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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
December 31, 1996
(Date of earliest event reported)
UNIDYNE CORPORATION
(Exact name of small business issuer
as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-10372 23-2154902
(State or other jurisdiction (Commission File No.) (IRS Employer Identification No.)
of incorporation or organization)
</TABLE>
118 PICKERING WAY, SUITE 104, EXTON, PENNSYLVANIA 19341
(Address of principal executive offices)
(610) 363-8237
(Issuer's telephone number)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 31, 1996, United Sales Corporation ("United"), a wholly
owned subsidiary of Registrant, merged with Maxwell Dynamometer Systems, Inc.,
a Delaware corporation under common control with Registrant and in which
Registrant held nine percent (9%) of the outstanding common stock, par value
$1.00 per share (the "Maxwell Common Stock"). As a result, the business of
Maxwell is now wholly owned by United, the surviving corporation which changed
its name to Maxwell Dynamometer Systems, Inc. ("Maxwell"). Pursuant to the
terms of the Agreement and Plan of Merger, the Maxwell Common Stock not already
owned by Registrant was converted into 192,332 shares of Registrant's newly
issued common stock, par value $.001 per share and 500,000 shares of
Registrant's newly issued Class A Convertible Preferred Stock, par value $10.00
per share. The Agreement and Plan of Merger gives Registrant a first right of
refusal to repurchase the Class A Convertible Preferred Stock, in the event
that the original holder thereof receives a bona fide offer to purchase any or
all of that stock.
Maxwell is engaged in the business of manufacturing and installing
customized dynamometer systems, particularly large dynamometer systems used in
the testing of trucks and buses. In addition, Maxwell is the owner of certain
technology utilized by Registrant in the dynamometer systems which Registrant
manufactures for use in automobile emissions testing. Maxwell is located in
Exton, Pennsylvania, in a leased facility consisting of approximately 3,500
square feet of office space and approximately 7,000 square feet of
manufacturing space.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
It is impracticable to provide financial statements for the business
operation acquired by Registrant as of the date hereof. Such financial
statement will be filed as an amendment to this Form 8-K.
EXHIBIT NO.
- -----------
10.1* Agreement and Plan of Merger, dated December 31, 1996, among
Maxwell Dynamometer Systems, Inc., UNIDYNE Corporation and
United Sales Corporation.
10.2* Certificate of Designation for Class A Convertible Preferred
Stock.
- ----------
* Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 15, 1997 /s/ C. Eugene Hutcheson
------------------------
C. Eugene Hutcheson
Chairman, Chief Executive Officer
and President
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EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 31, 1996 (the
"Merger Agreement") by and between Maxwell Dynamometer Systems, Inc. (the
"Company"), a Delaware corporation, UNIDYNE Corporation ("Parent"), a Delaware
corporation, and United Sales Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Mergerco"). Mergerco and the Company are
hereinafter sometimes collectively referred to as the "Constituent
Corporations."
WHEREAS, the Board of Directors of each of Parent, Mergerco and the
Company has approved the merger of the Company with Mergerco (the "Merger")
pursuant to the terms and subject to the conditions of this Merger Agreement
whereby (i) each of the issued and outstanding shares of common stock, $1.00
par value per share, of the Company ("Company Common Shares"), other than
Company Common Shares held by Parent, and shares held in the treasury of the
Company, if any, will be converted into the right to receive the Merger
Consideration set forth in Section 5 hereof, and (ii) the Company will become a
wholly owned subsidiary of Parent; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
and Section 368(a)(2)(D) of the Internal Revenue Code, as amended (the "Code").
NOW THEREFORE, the parties agree as follows:
THE MERGER
Section 1. The Merger. Upon the terms and subject to the conditions
hereof, at the Effective Time (as hereinafter defined), the Company shall be
merged with and into Mergerco in accordance with Section 251 of the General
Corporation Law of Delaware and the separate existence of the Company shall
thereupon cease, and Mergerco, as the surviving corporation in the Merger (the
"Surviving Corporation"), shall continue its existence under the laws of the
State of Delaware under the name "Maxwell Dynamometer Systems, Inc."
Section 2. Certificate of Incorporation. The Certificate of
Incorporation of the Company as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation,
until such Certificate of Incorporation is further changed or amended as
provided therein or by law.
Section 3. By-Laws. The By-Laws of the Company as in effect
immediately prior to the Effective Time shall be the By-Laws of the Surviving
Company until thereafter changed or amended as provided therein or as otherwise
permitted or required by law or by the Surviving Corporation's Certificate of
Incorporation.
Section 4. Board of Director and Officers. The initial directors of
the Surviving Corporation shall be C. Eugene Hutcheson, Charlotte E. Doremus,
David M. Barrett and Frank
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B. Holze and they shall serve until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and By-Laws of the Surviving Corporation or as otherwise provided
by law. The officers of the Surviving Corporation at the Effective Time shall
be the officers of the Surviving Corporation and they shall serve until their
successors are duly elected or appointed and qualify in the manner provided in
the Certificate of Incorporation and By-Laws of the Surviving Corporation or as
otherwise provided by law.
Section 5. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
a. Each Company Common Share then owned by Parent or
Mergerco or by any other direct or indirect subsidiary of Parent and shares
held in the treasury of the Company or by any direct or indirect subsidiary of
the Company (each of the foregoing shares being "Excluded Shares") shall, by
virtue of the Merger, and without any action on the part of the Company or the
holder thereof, be cancelled.
b. Each then remaining issued and outstanding Company Common
Share not cancelled pursuant to Section 5.a and then owned by KEYSTONE VENTURE
IV, L.P., a Pennsylvania limited partnership, shall be, by virtue of the
Merger, and without any action on the part of the holder thereof, cancelled and
converted solely into the right to receive, upon the surrender of the
certificate formerly representing such Company Common Share five and
seventy-seven hundredths (5.77) fully paid and nonassessable shares (a total of
192,332 shares) of common stock of Parent, $.001 par value per share ("Parent
Common Stock").
c. Each then remaining issued and outstanding Company Common
Share not cancelled pursuant to Section 5.a and then owned by Capital Idea,
Inc., a Colorado corporation ("Capital Idea"), shall be, by virtue of the
Merger, and without any action on the part of the holder thereof, cancelled and
converted solely into the right to receive, upon the surrender of the
certificate formerly representing such Company Common Share 1.85185 shares (a
total of 500,000 shares) of the Parent's Class A Convertible Preferred Stock.
d. The shares of Parent Common Stock and Parent Class A
Convertible Preferred Stock to be issued in the Merger in exchange for
certificates which immediately prior to the Effective Time represented Company
Common Shares is referred to herein as the "Merger Consideration."
e. Each then issued and outstanding share of common
stock with no par value ("Mergerco Common") of Mergerco shall be converted
into one fully paid and nonassessable share of common stock of Surviving
Corporation.
Section 6. Effective Time of Merger. A Certificate of Merger shall
be duly executed by Mergerco and the Company and shall be duly filed with the
Secretary of State of Delaware in accordance with the General Corporation Law
of Delaware. The Merger shall become effective when such Certificate of Merger
is so filed with the Secretary of State of Delaware.
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When used in the Merger Agreement, the term Effective Time shall mean the time
and date at which such Certificate of Merger is so filed.
Section 7. Certain Rights. Upon the merger becoming effective, all
the property, rights, privileges, franchises, patents, trademarks, licenses,
registrations, and other assets of every kind and description of the Company
shall be transferred to and vested in the Surviving Corporation without further
act or deed and all property, rights, and every other interest of Mergerco and
the Company shall be as effectively the property rights and interests of the
Surviving Corporation as they were of Mergerco and the Company respectively.
The Company hereby agrees from time to time, as and when requested by the
Surviving Corporation or by its successors or assigns, to execute and deliver
or cause to be executed and delivered all such deeds and instruments and to
take or cause to be taken such further or other 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 rights and
interests of the Company acquired or to be acquired by reason of or as a result
of the merger herein provided for and otherwise to carry out the intent and
purposes hereof and the proper officers and directors of the Surviving
Corporation, are fully authorized in the name of the Company or otherwise to
take any and all such action.
Section 8. First Right of Refusal. If Capital Idea receives from a
third party a bona fide offer to purchase any or all of the Class A Convertible
Preferred Stock which offer it intends to accept (the "Bona Fide Offer"),
Capital Idea shall give Parent written notice of the terms and conditions of
such Bona Fide Offer (the "Notice"). For a period of thirty (30) days
following receipt of the Notice, Parent shall have the option and right to
purchase from Capital Idea the Class A Convertible Preferred Stock which is
the subject of the Bona Fide Offer upon the same terms and conditions as the
Bona Fide Offer. If Parent fails to purchase such Class A Convertible
Preferred Stock within such 30 day period, Capital Idea may sell to the Bona
Fide Offeror upon the terms and conditions of the Bona Fide Offer. Other than
as provided in this Section 8, Capital Idea may not sell or transfer any of the
Class A Convertible Preferred Stock. Nothing herein shall prevent Capital Idea
from transferring shares of Class A Convertible Preferred Stock to its
shareholders or trusts for the benefit of such shareholder's immediate
families, provided that the transferees agree in writing to be bound by the
provisions of this Section 8. Nothing herein shall prevent Capital Idea from
pledging shares of Class A Convertible Preferred Stock, provided that the
pledgee agrees in writing to be bound by the provisions of this Section 8.
Section 9. Representations and Warranties of the Company. The
Company represents and warrants to Parent and Mergerco as follows:
a. Organization and Good Standing. The Company is a
duly incorporated and validly existing corporation in good standing under the
laws of the state of Delaware, with all requisite corporate power and authority
to own its properties and conduct its business, and is duly qualified and in
good standing as a foreign corporation authorized to do business in each of the
jurisdictions in which the character of the properties owned or leased by its
or the nature
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of the business transacted by it makes such qualification necessary, except
where the failure to be so qualified would not in the aggregate have a material
adverse effect on the business, assets, properties, financial condition or
results of operation of the Company and its subsidiaries taken as a whole (in
respect of the Company or Parent and its subsidiaries taken as a whole, as the
case may be, a "Material Adverse Effect"). The Company has heretofore
delivered to the parent true and correct copies of its articles of
incorporation and By-Laws as currently in effect.
b. Authorization; Binding Agreement. The Company has all
requisite corporate power and authority to execute and deliver this Merger
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Merger Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Company's Board of Directors, no other corporate proceedings on the part of the
Company are necessary to authorize this Merger Agreement and the transactions
contemplated hereby. This Merger Agreement has been duly and validly executed
and delivered by the Company, and constitutes a legal, valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms (except as enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally or by
the principles governing the availability of equitable remedies).
c. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of 1,000,000 Company Common shares. As
of the date hereof, 333,333 Company Common Shares are issued and outstanding,
all of which are validly issued, fully paid and nonassessable. There is not
now, and at the Effective Time there will not be, any existing option, warrant,
subscription or other rights, agreement or commitment to which the Company is a
party which either obligates the Company or any of its subsidiaries to issue,
sell or transfer any shares of its capital stock or restricts the transfer of
or otherwise relates to the capital stock of the Company or any of its
subsidiaries.
d. Financial Statements. The Company has delivered to Parent
true and complete copies of its balance sheet as of November 30, 1996 and its
income statement for the eleven months ended November 30, 1996 (collectively
the "Financial Statement"). As of their respective dates, the Financial
Statements did not contain any untrue statement of a material fact or omit to
state a fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Financial
Statements present fairly the financial position and results of operations of
the Company as of the dates and for the periods indicated subject to normal
year-end adjustments. Since the dates of such Financial Statements, there has
been no event which would have a Material Adverse Effect.
e. Litigation. As of the date hereof there are no claims,
actions, proceedings or investigations pending or, to the best knowledge of the
Company, threatened, involving or affecting the Company or any of its
properties or assets or, to the best of the Company's knowledge, any employee,
consultant, director or officer in his or her capacity as such, of the Company
or any of its subsidiaries before any court or governmental or regulatory
authority of body which, if adversely decided, could have a Material Adverse
Effect. As of the date
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hereof, neither the Company nor any of its property or assets is subject to any
order, judgment, injunction or decree that singly or in the aggregate has a
Material Adverse Effect.
f. Governmental Approvals and Compliance with Law. No
consent, license, approval, qualification or form of exemption from or
authorization of or declaration, registration or filing with any Government
Entity on the part of the Company which has not been made is required in
connection with the execution or delivery by the Company of this Merger
Agreement, the consummation by the Company of the transactions contemplated
hereby or the performance by the Company of its obligations hereunder other
than the filing of a Certificate of Merger with the Secretary of State of
Delaware in accordance with the General Corporation Law.
g. Absence of Breach. The execution and delivery by the
Company of this Merger Agreement, the consummation of the transactions
contemplated hereby and the performance by the Company of its obligations
hereunder, will not (a) subject to obtaining the required approval of the
Company's shareholders, conflict with or result in a breach of any of the
provisions of its Certificate of Incorporation or By-Laws,(b) contravene any
law, rule or regulation of any state or of the United States or any political
subdivision thereof or therein, or any order, writ, judgment, injunction,
decree, determination or award currently in effect, or (c) require any consent,
approval or notice under or result in a violation or breach of or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation, or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
license, agreement or other instrument to which the Company or any of its
subsidiaries is a party or by which any of their assets are bound, the failure
of which to obtain, in each such case, would have a Material Adverse Effect.
Section 10. Representations and Warranties of Parent and Mergerco.
Parent and Mergerco, jointly and severally, represent and warrant to the
Company as follows:
a. Organization and Good Standing. Each of Parent and
its subsidiaries (including Mergerco) is a duly incorporated and validly
existing corporation in good standing under the laws of the state of Delaware,
with all requisite corporate power and authority to own its properties and
conduct its business, and is duly qualified and in good standing as a foreign
corporation authorized to do business in each of the jurisdictions in which the
character of the properties owned or leased by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure
to be so qualified would not have a Material Adverse Effect. Parent and
Mergerco have heretofore delivered to the Company accurate and complete copies
of their respective certificates of incorporation and by-laws as currently in
effect.
b. Authorization: Binding Agreement. Each of Parent and
Mergerco has the requisite corporate power and authority to execute and deliver
this Merger Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Merger Agreement and the consummation of the
transactions contemplated hereby have been duly and
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validly authorized by the Board of Directors of each of Parent and Mergerco and
by Parent as the sole shareholder of Mergerco and no other corporate
proceedings on the part of Parent or Mergerco are necessary to authorize this
Merger Agreement and the transactions contemplated hereby. The Merger
Agreement has been duly and validly executed and delivered by Parent and
Mergerco and constitutes a legal, valid and binding agreement of Parent and
Mergerco, enforceable against each of them in accordance with its terms (except
as enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights generally or by the principles
governing the availability of equitable remedies.)
Section 11. Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Plan of Merger may be terminated and abandoned
by the Board of Directors of any Constituent Corporation at any time prior to
the date of filing a Certificate of Merger. This Plan of Merger may be amended
by the Boards of Directors of the Constituent Corporations at any time prior to
the date of filing articles of merger, provided that an amendment made
subsequent to the adoption of this Plan of Merger by the stockholders of any
Constituent Corporation shall not without approval of the affected
stockholders, (1) alter or change the amount or kind of shares, obligations,
cash, property and/or rights to be received in exchange for or on conversion of
all or any of the shares of any class or series thereof of such Constituent
Corporation, (2) alter or change any term of the Certificate of Incorporation
of the Surviving Corporation to be effected by the merger, or (3) alter or
change any of the terms and conditions of this Plan of Merger if such
alteration or change would adversely affect the holders of any class or series
of shares of such Constituent Corporation.
IN WITNESS WHEREOF, the parties to this Merger Agreement, pursuant to
the approval and authority duly given by resolution adopted by their respective
Boards of Directors, have caused these presents to be executed by the duly
authorized officers of each party hereto as the respective act, deed and
agreement of each of said corporations, on this 30th day of December, 1996.
MAXWELL DYNAMOMETER SYSTEMS, INC.,
a Delaware corporation
By: /s/ C. Eugene Hutcheson
------------------------------
C. Eugene Hutcheson
President
Attest: /s/ Charlotte E. Doremus
------------------------
Charlotte E. Doremus
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UNITED SALES CORPORATION,
a Delaware corporation
By: /s/ C. Eugene Hutcheson
--------------------------
C. Eugene Hutcheson
Director
By: /s/ Charlotte E. Doremus
---------------------------
Charlotte E. Doremus
Director
Attest: /s/ Charlotte E. Doremus
------------------------
Charlotte E. Doremus
UNIDYNE CORPORATION,
a Delaware corporation
By: /s/ C. Eugene Hutcheson
---------------------------
C. Eugene Hutcheson
President
Attest: /s/ Charlotte E. Doremus
------------------------
Charlotte E. Doremus
7
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EXHIBIT 10.2
CERTIFICATE OF DESIGNATION
OF
UNIDYNE CORPORATION
UNIDYNE CORPORATION (the "Corporation"), a corporation organized and
existing under the laws of the State of Delaware, does by its president and its
secretary and under its corporate seal hereby certify as follows:
FIRST: That by its Certificate of Incorporation, the total number of
shares which this Corporation may issue is stated partially in paragraph FOURTH
to be as follows:
The total number of shares of stock which the Corporation has
authority to issue is Seventy Million (70,000,000) shares, of
which Fifty Million (50,000,000) shares shall be Common Stock
of the par value of $0.001 per share (the "Common Stock") and
Twenty Million (20,000,000) shares shall be Preferred Stock of
the par value of $10.00 per share (the "Preferred Stock").
The Corporation shall be entitled to treat the person in whose
name any share of its stock is registered as the owner thereof
for all purposes and shall not be bound to recognize any
equitable or other claim to, or interest in, such share on the
part of any other person, whether or not the Corporation shall
have notice thereof, except as expressly provided by
applicable law. The shares of the Preferred Stock and Common
Stock, respectively, shall have the following express terms:
SECTION 1. PREFERRED STOCK.
1.1 AUTHORITY OF THE BOARD OF DIRECTORS TO CREATE SERIES. The
Board of Directors of the Corporation is hereby expressly
granted authority, to the full extent now or hereafter
permitted herein and by the Corporation Law, at any time or
from time to time, by resolution or resolutions, to create one
or more series of Preferred Stock, to fix the authorized
number of shares of any such series (which number of shares
may vary as between series and be changed from time to time by
like action), and to fix the terms of such series, including
but not limited to, the following:
(i) the designation of such series, which may be
by distinguishing number, letter or title;
(ii) the rate or rates at which shares of such
series shall be entitled to receive dividends; the periods in
respect of which dividends are payable; the conditions upon,
and times of payment of, such dividends; the relationship and
preference, if
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any, of such dividends to dividends payable on any other class
or classes or any other series of stock; whether such
dividends shall be cumulative and, if cumulative, the date or
dates from which such dividends shall accumulate; and the
other terms and conditions applicable to dividends upon shares
of such series;
(iii) the rights of the holders of the shares of
such series in case the Corporation be liquidated, dissolved or
wound up (which may vary depending upon the time, manner or
voluntary or involuntary nature or other circumstances of such
liquidation, dissolution or winding up) and the relationship
and preference, if any, of such rights to rights of holders of
shares of stock of any other class or classes or any other
series of stock;
(iv) the right, if any, of the Corporation to
redeem shares of such series at its option, including any
limitation of such right, and the amount or amounts to be
payable in respect of the shares of such series in case of
such redemption (which may vary depending on the time, manner
or other circumstances of such redemption), and the manner,
effect and other terms and conditions of any such redemption;
(v) the obligation, if any, of the Corporation to
purchase, redeem or retire shares of such series and/or to
maintain a fund for such purpose, and the amount or amounts to
be payable from time to time or such purpose or into such
fund, or the number of shares to be purchased, redeemed or
retired, the per share purchase price or prices, and the other
terms and conditions of any such obligation or obligations;
(vi) the voting rights, if any, which, if granted,
may be full, special, or limited, to be given the shares of
such series, including, without limiting the generality of the
foregoing, the right, if any, as a series or in conjunction
with other series or classes, to elect one or more members of
the Board of Directors either generally or at certain times or
under certain circumstances, and restrictions, if any, on
particular corporate acts without a specified vote or consent
of holders of such shares (such as, among others, restrictions
on modifying the terms of such series or of the Preferred
Stock, restricting the permissible terms of other series or
the permissible variations between series of the Preferred
Stock, authorizing or issuing additional shares of the
Preferred Stock, creating debt, or creating any class of stock
ranking prior to or on a parity with the Preferred Stock or
any series thereof as to dividends, or assets remaining for
distribution to the stockholders in the event
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of the liquidation, dissolution, or winding up of the
Corporation);
(vii) the right, if any, to exchange or convert the
shares into shares of any other series of the Preferred Stock
or into shares of any other class of stock of the Corporation
or the securities of any other corporation, and the rate or
basis, time, manner, terms and conditions of exchange or
conversion or the method by which the same shall be
determined; and
(viii) the other special rights, if any, and the
qualifications, limitations or restrictions thereof, of the
shares of such series.
The Board of Directors shall fix the terms of each series of
the Preferred Stock by resolution or resolutions adopted at
any time prior to the issuance of the shares thereof, and the
terms of each such series may, subject only to restrictions,
if any, imposed by this Amended and Restated Certificate of
Incorporation or by applicable law, vary from the terms of
other series to the extent determined by the Board of
Directors from time to time and provided in the resolution or
resolutions fixing the terms of the respective series of the
Preferred Stock.
1.2 STATUS OF CERTAIN SHARES. Shares of any series of
the Preferred Stock, whether provided for herein or by
resolution or resolutions of the Board of Directors, which
have been redeemed (whether through the operation of a sinking
fund or otherwise) or which, if convertible or exchangeable,
have been converted into or exchanged for shares of stock of
any other class or classes, or which have been purchased or
otherwise acquired by the Corporation, shall have the status
of authorized and unissued shares of the Preferred Stock of
the same series and may be reissued as a part of the series of
which they were originally a part or may be reclassified and
reissued as part of a new series of the Preferred Stock to be
created by resolution or resolutions of the Board of Directors
or as part of any other series of the Preferred Stock, all
subject to the conditions or restrictions on issuance set
forth herein or in the resolution or resolutions adopted by
the Board of Directors providing for the issue of any series
of the Preferred Stock.
1.3 CHANGES IN NUMBER OF AUTHORIZED SHARES. 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
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of a majority of the outstanding Common Stock, without a vote
of the holders of the Preferred Stock, or of any series
thereof, unless a vote of any such holders is required
pursuant to the express terms of the Preferred Stock or any
series thereof as fixed or determined pursuant to this Section
1 of this Article FOURTH.
SECOND: That pursuant to the authority vested in the Board of
Directors by the Company's Certificate of Incorporation, the Board of
Directors, in accordance with Section 141 of the General Corporation Law of the
State of Delaware, as amended (the "Act"), adopted the following resolution:
RESOLVED, that there is hereby created a series of
Preferred Stock of the Corporation which shall be known as
Class A Convertible Preferred Stock and that the number of
shares of such series shall be five hundred thousand (500,000)
and that the terms of such series shall be as described in
Exhibit B which is annexed hereto and made a part hereof.
THIRD: That the said resolution of the Board of Directors, and
creation and authorization of issuance thereby of said series of 500,000 Class
A Convertible Preferred Stock and determination thereby of the dividend rate,
redemption price, conversion rights, liquidation rights, voting rights and
preemptive rights, were duly made by the Board of Directors pursuant to
authority and in accordance with Sections 141 and 151 of the Act.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed by its President and attested by its Secretary as of
this 31st day of December, 1996.
[Corporate Seal] UNIDYNE CORPORATION
By: /s/ C. Eugene Hutcheson
---------------------------
C. Eugene Hutcheson
President
ATTEST:
/s/ Charlotte E. Doremus
- ----------------------------
Charlotte E. Doremus
Secretary
<PAGE> 5
EXHIBIT B
Class A Convertible Preferred Stock. The preferences, rights and
privileges of the Class A Convertible Preferred Stock and the qualifications,
limitations and restrictions thereof shall be as follows:
1. Dividends.
a. Payment. The holders of the Class A Convertible
Preferred Stock shall be entitled to receive cash dividends as and when
declared by the Board of Directors, out of the funds of the Corporation legally
available therefor, in the amount of 7% per annum of the liquidation preference
of $10 per share. Such dividends shall be payable at least annually with
respect to each calendar year on the last day of the immediately succeeding
March, commencing on March 31, 1997, pro rata to the holders of all outstanding
Class A Convertible Preferred Stock as of the record date fixed for such
dividend on the basis of the relative number of such shares held of record on
that date by each holder. Such dividends shall be cumulative as provided in
subsection 1.b. hereof. Accumulations of dividends shall not bear interest.
b. Cumulative. The cash dividend payable with respect
to each completed calendar year, including any calendar year in which all
shares of Class A Convertible Preferred Stock are redeemed or the Corporation
dissolves or is liquidated, shall be cumulative.
2. Redemption.
a. Optional Redemption. The Corporation may, at its
option, and upon a vote of a majority of its directors who are not beneficial
owners of shares of Class A Convertible Preferred Stock, redeem shares of the
Class A Convertible Preferred Stock, in whole or in part, at any time and from
time to time on or after January 1, 2002.
b. Class A Convertible Preferred Stock Redemption Price.
In the event of any redemption of Class A Convertible Preferred Stock, there
shall be paid to the holders thereof the redemption price of $11 per share,
plus accrued but unpaid dividends on each such share for all calendar years
through and including the date fixed for redemption (collectively, the "Class A
Convertible Preferred Stock Redemption Price").
c. Partial Redemptions. Redemptions of less than all of
the outstanding shares of Class A Convertible Preferred Stock pursuant to this
subsection 2. shall be pro rata from each holder of such shares on the basis of
the relative number of such shares outstanding and held of record by such
holder at the time the Corporation elects or is obligated to make such
redemption.
d. Redemption Procedure. Notice of every redemption
shall be deposited in the U.S. Mail, postage prepaid, not less than fifteen
(15) days before the Corporation elects to redeem the Class A Convertible
Preferred Stock, and addressed to each record holder of shares thereof at their
respective addresses then appearing on the books of the Corporation and
specifying (i) the redemption date, which date shall be not less than fifteen
(15) nor more than
<PAGE> 6
sixty (60) days after the date such notice is mailed, and (ii) the depository,
to whom such certificates representing such Class A Convertible Preferred Stock
should be delivered.
e. Payment of Aggregate Redemption Price by Corporation.
Not less than one (1) business day prior to a specified redemption date, the
Corporation shall deposit in good same day funds with the designated depository
the aggregate Class A Convertible Preferred Stock Redemption Price for all
shares of Class A Convertible Preferred Stock to be redeemed. At or before the
time of such deposit, the Corporation shall direct that the designated
depository pay such amount to the respective holders of Class A Convertible
Preferred Stock to be redeemed in amounts equal to the aggregate Class A
Convertible Preferred Stock Redemption Price for all shares of Class A
Convertible Preferred Stock to be redeemed by each such holder. Upon the
Corporation having given the notice required under subsection 2.d. hereof and
having made such deposits, holders of Class A Convertible Preferred Stock to be
redeemed pursuant to such call for redemption shall cease to be stockholders
with respect to such Class A Convertible Preferred Stock as of the redemption
date, and shall have, from and after the redemption date, no interest in or
claim against the Corporation with respect to such Class A Convertible
Preferred Stock, except only to receive checks or wire transfer of funds,
without interest, from the designated depository.
f. Cancellation of Redeemed Stock. All shares of Class
A Convertible Preferred Stock which are redeemed shall be retired and cancelled
as of the date fixed for redemption shall no longer be deemed to be outstanding
and may not thereafter be reissued.
3. a. Right to Convert. Subject to the terms and
conditions of this paragraph 3, the holder of any of the Class A Convertible
Preferred Stock shall have the right, at its option at any time from time to
time, to convert each share of Class 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 last full business day next preceding
the date fixed for payment of the amount distributable on the Preferred Shares)
into .54 of a share of fully paid and nonassessable shares of the Corporation's
common stock $.001 par value per share (a total of 270,000 shares) (the "Common
Shares"). Such rights 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 Class A Convertible Preferred Stock into Common Shares 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 holder
or holders of the 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 Common Shares
shall be issued.
b. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to above in
subsection 3.a. and surrender of the certificate or certificates for the shares
of Class A 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 Common Shares issuable upon the conversion
of such Class A Convertible Preferred Stock. To the extent permitted by law,
such conversion shall be deemed to have been effected
<PAGE> 7
as of the close of business on the date on which such written notice shall have
been received by the Corporation and the certificate or certificates for such
share or shares shall have been surrendered as aforesaid, and at such time the
rights of the holder of such Class A Convertible Preferred Stock shall cease,
and the person or persons in whose name or names any certificates or
certificates for Common Shares shall be issuable upon such conversion shall be
deemed to have become the holder or holders of records of the shares
represented thereby.
c. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of the Class A Convertible
Preferred Stock into Common Shares and no payment or adjustment shall be made
upon any conversion on account of any cash dividends on the Common Shares
issued upon such conversion. At the time of each conversion, the Corporation
shall pay in cash an amount equal to all dividends cumulated and unpaid on the
shares surrendered for conversion to the date upon which such conversion is
deemed to take place as provided in subsection 3.b. In case the number of
Class A Convertible Preferred Stock represented by the certificate or
certificates surrendered pursuant to subsection 3.a. exceeds the number of
shares converted, the Corporation shall, upon such conversion, execute and
deliver to the holder thereof, at the expense of the Corporation, a new
certificate or certificates for the number of Class A Convertible Preferred
Stock, represented by the certificates or certificates surrendered which is not
to be converted. If any fractional interest in a Common Share would, except
for the provisions of the first sentence of this subsection 3.c., be
deliverable upon any such conversion, the Corporation, in lieu of delivering
the fractional share thereof, shall pay to the holder surrendering the Class A
Convertible Preferred Stock for conversion an amount in cash equal to the
current market price of such fractional interest as determined in good faith by
the Board of Directors of the Corporation.
d. Adjustment of Number of Shares of Class A Convertible
Preferred Stock. If the Corporation shall at any time after the date hereof:
(i) declare a dividend on its Common Shares payable in shares of its capital
stock (whether Common Shares or of capital stock of any other class), (ii)
subdivide its outstanding Common Shares, or (iii) combine its outstanding
Common Shares into a smaller number of shares, the number of shares of Class A
Convertible Preferred Stock in effect at the time of the record date for that
dividend or of the effective date of that subdivision, or combination, shall be
proportionately adjusted so that the holders of the Class A Convertible
Preferred Stock on such record date shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if the Class A Convertible
Preferred Stock had been converted into Common Shares immediately prior to that
date, the holders of the Class A Preferred Stock would have owned upon
conversion and been entitled to receive by virtue of that dividend,
subdivision, or combination. The foregoing adjustment shall be made
successively whenever any event listed above shall occur.
e. Notice of Adjustment. Upon any adjustment of the
number of shares of Class A Convertible Preferred Stock held by any holder
thereof pursuant to subsection 3.c., the Corporation shall give written notice
thereof, by first class mail, postage prepaid, addressed to each holder of
Class A Convertible Preferred Stock at the address of such holder as shown on
the books of the Corporation, which notice shall state the number of shares of
Class A Convertible Preferred Stock held by such holder as a result of such
adjustment, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
<PAGE> 8
f. Other Notices. In case at any time:
(a) the Corporation shall declare any dividend
upon its Common Shares payable in cash or stock or make any
other distribution to the holders of its Common Shares;
(b) the Corporation shall offer for subscription
pro rata to the holders of its Common Shares 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 a sale of
all substantially all its assets to, another corporation; 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, addressed to each
holder of Class A Convertible Preferred Stock at the address
of such holder as shown on the books of the Corporation, (i)
at least 20 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, at least 20 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 Shares shall be entitled thereto, and such
notice in accordance with the foregoing clause (ii) shall also
specify the date on which the holders of Common Shares shall
be entitled to exchange their Common Shares for securities or
other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be.
g. Stock to be Reserved. The Corporation will at all
times reserve and keep available out of is authorized Common Shares or its
treasury shares, solely for the purpose of issuance upon conversion of Class A
Convertible Preferred Stock as herein provided, such number of shares of Common
Shares as shall then be issuable upon the conversion of all outstanding shares
of Preferred Shares (including shares issuable in respect of any cumulated but
unpaid dividends on the Preferred Shares). The Corporation covenants that all
shares of Common Shares which shall be so issued shall be duly and validly
issued and fully paid and nonassessable and free from all liens and charges
with respect to the issue thereof. The Corporation will not take any action
which results in an adjustment in the number of Class A Convertible Preferred
Stock outstanding if the total number of shares of Common Shares issued and
issuable after such action upon conversion of the Class A Convertible Preferred
Stock would
<PAGE> 9
exceed the total number of Common Shares then authorized by the Corporation's
Certificate of Incorporation.
h. No Reissuance of Preferred Shares. Preferred Shares
which are converted into Common Shares as provided herein shall not be
reissued.
4. Liquidation. In the event of liquidation or dissolution of the
Corporation, after the payment or provision for payment of all of the
liabilities of the Corporation and before any payment or other distribution is
made on account of the Common Stock, there shall be paid to the holders of the
Class A Convertible Preferred Stock the amount of the Class A Convertible
Preferred Stock Liquidation Preference; provided, however, that the amount of
accrued and unpaid dividends to be included therein shall be accrued up to the
date of payment. After payment to the holders of the Class A Convertible
Preferred Stock of the full preferential amount as provided above, such
holders, as such, shall not be entitled to share further in the assets of the
Corporation or in the proceeds of the liquidation. Nothing contained herein
shall be construed to prohibit the retirement of the Class A Convertible
Preferred Stock by purchase or redemption, and neither the purchase nor
redemption of the Class A Convertible Preferred Stock, nor a merger,
consolidation or reorganization of the Corporation, nor a sale, or lease or
transfer of all or substantially all of the assets of the Corporation, shall be
considered a liquidation or dissolution of the Corporation within the meaning
of this subsection 4. If the net assets of the Corporation legally available
therefore or the proceeds therefrom are insufficient to permit the payment upon
all outstanding shares of Class A Convertible Preferred Stock of the full
amount to which the holders thereof are entitled, then such net assets shall be
distributed pro rate to each holder of Class A Convertible Preferred Stock on
the basis of the number of such shares outstanding and held of record by each
such holder at the time of such payment.
5. Voting. The holders of the Class A Convertible
Preferred Stock shall have no voting rights, except as required by law.
6. Preemptive Rights. Holders of Class A Convertible
Preferred Stock shall not be entitled on account of holding such shares to
preemptive rights or other rights to acquire or subscribe for additional shares
or securities of the Corporation authorized to be issued.
