EXHIBIT 4.1
Preferred STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of May 16,
2002, among Wireless Facilities, Inc., a Delaware corporation (the "Company")
and each of the purchasers named on Schedule 1 hereto (each a "Purchaser" and
collectively, the "Purchasers").
R E C I T A L S:
A. WHEREAS, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to purchase from the Company, an aggregate of ninety
thousand (90,000) shares of a newly designated class of the Company's preferred
stock, par value U.S.$0.001 per share ("Preferred Stock"), entitled Series B
Preferred Stock (the "Series B Preferred Stock"), having an aggregate purchase
price of forty-five million dollars (U.S.$45,000,000); and
B. WHEREAS, the Company intends to file a certificate of designations with
the Secretary of State of the State of Delaware setting forth the rights,
preferences and privileges of the Series B Preferred Stock in the form attached
hereto as Exhibit A (the "Certificate of Designations").
A G R E E M E N T:
In consideration of the foregoing premises and the mutual covenants
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereby agree as follows:
Section 1. PURCHASE AND SALE OF PREFERRED STOCK
1.1 Purchase and Sale.
(a) Purchase and Sale. No later than May 30, 2002 (the "Closing
Date"), each Purchaser shall pay the amount specified next to its name on
Schedule 1 hereto the Company in immediately available funds by wire transfer to
an account at a bank named by the Company, subject to satisfaction of the
conditions in Section 4. At the Closing, subject to the terms and conditions
hereof, the Company shall issue and sell, at five hundred dollars (US$500.00)
per share, to the Purchasers the respective number of shares of Series B
Preferred Stock set forth opposite each of the Purchasers' names on Schedule 1
hereto (collectively, the "Offered Securities"), subject to satisfaction of the
conditions in Section 5.
(b) Time and Place of Closing. The closing of the purchase and sale of
the Offered Securities (the "Closing") shall occur on the Closing Date. The
Closing shall be held at the offices of Xxxxxx Godward LLP, 0000 Xxxxxxxx Xxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000 (by means of facsimile or overnight mail).
1.2 Closing Delivery. On the Closing Date, subject to the terms and
conditions hereof:
(a) Each Purchaser, severally and not jointly, shall pay the
applicable amount specified on Schedule 1 by wire transfer of immediately
available U.S. funds to an account designated in writing by the Company; and
(b) The Company shall execute and deliver to each Purchaser: (i) a
certificate representing the Offered Securities purchased by such Purchaser, and
(ii) a customary certificate from the secretary of the Company satisfactory to
such Purchaser.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants as of the date hereof to each Purchaser that:
2.1 The Company has been duly incorporated and is an existing corporation
in good standing under the laws of the State of Delaware, with requisite
corporate power and authority to own its properties and conduct its business as
presently conducted. The Company is duly qualified to do business as a foreign
corporation in good standing in all other U.S. jurisdictions in which its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries, taken
as a whole (hereinafter, a "Material Adverse Effect"). The Company has furnished
representatives of the Purchasers with correct and complete copies of the
charter and by-laws of the Company, both as amended and currently in effect.
2.2 Each subsidiary of the Company has been duly incorporated and is an
existing corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own its properties and
conduct its business as presently conducted. Each subsidiary of the Company is
duly qualified to do business as a foreign corporation in good standing in all
other U.S. jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the failure to
be so qualified would not have a Material Adverse Effect; all of the issued and
outstanding capital stock of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable and is owned
of record by the Company.
2.3 As of March 31, 2002, the authorized capital stock of the Company
consists of: (i) one hundred ninety-five million (195,000,000) shares of Common
Stock and (ii) five million (5,000,000) shares of Preferred Stock. As of May 15,
2002, forty-seven million six hundred ninety-eight thousand one hundred
thirty-eight (47,698,138) shares of Common Stock have been issued and are
outstanding and sixty-three thousand six hundred thirty-seven (63,637) shares of
Preferred Stock are issued and outstanding. As of May 15, 2002, thirty-one
thousand (31,000) shares of Common Stock are held in the Company's treasury. As
reflected in the Company's records as of May 15, 2002, other than with respect
to an aggregate of twenty-one million nine hundred forty-eight thousand three
hundred eighty-two (21,948,382) shares of Common Stock reserved for issuance
under the Company's equity incentive plans, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal),
proxy or stockholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its equity securities.
2.4 The Offered Securities, and the shares of Common Stock issuable upon
conversion of the Offered Securities (the "Conversion Shares"), and all
outstanding shares of capital stock of the Company have been duly authorized;
all outstanding shares of capital stock of the Company are, and, when the
Offered Securities have been delivered and paid for in accordance with this
Agreement on the Closing Date, and, when the Conversion Shares have been
delivered in accordance with the terms of the Certificate of Designations, such
Offered Securities and Conversion Shares will have been, validly issued, fully
paid and nonassessable. None of the Offered Securities or Conversion Shares are
subject to any preemptive right or any right of refusal.
2.5 No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required for the consummation of the
transactions contemplated by this Agreement in connection with the issuance and
sale of the Offered Securities or the Conversion Shares by the Company, except
for the filing of a Form D with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "Securities Act"), and
such as may be required under state securities laws.
2.6 This Agreement has been duly authorized, executed and delivered by the
Company. All corporate action on the part of the Company and its stockholders,
directors and officers necessary for the authorization, execution and delivery
of this Agreement, the performance of all the Company's obligations hereunder
and for the authorization, issuance or reservation for issuance, sale and
delivery of the Offered Securities or the Conversion Shares has been taken. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, (ii) rules of law governing specific performance, injunctive relief and
other equitable remedies, and (iii) the limitations imposed by applicable
federal or state securities laws on the indemnification provisions contained in
this Agreement.
2.7 The execution, delivery and performance of this Agreement, and the
issuance and sale of the Offered Securities and the Conversion Shares will not
result in a breach or violation of (i) any of the terms and provisions of the
charter or bylaws of the Company or any of its subsidiaries, nor (ii) any of the
terms and provisions of, or constitute a default under any statute, rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of the Company
or any of their properties, or any agreement or instrument to which the Company
or any such subsidiary is a party or by which the Company or any such subsidiary
is bound or to which any of the properties of the Company or any such subsidiary
is subject (except where such breaches, violations or defaults individually or
in the aggregate would not have a Material Adverse Effect). The Company has full
power and authority to authorize, issue and sell the Offered Securities or the
Conversion Shares as contemplated by this Agreement.
2.8 There have been no investment bankers, brokers or finders used by the
Company or its affiliates in connection with the transactions contemplated by
this Agreement and no persons or entities are entitled to a fee or compensation
in respect thereof.
2.9 The Company and its subsidiaries have good and marketable title to all
real properties and all other properties and assets owned by them that are
material to the operation of the Company's business, in each case free from
liens, encumbrances and defects that would materially affect the value thereof
or materially interfere with the use made or to be made thereof by them; and the
Company and its subsidiaries hold any leased real or personal property that are
material to the operation of the Company's business under valid and enforceable
leases with no exceptions that would materially interfere with the use made or
to be made thereof by them.
2.10 The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by them and have not received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or
any of its subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
2.11 There are no pending actions, suits or proceedings against or
affecting the Company, any of its subsidiaries or any of their respective
properties or any director, officer or employee (related to any such person's
services as a director, officer or employee of the Company) that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations under this
Agreement, or which are otherwise material in the context of the sale of the
Offered Securities and, to the Company's knowledge, no such actions, suits or
proceedings are threatened or contemplated. The Company has not initiated and
has no plan to initiate any action, suit or proceeding that, if decided
adversely to the Company, would, individually or in the aggregate, result in a
Material Adverse Effect.
2.12 The Company has made available to representatives of the Purchasers
all registration statements, proxy statements and other statements, reports,
schedules, forms and other documents filed by the Company with SEC since January
1, 2002, including copies of all the exhibits referenced therein (the "SEC
Documents"). All statements, reports, schedules, forms and other documents
required to have been filed by the Company with the SEC since January 1, 2002
have been so filed. As of their respective dates (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
amendment or superseding filing): (i) each of the SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be; and (ii) none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
2.13 The financial statements included in the SEC Documents present fairly
the financial position of the Company and its consolidated subsidiaries as of
the dates shown and
their results of operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis (except as may be indicated in the notes to such financial statements or,
in the case of unaudited statements, as permitted by Form 10-Q of the SEC, and
except that the unaudited financial statements may not have contained footnotes
and were subject to normal and recurring year-end adjustments which were not, or
are not reasonably expected to be, individually or in the aggregate, material in
amount), complied as to form in all material respects with the published rules
and regulations of the SEC applicable thereto.
2.14 The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, sufficient legal rights to all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable propriety or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to any
of the foregoing that, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect.
2.15 Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D under the Securities Act) (an "Affiliate") of the Company has,
directly, or through any agent, (a) sold, offered for sale, solicited any offers
to buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sales of the Offered
Securities in a manner that would require the registration under the Securities
Act of the Offered Securities; or (b) offered, solicited offers to buy or sold
the Offered Securities in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act; and the Company will not engage in any of the actions
described in subsections (a) and (b) of this paragraph.
2.16 Subject to the accuracy of each of the Purchaser's representations
herein, it is not necessary in connection with the offer, sale and delivery of
the Offered Securities to the several Purchasers in the manner contemplated by
this Agreement to register the Offered Securities under the Securities Act.
2.17 The issuance of the Offered Securities and the Conversion Shares,
neither individually nor in the aggregate, constitute an anti-dilution event for
any existing securityholders of the Company, other than the holders of the
Company's Series A Preferred Stock who will be entitled to a full-ratchet
anti-dilution adjustment, pursuant to which such securityholders would be
entitled to additional securities or a reduction in the applicable conversion
price or exercise price of any securities due to any issuance proposed to be
conducted hereunder.
2.18 The information contained in this Agreement and the SEC documents with
respect to the business, operations, assets, results of operations and financial
condition of the Company, and the transactions contemplated by this Agreement,
are true and complete in all material respects and do not omit to state any
material fact or facts necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 3. Representation and Warranties of the Purchasers. Each Purchaser
hereby, severally and not jointly, represents and warrants to the Company, as of
the date hereof, as follows:
3.1 If such Purchaser is an entity, such Purchaser is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite limited partnership, or other power and
authority to consummate the transactions contemplated hereby
3.2 Such Purchaser has full limited partnership, or other power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the legal, valid and binding obligation of
such Purchaser, enforceable against such Purchaser in accordance with its terms,
subject to (a) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, (b) rules of law governing specific performance,
injunctive relief and other equitable remedies, and (c) the limitations imposed
by applicable federal or state securities laws on the indemnification provisions
contained in this Agreement.
3.3 The execution, delivery and performance of this Agreement, and the
purchase and acceptance of the Offered Securities by such Purchaser will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under any statute, rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over such Purchaser or any subsidiary of such Purchaser or any of
their properties, or any material agreement or instrument to which such
Purchaser or any such subsidiary is a party or by which such Purchaser or any
such subsidiary is bound or to which any of the properties of such Purchaser or
any such subsidiary is subject, or the charter, by-laws, or other governing
documents of such Purchaser or any such subsidiary (except where any such
breaches, violations or defaults individually or in the aggregate would not have
a material adverse effect on Purchaser's ability to perform this Agreement).
3.4 Investment Representations.
(a) Such Purchaser is sophisticated in transactions of this type and
capable of evaluating the merits and risks of the transactions described herein
and has the capacity to protect its own interests. Such Purchaser has not been
formed solely for the purpose of entering into the transactions described herein
and is acquiring the Offered Securities for investment for its own account, not
as a nominee or agent, and not with the view to, or for resale, distribution
thereof, in whole or in part.
(b) Such Purchaser has not and does not intend to enter into any
contract, undertaking, agreement or arrangement with any person or entity to
sell, transfer or pledge the Offered Securities, other than to an affiliate,
partner or former partner of such Purchaser in compliance with the Securities
Act.
(c) Such Purchaser acknowledges its understanding that the Company
intends to sell the Offered Securities pursuant to a private placement exempt
from registration under the
Securities Act. In furtherance thereof, such Purchaser represents and warrants
that it is an "accredited investor" as that term is defined in Rule 501 of
Regulation D under the Securities Act, has the financial ability to bear the
economic risk of its investment, has adequate means for providing for its
current needs and personal contingencies and has no need for liquidity with
respect to its investment in the Company.
(d) Such Purchaser agrees that it shall not sell or otherwise transfer
any of the Offered Securities without registration under the Securities Act,
pursuant to Rule 144 (or any successor rule) under the Securities Act or
pursuant to an opinion of counsel reasonably satisfactory to the Company that no
violation of the Securities Act will be involved in such transfer. Such
Purchaser fully understands that none of the Offered Securities have been
registered under the Securities Act or under the securities laws of any
applicable state or other jurisdiction and, therefore, cannot be resold,
pledged, assigned or otherwise disposed of unless subsequently registered under
the Securities Act and under the applicable securities laws of such states or
jurisdictions or an exemption from such registration is available. Such
Purchaser understands that the Company is under no obligation to register the
Offered Securities on its behalf with the exception of certain registration
rights set forth herein. Such Purchaser understands the lack of liquidity and
restrictions on transfer of the Offered Securities and that this investment is
suitable only for a person or entity of adequate financial means that has no
need for liquidity of this investment and that can afford a total loss of its
investment.
3.5 There is no legal, administrative, arbitration or other action or
proceeding or governmental investigation pending, or to the knowledge of such
Purchaser threatened, against such Purchaser that challenges the validity or
performance of this Agreement or which, if successful, could hinder or prevent
such Purchaser from performing its obligations hereunder.
3.6 There have been no investment bankers, brokers or finders used by such
Purchaser or its affiliates in connection with the transactions contemplated by
this Agreement and no persons or entities are entitled to a fee or compensation
in respect thereof.
Section 4. CONDITIONS OF THE OBLIGATIONS OF THE PURCHASERS. The several
obligations of each Purchaser to purchase and pay for the Offered Securities on
the Closing Date will be subject to the satisfaction, or waiver by each
Purchaser, of each of the conditions below:
4.1 The representations and warranties of the Company herein must be
correct and complete on the Closing Date and the Company must have performed all
of its obligations hereunder required to be performed prior to the Closing Date.
4.2 The Company shall have filed the Certificate of Designations.
4.3 Each Purchaser must have received a customary opinion, dated the
Closing Date, from Xxxxxx Godward LLP, counsel for the Company, which is
reasonably acceptable to its counsel.
4.4 Each Purchaser must have received a certificate, dated the Closing
Date, of an officer of the Company in which such officer shall state that: the
representations and warranties of the Company in Section 2 of this Agreement are
correct; the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date; and there has been no material and
adverse change in the business of the Company since the date of this Agreement.
4.5 The business, assets, financial condition and operations of the Company
shall be substantially as represented to the Purchasers and no change shall have
occurred that, in the reasonable good faith judgment of the Purchasers, is or
could have a Material Adverse Effect, provided, however, that no change
constituting or related to (i) the economy or financial markets of the United
States of America or any other region, (ii) any change, effect or development
that is primarily caused by conditions generally effecting the industry in which
the Company conducts its business, (iii) any change that is primarily caused by
the announcement or pendency of this Agreement or the transactions contemplated
hereby or (iv) any generally applicable change in law, rule or regulation, shall
be deemed to be or have a Material Adverse Effect for the purposes of this
Section.
4.6 Satisfactory completion of legal due diligence by the Purchasers.
4.7 The Company and Meritech Capital Partners II L.P. ("Meritech") shall
have entered into an agreement providing for Board of Directors observing rights
for Meritech, in the form attached hereto as Exhibit B for so long as 50% of the
Offered Securities purchased by Meritech and its affiliates pursuant hereto
remain outstanding.
Section 5. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to sell the Offered Securities on the Closing Date to a Purchaser will
be subject to the satisfaction, or waiver by the Company, of each of the
conditions below:
5.1 The representations and warranties of such Purchaser herein must be
correct and complete on the Closing Date and such Purchaser must have performed
all of its obligations hereunder required to be performed prior to the Closing
Date.
5.2 Satisfaction of any notice period required by NASDAQ, and receipt of
any required clearances from NASDAQ.
5.3 The holders of a majority of the outstanding shares of the Company's
Series A Preferred Stock shall have approved the authorization and issuance of
the Series B Preferred Stock.
Section 6. REGISTRATION OF THE REGISTRABLE SECURITIES; COMPLIANCE WITH THE
SECURITIES ACT.
6.1 Registration Procedures. The Company is obligated to do the following:
(a) On the date that is 17 months after the Closing Date, subject to
delivery by the Purchasers of information statements reasonably satisfactory to
the Company regarding the Purchasers' addresses and holdings of capital stock of
the Company, the Company shall prepare and file with the SEC one or more
registration statements in order to register with the SEC the resale by the
Purchasers, from time to time, of the Conversion Shares (which, along with only
Common Stock issued as (or issuable upon the conversion of exercise of any
warrant, right or
other security that is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, the Offered Securities or the
Conversion Shares, are sometimes referred to herein as the "Registrable
Securities") through NASDAQ or the facilities of any national securities
exchange on which the Company's Common Stock is then traded, or in privately
negotiated transactions. The Company shall use its best efforts to cause such
registration statement to be declared effective as soon thereafter as reasonably
possible. The Company shall promptly notify the Purchasers of the effectiveness
of such registration statement.
(b) The Company shall prepare and file with the SEC (i) such
amendments and supplements to any registration statement and the prospectus used
in connection therewith, and (ii) such other filings required by the SEC, in
each case as may be necessary to keep the registration statement continuously
effective and not misleading until the earlier of (A) the date that the
Purchasers have completed the distribution related to the Registrable
Securities, or (B) such time that all Registrable Securities then held by the
Purchasers can be sold within a given three (3) month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
under the Securities Act; provided, however, that at any time, upon written
notice to the Purchasers and for a period not to exceed fifteen (15) days
thereafter (the "Suspension Period"), the Company may delay the filing or
effectiveness of any registration statement or suspend the use or effectiveness
of any registration statement (and the Purchasers hereby agree not to offer or
sell any Registrable Securities pursuant to such registration statement during
the Suspension Period) if the Company reasonably believes that the Company may,
in the absence of such delay or suspension hereunder, be required under state or
federal securities laws to disclose any corporate development the disclosure of
which could reasonably be expected to have an adverse effect upon the Company,
its stockholders, a potentially significant transaction or event involving the
Company, or any negotiations, discussions, or proposals directly relating
thereto. The Company may extend the Suspension Period for an additional
consecutive fifteen (15) days upon written notice to the Purchasers. The Company
agrees to use its commercially reasonable best efforts to insure that the
Suspension Period is kept to a minimum number of days. If so directed by the
Company, the Purchasers shall use their best efforts to deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then in
the Purchasers' possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
(c) Furnish to the Purchasers such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them, unless
the Company is already subject to service in such jurisdiction and except as
required by the Securities Act.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Purchasers;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing
underwriter(s) of such offering. Each Purchaser participating in such
underwriting shall also enter into and perform its obligations under such an
agreement.
(f) Notify each Purchaser whose Registrable Securities are covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing. The Company shall promptly amend or supplement such prospectus in
order to cause such prospectus not to include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the circumstances
then existing.
(g) Furnish, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, (i) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and (ii) a letter, dated as of
such date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering addressed to the
underwriters.
(h) Cause all such Registrable Securities registered pursuant
hereunder to be listed on NASDAQ and each other securities exchange on which
similar securities issued by the Company are then listed.
6.2 Transfer of Securities After Registration. Each Purchaser, severally
and not jointly, agrees that it will not effect any disposition of the
Registrable Securities that would constitute a sale within the meaning of the
Securities Act, unless:
(a) pursuant to a registration statement then in effect covering such
disposition, if such disposition is made in accordance with such; or
(b) the Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a reasonably detailed
statement of the circumstances surrounding the proposed disposition, and if
reasonably requested by the Company, the Purchaser shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, or
other evidence, reasonably satisfactory to the Company, that such disposition
will not require registration of such Registrable Securities under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to and in compliance with Rule 144, and
will not require (i) that such holder furnish the Company with a reasonably
detailed statement of the circumstances of the proposed disposition or (ii) an
opinion of counsel except in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b) above, no
such registration statement or opinion of counsel shall be necessary for a
transfer by a Purchaser
(A) that is a partnership to its partners or former partners in accordance with
partnership interests, (B) that is a limited liability company to its members or
former members in accordance with their interest in the limited liability
company, (C) that is a corporation to its majority owned subsidiaries or
affiliates or (D) that is an individual or a trustee of a trust to the
Purchaser's family members, any trust for the benefit of such Purchaser or his
or her family members, or an entity whose equity owners consist solely of the
Purchaser and his or her family members; provided that in each case the
transferee will be subject to the terms of this Agreement to the same extent as
if such transferee were an original Purchaser hereunder.
6.3 Legends. Each certificate representing Registrable Securities shall
(unless otherwise permitted by the provisions of the Agreement) be stamped or
otherwise imprinted with a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws or as
provided elsewhere in this Agreement):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL OR BASED ON
OTHER WRITTEN EVIDENCE IN THE FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION
IS IN COMPLIANCE THEREWITH.
6.4 Expenses of Registration. Except as specifically provided herein, all
expenses incurred by the Company in complying with Section 6 hereof, including,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and expenses of one counsel to the
Purchasers, blue sky fees and expenses, reasonable fees and disbursements of one
counsel for the Purchasers, fees and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company which shall be paid in any event by the
Company) (collectively, the "Registration Expenses") shall be borne by the
Company. All underwriting discounts and selling commissions applicable to a sale
incurred in connection with any registrations hereunder shall be borne by the
holders of the securities so registered pro rata on the basis of the number of
shares so sold.
6.5 Delay of Registration; Furnishing Information.
(a) The Purchasers shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them and the intended
method of disposition of such securities as shall be required to effect the
registration of their Registrable Securities. Furthermore, each Purchaser,
severally and not jointly, agrees to promptly notify the Company of any changes
in the information set forth in a registration statement regarding such
Purchaser or its plan of distribution set forth in such registration statement.
6.6 Indemnification. In the event any Registrable Securities are included
in a registration statement under this Section 6.
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Purchaser, the partners, officers and directors of each
Purchaser, any underwriter (as defined in the Securities Act) for such Purchaser
and each person, if any, who controls such Purchaser or underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law in connection with the
offering covered by such registration statement; and the Company will pay as
incurred to each such Purchaser, partner, officer, director, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 6.6 shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company, which consent shall not be unreasonably withheld,
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Purchaser, partner, officer, director, underwriter or controlling person of
such Purchaser.
(b) To the extent permitted by law, each Purchaser will, if
Registrable Securities held by such Purchaser are included in the securities as
to which such registration qualifications or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, its officers and
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Purchaser selling securities under
such registration statement or any of such other Purchaser's partners, directors
or officers or any person who controls such Purchaser, against any losses,
claims, damages or liabilities (joint or several) to which the Company or any
such director, officer, controlling person, underwriter or other such Purchaser,
or partner, director, officer or controlling person of such other Purchaser may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Purchaser under an
instrument duly executed by such Purchaser and stated to be specifically for use
in connection with such registration; and each such Purchaser will pay as
incurred any legal or other expenses reasonably incurred by the Company or any
such director, officer, controlling person, underwriter or other person
registering shares under such registration, or partner, officer, director or
controlling person of such other person registering shares under such
registration in connection with investigating or defending any such loss, claim,
damage, liability or action if it is judicially determined that there was such a
Violation; provided, however, that the indemnity
agreement contained in this Section 6.6 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Purchaser, which consent shall
not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 6.6 exceed the net proceeds from the offering
received by such Purchaser.
(c) Promptly after receipt by an indemnified party under this Section
6.6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 6.6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 6.6, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 6.6.
(d) If the indemnification provided for in this Section 6.6 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a Purchaser hereunder
exceed the net proceeds from the offering received by such Purchaser.
(e) The obligations of the Company and the Purchasers under this
Section 6.6 shall survive completion of any offering of Registrable Securities
in a registration statement and the termination of this Agreement. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
6.7 Agreement to Furnish Information. In connection with a registration in
which such Purchaser is participating, each Purchaser agrees to execute and
deliver such other agreements as may be reasonably requested by the Company or
the underwriter. In addition, if requested by the Company or the representative
of the underwriters of Common Stock (or other securities) of the Company, each
Purchaser shall provide, within ten (10) days of such request, such information
related to such Purchaser as may be required by the Company or such
representative in connection with the completion of any public offering of the
Company's securities pursuant to a registration statement filed under the
Securities Act.
6.8 Rule 144 Reporting. With a view to making available to the Purchasers
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and
(c) So long as a Purchaser owns any Registrable Securities, furnish to
such Purchaser forthwith upon request: a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 of the
Securities Act, and of the Exchange Act (at any time after it has become subject
to such reporting requirements); a copy of the most recent annual or quarterly
report of the Company; and such other reports and documents as a Purchaser may
reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration.
6.9 S-3 Eligibility. The Company will use its best efforts to meet the
requirements for the use of Form S-3 for registration of the resale by the
Purchasers of the Registrable Securities. The Company will use its best efforts
to file all reports required to be filed by the Company with the SEC in a timely
manner and take all other necessary action so as to maintain such eligibility
for the use of Form S-3.
Section 7. COVENANTS OF THE COMPANY.
7.1 Due Diligence. The Company hereby undertakes to provide all information
and to make its employees available to the extent reasonably requested by the
Purchasers and their respective counsel in the course of performing their due
diligence investigation of the Company prior to the Closing Date.
Section 8. COVENANTS OF THE PURCHASERS.
8.1 Confidentiality of Records. Each Purchaser agrees to use, and to use
its best efforts to insure that it and its authorized representatives use, the
same degree of care as such person uses to protect its own confidential
information to keep confidential any information furnished to it which the
Company identifies as being confidential or proprietary (so long as such
information has not been publicly disclosed by the Company or otherwise
generally known by
such Purchaser or transferee), except that such person may disclose such
proprietary or confidential information to any partner, subsidiary or parent of
such person for the purpose of evaluating its investment in the Company as long
as such partner, subsidiary or parent is advised of the confidentiality
provisions of this Section 8.1. Notwithstanding the above, a Purchaser shall not
be in violation of this Section 8.1 with regard to a disclosure that was in
response to a valid order by a court or other governmental body or as required
by law or regulation, provided that such Purchaser provides the Company with
prior written notice of such disclosure in order to permit the Company to seek
confidential treatment or other appropriate remedy of such confidential
information; provided that, in the event that such confidential treatment or
other remedy is not requested or obtained, the Purchaser shall furnish only that
part of the confidential information that is legally required and shall exercise
its reasonable best efforts to ensure that the confidential information so
obtained is accorded treatment as confidential property.
8.2 Prohibition on Use of Insider Information. Each Purchaser understands
that federal and state securities laws prohibit trading in the Company's
securities while such Purchaser is in the possession of "material nonpublic
information" concerning the Company and/or its affiliates. Each Purchaser
represents that it has been advised by its counsel of such laws and the
consequences of breaking such laws. Each Purchaser, and any transferee of
Registrable Securities, covenants not to enter into any transactions that would
violate applicable securities laws.
8.3 Lock-up Period. Each of the Purchasers, severally and not jointly,
hereby agrees that from the date hereof and until 30 months after the Closing
Date (the "Lock-Up Expiration Date"), such Purchaser will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, any
shares of the Company's Common Stock or securities convertible into or
exchangeable or exercisable for any shares of Common Stock (collectively, the
"Securities"), enter into a transaction which would have the same effect, or
enter into any swap, hedge or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of the Securities, whether
any such aforementioned transaction is to be settled by delivery of the
Securities or other securities, in cash or otherwise, or publicly disclose the
intention to make any such offer, sale, pledge or disposition, or to enter into
any such transaction, swap, hedge or other arrangement, without, in each case,
the prior written consent of the Company. The foregoing sentence (x) shall not
apply to transactions relating to Securities acquired (i) by the Purchasers
prior to the execution of this Agreement or (ii) by the Purchasers in the open
market after the date of this Agreement, (y) shall expire, for each Purchaser,
with respect to 20% of the total number of Offered Securities purchased by such
Purchaser, on each of the 18 month anniversary of the Closing Date, the 21 month
anniversary of the Closing Date, the 24 month anniversary of the Closing Date
and the 27 month anniversary of the Closing Date, and (z) shall expire, for each
Purchaser, in its entirety upon the occurrence of any event deemed a Liquidation
(as such term in defined in the Certificate of Designations). In furtherance of
the foregoing, each of the Purchasers, severally and not jointly, agrees that
the Company and its transfer agent and registrar are hereby authorized to
decline to make any transfer of shares of Securities if such transfer would
constitute a violation or breach of the terms of this Section.
Section 9. EXEMPTION FROM REGISTRATION; LEGEND. The Offered Securities and the
Conversion Shares will be issued under an exemption or exemptions from
registration under the Securities Act, and are also subject to certain rights
and obligations set forth herein.
Accordingly, the certificates evidencing the Offered Securities and any
Conversion Shares issuable upon the conversion thereof shall, upon issuance,
contain a legend, substantially in the form as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
SECURITIES LAWS AND NO INTEREST HEREIN MAY BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT TO
SUCH SECURITIES SHALL BE EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR (2) SUCH SECURITIES ARE TRANSFERRED PURSUANT TO RULE 144
PROMULGATED UNDER THE ACT (OR ANY SUCCESSOR RULE) OR (3) THE ISSUER OF
THESE SECURITIES SHALL HAVE RECEIVED AN OPINION OF COUNSEL FOR THE HOLDER
OF THESE SECURITIES SATISFACTORY TO THE ISSUER THAT NO VIOLATION OF THE ACT
OR SIMILAR STATE SECURITIES LAWS WILL BE INVOLVED IN SUCH TRANSFER.
Section 10. NOTICES. All communications hereunder will be in writing and, (a) if
sent to a Purchaser, will be mailed, delivered or telegraphed and confirmed to
the address for such Purchaser set forth on Schedule 1 hereto or (c) if sent to
the Company, will be mailed, delivered or telegraphed and confirmed to it at
0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, XX 00000, Attention: Chief Executive
Officer.
Section 11. EXPENSES. The Company, on the one hand, and each Purchaser, on the
other hand, are each responsible for its own expenses associated with the
purchases and sales of the Offered Securities pursuant to the terms of this
Agreement; provided, that the Company will pay, on the Closing Date, the legal
fees and expenses of legal counsel to (i) Meritech; provided, further, that such
amounts shall not exceed $20,000 and (ii) the KLS Trust dated July 14, 1999;
provided, further, that such amounts shall not exceed $5,000.
Section 12. AMENDMENT AND WAIVER
12.1 Except as otherwise expressly provided, this Agreement may be amended
or modified only upon the written consent of the Company and the Purchasers.
12.2 Except as otherwise expressly provided herein, (i) rights arising
under this Agreement may only be waived in writing by the party entitled to such
right and (ii) obligations under this Agreement may only be waived by the party
to whose benefit the obligations runs.
Section 13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and no other
person will have any right or obligation hereunder.
Section 14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
Section 15. APPLICABLE LAW AND VENUE. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, without
regard to principles of conflicts of laws. Any dispute under this Agreement that
is not settled by mutual consent shall be finally adjudicated by any federal or
state court sitting in the City and County of San Diego in the State of
California, and each party consents to the exclusive jurisdiction of such courts
(or any appellate court therefrom) over any such dispute. Each party further
consents to personal jurisdiction in the courts mentioned in the prior sentence.
[Signature Page Follows]
IN WITNESS WHEREOF, this Agreement is entered into by the undersigned
parties as of the date first written above.
Very truly yours,
WIRELESS FACILITIES, INC.
By: /s/ Wm. Xxxxxxxx Xxxxxx
--------------------------------------
Name: Wm. Xxxxxxxx Xxxxxx
Title: Vice President, Legal Affairs,
General Counsel and Secretary
MERITECH CAPITAL PARTNERS II L.P.
By: Meritech Capital Associates II L.L.C.
its General Partner
By: Meritech Management Associates II L.L.C.
a managing member
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx, a managing member
MERITECH CAPITAL AFFILIATES II L.P.
By: Meritech Capital Associates II L.L.C.
its General Partner
By: Meritech Management Associates II L.L.C.
a managing member
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx, a managing member
MCP ENTREPRENEUR PARTNERS II L.P.
By: Meritech Capital Associates II L.L.C.
its General Partner
By: Meritech Management Associates II L.L.C.
a managing member
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx, a managing member
OAK INVESTMENT PARTNERS X, LIMITED
PARTNERSHIP
/s/ Xxxxxx Xxxxxx
---------------------------------------
Xxxxxx Xxxxxx
Managing Member of Oak Associates X, LLC
The General Partner of Oak Investments Partners
X, Limited Partnership
OAK X AFFILIATES FUND, LIMITED
PARTNERSHIP
/s/ Xxxxxx Xxxxxx
---------------------------------------
Xxxxxx Xxxxxx
Managing Member of Oak Associates X, LLC
The General Partner of Oak X Affiliates Fund,
Limited Partnership
/s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx, as Trustee
of the KLS Trust dated July 14, 1999
Schedule 1
-------------------------------------------------------------------------------------------------------------
Purchaser Offered Securities
--------- ------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Meritech Capital Partners II L.P. 38,708
-------------------------------------------------------------------------------------------------------------
c/o Xxxxx Xxxxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
-------------------------------------------------------------------------------------------------------------
Meritech Capital Affiliates II L.P. 996
-------------------------------------------------------------------------------------------------------------
c/o Xxxxx Xxxxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
-------------------------------------------------------------------------------------------------------------
MCP Entrepreneur Partners II L.P. 296
-------------------------------------------------------------------------------------------------------------
c/o Xxxxx Xxxxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
-------------------------------------------------------------------------------------------------------------
Oak Investment Partners X, L.P. 39,368
-------------------------------------------------------------------------------------------------------------
000 Xxxxxxxxxx Xxx
Xxxxx 0000
Xxxx Xxxx, XX 00000
-------------------------------------------------------------------------------------------------------------
Oak X Affiliates Fund, L.P., 632
-------------------------------------------------------------------------------------------------------------
000 Xxxxxxxxxx Xxx
Xxxxx 0000
Xxxx Xxxx, XX 00000
-------------------------------------------------------------------------------------------------------------
KLS Trust dated July 14, 1999 10,000
========
-------------------------------------------------------------------------------------------------------------
x/x Xxxxxxx Xxxxx
Xxxxxxx Xxxxx Xxxxxx
0000 Century Park East (South Tower)
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
-------------------------------------------------------------------------------------------------------------
Total 90,000
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATIONS
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
of
SERIES B PREFERRED STOCK
of
WIRELESS FACILITIES, INC.
I, Xxxxxx X. Xxxxxx, Chief Executive Officer of WIRELESS FACILITIES, INC.,
a corporation organized and existing under the laws of the State of Delaware
(the "Corporation" or the "Company")), in accordance with the provisions of
Section 151 of the Delaware General Corporation Law, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of the
Corporation (the "Board of Directors") by the Certificate of Incorporation of
the Corporation and by Section 151(g) of the Delaware General Corporation Law,
on May 16, 2002, the Board of Directors adopted the following resolution,
creating a series of shares of convertible preferred stock, Series B, designated
as "Series B Preferred Stock":
"RESOLVED, that pursuant to the authority vested in the Board of Directors
(the "Board of Directors") of WIRELESS FACILITIES, INC., a corporation
organized and existing under the laws of the State of Delaware (the
"Corporation"), by the Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), the Board of Directors does hereby provide
for the authorization and issuance of a series of convertible preferred
stock, Series B, par value U.S.$0.001 per share, of the Corporation, to be
designated "Series B Preferred Stock," initially consisting of 90,000
shares, and to the extent that the designations, powers, preferences, and
relative participating, optional, or other special rights, and the
qualifications, limitations, and restrictions of the Series B Preferred
Stock are not stated and expressed in the Certificate of Incorporation, the
Board of Directors does hereby fix and herein state and express such
designations, powers, preferences, and relative participating, optional, or
other special rights, and the qualifications, limitations, and restrictions
thereof, as follows:
1. Designation and Rank.
(a) Ninety thousand (90,000) shares of the preferred stock of the
Corporation, par value $0.001 per share, shall be designated and known as the
"Series B Preferred Stock."
(b) The Series B Preferred Stock shall rank senior and prior to the common
stock, par value U.S.$0.001 per share, of the Corporation (the "Common Stock"),
and all other classes or series of the capital stock (other than preferred
stock) of the Corporation (now or hereafter authorized or issued), with respect
to the payment of any dividends, the conversion rights set forth herein and any
payment upon liquidation or redemption. The Series B Preferred Stock shall rank
on par with the Series A Preferred Stock of the Corporation with respect to the
payment of any dividends, the conversion rights set forth herein and any payment
upon liquidation or redemption. The Corporation may not issue any additional
classes or series of preferred stock with liquidation, redemption or conversion
rights or right of payment of any kind that is senior to the Series B Preferred
Stock, except pursuant to Section 12.
1.
2. Dividend Rights.
From and after the date hereof, when and if the Board of Directors declares
a dividend or distribution payable with respect to the then-outstanding shares
of Common Stock (other than in additional shares of Common Stock or Common Stock
Equivalents (as defined in Section 4(e)(i) below), the holders of the Series B
Preferred Stock shall be entitled to the amount of dividends per share in the
same form as such Common Stock dividends that would be payable on the largest
number of whole shares of Common Stock into which a holder's aggregate shares of
Series B Preferred Stock could then be converted pursuant to Section 4 hereof
(such number to be determined as of the record date for the determination of
holders of Common Stock entitled to receive such dividend).
3. Liquidation Rights.
(a) Liquidation Events. The occurrence of any of the following events shall
be deemed a "Liquidation": (i) any liquidation, dissolution, or winding-up of
the affairs of the Corporation; (ii) any transaction or series of related
transactions in which securities of the Corporation representing 50% or more of
the combined voting power of the Corporation's then outstanding voting
securities are acquired by a person, entity or group of related persons or
entities, excluding any consolidation or merger effected exclusively to change
the domicile of the Corporation; (iii) any consolidation, merger or
reorganization of the Corporation with or into any other corporation or other
entity or person pursuant to which the holders of the Corporation's outstanding
securities receive, pursuant to such transaction, securities in the surviving
entity that represent less than 50% of the voting power of such surviving
entity; or (iv) any sale, lease, exclusive license or other disposition of all
or substantially all of the assets of the Corporation.
(b) Liquidation Preference.
(i) In the event of any Liquidation, whether voluntary or involuntary,
before any payment of cash or distribution of other property shall be made to
the holders of Common Stock, or any other class or series of stock subordinate
in liquidation preference to the Series B Preferred Stock, the holders of the
Series B Preferred Stock shall be entitled to receive out of the assets of the
Corporation legally available for distribution to its stockholders, on behalf of
each share of Series B Preferred Stock held by such holder, U.S.$500.00 (the
"Original Issue Price") (as appropriately adjusted for any combinations,
divisions, or similar recapitalizations affecting the Series B Preferred Stock
after issuance) and all accumulated or accrued and unpaid dividends thereon
(collectively, the "Series B Liquidation Preference").
(ii) If, upon any Liquidation, the assets of the Corporation available
for distribution to its stockholders are insufficient to pay the holders of the
Series B Preferred Stock the full amounts to which they are entitled pursuant to
clause (b)(i) above, the holders of the Series B Preferred Stock shall share pro
rata in any distribution of assets in proportion to the respective amounts which
would be payable to the holders of the Series B Preferred Stock and any other
class or series of capital stock of the Corporation ranking on par with the
Series B Preferred Stock in respect of the shares held by them if all amounts
payable to them in respect of such were paid in full pursuant to clause (b)(i)
above.
2.
(iii) After the distributions described in clause (b)(i) or (b)(ii)
above have been paid, subject to the rights of any other class or series of
capital stock of the Corporation that may from time to time come into existence,
the remaining assets of the Corporation available for distribution to
stockholders shall be distributed among the holders of Common Stock pro rata
based on the number of shares of Common Stock held by each.
(c) Non-Cash Distributions. If any distribution to be made pursuant to this
Section 3 is to be paid other than in cash or Common Stock or Common Stock
Equivalents, the value of such distribution will be deemed its fair market value
as determined in good faith by the Board of Directors. Any securities shall be
valued as follows:
(i) Securities not subject to investment letter or other similar
restrictions on free marketability covered by clause (ii) below:
(1) if traded on a securities exchange or through the Nasdaq
National Market, the value shall be deemed to be the average of the closing
prices of the securities on such quotation system over the thirty (30) trading
day period ending three (3) trading days prior to the occurrence of the
Liquidation;
(2) if actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty (30) trading day period ending three (3) trading
days prior to the occurrence of the Liquidation; and
(3) if there is no active public market, the value shall be the
fair market value thereof, as determined by the Board of Directors.
(ii) The method of valuation of securities subject to investment
letter or other restrictions on free marketability (other than restrictions
arising solely by virtue of a stockholder's status as an affiliate or former
affiliate) shall be to effectuate an appropriate discount from the market value,
as determined by clause (i)(1), (2) or (3) of this Section 3(c), so as to
reflect the approximate fair market value thereof, as determined by the Board of
Directors.
(iii) The holders of at least a majority of the outstanding Series B
Preferred Stock shall have the right to challenge any determination by the Board
of Directors of fair market value pursuant to this Section 3(c), in which case
the determination of fair market value shall be made by an independent appraiser
selected jointly by the Board of Directors and the challenging parties, the cost
of such appraisal to be borne equally by the Corporation and the challenging
parties.
4. Conversion Rights.
The holders of the Series B Preferred Stock shall have conversion rights as
follows (the "Conversion Right"):
(a) Conversion Price. The "Conversion Price" shall, initially, be U.S.$5.00
per share and shall be subject to adjustment as set forth below in Sections 4(e)
and 4(f).
3.
(b) Automatic Conversion. If the closing price for the shares of the
Corporation's Common Stock (trading on a securities exchange or through Nasdaq
National Market or other national exchange or market) exceeds $11.00 per share
(as adjusted for events described in Section 4(e)(ii) and 4(e)(iii) below) for
any thirty consecutive trading day period that begins after February 28, 2005,
then, upon such occurrence, each share of Series B Preferred Stock shall be
automatically converted into such number of fully paid and non-assessable shares
of Common Stock as is determined by dividing (x) the Original Issue Price of
such share of Series B Preferred Stock (including any accumulated or accrued but
unpaid dividends thereon) by (y) the Conversion Price. The date of such
conversion is herein referred to as the "Conversion Date."
(c) Optional Conversion. The holders of the Series B Preferred Stock shall
have the right, at any time, to convert the shares of Series B Preferred Stock
held by such holder into that number of shares of Common Stock into which such
shares are convertible pursuant to Section 4(b) ("Optional Conversion"). In the
event of any Optional Conversion, the date of such conversion shall be referred
to as the "Optional Conversion Date."
(d) Mechanics of Conversion. On the Conversion Date or Optional Conversion
Date, as the case may be, (x) each holder shall tender such holder's shares of
Series B Preferred Stock to the Corporation for cancellation, free and clear of
encumbrances of any type or nature, and (y) the Corporation shall cause to be
delivered to such holder a number of shares of Common Stock as calculated
pursuant to Section 4(b) above, free and clear of encumbrances of any type or
nature. Each holder and the Corporation shall take all other necessary or
appropriate actions in connection with or to effect such closing.
(e) Certain Adjustments. To the extent that the holders of Series B
Preferred Stock do not participate fully with other stockholders of the
Corporation with respect to dividends paid pursuant to Section 2 hereof, the
following adjustments shall be made to the Conversion Price:
(i) Adjustment for Common Stock Dividends and Distributions. If, at
any time after the original issue date of the Series B Preferred Stock (the
"Original Issue Date"), the Corporation makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock or Common Stock
Equivalents, in each such event the Conversion Price that is then in effect
shall be decreased as of the time of such issuance or, in the event such record
date is fixed, as of the close of business on such record date, by multiplying
the Conversion Price then in effect by a fraction (i) the numerator of which is
the total number of shares of Common Stock and Common Stock Equivalents issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (ii) the denominator of which is the total
number of shares of Common Stock and Common Stock Equivalents issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock or Common
Stock Equivalents issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Conversion Price shall be recomputed accordingly as of the close of business
on such record date and thereafter the Conversion Price shall be adjusted
pursuant to this Section 4(e)(i) to reflect the actual payment of such dividend
or distribution.
4.
A "Common Stock Equivalent" shall mean each share of Common Stock
into which securities or property or rights are convertible, exchangeable or
exercisable for or into shares of Common Stock, or otherwise entitle the holder
thereof to receive directly or indirectly, any of the foregoing.
(ii) Adjustments for Stock Splits, Stock Subdivisions and
Combinations. If, at any time after the Original Issue Date, the Corporation
subdivides or combines the Common Stock without making a corresponding
subdivision or combination of the Series B Preferred Stock, (A) in the case of a
subdivision (including a stock split), the Conversion Price in effect
immediately prior to such event shall be proportionately decreased and the
number of shares of Common Stock purchasable thereunder shall be proportionately
increased, and (B) in the case of a combination (including a reverse stock
split), the Conversion Price in effect immediately prior to such event shall be
proportionately increased and the number of shares of Common Stock purchasable
thereunder shall be proportionately decreased. Any adjustment under this Section
4(e)(ii) shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(iii) Adjustments for Reclassification, Reorganization and
Consolidation. In case of (A) any reclassification, reorganization, change or
conversion of securities of the class issuable upon conversion of the Series B
Preferred Stock (other than a change in par value, or from par value to no par
value) into other shares or securities of the Corporation, or (B) any merger or
consolidation of the Corporation with or into another entity (other than a
Liquidation or a merger or consolidation with another entity in which the
Corporation is the acquiring and the surviving entity and that does not result
in any reclassification or change of outstanding securities issuable upon
conversion of the Series B Preferred Stock) each holder of shares of Series B
Preferred Stock shall have the right to receive, in lieu of the shares of Common
Stock otherwise issuable upon the conversion of its shares of Series B Preferred
Stock (and accumulated or accrued and unpaid dividends then-outstanding
thereunder) in accordance with Section 4(b), the kind and amount of shares of
stock and other securities, money and property receivable upon such
reclassification, reorganization, change, merger or consolidation upon
conversion by a holder of the maximum number of shares of Common Stock into
which such shares of Series B Preferred Stock could have been converted
immediately prior to such reclassification, reorganization, change, merger or
consolidation, all subject to further adjustment as provided herein or with
respect to such other securities or property by the terms thereof. The
provisions of this clause (iii) shall similarly attach to successive
reclassifications, reorganizations, changes, mergers and consolidations.
(f) Antidilution Adjustments. To the extent that (i) the Corporation issues
after the Original Issue Date and before November 28, 2003, Additional Shares of
Common Stock (as defined below) (in one or more transactions, whether or not
related), (ii) each such issuance is at an Effective Price (as defined below)
per share less than Conversion Price then in effect and (iii) the aggregate
gross proceeds of such issuances exceed $15 million, then the Conversion Price
shall be adjusted to equal the lowest Effective Price received by the
Corporation pursuant to any such issuance. The previous sentence will apply to
any issuances of Additional Shares of Common Stock after the $15 million
threshold has been met (provided any such issuance is below the Conversion Price
then in effect) but will not apply to any issuance of Additional
5.
Shares of Common Stock occurring after November 28, 2003. Notwithstanding the
foregoing, the Conversion Price shall in no event be lower than U.S.$[4.17].
(i) For the purpose of making any adjustment required under Section
4(f), the consideration received by the Company for any issue or sale of
securities shall (A) to the extent it consists of cash, be computed at the net
amount of cash received by the Company after deduction of any underwriting or
similar commissions, compensation or concessions paid or allowed by the Company
in connection with such issue or sale but without deduction of any expenses
payable by the Company (except for purposes of determining if the $15 million
threshold referred to above has been met, in which case the consideration
received will be deemed to be the aggregate gross proceeds received by the
Company), (B) to the extent it consists of property other than cash, be computed
at the fair value of that property as determined in good faith by the Board of
Directors, and (C) if Additional Shares of Common Stock, Convertible Securities
(as defined below) or rights or options to purchase either Additional Shares of
Common Stock or Convertible Securities are issued or sold together with other
stock or securities or other assets of the Company for a consideration which
covers both, be computed as the portion of the consideration so received that
may be reasonably determined in good faith by the Board of Directors to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
rights or options; provided, however, that the holders of at least a majority of
the outstanding Series B Preferred Stock shall have the right to challenge any
determination by the Board of Directors of fair market value pursuant to this
Section 4(f)(i), in which case the determination of fair market value shall be
made by an independent appraiser selected jointly by the Board of Directors and
the challenging parties, the cost of such appraisal to be borne equally by the
Corporation and the challenging parties.
(ii) For the purpose of the adjustment required under this Section
4(f), if the Company issues or sells (A) stock or other securities convertible
into, Additional Shares of Common Stock (such convertible stock or securities
being herein referred to as "Convertible Securities") or (B) rights or options
for the purchase of Additional Shares of Common Stock or Convertible Securities
and if the Effective Price of such Additional Shares of Common Stock is less
than the Conversion Price, in each case the Company shall be deemed to have
issued at the time of the issuance of such rights or options or Convertible
Securities the maximum number of Additional Shares of Common Stock issuable upon
exercise or conversion thereof and to have received as consideration for the
issuance of such shares an amount equal to the total amount of the
consideration, if any, received by the Company for the issuance of such rights
or options or Convertible Securities, plus, in the case of such rights or
options, the minimum amounts of consideration, if any, payable to the Company
upon the exercise of such rights or options, plus, in the case of Convertible
Securities, the minimum amounts of consideration, if any, payable to the Company
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) upon the conversion thereof; provided that if in the
case of Convertible Securities the minimum amounts of such consideration cannot
be ascertained, but are a function of antidilution or similar protective
clauses, the Company shall be deemed to have received the minimum amounts of
consideration without reference to such clauses; provided further that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by reason of
antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is
6.
reduced; provided further that if the minimum amount of consideration payable to
the Company upon the exercise or conversion of such rights, options or
Convertible Securities is subsequently increased, the Effective Price shall be
again recalculated using the increased minimum amount of consideration payable
to the Company upon the exercise or conversion of such rights, options or
Convertible Securities. No further adjustment of the Conversion Price, as
adjusted upon the issuance of such rights, options or Convertible Securities,
shall be made as a result of the actual issuance of Additional Shares of Common
Stock on the exercise of any such rights or options or the conversion of any
such Convertible Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall expire without
having been exercised, the Conversion Price, as adjusted upon the issuance of
such rights, options or Convertible Securities, shall be readjusted to the
Conversion Price which would have been in effect had an adjustment been made on
the basis that the only Additional Shares of Common Stock so issued were the
Additional Shares of Common Stock, if any, actually issued or sold on the
exercise of such rights or options or rights of conversion of such Convertible
Securities, and such Additional Shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Company upon such exercise,
plus the consideration, if any, actually received by the Company for the
granting of all such rights or options, whether or not exercised, plus the
consideration received for issuing or selling the Convertible Securities
actually converted, plus the consideration, if any, actually received by the
Company (other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities) on the conversion of such Convertible Securities.
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company or deemed to be issued pursuant to this
Section 4(f), whether or not subsequently reacquired or retired by the Company
other than (A) shares of Common Stock and/or options, warrants or other Common
Stock purchase rights, and the Common Stock issued or issuable pursuant to such
options, warrants or other rights to employees, officers or directors of, or
consultants or advisors to the Company or any subsidiary pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board; (B) shares of Common Stock issued or issuable pursuant to any equipment
loan or leasing arrangement, or debt financing from a bank or similar financial
institution; (C) shares of Common Stock issued or issuable in connection with
licensing transactions involving the Company and other entities, including (1)
joint ventures, manufacturing, marketing or distribution arrangements or (2)
technology transfer or development arrangements; provided that such transactions
in (1) and (2) and the issuance of shares therein has been approved by a
majority of the members of the Company's Board of Directors and the aggregate
number of shares so issued does not exceed four million (4,000,000)(as adjusted
for stock splits, stock dividends, stock combinations, recapitalizatons and the
like); and (D) any other issuances approved by the holders of a majority of the
Series B Preferred Stock then outstanding.
The "Effective Price" of Additional Shares of Common Stock
shall mean the quotient determined by dividing the total number of Additional
Shares of Common Stock issued or sold, or deemed to have been issued or sold by
the Company under this Section 4(f), into the aggregate consideration received,
or deemed to have been received by the Company for such issue under this Section
4(f), for such Additional Shares of Common Stock.
7.
5. Other Distributions.
In the event the Corporation provides the holders of its Common Stock with
consideration that is not otherwise addressed in Section 4 (including, without
limitation, declaring a distribution payable in securities, assets, cash or
evidences of indebtedness issued by other persons or the Corporation (excluding
cash dividends declared and paid by the Corporation out of retained earnings)),
then, in each such case, the holders of the Series B Preferred Stock shall be
entitled to a pro rata share of any such distribution as though such holders
were holders of the number of shares of Common Stock of the Corporation as
though the Series B Preferred Stock had been converted in whole as of the record
date fixed for the determination of the holders of Common Stock of the
Corporation entitled to receive such distribution.
6. Recapitalizations.
If at any time there occurs a recapitalization of the Common Stock (other
than a subdivision, combination, or merger or sale of assets provided for in
Section 4 hereof), the holders of the Series B Preferred Stock shall be entitled
to receive upon conversion of the Series B Preferred Stock the number of shares
of capital stock or other securities or property of the Corporation or otherwise
to which a holder of the Common Stock deliverable upon conversion would have
been entitled on such recapitalization. In any such case, appropriate adjustment
shall be made in the application of the provisions of Section 4 hereof with
respect to the rights of the holders of the Series B Preferred Stock after the
recapitalization to the end that the provisions of Section 4 hereof (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of the Series B Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
7. No Impairment.
The Corporation will not, by amendment of the Certificate of Incorporation
or through any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issuance 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 hereof
and in the taking of all such action as may be necessary or appropriate in order
to protect the Conversion Right of the holders of the Series B Preferred Stock
against impairment.
8. No Fractional Shares and Certificate as to Adjustments.
(a) No fractional shares of Common Stock will be issued upon the conversion
of any share or shares of the 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 shall be aggregated for purposes
of determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of a fraction of a share of Common Stock, the Corporation
shall, in lieu of issuing any fractional share, pay the holder otherwise
entitled to such fraction a sum in cash equal to such fraction multiplied by the
closing price of the Corporation's Common Stock on the Nasdaq National Market
(or any other national securities exchange on which the Common
8.
Stock is then traded) on the day immediately preceding the conversion. All
calculations under Section 4 hereof and this Section 8(a) shall be made to the
nearest cent or to the nearest share, as the case may be.
(b) Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to Section 4 hereof, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of shares of Series B
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Series B Preferred Stock, use its reasonable best efforts to furnish or cause to
be furnished to such holder a like certificate setting forth (i) such adjustment
or readjustment, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of a share of Series B
Preferred Stock.
9. Reservation of Stock Issuable Upon Conversion.
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 its shares of Common Stock that shall from time to time be sufficient
to effect the conversion of all outstanding shares of the Series B Preferred
Stock; and if at any time the number of authorized but unissued shares of Common
Stock not otherwise reserved for issuance shall not be sufficient to effect the
conversion of all then outstanding shares of the Series B Preferred Stock, the
Corporation shall take such corporate action that may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to its Certificate of
Incorporation.
10. Notices.
Any notice required by the provisions hereof to be given to the holders of
shares of Series B Preferred Stock shall be given in writing and shall be deemed
to have been given (i) in the case of personal or hand delivery, on the date of
such delivery, (ii) in the case of an internationally-recognized overnight
delivery courier, on the second business day after the date when sent, (iii) in
the case of mailing, on the fifth business day following that day on which the
piece of mail containing such communication is posted, and (iv) in the case of
facsimile transmission, the date of telephone confirmation of receipt.
11. Voting Rights.
Holders of Series B Preferred Stock shall be entitled to vote on all
matters submitted to a vote of the holders of the Corporation's Common Stock,
including with respect to the election of directors of the Corporation, on an as
if converted to Common Stock basis; provided, however, that the number of votes
to which the Series B Preferred Stock is entitled shall be based on a conversion
price of $5.00 per share, giving effect to any future adjustments pursuant to
Section
9.
4(e) above, but without giving any effect to any future adjustments pursuant to
Section 4(f) above.
12. Protective Provisions.
Subject to the rights of any series of preferred stock that may from time to
time come into existence, so long as any shares of Series B Preferred Stock are
outstanding, the Corporation shall not without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least a
majority of the then-outstanding shares of Series B Preferred Stock, voting
separately as a series:
(a) amend its Certificate of Incorporation (including the filing of a
Certificate of Designations) so as to (i) increase the number of authorized
shares of the Corporation's preferred stock or (ii) affect adversely the shares
of Series B Preferred Stock or any holder thereof, including, without
limitation, by creating any additional series of preferred stock (or issuing
shares under any such series) that is senior or pari passu in liquidation
preference, redemption right, conversion rights or right of payment to the
Series B Preferred Stock;
(b) after the date of this Certificate of Designation, create any new debt
instrument or create or increase any new or existing bank line (or similar
arrangement pursuant to which the Company is or becomes indebted), so that the
Company's total indebtedness pursuant to such instruments, lines or arrangements
exceeds $105,000,000 in the aggregate; or
(c) change the rights of the holders of the Series B Preferred Stock in any
other respect;
provided, however, that the authorization and issuance of additional shares of
Common Stock, and creation of any series of preferred stock (or issuing shares
under any such series) that is junior in right of payment upon liquidation,
redemption, conversion and payment rights and otherwise to the Series B
Preferred Stock shall not be deemed to adversely affect the rights, preferences
or privileges of the Series B Preferred Stock or any holder thereof or change
the rights of the holders of the Series B Preferred Stock in any other respect.
The Series B Preferred Stock shall have no preemptive rights pursuant
hereto.
13. Legend.
The Series B Preferred Stock and any underlying shares of Common Stock will
be issued under an exemption or exemptions from registration under the Act.
Accordingly, the certificates evidencing the Series B Preferred Stock and the
underlying Common Stock shall, upon issuance, contain a legend, substantially in
the form as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
SECURITIES LAWS AND NO INTEREST HEREIN MAY BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT TO
SUCH SECURITIES SHALL BE EFFECTIVE UNDER
10.
THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) SUCH SECURITIES ARE
TRANSFERRED PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT (OR ANY SUCCESSOR
RULE) OR (3) THE ISSUER OF THESE SECURITIES SHALL HAVE RECEIVED AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE ISSUER
THAT NO VIOLATION OF THE ACT OR SIMILAR STATE SECURITIES LAWS WILL BE INVOLVED
IN SUCH TRANSFER.
14. Status of Converted Stock.
In the event any shares of Series B Preferred Stock shall be converted
pursuant to Section 4 hereof, the shares so converted shall be canceled and
shall not be reissuable by the Corporation.
[Signature page follows]
11.
IN WITNESS WHEREOF, said Wireless Facilities, Inc. has caused this
Certificate of Designations to be signed by Xxxxxx X. Xxxxxx, its Chief
Executive Officer, as of May 28, 2002.
WIRELESS FACILITIES, INC.
By:
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
12.
