Exhibit 10(ii)
RESOLVED: That Article Fourth of the Restated Certificate of
Incorporation of the corporation, as amended, be amended to include the
rights and designation of the Series C Convertible Preferred Stock by
adding to Article Fourth thereof a new subsection F as follows:
F. SERIES C PREFERRED STOCK
1. Designation. There is hereby created a series of the Preferred Stock
consisting of 50,000 shares having the designation, voting powers, preferences,
relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof as are set forth in this
Paragraph F. This series is designated "Series C Convertible Preferred Stock"
(hereinafter called "Series C Stock").
2. Cash Dividend.
(a) The record holders of the outstanding shares of Series C
Stock ("Series C Holders") shall be entitled to receive noncumulative cash
dividends when and as declared by the Board of Directors, provided that no such
dividend shall be declared unless an equivalent, ratable dividend is also
declared with respect to the outstanding shares of Series B Stock.
(b) In addition to any dividends declared in accordance with
the preceding subparagraph (a), the holders of Series C Stock shall be entitled
to receive dividends at the rate of 8% per annum of the initial purchase price
of $100 per share, cumulative from the issuance date, but not to exceed 47% in
the aggregate, provided that such dividends shall be payable only upon a
Liquidation Event (as defined herein), and provided further that any such
dividend payment shall be coupled with an equivalent, ratable dividend to the
holders of Series B Stock calculated upon the initial purchase price of the
Series B Stock of $1,000 per share. Payment of dividends pursuant to this
subparagraph (b) shall be made in full prior to the payment of dividends on
Common Stock.
(c) Upon the payment or setting apart for payment of any
dividends upon the outstanding shares of Series C Stock and Series B Stock, the
Board of Directors may declare and pay dividends upon the Common Stock up to an
amount with respect to each share of Common Stock equal to the amount paid or
set aside for payment with respect to each share of Series C Stock and Series B
Stock divided, in each case, by the number of shares of Common Stock into which
each such share of Series C Stock or Series B Stock shall then be convertible.
3. Redemption. The Series C Stock may not be redeemed, in whole or in
part
4. Liquidation.
(a) In the event of a Liquidation Event, any amount paid or
payable to the Series C Holders shall rank, in right of payment, pari passu with
any and all amounts then payable by reason of such Liquidation Event to the
holders of Series B Stock and any declared but unpaid dividends on the Series B
Stock and senior to all other classes of stock.
(b) Subject to the preceding subparagraph (a), in the event of
any Liquidation Event, the Series C Holders shall be entitled to be paid an
amount equal to One Hundred Dollars ($100.00) per share plus all dividends
thereon accrued and remaining unpaid up to the date of such Liquidation Event
whether or not at such times the corporation shall have surplus available for
the payment of dividends.
(c) In the event of any Liquidation Event, the Series C
Holders shall not participate further in any liquidating distributions to
holders of Common Stock, but shall be given not less than 20 business days'
prior written notice of any Liquidation Event in order to decide whether to
convert their shares prior to the Liquidation Event.
(d) A merger, consolidation, dissolution, winding up or sale
of all or substantially all of the assets of the Corporation, whether voluntary
or involuntary, shall be deemed to be a liquidation event ("Liquidation Event")
unless (a) in the case of a merger, the Corporation is the surviving entity or
(b) the holders of at least 75% of the combined Series C Stock and Series B
Stock determine that such action should not be deemed a Liquidation Event.
5. Conversion.
(a) Right to Convert and Conversion Rate. At the option of
each holder of Series C Stock, such holder's holdings of Series C Stock shall be
convertible into shares of Common Stock at any time and from time to time and
cash in lieu of fractional shares upon the following terms and conditions:
(i) Each share of Series C Stock shall be convertible
from and after the date of its issuance at the office of any Transfer Agent for
the Series C Stock (or such other place as may be designated by the corporation)
into fully paid and non-assessable shares of Common Stock (as such Common Stock
shall then be constituted) into such whole number of fully paid and
nonassessable shares of Common Stock as equals $100 divided by the Conversion
Price (as last adjusted and then in effect). The "Conversion Price" shall
initially be equal to forty cents ($.40); provided however, that such Conversion
Price shall be subject to adjustment to the extent provided in subpart (b) of
this subparagraph 5.
(ii) In order to convert shares of Series C Stock into
Common Stock, the holder thereof shall surrender the certificate or certificates
for Series C Stock, duly endorsed to the corporation or in blank, at the office
of any Transfer Agent for the Series C Stock (or such other place as may be
designated by the corporation), and shall give written notice to the corporation
at said office that he elects to convert the same and shall state in writing
therein the name or names in which he wishes the certificate or certificates for
Common Stock to be issued. The corporation will, as soon as practicable
thereafter, deliver at said
office to such holder of shares of the Series C Stock such holder's nominee or
nominees, a certificate or certificates for the number of full shares of Common
Stock to which such holder shall be entitled as aforesaid. Shares of the Series
C Stock shall be deemed to have been converted as of the date of the surrender
of such certificate or certificates for conversion as provided above, and the
person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock on such date.
(b) Conversion Adjustment Provisions. The conversion rate
provided in subpart (a) (i) above shall be subject to adjustment to the extent
provided below:
(i) Stock Dividends, Subdivisions and
Combinations. In the event the corporation shall
(x) pay a dividend of Common Stock, or of any
capital stock convertible into Common Stock, on its
outstanding Common Stock;
(y) subdivide its outstanding Common Stock into a
larger number of shares of Common Stock by reclassification
or otherwise; or
(z) combine its outstanding Common Stock into a
smaller number of shares of Common Stock by reclassification
or otherwise.
the conversion rate in effect immediately prior thereto
shall be proportionately adjusted so that the holder of any
Series C Stock thereafter surrendered for conversion shall
be entitled to receive the number of shares of Common Stock
(and, in the case of a dividend payable in capital stock
convertible into Common Stock, the number of shares of such
capital stock) which such holder would have owned or have
been entitled to receive after the happening of any of the
events described above had such Series C Stock been
converted immediately prior to the happening of such event.
Such adjustment shall be made whenever any of the events
described above shall occur. In the case of a dividend, any
such adjustment shall be made as of the record date thereof
and in the case of a subdivision or combination, any such
adjustment shall be made as of the effective date thereof.
(ii) Minimum Adjustment. Notwithstanding the
provisions of (i) of this subpart (b), no adjustment in the
conversion rate shall be required unless such adjustment
would require an increase or decrease of at least 2% of such
rate; provided, however, that any such adjustments which
are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations required by any provision of this subpart (b)
shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
(iii) Notice of Adjustment of Conversion Price.
Whenever the Conversion Price shall be adjusted as provided
in this subsection (b), the corporation shall forthwith
file, at the office of the transfer agent for the Series C
Stock or at such other place as may be designated by the
corporation, a statement, signed by its independent
certified public accountants or its Chief Financial Officer,
showing in detail the facts requiring such adjustment and
the Conversion Price that shall be in effect after such
adjustment. The corporation shall also cause a copy of such
statement to be sent by first class, certified mail, return
receipt requested, postage prepaid, to each holder of shares
of Preferred Stock at such holder's address appearing on the
corporation's records.
(c) Fractional Shares. No fraction of a share of Common Stock
shall be issued upon any conversion of Series C Stock but, in lieu thereof,
there shall be paid an amount in cash equal to the same fraction of the market
value of a full share of Common Stock. For such purpose, the market value of a
share of Common Stock shall be the market value at the close of the most recent
trading day prior to the date as of which the determination is made; provided,
however, that if the Common Stock is not traded in such manner that such
valuation referred to herein is available, market value shall be determined in
good faith by the Board of Directors of the corporation.
(d) Reservation of Common Stock. The corporation shall at all
times reserve and keep available out of its authorized but unissued Common Stock
solely for the purposes of effecting the conversion of the shares of the Series
C Stock, the full number of shares of Common Stock then deliverable upon the
conversion of all shares of Series C Stock at the time outstanding.
6. Voting on Amendments to the Certificate of Incorporation as a
Class.
(a) The Series C Holders shall be entitled to vote as a
separate voting group on any proposed amendments to the corporation's
Certificate of Incorporation (including any applicable Certificates of
Designation), whether or not such voting rights are granted by Section 33-798 of
the Connecticut Business Corporation Act or a successor thereto, if the
amendment would:
(i) Increase or decrease the aggregate number of
authorized shares of the Series C Stock;
(ii) Effect an exchange or reclassification of all
or part of the shares of the Series C Stock into shares of
another class;
(iii) Effect an exchange or reclassification, or
create the right of exchange, of all or part of the shares
of another class into shares of the Series C Stock;
(iv) Change the designation, rights, preferences
or limitations of all or part of the shares of the Series C
Stock;
(v) Change the shares of all or part of the Series
C Stock into a different number of shares of the same class;
(vi) Create a new class of shares having rights or
preferences with respect to distributions or to dissolution
that are prior, superior or substantially equal to the
shares of the Series C Stock;
(vii) Increase the rights, preferences or number
of authorized shares of any class that, after giving effect
to the amendment, have rights or preferences with respect to
distributions or to dissolution that are prior, superior or
substantially equal to the shares of the Series C Stock; or
(viii) Cancel or otherwise affect rights to
distributions or dividends that have accumulated but not yet
been declared on all or part of the shares of the Series C
Stock.
(b) If a proposed amendment that entitles the Series C Stock
and one or more other series of shares to vote as separate voting groups under
this section would affect the Series C Stock and such one or more series in the
same or a substantially similar way, the shares of all the series so affected
must vote together as a single voting group on the proposed amendment.