CERTIFICATE OF THE POWERS, DESIGNATION,
PREFERENCES, RIGHTS AND LIMITATIONS OF
5% Cumulative Convertible Preferred Stock
of
GENERAL DATACOMM INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
GENERAL DATACOMM INDUSTRIES, INC., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby certifies
that, pursuant to the authority contained in Article Fourth of its Restated
Certificate of Incorporation, as amended, and in accordance with the provisions
of Section 151 of the General Corporation Law of the State of Delaware, the
Board of Directors of the Corporation at its meeting on July 10, 2000, duly
adopted a resolution providing for the issuance of 200,000 shares of a series of
5% Cumulative Convertible Preferred Stock, which resolution is as follows:
RESOLVED, that pursuant to authority conferred upon the Board
of Directors by the Restated Certificate of Incorporation, as amended,
of the Corporation (hereinafter called the "Certificate of
Incorporation"), the Board of Directors does hereby authorize the
issuance of a series of Preferred Stock, par value $1.00 per share, to
be known as the 5% Cumulative Convertible Preferred Stock, and to the
extent that the voting powers, designations, preferences and relative,
participating, optional or other special rights, and the
qualifications, limitations and restrictions thereof, are not set forth
in the Certificate of Incorporation, does hereby fix and herein state
and express such voting powers, designations, preferences and relative,
participating, optional and other special rights, and qualifications,
limitations and restrictions thereof, as follows (all terms used herein
which are defined in the Corporation's Certificate of Incorporation
shall have herein the meanings provided therein):
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(A) DESIGNATION AND SIZE OF ISSUE
The distinctive designation of the series shall be "5% Cumulative
Convertible Preferred Stock" (hereinafter referred to as this "Series"). The
number of shares which shall constitute this Series shall be 200,000 shares.
Each share of this Series shall have a par value of $1.00 per share.
(B) DIVIDENDS
(1) The annual rate of dividends payable on each share of this Series shall
be 5% or $1.25 per share.
(2) Dividends shall be payable out of funds or Common Stock legally available
therefor, quarterly in arrears on January 31, April 30, July 31 and October 31,
of each year, commencing October 31, 2000, except that if any such date is not a
Business Day in New York City, then such dividend shall be payable on the next
such succeeding Business Day (each such date on which a dividend is payable is a
"Dividend Payment Date"). The amount of dividends payable on shares of this
Series for each full quarterly dividend period shall be computed by dividing by
four the annual rate per share set forth in Section (B)(1). Dividends payable on
shares of this Series for the initial dividend period and dividends payable for
any period less than a full quarterly period shall be computed on the basis of a
360-day year of twelve 30-day months. Dividends shall be payable to holders of
record of the shares of the Series as they appear on the books of the
Corporation on such respective dates as may be fixed by the Board of Directors
of the Corporation in advance of the payment of each particular dividend,
provided that holders of shares of the Series called for redemption on a
redemption date falling between a dividend payment record date and the Dividend
Payment Date shall, in lieu of receiving such dividend payment on the Dividend
Payment Date fixed therefore, receive such dividend payment together with all
other accumulated and unpaid dividends, if any, on the date fixed for redemption
(unless such holders convert such shares in accordance with this resolution, in
which case such holders will receive such payment on the corresponding Dividend
Payment Date; see "Conversion Rights" below).
(3) Dividends payable on shares of this Series will be cumulative and shall
accumulate from date of original issue and shall be deemed to so accumulate from
such date until paid, whether or not earned or declared and whether or not there
are profits, surplus or other funds of the Corporation legally available for the
payment of dividends. Accumulations of dividends shall not bear interest.
(4) So long as any shares of this Series are outstanding, no dividend (other
than a dividend payable in Common Stock or other stock of the Corporation
ranking junior to this Series as to dividends and upon liquidation
[collectively, the
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"Junior Stock"]) shall be declared or paid or set aside for
payment, and no other distribution shall be declared or made, upon the Junior
Stock or upon any other stock of the Corporation ranking on a parity with this
Series as to dividends or upon liquidation, nor shall any Junior Stock nor any
other stock of the Corporation ranking on a parity with this Series as to
dividends or upon liquidation be redeemed, purchased or otherwise acquired for
any consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by the Corporation (except
by conversion into or exchange for Junior Stock of the Corporation), unless, in
each case, the full cumulative dividends on all outstanding shares of this
Series shall have been paid or contemporaneously are declared and paid through
the last Dividend Payment Date. Should dividends not be paid in full upon the
shares of this Series and any other preferred stock ranking on a parity as to
dividends with this Series, all dividends declared upon shares of this Series
and any other stock of the Corporation ranking on a parity as to dividends with
this Series shall be declared pro rata, so that the amount of dividends declared
per share on this Series and such other preferred stock shall in all cases bear
to each other the same ratio that accumulated dividends per share on the shares
of this Series and such other stock bear to each other. Holders of shares of
this Series shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of full cumulative dividends, as herein provided,
on this Series. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series which may
be in arrears.
(5) Unless otherwise declared to be paid in cash, at the
option of the Board of Directors dividends shall be paid in shares of the Common
Stock, provided such shares of Common Stock are registered under the
Registration Statement as hereinafter defined, based on the average closing
price for the 10 Trading Days preceding the Dividend Payment Date. If such
shares of Common Stock are not registered, then the dividends shall be paid in
cash. For each dividend which is declared, the Corporation shall provide the
holder written notice of its intention to pay dividends in shares of Common
Stock or cash not more than ten days prior to the Dividend Payment Date for
which such payment is to be made, and may indicate in such notice that the
election contained in such notice shall continue for later Dividend Payment
Dates until revised by a subsequent notice. Failure to timely provide such
written notice or to timely pay cash dividends shall be deemed an election by
the Corporation to pay dividends in shares of Common Stock.
(6) The term "Business Day" shall mean any weekday which is
not a day on which banking institutions in the City of New York are authorized
by law, or required by executive order, to close.
(7) For purposes of this resolution, the term "Trading Day"
means, as long as the Common Stock is listed or admitted to trading on the New
York Stock Exchange, Inc. (or any successor to such Exchange), a day on which
the New York
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Stock Exchange, Inc. (or such successor) is open for the
transaction of business, or, if the Common Stock is not listed or admitted to
trading on such Exchange, a day on which the principal national securities
exchange on which the Common Stock is listed is open for the transaction of
business, or if the Common Stock is not listed or admitted to trading on any
national securities exchange, a day on which any New York Stock Exchange member
firm is open for the transaction of business.
(C) REDEMPTION AND AUTOMATIC CONVERSION
(a) If an Early Redemption Event occurs, the
shares of this Series may be redeemed at the option of the Corporation, as a
whole or from time to time in part, at any time and prior to two (2) years from
the initial issuance of shares of this Series, upon no less than 30 nor more
than 60 days' notice by mail to the holders of shares of this Series at a
redemption price equal to $25.00 per share together, in each case, with
accumulated and unpaid dividends to the date fixed for redemption. The notice of
redemption (which if in part, shall specify the number of shares of this Series
to be redeemed) shall be given by mailing a notice of such redemption not later
than on the thirtieth day, and not earlier than the sixtieth day, before the
date fixed for redemption to such holder. "Early Redemption Event" shall mean
the closing of a transaction pursuant to which (i) the Corporation or a
subsidiary sells a business unit or units or assets in one or more transactions
for net proceeds of Fifty Million Dollars ($50,000,000) or more and/or (ii) the
Corporation sells securities pursuant to an underwritten public offering (not
including equity lines of credit or similar financings) in excess of Fifty
Million Dollars ($50,000,000). In the event the Closing Price of the
Corporation's Common Stock has equaled or exceeded l25% of the Conversion Price
(as hereinafter defined) per share then in effect for at least 20 Trading Days
in a 30 consecutive Trading Day period the Corporation shall also have the
option as a whole or from time to time in part, at any time and prior to the
automatic conversion date under Section (C)(b), upon no less than 30 nor more
than 60 days written notice to the holders of shares of this Series given at any
time such foregoing condition is satisfied, to require such holder of shares of
this Series to convert such shares into Common Stock of the Corporation at the
price and on the terms provided in Section D as of the date of such notice,
which date may not be prior to the 30th day from the receipt of such notice by
the holder, and upon the failure of such holders to so convert such shares by
the date set forth in the Corporation's notice, the shares of this Series which
are subject to such conversion notice, shall be automatically so converted into
shares of Common Stock of the Corporation as of the date of such notice, without
further action by any party, and the shares of this Series shall thereafter be
retired and canceled. No such notice of redemption or conversion under this
Section (C)(a) shall be effective unless (i) a registration statement filed with
the Securities and Exchange Commission ("Registration Statement") covering the
shares of Common Stock issuable upon conversion of, and dividends payable on,
the shares of this Series, is effective and available to the holders to resell
all of the
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registrable securities during the entire 30 Trading Day Period used to measure
the 125% Closing Price threshold through the redemption date, or (ii) the holder
is permitted to resell Underlying Shares pursuant to Rule 144(k) promulgated
under the Securities Act of 1933, as amended, without volume limitations. The
shares of Common Stock issuable upon conversion of, and dividends payable on,
the shares of this Series, are referred to as "Underlying Shares".
(b) Subject to the provisions of this Section and Section
(D)(10), all outstanding shares of the Series for which conversion notices have
not previously been received or for which redemption has not been made, shall be
automatically converted on the second (2nd) anniversary of the initial issue
date of shares of this Series, at the then applicable Conversion Price, and the
shares of this Series shall thereafter be canceled and retired subject to the
remainder of this Section (C)(b). The conversion contemplated by this Section
shall not occur at such time as (a)(1) a Registration Statement is not then
effective or (2) the holder is not permitted to resell Underlying Shares
pursuant to Rule 144(k) promulgated under the Securities Act of 1933, as
amended, without volume restrictions, as evidenced by an opinion letter of
counsel reasonably acceptable to the holder and the transfer agent for the
Common Stock, or (b) there are not sufficient shares of Common Stock authorized
and reserved for issuance upon such conversion. Notwithstanding the foregoing,
the two-year anniversary under this Section shall be extended (on a day-for-day
basis) for any Trading Days after the effective date of the Registration
Statement that a holder is unable to resell Underlying Shares under the
Registration Statement due to: (a) the Common Stock not being listed or quoted
for trading on the New York Stock Exchange, Inc. or any similar trading market,
(b) the failure of such Registration Statement to be declared effective within
90 days after the initial issuance of shares of this Series, or if so declared,
to remain effective during the time period covered by this Section C(b), as to
all Underlying Shares, or (c) the suspension of the holder's right to resell
Underlying Shares thereunder. The provisions of Section (D) (10)(b) shall not
apply to any automatic conversion pursuant to this subsection (b).
(c) For purposes of this resolution, the Closing
Price of the Corporation's Common Stock on any day shall be the last sale price
as shown on the Composite Tape of The New York Stock Exchange, Inc., or, in case
no such sales take place on such day, the average of the closing bid and asked
prices on the New York Stock Exchange on such day, or, if the Common Stock is
not listed or admitted to trading on such Exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or, if it is not listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices as furnished by any
New York Stock Exchange member firm selected from time to time by the Board of
Directors of the Corporation for such purpose (other than the Corporation or a
subsidiary thereof).
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(d) In the event that fewer than all the outstanding shares of
this Series are to be redeemed, the number of shares to be redeemed shall be
redeemed pro rata.
(D) CONVERSION RIGHTS
(1) Each holder of a share of this Series shall have the right, at any time and
from time to time following the listing of the Underlying Shares on the New York
Stock Exchange, Inc. or 30 days from the original issue date of shares of this
Series, whichever first occurs, to convert each such share into fully paid and
nonassessable shares of Common Stock of the Corporation at $5.00 per share
("Conversion Price"), or a rate of 5 shares of Common Stock for each share of
this Series ("Conversion Rate"), subject to adjustment as provided in this
Section (D).
(2) The Corporation shall make no payment or allowance for unpaid dividends,
whether or not in arrears, on converted shares of this Series, or for dividends
on the shares of Common Stock issued upon such conversion.
(3) The Corporation shall not be required, in connection with any conversion of
shares of this Series, to issue a fraction of a share of its Common Stock, but
in lieu thereof the Corporation shall make a cash payment (calculated to the
nearest cent) equal to such fraction multiplied by the Closing Price of the
Common Stock on the last Trading Day prior to the date of conversion.
(4) Any holder of shares of this Series electing to convert such shares into
Common Stock shall surrender the certificate or certificates for such shares at
the office of the Corporation (or at such other place as the Corporation may
designate in New York City by notice to the holders of shares of this Series)
during regular business hours, duly endorsed to the Corporation or in blank, or
accompanied by instruments of transfer to the Corporation or in blank, in form
satisfactory to the Corporation, and shall give written notice ("Election to
Convert") to the Corporation at such office that such holder elects to convert
such shares of this Series. The Corporation shall, within five (5) Trading Days
after receipt of such deposit of certificates for shares of this Series,
accompanied by the Election to Convert above prescribed, issue and deliver at
such office to the holder for whose account such shares were surrendered, or to
his nominee, certificates representing the number of shares of Common Stock and
the cash, if any, to which such holder is entitled upon such conversion. If the
Corporation fails to deliver the certificates within the above time period, the
holder may rescind in writing such Election to Convert prior to delivery of such
shares in which case the Corporation shall promptly return the certificates
delivered with the Election to Convert.
(5) Subject to Section (D)(4) above, conversion shall be deemed
to have been made as of the date of surrender of certificates for the shares of
this Series to be converted, and the giving of written notice, except as
otherwise provided in Section
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(C)(a), and the person entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such Common
Stock on such date.
(6) The Conversion Price and number of shares of Common Stock
issuable upon conversion of shares of this Series are subject to adjustment from
time to time as set forth in this Section. Upon each such adjustment of the
Conversion Price pursuant to this Section, the holder shall thereafter prior to
maturity or redemption be entitled to obtain upon conversion, at the Conversion
Price resulting from such adjustment, the number of shares of Common Stock
obtained by multiplying the Conversion Price in effect immediately prior to such
adjustment by the number of shares issuable upon conversion of shares of this
Series immediately prior to such adjustment and dividing the product thereof by
the Conversion Price resulting from such adjustment. Any adjustment to the
number of shares of Common Stock shall apply only to the shares of Common Stock
for which shares of this Series have not been converted.
(a) If the Corporation, at any time while shares of
this Series are outstanding, shall (i) pay a stock dividend to all
holders of its Common Stock or otherwise make a distribution or
distributions of Common Stock on shares of stock ranking junior to
this Series or pari passu securities, payable in shares of Common
Stock , (ii) subdivide outstanding shares of Common Stock into a
larger number of shares, or (iii) combine outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding
before such event and of which the denominator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding
after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination, and shall
apply to successive subdivisions and combinations.
(b) In case of any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, then the holder of shares of
this Series shall have the right thereafter to convert shares of this Series
only into the shares of stock and other securities, cash and property receivable
upon or deemed to be held by holders of Common Stock following such
reclassification or share exchange, and the holder, upon conversion of shares of
this Series, shall be entitled by reason of such event to receive such amount of
securities, cash or property equal to the amount of shares of Common Stock such
holder would have been entitled to had such holder converted shares of this
Series immediately
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prior to such reclassification or share exchange. This provision shall apply to
successive reclassifications or share exchanges.
(c) In case of any merger or consolidation of the
Corporation with or into another person or sale of all or substantially all of
the assets of the Corporation, then the holder shall have the right thereafter
in the case of such merger or consolidation or sale of all or substantially all
of the assets of the Corporation to receive upon the conversion of shares of
this Series, the same number and kind of shares of stock or the same amount of
property, cash or securities as it would have been entitled to receive upon the
occurrence of any such event as if it had been immediately prior to such event,
the holder of the number of shares of Common Stock then exercisable under shares
of this Series.
(d) For the purposes of this Section (D), the
following clauses shall also be applicable:
(i) Record Date. In case the Corporation
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a stock dividend, then such record date shall be the
date of the issue of the shares of Common Stock to have been issued upon the
declaration of such dividend.
(ii) Treasury Shares. The number of shares
of Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Corporation, and the disposition of any such
shares shall be considered an issue or sale of Common Stock.
(e) All calculations under this Section (D)
shall be made to the nearest cent or the nearest 1/100th of a share, as the case
may be.
(f) If (i) the Corporation shall declare a dividend
(or any other distribution) on its Common Stock; or (ii) the
Corporation shall declare a special nonrecurring cash dividend on or a
redemption of its Common Stock; or (iii) the Corporation shall
authorize the granting to all holders of the Common Stock rights or
warrants to subscribe for or purchase any shares of capital stock of
any class or of any rights; or (iv) the approval of any stockholders of
the Corporation shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to
which the Corporation is a party, any sale or transfer of all or
substantially all of the assets of the Corporation, or any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or property; or (v) the Corporation shall authorize
the voluntary dissolution, liquidation or winding up of the affairs of
the Corporation, then the Corporation shall cause to be mailed to the
holders of shares of this Series at their
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last address as they shall appear upon the stock books of the Corporation,
at least 15 calendar days prior to the applicable record or effective date
hereinafter specified, a notice ("Notice") stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up; provided, however, that the failure to mail such
notice or any defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such notice.
The holder of shares of this Series shall be entitled to convert shares of
this Series during the 15-day period commencing on the date of such Notice.
(g) Whenever an adjustment in the Conversion Price
is required, the Corporation shall forthwith place on file a statement
signed by its Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer or a Senior Vice President and by its Secretary,
Assistant Secretary or Treasurer, stating the adjusted Conversion Price
determined as provided herein. Such statements shall set forth in
reasonable detail such facts as shall be necessary to show the reason
and the manner of computing such adjustment. Promptly after the
adjustment of the Conversion Price, the Corporation shall mail a notice
thereof to each holder of shares of this Series setting forth the
Conversion Price after such adjustment and briefly stating the facts
requiring the adjustment and the manner of computing it.
(h) The term "Common Stock" as used in this
resolution means the Corporation's Common Stock, $.10 par value, as
the same exists as of the date of the Certificate of Designation
relating to this Series or any other class of stock resulting from
successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that at any
time as a result of an adjustment made pursuant to Section (D)(6)(b),
the holder of any share of this Series thereafter surrendered for
conversion shall become entitled to receive any shares of the
Corporation other than shares of its Common Stock, the Conversion Rate
of such other shares so receivable upon conversion of any share shall
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to
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the provisions with respect to Common Stock contained in subparagraphs
(a)through (g) of this Section(D)(6), and the provisions of Section (D)
(1) through (5) and (7) through (9) with respect to the Common Stock
shall apply on like or similar terms to any such other shares.
(i) If the Corporation during the six month period after the
initial issuance of shares of this Series at any time while any shares
of this Series are outstanding, shall issue shares of Common Stock or
rights, warrants, options (other than employee stock options) or other
securities or debt that are convertible into or exchangeable for
shares of Common Stock ("Common Stock Equivalents"), entitling any
person to acquire in excess of 100,000 shares of Common Stock at a
price per share less than the Conversion Price at the time of such
issuance (if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time thereafter, whether by
operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights issued in connection with such issuance,
be entitled to receive shares of Common Stock at a price less than the
Conversion Price as of the date of such issuance, such issuance shall
be deemed to have occurred for less than the Conversion Price), then
the Conversion Price shall, at the option of the holder exercised
within 15 days after receipt of the notice from the Corporation of the
issuance of such Common Stock or Common Stock Equivalents, together
with a reasonably detailed statement of the applicable terms thereof,
be adjusted to mirror the conversion, exchange or purchase price of
such Common Stock or Common Stock Equivalents (including any reset
provisions thereof). Such adjustment shall be made whenever such
Common Stock or Common Stock Equivalents are issued. This Section does
not apply to the issuance of shares of Common Stock or Common Stock
Equivalents to strategic investors, existing lenders, parties listed
in Schedule 6(b) of the Registration Rights Agreement covering the
Underlying Shares, or employees.
(j) In the event that during the six month period after the
initial issuance of the shares of this Series (i) the Corporation effects a
spin-off of the stock of a Subsidiary of the Corporation to the holders of the
Corporation's Common Stock, and (ii) the Corporation has sent a notice of
redemption of the shares of this Series prior to the first Reset Date, then the
Conversion Price for the shares of this Series shall be adjusted (provided no
adjustment in the Conversion Price by reason of such spin-off had previously
occurred) as of the date of such notice of redemption or the date such spin-off
was effected, whichever is later, so that on the conversion thereafter prior to
the first Reset Date only, of shares of this Series, the holder of such shares
of this Series shall receive such number of shares of Common Stock that the
shares of this
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Series are convertible into at the then Conversion Price plus so
many shares of stock of such Subsidiary so spun off by the Corporation as such
holder would have received had such holder converted such shares of this Series
into shares of Common Stock and been a holder of such shares of Common Stock of
the Corporation immediately prior to the record date of such spin-off.
(7) Any shares of this Series which shall at any time have
been converted shall, after such conversion be canceled and have the status of
authorized but unissued shares of Preferred Stock without designation as to
series until such shares are once more designated as part of a particular series
(other than this Series) by the Board of Directors. The Corporation shall at all
times reserve and keep available out of its authorized but unissued stock, for
the purpose of effecting the conversion of the shares of this Series, such
number of its duly authorized shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of this Series;
provided, however, that nothing contained herein shall preclude the Corporation
from satisfying its obligations in respect of the conversion of the shares by
delivery of purchased shares of Common Stock which are held in the treasury of
the Corporation.
(8) If any shares of Common Stock required to be
reserved for purposes of conversion of shares of this Series hereunder require
registration with or approval of any governmental authority before such shares
may be issued upon conversion, the Corporation shall cause such shares to be
duly registered or approved, as the case may be. The Corporation will use its
reasonable best efforts to list the shares of Common Stock required to be
delivered upon conversion of shares of this Series prior to such delivery upon
each national securities exchange upon which the outstanding Common Stock is
listed at the time of such delivery.
(9) The Corporation shall pay any and all issue or other taxes
that may be payable in respect of any issue or delivery of shares of Common
Stock on conversion of shares of this Series pursuant hereto. The Corporation
shall not, however, be required to pay any tax which is payable in respect of
any transfer involved in the issue or delivery of Common Stock in a name other
than that in which the shares of this Series so converted were registered, and
no such issue or delivery shall be made unless and until the person requesting
such issue has paid to the Corporation the amount of such tax, or has
established, to the satisfaction of the Corporation, that such tax has been
paid.
(10) (a) The Conversion Price shall be adjusted on the six (6)
month anniversary of the initial issue date of shares of this Series, and each
three (3) month anniversary thereafter (each a "Reset Date"), to the average
Closing Price of the Common Stock of the Corporation for the ten (10) Trading
Days preceding a Reset Date, if such adjusted Conversion Price is less than the
Conversion Price then in effect, provided, however, in no event shall the
Conversion Price be reset for (i) shares of this
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Series previously converted (and such conversion has not been rescinded as
provided in Section (D) (4) or ignored by failure of the Corporation to deliver
shares of Common Stock issuable on such conversion) or (ii) for which a
redemption notice has previously been given and for which the redemption price
therefor is thereafter timely paid. Prior to any such adjustment reducing the
Conversion Price, the Corporation, in lieu of adjusting the Conversion Price as
described above, shall have the option to redeem any outstanding shares of this
Series for cash at 105% of the redemption price, plus accumulated and unpaid
dividends which had accumulated through such Reset Date, by written notice to
each holder on or before at least 15 days prior to any such Reset Date, and any
such adjustment in the Conversion Price on any Reset Date shall not take effect.
Any such notice by the Corporation may contain a price below which the
Corporation is willing to redeem such shares and above which the Corporation is
not willing to redeem such shares. In the event such price stated in the notice
is less than the average Closing Price of the Common Stock for the ten (10)
Trading Days immediately preceding the Reset Date with respect to which such
notice is given, the Corporation shall have no obligation to redeem such shares
on such Reset Date and an adjustment will be made to the Conversion Price in
accordance with the first sentence of this Section. In no event shall any such
cash redemption payment for a Reset Date be due until the fifth (5th) Trading
Day following a Reset Date. If the Corporation defaults in making such cash
redemption payment on the applicable Fifth Trading Day, then an adjustment will
be made to the Conversion Price in accordance with the first sentence of this
Section and the Corporation shall no longer have such option on any remaining
Reset Date. If stockholders equity at September 30, 2000 (excluding foreign
exchange adjustments), less the loss for such quarter ended September 30, 2000
is less than $10,000,000, then there will be an additional Reset Date on the
tenth Trading Day following the public release of the results for such fourth
fiscal quarter ending September 30, 2000 and the other Reset Dates will occur on
the three month anniversary of such additional Reset Date.
(b) A holder may not convert shares of this
Series to the extent such conversion would result in the holder, together with
any affiliate thereof, beneficially owning (as determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934 and the rules promulgated
thereunder) in excess of 9.999% of the then issued and outstanding shares of
Common Stock, including shares of Common Stock issuable upon such conversion of
the shares of this Series and held by such holder after application of this
Section. Since the holder will not be obligated to report to the Corporation the
number of shares of Common Stock it may hold at the time of a conversion
hereunder, unless the conversion at issue by itself alone would result in the
issuance of shares of Common Stock in excess of 9.999% of the then outstanding
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shares of Common Stock without regard to any other shares of Common Stock which
may be beneficially owned by the holder or an affiliate thereof, the holder
shall have the authority and obligation to determine whether the restriction
contained in this Section will limit any particular conversion hereunder and to
the extent that the holder determines that the limitation contained in this
Section applies, the determination of which portion of conversion shall be the
responsibility and obligation of the holder. If the holder has delivered a Form
of Election to Convert for a number of shares of Common Stock that by itself
alone would result in the issuance in excess of the 9.999% of the then
outstanding shares of Common Stock without regard to any other shares of Common
Stock which may be beneficially owned by the holder or an affiliate thereof, the
Corporation shall notify the holder of this fact and shall honor the conversion
for the maximum number of shares of this Series permitted to be converted on
such date of conversion in accordance with the periods described herein and
disregard the balance of such Form of Election to Convert, as if never
delivered. The provisions of this Section may be waived by a holder (but only as
to itself and not to any other holder) upon not less than 61 days' prior notice
to the Corporation. Other holders shall be unaffected by any such waiver. The
Corporation shall not be liable for any failure to so notify the holders.
(c) Notwithstanding Section (D) (10) above to the
contrary, the maximum number of shares of Common Stock which the Corporation may
be required to issue under this Series in the aggregate shall not exceed
19.9999% of the number of outstanding shares of Common Stock as of July 20,
2000, or 4,886,703 shares of Common Stock, less the aggregate of (i) the number
of shares of Common Stock issuable by the Corporation upon exercise of the
Warrant (as defined in the Securities Purchase Agreement pursuant to which this
Series was issued) and (ii) dividends which may be paid or are payable in Common
Stock on shares of this Series (the "Issuable Maximum") To the extent, the
Corporation would otherwise be liable to issue shares of Common Stock in excess
of the Issuable Maximum pursuant to this Section but for the limitation
contained in this Section, on or after July 31, 2002 the Corporation shall, if
permitted by applicable law, rule or regulation, including but not limited to
the ability to list additional shares on the New York Stock Exchange, Inc. or if
not listed on such Exchange and listed on another stock exchange or market,
pursuant to the rules of such other subsequent exchange or market, if approval
is obtained from stockholders or otherwise, either issue all such shares or, at
the Corporation's option, pay the holder in cash the value of shares not so
issued including accumulated and unpaid dividends.
(E) VOTING
(1) Except as indicated below or as required by Delaware General Corporation Law
the shares of this Series shall not have voting rights. The shares of this
Series shall nonetheless have the following voting rights:
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(a) So long as any shares of this Series remain
outstanding, the Corporation shall not, either directly or indirectly,
without the affirmative vote at a meeting, or the written consent with
or without a meeting, of the holders of at least a majority in number
of shares of this Series then outstanding, (i) amend, alter or repeal
any of the provisions of the Certificate of Designation relating to
this Series or the Certificate of Incorporation, or authorize any
reclassification of the shares of this Series, so as in any such case
affect adversely the preferences, special rights or privileges or
voting power of the shares of this Series, or (ii) authorize or create
any class of stock ranking prior to the shares of this Series as to
dividends or distribution of assets on liquidation, or (iii) create, or
issue or increase the authorized number of shares of any series of the
Corporation's authorized preferred stock ranking prior to the shares of
this Series as to dividends or distributions on liquidation, or (iv)
increase the number of shares of this Series.
(b) In exercising the voting rights set forth in this
Section (E)(1), each share of this Series entitled to such voting right
shall have equal voting power, notwithstanding any greater or lesser
general voting powers of one or more series of preferred stock.
(2) No consent of holders of shares of this Series shall be required for (i) the
creation of any indebtedness of any kind of the Corporation, (ii) the
authorization or issuance of any class of stock of the Corporation junior to or
on a parity to the shares of this Series as to dividends and upon liquidation,
dissolution or winding up of the Corporation or (iii) subject to Section
(E)(1)(a), the issuance of any shares of preferred stock.
(F) LIQUIDATION RIGHTS
(1) Upon the dissolution, liquidation or winding up of the Corporation, whether
voluntary or involuntary, the holders of the shares of this Series shall be
entitled to receive out of the assets of the Corporation available for
distribution to stockholders, before any payment or distribution shall be made
on the Common Stock or on any other class or series of stock ranking junior to
this Series upon liquidation, a liquidating distribution in the amount of $25.00
for each outstanding share of this Series, plus all accumulated and unpaid
dividends on such shares to the date of final liquidation.
(2) Neither the sale, lease or exchange (for cash, shares of stock, securities
or other consideration) of all or substantially all the property and assets of
the Corporation nor the merger or consolidation of the Corporation into or with
any other corporation or the merger or consolidation of any other corporation
into or with the Corporation, shall be deemed to be a dissolution, liquidation
or winding up, voluntary or involuntary, for the purposes of this Section (F).
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(3) After the payment to the holders of the shares of this Series of the full
preferential amounts provided for in this Section (F), the holders of this
Series as such shall have no right or claim to any of the remaining assets of
the Corporation.
(4) In the event the assets of the Corporation available for distribution upon
any dissolution, liquidation or winding up of the Corporation, whether voluntary
or involuntary, shall be insufficient to pay the full preferential amounts to
which such holders are entitled pursuant to Section (F)(1), no such distribution
shall be made on account of any shares of any other class or series of preferred
stock ranking on a parity with the shares of this Series upon such dissolution,
liquidation or winding up unless proportionate distributive amounts shall be
paid on account of the shares of this Series, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.
(G) PRIORITY
(1) For purposes of this resolution, any stock of any class or series of
the Corporation shall be deemed to rank:
(i) Prior to the shares of this Series, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled
to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, whether
voluntary or involuntary, as the case may be, in preference or priority
to the holders of shares of this Series;
(ii) On a parity with shares of this Series, either as to dividends or upon
liquidation, whether or not the dividend rates, Dividend Payment Dates,
or redemption or liquidation prices per share or sinking fund
provisions, if any, are different from those of this Series, if the
holders of such stock are entitled to the receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of
the Corporation, whether voluntary or involuntary, in proportion to
their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of
such stock and the holders of shares of this Series; and
(iii) Junior to shares of this Series, either as to dividends or
upon liquidation, if such class or series shall be Common Stock or if
the holders of shares of this Series shall be entitled to receipt of
dividends or of amounts distributable upon dissolution, liquidation or
winding up of the Corporation, whether voluntary or involuntary, as the
case may be, in preference or priority to the holders of shares of such
class or series.
(H) NOTICES
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Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:30 p.m. (New York City time) on a Business Day, (ii) the
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section at or later than 5:30 p.m. (New York City time) on any date and earlier
than 11:59 p.m. (New York City time) on such date, (iii) the Business Day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be: (i) if to
the Corporation, to Park Road Extension, Middlebury, Connecticut 06762-1299;
facsimile number (203) 577-6244, attention Chief Financial Officer, or (ii) if
to a holder of shares of this Series, to such holder at the address or facsimile
number appearing on the register of the shares of this Series or such other
address or facsimile number as such holder may provide to the Corporation in
accordance with this Section.
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IN WITNESS WHEREOF, General DataComm Industries, Inc. has caused
this certificate to be signed and attested this 31st day of July, 2000.
GENERAL DATACOMM INDUSTRIES, INC.
By /S/ WILLIAM G. HENRY
Title: Vice President, Finance
Attest: /S/ HOWARD S. MODLIN
Secretary
