EXHIBIT 3.9
DATA RACE, INC.
STATEMENT OF RESOLUTION
ESTABLISHING SERIES B
PARTICIPATING CUMULATIVE PREFERRED STOCK
To the Secretary of State
of the State of Texas:
Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act, the undersigned corporation submits the following statement for
the purpose of establishing and designating a series of shares and fixing and
determining the preferences, limitations and relative rights thereof
1. The name of the corporation is DATA RACE, Inc.
2. The following resolution, establishing and designating a series of
shares and fixing and determining the preferences, limitations and relative
rights thereof, was duly adopted by the board of directors of the corporation
(which constitutes all necessary action on the part of the corporation) on
September 12, 1997:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of the Articles of
Incorporation of the Corporation, a series of Preferred Stock of the Corporation
is hereby created and that the designation, preferences, limitations and
relative rights, including voting rights, of the shares of such series are as
follows:
SECTION 1. DESIGNATION AND NUMBER OF SHARES. The shares of such series
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shall be designated as "Series B Participating Cumulative Preferred Stock" (the
"Series B Preferred Stock"), no par value. The number of shares initially
constituting the Series B Preferred Stock shall be 200,000; provided, however,
that, if more than a total of 200,000 shares of Series B Preferred Stock shall
be issuable upon the exercise of the Rights (the "Rights") issued pursuant to
the Rights Agreement dated as of September 15, 1997, between the Corporation and
ChaseMellon Shareholder Services, L.L.C. as Rights Agent, the Board of Directors
of the Corporation, pursuant to Article 2.13 of the Texas Business Corporation
Act, shall direct by resolution or resolutions that a statement be properly
executed and filed, providing for the total number of shares of Series B
Preferred Stock authorized to be issued to be increased (to the extent that the
Articles of Incorporation then permit) to the largest number of whole shares
(rounded up to the nearest whole number) issuable upon exercise of such Rights.
SECTION 2. DIVIDENDS OR DISTRIBUTIONS.
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(a) Subject to the prior and superior rights of the holders of shares of
any other series of Preferred Stock or other class of capital stock of the
Corporation expressly ranking prior and superior to the shares of Series B
Preferred Stock with respect to dividends, the holders of shares of the Series B
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of the assets of the Corporation legally available
therefor, (1) quarterly dividends payable in cash on the last day of each fiscal
quarter in each year, or such other dates as the Board of Directors of the
Corporation shall approve (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or a fraction of a share of
Series B Preferred Stock, in the amount of $10.00 per whole share (rounded to
the nearest cent) less the amount of all cash dividends declared on the Series B
Preferred Stock pursuant to the following clause (2) since the immediately
preceding Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series B Preferred Stock (the total of which shall not,
in any event, be less than zero) and (2) dividends payable in cash on the
payment date for each cash dividend declared on the Common Stock in an amount
per whole share (rounded to the nearest cent) equal to the Formula Number (as
hereinafter defined) then in effect times the cash dividends then to be paid on
each share of Common Stock. In addition, if the Corporation shall pay any
dividend or make any distribution on the Common Stock payable in assets,
securities or other forms of noncash consideration (other than dividends or
distributions solely in shares of Common Stock), then, in each such case, the
Corporation shall simultaneously pay or make on each outstanding whole share of
Series B Preferred Stock a dividend or distribution in like kind equal to the
Formula Number then in effect times such dividend or distribution on each share
of the Common Stock. As used herein, the "Formula Number" shall be 1,000;
provided, however, that, if at any time after September 29, 1997, the
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Corporation shall (i) declare or pay any dividend on the Common Stock payable in
shares of Common Stock or make any distribution on the Common Stock in shares of
Common Stock, (ii) subdivide (by a stock split or otherwise) the outstanding
shares of Common Stock into a larger number of shares of Common Stock or (iii)
combine (by a reverse stock split or otherwise) the outstanding shares of Common
Stock into a smaller number of shares of Common Stock, then in each such event
the Formula Number shall be adjusted to a number determined by multiplying the
Formula Number in effect immediately prior to such event by a fraction, the
numerator of which is the number of shares of Common Stock that are outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that are outstanding immediately prior to such event (and
rounding the result to the nearest whole number); and provided further, however,
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that, if at any time after September 29, 1997, the Corporation shall issue any
shares of its capital stock in a merger, reclassification, or change of the
outstanding shares of Common Stock, then in each such event the Formula Number
shall be appropriately adjusted to reflect such merger, reclassification or
change so that each share of
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Preferred Stock continues to be the economic equivalent of a Formula Number of
shares of Common Stock prior to such merger, reclassification or change.
(b) The Corporation shall declare a dividend or distribution on the Series
B Preferred Stock as provided in Section 2(a) immediately prior to or at the
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same time it declares a dividend or distribution on the Common Stock (other than
a dividend or distribution solely in shares of Common Stock); provided, however,
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that, in the event no dividend or distribution (other than a dividend or
distribution in shares of Common Stock) shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share on
the Series B Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date. The Board of Directors may fix a record date
for the determination of holders of shares of Series B Preferred Stock entitled
to receive a dividend or distribution declared thereon, which record date shall
be the same as the record date for any corresponding dividend or distribution on
the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series B Preferred Stock from and after the Quarterly Dividend Payment Date
next preceding the date of original issue of such shares of Series B Preferred
Stock; provided, however, that dividends on such shares which are originally
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issued after the record date for the determination of holders of shares of
Series B Preferred Stock entitled to receive a quarterly dividend and on or
prior to the next succeeding Quarterly Dividend Payment Date shall begin to
accrue and be cumulative from and after such Quarterly Dividend Payment Date.
Notwithstanding the foregoing, dividends on shares of Series B Preferred Stock
which are originally issued prior to the record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive a quarterly
dividend on the first Quarterly Dividend Payment Date shall be calculated as if
cumulative from and after the last day of the fiscal quarter next preceding the
date of original issuance of such shares. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series B Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
(d) So long as any shares of the Series B Preferred Stock are outstanding,
no dividends or other distributions shall be declared, paid or distributed, or
set aside for payment or distribution, on the Common Stock unless, in each case,
the dividend required by this Section 2 to be declared on the Series B Preferred
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Stock shall have been declared.
(e) The holders of the shares of Series B Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein.
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SECTION 3. VOTING RIGHTS. The holders of shares of Series B Preferred
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Stock shall have the following voting rights:
(a) Each holder of Series B Preferred Stock shall be entitled to a number
of votes equal to the Formula Number then in effect for each share of Series B
Preferred Stock held of record on each matter on which holders of the Common
Stock or shareholders generally are entitled to vote, multiplied by the maximum
number of votes per share which any holder of the Common Stock or shareholders
generally then have with respect to such matter (assuming any holding period or
other requirement to vote a greater number of shares is satisfied).
(b) Except as otherwise provided herein or by applicable law, the holders
of shares of Series B Preferred Stock and the holders of shares of Common Stock
shall vote together as one class for the election of directors of the
Corporation and on all other matters submitted to a vote of shareholders of the
Corporation.
(c) If, at the time of any annual meeting of shareholders for the election
of directors, the equivalent of six quarterly dividends (whether or not
consecutive) payable on any share or shares of Series B Preferred Stock are in
default, the number of directors constituting the Board of Directors of the
Corporation shall be increased by two. In addition to voting together with the
holders of Common Stock for the election of other directors of the Corporation,
the holders of record of the Series B Preferred Stock, voting separately as a
class to the exclusion of the holders of Common Stock, shall be entitled at said
meeting of shareholders (and at each subsequent annual meeting of shareholders),
unless all dividends in arrears have been paid or declared and set apart for
payment prior thereto, to vote for the election of two directors of the
Corporation, the holders of any Series B Preferred Stock being entitled to cast
a number of votes per share of Series B Preferred Stock equal to the Formula
Number. Until the default in payments of all dividends which permitted the
election of said directors shall cease to exist, any director who shall have
been so elected pursuant to the next preceding sentence may be removed at any
time, either with or without cause, only by the affirmative vote of the holders
of the shares of Series B Preferred Stock at the time entitled to cast a
majority of the votes for the election of any such director at a special meeting
of such holders called for that purpose, and any vacancy thereby created may be
filled by the vote of such holders. If and when such default shall cease to
exist, the holders of the Series B Preferred Stock shall be divested of the
foregoing special voting rights, subject to revesting in the event of each and
every subsequent like default in payments of dividends. Upon the termination of
the foregoing special voting rights, the terms of office of all persons who may
have been elected directors pursuant to said special voting rights shall
forthwith terminate, and the number of directors constituting the Board of
Directors shall be reduced by two. The voting rights granted by this Section
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3(c) shall be in addition to any other voting rights granted to the holders of
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the Series B Preferred Stock in this Section 3.
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(d) Except as provided herein, in Section 11 or by applicable law, holders
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of Series B Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for authorizing or taking any
corporate action.
SECTION 4. CERTAIN RESTRICTIONS.
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(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 are in arrears,
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thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series B Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) Declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series B Preferred Stock.
(ii) Declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Preferred Stock,
except dividends paid ratably on the Series B Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) Redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Preferred Stock;
provided, however, that the Corporation may at any time redeem, purchase or
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otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series B Preferred Stock; or
(iv) Purchase or otherwise acquire for consideration any shares of
Series B Preferred Stock, or any shares of stock ranking on a parity with the
Series B Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
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purchase or otherwise acquire such shares at such time and in such manner.
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SECTION 5. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
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winding up of the Corporation, whether voluntary or involuntary, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received an amount equal to the accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (x) $10.00 per whole share
or (y) an aggregate amount per share equal to the Formula Number then in effect
times the aggregate amount to be distributed per share to holders of Common
Stock or (2) to the holders of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series B Preferred
Stock, except distributions made ratably on the Series B Preferred Stock and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 6. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
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enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the then
outstanding shares of Series B Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share equal to the Formula
Number then in effect times the aggregate amount of stock, securities, cash or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is exchanged or changed. In the event both
this Section 6 and Section 2 appear to apply to a transaction, this Section 6
will control.
SECTION 7. NO REDEMPTION; NO SINKING FUND.
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(a) The shares of Series B Preferred Stock shall not be subject to
redemption by the Corporation or at the option of any holder of Series B
Preferred Stock; provided, however, that the Corporation may purchase or
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otherwise acquire outstanding shares of Series B Preferred Stock in the open
market or by offer to any holder or holders of shares of Series B Preferred
Stock.
(b) The shares of Series B Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
SECTION 8. RANKING. The Series B Preferred Stock shall rank junior to all
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other series of Preferred Stock of the Corporation, unless the Board of
Directors shall specifically determine otherwise in fixing the preferences
limitations and relative rights of the shares of any such other series.
SECTION 9. FRACTIONAL SHARES. The Series B Preferred Stock shall be
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issuable upon exercise of the Rights issued pursuant to the Rights Agreement in
whole shares or in any fraction of a share that is one one-thousandth
(1/1,000th) of a share or any integral multiple of such fraction which shall
entitle the holder, in proportion to such holder's fractional shares, to receive
dividends, exercise voting rights, participate
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in distributions and to have the benefit of all other rights of holders of
Series B Preferred Stock. In lieu of fractional shares, the Corporation, prior
to the first issuance of a share or a fraction of a share of Series B Preferred
Stock, may elect (1) to make a cash payment as provided in the Rights Agreement
for fractions of a share other than one one-thousandth (1/1,000th) of a share or
any integral multiple thereof or (2) to issue depository receipts evidencing
such authorized fraction of a share of Series A Preferred Stock pursuant to an
appropriate agreement between the Corporation and a depository selected by the
Corporation provided that such agreement shall provide that the holders of such
depository receipts shall have all the rights, privileges and preferences to
which they are entitled as holders of the Series B Preferred Stock.
SECTION 10. REACQUIRED SHARES. Any shares of Series B Preferred Stock
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purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock, without designation as to series until such shares are once
more designated as part of a particular series by the Board of Directors
pursuant to the provisions of the Article of Incorporation.
SECTION 11. AMENDMENT. None of the preferences, limitations and relative
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rights of the Series B Preferred Stock as provided herein or in the Articles of
Incorporation shall be amended in any manner which would alter or change the
preferences, limitations or relative rights of the holders of Series B Preferred
Stock so as to affect them adversely without the affirmative vote of the holders
of at least 66-2/3% of the outstanding shares of Series B Preferred Stock,
voting as a separate class; provided, however, that no such amendment approved
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by the holders of at least 66-2/3% of the outstanding shares of Series B
Preferred Stock shall be deemed to apply to the preferences, limitations or
relative rights of any holder of shares of Series B Preferred Stock originally
issued upon exercise of a Right after the time of such approval without the
approval of such holder.
IN WITNESS WHEREOF, the Corporation has caused this Statement to be duly
executed September 17, 1997.
DATA RACE, INC.
By: /s/ Gregory T. Skalla
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Gregory T. Skalla, Vice President-
Finance and Chief Financial Officer
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