EXHIBIT 3.1
CERTIFICATE OF DESIGNATION OF SERIES
AND DETERMINATION OF RIGHTS AND PREFERENCES
OF
SERIES B 5% CONVERTIBLE PREFERRED STOCK
OF
AMERICAN ELECTROMEDICS CORP.
American Electromedics Corp., a Delaware corporation
(the "Company"), acting pursuant to S 151 of the General
Corporation Law of Delaware, does hereby submit the following
Certificate of Designation of Series and Determination of Rights
and Preferences of its Series B Convertible Preferred Stock.
FIRST: The name of the Company is American
Electromedics Corp.
SECOND: The Board of Directors of the Company
pursuant to a unanimous written consent in
lieu of a meeting, dated as January 25, 1999,
adopted the following resolutions:
WHEREAS the Certificate of Incorporation of the Company
authorizes Preferred Stock consisting of 1,000,000 shares, par
value $.01 per share, issuable from time to time in one or more
series; and
WHEREAS the Board of Directors of the Company is
authorized, subject to limitations prescribed by law and by the
provisions of Article FOUR (4) of the Company's Certificate of
Incorporation, as amended, to establish and fix the number of
shares to be included in any series of Preferred Stock and the
designation, rights, preferences, powers, restrictions and
limitations of the shares of such series; and
WHEREAS it is the desire of the Board of Directors to
establish and fix the number of shares to be included in a new
series of Preferred Stock and the designation, rights,
preferences and limitations of the shares of such new series;
NOW, THEREFORE, BE IT RESOLVED that pursuant to Article
FOUR (4) of the Company's Certificate of Incorporation, as
amended, there is hereby established a new series of 2,000 shares
of Series B 5% Convertible Preferred Stock of the Company (the
"Series B Preferred Stock") to have the designation, rights,
preferences, powers, restrictions and limitations set forth in a
supplement of Article FOUR (4) as follows:
1. Dividends.
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(a) The holders of the Series B Preferred Stock shall
be entitled to receive, out of funds legally available therefor,
dividends at an annual rate equal to five percent (5%) (the
"Dividend Rate") of the Liquidation Preference (as hereinafter
defined) (subject to appropriate adjustments in the event of any
stock dividend, stock split, combination or other similar
recapitalization affecting such shares) per share per annum, and
no more, payable in preference and priority to any payment of any
cash dividend on Common Stock or any other shares of capital
stock of the Company ranking junior to the Series B Preferred
Stock in respect of dividends (such Common Stock and other
inferior stock being collectively referred to as "Junior Stock"),
at a date no earlier than the Conversion Date (as hereinafter
defined). No dividends shall be declared or paid on the Series B
Preferred Stock other than a dividend payable on shares of Series
B Preferred Stock then being converted in accordance with Section
4 hereof unless a dividend is also declared and/or paid as may
then be required on the Company's Series A Convertible Preferred
Stock (the "Series A Preferred Stock").
(b) Dividends shall accrue with respect to each share
of Series B Preferred Stock from the date on which such share is
issued and outstanding and thereafter shall be deemed to accrue
from day to day whether or not earned or declared and whether or
not there exists profits, surplus or other funds legally
available for the payment of dividends, and shall be cumulative
so that if such dividends on the Series B Preferred Stock shall
not have been paid, or declared and set apart for payment, the
deficiency shall be fully paid or declared and set apart for
payment before any dividend shall be paid or declared or set
apart for any Junior Stock and before any purchase or acquisition
of any Junior Stock is made by the Company, except the repurchase
of Junior Stock from employees of the Company upon termination of
employment. At the earlier of: (i) the redemption or conversion
of the Series B Preferred Stock or (ii) the liquidation, sale or
merger of the Company, any accrued but undeclared dividends shall
be paid to the holders of record of outstanding shares of Series
B Preferred Stock. No accumulation of dividends on the Series B
Preferred Stock shall bear interest.
(c) At the election of the Company, each dividend may
be paid either in shares of Common Stock or in cash. If
dividends are paid in shares of Common Stock, the number of
shares to be distributed shall be determined based on the average
Closing Bid Price of the shares of Common Stock for the five (5)
Trading Days immediately preceding the date such dividends are
declared and the shares of Common Stock issued in payment of the
dividend must either be subject to an effective registration
statement filed under the Securities Act of 1933, as amended (the
"Securities Act"), or be presently saleable pursuant to an
exemption from registration thereunder. For purposes of this
Certificate of Designations, the term "Closing Bid Price" means,
for the Common Stock as of any date, the closing bid price on the
principal securities exchange or trading market where the
Company's Common Stock is listed or traded as reported by
Bloomberg, L.P. ("Bloomberg"), or, if applicable, the closing bid
price of the Common Stock in the over-the-counter market on the
electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price is reported for the Common
Stock by Bloomberg, then the average of the bid prices of any
market makers for such security as reported in the "pink sheets"
by the National Quotation Bureau, Inc. If the Closing Bid Price
of the Common Stock cannot be calculated on such date on any of
the foregoing bases, the Closing Bid Price of the Common Stock on
such date shall be the fair market value as mutually determined
by the Company and the holders of a majority of the outstanding
shares of Series B Preferred Stock being converted for which the
calculation of the Closing Bid Price is required in order to
determine the Conversion Price of such shares. "Trading Day"
shall mean any day on which the Company's Common Stock is traded
for any period on the principal securities exchange or other
securities market on which the Common Stock is then being traded.
Dividends paid in shares of Common Stock shall be paid in full
shares only, with a cash payment equal to the value of any
fractional shares. Each dividend paid in cash shall be mailed to
the holders of record of the Series B Preferred Stock as their
names and addresses appear on the share register of the Company
or at the office of the transfer agent on the corresponding
dividend payment date.
2. Liquidation, Dissolution or Winding Up.
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(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the
holders of shares of Series B Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Company
available for distribution to its stockholders, after and subject
to the payment in full of all amounts required to be distributed
to the holders of any other class or series of stock of the
Company ranking in liquidation prior and in preference to the
Series B Preferred Stock (collectively referred to as "Senior
Preferred Stock"), in pari passu with the holders of the Series A
Preferred Stock and any other class or series of stock of the
Company, but before any payment shall be made to the holders of
Junior Stock by reason of their ownership thereof, an amount
equal to $1,000 per share of Series B Preferred Stock (the
"Liquidation Preference") plus any accrued but unpaid dividends
(whether or not declared). If upon any such liquidation,
dissolution or winding up of the Company the remaining assets of
the Company available for distribution to its stockholders shall
be insufficient to pay the holders of shares of Series B
Preferred Stock (and the holders of any other series of Preferred
Stock with a Liquidation Preference equal to the Liquidation
Preference of the Series B Preferred Stock, including, without
limitation, the holders of the Series A Preferred Stock) the full
amount to which they shall be entitled, the holders of shares of
Series B Preferred Stock (and the holders of any other series of
Preferred Stock with a Liquidation Preference equal to the
Liquidation Preference of the Series B Preferred Stock) shall
share ratably in any distribution of the remaining assets and
funds of the Company in proportion to the respective amounts
which would otherwise be payable in respect of the shares held by
them upon such distribution if all amounts payable on or with
respect to such shares were paid in full.
(b) After the payment of all preferential amounts
required to be paid to the holders of Preferred Stock upon the
dissolution, liquidation or winding up of the Company, all of the
remaining assets and funds of the Company available for
distribution to its stockholders shall be distributed ratably
among the holders of the Series A Preferred Stock, the Series B
Preferred Stock and the Common Stock, with each share of Series A
Preferred Stock and Series B Preferred Stock being deemed, for
such purpose, to be equal to the number of shares of Common
Stock, including fractions of a share, into which such share of
Series A Preferred Stock and Series B Preferred Stock is
convertible immediately prior to the close of business on the
business day fixed for such distribution.
(c) The merger or consolidation of the Company into or
with another corporation which results in the exchange of
outstanding shares of the Company for securities or other
consideration issued or paid or caused to be issued or paid by
such other corporation or an affiliate thereof (except if such
merger or consolidation does not result in the transfer of more
than fifty percent (50%) of the voting securities of the
Company), or the sale of all or substantially all the assets of
the Company, shall be deemed to be a liquidation, dissolution or
winding up of the Company for the purposes of this Section 2,
unless the holders of sixty-six and two-thirds percent (66-2/3%)
of the Series B Preferred Stock then outstanding vote otherwise.
The amount deemed distributed to the holders of Series B
Preferred Stock upon any such merger or consolidation shall be
the cash or the value of the property, rights and/or securities
distributed to such holders by the acquiring person, firm or
other entity. The value of such property, rights or other
securities shall be determined in good faith by the Board of
Directors of the Company.
3. Voting.
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(a) The holders of the Series B Preferred Stock shall
not have any voting rights except (i) as required by law and (ii)
as provided in Section 4(b) below.
(b) The Company shall not amend, alter or repeal
preferences, rights, powers or other terms of the Series B
Preferred Stock so as to affect adversely the Series B Preferred
Stock, without the written consent or affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of
the then outstanding shares of Series B Preferred Stock, given in
writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a class.
4. Conversion.
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The holders of the Series B Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. At any time and from time to
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time after April 30, 1999, each share of Series B Preferred Stock
shall be convertible, at the option of the holder thereof, into
such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing one thousand dollars ($1,000)
by the Conversion Price (as defined below) in effect at the time
of conversion, provided the conversion must be for not less than
an aggregate $25,000 Liquidation Preference of the Series B
Preferred Stock, or the balance of the holder's certificates for
Series B Preferred Stock if less than $25,000 aggregate
Liquidation Preference. The Conversion Price at which shares of
Common Stock shall be deliverable upon conversion of Series B
Preferred Stock without the payment of additional consideration
by the holder thereof (the "Conversion Price") shall be the lower
of (i) $2.00 or (ii) seventy-five percent (75%) of the average
Closing Bid Price of the shares of Common Stock for the five (5)
Trading Days prior immediately to the Conversion Date (as
hereinafter defined). In the event of a liquidation of the
Company, the Conversion Rights shall terminate at the close of
business on the first full trading day preceding the date fixed
for the payment of any amounts distributable on liquidation to
the holders of Series B Preferred Stock.
(b) Fractional Shares. No fractional shares of Common
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Stock shall be issued upon conversion of the Series B Preferred
Stock. In lieu of fractional shares, the Company shall pay cash
equal to such fraction multiplied by the then effective
Conversion Price.
(c) Mechanics of Conversion.
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(i) The Company shall permit each holder of
Series B Preferred Stock to exercise its right to convert the
Series B Preferred Stock by delivering an executed and completed
notice of conversion (a "Notice of Conversion") to the Company by
facsimile to (603) 880-6390 or such other facsimile number as
designated by the Company, and delivering within five (5)
business days thereafter, the original Notice of Conversion,
together with the certificates representing the related shares of
Series B Preferred Stock, to the Company by hand delivery or by
express courier, duly endorsed. Each date on which a Notice of
Conversion is faxed to and received in accordance with the
provisions hereof shall be deemed a "Conversion Date." The
Company shall, at its expense, transmit the certificates
representing the Common Stock issuable upon conversion of the
Series B Preferred Stock (together with certificates representing
the related shares of Series B Preferred Stock not so converted)
to such holder via express courier, by electronic transfer or
otherwise, within three (3) business days after receipt by the
Company of the date the certificates representing the shares of
Series B Preferred Stock to be converted are duly received by the
Company (the "Delivery Date"). For purposes of this Certificate
of Designations, such conversion of the Series B Preferred Stock
shall be deemed to have been made immediately prior to the close
of business on the Conversion Date.
(ii) The Company shall at all times have
authorized and reserved for the purpose of issuance a sufficient
number of shares of Common Stock to provide for the conversion of
the Series B Preferred Stock. The Company shall use its best
efforts at all times to maintain a number of shares of Common
Stock so reserved for issuance that is no less than two (2) times
the number that is then actually issuable upon the conversion of
the Series B Preferred Stock.
(iii) All shares of Series B Preferred Stock which
shall have been surrendered for conversion as herein provided
shall no longer be deemed to be outstanding and all rights with
respect to such shares, including the rights, if any, to receive
dividends, notices and to vote, shall immediately cease and
terminate on the Conversion Date, except only the right of the
holders thereof to receive shares of Common Stock in exchange
therefor. Any shares of Series B Preferred Stock so converted
shall be retired and canceled and shall not be reissued, and the
Company may from time to time take such appropriate action as may
be necessary to reduce the number of shares of authorized Series
B Preferred Stock accordingly.
(iv) If the conversion is in connection with an
underwritten offer of securities registered pursuant to the
Securities Act, the conversion may at the option of any holder
tendering Series B Preferred Stock for conversion be conditioned
upon the closing with the underwriter of the sale of securities
pursuant to such offering, in which event the person(s) entitled
to receive the Common Stock issuable upon such conversion of the
Series B Preferred Stock shall not be deemed to have converted
such Series B Preferred Stock until immediately prior to the
closing of the sale of securities.
(v) The Company understands that a delay in the
issuance of the Shares of Common Stock beyond the Delivery Date
could result in economic loss to the holder of the Series B
Preferred Stock being converted (the "Converting Holder"). As
compensation to the Converting Holder for such loss, the Company
agrees to pay late payments to the Converting Holder in the event
that due entirely to the Company's direct or indirect actions or
to its failure to act (the "Company's Actions"). The Company
shall issue and deliver the shares of Common Stock upon
conversion in accordance with the following schedule (where "No.
Business Days Late" is defined as the number of business days
beyond five (5) business days from the Delivery Date):
No. Business Days Late Late Payment for Each $10,000
---------------------- of Preferred Stock Liquidation
Amount Being Converted
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1 $100
2 $200
3 $300
4 $400
5 $500
>5 $500 +$200 for each Business
Day Late beyond 5 days from
The Delivery Date
The Company shall pay any payments incurred under this Subsection
(c)(v) in immediately available funds upon demand. Nothing
herein shall limit the Converting Holder's right to pursue actual
damages for the Company's Actions resulting in the transfer
agent's failure to issue and deliver the Common Stock to the
Converting Holder. Furthermore, in addition to any other
remedies which may be available to the addition to any other
remedies which may be available to the Converting Holder, in the
event that due to the Company's Actions, the transfer agent fails
to deliver such shares of Common Stock within five (5) business
days after the Delivery Date, the Converting Holder will be
entitled to revoke the relevant Notice of Conversion by
delivering a notice to such effect to the Company whereupon the
Company and the Converting Holder shall be restored to its
position immediately prior to delivery of such Notice of
Conversion.
(vi) If, by the relevant Delivery Date, due to the
Company's Actions, and the transfer agent fails for any reason to
deliver the Shares to be issued upon conversion of Series B
Preferred Stock and after such Delivery Date, the Converting
Holder purchases, in an open market transaction or otherwise,
shares of Common Stock (the "Covering Shares") solely in order to
make deliver in satisfaction of a sale of Common Stock by the
Converting Holder (the "Sold Shares"), which delivery such
Converting Holder anticipated to make using the shares of Common
Stock to be issued upon such conversion (a "Buy-In"), the Company
shall pay to the Converting Holder, in addition to all other
amounts contemplated in other provisions of the Securities
Purchase Agreement and related Agreements pursuant to which the
Series B Preferred Stock was sold by the Company to the initial
holders, and not in lieu thereof, the Buy-In Adjustment Amount
(as defined below). The "Buy In Adjustment Amount" is the amount
equal to the excess, if any, of (x) the Converting Holder's total
purchase price (including brokerage commissions, if any) for the
Covered Shares over (y) the net proceeds (after brokerage
commissions, if any) received by the Converting Holder from the
sale of the Sold Shares. The Company shall pay the Buy-In
Adjustment Amount to the Converting Holder in immediately
available funds immediately upon demand by the Converting Holder.
By way of illustration and not in limitation of the foregoing, if
the Converting Holder purchases shares of Common Stock having a
total purchase price (including brokerage commissions) of $11,000
to cover a Buy-In with respect to shares of Common Stock it sold
for net proceeds of $10,000, the Buy-In Adjustment Amount which
Company will be required to pay to the Converting Holder will be
$1,000.
(vii) Subject to the completeness and accuracy of
the Converting Holder's representations and warranties herein and
in the Securities Purchase Agreement pursuant to which the
Company sold the Series B Preferred Stock, upon the conversion of
any Series B Preferred Stock by a person who is a non-U.S.
Person, and following the expiration of any applicable Restricted
Period (as those terms are defined in Regulation S under the
Securities Act), the Company, shall at its expense, take all
necessary action (including the issuance of an opinion of
counsel) to assure that the Company's transfer agent shall issue
stock certificates without restrictive legend or stop orders in
the name of the Converting Holder (or its nominee (being a non-
U.S. Person) or such non-U.S. persons as may be designated by the
Converting Holder) and in such denominations to be specified at
conversion representing the number of shares of Common Stock
issuable upon such conversion, as applicable. Nothing in this
Section 4, however, shall affect in any way the Converting
Holder's or such nominee's obligations and agreement to comply
with all applicable securities laws upon resale of the Common
Stock.
(d) Quantity Limitations on Conversion.
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Notwithstanding anything herein to the contrary, no holder of
Series B Preferred Stock shall have the right, and the Company
shall not have the obligation, to convert all or any portion of
the Series B Preferred Stock (and the Company shall not have the
right to pay dividends on the Series B Preferred Stock in shares
of Common Stock) if and to, the extent that the issuance to such
holder of shares of Common Stock upon such conversion (or payment
of dividends) would result in such holder being deemed the
beneficial owner of more than nine and nine-tenths percent (9.9%)
of the then outstanding shares of Common Stock within the meaning
of Section 13 (d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules promulgated
thereunder.
(e) No Impairment. The Company will not, by amendment
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of its Certificate of Incorporation 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
Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 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 B Preferred Stock against impairment.
(f) Notice of Record Date. In the event:
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(i) that the Company declares a dividend (or any
other distribution) on its Common Stock payable in Common Stock
or other securities of the Company;
(ii) that the Company subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock
of the Company (other than a subdivision or combination of its
outstanding shares of Common Stock or a stock dividend or stock
distribution thereon);
(iv) of any consolidation or merger of the Company
into or with another corporation, or any exchange of shares,
recapitalization, reorganization or other similar event, as a
result of which shares of Common Stock of the Company shall be
changed into the same or a different number of shares of the same
or another class or classes of stock or securities of the Company
or another entity; or
(v) of the involuntary or voluntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed at its principal
executive offices or at the office of the transfer agent of the
Series B Preferred Stock, and shall cause notice thereof to be
mailed to the holders of the Series B Preferred Stock at least
ten (10) days prior to the record date specified in (A) below or
twenty (20) days before the date specified in (B) below, a notice
stating:
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be
taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution,
subdivision or combination are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or
winding up is expected to become effective, and the date as
of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution
or winding up.
(g) Adjustment to Conversion Price.
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(i) If, prior to the conversion of all shares of
Series B Preferred Stock, any of the events specified in Section
4(f)(i) through (iii) hereof occurs, the Board of Directors of
the Company shall make an equitable adjustment in the Conversion
Price, if necessary, to reflect such event in order to preserve
substantially the Conversion Rights of the holders of Series B
Preferred Stock. The Company shall send to each holder of Series
B Preferred Stock written notice of each change in the Conversion
Price.
(ii) If, prior to the conversion of all shares of
Series B Preferred Stock, any of the events specified in Section
4(f)(iv) hereof occurs, then the holders of Series B Preferred
Stock shall thereafter have the right to receive upon conversion
of shares of Series B Preferred Stock, upon the basis and upon
the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon
conversion, such shares of stock and/or securities as may be
issued or payable with respect to or in exchange for the number
of shares of Common Stock immediately theretofore receivable upon
the conversion of shares of Series B Preferred Stock held by such
holders had such merger, consolidation, exchange of shares,
recapitalization or reorganization not taken place. In any case
subject to this Subsection (g) (ii) appropriate provisions shall
be made with respect to the rights and interests of the holders
of the Series B Preferred Stock to the end that the provisions
hereof (including, without limitation, provisions for adjustment
of the Conversion Price and of the number or type of shares
issuable upon conversion of the Series B Preferred Stock) shall
thereafter be applicable, as nearly as may be practicable in
relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof. The Company shall not
effect any transaction described in this Subsection (g) (ii)
unless the resulting successor or acquiring entity (if not the
Company) assumes by written instrument the obligation to deliver
to the holders of the Series B Preferred Stock such shares of
stock and/or securities as, in accordance with the foregoing
provisions, the holders of the Series B Preferred Stock may be
entitled to purchase upon conversion, provided that such
resulting successor or acquiring entity has a class of securities
registered under Section 12 of the Exchange Act.
(h) Mandatory Conversion.
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(i) The Company may, at its option, require all
(and not less than all) holders of shares of Series B Preferred
Stock then outstanding to convert their shares of Series B
Preferred Stock into shares of Common Stock at the then effective
Conversion Price pursuant to this Section 4, at any time on or
after the first anniversary of the date the registration
statement filed under the Securities Act relating to the shares
of Common Stock into which the Series B Preferred Stock is then
convertible was declared effective by the Securities and Exchange
Commission.
(ii) All holders of record of shares of Series B
Preferred Stock then outstanding will be given at least ten (10)
days' prior written notice of the date fixed and the place
designated for mandatory conversion of all such shares of Series
B Preferred Stock pursuant to this Section 4(h). Such notice
will be sent by first class or registered mail, postage prepaid,
to each record holder of Series B Preferred Stock at such
holder's address last shown on the records of the transfer agent
for the Series B Preferred Stock (or the records of the Company,
if it serves as its own transfer agent).
5. Optional Redemption.
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(a) Redemption Price. At any time, and from time to
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time, the Company may, at its option, redeem any number of shares
of Series B Preferred Stock by paying cash to the holders thereof
equal to: (i) during the first thirty (30) days following the
date the shares are first issued (the "Issue Date"), one hundred
and five percent (105%) of the sum of (A) Liquidation Preference
for such shares plus (B) any accrued but unpaid dividends (such
sum being the "Redemption Amount"), (ii) during the second thirty
(30) day period following the Issue Date at one hundred and ten
percent (110%) of the Redemption Amount, (iii) during the third
thirty (30) day period following the Issue Date at one hundred
and fifteen percent (115%) of the Redemption Amount, (iv) during
the fourth thirty (30) day period following the Issue Date at one
hundred and twenty percent (120%) of the Redemption Amount, and
(v) thereafter at the greater of (X) one hundred and twenty
percent (120%) of the Redemption Amount or (Y) the market price
on an as converted basis of the shares of Series B Preferred
Stock (based on the average Closing Bid Price of the Common Stock
for the five (5) Trading Days immediately preceding the date of
the Company's notice of redemption) plus all accrued and unpaid
dividends. Notwithstanding anything to the contrary contained
herein, so long as any shares of the Series A Preferred Stock
remain outstanding, the Company shall not redeem any shares of
Series B Preferred Stock without the prior written consent of the
holders of sixty-six and two-thirds percent (66 %) of the
outstanding shares of Series A Preferred Stock.
(b) Redemption Procedure. Upon receipt of notice of
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the Company's election to exercise its redemption rights under
Section 5(a) thereof, each holder of Series B Preferred Stock
shall accept its ratable portion (based on its holdings of Series
B Preferred Stock as compared to the aggregate number of shares
of Series B Preferred Stock then outstanding) of such offer by
tendering such holder's shares to the Company for redemption, at
an address to be set forth in such notice, at any time prior to
5:00 p.m. New York time on the fifth Trading Day (the "Redemption
Date") following receipt of such notice. Within five (5) Trading
Days of the Redemption Date, if notice is sent, the Company shall
remit fifty percent (50%) of the applicable redemption price and
within ten (10) Trading Days of the Redemption Date, if notice is
sent, the Company shall remit the remaining fifty percent (50%)
of the applicable redemption price, calculated pursuant to
Section 5(a) hereof, by check to each holder of the Series B
Preferred Stock, to the most recent address of each holder, as
set forth in the Company's books and records. The failure of the
Company to remit the redemption price within the applicable time
period shall render the Company's notice of redemption void, and
the Company shall thereafter have no right to redeem any shares
of Series B Preferred Stock pursuant to this Section 5.
(c) Cancellation of Redeemed Stock. Any shares of
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Series B Preferred Stock redeemed pursuant to this Section 5 or
otherwise acquired by the Company in any manner whatsoever shall
be canceled and shall not under any circumstances be reissued.
The Company may from time to time take such appropriate corporate
action as may be necessary to reduce accordingly the number of
authorized shares of the Company's capital stock.
(d) Restrictions on Purchases. The Company will not,
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and will not permit any subsidiary of the Company to, purchase or
acquire any shares of Series B Preferred Stock otherwise than
pursuant to an offer made on the same terms to all holders of
Series B Preferred Stock at the time outstanding.
(e) Conversion Right. Anything contained in this
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Section 5 to the contrary notwithstanding, the holders of shares
of Series B Preferred Stock to be redeemed in accordance with
this Section shall have the right, exercisable at any time up to
the close of business on the Redemption Date (unless the Company
is legally prohibited from redeeming such shares on such date, in
which event such right shall be exercisable until the removal of
such legal disability), to convert all or any part of such shares
to be redeemed as herein provided into shares of Common Stock
pursuant to Section 4 hereof.
6. Sinking Fund. The Company shall not be required to
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establish or maintain any sinking fund for the payment of
dividends or liquidation preferences on the Series B Preferred
Stock or the redemption of any shares thereof.
7. Notices. Except as otherwise specifically provided
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herein, all notices to be provided hereunder shall be sent by
first class or registered mail, postage prepaid, in the case of
the Company to its principal executive offices, or in the case
each record holder of Series B Preferred Stock, at such holder's
address last shown on the records of the transfer agent for the
Series B Preferred Stock (or the records of the Company, if it
serves as its own transfer agent).
IN WITNESS WHEREOF, the Company has caused this
Certificate to be executed by its President this 2nd day of
February, 1999.
By: /s/ Michael T. Pieniazek
------------------------
Michael T. Pieniazek
President