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THIS DOCUMENT IS A COPY OF THE SCHEDULE 13D FILED ON JANUARY 12, 1998,
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Berger Holdings, Ltd.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
084037 40 7
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(CUSIP Number)
JOHN P. KIRWIN, III
Argosy Investment Partners, L.P.
950 West Valley Road, Suite 2902
Wayne, Pennsylvania 19087
(610) 971-9685
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 2, 1998
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [__].
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act.
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CUSIP No. 084037 40 7
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1. Name of Reporting Person and I.R.S. Identification Number
Argosy Investment Partners, L.P. - Taxpayer I.D. #23-2894403
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2. Check the Appropriate Row if a Member of a Group (See Instructions)
(a) N/A
(b) N/A
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3. SEC Use Only
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4. Source of Funds
WC
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d)
or 2(e)
N/A
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6. Citizenship or Place of Organization
Pennsylvania
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Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power Total of 412,935 shares of Common Stock, as
follows:
352,935 shares of Common Stock, receivable upon
conversion of 15,000 shares of Series A
Convertible Preferred Stock (the "Preferred
Stock") at any time; plus
60,000 shares of Common Stock, receivable upon
exercise of warrant at any time prior to January
2, 2003.
8. Shared Voting Power N/A
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9. Sole Dispositive Power Total of 412,935 shares of Common Stock, as
follows:
352,935 shares of Common Stock, receivable upon
conversion of 15,000 shares of Preferred Stock at
any time; plus
60,000 shares of Common Stock, receivable upon
exercise of warrant at any time prior to January
2, 2003.
10. Shared Dispositive Power N/A
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
Total of 412,935 shares of Common Stock, as follows:
352,935 shares of Common Stock, receivable upon conversion of 15,000
shares of Preferred Stock at any time; plus
60,000 shares of Common Stock, receivable upon exercise of warrant at
any time prior to January 2, 2003.
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12. Check if Aggregate Amount in Row (11) Excludes Certain Shares
N/A
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13. Percent of Class Represented by Amount in Row (11)
7.9%
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14. Type of Reporting Person
PN
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ITEM 1. SECURITY AND ISSUER.
This Schedule 13D is filed in connection with the beneficial ownership
of the $.01 par value Common Stock (the "Common Stock") of Berger Holdings,
Ltd., a Pennsylvania corporation (the "Issuer"). The address of the principal
executive office of the Issuer is 805 Pennsylvania Boulevard, Feasterville,
Pennsylvania 19053.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13D is filed by Argosy Investment Partners, L.P., a
Pennsylvania limited partnership (the "Partnership"). The Partnership is a small
business investment company licensed by the United States Small Business
Administration. The principal business of the Partnership is to realize capital
appreciation by investing in securities of qualified small business concerns.
The address of the principal business and principal office of the Partnership is
950 West Valley Road, Suite 2902, Wayne, Pennsylvania 19087.
Pursuant to Instruction C of Schedule 13D, the following information is
provided with respect to the general partner of the Partnership. Argosy
Associates, L.P., is the general partner of the Partnership (the "General
Partner"). The business of the General Partner is to act as general partner of
Partnership. The address of the principal business and principal office of the
General Partner is 950 West Valley Road, Suite 2902, Wayne, Pennsylvania 19087.
Neither the Partnership nor the General Partner has ever, including
during the last five years, been convicted in a criminal proceeding. Neither the
Partnership nor the General Partner has ever, including during the last five
years, been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction a result of which such proceeding is or was to subject
it to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or State securities laws
or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On January 2, 1998, the Partnership (i) purchased for $500,000 the
Issuer's 12.25% Debenture in the original principal amount of $500,000 (the
"Debenture"), (ii) received a Stock Purchase Warrant to purchase 60,000 shares
of the Common Stock of the Issuer (the "Warrant"), and (iii) purchased 15,000
shares of the Series A Convertible Preferred Stock of the Issuer for $1,500,000
(the "Preferred Stock"). These purchases were made with working capital of the
Partnership.
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ITEM 4. PURPOSE OF TRANSACTION.
The Partnership purchased the Debenture, the Warrant, and the Preferred
Stock for purposes of investment. The Partnership is entitled, together with the
other holder of the Preferred Stock, to elect two directors of the Issuer, and
it is intended that the Partnership shall select one such director. The Articles
of Incorporation of the Issuer, as amended, provide that in the event that the
Issuer fails to pay four consecutive Preferred Stock dividends, the holders of
the Preferred Stock, as a class, may elect a majority of the Board of Directors
of the Issuer. Neither the Partnership nor the General Partner has any intention
of changing or influencing the control of the Issuer other than as set forth
above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
After the purchase reported herein, the Partnership beneficially owns
412,935 shares of Common Stock of the Issuer, which such shares the Partnership
has the sole power to vote and the sole power to dispose. Such shares represent
7.9% of the outstanding Common Stock of the Issuer. The Partnership does not
have any other ownership, voting, or dispositive power with respect to any
Common Stock of the Issuer. The Partnership has not, during the last 60 days,
acquired any other Common Stock of the Issuer.
The General Partner, individually, does not beneficially own any shares
of Common Stock of the Issuer. The General Partner, individually, does not have
any ownership, voting, or dispositive power with respect to any Common Stock of
the Issuer. The General Partner, individually, has not, during the last 60 days,
acquired any Common Stock of the Issuer.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
There are no contracts, arrangements, understandings, or relationships
with respect to the securities of the Issuer to which the Partnership or the
General Partner are a party, except as herein described. As a party to that
certain Registration Rights Agreement dated January 2, 1998, the holders of the
Preferred Stock agreed that no holder would solicit proxies from any of the
Issuer's shareholders for any purpose or, other than with the holder's own
affiliates, act as a member of a group with any other holders of the Issuer's
Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The Articles of Amendment of the Articles of Incorporation of the
Issuer filed in the Commonwealth of Pennsylvania on December 30, 1997, are
attached hereto as Exhibit A.
[The balance of this page intentionally left blank.]
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Schedule 13D is true, complete,
and correct.
The Partnership:
ARGOSY INVESTMENT PARTNERS, L.P.
By: Argosy Associates, L.P., its general partner
By: Argosy Associates, Inc., its general partner
By: /s/ John P. Kirwin, III
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John P. Kirwin, III
General Partner:
Argosy Investment Associates, L.P.
By: Argosy Associates, Inc., its General Partner
By: /s/ John P. Kirwin, III
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John P. Kirwin, III
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STATEMENT WITH RESPECT TO SHARES
OF
BERGER HOLDINGS, LTD.
RESOLVED, that pursuant to the powers expressly delegated to the Board
of Directors by Article 6 of the Articles of Incorporation of the Corporation,
as amended, the Corporation hereby establishes and designates one series of
preferred stock and fixes and determines as set forth herein the relative rights
and preferences thereof as follows:
SECTION 1. DESIGNATION. There shall be established a series of
preferred stock, which shall consist of 40,000 shares of the authorized
preferred stock and shall be designated Series A Convertible Preferred Stock
(herein referred to as the "Preferred Stock").
SECTION 2. DIVIDENDS.
(A) The holders of Preferred Stock shall be entitled to
receive dividends (the "Preferred Dividend") payable in cash at the rate of
$10.00 per share per annum or such rate as modified under Section 2(b) herein
(the "Dividend Rate") on a cumulative basis from the actual date of original
issue of each share of Preferred Stock (the "Original Issue Date"), whether or
not declared, out of funds legally available therefor, payable quarterly in
arrears on the first day of each February, May, August, and November in each
year (each a "Dividend Payment Date"). Payments shall commence on the first such
date to occur after the Original Issue Date. Each such Preferred Dividend shall
be payable to the holders of record of the Preferred Stock at the close of
business on the preceding December 31, March 31, June 30, and September 30,
respectively. Each dividend shall be declared by the Board of Directors no more
than fifteen (15) days prior to its respective record date. Payments shall equal
$2.50 per share on each Dividend Payment Date or such lesser amount as shall
result from any proration in respect of any partial quarterly period. The amount
of Preferred Dividends payable upon the occurrence of any event described in
Sections 3, 5 or 7 hereof shall be computed by multiplying the applicable
Dividend Rate by a fraction, the numerator of which shall be the number of days
since the preceding Dividend Payment Date to the date of payment of such partial
Preferred Dividend and the denominator of which shall be 360.
(B) Beginning on the fifth anniversary of the Original Issue
Date, the Dividend Rate shall be adjusted by increasing the Dividend Rate to
$20.00 per share per annum, with the quarterly Preferred Dividend being
increased to $5.00 per share.
(C) So long as any of the shares of Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of or options, warrants or rights to subscribe for or purchase shares of Common
Stock) shall be declared or paid or set apart for payment by the Corporation or
other distribution of cash or other property declared or made directly or
indirectly by the Corporation or any affiliate or any person acting on behalf of
the Corporation or any of its affiliates with respect to any shares of Common
Stock or other capital stock over which the Preferred Stock has preference or
priority in the payments of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation ("Junior Stock"), nor
shall any shares of Junior Stock be redeemed, purchased or otherwise acquired
(other than a (i) purchase or other acquisition of Common Stock made for
purposes of any employee incentive or benefit plan of the Corporation or any
subsidiary or (ii) the purchase of up to 125,000 shares of Common Stock (as
adjusted for stock splits or stock dividends) pursuant to the "Put Option"
contained in the Asset Purchase Agreement dated as of
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December 3, 1997, by and among the Corporation and the parties thereto) 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) directly or indirectly by the
Corporation or any affiliate or any person acting on behalf of the Corporation
or any of its affiliates (except by conversion into or exchange for Junior
Stock), nor shall any other cash or other property otherwise be paid or
distributed to or for the benefit of any holder of shares of Junior Stock in
respect thereof, directly or indirectly, by the Corporation or any affiliate or
any person acting on behalf of the Corporation or any of its affiliates unless
in each case (x) the full Preferred Dividends (including all accumulated,
accrued and unpaid dividends) on all outstanding shares of Preferred Stock shall
have been paid or such dividends have been declared and set apart for payment
for the current dividend periods with respect to the Preferred Stock and (y)
sufficient funds shall have been paid or set apart for the payment of the full
Preferred Dividend for the current dividend period with respect to the Preferred
Stock.
(D) If and whenever a quarterly Preferred Dividend is not paid
on a Dividend Payment Date (whether or not declared), then the amount of such
Preferred Dividend remaining in arrears and unpaid from time to time shall bear
interest from such Dividend Payment Date until the date it is paid in full at an
annual rate equal to ten percent (10%). Interest payable in respect of Preferred
Dividends which are in arrears shall be computed on the basis of twelve (12) 30
- - day months and a 360-day year. No payment shall be applied to the Preferred
Dividend due on a Dividend Payment Date unless and until all arrears, including
interest thereon, with respect to accumulated, accrued but unpaid Preferred
Dividends shall have been paid.
SECTION 3. LIQUIDATION, DISSOLUTION, OR WINDING UP.
(A) In the event of any liquidation, dissolution, or winding
up of the Corporation, whether voluntary or involuntary, the holders of the
Preferred Stock shall be entitled to be paid first out of the assets of the
Corporation available for distribution to holders of the Corporation's capital
stock of all classes and before any sums shall be paid or any assets distributed
among the holders of shares of any other class or series of capital stock of the
Corporation, including Common Stock, an amount per share equal to One Hundred
Dollars ($100.00) plus an amount equal to all the accrued but unpaid Preferred
Dividends (whether or not declared), and the amount equal to all interest, if
any, on any Preferred Dividends in arrears, in each case to the date of final
distribution to such holders (the "Preference Amount"). Until the holders of the
Preferred Stock have been paid the Preference Amount in full, no payment will be
made to any holder of Junior Stock upon the liquidation, dissolution or winding
up of the Corporation. If the assets of the Corporation shall be insufficient to
permit the payment in full to the holders of the Preferred Stock of the
Preference Amounts, then the entire assets of the Corporation available for such
distribution shall be distributed ratably among the holders of the Preferred
Stock in proportion to the Preference Amount each such holder is otherwise
entitled to receive. After payment of the Preference Amount shall have been made
in full to the holders of the Preferred Stock or funds necessary for such
payment shall have been set aside by the Corporation in trust for the account of
holders of the Preferred Stock so as to be available for such payment, holders
of the Preferred Stock shall not be entitled to participate in the distribution
of any remaining assets of the Corporation.
(B) Any consolidation, merger or a statutory share exchange
(other than a (i) merger with a wholly-owned subsidiary of the Corporation, (ii)
or a mere reincorporation transaction, or (iii) a merger pursuant to which the
Corporation is the surviving entity and the capitalization of the Corporation
remains unchanged) in which the outstanding shares of capital stock of the
Corporation are exchanged for securities or other consideration of or from
another corporation, or a sale of all or substantially all the assets or stock
of the Corporation, shall be deemed to be a liquidation, dissolution,
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or winding up of the affairs of the Corporation within the meaning of this
Section 3, and shall entitle the holders of the Preferred Stock to receive on
the effective date of such event the Preference Amount, in cash, securities or
other property; provided, however, that any such event shall not be so regarded
as a liquidation, dissolution, or winding up of the affairs of the Corporation
with respect to the Preferred Stock if the holders of seventy-five percent (75%)
of the outstanding shares of the Preferred Stock approve such event or elect not
to have any such event deemed to be a liquidation, dissolution, or winding up of
the affairs of the Corporation by giving written notice thereof to the
Corporation at least ten (10) days prior to the effective date of such event.
(C) Whenever the distribution provided for in this Section 3
shall be paid in property other than cash, the value of such distribution shall
be the fair value thereof determined in good faith by the Board of Directors of
the Corporation.
SECTION 4. VOTING RIGHTS.
(A) Except as otherwise required by law, or as specifically
provided herein, the holders of Preferred Stock shall have full voting rights
and powers, and the holders of shares of Preferred Stock and Common Stock shall
vote together as a single class on all matters submitted to a vote of the
stockholders of the Corporation; provided, however, that solely with respect to
the right to elect and remove directors, the holders of Preferred Stock shall
not be entitled to vote pursuant to this Section 4(a), but the provisions of
Section 4(b) and (c) shall govern the rights of the holders of Preferred Stock
with respect to the election or removal of directions. In any vote pursuant to
the preceding sentence, each holder of Preferred Stock shall be entitled to that
number of votes equal to the number of shares of Common Stock which would be
issuable upon conversion of such shares of Preferred Stock, as provided in
Section 5(a) hereof (the "As Converted Number of Shares") of such holder (with
fractional shares rounded up or down to the nearest whole number) at the record
date for the determination of stockholders entitled to vote on such matters or,
if no such record date is established, at the date such vote is taken or any
written consent of stockholders is solicited. The holders of the Preferred Stock
shall be entitled to notice of any stockholders' meeting in accordance with the
Bylaws of the Corporation.
(B) The holders of the Preferred Stock, voting separately as
one class, shall have the exclusive and special right at all times to elect two
(2) directors (the "Preferred Directors") to the Board of Directors of the
Corporation provided, however, that so long as any shares of Preferred Stock are
outstanding, the Board of Directors shall not consist of more than nine (9)
members. The Preferred Directors shall be elected by the vote of the holders of
seventy-five percent (75%), and removed by the vote of the holders of
seventy-five percent (75%), of the shares of Preferred Stock then outstanding.
The right of holders of the Preferred Stock contained in this Section 4(b) may
be exercised either at a special meeting of the holders of Preferred Stock or at
any annual or special meeting of the stockholders of the Corporation, or by
written consent of such holders in lieu of a meeting. Upon the written request
of the holders of record of at least a majority of the Preferred Stock then
outstanding, the Secretary of the Corporation shall call a special meeting of
the holders of Preferred Stock for the purpose of (i) removing any Preferred
Director elected pursuant to this Section 4(b) and/or (ii) electing director(s)
to fill a vacancy of the directorship authorized to be filled by the holders of
Preferred Stock pursuant to this Section 4(b). Such meeting shall be held at the
earliest practicable date.
At any meeting held for the purpose of electing or removing a Preferred
Director, the presence, in person or by proxy, of the holders of record of
seventy-five percent (75%) of the Preferred Stock then outstanding shall be
required to constitute a quorum of the Preferred Stock for such election.
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A vacancy in the directorship to be elected by the holders of Preferred Stock
pursuant to this Section 4(b) may be filled only by vote or written consent in
lieu of a meeting of the holders of seventy-five percent (75%) of the shares of
Preferred Stock then outstanding and may not be filled by the remaining
directors.
(C) If and whenever four (4) quarterly dividends (whether or
not consecutive) payable on the Preferred Stock shall be in arrears (which
shall, with respect to any such quarterly dividend, mean that any such dividend
has not been paid in full), whether or not earned or declared, the number of
directors then constituting the Board of Directors shall be increased to a
number which allows for holders of the Preferred Stock to elect a majority of
the entire Board of Directors at a special meeting of stockholders called as
hereinafter provided. Whenever all arrears in dividends on the Preferred Stock
(together with interest on dividends in arrears pursuant to Section 2(d) above)
shall have been paid and dividends thereon for the current quarterly dividend
period shall have been paid or declared and set apart for payment, then the
right of the holders of the Preferred Stock to elect such additional directors
shall cease (but subject always to the same provision of the vesting of such
special voting rights in the case of any similar future arrearages in four (4)
quarterly dividends), and the terms of office of all persons elected as
additional directors by the holders of the Preferred Stock pursuant to this
Section 4(c) shall forthwith terminate and the number of the Board of Directors
shall be reduced accordingly. At any time after such additional voting power
shall have been so vested in the holders of the Preferred Stock, the Secretary
of the Corporation may, and upon the written request of any holder of Preferred
stock (addressed to the Secretary at the principal office of the Corporation)
shall, call a special meeting of the holders of the Preferred Stock for the
election of the additional directors to be elected by them as herein provided,
such call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within twenty (20) days after receipt of any such
request, then any holder of Preferred Stock may call such meeting, upon the
notice above provided, and for that purpose shall have access to the stock books
of the Corporation. The additional Preferred Directors elected at any special
meeting shall hold office until the next annual meeting of the stockholders or
special meeting held in lieu thereof if such office shall not have previously
terminated as above provided. If any vacancy shall occur among the additional
Preferred Directors, a successor shall be elected by the Board of Directors,
upon the nomination of the then remaining Preferred Directors or the successor
of such remaining directors, to serve until the next annual meeting of the
stockholders or special meeting held in place thereof if such office shall not
have previously terminated as above provided.
SECTION 5. CONVERSION RIGHTS. The holders of the Preferred Stock shall
have the following conversion rights:
(A) RIGHT TO CONVERT. Each share of Preferred Stock shall be
convertible at any time, and from time to time, at the option of the holder
thereof, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing One Hundred Dollars ($100.00) (the "Numerator") by
the Conversion Price (as defined below) in effect at the time of conversion. The
conversion price at which shares of Common Stock shall be deliverable upon
conversion of Preferred Stock without the payment of additional consideration by
the holder thereof (the "Conversion Price") initially shall be Four and 25/100
Dollars ($4.25). Such initial Conversion Price, and the rate at which shares of
Preferred Stock may be converted into shares of Common Stock, shall be subject
to adjustment as provided below. The conversion rights of the holders of
Preferred Stock shall terminate (i) in the event of a liquidation of the
Corporation, at the close of business on the first full day preceding the date
fixed for the payment of any amounts distributable on liquidation to the holders
of
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Preferred Stock; and (ii) in the event shares of Preferred Stock are called
for redemption pursuant to Section 7 hereof, at the close of business on the
Redemption Date (as defined in Section 7(a) below), unless the Corporation shall
default in making payment in full of the Redemption Price.
(B) ADJUSTMENT TO CONVERSION PRICE UPON OCCURRENCE OF
EXTRAORDINARY COMMON STOCK EVENT. Upon the happening of an Extraordinary Common
Stock Event (as hereinafter defined), the Conversion Price for the Preferred
Stock, simultaneously with the happening of such Extraordinary Common Stock
Event, shall be adjusted by multiplying the then-effective Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such Extraordinary Common Stock Event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such Extraordinary Common Stock Event, and the product so
obtained thereafter shall be the Conversion Price for the Preferred Stock. The
Conversion Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive Extraordinary Common Stock Event(s).
"Extraordinary Common Stock Event" shall mean (i) the issuance of additional
shares of Common Stock as a dividend or other distribution on outstanding Common
Stock, (ii) a stock split or subdivision of outstanding shares of Common Stock
into a greater number of shares of Common Stock, or (iii) a reverse stock split
or combination of outstanding shares of Common Stock into a smaller number of
shares of Common Stock.
(C) RECAPITALIZATION OR RECLASSIFICATION. If the Common Stock
issuable upon the conversion of the Preferred Stock shall be changed into the
same or a different number of shares of any class or classes of stock of the
Corporation, whether by recapitalization, reclassification, or otherwise (other
than a subdivision or combination of shares or stock dividend provided for in
Section 5(b) hereof, or a reorganization, merger, share exchange, consolidation,
or sale of assets provided for in Section 5(d) hereof), then and in each such
event the holder of each share of Preferred Stock shall have the right
thereafter to convert such share into the kind and amount of shares of stock and
other securities and property receivable upon such recapitalization,
reclassification, or other change by holders of the number of shares of Common
Stock into which such share of Preferred Stock might have been converted
immediately prior to such recapitalization, reclassification, or change, all
subject to further adjustment as provided herein.
(D) CAPITAL REORGANIZATION, MERGER, SHARE EXCHANGE,
CONSOLIDATION, OR SALE OF ASSETS. If at any time or from time to time there
shall be a capital reorganization of the Common Stock, including a merger, share
exchange, consolidation, or sale of all or substantially all of assets of the
Corporation (other than a subdivision or combination of shares or stock dividend
provided for in Section 5(b) hereof or a recapitalization or reclassification
provided for in Section 5(c) hereof), then, as a part of such reorganization,
provision shall be made so that the holders of the Preferred Stock thereafter
shall be entitled to receive, upon conversion of each share of the Preferred
Stock, the number of shares of stock or other securities or property to which a
holder of the number of shares of Common Stock into which such shares of
Preferred Stock might have been converted immediately prior to such capital
reorganization would have been entitled to receive. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 5 with respect to the rights of the holders of the Preferred Stock
after the reorganization to the end that the provisions of this Section 5
(including adjustment of the Conversion Price then in effect and the number of
shares acquired upon conversion of the Preferred Stock) shall be applicable
after that event in as nearly equivalent a manner as may be practicable.
Notwithstanding the foregoing, in the case of a consolidation, merger, share
exchange, or sale of all or substantially all the assets of the Corporation, the
provisions of Section 3(b) shall apply to the Preferred Stock, and this Section
5(d) shall not apply, unless, as provided in Section 3(b) the holders of seventy
five percent (75%) of the outstanding shares of Preferred Stock elect that
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such event shall not be deemed to be a liquidation, dissolution, or winding up
of the affairs of the Corporation.
(E) CERTAIN DILUTIVE ISSUES.
(I) SPECIAL DEFINITIONS. For purposes of this
Section 5(e), the following definitions apply:
(1) "Options" shall mean rights, options, or
warrants to subscribe for, purchase or otherwise acquire either Common
Stock or Convertible Securities (as defined below), except for (A)
currently exercisable options and warrants to purchase an aggregate of
1,539,248 shares of Common Stock outstanding on the Original Issue
Date (the "Outstanding Options"); (B) options to purchase an aggregate
of 1,270,000 shares of Common Stock granted or provided for but not
exercisable as of the Original Issue Date (the "Agreed Options"), (C)
rights or options to acquire up to an aggregate of 250,000 shares of
Common Stock which may be granted to employees, directors or
consultants to the Corporation at an exercise price of no less than
the Fair Market Value (as defined in Section 5(h) below) on the date
of grant (the "Future Options") and (D) warrants to purchase an
aggregate of 350,000 shares of Common Stock granted and reserved for
issuance on the Original Issue Date (the "Current Warrants").
(2) "Convertible Securities" shall mean any
evidences of indebtedness, shares of stock (other than Common Stock
and Preferred Stock) or other securities convertible into or
exchangeable for Common Stock.
(3) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued (or deemed to be issued
pursuant to Section 5(e)(iii)) by the Corporation after the Original
Issue Date, other than shares of Common Stock issued or issuable upon
(i) upon conversion of shares of Preferred Stock or as a dividend or
distribution on Preferred Stock, (ii) upon the exercise of the
Outstanding Options; (iii) upon the exercise of the Agreed Options,
(iv) upon the exercise of any Future Options, or (v) upon the exercise
of the Current Warrants.
(II) NO ADJUSTMENT OF CONVERSION PRICE. Any
provision herein to the contrary notwithstanding, no adjustment in the number of
shares of Common Stock into which shares of Preferred Stock is convertible shall
be made, by adjustment in the Conversion Price, unless the consideration per
share (determined pursuant to Section 5(e)(v) hereof) for an Additional Share of
Common Stock issued or deemed to be issued by the Corporation is less than the
Conversion Price in effect on the date of, and immediately prior to, the issue
of such Additional Shares of Common Stock.
(III) ISSUE OF OPTIONS AND CONVERTIBLE SECURITIES.
In the event the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of securities then
entitled to receive any such Options or Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein for a subsequent adjustment of such number)
of Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been
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fixed, as of the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to Section 5(e)(v) hereof) of
such Additional Shares of Common Stock would be less than the Conversion Price
in effect on the date of and immediately prior to such issue, or such record
date, as the case may be, and provided that in any such case in which Additional
Shares of Common Stock are deemed to be issued:
(1) no further adjustments in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Corporation, or decrease or
increase in the number of shares of Common Stock issuable upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options or the rights of conversion or exchange under
such Convertible Securities, provided, however, that no such adjustment of the
Conversion Price shall affect Common Stock previously issued upon conversion of
shares of Preferred Stock;
(3) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities that shall
not have been exercised, the Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration, be recomputed
as if:
(A) in the case of Convertible Securities
or Options for Common Stock, the only Additional Shares of Common Stock issued
were the shares of Common Stock, if any, actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible Securities and
the consideration received therefor was the consideration actually received by
the Corporation for the issue of all such Options, whether or not exercised,
plus the consideration actually received by the Corporation upon such exercise,
or for the issue of all such Convertible Securities that were actually converted
or exchanged, plus the additional consideration, if any, actually received by
the Corporation upon such conversion or exchange, and
(B) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the Corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the Corporation for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the Corporation
(determined pursuant to Section 5(e)(v)) upon the issue of the Convertible
Securities with respect to which such Options were actually exercised;
(4) no readjustment pursuant to Section 5(e)(iii)(2)
or (3) above shall have the effect of increasing the Conversion Price to an
amount which exceeds the lower of (a) the Conversion Price prior to the initial
adjustment to which the readjustment applies, or (b)
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the Conversion Price that would have resulted from any issuance of Additional
Shares of Common Stock between the date of the initial adjustment date and such
readjustment date; and
(5) in the event of any change in the number of
shares of Common Stock issuable upon the exercise, conversion or exchange of any
Option or Convertible Security, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Conversion Price then in
effect shall forthwith be readjusted to such Conversion Price as would have been
obtained had the adjustment which was initially made upon the issuance of such
unexercised Option or unconverted Convertible Security, been made upon the basis
of such subsequent change, but no further adjustment shall be made for the
actual issuance of Common Stock upon the exercise or conversion of any such
Option or Convertible Security.
(IV) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE
OF ADDITIONAL SHARES OF COMMON STOCK. In the event the Corporation at any time
after the Original Issue Date shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
Section 5(e)(iii)), without consideration or for a consideration per share less
than the Conversion Price in effect on the date of and immediately prior to such
issue, then and in such event, the Conversion Price shall be reduced to a price
(calculated to the nearest cent) determined by multiplying the then current
Conversion Price by a fraction the numerator of which shall be the sum of
(A) the number of shares of Common Stock
outstanding immediately prior to such issue, plus
(B) the number of shares of Common Stock
which the aggregate consideration received by the Corporation for the total
number of Additional Shares of Common Stock so issued would purchase at the
Conversion Price in effect immediately prior to such issuance
and the denominator of which shall be the sum of
(X) the number of shares of Common Stock
outstanding immediately prior to such issue, plus
(Y) the number of such Additional Shares of
Common Stock so issued.
For the purpose of the above calculation, the number of shares of Common Stock
outstanding shall be calculated on a fully diluted basis, as if all shares of
Preferred Stock and all other Convertible Securities had been fully converted
into shares of Common Stock immediately prior to such issuance, and any
outstanding warrants, options or other rights for the purchase of shares of
stock or Convertible Securities had been fully exercised immediately prior to
such issuance, and the resulting securities fully converted into shares of
Common Stock, if so convertible as of such date. This calculation shall not
include, however, any Additional Shares of Common Stock issuable with respect to
shares of Preferred Stock, Convertible Securities or outstanding options,
warrants or other rights for the purchase of shares or Convertible Securities,
solely as a result of adjustment of the Conversion Price resulting from the
issuance of Additional Shares of Common Stock causing such adjustment.
The provisions of this Section 5(e)(iv) do not apply if the provisions
of any of Section 5(b), (c) or (d) apply.
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(V) DETERMINATION OF CONSIDERATION. The
consideration received by the Corporation for the issue of any Additional Shares
of Common Stock shall be computed as follows:
(1) CASH, PROPERTY, AND OTHER CONSIDERATION.
Such consideration shall:
(A) insofar as it consists of cash, be
computed as the aggregate amount of cash received by the Corporation excluding
amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property,
services, or other consideration other than cash, be computed at the fair value
thereof at the time of such issue, as determined in good faith by the Board of
Directors; and
(C) in the event Additional Shares of
Common Stock are issued together with other shares or securities or other assets
of the Corporation for consideration which covers both, be the proportion of the
consideration so received, computed as provided in clauses (a) and (b) above, as
is determined in good faith by the Board of Directors.
(2) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Options and Convertible
Securities, shall be deemed to be the sum of the consideration paid for such
Option or Convertible Security, if any, plus the lowest consideration per share
then payable upon the exercise of Options, as set forth in the instruments
relating to such Options or Convertible Securities, without regard to any
provision contained therein designed to protect against dilution. If Options or
Convertible Securities are issued together with other securities or instruments
of the Corporation, the Board of Directors shall determine in good faith the
amount of consideration paid for such Option or Convertible Securities.
(F) CERTIFICATE AS TO ADJUSTMENTS. In each case of an
adjustment or readjustment of the Conversion Price of the Preferred Stock, the
Corporation will furnish each holder of the Preferred Stock with a certificate
prepared by the Chief Financial Officer of the Corporation showing such
adjustment or readjustment and stating in detail the facts upon which such
adjustment or readjustment is based.
(G) EXERCISE OF CONVERSION PRIVILEGE. To exercise its
conversion privilege, a holder of Preferred Stock shall surrender the
certificate(s) representing the shares being converted to the Corporation at its
principal office, accompanied by written notice to the Corporation at that
office that such stockholder elects to convert such shares (a "Conversion
Notice"). The Conversion Notice also shall state the name(s) and address(es) in
which the certificate(s) for shares of Common Stock issuable upon such
conversion shall be issued. The certificate(s) for shares of Preferred Stock
surrendered for conversion shall be accompanied by proper assignment thereof to
the Corporation or in blank. The date when the Conversion Notice is received by
the Corporation together with the certificate(s) representing the shares of
Preferred Stock being converted shall be the "Conversion Date." As promptly as
practicable after the Conversion Date, the Corporation shall issue and deliver
to the holder of the shares of Preferred Stock being converted, or on its
written order, such certificate(s) as it may request of the number of whole
shares of Common Stock issuable upon the conversion of such shares of Preferred
Stock in accordance with the provisions of this Section 5 and cash, as provided
in
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Section 5(h), in respect of any fraction of a share of Common Stock issuable
upon such conversion. Such conversion shall be deemed to have been effected
immediately prior to the close of business on the Conversion Date, and at such
time the rights of the holder as a holder of the converted shares of Preferred
Stock shall cease and the person(s) in whose name(s) any certificate(s) for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder(s) of record of the shares of Common Stock represented
thereby.
(H) CASH IN LIEU OF FRACTIONAL SHARES. No fractional shares of
Common Stock or scrip representing fractional shares shall be issued upon the
conversion of shares of Preferred Stock. Instead of any fractional shares of
Common Stock that otherwise would be issuable upon conversion of a series of
Preferred Stock, the Corporation shall pay to the holder of the shares of
Preferred Stock that were converted a cash adjustment in respect of such
fractional shares in an amount equal to the same fraction of the Fair Market
Value price per share of the Common Stock at the close of business on the
Conversion Date. "Fair Market Value" shall mean (i) in the case of a security
listed or admitted to trading on any securities exchange, the last reported sale
price, regular way (as determined in accordance with the practices of such
exchange), on such day, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day (and in the case of a security
traded on more than one national securities exchange, at such price or such
average, upon the exchange on which the volume of trading during the last
calendar year was the greatest), (ii) in the case of a security not then listed
or admitted to trading on any securities exchange, the last reported sale price
on such day, or if no sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a reputable quotation service
designated by the Corporation, (iii) in the case of a security not then listed
or admitted to trading on any securities exchange and as to which no such
reported sale price or bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported by a reputable
quotation service, or the Wall Street Journal, or if there are no bids and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than 30 days prior to the date in
question) for which prices have been so reported, and (iv) in the case of a
security determined by the Corporation's Board of Directors as not having an
active quoted market or in the case of other property, such fair market value as
shall be determined by the Board of Directors. The determination as to whether
any fractional shares are issuable shall be based upon the total number of
shares of Preferred Stock being converted at any one time by any holder thereof,
not upon each share of Preferred Stock being converted.
(I) RESERVATION OF COMMON STOCK. The Corporation at all times
shall reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the shares
of the Preferred Stock, such number of its shares of Common Stock as from time
to time shall be sufficient to effect the conversion of all outstanding shares
of the Preferred Stock.
SECTION 6. RESTRICTIONS AND LIMITATIONS; VOTING AS A CLASS. So long as
any shares of Preferred Stock remain outstanding, in addition to any other vote
or consent of stockholders required by law or the Articles of Incorporation, the
Corporation will not take any of the following actions without the affirmative
vote or consent (with each share of Preferred Stock being entitled to one vote)
of the holders of at least seventy-five percent (75%) of the outstanding shares
of the Preferred Stock, given in writing or by resolution adopted at a meeting
called for such purpose:
(A) amend the Articles of Incorporation or Bylaws of the
Corporation if such amendment would:
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(I) reduce the Dividend Rate on the Preferred Stock
provided for herein, make such dividends noncumulative, defer the date
from which dividends will accrue, cancel accrued and unpaid dividends,
or change the relative seniority rights of the holders of the Preferred
Stock as to the payment of dividends in relation to the holders of any
other capital stock of the Corporation;
(II) reduce the amount payable to the holders of the
Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, or change the relative
seniority of the liquidation preferences of the holders of the
Preferred Stock;
(III) reduce the Redemption Price specified in
Section 7 hereof with respect to the Preferred Stock;
(IV) cancel or modify the conversion rights of the
Preferred Stock provided for in Section 5 hereof; or
(V) adversely affect any of the rights, preferences
or privileges provided for herein for the benefit of any shares of Preferred
Stock; provided that no issuance of equity securities which shall have been
approved under Section 6(d) hereof (or which does not require approval under
such Section 6(d)) shall be deemed to have such an adverse effect.
(B) redeem, purchase or otherwise acquire for value (or pay
into or set aside for a sinking fund for such purpose) any share or shares of
Preferred Stock otherwise than by redemption of Preferred Stock in accordance
with Section 7 hereof or by conversion in accordance with Section 5 hereof;
(C) redeem, purchase or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose) any share or shares of Junior Stock,
except for (i) a purchase or other acquisition of Common Stock made for purposes
of any employee incentive or benefit plan of the Corporation or any subsidiary,
or (ii) the purchase of up to 125,000 shares of Common Stock (as adjusted for
stock splits or stock dividends) pursuant to the "Put Option" contained in the
Asset Purchase Agreement dated as of December 3, 1997, by and among the
Corporation and the parties thereto.
(D) authorize or issue, or obligate itself to issue, any other
equity security (i) senior to or on a parity with the Preferred Stock as to
dividend rights or redemption rights or liquidation preferences or (ii) which
entitles the holders thereof to voting rights equal to at least twenty percent
(20%) of the outstanding voting power of all capital stock of the Corporation or
to elect directors which constitute twenty percent (20%) or more of the Board of
Directors;
(E) effect any sale, lease, assignment, transfer, or other
conveyance of all or substantially all of the assets of the Corporation or any
of its subsidiaries, or any consolidation or merger involving the Corporation or
any of its subsidiaries, except (i) merger with wholly-owned subsidiary of the
Corporation, (ii) a mere reincorporation transaction, or (iii) a merger pursuant
to which the Corporation is the surviving entity and the capitalization of the
Corporation remains unchanged, or (iv) upon an election by the holders of
Preferred Stock pursuant to Section 3(b) hereof;
(F) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Preferred Stock (which
shall not prohibit the increase or decrease by the Corporation of the total
number of authorized shares of preferred stock); or
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(G) effect any change in the rights or limitations of the
Common Stock, or any recapitalization of the Corporation.
SECTION 7. REDEMPTION.
(A) REDEMPTION AT THE OPTION OF THE CORPORATION. Shares of
Preferred Stock shall not be redeemable by the Corporation at any time prior to
the second anniversary of the Original Issue Date. On and after the second (2nd)
anniversary of the Original Issue Date, at the option of the Corporation, the
Corporation may fix a date (the "Redemption Date") on which it shall redeem all
(but not less than all) of the then outstanding shares of Preferred Stock by
paying in cash, out of funds legally available therefor, to the holders thereof
and in respect of each such share of Preferred Stock, the Redemption Price (as
defined below), (i) at any time prior to the fifth anniversary of the Original
Issue Date but only in the event that the average bid price of the Common Stock
of the Corporation exceeds Nine Dollars ($9.00) per share (without giving effect
to any stock splits, stock dividends or recapitalizations after the Original
Issue Date), with respect to each of the twenty (20) consecutive Trading Days
(as defined below) immediately preceding the date of the Redemption Notice (as
defined in Section 7(b) below), or (ii) at any time after the fifth anniversary
of the Original Issue Date. A holder of Preferred Stock may elect, by written
notice delivered to the Corporation not less than ten (10) days prior to the
Redemption Date, to waive its right to have redeemed all (but not less than all)
of the shares of Preferred Stock held by such holder which are eligible to be
redeemed on such Redemption Date, provided that on such Redemption Date each
such share of Preferred Stock which is not redeemed shall be converted
automatically into shares of Common Stock at the Conversion Price then in effect
on such Redemption Date. The term "Trading Day" shall mean any day other than
Saturday or Sunday on which national securities exchanges are open for trading
and trades in Corporation Common Stock occur. The term "Redemption Price" shall
mean an amount per share equal to (A) for any redemption pursuant to clause (i)
above, the Preference Amount (determined as provided in Section 3(a) hereof);
and (B) for any redemption pursuant to clause (ii) above, One Hundred Five
Dollars ($105.00) plus an amount equal to all the accrued but unpaid Preferred
Dividends (whether or not declared), and the amount equal to all interest, if
any, on any Preferred Dividends in arrears, in each case to the Redemption Date.
(B) PROCEDURES FOR REDEMPTION OF PREFERRED STOCK. At least
thirty (30) days but not more than forty-five (45) days prior to the Redemption
Date the Corporation shall mail a written notice, first class postage prepaid,
to each holder of record at the close of business on the business day preceding
the day on which notice is given, of the Preferred Stock to be redeemed, at the
address last shown on the records of the Corporation for such holder, notifying
such holder of the redemption to be effected, specifying (i) that all shares of
Preferred Stock shall be redeemed from such holder, (ii) the Redemption Date,
(iii) the Redemption Price, (iv) the place at which payment may be obtained, (v)
advising such holder of its right to elect to waive its right to have all (but
not less than all) such shares redeemed and that, if such election is made, such
shares of Preferred Stock which are not redeemed shall be converted
automatically into shares of Common Stock at the Conversion Price then in effect
(setting forth such Conversion Price), and (vi) calling upon such holder to
surrender to the Corporation, in the manner and at the place designated, its
certificate or certificates representing the shares to be redeemed (the
"Redemption Notice"). On or after the Redemption Date, each holder of Preferred
Stock to be redeemed shall surrender to the Corporation the certificate or
certificates representing such shares, in the manner and at the place designated
in the Redemption Notice, and thereupon the Redemption Price of such shares
shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled. From and after each Redemption Date, unless there
shall have been a default in payment of the Redemption Price, any
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shares of Preferred Stock redeemed on such Redemption Date shall not be entitled
to any further rights as Preferred Stock and shall not be deemed outstanding for
any purpose. If the funds of the Corporation legally available for redemption of
shares of Preferred Stock on any Redemption Date are insufficient to redeem the
total number of shares of Preferred Stock to be redeemed on such date, those
funds which are legally available will be used to redeem the maximum possible
number of such shares ratably among the holders of such shares to be redeemed
based upon the number of shares of Preferred Stock held by each such holder. The
shares of Preferred Stock not redeemed shall remain outstanding and entitled to
all the rights and preferences provided herein. At any time thereafter when
additional funds of the Corporation are legally available for the redemption of
shares of Preferred Stock such funds will be used immediately to redeem the
balance of the shares which the Corporation has become obliged to redeem on any
Redemption Date, but which it has not redeemed, it being understood that any
such redemption shall not constitute a waiver by a holder of Preferred Stock of
any rights derived from the failure to redeem on the Redemption Date.
SECTION 8. NO REISSUANCE OF CONVERTIBLE PREFERRED STOCK; STATUS OF
STOCK. No share of Preferred Stock acquired by the Corporation by reason of
redemption, purchase, conversion, or otherwise shall be reissued, and all such
shares shall be restored to the status of authorized but unissued shares of
preferred stock, without designation as to rights, limitations or preferences.
SECTION 9. NO DILUTION OR IMPAIRMENT. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, share exchange, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of the Preferred Stock set forth
herein, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of the Preferred Stock
against dilution or other impairment.
SECTION 10. NOTICES OF RECORD DATE. In the event of any:
(A) taking by the Corporation of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase, or otherwise acquire any shares of stock of any class
or any other securities or property, or to receive any other right; or
(B) capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation,
any merger, consolidation, or share exchange of the Corporation, or any transfer
of all or substantially all the assets of the Corporation to any other
corporation, or any other entity or person; or
(C) voluntary or involuntary dissolution, liquidation, or
winding up the Corporation;
then and in each such event the Corporation shall mail or cause to be mailed to
each holder of Preferred Stock a notice specifying (i) the record date for such
dividend, distribution, or right and a description of such dividend,
distribution, or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger, share
exchange, dissolution, liquidation, or winding up is expected to become
effective, and (iii) the time, if any, that is to be fixed as to when the
holders of record of Common Stock (or other securities) shall be entitled to
exchange their shares of Common Stock (or other securities) for securities or
other property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, share exchange,
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dissolution, liquidation, or winding up. Such notice shall be mailed at least
ten (10) days prior to the date specified in such notice on which such action is
to be taken.
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