Exhibit 3.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES
A CONVERTIBLE PREFERRED STOCK
OF
CICERO INC.
(Pursuant
to Section 151 of the Delaware General Corporation
Law)
Cicero
Inc., a corporation organized and existing under the laws of the
State of Delaware (the “
Company
”), hereby
certifies that, pursuant to the authority conferred upon the Board
of Directors of the Company (the “
Board of Directors
” or
the “
Board
”) by the
Company’s Certificate of Incorporation and pursuant to the
provisions of Section 151 of the Delaware General Corporation Law,
the Board of Directors, by unanimous written consent, dated August
11, 2017, adopted the following resolution (which has not been
modified, altered or amended and is presently in full force and
effect) providing for the designation, rights, preferences,
qualifications, limitations and restrictions of Series A Preferred
Stock (as defined below):
WHEREAS, the
Certificate of Incorporation of the Company authorizes ten million
(10,000,000) shares of preferred stock, par value $.001 per share,
of the Company (the “
Preferred Stock
”)
issuable from time to time in one or more series; and
WHEREAS, the Board
of Directors is authorized by the Certificate of Incorporation to
establish and fix from time to time the number of shares to be
included in any series of Preferred Stock and the designation,
preferences and rights of the shares of each such series and the
qualifications, limitations and restrictions thereof;
NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors deems it
advisable to, and hereby does, designate Series A Convertible
Preferred Stock, par value $.001 per share, and fixes and
determines the rights, preferences, qualifications, limitations and
restrictions relating to such Series A Convertible Preferred Stock
as follows:
1.
Designation
and Amount; Rank
.
(a)
Designation
and Amount
. The shares of Preferred Stock created hereby
shall be designated the “Series A Convertible Preferred
Stock” (the “
Series A Preferred
Stock
”) and the authorized number of shares
constituting such series shall be 5,083 shares. The rights,
preferences, qualifications, limitations, restrictions and other
matters relating to the Series A Preferred Stock are as set forth
herein.
(b)
Rank
.
The Series A Preferred Stock shall rank, with respect to dividend
rights and rights upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company (each, a
“
Liquidation
Event
”), (a) senior in preference and priority to the
common stock, par value $.001, of the Company (the
“
Common
Stock
”) and any other class or series of equity
security established and designated by the Board of Directors the
terms of which do not expressly provide that it ranks senior in
preference or priority to or on parity with the Series A Preferred
Stock with respect to dividend rights and rights upon a Liquidation
Event (collectively, “
Junior Securities
”), (b)
on parity, without preference or priority, with and each other
class or series of equity security established and designated by
the Board of Directors the terms of which expressly provide that it
ranks on parity, without preference or priority to, the Series A
Preferred Stock with respect to dividend rights and rights upon a
Liquidation Event (collectively, “
Parity Securities
”), and
(c) junior in preference and priority to each other class or series
of equity security established and designated by the Board of
Directors the terms of which expressly provide that it ranks senior
in preference or priority to the Series A Preferred Stock with
respect to dividend rights and rights upon a Liquidation Event
(collectively, “
Senior
Securities
”).
2.
Dividends
.
The Company shall not declare, pay or set aside any dividends on
shares of any other class or series of capital stock of the Company
(other than dividends on shares of Common Stock payable in shares
of Common Stock) unless (in addition to the obtaining of any
consents required elsewhere in the Certificate of Incorporation)
the holders of the Series A Preferred Stock then outstanding shall
first receive, or simultaneously receive, a dividend on each
outstanding share of Series A Preferred Stock in an amount at least
equal to (i) in the case of a dividend on Common Stock or any class
or series that is convertible into Common Stock, that dividend per
share of Series A Preferred Stock as would equal the product of (A)
the dividend payable on each share of such class or series
determined, if applicable, as if all shares of such class or series
had been converted into Common Stock and (B) the number of shares
of Common Stock issuable upon conversion of a share of Series A
Preferred Stock, in each case calculated on the record date for
determination of holders entitled to receive such dividend or (ii)
in the case of a dividend on any class or series that is not
convertible into Common Stock, at a rate per share of Series A
Preferred Stock determined by (A) dividing the amount of the
dividend payable on each share of such class or series of capital
stock by the original issuance price of such class or series of
capital stock (subject to appropriate adjustment in the event of
any stock dividend, stock split, combination or other similar
recapitalization with respect to such class or series) and (B)
multiplying such fraction by an amount equal to the Series A
Original Issue Price (as defined below); provided that, if the
Company declares, pays or sets aside, on the same date, a dividend
on shares of more than one class or series of capital stock of the
Company, the dividend payable to the holders of Series A Preferred
Stock pursuant to this Section 1 shall be calculated based upon the
dividend on the class or series of capital stock that would result
in the highest Series A Preferred Stock dividend. The
“
Series A Original
Issue Price
” shall mean $1,000.00 per share, subject
to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization with respect
to the Series A Preferred Stock.
3.
Liquidation
.
(a)
Series
A Liquidation Preference
. Upon a Liquidation Event, after
the payment (or the setting aside for payment or distribution) of
all preferential amounts required to be paid to the holders of any
Senior Securities, in the event of any Liquidation Event, the
holders of shares of Series A Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Company
available for distribution to its stockholders before any payment
shall be made to the holders of any Junior Securities by reason of
their ownership thereof, an amount per share equal to the Series A
Original Issue Price plus any dividends accrued or declared but
unpaid thereon as of the date of such Liquidation Event (the
“
Liquidation
Preference
”). If upon any such Liquidation Event the
assets of the Company available for distribution to its
stockholders shall be insufficient to pay the holders of shares of
Series A Preferred Stock the full amount to which they shall be
entitled under this
Section 3
, the holders of
shares of Series A Preferred Stock and Parity Securities shall
share ratably in any distribution of the assets available for
distribution in proportion to the respective amounts which would
otherwise be payable in respect of the shares held by them upon
such distribution if all amounts payable on or with respect to such
shares were paid in full.
(b)
Distribution
to Holders of Common Stock and Series A Preferred Stock
.
Upon a Liquidation Event, after the payment (or the setting aside
for payment or distribution) of all preferential amounts required
to be paid to the holders of shares of Series A Preferred Stock and
any other Parity Securities, the remaining assets (if any) of the
Company available for distribution to its stockholders shall be
distributed first to the holders of any Junior Securities entitled
to a liquidation preference in payment of the aggregate liquidation
preference of all such holders and then to the holders of Common
Stock, and the holders of Series A Preferred Stock shall not be
entitled to any further participation in any distribution of assets
by the Company by reason of their ownership thereof.
(c)
Consolidation,
Merger, Etc.
A consolidation or merger of the Company with
or into any other corporation or corporations, or a sale, lease,
transfer, exclusive license or other disposition, in a single
transaction or series of related transactions, of all or
substantially all of the assets of the Company and its subsidiaries
taken as a whole or the effectuation by the Company of a
transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Company is disposed,
shall be deemed to be a Liquidation Event within the meaning of
this Certificate of Designations, in each case, unless the holders
of a majority of the outstanding Series A Preferred Stock elect not
to treat such event as a Liquidation Event;
provided
, that, as a result of
such consolidation, merger or similar transaction or series of
transactions (each, a “
Combination Transaction
”)
in which the Company is a constituent corporation or a party, the
voting securities of the Company that are outstanding immediately
prior to the consummation of such Combination Transaction (other
than any such securities that are held by an “
Acquiring Stockholder
”,
as defined below) do not represent, or are not converted into,
securities of the surviving corporation of such Combination
Transaction (or such surviving corporation’s parent
corporation if the surviving corporation is owned by the parent
corporation) that, immediately after the consummation of such
Combination Transaction, together possess at least a majority of
the total voting power of all securities of such surviving
corporation (or its parent corporation, if applicable) that are
outstanding immediately after the consummation of such Combination
Transaction, such outstanding securities of such surviving
corporation (or its parent corporation, if applicable) expressly
include securities that are held by the Acquiring Stockholder. For
purposes of this
Section
3(c)
, an “
Acquiring Stockholder
”
means a stockholder or stockholders of the Company that (i) merges
or combines with the Company in such Combination Transaction or
(ii) owns or controls a majority of another corporation that merges
or combines with the Company in such Combination Transaction.
Notwithstanding the foregoing, the sale by the Company of
securities in an equity financing shall not be deemed a Combination
Transaction.
(d)
Non-Cash
Distributions
. In any Liquidation Event, if proceeds
received by the Company or its stockholders are other than cash,
the value of such non-cash consideration shall be determined in
good faith by the Board of Directors.
4.
Voting
Rights
.
(a)
General
.
Except as otherwise expressly provided in this Certificate of
Designations or as otherwise required by law, (a) each holder of
Series A Preferred Stock shall be entitled to vote on all matters
submitted to a vote of the stockholders of the Company and shall be
entitled to that number of votes equal to the number of shares of
Common Stock into which such holder's shares of Series A Preferred
Stock could then be converted at the record date for the
determination of stockholders entitled to vote on such matters or,
if no such record date is established, at the date such vote is
taken or any written consent of stockholders is solicited, and (b)
the holders of shares of Series A Preferred Stock, Series A-1
Preferred Stock and Common Stock shall vote together (or tender
written consents in lieu of a vote) as a single class on all
matters submitted to the stockholders of the Company. Fractional
votes shall not, however, be permitted and any fractional voting
rights available on an as-converted basis (after aggregating all
shares of Common Stock into which shares of Series A Preferred
Stock held by each holder could be converted) shall be rounded to
the nearest whole number. In connection with the foregoing, the
Company shall provide each holder of Series A Preferred Stock with
prior notification of any meeting of the stockholders (and copies
of proxy materials and other information sent to stockholders) at
the same time such notice and materials are provided to the holders
of Common Stock.
(b)
Series
A Protective Provisions
. The approval of the holders of at
least 2/3 of the outstanding shares of the Series A Preferred Stock
voting together separately as a class will be required
for:
(i) the
merger, sale of all, or substantially all of the assets or
intellectual property, recapitalization, or reorganization of the
Company, unless such action (i) results in net proceeds to the
stockholders of the Company in excess of $5,000,000, and (ii) has
received the prior approval of the Board of Directors;
(ii) the
authorization or issuance of any equity security having any right,
preference or priority superior to or on parity with the Series A
Preferred Stock (excluding debt not convertible into any such
Senior Security or Parity Security);
(iii) the
redemption, repurchase or acquisition, directly or indirectly,
through subsidiaries or otherwise, of any equity securities (other
a repurchase of the Series A Preferred Stock) or the payment of
dividends or other distributions on equity securities by the
Company (other than on the Series A Preferred Stock);
(iv) any
amendment or repeal of any provision of the Company’s
Certificate of Incorporation or By-laws that would adversely affect
the rights, preferences, or privileges of the Series A Preferred
Stock; and
(v) the
liquidation, dissolution or winding-up of the business and affairs
of the Company, the effectuation of any Liquidation Event, or the
consent to any of the foregoing, unless such action (i) results in
net proceeds to the stockholders of the Company in excess of
$5,000,000, and (ii) has received the prior approval of the Board
of Directors.
5.
Conversion
.
The holders of Series A Preferred Stock shall have conversion
rights as follows (the “
Conversion
Rights
”):
(a)
Optional
Conversion
. Each share of Series A 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 the Series A
Original Issue Price by the Conversion Price (as defined below) in
effect at the time of conversion. The conversion price at which
shares of Common Stock shall be deliverable upon conversion of
Series A Preferred Stock without the payment of additional
consideration by the holder thereof (the “
Conversion Price
”) shall
initially be $0.05 Such initial Conversion Price, and the rate at
which shares of Series A Preferred Stock may be converted into
shares of Common Stock, shall be subject to adjustment as provided
below. The right of redemption shall continue until the fifth
business day prior to a Redemption Date (defined below in Section
6(a)) or other redemption by or surrender to the Company of the
Series A Preferred Stock for any reason other than a conversion
pursuant to this Section 5.
(b)
Fractional
Shares
. No fractional shares of Common Stock shall be issued
upon conversion of Series A Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled,
the Company at its election shall either (i) pay cash equal to the
product (calculated to the nearest cent) of such fraction and the
then-effective Conversion Price, or (ii) issue one whole share of
Common Stock for each fractional share to which the holder would
otherwise be entitled.
(c)
Mechanics
of Conversion
.
(i) In
order for a holder of Series A Preferred Stock to convert shares of
Series A Preferred Stock into shares of Common Stock, such holder
shall surrender the certificate or certificates for such shares of
Series A Preferred Stock at the office of the transfer agent for
the Series A Preferred Stock (or at the principal office of the
Company if the Company serves as its own transfer agent), together
with written notice that such holder elects to convert all or any
number of the shares of the Series A Preferred Stock represented by
such certificate or certificates. Such notice shall state such
holder’s name or the names of the nominees in which such
holder wishes the certificate or certificates for shares of Common
Stock to be issued. If required by the Company, certificates
surrendered for conversion shall be endorsed or accompanied by a
written instrument or instruments of transfer, in form satisfactory
to the Company, duly executed by the registered holder or his or
its attorney duly authorized in writing. The Company shall not be
obligated to issue certificates evidencing the shares of Common
Stock issuable upon a conversion unless the certificates evidencing
such shares of Series A Preferred Stock are either delivered to the
Company or its transfer agent as provided above, or the holder
notifies the Company or its transfer agent that such certificates
have been lost, stolen or destroyed and executes an agreement
satisfactory to the Company to indemnify the Company from any loss
incurred by it in connection with such certificates. The date of
receipt of such certificates and notice by the transfer agent (or
by the Company if the Company serves as its own transfer agent)
shall be the conversion date (the “
Conversion Date
”) and
such shares of Series A Preferred Stock shall thereupon be
converted, without further action, into the number of shares of
Common Stock provided for in this
Section 5
, and such number of
shares of Common Stock into which the Series A Preferred Stock is
converted shall thereupon be deemed to have been issued to such
holder(s) or nominee(s) of such holder(s) of the Series A Preferred
Stock.
(ii) The
Company shall, as soon as practicable after the Conversion Date,
issue and deliver at such office to such holder of Series A
Preferred Stock, or to his or its nominees, 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 (if applicable). Notwithstanding the foregoing,
if the Company’s transfer agent is participating in the
Depository Trust Company (“
DTC
”) Fast Automated
Securities Transfer program, and so long as the certificates
therefore do not bear a legend, and the holder thereof is not then
required to return such certificate for the placement of a legend
thereon, the Company shall cause its transfer agent to promptly
electronically transmit the Common Stock issuable upon conversion
to the holder by crediting the account of the holder or its nominee
with DTC through its Deposit Withdrawal Agent Commission system
(“
DTC
Transfer
”). If the aforementioned conditions to a DTC
Transfer are not satisfied, the Company shall deliver as provided
above to the holder physical certificates representing the Common
Stock issuable upon conversion. Further, a holder may instruct the
Company to deliver to the holder physical certificates representing
the Common Stock issuable upon conversion in lieu of delivering
such shares by way of DTC Transfer.
(iii) The
Company shall at all times when the Series A 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 A 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 shares of Series A
Preferred Stock. Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value
of the shares of Common Stock issuable upon conversion of the
Series A Preferred Stock, the Company will take any corporate
action which may, in the opinion of its counsel, be necessary so
that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Conversion
Price.
(iv) On
the Conversion Date, all shares of Series A Preferred Stock which
have been surrendered for conversion as herein provided shall no
longer be deemed to be outstanding and all rights with respect to
such shares, including the rights, if any, to receive notices and
to vote and the accrual of dividends thereon, 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 therefore (and cash, if any, with respect to any fractions
of a share as provided in
Section 5
).
(v) If
the conversion is in connection with an underwritten offering of
securities registered pursuant to the Securities Act of 1933, as
amended, the conversion may at the option of any holder tendering
Series A Preferred Stock for conversion, be conditioned upon the
closing with the underwriter of the sale of securities pursuant to
such offering, in which event the person(s) entitled to receive the
Common Stock issuable upon such conversion of Series A Preferred
Stock shall not be deemed to have converted such Series A Preferred
Stock until immediately prior to the closing of the sale of
securities.
(d)
Adjustment
for Stock Splits and Combinations
. If the Company shall at
any time or from time to time after the Original Issue Date effect
a subdivision of the outstanding Common Stock, whether by way of a
stock split or a stock split by way of a stock dividend, the
Conversion Price then in effect immediately before that subdivision
shall be proportionately decreased. If the Company shall at any
time or from time to time after the Original Issue Date 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 subsection shall become
effective at the close of business on the date the subdivision or
combination becomes effective.
(e)
Adjustment
for Certain Dividends and Distributions
. In the event the
Company at any time, or from time to time after the Original Issue
Date 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 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 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 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 subsection as of the time of
actual payment of such dividends or distributions.
(f)
Adjustments
for Other Dividends and Distributions
. In the event the
Company at any time or from time to time after the Original Issue
Date 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 Company
other than shares of Common Stock (other than as otherwise adjusted
in this
Section 5
),
in cash otherwise than out of retained earnings, in stock or other
securities of other persons, in evidences of indebtedness issued by
the Company or other persons, in assets (excluding cash dividends)
or in options or rights (excluding options to purchase and rights
to subscribe for Common Stock or other securities of the Company
convertible into or exchangeable for Common Stock), then and in
each such event provision shall be made so that the holders of
Series A Preferred Stock shall receive upon conversion thereof in
addition to the number of shares of Common Stock receivable
thereupon, the amount of securities and other assets of the Company
that they would have received had their Series A 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 and other
assets receivable by them as aforesaid during such period giving
application to all adjustments called for during such period
(subject to all other adjustments called for during such period
under this
Section
5
), under this paragraph with respect to the rights of the
holders of Series A Preferred Stock.
(g)
Adjustment
for Reclassification, Exchange, or Substitution
. If the
Common Stock issuable upon the conversion of the Series A 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 provided for above), the
Conversion Price then in effect shall, concurrently with the
effectiveness of such reorganization or reclassification, be
proportionately adjusted such that the Series A Preferred Stock
shall be convertible into, in lieu of the number of shares of
Common Stock which the holders would otherwise have been entitled
to receive, a number of shares of such other class or classes of
stock equivalent to the number of shares of Common Stock that would
have been subject to receipt by the holders upon conversion of the
Series A Preferred Stock immediately before that
change.
(h)
Adjustment
for Merger or Reorganization or Sale of Assets
. Subject to
Section 3
, in case
of any consolidation or merger of the Company with or into another
corporation or other entity or the sale of all or substantially all
of the assets of the Corporation to another corporation or other
entity, each share of Series A 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 Company deliverable upon conversion of such
Series A Preferred Stock would have been entitled upon such
consolidation, merger or sale; 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 set forth in
this
Section 5
with
respect to the rights and interest thereafter of the holders of
Series A Preferred Stock, to the end that the provisions set forth
in this
Section 5
(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 A Preferred Stock.
(i)
No
Duplication
. If any action would require adjustment of the
Conversion Price pursuant to more than one of the provisions
described in this
Section
5
in a manner such that adjustments are duplicative, only
one such adjustment shall be made.
(j)
No
Impairment
. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, purposefully
avoid or seek to avoid 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 the carrying out of all
the provisions of this
Section 5
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 Series A Preferred
Stock against impairment.
(k)
Certificate
as to Adjustments
. Upon the occurrence of each adjustment of
the Conversion Price pursuant to this
Section 5
, the Company at its
expense shall promptly compute such adjustment in accordance with
the terms hereof and, in the case of adjustments amounting to a
more than five percent (5%) change in the Conversion Price, furnish
to each holder of Series A Preferred Stock a certificate setting
forth such adjustment and showing in detail the facts upon which
such adjustment is based. The Company shall, upon the written
request at any time of any holder of Series A Preferred Stock,
furnish or cause to be furnished to such holder a similar
certificate setting forth (i) such adjustments, (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 A Preferred
Stock.
(l)
Notices
of Record Date
. In the event of any taking by the Company of
a record 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 a cash dividend) or other distribution, the
Company shall mail to each holder of Series A Preferred Stock at
least ten (10) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken of the
purpose of such dividend or distribution.
6.
Redemption
.
(a)
General
.
Unless prohibited by Delaware law governing distributions to
stockholders, shares of Series A Preferred Stock shall be redeemed
by the Company at a price equal the Series A Original Issue Price
per share, plus all declared but unpaid dividends
thereon
(the
“
Redemption
Price
”), paid in three (3) annual installments
commencing not more than sixty (60) days after (i) receipt by the
Company at any time after (A) the Company’s trailing 12-month
EBITDA is in excess of $5,000,000, (B) the sale of all, or
substantially all of the assets of the Company in one or more
related transactions, or (C), in one or more transactions separate
from that specified in subpart “B” above, the sale of
all or substantially all the intellectual property of the Company,
which in the case of the transactions specified in subparts
“B” and “C” above result in net proceeds to
the Company in excess of $6,000,000, after receipt by the Company
from the holders of at least a majority of the then outstanding
shares of Series A Preferred Stock, a written notice requesting
redemption of all shares of Series A Preferred Stock (the
“
Preferred
Holder’s Redemption Request
”) or (ii) at any
time after the Company gives notice to the holders of the then
outstanding shares of Series A Preferred Stock for the redemption
of all shares of Series A Preferred Stock (the “
Company Redemption
Request
”, and together with the Preferred
Holder’s Redemption Request, each a “
Redemption Request
”. Once
a Company Redemption Request is given, it may not be withdrawn
without the unanimous agreement of all the holders of the Series A
Preferred Stock that is to be redeemed. Upon receipt of a
Redemption Request, the Company shall apply all of its assets to
any such redemption, and to no other corporate purpose, except to
the extent prohibited by Delaware law governing distributions to
stockholders. The date of each installment shall be referred to as
a “
Redemption
Date
.” On each Redemption Date, the Company shall
redeem, on a pro rata basis in accordance with the number of shares
of Series A Preferred Stock owned by each holder, that number of
outstanding shares of Series A Preferred Stock determined by
dividing (x) the total number of shares of Series A Preferred Stock
outstanding immediately prior to such Redemption Date by (y) the
number of remaining Redemption Dates (including the Redemption Date
to which such calculation applies). If on any Redemption Date
Delaware law governing distributions to stockholders prevents the
Company from redeeming all shares of Series A Preferred Stock to be
redeemed, the Company shall ratably redeem the maximum number of
shares that it may redeem consistent with such law, and shall
redeem the remaining shares as soon as it may lawfully do so under
such law.
(b)
Redemption
Notice
. The Company shall send written notice of the
mandatory redemption (the “
Redemption Notice
”) to
each holder of record of Series A Preferred Stock not less than
forty (40) days prior to each Redemption Date. Each Redemption
Notice shall state:
(i) the
number of shares of Series A Preferred Stock held by the holder
that the Company shall redeem on the Redemption Date specified in
the Redemption Notice;
(ii) the
Redemption Date and the Redemption Price;
(iii) the
date upon which the holder’s right to convert such shares
terminates (as determined in accordance with
Section 5(a)
); and
(iv) for
holders of shares in certificated form, that the holder is to
surrender to the Company, in the manner and at the place
designated, his, her or its certificate or certificates
representing the shares of Series A Preferred Stock to be
redeemed.
(c)
Surrender
of Certificates; Payment
. On or before the applicable
Redemption Date, each holder of shares of Series A Preferred Stock
to be redeemed on such Redemption Date, unless such holder has
exercised his, her or its right to convert such shares as provided
in
Section 5(a)
,
shall, if a holder of shares in certificated form, surrender the
certificate or certificates representing such shares (or, if such
registered holder alleges that such certificate has been lost,
stolen or destroyed, a lost certificate affidavit and agreement
reasonably acceptable to the Company to indemnify the Company
against any claim that may be made against the Company on account
of the alleged loss, theft or destruction of such certificate) to
the Company, in the manner and at the place designated in the
Redemption Notice, and thereupon the Redemption Price for such
shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof.
In the event less than all of the shares of Series A Preferred
Stock represented by a certificate are redeemed, a new certificate,
instrument, or book entry representing the unredeemed shares of
Series A Preferred Stock shall promptly be issued to such
holder.
(d)
Rights
Subsequent to Redemption
. If the Redemption Notice shall
have been duly given, and if on the applicable Redemption Date the
Redemption Price payable upon redemption of the shares of Series A
Preferred Stock to be redeemed on such Redemption Date is paid or
tendered for payment or deposited with an independent payment agent
so as to be available therefor in a timely manner, then
notwithstanding that any certificates evidencing any of the shares
of Series A Preferred Stock so called for redemption shall not have
been surrendered, dividends with respect to such shares of Series A
Preferred Stock shall cease to accrue after such Redemption Date
and all rights with respect to such shares shall forthwith after
the Redemption Date terminate, except only the right of the holders
to receive the Redemption Price without interest upon surrender of
any such certificate or certificates therefor.
7.
Miscellaneous
.
(a)
No
Pre-emptive Rights
. No Holder
of Series A Preferred Stock shall be entitled as a matter of right
to subscribe for or purchase, or have any pre-emptive right with
respect to, any part of any new or additional issue of stock of any
class whatsoever, or of securities convertible into any stock of
any class whatsoever, or any other shares, rights, options or other
securities of any class whatsoever, whether now or hereafter
authorized and whether issued for cash or other consideration or by
way of dividend.
(b)
Waiver
.
Notwithstanding any provision in this Certificate of Designations
to the contrary, any provision contained herein and any right of
the holders of Series A Preferred Stock granted hereunder may be
waived as to all shares of Series A Preferred Stock (and the
holders thereof) upon the written consent of the holders of not
less than a majority of the shares of Series A Preferred Stock then
outstanding, unless a higher percentage is required by applicable
law, in which case the written consent of the holders of not less
than such higher percentage shall be required.
(c)
Retirement
and Cancellation of Shares
. Shares of Series A Preferred
Stock which have been converted or otherwise cancelled shall be
deemed to have been retired and cancelled and, following the filing
of any certificates required by applicable law, have the status of
authorized and unissued shares of Preferred Stock, and may be
available to be issued thereafter by the Company as a newly
designated class or series of Preferred Stock. When all the Series
A Preferred Stock is surrendered to the Company, the Series A
Preferred Stock will terminate and not be reissuable as Series A
Preferred Stock.
(d)
Lost
or Stolen Certificates
. Upon receipt by the Company of (i)
evidence of the loss, theft, destruction or mutilation of any
Series A Preferred Stock Certificate(s) and (ii) (y) in the case of
loss, theft or destruction, indemnity (without any bond or other
security) reasonably satisfactory to the Company, or (z) in the
case of mutilation, the Series A Preferred Stock Certificate(s)
(surrendered for cancellation), the Company shall execute and
deliver new Series A Preferred Stock Certificate(s) of like tenor
and date. However, the Company shall not be obligated to reissue
such lost or stolen Series A Preferred Stock Certificate(s) if the
holder contemporaneously requests the Company to convert such
Series A Preferred Stock.
(e)
Severability
.
If any provision of this Certificate of Designations shall be held
to be invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision of this Certificate of
Designations.
(f)
Captions
.
The caption headings of the sections of this Certificate of
Designations are for convenience of reference only and shall not
affect the interpretation of any of the provisions
hereof.
(g)
Notices
.
Any notices required or permitted to be given under the terms
hereof shall be sent by certified or registered mail (return
receipt requested) or delivered personally, by responsible
overnight carrier or by confirmed facsimile, and shall be effective
five (5) days after being placed in the mail, if mailed, or upon
receipt or refusal of receipt, if delivered personally or by
responsible overnight carrier or confirmed facsimile, in each case
addressed to a party. The addresses for such communications are:
(i) if to the Company to Cicero Inc., 8000 Regency Parkway, Cary,
NC 27511 Telephone: (919) 380-5000, Facsimile: (919) 380-5121,
Attention: John P. Broderick, and (ii) if to any holder to the
address set forth on the Company’s stock transfer records, or
such other address as may be designated in writing hereafter, in
the same manner, by such person.
(h)
No
Other Rights
. The Series A Preferred Stock shall not have
any relative, participating, optional or other special rights or
powers except as set forth herein or as may be required by
law.
IN
WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be duly executed and acknowledged by it undersigned
duly authorized officer this 11th day of August, 2017.
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CICERO
INC.
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By:
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/s/
John
Broderick
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Name:
John
Broderick
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Title:
CEO/CFO
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