Exhibit 3(a)
CERTIFICATE OF INCORPORATION
OF
RESPONSE USA, INC.
FIRST: The name of the Corporation is Response USA, Inc.
SECOND: The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle, 19801. The name of the registered agent at such address is The
Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted by the Corporation is as follows:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The aggregate number of shares which this corporation shall have
authority to issue is 12,500,000 shares of Common Stock, $.002 par value per
share, and 250,000 shares of Undersigned Preferred Stock, $1.00 par value per
share.
The Undesignated Preferred Stock may be divided and issued from time to time in
one or more series as may be designated by the Board of Directors of the
Corporation, each of such series to be distinctly titled and to consist of the
number of shares designated by the Board of Directors. All shares of any one
series of Undesignated Preferred Stock as designated by the Board of Directors
shall be alike in every particular, except that shares of any one series issued
at different times may differ as to the date from which dividends thereon (if
any) shall accrue or be cumulative (or both). The designations, preferences,
qualifications, limitations, restrictions, options, and other optional, special
participating or relative rights (if any), of any series of Undesignated
Preferred Stock may differ from those of any and all other series at any time
outstanding. The Board of Directors of the Corporation is hereby expressly
vested with authority to fix by resolution the designations, preferences,
qualifications, limitations, restrictions, options and other optional, special,
participating or relative rights (if any), of the Undesignated Preferred Stock
and each series thereof which may be designated by the Board of Directors,
including, but without limiting the generality of the foregoing, the following:
THE NUMBER OF SHARES TO CONSTITUTE SUCH SERIES AND THE DESIGNATION
THEREOF;
THE VOTING RIGHTS AND POWERS (IF ANY) OF SUCH UNDESIGNATED PREFERRED
STOCK AND EACH SERIES THEREOF;
THE RATES AND TIMES AT WHICH, AND THE TERMS AND CONDITIONS ON WHICH,
DIVIDENDS (IF ANY) ON EACH SERIES OF UNDESIGNATED PREFERRED STOCK WILL BE
PAID, AND ANY DIVIDEND PREFERENCE OR RIGHTS OF CUMULATION;
THE RIGHTS (IF ANY) OF HOLDERS OF UNDESIGNATED PREFERRED STOCK, AND
EACH SERIES THEREOF, TO CONVERT THE SAME INTO, OR EXCHANGE THE SAME FOR,
SHARES OF OTHER CLASSES (OR SERIES OF CLASSES) OF CAPITAL STOCK OF THE
CORPORATION AND THE TERMS AND CONDITIONS FOR SUCH CONVERSION OR EXCHANGE,
INCLUDING PROVISIONS FOR ADJUSTMENT OR CONVERSION OR EXCHANGE PRICES OR
RATES IN SUCH EVENT AS THE BOARD OF DIRECTORS SHALL DETERMINE;
THE REDEMPTION RIGHTS (IF ANY) OF THE CORPORATION AND OF THE HOLDERS
OF THE UNDESIGNATED PREFERRED STOCK AND EACH SERIES THEREOF AND THE TIMES
AT WHICH, AND THE TERMS AND CONDITIONS ON WHICH, UNDESIGNATED PREFERRED
STOCK, AND EACH SERIES THEREOF, MAY BE REDEEMED; AND
THE RIGHTS AND PREFERENCES (IF ANY) OF THE HOLDERS OF UNDESIGNATED
PREFERRED STOCK, AND EACH SERIES THEREOF, UPON THE VOLUNTARY OR INVOLUNTARY
LIQUIDATION, DISSOLUTION OR WINDING UP OF THE CORPORATION.
FIFTH: The name and mailing address of the persons who are to serve as
directors of the Corporation until the first annual meeting of stockholders or
until a successor is elected and qualified is as follows:
Name Mailing Address
---- ---------------
Richard M. Brooks 1300 Admiral Wilson Boulevard
Camden, New Jersey 08101
Ronald A. Feldman 1300 Admiral Wilson Boulevard
Camden, New Jersey 08101
Howard B. Levin 1300 Admiral Wilson Boulevard
Camden, New Jersey 08101
SIXTH: The name and address of the sole incorporator is as follows:
Name Mailing Address
---- ---------------
Maxine M. DiRenza 1515 Market Street, 9th Floor
Philadelphia, PA 19102
SEVENTH: In furtherance of and not in limitation of powers conferred by
statute, it is further provided:
Election of directors need not be by written ballot.
The board of directors is expressly authorized to adopt, amend or repeal
the By-laws of the Corporation.
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EIGHTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and the Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
NINTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. Any repeal or modification of this paragraph shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
If the Delaware General Corporation Law is hereafter amended to authorize the
further elimination or limitation of the liability of a director, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the amended Delaware General Corporation Law. Any
repeal or modification of this paragraph shall not adversely affect any right or
protection of a director of the corporation existing hereunder with respect to
any act or omission occurring prior to such repeal or modification.
EXECUTED on MARCH 18, 1992
-------------------------
/s/ Maxine M. Direnza
-------------------------
Maxine M. DiRenza
Incorporator
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
RESPONSE USA, INC.
The undersigned, being, respectively, Chief Executive Officer and Secretary
of Response USA, Inc., a Delaware corporation (the "Corporation"), do hereby
certify as follows:
FIRST: That the Board of Directors of the Corporation adopted a
resolution proposing and declaring advisable a reverse split of the
Corporation's issued and outstanding Common Stock, $.008 par value per share, on
a one-for-ten basis.
SECOND: The foregoing amendment has been duly adopted by the stockholders
of the Corporation in accordance with Section 242 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Richard M. Brooks, its Chief Executive Officer, and attested Ronald A.
Feldman, its Secretary, this 20th day of November, 1995.
/s/ Richard M. Brooks
-------------------------------
Richard M. Brooks,
Chief Executive Officer
ATTEST:
/s/ Ronald A. Feldman
- -----------------------------
Ronald A. Feldman,
Secretary
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
1996-SERIES A CONVERTIBLE PREFERRED STOCK
OF
- RESPONSE USA INC. -
Response USA Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Company"), does by its President hereby certify:
That pursuant to the authority vested in the Board of Directors by the
Certificate of Incorporation, the Board, pursuant to the unanimous written
consent dated as of May 30, 1996, adopted the following resolutions:
RESOLVED, that pursuant to the authority so conferred upon it, the Board of
Directors hereby authorizes the issuance of 7,500 shares of 1996-Series A
Convertible Preferred Stock, pare value $.01 per share ("1996-Series A
Convertible Preferred"), and
RESOLVED, that the voting powers, preferences and relative rights and privileges
and other rights granted to the 1996-Series A Convertible Preferred and the
qualifications, limitations or restrictions imposed thereon be, and they hereby
are, as follows:
SECTION 1. DESIGNATION AND AMOUNT.
The shares of such series shall be designated as "1996-Series A Convertible
Preferred Stock" (the "1996-Series A Convertible Preferred") and the number of
shares constituting the 1996-Series A Convertible Preferred shall be 7,500.
Such number of shares may be decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of 1996-Series A
Convertible Preferred to a number less than the number of shares then
outstanding.
SECTION 2. RANK.
The 1996-Series A Convertible Preferred shall rank: (i) prior to all of the
Company's Common Stock, par value $0.008 per share ("Common Stock"); (ii) prior
to any class or series of capital stock of the Company hereafter created
(collectively, with the Common Stock, "Junior Securities"); (iii) on parity with
any class or series of capital stock of the Company hereafter created
specifically ranking by its terms on parity with the 1996-Series A Convertible
Preferred Stock with the prior consent of the holders of 75% of the shares of
then outstanding 1996-Series A Convertible Preferred ("Parity Securities");
(iv) after any class or series of capital stock of the Company hereafter created
and specifically ranking by its terms senior to the 1996-Series A Convertible
Preferred with the prior consent of the holders of 75% of the shares of then
outstanding 1996-Series A Convertible Preferred (collectively, "Senior
Securities"), in each case as to distributions of assets upon liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary (all
such distributions being referred to collectively as "Distributions").
SECTION 3. DIVIDENDS.
The 1996-Series A Convertible Preferred will bear no dividends, and the holders
of the 1996-Series A Convertible ("Holders") shall not be entitled to receive
dividends on the 1996-Series A Convertible.
SECTION 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the Company,
either voluntary or involuntary, the Holders of shares of 1996-Series A
Convertible Preferred shall be entitled to receive, immediately after any
distributions to Senior Securities required by the Company's Certificate of
Incorporation, and prior and in preference to any distribution to Junior
Securities but in parity with any distribution of Parity Securities, an amount
per share equal to the sum of (i) $1.250 for each outstanding share of
1996-Series A Convertible Preferred (the "Original 1996-Series A Issue Price")
and (ii) an amount equal to 10% of the Original 1996-Series A Issue Price per
annum for the period that has passed since the Escrow Date (as hereinafter
defined). If upon the occurrence of such event, the assets and funds thus
distributed among the Holders of the 1996-Series A Convertible Preferred and
Parity Securities shall be insufficient to permit the payment to such holders of
the full preferential amounts due to the holders of the 1996-Series A
Convertible Preferred and the Parity Securities, respectively, then the entire
assets and funds of the Company legally available for such distribution shall be
distributed among the holders of the 1996-Series A Convertible Preferred and the
Parity Securities, on a pro rata basis in proportion to the respective amounts
that otherwise would 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) Upon the completion of the distribution required by subsection 4(a), if
assets remain in the Company, they shall be distributed to holders of Parity
Securities (unless holders of Parity Securities have received distributions
pursuant to subsection (a) above) and Junior Securities in accordance with the
Company's Certificate of Incorporation.
(c) A consolidation or merger of the Company with or into any other corporation
or corporations, or a sale, conveyance or disposition of all or substantially
all of the assets of the Company or the effectuation by the Company of a
transaction or series of related transactions in which more than 50% of the
voting power of the Company is disposed of, shall not be deemed to be a
liquidation, dissolution or winding up within the meaning of this Section 4, but
shall instead be treated pursuant to Section 5(d) hereof.
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SECTION 5. CONVERSION.
(a) HOLDER'S RIGHT TO CONVERT.
(i) The record Holder of this 1996-Series A Convertible Preferred shall be
entitled (at the times and in the amounts set forth below), subject to the
Company's right to redeem the Premium (as defined herein) in accordance with
Section 6(a), at the office of the Company or any transfer agent for the
1996-Series A Convertible Preferred , to convert portions of the 1996-Series A
Convertible Preferred held by such Holder (but only in multiples of $10,000)
into that number of fully-paid and non-assessable shares of the Common Stock at
the Conversion Price as set forth below. The number of shares of Common Stock
into which this 1996-Series A Convertible Preferred may be converted is
hereinafter referred to as the "Conversion Number" for such 1996-Series A
Convertible Preferred. The record Holder of this 1996-Series A Convertible
Preferred shall be entitled to convert up to 50 percent of the number of shares
of 1996-Series A Convertible Preferred held by such Holder beginning 45 days
following the Escrow Date. The balance of the shares of 1996-Series A
Convertible Preferred will become convertible at the option of such Holder
commencing 70 days following the Escrow Date. The following formula sets forth
the Conversion Number for each share of 1996-Series A Convertible Preferred in
the event the Company does not redeem the Premium pursuant to Section 6(a):
Conversion Number = The Premium + 1,000
--------------------
Conversion Price
where the Premium is equal to: (.10)(N/365)(1,000)
and the following formula sets forth the Conversion Number for each share of
1996-Series A Convertible Preferred in the event the Company redeems the Premium
in accordance with Section 6(a):
Conversion Number = 1,000
----------------
Conversion Price
where,
N = the number of days between (i) the date (the "Escrow Date") that, in
connection with the consummation of the initial purchase of this
1996-Series A Convertible Preferred from the Company, the escrow agent
first has in its possessions, prior to 10:30 A.M., New York City time on
such date (or after 10:30 A.M. on such date, if the escrow agent is able to
deposit such funds in an interest bearing account in time for such funds to
accrue interest for that day), funds representing full payment for the
shares of 1996-Series A Convertible Preferred for which conversion is being
elected, and (ii) the applicable date of conversion for the shares of
1996-Series A Convertible Preferred for which conversion is being elected,
and
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CONVERSION PRICE = Lesser of (a) 80% of the average closing bid price of
the Company's Common Stock as reported by the NASDAQ Small Cap Stock Market
("NASDAQ") for the five trading days immediately preceding the date of
closing; or (b) 80% of the Strike Price (as defined below) for the five
trading days preceding the Date of Conversion. In no event shall the
Conversion Price exceed $5.00 (subject to equitable adjustments from time
to time for stock splits, stock dividends, recapitalisations,
reorganisations, and similar transactions). For purposes hereof, the term
"Strike Price" shall mean the average closing bid price of the Company's
Common Stock as reported by NASDAQ (or, if not reported by NASDAQ as
reported by such other exchange or market where traded).
Notwithstanding anything herein to the contrary, in no event shall holders
of shares of 1996-Series A Convertible Preferred be entitled to convert any
such shares in excess of that number of shares upon conversion of which the
sum of (x) the number of shares of Common Stock beneficially owned by the
holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unconverted portion
of the shares of 1996-Series A Convertible Preferred ) and (y) the number
of shares of Common Stock issuable upon conversion of the shares of
1996-Series A Convertible Preferred with respect to which the determination
of this proviso is being made would result in beneficial ownership by the
holder and its affiliates of more than 4.9% of the outstanding shares of
Common Stock. For purposes of the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and Regulation 13 D-G
thereunder, except as otherwise provided in clause (x) of such proviso.
(ii) MECHANICS OF CONVERSION. In order to convert 1996-Series A Convertible
Preferred into full shares of Common Stock, the Holder shall (i) transmit
facsimile copy of the fully executed notice of conversion in the form attached
hereto ("Notice of Conversion") to the Company at such office that he elects to
convert the same (Facsimile number (609) 896-3535), which notice shall specify
the number of shares of 1996-Series A Convertible Preferred to be converted and
shall contain a calculation of the Conversion Price (together with a copy of the
first page of each certificate to be converted) to the Company or its designated
transfer agent prior to midnight, New York City time (the "Conversion Notice
Deadline") on the date of conversion specified on the Notice of Conversion and
(ii) promptly surrender the original certificate or certificates therefor, duly
endorsed, and deliver the original Notice of Conversion by either overnight
courier or 2-day courier, to the office of the Company or of any transfer agent
for the 1996-Series A Convertible Preferred; provided, however, that the Company
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such conversion unless either the certificates evidencing
such 1996-Series A Convertible Preferred are delivered to the Company or its
transfer agent as provided above, or the Holder notifies the Company or its
transfer agent that such certificates have been lost, stolen or destroyed. Upon
receipt by the Company of evidence of the loss, theft, destruction or mutilation
of the certificate or certificates ("Stock Certificates") representing shares of
1996-Series A Convertible Preferred, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of the Stock Certificate(s), if
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mutilated, the Company shall execute and deliver new Stock Certificate(s) of
like tenor and date. No fractional shares of Common Stock shall be issued upon
conversion of this 1996-Series A Convertible Preferred. In lieu of any
fractional share to which the Holder would otherwise be entitled, the Company
shall pay cash to such Holder in an amount equal to such fraction multiplied by
the Conversion Price then in effect. In the case of a dispute as to the
calculation of the Conversion Price, the Company's calculation shall be deemed
conclusive absent manifest error.
The Company shall issue and deliver within two (2) business days after delivery
to the Company of such certificates (the "Delivery Period"), or after such
agreement and indemnification, to such Holder of 1996-Series A Convertible
Preferred at the address of the Holder on the books of the Company, (i) a
certificate or certificates for the number of shares of Common Stock equal to
the Conversion Number, for the shares of 1996-Series A Convertible Preferred
being so converted and (ii) a certificate representing the balance of the shares
of 1996-Series A Convertible Preferred not so converted, if any. The date on
which conversion occurs (the "Date of Conversion") shall be deemed to be the
date set forth in such Notice of Conversion, provided that the copy of the
Notice of Conversion is faxed to the Company before midnight, New York City
time, on the Date of Conversion. Upon a conversion of shares of 1996-Series A
Convertible Preferred, the Holder shall promptly deliver original Stock
Certificates representing the share of 1996-Series A Convertible Preferred to be
converted to the transfer agent or the Company. The person or persons entitled
to receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date. In addition to any other remedies available to a
Holder, including actual damages and/or equitable relief, the Company shall pay
to a holder $250 in cash for the first day beyond such Delivery Period that the
Company fails to deliver Common Stock issuable upon surrender of shares of
1996-Series A Convertible Preferred with a Notice of Conversion and $500 per day
in cash for each day thereafter until such time as the earlier of the date that
the Company has delivered all such Common Stock and the tenth day beyond such
Delivery Period. Such cash amount shall be paid to such holder by the fifth day
of the month following the month in which it has accrued. In the event the
Company fails to deliver such Common Stock prior to the expiration of the ten
(10) business day period after the Delivery Period for any reason (whether due
to a requirement of law or a stock exchange or otherwise), such holder shall be
entitled to (in addition to any other remedies available to the holder)
Conversion Default Payments in accordance with Section 5(c) hereof beginning on
the expiration of such ten (10) business day period.
(B) MANDATORY CONVERSION. On the Effective Mandatory Conversion Date (as
defined below), all shares of 1996-Series A Convertible Preferred which have not
previously been converted into shares of Common Stock shall automatically
convert into that number of fully paid and non-assessable shares of Common
Stock, computed pursuant to the applicable formula set forth in Section 5(a)(i)
above. The Company shall effect such conversion by giving written notice to
Holders at least two but not more than ten days prior to effectuating the
conversion ("Effective Mandatory Conversion Date"); provided, however, that the
Company may not designate a date as the Effective Mandatory Conversion Date
prior to such date that is such number of days, if any, after June 1, 1999 as is
equal to the number of days for which the Company is required to make payments
under Section 2(c) or
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11 of that certain Registration Rights Agreement executed in connection with the
initial issuance of the 1996-Series A Convertible Preferred (the "Registration
Rights Agreement"). Holders will thereupon be required to surrender their
preferred stock certificates to the Company is order to receive certificates
evidencing shares of the Company's Common Stock, and all rights of Holders,
except the right to receive certificates evidencing Common Stock pursuant to the
mandatory conversion, shall be extinguished as of the Effective Mandatory
Conversion Date. Nothing herein shall prevent a Holder from converting shares
of 1996-Series A Convertible Preferred pursuant to Section 5(a) after the
Company delivers a notice hereunder and prior to the Effective Mandatory
Conversion Date.
(C) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the
1996-Series A Convertible Preferred, such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all then
outstanding 1996-Series A Convertible Preferred; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of 1996-Series A
Convertible Preferred, the Company will take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose. If, at any time a
holder of shares of 1996-Series A Convertible Preferred submits a Notice of
Conversion, the Company does not have sufficient authorized but unissued shares
of Common Stock available to effect such conversion in accordance with the
provisions of this Section 5 (a "Conversion Default"), the Company shall issue
to the holder all of the shares of Common Stock which are available to effect
such conversion. The number of shares of 1996-Series A Convertible Preferred
included in the Notice of Conversion which exceeds the amount which is then
convertible into available shares of Common Stock (the "Default Amount") shall,
notwithstanding anything to the contrary contained herein, not be convertible
into Common Stock in accordance with the terms hereof until (and at the Holder's
option at any time after) the date additional shares of Common Stock are
authorized by the Company to permit such conversion, at which time the
Conversion Price in respect thereof shall be the lesser of (i) the Conversion
Price on the Conversion Default Date (as defined below) and (ii) the Conversion
Price on the Date of Conversion elected by the Holder in respect thereof. The
Company shall pay to the Holder payments ("Conversion Default Payments") for a
Conversion Default in the amount of (N/365), multiplied by the product of the
Original 1996-Series A Issue Price with respect to each share of 1996-Series A
Convertible Preferred, multiplied by the Default Amount multiplied by .25, where
N = the number of days from the first day of the Conversion Default (the
"Conversion Default Date") to the date (the "Authorization Date") that the
Company authorizes a sufficient number of shares of Common Stock to effect
Conversion of the full number of shares of 1996-Series A Convertible Preferred.
The Company shall send notice to the holder of the authorization of additional
shares of Common Stock, the Authorization Date and the amount of holder's
accrued Conversion Default Payments. The accrued Conversion Default Payments
for each calendar month shall be paid in cash or, subject to the limitations
contained in Section 5(a), shall be convertible into Common Stock at the
Conversion Price, at the holder's option, as follows:
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(X) In the event holder elects to take such payment in cash, cash payment
shall be made to holder by the fifth day of the month following the
month in which it has accrued;
(Y) In the event holder elects to take such payment in Common Stock, the
holder may convert such payment amount into Common Stock at the
Conversion Price (as in effect at the time of Conversion) at any time
after the fifth day of the month following the month in which it has
accrued in accordance with the terms of this Section 5(c).
Nothing herein shall limit the holder's right to pursue actual damages for the
Company's failure to maintain a sufficient number of authorized shares of Common
Stock, and each holder shall have the right to pursue all remedies available at
law or in equity (including a decree of specific performance and/or injunctive
relief).
(D) ADJUSTMENT TO CONVERSION PRICE.
(i) If, prior to the conversion of all 1996-Series A Convertible Preferred,
there shall be any merger, consolidation, 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, then the Holders of 1996-Series A Convertible
Preferred shall thereafter have the right to purchase and receive upon
conversion of 1996-Series A Convertible Preferred, 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 purchasable and
receivable upon the conversion of 1996-Series A Convertible Preferred held by
such Holders had such merger, consolidation, exchange of shares,
recapitalization or reorganization not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
the Holders of the 1996-Series A Convertible Preferred to the end that the
provisions hereof (including, without limitation, provisions for adjustment of
the number of shares issuable upon conversion of the 1996-Series A Convertible
Preferred pursuant to Sections 5(a)(i) and 5(d) hereof) shall thereafter be
applicable, as nearly as may be practicable in relation to any shares of stock
or securities hereafter deliverable upon the exercise hereof. The Company shall
not effect any transaction described in this subsection 5(d) unless the
resulting successor or acquiring entity (if not the Company) assumes by written
instrument the obligation to deliver to the Holders of the 1996-Series A
Convertible Preferred such shares of stock and/or securities as, in accordance
with the foregoing provisions, the Holders of the 1996-Series A Convertible
Preferred may be entitled to purchase.
(ii) If, any adjustment under this subsection 5(d) would create a fractional
share of Common Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of shares of Common
Stock issuable upon conversion shall be the next higher number of shares.
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SECTION 6. CASH REDEMPTION OF PREMIUM BY COMPANY; NO REDEMPTION OF
1996-SERIES A CONVERTIBLE.
(a) The Company shall have the right, in its sole discretion, upon receipt
of a Notice of Conversion pursuant to Section 5(a)(ii) or in the event of a
mandatory conversion effected in accordance with Section 5(b) hereof, to redeem
any portion of the Premium subject to such conversion for a sum of cash equal to
the amount of the Premium being so redeemed. All cash redemption payments
hereunder shall be paid in lawful money of the United State of America at such
address for the holder as appears on the record books of the Company (or at such
other address as such holder shall hereafter give to the Company be written
notice). In the event the Company elects, pursuant to this Section 6(a), to
redeem all or any portion of the Premium in cash and fails to pay such holder
the applicable redemption amount to which such holder is entitled by depositing
a check in the U.S. Mail to such holder within three (3) business days of
receipt by the Company of a Notice of Conversion (in the case of a redemption in
connection with an optional conversion) or the Effective Mandatory Conversion
Date (in the case of a redemption in connection with a mandatory conversion),
the Company shall thereafter forfeit its right to redeem such Premium in cash
and such Premium shall thereafter be converted into shares of Common Stock in
accordance with Section 5(a)(i) hereof.
(b) Each holder of 1996-Series A Convertible Preferred shall have the
right to require the Company to provide advance notice to such Holder stating
whether the Company will elect to redeem all or any portion of the Premium in
cash pursuant to the Company's redemption rights discussed in subparagraph (a)
of this Section 6 as set forth herein. A Holder may exercise such right from
time to time by sending notice (an "Election Notice") to the Company, by
facsimile, requesting that the Company disclose to such holder whether the
Company would elect to redeem any portion of the Premium for cash in lieu of
issuing Common Stock in accordance with Section 6(a) hereof if such Holder were
to exercise his, her or its right of conversion pursuant to Section 5. The
Company shall, no later than the fifth (5th) business day following receipt of
an Election Notice, disclose to such holder, whether the Company would elect to
redeem any portion of a Premium in connection with a conversion pursuant to a
Notice of Conversion delivered over the subsequent ten (10) business day period.
If the Company does not respond to such holder within such five (5) business day
period via facsimile, the Company shall, with respect to any conversion pursuant
to a Notice of Conversion delivered within the subsequent ten (10) business day
period, forfeit its right to redeem such Premium in accordance with subparagraph
(a) of this Section 6 and shall be required to convert such Premium into shares
of Common Stock in accordance with Section 5 hereof. (c) The 1996-Series A
Convertible Preferred is not subject to mandatory redemption. The Company shall
have no right to redeem any shares of 1996-Series A Convertible Preferred for
cash, whether upon conversion pursuant to Section 5 or otherwise.
SECTION 7. VOTING RIGHTS.
Except as otherwise provided by Delaware law, the Holders of the 1996-Series A
Convertible Preferred shall have no voting power whatsoever, and no holder of
1996-Series A Convertible
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Preferred shall vote or otherwise participate in any proceeding in which actions
shall be taken by the Company or the shareholders thereof or be entitled to
notification as to any meeting of the Board of Directors or the shareholders.
To the extent that under Delaware law the vote of the Holders of the 1996-Series
A Convertible Preferred, voting separately as a class, is required to authorize
a given action of the Company, the affirmative vote or consent of the holders of
at least seventy-five percent (75%) of the outstanding shares of the 1996-Series
A Convertible Preferred shall constitute the approval of such action by the
class. To the extent that under Delaware law the holders of the 1996-Series A
Convertible Preferred are entitled to vote on a matter with holders of Common
Stock, voting together as one class, each share of 1996-Series A Convertible
Preferred shall be entitled to a number of votes equal to the number of shares
of Common Stock into which it is then convertible using the record date for the
taking of such vote of stockholders as the date as of which the Conversion Price
is calculated. Holders of the 1996-Series A Convertible Preferred shall be
entitled to notice of all stockholder meetings or written consents with respect
to which they would be entitled to vote, which notice would be provided pursuant
to the Company's by-laws and applicable statutes.
SECTION 8. PROTECTIVE PROVISIONS.
So long as any shares of 1996-Series A Convertible Preferred are
outstanding, the Company shall not without first obtaining the approval (by vote
or written consent, as provided by law) of the holders of at least seventy-five
percent (75%) of the then outstanding shares of 1996-Series A Convertible
Preferred;
(a) alter or change the rights, preferences or privileges of the shares of
1996-Series A Convertible Preferred or any other class of the Company's Capital
Stock so as to affect adversely the 1996-Series A Convertible Preferred; or
(b) create any new class or series of stock having a preference over or which
is on a parity with the 1996-Series A Convertible Preferred with respect to
Distributions (as defined in Section 2 above); or
(c) do any act or thing not authorized or contemplated by this Certificate of
Designation which would result in taxation of the holders of shares of the
1996-Series A Convertible Preferred under Section 305 of the Internal Revenue
Code of 1986, as amended (or any comparable provision of the Internal Revenue
Code as hereafter from time to time amended); or
(d) issue any shares of 1996-Series A Convertible Preferred after July 19,
1996.
SECTION 9. STATUS OF CONVERTED STOCK.
In the event any shares of 1996-Series A Convertible Preferred shall be
converted pursuant to Section 5 hereof, the shares so converted or redeemed
shall be canceled, shall return to the status of
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authorized, but unissued preferred stock of no designated series, and shall not
be issuable by the Company as 1996-Series A Convertible Preferred.
FURTHER RESOLVED, that the statements contained in the foregoing resolutions
creating and designating the said 1996-Series A Convertible Preferred and fixing
the number, powers, preferences and relative, optional, participating, and other
special rights and the qualifications, limitations, restrictions, and other
distinguishing characteristics thereof shall, upon the effective date of said
series, be deemed to be included in and be a part of the certificate of
incorporation of the Company pursuant to the provisions of Delaware law.
Signed on 28TH of JUNE 1996.
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/S/ Richard M. Brooks Chairman of the Board and CEO
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Richard M. Brooks
/s/ Ronald A. Feldman Vice President and COO
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Ronald A. Feldman
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