Exhibit 3.5
ADVANCED REMOTE COMMUNICATION SOLUTIONS, INC.
CERTIFICATE OF DETERMINATION
Michael Silverman and Dean Kernus hereby certify that:
1. Michael Silverman is the President and Dean Kernus is the Secretary
of Advanced Remote Communication Solutions, Inc., a California corporation (the
"Corporation").
2. The number of shares of preferred stock is 1,000,000. The number of
Series B Preferred Stock to be issued is 376.25. None of the Series B Preferred
Stock has been issued.
3. The Board of Directors of the Corporation duly adopted the following
resolution:
WHEREAS, the Articles of Incorporation authorize the Preferred
Stock of the Corporation to be issued in series and authorize the Board of
Directors of the Corporation to determine the rights, preferences, privileges
and restrictions granted to or imposed upon any wholly unissued series of
Preferred Stock and to fix the number of shares and designation of any such
series; and
WHEREAS, the Board of Directors of the Corporation ("Board")
desires, pursuant to its authority, to fix the terms of a series of Preferred
Stock, the number of shares constituting that series, and the designation of
that series;
NOW, THEREFORE, BE IT RESOLVED, that the Board does hereby fix
and determine the designation of, the number of shares constituting, and the
rights, preferences, privileges, and restrictions relating to a series of
Preferred Stock as follows:
A. The second series of Preferred Stock of this Corporation shall be designated
and known as "Series B Preferred Stock", and the total number of shares of such
series is Three Hundred Seventy-Three and Three-Quarters (373.75).
B. The powers, rights, preferences, restrictions, and other matters relating to
the Series B Preferred Stock are as follows:
1. Dividends.
(a) Priority of Dividends. No dividends shall be declared or
set aside for Corporation's common stock ("Common Stock", such Common Stock and
other junior capital stock being collectively referred to as "Junior Stock"),
unless at the same time or prior thereto all accrued and unpaid dividends on the
Series B Preferred Stock shall be declared, set aside and paid on all the then
outstanding shares of Series B Preferred Stock. With respect to dividends, the
Series B Preferred Stock shall rank pari passu with the Series A Preferred
Stock.
(b) Dividend Rate; Dividend Payment Dates. The holder of the
Series B Preferred Stock shall be entitled to receive when, as and if declared
by the Board of Directors ("Board"), out of funds legally available therefor,
cumulative cash dividends, in preference and priority to dividends on any Junior
Stock, that shall accrue on the Liquidation Price (as defined in Section 2(a))
of each share of the Series B Preferred Stock at the rate per annum of One
Thousand Dollars ($1,000) per share from and including the date on which the
shares of Series B
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Preferred Stock were first issued ("Original Issue Date") to and including the
date on which the Liquidation Price or Redemption Price of such share is paid in
full to the holders of such shares pursuant to Section 2 or 5, respectively. The
accrued dividends will be adjusted for stock splits, stock dividends,
recapitalizations, reclassifications, reorganizations and similar events
(together referred to as "Recapitalization Events") which affect the number of
outstanding shares of the Series B Preferred Stock. Accrued dividends on the
Series B Preferred Stock shall be payable out of funds legally available
therefor commencing on January 1, 2001 and thereafter semi-annually on July 1
and January 1 of each year (each a "Dividend Payment Date"), to the holder of
record of the Series B Preferred Stock as of the close of business on the
applicable record date. Dividends shall be fully cumulative and shall accrue on
a daily basis based on a 365-day or 366-day year, as the case may be, without
regard to the occurrence of a Dividend Payment Date and whether or not such
dividends have been declared and whether or not there are any unrestricted funds
of the Corporation legally available for the payment of dividends. The amount of
dividends "accrued" with respect to any share of Series B Preferred Stock as of
the first Dividend Payment Date after the Original Issue Date, or as of any
other date after the Original Issue Date that is not a Dividend Payment Date,
shall be calculated on the basis of the actual number of days elapsed from and
including the Original Issue Date, in the case of the first Dividend Payment
Date and any date of determination prior to the first Dividend Payment, or from
and including the last preceding Dividend Payment Date, in the case of any other
date of determination, to and including such date of determination which is to
be made, in each case based on a year of 365 or 366 days, as the case may be
(the "Dividend Period"). Whenever the Board declares any dividend pursuant to
this Section 1, notice of the applicable record date and related Dividend
Payment Date shall be given in accordance with Section 4(n).
(c) Compounding of Dividends; Addition to Conversion Value and
to Liquidation Price. On each Dividend Payment Date, all dividends that have
accrued on each share of Series B Preferred Stock during the immediately
preceding Dividend Period shall, to the extent not paid on such Dividend Payment
Date for any reason (whether or not such unpaid dividends have been earned or
declared or there are any unrestricted funds of the Corporation legally
available for the payment of dividends), be added to the Conversion Value (as
defined in Section 4(b)) of such share effective as of such Dividend Payment
Date and shall remain a part thereof. All dividends that have accrued on each
share of Series B Preferred Stock during any Dividend Period shall, to the
extent not paid in full on the first Dividend Payment Date after the end of such
Dividend Period for any reason (whether or not such unpaid dividends have been
earned or declared or there are any unrestricted funds of the Corporation
legally available for the payment of dividends), be added to the Liquidation
Price of such share effective as of the first Dividend Payment Date after the
last day of such Dividend Period and shall remain a part thereof to and
including the date on which the Liquidation Price or Redemption Price of such
share is paid in full to the holder of such share pursuant to Sections 2 or 5,
respectively. No accrued dividends (or dividends accrued thereon) which have
been added to the Liquidation Price or Conversion Value of any Series B
Preferred Stock may be subsequently declared or, except in accordance with
Section 2 or 5, paid by the Corporation without the consent of the holders of a
majority of the shares of Series B Preferred Stock.
(d) Pro Rata Declaration and Payment of Dividends. All
dividends paid with respect to shares of the Series B Preferred Stock pursuant
to this Section 1 shall be declared and paid pro rata to all the holders of the
shares of Series B Preferred Stock outstanding as of the applicable record date.
2. Liquidation, Dissolution or Winding Up.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, or the sale of
substantially all of its assets (each such event, a "Liquidation"), except as
provided in Section 2(b) below, the holders of shares of Series B Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders before payment to the
holders of Junior Stock by reason of their ownership thereof, an amount equal to
(i) Ten Thousand Dollars ($10,000) per share (subject to appropriate adjustment
for any Recapitalization Events), plus (ii) an amount equal to all dividends
accrued on such share of Series B Preferred Stock since the Original Issue Date
thereof but not yet paid (including those which, pursuant to Section 1(c), have
been added to and remain part of the Liquidation Price as of such time of
determination), whether or not such unpaid dividends have been earned or
declared or there are any unrestricted funds of the Corporation legally
available for the payment of dividends (the "Liquidation Price"). With respect
to the payment of all preferential amounts required to be paid to the holders of
Series B Preferred Stock upon the Liquidation of the Corporation, the Series B
Preferred Stock shall rank pari passu with the Series A Preferred Stock.
(b) After the payment of all preferential amounts required to
be paid to the holders of Series B Preferred Stock, upon the Liquidation of the
Corporation, the holders of shares of Junior Stock then outstanding shall be
entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
3. Voting Rights.
(a) Holders of shares of Series B Preferred Stock shall be
entitled to the number of votes equal to the number of votes to which the number
of whole shares of Common Stock into which the shares of Series B Preferred
Stock held by such holder are convertible (as adjusted from time to time
pursuant to Section 4 hereof), at each meeting of the stockholders of the
Corporation (and for purposes of written actions of stockholders in lieu of
meetings) with respect to any and all matters presented to the stockholders of
the Corporation for their action or consideration.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series B Preferred Stock so
as to affect adversely the Series B Preferred Stock, without the written consent
or affirmative vote of the holders of a majority of the then outstanding shares
of Series B Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class. For this
purpose, without limiting the generality of the foregoing, the authorization or
issuance of any Preferred Stock having a preference or priority over the Series
B Preferred Stock as to the right to receive dividends or amounts distributable
upon Liquidation of the Corporation shall be deemed to affect adversely the
Series B Preferred Stock. In addition, the holders of the Series B Preferred
Stock shall have the right to vote on all matters requiring their vote or
approval under, and in the manner set forth in, the California General
Corporation Law. Except as otherwise required by the California General
Corporation Law, any class vote pursuant to this Section 3 shall be determined
by the holders of a majority of the Series B Preferred Stock as of the
applicable record date.
(c) In addition to the matters described in Section 3(b)
above, the Corporation shall not, without the written consent or affirmative
vote of the holders of a majority of the then outstanding shares of the Series B
Preferred Stock given in writing or by vote at a meeting, consenting or voting
(as the case may be) as a separate class:
(i) purchase, sell or issue any preferred
stock ranking senior to or pari passu
with the Series B Preferred (including any increase or decrease (other than by
Conversion) to the authorized shares of Series B Preferred); or
(ii) pay dividends or make other distributions
to holders of the Corporation's
Junior Stock, or repurchase or redeem any such shares of Junior Stock, except
that dividend payments to holders of Junior Stock may be paid if (A) funds are
legally available therefor and (B) all accrued cash dividends on Series B
Preferred Stock have been paid in full.
4. Conversion at the Option of a Holder. The holders of the Series B
Preferred Stock shall have conversion rights as follows (the "Conversion
Rights"):
(a) Right to Convert. Each share of Series B Preferred Stock
shall be convertible, at the option of the holder thereof, at any time and from
time to time, into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing (i) the Conversion Value (as defined below)
of such share determined as of such time by (ii) the Conversion Price (as
defined below) determined as of such time. In the event of a notice of
redemption of any shares of Series B Preferred Stock pursuant to Section 5
hereof, the Conversion Rights of the shares designated for redemption shall
terminate at the close of business on the last full day preceding the date fixed
for redemption, unless the Redemption Price is not paid in full when due, in
which case the Conversion Rights for such shares shall continue until the
Redemption Price is paid in full. In the event of a Liquidation of the
Corporation, the Conversion Rights shall terminate at the close of business on
the last full day preceding the date fixed for the payment of any amounts
distributable on Liquidation to the holders of Series B Preferred Stock.
(b) Conversion. The "Conversion Value" measured per share of
the Series B Preferred Stock shall be:
(i) as of any time before the first Dividend
Payment Date, the sum of (A) Ten
Thousand Dollars ($10,000) (subject to appropriate adjustment in the event of
any Recapitalization Events) plus (B) an amount equal to all dividends accrued
on such share of Series B Preferred Stock since the Original Issue Date through
and including such time, whether or not such unpaid dividends have been earned
or declared or there are any unrestricted funds of the Corporation legally
available for the payment of dividends.
(ii) as of any time on or after the first
Dividend Payment Date, the sum of (a) Ten
Thousand Dollars ($10,000) (subject to appropriate adjustment in the event of
any Recapitalization Events) plus (B) an amount equal to all dividends accrued
on such share of Series B Preferred Stock since the Original Issue Date but not
yet paid (including those which, pursuant to Section 1(c), have been added to
and remain part of the Conversion Value at such time), whether or not such
unpaid dividends have been earned or declared or there are any unrestricted
funds of the Corporation legally available for the payment of dividends.
(c) Conversion Price. The conversion price at which a share of
Common Stock shall be deliverable upon conversion of Series B Preferred Stock
without the payment of additional consideration by the holder thereof shall
initially be Three and 75/100 Dollars ($3.75) (the "Conversion Price"). Such
initial Conversion Price, and the rate at which shares of Series B Preferred
Stock may be converted into share of Common Stock, shall be subject to
adjustment as provided in this Section 4.
(d) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of the Series B Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.
(e) Mechanics of Conversion.
(i) In order for a holder of Series B Preferred
Stock to convert shares of Series
B Preferred Stock into shares of Common Stock, such holder shall surrender the
certificate or certificates for such shares of Series B Preferred Stock, at the
principal office of the Company or the office of the transfer agent for the
Series B Preferred Stock, together with written notice that such holder elects
to convert all or any number of the shares of Series B Preferred Stock
represented by such certificate or certificates. If required by the Corporation,
certificates surrendered for conversion shall be endorsed or accompanied by a
written instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the registered holder or his or its attorney duly
authorized in writing. The date of receipt of such certificates and notice by
the Company or its transfer agent shall be the conversion date ("Conversion
Date"). The Corporation shall, as soon as practicable after the Conversion Date,
issue and deliver at such office to such holder of Series B Preferred Stock a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled, together with cash in lieu of any fraction of a
share. As of the Conversion Date, the person entitled to receive certificates of
Common Stock shall be regarded for all corporate purposes as the holder of the
number of shares of Common Stock to which he or it is entitled upon the
conversion.
(ii) The Corporation shall at all times when the
Series B Preferred Stock shall be
outstanding, reserve and keep available out of its authorized but unissued
stock, for the purpose of effecting the conversion of the Series B Preferred
Stock, such number of its duly authorized shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding Series B
Preferred Stock.
(iii) All shares of Series B Preferred Stock which
shall have been surrendered for
conversion as herein provided shall no longer be deemed to be outstanding and
all rights with respect to such shares, shall immediately cease and terminate on
the Conversion Date, except only the right of the holders thereof to receive
shares of Common Stock in exchange therefor, which shares of Common Stock shall
be deemed to be outstanding as of the Conversion Date. Any shares of Series B
Preferred Stock so converted shall be not be reissued as Series B Preferred
Stock.
(f) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the Original Issue Date
for the Series B Preferred Stock effect a subdivision of the outstanding Common
Stock, the Conversion Price then in effect immediately before that subdivision
shall be proportionately decreased. If the Corporation shall at any time or from
time to time after the Original Issue Date for the Series B Preferred Stock
combine the outstanding shares of Common Stock, the Conversion Price then in
effect immediately before the combination shall be proportionately increased.
Any adjustment under this paragraph shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(g) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time, or from time after the Original Issue Date
for the Series B Preferred Stock, shall make or issue, or fix 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, then and in
each such event the Conversion Price for the Series B Preferred Stock then in
effect shall be decreased as of the time of such issuance or, in the event such
a record date shall have been fixed, as of the close of business on such record
date, by multiplying the Conversion Price for the Series B Preferred Stock then
in effect by a fraction:
(i) the numerator of which shall be the total
number of shares of Common Stock
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 shall be the total
number of shares of Common Stock
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
issuable in payment of such dividend or distribution; provided, however, if such
record date shall have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Conversion Price
for the Series B Preferred Stock shall be recomputed accordingly as of the close
of business on such record date and thereafter the Conversion Price for the
Series B Preferred Stock shall be adjusted pursuant to this paragraph as of the
time of actual payment of such dividends or distributions.
(h) Adjustments for Other Dividends and Distributions. In the
event the Corporation at any time or from time to time after the Original Issue
Date for the Series B Preferred Stock shall make or issue, or fix a record date
for the determination of holders of Common Stock entitled to receive, a dividend
or other distribution payable in securities of the Corporation other than shares
of Common Stock, then and in each such event provision shall be made so that the
holders of the Series B Preferred Stock shall receive upon conversion thereof in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Corporation that they would have received had their
Series B Preferred Stock been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the conversion date, retained such securities receivable by them as
aforesaid during such period giving application to all adjustments called for
during such period, under this paragraph with respect to the rights of the
holders of the Series B Preferred Stock.
(i) Adjustment for Reclassification, Exchange, or
Substitution. If the Common Stock issuable upon the conversion of the Series B
Preferred Stock shall be changed into the same or a different number of shares
of any class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
of stock dividend provided for above, or a reorganization, merger,
consolidation, or sale of assets provided for below), then and in each such
event the holder of each such share of Series B Preferred Stock shall have the
right thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of Common
Stock into which such shares of Series B Preferred Stock might have been
converted immediately prior to such reorganization, reclassification, or change,
all subject to further adjustment as provided herein.
(j) Adjustment for Merger or Reorganization. In case of any
consolidation or merger of the Corporation with or into another corporation,
each share of Series B Preferred Stock shall thereafter be convertible into the
kind and amount of shares of stock or other securities or property to which a
holder of the number of shares of Common Stock of the Corporation deliverable
upon conversion of such Series B Preferred Stock would have been entitled upon
such consolidation or merger; and, in such case, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Section 4 set forth with respect to the
rights and interest thereafter of the holders of the Series B Preferred Stock,
to the end that the provisions set forth in this Section 4 (including provisions
with respect to changes in and other adjustments of the Conversion Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the conversion of
the Series B Preferred Stock.
(k) In the event this Corporation at any time after the date
on which the Series B Preferred Stock is first issued, shall issue Additional
Shares of Common Stock (as defined herein) without consideration or for a
consideration per share less than the Conversion Price of the Series B Preferred
in effect on the date of and immediately prior to such issue, then and in such
event, the Conversion Price of the Series B Preferred Stock shall be reduced,
concurrently with such issue, to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issue plus the
number of shares of Common Stock which the aggregate consideration received by
this Corporation for the total number of Additional Shares of Common Stock so
issued would purchase at such Conversion Price in effect immediately prior to
such issuance, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issue plus the number of such
Additional Shares of Common Stock determined immediately after such issue or
sale of Additional Shares. For the purpose of the above calculation, the number
of shares of Common Stock outstanding immediately prior to such issue shall be
calculated on a fully diluted basis, as if all shares of Series B Preferred
Stock had been fully converted into shares of Common Stock immediately prior to
such issuance and any outstanding warrants, options or other rights for the
purchase of shares of stock or convertible securities had been fully exercised
immediately prior to such issuance (and the resulting securities fully converted
into shares of Common Stock, if so convertible) as of such date. For purposes of
this Section 4(k), "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by this Corporation after the date hereof, other than shares
of Common Stock issued or issuable (i) upon conversion of shares of Series B
Preferred Stock, (ii) to officers, directors or employees of, or consultants to,
this Corporation pursuant to stock option or stock purchase plans or agreements
on terms approved by the Board of Directors (iii) to joint venture partners,
acquisition targets, outside developers and equipment lessors of this
Corporation, or (iv) upon exercise of warrants issued pursuant to Article 5
hereof; provided, however, that the number of shares of Common Stock issued
pursuant to clauses (ii) and (iii) above shall not exceed, in the aggregate 20%
of the number of shares of Common Stock outstanding on the date hereof (net of
any repurchases of such shares or cancellations or expirations of options),
subject to adjustment for all subdivisions and combinations.
(l) No Impairment. The Corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment.
(m) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 4,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder 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, furnish or cause to be furnished
to such holder a similar certificate setting forth (i) such adjustments and
readjustments; (ii) the Conversion Price then in effect; and (iii) the number of
shares of Common Stock and the amount, if any, of other property which then
would be received upon the conversion of Series B Preferred Stock.
(n) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend
(or any other distribution) on its
Common Stock payable in Common Stock or other securities of the Corporation;
(ii) that the Corporation subdivides or combine
its outstanding shares of Common
Stock;
(iii) of any reclassification of the Common Stock of
the Corporation (other than a
subdivision or combination of its outstanding shares of Common Stock or a stock
dividend or stock distribution thereon), or of any consolidation or merger of
the Corporation into or with another corporation; or
(iv) of the Liquidation of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series B Preferred Stock, and shall cause to
be mailed to the holders of the Series B Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
(10) days prior to the record date specified in (A) below or twenty (20) days
before the date specified in (B) below, a notice stating:
(A) the record date of such
dividend, distribution, subdivision or
combination, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution,
subdivision or combination are to be determined, or
(B) the date on which such
reclassification, consolidation, merger, or
Liquidation is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, or Liquidation.
5. Optional Redemption of Series B Preferred Stock.
(a) At any time, the Company may redeem the Series B Preferred
Stock out of funds legally available therefor, in whole, or from time to time in
part and shall be in an amount with respect to each share of Series B Preferred
Stock equal to (i) Ten Thousand Dollars ($10,000) per share (subject to
appropriate adjustment in the event of any Recapitalization Events), plus (ii)
an amount equal to all dividends accrued on such share of Series B Preferred
Stock since the Original Issue Date thereof but not yet paid (including those
which, pursuant to Section 1(c), have been added to and remain part of the
Liquidation Price as of such time of determination), whether or not such unpaid
dividends have been earned or declared or there are any unrestricted funds of
the Corporation legally available for the payment of dividends (the "Redemption
Price"). If only a part of the Series B Preferred Stock is to be redeemed, the
redemption shall be carried out pro rata according to the number of shares of
Series B Preferred Stock held by each holder subject to the redemption. In the
event of a redemption occurring within one (1) year from the Original Issue
Date, the Redemption Price shall also include the issuance of warrants to
purchase Common Stock (the "Warrants") as follows:
1. The term of the Warrants shall be two (2) years
commencing on the date fixed for redemption and shall
be exercisable in whole or in part at any time during
the term;
2. The number of shares of Common Stock purchasable
upon the exercise of the Warrants shall be calculated
by multiplying the number of shares so redeemed times
fifty (50);
3. The purchase price for each share of Common Stock
issuable upon the exercise of the Warrants shall
equal a sum determined by averaging the closing
selling price of one share of Common Stock over the
thirty (30) calendar days preceding the date fixed
for redemption (aa) in the over-the-counter market,
as such price is reported by the National Association
of Securities Dealers through its NASDAQ system or
any successor system, or (bb) if the Common Stock is
at the time listed or admitted to trading on any
stock exchange, then as such price is officially
quoted in the composite tape of transactions on such
exchange; and
4. The Warrants shall otherwise be in the form of,
and contain the provisions set forth in, attached
Annex A.
(b) The Corporation shall provide each holder of Series B
Preferred Stock, with a written notice of redemption (addressed to the holder at
its address as it appears on the books of the Corporation), not later than
thirty (30) days before the date fixed for redemption. The notice of redemption
shall specify (i) the date fixed for redemption; (iii ) the Redemption Price;
(iv) the place the holders of Series B Preferred Stock may obtain payment of the
Redemption Price, upon surrender of their certificates; and (v) the last date
(determined pursuant to Section 4(a) hereof) prior to the date of redemption
that the right of conversion of the Series B Preferred Stock may be exercised.
If funds of the Corporation are legally available on the date fixed for
redemption, then whether or not shares are surrendered for payment of the
Redemption Price, the shares shall no longer be outstanding and the holders
thereof shall cease to be shareholders of the Corporation with respect to the
shares redeemed on and after the date fixed for redemption and shall be entitled
to receive the Redemption Price without interest upon the surrender of the share
certificate. If less than all the shares represented by a share certificate are
to be redeemed, the Corporation shall issue a new share certificate for the
shares not redeemed.
(c) The Redemption Price shall be paid by the Corporation in
cash to the holders of Series B Preferred Stock subject to redemption. If on the
date fixed for redemption funds of the Corporation legally available therefor
shall be insufficient to redeem all the shares of the series of Series B
Preferred Stock required to be redeemed as provided herein, funds to the extent
legally available shall be used for such purpose, and the Corporation shall
effect such redemption pro rata according to the number of shares of Series B
Preferred Stock held by each holder.
(d) If on the Redemption Date, funds of the Corporation
legally available therefor shall be insufficient to redeem all the shares of
Series B Preferred Stock required to be redeemed as provided herein, funds to
the extent legally available shall be used for such purpose and the Corporation
shall effect such redemption pro rata according to the number of shares of
Series B Preferred Stock held by each holder and the Corporation shall make
additional partial redemptions out of funds legally available for such purpose
beginning thirty (30) days after the date fixed for redemption and each thirty
(30) days thereafter until all shares of the Series B Preferred Stock subject to
redemption have been redeemed; provided that the right to convert any such
unredeemed shares of Series B Preferred Stock shall continue to be available to
the holders of Series B Preferred Stock until the last full business day
preceding any such subsequent redemption as set forth herein.
/s/ Michael Silverman
Michael Silverman, President
/s/ Dean Kernus
Dean Kernus, Secretary
Michael Silverman declares under penalty of perjury under the laws of
the State of California that he has read the foregoing Certificate of
Determination and knows the contents thereof and that the same is true of his
own knowledge.
Dated: May 19, 2000 /s/ Michael Silverman
Michael Silverman
Dean Kernus declares under penalty of perjury under the laws of the
State of California that he has read the foregoing Certificate of Determination
and knows the contents thereof and that the same is true of his own knowledge.
Dated: May 19, 2000 /s/ Dean Kernus
Dean Kernus
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ANNEX A
Neither this Warrant nor the shares of Common Stock issuable hereunder have been
registered under the Securities Act of 1933, the laws of California or the laws
of any other state, and neither may be sold or otherwise transferred without
such registration or an opinion of counsel satisfactory to the Company that an
exemption therefrom is available.
No. of Shares: _______ Warrant No. ____
WARRANT
To Purchase Common Stock of
ADVANCED REMOTE COMMUNICATION SOLUTIONS, INC.
Expiring __________ (the "Expiration Date")
(subject to the survival of
certain provisions hereof)
Pursuant to the terms of this Warrant Agreement, ("Warrant"), ADVANCED
REMOTE COMMUNICATION SOLUTIONS, INC., a California corporation (the "Company")
for value received, hereby grants to ________________ ("Holder") the right to
purchase at any time after the Original Issue Date and on or before 5:00 p.m.
Pacific time on the Expiration Date, ________ shares of Common Stock of the
Company, at the Purchase Price (as hereinafter defined) payable in lawful money
of the United States of America, subject to the provisions, limitations and
restrictions hereof. The number of shares of Common Stock purchasable hereunder
and the Purchase Price therefor are subject to adjustment as hereinafter set
forth in Section 5.
Section 1. Certain Definitions. For all purposes of this Warrant
the following terms shall have the
meanings indicated:
"Basic Purchase Price" shall mean the initial purchase price per share
of Common Stock set forth in Section 2.
"Commission" shall mean the Securities and Exchange Commission or any
other Federal agency then administering the Securities Act.
"Common Stock" shall mean the shares of the Company's authorized Common
Stock, no par value, as constituted at the Original Issue Date.
"Original Issue Date" shall mean ____________.
"Purchase Price" shall mean the Basic Purchase Price or such Basic
Purchase Price as adjusted from time to time pursuant to the provisions hereof.
"Securities Act" shall mean the Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
"Warrant Shares" shall mean the shares of Common Stock purchased or
purchasable by the Holder upon the exercise thereof pursuant to Section 3
thereof.
All terms in this Warrant which are not defined in Section 1 have the
meanings respectively set forth
therefor elsewhere in this Warrant.
Section 2. Basic Purchase Price. The Basic Purchase Price at
which a holder may exercise this Warrant
shall be a price per share initially equal to ___________ ($___).
Section 3. Exercise of Warrant, Etc.
3.1 Procedure for Exercise of Warrant. To exercise this Warrant in
whole or in part, the Holder shall deliver to the Company at its principal
executive offices in San Diego, California (or such other place or agency of the
Company in the Continental United States as the Company may designate by notice
in writing to the Holder) (i) the Subscription Form attached hereto completed to
specify the number of shares of Common Stock as to which such Holder is electing
to exercise this Warrant, (ii) cash or a certified or cashier's check, payable
to the order of the Company, in an amount equal to the then aggregate Purchase
Price of the shares of Common Stock being purchased and (iii) this Warrant. Upon
the Company's acceptance of such subscription (such acceptance to be acted upon
and effected (provided such election appears to be proper and issuance of shares
as a result of the election complies with applicable securities laws) within two
business days of receipt thereof), such Holder shall be deemed to be the Holder
of record of the Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such Common Stock shall not then be actually delivered
to such Holder, and the Company shall, as promptly as practicable, and in any
event within 5 business days thereafter, execute or cause to be executed and
deliver to such Holder a certificate or certificates representing the aggregate
number of shares of Common Stock specified in the Subscription Form. Each stock
certificate so delivered shall be in such denomination as may be requested by
the Holder and shall be registered in the name of such Holder. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of the stock certificate(s), deliver to Holder a new warrant evidencing
the rights of Holder to purchase the remaining Warrant Shares. The Company shall
pay all expenses, taxes and other charges payable in connection with the
preparation, execution and delivery of stock certificates pursuant to this
Section.
3.2 Character of Warrant Shares. All shares of Common Stock issuable
upon the exercise of this Warrant shall be duly authorized, validly issued,
fully paid and non-assessable; and without limiting the generality of the
foregoing, the Company covenants and agrees that it will reserve a sufficient
number of shares of Common Stock for issuance upon exercise of this Warrant.
Section 4. Exchange and Replacement.
(a) The Holder shall not transfer or assign this Warrant except in full
compliance with applicable securities laws and, on request by the Company, the
transferor shall furnish to the Company an opinion of the transferor's counsel
acceptable to the Company to the effect that the transfer is in compliance with
such securities laws. Any attempted or purported assignment or transfer of this
Warrant without compliance with the preceding sentence shall be void. In the
event of any transfer permitted by this Section 4, the Company shall register or
shall cause its agent to register the transfer or assignment on its warrant
register upon surrender of this Warrant, duly endorsed, or accompanied by a
written instrument of transfer duly executed by the Holder or by the duly
appointed legal representative or attorney thereof. On any such registration of
transfer, the Company shall issue a new warrant of like tenor, in lieu of the
transferred or assigned Warrant.
(b) Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant, and, in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new Warrant of like tenor, in lieu of this
Warrant. This Warrant shall be promptly canceled by the Company upon the
surrender hereof in connection with any exchange or replacement.
<PAGE>
Section 5. Anti-Dilution Provision; Adjustment of Purchase Price.
5.1 Adjustment of Purchase Price and Number of Shares. The number of
shares of Common Stock and Purchase Price of the Common Stock issuable upon the
exercise of this Warrant shall be subject to adjustment upon the happening of
certain events as follows:
(a) Adjustments for Dividends in Stock. If the Company shall,
while this Warrant remains in force, declare or pay to its
common stockholders a dividend payable in any kind of shares
of stock or other securities of the Company, the Holder who
thereafter exercises the Warrant as herein provided shall be
entitled to receive in addition to the shares of Common Stock
as provided herein, such additional shares or shares of stock
or other securities as such Holder would have received in the
form of such dividend if it had been the shareholder of record
of such Common Stock on the record date for the determination
of common stockholders entitled to receive such dividend, and
the Purchase Price in effect immediately prior to such
distribution shall be adjusted proportionately so that the
aggregate Purchase Price for all shares of Common Stock or
other securities covered by this Warrant immediately after
such distribution shall be equal to the aggregate Purchase
Price for the shares of Common Stock or other securities
covered by this Warrant.
(b) Adjustments for Recapitalization. If the Company shall,
while this Warrant remains in force, effect a recapitalization
of such character that the shares of Common Stock covered
hereby shall be changed into or become exchangeable for a
larger or smaller number of shares, then the number of shares
of Common Stock which the Holder shall be entitled to purchase
hereunder, shall be increased or decreased, as the case may
be, in direct proportion to the increase or decrease in the
total number of shares of Common Stock which shall in the case
of an increase in the number of shares shall be
proportionately increased, and in the case of a decrease in
the number of shares be proportionately reduced and the
Purchase Price in effect immediately prior to such
recapitalization shall be adjusted proportionately so the
aggregate Purchase Price for all shares of Common Stock or
other securities covered by this Warrant immediately after
such recapitalization shall be equal to the aggregate Purchase
Price for the shares of Common Stock or other securities
covered by this Warrant.
(c) Adjustment for Reorganization, Merger or Transfer. If the
Company, shall, at any time while this Warrant remains in
force, consolidate or merge with, or shall transfer or convey
substantially all its assets to any other person or entity,
the Holder who thereafter exercises the Warrant as herein
provided shall be entitled to receive, upon payment of the
Purchase Price, that number of shares of stock or other
securities or property of the corporation resulting from such
consolidation or merger or transfer to which each share of
Common Stock deliverable upon exercise of this Warrant would
have been entitled upon such consolidation or merger or
transfer, had the Holder exercised its right to purchase
hereunder and had such Holder been the shareholder of record
at the time of consolidation, merger or transfer.
(d) Adjustment for Stock Splits and Reverse Stock Splits. If
the Company, while this Warrant remains in force, shall
subdivide its outstanding shares of Common Stock into a
greater number of shares, the Purchase Price shall thereby be
proportionately decreased and the number of shares receivable
upon exercise of this Warrant shall thereby be proportionately
increased; conversely, if at any time while this Warrant
remains in force, the outstanding number of shares of Common
Stock of the Company shall be combined into a smaller number
of shares, the Purchase Price in effect immediately prior to
such combination shall be proportionately increased and the
number of shares of Common Stock receivable upon exercise of
this Warrant shall be proportionately decreased.
5.2 Notice. Upon each adjustment of the Purchase Price and upon each
change in the number of shares of Common Stock issuable upon the exercise of
this Warrant, and in the event of any change in the rights of the Holder by
reason of other events herein set forth, then and in each such case, the Company
will promptly send Holder a notice stating the adjusted Purchase Price and the
new number of shares so issuable, or specifying the other shares of stock,
securities or assets and the amount thereof receivable as a result of such
change in rights, and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
5.3 No Fractional Shares. No fractional shares shall be issuable upon
exercise of the Warrants, and the number of shares of Common Stock to be issued
shall be rounded to the nearest whole share. If any fractional interest in
Common Stock would, except for the provisions of this Subsection 5.3, be
deliverable upon exercise, then the Company shall pay to the Holder upon
exercise an amount of cash equal to the current market value of such fractional
interest.
5.4 Reservation of Stock Issuable Upon Exercise. The Company 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 exercise of this Warrant
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the full exercise of this Warrant; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the full exercise of this Warrant, then the Company will take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
Section 6. Special Agreements of the Company. The Company covenants
and agrees that:
6.1 Will Avoid Certain Actions. The Company will not, by amendment of
its Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, issue or sale of securities or otherwise, avoid to or
take any action which would have the effect of voiding the observance or
performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in carrying out all of the
provisions of this Warrant.
6.2 Notices of Certain Events. The Company agrees to review its stock
ledgers, stock transfer books and other corporate records periodically (and not
less often than once in each calendar quarter) in order to determine whether the
Holder is or shall have become, solely due to its ownership of this Warrant,
directly or indirectly, the beneficial owner of more than such percentage of any
class of its equity securities (as defined in the Securities Exchange Act of
1934) as shall cause such Holder to be required to make any filings or
declarations to the Company, the Securities and Exchange Commission, any
national securities exchange or any other party pursuant to the provisions of
the Securities Exchange Act of 1934 or any comparable federal statute.
6.3 Will Bind Successors. This Warrant shall be binding upon any
corporation, person or entity succeeding to the Company by merger, consolidation
or acquisition of all or substantially all of the Company's assets.
Section 7. Notification by the Company. in case at any time:
(1) there shall be proposed any other transaction of a type referred to
in Section 5; or
(2) there shall be proposed a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of such cases, the Company shall give written notice to
the Holder of the date on which (a) the books of the Company shall close or a
record shall be taken for such dividend, distribution, subscription rights, or
other transaction, and (b) such reorganization, reclassification, consolidation,
merger, sale, dissolution, other transaction, liquidation or winding-up shall
take place, as the case may be. Such notice shall also specify the date as of
which the holders of Common Stock of record shall participate in such dividend,
distribution or subscription rights, or shall be entitled to exchange their
Common Stock for, or receive in respect of their Common Stock, securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, other transaction, liquidation, or
winding-up, as the case may be. Such written notice shall be given not less than
ten (10) and not more than sixty (60) days prior to the action in question and
not less than ten (10) days and not more than sixty (60) days prior to the
record date or the date on which the Company's transfer books are closed in
respect thereto and such notice may state that the record date is subject to the
effectiveness of a registration statement under the Securities Act, or to a
favorable vote of stockholders, if either is required.
Section 8. Notices. Any notice or other document required or permitted
to be given or delivered to the Holder hereof shall be delivered at, or sent by
certified or registered mail to the address of the Holder as is set forth in the
stock records of the Company, or such other address as shall have been furnished
in writing to the Company by any such Holder. Any notice or other document
required or permitted to be given or delivered to the Company shall be delivered
at, or sent by certified or registered mail to, the principal office of the
Company, at 10675 Sorrento Valley Road, Suite 200, San Diego, California 92121,
Attention: President, or such other address as shall have been furnished in
writing to the Holder by the Company.
Section 9. No Rights as Stockholder; Limitation of Liability. This
Warrant shall not entitle the Holder hereof to any of the rights of a
stockholder of the Company, except as otherwise provided herein. No provision
hereof, in the absence of affirmative action by the Holder hereof to purchase
shares of Common Stock, and no mere enumeration herein of the rights or
privileges of the Holder hereof, shall give rise to any liability of such Holder
for the Purchase Price or as a stockholder of the Company whether such liability
is asserted by the Company or by creditors of the Company.
Section 10. Law Governing. This Warrant shall be governed by, and
construed and enforced in accordance
with, the laws of the State of California.
Section 11. Miscellaneous. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party (or any predecessor in interest thereof) against which
enforcement of the same is sought. The headings in this Warrant are for purposes
of reference only and shall not affect the meaning or construction of any of the
provisions hereof.
Section 12. Investment Representation. The Holder by acceptance hereof
represents and warrants to the Company that this Warrant and the Common Stock
issuable upon exercise thereof are being acquired for investment only and not
with a view towards resale or further distribution. Holder represents and
warrants that Holder is familiar with the business and affairs of the Company
and has had access to all information and materials requested by Holder
concerning the Company.
Section 13. Indemnification. The Holder by acceptance hereof agrees to
indemnify, defend and hold the Company, its officers, directors, attorneys,
accountants and corporate agents ("Indemnitee") harmless against any and all
losses, claims, demands, damages, or liabilities to which Indemnitee may become
subject under the Securities Act, or any state securities law, which arise out
of or are based upon the disposition by the Holder, or the shares of Common
Stock issued upon exercise hereof, in violation of the provisions of this
Warrant.
IN WITNESS WHEREOF, ADVANCED REMOTE COMMUNICATION SOLUTIONS, INC
has caused this Warrant to be signed
by its duly authorized officer, and to be dated as of the Original Issue Date.
ADVANCED REMOTE COMMUNICATION SOLTUIONS,
INC.
By:
Name:
Its: _____________________________
