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EXHIBIT 4.1
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF CLASS A
PREFERRED STOCK, SECOND SERIES
OF
PUBLICARD, INC.
Pursuant to Section 1522 of the Business
Corporation Law of 1988, as amended, of the Commonwealth of Pennsylvania ("BCL")
PubliCARD, Inc. (the "Corporation"), a corporation organized and
existing under the BCL, hereby certifies that, pursuant to the provisions of
Section 1522 of the BCL, its Board of Directors, at a meeting duly called and
held on November 1, 2000, at which a quorum was present and acting throughout,
duly adopted the following resolution:
WHEREAS, the Board of Directors of the Corporation is authorized by
Article Fourth of the Amended and Restated Articles of Incorporation dated March
9, 1984, as amended, to issue up to 1,000,000 shares of Class A Preferred Stock
in one or more series and, in connection with the creation of any series, to
fix, by resolutions providing for, the issuance of shares, the powers,
designations, preferences and relative, participating, optional or other rights
of the series and the qualifications, limitations or restrictions thereof; and
WHEREAS, it is the desire of the Board of Directors of the Corporation,
pursuant to such authority, to authorize and fix the designations, voting
rights, preferences, limitations and special rights of a series of Class A
Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED, that there is hereby created, provided
for and approved, a series of Class A Preferred Stock to be designated "Class A
Preferred Stock, Second Series" on the terms and with the provisions herein set
forth in the Certificate of Designations, Preferences and Rights of Class A
Preferred Stock, Second Series of PubliCARD, Inc. attached to this resolution as
Annex A ("Certificate of Designations"); and
FURTHER RESOLVED, that the officers of this Corporation be, and they
hereby are, authorized and empowered to make any changes they may deem necessary
or appropriate in the Certificate of Designations and then to execute and file
with the Secretary of State of the
Exh. 4.1 - 1
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Commonwealth of Pennsylvania such Certificate of Designations setting forth the
designations, voting rights, preferences, limitations and special rights of the
Class A Preferred Stock, Second Series.
/s/ Antonio L. DeLise
------------------------------------------
Name: Antonio L. DeLise
Title: Vice President, Chief Financial
Officer, and Secretary
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ANNEX A
CLASS A PREFERRED STOCK, SECOND SERIES
The powers, designations, preferences and relative, participating,
optional or other rights of the Class A Preferred Stock, Second Series of
PubliCARD, Inc. (the "Corporation") are as follows:
1. DESIGNATION AND AMOUNT.
This series of preferred stock shall be designated as "Class A
Preferred Stock, Second Series." The Class A Preferred Stock, Second Series
shall have no par value per share. The number of authorized shares constituting
the Class A Preferred, Second Series shall be 1,000 shares. Shares of the Class
A Preferred, Second Series have a stated value of Five Thousand Dollars
($5,000.00) per share (the "Stated Value").
2. DIVIDENDS.
(a) Holders of Class A Preferred Stock, Second
Series shall be entitled to receive dividends when, as and if declared by the
Board of Directors of the Corporation (the "Board of Directors"); provided that
Board of Directors has no present intention to declare any dividends.
(b) In the event the Board of Directors shall
elect to pay or declare and set apart for payment any dividend on any shares of
common stock, par value $.10 per share, of the Corporation (the "Common Stock")
in cash out of funds legally available therefor or in stock or other
consideration, the holders of the Class A Preferred Stock, Second Series shall
be entitled to receive dividends payable in the form and in an amount per share
equal to the per share amount that would have been payable to such holders had
such holders converted their Class A Preferred Stock, Second Series into Common
Stock pursuant to Section 5 below prior to the record date with respect to such
dividend.
3. LIQUIDATION PREFERENCE.
(a) Subject to the rights, privileges,
preferences and priorities of the holders of "Preferred Stock", no par value per
share, of the Company, in the event of any bankruptcy, liquidation, dissolution
or winding up of the Corporation, either voluntary or involuntary, each holder
of Class A Preferred Stock, Second Series at the time thereof shall be entitled
to receive, prior and in preference to any distribution of any of the assets or
funds of the Corporation to the holders of the Common Stock or any other class
of stock ranking junior upon liquidation, dissolution or winding up to the Class
A Preferred Stock, Second Series ("Junior Securities") by reason of their
ownership of such stock, an amount per share of Class A Preferred Stock, Second
Series equal to the applicable Stated Value (the "Liquidation Preference").
After the payment of the full Liquidation Preference on account of all shares of
Class A Preferred Stock, Second Series as set forth in this Section 3, the
remaining assets of the Corporation legally
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available for distribution, if any, shall be distributed ratably to the holders
of the Common Stock and/or holders of any Junior Securities in accordance with
the terms thereof. If the assets and funds legally available for distribution
among the holders of Class A Preferred Stock, Second Series shall be
insufficient to permit the payment to the holders of the full aforesaid
preferential amount, then the assets and funds shall be distributed ratably
among holders of Class A Preferred Stock, Second Series in proportion to the
number of shares of Class A Preferred Stock, Second Series owned by each holder.
(b) A merger, recapitalization, reorganization,
sale of voting control to a single buyer or a group of related buyers in one or
a series of related transactions, or other business combination transaction
involving the Corporation in which the shareholders of the Corporation
immediately prior to the consummation of such transaction do not own at least a
majority of the issued and outstanding shares of the surviving corporation or
the Corporation (as applicable) immediately following the consummation of such
transaction or sale of all or substantially all of the assets of the Corporation
(collectively, a "Liquidation Event") shall be deemed to be a liquidation of the
Corporation.
(c) In any Liquidation Event, if the
consideration received by the Corporation is other than cash, its value will be
deemed its fair market value as determined in good faith by the Board of
Directors.
4. VOTING RIGHTS.
In addition to any other rights provided by law and except as
otherwise provided herein, so long as at least two hundred and fifty (250)
shares of Class A Preferred Stock, Second Series shall be outstanding (as
adjusted for stock splits, combinations and the like), the Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of at least a majority of the outstanding shares of Class A Preferred
Stock, Second Series, voting together as a single class, authorize or issue
shares of any class or series of stock (other than shares of Preferred Stock or
shares of Class A Preferred Stock, First Series), or any other securities
convertible into or exchangeable for shares of any class or series of stock
having any preference or priority as to dividends or liquidation superior to any
preference or priority of the shares of Class A Preferred Stock, Second Series.
5. CONVERSION.
Shares of Class A Preferred Stock, Second Series may be
converted into shares of Common Stock, on the terms and conditions set forth in
this Section 5.
(a) Optional Conversion.
(i) At any time and from time to time,
each holder of shares of Class A Preferred Stock, Second
Series may, upon 30 days' prior written notice to the
Corporation, convert each share held by such holder into Two
Thousand Five
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Hundred (2,500) shares of Common Stock, subject to adjustment
as provided in Section 6 hereof.
(ii) References in this Section 5 to
"Common Stock" shall include all stock or other securities or
property (including cash) into which Common Stock is converted
following any merger, reorganization or reclassification of
the capital stock of the Corporation.
(b) Common Stock. The Common Stock to be issued
upon conversion hereunder shall be fully paid and nonassessable.
(c) Procedures for Conversion.
(i) In order to convert shares of Class
A Preferred Stock, Second Series into shares of Common Stock
pursuant to Section 5(a), the holder shall surrender the
certificate or certificates therefore, duly endorsed for
transfer, at any time during normal business hours, to the
Corporation at its principal or at such other office or agency
then maintained by it for such purpose (the "Payment Office"),
accompanied by written notice to the Corporation of such
holder's election to convert and (if so required by the
Corporation or any conversion agent) by an instrument of
transfer, in form reasonably satisfactory to the Corporation
and to any conversion agent, duly executed by the registered
holder or by his duly authorized attorney, and any taxes
required pursuant to Section 5(c)(iii). As promptly as
practicable after the surrender for conversion of any share of
Class A Preferred Stock, Second Series in the manner provided
in the preceding sentence, and the payment in cash of any
amount required by the provisions of Section 5(c)(iii), the
Corporation will deliver or cause to be delivered at the
Payment Office to or upon the written order of the holder of
such shares, certificates representing the number of full
shares of Common Stock issuable upon such conversion, issued
in such name or names as such holder may direct. Such
conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the
shares in proper order for conversion, and all rights of the
holder of such shares as a holder of such shares shall cease
at such time and the person or persons in whose name or names
the certificates for such shares of Common Stock are to be
issued shall be treated for all purposes as having become the
record holder or holders thereof at such time; provided,
however, that any such surrender and payment on any date when
the stock transfer books of the Corporation shall be closed
shall constitute the person or persons in whose name or names
the certificates for such shares of Common Stock are to be
issued as the record holder or holders thereof for all
purposes immediately prior to the close of business on the
next succeeding day on which such stock transfer books are
opened.
(ii) The Corporation shall not be
required to issue fractional shares of Common Stock upon
conversion of shares of Class A Preferred Stock,
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Second Series. At the Corporation's discretion, in the event
the Corporation determines not to issue fractional shares, 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 fair market value of a share
of Common Stock on the date of conversion (as determined in
good faith by the Board of Directors).
(iii) The issuance of certificates for
shares of Common Stock upon conversion shall be made without
charge for any issue, stamp or other similar tax in respect of
such issuance. However, if any such certificate is to be
issued in a name other than that of the holder of record of
the shares converted, the person or persons requesting the
issuance thereof shall pay to the Corporation the amount of
any tax which may be payable in respect of any transfer
involved in such issuance or shall establish to the
satisfaction of the Corporation that such tax has been paid or
is not payable.
(d) Reservation of Stock Issuable Upon
Conversion. The Corporation shall 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 Class A Preferred Stock, Second
Series, 2,500,000 shares of Common Stock. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Class A Preferred Stock,
Second Series without regard to whether the holders of Class A Preferred Stock,
Second Series are then entitled to convert, the Corporation will use its
reasonable best efforts to take such corporate action as 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 purpose,
including, without limitation, taking appropriate board action, recommending
such an increase to the holders of Common Stock, holding shareholders meetings,
soliciting votes and proxies in favor of such increase to obtain the requisite
stockholder approval and upon such approval, the Corporation shall reserve and
keep available such additional shares solely for the purpose of effecting the
conversion of the shares of the Class A Preferred Stock, Second Series.
(e) Merger, Etc.
(i) Notwithstanding any other provision
hereof, in case of any merger or other business combination
transaction involving the Corporation, then, concurrently with
the consummation of such transaction, provision shall be made
so that each share of Class A Preferred Stock, Second Series
shall thereafter be convertible into the number of shares of
stock or other securities or property (including cash) to
which a holder of the number of shares of Common Stock
deliverable upon conversion of such share of Class A Preferred
Stock, Second Series would have been entitled assuming
conversion immediately prior to the closing of the
transaction.
(ii) In case of any merger or other
business combination transaction involving the Corporation, in
which the Corporation is not the
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surviving entity, and the Corporation or the holders do not
otherwise convert all outstanding shares of Class A Preferred
Stock, Second Series, the Class A Preferred Stock, Second
Series shall be converted into or exchanged for and shall
become shares of the surviving corporation having, in respect
of the surviving corporation, substantially the same powers,
preferences and relative participating, optional or other
special rights, and the qualifications, limitations or
restrictions thereon, that the Class A Preferred Stock, Second
Series had immediately prior to such transaction.
6. ADJUSTMENTS.
The Corporation shall give holders of Series A
Convertible Preferred Stock notice of any event described below which requires
an adjustment pursuant to this Section 6 at the time of such event.
(a) Definitions. As used in this Section 6, the
following terms have the respective meanings set forth below:
"Additional Shares of Common Stock" shall mean shares of
Common Stock issued by the Corporation after the closing of the transactions
contemplated by those certain Preferred Stock Purchase Agreements dated various
dates from November 15 through 27, 2000 between the Corporation and the
purchasers named therein.
"Fully Diluted Outstanding" shall mean, when used with
reference to Common Stock, at any date as of which the number of shares thereof
is to be determined, all shares of Common Stock outstanding at such date and all
shares of Common Stock issuable in respect of Class A Preferred Stock, Second
Series outstanding on such date and other securities convertible into, or
options or warrants to purchase, shares of Common Stock outstanding on such
date, whether or not such options, warrants or other securities are presently
convertible or exercisable.
(b) Stock Dividends, Subdivisions and
Combinations. If at any time the Corporation shall:
(i) take a record of the holders of its
Common Stock for the purpose of entitling them to receive a
dividend payable in, or other distribution of, Additional
Shares of Common Stock,
(ii) subdivide its outstanding shares of
Common Stock into a larger number of shares of Common Stock,
or
(iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock,
then number of shares of Common Stock issuable upon conversion of a share of
Class A Preferred Stock, Second Series shall be adjusted such that it will equal
the applicable number of
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shares issuable upon conversion of a share of Class A Preferred Stock, Second
Series immediately prior to the occurrence of any such event multiplied by a
fraction, the numerator of which shall be the number of Fully Diluted
Outstanding shares of Common Stock immediately after the occurrence of such
event and the denominator of which shall be the number of Fully Diluted
Outstanding shares of Common Stock immediately prior to the occurrence of such
event.
(c) Other Provisions Applicable to Adjustments
Under This Section. The following provisions shall be applicable to the making
of adjustments provided for in this Section 6:
(i) When Adjustments to Be Made. The
adjustments required by this Section 6 shall be made whenever
and as often as any specified event requiring an adjustment
shall occur. For the purpose of any adjustment, any specified
event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(ii) When Adjustment Not Required. If
the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights
and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or
deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by
reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and
annulled.
(d) Certain Limitations. Notwithstanding
anything herein to the contrary, the Corporation shall not enter into any
transaction which, by reason of any adjustment hereunder, would cause the
applicable Conversion Price to be less than the par value per share of Common
Stock.
7. NO REDEMPTION.
The shares of Class A Preferred Stock, Second Series
shall not be redeemable.
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