Certificate of Designation of Series A Preferred Stock of Optical Sensors Incorporated
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This document establishes the rights and preferences of the Series A Preferred Stock issued by Optical Sensors Incorporated. It outlines the number of shares authorized, voting rights, dividend entitlements, liquidation preferences, and conversion rights for holders of Series A Preferred Stock. The agreement specifies that Series A Preferred shareholders have voting rights equivalent to common stock on an as-converted basis, receive dividends if common stockholders do, and have priority in liquidation events. It also details the process for converting preferred shares into common stock and addresses treatment in mergers or asset sales.
EX-4.1 2 0002.txt CERTIFICATE OF DESIGNATION EXHIBIT 4.1 CERTIFICATE OF DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES A PREFERRED STOCK OF OPTICAL SENSORS INCORPORATED The undersigned Chief Financial Officer of Optical Sensors Incorporated, a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), in accordance with the provisions of Section 151 thereof, does hereby certify that, pursuant to the authority conferred upon the Board of Directors of the Corporation (the "Board") by the Certificate of Incorporation of the Corporation, the Board on August 10, 2000, adopted the following resolution creating a series of Four Million Five Hundred Thousand (4,500,000) shares of the Corporation's undesignated preferred stock, par value $.01 per share, to be designated as Series A Preferred Stock: RESOLVED, that pursuant to the authority granted to and vested in this Board of Directors in accordance with the Certificate of Incorporation of the Corporation, a new series of preferred stock is hereby created, and that the designation and amount thereof and the relative rights and preferences of the shares of such series, are as follows: 1. Shares and Classes Authorized. Four Million Five Hundred Thousand (4,500,000) shares of the Corporation's undesignated preferred stock, par value $.01 per share, that are authorized by Article IV of the Corporation's Certificate of Incorporation are designated as Series A Preferred Stock (the "Series A Preferred"). 2. Definitions. For purposes of this Certificate of Designation (this "Certificate") the following definitions shall apply and shall be equally applicable to both the singular and plural forms of the defined terms: 2.1 "Affiliate" shall mean any Person which directly or indirectly controls, is controlled by, or is under common control with, the indicated Person. 2.2 "Average Original Issue Price" shall mean (i) the aggregate purchase price that was paid for all shares of Series A Preferred issued to the Investors prior to the date of determination (whether or not all such shares are then outstanding) divided by (ii) the aggregate number of shares of Series A Preferred that were issued to the Investors prior to the date of determination (whether or not all such shares are then outstanding). 2.3 "Board" shall mean the Board of Directors of the Corporation. 2.4 "Common Stock" shall mean common stock of the Corporation, par value $.01 per share. 2.5 "Conversion Date" shall have the meaning set forth in Section 6.1 below. 2.6 "Conversion Price", shall have the meaning set forth in Section 6.1 below 2.7 "Conversion Rights" shall have the meaning set forth in Section 6 below. 2.8 "Investors" shall have the meaning set forth in the Securities Purchase Agreement by and between the Company and Circle F Ventures LLC and Special Situations Fund III, L.P. dated August 10, 2000. 3. Voting Rights. At all meetings of the stockholders of the Corporation and in the case of any actions of stockholders in lieu of a meeting, each holder of Series A Preferred shall have that number of votes on all matters submitted to the stockholders that is equal to the number of whole shares of Common Stock into which such holder's shares of Series A Preferred are then convertible, as provided in Section 6 below, as of the record date for the determination of the stockholders entitled to vote on such matters or, if no such record date is established, on the date such vote is taken or any written consent of such stockholders is effected. Except as may be otherwise provided by agreement or by law, the holders of the Common Stock and the holders of the Series A Preferred shall vote together as a single class on all actions to be taken by the stockholders of the Corporation. 4. Dividends. The holders of Series A Preferred shall not be entitled to receive dividends in any fixed amount; provided, however, that in the event that the Corporation shall at any time declare and pay a dividend or distribution of assets on shares of the Common Stock, it shall, at the same time, declare and pay to each holder of Series A Preferred a dividend equal to the dividend that would have been payable to such holder as if the shares of Series A Preferred held by such holder had been converted, pursuant to Section 6 below, into Common Stock on the date of determination of holders of Common Stock entitled to receive such dividend. 5. Liquidation Rights. ------------------ 5.1 Preference of Series A Preferred. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Series A Preferred then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, whether such assets are capital, surplus, or earnings, before any payment or declaration and setting apart for payment of any amount shall be made in respect of the Common Stock or any other class of shares of the Corporation ranking junior in liquidation or dissolution the Series A Preferred, an amount for each share of Series A Preferred held that is equal to the Average Original Issue Price. 5.2 Reorganization; Sale of Assets. The merger, acquisition or consolidation of the Corporation into or with any other entity or entities which results in the exchange of outstanding shares of the Corporation for securities or other consideration issued or paid or caused to be issued or paid by any such entity or Affiliate thereof pursuant to which the shareholders of the Corporation immediately prior to the transaction do not own a majority of the outstanding shares of the surviving 2 corporation immediately after the transaction, or any sale, lease, license (on an exclusive basis) or transfer by the Corporation of all or substantially all its assets, shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of the provisions of this Section 5 unless this provision is waived by the affirmative vote of at least a majority of the shares of the Series A Preferred Stock outstanding (voting together as a single class). 5.3 Remaining Assets. If the assets of the Corporation available for distribution to the Corporation's stockholders exceed the aggregate amount payable to the holders of the outstanding Series A Preferred pursuant to Section 5.1 hereof, then after the payments required by Section 5.1 shall have been made or irrevocably set apart, such assets shall be distributed equally among the holders of the Common Stock and the outstanding Series A Preferred, provided, however, that holders shall be deemed to hold, in lieu of Series A Preferred, the number of shares of Common Stock into which such shares Series A Preferred are then convertible pursuant to Section 6 below. 5.4 Notice. Written notice of such liquidation, dissolution or winding up, stating a payment date and the place where said payments shall be made, shall be given by mail, postage prepaid, or by telex, facsimile or courier service to non-U.S. residents, not less than twenty (20) days prior to the payment date stated therein, to the holders of record of Series A Preferred, such notice to be addressed to each such holder at its address as shown on the records of the Corporation. 5.5 Determination of Consideration. To the extent any distribution pursuant to Section 5.1 or Section 5.3 consists of property other than cash, the value thereof shall, for purposes of Section 5.1 or Section 5.3, be the fair value at the time of such distributions as determined in good faith by the Board. 6. Conversion. The holders of the Series A shall have the following conversion rights (the "Conversion Rights"): 6.1 Optional Conversion of the Series A Preferred Stock. The Series A Preferred shall be convertible, without the payment of any additional consideration by the holder thereof and at the option of the holder thereof, at any time after the first issuance of shares of Series A Preferred by the Corporation, at the office of the Corporation or any transfer agent for the Common Stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Average Original Issue Price of the shares of Series A Preferred being converted by the Conversion Price of the shares of Series A Preferred being converted, determined as hereinafter provided, in effect at the time of conversion and then multiplying such quotient by each share of Series A Preferred to be converted. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion without the payment of any additional consideration by the holder thereof (the "Conversion Price") shall initially be equal to the Average Original Issue Price of the shares of the Series A Preferred being converted. Such initial Conversion Price shall be subject to adjustment, in order 3 to adjust the number of shares of Common Stock into which the Series A Preferred is convertible, as hereinafter provided. 6.2 Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series A Preferred . In lieu of any fractional share to which any holder would otherwise be entitled upon conversion of some or all of the Series A Preferred owned by such holder, the Corporation shall pay cash equal to such fraction multiplied by the then effective Conversion Price or round up to the nearest whole share. 6.3 Mechanics of Optional Conversion. Before any holder of Series A Preferred Stock shall be entitled to convert the same into full shares of Common Stock, such holder shall surrender the certificate or certificates therefor, endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by such holder's attorney duly authorized in writing, at the office of the Corporation or of any transfer agent for the Common Stock, and shall give at least five (5) days' prior written notice to the Corporation at such office that such holder elects to convert the same and shall state therein such holder's name or the name of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series A Preferred Stock, or to such holder's nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid, together with cash in lieu of any fraction of a share. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series A Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. From and after such date, all rights of the holder with respect to the Series A Preferred Stock so converted shall terminate, except only the right of such holder, upon the surrender of his, her or its certificate or certificates therefor, to receive certificates for the number of shares of Common Stock issuable upon conversion thereof and cash for fractional shares. 6.4 Certain Adjustments for Stock Splits, Dividends, Mergers, Reorganizations, Etc. (a) Adjustment for Stock Splits, Stock Dividends and Combinations of Common Stock. In the event the outstanding shares of Common Stock shall, after the sale of any shares of Series A Preferred, be further subdivided (split), or combined (reverse split), by reclassification or otherwise, or in the event of any dividend or other distribution payable on the Common Stock in shares of Common Stock, the number of shares of Common Stock into which each share of Series A Preferred is convertible into and the Conversion Price in effect immediately prior to such 4 subdivision, combination, dividend or other distribution shall, concurrently with the effectiveness of such subdivision, combination, dividend or other distribution, be appropriately adjusted. (b) Adjustment for Merger or Reorganization, Etc. In the event of a reclassification, reorganization or exchange (other than described in subsection 6.3(a) above) or any consolidation or merger of the Corporation with another Corporation (other than a merger, acquisition or other reorganization as defined in Section 5.2, which shall be considered a liquidation pursuant to Section 5 above), each share of Series A Preferred 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 Series A Preferred would have been entitled upon such reclassification, reorganization, exchange, consolidation, merger or conveyance had the conversion occurred immediately prior to the event; and, in any such case, appropriate adjustment (as determined by the Board) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the Series A Preferred, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the applicable Conversion Price) 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 A Preferred. (c) Adjustments for Other Dividends and Distributions. In the event the Corporation, at any time or from time to time after the filing of this Certificate of Designation, makes, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, then and in each such event, provision shall be made so that the holders of Series A Preferred shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation which they would have received had their Series A Preferred been converted into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Section 6.4(c) with respect to the rights or the holders of the Series A Preferred . 6.5 Common Stock Reserved. The Corporation shall reserve and keep available out of its authorized but unissued Common Stock such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of the Series A Preferred. 5 7. Status of Preferred Stock Upon Retirement. Shares of Series A Preferred which are acquired or redeemed by the Corporation or converted pursuant to Section 6 shall be retired and shall not thereafter be reissued. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation of Rights and Preferences on behalf of the Corporation this 10 day of August, 2000. OPTICAL SENSORS INCORPORATED By: ---------------------------------- Its: --------------------------------- 6