Exhibit 3(i)
FEDERAL INDENTIFICATION
Examiner NO. 04-1052250
The Commonwealth of Massachusetts
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
CERTIFICATE OF VOTE OF DIRECTORS
ESTABLISHING A CLASS OR SERIES OF STOCK
(General Laws, Chapter 156B, Section 26)
We, Charles J. Housman, *President/Vice President(crossed out),
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and Malcolm D. Finks, *Clerk/Assistant Clerk(crossed out),
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of Armatron International, Inc.
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(Exact name of corporation)
located at: 2 Main Street, Melrose, MA 02176
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(Street Address of corporation in Massachusetts)
do hereby certify that by unanimous written consent of the directors of the
corporation dated April 16, 1999, the following vote establishing and
designating a class or series of stock and determining the relative rights
and preferences thereof was duly adopted:
That pursuant to the authority expressly granted to and vested in the Board
of Directors of the Corporation by the provisions of the Restated Articles
of Organization of the Corporation, the Board of Directors of the
Corporation deems it advisable to amend the Restated Articles of
Organization of the Corporation, so as to designate 6,667 shares of
Preferred Stock, $100.00 par value per share, of the Corporation as Series
A Preferred Stock (the "Series A Preferred Stock"), such Series A Preferred
Stock to have the rights preferences, powers, qualification and
restrictions substantially as set forth in the Certificate of Vote of
Directors establishing the Series A Preferred Stock attached hereto as
Exhibit A, with such changes thereto as the President of the Corporation
shall authorize and approve.
That, the appropriate officers of the Corporation be, and they hereby are,
authorized and directed to execute and file with the Secretary of State of
the Commonwealth of Massachusetts the Certificate of Vote of Directors
establishing the Series A Preferred Stock.
* Delete the inapplicable words.
Note: Votes for which the space provided above is not sufficient should be
provided on one side of separate 8 1/2 x 11 sheets of white paper,
numbered 2A, 2B, etc. with a left margin of at least 1 inch.
SIGNED UNDER THE PENALTIES OF PERJURY, this 16th day of April, 1999.
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/s/ Charles J. Housman, *President/Vice President(crossed out)
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Charles J. Housman
/s/ Malcolm D. Finks, *Clerk/Assistant Clerk(crossed out)
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Malcolm D. Finks
* Delete the inapplicable words.
THE COMMONWEALTH OF MASSACHUSETTS
CERTIFICATE OF VOTE OF DIRECTORS
ESTABLISHING A SERIES OF A CLASS OF STOCK
(General Laws, Chapter 156B, Section 26)
=============================
I hereby approve the within Certificate of Vote of Directors and, the
filing fee in the amount of $______________ having been paid,
said certificate is deemed to have been filed with me this _________
day of ___________, 19__.
Effective date:__________________________
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
Malcolm D. Finks
Bass Doherty & Finks, P.C.
40 Soldiers Field Place
Boston, MA 02135-1104
Telephone: (617) 787-5551
Exhibit A
1. Number, Designation and Rank.
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(a) This series shall consist of 6,667 preferred shares in the
Corporation and shall be designated the Series A Preferred Stock ("Series
A Preferred Stock").
(b) The Series A Preferred Stock shall, with respect to dividend
rights and rights on liquidation rank prior to all classes or series of
equity securities of the Corporation, including the Common Stock.
2. Definitions.
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For purposes of this Certificate of Vote of Directors, "Junior Shares"
shall mean all Common Stock and any other shares of capital stock of the
Corporation other than the Series A Preferred Stock.
3. Dividends Rights of Preferred.
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The holders of the Series A Preferred Stock shall be entitled to
receive, out of any assets at the time legally available therefor, dividends
per share in cash at the rate of 10% per annum multiplied by $2,000,100 (as
adjusted for any stock dividends, stock splits, recapitalizations,
consolidations or the like), payable in preference and priority to any
payment of any dividend on Junior Shares. The right to such dividends shall
be cumulative and shall accrue and compound on a daily basis, regardless of
whether the Board of Directors has declared a dividend payment or whether
there are any profits, surplus or other funds of the Corporation available
for dividends, beginning on the date this Certificate of Vote is executed
(the "Original Issuance Date"). Dividends shall be payable quarterly on the
last day of each March, June, September and December. All cash payments of
dividends with respect to the Series A Preferred Stock shall be made in such
coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts. If at any
time the Corporation pays less than the total amount of accumulated and
unpaid dividends with respect to the Series A Preferred Stock because there
exists no funds at the time legally available therefor, such payment shall be
distributed ratably among the holders of the Series A Preferred Stock based
upon the number of shares of Series A Preferred Stock held by each such
holder and any accumulated and unpaid dividends shall be payable at the end
of the next succeeding quarter in which such funds are legally available, on
the basis set forth above, after the dividends to be paid in that quarter
have been paid. No dividends shall be paid on any Junior Shares unless (i)
the stated dividend provided for in the first sentence of this Paragraph 3
shall theretofore have been declared and paid in full on all shares of Series
A Preferred Stock then outstanding, and (ii) a dividend equal to the dividend
declared on such Junior Shares is paid with respect to all outstanding shares
of Series A Preferred Stock in an amount for each such share of Series A
Preferred Stock equal to the aggregate amount of such dividends for all
Junior Shares into which each such share of Series A Preferred Stock could
then be converted.
In the event that any dividend declared pursuant to the preceding
paragraph on any shares of the Series A Preferred Stock shall remain unpaid
at the time of any conversion of such Series A Preferred Stock pursuant to
Paragraph 5 hereof, then, notwithstanding such conversion, such dividends
shall be paid by the Corporation, in cash, in full, as promptly as possible
after the effectiveness of such conversion, whenever funds are legally
available therefor.
4. Liquidation Preference.
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(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the Series A
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Junior Shares by reason of their ownership thereof, the amount
per share of (i) $300, plus (ii) all accumulated and unpaid dividends on the
Series A Preferred Stock to the date of payment of such liquidation amount
(both as adjusted for any stock dividends, stock splits, recapitalizations,
consolidations or the like). If, upon the occurrence of such event, the
assets and funds thus distributed among the holders of the Series A Preferred
Stock shall be insufficient to permit the payment to such holders of the full
preferential amount aforesaid, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock based upon the number of
shares of Series A Preferred Stock held by each such holder. After payment
has been made to the holders of the Series A Preferred Stock of the full
amounts to which they shall be entitled as aforesaid, all remaining assets
and funds of the Corporation shall be distributed in like amounts per share
on an as converted basis among the holders of the Junior Shares.
(b) For purposes of this Paragraph 4, a liquidation, dissolution or
winding up of the Corporation shall be deemed to be occasioned by, or to
include, the Corporation's sale of all or substantially all of its assets or
the acquisition of this Corporation by another entity by means of merger or
consolidation resulting in the exchange of the outstanding shares of this
Corporation for securities or consideration issued, or caused to be issued,
by the acquiring entity or its subsidiary, if the stockholders of this
Corporation hold less than 50% of the outstanding voting equity securities of
such acquiring entity or its subsidiary.
(c) In the event the Corporation shall propose to take any action of
the types described in subparagraphs (a) or (b) of this Paragraph 4, the
Corporation shall, within ten (10) days after the date the Board of Directors
approves such action, or twenty (20) days prior to any stockholders' meeting
called to approve such action, whichever is earlier, give each holder of
shares of Series A Preferred Stock initial written notice of the proposed
action. Such initial written notice shall describe the material terms and
conditions of such proposed action, including a description of the stock,
cash and property to be received by the holders of shares of Series A
Preferred Stock upon consummation of the proposed action and the date of
delivery thereof. If any material change in the facts set forth in the
initial notice shall occur, the Corporation shall promptly give written
notice to each holder of shares of Series A Preferred Stock of such material
change.
(d) The Corporation shall not consummate any proposed action of the
types described in subparagraphs (a) or (b) of this Paragraph 4 before the
expiration of thirty (30) days after the mailing of the initial notice or
twenty (20) days after the mailing of any subsequent written notice,
whichever is later; provided that any such 30-day or 20-day period may be
shortened upon the written consent of the holders of sixty-six and two-thirds
(66 2/3) of the outstanding shares of Series A Preferred Stock.
(e) In the event the Corporation shall propose to take any action of
the types described in subparagraphs (a) or (b) of this Paragraph 4 that will
involve the distribution of assets other than cash, the Board of Directors
shall make a good faith appraisal of the value of the assets to be
distributed to the holders of shares of Series A Preferred Stock. The
Corporation shall give prompt written notice to each holder of shares of
Series A Preferred Stock of such valuation. All notices pursuant to this
Paragraph 4 shall be deemed given upon personal delivery or upon deposit in a
United States Post Office by registered or certified mail.
5. Conversion.
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The holders of the Series A Preferred Stock shall have conversion
rights as follows (the "Conversion Rights"):
(a) Right to Convert and Automatic Conversion.
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(i) Each share of Series A Preferred Stock shall be convertible,
at the option of the holder thereof, at the office of the Corporation
or any transfer agent for the Series A Preferred Stock, into fully paid
and nonassessable shares of Common Stock at the Conversion Rate (as
hereinafter defined) in effect at the time of conversion. The number
of shares of Common Stock into which each share of Series A Preferred
Stock may be converted is hereinafter referred to as the "Conversion
Rate." The initial Conversion Rate shall each be 1,000, and such
Conversion Rate shall be subject to the adjustments described below.
The amount obtained by dividing $300 by the Conversion Rate shall be
called the "Conversion Price."
(ii) Each share of Series A Preferred Stock shall automatically
be converted into shares of Common Stock at the then effective
Conversion Rate in the event of (a) the conversion of 75% of all
outstanding shares of Series A Preferred Stock into Common Stock,
effective upon such conversion, or (b) the closing of a firm commitment
underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended, covering the
offer and sale of Common Stock for the account of the Corporation to
the public (other than a registration statement with respect to
employee stock option or purchase plans). In the event of such an
offering, the person(s) entitled to receive the Common Stock issuable
upon such conversion of the Series A Preferred Stock shall not be
deemed to have converted such Preferred Stock until immediately prior
to the closing of such sale of securities.
(iii) No fractional shares of Common Stock shall be issued upon
conversion of the Series A Preferred Stock. Any shares of Series A
Preferred Stock surrendered by a stockholder for conversion which would
otherwise result (after aggregation of all shares surrendered by such
stockholder for conversion) in a fractional share of Common Stock shall
be redeemed for an amount per share payable in cash equal to the
current market price of such fractional share as determined in good
faith by the Board of Directors of the Corporation, payable as promptly
as possible whenever funds are legally available therefor.
(b) Mechanics of Conversion. Before any holder of Series A Preferred
Stock shall be entitled to convert the same into shares of Common Stock, he
shall surrender the certificate or certificates therefor, duly endorsed, at
the principal office of the Corporation or of any transfer agent for the
Series A Preferred Stock, and shall give written notice to the Corporation at
such office that he elects to convert the same and shall state therein the
name or names in which he wishes the certificate or certificates for shares
of Common Stock to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred Stock, or to his nominee or nominees (i) a certificate or
certificates for the number of shares of Common Stock to which he shall be
entitled as aforesaid, plus (ii) all accumulated and unpaid dividends on the
converted Series A Preferred Stock to the date of such conversion. Except as
set forth in subparagraph 5(a)(ii) above, 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 A 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.
(c) Adjustment for Combinations or Consolidations; Reorganizations,
Reclassification, Exchange and Substitution.
(i) In the event the Corporation at any time or from time to
time after the Original Issue Date effects a subdivision or combination
of its outstanding Common Stock into a greater or lesser number of
shares without a proportionate and corresponding subdivision or
combination of its outstanding Series A Preferred Stock, then and in
each such event the Conversion Rate shall be increased or decreased
proportionately.
(ii) If the Common Stock issuable upon conversion of the Series
A Preferred Stock shall be changed into the same or a different number
of shares of any other class or classes of stock or other securities or
property, whether by reorganization (unless such reorganization is
deemed a liquidation under subparagraph 4(b) hereof), reclassification
or otherwise (other than a subdivision or combination of shares
provided for above), then the Conversion Rate 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 or other securities or property 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 such event; and, in any such case, appropriate adjustment (as
determined by the Board) shall be made in the application of the
provisions herein set forth with respect to the rights and interests
thereafter of the holders of the Series A Preferred Stock, to the end
that the provisions set forth herein (including provisions with respect
to change in and other adjustments of the Conversion Rate) 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.
(d) Adjustment for Dividends, Distributions and Common Stock
Equivalents. In the event the Corporation 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 or any series of Preferred Stock
entitled to receive a dividend or other distribution to be made only to such
holders of Common Stock or any series of Preferred Stock or any combination
of Common Stock or series of Preferred Stock, but not to all series of
Preferred Stock on a pro rata basis, payable in additional shares of Common
Stock, or other securities or rights convertible into or entitling the holder
thereof to receive additional shares of Common Stock, directly or indirectly
(hereinafter referred to as "Common Stock Equivalents"), without payment of
any consideration by such holder for such Common Stock, then and in each such
event the maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for a subsequent
adjustment of such number) of Common Stock issuable in payment of such
dividend or distribution or upon conversion or exercise of such Common Stock
Equivalents shall be deemed to be issued and outstanding 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. In each such event, the
Conversion Rate shall be increased 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 Rate by a fraction,
(i) the numerator of which shall be the sum of (x) the total
number of shares of Common Stock issued and outstanding (before
conversion of any then outstanding shares of Preferred Stock and
excluding Common Stock issuable upon exchange or conversion or exercise
of outstanding Common Stock Equivalents) immediately prior to the time
of such issuance or the close of business on such record date plus (y)
the number of shares of Common Stock issuable in payment of such
dividend or distribution or upon conversion or exercise of such Common
Stock Equivalents; and
(ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding (before conversion of any
then outstanding shares of Preferred Stock and excluding Common Stock
issuable upon exchange or conversion or exercise of outstanding Common
Stock Equivalents) immediately prior to the time of such issuance or
the close of business on such record date;
provided, however, that (A) 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 Rate computed
upon the original issuance thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based
thereon, shall be recomputed accordingly as of the close of business on
such record date, and thereafter the Conversion Rate shall be adjusted
pursuant to this Paragraph 5(d) as of the time of actual payment of
such dividends or distributions; (B) if such Common Stock Equivalents
provide, with the passage of time or otherwise, for any decrease in the
number of shares of Common Stock issuable upon conversion or exercise
thereof (or upon the occurrence of a record date with respect thereto),
the Conversion Rate computed upon the original issuance thereof (or
upon the occurrence of a record date with respect thereto) and any
subsequent adjustments based thereon, shall, upon any such decrease
becoming effective, be recomputed to reflect such decrease insofar as
it affects the rights of conversion or exercise of the Common Stock
Equivalents then outstanding; (C) upon the expiration of any rights of
conversion or exercise under any unexercised Common Stock Equivalents,
the Conversion Rate computed upon the original issuance thereof (or
upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration, be
recomputed as if the only additional shares of Common Stock issued were
the shares of such stock, if any, actually issued upon the conversion
or exercise of such Common Stock Equivalents; and (D) in the case of
Common Stock Equivalents which expire by their terms not more than
sixty (60) days after the date of issuance thereof, no adjustment in
the Conversion Rate shall be made until the expiration or exercise of
all such Common Stock Equivalents, whereupon such adjustments shall be
made in the manner provided in clause (C) above.
(e) Adjustment of Conversion Rates for Diluting Issues. The
Conversion Rate shall be subject to the following adjustment, in addition to
those set forth above. Except as otherwise provided in this subparagraph
(e), in the event the Corporation sells or issues any Common Stock or Common
Stock Equivalents at a per share consideration (as defined below) less than
the Conversion Price, then the Conversion Rate and Conversion Price then in
effect shall be adjusted as provided in subparagraphs (i), (ii) and (iii)
hereof. For the purposes of the foregoing, the per share consideration with
respect to the sale or issuance of Common Stock shall be the price per share
received by the Corporation, prior to the payment of any expenses,
commissions, discounts and other applicable costs, less the amount of any
dividend or other distribution on the Common Stock (other than in cash out of
its retained earnings, or to repurchase shares of Common Stock from employees
or consultants upon termination of employment or consultant relationship)
made since the most recent adjustment of the Conversion Rate. With respect
to the sale or issuance of Common Stock Equivalents which are convertible
into or exchangeable for Common Stock without further consideration, the per
share consideration shall be determined by dividing the maximum number of
shares of Common Stock issuable with respect to such Common Stock Equivalents
(as set forth in the instrument relating thereto without regard to any
provisions contained therein for subsequent adjustment of such number) into
the aggregate consideration received by the Corporation upon the sale or
issuance of such Common Stock Equivalents. With respect to the issuance of
other Common Stock Equivalents, the per share consideration shall be
determined by dividing the maximum number of shares of Common Stock issuable
with respect to such Common Stock Equivalents into the total aggregate
consideration received by the Corporation upon the sale or issuance of such
Common Stock Equivalents plus the minimum aggregate amount of additional
consideration receivable by the Corporation upon the conversion or exercise
of such Common Stock Equivalents. The issuance of Common Stock or Common
Stock Equivalents for no consideration shall be deemed to be an issuance at a
per share consideration of $.01. In connection with the sale or issuance of
Common Stock and/or Common Stock Equivalents for non-cash consideration, the
fair market value of such consideration shall be determined by the Board of
Directors of the Corporation.
As used herein, "Additional Shares of Common Stock" shall mean either
shares of Common Stock issued subsequent to the Original Issue Date or, with
respect to the issuance of Common Stock Equivalents, the maximum number of
shares of Common Stock issuable in exchange for, upon conversion of, or upon
exercise of such Common Stock Equivalents issued subsequent to the Original
Issue Date.
The Conversion Price and Conversion Rate shall be determined and
adjusted once only with respect to any single offering of the Corporation's
securities for financing purposes, provided that all closings with respect to
any such offering occur within a period of no more than 120 days and,
provided further, that an appropriate adjustment shall be made for the
benefit of any holder of Series A Preferred Stock who converts the Series A
Preferred Stock into Common Stock during such 120 day period.
(i) Upon each issuance of Additional Shares of Common Stock for
a per share consideration less than the Conversion Price in effect on
the date of such issuance, the Conversion Rate in effect on the date of
the issuance of Additional Shares of Common Stock will be adjusted by
multiplying it by a fraction the numerator of which is the Conversion
Price as then in effect and the denominator of which is the per share
consideration received by the Corporation for such Additional Shares of
Common Stock.
(ii) Upon each issuance of Common Stock Equivalents exchangeable
without further consideration into Common Stock for a per share
consideration less than a Conversion Price in effect on the date of
such issuance, the Conversion Rate in effect on such date will be
adjusted as in subparagraph (i) above on the basis that the related
Additional Shares of Common Stock are to be treated as having been
issued on the date of issuance of the Common Stock Equivalents, and the
aggregate consideration received by the Corporation for such Common
Stock Equivalents shall be deemed to have been received for such
Additional Shares of Common Stock.
(iii) Upon each issuance of Common Stock Equivalents other than
those described in subparagraph (ii) above, for a per share
consideration less than the Conversion Price in effect on the date of
such issuance, the Conversion Rate in effect on such date will be
adjusted as in subparagraph (i) above on the basis that the related
Additional Shares of Common Stock are to be treated as having been
issued on the date of issuance of such Common Stock Equivalents, and
the aggregate consideration received and the minimum amount receivable
by the Corporation on conversion or exercise of such Common Stock
Equivalents shall be deemed to have been received for such Additional
Shares.
(iv) Once any Additional Shares of Common Stock have been
treated as having been issued for the purpose of this subparagraph
5(e), they shall be treated as issued and outstanding shares of Common
Stock whenever any subsequent calculations must be made pursuant
hereto; provided that on the expiration of any options, warrants or
rights to purchase Additional Shares of Common Stock or the termination
of any rights to convert or exchange for Additional Shares of Common
Stock on account of which an adjustment in the Conversion Rate has been
made previously pursuant to this subparagraph 5(e), such Conversion
Rate shall forthwith be readjusted to such Conversion Rate as would
have been obtained had the adjustment made upon the issuance of such
options, warrants, rights, or convertible or exchangeable securities
been made upon the basis of the issuance of only the number of shares
of Common Stock actually issued upon the exercise of such options,
warrants or rights, or upon the conversion or exchange of such
securities.
(v) The foregoing notwithstanding, no adjustment of the
Conversion Rate or Conversion Price shall be made as a result of the
issuance of:
-- any shares of Common Stock (or any options, warrants or
rights to purchase such shares of Common Stock) issued or
issuable to employees, officers, directors or consultants of the
Corporation with the approval of the Board of Directors of the
Corporation pursuant to any stock option plan, stock incentive or
purchase plan or agreement approved by the Board of Directors of
the Corporation;
-- any shares of Common Stock pursuant to which any Conversion
Rate or Conversion Price is adjusted under subparagraphs (c) or
(d) of this Paragraph 5;
-- any shares of Common Stock issued pursuant to the exchange,
conversion, or exercise of any Common Stock Equivalents according
to their terms which have previously been incorporated into
computations hereunder on the date when such Common Stock
Equivalents were issued; or
-- any shares of Common Stock issued upon conversion of the
Series A Preferred Stock.
(f) No Adjustment. No adjustment in the Conversion Rate or Conversion
Price need be made if such adjustment would result in a change in the
Conversion Price of less than $.01. Any adjustment of less than $.01 which is
not made shall be carried forward and shall be made at the time of and
together with any subsequent adjustment which, on a cumulative basis, amounts
to an adjustment of $.01 or more in the Conversion Price.
(g) No Impairment. The Corporation will not, by amendment of its
Articles of Organization or through any reorganization, 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 to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the
provisions of this Paragraph 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 Stock against impairment.
(h) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this Paragraph
5, the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Series A 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 A Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (i)
such adjustments and readjustments, (ii) the Conversion Rate 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 the Series A Preferred Stock.
(i) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of (i) determining the holders thereof who are entitled to receive
any dividend (other than a cash dividend) or other distribution, any Common
Stock Equivalents or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or property,
or to receive any other right, (ii) effecting any reclassification or
recapitalization of its shares of Common Stock outstanding involving a change
in the shares of Common Stock, or (iii) merging or consolidating with or
into any other corporation, or selling, leasing or conveying all or
substantially all its property or business, or liquidating, dissolving or
winding up, the Corporation shall mail to each holder of Series A Preferred
Stock at least twenty (20) 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, right, reclassification, recapitalization,
consolidation, sale, lease, conveyance, liquidation, dissolution or winding
up, and the amount and character of such dividend, distribution, right,
reclassification, recapitalization, consolidation, sale, lease, conveyance,
liquidation, dissolution or winding up. Failure to give such notice shall not
in any way affect the legality of such transaction.
(j) Reservation of Stock Issuance Upon Conversion. The Corporation
shall at all times reserve and keep available, free from preemptive rights,
3,393,500 shares out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of the shares of Series A
Preferred Stock. The Corporation shall, prior to the date of conversion of
the Series A Preferred Stock as set forth in this Paragraph 5, take such
corporate action as may be necessary to increase its number of authorized but
unissued shares of Common Stock to such number of its 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.
(k) Notices. Any notice required by the provisions of this Paragraph
5 to be given to the holders of shares of Series A Preferred Stock shall be
deemed given if deposited in the United States mail, first class, postage
prepaid, and addressed to each holder of record at his address appearing on
the books of the Corporation.
(l) No Reissuance of Preferred Stock. No share or shares of Preferred
Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
cancelled, retired and eliminated from the shares which the Corporation shall
be authorized to issue.
(m) Validity of Shares. The Corporation agrees that it will from time
to time take all such actions as may be requisite to assure that all shares
of Common Stock which may be issued upon conversion of any of the Series A
Preferred Stock will, upon issuance, be legally and validly issued, fully
paid and non-assessable and free from all taxes, liens and charges with
respect to the issue thereof; and, without limiting the generality of the
foregoing, the Corporation agrees that it will from time to time take all
such action as may be requisite to assure that the par value per share, if
any, of the Common Stock is at all times equal to or less than the then
current par value of the Series A Preferred Stock divided by the number of
shares of Common Stock into which each share of the Series A Preferred Stock
can, from time to time, be converted.
(n) Taxes. The Corporation will pay all taxes and other governmental
charges that may be imposed in respect of the issue or delivery of shares of
Common Stock upon conversion of the Series A Preferred Stock.
(o) Good Faith. If any event occurs as to which in the reasonable
opinion of the Board of Directors of the Corporation, in good faith, the
other provisions of this Paragraph 5 are not strictly applicable but the lack
of any adjustment in the Conversion Price would not, in the opinion of the
Board of Directors of the Corporation, fairly protect the conversion rights
of the holders of the Series A Preferred Stock in accordance with the basic
intent and principles of such provisions, or if strictly applicable would not
fairly protect the conversion rights of the holders of the Series A Preferred
Stock in accordance with the basic intent and principles of such provisions,
then the Board of Directors shall appoint a firm of independent certified
public accountants (which may be the regular auditors of the Corporation) of
recognized national standing, which shall give their opinion upon the
adjustment, if any, to the Conversion Price, on a basis consistent with the
basic intent and principles of this Paragraph 5, necessary to preserve,
without dilution, the exercise rights of all the registered holders of the
Series A Preferred Stock. Upon receipt of such opinion, the Board of
Directors shall forthwith make the adjustments described therein.
6. Voting Rights. Except as otherwise required by law or the
Corporation's Articles of Organization, each share of Series A Preferred
Stock issued and outstanding shall have the number of votes equal to the
number of shares of Common Stock into which such shares of Series A Preferred
Stock could be converted on the record date for the vote or consent of
stockholders were sufficient shares of Common Stock available for conversion
and shall have voting rights and powers equal to the voting rights and powers
of the Common Stock. The holder of each share of Series A Preferred Stock
shall be entitled to notice of any stockholders' meeting in accordance with
the bylaws of the Corporation. The holders of the Series A Preferred Stock
shall vote with holders of the Common Stock upon any other matters submitted
to a vote of stockholders, except those matters required by law or the
Corporation's Articles of Organization, to be submitted to a class vote.
7. Covenants.
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(a) In addition to any other rights provided by law, so long as shares
of Series A Preferred Stock shall be outstanding, the Corporation shall not,
without first obtaining the affirmative vote or written consent of the
holders of 66 2/3 of such outstanding shares of Series A Preferred Stock,
amend or repeal any provision of, or add any provision to, the Corporation's
Articles of Organization, or bylaws if such action would alter or change the
preferences, rights, privileges or powers of, or the restrictions provided
for the benefit of, the Series A Preferred Stock.
Further, so long as any Series A Preferred Stock shall be outstanding,
the Corporation shall not without first obtaining the affirmative vote or
written consent of the holders of 66 2/3 of such outstanding shares of Series
A Preferred Stock, voting as a single class:
(i) Increase or decrease the number of shares of Series A
Preferred Stock authorized hereby;
(ii) Authorize or issue shares of any class or series of stock
having any rights, preferences or privileges superior to or on a parity
with the Series A Preferred Stock or authorize or issue shares of stock
of any class or any bonds, debentures, notes or other obligations
convertible into or exchangeable for, or having option rights to
purchase, any shares of stock of the Corporation having any rights,
preferences or privileges superior to or on a parity with the Series A
Preferred Stock;
(iii) Reclassify any outstanding shares into shares having any
rights, preferences or privileges superior to or on a parity with the
Series A Preferred Stock;
(iv) Pay or declare any dividends on any Junior Stock, except
for dividends payable on the Common Stock solely in the form of
additional shares of Common Stock;
(v) Repurchase, acquire or retire any shares of Preferred Stock
or Junior Shares, except in a consolidation or merger pursuant to
subsection (vi) below or from employees, directors or consultants of
this Corporation upon termination pursuant to terms of agreements
entered into with such persons approved by the Board of Directors of
the Corporation and providing for repurchase of such shares at cost; or
(vi) Undertake or effect any liquidation of the Corporation or
any consolidation or merger of the Corporation with or into another
corporation or the sale, transfer or conveyance of all or substantially
all of the assets of the Corporation to another person or persons in
any transaction or series of transactions, if the stockholders of this
Corporation hold less than 50% of the outstanding voting equity
securities of the successor or surviving corporation in such merger,
consolidation, sale or conveyance of assets.
(b) The obligations set forth in this Paragraph 7 may be amended or
waived only by holders of at least 66 2/3% of the outstanding shares of the
Series A Preferred Stock.