EXHIBIT 99.1
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CERTIFICATE OF INCORPORATION
OF
NATIONAL DATACOMPUTER, INC.
* * * * * * * *
FIRST. The name of the corporation is National Datacomputer, Inc.
SECOND. The address of its registered office in the State of Delaware
is Corporation Trust
Center, 1209 Orange Street, in the City of Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which the corporation shall
have authority to issue is 250,000 shares of Common Stock with a par value of
one-tenth of a cent ($.001) per share and 50,000 shares of Preferred Stock with
a par value of one-tenth of a cent ($.001) per share.
A description of the respective classes of stock and
a statement of the designations, preferences, voting powers (or no voting
powers), relative, participating, optional or other special rights and
privileges and the qualifications, limitations and restrictions of the Preferred
Stock and Common Stock are as follows:
A. PREFERRED STOCK
The Preferred Stock may be issued in one or more
series at such time or times and for such consideration or considerations as the
board of directors may determine. Each series shall be so designated as to
distinguish the shares thereof from the shares of all other series
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and classes. Except as otherwise provided herein, different series of Preferred
Stock shall not be construed to constitute different classes of shares for the
purpose of voting by classes.
The board of directors is expressly authorized to
provide for the issuance of all or any shares of the Preferred Stock in one or
more series, each with such designations, preferences, voting powers (or no
voting powers), relative, participating, optional or other special rights and
privileges and such qualifications, limitations or restrictions thereof as shall
be stated in the resolution or resolutions adopted by the board of directors to
create such series, and a certificate of said resolution or resolutions shall be
filed in accordance with the General Corporation Law of the State of Delaware.
The authority of the board of directors with respect to each such series shall
include, without limitation of the foregoing, the right to provide that the
shares of each such series may be: (i) subject to redemption at such time or
times and at such price or prices; (ii) entitled to receive dividends (which may
be cumulative or non-cumulative) at such rates, on such conditions, and at such
times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes or any other series; (iii) entitled to
such rights upon the dissolution of, or upon any distribution of the assets of,
the corporation; (iv) convertible into, or exchangeable for, shares of any other
class or classes of stock, or of any other series of the same or any other class
or classes of stock of the corporation at such price or prices or at such rates
of exchange and with such adjustments, if any; (v) entitled to the benefit of
such limitations, if any, on the issuance of additional shares of such series or
shares of any other series of Preferred Stock; or (vi) entitled to such other
preferences, powers, qualifications, rights and privileges, all as the board of
directors may deem advisable and as are not inconsistent with law and the
provisions of this Certificate of Incorporation.
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B. COMMON STOCK
1. Relative Rights of Preferred Stock and Common
Stock. All preferences, voting powers, relative, participating, optional or
other special rights and privileges, and qualifications, limitations, or
restrictions of the Common Stock are expressly made subject and subordinate to
those that may be fixed with respect to any shares of the Preferred Stock.
2. Voting Rights. Except as otherwise required by law
or this Certificate of Incorporation, each holder of Common Stock shall have one
vote in respect of each share of stock held by him of record on the books of the
corporation for the election of directors and on all matters submitted to a vote
of stockholders of the corporation.
3. Dividends. Subject to the preferential rights of
the Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive, when and if declared by the board of directors, out of the assets of
the corporation which are by law available therefor, dividends payable either in
cash, in property or in shares of capital stock.
4. Dissolution, Liquidation or Winding Up. In the
event of any dissolution, liquidation or winding up of the affairs of the
corporation, after distribution in full of the preferential amounts, if any, to
be distributed to the holders of shares of the Preferred Stock, holders of
Common Stock shall be entitled, unless otherwise provided by law or this
Certificate of Incorporation, to receive all of the remaining assets of the
corporation of whatever kind available for distribution to stockholders ratably
in proportion to the number of shares of Common Stock held by them respectively.
FIFTH. The name and mailing address of the sole incorporator is as
follows:
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Name Mailing Address
---- ---------------
Conant M. Webb Testa, Hurwitz & Thibeault
Exchange Place
53 State Street
Boston, Massachusetts 02109
SIXTH. The corporation is to have perpetual existence.
SEVENTH. In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware:
A. The board of directors of the corporation is expressly
authorized to adopt, amend or repeal the by-laws of the corporation.
B. Elections of directors need not be by written ballot unless
the by-laws of the corporation shall so provide.
C. The books of the corporation may be kept at such place
within or without the State of Delaware as the by-laws of the
corporation may provide or as may be designated from time to time by
the board of directors of the corporation.
EIGHTH. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a
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majority in number representing three-fourths in value of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
NINTH. The corporation eliminates the personal liability of each member
of its board of directors to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that the foregoing
shall not eliminate the liability of a director (i) for any breach of such
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 Title 8 of the Delaware
Code or (iv) for any transaction from which such director derived an improper
personal benefit.
TENTH. The corporation reserves the right to amend or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon a stockholder
herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the sole incorporator hereinabove named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 16th day of December, 1986.
/s/ Conant M. Webb
-----------------------
Conant M. Webb
AGREEMENT OF MERGER
AGREEMENT OF MERGER, dated as of the 6th day of February, 1987 between
Computer Systems Engineering, Inc., a corporation organized under the laws of
the Commonwealth of Massachusetts ("CSE"), and National Datacomputer, Inc., a
corporation organized under the laws of the State of Delaware ("NDC"). The two
corporations are hereinafter sometimes called the "Constituent Corporations".
CSE is hereinafter also sometimes referred to as the "Merged Corporation", and
NDC is hereinafter also sometimes referred to as the "Surviving Corporation".
WITNESSETH THAT:
WHEREAS, the Constituent Corporations deem it advisable and generally
to the welfare of the Constituent Corporations that CSE be merged with and into
NDC under the terms and conditions hereinafter set forth, such merger to be
effected pursuant to the statutes of the Commonwealth of Massachusetts and the
statutes of the State of Delaware in a transaction qualifying as a
reorganization within the meaning of Section 368(a)(l)(F) of the Internal
Revenue Code; and
WHEREAS, NDC, by its certificate of incorporation has an authorized
capital stock consisting of 500,000 shares of Preferred Stock, par value $.001
per share, none of which are now issued and outstanding; 250,000 shares of
Common Stock, par value $.001 per share, 10 of which are now issued and
outstanding, and on the effective date of the merger such ten shares of issued
and outstanding Common Stock shall be cancelled and NDC shall have by its
Certificate of Incorporation additional authorized capital stock of 250,000,000
shares of Common Stock, par value $.0001 per share; and
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WHEREAS, CSE by its Articles of Organization has an authorized capital
stock consisting of 1,000,000 shares of Common Stock, $.01 par value, of which
765,284 shares are now issued and outstanding; and
WHEREAS, the registered office of CSE in the Commonwealth of
Massachusetts is located at 34 Linnell Circle, Billerica, and the registered
office of NDC in the State of Delaware is located at 1209 Orange Street, in the
City of Wilmington, County of New Castle;
NOW, THEREFORE, the Constituent Corporations, parties to this Agreement
of Merger, in consideration of the mutual covenants, agreements and provisions
hereinafter contained, do hereby prescribe the terms and conditions of such
merger and mode of carrying the same into effect as follows:
FIRST: NDC, a corporation organized under the laws of the State of
Delaware, hereby merges into itself CSE, a corporation organized under the laws
of the Commonwealth of Massachusetts, and CSE shall be and hereby is merged into
NDC, which shall be the Surviving Corporation. The separate existence of CSE
shall cease at the effective date of the merger, except insofar as it may be
continued by law or in order to carry out the purposes of this Agreement of
Merger and except as continued in the Surviving Corporation.
SECOND: The Certificate of Incorporation of NDC as in effect on the
date of the merger provided for in this Agreement of Merger, shall be and hereby
is amended upon the effective date of the merger so that the first paragraph of
Article FOURTH thereof shall be amended so as to read in its entirety as
follows:
"FOURTH. The total number of shares of stock which the Corporation
shall have authority to issue is 250,000,000 shares of Common Stock with a par
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value of one-hundredth of a cent ($.0001) per share and 50,000 shares of
Preferred Stock with a par value of one-tenth of a cent ($.001) per share." and,
as so amended, the Certificate of Incorporation of NDC shall continue in full
force and effect as the charter document of the Surviving Corporation until the
same shall be altered, amended or repealed as provided therein or in accordance
with law.
THIRD: The manner of converting the outstanding shares of the capital
stock of the Merged Corporation into the shares or other securities of the
Surviving Corporation shall be as follows:
(a) The ten shares of Common Stock, $.001 par value of the
Surviving Corporation issued and outstanding on the date hereof shall, without
any further action on the part of anyone, be cancelled on and as of the
effective date of the merger.
(b) Each share of Common Stock of the Merged Corporation held
as treasury stock on the date hereof shall, without any further action on the
part of anyone, be cancelled on and as of the effective date of the merger.
(c) Each share of Common Stock of the Merged Corporation
outstanding on the effective date of this merger, and all rights in respect
thereof shall, without any further action on the part of anyone, be changed and
converted into 44.78 shares of Common Stock, $.0001 par value, of the Surviving
Corporation (rounded to the next highest whole number of shares to avoid
fractional shares) on and as of the effective date of the merger.
(d) After the effective date of the merger, each holder of a
certificate or certificates which theretofore represented shares of Common Stock
of the Merged Corporation shall cease to have any rights as a stockholder of the
Merged Corporation except such as are expressly reserved to such stockholder by
statute. After the effective date of the merger each
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holder of any outstanding certificate representing shares of Common Stock of the
Merged Corporation shall surrender the same to the Surviving Corporation and
each such holder shall be entitled upon such surrender to receive the number of
shares of the Surviving Corporation on the basis provided in subsection (b)
immediately above. Until so surrendered the certificates representing the
outstanding shares of the stock of the Merged Corporation to be converted into
the stock of the Surviving Corporation, as provided herein, may be treated by
the Surviving Corporation for all corporate purposes as evidencing the ownership
of shares of the Surviving Corporation as though such surrender and exchange had
taken place.
FOURTH: The manner of converting the outstanding options to purchase
shares of the Common Stock of the Merged Corporation into options to purchase
shares of the Common Stock of the Surviving Corporation shall be as follows:
(a) Each option to purchase a share of Common Stock of the Merged
Corporation which shall be outstanding on the effective date of this merger, and
all rights in respect thereof shall, without any further action on the part of
anyone, be changed and converted into an option to purchase 44.78 shares of
Common Stock, $.0001 par value, of the Surviving Corporation (rounded to the
next highest whole number of shares to avoid fractional shares) on and as of the
effective date of the merger.
(b) After the effective date of the merger, each holder of an option
which theretofore represented an option to purchase shares of Common Stock of
the Merged Corporation shall cease to have any rights as an optionholder of the
Merged Corporation except such as are expressly reserved to such optionholder by
statute.
FIFTH: The Merged Corporation's 1986 Stock Plan (the "Plan") shall
become the 1986 Stock Plan of the Surviving Corporation, pursuant to Section 13
thereof, including the following:
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(a) Outstanding options shall be treated as set forth in
article FOURTH above.
(b) In lieu of the 420,688 shares of Common Stock of the
merged Corporation reserved for grant pursuant to the Plan, 18,838,408 shares of
the Common Stock of the Surviving Corporation shall be reserved under the Plan.
SIXTH: The terms and conditions of the merger are as follows:
(a) The by-laws of NDC as they shall exist on the effective
date of this merger shall be and remain the by-laws of the Surviving Corporation
until the same shall be altered, amended and repealed as therein provided or in
accordance with law.
(b) The directors and officers of the Surviving Corporation,
namely Norman Mackinnon as President, Secretary and Treasurer, David Baer as
Assistant Secretary and Norman MacKinnon and John Ward as Directors, shall
continue in office until the next annual meeting of stockholders or directors of
the Surviving Corporation, respectively, and until their successors shall have
been elected and qualified.
(c) At and after the effective date of the merger, the
Surviving Corporation shall succeed to and possess, without further act or deed,
all the rights, privileges, obligations, powers and franchises, both public and
private, and all of the property, real, personal and mixed, both tangible and
intangible of each of the Constituent Corporations; all debts due to either of
the Constituent Corporations on whatever account, as well as for stock
subscriptions, shall be vested in the Surviving Corporation; all claims,
demands, property, rights, privileges, powers and franchises and every other
interest of either of the Constituent Corporations shall be as effectively the
property of the Surviving Corporation as they were of the respective Constituent
Corporations; the title to any real estate vested by deed or otherwise in either
of the Constituent Corporations shall not revert or be in any way impaired by
reason of the merger, but shall be
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vested in the Surviving Corporation; all rights of creditors and all liens upon
any property of either of the Constituent Corporations shall be preserved
unimpaired; all debts, liabilities and duties of the respective Constituent
Corporations shall thenceforth attach to the Surviving Corporation and may be
enforced against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it; and the Surviving Corporation shall
indemnify and hold harmless the officers and directors of each of the
Constituent Corporations against all such debts, liabilities and duties and
against all claims and demands arising out of the merger.
(d) As and when requested by the Surviving Corporation or by
its successors or assigns, the Merged Corporation will execute and deliver or
cause to be executed and delivered all such deeds and instruments and will take
or cause to be taken all such further action as the Surviving corporation may
deem necessary or desirable in order to vest in and confirm to the Surviving
Corporation title to and possession of any property of either of the Constituent
Corporations acquired by the Surviving Corporation by reason or as a result of
the merger herein provided for and otherwise to carry out the intent and
purposes hereof, and the officers and directors of the Merged Corporation and
the officers and directors of the Surviving Corporation are fully authorized in
the name of the Merged Corporation or otherwise to take any and all such action.
(e) This Agreement of Merger shall be submitted to the
stockholders of each of the Constituent Corporations as and to the extent
provided by law. The merger shall take effect when any and all documents or
instruments necessary to perfect the merger, pursuant to the requirements of the
Massachusetts Business Corporation Law and the General Corporation Law of
Delaware, are accepted for filing by the appropriate office of the Commonwealth
of Massachusetts and the State of Delaware, respectively.
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(f) This Agreement of Merger may be terminated or abandoned by
(a) either Constituent Corporation, acting by its Board of Directors, at any
time prior to its adoption by the stockholders of both of the Constituent
Corporations as and to the extent provided by law, or (b) the mutual consent of
the Constituent Corporations, each acting by its Board of Directors, at any time
after such adoption by such stockholders and prior to the effective date of the
merger. In the event of such termination or abandonment, this Agreement of
Merger shall become wholly void and of no effect and there shall be no further
liability or obligation hereunder on the part of either of the Constituent
Corporations or of its Board of Directors or stockholders.
(g) This Agreement of Merger constitutes a Plan of
Reorganization, as well as a Plan of Merger, to be carried out in the manner, on
the terms and subject to the conditions herein set forth.
(h) All corporate acts, plans, policies, approvals and
authorizations of CSE, its stockholders, Board of Directors, committees elected
or appointed by the Board of Directors, officers and agents, which were valid
and effective immediately prior to the effective date of the merger, shall be
taken for all purposes as the acts, plans, policies, approvals and
authorizations of the Surviving Corporation and shall be effective and binding
thereon as they were on CSE. The employees of CSE shall become the employees of
the Surviving Corporation and continue to be entitled to the same rights and
benefits they enjoyed as employees of CSE.
(i) From the effective date of the merger, the officers and
directors of the Surviving Corporation are hereby authorized in the name of the
corporations that were the Constituent Corporations to execute, acknowledge and
deliver all instruments and do all things as may be necessary or desirable to
vest in the Surviving Corporation any property or rights of either of the
Constituent Corporations or to carry out the purposes of this Agreement of
Merger.
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IN WITNESS WHEREOF, the parties to this agreement, pursuant to the
approval and authority duly given by resolutions adopted by their respective
Boards of Directors have caused these presents to be executed by the President
and Treasurer and attested by the Assistant Clerk or Assistant Secretary, as
indicated below, of each party hereto.
COMPUTER SYSTEMS ENGINEERING, INC.
[Corporate Seal]
By: /s/ Norman Mackinnon
--------------------------
Norman Mackinnon
President
ATTEST:
By: /s/ John P. Ward
---------------------------
John Ward
Clerk
NATIONAL DATACOMPUTER, INC.
[Corporate Seal]
By: /s/ Norman Mackinnon
-----------------------------
Norman Mackinnon
President
ATTEST:
By: /s/ David Baer
---------------------------
David Baer
Assistant Secretary
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State of Massachusetts )
) ss.
County of Suffolk )
BEFORE ME, the undersigned authority, personally appeared Norman
Mackinnon, President of Computer Systems Engineering, Inc., a Massachusetts
corporation, to me known to be the person who executed the foregoing instrument,
and acknowledged to and before me that he executed said instrument in the name
of and on behalf of said Corporation for the purposes therein expressed.
WITNESS my hand and official seal this 9th day of February 1987.
/s/ Mary M. Moran
-------------------------------
Notary Public
My Commission expires: June 4, 1993
State of Massachusetts )
) ss.
County of Suffolk )
BEFORE ME, the undersigned authority, personally appeared John Ward,
Clerk of Computer Systems Engineering, Inc., a Massachusetts corporation, to me
known to be the person who executed the foregoing instrument, and acknowledged
to and before me that he executed said instrument in the name of and on behalf
of said Corporation for the purposes therein expressed.
WITNESS my hand and official seal this 9th day of February 1987.
/s/ Mary M. Moran
--------------------------------
Notary Public
My Commission expires: June 4, 1993
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State of Massachusetts )
) ss.
County of Suffolk )
BEFORE ME, the undersigned authority, personally appeared Norman
Mackinnon, President of National Datacomputer, Inc., a Delaware corporation, to
me known to be the person who executed the foregoing instrument and acknowledged
to and before me that he executed said instrument in the name of and on behalf
of said Corporation for the purposes therein expressed.
WITNESS my hand and official seal this 9th day of February 1987.
/s/ Mary M. Moran
--------------------------------
Notary Public
My Commission expires: June 4, 1993
State of Massachusetts )
) ss.
County of Suffolk )
BEFORE ME, the undersigned authority, personally appeared David Baer,
Assistant Secretary of National Datacomputer, Inc., a Delaware corporation, to
me known to be the person who executed the foregoing instrument, and
acknowledged to and before me that he executed said instrument in the name of
and on behalf of said Corporation for the purposes therein expressed.
WITNESS my hand and official seal this 9th day of February 1987.
/s/ Mary M. Moran
---------------------------------
Notary Public
My Commission expires: June 4, 1993
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Clerk's Certificate
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I hereby certify that the Agreement of Merger was duly adopted by the
stockholders of Computer Systems Engineering, Inc., a Massachusetts corporation,
at a special meeting of Stock-holders on February 9, 1987.
/s/ John P. Ward
------------------------------
Clerk
Assistant Secretary's Certificate
---------------------------------
I hereby certify that the Agreement of merger was duly adopted by the
sole stockholder of National Datacomputer, Inc., a Delaware corporation, by
written consent dated February 9, 1987.
/s/ David Baer
------------------------------
Assistant Secretary
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NATIONAL DATACOMPUTER, INC.
National Datacomputer, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Company"), DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Company, by unanimous written
consent on April 14, 1987, in accordance with the provisions of Section 141(f)
of the General Corporation Law of Delaware, duly adopted a resolution setting
forth a proposed amendment to the Certificate of Incorporation of the Company.
The resolution setting forth the proposed amendment is as follows:
RESOLVED: That a proposed amendment to the Certificate of
Incorporation of the Company (the "Amendment"),
effecting a change in Article FOURTH thereof so
that said Article FOURTH shall be and read in its
entirety as set forth in Exhibit A hereto, is
recommended to the stockholders for approval as
being in the best interests of the Company.
SECOND: That the stockholders of the Company duly adopted such
resolution by written consent vote in accordance with the provisions of Section
228 of the General Corporation Law of the State of Delaware.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
Exhibit A
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AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
NATIONAL DATACOMPUTER, INC.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 250,000,000 shares of Common Stock with a par value
of two-hundreths of a cent ($.0002) per share and 50,000 shares of Preferred
Stock with a par value of one-tenth of a cent ($.001) per share.
At the same time as the filing of this Certificate of Amendment of
Certificate of Incorporation with the Secretary of State of Delaware becomes
effective, each currently outstanding share of Common Stock, $.0001 par value
per share, shall be converted into .9803482 of a share of Common Stock, $.0002
par value per share.
No fractional shares of Common Stock or script certificates shall be
issued to the holders of the currently outstanding Common Stock by reason of the
foregoing, but upon surrender of certificates for such Common Stock by the
holders entitled to such fractional share interests, the Corporation shall issue
to such holders that number of shares of Common Stock, $.0002 par value, to
which such holders are entitled, rounded to the next highest whole number of
shares to avoid fractional shares.
IN WITNESS WHEREOF, the Company has caused this certificate to be
signed by Norman Mackinnon, President, and attested to by David Baer, Assistant
Secretary, this 14th day of April, 1987.
NATIONAL DATACOMPUTER, INC.
By: /s/ Norman Mackinnon
---------------------------
President
ATTEST:
/s/
- -----------------------------
Assistant Secretary
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 08/25/1994
944160110 - 2111518
STATEMENT OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
NATIONAL DATACOMPUTER, INC.
NATIONAL DATACOMPUTER, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware
(hereinafter the "Corporation"), DOES HEREBY CERTIFY:
That by unanimous written consent, dated March 1, 1994, the directors
of the Corporation adopted the following resolution setting forth the
designations, powers, preferences and rights of its Series A Convertible
Preferred Stock:
RESOLVED: That the designations,
powers, preferences and rights of the Series
A Convertible Preferred Stock be, and hereby
are, as set forth below:
1. NUMBER OF SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK. Of the
50,000 shares of authorized and unissued Preferred Stock, $.001 par value per
share ("Preferred Stock") of the Corporation, twenty (20) shares shall be
designated and known as "Series A Convertible Preferred Stock." The Corporation,
at its discretion, shall have the authority to issue one half (`/,) shares of
the Series A Convertible Preferred Stock.
2. VOTING.
(a) Each holder of outstanding shares of Series A Convertible
Preferred Stock shall be entitled to the number of votes equal to the number of
whole shares of Common Stock, as hereinafter defined, into which the shares of
Series A Convertible Preferred Stock held by such holder are convertible, at
each meeting of stockholders of the Corporation (and written actions of
stockholders in lieu of meetings) with respect to any and all matters presented
to the stockholders of the Corporation for their action or consideration. Except
as provided by law, by the provisions of Subparagraph (b) below, or by the
provisions establishing any other series of Preferred Stock, holders of Series A
Convertible Preferred Stock shall vote together with the holders of all other
classes and series of securities of the Corporation as a single class.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series A Convertible
Preferred Stock so as to affect adversely the Series A Convertible Preferred
Stock, without the written consent or affirmative vote, of the holders of
fifty-one percent (51%) of the then outstanding shares of Series A Convertible
Preferred Stock to be affected by amendment, alteration or repeal, given in
writing or by vote at
a meeting, consenting or voting (as the case may be) separately as a class. For
this purpose, without limiting the generality of the foregoing, the
authorization or issuance of any series of Preferred Stock with preference or
priority over the Series A Convertible Preferred Stock as to the right to
receive either dividends or amounts distributable upon liquidation, dissolution
or winding up of the Corporation shall be deemed to affect adversely the
designated class of Series A Convertible Preferred Stock, and the authorization
or issuance of any series of Preferred Stock on a parity with Series A
Convertible Preferred Stock as to the right to receive either dividends or
amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall not be deemed to affect adversely the Series A Convertible
Preferred Stock. The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares then outstanding) by
the affirmative vote of the holders of a majority of the then outstanding shares
of all other classes or series of stock of the Corporation entitled to vote
thereon, voting as a single class.
3. DIVIDENDS.
(a) In each fiscal year of the Corporation, the holders of
shares of Series A Convertible Preferred Stock shall be entitled to receive,
before any cash dividend shall be declared and paid upon or set aside for the
Common Stock in such fiscal year, when, as and if declared by the Board of
Directors of the Corporation out of the funds legally available for that
purpose, dividends payable in cash in an amount per share for such fiscal year
equal to the product of (i) the per share amount, if any, of the cash dividend
declared, paid or set aside for the Common Stock during such fiscal year,
multiplied by (ii) the number of whole shares of Common Stock into which each
such share of Series A Convertible Preferred Stock is then convertible.
(b) The Corporation shall not declare or pay any dividends or
any other distributions of property or assets on shares of Common Stock, other
than dividends payable solely in cash or in shares of Common Stock, without the
prior written consent or affirmative vote of the holders of at least fifty-one
percent (51%) of the then outstanding shares of Series A Preferred Stock given
in writing or by vote at a meeting, voting as a single class.
4. ADDITIONAL PAYMENTS. In addition to any dividends for which holders
of shares of Series A Convertible Preferred Stock shall be entitled to receive
pursuant to Subparagraph 3(a) above, holders of shares of Series A Convertible
Preferred Stock shall be entitled to receive interest equal to seven and
one-half percent (7.5%) per annum of the stated value of such Series A
Convertible Preferred Stock, valued as of the date of such original purchase,
payable on January 31, 1995. In the event that holders of Series A Convertible
Preferred Stock convert their shares pursuant to Paragraph 6 herein prior to
January 1, 1995, such holders' right to receive any accrued interest in
accordance with this paragraph shall be forfeited.
5. LIQUIDATION. In the event of a voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the holders of shares of Series A
Convertible Preferred Stock shall be entitled to receive out of the assets of
the Corporation legally available for distribution to holders of its capital
stock, before any payment or distribution shall be made to holders of Common
Stock or any other class of stock ranking junior to Series A Convertible
-2-
Preferred Stock, an amount per share equal to the par value of such shares of
Series A Convertible Preferred Stock plus all dividends which have accrued and
are unpaid and therefore are in arrears. If upon such liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the assets
to be distributed among the holders of Series A Convertible Preferred Stock
shall be insufficient to permit payment to the holders of Series A Convertible
Preferred Stock of the amount distributable as aforesaid, then the entire assets
of the Corporation to be so distributed shall be distributed ratably among the
holders of Series A Convertible Preferred Stock. Upon any such liquidation,
dissolution or winding up of the Corporation, after the holders of Series A
Convertible Preferred Stock shall have been paid in full the amounts to which
they shall be entitled, the remaining net assets of the Corporation may be
distributed to the holders of stock ranking on liquidation junior to the Series
A Convertible Preferred Stock. Written notice of such liquidation, dissolution
or winding up, stating a payment date, the amount of the liquidation payments
and the place where said liquidation payments shall be payable, shall be given
by mail, postage prepaid, or by telex to non-U.S. residents, not less than 10
days prior to the payment date stated therein, to the holders of record of
Series A Convertible Preferred Stock, such notice to be addressed to each such
holder at its address as shown by the records of the Corporation. For purposes
hereof, the Common Stock shall rank on liquidation junior to the Series A
Convertible Preferred Stock.
6. RESTRICTIONS. At any time when shares of Series A Convertible
Preferred Stock are outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Corporation's Certificate of Incorporation, as amended, without the
approval of the holders of at least a majority of the then outstanding shares of
Series A Convertible Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a series, the
Corporation will not:
(a) Create or authorize the creation of any additional class
or series of shares of stock unless the same ranks junior to the Series A
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation; or increase the authorized amount
of the Series A Convertible Preferred Stock or increase the authorized amount of
any additional class or series of shares of stock unless the same ranks junior
to the Series A Convertible Preferred Stock as to the distribution of assets on
the liquidation, dissolution or winding up of the Corporation; or create or
authorize any obligation or security convertible into shares of Series A
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, whether any such creation,
authorization or increase shall be by means of amendment to the Corporation's
Certificate of Incorporation or by merger, consolidation or otherwise; or
(b) Redeem or otherwise acquire any shares of Series A
Convertible Preferred Stock except as expressly authorized herein or pursuant to
a purchase offer made pro rata to all holders of the shares of Series A
Convertible Preferred Stock on the basis of the aggregate number of outstanding
shares of Series A Convertible Preferred Stock then held by each such holder.
7. OPTIONAL CONVERSION. The holders of shares of Series A Convertible
Preferred Stock shall have the following conversion rights:
-3-
(a) Right to Convert. Subject to the terms and conditions of
this Paragraph 7, the holder of any share or shares of Series A Convertible
Preferred Stock shall have the right, at its option at any time, to convert each
such share of Series A Convertible Preferred Stock (except that upon any
liquidation of the Corporation, the right of conversion shall terminate at the
close of business on the business day fixed for payment of the amount
distributable on the Series A Convertible Preferred Stock) into five million
five hundred thousand (5,500,000) shares of Common Stock. Such right of
conversion shall be exercised by the holder thereof by giving written notice
that the holder elects to convert a stated number of shares of Series A
Convertible Preferred Stock into Common Stock and by surrender of a certificate
or certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series A
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Common
Stock shall be issued.
(b) Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in Subparagraph
7(a) and surrender of the certificate or certificates for the share or shares of
Series A Convertible Preferred Stock to be convened, the Corporation shall issue
and deliver, or cause to be issued and delivered, to the holder, registered in
such name or names as such holder may direct, a certificate or certificates for
the number of whole shares of Common Stock. To the extent permitted by law, such
conversion shall be deemed to have been effected as of the close of business on
the date on which such written notice shall have been received by the
Corporation and the certificate and certificates for such share or shares shall
have been surrendered as aforesaid, and at such time the rights of the holder of
such share or shares of Series A Convertible Preferred Stock shall cease, and
the person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares represented thereby.
(c) Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series A Convertible
Preferred Stock into Common Stock and no payment or adjustment shall be made
upon any conversion on account of any cash dividends on the Common Stock issued
upon such conversion. At the time of each conversion, the Corporation shall pay
in cash an amount equal to all dividends, accrued and unpaid on the shares of
Series A Convertible Preferred Stock surrendered for conversion to the date upon
which such conversion is deemed to take place as provided in Subparagraph 7(b).
In case the number of shares of Series A Convertible Preferred Stock represented
by the certificate or certificates surrendered pursuant to Subparagraph 7(a)
exceeds the number of shares converted, the Corporation shall, upon such
conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series A Convertible Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted.
(d) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification,
-4-
lawful and adequate provisions shall be made whereby each holder of a share or
shares of Series A Convertible Preferred Stock shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of the shares of Common Stock immediately theretofore receivable upon
the conversion of such share or shares of Series A Convertible Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock immediately theretofore
receivable upon such conversion had such reorganization or reclassification not
taken place, and in any such case appropriate provisions shall be made with
respect to the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the conversion rights) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights.
8. MANDATORY CONVERSION OF SERIES A CONVERTIBLE PREFERRED STOCK. The
Corporation may, at its option, require all (but not less than all) holders of
shares of Series A Convertible Preferred Stock then outstanding to convert their
shares of Series A Convertible Preferred Stock into shares of Common Stock at
the then effective conversion rate pursuant to Subparagraph 7(a), at any time on
or after the closing of the (i) sale of shares of Common Stock in a public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, or (ii) the consolidation or merger of the Corporation
into or with any other entity or entities which results in the exchange of
outstanding shares of the Corporation for securities or other consideration
issued or paid or caused to be issued or paid by any such entity or affiliate
thereof, or (iii) sale or transfer by the Corporation of all or substantially
all of its assets. A holder of the Series A Convertible Preferred Stock may, at
any time, convert his shares of Series A Convertible Preferred Stock to Common
Stock pursuant to Paragraph 7 herein.
On or before the date fixed for conversion, each holder of shares of
Series A Convertible Preferred Stock shall surrender his or its certificate or
certificates for all such shares to the Corporation at the place designated in
such notice, and shall thereafter receive certificates for the number of shares
of Common Stock to which such holder is entitled pursuant to Subparagraph 7(a).
On the date fixed for conversion, all rights with respect to the Series A
Convertible Preferred Stock so converted, including the rights, if any, to
receive notices and vote, will terminate, except only the rights of the holders
thereof, upon surrender of their certificate or certificates therefor, to
receive certificates for the number of shares of Common Stock into which such
Series A Convertible Preferred Stock has been converted.
All certificates evidencing shares of Series A Convertible Preferred
Stock that are required to be surrendered for conversion in accordance with the
provisions hereof shall, from and after the date such certificates are so
required to be surrendered, be deemed to have been retired and cancelled and the
shares of Series A Convertible Preferred Stock represented thereby converted
into Common Stock for all purposes, notwithstanding the failure of the holder or
holders thereof to surrender such certificates on or prior to such date. The
Corporation may thereafter take such appropriate action as may be necessary to
reduce the authorized Series A Convertible Preferred Stock accordingly.
-5-
9. NOTICES. In case at any time:
(a) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other pro rata distribution to the
holders of its Common Stock;
(b) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights;
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all
its assets to, another entity or entities; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by telex to non-U.S. residents, addressed to
each holder of any shares of Series A Convertible Preferred Stock at the address
of such holder as shown on the books of the Corporation, (i) at least 10 days'
prior to written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 10
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and (ii) shall also
specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be.
10. STOCK TO BE RESERVED. The Corporation, upon the effective date of
this Statement of Designation, does not have a sufficient number of shares of
Common Stock as shall be issuable upon the conversion of all outstanding shares
of Series A Convertible Preferred Stock, upon exercise of all outstanding
options and warrants, and in connection with future financings. The Corporation
shall use its best efforts to effect an amendment to its Certificate of
Incorporation, as amended, such that there will be a sufficient number of shares
of Common Stock available for issuance upon conversion of all of the outstanding
shares of Series A Convertible Preferred Stock, upon exercise of all outstanding
options and warrants, and in connection with future financings. Thereafter, the
Corporation will at all times reserve and keep available out of its authorized
Common Stock, solely for the purpose of issuance upon the conversion of Series A
Convertible Preferred Stock as herein provided, such number of shares of Common
Stock as shall then be issuable upon the conversion of all outstanding shares of
Series A Convertible Preferred. The Corporation covenants that all shares of
Common Stock which shall be so issued shall be duly and validly issued. The
Corporation will take all such action as may be so issued without violation of
any applicable law or regulation, or of any requirement of
-6-
any national securities exchange upon which the Common Stock may be listed. The
Corporation will not take any action which results in any adjustment of the
conversion rights if the total number of shares of Common Stock issued and
issuable after such action upon conversion of the Series A Convertible Preferred
Stock would exceed the total number of shares of Common Stock then authorized by
the Corporation's Certificate of Incorporation, as amended,
11. NO REISSUANCE OF SERIES A CONVERTIBLE PREFERRED STOCK. Shares of
Series A Convertible Preferred Stock which are converted into shares of Common
Stock as provided herein shall not be reissued.
12. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of Series A Convertible Preferred Stock shall be made without
charge to the holder thereof for any issuance tax in respect thereof, provided
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series A Convertible
Preferred Stock which is being converted.
13. CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Series A Convertible Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series A Convertible Preferred Stock in any manner which interferes
with the timely conversion of such Series A Convertible Preferred Stock, except
as may otherwise be required to comply with applicable securities laws.
14. DEFINITION OF COMMON STOCK. As used in this Statement of
Designation, the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, $.0002 par value per share, as constituted on the date
of filing of these terms of the Series A Convertible Preferred Stock, and shall
also include any capital stock of any class of the Corporation thereafter
authorized which shall neither be limited to a fixed sum or percentage of par
value in respect of the rights of the holders thereof to participate in
dividends nor entitled to a preference in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; provided that the shares of Common Stock receivable upon conversion
of shares of Series A Convertible Preferred Stock shall include only shares
designated as Common Stock and shall include only shares designated as Common
Stock of the Corporation on the date of filing of this instrument, or in case of
any reorganization or reclassification of the outstanding shares thereof, the
stock, securities or assets provided for in Subparagraph 7(d).
15. AMENDMENTS. No provision of these terms of the Series A Convertible
Preferred Stock may be amended, modified or waived without the written consent
or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series A Convertible Preferred Stock.
RESOLVED: That the President and Secretary be, and hereby are,
authorized and directed to execute and file a Statement of
Designation with the Delaware Secretary of State.
-7-
IN WITNESS HEREOF, the said National Datacomputer, Inc. has caused its
corporate seal to be hereunto affixed and this Statement of Designation to be
signed by Norman Mackinnon, its President and Secretary, this 10th day of
August, 1994.
NATIONAL DATACOMPUTER, INC.
By: /s/ Norman Mackinnon
--------------------------
Norman Mackinnon
President
/s/ Norman Mackinnon
- ---------------------------
Norman Mackinnon
Secretary
[SEAL]
-8-
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 10/17/1994
944196961 - 2111518
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
NATIONAL DATACOMPUTER, INC.
NATIONAL DATACOMPUTER; INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
That by unanimous written consent dated August 15, 1994, all of the
directors of NATIONAL DATACOMPUTER, INC. and that at a Special Meeting of
Stockholders held on October 14, 1994, a majority of the stockholders of
NATIONAL DATACOMPUTER, INC. adopted the following resolution amending the
Certificate of Incorporation of said Corporation:
RESOLVED: That Article 4 of the Certificate of Incorporation be, and hereby is
deleted in its entirety and the following be, and hereby is, inserted
in place thereof:
"4. The total number of shares of all
classes which the Corporation shall have authority to
issue is ten million My thousand (10,050,000), of
which ten million (10,000,000) shares are to be
Common Stock, of the par value of two cents ($.02)
each, and fifty thousand (50,000) shares are to be
Preferred Stock, of the par value of one-tenth of a
cent ($.001) each, of which twenty (20) shares have
been designated as Series A Convertible Preferred
Stock, of the par value of one-tenth of a cent
(5.001) amounting in the aggregate to Two Hundred
Thousand Fifty and 00/100 Dollars ($200,050.00)."
IN WITNESS WHEREOF, the said NATIONAL DATACOMPUTER, INC. has caused its
corporate seal to be hereunto affixed and this Certificate of Amendment to be
signed by its President and Secretary this 7th day of October, 1994.
NATIONAL DATACOMPUTER, INC.
By: /s/ Norman Mackinnon
---------------------------
Norman Mackinnon
President
/s/ Norman Mackinnon
- -----------------------------
Norman Mackinnon
Secretary
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:15 AM 04/06/1995
950076623 - 2111518
Certificate
for Renewal and Revival of Charter
NATIONAL DATACOMPUTER, INC., a corporation organized under the laws of
Delaware, the charter of which was voided for non-payment of taxes, now desires
to procure a restoration, renewal and revival of its charter, and hereby
certifies as follows:
1. The name of this corporation is NATIONAL DATACOMPUTER, INC.
2. Its registered office in the State of Delaware is located at 1209
ORANGE STREET, City of WILMINGTON Zip Code 19801 County of NEW CASTLE the name
and address of its registered agent is CORPRATION TRUST COMPANY, 1209 ORANGE
STREET, WILMINGTON, DE 19901.
3. The date of filing of the original Certificate of Incorporation in
Delaware was DECEMBER 17, 1986.
4. The date when restoration, renewal, and revival of the charter of
this company is to commence is the 28th day of FEBRUARY,1995, same being prior
to the date of the expiration of the charter. This renewal and revival of the
charter of this corporation is to be perpetual.
5. This corporation was duly organized and carried on the business
authorized by its charter until the 1st day of MARCH A.D. 1995, at which time
its charter became inoperative and void for non-payment of taxes and this
certificate for renewal and revival is filed by authority of the duly elected
directors of the corporation in accordance with the laws of the State of
Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section
312 of the General Corporation Law of the State of Delaware, as amended,
providing for the renewal, extension and restoration of charters, NORMAN
MACKINNON, the last and acting President, and NORMAN MACKINNON, the last and
acting Secretary of NATIONAL DATACOMPUTER, INC., have hereunto set their hands
to this certificate this 5th day of April, 1995.
/s/ Norman Mackinnon
------------------------------
LAST AND ACTING PRESIDENT
ATTEST:
/s/ Norman Mackinnon
------------------------------
LAST AND ACTING SECRETARY
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:15 PM 04/25/1996
960120142 - 2111518
STATEMENT OF DESIGNATION
OF
SERIES B CONVERTIBLE PREFERRED STOCK
NATIONAL DATACOMPUTER, INC.
NATIONAL DATACOMPUTER, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware
(hereinafter the "Corporation"), DOES HEREBY CERTIFY:
That by unanimous written consent, dated April 19, 1996, the directors
of the Corporation adopted the following resolution setting forth the
designations, powers, preferences and rights of its Series A Convertible
Preferred Stock:
RESOLVED: That the designations, powers, preferences and rights of the
Series B Convertible Preferred Stock be, and hereby are, as
set forth below:
1. NUMBER OF SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK. Of the
50,000 shares of authorized and unissued Preferred Stock, $.001 par value per
share ("Preferred Stock") of the Corporation, three thousand (3,000) shares
shall be designated and known as "Series B Convertible Preferred Stock."
2. VOTING.
(a) Each holder of outstanding shares of Series B Convertible
Preferred Stock at each meeting of stockholders of the Corporation (and written
actions of stockholders in lieu of meetings) with respect to any and all matters
presented to the stockholders of the Corporation for their action or
consideration shall be entitled to the number of votes equal to the number of
whole shares of Common Stock, as hereinafter defined, into which the shares of
Series B Convertible Preferred Stock held by such holder are convertible on the
record date established for such meeting. Except as provided by law, by the
provisions of Subparagraph 2(b) below, or by the provisions establishing any
other series of Preferred Stock, holders of Series B Convertible Preferred Stock
shall vote together with the holders of all other classes and series of
securities of the Corporation as a single class.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series B Convertible
Preferred Stock so as to affect adversely the Series B Convertible Preferred
Stock, without the written consent or affirmative vote of the holders of at
least a majority of the then outstanding shares of Series B Convertible
Preferred Stock to be affected by amendment, alteration or repeal, given in
writing or by vote at a meeting,
-2-
consenting or voting (as the case may be) separately as a class. For this
purpose, without limiting the generality of the foregoing, the authorization or
issuance of any series of Preferred Stock with preference or priority over the
Series B Convertible Preferred Stock as to the right to receive either dividends
or amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall be deemed to affect adversely the designated class of Series B
Convertible Preferred Stock, and the authorization or issuance of any series of
Preferred Stock on a parity with Series B Convertible Preferred Stock as to the
right to receive either dividends or amounts distributable upon liquidation,
dissolution or winding up of the Corporation shall not be deemed to affect
adversely the Series B Convertible Preferred Stock. The number of authorized
shares of Preferred Stock may be increased or decreased (but not below the
number of shares then outstanding) by the affirmative vote of the holders of a
majority of the then outstanding shares of all other classes or series of stock
of the Corporation entitled to vote thereon, voting as a single class.
3. DIVIDENDS.
(a) The holders of shares of Series B Convertible Preferred
Stock shall be entitled to receive, before any cash dividend shall be declared
and paid upon or set aside for the Common Stock in any fiscal year of the
Corporation, only when, as and if declared by the Board of Directors of the
Corporation out of the funds legally available for that purpose, dividends
payable in cash or Common Stock in an amount per share for such fiscal year
equal to the product of (i) the per share amount, if any, of the cash dividend
declared, paid or set aside for the Common Stock during such fiscal year,
multiplied by (ii) the number of whole shares of Common Stock into which each
such share of Series B Convertible Preferred Stock is then convertible as
determined by Paragraph 7 below.
(b) The Corporation shall not declare or pay any dividends or
any other distributions of property or assets on shares of Common Stock, other
than dividends payable solely in cash or Common Stock, without the prior written
consent or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series B Preferred Stock given in writing or by vote at a
meeting, voting as a single class.
4. ADDITIONAL PAYMENTS. In addition to any dividends for which holders
of shares of Series B Convertible Preferred Stock shall be entitled to receive
pursuant to Subparagraph 3(a) above, holders of shares of Series B Convertible
Preferred Stock shall be entitled to receive interest equal to eight percent
(8%) per annum of the stated value (the "Stated Value") of such Series B
Convertible Preferred Stock. The Stated Value for all of the shares of Series B
Convertible Preferred Stock as of the Original Issuance Date (defined below) is
$3,000,000 (the "Original Aggregate Stated Value") and the Stated Value of each
share of Series B Convertible Preferred Stock is $1,000. Such interest accrue
from the Original Issuance Date, and shall be payable, in cash or Common Stock,
on a quarterly basis, as described in Subparagraph 4(b) below, commencing with
the Corporation's fiscal quarter ending June 30, 1996. In the event that the
Corporation decides to make payment of such interest in Common Stock, the amount
of shares of Common Stock to be issued to make such payment shall be that number
of shares equal to (i) the amount of interest due and payable, divided by (ii)
the Average Closing Price (defined in Subparagraph 7(a) below) of the Common
Stock, as reported by the Nasdaq SmallCap Market or in the "Pink Sheets" during
the ten trading days immediately preceding the date of delivery to
-2-
the holders of the Series B Convertible Preferred Stock of the Common Stock as
required by Subparagraph 4(h) as payment for the interest due hereunder.
(b) Interest hereunder shall accrue and be calculated and
payable with respect to (i) those shares of Series B Convertible Preferred Stock
that remain issued and outstanding at the end of each of the Corporation's
fiscal quarters (ii) and any shares of Series B Convertible Preferred Stock that
are converted during a fiscal quarter for which interest is calculated and paid.
With respect to those shares of Series B Convertible Preferred Stock that remain
issued and outstanding at the end a fiscal quarter, interest shall be calculated
based on the Stated Value of such remaining issued and outstanding shares of
Series B Convertible Preferred Stock as set forth in the Corporation's Annual
Reports on Form 10-K(SB) or Quarterly Reports on Form 10-Q(SB) to be filed with
the Securities and Exchange Commission ("SEC"). With respect to any shares of
Series B Convertible Preferred Stock that are converted during a fiscal quarter,
interest shall be calculated based on the Stated Value of such shares up to and
including the Conversion Date (defined in Subparagraph 7(f)).
(c) Payment of interest due hereunder with respect to those
shares of Series B Convertible Preferred Stock that remain issued and
outstanding at the end of each of the Corporation's fiscal quarters shall be
made within 15 business days after the filing with the SEC of the applicable
report. Payment of interest due hereunder with respect to any shares of Series B
Convertible Preferred Stock that are converted during a fiscal quarter shall be
calculated and made within 30 days of the Conversion Date of such shares.
Payment of interest upon such converted shares of Series B Convertible Preferred
Stock shall be accompanied by the Company's calculation of the interest.
(d) With respect to the payment of interest due hereunder upon
those shares of Series B Convertible Preferred Stock that remain issued and
outstanding at the end of a fiscal quarter, the Corporation shall notify the
holders of the Series B Convertible Preferred Stock in writing not less than 10
days prior to the end of such fiscal quarter of whether the Corporation shall
pay the interest due hereunder in cash or Common Stock. With respect to the
payment of interest due hereunder upon those shares of Series B Convertible
Preferred Stock that are converted during a fiscal quarter, the Corporation
shall notify the holders of the Series B Convertible Preferred Stock in Writing
not less than 10 days after the Conversion Date whether the Corporation shall
pay the interest due hereunder in cash or Common Stock.
5. LIQUIDATION. In the event of a voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation. the holders of shares of Series B
Convertible Preferred Stock shall be entitled to receive out of the assets of
the Corporation legally available for distribution to holders of its capital
stock, before any payment or distribution shall be made to holders of Common
Stock or any other class of stock ranking junior to Series B Convertible
Preferred Stock, an amount per share equal to the Stated Value of such shares of
Series B Convertible Preferred Stock plus all dividends which have accrued and
are unpaid and therefore are in arrears. If upon such liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the assets
to be distributed among the holders of Series B Convertible Preferred Stock
shall be insufficient to permit payment to the holders of Series B Convertible
Preferred Stock of the amount distributable as aforesaid, then the entire assets
of the Corporation to be so distributed shall be distributed ratably among the
holders of Series B Convertible
-3-
Preferred Stock. Upon any such liquidation, dissolution or winding up of the
Corporation, after the holders of Series B Convertible Preferred Stock shall
have been paid in full the amounts to which they shall be entitled. the
remaining net assets of the Corporation may be distributed to the holders of
stock ranking on liquidation junior to the Series B Convertible Preferred Stock.
Written notice of such liquidation, dissolution or winding up, stating a payment
date, the amount of the liquidation payments and the place where said
liquidation payments shall be payable, shall be given by mail, postage prepaid,
or by telex to non-U.S. residents, not less than 10 days prior to the payment
date stated therein, to the holders of record of Series B Convertible Preferred
Stock, such notice to be addressed to each such holder at its address as shown
by the records of the Corporation. For purposes hereof, the Common Stock shall
rank on liquidation junior to the Series B Convertible Preferred Stock.
6. RESTRICTIONS. At any time when shares of Series B Convertible
Preferred Stock are outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Corporation's Certificate of Incorporation, as amended, without the
approval of the holders of at least a majority of the then outstanding shares of
Series B Convertible Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a series, the
Corporation will not create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series B
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation; or increase the authorized amount
of the Series B Convertible Preferred Stock or increase the authorized amount of
any additional class or series of shares of stock unless the same ranks junior
to the Series B Convertible Preferred Stock as to the distribution of assets on
the liquidation, dissolution or winning up of the Corporation; or create or
authorize any obligation or security convertible into shares of Series B
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, whether any such creation,
authorization or increase shall be by means of amendment to the Corporation's
Certificate of Incorporation or by merger, consolidation or otherwise.
7. OPTIONAL CONVERSION. The holders of shares of Series B Convertible
Preferred Stock shall have the following conversion rights:
(a) Right to Convert; Conversion Price. Subject to the terms,
conditions. and restrictions of this Paragraph 7, the holder of any share or
shares of Series B Convertible Preferred Stock shall have the right to convert
each such share of Series B Convertible Preferred Stock (except that upon any
liquidation of the Corporation, the right of conversion shall terminate at the
close of business on the business day fixed for payment of the amount
distributable on the Series B Convertible Preferred Stock) into an amount of
shares of Common Stock equal to the Stated Value of such share or shares of
Series B Convertible Preferred Stock based upon (i) the average closing bid
price of the Common Stock (the "Average Closing Price"), as reported by the
Nasdaq SmallCap Market or in the so called "Pink Sheets," during the period of
five trading days immediately preceding the date of conversion (the "Conversion
Date"), after (ii) discounting the Average Closing Price by an amount equal to
forty percent (40%) of the Average Closing Price to determine the conversion
price (the "Conversion Price"). To illustrate, if the Average Closing Price on
the Conversion Date is $2.00 and one-third (1/3) of the shares of Series B
Convertible Preferred Stock are being converted, the Stated Value for
-4-
which would be $1,000,000, then the Conversion Price shall be $1.20 per share of
Common Stock ($2.00 x .60), whereupon the Stated Value of $1,000,000 of Series B
Convertible Preferred Stock would entitle the holder thereof to convert
one-third (1/3) of the shares of Series B Convertible Preferred Stock into
833,333 shares of Common Stock ($1,000,000 divided by $1.20 equals 833,333).
(b) In no event shall the Conversion Price exceed $1.50 or be
less than, except as set forth below in Subparagraph 7(c), $1.00 (the "Minimum
Conversion Price"). To illustrate, if the Average Closing Price equals or
exceeds $2.50, then the Conversion Price shall be $1.50. If the Average Closing
Price equals or is less than $1.67, then the Conversion Price shall be $1.00.
(c) Elimination of Minimum Conversion Price. In the event that
at any time prior to March 31, 1999, the Corporation's Stockholders' Equity, as
set forth in any of the Corporation's Annual Reports on Form 10-K(SB) or
Quarterly Reports on Form 10-Q(SB) to be filed with SEC during such period, is
less than $1,000,000, then the Minimum Conversion Price as applied to any future
conversion into Common Stock of the Shares pursuant to Subparagraphs 7(a) and
7(b) shall be eliminated, and the Conversion Price shall be that price as
determined in accordance with Subparagraph 7(a) without any minimum price in
effect. In the event that the Minimum Conversion Price is eliminated pursuant to
Subparagraph 7(c), then the Company shall not be required to issue the Bonus
Warrants pursuant to Section 3.1 of that certain Regulation S Offshore
Subscription Agreement by and between the Corporation and the holder(s) of the
Series B Convertible Preferred Stock pursuant to which such shares were issued
and the provisions of Section 3.1 of the Subscription Agreement with respect to
the Bonus Warrants shall be null and void, and of no effect against the
Corporation.
(d) Restrictions on Conversion. The holder of any share or
shares of Series B Convertible Preferred Stock may not convert any of such
shares for a period of at least forty-four (44) calendar days following the date
upon which the Series B Convertible Preferred Stock was originally issued (the
"Original Issuance Date"), and thereafter may convert such shares only on the
dates and in the amounts as follows: commencing on the 45th calendar day
following the Original Issuance Date and continuing up to and including the 74th
calendar day following the Original Issuance Date, the holder may convert up to
one-third (1/3) of the Series B Convertible Preferred Stock held by the holder
on such date (i.e. - no more than $1,000,000 of the Stated Value of such shares
of the Series B Convertible Preferred Stock); commencing on the 75th calendar
day following the Original Issuance Date and continuing up to and including the
104th calendar day following the Original Issuance Date, the holder may convert
up to two-thirds (2/3) of the Series B Convertible Preferred Stock held by the
holder on such date (i.e. - no more than $2,000,000 of the Stated Value of such
shares of Series B Convertible Preferred Stock); and commencing on the 105th
calendar day following the Original Issuance Date and continuing thereafter, the
holder may convert up to 100% of the Series B Convertible Preferred Stock held
by the holder on such date (i.e. - the Original Aggregate Stated Value of all of
the shares of Series B Convertible Preferred Stock.)
(e) Notice of Conversion. The right of conversion shall be
exercised by the holder thereof by giving written notice (the "Conversion
Notice") to the Corporation that the holder elects to convert a specified number
of shares of Series B Convertible Preferred Stock
-5-
representing a specified Stated Value thereof into Common Stock and by surrender
of a certificate or certificates for the shares so to be converted to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the holders
of the Series B Convertible Preferred Stock) at any time during its usual
business hours on the date set forth in the Conversion Notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued. The Conversion Notice
shall include therein the Stated Value of shares of Series B Convertible
Preferred Stock to be converted, and a calculation (i) of the Average Closing
Price, (ii) the Conversion Price, and (iii) the number of shares of Common Stock
to be issued in connection with such conversion. The Corporation shall have the
right to review the calculations included in the Conversion Notice, and shall
provide notice of any discrepancy or dispute therewith within three business
days of the receipt thereof.
(f) Issuance of Certificates; Time Conversion Effected.
Promptly, but in no event more than ten business days, after the receipt of the
Conversion Notice referred to in Subparagraph 7(e) and surrender of the
certificate or certificates for the share or shares of Series B Convertible
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered to the holder, registered in such name or names
as such holder may direct, a certificate or certificates for the number of whole
shares of Common Stock into which such shares of Series B Convertible Preferred
Stock are converted. To the extent permitted by law, such conversion shall be
deemed to have been effected as of the close of business on the date (the
"Conversion Date") on which such Conversion Notice shall have been received by
the Corporation and the certificate and certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Series B Convertible Preferred Stock shall
cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby.
(g) Fractional Shares: Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series B Convertible
Preferred Stock into Common Stock. In case the number of shares of Series B
Convertible Preferred Stock represented by the certificate or certificates
surrendered pursuant to Subparagraph 7(a) exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series B Convertible Preferred Stock represented by
the certificate or certificates surrendered which are not to be converted.
(h) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a share or shares
of Series B Convertible Preferred Stock shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of the shares of Common Stock immediately theretofore receivable upon
the conversion of such share or shares of Series B Convertible Preferred Stock,
such shares of stock, securities or assets as may be issued or
-6-
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such Common Stock immediately
theretofore receivable upon such conversion had such reorganization or
reclassification not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of such holder to the end
that the provisions hereof (including without limitation provisions for
adjustments of the conversion rights) shall thereafter be applicable, as nearly
as may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
(i) Adjustments for Splits, Combinations, etc. The Conversion
Price and the number of shares of Common Stock into which the Series B
Convertible Preferred Stock shall be convertible shall be adjusted appropriately
for stock splits, combinations, or other similar events (other than employee
benefit plans and stock option plans for employees or consultants to the
Company). Additionally, an adjustment will be made in the case of an exchange of
Common Stock, consolidation or merger of the Company with or into another
corporation or sale of all or substantially all of the assets of the Company in
order to enable the holder of Series B Convertible Preferred Stock to acquire
the kind and the number of shares of stock or other securities or property
receivable in such event by a holder of the Series B Convertible Preferred Stock
of the number of shares that might otherwise have been purchased upon the
conversion of the Series B Convertible Preferred Stock. No adjustment to the
Conversion Price will be made for dividends (other than stock dividends), if
any, paid on the Common Stock or for securities issued pursuant to exercise of
the currently outstanding options, warrants, or options that may be granted or
shares issued in connection with the acquisition of another business by the
Company.
8. MANDATORY CONVERSION.
(a) Mandatory Conversion Date. If at March 31, 1999 (the
"Mandatory Conversion Date"), there remains issued and outstanding any shares of
Series B Convertible Preferred Stock, then the Corporation shall be entitled to
require all (but not less than all) holders of shares of Series B Convertible
Preferred Stock then outstanding to convert their shares of Series B Convertible
Preferred Stock into shares of Common Stock at the then effective Conversion
Price pursuant to Subparagraph 7(a). The Corporation shall provide written
notice (the "Mandatory Conversion Notice") to the holders of shares of Series B
Convertible Preferred Stock of such mandatory conversion. The Mandatory
Conversion Notice shall include (i) the Stated Value of the shares of Series B
Convertible Preferred Stock to be converted, (ii) the Conversion Price at March
31, 1999, and (iii) the number of shares of the Corporation's Common Stock to be
issued upon such mandatory conversion at the then applicable Conversion Price.
No Minimum Conversion Price shall be applicable to mandatory conversion of the
Series B Convertible Preferred Stock pursuant to this Paragraph 8.
(b) Surrender of Certificates. On or before the Mandatory
Conversion Date, each holder of shares of Series B Convertible Preferred Stock
shall surrender his or its certificate or certificates for all such shares to
the Corporation at the place designated in such Mandatory Conversion Notice, and
shall thereafter receive certificates for the number of shares of Common Stock
to which such holder is entitled. On the Mandatory Conversion Rate, all rights
with respect to the Series B Convertible Preferred Stock so converted, including
the rights, if any, to receive
-7-
notices and vote, will terminate. All certificates evidencing shares of Series B
Convertible Preferred Stock that are required to be surrendered for conversion
in accordance with the provisions hereof, from and after the Mandatory
Conversion Date, shall be deemed to have been retired and cancelled and the
shares of Series B Convertible Preferred Stock represented thereby converted
into Common Stock for all purposes, notwithstanding the failure of the holder or
holders thereof to surrender such certificates on or prior to such date. The
Corporation may thereafter take such appropriate action as may be necessary to
reduce the authorized Series B Convertible Preferred Stock accordingly.
9. REDEMPTION OF SERIES B CONVERTIBLE PREFERRED STOCK.
(a) Right to Redeem Series B Convertible Preferred Stock. At
any time, and from time to time, on and after the expiration of the restrictions
of conversion contained in Subparagraph 7(d), if the closing bid price of the
Company's Common Stock as reported by the Nasdaq SmallCap Market or in the "Pink
Sheets" equals or exceeds $5.00 for 20 consecutive trading days, then the
Corporation may, in its sole discretion, but shall not be obligated to, redeem,
in whole or in part, the then issued and outstanding shares of Series B
Convertible Preferred Stock, at a price of $1,000 per share of such Series B
Convertible Preferred Stock (the "Redemption Price"), subject to adjustment as
provided in Paragraph 7.
(b) Notice of Redemption. The Corporation shall provide each
holder of record of the Series B Convertible Preferred Stock with written notice
of redemption (the "Redemption Notice") not less than 30 days prior to any date
stipulated by the Corporation for the redemption of the Series B Convertible
Preferred Stock (the "Redemption Date"). The Redemption Notice shall contain (i)
the Redemption Date, (ii) the number of shares of Series B Convertible Preferred
Stock to be redeemed from the holder to whom the Redemption Notice is delivered,
(iii) instructions for surrender to the Corporation of the certificate or
certificates representing the shares of Series B Convertible Preferred Stock to
be redeemed, and (iv) instructions as to how to specify to the Corporation the
number of shares of Series B Convertible Preferred Stock to be redeemed as
provided in this Paragraph 9, and the number of shares of Series B Convertible
Preferred Stock to be converted into Common Stock pursuant to Paragraph 7.
(c) Right to Convert Series B Convertible Preferred Stock upon
Receipt of Redemption Notice. Upon receipt of the Redemption Notice, the
recipient thereof shall have the option, at is sole election, to specify what
portion of the Series B Convertible Preferred Stock called for redemption in the
Redemption Notice shall be redeemed as provided in this Paragraph 8 or converted
into Common Stock in the manner provided in Paragraph 7. If the holder of the
Series B Convertible Preferred Stock called for redemption elects to convert
such shares, then such conversion shall take place on the Redemption Date, in
accordance with the terms of Paragraph 7.
(d) Surrender of Certificates; Payment of Redemption Price. On
or before the Redemption Date, each holder of the shares of Series B Convertible
Preferred Stock to be redeemed shall surrender the required certificate or
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be paid by the Corporation via
-8-
check to the order of the person whose name appears on such certificate or
certificates as the owner thereof, and each such surrendered certificate shall
be canceled and retired. If a certificate is surrendered and all the shares
evidenced thereby are not being redeemed, the Corporation shall issue new
certificates to be registered in the names of the person(s) whose name(s)
appear(s) as the owners on the respective surrendered certificates and deliver
such certificate to such person(s).
(e) Deposit of Redemption Price. On the Redemption Date in
respect to any shares of Series B Convertible Preferred Stock, or prior thereto,
the Corporation shall deposit with any bank or trust company (the "Depository")
having a capital and surplus of at least $50,000,000, a sum equal to (i) the
aggregate Redemption Price of all such shares called for redemption, less (ii)
the aggregate Redemption Price for those shares of Series B Convertible
Preferred Stock in respect of which the Corporation has received notice from the
holder thereof of its election, pursuant to Subparagraph 8(c), to convert shares
of Series B Convertible Preferred Stock into Common Stock. The Corporation shall
provide instructions and authority to a Depository to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon the
surrender of their share certificates. The deposit of the Redemption Price by
the Corporation with the Depository, shall constitute full payment for the
shares of Series B Convertible Preferred Stock to be redeemed, and from and
after that date of the deposit, the redeemed shares shall be deemed to be no
longer issued and outstanding, and the holders thereof shall cease to be holders
with respect to such shares and shall have no rights with respect thereto,
except the right to receive from the Depository payment of the Redemption Price,
without interest, upon surrender of their certificates therefor. Any funds so
deposited and unclaimed at the end of one year from the Redemption Date shall be
released and delivered to the Corporation, after which the former holders of
shares of Series B Convertible Preferred Stock called for redemption shall be
entitled to receive payment of the Redemption Price in respect of their shares
only from the Corporation.
10. NOTICES. In cast at any time:
(a) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other pro rata distribution to the
holders of its Common Stock; or
(b) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights; or
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all
its assets to, another entity or entities; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by telex to non-U.S. residents, addressed to
each holder of any shares of Series B Convertible Preferred Stock at the address
of such holder as shown on the books of the
-9-
Corporation, (i) at least 10 days' prior to written notice of the date on which
the books of the Corporation shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights to vote
in respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up and (ii) in the case of any such
reorganization, reclassification, consolidation, merger, sale. dissolution,
liquidation or winding up, at least 10 days' prior written notice of the date
when the same shall take place. Such notice in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto and (ii) shall also specify the date on which the holders of
Common Stock shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as the case
may be.
11. STOCK TO BE RESERVED. The Corporation, upon the effective date of
this Statement of Designation, has a sufficient number of shares of Common Stock
available to reserve for issuance upon the conversion of all outstanding shares
of Series B Convertible Preferred Stock, assuming that the Minimum Conversion
Price remains in effect. (The Corporation, under such circumstances would
require to issue a maximum of 3,000,000 shares of Common Stock upon conversion
of all of the outstanding shares of Series 13 Convertible Preferred Stock if all
of such shares were converted at the Minimum Conversion Price). The Corporation
shall use its best efforts to effect an amendment to its Certificate of
Incorporation, as. amended. such that there will be a sufficient number of
shares of Common Stock available for issuance upon conversion of all of the
outstanding shares of Series 13 Convertible Preferred Stock if the Minimum
Conversion Price is eliminated pursuant to Subparagraph 7(c) above. Thereafter,
the Corporation will at all times reserve and keep available out of its
authorized Common Stock, solely for the purpose of issuance upon the conversion
of Series B Convertible Preferred Stock as herein provided, such number of
shares of Common Stock as shall then be issuable upon the conversion of all
outstanding shares of Series B Convertible Preferred. The Corporation covenants
that all shares of Common Stock which shall be so issued shall be duly and
validly issued. The Corporation will take all such action as may be so issued
without violation of any applicable law or regulation, or of any requirement of
any national securities exchange upon which the Common Stock may be listed. The
Corporation will not take any action which results in any adjustment of the
conversion rights if the total number of shares of Common Stock issued and
issuable after such action upon conversion of the Series B Convertible Preferred
Stock would exceed the total number of shares of Common Stock then authorized by
the Corporation's Certificate of Incorporation, as amended.
12. NO REISSUANCE OF SERIES B CONVERTIBLE PREFERRED STOCK. Shares of
Series B Convertible Preferred Stock which are converted into shares of Common
Stock as provided herein shall not be reissued.
13. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of Series B Convertible Preferred Stock shall be made without
charge to the holder thereof for any issuance tax in respect thereof, provided
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series B Convertible
Preferred Stock which is being converted.
-10-
14. CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Series B Convertible Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series B Convertible Preferred Stock in any manner which interferes
with the timely conversion of such Series B Convertible Preferred Stock, except
as may otherwise be required to comply with applicable securities laws.
15. DEFINITION OF COMMON STOCK. As used in this Statement of
Designation, the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, $.02 par value per share, as constituted on the date of
filing of these terms of the Series B Convertible Preferred Stock, and shall
also include any capital stock of any class of title Corporation thereafter
authorized which shall neither be limited to a fixed sum or percentage of par
value in respect of the rights of the holders thereof to participate in
dividends nor entitled to a preference in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; provided that the shares of Common Stock receivable upon conversion
of shares of Series B Convertible Preferred Stock shall include only shares
designated as Common Stock of the Corporation on the date of filing of this
instrument. or in case of any reorganization, reclassification, or stock split
of the outstanding shares thereof, the stock, securities or assets provided for
in Subparagraph 7(h).
16. AMENDMENTS. No provision of these terms of the Series B Convertible
Preferred Stock may be amended, modified or waived without the written consent
or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series B Convertible Preferred Stock.
RESOLVED: That the President and Secretary be, and hereby are,
authorized and directed to execute and file a Statement of
Designation with the Delaware Secretary of State.
IN WITNESS HEREOF, the said National Datacomputer, Inc. has caused its
corporate seal to be hereunto affixed and this Statement of Designation to be
signed by Norman Mackinnon, its President and Secretary, this 19th day of April,
1996.
NATIONAL DATACOMPUTER, INC.
By: /s/ Norman Mackinnon
--------------------------
Norman Mackinnon
President
/s/ Norman Mackinnon
- ---------------------------
Norman Mackinnon
Secretary
[SEAL]
-11-
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:00 PM 06/27/1996
960189910 - 2111518
CERTIFICATE OF INCREASE
OF
SHARES DESIGNATED
AS
SERIES B CONVERTIBLE PREFERRED STOCK
NATIONAL DATACOMPUTER, INC. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
That the Certificate of Incorporation of said corporation was filed in
the office of the Secretary of State of Delaware on December 17, 1986, a
Certificate of Amendment was filed on April 15, 1987, a Certificate of Amendment
was filed on October 17, 1994 and a Certificate of the Designations, Preferences
and Rights of Series B Convertible Preferred Stock was filed in said office of
the Secretary of State on April 25, 1996.
That by unanimous written consent dated June 25, 1996, all of the
directors and all of the Series B shareholders of the Corporation adopted a
resolution authorizing and directing an increase in the number of shares
designated as Series B Convertible Preferred Stock from three thousand (3,000)
shares to four thousand two hundred (4,200) shares, in accordance with the
provisions of section 151 of The General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the said NATIONAL DATACOMPUTER, INC. has caused
this consent to be executed by its President this 26th day of June, 1996.
/s/ Malcolm M. Bibby
-------------------------------
Malcolm M. Bibby, Ph.D., President
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
NATIONAL DATACOMPUTER, INC.
NATIONAL DATACOMPUTER, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: That at a meeting on July 25, 1996, all of the directors and at
a meeting on October 4, 1996, a majority of the stockholders of
NATIONAL DATACOMPUTER, INC., adopted the following resolution amending
the Certificate of Incorporation of said Corporation.
RESOLVED: That the first paragraph of Article FOURTH
of the Company's Certificate of
Incorporation be, and hereby is, deleted in
its entirety and the following be, and
hereby is, inserted in place thereof:
"FOURTH: The total number of shares
of all classes of stock which the
Corporation shall have authority to issue is
twenty million fifty thousand (20,050,000),
of which twenty million (20,000,000) shares
are to be Common Stock, of the par value of
two cents ($.02) each, and fifty thousand
(50,000) shares are to be Preferred Stock,
of the par value of one tenth of one cent
($.001) each, of which twenty (20) shares
have been designated as Series A Convertible
Preferred Stock, of the par value of one
tenth of one cent ($.001) each, and four
thousand two hundred (4,200) shares have
been designated as Series B Convertible
Preferred Stock, of the par value of one
tenth of one cent ($.001) each, amounting in
the aggregate to Four Hundred Thousand Fifty
and 00/100 Dollars ($400,050.00)."
SECOND: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, the said NATIONAL DATACOMPUTER, INC. has caused its
corporate seal to be hereunto affixed and this Certificate of Amendment to be
signed by its President and Secretary this 13th day of December, 1996.
NATIONAL DATACOMPUTER, INC.
/s/ Malcolm M. Bibby
------------------------------------------
Malcolm M. Bibby, Ph.D., President
/s/ Malcolm M. Bibby
Malcolm M. Bibby, Ph.D., Secretary
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
NATIONAL DATA COMPUTER, INC.
NATIONAL DATACOMPUTER, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: That at the Special Meeting in Lieu of Annual Meeting of
Stockholders held on October 4, 1996, a majority of the stockholders of
NATIONAL DATACOMPUTER, INC. adopted the following resolution to
authorize the amendment of the Certificate of Incorporation of said
Corporation.
RESOLVED: That the Board of Directors be, and hereby
is, authorized to execute, at its
discretion, an amendment to the Company's
Certificate of Incorporation to effect a
reverse stock split in the issued and
outstanding shares of the Company's Common
Stock.
SECOND: That by unanimous written consent dated December 12, 1996, all
of the directors of NATIONAL DATACOMPUTER, INC. adopted the following
resolution to amend the Certificate of Incorporation of said
Corporation.
RESOLVED: That the first paragraph of Article FOURTH
of the Company's Certificate of
Incorporation be, and hereby is, deleted in
its entirety and the following be, and
hereby is, inserted in place thereof:
"FOURTH: The total number of shares of all
classes of stock which the Corporation shall
have authority to issue is five million
fifty thousand (5,050,000), of which five
million (5,000,000) shares are to be Common
Stock, of the par value of eight cents
($.08) each, and fifty thousand (50,000)
shares are to be Preferred Stock, of the par
value of one tenth of one cent ($.001) each,
of which twenty (20) shares have been
designated as Series A Convertible Preferred
Stock, orate par value of one tenth of one
cent ($.001) each, and four thousand two
hundred (4,200) shares have been designated
as Series B Convertible Preferred Stock, of
the par value of one tenth of one cent
($.001) each,
amounting in the aggregate to Four Hundred
Thousand Fifty and 00/100 Dollars
($400,050.00)."
FURTHER
RESOLVED: That at the effective time of this
amendment, every four (4) shares of Common
Stock of the Corporation, $.02 par value per
share, outstanding immediately prior to the
effective time of this amendment shall be
converted into one (1) share of Common Stock
of the Corporation, $.08 par value per
share. No fractional shares of Common Stock
or script certificates shall be issued by
reason of such reverse stock split, but upon
surrender of certificates for such Common
Stock by the holders entitled to such
fractional share interests, the Corporation
shall issue to such holders that number of
Shares of Common Stock, $.08 par value per
share, to which such holders are entitled,
rounded to the next highest whole number of
shares to avoid fractional shares. This
amendment and the reverse stock split
effected hereby shall be effective on the
date that such amendment is filed with the
Secretary of State of the State of Delaware.
[THIS SPACE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the said NATIONAL DATACOMPUTER, INC. has caused its
corporate seal to be hereunto affixed and this Certificate of Amendment to be
signed by its President and Secretary this 13th day of December, 1996.
NATIONAL DATACOMPUTER, INC.
/s/ Malcolm M. Bibby
-----------------------------------
Malcolm M. Bibby, Ph.D., President
/s/ Malcolm M. Bibby
Malcolm M. Bibby, Ph.D., Secretary
[SEAL]
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 10:30 AM 03/03/1997
971068752 - 2111518
STATEMENT OF DESIGNATION
OF
SERIES C CONVERTIBLE PREFERRED STOCK
NATIONAL DATACOMPUTER, INC.
NATIONAL DATACOMPUTER, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware
(hereinafter the "Corporation"), DOES HEREBY CERTIFY:
That by unanimous written consent, dated January 23, 1997, the
directors of the Corporation adopted the following resolution setting forth the
designations, powers, preferences and rights of its Series C Convertible
Preferred Stock:
RESOLVED: That the designations, powers, preferences and rights
of the Series C Convertible Preferred Stock be, and
hereby are, as set forth below:
1. NUMBER OF SHARES OF SERIES C CONVERTIBLE PREFERRED STOCK. Of the
50,000 shares of authorized and unissued Preferred Stock, $.001 par value per
share ("Preferred Stock") of the Corporation, nine hundred (900) shares shall be
designated and known as "Series C Convertible Preferred Stock."
2. VOTING.
(a) Each holder of outstanding shares of Series C Convertible
Preferred Stock at each meeting of stockholders of the Corporation (and written
actions of stockholders in lieu of meetings) with respect to any and all matters
presented to the stockholders of the Corporation for their action or
consideration shall be entitled to the number of votes equal to the number of
whole shares of Common Stock, as hereinafter defined, into which the shares of
Series C Convertible Preferred Stock held by such holder are correctable on the
record date established for such meeting. Except as provided by law, by the
provisions of Subparagraph 2(b) below, or by the provisions establishing any
other series of Preferred Stock, holders of Series C Convertible Preferred Stock
shall vote together with the holders of all other classes and series of
securities of the Corporation as a single class.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series C Convertible
Preferred Stock so as to affect adversely the Series C Convertible Preferred
Stock, without the written consent or affirmative vote of the holders of at
least a majority of the then outstanding shares of Series C Convertible
Preferred Stock to be affected by amendment, alteration or repeal, given in
writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a class. For this purpose, without
limiting the generality of the foregoing, the authorization or issuance of any
series of Preferred Stock with preference or priority over the Series C
Convertible Preferred Stock as to the right to receive either dividends or
amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall be deemed to affect adversely the designated class of Series C
Convertible Preferred Stock, and the authorization or issuance of any series of
Preferred Stock on a parity with Series C Convertible Preferred Stock as to the
right to receive either dividends or amounts distributable upon liquidation,
dissolution or winding up of the Corporation shall not be deemed to affect
adversely the Series C Convertible Preferred Stock. The number of authorized
shares of Preferred Stock may be increased or decreased (but not below the
number of shares then outstanding) by the affirmative von of the holders of a
majority of the then outstanding shares of all other classes or series of stock
of the Corporation entitled to vote thereon, voting as a single class.
3. DIVIDENDS.
(a) The holders of Shares of Series C Convertible Preferred
Stock shall be entitled to receive, before any cash dividend shall be declared
and paid upon or set aside for the Common Stock in any fiscal year of the
Corporation, only when, as and if declared by the Board of Directors of the
Corporation out of the funds legally available for that purpose, dividends
payable in cash or Common Stock in an amount per share for such fiscal year
equal to the product of (i) the per share amount, if any, of the cash dividend
declared, paid or set aside for the Common Stock during such fiscal year,
multiplied by (ii) the number of whole shares of Common Stock into which each
such share of Series C Convertible Preferred Stock is then convertible as
determined by Paragraph 7 below.
(b) The Corporation shall not declare or pay any dividends or
any (OCT distributions of property or assets on shares or Common Stock, other
than dividends payable solely in cash or Common Stock, without the prior written
consent or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series C Preferred Stock given in writing or by vote at a
meeting, voting as a single class.
4. ADDITIONAL PAYMENTS.
(a) In addition to any dividends for which holders of shares
of Series C Convertible Preferred Stock shall be entitled to receive pursuant to
Subparagraph 3(a) above, holders of shares of Series C Convertible Preferred
Stock shall be entitled to receive interest equal to six percent (6%) per annum
of the stated value (the "Stated Value") of such Series C Convertible Preferred
Stock. The Stated Value for all of the shares of Series C Convertible Preferred
Stock as of the Original Issuance Date (defined below) is $900,000 (the
"Original Aggregate Stated Value") and the Stated Value of each share of Series
C Convertible Preferred Stock is $1,000. Such interest accrue from the Original
Issuance Late, and shall be payable, in cash or Common Stock, on a quarterly
basis, as described in Subparagraph 4(b) below, commencing with the
Corporation's fiscal quarter ending March 31, 1997. In the event that the
Corporation decides to make payment of such interest in Common Stock, the amount
of shares of Common Stock to be issued to make such payment shall be that number
of shares equal to (i) the amount of interest due and payable, divided by (ii)
the Average Closing Price (defined in Subparagraph 7(a) below) of the Common
Stock, as reported by the Nasdaq SmallCap Market or
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in the "Pink Sheets" during the ten trading days immediately preceding the date
of delivery to the holders of the Series C Convertible Preferred Stock of the
Common Stock as required by Subparagraph 4(b) as payment for the interest due
hereunder.
(b) Interest hereunder shall accrue and be calculated and
payable with respect to (i) those shares of Series C Convertible Preferred Stock
that remain issued and outstanding at the end of each of the Corporation's
fiscal quarters (ii) and any shares of Series C Convertible Preferred Stock that
are converted during a fiscal quarter for which interest is calculated and paid.
With respect to those shares of Series C Convertible Preferred Stock that remain
issued and outstanding at the end a fiscal quarter, interest shall be calculated
based on the Stated Value of such remaining issued and outstanding shares of
Series C Convertible Preferred Stock as set forth in the Corporation's Annual
Reports on Form 10-K(SB) or Quarterly Reports on Form 10-Q(SB) to be filed with
the Securities and Exchange Commission ("SEC"). With respect to any shares of
Series C Convertible Preferred Stock that are converted during a fiscal quarter,
interest shall be calculated based on the Stated Value of such shares up to and
including the Conversion Date (defined in Subparagraph 7(f)).
(c) Payment of interest due hereunder with respect to those
shares of Series C Convertible Preferred Stock that remain issued and
outstanding at the end of each of the Corporation's fiscal quarters shall be
made within 15 business days after the filing with the SEC of the applicable
report. Payment of interest due hereunder with respect to any shares of Series C
Convertible Preferred Stock that arc converted during a fiscal quarter shall be
calculated and made within 30 days of the Conversion Date of such shares.
Payment of interest upon such converted shares of Series C Convertible Preferred
Stock shall be accompanied by the Company's calculation of the interest.
(d) With respect to the payment of interest due hereunder upon
those shares of Series C Convertible Preferred Stock that remain issued and
outstanding at the end of a fiscal quarter, the Corporation shall notify the
holders of the Series C Convertible Preferred Stock in writing not less than 10
days prior to the end of such fiscal quarter of whether the Corporation shall
pay the interest due hereunder in cash or Common Stock. With respect to the
payment of interest due hereunder upon those shares of Series C Convertible
Preferred Stock that are converted during a fiscal quarter, the Corporation
shall notify the holders of the Series C Convertible Preferred Stock in writing
not less than 10 days after the Conversion Date whether the Corporation shall
pay the interest due hereunder in cash or Common Stock.
5. LIQUIDATION. In the event of a voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the holders of shares of Series C
Convertible Preferred Stock shall be entitled to receive out of the assets of
the Corporation legally available for distribution to holders of its capital
stock, before any payment or distribution shall be made to holders of Common
Stock or any other class of stock ranking junior to Series C Convertible
Preferred Stock, an amount per share equal to the Stated Value of such shares of
Series C Convertible Preferred Stock plus all dividends which have accrued and
are unpaid and therefore are in arrears. If upon such liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the assets
to be distributed among the holders of Series C Convertible Preferred Stock
shall be insufficient to permit payment to the holders of Series C Convertible
Preferred Stock of the amount distributable is aforesaid, then the entire assets
of the Corporation
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to be so distributed shall be distributed ratably among the holders of Series C
Convertible Preferred Stock. Upon any such liquidation, dissolution or winding
up of the Corporation, after the holders of Series C Convertible Preferred Stock
shall have been paid in full the amounts to which they shall be entitled, the
remaining net assets of the Corporation may be distributed to the holders of
stock ranking on liquidation junior to the Series C Convertible Preferred Stock.
Written notice of such liquidation, dissolution or winding up, stating a payment
date, the amount of the liquidation payments and the place where said
liquidation payments shall be payable, shall be given by mail, postage prepaid,
or by telex to non-US residents, not less than 10 days prior to the payment date
stated therein, to the holders of record of Series C Convertible Preferred
Stock, such notice to be addressed to each such holder at its address as shown
by the records of the Corporation. For purposes hereof, the Common Stock shall
rank on liquidation junior to the Series C Convertible Preferred Stock.
6. RESTRICTIONS. At any time when shares of Series C Convertible
Preferred Stock are outstanding, except where the vote or written consent of the
holders of a greater number of shares of' the Corporation is required by law or
by the Corporation's Certificate of Incorporation, as amended, without the
approval of the holders of at least a majority of the then outstanding shares of
Series C Convertible Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a series, the
Corporation will not create or authorize the creation of any additional class or
series of' shares or stock unless the same ranks junior to the Series C
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation; or increase the authorized amount
of the Series C Convertible Preferred Stock or increase the authorized amount of
any additional class or series of shares of stock unless the same ranks junior
to the. Series C Convertible Preferred Stock as to the distribution of assets cm
the liquidation, dissolution or winding up of the Corporation; or create or
authorize any obligation or security convertible into shares of Series C
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, whether any such creation,
authorization or increase shall be by means of amendment to the Corporation's
Certificate of Incorporation or by merger, consolidation or otherwise.
7. OPTIONAL CONVERSION. The holders of shares of Series C Convertible
Preferred Stock shall have the following conversion rights:
(a) Right to Convert; Conversion Price. Subject to the terms,
conditions, and restrictions of this Paragraph 7, the holder of any share or
shares of Series C Convertible Preferred Stock shall have the right to convert
each such share of Series C Convertible Preferred Stuck (except that upon any
liquidation of the Corporation, the right of conversion shall terminate at the
close of business on the business day fixed for payment of the amount
distributable on the Series C Convertible Preferred Stock) into an amount of
shares of Common Stock equal to the Stated Value of such share or shares of
Series C Convertible Preferred Stock divided by $3.20.
(b) Restrictions on Conversion. The holder of any share or
shares of Series C Convertible Preferred Stock may not convert any of such
shares for a period of at least three hundred sixty-five (365) days following
the date upon which the Series C Convertible Preferred Stock was originally
issued (the "Original Issuance Date").
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(c) Notice of Conversion. The right of conversion shall be
exercised by the holder thereof by giving written notice (the "Conversion
Notice") to the Corporation that the holder elects to convert a specified number
of shares of Series C Convertible Preferred Stock representing a specified
Stated Value thereof into Common Stock and by surrender of a certificate or
certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series C
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in the Conversion Notice, together with a statement of the name
or names (with address) in which the certificate or certificates for shares of
Common Stock shall be issued. The Conversion Notice shall include therein the
Stated Value of shares of Series C Convertible Preferred Stock to be converted,
and the number of shares of Common Stock to be issued in connection with such
conversion. The Corporation shall have the right to review the calculations
included in the Conversion Notice, and shall provide notice of any discrepancy
or dispute therewith within three business days of the receipt thereof:
(d) Issuance of Certificates; Time Conversion Effected.
Promptly, but in no event more than ten business days, after the receipt of the
Conversion Notice referred to in Subparagraph 7(e) and surrender of the
certificate or certificates for the share or shares of Series C Convertible
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock into which such shares of Series C Convertible
Preferred Stock are converted. To the extent permitted by law, such conversion
shall be deemed to have been effected as of the close of business on the date
(the "Conversion Date") on which such Conversion Notice shall have been received
by the Corporation and the certificate and certificates for such share or shares
shall. have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Series C Convertible Preferred Stock shall
cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby.
(e) Fractional Share; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series C Convertible
Preferred Stock into Common Stock. In case the number of shares of Series C
Convertible Preferred Stock represented by the certificate or certificates
surrendered pursuant to Subparagraph 7(a) exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series C Convertible Preferred Stock represented by
the certificate or certificates surrendered which are not to be converted.
(f) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a share or shares
of Series C Convertible Preferred Stock shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of the shares of Common Stock immediately theretofore receivable upon
the conversion of-such share or shares of Series C Convertible Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock
-5-
immediately theretofore receivable upon such conversion had such reorganization
or reclassification not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of such holder to the end
that the provisions hereof (including without limitation provisions for
adjustments of the conversion rights) shall thereafter be applicable, as nearly
as may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
(g) Adjustments for Splits, Combinations, etc. The Conversion
Price and the number of shares of Common Stock into which the Series C
Convertible Preferred Stuck shall be convertible shall be adjusted appropriately
for stock splits, combinations, or other similar events (other than employee
benefit plans and stock option plans for employees or consultants to the
Company). Additionally, an adjustment will be made in the case of an exchange of
Common Stock, consolidation or merger of the Company with or into another
corporation or sale of all or substantially all of the assets or the Company in
order to enable the holder of Series C Convertible Preferred Stock to acquire
the kind and the number of shares of stock or other securities or property
receivable in such event by a holder of the Series C Convertible Preferred Stock
of the number of shares that might otherwise have been purchased upon the
conversion of the Series C Convertible Preferred Stock. No adjustment to the
Conversion Price will be made for dividends (other than stock dividends), if
any, paid on the Common Stock or for securities issued pursuant to exercise of
the currently outstanding options, warrants, or options that may be granted or
shares issued in connection with the acquisition of another business by the
Company.
8. MANDATORY CONVERSION.
(a) Mandatory Conversion Date. If at January 24, 2000 (the
"Mandatory Conversion Date"), there remains issued and outstanding any shares of
Series C Convertible Preferred Stock, then the Corporation shall be entitled to
require all (but not less than all) holders of shares of Series C Convertible
Preferred Stock then outstanding to convert their shares of Series C Convertible
Preferred Stock into shares of Common Stock pursuant to Subparagraph 7(a). The
Corporation shall provide written notice (the "Mandatory Conversion Notice") to
the holders of shares of Series C Convertible Preferred Stock of such mandatory
conversion. The Mandatory Conversion Notice shall include the Stated Value of
the shares of Series C Convertible Preferred Stock to be converted, and the
number of shares of the Corporation's Common Stock to be issued upon such
mandatory conversion.
(b) Surrender of Certificates. On or before the Mandatory
Conversion Date, each holder of shares of Series C Convertible Preferred Stock
shall surrender his, her or its certificate or certificates for all such shares
to the Corporation at the place designated in such Mandatory Conversion Notice,
and shall thereafter receive certificates for the number of shares of Common
Stock to which such holder is entitled. On the Mandatory Conversion Rate, all
rights with respect to the Series C Convertible Preferred Stock so converted,
including the rights, if any, to receive notices and vote, will terminate. All
certificates evidencing shares of Series C Convertible Preferred Stock that are
requited to be surrendered for conversion in accordance with the provisions
hereof, from and after the Mandatory Conversion Date, shall be deemed to
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have been retired and cancelled and the shares of Series C Convertible Preferred
Stuck represented thereby converted into Common Stuck for all purposes,
notwithstanding the failure of the holder or holders thereof to surrender such
certificates on or prior to such date. The Corporation may thereafter take such
appropriate action as may be necessary to reduce the authorized Series C
Convertible Preferred Stock accordingly.
9. REDEMPTION OF SERIES C CONVERTIBLE PREFERRED STOCK.
(a) Right to Redeem Series C Convertible Preferred Stock. At
any time, and from time to time, on and after the expiration of the restrictions
of conversion contained in Subparagraph 7(b), if the closing bid price of the
Company's Common Stock as reported by the Nasdaq SmallCap Market or in the "Pink
Sheets" equals or exceeds $20.00 for 20 consecutive trading days, then the
Corporation may, in its sole discretion, but shall not be obligated to, redeem,
in whole or in part, the then issued and outstanding shares of Series C
Convertible Preferred Stock, at a price of $1,000 per share of such Series C
Convertible Preferred Stock (the "Redemption Price"), subject to adjustment as
provided in Paragraph 7.
(b) Notice of Redemption. The Corporation shall provide each
holder of record of the Series C Convertible Preferred Stock with written notice
of redemption (the "Redemption Notice") not less than 30 days prior to any date
stipulated by the Corporation for the redemption of the Series C Convertible
Preferred Stock (the "Redemption Date"). The Redemption Notice shall contain (i)
the Redemption Date, (ii) the number of shares of Series C Convertible Preferred
Stock to be redeemed from the holder to whom the Redemption Notice is delivered,
(iii) instructions for surrender to the Corporation of the certificate or
certificates representing the shares of Series C Convertible Preferred Stock to
be redeemed, and (iv) instructions as to how to specify to the Corporation the
number of shares of Series C Convertible Preferred Stock to be redeemed as
provided in this Paragraph 9, and the number of shares of Series C Convertible
Preferred Stock to be converted into Common Stock pursuant to Paragraph 7.
(c) Right to Convert Series C Convertible Preferred Stock upon
Receipt of Redemption Notice. Upon receipt of the Redemption Notice, the
recipient thereof shall have the option, at is sole election, to specify what
portion of the Series C Convertible Preferred Stock called for redemption in the
Redemption Notice shall be redeemed as provided in this Paragraph 8 or converted
into Common Stock in the manner provided in Paragraph 7. If the holder of the
Series C Convertible Preferred Stock called for redemption elects to convert
such shares, then such conversion shall take place on the Redemption Date, in
accordance with the terms of Paragraph 7.
(d) Surrender of Certificates; Payment of Redemption Price. On
or before the Redemption Date, each holder of the shares of Series C Convertible
Preferred Stock to be redeemed shall surrender the required certificate or
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and upon, the Redemption Date,
the Redemption Price for such shares shall be paid by the Corporation via check
to the order of the person whose name appears on such certificate or
certificates as the owner thereof, and each such surrendered certificate shall
be canceled and retired. If a certificate is surrendered and all the shares
evidenced thereby arc not being redeemed, the Corporation shall
-7-
issue new certificates to be registered in the names of the person(s) whose
name(s) appear(s) as the owners on the respective surrendered certificates and
deliver such certificate to such person(s).
(e) Deposit of Redemption Price. On the Redemption Date in
respect to any shares of Series C Convertible Preferred Stock, or prior thereto.
the Corporation shall deposit with any bank or trust company (the "Depository")
having a capital and surplus of at least $50,000,000, a sum equal to (i) the
aggregate Redemption Price of all such shares called for redemption, less (ii)
the aggregate Redemption Price for those shares of Series C Convertible
Preferred Stock in respect of which the Corporation has received notice from the
holder thereof of its election, pursuant to Subparagraph 8(c), to convert shares
of Series C Convertible Preferred Stock into Common Stock. The Corporation shall
provide instructions and authority to the Depository to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon the
surrender of their share certificates. The deposit of the Redemption Price by
the Corporation with the Depository shall constitute full payment for the shares
of Series C Convertible Preferred Stock to be redeemed, and from and alter that
date of the deposit, the redeemed shares shall be deemed to be no longer issued
and outstanding, and the holders thereof shall cease to be holders with respect
to such shares and shall have no rights with respect thereto, except the right
to receive from the Depository payment of the Redemption Price, without
interest, upon surrender of their certificates therefore. Any funds so deposited
and unclaimed at the end of one year from the Redemption Date shall be released
and delivered to the Corporation, after which the former holders of shares of
Series C Convertible Preferred Stock called for redemption shall be entitled to
receive payment of the Redemption Price in respect of their shares only from the
Corporation.
10. NOTICES. In case at any time:
(a) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other pro rata distribution to the
holders of its Common Stock; or
(b) the Corporation shall offer fir subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights; or
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all
its assets to, another entity or entities: or
(d) there shall be a voluntary or involuntary dissolution.,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by telex to non U.S. residents, addressed to
each holder of any shares of Series C Convertible Preferred Stock at the address
of such holder as shown on the books of the Corporation, (i) at least 10 days'
prior to written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (ii) in the case of any such reorganization, reclassification,
-8-
consolidation, merger, sale, dissolution, liquidation or winding up, at least 10
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend distribution or subscription rights, the date on which
the holders of Common Stock shall be entitled thereto and (ii) shall also
specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be.
11. STOCK TO BE RESERVED. The Corporation, upon the effective date of
this Statement of Designation, has a sufficient number of shares of Common Stock
available to reserve for issuance upon the conversion of all outstanding shares
of Series C Convertible Preferred Stock. The Corporation will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Series C Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series C Convertible
Preferred. The Corporation covenants that all shares of Common Stock which shall
be so issued shall be duly and validly issued. The Corporation will take all
such action as may be so issued without violation of any applicable law or
regulation or of any requirement of any national securities exchange upon which
the Common Stock may be listed. The Corporation will not take any action which
results in any adjustment of the conversion rights if the total number of shares
of Common Stock issued and issuable after such action upon conversion of the
Series C Convertible Preferred Stock would exceed the total number of shares of
Common Stock then authorized by the Corporation's Certificate of Incorporation,
as amended.
12. NO REISSUANCE OF SERIES C CONVERTIBLE PREFERRED STOCK. Shares of
Series C Convertible Preferred Stock which are converted into shares of Common
Stock as provided herein shall not be reissued.
13. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of Series C Convertible Preferred Stock shall be made without
charge to the holder thereof for any issuance tax in respect thereof, provided
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series C Convertible
Preferred Stock which is being converted.
14. CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Series C Convertible Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series C Convertible Preferred Stock in any manner which interferes
with the timely conversion of such Series C Convertible Preferred Stock, except
as may otherwise be required to comply with applicable securities laws.
15. DEFINITION OF COMMON STOCK. As used in this Statement of
Designation, the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, S.08 par value per share, as constituted on the date of
filing of these terms of the Series C Convertible Preferred Stock, and shall
also include any capital stock of any class of the
-9-
Corporation thereafter authorized which shall neither be limited to a fixed sum
or percentage of par value in respect of the rights of the holders thereof to
participate in dividends nor entitled to a preference in the distribution of
assets upon the voluntary or involuntary liquidation, dissolution or winding up
of the Corporation; provided that the shares of Common Stock receivable upon
conversion of shares of Series C Convertible Preferred Stock shall include only
shares designated as Common Stock of the Corporation on the date of tiling of
this instrument, or in case of any reorganization, reclassification, or stock
split of the outstanding shares thereof, the stock, securities or assets
provided for in. Subparagraph 7(f).
16. AMENDMENTS. No provision of these terms of the Series C Convertible
Preferred Stock may be amended, modified or waived without the written consent
or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series C Convertible Preferred Stock.
RESOLVED: That the President and Secretary be, and hereby arc,
authorized and directed to execute and file a
Statement of Designation, with the Delaware Secretary
of State.
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IN WITNESS HEREOF, the said National Datacomputer, Inc. has caused its
corporate seal to be hereunto affixed and this Statement of Designation to be
signed by Malcolm M. Bibby, its President and Secretary, this 24th day of
January, 1997.
NATIONAL DATACOMPUTER, INC.
/s/ Malcolm M. Bibby
----------------------------
Malcolm M. Bibby, Ph.D.
President
/s/ Malcolm M. Bibby
- -----------------------------
Malcolm M. Bibby, Ph.D.
Secretary
[SEAL]
-11-
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 10:31 AM 03/03/1997
971068757 - 2111518
STATEMENT OF DESIGNATION
OF
SERIES D CONVERTIBLE PREFERRED STOCK
NATIONAL DATACOMPUTER, INC.
NATIONAL DATACOMPUTER, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(hereinafter the "Corporation"), DOES HEREBY CERTIFY:
That by unanimous written consent, dated February 25, 1997, the
directors of the Corporation adopted the following resolution setting forth the
designations, powers, preferences and rights of its Series D Convertible
Preferred Stock:
RESOLVED: That the designations, powers, preferences and rights
of the Series D Convertible Preferred Stock be, and
hereby are, as set forth below:
1. NUMBER OF SHARES OF SERIES D CONVERTIBLE PREFERRED STOCK. Of the
50,000 shares of authorized and unissued Preferred Stock, $.001 par value per
share ("Preferred Stock") of the Corporation, three hundred fifty (350) shares
shall be designated and known as "Series D Convertible Preferred Stock."
2. VOTING.
(a) Each holder of outstanding shares of Series D Convertible
Preferred Stock at each meeting of stockholders of the Corporation (and written
actions of stockholders in lieu of meetings) with respect to any and all matters
presented to the stockholders of the Corporation for their action or
consideration shall be entitled to the number of votes equal to the number of
whole shares of Common Stock, as hereinafter defined, into which the shares of
Series D Convertible Preferred Stock held by such holder are convertible on the
record date established for such meeting. Except as provided by law, by the
provisions of Subparagraph 2(b) below, or by the provisions establishing any
other series of Preferred Stock, holders of Series D Convertible Preferred Stock
shall vote together with the holders of all other classes and series of
securities of the Corporation as a single class.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series D Convertible
Preferred Stock so as to affect adversely the Series D Convertible Preferred
Stock, without the written consent or affirmative vote of the holders of at
least a majority of the then outstanding shares of Series D Convertible
Preferred Stock to be affected by amendment, alteration or repeal, given in
writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a class. For this purpose, without
limiting the generality of the foregoing, the authorization or issuance of any
series of Preferred Stock with preference or priority over the Series D
Convertible Preferred Stock as to the right to receive either dividends or
amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall be deemed to affect adversely the designated class of Series D
Convertible Preferred Stock, and the authorization or issuance of any series of
Preferred Stock on a parity with Series D Convertible Preferred Stock as to the
right to receive either dividends or amounts distributable upon liquidation,
dissolution or winding up of the Corporation shall not be deemed to affect
adversely the Series D Convertible Preferred Stock. The number of authorized
shares of Preferred Stock may be increased or decreased (but not below the
number of shares then outstanding) by the affirmative vote of the holders of a
majority of the then outstanding shares of all other classes or series of stock
of the Corporation entitled to vote thereon, voting as a single class.
3. DIVIDENDS.
(a) The holders of shares of Series D Convertible Preferred
Stock shall be entitled to receive, before any cash dividend shall be declared
and paid upon or set aside for the Common Stock in any fiscal year of the
Corporation, only when, as and if declared by the Board of Directors of the
Corporation out of the funds legally available for that purpose, dividends
payable in cash or Common Stock in an amount per share for such fiscal year
equal to the product of (i) the per share amount, if any, of the cash dividend
declared, paid or set aside for the Common Stock during such fiscal year,
multiplied by (ii) the number of whole shares of Common Stock into which each
such share of Series D Convertible Preferred Stock is then convertible as
determined by Paragraph 7 below.
(b) The Corporation shall not declare or pay any dividends or
any other distributions of property or assets on shares of Common Stock, other
than dividends payable solely in cash or Common Stock, without the prior written
consent or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series D Preferred Stock given in writing or by vote at a
meeting, voting as a single class.
4. ADDITIONAL PAYMENTS.
(a) In addition to any dividends for which holders of shares
of Series D Convertible Preferred Stock shall be entitled to receive pursuant to
Subparagraph 3(a) above, holders of shares of Series D Convertible Preferred
Stock shall be entitled to receive interest equal to six percent (6%) per annum
of the stated value (the "Stated Value") of such Series I) Convertible Preferred
Stock. The Stated Value for all of the shares of Series D Convertible Preferred
Stock as of the Original Issuance Date (defined below) is $350,000 (the
"Original Aggregate Stated Value") and the Stated Value of each share of Series
D Convertible Preferred Stock is $1,000. Such interest accrue from the Original
Issuance Date, and shall be payable, in cash or Common Stock, on a quarterly
basis, as described in Subparagraph 4(b) below, commencing with the
Corporation's fiscal quarter ending March 31, 1997. In the event that the
Corporation decides to make payment of such interest in Common Stock, the amount
of shares of Common Stock to be issued to make such payment shall be that number
of shares equal to (i) the amount of interest due and payable, divided by (ii)
the Average Closing Price (defined in Subparagraph 7(a) below) of the Common
Stock, as reported by the Nasdaq SmallCap Market or
-2-
in the "Pink Sheets" during the ten trading days immediately preceding the date
of delivery to the holders of the Series D Convertible Preferred Stock of the
Common Stock us required by Subparagraph 4(b) as payment for the interest due
hereunder.
(b) Interest hereunder shall accrue and be calculated and
payable with respect to (i) those shares of Series D Convertible Preferred Stock
that remain issued and outstanding at the end of each of the Corporation's
fiscal quarters (ii) and any shares of Series D Convertible Preferred Stock that
are converted during a fiscal quarter for which interest is calculated and paid.
With respect to those sham of Series D Convertible Preferred Stock that remain
issued and outstanding at the end a fiscal quarter, interest shall be calculated
based on the Stated Value of such remaining issued and outstanding shares of
Series D Convertible Preferred Stock as set forth in the Corporation's Annual
Reports on Form 10- K(SB) or Quarterly Reports on Form 10-Q(SB) to be filed with
the Securities and Exchange Commission ("SEC"). With respect to any shares of
Series D Convertible Preferred Stock that are converted during a fiscal quarter,
interest shall be calculated based on the Stated Value of such shares up to and
including the Conversion Date (defined in Subparagraph 7(f)).
(c) Payment of interest due hereunder with respect to those
shares of Series D Convertible Preferred Stock that remain issued and
outstanding at the end of each of the Corporation's fiscal quarters shall be
made within 15 business days after the filing with the SEC of the applicable
report. Payment of interest due hereunder with respect to any shares of Series D
Convertible Preferred Stock that are converted during a fiscal quarter shall be
calculated and made within 30 days of the Conversion Date of such shares.
Payment of interest upon such converted shares of Series D Convertible Preferred
Stock shall be accompanied by the Company's calculation of the interest.
(d) With respect to the payment of interest due hereunder upon
those shares of Series D Convertible Preferred Stock that remain issued and
outstanding at the end of a fiscal quarter, the Corporation shall notify the
holders of the Series D Convertible Preferred Stock in writing not less than 10
days prior to the end of such fiscal quarter of whether the Corporation shall
pay the interest due hereunder in cash or Common Stock. With respect to the
payment of interest due hereunder upon those shares of Series D Convertible
Preferred Stock that are converted during a fiscal quarter, the Corporation
shall notify the holders of the Series D Convertible Preferred Stock in writing
not less than 10 days alter the Conversion Date whether the Corporation shall
pay the interest due hereunder in cash or Common Stock.
5. LIQUIDATION. In the event of a voluntary or involuntary
dissolution, liquidation, or winding up of the Corporation, the holders of
shares of Series D Convertible Preferred Stock shall be entitled to receive out
of the assets of the Corporation legally available for distribution to holders
of its capital stock, before any payment or distribution shall be made to
holders of Common Stock or any other class of stock ranking junior to Series D
Convertible Preferred Stock, an amount per share equal to the Stated Value of
such shares of Series D Convertible Preferred. Stock plus all dividends which
have accrued and are unpaid and therefore are in arrears. If upon such
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the assets to be distributed among the holders of Series D
Convertible Preferred Stock shall be insufficient to permit payment to the
holders of Series D Convertible Preferred Stock of the amount distributable as
aforesaid, then the entire assets of the Corporation
-3-
to be so distributed shall be distributed ratably among the holders of Series D
Convertible Preferred Stock. Upon any such liquidation, dissolution or winding
up of the Corporation, after the holders of Series D Convertible Preferred Stock
shall have been paid in full the amounts to which they shall be entitled, the
remaining net assets of the Corporation may be distributed to the holders of
stock ranking on liquidation junior to the Series D Convertible Preferred Stock.
Written notice of such liquidation, dissolution or, winding up, stating .a
payment date, the amount of the liquidation payments and the piece where said
liquidation payments shall be payable, shall be given by mail, postage prepaid,
or by telex to non-U.S. residents, not less than 10 days prior to the payment
date stated therein, to the holders of record of Series D Convertible Preferred
Stock, such notice to be addressed to each such holder at its address as shown
by the records of the Corporation. For purposes hereof, the Common Stock shall
rank on liquidation junior to the Series D Convertible Preferred Stock.
6. RESTRICTIONS. At any time when shares of Series D Convertible
Preferred Stock are outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Corporation's Certificate of Incorporation, as amended, without the
approval of the holders of at least a majority of the than outstanding shares of
Series D Convertible Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a series, the
Corporation will not create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series D
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation; or increase the authorized amount
of the Series D Convertible Preferred Stock or increase the authorized amount of
any additional class or series of shares of stock unless the same ranks junior
to the Series D Convertible Preferred Stock as to the distribution of assets on
the liquidation, dissolution or winding up of the Corporation; or create or
authorize any obligation or security convertible into shares of Series D
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, whether any such creation,
authorization or increase shall be by means of amendment to the Corporation's
Certificate of incorporation or by merger, consolidation or otherwise.
7. OPTIONAL CONVERSION. The holders of shares of Series D Convertible
Preferred Stock shall have the following conversion rights:
(a) Right to Convert; Conversion Price. Subject to the terms,
conditions, and restrictions of this Paragraph 7, the holder of any share or
shares of Series D Convertible Preferred Stock shall have the right to convert
each such share of Series D Convertible Preferred Stock (except that upon any
liquidation of the Corporation, the right of conversion shall terminate at the
close of business on the business day fixed for payment of the amount
distributable on the Series D Convertible Preferred Stock) into an amount of
shares of Common Stock equal to the Stated Value of such share or shares of
Series D Convertible Preferred Stock divided by $2.74.
(b) Restrictions on Conversion. The holder of any share or
shares of Series D Convertible Preferred Stock may not convert any of such
shares for a period of at least three hundred sixty-five (365) days following
the date upon which the Series D Convertible Preferred Stock was originally
issued (the "Original Issuance Date").
-4-
(c) Notice of Conversion. The right of conversion shall be
exercised by the holder thereof by giving written notice (the "Conversion
Notice") to the Corporation that the holder elects to convert a specified number
of shares of Series D Convertible Preferred Stock representing a specified
Stated Value thereof into Common Stock and by surrender of a certificate or
certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series D
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in the Conversion Notice, together with a statement of the name
or names (with address) in which the certificate or certificates for shares of
Common Stock shall be issued. The Conversion Notice shall include therein the
Stated Value of shares of Series D Convertible Preferred Stock to be converted,
and the number of shares of Common Stock to be issued in connection with such
conversion. The Corporation shall have the right to review the calculations
included in the Conversion Notice, and shall provide notice of any discrepancy
or dispute therewith within three business days of the receipt thereof.
(d) Issuance of Certificates; Time Conversion Effected.
Promptly, but in no event more than ten business days, after the receipt of the
Conversion Notice referred to in Subparagraph 7(e) and surrender of the
certificate or certificates for the share or shares of Series D Convertible
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock into which such shares of Series D Convertible
Preferred Stock arc converted. To the extent permitted by law, such conversion
shall be deemed to have been effected as of the close of business on the date
(the "Conversion Date") on which such Conversion Notice shall have been received
by the Corporation and the certificate and certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Series D Convertible Preferred Stock shall
cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder, or holders of record of the shares
represented thereby.
(e) Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series D Convertible
Preferred Stock into Common Stock. In case the number of shares of Series D
Convertible Preferred Stock represented by the certificate or certificates
surrendered pursuant to Subparagraph 7(a) exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series D Convertible Preferred Stock represented by
the certificate or certificates surrendered which are not to be converted.
(f) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a share or shares
of Series D Convertible Preferred Stock shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of the shares of Common Stock
-5-
immediately theretofore receivable upon the conversion of such. share or shares
of Series D Convertible Preferred Stock, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of such
Common Stock immediately theretofore receivable upon such conversion had such
reorganization or reclassification not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
such holder to the end that the provisions hereof (including without limitation
provisions for adjustments of the conversion rights) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock., securities
or assets thereafter deliverable upon the exercise of such conversion rights.
(g) Adjustments for Splits, Combinations, etc. The Conversion
Price and the number of shares of Common Stock into which. the Series D
Convertible Preferred Stock shall be convertible shall be adjusted appropriately
for stock splits, combinations, or other similar events (other than employee
benefit plans and stock option plans for employees or consultants to the
Company). Additionally, an adjustment will be made in the case of an exchange of
Common Stock, consolidation or merger of the Company with or into another
corporation or sale of all or substantially all of the assets of the Company in
order to enable the holder of Series D Convertible Preferred Stock to acquire
the kind and the number of shares of stock or other securities or property
receivable in such event by a holder of the Series D Convertible Preferred Stock
of the number of shares that might otherwise have been purchased upon the
conversion of. the Series D Convertible Preferred Stock. No adjustment to the
Conversion Price will be made for dividends (other than stock dividends), if
any, paid on the Common Stock or for securities issued pursuant to exercise of
the currently outstanding options, warrants, or options that may be granted or
shares issued in connection with the acquisition of another business by the
Company.
8. MANDATORY CONVERSION.
(a) Mandatory Conversion Date. If at February 26, 2000 (the
"Mandatory Conversion Date"), there remains issued and outstanding any shares of
Series D Convertible Preferred Stock, then the Corporation shall be entitled to
require all (but not less than all) holders of shares of Series D Convertible
Preferred Stock then outstanding to convert their sham of Series D Convertible
Preferred Stock into shares of Common Stock pursuant to Subparagraph 7(a). The
Corporation shall provide written notice (the "Mandatory Conversion Notice") to
the holders of shares of Series D Convertible Preferred Stock of such mandatory
conversion. The Mandatory Conversion Notice shall include the Stated Value of
the shares of Series D Convertible Preferred Stock to be converted, and the
number of shares of the Corporation's Common Stock to be issued upon such
mandatory conversion.
(b) Surrender of Certificates. On or before the Mandatory
Conversion Date, each holder of shares of Series D Convertible Preferred Stock
shall surrender his, her or its certificate or certificates for all such shares
to the Corporation at the place designated in such Mandatory Conversion Notice,
and shall thereafter receive certificates for the number of shares of Common
Stock to which such holder is entitled. On the Mandatory Conversion Rate, all
rights with respect to the Series D Convertible Preferred Stock so converted,
including the rights, if any, to receive notices and vote, will terminate. All
certificates evidencing shares of Series D Convertible Preferred Stock that are
required to be surrendered for conversion in accordance with the provisions
hereof, from and after the Mandatory Conversion Date, shall be deemed to
-6-
have been retired and cancelled and the shares of Series D Convertible Preferred
Stock represented thereby converted into Common Stock for alt purposes,
notwithstanding the failure of the holder or holders thereof to surrender such
certificates on or prior to such date_ The Corporation may thereafter take such
appropriate action as may be necessary to reduce the authorized Series D
Convertible Preferred Stock accordingly.
9. REDEMPTION OF SERIES D CONVERTIBLE PREFERRED STOCK.
(a) Right to Redeem Series D Convertible Preferred Stock. At
any time, and from time to time, on and after the expiration of the restrictions
of conversion contained in Subparagraph 7(b), if the closing bid price of the
Company's Common Stock as reported by the Nasdaq SmallCap Market or in the "Pink
Sheets" equals or exceeds $20.00 for 20 consecutive trading days, then the
Corporation may, in its sole discretion, but shall not be obligated to, redeem,
in whole or in part, the then issued and outstanding shares of Series D
Convertible Preferred Stock at a price of $1,000 per share of such Series D
Convertible Preferred Stock (the "Redemption Price"), subject to adjustment as
provided in Paragraph 7.
(b) Notice of Redemption. The Corporation shall provide each
holder of record of the Series D Convertible Preferred Stock with written notice
of redemption (the "Redemption Notice") not less than 30 days prior to any date
stipulated by the Corporation for the redemption of the Series D Convertible
Preferred Stock (the "Redemption Date"). The Redemption Notice shall contain (i)
the Redemption Date, (ii) the number of shares of Series D Convertible Preferred
Stock to be redeemed from the holder to whom the Redemption Notice is delivered,
(iii) instructions for surrender to the Corporation of the certificate or
certificates representing the shares of Series D Convertible Preferred Stock to
be redeemed, and (iv) instructions as to how to specify to the Corporation the
number of shares of Series D Convertible Preferred Stock to be redeemed as
provided in this Paragraph 9, and the number of shares of Series D Convertible
Preferred Stock to be converted into Common Stock pursuant to Paragraph 7.
(c) Right to Convert Series D Convertible Preferred Stock upon
Receipt of Redemption Notice. Upon receipt of the Redemption Notice, the
recipient thereof shall have the option., at is sole election, to specify what
portion of the Series D Convertible Preferred Stock called for redemption in the
Redemption Notice shall be redeemed as provided in this Paragraph 8 or converted
into Common Stock in the manner provided in Paragraph 7. If the holder of the
Series D Convertible Preferred Stock called for redemption elects to convert
such shares, then such conversion shall take place on the Redemption Date, in
accordance with the terms of Paragraph 7.
(d) Surrender of Certificates; Payment of Redemption Price. On
or before the Redemption Date, each holder of the shares of Series D Convertible
Preferred Stock to be redeemed shall surrender the required certificate or
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be paid by the Corporation via check to
the order of the person whose name appears on such certificate or certificates
as the owner thereof, and each such surrendered certificate shall be canceled
and retired. If a certificate is surrendered and all the shares evidenced
thereby are not being redeemed, the Corporation shall
-7-
issue new certificates to be registered in the names of the person(s) whose
name(s) appear(s) as the owners on the respective surrendered certificates and
deliver, such certificate to such person(s).
(e) Deposit of Redemption Price. On the Redemption Date in
respect to any shares of Series D Convertible Preferred Stock, or prior thereto,
the Corporation shall deposit with any bank or trust company (the "Depository")
having a capital and surplus of at least $50,000,000, a sum equal to (i) the
aggregate Redemption Price of all such shares called for redemption, less (ii)
the aggregate Redemption Price for those shares of Series D Convertible
Preferred Stock in respect of which the Corporation has received notice from the
holder thereof of its election, pursuant to Subparagraph 8(c), to convert shares
of Series D Convertible Preferred Stock into Common Stock. The Corporation shall
provide instructions and authority to the Depository to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon the
surrender of their share certificates. The deposit of the Redemption Price by
the Corporation with the Depository shall constitute full payment for the shares
of Series D Convertible Preferred Stock to be redeemed, and from and after that
date of the deposit, the redeemed shares shall be deemed to be no longer issued
and outstanding, and the holders thereof shall cease to be holders with respect
to such shares and shall have no rights with respect thereto, except the right
to receive from the Depository payment of the Redemption Price, without
interest, upon surrender of their certificates therefor. Any funds so deposited
and unclaimed at the end of one year from the Redemption Date shall be released
and delivered to the Corporation, after which the former holders of shares of
Series D Convertible Preferred Stock called for redemption shall be entitled to
receive payment of the Redemption Price in respect of their shares only from the
Corporation.
10. NOTICES. In case at any time:
(a) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other pro rata distribution to the
holders elite Common Stock; or
(b) the Corporation shall offer for subscription pro rate to
the holders of its Common Stock any additional shares of stock of any class or
other rights; or
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all
its assets to, another entity or entities; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by telex to non-U.S. residents, addressed to
each holder of any shares of Series D Convertible Preferred Stock at the address
of such holder as shown on the books of the Corporation, (i) at least 10 days'
prior written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (ii) in the case of any such reorganization, reclassification,
-8-
consolidation, merger, sale, dissolution, liquidation or winding up, at least 10
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and (ii) shall also
specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be.
11. STOCK TO BE RESERVED. The Corporation, upon the effective date of
this Statement of Designation, has a sufficient number of shares of Common Stock
available to reserve for issuance upon the conversion of all outstanding shares
of Series D Convertible Preferred Stock. The Corporation will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Series D Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series D Convertible
Preferred. The Corporation covenants that all shares of Common Stock which shall
be so issued shall be duly and validly issued. The Corporation will take all
such action as may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon which
the Common Stock may be listed. The Corporation will not take any action which
results in any adjustment of the conversion rights if the total number of shares
of Common Stock issued and issuable after such action upon conversion of the
Series D Convertible Preferred Stock would exceed the total number of shares of
Common Stock then authorized by the Corporation's Certificate of Incorporation,
as amended.
12. NO REISSUANCE OF SERIES D CONVERTIBLE PREFERRED STOCK. Shares of
Series D Convertible Preferred Stock which are converted into shares of Common
Stock as provided herein shall not be reissued.
13. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of Series D Convertible Preferred Stock shall be made without
charge to the holder thereof for any issuance tax in respect thereof, provided
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series D Convertible
Preferred Stock which is being converted.
14. CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Series D Convertible Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series D Convertible Preferred Stock in any manner which interferes
with the timely conversion of such Series D Convertible Preferred Stock, except
as may otherwise be required to comply with applicable securities laws.
15. DEFINITION OF COMMON STOCK. As used in this Statement of
Designation, the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, $.08 par value per share, as constituted on the date of
filing of these terms of the Series D Convertible Preferred Stock, and shall
also include any capital stock of any class of the
-9-
Corporation thereafter authorized which shall neither be limited to a fixed sum
or percentage of lair value in respect of the rights of the holders thereof to
participate in dividends nor entitled to a preference in the distribution o f
assets upon the voluntary or involuntary liquidation, dissolution or winding up
of the Corporation; provided that the shares of Common Stock receivable upon
conversion of shares of Series D Convertible Preferred Stock shall include only
shares designated as Common Stock of the Corporation on the date of filing of
this instrument, or in case of any reorganization, reclassification, or stock
split of the outstanding shares thereof, the stock, securities or assets
provided for in Subparagraph 7(f).
16. AMENDMENTS. No provision of these terms of the Series D Convertible
Preferred Stock may be amended, modified or waived without the written consent
or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series D Convertible Preferred Stock.
RESOLVED: That the President and Secretary be, and hereby are,
authorized and directed to execute and file a
Statement of Designation with the Delaware Secretary
of State.
-10-
IN WITNESS HEREOF, the said National Datacomputer, Inc. has caused its
corporate seal to be hereunto affixed and this Statement of Designation to be
signed by Malcolm M. Bibby, its President and Secretary, this 26th day of
February, 1997.
NATIONAL DATACOMPUTER, INC.
/s/ Malcolm M. Bibby
---------------------------
Malcolm M. Bibby, Ph.D.
President
/s/ Malcolm M. Bibby
- ---------------------------
Malcolm M. Bibby, Ph.D.
Secretary
-11-
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 02/18/1998
98106463 - 2111518
STATEMENT OF DESIGNATION
OF
SERIES E CONVERTIBLE PREFERRED STOCK
OF
NATIONAL DATACOMPUTER, TNC.
NATIONAL DATACOMPUTER, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware
(hereinafter the "Corporation"), DOES HEREBY CERTIFY:
That by unanimous written consent, dated January 29, 1998, the
directors of the Corporation adopted the following resolution setting forth the
designations, powers, preferences and rights of its Series E Convertible
Preferred Stock:
RESOLVED: That the designations, powers, preferences and rights
of the Series B Convertible Preferred Stock be, and
hereby are, as set forth below:
1. NUMBER OF SHARES OF SERIES E CONVERTIBLE PREFERRED STOCK.
Of the 50,000 shares of authorized and unissued Preferred Stock, $.001
par value per share ("Preferred Stock") of the Corporation, five hundred (500)
shares shall be designated and known as "Series E Convertible Preferred Stock."
Each share of Series E Preferred Stock shall have a stated value of One Thousand
Dollars ($1,000.00).
2. VOTING.
(a) Each holder of outstanding shares of Series E Convertible
Preferred Stock at each meeting of stockholders of the Corporation (and written
actions of stockholders in lieu of meetings) with respect to any and all matters
presented to the stockholders of the Corporation for their action or
consideration shall be entitled to the number of votes equal to the number of
whole shame of Common Stock, as hereinafter defined, into which the shares of
Series E Convertible Preferred Stock held by such holder are convertible on the
record data established for such meeting. Except as provided by law, by the
provisions of Subparagraph 2(b) below, or by the provisions establishing any
other series of Preferred Stock, holders of Series E Convertible Preferred Stock
shall vote together with the holders of all other classes and sales of
securities of the Corporation u a single class.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series E Convertible
Preferred Stock so as to affect adversely the series E Convertible Preferred
Stock, without the written consent or affirmative vote of the
holders of at least a majority of the then outstanding shares of Series E
Convertible Preferred Stock to be affected by amendment, alteration or repeal,
given in writing or by vote at a meeting, consenting or voting (as the case may
be) separately as a class. For this purpose, without limiting the generality of
the foregoing, the authorization or issuance of any series of Preferred Stock
with preference or priority over the Series E Convertible Preferred Stock as to
the right to receive either dividends or amounts distributable upon liquidation,
dissolution or winding up of the Corporation shall be deemed to affect adversely
the designated class of Series E Convertible Preferred Stock, and the
authorization or issuance of any series of Preferred Stock on a parity with
Series E Convertible Preferred Stock as to the right to receive either dividends
or amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall not be deemed to affect adversely the Series E Convertible
Preferred Stock. The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares then outstanding) by
the affirmative vote of the holders of a majority of the then outstanding shares
of all other classes or series of stock of the Corporation entitled to vote
thereon, voting as a single class.
3. DIVIDENDS.
(a) The holders of shares of Series E Convertible Preferred
Stock shall be entitled to receive, before any cash dividend shall be declared
and paid upon or set aside for the Common stock in any fiscal year of the
Corporation, only when, as and if declared by the Board of Directors of the
Corporation out of the funds legally available for that purpose, dividends
payable in cash or Common Stock in an amount per share for such fiscal year
equal to the product of (i) the per share amount, if any, of the cash dividend
declared, paid or set aside for the Common Stock during such fiscal year,
multiplied by (ii) the number of whole shares of Common Stock into which each
such share of Series E Convertible Preferred Stock is then convertible as
determined by Paragraph 6 below.
(b) The Corporation shall not declare or pay any dividends or
any other distributions of property or assets on shares of Common Stock, other
than dividends payable solely in cash or Common Stock, without the prior written
consent or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series E Preferred Stock given in writing or by vote at a
meeting, voting as a single class.
4. LIQUIDATION.
In the event of a voluntary or involuntary dissolution, liquidation, or
winding up of the Corporation, the holders of shares of Series E Convertible
Preferred Stock shall be entitled to receive out of the assets of the
Corporation legally available for distribution to holders of its capital stock,
before any payment or distribution shall be made to holders of Common Stock or
any other lass of stock ranking junior to Series E Convertible Preferred Stock,
an amount per share equal to the Stated Value of such shares of Series E
Convertible Preferred Stock plus all dividends which have accrued and are unpaid
and therefore are in arrears. If upon such liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the assets to be
distributed among the holders of Series E Convertible Preferred Stock shall be
insufficient to permit payment to the holders of Series E Convertible Preferred
Stock of the amount distributable as aforesaid, then the entire assets of the
Corporation to be so distributed
2
shall be distributed ratably among the holders of Series E Convertible Preferred
Stock. Upon any such liquidation, dissolution or winding up of the Corporation,
after the holders of Series E Convertible Preferred Stock shall have been paid
in fit the amounts to which they shall be entitled, the remaining net assets of'
the Corporation may be distributed to the holders of stock ranking on
liquidation junior to the Series E Convertible Preferred Stock. Written notice
of such liquidation, dissolution or winding up, stating a payment date, the
amount of the liquidation payments and the place where said liquidation payments
shall be payable, shall be given by mail, postage prepaid, or by telex to
non-U.S. residents, not less than 10 days prior to the payment date stated
therein, to the holders of record of Series E Convertible Preferred Stock, such
notice to be addressed to each such holder at its address as shown by the
records of the Corporation. For purposes hereof, the Common Stock shall rank on
liquidation junior to the Series E Convertible Preferred Stock.
5. RESTRICTIONS.
At any time when shares of Series E Convertible Preferred Stock are
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Corporation's Certificate of Incorporation, as amended, without the approval of
the holders of at least a majority of the then outstanding shares of Series E
Convertible Preferred Stock given in writing or by vote at a meeting, consenting
or voting (as the case may be) separately as a series, the Corporation will not
create or authorize the creation of any additional class or series of shares of
stock unless the same ranks junior to the Series E Convertible Preferred Stock
as to the distribution of assets on the liquidation, dissolution or winding up
of the Corporation; or increase the authorized amount of the Series E
Convertible Preferred Stock or increase the authorized amount of any additional
class or series of shares of stock unites the same ranks junior to the Series E
Convertible Preferred Stock is to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation; or create or authorize any
obligation or security convertible into shares of Series E Convertible Preferred
Stock as to the distribution of assets on the liquidation, dissolution or
winding up of the Corporation, whether any such creation, authorization or
increase shall be by means of amendment to the Corporation's Certificate of
Incorporation or by merger, consolidation or otherwise.
6. OPTIONAL CONVERSION.
The holders of shares of Series E Convertible Preferred Stock shall
have the following conversion rights:
(a)(i) Right to Convert; Conversion Price. Subject to the
terms, conditions, and restrictions of this Paragraph 6, the holder of any share
or shares of Series E Convertible Preferred Stock shall have the right to
convert each such share of Series E Convertible Preferred Stock (except that
upon any liquidation of the Corporation, the right of conversion shall terminate
at the close of business on the business day fixed for payment of the amount
distributable on the Series E Convertible Preferred Stock) into an amount of
shares of Common Stock equal to the Stated Value of such share or shares of
Series E Convertible Preferred Stock divided by $0.75.
3
(ii) On or after December 31, 1998, the Conversion Price shall
equal sixty percent (60%) of the Corporation's average closing bid price for the
twenty (20) trading days preceding the date of such conversion but in any event
no less than the Stated Value of such share or shares of Series E Convertible
Preferred Stock divided by $.60 per share but in any event no more than $.75 per
share. If at any time after the date of the filing of this Certificate of
Designation and prior to January 31, 2003, the Corporation's stockholders equity
at the end of any fiscal quarter (as reported on the Company's Form 10-Q or Form
10-K filing with the Securities and Exchange Commission) does not exceed $
1,500,000 plus 50% of the net proceeds of any future equity financing by any
third party, then the Conversion Price shall equal the lesser of $0.75 or sixty
percent (60%) of the Corporation's bid price for the five trading days prior to
the date of such conversion notice.
(iii) If after the date of filing of this Certificate of
Designation (a) the closing price (or the average of the closing bid and asked
price if the principal exchange on which the Corporation's common stock trades
does not report a closing price) for the Corporation's Common Stock shall trade
below $1.00 for any twenty (20) consecutive trading days on the NASDAQ Small Cap
Market, the NASDAQ National Market System, or the American Stock Exchange, and
(b) the holders of a majority of the Series E Convertible Preferred Stock
request that the Corporation seek a reverse stock split, which reverse split is
necessary in order to maintain a listing on its then current trading exchange,
then the Corporation agrees to take all efforts necessary to effect an
appropriate reverse stock split of the Corporation's Common Stock. In the event
of such a reverse stock split, the Conversion Price described above shall not be
modified.
(iv) Notwithstanding the foregoing, the provisions of Section
6(a) (exclusive of the Section 6(a)(i)) shall terminate immediately following
the issuance of a majority of the Corporation's Common Stock (or other
securities convertible into Common Stock) to a third party or parties in a
merger or similar transaction.
(b) Restrictions on Conversion. The holder of any share or
shares of Series E Convertible Preferred Stock may not convert any of such
shares for a period of at least forty (40) days following the date upon which
the Series E Convertible Preferred Stock was originally issued (the "Original
Issuance Date").
(c) Notice of Conversion. The right of conversion shall be
exercised by the holder thereof by giving written notice (the "Conversion
Notice") to the Corporation that the holder elects to convert a specified number
of shares of Series E Convertible Preferred Stock representing a specified
Stated Value thereof into Common Stock and by surrender of a certificate or
certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series E
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in the Conversion Notice, together with a statement of the name
or names (with address) in which the certificate or certificates for shares of
Common Stock shall be issued. The Conversion Notice shall include therein the
Stated Value of shares of Series E Convertible Preferred Stock to be converted,
and the number of shares of Common Stock to be issued in connection with such
conversion. The Corporation shall have the right to
4
review the calculations included in the Conversion Notice, and shall provide
notice of any discrepancy or dispute therewith within three business days of the
receipt thereof.
(d) Issuance of Certificates; Time Conversion Effected.
Promptly, but in no event more than seven (7) business days, after the receipt
of the Conversion Notice referred to in Subparagraph 6(e) and surrender of the
certificate or certificates for the share or shares of Series E Convertible
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock into which such shares of Series Convertible
Preferred Stock are converted. To the extent permitted by law, such conversion
shall be deemed to have been effected as of the close of business on the date
(the "Conversion Date") on which such Conversion Notice shall have been received
by the Corporation and the certificate and certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Series E Convertible Preferred Stock shall
cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby. If the Corporation shall fail to issue such certificates
within the time frame described above, then the Corporation shall pay to the
holders of such certificates a penalty for each trading day after the initial
seven trading days in which such certificate is not issued equal to $1,000.00.
Notwithstanding the foregoing, the penalty described above shall not apply if
the delay is caused by forces outside of the control of the Corporation (e.g.,
flood, earthquake, natural disaster or labor work stoppage) or if the
Corporation does not then have adequate shares of Common Stock available for
issuance upon conversion. If the delay is caused because the Corporation does
not have adequate shares of Common Stock available for issuance upon conversion,
then the Corporation shall use its best efforts to cause a stockholders' meeting
to be held within ninety (90) days of the date it first determines additional
shares of Common Stock are needed in order to amend its Certificate of
Incorporation to increase the number of authorized shares of Common Stock.
Thereafter, the Corporation shall issue such Common Stock as set forth above
within seven days of the date the Corporation's stockholders approve such
proposal, and failure to comply with the provisions of this Subsection (d)
thereafter shall subject the Corporation to the penalties provided above unless
the failure to cause the issuance of such shares of Common Stock thereafter is
caused by failure to obtain the necessary votes required for stockholder
approval for such amendment to the Certificate of Incorporation (including the
votes of all of the holders of then outstanding classes of Preferred Stock of
the Corporation).
(e) Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series E Convertible
Preferred Stock into Common Stock. In case the number of shares of Series E
Convertible Preferred Stock represented by the certificate or certificates
surrendered pursuant to Subparagraph 6(a) exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series E Convertible Preferred Stock represented by
the certificate or certificates surrendered which are not to be converted.
(f) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders
5
of Common Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization or reclassification, lawful and adequate provisions shall be made
whereby each holder of a share or shares of Series E Convertible Preferred Stock
shall thereupon have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore receivable upon the conversion of such share or shares
of Series E Convertible Preferred Stock, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of such
Common Stock immediately theretofore receivable upon such conversion had such
reorganization or reclassification not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
such holder to the end that the provisions hereof (including without limitation
provisions for adjustments of the conversion rights) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise of such conversion rights.
(g) Adjustments for Splits, Combinations, etc. Except as set
forth in Section 6(a)(ii), the Conversion Price and the number of shares of
Common Stock into which the Series E Convertible Preferred Stock shall be
convertible shall be adjusted appropriately for stock splits, combinations, or
other similar events. Additionally, an adjustment will be made in the case of an
exchange of Common Stock, consolidation or merger of the Company with or into
another corporation or sale of all or substantially all of the mats of the
Company in order to enable the holder of Series E Convertible Preferred Stock to
acquire the kind and the number of shares of stock or other securities or
properly receivable in such event by a holder of the Series E Convertible
Preferred Stock of the number of shares that might otherwise have been purchased
upon the conversion of the Series E Convertible Preferred Stock. No adjustment
to the Conversion Price will be made for dividends (other than stock dividends),
if any, paid on the Common Stock or for securities issued pursuant to exercise
of the currently outstanding options, warrants, or options that may be granted
or shares issued in connection with the acquisition of another business by the
Company.
(h) Protection Against Dilutive Issuances. If the Corporation
shall at any time after the issue date of the Series E Preferred Stock issue
additional shares of Common Stock (other than upon the exercise of any warrant,
option or other security convertible into the Corporation's Common Stock
outstanding at the date of the filing of this Certificate of Designation), but
excluding shares issued as a dividend or distribution or stock split as provided
herein, without consideration, or for a consideration per share loss than the
applicable conversion price of the Series E Convertible Preferred Stock in
effect on the date of and immediately prior to such issue, then and in such
event, the Conversion Price will be the Conversion Price determined in
accordance with the following formula:
Conversion Price = (P1*Q1) + (P2*Q2)
-----------------
(Q1+Q2)
P1 = Conversion Price in effect immediately prior to such
issue or sale
Q1 = Number of Shares of Common Stock deemed outstanding
(including all shares issuable upon exercise of all
currently outstanding options and warrants)
P2 = Average price per share received by the Corporation upon
such issue or sale; and
Q2 = Number of shares of Common Stock issued or sold, or
deemed to have been issued or sold, in the subject
transaction
All shares of stock issuable upon conversion of preferred stock issued
or issuable to holders of Series E Convertible Preferred Stock, as well as
warrants to be issued to holders of the Series E Convertible Preferred Stock
pursuant to the terms of the Subscription Agreements relating to the sale of the
Series E Convertible Preferred Stock, as well as any additional securities
issued to holders of Series E Convertible Preferred Stock under the right of
first refusal formula set forth in such Subscription Agreements, would be deemed
to be outstanding (rather than a new Q2 new issuance).
Notwithstanding the foregoing, (I) the applicable Conversion Price
shall not be so reduced at such time if the amount of such reduction would be an
amount less than $.02, but any such amount shall be carried forward and
reduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $.02 or more, and (II) the
provisions of this Section 6(h) shall terminate immediately following the filing
by the Corporation with the Securities and Exchange Commission of an
announcement relating to the issuance of a majority of the Corporation's issued
and outstanding shares to any third party in a merger or similar transaction;
and (III) the provisions of this Section 6(h) will not apply to any shares
subsequently issued to a holder of the Series E Preferred Stock issued in
accordance with the provisions of Section 5.6 of the Subscription Agreement.
7. MANDATQRY CONVERSION.
(a) Mandatory Conversion Date. If at January 31, 2001 (the
"Mandatory Conversion Date"), there remains issued and outstanding any shares of
Series E Convertible Preferred Stock, then the Corporation shall be entitled to
require all (but not loss than all) holders of shares of Series E Convertible
Preferred Stock then outstanding to convert their shares of Series E Convertible
Preferred Stock into shares of Common Stock pursuant to Subparagraph 6(a). The
Corporation shall provide written notice (the "Mandatory Conversion Notice") to
the holders of shares of Series E Convertible Preferred Stock of such mandatory
conversion. The Mandatory Conversion Notice shall include the Stated Value tithe
shares of Series E Convertible Preferred Stock to be converted, and the number
of shares of the Corporation's Common Stock to be issued upon such mandatory
conversion. On the Mandatory Conversion Date, the Corporation may, at its option
if it elects to convert the shares of Series E Convertible Preferred Stock,
cause the conversion of such shares at the lesser of $.00075 per share or 60% of
the bid price (or the average of the closing bid and ask price as reported by
the principal exchange on which the Corporation's securities trade if such
exchange does not report a dosing price) for the five trading days preceding
January 31, 2001. Alternatively, the Corporation may elect to
7
redeem all or a portion of the Series E Preferred Stock on the Mandatory
Conversion Date at its face value and any accrued but unpaid dividends in cash.
(b) Surrender of Certificates. On or before the Mandatory
Conversion Date, each holder of shares of Series E Convertible Preferred Stock
shall surrender his, her or its certificate or certificates for all such shares
to the Corporation at the place designated in such Mandatory Conversion Notice,
and shall thereafter receive certificates for the number of shares of Common
Stock to which such holder is entitled or a chock for sums due as described in
Subsection (a) above. On the Mandatory Conversion Rate, all rights with respect
to the Series E Convertible Preferred Stock so-converted, including the rights,
if any, to receive notices and vote, will terminate. All certificates evidencing
shares of Series E Convertible Preferred Stock that are required to be
surrendered for conversion in accordance with the provisions hereof from and
after the Mandatory Conversion Date, shall be deemed to have been retired and
canceled and the shares of Series E Convertible Preferred Stock represented
thereby converted into Common Stock for all purposes, notwithstanding the
failure of the holder or holders thereof to surrender such certificates on or
prior to such date. The Corporation may thereafter take such appropriate action
as may be necessary to reduce the authorized Series E Convertible Preferred
Stock accordingly.
8. REDEMPTION OF SERIES E CONVERTIBLE PREFERRED STOCK.
(a) Right to Redeem Series' E Convertible Preferred Stock. At
any time, and from time to time, on and after the expiration of the restrictions
of conversion contained in Subparagraph 6(b), if the closing bid price of the
Company's Common Stock as reported by the principal stock exchange on which the
Corporation's Common Stock then trades equals or exceeds $5.00 for 20
consecutive trading days, then the Corporation may, in its solo discretion, but
shall not be obligated to, redeem, in whole or in part, the then issued and
outstanding shares of Series E Convertible Preferred Stock, at a price of $1,000
per-share of such Series E Convertible Preferred Stock (the "Redemption Price"),
subject to adjustment as provided in Paragraph 6.
(b) Notice of Redemption. The Corporation shall provide each
holder of record of the Series E Convertible Preferred Stock with written notice
of redemption (the "Redemption Notice") not less than 30 days prior to any date
stipulated by the Corporation for the redemption of the Series E Convertible
Preferred Stock (the "Redemption Date"). The Redemption Notice shall contain (i)
the Redemption Date, (ii) the number of shares of Series E Convertible Preferred
Stock to be redeemed from the holder to whom the Redemption Notice is delivered,
(iii) instructions for surrender to the Corporation of the certificate or
certificates representing the shares of Series E Convertible Preferred Stock to
be redeemed, and (iv) instructions as to how to specify to the Corporation the
number of shares of Series E Convertible Preferred Stock to be redeemed as
provided in this Paragraph 8, and the number of shares of Series E Convertible
Preferred Stock to be converted into Common Stock pursuant to Paragraph 6.
(c) Right to Convert Series E Convertible Preferred Stock upon
Receipt of Redemption Notice. Upon receipt of the Redemption Notice, the
recipient thereof shall have the option, at is sole election, to specify what
portion of the Series E Convertible Preferred Stock
8
called for redemption in the Redemption Notice shall be redeemed as provided in
this Paragraph 8 or converted into Common Stock in the manner provided in
Paragraph 6. If the holder of the Series E Convertible Preferred Stock called
for redemption elects to convert such shares, then such conversion shall take
place on the Redemption Date, in accordance with the terms of Paragraph 6.
(d) Surrender of Certificates; Payment of Redemption Price. On
or before the Redemption Date, each holder of the shares of Series E Convertible
Preferred Stock to be redeemed shall surrender the required certificate or
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be paid by the Corporation via check to
the order of the person whose name appears on such certificate or certificates
as the owner thereof, and each such surrendered certificate shall be canceled
and retired. If a certificate is surrendered and all the shares evidenced
thereby are not being redeemed, the Corporation shall issue new certificates to
be registered in the names of the person(s) whose name(s) appear(s) as the
owners on the respective surrendered certificates and deliver such certificate
to such person(s).
(e) Deposit of Redemption Price. On the Redemption Date in
respect to any shares of Series E Convertible Preferred Stock, or prior thereto,
the Corporation shall deposit with any bank or trust company (the "Depository")
having a capital and surplus of at least $50,000,000, a sum equal to (i) the
aggregate Redemption Price of all such shares called for redemption, less (ii)
the aggregate Redemption Price for those shares of Series E Convertible
Preferred Stock in respect of which the Corporation has received notice from the
holder thereof of its election, pursuant to Subparagraph 6(c), to convert shares
of Series E Convertible Preferred Stock into Common Stock. The Corporation shall
provide instructions and authority to the Depository to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon the
surrender of their share certificates. The deposit of the Redemption Price by
the Corporation with the Depository shall constitute full payment for the shares
of Series E Convertible Preferred Stock to be redeemed, and from and after that
date of the deposit, the redeemed shares shall be deemed to be no longer issued
and outstanding, and the holders thereof shall cease to be holders with respect
to such hares and shall have no rights with respect thereto, except the right to
receive from the Depository payment of the Redemption Price, without interest,
upon surrender of their certificates therefor. Any funds so deposited and
unclaimed at the end of one year from the Redemption Date shall be released and
delivered to the Corporation, after which the former holders of shares of Series
E Convertible Preferred Stock called for redemption shall be entitled to receive
payment of the Redemption Price in respect of their shares only from the
Corporation.
9. NOTICES.
In case at any time:
(a) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other pro rata distribution to the
holders of its Common Stock; or
9
(b) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights; or
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all
its assets to, another entity or entitles; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by
first class mail, postage prepaid, or by facsimile to non-U.S. residents,
addressed to each holder of any shares of Series E Convertible Preferred Stock
at the address of such holder as shown on the books of the Corporation, (i) at
least 10 days' prior to written notice of the date on which the books of the
Corporation shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in respect
of any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up and (ii) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least 10 days' prior written notice of the data
when the same shall take place. Such notice in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend, distribution or
subscription rights, the data on which the holders of Common Stock shall be
entitled thereto and (ii) shall also specify the date on which the holders of
Common Stock shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as the case
may be.
10. STOCK TO BE RESERVED.
The Corporation, upon the effective date of this Statement of
Designation, has a sufficient number of shares of Common Stock available to
reserve for issuance upon the conversion of all outstanding shares of Series E
Convertible Preferred Stock. The Corporation will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issuance
upon the conversion of Series E Convertible Preferred Stock as herein provided,
such number of shares of Common Stock as shall then be issuable upon the
conversion of all outstanding shares of Series E Convertible Preferred. The
Corporation covenants that all shares of Common Stock which shall be so issued
shall be duly and validly issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon which
the Common Stock may be listed.
11. NO REISSUANCE OF SERIES E CONVERTIBLE PREFERRED STOCK.
Shares of Series E Convertible Preferred Stock which are converted into
shares of Common Stock as provided herein shall not be reissued.
12. ISSUE TAX.
The issuance of certificates for shares of Common Stock upon conversion
of Series E Convertible Preferred Stock shall be made without charge to the
holder thereof for any issuance
10
tax in respect thereof, provided that the Corporation shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the holder
of the Series E Convertible Preferred Stock which is being converted.
13. CLOSING OF BOOKS.
The Corporation will at no time close its transfer books against the
transfer of any Series E Convertible Preferred Stock or of any shares of Common
Stock issued or issuable upon the conversion of any shares of Series E
Convertible Preferred Stock in any manner which interferes with the timely
conversion of such Series E Convertible Preferred Stock, except as may otherwise
be required to comply with applicable securities laws.
14. DEFINITION OF COMMON STOCK.
As used in this Statement of Designation, the term "Common Stock" shall
mean and include the Corporation's authorized Common Stock, $.08 par value per
share, as constituted on the date of filing of these terms of the Series E
Convertible Preferred Stock, and shall also include any capital stock of any
class of the Corporation thereafter authorized which shall neither be limited to
a fixed sum or percentage of par value in respect of the rights of the holders
thereof to participate in dividends nor entitled to a preference in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that the shares of Common
Stock receivable upon conversion of shares of Series E Convertible Preferred
Stock shall include only shares designated as Common Stock of the Corporation on
the date of filing of this instrument, or in case of any reorganization,
reclassification, or stock split of the outstanding shares thereof, the stock,
securities or assets provided for in Subparagraph 6(f).
15. AMENDMENTS.
No provision of these terms of the Series E Convertible Preferred Stock
may be amended, modified or waived without the written consent or affirmative
vote of the holders of at least a majority of the then outstanding shares of
Series E Convertible Preferred Stock
RESOLVED: That the President and Secretary be, and hereby are,
authorized and directed to execute and file a
Statement of Designation with the Delaware Secretary
of State.
11
IN WITNESS WHEREOF, the said National Datacomputer, Inc. has caused its
corporate seal to be hereunto affixed and this Statement of Designation to be
signed by Malcolm M. Bibby, its President and Secretary, this 29th day of
January, 1998.
NATIONAL DATACOMPUTER, INC.
/s/ Malcolm M. Bibby
-----------------------------
Malcolm M. Bibby, Ph.D.
President
/s/ Malcolm M. Bibby
- ---------------------------
Malcolm M. Bibby, Ph.D.
Secretary
12
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 02/18/1998
98106463 - 2111518
STATEMENT OF DESIGNATION
OF
SERIES F CONVERTIBLE PREFERRED STOCK
OF
NATIONAL DATACOMPUTER, INC.
NATIONAL DATACOMPUTER, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware
(hereinafter the "Corporation"), DOES HEREBY CERTIFY:
That by unanimous written consent, dated September 24, 1998, the
directors of the Corporation adopted the following resolution setting forth the
designations, powers, preferences and rights of its Series F Convertible
Preferred Stock:
RESOLVED: That the designations, powers, preferences and rights
of the Series F Convertible Preferred Stock be, and
hereby are, as set forth below:
1. NUMBER OF SHARES OF SERIES F CONVERTIBLE PREFERRED STOCK.
Of the 50,000 shares of authorized and unissued Preferred Stock, $.001
par value per share ("Preferred Stock") of the Corporation, one hundred seventy
five (175) shares shall be designated and known as "Series F Convertible
Preferred Stock." Each share of Series F Preferred Stock shall have a stated
value of One Thousand Dollars ($1,000.00) (the "Stated Value").
2. VOTING.
(a) Each holder of outstanding shares of Series F Convertible
Preferred Stock at each meeting of stockholders of the Corporation (and written
actions of stockholders in lieu of meetings) with respect to any and all matters
presented to the stockholders of the Corporation for their action or
consideration shall be entitled to the number of votes equal to the number of
whole shares of Common Stock, as defined in Paragraph 14, into which the shares
of Series F Convertible Preferred Stock held by such holder are convertible on
the record date established for such meeting. Except as provided by law, by the
provisions of Subparagraph 2(b) below, or by the provisions establishing any
other series of Preferred Stock, holders of Series F Convertible Preferred Stock
shall vote together with the holders of all other classes and series of
securities of the Corporation as a single class.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series F Convertible
Preferred Stock so as to affect adversely the
Series F Convertible Preferred Stock, without the written consent or affirmative
vote of the holders of at least a majority of the then outstanding shares of
Series F Convertible Preferred Stock to be affected by amendment, alteration or
repeal, given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a class. For this purpose, without limiting the
generality of the foregoing, the authorization or issuance of any series of
Preferred Stock with preference or priority over the Series F Convertible
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed to affect adversely the designated class of Series F Convertible
Preferred Stock, and the authorization or issuance of any series of Preferred
Stock on a parity with Series F Convertible Preferred Stock as to the right to
receive either dividends or amounts distributable upon liquidation, dissolution
or winding up of the Corporation shall not be deemed to affect adversely the
Series F Convertible Preferred Stock. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below the number of
shares then outstanding) by the affirmative vote of the holders of a majority of
the then outstanding shares of all other classes or series of stock of the
Corporation entitled to vote thereon, voting as a single class.
3. DIVIDENDS.
(a) The holders of shares of Series F Convertible Preferred
Stock shall be entitled to receive, before any cash dividend shall be declared
and paid upon or set aside for the Common stock in any fiscal year of the
Corporation, only when, as and if declared by the Board of Directors of the
Corporation out of the funds legally available for that purpose, dividends
payable in cash or Common Stock in an amount per share for such fiscal year
equal to the product of (i) the per share amount, if any, of the cash dividend
declared, paid or set aside for the Common Stock during such fiscal year,
multiplied by (ii) the number of whole shares of Common Stock into which each
such share of Series F Convertible Preferred Stock is then convertible as
determined by Paragraph 7 below.
(b) The Corporation shall not declare or pay any dividends or
any other distributions of property or assets on shares of Common Stock, other
than dividends payable solely in cash or Common Stock, without the prior written
consent or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series F Preferred Stock given in writing or by vote at a
meeting, voting as a single class.
4. ADDITIONAL PAYMENTS.
(a) In addition to any dividends for which holders of shares
of Series F Convertible Preferred Stock shall be entitled to receive pursuant to
Subparagraph 3(a) above, holders of shares of Series F Convertible Preferred
Stock shall be entitled to receive interest equal to six percent (6%) per annum
of the Stated Value of such Series F Convertible Preferred Stock. The Stated
Value for all of the shares of Series F Convertible Preferred Stock as of the
Original Issuance Date (defined below) is $175,000 (the "Original Aggregate
Stated Value") and the Stated Value of each share of Series F Convertible
Preferred Stock is $1,000. Such interest shall accrue from the Original Issuance
Date, and shall be payable, in cash or Common Stock, on a quarterly basis, as
described in Subparagraph 4(b) below, commencing with the Corporation's fiscal
quarter ending June 30, 1999. In the event that the Corporation decides to make
payment
2
of such interest in Common Stock, the amount of shares of Common Stock to be
issued to make such payment shall be that number of whole shares closest to (i)
the amount of interest due and payable, divided by (ii) the average closing bid
price of the Common Stock, as reported by the Nasdaq SmallCap Market or in the
"Pink Sheets" during the ten trading days immediately preceding the date of
delivery to the holders of the Series F Convertible Preferred Stock of the
Common Stock as required by Subparagraph 4(b) as payment for the interest due
hereunder.
(b) Interest hereunder shall accrue and be calculated and
payable with respect to (i) those shares of Series F Convertible Preferred Stock
that remain issued and outstanding at the end of each of the Corporation's
fiscal quarters, and (ii) any shares of Series F Convertible Preferred Stock
that are converted during a fiscal quarter for which interest is calculated and
paid. With respect to those shares of Series F Convertible Preferred Stock that
remain issued and outstanding at the end of a fiscal quarter, interest shall be
calculated based on the Stated Value of such remaining issued and outstanding
shares of Series F Convertible Preferred Stock as set forth in the Corporation's
Annual Reports on Form 10-K(SB) or Quarterly Reports on Form 10-Q(SB) to be
filed with the Securities and Exchange Commission ("SEC"). With respect to any
shares of Series F Convertible Preferred Stock that are converted during a
fiscal quarter, interest shall be calculated based on the Stated Value of such
shares up to and including the Conversion Date (defined in Subparagraph 7(d)).
(c) Payment of interest due hereunder with respect to those
shares of Series F Convertible Preferred Stock that remain issued and
outstanding at the end of each of the Corporation's fiscal quarters shall be
made within 15 business days after the filing with the SEC of the applicable
report. Payment of interest due hereunder with respect to any shares of Series F
Convertible Preferred Stock that are converted during a fiscal quarter shall be
calculated and made within 30 days of the Conversion Date of such shares.
Payment of interest upon such converted shares of Series F Convertible Preferred
Stock shall be accompanied by the Company's calculation of the interest.
(d) With respect to the payment of interest due hereunder upon
those shares of Series F Convertible Preferred Stock that remain issued and
outstanding at the end of a fiscal quarter, the Corporation shall notify the
holders of the Series F Convertible Preferred Stock in writing not less than 10
days prior to the end of such fiscal quarter if the Corporation intends to pay
the interest due hereunder in cash instead of in Common Stock. With respect to
the payment of interest due hereunder upon those shares of Series F Convertible
Preferred Stock that are converted during a fiscal quarter, the Corporation
shall notify the holders of the Series F Convertible Preferred in writing not
less than 10 days after the Conversion Date whether the Corporation shall pay
the interest due hereunder in cash or Common Stock.
5. LIQUIDATION.
In the event of a voluntary or involuntary dissolution, liquidation, or
winding up of the Corporation, the holders of shares of Series F Convertible
Preferred Stock shall be entitled to receive out of the assets of the
Corporation legally available for distribution to holders of its capital stock,
before any payment or distribution shall be made to holders of Common Stock or
any other class of stock ranking junior to Series F Convertible Preferred Stock,
an amount per share equal to the Stated Value of such shares of Series F
Convertible Preferred Stock plus all
3
dividends which have accrued and are unpaid and therefore are in arrears. If
upon such liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the holders of
Series F Convertible Preferred Stock shall be insufficient to permit payment to
the holders of Series F Convertible Preferred Stock of the amount distributable
as aforesaid, then the entire assets of the Corporation to be so distributed
shall be distributed ratably among the holders of Series F Convertible Preferred
Stock. Upon any such liquidation, dissolution or winding up of the Corporation,
after the holders of Series F Convertible Preferred Stock shall have been paid
in full the amounts to which they shall be entitled, the remaining net assets of
the Corporation may be distributed to the holders of stock ranking on
liquidation junior to the Series F Convertible Preferred Stock. Written notice
of such liquidation, dissolution or winding up, stating a payment date, the
amount of the liquidation payments and the place where said liquidation payments
shall be payable, shall be given by mail, postage prepaid, or by telex to
non-U.S. residents, not less than 10 days prior to the payment date stated
therein, to the holders of record of Series F Convertible Preferred Stock, such
notice to be addressed to each such holder at its address as shown by the
records of the Corporation. For purposes hereof, the Common Stock shall rank on
liquidation junior to the Series F Convertible Preferred Stock.
6. COVENANTS.
At any time when shares of Series F Convertible Preferred Stock are
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Corporation's Certificate of Incorporation, as amended, without the approval of
the holders of at least a majority of the then outstanding shares of Series F
Convertible Preferred Stock given in writing or by vote at a meeting, consenting
or voting (as the case may be) separately as a series, the Corporation will not
create or authorize the creation of any additional class or series of shares of
stock unless the same ranks junior to or in parity with the Series F Convertible
Preferred Stock as to the distribution of assets on the liquidation, dissolution
or winding up of the Corporation; or increase the authorized amount of the
Series F Convertible Preferred Stock or increase the authorized amount of any
additional class or series of shares of stock unless the same ranks junior to or
in parity with the Series F Convertible Preferred Stock as to the distribution
of assets on the liquidation, dissolution or winding up of the Corporation; or
create or authorize any obligation or security convertible into shares of Series
F Convertible Preferred Stock as to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, whether any such
creation, authorization or increase shall be by means of amendment to the
Corporation's Certificate of Incorporation or by merger, consolidation or
otherwise.
7. OPTIONAL CONVERSION.
The holders of shares of Series F Convertible Preferred Stock shall have
the following conversion rights:
(a) Right to Convert; Conversion Price. Subject to the terms,
conditions, and restrictions of this Paragraph 7, the holder of any share or
shares of Series F Convertible Preferred Stock shall have the right to convert
each such share of Series F Convertible Preferred Stock (except that upon any
liquidation of the Corporation, the right of conversion shall
4
terminate at the close of business on the business day fixed for payment of the
amount distributable on the Series F Convertible Preferred Stock) into an amount
of shares of Common Stock equal to the Stated Value of such share or shares of
Series F Convertible Preferred Stock divided by a conversion price (the
"Conversion Price") determined as follows:
(i) During the six month period commencing on the one
year anniversary of the date upon which the Series F Convertible
Preferred Stock are originally issued (the "Original Issuance Date")
and continuing until the 18 month anniversary of the Original Issuance
Date, the Conversion Price shall be equal to One Dollar ($1.00); and
(ii) During the period commencing on the day after
the 18 month anniversary of the Original Issuance Date and continuing
until no shares of Series F Convertible Preferred Stock remain
outstanding, the Conversion Price shall be equal to the lesser of (A)
One Dollar ($1.00) and (B) if the closing price (or the average of the
closing bid and asked price if the principal exchange on which the
Corporation's common stock trades does not report a closing price) for
the Corporation's Common Stock shall trade below $1.00 for any ten (10)
consecutive trading days on the NASDAQ SmallCap Market, the NASDAQ
National Market System, the American Stock Exchange or in the so-called
"Pink Sheets," the Conversion Price shall be equal to seventy percent
(70%) of the Corporation's average closing bid price for the ten (10)
trading days preceding the date of the Conversion Notice, as defined in
Subparagraph 7(c).
(b) Restrictions on Conversion. The holder of any share or
shares of Series F Convertible Preferred Stock may not convert any of such
shares for a period of at least one (1) year following the Original Issuance
Date.
(c) Notice of Conversion. The right of conversion shall be
exercised by the holder thereof by giving written notice (the "Conversion
Notice") to the Corporation that the holder elects to convert a specified number
of shares of Series F Convertible Preferred Stock representing a specified
Stated Value thereof into Common Stock and by surrender of a certificate or
certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series F
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in the Conversion Notice, together with a statement of the name
or names (with address) in which the certificate or certificates for shares of
Common Stock shall be issued. The Conversion Notice shall include therein the
Stated Value of shares of Series F Convertible Preferred Stock to be converted,
and the number of shares of Common Stock to be issued in connection with such
conversion. The Corporation shall have the right to review the calculations
included in the Conversion Notice, and shall provide notice of any discrepancy
or dispute therewith within three (3) business days of the receipt thereof.
(d) Issuance of Certificates; Time Conversion Effected.
Promptly, but in no event more than seven (7) business days, after the receipt
of the Conversion Notice referred to in Subparagraph 7(c) and surrender of the
certificate or certificates for the share or shares of Series F Convertible
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may
5
direct, a certificate or certificates for the number of whole shares of Common
Stock into which such shares of Series F Convertible Preferred Stock are
converted. To the extent permitted by law, such conversion shall be deemed to
have been effected as of the close of business on the date (the "Conversion
Date") on which such Conversion Notice shall have been received by the
Corporation and the certificate and certificates for such share or shares shall
have been surrendered as aforesaid, and at such time the rights of the holder of
such share or shares of Series F Convertible Preferred Stock shall cease, and
the person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares represented thereby.
If the Corporation shall fail to issue such certificates within the time frame
described above, then the Corporation shall pay to the holders of such
certificates a penalty for each trading day after the initial seven trading days
in which such certificate is not issued equal to $1,000.00. Notwithstanding the
foregoing, the penalty described above shall not apply if the delay is caused by
forces outside of the control of the Corporation (e.g., flood, earthquake,
natural disaster or labor work stoppage) or if the Corporation does not then
have adequate shares of Common Stock available for issuance upon conversion. If
the delay is caused because the Corporation does not have adequate shares of
Common Stock available for issuance upon conversion, then the Corporation shall
use its best efforts to cause a stockholders' meeting to be held within ninety
(90) days of the date it first determines additional shares of Common Stock are
needed in order to amend its Certificate of Incorporation to increase the number
of authorized shares of Common Stock. Thereafter, the Corporation shall issue
such Common Stock as set forth above within seven (7) days of the date the
Corporation's stockholders approve such proposal, and failure to comply with the
provisions of this Subparagraph 7(d) thereafter shall subject the Corporation to
the penalties provided above unless the failure to cause the issuance of such
shares of Common Stock thereafter is caused by failure to obtain the necessary
votes required for stockholder approval for such amendment to the Certificate of
Incorporation (including the votes of all of the holders of then outstanding
classes of Preferred Stock of the Corporation).
(e) Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series F Convertible
Preferred Stock into Common Stock. In case the number of shares of Series F
Convertible Preferred Stock represented by the certificate or certificates
surrendered pursuant to Subparagraph 7(c) exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series F Convertible Preferred Stock represented by
the certificate or certificates surrendered which are not to be converted.
(f) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a share or shares
of Series F Convertible Preferred Stock shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of the shares of Common Stock immediately theretofore receivable upon
the conversion of such share or shares of Series F Convertible Preferred Stock,
such shares of stock, securities or assets as may be issued or
6
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such Common Stock immediately
theretofore receivable upon such conversion had such reorganization or
reclassification not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of such holder to the end
that the provisions hereof (including without limitation provisions for
adjustments of the conversion rights) shall thereafter be applicable, as nearly
as may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
(g) Adjustments for Splits, Combinations, etc. The Conversion
Price and the number of shares of Common Stock into which the Series F
Convertible Preferred Stock shall be convertible shall be adjusted appropriately
for stock splits, combinations, or other similar events. Additionally, an
adjustment will be made in the case of an exchange of Common Stock,
consolidation or merger of the Company with or into another corporation or sale
of all or substantially all of the assets of the Company in order to enable the
holder of Series F Convertible Preferred Stock to acquire the kind and the
number of shares of stock or other securities or property receivable in such
event by a holder of the Series F Convertible Preferred Stock of the number of
shares that might otherwise have been purchased upon the conversion of the
Series F Convertible Preferred Stock. No adjustment to the Conversion Price will
be made for dividends (other than stock dividends), if any, paid on the Common
Stock or for securities issued pursuant to exercise of the currently outstanding
options, warrants, or options that may be granted or shares issued in connection
with the acquisition of another business by the Company.
(h) Protection Against Dilutive Issuances. If the Corporation
shall at any time after the issue date of the Series F Preferred Stock issue
additional shares of Common Stock to any third party (other than upon the
exercise of any warrant, option or other security convertible into the
Corporation's Common Stock outstanding at the date of the filing of this
Certificate of Designation), excluding shares issued as a dividend or
distribution or stock split as provided herein, without consideration, or for a
consideration per share less than the applicable conversion price of the Series
F Convertible Preferred Stock in effect on the date of and immediately prior to
such issue, then and in such event, the Conversion Price will be the Conversion
Price determined in accordance with the following formula:
Conversion Price = (P1*Q1) + (P2*Q2)
-----------------
(Q1+Q2)
P1 = Conversion Price in effect immediately prior to such
issue or sale
Q1 = Number of Shares of Common Stock deemed outstanding
(including all shares issuable upon exercise of all
currently outstanding options and warrants)
P2 = Average price per share received by the Corporation upon
such issue or sale; and
Q2 = Number of shares of Common Stock issued or sold, or
deemed to have been issued or sold, in the subject
transaction
7
All shares of stock issuable upon conversion of Preferred
Stock issued or issuable to holders of Series F Convertible Preferred Stock
would be deemed to be outstanding (rather than a new Q2 new issuance).
Notwithstanding the foregoing, (I) the applicable Conversion
Price shall not be so reduced at such time if the amount of such reduction would
be an amount less than $.02, but any such amount shall be carried forward and
reduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $.02 or more, and (II) the
provisions of this Subparagraph 7(h) shall terminate immediately following the
filing by the Corporation with the Securities and Exchange Commission of an
announcement relating to the issuance of a majority of the Corporation's issued
and outstanding shares to any third party in a merger or similar transaction.
8. REDEMPTION OF SERIES F CONVERTIBLE PREFERRED STOCK.
(a) Right to Redeem Series F Convertible Preferred Stock. At
any time, and from time to time, the Corporation may, in its sole discretion,
but shall not be obligated to, redeem, in whole or in part, the then issued and
outstanding shares of Series F Convertible Preferred Stock, at a price of $1,200
per share of such Series F Convertible Preferred Stock (the "Redemption Price"),
subject to adjustment as provided in Paragraph 7.
(b) Notice of Redemption. The Corporation shall provide each
holder of record of the Series F Convertible Preferred Stock with written notice
of redemption (the "Redemption Notice") not less than 30 days prior to any date
stipulated by the Corporation for the redemption of the Series F Convertible
Preferred Stock (the "Redemption Date"). The Redemption Notice shall contain (i)
the Redemption Date, (ii) the number of shares of Series F Convertible Preferred
Stock to be redeemed from the holder to whom the Redemption Notice is delivered,
(iii) instructions for surrender to the Corporation of the certificate or
certificates representing the shares of Series F Convertible Preferred Stock to
be redeemed, and (iv) instructions as to how to specify to the Corporation the
number of shares of Series F Convertible Preferred Stock to be redeemed as
provided in this Paragraph 8, and the number of shares of Series F Convertible
Preferred Stock to be converted into Common Stock pursuant to Paragraph 7.
(c) Right to Convert Series F Convertible Preferred Stock upon
Receipt of Redemption Notice. Upon receipt of the Redemption Notice, the
recipient thereof shall have the option, at is sole election, to specify what
portion of the Series F Convertible Preferred Stock called for redemption in the
Redemption Notice shall be redeemed as provided in this Paragraph 8 or converted
into Common Stock in the manner provided in Paragraph 7. If the holder of the
Series F Convertible Preferred Stock called for redemption elects to convert
such shares, then such conversion shall take place on the Redemption Date, in
accordance with the terms of Paragraph 7.
(d) Surrender of Certificates; Payment of Redemption Price. On
or before the Redemption Date, each holder of the shares of Series F Convertible
Preferred Stock to be redeemed shall surrender the required certificate or
certificates representing such shares to the
8
Corporation, in the manner and at the place designated in the Redemption Notice,
and upon the Redemption Date, the Redemption Price for such shares shall be paid
by the Corporation via check to the order of the person whose name appears on
such certificate or certificates as the owner thereof, and each such surrendered
certificate shall be canceled and retired. If a certificate is surrendered and
all the shares evidenced thereby are not being redeemed, the Corporation shall
issue new certificates to be registered in the names of the person(s) whose
name(s) appear(s) as the owners on the respective surrendered certificates and
deliver such certificate to such person(s).
(e) Deposit of Redemption Price. On the Redemption Date in
respect to any shares of Series F Convertible Preferred Stock, or prior thereto,
the Corporation shall deposit with any bank or trust company (the "Depository")
having a capital and surplus of at least $50,000,000, a sum equal to (i) the
aggregate Redemption Price of all such shares called for redemption, less (ii)
the aggregate Redemption Price for those shares of Series F Convertible
Preferred Stock in respect of which the Corporation has received notice from the
holder thereof of its election, pursuant to Subparagraph 7(c), to convert shares
of Series F Convertible Preferred Stock into Common Stock. The Corporation shall
provide instructions and authority to the Depository to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon the
surrender of their share certificates. The deposit of the Redemption Price by
the Corporation with the Depository shall constitute full payment for the shares
of Series F Convertible Preferred Stock to be redeemed, and from and after that
date of the deposit, the redeemed shares shall be deemed to be no longer issued
and outstanding, and the holders thereof shall cease to be holders with respect
to such shares and shall have no rights with respect thereto, except the right
to receive from the Depository payment of the Redemption Price, without
interest, upon surrender of their certificates therefor. Any funds so deposited
and unclaimed at the end of one year from the Redemption Date shall be released
and delivered to the Corporation, after which the former holders of shares of
Series F Convertible Preferred Stock called for redemption shall be entitled to
receive payment of the Redemption Price in respect of their shares only from the
Corporation.
9. NOTICES.
In case at any time:
(a) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other pro rata distribution to the
holders of its Common Stock; or
(b) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights; or
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all
its assets to, another entity or entities; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
9
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile to non-U.S. residents, addressed to
each holder of any shares of Series F Convertible Preferred Stock at the address
of such holder as shown on the books of the Corporation, (i) at least 10 days'
prior to written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 10
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and (ii) shall also
specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be.
10. STOCK TO BE RESERVED.
The Corporation, upon the first anniversary of the Original Issuance
Date, will have a sufficient number of shares of Common Stock available to
reserve for issuance upon the conversion of all outstanding shares of Series F
Convertible Preferred Stock. The Corporation will at all times thereafter
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Series F Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series F Convertible
Preferred Stock. The Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued without violation of any
applicable law or regulation, or of any requirement of any national securities
exchange upon which the Common Stock may be listed.
11. NO REISSUANCE OF SERIES F CONVERTIBLE PREFERRED STOCK.
Shares of Series F Convertible Preferred Stock which are converted into
shares of Common Stock as provided herein shall not be reissued.
12. ISSUE TAX.
The issuance of certificates for shares of Common Stock upon conversion
of Series F Convertible Preferred Stock shall be made without charge to the
holder thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Series F Convertible Preferred Stock
which is being converted.
13. CLOSING OF BOOKS.
The Corporation will at no time close its transfer books against the
transfer of any Series F Convertible Preferred Stock or of any shares of Common
Stock issued or issuable upon the conversion of any shares of Series F
Convertible Preferred Stock in any manner which interferes
10
with the timely conversion of such Series F Convertible Preferred Stock, except
as may otherwise be required to comply with applicable securities laws.
14. DEFINITION OF COMMON STOCK.
As used in this Statement of Designation, the term "Common Stock" shall
mean and include the Corporation's authorized Common Stock, $.08 par value per
share, as constituted on the date of filing of these terms of the Series F
Convertible Preferred Stock, and shall also include any capital stock of any
class of the Corporation thereafter authorized which shall neither be limited to
a fixed sum or percentage of par value in respect of the rights of the holders
thereof to participate in dividends nor entitled to a preference in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that the shares of Common
Stock receivable upon conversion of shares of Series F Convertible Preferred
Stock shall include only shares designated as Common Stock of the Corporation on
the date of filing of this instrument, or in case of any reorganization,
reclassification, or stock split of the outstanding shares thereof, the stock,
securities or assets provided for in Subparagraph 7(f).
15. AMENDMENTS.
No provision of these terms of the Series F Convertible Preferred Stock
may be amended, modified or waived without the written consent or affirmative
vote of the holders of at least a majority of the then outstanding shares of
Series F Convertible Preferred Stock.
RESOLVED: That the President and Secretary be, and hereby are,
authorized and directed to execute and file a
Statement of Designation of Series F Convertible
Preferred Stock with the Delaware Secretary of State.
IN WITNESS WHEREOF, the said National Datacomputer, Inc. has caused its
corporate seal to be hereunto affixed and this Statement of Designation to be
signed by Malcolm M. Bibby, Ph.D., its President and Secretary, this 29th day of
March, 1999.
NATIONAL DATACOMPUTER, INC.
By: /s/ Malcolm M. Bibby
-------------------------------
Malcolm M. Bibby, Ph.D.
President
/s/ Malcolm M. Bibby
- ---------------------------
Malcolm M. Bibby, Ph.D.
Secretary
[SEAL]
11
STATE OF DELAWARE
CERTIFICATE FOR RENEWAL
AND REVIVAL OF CHARTER
National Datacomputer, Inc., a corporation organized under the laws of
Delaware, the charter of which was voided for non-payment of taxes, now desires
to procure a restoration, renewal and revival of its charter, and hereby
certifies as follows:
1. The name of this corporation is National Datacomputer, Inc.
2. Its registered office in the State of Delaware is located at
1209 Orange Street, City of Wilmington, DE Zip Code 19801
County of New Castle the name and address of its registered
agent is The Corporation Trust Company.
3. The date of filing of the original Certificate of
Incorporation in Delaware was 12-17-1986.
4. The date when restoration, renewal, and revival of the charter
of this company is to commence is the 29th day of February
2000, same being prior to the date of the expiration of the
charter. This renewal and revival of the charter of this
corporation is to be perpetual.
5. This corporation was duly organized and carried on the
business authorized by its charter until the 1st day of March
A.D. 2000, at which time its charter became inoperative and
void for non-payment of taxes and this certificate for renewal
and revival is filed by authority of the duly elected
directors of the corporation in accordance with the laws of
the State of Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section
312 of the General Corporation Law of the State of Delaware, as amended,
providing for the renewal, extension and restoration of charters, Gerald Eilberg
the last and acting authorized officer hereunto set his/her hand to this
certificate this 4th day of May 2000.
By: /s/ Gerald Eilberg
------------------------------
Authorized Officer
Name: Gerald Eilberg
Print or Type
Title: Vice President Finance, CFO
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:00 PM 05/04/2000
001227924 - 2111518
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 02/18/1998
98106463 - 2111518
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
NATIONAL DATACOMPUTER, INC.
It is hereby certified that:
FIRST: The name of the corporation is National Datacomputer, Inc.
(the "Corporation").
SECOND: The Certificate of Incorporation of the Corporation filed on
December 17, 1986, as amended from time to time thereafter, is
hereby amended by striking out the first paragraph of Article
Fourth in its entirety and by substituting in lieu of the
following:
"FOURTH: The total number of shares of all class of stock
which the Corporation shall have authority to issue is
thirty million fifty thousand (30,050,000), of which
thirty million (30,000,000) shares are to be Common Stock,
of the par value of eight cents ($.08) each, and fifty
thousand (50,000) shares are to be Preferred Stock, of the
par value of one-tenth of one cent ($.001) each, of which
four thousand two hundred (4,200) shares have been
designated as Series B Convertible Preferred Stock, of the
par value of one-tenth of one cent ($.001) each, and of
which nine hundred (900) shares have been designated as
Series C Convertible Preferred Stock, of the par value of
one-tenth of one cent ($.001) each, and of which three
hundred fifty (350) shares have been designated as Series
D Convertible Preferred Stock, of the par value of
one-tenth of one cent ($.001) each, and of which five
hundred (500) shares have been designated as Series E
Convertible Preferred Stock, of the par value of one-tenth
of one cent ($.001), and of which one hundred seventy five
(175) shares have been designated as Series F Convertible
Preferred Stock, of the par value of one-tenth of one cent
($.001), amounting in the aggregate to Two Million Four
Hundred Thousand Fifty and 00/100 Dollars
($2,400,050.00)."
THIRD: In lieu of a meeting and vote of the stockholders,
stockholders representing a majority of the shares of stock
entitled to vote have consented to said amendments in
accordance with the provisions of Section 228(a) and 242 of
the General Corporation Law of the State of Delaware, and
written notice of the adoption of the amendments has been
given as provided in Section 228 of the General Corporation
Law of the State of Delaware to every stockholder entitled to
such notice, or notice thereof has been waived pursuant to
Section 229 of the General Corporation Law of the State of
Delaware.
FOURTH: The aforesaid amendment of the Certificate of Incorporation,
as amended, has been duly adopted in accordance with the
applicable provisions of Section 242, 141(f) and 228 of the
General Corporation Law of the State of Delaware.
EXECUTED, effective as of this 22 day of May, 2000.
NATIONAL DATACOMPUTER, INC.
By: /s/ Malcolm M. Bibby
----------------------------------
Malcolm M. Bibby
President and Chairman of the Board
2
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/05/2000
001288963 - 2111518
CERTIFICATE OF CORRECTION OF
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
NATIONAL DATACOMPUTER, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation" is National Datacomputer, Inc.
2. The date of filing of the original Certificate of
Incorporation of the Corporation with the Secretary of State of the State of
Delaware was December 17,1986.
3. The Certificate of Amendment of Certificate of
Incorporation, which was filed on April 15, 1987, is hereby corrected.
4. The inaccuracy to be corrected in the Certificate of
Amendment of Certificate of Incorporation, which was filed on April 15, 1987, is
as follows:
The amendment set forth in Article FIRST of the Certificate of
Amendment should have replaced only the first paragraph of Article FOURTH of the
Certificate of Incorporation.
5. The portion of the Certificate of Amendment of Certificate
of Incorporation, which was filed on April 15, 1987, in corrected form is as
follows:
"RESOLVED: That a proposed amendment to the Certificate of
Incorporation of the Company (the "Amendment"), effecting a change in Article
FOURTH thereof so that the first paragraph of said Article FOURTH shall be and
read as set forth in Exhibit A hereto, is recommended to the stockholders for
approval as being in the best interests of the Company,"
Executed this 24th day of May, 2000.
NATIONAL DATACOMPUTER, INC.
By: /s/ Malcolm M. Bibby
-----------------------------
Malcolm M. Bibby
President and Chairman of the Board
CERTIFICATE OF CORRECTION OF
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
NATIONAL DATACOMPUTER, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation" is National Datacomputer, Inc.
2. The date of filing of the original Certificate of
Incorporation of the Corporation with the Secretary of State of the State of
Delaware was December 17,1986.
3. The Certificate of Amendment of Certificate of
Incorporation, which was filed on April 15, 1987, is hereby corrected.
4. The inaccuracy to be corrected in the Certificate of
Amendment of Certificate of Incorporation, which was filed on April 15, 1987, is
as follows:
The amendment set forth in Article FIRST of the Certificate of
Amendment should have replaced only the first paragraph of Article FOURTH of the
Certificate of Incorporation.
5. The portion of the Certificate of Amendment of Certificate
of Incorporation, which was filed on April 15, 1987, in corrected form is as
follows:
"RESOLVED: That a proposed amendment to the Certificate of
Incorporation of the Company (the "Amendment"), effecting a change in Article
FOURTH thereof so that the first paragraph of said Article FOURTH shall be and
read as set forth in Exhibit A hereto, is recommended to the stockholders for
approval as being in the best interests of the Company,"
Executed this 24th day of May, 2000.
NATIONAL DATACOMPUTER, INC.
By: /s/ Malcolm M. Bibby
---------------------------
Malcolm M. Bibby
President and Chairman of the Board
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/05/2000
001288980 - 2111518
CERTIFICATE OF CORRECTION OF
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
NATIONAL DATACOMPUTER, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is National Datacomputer, Inc.
2. The date of filing of the original Certificate of Incorporation of
the Corporation with the Secretary of State of the State of Delaware was
December 17, 1986.
3. The Certificate of Amendment of Certificate of Incorporation, which
was filed on October 17, 1994, is hereby corrected.
4. The inaccuracy to be corrected in the Certificate of Amendment of
Certificate of Incorporation, which was filed on October 17, 1994, is as
follows:
The amendment set forth in the second paragraph of the Certificate of
Amendment should have replaced only the first paragraph of Article FOURTH of the
Certificate of Incorporation.
5. The portion of the Certificate of Amendment of Certificate of
Incorporation, which was filed on October 17, 1994, in corrected form is as
follows:
"RESOLVED: That the first paragraph of Article 4 of the Certificate of
Incorporation be, and hereby is, deleted and the following be, and hereby is,
inserted in place thereof:
"FOURTH. The total number of shares of all classes which the
Corporation shall have authority to issue is ten million fifty thousand
(10,050,000), of which ten million (10,000,000) shares are to be Common Stock,
of the par value of two cents ($.02) each, and fifty thousand (50,000) shares
are to be Preferred Stock, of the par value of one-tenth of a cent ($.001) each,
of which twenty (20) shares have been designated as Series A Convertible
Preferred Stock, of the par value of one-tenth of a cent ($.001) amounting in
the aggregate to Two Hundred Thousand Fifty and 00/100 Dollars ($200,050.00).""
Executed this 24th day of May, 2000.
NATIONAL DATACOMPUTER, INC.
By: /s/ Malcolm M. Bibby
-----------------------------
Malcolm M. Bibby
President and Chairman of the Board
2
CERTIFICATE OF CORRECTION OF
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
NATIONAL DATACOMPUTER, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is National Datacomputer, Inc.
2. The date of filing of the original Certificate of Incorporation of
the Corporation with the Secretary of State of the State of Delaware was
December 17, 1986.
3. The Certificate of Amendment of Certificate of Incorporation, which
was filed on October 17, 1994, is hereby corrected.
4. The inaccuracy to be corrected in the Certificate of Amendment of
Certificate of Incorporation, which was filed on October 17, 1994, is as
follows:
The amendment set forth in the second paragraph of the Certificate of
Amendment should have replaced only the first paragraph of Article FOURTH of the
Certificate of Incorporation.
5. The portion of the Certificate of Amendment of Certificate of
Incorporation, which was filed on October 17, 1994, in corrected form is as
follows:
"RESOLVED: That the first paragraph of Article 4 of the Certificate of
Incorporation be, and hereby is, deleted and the following be, and hereby is,
inserted in place thereof:
"FOURTH. The total number of shares of all classes which the
Corporation shall have authority to issue is ten million fifty thousand
(10,050,000), of which ten million (10,000,000) shares are to be Common Stock,
of the par value of two cents ($.02) each, and fifty thousand (50,000) shares
are to be Preferred Stock, of the par value of one-tenth of a cent ($.001) each,
of which twenty (20) shares have been designated as Series A Convertible
Preferred Stock, of the par value of one-tenth of a cent ($.001) amounting in
the aggregate to Two Hundred Thousand Fifty and 00/100 Dollars ($200,050.00).""
Executed this 24th day of May, 2000.
NATIONAL DATACOMPUTER, INC.
By: /s/ Malcolm M. Bibby
---------------------------
Malcolm M. Bibby
President and Chairman of the Board
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NATIONAL DATACOMPUTER, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is National Datacomputer, Inc.
2. The date of filing of the Certificate of Incorporation of the
Corporation with the Secretary of State of the State of Delaware was December
17, 1986. Thereafter the Certificate of Incorporation was amended by the filing
of the following documents with the Secretary of State of the State of Delaware
on the dates noted: an Agreement of Merger on February 18, 1987; a Certificate
of Amendment on April 15, 1987; a Certificate of Designation on August 25, 1994;
a Certificate of Amendment on October 17, 1994; a Certificate of Designation on
April 25, 1996; a Certificate of Designation on June 27, 1996; two Certificates
of Amendment on December 18, 1996; two Certificates of Designation on March 3,
1997; a Certificate of Designation on February 18, 1998; a Certificate of
Designation on March 29, 1999; and a Certificate of Amendment on May 22, 2000.
3. The Certificate of Incorporation, as amended to date, is hereby
further amended to, among other things, change the capitalization of the
Corporation by increasing the number of authorized shares, eliminating all
Preferred Stock Designations and changing the par value of the Common Stock,
said amendments shall be effected by striking out Article Fourth of the
Certificate of Incorporation, as amended, in its entirety and by substituting in
lieu thereof the following new Article Fourth:
"FOURTH:
a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Fifty Million Fifty
Thousand (50,050,000), consisting of:
i) 50,000,000 shares of Common Stock, Zero Dollars and One-Tenth of One
Cent ($0.001) Par Value per share (the "Common Stock") and
ii) 50,000 shares of Preferred Stock, Zero Dollars and One-Tenth of One
Cent ($0.001) Par Value per share (the "Preferred Stock").
b) Common Stock.
1. General. The voting, dividend and liquidation and other rights
of the holders of the Common Stock are expressly made subject to and qualified
by the rights of the holders of any series of Preferred Stock.
2. Voting Rights. The holders of record of the Common Stock are
entitled to one vote per share on all matters to be voted on by the
Corporation's stockholders.
3. Dividends. Dividends may be declared and paid on the Common
Stock from funds lawfully available therefor if, as and when determined by the
Board of Directors in their sole discretion, subject to provisions of law, any
provision of this Certificate of Incorporation, as amended from time to time,
and subject to the relative rights and preferences of any shares of Preferred
Stock authorized, issued and outstanding hereunder.
4. Liquidation. Upon the dissolution, liquidation or winding up
of the Corporation, whether voluntary or involuntary, holders of record of the
Common Stock will be entitled to receive pro rata all assets of the Corporation
available for distribution to its stockholders, subject, however, to the
liquidation rights of the holders of Preferred Stock authorized, issued and
outstanding hereunder.
5. Reclassification. Upon the effectiveness of this Certificate of
Amendment, every share of Common Stock outstanding or held by the Corporation in
its treasury shall be changed and reclassified into one share of Common Stock,
$0.001 par value per share, which shares shall be fully paid and nonassessable
shares of Common Stock of the Corporation.
c) Preferred Stock. The Preferred Stock may be issued from time to time
in one or more series. The Board of Directors is authorized, subject to any
limitations prescribed by law, to provide for the issuance of shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware (such certificate being hereafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof. In the event that
at any time the Board of Directors shall have established and designated one or
more series of Preferred Stock consisting of a number of shares less than all of
the authorized number of shares of Preferred Stock, the remaining authorized
shares of Preferred Stock shall be deemed to be shares of an undesignated series
of Preferred Stock unless and until designated by the Board of Directors as
being part of a series previously established or a new series then being
established by the Board of Directors. Notwithstanding the fixing of the number
of shares constituting a particular series, the Board of Directors may at any
time thereafter authorize an increase or decrease in the number of shares of any
such series except as set forth in the Preferred Stock Designation for such
series. In case the number of shares of any series shall be so decreased, the
shares constituting such decrease shall resume the status of authorized
undesignated Preferred Stock unless and until designated by the Board of
Directors as being part of a series previously established or a new series then
being established by the Board of Directors. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of the
capital stock of the Corporation entitled to vote thereon,
2
without a vote of the holders of the Preferred Stock or of any series thereof,
voting as a separate class, unless a vote of any such holders is required
pursuant to the terms of any Preferred Stock Designation."
4. The Amendment of the Certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Section 228 and
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President and Chief Executive Officer on the 30th
day of March, 2007.
NATIONAL DATACOMPUTER, INC.
By: /s/ William B. Berens
---------------------------
William B. Berens
President and Chief Executive Officer
3