SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
DYNASIL CORPORATION OF AMERICA
(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-1734088
(State of Incorporation (IRS Employer
or Organization) Identification No.)
44 Hunt Street, Watertown, MA 02472
(Address of Principal (Zip Code)
Executive Offices)
If this form relates to the If this form relates to the
registration of a class of registration of a class of
securities pursuant to securities pursuant to
Section 12(b) of the Exchange Section 12(g) of the Exchange
Act and is effective pursuant Act and is effective pursuant
to General Instruction A.(c), to General Instruction A.(d),
please check the following please check the following
box. x box. __
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Securities Act registration statement file number to which
this form relates: (If Applicable)
Securities to be registered pursuant to Section 12(b) of the
Act:
Title of Each Class Name of Each Exchange on
to be so Registered Which
Each Class is to be
Registered
Common Stock, $0.0005 par NASDAQ Global Market
value
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Securities to be registered pursuant to Section 12(g) of the
Act:
None
(Title of Class)
Explanatory Note
This registration statement on Form 8-A is being filed
to change the registration of the common stock, $0.0005 par
value (the "Common Stock"), of Dynasil Corporation of
America, a Delaware corporation (the "Registrant"), from
Section 12(g) under the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), to Section 12(b) under the
Exchange Act in connection with the listing of the Common
Stock on the NASDAQ Global Market ("Nasdaq"). The Common
Stock is currently registered under Section 12(g) of the
Exchange Act and is quoted on the Over the Counter Bulletin
Board ("OTCBB") under the symbol "DYSL.OB". The Registrant
anticipates that the quotation of the Common Stock on OTCBB
will be terminated following the closing of trading on
Thursday 16, 2010 and that the listing of the Common
Stock on Nasdaq will begin at the opening of trading on the
Nasdaq on Friday 17, 2010 under the symbol "DYSL".
Item 1. Description of Registrant's Securities to
be Registered.
The following description of the Registrant's capital stock and provisions of the Registrant's certificate of incorporation and bylaws are summaries only, and they are qualified by reference to the Registrant's certificate of incorporation and bylaws.
The Registrant's authorized capital stock consists of 40,000,000 shares of common stock, par value $0.0005 per share, and 15,000,000 shares of preferred stock, par value $0.001 per share. As of December 13, 2010, 12,738,080 shares of common stock and 5,256,000 shares of preferred stock were outstanding.
Common Stock
Holders of the Registrant's common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. An election of directors by the stockholders shall be determined by a plurality of the votes cast by the stockholders entitled to vote on the election. Holders of common stock are entitled to receive proportionately any dividends as may be declared by the Registrant's board of directors, subject to any preferential dividend rights of outstanding preferred stock.
In the event of the Registrant's liquidation or dissolution, the holders of common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that the Registrant may designate and issue in the future.
Preferred Stock
Under the Registrant's certificate of incorporation, the Registrant's Board of Directors has the authority, without further action by stockholders, to designate up to 15,000,000 shares of preferred stock in one or more series and to fix the designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions granted to or imposed upon the preferred stock, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preference and sinking fund terms, any or all of which may be greater than the rights of the Common Stock.
The issuance of preferred stock could:
. adversely affect the voting power of holders of Common Stock and reduce the likelihood that common stockholders will receive dividend payments and payments upon liquidation;
. have the effect of decreasing the market price of the Registrant's Common Stock; and
. have the effect of delaying, deterring or preventing a change in control of the Registrant.
In June 2008 the Registrant designated terms of a new class of preferred stock titled Series C 10% Cumulative Convertible Preferred Stock (the "Series C Preferred Stock"), and thereafter issued 5,256,000 shares of the Series C Preferred Stock in a private placement. The Series C Preferred Stock contain priority and cumulative rights, preferences on dissolution, liquidation and winding up, and redemption, conversion and anti-dilution rights, as specified in the Certificate of Designation of Preferred Stock of Dynasil Corporation of America filed herewith as Exhibit 3.05. On October 22, 2010 the Registrant determined to cause the mandatory conversion of all outstanding shares of the Series C Preferred Stock into shares of its Common Stock, which information is incorporated herein by reference to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 25, 2010. The conversion will be effected on December 21, 2010 (the "Conversion Date"). As a result, following the conversion on the Conversion Date, there will be no shares of preferred stock outstanding.
Delaware law provides that the holders of preferred stock will have the right to vote separately as a class on any proposal involving fundamental changes in the rights of holders of that preferred stock. This right is in addition to any voting rights that may be provided for in the applicable certificate of designation.
Anti-Takeover Provisions of Delaware Law and the Registrant's Corporate Documents
Delaware Law. The Registrant is governed by the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:
. before the date that the person became an "interested stockholder," the Board of Directors approved either the "business combination" or the transaction which makes the person an "interested stockholder;"
. upon completion of the transaction that results in the "interested stockholder" becoming an "interested stockholder," the "interested stockholder" owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or
. on or subsequent to the date that the person became an "interested stockholder," the business combination is approved by the board of directors and the vote of at least 66 2/3 % of the outstanding voting stock that is not owned by the "interested stockholder."
Generally, a "business combination" includes a merger, asset sale or other transaction resulting in a financial benefit to the stockholder. An "interested stockholder" is a person who either owns 15% or more of the Registrant's outstanding voting stock or, together with affiliates and associates, owns or, within three prior years, did own, 15% or more of the Registrant's outstanding voting stock. The statute could have the effect of delaying, deferring or preventing a change in the Registrant's control with respect to transactions the Registrant's board of directors does not approve in advance.
By-Laws and Certificate of Incorporation Provisions. The Registrant's by-laws provide that special meetings of the Registrant's stockholders may be called by the directors or by any officer instructed by the directors. The Registrant's certificate of incorporation also specifies that the board of directors may alter, amend or repeal the Registrant's by-laws, and it gives the Board of Directors the power to use preferred stock with any characteristics it deems fit. Further, the Registrant's certificate of incorporation does not include a provision for cumulative voting for directors.
The foregoing provisions could delay or discourage transactions involving an actual or potential change in control of the Registrant or the Registrant's management, including transactions in which stockholders might otherwise receive a premium for their shares over then current prices. Such provisions could also limit the ability of stockholders to remove current management or approve transactions that stockholders may deem to be in their best interests and could adversely affect the price of the Registrant's common stock.
Item 2. Exhibits.
Exhibit
Number Description
3.01 Certificate of Incorporation of the Registrant
(previously filed as Exhibit A to the Registrant's
Definitive Proxy Statement on Schedule 14A for the
2008 Annual Meeting of Shareholders (File No. 0-
27503) filed on January 4, 2008 and incorporated
herein by reference)
3.02 Certificate of Merger of Foreign Corporation into a
Domestic Corporation, dated February 29, 2008 (filed
herewith)
3.03 Certificate of Amendment of Certificate of
Incorporation, dated March 6, 2008 (filed herewith)
3.04 Certificate of Amendment of Certificate of
Incorporation, dated February 26, 2009 (previously
filed as Exhibit 3.1 to the Registrant's Quarterly
Report on Form 10-Q (File No. 0-27503) filed on May
15, 2009 and incorporated herein by reference)
3.05 Certificate of Designation of Preferred Stock of
Dynasil Corporation of America, dated March 27, 2009
(filed herewith)
3.06 By-Laws of the Registrant (previously filed as
Exhibit B to the Registrant's Definitive Proxy
Statement on Schedule 14A for the 2008 Annual Meeting
of Shareholders (File No. 0-27503) filed on January
4, 2008 and incorporated herein by reference)
4.01 See Exhibits 3.01, 3.02, 3.03, 3.04, 3.05 and 3.06
for provisions of the Certificate of Incorporation,
as amended, and By-laws, of the Registrant defining
rights of the holders of Common Stock of the
Registrant
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereto duly authorized.
DYNASIL CORPORATION OF
AMERICA
Date: December 14, 2010 By /s/ Craig T. Dunham
-------------------------
Craig T. Dunham
President
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Exhibit Index.
Exhibit
Number Description
3.01 Certificate of Incorporation of the Registrant
(previously filed as Exhibit A to the Registrant's
Definitive Proxy Statement on Schedule 14A for the
2008 Annual Meeting of Shareholders (File No. 0-
27503) filed on January 4, 2008 and incorporated
herein by reference)
3.02 Certificate of Merger of Foreign Corporation into a
Domestic Corporation, dated February 29, 2008 (filed
herewith)
3.03 Certificate of Amendment of Certificate of
Incorporation, dated March 6, 2008 (filed herewith)
3.04 Certificate of Amendment of Certificate of
Incorporation, dated February 26, 2009 (previously
filed as Exhibit 3.1 to the Registrant's Quarterly
Report on Form 10-Q (File No. 0-27503) filed on May
15, 2009 and incorporated herein by reference)
3.05 Certificate of Designation of Preferred Stock of
Dynasil Corporation of America, dated March 27, 2009
(filed herewith)
3.06 By-Laws of the Registrant (previously filed as
Exhibit B to the Registrant's Definitive Proxy
Statement on Schedule 14A for the 2008 Annual Meeting
of Shareholders (File No. 0-27503) filed on January
4, 2008 and incorporated herein by reference)
4.01 See Exhibits 3.01, 3.02, 3.03, 3.04, 3.05 and 3.06
for provisions of the Certificate of Incorporation,
as amended, and By-laws, of the Registrant defining
rights of the holders of Common Stock of the
Registrant
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STATE OF DELAWARE
CERTIFICATE OF MERGER OF
FOREIGN CORPORATION INTO
A DOMESTIC CORPORATION
Pursuant to Title 8, Section 252 of the Delaware General Corporation Law, the undersigned corporation executed the following Certificate of Merger:
FIRST: The name of the surviving corporation is Dynasil Holdings Company, a Delaware corporation, and the name of the corporation being merged into this surviving corporation is Dynasil Corporation of America, a New Jersey corporation.
SECOND: The Agreement of Merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations pursuant to Title 8 Section 252 of the General Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is Dynasil Holdings Company, a Delaware corporation.
FOURTH: The Certificate of Incorporation of the surviving corporation shall be its Certificate of Incorporation. (If amendments are affected please set forth)
FIFTH: The authorized stock and par value of the non- Delaware corporation is as set forth in Exhibit A hereto.
SIXTH: The merger is to become effective on filing.
SEVENTH: The Agreement of Merger is on file at 385 Cooper Road, West Berlin, NJ 08091, an office of the surviving corporation.
EIGHTH: A copy of the Agreement of Merger will be furnished by the surviving corporation on request, without cost, to any stockholder of the constituent corporations.
IN WITNESS WHEREOF, said surviving corporation has caused this certificate to be signed by an authorized officer, the 29th of February, A.D., 2008.
By: /s/ Craig T. Dunham
Authorized Officer
Name: Craig T. Dunham
Print or Type
Title: President
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EXHIBIT A TO CERTIFICATE OF MERGER
The Corporation is authorized to issue an aggregate of 35,000,000 shares, consisting of two classes, as follows: One class of stock shall be 25,000,000 authorized shares of Common Stock, par value $0.0005 per share. The other class of stock shall be 10,000,000 authorized shares of Preferred Stock, par value $0.001.
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
The corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:
FIRST: That at a meeting of the Board of Directors of Dynasil Holdings Company resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders or said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered "FIRST" so that, as amended, said Article shall be and read as follows:
FIRST: The name of this corporation shall be:
DYNASIL CORPORATION OF AMERICA.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the stockholders of said corporation was duly called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of share as required by statute were voted in favor of the amendment.
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.
IN WITNESS WHEREOF, said corporation has caused this certificate to be signed this 6th day of March, 2008.
By: /s/ Gerald Chalphin
Authorized Officer
Title: Assistant Secretary
Name: Gerald Chalphin
Print or Type
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CERTIFICATE OF DESIGNATION
OF PREFERRED STOCK OF
DYNASIL CORPORATION OF AMERICA
Pursuant to Section 151 of the General Corporation Law of the State of Delaware, Dynasil Corporation of America, a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), in accordance with the provisions of Section 103 thereof, hereby certifies:
That pursuant to the authority vested in the Board of Directors of the Corporation (the "Board of Directors") in accordance with the provisions of the Certificate of Incorporation of the Corporation, the Board of Directors on September 22, 2006 adopted a resolution establishing a new series of preferred stock within the corporation's Preferred Stock, such series to be designated Series B 10% Cumulative Convertible Preferred Stock, to consist of 700,000 shares of stock, and to have the following designations, preferences, rights and qualifications, limitations and restrictions:
Series B 10% Cumulative Convertible Preferred Stock Statement of Designations, Preferences, Rights and Qualifications, Limitations and Restrictions
A series of cumulative convertible preferred shares designated "Series B 10% Cumulative Convertible Preferred Stock" is established. The Series B 10% Cumulative Convertible Preferred Stock shall have a par value of $.001 per share. When issued for a price in excess of that amount, the shares of Series B 10% Cumulative Convertible Preferred Stock shall be fully paid and nonassessable. The Series B 10% Cumulative Convertible Preferred Stock shall consist of 700,000 preferred shares, which the Board of Directors may increase only in connection with a stock split or decrease from time to time but not below the number of shares of Series B 10% Cumulative Convertible Preferred Stock then outstanding. On redemption, conversion, or other reacquisition of any of the Series B 10% Cumulative Convertible Preferred Stock, the reacquired shares shall be cancelled and shall become part of the authorized and unissued preferred stock but shall not be authorized and unissued Series B 10% Cumulative Convertible Preferred Stock. The rights, preferences, designations and limitations of the Series B 10% Cumulative Convertible Preferred Stock are as follows:
Priority
(a) The Series B 10% Cumulative Convertible Preferred Stock shall be senior to any other class or series of preferred shares in respect of (1) payment of dividends; (2) payment on dissolution, liquidation or winding up and (3) redemption, except for shares of the Series A 10% Cumulative Convertible Preferred Stock.
Dividend Rate and Payment Dates
(b) Holders of shares of Series B 10% Cumulative Convertible Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors at the rate of ten percent (10%) per annum of the amount paid for each share, and no more. Dividends shall be payable quarterly on the last day of December, March, June and September in each year for the quarterly period ending on that date. The first dividend shall be payable on December 31, 2006.
Priority and Cumulative Rights
(c) Dividends on the Series B 10% Cumulative Convertible Preferred Stock shall be cumulative from the date of issuance; provided, however, that accumulations of dividends shall not bear interest. In no event, so long as any shares of the Series B 10% Cumulative Convertible Preferred Stock are outstanding, shall the Corporation pay or declare any cash or property dividends, distribute any of its assets, or purchase or acquire for value any shares of the Corporation unless and until all dividends on the Series B 10% Cumulative Convertible Preferred Stock for all prior periods and for the then current quarterly period have been paid or have been declared and a sum sufficient for payment has been set apart. This subparagraph shall not prohibit the declaration and payment of any dividend on Common Stock payable in Common Stock.
Preferences on Dissolution, Liquidation, or Winding Up
(d) On any voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, before any payment or other distribution, whether in cash, property or otherwise, shall be made to the holders of any other shares of the Corporation, the holders of the Series B 10% Cumulative Convertible Preferred Stock shall be entitled to receive for each share of Series B 10% Cumulative Convertible Preferred Stock they hold the sum of $1.00 plus an amount equal to all unpaid dividends accrued to the date established for payment of the distribution, and no more. For the purpose of this Subparagraph (d), dividends shall be deemed to accrue on a daily basis. The merger or consolidation of the Corporation into or with any other corporation, the merger of any other corporation into the Corporation, or the sale, lease, or conveyance of all or substantially all of the property or business of the Corporation shall not be deemed to be a dissolution, liquidation, or winding up for purposes of this Subparagraph (d). If, on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the assets of the Corporation are insufficient to permit full payment to the holders of the Series B 10% Cumulative Convertible Preferred Stock as provided in this Subparagraph, then the holders of the Series B 10% Cumulative Convertible Preferred Stock shall share ratably in any distribution of assets in proportion to the full amounts to which they would otherwise be respectively entitled.
Redemption
(e) The Corporation shall not redeem or repurchase any other class or series of Preferred Stock or Common Stock unless and until all shares of the Series B 10% Cumulative Convertible Preferred Stock have been redeemed. Commencing on and after the second anniversary of their issuance, shares of Series B 10% Cumulative Convertible Preferred Stock may be redeemed at any time or periodically, in whole or in part, at the option of the Corporation by the vote of its Board of Directors. The shares of the Series B 10% Cumulative Convertible Preferred Stock shall be redeemed on the following conditions:
Redemption Price
(1) The redemption price shall be $1.00 per share plus any accrued and unpaid dividends to the redemption date. For the purpose of this Subparagraph, dividends shall be deemed to accrue on a daily basis.
Partial Redemption
(2) If the Corporation redeems less than all of the outstanding shares of Series B 10% Cumulative Convertible Preferred Stock, the redemption may be pro rata, by lot or in any equitable manner that the Board of Directors in its discretion shall determine.
Notice
(3) Written notice of redemption shall be given to each holder of record of the shares of Series B 10% Cumulative Convertible Preferred Stock to be redeemed. The notice of redemption shall be given by first class mail to each holder's address as it shall appear on the stock books of the Corporation. In addition, the Corporation may give notice by any other method or in any other fashion, including by telephone, facsimile, email or the like, as the Board of Directors shall deem necessary, appropriate, convenient or reasonable under the circumstances. Such notice of redemption shall be given at least thirty (30) days and not more than sixty (60) days before the date fixed for redemption. Each notice shall specify the shares of stock to be redeemed, the redemption price, the date fixed for redemption, the place for payment of the redemption price and for surrender of the certificate representing the shares to be redeemed, and, if less than all of the shares of the holder are to be redeemed, the number of the holder's shares to be redeemed. No defect in the notice nor any defect in the mailing of it shall alone affect the validity of the proceedings for redemption except as to any holder to whom the Corporation has failed to mail the notice.
Deposit
(4) On or before the date fixed for the redemption of any shares of Series B 10% Cumulative Convertible Preferred Stock, the Corporation shall deposit sums sufficient to redeem the shares in a trust fund or escrow account for the benefit of the respective holders of the shares. This deposit shall be made with one or more banks or trust companies, each having capital and surplus of at least $5,000,000 and doing business in any city in the United States in which the Corporation or any of its subsidiaries shall have an office or conduct operations, with any bank, trust company or other person, firm or entity in the United States duly appointed and acting as transfer agent for any shares of the capital stock the Corporation or with any other person, firm or entity the Board of Directors reasonably believes capable of assisting the Corporation in effecting the redemption (singly, a "depositary"). The deposit shall be accompanied by irrevocable instructions authorizing the depositary to (a) deliver in the Corporation's name, place and stead the notice of redemption, or to complete the delivery if previously commenced, and (b) pay on or after the date fixed for redemption to the holders of the shares being redeemed the redemption price of the shares on surrender of the certificates representing those shares. From and after the time of the deposit those shares shall be considered redeemed. The holders who are entitled to payment for the redemption of their shares shall be evidenced by a list certified by the President or Vice President and the Secretary or an Assistant Secretary of the Corporation. Dividends on the shares being redeemed shall cease to accrue after the date of redemption. The deposit shall constitute full payment of the redemption price to the holders of the shares being redeemed. Those shares shall no longer be considered outstanding, and the holders of them shall cease to be shareholders with respect to those shares. The holders of the shares being redeemed shall have no rights with respect to the shares except the right to receive from the depositary (or its successor) payment of the redemption price of the shares, without interest, on surrender of the certificates representing those shares. Funds deposited that are not required for redemption of the shares because of the conversion of those shares prior to the date fixed for conversion shall be returned to the Corporation. Funds deposited and unclaimed at the end of six years shall be repaid to the Corporation, and any holder of shares of Series B 10% Cumulative Convertible Preferred Stock called for redemption shall subsequently look only to the Corporation for payment.
Certificates for Unredeemed Shares
(5) If less than all of the shares of Series B 10% Cumulative Convertible Preferred Stock are redeemed, the Corporation shall issue one or more new certificates representing the unredeemed shares.
No Sinking Fund
(f) The Corporation shall not be obligated to make payments into or to maintain any sinking fund for shares of the Series B 10% Cumulative Convertible Preferred Stock.
Conversion Rights
(g) At any time after issuance and prior to the date fixed for their redemption, the holder of any shares of Series B 10% Cumulative Convertible Preferred Stock may convert the shares Series B 10% Cumulative Convertible Preferred Stock into shares of the Corporation's common stock, Shares of Series B 10% Cumulative Convertible Preferred Stock shall be convertible on the following terms:
Conversion Ratio and Conversion Price
(1) On exercise of the option to convert, the holder shall be entitled to receive 1,333 shares of Common Stock for each share of Series B 10% Cumulative Convertible Preferred Stock converted (the "Conversion Ratio"). The Conversion Ratio is intended to be the equivalent of a conversion exercise price of $.75 per share (the "Conversion Price")
Exercise of Conversion Rights
(2) The conversion rights may be exercised at any time from and after the date of issuance and prior to the close of business on the day fixed for redemption. The holder of the convertible shares shall exercise the option to convert by delivering a written notice electing to convert the shares to common shares and surrendering the share certificate or certificates for the shares of Series B 10% Cumulative Convertible Preferred Stock to be converted to the Corporation's office, the depositary or the office of the transfer agent for shares of the Corporation's common stock. The certificates surrendered shall be duly endorsed or assigned to the Corporation. Conversion of the shares shall be deemed effective immediately before the close of business on the date on which the shares are surrendered, which shall be the conversion date. On the conversion date, or as soon as practicable after that date, the Corporation shall deliver to the holder of the shares surrendered, or to another person designated by the holder in writing, a certificate for the number of full shares of Common Stock deliverable on the conversion as provided herein plus a certificate for any fractional share of Common Stock that is deliverable or an amount of cash instead of the fractional share as provided below.
Antidilution Provision
(3) The number of shares of Common Stock to be issued as provided in this Subparagraph shall be adjusted by appropriate amendment to account for any and all increases or reductions in the number of outstanding shares of Common Stock that may have accrued since the date of the first issuance of shares of the Series B 10% Cumulative Convertible Preferred Stock because of a split, share dividend, combination, reclassification, merger, consolidation, other capital change or reorganization or other transaction affecting the number of outstanding common shares. This adjustment shall be made to fairly and equitably preserve as far as reasonably possible the original conversion rights of the Series B 10% Cumulative Convertible Preferred Stock. If an adjustment is required, no notice of redemption shall be given until the amendment and adjustment has been accomplished. On payment of a dividend, any adjustment made pursuant to this subparagraph shall become effective immediately after the opening of business on the day following the record date for the determination of shareholders entitled to receive the dividend. In the case of a subdivision, combination, reclassification or other transaction an adjustment made pursuant to this subparagraph shall become effective immediately after the opening of business on the day following the day on which the respective action becomes effective. Any adjustment required by this subparagraph shall be made so that the holder of any share of Series B 10% Cumulative Convertible Preferred Stock subsequently surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation that the holder would have owned or been entitled to receive after occurrence of the corporate action if the share of Series B 10% Cumulative Convertible Preferred Stock had been converted immediately before the occurrence of the corporate action.
Fractional Shares
(4) The Corporation may, but shall not be required to, deliver fractional shares of Common Stock on conversion of shares of the Series B 10% Cumulative Convertible Preferred Stock. Instead of any fractional share of Common Stock that would otherwise be deliverable on conversion, the Corporation may pay an amount in cash equal to the current market value of the fractional share, computed on the basis of the market price on the last business day before the conversion date, as defined above. For purposes of this Subparagraph, the "market price" on any business day shall be the closing bid price for each share of Common Stock in the over-the-counter market as furnished by a member of the National Association of Securities Dealers selected from time to time by the Corporation for that purpose or, if the shares of Common Stock are listed or admitted to trading on any national securities exchange, the reported closing price for each share of Common Stock on that exchange.
Reservation of Common Shares for Conversion
(5) The Corporation shall at all times reserve and keep available from its authorized but unissued common shares solely for effecting conversion of its Series B 10% Cumulative Convertible Preferred Stock the full number of shares of Common Stock deliverable on conversion of all Series B 10% Cumulative Convertible Preferred Stock.
Merger, or Sale of Corporate Assets
(6) On any capital reorganization, reclassification of the shares, consolidation, merger, or sale or conveyance of all or substantially all of the assets of the Corporation to another corporation, each share of Series B 10% Cumulative Convertible Preferred Stock shall be convertible into the number of shares or other securities or property to which the number of shares of Common Stock that would have been deliverable on conversion of the shares of Series B 10% Cumulative Convertible Preferred Stock immediately before the corporate action, would be entitled. Appropriate adjustment, as determined by the Board of Directors, shall be made with respect to the subsequent rights and interests of the holders of the shares of Series B 10% Cumulative Convertible Preferred Stock so that all provisions of this Subparagraph shall remain applicable as much as is practicable in relation to any shares or other property subsequently deliverable on conversion of the shares of Series B 10% Cumulative Convertible Preferred Stock.
Further Adjustments to the Conversion Ratio
(7) The Conversion Ratio shall be further adjusted periodically as follows: If any shares of Series B 10% Cumulative Convertible Preferred Stock are outstanding and the Corporation issues securities (including evidences of indebtedness) or rights, options or warrants (excluding up to a maximum of 5% of the Corporation's outstanding shares if issued under the Corporation's Employee Stock Purchase Plan or 1999 Stock Incentive Plan) that entitle the holder(s) thereof to convert into, exchange for or purchase shares of Common Stock at a price that is less than the Conversion Price in effect on the date of issuance of such securities, rights, options or warrants, the Conversion Ratio in effect shall be adjusted as of the day of such issuance as follows. The Conversion Ratio in effect on the date of issuance of such securities, rights, options or warrants shall be multiplied by a fraction the numerator of which shall be the product of multiplying (i) the sum of the number of shares of Common Stock outstanding on that issuance date and the number of shares issuable on exercise of all then outstanding shares of Series B 10% Cumulative Convertible Preferred Stock by (ii) the Conversion Price in effect on that date and the denominator of which shall be the sum of (i) multiplying the number of shares of Common Stock outstanding on that issuance date by the Conversion Price in effect on that date and (ii) multiplying the number of shares issuable on exercise of the securities, rights, options or warrants so issued by the conversion, exchange or purchase price applicable to such securities, rights, options or warrants. To the extent that the securities, rights, options or warrants are not converted, exchanged or exercised before they expire, the Conversion Ratio shall be readjusted as of the close of business on the applicable expiration date to the Conversion Ratio that would then be in effect based on the number of shares of Common Stock actually delivered on conversion, exchange or exercise of the securities, rights, options or warrants. Anything herein to the contrary notwithstanding, the Board of Directors of the Corporation shall be authorized to make such interpretations of or adjustments to the foregoing as the Board of Directors shall in good faith determine to be necessary or desirable to give effect to the foregoing.
No Adjustment When Same Action Taken for Series B 10% Cumulative Convertible Preferred Stock
(8) No adjustment in the Conversion Ratio for shares of
Series B 10% Cumulative Convertible Preferred Stock shall be
made if, at the same time that the Corporation takes an action
that would otherwise require adjustment under this subparagraph
(g), the Corporation takes the same action with respect to the
shares of Series B 10% Cumulative Convertible Preferred Stock
in the same proportion as if each share of Series B 10%
Cumulative Convertible Preferred Stock had been converted
(i) at the then applicable Conversion Ratio immediately before
the date of such action or (ii) immediately before the
occurrence of the subdivision, combination, or
reclassification.
Adjustments Only as Provided
(9) Except as otherwise provided herein, no adjustment in the Conversion Ratio shall be made because of the issuance of shares of Common Stock, the issuance of any securities convertible into or exchangeable for shares of Common Stock, the issuance of any securities carrying the right to purchase any shares of Common Stock or securities convertible into or exchangeable for those shares, or any other reason.
Minimum Adjustment
(10) No adjustment in the Conversion Ratio shall be required unless the adjustment requires an increase or decrease of at least one percent (1%) of the Conversion Ratio. However, any adjustments that are not required to be made because of the preceding sentence shall be carried forward and taken into account in any subsequent adjustment. All calculations relating to fractional shares made pursuant to this subparagraph (g) shall be made to the nearest hundredth of a share.
Statements and Notification of Adjustments
(11) As soon as possible after the Conversion Ratio is adjusted, the Corporation shall maintain at its office and shall file with its transfer agent for shares of its Common Stock a statement, signed by the President and the Secretary or Assistant Secretary of the Corporation, detailing the facts requiring the adjustment and specifying the Conversion Ratio after the adjustment. The transfer agent shall be under no duty or responsibility concerning the statement except to exhibit it to any holder of shares of Series B 10% Cumulative Convertible Preferred Stock desiring to inspect it. In addition, for adjustments made while any shares of Series B 10% Cumulative Convertible Preferred Stock are outstanding, the Corporation shall state that an adjustment has been made and shall give the adjusted Conversion Ratio in the next annual report to the shareholders. The annual report shall be mailed to all holders of record of Series B 10% Cumulative Convertible Preferred Stock on the record date used for mailing the annual report to holders of shares of Common Stock.
Notice of Corporate Action and Record Date
(12) In addition to any other notice required herein, the
Corporation shall cause to be mailed to the transfer agent for
shares of the Common Stock and to the holders of record of the
outstanding shares of Series B 10% Cumulative Convertible
Preferred Stock, a notice of the taking of a record if the
Corporation takes a record of the holders of its Common Stock
for the following purposes: (i) to entitle them to receive a
dividend or any other distribution payable other than in cash
out of current or retained earnings; (ii) to entitle them to
subscribe for or purchase shares of any class or receive any
other rights; (iii) to effect any merger, consolidation, or
reorganization of the Corporation; (iv) to reclassify its
shares other than by subdivision, combination, or alteration of
the par value of the shares of Common Stock outstanding; (v) to
transfer all or substantially all of its assets; or (vi) to
take any other action that would require an adjustment to the
conversion ration under this subparagraph (g). The notice
shall state the date on which the record is to be taken, the
purpose for which the record is taken, the date on which the
respective corporate action is to be effective, and fix the
date by which holders of record of the shares of Common Stock
shall be entitled to exchange their shares for securities or
other property deliverable on the occurrence of the respective
corporate action. The notice shall be mailed at least thirty
(30) days before any of the dates that are required to be
specified in the notice. The Corporation shall additionally
mail a notice of all shareholder meetings and any accompanying
proxy statement to the holders of Series B 10% Cumulative
Convertible Preferred Stock at the same time the notice and
proxy statement is mailed to the holders of Common Stock. If
any action is taken by means of consent, notice of that action
by consent shall be sent to the holders of Series B 10%
Cumulative Convertible Preferred Stock at least thirty (30)
days before the effective date of the consent. Failure to give
or receive any notice required by this subparagraph, or any
defect in a notice, shall not affect the legality or validity
of the corporate action. However, the failure or defect shall
not affect the rights of the holders of Series B 10% Cumulative
Convertible Preferred Stock to obtain an appropriate remedy to
account for the failure or defect.
Voting Rights
(h) The holders of Series B 10% Cumulative Convertible Preferred Stock shall have no voting rights except as otherwise may be required by the New Jersey Business Corporation Act.
One Vote and Class Voting
(i) On any matter on which the holders of the shares of the Series B 10% Cumulative Convertible Preferred Stock shall be entitled to vote, they shall be entitled to one vote for each share held. The holders of the shares of the Series B 10% Cumulative Convertible Preferred Stock shall vote only as a separate class; their votes shall not be counted together with those of the holders of any other class or series of shares of the Corporation.
And that the Board of Directors on June 26, 2008 adopted a further resolution establishing a new series of preferred stock within the Corporation's Preferred Stock, such series to be designated Series C 10% Cumulative Convertible Preferred Stock, to consist of up to 7,000,000 shares of stock, and to have the following designations, preferences, rights and qualifications, limitations and restrictions:
Series C 10% Cumulative Convertible Preferred Stock Statement of Designations, Preferences, Rights and Qualifications, Limitations and Restrictions
A series of cumulative convertible preferred shares designated "Series C 10% Cumulative Convertible Preferred Stock" is established. The Series C 10% Cumulative Convertible Preferred Stock shall have a par value of $.001 per share. When issued for a price equal to or in excess of that amount, the shares of Series C 10% Cumulative Convertible Preferred Stock shall be fully paid and nonassessable. The Series C 10% Cumulative Convertible Preferred Stock shall consist of up to 7,000,000 preferred shares, which the Board of Directors may increase only in connection with a stock split or decrease from time to time but not below the number of shares of Series C 10% Cumulative Convertible Preferred Stock then outstanding. On redemption, conversion, or other reacquisition of any of the Series C 10% Cumulative Convertible Preferred Stock, the reacquired shares shall be cancelled and shall become part of the authorized and unissued preferred stock but shall not be authorized and unissued Series C 10% Cumulative Convertible Preferred Stock. The rights, preferences, designations and limitations of the Series C 10% Cumulative Convertible Preferred Stock are as follows:
Priority
(a) The Series C 10% Cumulative Convertible Preferred Stock shall be senior to any other class or series of preferred shares in respect of (1) payment of dividends; (2) payment on dissolution, liquidation or winding up and (3) redemption, except for shares of the Series B 10% Cumulative Convertible Preferred Stock.
Dividend Rate and Payment Dates
(b) Holders of shares of Series C 10% Cumulative Convertible Preferred Stock shall be entitled to receive cash dividends when, as and if declared by the Board of Directors at the rate of ten percent (10%) per annum of the amount paid for each share, and no more. Dividends shall be payable quarterly on the fifth day of October, January, April and July in each year for the immediately preceding quarterly fiscal period. The first dividend shall be payable on October 5, 2008. Notwithstanding the foregoing and subject to the further requirement that no more than an aggregate of 480,000 shares of common stock may be issued for this purpose, holders of shares of the Series C 10% Cumulative Convertible Preferred Stock may upon notice to the Corporation elect to receive shares of common stock in lieu of the payment of cash dividends as set forth herein. If a holder of shares of Series C 10% Cumulative Convertible Preferred Stock makes such an election, the shares deliverable in lieu of cash dividends will be issued at a price that equals $2.50 per share.
Priority and Cumulative Rights
(c) Dividends on the Series C 10% Cumulative Convertible Preferred Stock shall be cumulative from the date of issuance; provided, however, that accumulations of dividends shall not bear interest. In no event, so long as any shares of the Series C 10% Cumulative Convertible Preferred Stock are outstanding, shall the Corporation pay or declare any cash or property dividends, distribute any of its assets, or purchase or acquire for value any shares of the Corporation unless and until all dividends on the Series C 10% Cumulative Convertible Preferred Stock for all prior periods and for the then current quarterly period have been paid or have been declared and a sum sufficient for payment has been set apart. This subparagraph shall not prohibit the declaration and payment of any dividend on Common Stock payable in Common Stock.
Preferences on Dissolution, Liquidation, or Winding Up
(d) On any voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, before any payment or other distribution, whether in cash, property or otherwise, shall be made to the holders of any other shares of the Corporation, the holders of the Series C 10% Cumulative Convertible Preferred Stock shall be entitled to receive for each share of Series C 10% Cumulative Convertible Preferred Stock they hold the sum of $1.00 plus an amount equal to all unpaid dividends accrued to the date established for payment of the distribution, and no more. For the purpose of this Subparagraph (d), dividends shall be deemed to accrue on a daily basis. The merger or consolidation of the Corporation into or with any other corporation, the merger of any other corporation into the Corporation, or the sale, lease, or conveyance of all or substantially all of the property or business of the Corporation shall not be deemed to be a dissolution, liquidation, or winding up for purposes of this Subparagraph (d). If, on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the assets of the Corporation are insufficient to permit full payment to the holders of the Series C 10% Cumulative Convertible Preferred Stock as provided in this Subparagraph, then the holders of the Series C 10% Cumulative Convertible Preferred Stock shall share ratably in any distribution of assets in proportion to the full amounts to which they would otherwise be respectively entitled.
Redemption
(e) Except for shares of the Series B 10% Cumulative Convertible Preferred Stock, the Corporation shall not redeem or repurchase any other class or series of Preferred Stock or Common Stock unless and until all shares of the Series C 10% Cumulative Convertible Preferred Stock have been redeemed. Commencing on and after the second anniversary of their issuance, shares of Series C 10% Cumulative Convertible Preferred Stock may be redeemed at any time or periodically, in whole or in part, at the option of the Corporation by the vote of its Board of Directors. The shares of the Series C 10% Cumulative Convertible Preferred Stock shall be redeemed on the following conditions:
Redemption Price
(1) The redemption price shall be $1.05 per share plus any accrued and unpaid dividends to the redemption date. For the purpose of this Subparagraph, dividends shall be deemed to accrue on a daily basis.
Partial Redemption
(2) If the Corporation redeems less than all of the outstanding shares of Series C 10% Cumulative Convertible Preferred Stock, the redemption may be pro rata, by lot or in any equitable manner that the Board of Directors in its discretion shall determine.
Notice
(3) Written notice of redemption shall be given to each holder of record of the shares of Series C 10% Cumulative Convertible Preferred Stock to be redeemed. The notice of redemption shall be given by first class mail to each holder's address as it shall appear on the stock books of the Corporation. In addition, the Corporation may give notice by any other method or in any other fashion, including by telephone, facsimile, email or the like, as the Board of Directors shall deem necessary, appropriate, convenient or reasonable under the circumstances. Such notice of redemption shall be given at least thirty (30) days and not more than sixty (60) days before the date fixed for redemption. Each notice shall specify the shares of stock to be redeemed, the redemption price, the date fixed for redemption, the place for payment of the redemption price and for surrender of the certificate representing the shares to be redeemed, and, if less than all of the shares of the holder are to be redeemed, the number of the holder's shares to be redeemed. No defect in the notice nor any defect in the mailing of it shall alone affect the validity of the proceedings for redemption except as to any holder to whom the Corporation has failed to mail the notice.
Deposit
(4) On or before the date fixed for the redemption of any shares of Series C 10% Cumulative Convertible Preferred Stock, the Corporation shall deposit sums sufficient to redeem the shares in a trust fund or escrow account for the benefit of the respective holders of the shares. This deposit shall be made with one or more banks or trust companies, each having capital and surplus of at least $5,000,000 and doing business in any city in the United States in which the Corporation or any of its subsidiaries shall have an office or conduct operations, with any bank, trust company or other person, firm or entity in the United States duly appointed and acting as transfer agent for any shares of the capital stock the Corporation or with any other person, firm or entity the Board of Directors reasonably believes capable of assisting the Corporation in effecting the redemption (singly, a "depositary"). The deposit shall be accompanied by irrevocable instructions authorizing the depositary to (a) deliver in the Corporation's name, place and stead the notice of redemption, or to complete the delivery if previously commenced, and (b) pay on or after the date fixed for redemption to the holders of the shares being redeemed the redemption price of the shares on surrender of the certificates representing those shares. From and after the time of the deposit those shares shall be considered redeemed. The holders who are entitled to payment for the redemption of their shares shall be evidenced by a list certified by the President or Vice President and the Secretary or an Assistant Secretary of the Corporation. Dividends on the shares being redeemed shall cease to accrue after the date of redemption. The deposit shall constitute full payment of the redemption price to the holders of the shares being redeemed. Those shares shall no longer be considered outstanding, and the holders of them shall cease to be shareholders with respect to those shares. The holders of the shares being redeemed shall have no rights with respect to the shares except the right to receive from the depositary its successor) payment of the redemption price of the shares, without interest, on surrender of the certificates representing those shares. Funds deposited that are not required for redemption of the shares because of the conversion of those shares prior to the date fixed for conversion shall be returned to the Corporation. Funds deposited and unclaimed at the end of six years shall be repaid to the Corporation, and any holder of shares of Series C 10% Cumulative Convertible Preferred Stock called for redemption shall subsequently look only to the Corporation for payment.
Certificates for Unredeemed Shares
(5) If less than all of the shares of Series C 10% Cumulative Convertible Preferred Stock are redeemed, the Corporation shall issue one or more new certificates representing the unredeemed shares.
No Sinking Fund
(f) The Corporation shall not be obligated to make payments into or to maintain any sinking fund for shares of the Series C 10% Cumulative Convertible Preferred Stock.
Conversion Rights
(g) At any time after issuance and prior to the date fixed for their redemption, the holder of any shares of Series C 10% Cumulative Convertible Preferred Stock may convert the shares Series C 10% Cumulative Convertible Preferred Stock into shares of the Corporation's common stock. Shares of Series C 10% Cumulative Convertible Preferred Stock shall be convertible on the following terms:
Conversion Ratio and Conversion Price
(1) On exercise of the option to convert, the holder shall be entitled to receive 0.4 shares of Common Stock for each share of Series C 10% Cumulative Convertible Preferred Stock converted (the "Conversion Ratio"). The Conversion Ratio is intended to be the equivalent of a conversion exercise price of $2.50 per share (the "Conversion Price")
Exercise of Conversion Rights
(2) The conversion rights may be exercised at any time from and after the date of issuance and prior to the close of business on the day fixed for redemption. The holder of the convertible shares shall exercise the option to convert by delivering a written notice electing to convert the shares to common shares and surrendering the share certificate or certificates for the shares of Series C 10% Cumulative Convertible Preferred Stock to be converted to the Corporation's office, the depositary or the office of the transfer agent for shares of the Corporation's common stock. The certificates surrendered shall be duly endorsed or assigned to the Corporation. Conversion of the shares shall be deemed effective immediately before the close of business on the date on which the shares are surrendered, which shall be the conversion date. On the conversion date, or as soon as practicable after that date, the Corporation shall deliver to the holder of the shares surrendered, or to another person designated by the holder in writing, a certificate for the number of full shares of Common Stock deliverable on the conversion as provided herein plus a certificate for any fractional share of Common Stock that is deliverable or an amount of cash instead of the fractional share as provided below.
Mandatory Conversion
(3) If authorized by the Corporation's Board of Directors, commencing on and after the second anniversary of their issuance and subject to the further requirement that shares of the Corporation's common stock must have traded at a per share price of $4.00 or more for seven (7) consecutive business days, shares of Series C 10% Cumulative Convertible Preferred Stock shall automatically be converted into shares of the Corporation's common stock on the same terms set forth above.
Antidilution Provision
(4) The number of shares of Common Stock to be issued as provided in this Subparagraph shall be adjusted by appropriate amendment to account for any and all increases or reductions in the number of outstanding shares of Common Stock that may have accrued since the date of the first issuance of shares of the Series C 10% Cumulative Convertible Preferred Stock because of a split, share dividend, combination, reclassification, merger, consolidation, other capital change or reorganization or other transaction affecting the number of outstanding common shares. This adjustment shall be made to fairly and equitably preserve as far as reasonably possible the original conversion rights of the Series C 10% Cumulative Convertible Preferred Stock. If an adjustment is required, no notice of redemption shall be given until the amendment and adjustment has been accomplished. On payment of a dividend, any adjustment made pursuant to this subparagraph shall become effective immediately after the opening of business on the day following the record date for the determination of shareholders entitled to receive the dividend. In the case of a subdivision, combination, reclassification or other transaction an adjustment made pursuant to this subparagraph shall become effective immediately after the opening of business on the day following the day on which the respective action becomes effective. Any adjustment required by this subparagraph shall be made so that the holder of any share of Series C 10% Cumulative Convertible Preferred Stock subsequently surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation that the holder would have owned or been entitled to receive after occurrence of the corporate action if the share of Series C 10% Cumulative Convertible Preferred Stock had been converted immediately before the occurrence of the corporate action.
Fractional Shares
(5) The Corporation may, but shall not be required to, deliver fractional shares of Common Stock on conversion of shares of the Series C 10% Cumulative Convertible Preferred Stock. Instead of any fractional share of Common Stock that would otherwise be deliverable on conversion, the Corporation may pay an amount in cash equal to the current market value of the fractional share, computed on the basis of the market price on the last business day before the conversion date, as defined above. For purposes of this Subparagraph, the "market price" on any business day shall be the closing bid price for each share of Common Stock in the over-the-counter market as furnished by a member of the National Association of Securities Dealers selected from time to time by the Corporation for that purpose or, if the shares of Common Stock are listed or admitted to trading on any national securities exchange, the reported closing price for each share of Common Stock on that exchange.
Reservation of Common Shares for Conversion
(6) The Corporation shall at all times reserve and keep available from its authorized but unissued common shares solely for effecting conversion of its Series C 10% Cumulative Convertible Preferred Stock the full number of shares of Common Stock deliverable on conversion of all Series C 10% Cumulative Convertible Preferred Stock.
Merger, or Sale of Corporate Assets
(7) On any capital reorganization, reclassification of the shares, consolidation, merger, or sale or conveyance of all or substantially all of the assets of the Corporation to another corporation, each share of Series C 10% Cumulative Convertible Preferred Stock shall be convertible into the number of shares or other securities or property to which the number of shares of Common Stock that would have been deliverable on conversion of the shares of Series C 10% Cumulative Convertible Preferred Stock immediately before the corporate action, would be entitled. Appropriate adjustment, as determined by the Board of Directors, shall be made with respect to the subsequent rights and interests of the holders of the shares of Series C 10% Cumulative Convertible Preferred Stock so that all provisions of this Subparagraph shall remain applicable as much as is practicable in relation to any shares or other property subsequently deliverable on conversion of the shares of Series C 10% Cumulative Convertible Preferred Stock.
Further Adjustments to the Conversion Ratio
(8) The Conversion Ratio shall be further adjusted periodically as follows: If any shares of Series C 10% Cumulative Convertible Preferred Stock are outstanding and the Corporation issues securities (including evidences of indebtedness) or rights, options or warrants (excluding up to a maximum of 5% of the Corporation's outstanding shares if issued under the Corporation's Employee Stock Purchase Plan or 1999 Stock Incentive Plan) that entitle the holder(s) thereof to convert into, exchange for or purchase shares of Common Stock at a price that is less than the Conversion Price in effect on the date of issuance of such securities, rights, options or warrants, the Conversion Ratio in effect shall be adjusted as of the day of such issuance as follows. The Conversion Ratio in effect on the date of issuance of such securities, rights, options or warrants shall be multiplied by a fraction the numerator of which shall be the product of multiplying (i) the sum of the number of shares of Common Stock outstanding on that issuance date and the number of shares issuable on exercise of all then outstanding shares of Series C 10% Cumulative Convertible Preferred Stock by (ii) the Conversion Price in effect on that date and the denominator of which shall be the sum of (i) multiplying the number of shares of Common Stock outstanding on that issuance date by the Conversion Price in effect on that date and (ii) multiplying the number of shares issuable on exercise of the securities, rights, options or warrants so issued by the conversion, exchange or purchase price applicable to such securities, rights, options or warrants. To the extent that the securities, rights, options or warrants are not converted, exchanged or exercised before they expire, the Conversion Ratio shall be readjusted as of the close of business on the applicable expiration date to the Conversion Ratio that would then be in effect based on the number of shares of Common Stock actually delivered on conversion, exchange or exercise of the securities, rights, options or warrants. Anything herein to the contrary notwithstanding, the Board of Directors of the Corporation shall be authorized to make such interpretations of or adjustments to the foregoing as the Board of Directors shall in good faith determine to be necessary or desirable to give effect to the foregoing.
No Adjustment When Same Action Taken for Series C 10% Cumulative Convertible Preferred Stock
(9) No adjustment in the Conversion Ratio for shares of
Series C 10% Cumulative Convertible Preferred Stock shall be
made if, at the same time that the Corporation takes an action
that would otherwise require adjustment under this subparagraph
(g), the Corporation takes the same action with respect to the
shares of Series C 10% Cumulative Convertible Preferred Stock
in the same proportion as if each share of Series C 10%
Cumulative Convertible Preferred Stock had been converted
(i) at the then applicable Conversion Ratio immediately before
the date of such action or (ii) immediately before the
occurrence of the subdivision, combination, or
reclassification.
Adjustments Only as Provided
(10) Except as otherwise provided herein, no adjustment in the Conversion Ratio shall be made because of the issuance of shares of Common Stock, the issuance of any securities convertible into or exchangeable for shares of Common Stock, the issuance of any securities carrying the right to purchase any shares of Common Stock or securities convertible into or exchangeable for those shares, or any other reason.
Minimum Adjustment
(11) No adjustment in the Conversion Ratio shall be required unless the adjustment requires an increase or decrease of at least one percent (1%) of the Conversion Ratio, However, any adjustments that are not required to be made because of the preceding sentence shall be carried forward and taken into account in any subsequent adjustment. All calculations relating to fractional shares made pursuant to this subparagraph (g) shall be made to the nearest hundredth of a share.
Statements and Notification of Adjustments
(12) As soon as possible after the Conversion Ratio is adjusted, the Corporation shall maintain at its office and shall file with its transfer agent for shares of its Common Stock a statement, signed by the President and the Secretary or Assistant Secretary of the Corporation, detailing the facts requiring the adjustment and specifying the Conversion Ratio after the adjustment. The transfer agent shall be under no duty or responsibility concerning the statement except to exhibit it to any holder of shares of Series C 10% Cumulative Convertible Preferred Stock desiring to inspect it. In addition, for adjustments made while any shares of Series C 10% Cumulative Convertible Preferred Stock are outstanding, the Corporation shall state that an adjustment has been made and shall give the adjusted Conversion Ratio in the next annual report to the shareholders. The annual report shall be mailed to all holders of record of Series C 10% Cumulative Convertible Preferred Stock on the record date used for mailing the annual report to holders of shares of Common Stock.
Notice of Corporate Action and Record Date
(13) In addition to any other notice required herein, the
Corporation shall cause to be mailed to the transfer agent for
shares of the Common Stock and to the holders of record of the
outstanding shares of Series C 10% Cumulative Convertible
Preferred Stock, a notice of the taking of a record if the
Corporation takes a record of the holders of its Common Stock
for the following purposes: (i) to entitle them to receive a
dividend or any other distribution payable other than in cash
out of current or retained earnings; (ii) to entitle them to
subscribe for or purchase shares of any class or receive any
other rights; (iii) to effect any merger, consolidation, or
reorganization of the Corporation; (iv) to reclassify its
shares other than by subdivision, combination, or alteration of
the par value of the shares of Common Stock outstanding; (v) to
transfer all or substantially all of its assets; or (vi) to
take any other action that would require an adjustment to the
conversion ration under this subparagraph (g). The notice
shall state the date on which the record is to be taken, the
purpose for which the record is taken, the date on which the
respective corporate action is to be effective, and fix the
date by which holders of record of the shares of Common Stock
shall be entitled to exchange their shares for securities or
other property deliverable on the occurrence of the respective
corporate action. The notice shall be mailed at least thirty
(30) days before any of the dates that are required to be
specified in the notice. The Corporation shall additionally
mail a notice of all shareholder meetings and any accompanying
proxy statement to the holders of Series C 10% Cumulative
Convertible Preferred Stock at the same time the notice and
proxy statement is mailed to the holders of Common Stock, If
any action is taken by means of consent, notice of that action
by consent shall be sent to the holders of Series C 10%
Cumulative Convertible Preferred Stock at least thirty (30)
days before the effective date of the consent. Failure to give
or receive any notice required by this subparagraph, or any
defect in a notice, shall not affect the legality or validity
of the corporate action. However, the failure or defect shall
not affect the rights of the holders of Series C 10% Cumulative
Convertible Preferred Stock to obtain an appropriate remedy to
account for the failure or defect.
Voting Rights
(h) The holders of Series C 10% Cumulative Convertible Preferred Stock shall have no voting rights except as otherwise may be required by the Delaware General Corporation Law.
One Vote and Class Voting
(i) On any matter on which the holders of the shares of the Series C 10% Cumulative Convertible Preferred Stock shall be entitled to vote, they shall be entitled to one vote for each share held.
The holders of the shares of the Series C 10% Cumulative Convertible Preferred Stock shall vote only as a separate class; their votes shall not be counted together with those of the holders of any other class or series of shares of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed this 27th day of March, 2009.
DYNASIL CORPORATION OF AMERICA
By: /s/ Gerald Chalphin
Gerald Chalphin
Assistant Secretary
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