaning of this paragraph 5.
6. Conversion Rights.
(a) Optional Conversion; Conversion Rate; Conversion Price. Each
share of Series C Preferred Stock shall be convertible, at the option of the
holder thereof, into shares of Common Stock at any time after the issuance of
such share. The number of shares of Common Stock into which each share of
Series C Preferred Stock may be converted shall be determined by dividing $25.00
by a price, hereinafter referred to as the "Conversion Price," in effect for the
Series C Preferred Stock at the time of the conversion. The Conversion Price
per share of Series C Preferred Stock initially shall be $25.00, subject to
adjustment as provided.
(b) Automatic Conversion. Each share of Series C Preferred Stock
shall automatically be converted into fully paid and nonassessable shares of
Common Stock of the Corporation at the Conversion Price then in effect for the
Series C Preferred Stock (subject to adjustment as provided below) upon the
earlier to occur of:
(i) the effective date of a firm commitment, underwritten public
offering of Common Stock pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), other than a
registration under Rule 145 of the Securities Act (or any successor thereto) or
to any employee benefit plan of the Corporation, generating aggregate proceeds
to the Company of at least Twenty Five Million Dollars ($25,000,000) (before
deducting underwriters' discounts and all expenses relating to the offering),
and an offering price (prior to underwriters' discounts and expenses) of not
less than Forty Dollars ($40.00) per share, appropriately adjusted for stock
dividends, stock splits, stock combinations, recapitalizations,
reclassifications, exchanges and the like ("Initial Public Offering"), provided,
however, that such automatic conversion shall not be deemed to have occurred in
the event that the Initial Public Offering does not close; or
(ii) the date on which the holders of two-thirds (2/3) of the
then outstanding shares of Series C Preferred Stock consent in writing to such
conversion.
(c) Conversion Mechanics. The holder of any shares of Series C
Preferred Stock may exercise the conversion rights as to such shares or any part
thereof by delivering to the Corporation during regular business hours, at the
office of any transfer agent of the Corporation, or at the principal office of
the Corporation or at such other place as may be designated by the Corporation,
the certificate or certificates for the shares to be converted, duly endorsed
for transfer to the Corporation (if required by it), accompanied by written
notice stating that the holder elects to convert such shares. Except as set
forth above, conversion shall be deemed to have been effected on the date when
such delivery is made, and such date is referred to herein as the "Conversion
Date." As promptly as practicable thereafter the Corporation shall issue and
deliver to or upon the written order of such holder, at such office or other
place designated by the Corporation, a certificate or certificates for the
number of full shares of Common Stock to which such holder is entitled and a
check for cash with respect to any fractional interest in a share of Common
Stock as provided below. The holder shall be
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deemed to have become a shareholder of record for the Common Stock on the
applicable Conversion Date unless the transfer books of the Corporation are
closed on the date, in which event such holder shall be deemed to have become a
shareholder of record for the Common Stock on the next succeeding date on which
the transfer books are open. Upon conversion of only a portion of the number of
shares of Series C Preferred Stock, as the case may be, represented by a
certificate surrendered for conversion, the Corporation shall issue and deliver
to or upon the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate for the number
of shares of Series C Preferred Stock representing the unconverted portion of
the certificate so surrendered.
(d) No Fractional Shares. No fractional shares of Common Stock or
scrip shall be issued upon conversion of shares of Series C Preferred Stock. If
more than one share of Series C Preferred Stock shall be surrendered for
conversion at any one time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of Series C Preferred Stock so surrendered.
Instead of any fractional shares of Common Stock which would otherwise be
issuable upon conversion of any shares of Series C Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fractional interest
equal to the fair market value of such fractional interest as determined in good
faith by the Corporation's Board of Directors.
(e) Taxes. The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion pursuant hereto of Series C Preferred Stock. The
Corporation shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the Series C Preferred Stock so
converted were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Corporation the
amount of any such tax, or has established, to the satisfaction of the
Corporation, that such tax has been paid.
(f) Share Reserve. The Corporation shall at all times reserve and
keep available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Series C Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all Series C
Preferred Stock from time to time outstanding. The Corporation shall from time
to time (subject to obtaining necessary director and shareholder approval, which
the Corporation shall use its best efforts to promptly obtain), in accordance
with the laws of the State of Delaware, promptly increase the authorized amount
of its Common Stock if at any time the authorized number of shares of its Common
Stock remaining unissued shall not be sufficient to permit the conversion of all
of the shares of Series C Preferred Stock at the time outstanding.
(g) Registration or Listing. If any shares of Common Stock to be
reserved for the purpose of conversion of shares of Series C Preferred Stock
require registration or listing with, or approval of, any governmental
authority, stock exchange, quotation system or other regulatory body under any
federal or state law or regulation or otherwise, before such shares may be
validly issued or delivered upon conversion and traded or quoted on an exchange
or quotation system on which other shares of Common Stock are then listed or
quoted, the Corporation will in good faith and as expeditiously as possible
endeavor to secure such registration, listing or approval, as the case may be.
(h) Status Upon Issuance. All shares of Common Stock which may be
issued upon conversion of the shares of Preferred Stock will upon issuance by
the Corporation be
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validly issued, fully paid and non-assessable and free from all taxes, liens and
charges created by the Corporation with respect to the issuance thereof.
7. Adjustments.
(a) Adjustments to Conversion Prices for Stock Dividends and for
Combinations or Subdivisions of Common Stock. In the event that the Corporation
shall at any time declare or pay, without consideration, any dividend on the
Common Stock payable in Common Stock or in any right to acquire Common Stock for
no consideration, or shall subdivide the outstanding Common Stock into a greater
number of shares of Common Stock (by stock split, reclassification or otherwise
than by payment of a dividend in Common Stock or in any right to acquire Common
Stock), or in the event the outstanding shares of Common Stock shall be combined
or consolidated, by reclassification or otherwise, into a lesser number of
shares of Common Stock, then the Conversion Price for the Series C Stock in
effect immediately prior to each such stock dividend, combination or subdivision
shall be proportionately increased or decreased, as appropriate, effective at
the close of business on the date of each such stock dividend, combination or
subdivision, as the case may be. In the event that the Corporation shall
declare or pay, without consideration, any dividend on the Common Stock payable
in any right to acquire Common Stock for no consideration then the Corporation
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.
(b) Adjustments for Capital Reorganizations and Reclassifications.
In case of any capital reorganization (other than in connection with a merger or
other reorganization in which the Corporation is not the continuing or surviving
entity) or any reclassification of the Common Stock of the Corporation, the
Series C Preferred Stock shall thereafter be convertible into the number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock of the Corporation deliverable upon conversion of the
shares of Series C Preferred Stock immediately prior to each such reorganization
or recapitalization would have been entitled upon such reorganization, or
reclassification; and, in any such case, appropriate adjustment (as determined
by the Board of Directors) shall be made in the application of the provisions
herein set forth with respect to the rights and interests thereafter of the
holders of Series C Preferred Stock, to the end that the provisions set forth
herein shall thereafter be applicable, as nearly as reasonably may be, in
relation to any share of stock or other property thereafter deliverable upon the
conversion.
(c) Noncash Dividends, Stock Purchase Rights, Capital Reorganizations
and Dissolutions. In case:
(i) the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend, or any
other distribution, payable otherwise than in cash; or
(ii) the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to subscribe for or purchase any
shares of stock of any class or to receive any other rights; or
(iii) of any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation (other than a
subdivision or combination of its outstanding shares of Common Stock),
consolidation or merger of the Corporation with or into another
5
corporation or conveyance of all or substantially all of the assets of the
Corporation to another corporation; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be mailed to the
transfer agent for Series C Preferred Stock, and to the holders of record of the
outstanding Series C Preferred Stock, at least ten (10) days prior to the date
hereinafter specified, a notice stating the date on which (x) a record is to be
taken for the purpose of such dividend, distribution or rights, or (y) such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up is to take place and the date, if any is
to be fixed, as of which 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, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
(d) Other Issuances. Upon the issuance by the Corporation of any
Equity Securities (as defined below) without consideration or for consideration
per share of Common Stock issued or issuable upon exchange, exercise or
conversion of such Equity Securities of less than the Conversion Price then in
effect, then the Conversion Price shall be adjusted to a price (calculated to
the nearest cent) determined by multiplying the Conversion Price by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance (on a fully diluted basis) plus the number of
shares of Common Stock which the aggregate consideration received by the
Corporation for the newly issued Equity Securities would purchase at the
Conversion Price in effect immediately prior to such issuance, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance (on a fully diluted basis) plus the number of
additional shares of Equity Securities so issued. For purposes of this
subsection 7(d) the following provisions will be applicable:
(i) in the case of an issue or sale for cash of shares of Common
Stock, the "consideration per share" received by the Corporation therefor shall
be deemed to be the amount of cash received, before deducting therefrom any
commissions or expenses paid by the Corporation.
(ii) in case of the issuance (otherwise than upon conversion or
exchange of obligations or shares of stock of the Corporation) of additional
shares of Common Stock for a consideration other than cash or a consideration
partly other than cash, the amount of the consideration other than cash received
by the Corporation for such shares shall be deemed to be the fair market value
of such consideration as determined in good faith by the Board of Directors.
(iii) in case of the issuance by the Corporation in any manner
of any rights to subscribe for or to purchase shares of Common Stock, or any
options for the purchase of shares of Common Stock or stock convertible into
Common Stock, all shares of Common Stock or stock convertible into Common Stock
to which the holders of such rights or options shall be entitled to subscribe
for or purchase pursuant to such rights or options shall be deemed "outstanding"
as of the date of the offering of such rights or the granting of such options,
as the case may be, and the minimum aggregate consideration named in such rights
or options for the shares of Common Stock or stock convertible into Common Stock
covered thereby, plus the consideration, if any, received by the Corporation for
such rights or options, shall be deemed to
6
be the "consideration per share" received by the Corporation (as of the date of
the offering of such rights or the granting of such options, as the case may be)
for the issuance of such shares.
(iv) in case of the issuance or issuances by the Corporation in
any manner of any obligations or of any shares of stock of the Corporation that
shall be convertible into or exchangeable for Common Stock, all shares of Common
Stock issuable upon the conversion or exchange of such obligations or shares
shall be deemed issued as of the date such obligations or shares are issued, and
the amount of the "consideration per share" received by the Corporation for such
additional shares of Common Stock shall be deemed to be the total of (X) the
amount of consideration received by the Corporation upon the issuance of such
obligations or shares, as the case may be, plus (Y) the minimum aggregate
consideration, if any, other than such obligations or shares, receivable by the
Corporation upon such conversion or exchange, except in adjustment of dividends.
The amount of the "consideration per share" received by the
Corporation upon the issuance of any rights or options referred to in subsection
(iii) above or upon the issuance of any obligations or shares which are
convertible or exchangeable as described in subsection (iv) above, and the
amount of the consideration, if any, other than such obligations or shares so
convertible or exchangeable, receivable by the Corporation upon the exercise,
conversion or exchange thereof shall be determined in the same manner provided
in subsections (i) and (ii) above with respect to the consideration received by
the Corporation in case of the issuance of additional shares of Common Stock;
provided, however, that if such obligations or shares of stock so convertible or
exchangeable are issued in payment or satisfaction of any dividend upon any
stock of the Corporation other than Common Stock, the amount of the
"consideration per share" received by the Corporation upon the original issuance
of such obligations or shares or stock so convertible or exchangeable shall be
deemed to be the value of such obligations or shares of stock, as of the date of
the adoption of the resolution declaring such dividend, as determined by the
Board of Directors at or as of that date. On the expiration of any rights or
options referred to in subsection (iii), or the termination of any right of
conversion or exchange referred to in subsection (iv), or any change in the
number of shares of Common Stock deliverable upon exercise of such options or
rights or upon conversion of or exchange of such convertible or exchangeable
securities, the Conversion Price then in effect shall forthwith be readjusted to
such Conversion Price as would have been obtained had the adjustments made upon
the issuance of such options, rights or convertible or exchangeable securities
been made upon the basis of the delivery of only the number of shares of Common
Stock actually delivered or to be delivered upon the exercise of such rights or
options or upon the conversion or exchange of such securities.
(e) Exclusions. Anything herein to the contrary notwithstanding, the
Corporation shall not be required to make any adjustment of a Conversion Price
as a result of the issuance after the effective date of this Certificate of
Designation, of (w) shares of Common Stock (or any options, warrants or rights
to purchase such shares) to officers, directors, employees or consultants of the
Corporation or its subsidiaries pursuant to stock option or stock purchase plans
or agreements or other employee benefit plans and any shares of Common Stock
issued upon exercise or conversion pursuant to such plans or agreements, (x)
shares of Common Stock (or any options, warrants or rights to purchase such
shares), which have been approved by the Board of Directors in connection with
strategic investments, licensing arrangements or debt or equipment financings,
(y) shares issuable upon conversion or exercise of securities which are
outstanding as of the date of this Certificate of Designation or (z) shares of
Common Stock (or any options, warrants or rights to purchase such shares), which
have been approved
7
by the Board of Directors issued as consideration in connection with mergers,
acquisitions or other business combinations.
(f) Definition of Equity Securities. For purposes of this
Certificate of Designation, "Equity Securities" shall mean any securities having
voting rights in the election of the Board of Directors not contingent upon
default, or any securities evidencing an ownership interest in the Company, or
any securities convertible into or exercisable for any shares of the foregoing,
or any agreement or commitment to issue any of the foregoing.
(g) Protection of Conversion Rights. The Corporation 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
Corporation, 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 C Preferred Stock against impairment.
8. Voting Rights. Holders of shares of Series C Preferred Stock shall be
entitled to vote on all matters submitted to a vote of the stockholders of the
Company. Each share of Series C Preferred Stock shall entitle the holder to
that number of votes equal to the number of shares of Common Stock into which
such share of Series C Preferred Stock is convertible as of the record date
established for the vote of the stockholders of the Company. Fractional votes
will not, however, be permitted, and any fractional voting rights resulting from
the above formula (after aggregating all shares of Common Stock into which
shares of Series C Preferred Stock held by each holder could be converted) shall
be rounded to the nearest whole number (with one-half being rounded upward).
Except with respect to the seat on the Board of Directors allocated to the
shares of Series C Preferred Stock as described below or as required by law, the
Series C Preferred Stock will vote together with the Common Stock and not as a
separate class.
9. Board Seat. The Board of Directors shall consist of three (3) up to
seven (7) members. The holders of Series B Preferred Stock, voting together as
a single class, shall be entitled to designate one (1) member of the Board of
Directors. The holders of the Series C Preferred Stock, voting together as a
single class, shall be entitled to designate two (2) members of the Board of
Directors. The remaining four (4) directors shall be designated by the holders
of the Common Stock, the Series B Preferred Stock and the Series C Preferred
Stock voting together as a single class.
10. No Preemptive Rights. No holder of the Series C Preferred Stock shall
be entitled, as of right, to purchase or subscribe for any part of the unissued
capital stock of the Corporation or of any capital stock of the Corporation to
be issued by reason of any increase of the authorized capital stock of the
Corporation, or to purchase or subscribe for any bonds, certificates of
indebtedness, debentures or other securities convertible into or carrying
options or warrants to purchase stock or other securities of the Corporation or
to purchase or subscribe for any stock of the Corporation purchased by the
Corporation or by its nominee or nominees, or to have any other preemptive
rights now or hereafter defined by the laws of the State of Delaware.
11. Protective Covenants. So long as shares of Series C Preferred Stock
remain outstanding and for such further period as may be required by law, the
Company will not, without first obtaining the affirmative vote or written
consent of the holders of at least a majority
8
of the then outstanding Series C Preferred Stock voting separately as a class
(i) sell, convey or otherwise dispose of all or substantially all of assets of
the Company, merge the Company with or consolidate the Company into another
entity, or engage in any other form of corporate reorganization or
recapitalization that would require the vote of the Company's shareholders under
applicable law; (ii) increase the number of authorized shares of Series C
Preferred Stock (except as a result of a stock split or combination); (iii)
effect an exchange, reclassification or cancellation of all or a part of the
shares of Series C Preferred Stock (except as a result of a stock split or
combination); (iv) effect an exchange, or create a right of exchange, of all or
part of the shares of another class into shares of Series C Preferred Stock; (v)
alter or change the rights, preferences, privileges and restrictions of the
Series C Preferred Stock; (vi) authorize or issue shares of any class of stock
having any rights, preferences or privileges superior to any such right,
preference or privilege of the Series C Preferred Stock; (vii) authorize or
issue shares of stock of any class or any bonds, debentures, notes or other
obligations convertible into or exchangeable for, or having option rights to
purchase, any shares of stock of the Company having any rights, preferences or
privileges superior to any right, preference or privilege of the Series C
Preferred Stock; or (viii) reclassify any other outstanding shares of stock into
shares having any right, preference or privilege superior to any such right,
preference, privilege or priority of the Series C Preferred Stock.
12. Notices of Record Date. In the event that the Company shall propose at
any time (i) to declare any dividend or distribution upon the Common Stock other
than distributions to shareholders in connection with the repurchase of shares
of former employees or consultants to which at least a majority of the holders
of Series C Preferred Stock have consented, (ii) to offer for subscription to
the holders of any class or series of its capital stock any additional shares of
stock of any class or series or any other rights, (iii) to effect any
reclassification or recapitalization or (iv) to merge or consolidate with or
into any other corporation, or sell, lease or convey all or substantially all
its property or business, or to liquidate, dissolve or wind up; then the Company
will send to the holders of the Series C Preferred Stock, at least ten (10)
days' prior written notice of the date on which a record shall be taken for such
dividend, distribution or subscription rights and on which such event shall take
place.
13. No Implied Limitations. Except as otherwise provided by the express
provisions of this Certificate of Designation of Series C Preferred Stock,
nothing herein shall limit, by inference or otherwise, the discretionary right
of the Board to classify and reclassify and issue any shares of Preferred Stock
and to fix or alter all terms thereof to the full extent provided in the
Certificate of Incorporation of the Corporation.
14. General Provisions. In addition to the above provisions with respect
to the Series C Preferred Stock, such Series C Preferred Stock shall be subject
to, and entitled to the benefits of, the provisions set forth in the
Corporation's Certificate of Incorporation with respect to the Corporation's
Preferred Stock generally.
15. Notices. All notices required or permitted to be given by the
Corporation with respect to the Series C Preferred Stock shall be in writing,
and if delivered by first class United States mail, postage prepaid, to the
holders of the Series C Preferred Stock at their last addresses as they shall
appear on the books of the Corporation, shall be conclusively presumed to have
been duly given, whether or not the stockholder actually receives such notice;
provided, however, that failure to duly give such notice by mail, or any defect
in such notice, to the holders of any stock designated for redemption, shall not
affect the validity of the proceedings for the redemption of any other shares of
Series C Preferred Stock.
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FURTHER RESOLVED, that the statements contained in the foregoing
resolutions creating and designating the said Series C issue of Preferred Stock
and fixing the number, limited 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
Articles of Incorporation of the Corporation pursuant to the provisions of the
General Corporation Law of the State of Delaware.
The effective time and date of the series herein certified shall be the
date such Certificate of Designation is filed with the Delaware Secretary of
State.
Dated: ______________, 2000 MINDARROW SYSTEMS, INC.
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Tom Blakeley, President
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Eric McAfee, Corporate Secretary
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