Document:

exv10w1

 

Exhibit 10.1

SUMMARY OF DIRECTOR COMPENSATION

(Effective April 1, 2007)

     Effective April 1, 2007, non-employee directors of Cardiogenesis Corporation are entitled to
receive the following compensation for their service on the Board and committees of the Board:

     1. Each non-employee director will receive an annual retainer of $12,000 (payable quarterly)
and a per meeting fee of $2,500 for each regularly scheduled quarterly meeting of the Board of
Directors attended in person by such director as well as reimbursement for travel expenses
associated with attendance at any such meeting.

     2. In addition, the chairmen of the Company’s Audit Committee, Compensation Committee, and
Corporate Governance Committee will receive an additional annual retainer of $5,000, $2,500 and
$2,000 per year (payable quarterly). Members of the Audit Committee other than the chairman will
receive an additional annual retainer of $2,500 (payable quarterly).

     3. Each member of the Company’s Audit Committee, Compensation Committee and Corporate
Governance Committee will receive a per meeting fee of $1,000 for each regularly scheduled separate
meeting of such Committee attended by such person or telephonically.

     4. Pursuant to the terms of the Company’s 1996 Director Stock Option Plan, as currently in
effect, each non-employee director of the Company receives an option to purchase 22,500 shares of
Common Stock upon his election to the Board of Directors and subsequent option grants of 7,500
shares upon his re-election each year (provided that such re-election is at least six months after
the date of initial election to the Board of Directors). The exercise price is 100% of the closing
price of the Company’s common stock on the date prior to the grant date. Initial option grants vest
as to one-third of the shares on each yearly anniversary of the grant date until fully vested.
Subsequent option grants vest in full on the first anniversary of the date of grant. If the
non-employee director ceases to serve as a director for any reason, vesting shall cease as of the
date of such termination and shall be exercisable for 60 days following termination except in the
case of death or disability in which case the option shall be exercisable for a period of 12 months
following termination as a director.exv4w9

 

Exhibit 4.9

CERTIFICATE OF DESIGNATION

OF

SERIES J CONVERTIBLE PREFERRED STOCK

OF

DIGITAL RECORDERS, INC.

Digital Recorders, Inc., a corporation organized and existing under the Business Corporation Act of
the State of North Carolina (hereinafter called the “Corporation”), hereby certifies that the
following resolution was adopted by the Board of Directors of the Corporation as required by
Section 55-6-02 of the Business Corporation Act at a meeting duly called and held on June 11, 2007.

RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this
Corporation (hereinafter called the “Board of Directors” or the “Board”) in accordance with the
provisions of the Articles of Incorporation of the Corporation (“Articles of Incorporation”), the
Board of Directors hereby certifies in their entirety the terms and provisions of the Series J
Convertible Preferred Stock, par value $.10 per share (the “Preferred Stock”), shall have the
designation and number of shares, and the relative rights, preferences, and limitations thereof as
follows:

	 	 	 
	Section 1.

	 	Designation and Amount. The shares of this series shall be
designated as “Series J Convertible Preferred Stock” (the
“Series J Preferred Stock”) and the number of shares
constituting the Series J Preferred Stock shall be 250 shares.
Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no
decrease shall reduce the number of shares of Series J
Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance
upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the
Corporation convertible into Series J Preferred Stock.
	 
	 	 
	Section 2.

	 	Dividends and Distributions.

     (a) The holders of shares of Series J Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, consistent with
applicable law and out of funds legally available therefor, dividends during the
period commencing on June 17, 2007 (the “Commencement Date”) and continuing for as
long as any of the shares of Series J Preferred Stock remain outstanding. Dividends
shall accrue quarterly at the rate of eight percent (8%) per annum on the
Liquidation Preference (as hereinafter defined), shall compound quarterly, and shall
be paid on June 17, September 17, December 17 and March 17 of each year (each, a
“Payment Date”) (except that if any such date is a Saturday, Sunday or legal
holiday, then such dividend shall be payable on the next day that is not a Saturday,
Sunday or legal holiday); provided, however, that the first payment of dividends
following the Commencement Date shall be made on June 17, 2007. Each such dividend
shall be payable in arrears to the holders of record of shares of Series J Preferred
Stock, as they appear on the stock records of the Corporation, at the close of
business on the date that is fifteen (15) days

1

 

preceding the Payment Date thereof, provided, however, that the Board of
Directors may fix a different record date for any dividend payment, which date shall
be not less than ten (10) days nor more than sixty (60) days preceding the Payment
Date thereof. Dividends on shares of Series J Preferred Stock shall accrue (whether
or not declared) on a daily basis from and including the Commencement Date. Accrued
dividends for each Dividend Period (as hereinafter defined) shall be cumulative
(whether or not such dividends are declared) and shall compound on each Payment
Date. Such dividends shall accumulate to the extent not paid on the Payment Date
occurring on the last day of the Dividend Period for which they accrue, and any such
accrued and unpaid dividends for any past Dividend Period may be declared and paid
at any time, without reference to any regular Payment Date, to holders of record on
such date, not more than forty-five (45) days preceding the Payment Date thereof, as
may be fixed by the Board of Directors. For purposes of this Section 2, a “Dividend
Period” shall mean a quarterly dividend period commencing on the calendar day
immediately following the Commencement Date and immediately following each
subsequent Payment Date and ending on and including the next following Payment Date.
The Series J Preferred Stock shall rank pari passu with the Series G and H
Convertible Preferred Stock (the “Series G Preferred Stock”, the “Series H Preferred
Stock” and together with the Series J Preferred Stock, collectively, the “Pari Passu
Stock”) and prior and superior to the Series AAA Preferred Stock and the Series E
Redeemable Nonvoting Convertible Preferred Stock (“Series E Preferred Stock”) and
the common stock, par value $0.10 per share (the “Common Stock” and together with
the Series AAA and E Preferred Stock and any other class or series of stock ranking
junior to the Preferred Stock (as defined below) with respect to dividends and
payments upon liquidation, dissolution and winding up are referred to, collectively,
as the “Junior Stock”), of the Corporation with respect to the payment of dividends.
In the event any new shares of Series J Preferred Stock are issued during any
Dividend Period or any shares of Series J Preferred Stock are redeemed by the
Corporation or converted during any Dividend Period, the accrued dividends shall be
prorated in proportion to the number of days during that Dividend Period during
which such shares were outstanding. All accrued but unpaid dividends shall be paid
upon redemption or conversion of the shares of Series J Preferred Stock.

     (b) Such dividends shall be payable in cash or additional shares of Series J
Preferred Stock, at the Series J Preferred Stock holder’s option, which shall be
designated in writing on an annual basis. In the event that any payment of
dividends would require shareholder approval under the NASDAQ listing requirements,
the Corporation agrees to seek such approval, together with approval of all future
issuances of Series J Preferred Stock payable as dividends on the outstanding shares
of Series J Preferred Stock (if legally permissible), at the next regularly
scheduled meeting of shareholders after it has been determined that shareholder
approval would be required for the issuance of any shares as dividends on the next
scheduled Payment Date, if such shareholder approval shall not have previously been
sought. Dividends shall be paid in cash out of funds legally available therefor on
any Payment Date(s) that may arise between the date

2

 

of such determination and the meeting of shareholders at which the shareholders
vote on such authorization, the Series J Preferred Stock holder agreeing to recuse
itself from this vote. In the event the shareholders reject such authorization,
such dividends will be paid in shares of Series J Preferred Stock to the maximum
extent that they may be so paid without violating the limitations set forth in the
second sentence of this paragraph (b), and thereafter, such dividends shall be paid
in cash out of funds legally available therefor, commencing on the next Payment
Date.

     (c) The number of shares of Series J Preferred Stock (or fraction thereof)
issuable on each whole or fractional share of Series J Preferred Stock on each
Payment Date shall be equal to the quotient (rounded to four decimal places)
obtained by dividing (i) the dollar value of the dividend to be paid thereon by (ii)
the Liquidation Preference thereof.

	 	 	 
	Section 3.

	 	Voting Rights. In addition to any voting rights provided by
law, the holders of Series J Preferred Stock shall be entitled
to vote with the holders of Common Stock, voting together as a
single class, on any matters on which holders of Common Stock
are entitled to vote, and the holder of each outstanding whole
or fractional share of Series J Preferred Stock shall be
entitled to a number of votes equal to the quotient obtained by
dividing the Liquidation Preference thereof by $2.26.
Fractional votes shall not, however, be permitted and any
fractional voting rights resulting from the above formula
(after aggregating all whole and fractional shares of Series J
Preferred Stock held by each holder) shall be adjusted downward
to the nearest whole number.
	 
	 	 
	Section 4.

	 	Liquidation.

     (a) The liquidation preference for the Series J Preferred Stock (the
“Liquidation Preference”) shall equal Five Thousand Dollars ($5,000.00) per share.
The Series J Preferred Stock shall be pari passu with the Pari Passu Stock
(collectively with the Series J Preferred Stock, the “Preferred Stock”) and rank
prior and superior to the Series AAA and E Preferred Stock and the Common Stock with
respect to payments upon liquidation, dissolution and winding up. The Series AAA
and E Preferred Stock, the Common Stock and any other class or series of stock
ranking junior to the Preferred Stock with respect to payments upon liquidation,
dissolution and winding up are referred to collectively herein as “Junior Stock.”

     (b) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary (collectively, a “Liquidating Event”),
the Corporation shall pay or make adequate provision for the payment of all
indebtedness and other obligations of the Corporation. Thereafter, the remaining
assets of the Corporation shall be used to pay, prior to any distribution of any of
the assets of the Corporation to the holders of Junior Stock by reason of the
ownership thereof, an amount equal to the Liquidation Preference per share of the

3

 

Preferred Stock, plus an amount equal to accrued and unpaid dividends on such shares, if any.

     (c) After all such Liquidation Preferences shall have been paid in full to each
holder of Preferred Stock (including accrued but unpaid dividends), each holder of
Junior Stock other than Common Stock shall be entitled to be paid from the remaining
assets of the Corporation such amounts, if any, to which such holder may be entitled
under any other provision of these Articles of Incorporation prior to any
distribution of any of the assets of the Corporation to the holders of Common Stock.

     (d) Any assets of the Corporation remaining after the payments specified in
paragraphs (b) and (c) above shall be distributed pro rata with respect to the
outstanding shares of Common Stock.

     (e) If upon any Liquidating Event, the assets of the Corporation shall be
insufficient to pay all the holders of any class or series of capital stock the full
amount to which they are entitled pursuant to this Section 4, then the following
rules shall apply: (i) each holder of shares of the class or series shall be paid
his pro rata share, which shall equal the product determined by multiplying the
aggregate amount to be paid to all holders of that class or series by a fraction (x)
whose numerator equals the number of shares of that class or series owned by the
shareholder, and (y) whose denominator equals the number of issued and outstanding shares of that class or series, and (ii) in any case in which the owner of two or
more series or classes of capital stock shall have equal priority to any
distribution, each holder shall be paid his pro rata share, which shall equal the
product determined by multiplying the aggregate amount available for payment to all
holders of the series or classes with equal priority, by a fraction (x) whose
numerator equals the amount such shareholder would receive if the Corporation had
adequate funds to pay the Liquidation Preferences of the shares of the series or
classes having equal priorities owned by the shareholder, and (y) whose denominator
equals the aggregate Liquidation Preferences of all issued and outstanding shares of
the series or classes having equal priorities.

     (f) For the purposes of this Section 4, any merger or consolidation of the
Corporation into or with any other corporation or entity, or a sale, conveyance,
mortgage, transfer, license, pledge, lease or other disposition of all or
substantially all of the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation unless (i) the
shareholders of the Corporation immediately prior thereto shall, immediately
thereafter, hold as a group the right to cast at least a majority of the votes of
all holders of voting securities of the resulting or surviving corporation or entity
on any matter on which any such holders of voting securities shall be entitled to
vote; or (ii) the holders of Series J Preferred Stock shall determine, by vote of
the holders of a majority of the outstanding shares of such series, voting as a
separate class, that it shall not be so deemed.

4

 

     (g) For purposes of this Section 4, if any asset distributed to shareholders
upon liquidation of the Corporation consists of property other than cash, the amount
of such distribution shall be deemed to be the fair market value thereof at the time
of such distribution, as determined in good faith by the Board of Directors of the
Corporation.

     (h) Written notice of any Liquidating Event stating a payment date, the place
where such payment shall be made, the amount of each payment in liquidation and the
amount of accrued dividends to be paid, shall be given by first class mail, postage
prepaid, not less than ten (10) days prior to the payment date stated therein, to
each shareholder of record (whether or not the shareholder is to receive any
payment) at such shareholder’s address as shown in the records of the Corporation.

	 	 	 
	Section 5.

	 	Redemption.

     (a) The holders of the Series J Preferred Stock shall not have the right to
cause the Corporation to redeem shares of their Series J Preferred Stock at any
time.

     (b) The Corporation shall have the right, but not the obligation, exercisable
at any time and from time to time, to redeem all or any portion of the outstanding shares of Series J Preferred Stock. All redemptions of less than all outstanding shares of Series J Preferred Stock shall be effected on a pro rata basis.

     (c) The redemption price to be paid by the Corporation for any shares of Series
J Preferred Stock shall equal the Liquidation Preference for those shares, plus an
amount equal to the cash value of all accrued but unpaid dividends thereon. Upon
payment of such redemption price, the Corporation shall have no further obligation
with respect to payment of accrued and unpaid dividends with respect to the shares
so redeemed.

     (d) At least thirty (30) days prior to any redemption, the Corporation will
provide to the holders of shares to be redeemed written notice (the “Redemption
Notice”) of the number of shares to be redeemed (the “Redemption Shares”), the
redemption price and the redemption date (the “Redemption Date”). Such notice shall
be sent to the address for each holder of Series J Preferred Stock on the records of
the Corporation. Upon receipt of any Redemption Notice, holders of Series J
Preferred Stock shall send to the Corporation stock certificate(s) duly endorsed for
transfer representing the Redemption Shares as provided in the Redemption Notice for
receipt by the Corporation on or before the Redemption Date. Upon receipt of stock
certificate(s) representing the Redemption Shares endorsed as provided above (but
not prior to the Redemption Date), the Corporation will send to the holders of the
Redemption Shares payment of the redemption price as stated in the Redemption
Notice, and if not all the shares represented by the stock certificate(s) provided
to the Corporation are to be

5

 

redeemed, stock certificate(s) representing the shares that have not been
redeemed.

     The Corporation shall have no obligation to make any payment for Redemption
Shares until the owner of the Redemption Shares complies in full with the procedures
set forth above. Notwithstanding failure by any shareholder to comply with the
procedures set forth in the preceding paragraph and the consequent failure by the
Corporation to pay the redemption price for the Redemption Shares, the Redemption
Shares shall, from and after the Redemption Date stated in the Redemption Notice,
cease to be issued and outstanding shares of capital stock of the Corporation and
the former owner shall not be entitled to vote, receive dividends or exercise any
other rights of a shareholder on account of the Redemption Shares. From and after
the Redemption Date the sole obligation of the Corporation on account of the
Redemption Shares shall be to pay the redemption price stated in the Redemption
Notice, together with interest at the rate equal to the dividend rate in effect on
the Redemption Date in the event of late payment.

     (e) Holders of outstanding shares of Series J Preferred Stock shall have the
right to convert such shares into shares of Common Stock in accordance with Section
6 hereof at any time before the close of business on the fifth Business Day
preceding the Redemption Date specified for such shares. Without limiting any
rights of the Corporation, the Corporation may reduce the number of shares that it
has elected to redeem as specified in a Redemption Notice by a number equivalent to
the number of shares of Series J Preferred Stock converted into Common Stock during
the period beginning on the date of the Redemption Notice and ending on the
Redemption Date.

     (f) All shares of the Series J Preferred Stock that shall have been redeemed as
herein provided shall no longer be deemed to be outstanding. Any shares of Series J
Preferred Stock so redeemed shall be retired and canceled and shall not be reissued,
and the Corporation may from time to time take such appropriate action as may be
necessary to reduce the authorized Series J Preferred Stock accordingly.

	 	 	 
	Section 6.

	 	Conversion of Series J Preferred Stock. Each holder of shares of Series J
Preferred Stock shall have the right to convert all or any portion of such shares as such
holder desires to convert, and in certain circumstances such shares shall be automatically
converted, into shares of the Common Stock of the Corporation, as follows:

     (a) Optional Conversion. Subject to and in compliance with the
provisions of this Section 6, any or all shares of Series J Preferred Stock, at the
option of the holder, may be converted at any time or from time to time prior to the
fifth Business Day preceding any Redemption Date established for such shares, if
any, into a number of fully paid and nonassessable shares (calculated as to each
conversion to the largest whole share) of Common Stock determined by

6

 

multiplying the number of whole and fractional shares of Series J Preferred
Stock to be converted by a fraction, the numerator of which is the Liquidation
Preference of a share of Series J Preferred Stock, plus an amount equal to accrued
and unpaid dividends on such shares, if any, and the denominator of which is the
conversion price then in effect for the Series J Preferred Stock (the “Conversion
Price”). Initially, the Conversion Price is $2.26 per share; provided, however,
that the Conversion Price shall be subject to adjustment in accordance with the
provisions in Section 6(d) below.

     (b) Automatic Conversion. The outstanding shares of Series J Preferred
Stock shall automatically convert to shares of Common Stock in the circumstances
described in the following subparagraph, as follows:

If the closing bid price for the Common Stock on The Nasdaq Stock Market (or
other exchange or market on which the Common Stock may from time to time be
traded) for any period of twenty (20) consecutive trading days exceeds
$4.52, then all outstanding shares of Series J Preferred Stock shall
automatically convert, at the close of the market on the last trading day in
such period, into a number of fully paid and nonassessable shares
(calculated to the largest whole share) of Common Stock determined by
multiplying the number of shares of Series J Preferred Stock then
outstanding by a fraction, the numerator of which is the Liquidation
Preference of a share of Series J Preferred Stock, plus an amount equal to
accrued and unpaid dividends on such shares, if any, and the denominator of
which is the then applicable Conversion Price, provided that the resale of
the shares issuable upon conversion shall have been registered or shall be
subject to available exemption under applicable security laws.

     (c) Mechanics of Conversion. Before any holder of Series J Preferred
Stock shall be entitled to convert the same into full shares of Common Stock, unless
the conversion is an automatic conversion, the holder shall surrender the
certificate or certificates therefor, duly endorsed for transfer, at the office of
the Corporation or any transfer agent of the Corporation and shall give written
notice to the Corporation at such office that he elects to convert the same, such
notice to state the name or names and addresses to which certificates for Common
Stock will be issued. No fractional shares of Common Stock shall be issued upon
conversion of Series J Preferred Stock. In lieu of any fractional shares to which
the holder would otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the then-effective Conversion Price. The Corporation shall,
as soon as practicable thereafter, issue and deliver at such office to such holder
of Series J Preferred Stock, or to a third party such holder may designate in
writing, a certificate or certificates for the number of whole shares of Common
Stock to which he shall be entitled and a check payable to the holder in the amount
of any cash amounts payable in lieu of fractional shares as aforesaid, and if less
than all the shares of Series J Preferred Stock represented by such certificates are
converted, a certificate representing the shares of Series J

7

 

Preferred Stock not converted. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of the shares of Series J Preferred Stock 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 or holders of such shares of Common
Stock on such date.

     (d) Adjustments to Conversion Price.

(i) Adjustments for Subdivisions, Common Stock Dividends,
Combinations or Consolidations of Common Stock. In the event the
outstanding shares of Common Stock shall be subdivided or increased
by stock split or stock dividend, into a greater number of shares of
Common Stock, the Conversion Price then in effect shall concurrently
with the effectiveness of such subdivision or payment of such stock
dividend, be proportionately decreased. In the event the outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of
Common Stock, the Conversion Price then in effect shall concurrently
with the effectiveness of such combination or consolidation, be
proportionately increased.

(ii) Adjustments for Reclassification, Exchange and
Substitution. If the Common Stock issuable upon conversion of
the Series J Preferred Stock shall be changed into the same or a
different number of shares of any other class or classes of stock,
whether by capital reorganization, reclassification or otherwise
(other than a subdivision or combination of shares provided for
above), the Series J Preferred Stock shall thereafter be convertible
into, in lieu of the 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 that would have been obtainable in
exchange for the shares of Common Stock that were issuable upon
conversion of the Series J Preferred Stock immediately before that
change.

     (e) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 6, the
Corporation at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and furnish to each holder of Series J Preferred
Stock a certificate setting forth such adjustment or readjustment in accordance with
the terms hereof and furnish to each holder of Series J Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in detail the
facts upon which such adjustment or readjustment is based. The Corporation shall,
upon the written request at any time of any holder of Series J Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting forth (i)
such adjustments and readjustments, (ii) the Conversion

8

 

Price at the time in effect 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 Series J Preferred Stock.

     (f) No Impairment. The Corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution or issuance or sale of securities or any other
voluntary action (other than actions taken in good faith), avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in carrying out all the
provisions of this Section 6 and in taking all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the Series J
Preferred Stock against impairment.

     (g) Reservation of Stock. The Corporation shall, at all times when any shares of the Series J Preferred Stock shall be outstanding, reserve and keep
available out of its authorized but unissued stock, (i) for the purpose of effecting
the conversion of the Series J Preferred Stock pursuant to Section 6, 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 Series J Preferred Stock and (ii) for
the purpose of paying accrued dividends in the form of shares of Series J Preferred
Stock, such number of its duly authorized shares of Series J Preferred Stock as
shall from time to time be sufficient to pay such dividends.

     (h) Cancellation of Series J Preferred Stock. All shares of the Series
J Preferred Stock that shall have been surrendered for conversion as herein provided
shall no longer be deemed to be outstanding. Any shares of the Series J Preferred
Stock so converted shall be retired and canceled and shall not be reissued, and the
Corporation may from time to time take such appropriate action as may be necessary
to reduce the authorized shares of Series J Preferred Stock accordingly.

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}]]