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EXHIBIT 3.1(c)
CERTIFICATE OF DESIGNATION
OF THE VOTING POWERS, DESIGNATION,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF THE
SERIES B PREFERRED STOCK
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Pursuant to Section 151 of the
General Corporation Law of
the State of Delaware
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I, Bart C. Shuldman, President and Chief Executive Officer of TransAct
Technologies Incorporated, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), DO HEREBY
CERTIFY:
that, pursuant to authority conferred upon the Board of Directors of
the Corporation by its Certificate of Incorporation (the "Certificate"), and,
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, said Board of Directors, at duly called meetings held on
March 3, 2000 and March 17, 2000, respectively, at each of which a quorum was
present and acted throughout, adopted the following resolutions, which
resolutions remain in full force and effect on the date hereof creating a series
of 8,000 shares of Preferred Stock having a par value of $.01 per share,
designated as Series B Preferred Stock (the "Series B Preferred") out of the
class of 5,000,000 shares of preferred stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the Certificate, the Board of
Directors does hereby create, authorize and provide for the issuance of the
Series of Preferred Stock having the voting powers, designation, relative,
participating, optional and other special rights, preferences, and
qualifications, limitations and restrictions thereof that are set forth as
follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series B Preferred Stock" and the initial number of
shares constituting such series shall be 8,000.
Section 2. Dividends.
2A. General Obligation. When and as declared by the
Corporation's Board of Directors and to the extent permitted under the General
Corporation Law of Delaware, the
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Corporation shall pay preferential dividends, quarterly in cash, to the holders
of the Series B Preferred as provided in this Section 2. Except as otherwise
provided herein, dividends on each share of the Series B Preferred (a "Share")
shall accrue, whether or not declared or paid, on a daily basis at the rate of
7% per annum of the sum of the Stated Value thereof plus all accumulated and
unpaid dividends thereon from and including the date of issuance of such Share
to and including the first to occur of (i) the date on which the Liquidation
Preference Price of such Share (plus all accrued and unpaid dividends thereon)
is paid to the holder thereof in connection with the liquidation of the
Corporation or the redemption of such Share by the Corporation, (ii) the date on
which such Share is converted into shares of Conversion Stock hereunder or (iii)
the date on which such Share is otherwise acquired by the Corporation. Such
dividends shall accrue whether or not they have been declared and whether or not
there are profits, surplus or other funds of the Corporation legally available
for the payment of dividends, and such dividends shall be cumulative such that
all accrued and unpaid dividends shall be fully paid before any dividends,
distributions, redemptions or other payments may be made with respect to any
Junior Securities. The date on which the Corporation initially issues any Share
shall be deemed to be its "date of issuance" regardless of the number of times
transfer of such Share is made on the stock records maintained by or for the
Corporation and regardless of the number of certificates which may be issued to
evidence such Share.
2B. Dividend Payment Dates. Dividends shall accrue on the
Series B Preferred Stock from and after the date of issuance thereof and shall
be payable on January 1, April 1, July 1 and October 1 of each year, beginning
(on a prorated basis) on April 1, 2000 (the "Dividend Payment Dates"); provided,
however, that incremental dividends over and above the rate of 7% per annum
payable pursuant to clause (i) of Paragraph 10B hereof need not be paid on the
Dividend Payment Dates and shall accrue until otherwise payable pursuant to the
terms hereof.
2C. Distribution of Partial Dividend Payments. Except as
otherwise provided herein, if at any time the Corporation pays less than the
total amount of dividends then accrued with respect to the Series B Preferred,
such payment shall be distributed pro rata among the holders thereof based upon
the aggregate accrued but unpaid dividends on the Shares held by each such
holder.
2D. Payment of Dividends with Shares. Notwithstanding any
other provision of this Section 2, in the sole discretion of the Corporation,
any dividends accruing on the Series B Preferred may be paid in lieu of cash
dividends by the issuance of additional Shares of Series B Preferred (including
fractional Shares) having an aggregate Stated Value at the time of such payment
equal to the amount of the dividend to be paid; provided that if the Corporation
chooses to pay dividends in the form of additional Shares of Series B Preferred
pursuant to this paragraph 2D, then the rate at which dividends are paid shall
be calculated as if the rate specified in paragraph 2A above were 9% per annum;
provided further that if the Corporation pays less than the total amount of
dividends then accrued on the Series B Preferred in the form of additional
Shares, such payment in Shares shall be made pro rata among the holders of
Series B Preferred based upon the aggregate accrued but unpaid dividends on the
Shares held by each such holder. If and when any Shares are issued under this
paragraph 2D for the payment of accrued dividends,
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such Shares shall be deemed to be validly issued and outstanding and fully paid
and nonassessable.
2E. Participating Dividends. In the event that the Corporation
declares or pays any dividends upon the Common Stock (whether payable in cash,
securities or other property) other than dividends payable solely in shares of
Common Stock, the Corporation shall also declare and pay to the holders of the
Series B Preferred at the same time that it declares and pays such dividends to
the holders of the Common Stock, the dividends which would have been declared
and paid with respect to the Common Stock issuable upon conversion of the Series
B Preferred had all of the outstanding Series B Preferred been converted
immediately prior to the record date for such dividend, or if no record date is
fixed, the date as of which the record holders of Common Stock entitled to such
dividends are to be determined.
Section 3. Liquidation.
Upon any liquidation, dissolution or winding up of the
Corporation (whether voluntary or involuntary), each holder of Series B
Preferred shall be entitled to be paid, before any distribution or payment is
made upon any Junior Securities, an amount in cash equal to the aggregate
Liquidation Preference Price of all Shares held by such holder, and the holders
of Series B Preferred shall not be entitled to any further payment. If upon any
such liquidation, dissolution or winding up of the Corporation the Corporation's
assets to be distributed among the holders of the Series B Preferred are
insufficient to permit payment to such holders of the aggregate amount which
they are entitled to be paid under this Section 3, then the entire assets
available to be distributed to the Corporation's stockholders shall be
distributed pro rata among such holders based upon the aggregate Liquidation
Preference Price of the Series B Preferred held by each such holder. Prior to
the liquidation, dissolution or winding up of the Corporation, the Corporation
shall declare for payment all accrued and unpaid dividends with respect to the
Series B Preferred, but only to the extent of funds of the Corporation legally
available for the payment of dividends. Not less than sixty (60) days prior to
the payment date stated therein, the Corporation shall mail written notice of
any such liquidation, dissolution or winding up to each record holder of Series
B Preferred, setting forth in reasonable detail the amount of proceeds to be
paid with respect to each Share and each share of Common Stock in connection
with such liquidation, dissolution or winding up.
Section 4. Priority of Series B Preferred on Dividends and
Redemptions.
4A. No Payments With Respect to Junior Securities.
So long as fifty percent (50%) or more of the Series B
Preferred issued pursuant to the Purchase Agreement remains outstanding, subject
to approval by a representative designated in writing by a majority of the
holders of Series B Preferred (such approval not to be unreasonably withheld in
the event the holders of Series B Preferred determine that such action would not
have an adverse impact on the creditworthiness of the Series B Preferred), the
Corporation will not pay any dividend or other distribution on any shares of
Junior Securities (other than dividends paid or distributions made in shares of
Junior Securities) or make any
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purchase, redemption, retirement or other acquisition of any shares of Junior
Securities, or of any option, warrant or other right to acquire its capital
stock (a "Restricted Payment").
4B. No Issuance of Senior or pari passu Securities.
So long as fifty percent (50%) or more of the Series B
Preferred issued pursuant to the Purchase Agreement remains outstanding, without
the prior written consent of the holders of a majority of the outstanding shares
of the Series B Preferred, the Corporation shall not (i) effect a voluntary
liquidation, dissolution or winding up of the Corporation; or (ii) amend its
Certificate of Incorporation, as amended, or take any other action to approve or
issue any capital stock of the Corporation that is, or reclassify stock into
stock of the Corporation that is, senior or pari passu in right to the payment
of dividends, payment upon liquidation, redemption or otherwise to the Series B
Preferred; (iii) increase the authorized number of shares of Series B Preferred;
or (iv) amend its Certificate of Incorporation, as amended, or take any other
action that would alter the rights, preferences or privileges of the Series B
Preferred as in effect on the date of the original issuance of the Series B
Preferred.
Section 5. Redemptions.
5A. Scheduled Redemption. On April 7, 2007 (the "Scheduled
Redemption Date"), the Corporation shall have the right to redeem all
outstanding shares of Series B Preferred at a price per Share equal to the
Liquidation Preference Price thereof.
5B. Mandatory Redemption. On or after April 7, 2005, the
holders of a majority of the outstanding shares of the Series B Preferred shall
have the right to require the Corporation to redeem all, but not less than all,
of the outstanding Series B Preferred in Cash at the Liquidation Preference
Price.
5C. Redemption Payments. For each Share which is to be
redeemed hereunder, the Corporation shall be obligated on the Redemption Date to
pay to the holder thereof (upon surrender by such holder at the Corporation's
principal office of the certificate representing such Share) an amount in cash
in immediately available funds equal to the Liquidation Preference Price of such
Share. If the funds of the Corporation legally available for redemption of
Shares on any Redemption Date are insufficient to redeem the total number of
Shares to be redeemed on such date, those funds which are legally available
shall be used to redeem the maximum possible number of Shares pro rata among the
holders of the Shares to be redeemed based upon the aggregate Liquidation
Preference Price of such Shares held by each such holder. At any time thereafter
when additional funds of the Corporation are legally available for the
redemption of Shares, such funds shall immediately be used to redeem the balance
of the Shares which the Corporation has become obligated to redeem on any
Redemption Date but which it has not redeemed. Prior to any redemption of Series
B Preferred , the Corporation shall declare for payment all accrued and unpaid
dividends with respect to the Shares which are to be redeemed, but only to the
extent of funds of the Corporation legally available for the payment of
dividends.
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5D. Notice of Redemption. The Corporation shall mail written
notice of each redemption of any Series B Preferred (other than a redemption at
the request of a holder or holders of Series B Preferred) to each record holder
thereof not more than sixty (60) nor less than thirty (30) days prior to the
date on which such redemption is to be made. In case fewer than the total number
of Shares represented by any certificate are redeemed, a new certificate
representing the number of unredeemed Shares shall be issued to the holder
thereof without cost to such holder within five (5) business days after
surrender of the certificate representing the redeemed Shares.
5E. Dividends After Redemption Date. No Share shall be
entitled to any dividends accruing after the date on which the Liquidation
Preference Price of such Share is paid to the holder of such Share. On such
date, all rights of the holder of such Share shall cease, and such Share shall
no longer be deemed to be issued and outstanding.
5F. Redeemed or Otherwise Acquired Shares. Any Shares which
are redeemed or otherwise acquired by the Corporation shall be canceled and
retired to authorized but unissued shares and shall not be reissued, sold or
transferred.
5G. Other Redemptions or Acquisitions. The Corporation shall
not, nor shall it permit any Subsidiary to, redeem or otherwise acquire any
Shares of Series B Preferred, except as expressly authorized herein or pursuant
to a purchase offer made pro rata to all holders of Series B Preferred on the
basis of the number of Shares owned by each such holder.
5H. Payment of Accrued Dividends. The Corporation may not
redeem any Series B Preferred unless all dividends accrued on the outstanding
Series B Preferred through the immediately preceding Dividend Payment Date have
been declared and paid in full.
5I. Change of Control.
(i) If a Change of Control has occurred or the
Corporation enters into a binding agreement or a non-binding letter of intent,
memorandum of understanding or similar document that contemplates a Change of
Control, the Corporation shall give prompt written notice of such Change of
Control (or anticipated Change of Control, as the case may be) describing in
reasonable detail the material terms and date (or anticipated date, as the case
may be) of consummation thereof to each holder of Series B Preferred, but in any
event such notice shall not be given later than five days after the occurrence
of such Change of Control, and the Corporation shall give each holder of Series
B Preferred prompt written notice of any material change in the terms or timing
of such transaction. Any holder of Series B Preferred may require the
Corporation to redeem all, but not less than all, of the Series B Preferred
owned by such holder for an amount in cash per share equal to the sum of (a) all
accrued but unpaid cash dividends (whether or not declared), and (b) two hundred
percent (200%) of the Stated Value by giving written notice to the Corporation
of such election prior to the later of (i) fourteen (14) days after receipt of
the Corporation's notice and (ii) ten (10) business days prior to the
consummation of the Change of Control (the "Expiration Date"). The Corporation
shall give prompt written notice of any such election to all other holders of
Series B Preferred within five
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(5) days after the receipt thereof, and each such holder shall have until the
later of (a) the Expiration Date or (b) ten days after receipt of such second
notice to request redemption hereunder (by giving written notice to the
Corporation) of all or any portion of the Series B Preferred owned by such
holder.
Upon receipt of such election(s), the Corporation
shall be obligated to redeem the aggregate number of Shares specified therein on
the occurrence of the Change of Control. If any proposed Change of Control does
not occur, all requests for redemption in connection therewith shall be
automatically rescinded, or if there has been a material change in any of the
pricing terms or the timing of the transaction, any holder of Series B Preferred
may rescind such holder's request for redemption by giving written notice of
such rescission to the Corporation.
The term "Change of Control" means (a) any sale,
transfer or issuance or series of sales, transfers and/or issuances of Common
Stock by the Corporation or any holders thereof which results in any Person or
group of Persons (as the term "group" is used under the Securities Exchange Act
of 1934), beneficially owning (as such term is used in the Securities Exchange
Act of 1934) more than fifty (50%) of the Common Stock outstanding at the time
of such sale, transfer or issuance or series of sales, transfers and/or
issuances, or acquiring the power to vote more than fifty (50%) of the Common
Stock then outstanding, and (b) any sale or transfer of more than fifty (50%) of
the assets of the Corporation and its Subsidiaries on a consolidated basis
(measured either by book value in accordance with generally accepted accounting
principles consistently applied or by fair market value determined in the
reasonable good faith judgment of the Corporation's Board of Directors) in any
transaction or series of transactions (other than sales in the ordinary course
of business) to any Person or group of Persons and (c) any merger or
consolidation to which the Corporation is a party, except (i) for a merger in
which the Corporation is the surviving corporation, the terms of the Series B
Preferred are not changed and the Series B Preferred is not exchanged for cash,
securities or other property, and after giving effect to such merger, the
holders of the Corporation's outstanding capital stock possessing more than
fifty percent (50%) of the voting power to elect a majority of the Corporation's
Board of Directors immediately prior to the merger shall continue to own the
Corporation's outstanding capital stock possessing more than fifty percent (50%)
of the voting power to elect a majority of the Corporation's Board of Directors
or (ii) a merger or consolidation in which the holders of the Corporation's
outstanding Common Stock are entitled to receive securities which are listed on
the New York Stock Exchange or NASDAQ with a value of greater than $18.00 per
share of Common Stock and such securities are not subject to any restrictions on
transfer other than those imposed by law.
(ii) Redemptions of any Shares made pursuant to this
paragraph 5I shall not relieve the Corporation of its obligation to redeem any
Shares that are not redeemed pursuant to this Section 5 on the Scheduled
Redemption Date pursuant to paragraph 5A above.
(iii) Notwithstanding the foregoing provisions of
this paragraph 5I, the Corporation shall not be required to redeem any Shares
under this paragraph 5I from and after
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the date on which the Corporation shall have given notice pursuant to paragraph
5A above, or paragraph 7B below, that it has elected to redeem or convert such
shares.
Section 6. Voting Rights.
6A. Election of Directors. Subject to the provisions of
paragraph 6C below, in the election of directors of the Corporation, the holders
of the Series B Preferred, voting separately as a single class to the exclusion
of all other classes of the Corporation's capital stock and with each Share of
Series B Preferred entitled to one vote, shall be entitled to elect one (1)
director to serve on the Corporation's Board of Directors who will have the
right to serve on any committee of the Board of Directors until his or her
successor is duly elected by the holders of the Series B Preferred or he or she
is removed from office by the holders of the Series B Preferred. If the holders
of the Series B Preferred for any reason fail to elect anyone to fill any such
directorship, such position shall remain vacant until such time as the holders
of the Series B Preferred elect a director to fill such position and shall not
be filled by resolution or vote of the Corporation's Board of Directors or the
Corporation's other stockholders.
6B. Other Voting Rights. The holders of the Series B Preferred
shall be entitled to notice of all stockholders' meetings in accordance with the
Corporation's bylaws, except as otherwise required by applicable law. Except to
the extent that voting as a separate class or series is required by law, and
except as described in paragraph 4B, hereof, the holders of Series B Preferred
will be entitled to vote on all matters submitted to the stockholders for a vote
together with the holders of Common Stock and all other series of preferred
stock voting together as a single class with each share of Common Stock entitled
to one vote per share and each Share of Series B Preferred entitled to one vote
for each share of Common Stock issuable upon conversion of such Share of Series
B Preferred as of the record date for such vote or, if no record date is
specified, as of the date of such vote.
6C. Loss of Voting Rights. The holders of the Series B
Preferred shall cease to have the right to elect a member of the Corporation's
Board of Directors when the shares of Common Stock into which the
then-outstanding shares of Series B Preferred held by Advance Capital Partners,
L.P., a Delaware limited partnership and Advance Capital Offshore Partners,
L.P., a Cayman Islands limited partnership (together, "Advance"), are
convertible, when added to the then-outstanding shares of Common Stock held by
Advance that were issued upon conversions of Series B Preferred, in each case
not including any shares distributed to its partners, represent (a) fifty
percent (50%) or less of the number of shares of Common Stock into which all of
the Series B Preferred issued pursuant to the Purchase Agreement were
convertible on the date of issuance of the Series B Preferred and (b) five
percent (5%) or less of the number of shares of Common Stock then outstanding
(on a fully-diluted basis). At any time after the holders of the Series B
Preferred cease to have the right to elect a member of the Corporation's Board
of Directors, promptly (and in any event not more than ten (10) business days)
after a majority of the other directors request the resignation of the director
elected by the holders of the Series B Preferred, such director shall resign
from the Corporation's Board of Directors.
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Section 7. Conversion.
7A. Conversion Procedure.
(i) At any time and from time to time, any holder of
Series B Preferred may convert all or any portion of the shares of Series B
Preferred (including any fraction of a share of Series B Preferred) held by such
holder into a number of shares of Conversion Stock computed by multiplying the
number of shares of Series B Preferred to be converted by one thousand dollars
($1,000) and dividing the result by the Series B Conversion Price then in
effect.
(ii) Except in the case of a mandatory conversion
pursuant to Section 7B hereof and as otherwise provided herein, each conversion
of Series B Preferred shall be deemed to have been effected as of the close of
business on the date on which the certificate or certificates representing the
Series B Preferred to be converted have been surrendered for conversion at the
principal office of the Corporation. At the time any conversion has been
effected, the rights of the holder of the Shares converted as a holder of Series
B Preferred shall cease and the Person or Persons in whose name or names any
certificate or certificates for shares of Conversion Stock are to be issued upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of Conversion Stock represented thereby.
(iii) The conversion rights of any Share subject to
redemption hereunder shall terminate on the Redemption Date for such Share
unless the Corporation has failed to pay to the holder thereof the Liquidation
Preference Price of such Share.
(iv) Notwithstanding any other provision hereof, if a
conversion of Series B Preferred is to be made in connection with a Change of
Control or other transaction affecting the Corporation, the conversion of any
Shares of Series B Preferred may, at the election of the holder thereof, be
conditioned upon the consummation of such transaction, in which case such
conversion shall not be deemed to be effective until such transaction has been
consummated.
(v) As soon as possible after a conversion has been
effected (but in any event within three (3) business days after conversion
pursuant to paragraph 7B, below or within three (3) business days after notice
of conversion has been delivered to the Corporation, provided that such
conversion has been effected by such date, in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates
representing the number of shares of Conversion Stock issuable by
reason of such conversion in such name or names and such denomination
or denominations as the converting holder has specified;
(b) payment in an amount equal to all
accrued dividends with respect to each Share converted which have not
been paid prior thereto, plus the amount payable under subparagraph (x)
below with respect to such conversion; and
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(c) a certificate representing any Shares
which were represented by the certificate or certificates delivered to
the Corporation in connection with such conversion but which were not
converted.
(vi) The Corporation shall declare the payment of all
dividends payable under subparagraph (v)(b) above. If the Corporation is not
permitted under applicable law to pay any portion of the accrued and unpaid
dividends on the Series B Preferred being converted, the Corporation shall pay
such dividends to the converting holder as soon thereafter as funds of the
Corporation are legally available for such payment. At the request of any such
converting holder, the Corporation shall provide such holder with written
evidence of its obligation to such holder. If for any reason the Corporation is
unable to pay any portion of the accrued and unpaid dividends on Series B
Preferred being converted, such dividends may, at the converting holder's
option, be converted into an additional number of shares of Conversion Stock
determined by dividing the amount of the unpaid dividends to be applied for such
purpose, by the lesser of (a) the Conversion Price then in effect and (b) the
Market Price of a share of Common Stock.
(vii) The issuance of certificates for shares of
Conversion Stock upon conversion of the Series B Preferred shall be made without
charge to the holders of such Series B Preferred for any issuance tax in respect
thereof or other cost incurred by the Corporation in connection with such
conversion and the related issuance of shares of Conversion Stock. Upon
conversion of each Share, the Corporation shall take all such actions as are
necessary in order to insure that the Conversion Stock issuable with respect to
such conversion shall be validly issued, fully paid and nonassessable, free and
clear of all taxes, liens, charges and encumbrances with respect to the issuance
thereof (other than customary securities legends and any restrictions on
transfer applicable thereto pursuant to the Purchase Agreement).
(viii) The Corporation shall not close its books
against the transfer of Series B Preferred or of Conversion Stock issued or
issuable upon conversion of Series B Preferred in any manner which interferes
with the timely conversion of Series B Preferred. The Corporation shall assist
and cooperate with any holder of Shares required to make any governmental
filings or obtain any governmental approval prior to or in connection with any
conversion of Shares hereunder (including, without limitation, making any
filings required to be made by the Corporation).
(ix) The Corporation shall at all times reserve and
keep available out of its authorized but unissued shares of Conversion Stock,
solely for the purpose of issuance upon the conversion of Series B Preferred,
such number of shares of Conversion Stock issuable upon the conversion of all
outstanding Series B Preferred. All shares of Conversion Stock which are so
issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance). The Corporation shall not take any action which would cause the
number of authorized but
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unissued shares of Conversion Stock to be less than the number of such shares
required to be reserved hereunder for issuance upon conversion of Series B
Preferred.
(x) If any fractional interest in a share of
Conversion Stock would, except for the provisions of this subparagraph, be
delivered upon any conversion of Series B Preferred, the Corporation, in lieu of
delivering the fractional share therefor, shall pay an amount to the holder
thereof equal to the Market Price of such fractional interest as of the date of
conversion.
(xi) If the shares of Conversion Stock issuable by
reason of conversion of Series B Preferred are convertible into or exchangeable
for any other stock or securities of the Corporation, the Corporation shall, at
the converting holder's option, upon surrender of the Shares to be converted by
such holder as provided herein together with any notice, statement or payment
required to effect such conversion or exchange of Conversion Stock, deliver to
such holder or as otherwise specified by such holder a certificate or
certificates representing the stock or securities into which the shares of
Conversion Stock issuable by reason of such conversion are so convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as such holder has specified.
7B. Mandatory Conversion. Each share of Series B Preferred
will automatically convert into shares of the Corporation's Common Stock (on the
conversion terms described in this Section 7) without any action on the part of
the holders of Series B Preferred if at any time the average closing bid prices
of the Common Stock quoted in the NASDAQ system is thirty five dollars ($35) per
share or more for a thirty (30) consecutive day trading period ending on or
after the third anniversary of the date of issuance of the Series B Preferred or
for a sixty (60) consecutive day trading period beginning on or after the second
anniversary of the date of issuance of the Series B Preferred. If the Series B
Preferred is converted to Common Stock pursuant to this Section 7B, dividends on
the Series B Preferred will accrue and be paid as though the Series B Preferred
had remained outstanding until the later of (i) the date of conversion or (ii)
the third anniversary of the date of issuance of the Series B Preferred.
Additionally, on April 7, 2007, the Corporation shall have the right to convert
the Preferred Shares into shares of Common Stock on the conversion terms
described in this Section 7.
7C. Conversion Price.
(i) The initial Series B Conversion Price
("Conversion Price") shall be nine dollars ($9.00). In order to prevent dilution
of the conversion rights granted under this Section 7, the Conversion Price
shall be subject to adjustment from time to time pursuant to this paragraph 7C.
(ii) If and whenever on or after the original date of
issuance of the Series B Preferred the Corporation issues or sells, or in
accordance with paragraph 7D is deemed to have issued or sold, any shares of its
Common Stock for a consideration per share less than the Conversion Price in
effect immediately prior to the time of such issue or sale, then immediately
upon such issue or sale or deemed issue or sale the Conversion Price shall be
reduced to the
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Conversion Price determined by dividing (a) the sum of (1) the product derived
by multiplying the Conversion Price in effect immediately prior to such issue or
sale by the number of shares of Common Stock Deemed Outstanding immediately
prior to such issue or sale, plus (2) the consideration, if any, received by the
Corporation upon such issue or sale, by (b) the number of shares of Common Stock
Deemed Outstanding immediately after such issue or sale.
(iii) Notwithstanding the foregoing, there shall be
no adjustment in the Conversion Price as a result of (a) the exercise of any
options outstanding on the date of original issuance of the Series B Preferred
issued to directors, officers or employees of, or consultants to, the
Corporation and its Subsidiaries pursuant to stock option plans and stock
ownership plans approved by the Corporation's Board of Directors or (b) any
issue or sale (or deemed issue or sale) of up to an aggregate of 1,046,098
shares of Common Stock to directors, officers or employees of, or consultants
to, the Corporation and its Subsidiaries pursuant to stock option plans and
stock ownership plans approved by the Corporation's Board of Directors (as such
number of shares is proportionately adjusted for subsequent stock splits,
combinations and dividends affecting the Common Stock).
7D. Effect on Conversion Price of Certain Events. For purposes
of determining the adjusted Conversion Price under paragraph 7C, the following
shall be applicable:
(i) Issuance of Rights or Options. If the Corporation
in any manner grants or sells any Options and the price per share for which
Common Stock is issuable upon the exercise of such Options, or upon conversion
or exchange of any Convertible Securities issuable upon exercise of such
Options, is less than the Conversion Price in effect immediately prior to the
time of the granting or sale of such Options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to be
outstanding and to have been issued and sold by the Corporation at the time of
the granting or sale of such Options for such price per share. For purposes of
this paragraph, the "price per share for which Common Stock is issuable" shall
be determined by dividing (A) the total amount, if any, received or receivable
by the Corporation as consideration for the granting or sale of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Corporation upon exercise of all such Options, plus in the case of such Options
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the issuance
or sale of such Convertible Securities and the conversion or exchange thereof,
by (B) the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options. No further
adjustment of the Conversion Price shall be made when Convertible Securities are
actually issued upon the exercise of such Options or when Common Stock is
actually issued upon the exercise of such Options or the conversion or exchange
of such Convertible Securities.
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(ii) Issuance of Convertible Securities. If the
Corporation in any manner issues or sells any Convertible Securities and the
price per share for which Common Stock is issuable upon conversion or exchange
thereof is less than the Conversion Price in effect immediately prior to the
time of such issue or sale, then the maximum number of shares of Common Stock
issuable upon conversion or exchange of such Convertible Securities shall be
deemed to be outstanding and to have been issued and sold by the Corporation at
the time of the issuance or sale of such Convertible Securities for such price
per share. For the purposes of this paragraph, the "price per share for which
Common Stock is issuable" shall be determined by dividing (A) the total amount
received or receivable by the Corporation as consideration for the issue or sale
of such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No
further adjustment of the Conversion Price shall be made when Common Stock is
actually issued upon the conversion or exchange of such Convertible Securities,
and if any such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustments of the Conversion Price had been
or are to be made pursuant to other provisions of this Section 7, no further
adjustment of the Conversion Price shall be made by reason of such issue or
sale.
(iii) Change in Option Price or Conversion Rate. If
the purchase price provided for in any Options, the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities or
the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock changes at any time, the Conversion Price in
effect at the time of such change shall be immediately adjusted to the
Conversion Price which would have been in effect at such time had such Options
or Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold; provided that if such adjustment would
result in an increase of the Conversion Price then in effect, such adjustment
shall not be effective until thirty (30) days after written notice thereof has
been given by the Corporation to all holders of the Series B Preferred . For
purposes of paragraph 7D, if the terms of any Option or Convertible Security
which was outstanding as of the date of issuance of the Series B Preferred are
changed in the manner described in the immediately preceding sentence, then such
Option or Convertible Security and the Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have been issued as
of the date of such change.
(iv) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the termination of
any right to convert or exchange any Convertible Security without the exercise
of any such Option or right, the Conversion Price then in effect hereunder shall
be adjusted immediately to the Series B Conversion Price which would have been
in effect at the time of such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately prior to such
expiration or termination, never been issued; provided that if such expiration
or termination would result in an increase in the Conversion Price then in
effect, such increase shall not be effective until thirty (30) days after
written notice thereof has been given to all holders of the
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Series B Preferred. For purposes of paragraph 7D, the expiration or termination
of any Option or Convertible Security which was outstanding as of the date of
issuance of the Series B Preferred shall not cause the Conversion Price
hereunder to be adjusted unless, and only to the extent that, a change in the
terms of such Option or Convertible Security caused it to be deemed to have been
issued after the date of issuance of the Series B Preferred.
(v) Calculation of Consideration Received. If any
Common Stock, Option or Convertible Security is issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor shall be
deemed to be the amount received by the Corporation therefor (net of discounts,
commissions and related expenses). If any Common Stock, Option or Convertible
Security is issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Corporation shall be the fair
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the
Corporation shall be the Market Price thereof as of the date of receipt. If any
Common Stock, Option or Convertible Security is issued to the owners of the
non-surviving entity in connection with any merger in which the Corporation is
the surviving corporation, the amount of consideration therefor shall be deemed
to be the fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common Stock, Option or
Convertible Security, as the case may be. The fair value of any consideration
other than cash and securities shall be determined jointly by the Corporation
and the holders of a majority of the outstanding Series B Preferred. If such
parties are unable to reach agreement within a reasonable period of time, the
fair value of such consideration shall be determined by an independent appraiser
experienced in valuing such type of consideration jointly selected by the
Corporation and the holders of a majority of the outstanding Series B Preferred.
The determination of such appraiser shall be final and binding upon the parties,
and the fees and expenses of such appraiser shall be borne by the Corporation.
(vi) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held by or
for the account of the Corporation or any Subsidiary, and the disposition of any
shares so owned or held shall be considered an issue or sale of Common Stock.
(vii) Record Date. If the Corporation takes a record
of the holders of Common Stock for the purpose of entitling them (a) to receive
a dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (b) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date shall be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or upon the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
7E. Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision shall be proportionately
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reduced, and if the Corporation at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Conversion Price in effect immediately prior to
such combination shall be proportionately increased.
7F. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Corporation's assets or other
transaction, in each case which is effected in such a manner that the holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series B Preferred then outstanding) to insure that each of the holders of
Series B Preferred shall thereafter have the right to acquire and receive, in
lieu of or in addition to (as the case may be) the shares of Conversion Stock
immediately theretofore acquirable and receivable upon the conversion of such
holder's Series B Preferred, such shares of stock, securities or assets as such
holder would have received in connection with such Organic Change if such holder
had converted its Series B Preferred immediately prior to such Organic Change.
In each such case, the Corporation shall also make appropriate provisions (in
form and substance satisfactory to the holders of a majority of the Series B
Preferred then outstanding) to insure that the provisions of this Section 7 and
Sections 8 and 9 hereof shall thereafter be applicable to the Series B Preferred
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Corporation, an
immediate adjustment of the Conversion Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of Conversion Stock
acquirable and receivable upon conversion of Series B Preferred, if the value so
reflected is less than the Conversion Price in effect immediately prior to such
consolidation, merger or sale). The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Corporation) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance satisfactory to the holders of a majority of the Series B
Preferred then outstanding), the obligation to deliver to each such holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
7G. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 7 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Corporation's Board of Directors shall make an appropriate adjustment
in the Conversion Price so as to protect the rights of the holders of Series B
Preferred; provided that no such adjustment shall increase the Conversion Price
as otherwise determined pursuant to this Section 7 or decrease the number of
shares of Conversion Stock issuable upon conversion of each Share.
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7H. Notices.
(i) Immediately upon any adjustment of the Conversion
Price, the Corporation shall give written notice thereof to all holders of
Series B Preferred, setting forth in reasonable detail and certifying the
calculation of such adjustment.
(ii) The Corporation shall give written notice to all
holders of Series B Preferred at least twenty (20) days prior to the date on
which the Corporation closes its books or takes a record (a) with respect to any
dividend or distribution upon Common Stock, (b) with respect to any pro rata
subscription offer to holders of Common Stock or (c) for determining rights to
vote with respect to any Organic Change, dissolution or liquidation.
(iii) The Corporation shall also give written notice
to the holders of Series B Preferred at least twenty (20) days prior to the date
on which any Organic Change shall take place.
Section 8. Liquidating Dividends.
If the Corporation declares or pays a dividend upon the Common
Stock payable otherwise than in cash out of earnings or earned surplus
(determined in accordance with generally accepted accounting principles,
consistently applied) except for a stock dividend payable in shares of Common
Stock (a "Liquidating Dividend"), then the Corporation shall pay to the holders
of Series B Preferred at the time of payment thereof the Liquidating Dividends
which would have been paid on the shares of Conversion Stock had such Series B
Preferred been converted immediately prior to the date on which a record is
taken for such Liquidating Dividend, or, if no record is taken, the date as of
which the record holders of Common Stock entitled to such dividends are to be
determined.
Section 9. Purchase Rights.
If at any time the Corporation grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then each holder of Series B Preferred
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Conversion Stock acquirable upon
conversion of such holder's Series B Preferred immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or if no such record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights.
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Section 10. Events of Noncompliance.
10A. Definition. An Event of Noncompliance shall have
occurred if:
(i) the Corporation fails to pay on any two
consecutive Dividend Payment Dates the full amount of dividends then accrued on
the Series B Preferred, either in cash or in additional Shares of Series B
Preferred, whether or not such payments are legally permissible or are
prohibited by any agreement to which the Corporation is subject;
(ii) the Corporation fails to make any redemption
payment with respect to the Series B Preferred which it is required to make
hereunder, whether or not such payment is legally permissible or is prohibited
by any agreement to which the Corporation is subject;
(iii) the Corporation or any material Subsidiary
makes an assignment for the benefit of creditors or admits in writing its
inability to pay its debts generally as they become due; or an order, judgment
or decree is entered adjudicating the Corporation or any material Subsidiary
bankrupt or insolvent; or any order for relief with respect to the Corporation
or any material Subsidiary is entered under the Federal Bankruptcy Code; or the
Corporation or any material Subsidiary petitions or applies to any tribunal for
the appointment of a custodian, trustee, receiver or liquidator of the
Corporation or any material Subsidiary or of any substantial part of the assets
of the Corporation or any material Subsidiary, or commences any proceeding
(other than a proceeding for the voluntary liquidation and dissolution of a
Subsidiary) relating to the Corporation or any material Subsidiary under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction; or any such petition or
application is filed, or any such proceeding is commenced, against the
Corporation or any material Subsidiary and either (a) the Corporation or any
such Subsidiary by any act indicates its approval thereof, consent thereto or
acquiescence therein or (b) such petition, application or proceeding is not
dismissed within sixty (60) days;
(iv) a judgment in excess of $2,000,000 is rendered
against the Corporation or any material Subsidiary and, such judgment is not (a)
discharged, bonded or otherwise satisfied within 60 days from the entry thereof,
(b) covered by adequate insurance, or (c) the execution of such judgment is not
stayed pending appeal or, within 60 days after the expiration of such stay,
discharged or otherwise satisfied; or
(v) the Corporation or any material Subsidiary
defaults in the performance of any obligation or agreement, and such default is
continuing for a period of seven (7) days, if the effect of such default is to
cause an amount exceeding $2,000,000 to become due prior to its stated maturity
or the holder or holders of any obligation causes an amount exceeding $2,000,000
to become due prior to its stated maturity.
10B. Consequences of Events of Noncompliance.
(i) If an Event of Noncompliance of the type
described in subparagraphs 10A(i), 10A(ii) or 10A(iii) has occurred and is
continuing, the dividend rate on
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the Series B Preferred shall increase immediately by an increment of two
percentage point(s). Thereafter, until such time as no Event of Noncompliance
exists, the dividend rate shall increase automatically at the end of each
succeeding ninety-day (90-day) period by an additional increment of two (2)
percentage point(s) (but in no event shall the dividend rate exceed 17%). Any
increase of the dividend rate resulting from the operation of this subparagraph
shall terminate as of the close of business on the date on which no Event of
Noncompliance exists, subject to subsequent increases pursuant to this
paragraph.
(ii) If an Event of Noncompliance of the type
described in subparagraphs 10A(ii), 10A(iv) or 10A(v) has occurred and is
continuing, the holders of a majority of the Series B Preferred then outstanding
may demand (by written notice delivered to the Corporation) immediate redemption
of all or any portion of the Series B Preferred owned by such holder or holders
at a price per Share equal to the Liquidation Preference Price thereof. The
Corporation shall give prompt written notice of such election to the other
holders of Series B Preferred (but in any event within five (5) days after
receipt of the initial demand for redemption), and each such other holder may
demand immediate redemption of all or any portion of such holder's Series B
Preferred by giving written notice thereof to the Corporation within seven days
after receipt of the Corporation's notice. The Corporation shall, to the extent
permitted by applicable law, redeem all Series B Preferred as to which rights
under this paragraph have been exercised within fifteen (15) business days after
receipt of the initial demand for redemption.
(iii) If an Event of Noncompliance of the type
described in subparagraph 10A(iii) has occurred, all of the Series B Preferred
then outstanding shall be subject to immediate redemption by the Corporation
(without any action on the part of the holders of the Series B Preferred) at a
price per Share equal to the Liquidation Preference Price thereof. The
Corporation shall, to the extent permitted by applicable law, immediately redeem
all Series B Preferred upon the occurrence of such Event of Noncompliance.
(iv) If any Event of Noncompliance exists, each
holder of Series B Preferred shall also have any other rights which such holder
is entitled to under the Purchase Agreement or any other contract or agreement
with such holder at any time and any other rights which such holder may have
pursuant to applicable law.
Section 11. Registration of Transfer.
The Corporation shall keep at its principal office a register
for the registration of Series B Preferred . Upon the surrender of any
certificate representing Series B Preferred at such place, the Corporation
shall, at the request of the record holder of such certificate, execute and
deliver (at the Corporation's expense) a new certificate or certificates in
exchange therefor representing in the aggregate the number of Shares represented
by the surrendered certificate. Each such new certificate shall be registered in
such name and shall represent such number of Shares as is requested by the
holder of the surrendered certificate and shall be substantially identical in
form to the surrendered certificate, and dividends shall accrue on the Series B
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Preferred represented by such new certificate from the date to which dividends
have been fully paid on such Series B Preferred represented by the surrendered
certificate.
Section 12. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing Series B Preferred, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Corporation shall
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of Shares of such class
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate, and dividends
shall accrue on the Series B Preferred represented by such new certificate from
the date to which dividends have been fully paid on such lost, stolen, destroyed
or mutilated certificate.
Section 13. Information Rights. So long as fifty percent (50%)
or more of the Series B Preferred issued pursuant to the Purchase Agreement
remains outstanding, the Company will deliver to the holders of the Series B
Preferred the Company's Form 10-K, Form 10-Q, proxy statement, annual report,
any filings that the Company makes from time to time with the Securities and
Exchange Commission and any information distributed to the board of directors.
The holders of the Preferred Stock agree to maintain the confidentiality of all
Confidential Information received from the Company.
Section 14. Definitions.
"Change of Control" has the meaning set forth in paragraph 5H
hereof.
"Common Stock" means, collectively, the Corporation's Common
Stock, $0.01 par value per share, and any capital stock of any class of the
Corporation hereafter authorized which is not limited to a fixed sum or
percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Corporation.
"Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to
subparagraphs 7D(i) and 7D(ii) hereof whether or not the Options or Convertible
Securities are actually exercisable at such time.
"Confidential Information" means any information concerning
the Company's business other than information that (i) was already known to the
Person having a duty to keep confidential such information on a nonconfidential
basis prior to the time of disclosure, (ii) is or becomes generally available to
the public through no act or omission of such Person or (iii)
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becomes available to such Person on a nonconfidential basis from a source other
than any party hereto (or any agent or representative thereof) if such source
was not under a prohibition against disclosing the information to such Person.
"Conversion Stock" means shares of the Corporation's Common
Stock, par value $0.01 per share; provided that if there is a change such that
the securities issuable upon conversion of Series B Preferred are issued by an
entity other than the Corporation or there is a change in the type or class of
securities so issuable, then the term "Conversion Stock" shall mean one share of
the security issuable upon conversion of Series B Preferred if such security is
issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
"Convertible Securities" means any stock or securities
directly or indirectly convertible into or exchangeable for Common Stock.
"Junior Securities" means any capital stock or other equity
securities of the Corporation, except for the Series B Preferred.
"Liquidation Preference Price" of any Share as of any
particular date shall be equal to one thousand dollars ($1,000), plus any
accrued but unpaid dividends, whether or not declared.
"Market Price" of any security means the average of the
closing prices of such security's sales on all securities exchanges on which
such security may at the time be listed, or, if there has been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of twenty one
(21) days consisting of the day as of which "Market Price" is being determined
and the twenty (20) consecutive business days prior to such day. If at any time
such security is not listed on any securities exchange or quoted in the NASDAQ
System or the over-the-counter market, the "Market Price" shall be the fair
value thereof determined jointly by the Corporation and the holders of a
majority of the Series B Preferred. If such parties are unable to reach
agreement within a reasonable period of time, such fair value shall be
determined by an independent appraiser experienced in valuing securities jointly
selected by the Corporation and the holders of a majority of the Series B
Preferred. The determination of such appraiser shall be final and binding upon
the parties, and the Corporation shall pay the fees and expenses of such
appraiser.
"Options" means any rights, warrants or options to subscribe
for or purchase Common Stock or Convertible Securities.
"Person" means an individual, a partnership, a corporation, a
limited liability company, a limited liability partnership, an association, a
joint stock company, a trust, a joint
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venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Purchase Agreement" means the Purchase Agreement, dated as of
March __, 2000, by and among the Corporation and certain investors, as such
agreement may from time to time be amended in accordance with its terms.
"Redemption Date" as to any Share means the date specified in
the notice of any redemption at the Corporation's option or at the holder's
option or the applicable date specified herein in the case of any other
redemption; provided that no such date shall be a Redemption Date unless the
Liquidation Preference Price of such Share (plus all accrued and unpaid
dividends thereon and any required premium with respect thereto) is actually
paid in full on such date, and if not so paid in full, the Redemption Date shall
be the date on which such amount is fully paid.
"Series B Conversion Price" means nine dollars ($9.00),
subject to adjustment as provided in Section 7C hereof.
"Stated Value" means one thousand dollars ($1,000) per Share.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing general partner of such
limited liability company, partnership, association or other business entity.
Section 15. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to any provision of Sections 1 to 16 hereof without the
prior written consent of the holders of greater than fifty percent (50%) of the
Series B Preferred outstanding at the time such action is taken; provided that
no such action shall change (a) the rate at which or the manner in which
dividends on the Series B Preferred accrue or the times at which such dividends
become payable or the amount payable on redemption of the Series B Preferred or
the times at which redemption of Series B Preferred is to occur, without the
prior written consent of the holders of at least seventy-five percent (75%) of
the Series B Preferred then outstanding, (b) the Conversion Price
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of the Series B Preferred or the number of shares or class of stock into which
the Series B Preferred is convertible, without the prior written consent of the
holders of at least seventy-five percent (75%) of the Series B Preferred then
outstanding, or (c) the percentage required to approve any change described in
clauses (a) and (b) above, without the prior written consent of the holders of
at least seventy-five percent (75%) of the Series B Preferred then outstanding;
and provided further that no change in the terms hereof may be accomplished by
merger or consolidation of the Corporation with another corporation or entity
unless the Corporation has obtained the prior written consent of the holders of
the applicable percentage of the Series B Preferred then outstanding.
Section 16. Notices.
Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be delivered by registered or
certified mail, return receipt requested and postage prepaid, or by reputable
overnight courier service, charges prepaid, and shall be deemed to have been
given when so mailed or sent (i) to the Corporation, at its principal executive
offices and (ii) to any stockholder, at such holder's address as it appears in
the stock records of the Corporation (unless otherwise indicated by any such
holder).
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IN WITNESS WHEREOF, TransAct Technologies Incorporated has caused this
Certificate to be signed by its President and Chief Executive Officer and
attested by its Secretary this 5th day of April, 2000.
TRANSACT TECHNOLOGIES
INCORPORATED
By /s/ Bart C. Shuldman
Attest:
/s/ Richard L. Cote
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