**Exhibit 3.2**

 

**CERTIFICATE OF DESIGNATIONS**

 

**OF**

 

**SERIES A JUNIOR PARTICIPATING PREFERRED STOCK**

 

**OF**

 

**ITERIS, INC.**

 

Pursuant to Section 151 of the

 

Delaware General Corporation Law

 

Iteris, Inc., a Delaware corporation (the “Corporation”), doeshereby certify that the following resolution was adopted by the Board ofDirectors of the Corporation effective August 20, 2009, and suchresolution has not been rescinded or amended and is in full force and effect asof the date hereof:

 

**RESOLVED**, that pursuant to the authorityconferred upon the Board of Directors of Iteris, Inc., a Delawarecorporation (the “Corporation”), by the provisions of the certificate ofincorporation of the Corporation, as amended to date (the “Certificate ofIncorporation”), there hereby is created, out of the authorized shares ofundesignated Preferred Stock, a series of Preferred Stock of the Corporationconsisting of One Hundred Thousand (100,000) shares, having the followingdesignations, preferences, relative, participating, optional and other specialrights, voting powers, qualifications, limitations and restrictions:

 

**SERIES A JUNIOR PARTICIPATING PREFERRED STOCK**

 

**Section 1.****                                         ****Designation and Amount****.**  The shares ofsuch series shall be designated as “Series A Junior ParticipatingPreferred Stock” (the “***Series APreferred Stock***”) and the number of shares constituting suchseries shall be One Hundred Thousand (100,000). Such number of shares may be increased or decreased by resolution of theBoard of Directors, provided that no decrease shall reduce the number of sharesof Series A Preferred Stock to a number less than the number of sharesthen outstanding plus the number of shares reserved for issuance upon theexercise of outstanding options, rights or warrants or upon the conversion ofany outstanding securities issued by the Corporation convertible into Series APreferred Stock.

 

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**Section 2.****                                         ****Dividends andDistributions****.**

 

(A)                              Subject to the prior and superior rightsof the holders of any shares of any series of Preferred Stock ranking prior andsuperior to the shares of Series A Preferred Stock, the holders of sharesof Series A Preferred Stock, in preference to the holders of Common Stock,par value $0.10 per share (or as such par value may be changed from time totime), of the Corporation (the “***CommonStock***”) and of any other junior stock, shall be entitled toreceive, when, as and if declared by the Board of Directors out of fundslegally available for the purpose, quarterly dividends payable in cash on orabout the last day of each of March, June, September and December ineach year (each such date being referred to herein as a “***Quarterly Dividend Payment Date***”),commencing on the first Quarterly Dividend Payment Date after the first issuanceof a share or fraction of a share of Series A Preferred Stock, in anamount per share (rounded to the nearest cent) equal to the greater of (i) OneDollar ($1.00) or (ii) subject to the provision for adjustment hereinafterset forth, One Thousand (1,000) times the aggregate per share amount of allcash dividends, and One Thousand (1,000) times the aggregate per share amount(payable in kind) of all non-cash dividends or other distributions, other thana dividend payable in shares of Common Stock or a subdivision of theoutstanding shares of Common Stock (by reclassification or otherwise), declaredon the Common Stock since the immediately preceding Quarterly Dividend PaymentDate or, with respect to the first Quarterly Dividend Payment Date, since thefirst issuance of any share or fraction of a share of Series A PreferredStock.  If the Corporation shall at anytime on or after September 3, 2009 (the “***Record Date***”) declare or pay any dividend on the CommonStock payable in shares of Common Stock, or effect a subdivision or combinationor consolidation of the outstanding shares of Common Stock (by reclassificationor otherwise than by payment of a dividend in shares of Common Stock) into agreater or lesser number of shares of Common Stock, then in each such case theamount to which holders of shares of Series A Preferred Stock wereentitled immediately prior to such event under clause (ii) of thepreceding sentence shall be adjusted by multiplying such amount by a fraction,the numerator of which is the number of shares of Common Stock outstandingimmediately after such event and the denominator of which is the number ofshares of Common Stock that were outstanding immediately prior to such event.

 

(B)                                The Corporation shall declare a dividendor distribution on the Series A Preferred Stock as provided in paragraph (A) ofthis Section immediately after it declares a dividend or distribution onthe Common Stock (other than a dividend payable in shares of Common Stock);provided that, in the event no dividend or distribution shall have beendeclared on the Common Stock during the period between any Quarterly DividendPayment Date and the next subsequent Quarterly Dividend Payment Date, adividend of $1.00 per share on the Series A Preferred Stock shallnevertheless be payable on such subsequent Quarterly Dividend Payment Date.

 

(C)                                Dividends shall begin to accrue and becumulative on outstanding shares of Series A Preferred Stock from theQuarterly Dividend Payment Date next preceding the date of issue of such sharesof Series A Preferred Stock, unless the date of issue of such shares isprior to the record date for the first Quarterly Dividend Payment Date, inwhich case dividends on such shares shall begin to accrue from the date ofissue of such shares, or unless the date of issue is a Quarterly DividendPayment Date or is a date after the record date for the determination ofholders of shares of Series A Preferred Stock entitled to receive aquarterly dividend and before such Quarterly Dividend Payment Date, in eitherof which events such dividends shall begin to accrue and be cumulative fromsuch Quarterly Dividend Payment Date. Accrued but unpaid 

 

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dividends shall not bear interest.  Dividends paid on the shares of Series APreferred Stock in an amount less than the total amount of such dividends atthe time accrued and payable on such shares shall be allocated pro rata on ashare-by-share basis among all such shares at the time outstanding.  The Board of Directors may fix a record datefor the determination of holders of shares of Series A Preferred Stockentitled to receive payment of a dividend or distribution declared thereon,which record date shall be not more than 60 days prior to the date fixed forthe payment thereof.

 

**Section 3.****                                         ****Voting Rights****.**  The holders ofshares of Series A Preferred Stock shall have the following voting rights:

 

(A)                              Subject to the provision for adjustmenthereinafter set forth, each share of Series A Preferred Stock shallentitle the holder thereof to One Thousand (1,000) votes on all matterssubmitted to a vote of the stockholders of the Corporation. If the Corporationshall at any time on or after the Record Date declare or pay any dividend onCommon Stock payable in shares of Common Stock, or effect a subdivision orcombination or consolidation of the outstanding shares of Common Stock (byreclassification or otherwise than by payment of a dividend in shares of CommonStock) into a greater or lesser number of shares of Common Stock, then in eachsuch case the number of votes per share to which holders of shares of Series APreferred Stock were entitled immediately prior to such event shall be adjustedby multiplying such number by a fraction, the numerator of which is the numberof shares of Common Stock outstanding immediately after such event and thedenominator of which is the number of shares of Common Stock that wereoutstanding immediately prior to such event.

 

(B)                                Except as otherwise provided herein, inthe Certificate of Incorporation, in any other Certificate of Designationscreating a series of Preferred Stock, or by law, the holders of shares of Series APreferred Stock and the holders of shares of Common Stock and any other capitalstock of the Corporation having general voting rights shall vote together asone class on all matters submitted to a vote of stockholders of theCorporation.

 

(C)                                Except as set forth herein, holders of Series APreferred Stock shall have no special voting rights and their consent shall notbe required (except to the extent they are entitled to vote with holders ofCommon Stock as set forth herein) for taking any corporate action.

 

**Section 4.****                                         ****Certain Restrictions****.**

 

(A)                              Whenever quarterly dividends or otherdividends or distributions payable on the Series A Preferred Stock asprovided in Section 2 are in arrears, thereafter and until allaccrued and unpaid dividends and distributions, whether or not declared, onshares of Series A Preferred Stock outstanding shall have been paid infull, the Corporation shall not:

 

(i)                                     declare or pay dividends on or make anyother distributions on any shares of stock ranking junior (either as todividends or upon liquidation, dissolution or winding up) to the Series APreferred Stock;

 

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(ii)                                  declare or pay dividends on or make anyother distributions on any shares of stock ranking on a parity (either as todividends or upon liquidation, dissolution or winding up) with the Series APreferred Stock, except dividends paid ratably on the Series A PreferredStock and all such parity stock on which dividends are payable or in arrears inproportion to the total amounts to which the holders of all such shares arethen entitled;

 

(iii)                               redeem or purchase or otherwise acquirefor consideration shares of any stock ranking junior (either as to dividends orupon liquidation, dissolution or winding up) to the Series A PreferredStock, provided that the Corporation may at any time redeem, purchase orotherwise acquire shares of any such junior stock in exchange for shares of anystock of the Corporation ranking junior (either as to dividends or upondissolution, liquidation or winding up) to the Series A Preferred Stock;or

 

(iv)                              redeem or purchase or otherwise acquirefor consideration any shares of Series A Preferred Stock, or any shares ofstock ranking on a parity with the Series A Preferred Stock, except inaccordance with a purchase offer made in writing or by publication (asdetermined by the Board of Directors) to all holders of such shares upon suchterms as the Board of Directors, after consideration of the respective annualdividend rates and other relative rights and preferences of the respectiveseries and classes, shall determine in good faith will result in fair andequitable treatment among the respective series or classes.

 

(B)                                The Corporation shall not permit anysubsidiary of the Corporation to purchase or otherwise acquire forconsideration any shares of stock of the Corporation unless the Corporationcould, under paragraph (A) of this Section 4, purchase orotherwise acquire such shares at such time and in such manner.

 

**Section 5.****                                         ****Reacquired Shares****.**  Any shares of Series APreferred Stock purchased or otherwise acquired by the Corporation in anymanner whatsoever shall be retired and cancelled promptly after the acquisitionthereof.  All such shares shall upontheir cancellation become authorized but unissued shares of Preferred Stock andmay be reissued as part of a new series of Preferred Stock subject to theconditions and restrictions on issuance set forth herein, in the Certificate ofIncorporation, or in any other Certificate of Designations creating a series ofPreferred Stock or any similar stock or as otherwise required by law.

 

**Section 6.****                                         ****Liquidation, Dissolutionor Winding Up****.**

 

(A)                              Upon any liquidation (voluntary orotherwise), dissolution or winding up of the Corporation, no distribution shallbe made to the holders of shares of stock ranking junior (either as todividends or upon liquidation, dissolution or winding up) to the Series APreferred Stock unless, prior thereto, the holders of shares of Series APreferred Stock shall have received One Thousand Dollars ($1,000.00) per share,plus an amount equal to accrued and unpaid dividends and distributions thereon,whether or not declared, to the date of such payment (the “***Series A Liquidation Preference***”).  Following the payment of the full amount ofthe Series A Liquidation Preference, no additional distributions shall bemade to the holders of shares of Series A Preferred Stock unless, priorthereto, the holders of shares of Common Stock shall have received an amountper share equal to the quotient obtained by dividing (i) the Series A

 

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Liquidation Preference by (ii) One Thousand(1,000) (as appropriately adjusted as set forth in paragraph (C) below toreflect such events as stock splits, stock dividends and recapitalizations withrespect to the Common Stock) (such quotient, the “***Common Adjustment***” and the number in clause (ii), the “***Adjustment Number***”).  Following the payment of the full amount ofthe Series A Liquidation Preference and the Common Adjustment in respectof all outstanding shares of Series A Preferred Stock and Common Stock,respectively, holders of Series A Preferred Stock and holders of shares ofCommon Stock shall receive their ratable and proportionate share of theremaining assets to be distributed in the ratio of the Adjustment Number to One(1) with respect to such Preferred Stock and Common Stock, on a per sharebasis, respectively.

 

(B)                                If, however, there are not sufficientassets available to permit payment in full of the Series A LiquidationPreference and the liquidation preferences of all other series of PreferredStock, if any, which rank on a parity with the Series A Preferred Stock,then such remaining assets shall be distributed ratably to the holders of suchparity shares (including the Series A Preferred Stock) in proportion totheir respective liquidation preferences. If, after payment of the full Series A Liquidation Preference,there are not sufficient assets available to permit payment in full of theCommon Adjustment, then such remaining assets shall be distributed ratably tothe holders of Common Stock.

 

(C)                                If the Corporation shall at any timeafter the Record Date (i) declare any dividend on Common Stock payable inshares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combinethe outstanding Common Stock into a smaller number of shares, then in each suchcase the Adjustment Number in effect immediately prior to such event shall beadjusted by multiplying such Adjustment Number by a fraction the numerator ofwhich is the number of shares of Common Stock outstanding immediately aftersuch event and the denominator of which is the number of shares of Common Stockthat were outstanding immediately prior to such event.

 

**Section 7.****                                         ****Consolidation, Merger,Etc.**  If the Corporation shall enter into anyconsolidation, merger, combination or other transaction in which the shares ofCommon Stock are exchanged for or changed into other stock or securities, cashand/or any other property, then in any such case the shares of Series APreferred Stock shall at the same time be similarly exchanged or changed in anamount per share (subject to the provision for adjustment hereinafter setforth) equal to One Thousand (1,000) times the aggregate amount of stock,securities, cash and/or any other property (payable in kind), as the case maybe, into which or for which each share of Common Stock is changed orexchanged.  In the event the Corporationshall at any time after the Record Date declare or pay any dividend on CommonStock payable in shares of Common Stock, or effect a subdivision or combinationor consolidation of the outstanding shares of Common Stock (by reclassificationor otherwise than by payment of a dividend in shares of Common Stock) into agreater or lesser number of shares of Common Stock, then in each such case theamount set forth in the preceding sentence with respect to the exchange orchange of shares of Series A Preferred Stock shall be adjusted bymultiplying such amount by a fraction the numerator of which is the number ofshares of Common Stock outstanding immediately after such event and thedenominator of which is the number of shares of Common Stock that wereoutstanding immediately prior to such event.

 

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**Section 8.****                                         ****No Redemption****.**  The shares of Series APreferred Stock shall not be redeemable.

 

**Section 9.****                                         ****Rank**. The Series A Preferred Stock shall rank, with respect to thepayment of dividends and the distribution of assets, junior to all other seriesof the Preferred Stock, whether designated or issued before or after the dateof this Certificate of Designations, unless the terms of any such series shallprovide otherwise.

 

**Section 10.****                                  ****Fractional Shares**. The Series A Preferred Stock may be issued in fractions of a sharethat shall entitle the holder, in proportion to such holder’s fractionalshares, to exercise voting rights, receive dividends, participate indistributions and have the benefit of all other rights of holders of the Series APreferred Stock.

 

**Section 11.****                                  ****Amendment**. The Certificate of Incorporation shall not be amended in any manner thatwould materially alter or change the powers, preferences or special rights ofthe Series A Preferred Stock so as to affect them adversely without theaffirmative vote of the holders of a majority of the outstanding shares of Series APreferred Stock.

 

*[Remainder of Page Left Intentionally Blank]*

 

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IN WITNESS WHEREOF, the Corporation has caused this Certificate ofDesignations of Series A Junior Participating Preferred Stock of Iteris, Inc.to be executed this 21st day of August 2009.

 
|   | **ITERIS, INC.** |
|--------|------------------|
|   | ** **       |
|   |             |
|   | By:              | /S/ JAMES S. MIELE |
|   |             | James S. Miele |
|   |             | Chief Financial Officer  and Secretary |

 

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