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EXHIBIT 3.7
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:00 PM 05/20/1998
981193867 - 2202214
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF PREFERRED STOCK
OF MICROTEL INTERNATIONAL INC.,
A DELAWARE CORPORATION
The undersigned, Carmine T. Oliva, hereby certifies that:
A. He is the duly elected and acting President of MicroTel
International Inc., a Delaware a corporation (the "Corporation").
B. Pursuant to authority given by the corporation's Certificate
of Incorporation, and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Board of Directors of
the Corporation has duly adopted the following recitals and resolutions:
WHEREAS, the Certificate of Incorporation of this corporation
provides for two classes of shares known as Common Stock and Preferred Stock;
WHEREAS, the Board of Directors of the Corporation is authorized by
the Certificate of Incorporation to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof; and
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors deems it
advisable to adopt, and hereby does adopt, the Corporation's Certificate of
Designations, Preferences and Rights of Series A Preferred Stock of MicroTel
International Inc., a Delaware corporation:
A. DESIGNATION. One series of Preferred Stock, designated Series
A Preferred Stock, is hereby provided for, which shares shall have the
rights, privileges and preferences set forth below.
B. AUTHORIZED NUMBER. The number of shares constituting the
Series A Preferred Stock shall be 250, parvalue .01 per share.
C. DIVIDEND PROVISIONS. The holders of shares of Series A
Preferred Stock shall not be entitled to receive dividends.
D. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding
up of the Corporation, either voluntary or involuntary, the holders of shares
of Series A Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of this corporation to
the holders of the Common Stock by reason of their ownership, an amount per
share equal to $10,000 (the "Stated Value") for each outstanding share of
Series A Preferred
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Stock. If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series A Preferred Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then the entire assets and funds of the corporation
legally available for distribution shall be distributed ratably among the
holders of the Series A Preferred Stock on a share-by-share basis in
proportion to the aggregate preferential amounts of each such series of
Preferred Stock.
(b) A consolidation or merger of the Corporation with or
into any other corporation or corporations, or a sale, conveyance or
disposition of all or substantially all of the assets of this corporation or
the effectuation by the Corporation of a transaction or series of related
transactions in which mote than 50% of the voting power of the Corporation is
disposed of, shall not be deemed to be a liquidation, dissolution or winding
up within the meaning of this Section D but shall instead be treated pursuant
to Section E hereto.
E. CONVERSION. The holders of the Series A Preferred Shams shall
have conversion rights as follows (the "Conversion Rights"):
(1) CONVERSION RIGHTS.
(i) All Series A Preferred Share shall be convertible,
at the option of the holders of such shares, at any time after the ninetieth
(90th) day of issuance of such shares, at the office of the Corporation or
any transfer agent for the Series A Preferred Shares, into the number of
fully paid and nonassessable unrestricted and nonlegended Common Shares of
the Corporation at the conversion price per Series A Preferred Share equal to
$10,000 divided by the lesser of (x) $1.26 and (y) One Hundred Percent (100%)
of the arithmetic average of the three lowest closing bid prices over the
forty (40) trading days prior to the exercise date of any such conversion. No
more than 20% of the aggregate number of Series A Preferred Shares originally
purchased and owned by the Buyer may be converted in any thirty (30) day
period after the ninetieth (90th) day of issuance.
(ii) In the event of a call for redemption of any Series
A Preferred Share pursuant to Section F hereof, each bolder of any Series A
Preferred Shares shall have the right to exercise the conversion rights set
forth in this Section E and the right to convert each share shall cease as to
the shares designated for redemption as of the close of business on the
business day immediately prior to the redemption date, unless default is made
in payment of the redemption price, If the Corporation has received a notice
of conversion with respect to any Series A Preferred Shares the Corporation
may not redeem such Series A Preferred Shares provided the Series A Preferred
Shares are delivered for conversion as set forth in Section E(2).
(2) MECHANICS OF CONVERSION.
(i) No fractional shares of Common Stock shall be issued
upon conversion of the Series A Preferred Shares. In lieu of any fractional
share to which the holder would otherwise be entitled, the Corporation shall
round up to the nearest whole share. In the case of a dispute as to the
calculation of the Conversion Rate, the Corporation's calculation shall be
deemed conclusive absent manifest error. In order to convert Series A
Preferred Shares into full shares of Common Stock, the holder shall surrender
the certificate or certificates therefor,
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duly endorsed, by either overnight courier or 2-day courier, to the office of
the Corporation for the Series A Preferred Shares, and shall give written
notice to the Corporation at such office that the holder elects to convert
the same, the number of shares of Series A Preferred Shares so converted and
a calculation of the Conversion Rate (with an advance copy of the
certificates) and the notice by facsimile); provided, however, that the
Corporation shall not be obligated to deliver certificates evidencing the
shares of Common Stock issuable upon such conversion unless certificates
evidencing such Series A Preferred Shares are delivered to the Corporation as
provided above, or the holder notifies the Corporation that such certificates
have been lost, stolen or destroyed and executes an agreement satisfactory to
the Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates.
(ii) The Corporation shall use reasonable efforts to
cause to be issued and delivered within two (2) business days after delivery
to the Corporation of such Series A Preferred Shares, or after such agreement
and indemnification, to such holder of Series A Preferred Shares at the
address of the holder on the stock books of the Corporation, a certificate or
certificates for the number of shares of Common Stock to which he shall be
entitled as aforesaid. The date on which notice of conversion is given (the
"Date of Conversion") shall be deemed to be the date set forth in such notice
of conversion provided the original Series A Preferred Shares to be converted
are received by the Corporation within five (5) business days thereafter and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder
or holders of such shares of Common Stock on such date. If the original
Series A Preferred Shares to be converted are not received by the Corporation
within five (5) business days after the Conversion, the notice of conversion
shall become null and void.
(3) CONVERSION PRICE ADJUSTMENT. The closing bid price used
to determine the Conversion Price shall be appropriately adjusted to reflect,
as deemed equitable and appropriate by the Corporation, any stock dividend,
stock split or share combination of the Common Stock. In the event of a
merger, reorganization, recapitalization or similar event of or with respect
to the Corporation (a "Corporate Change") (other than a Corporate Change in
which all or substantially all of the consideration received by the holders
of the Company's equity securities upon such Corporate Change consists of
cash or assets other than securities issued by the acquiring entity or any
affiliate thereof), the Series A Preferred Shares shall be convertible into
such class and type of securities as the Holder would have received had the
Holder converted the Series A Preferred Shares immediately prior to such
Corporate Change, as appropriately adjusted to equitably reflect the
conversion price and any stock dividend, stock split or share combination of
the common stock after such corporate event.
(4) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued Common Shares solely for the purpose of effecting the
conversion of the Series A Preferred Shares such number of its Common Shares
as shall from time to time be sufficient to effect the conversion of all
outstanding Series A Preferred Shares; and if at any time the number of
authorized but unissued Common Shares shall not be sufficient to effect the
conversion of all then outstanding Series A Preferred Shares, in addition to
such other remedies as shall be available to the holder of such Series A
Preferred Shares, the Corporation will take such corporate action as may, in
the opinion
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of its counsel, be necessary to increase its authorized but unissued Common
Shares to such number of shares as shall be sufficient for such purposes.
F. REDEMPTION OF SERIES A PREFERRED SHARES.
(1) OPTIONAL REDEMPTION. The Corporation may redeem all
outstanding and unconverted Series A Preferred Shares for cash at a per share
price equal to $11,500 (115% of the Stated Value) for each Series A Preferred
Share by giving written notice to Buyer at least twenty (20) days in advance
of such redemption. If the Corporation has received a notice of conversion
with respect to any Series A Preferred Shares, the Corporation may not redeem
such Series A Preferred Shares provided the Series A Preferred Shares are
delivered for conversion as set forth in Section E(2) during the notice
period prior to the redemption date as set forth in F(3)(ii) below.
(2) MANDATORY REDEMPTION. On May 22, 2003, the Corporation
shall redeem all Series A Preferred Shares then outstanding, by the payment
therefor of the redemption price of $11,500 per share.
(3) MANNER OF REDEMPTION OF SERIES A PREFERRED SHARES.
(i) If less than all of the outstanding Series A
Preferred Shares shall be called for redemption, the particular shares of
such series to be redeemed shall be selected by lot or by such other
equitable manner as may be prescribed by resolution of the Board of Directors.
(ii) Notice of redemption of any Series A Preferred
Shares shall be given by the Corporation by fax or other written
communication, at least twenty (20) days prior to the date fixed by the Board
of Directors of the Corporation for redemption (herein called the "redemption
date"), to the holders of record of the shares to be redeemed at their
respective addresses then appearing on the records of the Corporation. The
notice of the redemption shall state:
(A) the redemption date,
(B) the redemption price (which must be paid within five
(5) business stays after the date of redemption),
(C) whether the redemption is an optional redemption or
a mandatory redemption,
(D) if less that ail outstanding Series A Preferred
Shares are to be redeemed, the identification of the Series A Preferred
Shares to be redeemed, (E) the conversion rate on the date of the notice,
(F) that on the redemption date the redemption price
will become due and payable upon each Series A Preferred Shares to be
redeemed and the right to convert each share of Series A Preferred Share
shall cease as of the close of business on the
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business day prior to the redemption date, unless default shall be made in
the payment of the redemption price, and
(G) the place or places where such Series A Preferred
Shares to be redeemed are to be surrendered for payment of the redemption
price.
(4) FAILURE TO REDEEM. If the Corporation fails to pay the
redemption price after calling any Series A Preferred Shares for optional
redemption under Section F(1), the Corporation shall have no further right to
redeem Series A Preferred Shares under Section F(1).
(5) REACQUIRED SHARES. Any shares of the Series A Preferred Stock
converted, redeemed or purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Series A Preferred Stock and may be
reissued at the direction of the Corporation subject to the conditions or
restrictions on issuance not forth herein.
G. CORPORATE EVENTS. In the event of(i) any declaration by the
Corporation of a record date of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive
any dividend (other than cash dividend) or other distribution or (ii) any
capita; reorganization of the Corporation, any reclassification or
recapitalization of the capital stock of the Corporation, any merger or
consolidation of the Corporation, and any transfer of all or substantially
all of the assets of the Corporation to any other Corporation, or any other
entity or person, or any voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, the Corporation shall mail to each holder of
Series A Preferred Shares at least twenty (20) days prior to the record date
specified therein, a notice specifying (A) the date on which any such record
is to be declared for the purpose of such dividend or distribution and a
description of such dividend or distribution, (B) the date on which any such
reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation or winding up is expected to become effective and
(C) the time, if any, that is to be fixed as to when the holders of record of
Common Stock (or other securities) will receive for securities or other
property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution or winding up.
H. VOTING RIGHTS.
(1) The Holders of the Series A Preferred Shares shall not have
any voting rights except as set forth below or as otherwise from time to time
required by law.
(2) To the extent that under California law the vote of the
holders of the Series A Preferred Shares, voting separately as a class, is
required to authorize a given action of the Corporation, the affirmative vote
or consent of the holders of at least a majority of the outstanding Series A
Preferred Shares shall constitute the approval of such action by the class.
To the extent that under California law the holders of the Series A Preferred
Shares are entitled to vote on a matter with holders of Common Stock voting
together as one class, each Series A Preferred Shares shall be entitled to a
number of votes equal to the number of shares of Common Stock into which it
is then convertible using the record date for the taking of such vote of
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stockholders as the date as of which the Conversion Price is calculated.
Holders of the Series A Preferred Shares shall be entitled to notice of all
shareholder meetings or written consents with respect to which they would be
entitled to vote, which notice would be provided pursuant to the
Corporation's bylaws arid applicable statutes.
I. PROTECTIVE PROVISIONS. So long as the Series A Preferred Shares are
outstanding, the Corporation shall not take any action that would impair the
rights of the holders of the Series A Preferred Shares set forth herein and
shall not without first obtaining the approval (by vote or written consent,
as provided by law) of the holders of at least a majority in aggregate
principal amount or the Series A Preferred Shares then outstanding:
(1) Alter or change the rights, preferences or privileges of the
Series A Preferred Shares so as to affect adversely the Series A Preferred
Shares.
(2) For a period of eight (8) months from the issuance of the
Series A Preferred Shares, create any new class or series of stock which
ranks prior to or PARI PASSU to the Series A Preferred Share with respect to
liquidation preference, other than any additional series of Preferred Shares
issued for a purchase price not to exceed $2 million, which may rank PARI
PASSU.
(3) Do any act or thing which would result in taxation of the
holders of Series A Preferred Shares under Section 305 of the Internal
Revenue Code of 1985, as amended (or any comparable provision of the Internal
Revenue Code as hereafter from time to time amended).
IN WITNESS WHEREOF, the Corporation has caused this Certificate to
be signed by its authorized officer as of May 20, 1998.
MICROTEL INTERNATIONAL, INC.
By: /S/Carmine T. Oliva
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Carmine T. Oliva
President and Chief Executive Officer
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