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EXHIBIT 3.2
CERTIFICATE OF THE DESIGNATION, PREFERENCES AND RIGHTS
OF THE SERIES A PREFERRED STOCK
OF
UNLTD VENTURES INCORPORATED
I, Sheldon Kales, the President and Secretary of UNLTD Ventures
Incorporated, a Delaware corporation, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Articles of Incorporation of the Company, the Board of Directors on October
30, 2008, adopted the following resolution creating a series of Preferred
Shares, $0.001 par value per share, designated as the Series A Preferred Shares.
The relative rights and preferences of the Series A Preferred Stock are as
follows:
1. Designation and Amount. The shares of such series shall be designed as
the Series A Preferred Shares (the "Series A Preferred Shares"), and the number
of shares constituting such series shall be 4,200,000. The number of shares
constituting such series may, unless prohibited by the Articles of
Incorporation, be decreased by resolution of the Board of Directors; provided
that no decrease shall reduce the number of Series A Preferred Shares to a
number less than the number of shares then outstanding plus the number of shares
issuable upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series A Preferred Shares.
2. Reacquired Shares. Any Series A Preferred Shares purchased or otherwise
acquired by the Company in any manner whatsoever shall constitute authorized but
unissued Preferred Shares and may be reissued as part of a new series of
Preferred Shares by resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth herein, in the Articles
of Incorporation, or in any other Certificate of Designation creating a series
of Preferred Shares or as otherwise required by law.
3.1 Liquidation Preference. In the event of: (i) any liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary; (ii)
any Deemed Liquidation Event (as defined below), any and all assets of the
Company available for distribution (and, in the case of certain reorganizations,
mergers or consolidations, the securities received by the Company or its
shareholders in such reorganization, merger or consolidation) shall be
distributed to the shareholders of the Company in the following order and
preference:
3.2 First, prior to the repayment of any shareholders loans and prior and
in preference to any distribution to any of the holders of any other classes or
series of shares of the Company, each holder of Series A Preferred Shares shall
be entitled to receive an amount (in cash, cash equivalents or, if applicable,
securities) for each Series A Preferred Share held equal to (i) $0.133 (subject
to adjustment for Recapitalization Events); plus (ii) $0.0106 for each Preferred
Share (subject to adjustment for Recapitalization Events), compounded annually
from the date of the issuance of each Series A Preferred Share up to the date of
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distribution; plus (iii) an amount equal to the declared but unpaid dividends on
such Series A Preferred Shares (the "Preference Amount"). Such distribution
among the holders of the Series A Preferred Shares shall be made in proportion
to the aggregate respective preferences amounts of the Series A Preferred Shares
owned by each such holder.
3.3 After payment in full of the Preference Amounts, all remaining assets,
if any, shall be distributed among all of the Company's shareholders (holders of
Series A Preferred Shares and common shares) pro rata to their holdings in the
Company's issued share capital on an as-converted basis.
3.4 For purposes of this Section 3 "Deemed Liquidation Event(s)" shall
mean (i) any merger, reorganization or consolidation of the Company with or into
another entity, other than a wholly owned subsidiary of the Company, or the
acquisition of the Company by means of any transaction or series of related
transactions, following which the existing shareholders of the Company as of
immediately prior to such transaction or series of related transactions hold, by
virtue of securities issued as consideration for the Company's acquisition, less
than 50% of the voting power of the surviving or acquiring entity or less than
50% of the issued and outstanding share capital of the surviving or acquiring
entity; (ii) a sale, exclusive license, lease or other disposal of all or
substantially all of the shares and/or a sale of all or substantially all of the
assets of the Company (including without limitation its intellectual property
rights), in a single transaction or a series of related transactions, other than
to a wholly owned subsidiary of the Company and other than to an entity in which
Company's shareholders existing prior to said sale hold over 50% of the issued
and outstanding shares of the purchasing entity; or (iii) a financial or
corporate reorganization similar to any of the events described in (i) or (ii)
above having the same effect, unless the holders of more than 50% of the voting
power of all then issued Series A Preferred Shares, voting together as a single
class and on an as converted basis, determine not to treat such event as a
Deemed Liquidation Event for the purpose of this Section 3.
3.5 For purposes of this Section 3, "Recapitalization Events" shall mean
any share combination or subdivision, share split, share dividend, or any other
reclassification, reorganization or recapitalization of the Company's share
capital and the like.
4. Dividend Preference. Prior to and in preference to the distribution of
any dividends to the holders of any class or series of shares of the Company
(including shares of common stock), each of the holders of the Series A
Preferred Shares shall be entitled to receive for each Series A Preferred Share
held, non-cumulative dividends, as and when dividends are declared by the Board,
at the rate of $0.0106 (subject to adjustment for Recapitalization Events, as
that term is defined in Section 3.5) for such Preferred Share per annum,
calculated thereon from the respective original issue date of such share until
the date of distribution of such dividends. After the dividend preference of the
Series A Preferred Shares has been paid in full for a given calendar year, the
Series A Preferred Shares shall participate pro rata with the common shares in
the receipt of any additional dividends distributed, pro rata and pari passu
amongst the holders of the Series A Preferred Shares and the shares of common
stock in accordance with their respective shareholdings in the Company on an as
converted basis.
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5.1 Conversion. The holders of the Series A Preferred Shares shall have
conversion rights as follows (the "Conversion Rights"):
5.2 Each Preferred Share shall be convertible, at the option of the holder
of such share, at any time after the date of issuance of such share, into one
fully paid and non-assessable share of the Company's common stock.
5.3 Notwithstanding anything to the contrary herein, each series of Series
A Preferred Shares shall automatically be converted into one fully paid and
non-assessable share of the Company's common stock, immediately: (i) prior to
the closing of an offering by the Company of its securities to the public in a
bona fide underwriting pursuant to a registration statement under the U.S.
Securities Act of 1933, as amended, the Israeli Securities Law - 1968, or
similar securities law of another jurisdiction, with gross offering proceeds to
the Company of not less than $15,000,000 (fifteen million U.S. dollars), which
yields an imputed pre-money company valuation of at least $50,000,000 (fifty
million U.S. dollars) on a fully diluted basis (the "Qualified IPO"); or (ii)
upon written demand of the holders (on an as converted basis) of at least 51% of
the then outstanding Series A Preferred Shares.
5.4 Before any holder of the Series A Preferred Shares shall be entitled
to convert the same into shares of common stock the holder shall surrender the
certificate or certificates thereof at the Company's office and shall give
written notice by registered mail, postage prepaid, to the Company of the
election to convert the same. The Company shall, as soon as practicable
thereafter, issue and deliver to such holder of Series A Preferred Shares a
certificate or certificates for the number of shares of common stock to which
such holder shall be entitled as aforesaid. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the Series A Preferred Shares to be converted, 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 of such shares
of common stock as of such date. In the case of automatic conversion pursuant to
Section 5.3, such conversion shall be deemed to have been made immediately prior
to the close of business on the date of the occurrence of any of the events
listed in Section 5.3, 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 of such shares of common stock issuable as of such date.
If the conversion is in connection with a Qualified IPO, the conversion,
unless otherwise designated by the holder, will be conditioned upon the closing
with the underwriters of the sale of securities pursuant to shares of common
stock issuable upon the conversion of the Series A Preferred Shares. The Series
A Preferred Shares will be deemed to have converted immediately prior to the
closing of such sale of securities.
5.5 In the event the Company shall at any time declare or pay any dividend
on its common stock payable in shares of common stock, or effect a subdivision,
combination, consolidation, or stock split of the outstanding shares of common
stock (by reclassification or otherwise) into a greater or lesser number of
shares of common stock, then in each such case the number of shares of common
stock issuable upon the conversion of the Series A Preferred Shares immediately
prior to such event shall be adjusted by multiplying such number by a fraction,
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the numerator of which is the number of shares of common stock outstanding
immediately after such event and the denominator of which is the number of
shares of common stock that were outstanding immediately prior to such event.
5.6 In the event the Company shall declare a distribution payable in
securities of the Company, securities of other persons, evidence of indebtedness
issued by the Company or other persons, assets (including cash dividends) or
options or rights then, in each such case for the purpose of this Section 5.6
the holders of the Series A Preferred Shares shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of common stock into which their Series A Preferred Shares
are convertible as of the record date fixed for the determination of the holders
of shares of common stock entitled to receive such distribution.
5.7 If at any time or from time to time there shall be a recapitalization
of the shares of common stock (other than a subdivision, combination or merger
or sale of assets transaction provided for elsewhere in this Section 5),
provision shall be made so that the holders of the Series A Preferred Shares
shall thereafter be entitled to receive upon conversion of the Series A
Preferred Shares the number of shares of common stock or other securities or
property of the Company or otherwise, to which a holder of shares of common
stock deliverable upon conversion of the Series A Preferred Shares would have
been entitled immediately prior to such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 5.7 with respect to the rights of the holders of the Series A
Preferred Shares after the recapitalization to the end that the provisions of
this Section 5.7 (including adjustment of the number of shares issuable upon
conversion of the Series A Preferred Shares) shall be applicable after that
event as nearly equivalent as may be practicable.
5.8 The Company will not, by amendment of its Articles of Incorporation or
through any reorganization, recapitalization, 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 with
respect to any rights of the holders of the Series A Preferred Shares against
impairment, 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 the Series A Preferred Shares against impairment.
5.9 No fractional shares shall be issued upon conversion of the Series A
Preferred Shares, and the number of shares of common stock to be issued shall be
rounded to the nearest whole share.
5.10 The Company shall at all times reserve and keep available out of its
authorized but unissued common stock, solely for the purpose of effecting the
conversion of the Series A Preferred Shares, such number of its shares of common
stock 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 shares of common stock 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 Series A Preferred
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Shares, the Company will take such corporate action as may be necessary to
increase its authorized but unissued common stock to such number of shares as
shall be sufficient for such purposes.
5.11 The Company shall pay any and all issue and other taxes that may be
payable in respect of any issue or delivery of shares of common stock upon
conversion of the Series A Preferred Shares pursuant hereto; provided, however,
that the Company shall not be obligated to pay any transfer taxes resulting from
any transfer requested by any holder in connection with any such conversion.
6. 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, any right to subscribe for, purchase or
otherwise acquire any shares of any class or any other securities or property,
or to receive any other right, the Company shall mail to each holder of the
Seroes A Preferred Shares, at least 15 days prior to the date specified therein,
a notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right.
7. Notices of Adjustment. Upon the occurrence of each adjustment
applicable to the Series A Preferred Shares, the Company, at its expense, shall
promptly compute such adjustment in accordance with the terms hereof and prepare
and furnish to each holder of Series A Preferred Shares a certificate setting
forth each adjustment and showing in detail the facts upon which such adjustment
is based. The Company shall furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustment, (ii) any adjustment to the
amount of the Liquidation Preference or Dividend Preference, and (iii) the
number of shares of common stock and the amount, if any, of other property which
at the time would be received upon the conversion of each Series A Preferred
Share.
8.1 Voting Rights. Each Series A Preferred Share shall entitle the holder
thereof to one vote for each share of common stock into which such Series A
Preferred Share could then be converted (with any fractional share determined on
an aggregate conversion basis being rounded to the nearest whole share), and
with respect to such vote, such holder shall have full voting rights and powers
equal to the voting rights and powers of the holders of common stock, and shall
be entitled, notwithstanding any provision hereof, to notice of any
shareholders' meeting in accordance with Delaware law, and shall be entitled to
vote, together with holders of common stock, with respect to any question upon
which holders of common stock have the right to vote.
8.2 The holders of the common stock and the Series A Preferred Shares
shall not vote as separate classes on any matter except where required by law or
by the Company's Articles of Incorporation.
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IN WITNESS WHEREOF, I have executed this Certificate of Designation,
Preferences and Rights this 11th day of March, 2009.
/s/ Sheldon Kales
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Sheldon Kales, President and Secretary
