SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event report)November 28, 1995
Commission File Number 0-12516
Dynamic Healthcare Technologies, Inc.
(Exact name of registrant as specified in its charter)
Nebraska 0-12516 47-0643468
(State or other jurisdiction (Commission File Number)(IRS E.I.N.)
of Incorporation)
101 Southhall Lane, Suite 210 Maitland, Florida 32751
Address of principal executive offices) (ZIP Code)
(407) 875-9991
(Registrant's telephone, including area code)
None
(Former name of former address, if changed from last report)
This report consists of thirty (30) pages.
The index to exhibit appears on page five (5).<PAGE>
FORM 8-K
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
NOVEMBER 28, 1995
Item 1. Changes in Control of Registrant
None.
Item 2. Acquisition or Disposition of Assets
None.
Item 3. Bankruptcy or Receivership
None.
Item 4. Changes in Registrant's Certifying Accountants
None.
Item 5. Other Events
On November 28, 1995, the Registrant pursuant to unanimous
approval by the Registrant's Board of Directors filed the
Designation of Series A Preferred Stock ("Series A Shares") and
Series B Preferred Stock ("Series B Shares") with the State of
Nebraska Secretary's office authorizing 1,055,938 shares of 9%
Series A Cumulative Convertible Preferred Stock and 4,384,375
shares of 9% Series B Cumulative Convertible Preferred Stock. In
connection therewith, on November 28, 1995, all of the $775,000
of previously outstanding Subordinated Convertible Notes were
converted to an aggregate of 968,750 Series A Shares.
On December 5, 1995 the Registrant closed a Private Placement
resulting in $2.7 million of new equity investment into the
Registrant in exchange for 3,375,000 Series B Preferred Shares.
Although the Offering has been completed, final closing is
expected to provide $350,000 of additional proceeds on or before
December 31, 1995 in exchange for 437,500 Series B Preferred
Shares.
Also on December 5, 1995 the Registrant received acceptance of a
Letter of Intent to acquire all of the outstanding common stock
of Dimensional Medicine, Inc. ("DMI") for approximately $550,000.
In addition, the Registrant intends to retire certain debt of DMI
at the closing of approximately $600,000. The proposed
transaction is subject to the approval of both company's Board of
Directors, and DMI shareholders, and the negotiation and
execution of definitive agreements.
On December 7, 1995 the Registrant refinanced its demand Line of
Credit with the Bank. The then outstanding balance of $3.4
million was extinguished by a $600,000 cash payment and the issuance of a Term
Note in the amount of $2,800,000 in favor of
the Bank. The Term Note is payable in fixed monthly payments of
principal and interest of $29,911 beginning January 1, 1996 and
a balloon payment on March 31, 1998. The Term Note bears a
floating interest rate equal to the Bank's prime rate plus two
percent (2%) per annum, which was 10.75% as of December 8, 1995.
Item 6. Resignations of Registrant's Directors
None.
Item 7. Financial Statements and Exhibits
None.
Item 8. Change in Fiscal Year
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
(Registrant)
Date: December 11, 1995 /S/MITCHEL J.LASKEY
Mitchel J. Laskey
President , COO
Date: December 11, 1995 /S/PAUL S. GLOVER
Paul S. Glover
Vice President of Finance, CFO
<PAGE>
FORM 8-K
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
INDEX TO EXHIBITS
Description of Exhibits: Page Number
Exhibit 4: Designation of Series A
Preferred Stock and Series B Preferred Stock 6
Exhibit 20(a):November 28, 1995 Press Release 23
Exhibit 20(b):December 5, 1995 Press Release 24
Exhibit 20(c):December 7, 1995 Press Release 26
Exhibit 20(d):December 10, 1995 Press Release 28
<PAGE>
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
DESIGNATION OF SERIES A PREFERRED STOCK AND
SERIES B PREFERRED STOCK
1. The name of the corporation is Dynamic Healthcare
Technologies, Inc. (the "Corporation").
2. The resolution determining the Series A Preferred Stock
and Series B Preferred Stock is as follows:
NOW, THEREFORE BE IT RESOLVED: that the Corporation be, and it
hereby is, authorized to issue One Million Fifty Five Thousand
Nine Hundred and Thirty Eight (1,055,938) shares of 9% Series A
Cumulative Convertible Preferred Stock, $.01 par value (the
"Series A Preferred Stock") and Four Million Three Hundred Eighty
Four Thousand Three Hundred and Seventy Five (4,384,375) shares
of 9% Series B Cumulative Convertible Preferred Stock, $.01 par
value ("Series B Preferred Stock") which shall have the following
attributes:
1. Designations. One Million Fifty Five Thousand Nine
Hundred and Thirty Eight (1,055,938)shares of the Preferred Stock
of the Corporation shall constitute a series of Preferred Stock
designated as "9% Series A Cumulative Convertible Preferred
Stock" ("Series A Preferred Stock"). Four Million Three Hundred
Eighty Four Thousand Three Hundred and Seventy Five (4,384,375)
shares of the Preferred Stock of the Corporation shall constitute
a series of Preferred Stock designated as "9% Series B Cumulative
Convertible Preferred Stock" ("Series B PreferredStock").
2. Dividends. The holders of shares of Series A Preferred
Stock and Series B Preferred Stock each will be entitled to
receive, on a pari passu basis, when and as declared by the Board
of Directors out of assets of the Corporation legally available
for payment, an annual cash dividend at the rate of 9% of the
Conversion Value (as defined below) per share of the Series A
Preferred Stock and the Series B Preferred Stock, as the case may
be, payable quarterly in arrears on March 31, June 30, September
30 and December 31, commencing December 31, 1995 (each a
"dividend payment date"); provided that, if on any such day banks
in the City of New York are authorized or required to close,
dividends otherwise payable on such day will be payable on the
next day that banks in the City of New York are not authorized or
required to close. Such dividends on shares of the Series A
Preferred Stock and Series B Preferred Stock will be cumulative
from the date of initial issuance of such shares of Series A
Preferred Stock and Series B Preferred Stock, as the
case may be. Such dividends will be payable, in arrears, to
holders of record as they appear on the stock books of the
Corporation on such record dates, not more than 60 days nor less
than 10 days preceding the payment dates thereof, as shall be
fixed by the Board of Directors. The amount of dividends payable per share
for each dividend period shall be computed by dividing
by four the 9% annual rate. The amount of dividends payable on
the Series A Preferred Stock and Series B Preferred Stock for the
initial dividend period and for any period shorter than a full
quarterly dividend period shall be computed on the basis of a
360-day year of twelve 30-day months.
(b) In the event the Corporation (i) shall be in default
under the terms of the Series B preferred stock purchase
agreement to be entered into among the Corporation and certain
investors to be parties thereto relating to the issuance of
shares of Series B Preferred Stock; (ii) shall be in default
under the terms of any loan agreements or similar agreement with
commercial lenders for borrowed money; (iii) shall file for, or
have filed against it a petition for bankruptcy; or (iv) shall
not make a dividend payment when due (any of which, shall be an
"Event of Default") the dividend rate on the Series B Preferred
Stock shall increase to fifteen (15%) percent per annum (the
"Default Dividend Rate"), so long as the Event of Default
continues. During an Event of Default, the holders of the Series
A Preferred Stock may, at their option, upon written notice to
the Corporation at least 10 days prior to the payment date of any
dividends (or, in the case of dividend payments not paid when
due, at any time after the applicable payment due date), elect to
receive such dividend payments in the form of additional shares
of Series A Preferred Stock, with the number of additional shares
of Series A Preferred Stock to be received to be equal to the
amount of the dividend due divided by the Conversion Value then
in effect for the Series A Preferred Stock. During an Event of
Default, the holders of the Series B Preferred Stock may, at
their option, upon written notice to the Corporation at least 10
days prior to the payment date of any such dividends (or, in the
case of dividend payments not paid when due, at any time after
the applicable payment due date), elect to receive such dividend
payments in the form of additional shares of Series B Preferred
Stock, with the number of additional shares of Series B Preferred
Stock to be received to be equal to the amount of the dividend
due (at the Default Dividend Rate) divided by the Conversion
Price (as defined below) then in effect for the Series B
Preferred Stock.
(c) The Corporation may not declare or pay any dividend or
make any distribution of assets on, or redeem, purchase or
otherwise acquire, shares of common stock of the Corporation
("Common Stock") or of any other stock of the Corporation ranking
junior to the Series A Preferred Stock or Series B Preferred
Stock as to the payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up, unless all
accrued and unpaid dividends on the Series A Preferred Stock and
Series B Preferred Stock for all prior dividend periods have been
or contemporaneously are declared and paid (including any
dividends paid pursuant to Section 2(b)) and the full quarterly
dividend on the Series A Preferred Stock and Series B Preferred
Stock for the current dividend period has been or contemporaneously is
declared and set apart for payment.
3. Rights on Liquidation, Dissolution or Winding Up, Etc.
(a) In the event of any voluntary or involuntary liquidation
of the Corporation, the assets of the Corporation available for
distribution to its shareholders, whether from capital, surplus
or earnings, shall be distributed in the following order of
priority:
(i) The holders of Series A Preferred Stock and Series B
Preferred Stock shall be entitled to receive, prior and in
preference to any distribution to the holders of Common Stock or
any class of stock ranking as to dividends or upon liquidation
junior to the Series A Preferred Stock or Series B Preferred
Stock (x) as to the holders of Series B Preferred Stock, an
amount equal to the greater of (A) $.80 per share for each share
of Series B Preferred Stock then outstanding, and, in
addition, an amount equal to all accrued but unpaid dividends on
such share of Series B Preferred Stock as of the date such
payment is made to the holders of Series B Preferred Stock or (B)
the amount the holders of Series B Preferred Stock would have
received had the holders of Series B Preferred Stock converted
the Series B Preferred Stock into Common Stock as provided in
Section 8 immediately prior to the voluntary or involuntary
liquidation and, in addition, an amount equal to all accrued but
unpaid dividends on such shares of Series B Preferred Stock as of
the date such payment is made to the holders of Series B
Preferred Stock and (y) as to the holders of
Series A Preferred Stock, an amount equal to $.80 per share for
each share of Series A Preferred Stock then outstanding, and, in
addition, an amount equal to all accrued but unpaid dividends on
such share of Series A Preferred Stock as of the date such
payment is made to the holders of Series A Preferred Stock.
(ii) Distributions made to holders of Series A Preferred
Stock and Series B Preferred Stock pursuant to this Section 3(a)
shall be made pro rata based on the amounts the respective
liquidation preferences of the Series A Preferred Stock and
Series B Preferred Stock determined in accordance with Section
3(a)(i) bear to the total amount available for distribution.
(iii) After distribution of the amounts set forth in Sections
3(a)(i) above, the remaining assets of the Corporation available
for distribution, if any, to the stockholders of the Corporation
shall be distributed to the holders of issued and outstanding
shares of Common Stock, pro rata, based upon their respective
holdings.
(b) In the event of any voluntary or involuntary dissolution
or winding up of the Corporation, the assets of the Corporation
available for distribution to its shareholders, whether from
capital, surplus or earnings, shall be distributed in the
following order of priority:
(i) The holders of Series A Preferred Stock and Series B
Preferred Stock shall be entitled to receive, prior and in
preference to any distribution to the holders of Common Stock or
any class of stock ranking as to dividends or upon liquidation
junior to the Series A Preferred Stock or Series B Preferred
Stock (x) as to the holders of Series B Preferred Stock, an
amount equal to the greater of (A) $.80 per share for each share
of Series B Preferred Stock then outstanding, and, in
addition, an amount equal to all accrued but unpaid dividends on
such share of Series B Preferred Stock as of the date such
payment is made to the holders of Series B Preferred Stock or (B)
the amount the holders of Series B Preferred Stock would have
received had the holders of Series B Preferred Stock converted
the Series B Preferred Stock into Common Stock as provided in
Section 8 immediately prior to the voluntary or involuntary
dissolution or winding up of the Corporation and, in addition, an
amount equal to all accrued but unpaid dividends on such shares
of Series B Preferred Stock as of the date such payment is made
to the holders of Series B Preferred Stock and (y) as to the
holders of Series A Preferred Stock, an amount equal to the
greater of (A) $.80 per share for each share of Series A
Preferred Stock then outstanding and, in addition, an amount
equal to all accrued but unpaid dividends on such share of Series
A Preferred Stock as of the date such payment is made to the
holders of Series A Preferred Stock or (B) the amount the holders
of Series A Preferred Stock would have received had the holders
of Series A Preferred Stock converted the Series A Preferred
Stock into Common Stock as provided in Section 7 immediately
prior to the voluntary or involuntary dissolution or winding up
of the Corporation and, in addition, an amount equal to all
accrued but unpaid dividends on such shares of Series A Preferred
Stock as of the date such payment is made to the holders of
Series A Preferred Stock.
(ii) Distributions made to holders of Series A Preferred
Stock and Series B Preferred Stock pursuant to this Section 3(b)
shall be made pro rata based on the amounts the respective
liquidation preferences of the Series A Preferred Stock and
Series B Preferred Stock determined in accordance with Section
3(b)(i) bear to the total amount available for distribution.
(iii) After distribution of the amounts set forth in Sections
3(b)(i) above, the remaining assets of the Corporation available
for distribution, if any, to the stockholders of the Corporation
shall be distributed to the holders of issued and outstanding
shares of Common Stock, pro rata, based upon their respective
holdings.
4. Redemption of Series A Preferred Stock. On any date
after (i) June 30, 1998 and (ii) all shares of the Series B
Preferred Stock have been redeemed as provided in Section 5 or
there are otherwise no shares of Series B Preferred Stock
outstanding, the Corporation shall (unless otherwise prevented by
law) redeem, at the Corporation's option and upon the written
notice to the holders of the then outstanding shares of Series A
Preferred Stock (which notice shall state the Corporation's
intention to exercise the redemption option set forth herein as
provided in Section 4(b). The redemption price of shares of the
Series A Preferred Stock shall be equal to (a) the stated value
per share of $.90 per share if redeemed prior to June 30, 1999
plus any accrued but unpaid dividends and (b) the stated value
per share of $.80 per share if redeemed on or after June 30, 1999
plus any accrued but unpaid dividends.
(b) Notice of any Series A Preferred Stock redemption date
and the redemption option exercisable in connection therewith
pursuant to this Section 4 shall be sent by the Corporation by
first-class certified mail, return receipt requested, postage
prepaid, to the holders of record of shares of Series A Preferred
Stock at their respective addresses as the same shall appear on
the books of the Corporation. Such notice shall be mailed not
less than 30 nor more than 60 days in advance of the applicable
Series A Preferred Stock redemption date. At any time on or
after the Series A Preferred Stock redemption date, the holders
of record of shares of Series A Preferred Stock to be redeemed on
such Series A Preferred Stock redemption date in accordance with
this Section 4 shall be entitled to receive the applicable
redemption price upon actual delivery to the Corporation or its
agents of the certificates representing the shares to be
redeemed. If upon any redemption the assets of the Corporation
available for redemption shall be insufficient to pay the
holders of the shares of Series A Preferred Stock the full
amounts to which they shall be entitled, the holders of shares of
Series A Preferred Stock shall share ratably in any such
redemption according to the respective amounts which would be
payable in respect of such shares to be redeemed to the holders
thereof if all amounts payable on or with respect to such shares
were paid in full.
5. Redemption of Series B Preferred Stock. Upon the
occurrence of (i) a consolidation or merger of the Corporation
with and into any other corporation or corporations in a
transaction in which the common shareholders of the Corporation
receive cash, securities or other consideration in exchange for
the shares of capital stock of the Corporation then held by them
or (ii) the sale of all or substantially all of the assets of the
Corporation, the Corporation shall (unless otherwise prohibited
by applicable law) redeem, at the option and upon the written
notice of holders of a majority of the then-outstanding shares of
Series B Preferred Stock (the "Majority Series B Holders") (which
notice shall state such holders' intention to exercise the
redemption option set forth herein and the number of shares of
Series B Preferred Stock sought to be redeemed, delivered at
least 60, but not more than 90, days prior to the redemption
date) that number of shares of Series B Preferred Stock specified
in the aforesaid written notice. The redemption price of shares
of the Series B Preferred Stock shall be equal to the amount
provided for in Section 3(a)(i).
(b) Notice of any Series B Preferred Stock redemption date and
the redemption option exercisable in connection therewith
pursuant to this Section 5 shall be sent by the Corporation by
first-class certified mail, return receipt requested, postage
prepaid, to the holders of record of shares of Series B Preferred
Stock at their respective addresses as the same shall appear on
the books of the Corporation. Such notice shall be mailed not
less than 30 nor more than 60 days in advance of the applicable
Series B Preferred Stock redemption date. At any time on or
after the Series B Preferred Stock redemption date, the holders
of record of shares of Series B Preferred Stock to be redeemed on
such Series B Preferred Stock redemption date in accordance with
this Section 5 shall be entitled to receive the applicable
redemption price upon actual delivery to the Corporation
or its agents of the certificates representing the shares to be
redeemed. If upon any redemption the assets of the Corporation
available for redemption shall be insufficient to pay the holders
of the shares of Series B Preferred Stock the full amounts to
which they shall be entitled, the holders of shares of Series B
Preferred Stock shall share ratably in any such redemption
according to the respective amounts which would be payable in
respect of such shares to be redeemed to the holders thereof if
all amounts payable on or with respect to such shares were paid
in full.
6. Voting Rights. (a) The holders of shares of Series A
Preferred Stock shall have no voting rights whatsoever, except
for any voting rights to which they may be entitled under the
laws of the State of Nebraska, provided, however, that if
dividends on the Series A Preferred Stock shall be in arrears for
two calendar quarter(s) and so long as such dividends shall be in
arrears, each holder of shares of Series A Preferred Stock shall
be entitled to such number of votes in respect of such Series A
Preferred Stock, as shall equal the largest whole number of
shares of Common Stock into which such Series A Preferred Stock
are then convertible as provided in Section 7 hereof, to vote on
all matters to which holders of Common Stock shall be entitled to
vote, voting together with the holders of Common Stock as one
class.
(b) In addition to the rights specified in Section (c) below,
each holder of shares of Series B Preferred Stock shall be
entitled to such number of votes in respect of such Series B
Preferred Stock, as shall equal the largest whole number of
shares of Common Stock into which such shares of Series B
Preferred Stock are then convertible as provided in Section 8
hereof, to vote on all matters to which holders of Common Stock
shall be entitled to vote, voting together, in the same manner
and with the same effect as such holders of Common Stock as one
class.
(c) The Corporation shall not, without the affirmative consent
or approval of two-thirds of the then outstanding shares of
Series B Preferred Stock (the "Two-Thirds Series B Holders"),
voting as a separate class, given at a meeting called for such
purposes for which notice shall have been given to the holders of
the Series B Preferred Stock:
(i) in any manner authorize, create or issue any class or series
of capital stock in either case (A) ranking, either as to payment
of dividends, distribution of assets or redemptions, prior to or
on a parity with the Series B Preferred Stock, or (B) which in
any manner adversely affects the holders of Series B Preferred
Stock, or authorize, create or issue any shares of any class or
series of any bonds, debentures, notes or other obligations
convertible into or exchangeable for, or having optional rights
to purchase, any shares having any such preference or priority or
so adversely affecting the holders of Series B Preferred Stock;
(iii) in any manner alter or change the designations, powers,
preferences or rights, or the qualifications, limitations or
restrictions of the Series A Preferred Stock or the Series B
Preferred Stock, provided, that such consent or approval shall
not be required to increase the number of authorized shares of
Series A Preferred Stock and Series B Preferred Stock solely in
order to permit the Corporation to satisfy its obligations to pay
dividends in shares of Series A Preferred Stock and Series B
Preferred Stock pursuant to Section 2(b), as the case may be.
(iii) reclassify the shares of Common Stock or Series A Preferred
Stock or any other shares or any class or series of capital stock
hereafter created junior to the Series B Preferred Stock into
shares of any class or series of capital stock (A) ranking,
either as to payment of dividends, distribution of assets or
redemptions, prior to on or a parity with the Series B Preferred
Stock, or (B) which in any manner adversely affects the holders
of Series B Preferred Stock; (iv) engage in any business other
than the businesses in which it is engaged in as of the date
hereof or any businesses or activities substantially similar or
related thereto;
(v) merge or consolidate with and into any other person (other
than a wholly-owned subsidiary of the Corporation), or purchase
or acquire the business, of all or substantially all of the
capital stock, other equity interests or assets of any other
person unless in the case of such purchase the aggregate purchase
price including liabilities assumed does not exceed $500,000; or
(vi) permit the occurrence of a Change of Control (as defined
below). "Change of Control" means (i) the direct or indirect
sale, lease, exchange or other transfer of all or substantially
all of the assets of the Corporation to any person or entity or
group of persons or entities acting in concert as a partnership
or other group (a "Group of Persons") or (ii) the merger or
consolidation of the Corporation with or into another corporation
with the effect that the then existing shareholders of the
Corporation hold less than 50% of the combined voting power of
the then outstanding securities of the surviving corporation of
such merger or the corporation resulting from such consolidation
ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of
directors.
7. Conversion of Series A Preferred Stock. (a) The
holders of Series A Preferred Stock shall have the right, at such
holders' option, at any time or from time to time to convert such
shares of Series A Preferred Stock into such whole number of
fully paid and nonassessable shares of Common Stock as is equal
to the number of fully paid and nonassessable shares of Common
Stock which results from dividing the "Conversion Price" per
share in effect for the Series A Preferred Stock at the time of
conversion into the "Conversion Value" per share of Series A
Preferred Stock. The number of shares of Common Stock into which
the Series A Preferred Stock is convertible is hereinafter
collectively referred to as the "Conversion Rate" for such
series.
The initial Conversion Price (as defined below) per share of the
Series A Preferred Stock shall be $.80, and the Conversion Value
(as defined below) per share of Series A Preferred Stock shall be
$.80. The holder of any shares of Series A Preferred Stock,
exercising the aforesaid right to convert such shares into shares
of Common Stock shall be entitled to receive, in cash, an amount
equal to all accrued dividends with respect to such shares of
Series A Preferred Stock up to and including the respective
conversion date of the Series A Preferred Stock.
(b) Each share of Series A Preferred Stock shall automatically
be converted into shares of Common Stock at the then effective
Conversion Price in accordance with Section 7(a) for such
series if (i) the Corporation's Common Stock Current Market Price
(as defined in Section 9 hereof) shall have traded above 150% of
the then effective Conversion Price of the Series A
Preferred Stock for twenty (20) consecutive trading days
commencing after of the issuance date of such share on any
nationally recognized stock exchange or NASDAQ and (ii) the
shares of Common Stock issuable upon such conversion have been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may be freely sold by the holders of such
shares under the Securities Act.
(c) Before any holder of Series A Preferred Stock shall be
entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any
transfer agent for the Series A Preferred Stock, and shall give
written notice to the Corporation at its principal corporate
office, of the election to convert the same and shall state
therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Series A Preferred
Stock, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to
the close of business on the date of such surrender of the shares
of Series A Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of
such date.
(d) In the event the Corporation shall declare a distribution
payable in securities of other persons, evidences of indebtedness
issued by the Corporation or other persons, assets (excluding
cash dividends) or options or rights to the holders the
Corporation's Common Stock, then, in each such case for the
purpose of this subsection 7(d), the holders of the Series A
Preferred Stock shall be entitled to a proportionate share of any
such distribution as though they were the holders of the
number of shares of Common Stock of the Corporation into which
their shares of Series A Preferred Stock are convertible as of
the record date fixed for the determination of the holders of
Common Stock of the Corporation entitled to receive such
distribution.
(e) If at any time or from time to time there shall be a
recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for
elsewhere in this Section 7) provision shall be made so that the
holders of the Series A Preferred Stock shall thereafter be
entitled to receive upon conversion of the Series A Preferred
Stock the number of shares of stock or other securities or
property of the Corporation or otherwise, to which a holder of
Common Stock deliverable upon conversion would have been entitled
on such recapitalization.
In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 7 with respect to
the rights of the holders of the Series A Preferred Stock after
the recapitalization to the end that the provisions of this
Section 7 (including adjustment of the Conversion Price then in
effect and the number of shares issuable upon conversion of the
Series A Preferred Stock) shall be applicable after that event as
nearly equivalent as may be practicable.
(f) The Corporation will not, by amendment of its Amended and
Restated Articles of Incorporation, as amended through the date
of the filing hereof, or through any reorganization,
recapitalization, transfer of assets, consolidation, merger,
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 to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 7 and in the
taking of all such action as may be necessary or appropriate in
order to protect the conversion rights of the holders of the
Series A Preferred Stock against impairment.
(g) If any capital reorganization or reclassification of the
capital stock of the Corporation, or consolidation or merger of
the Corporation with and into another corporation, or the sale of
all or substantially all of its assets to another corporation,
shall be effected while any shares of Series A Preferred Stock
are outstanding in such a manner that holders of shares of Common
Stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision
shall be made whereby each holder of Series A Preferred Stock
shall thereafter have the right to receive upon the basis and
upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore receivable upon
conversion of Series A Preferred Stock, such shares of stock,
securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such
Common Stock equal to the number of shares of such Common Stock
immediately theretofore so receivable had such reorganization,
reclassification, consolidation, merger or sale not taken place,
and in such case appropriate provision shall be made with respect
to the rights and interests of the holders of Series A Preferred
Stock to the end that the provisions hereof (including, without
limitation, provisions for adjustment of the Conversion Price of
the Series A Preferred Stock and of the number of shares of
Common Stock issuable upon conversion thereof) shall thereafter
be applicable, as nearly as may be possible, in relation to any
shares of stock, securities or assets thereafter deliverable upon
the conversion of such shares of Series A Preferred Stock. The
Corporation shall not effect any such consolidation, merger or
sale unless prior to or simultaneously with the consummation
thereof the survivor or successor corporation (if other than the
Corporation) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written
instrument executed and mailed or delivered to each holder of
Series A Preferred Stock, the obligation to deliver to such
holders of Series A Preferred Stock such shares of stock,
securities or assets as, in accordance with the foregoing
provisions, such holder of Series A Preferred Stock may be
entitled to receive, and containing the express assumption of
such successor corporation of the due and punctual performance
and observance of every provision of these Articles of
Incorporation to be performed and observed by the Corporation and
of all liabilities and obligations of the Corporation hereunder
with respect to the Series A Preferred Stock.
(h) (i) No fractional shares shall be issued upon the conversion
of any share or shares of the Series A Preferred Stock, and the
number of shares of Common Stock to be issued shall be rounded to
the nearest whole share. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Corporation
shall made a cash payment equal to the Current Market Price of
the Common Stock as of two business days prior to payment
multiplied by such fraction.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series A Preferred Stock pursuant to this
Section 7, the Corporation, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series A
Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any holder of Series A
Preferred Stock, furnish or cause to be furnished to such holder
a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price for such Series A
Preferred Stock at the time in effect, and (C) the number of
shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of a
share of such Series A Preferred Stock.
(i) In the event of any 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 (other than a cash dividend) or other distribution, 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, the Corporation shall mail to each
holder of Series A Preferred Stock, at least twenty (20) days
prior to the date specified therein, a notice specifying the date
on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of
such dividend, distribution or right.
(j) The Corporation shall at all times 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
Series A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series A Preferred
Stock; and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series A
Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Series A Preferred Stock, the
Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes, including, without
limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to these
provisions. The Corporation shall pay all documentary, stamp or
other transactional taxes attributable to the issuance or
delivery of shares of capital stock of the Corporation upon
conversion of any shares of Series A Preferred Stock; provided,
however, that the Corporation shall not be required to pay any
taxes which may be payable in respect of any transfer involved in
the issuance or delivery of any certificate for such shares in a
name other than that of the holder of the shares of Series A
Preferred Stock in respect of which such shares are being issued.
All shares of Common Stock which may be issued in connection with
the conversion provisions set forth herein will, upon issuance by
the Corporation, be validly issued, fully paid and nonassessable
and free from all taxes, liens or charges with respect thereto.
(k) Any notice required by the provisions of this Section 7 to
be given to the holders of shares of Series A Preferred Stock
shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his
address appearing on the books of the Corporation.
(l) In the event any shares of Series A Preferred Stock shall be
converted pursuant to Section 7 hereof, the shares so converted
shall be cancelled. The Amended and Restated Articles of
Incorporation of the Corporation, as amended, may be
appropriately amended from time to time to effect the
corresponding reduction in the Corporation's authorized capital
stock.
8. Conversion of Series B Preferred Stock. (a)The holders of
Series B Preferred Stock shall have the right, at such holders'
option, at any time or from time to time, to convert such shares
of Series B Preferred Stock into such whole number of fully paid
and nonassessable shares of Common Stock as is equal to the
number of fully paid and nonassessable shares of Common Stock
which results from multiplying the number of shares of Series B
Preferred Stock to be converted by the "Conversion Value" and
dividing the result by the "Conversion Price" per share in effect
for the Series B Preferred Stock at the time of conversion. The
number of shares of Common Stock into which the Series B
Preferred Stock is convertible is hereinafter collectively
referred to as the "Conversion Rate" for such series. The
initial Conversion Price per share of the Series B Preferred
Stock shall be $.80, and the Conversion Value per share of Series
B Preferred Stock shall be $.80. The holder of any shares of
Series B Preferred Stock, exercising the aforesaid right to
convert such shares into shares of Common Stock shall be entitled
to receive, in cash, an amount equal to all accrued dividends
with respect to such shares of Series B Preferred Stock up to and
including the respective conversion date of the Series B
Preferred Stock.
(b) Each share of Series B Preferred Stock shall automatically
be converted into shares of Common Stock at the then effective
Conversion Price for such series in accordance with Section
8(a) if (i) the Corporation's Common Stock Current Market Price
(as defined in Section 9 hereof) shall have traded above 350% of
the then effective Conversion Price of the Series B Preferred
Stock for twenty (20) consecutive trading days on any nationally
recognized stock exchange or NASDAQ following the earliest date
of the satisfaction of the condition set forth in Section
8(b)(iii) below, (ii) the average weekly trading volume of the
Corporation's Common Stock during such twenty consecutive trading
is equal to or greater than 150,000 shares of Common Stock and
(iii) the shares of Common Stock to be issued upon such
conversion have been registered under the Securities Act and may
be freely sold by the holders of such shares under the Securities
Act or, if not so registered, all such shares of Common Stock
must be eligible to be sold by the holders pursuant to Rule
144(k) promulgated under the Securities Act.
(c) (i) In the event that as a result of litigation arising
from the Securities and Exchange Commission investigation
involving the Corporation existing on the date hereof and the
issues giving rise to such investigation (including but not
limited to any class action or other lawsuits which may be
brought by stockholders of the Corporation) the Corporation
becomes subject to losses, claims, damages, or liabilities and/or
incurs legal expenses defending itself in such a litigation
(together, "Litigation Damages and Expenses") that in the
aggregate exceed $150,000, the Conversion Price of the Series B
Preferred Stock shall be adjusted by reducing the Conversion
Price of the Series B Preferred Stock such that it results in the
issuance of additional shares of Common Stock in an amount equal
to the product of multiplying (i) the fully-diluted ownership
percentage represented by the Series B Preferred Stock (using the
treasury stock method) and (ii) the quotient of dividing (a) the
Litigation Damages and Expenses in excess of $150,000 by (b) the
average bid price of the Corporation's Common Stock over the
twenty (20) days immediately following the initial public
announcement or other disclosure by the Corporation relating to
the final determination of the Litigation Damages and Expenses.
(ii) In the event that the Series B Preferred Stock has not been
redeemed pursuant to Section 5 (a "Section 5 Redemption") or
converted to Common Stock pursuant to Section 8(b) (a "Section
8(b) Conversion") prior to the fifth anniversary of the date of
the initial issuance of Series B Preferred Stock (the "Series B
Initial Issuance Date"), then at any time thereafter and prior to
the occurrence of either a Section 5 Redemption or a Section 8(b)
Conversion in respect of the Series B Preferred Stock, the
Two-Thirds Series B Holders shall have the option, upon sixty
(60) days written notice to the Corporation, to adjust the
Conversion Price as of such sixtieth (60th) day (the "Adjusted
Conversion Price Date") to a Conversion Price equal to the lower
of the quotient resulting from dividing the average Current
Market Price for the twenty (20) Business Days prior to (a) the
date of the giving of notice by the holders of Series B Preferred
Stock pursuant to Section 8(c)(ii) or (b) the Adjusted Conversion
Price Date by 3.5 (e.g., if the then average Current Market Price
is $.70, then the new Conversion Price would be $.20) unless
prior to the Adjusted Conversion Price Date the Corporation shall
redeem upon twenty (20) days prior written notice all of the
existing Series B Preferred Stock. The Series B Preferred Stock
shall be redeemed at a price equal to $.80 per share for each
share of Series B Preferred Stock then outstanding, and, in
addition, an amount equal to all accrued but unpaid dividends on
each such share of Series B Preferred Stock as of the date of
such payment. A holder of Series B Preferred Stock may at any
time prior to such scheduled redemption date elect to convert its
Series B Preferred Stock pursuant to Section 8(a).
(d) Before any holder of Series B Preferred Stock shall be
entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any
transfer agent for the Series B Preferred Stock, and shall give
written notice to the Corporation at its principal corporate
office, of the election to convert the same and shall state
therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Series B Preferred
Stock, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to
the close of business on the date of such surrender of the shares
of Series B Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of
such date.
(e) The Conversion Price of the Series B Preferred Stock shall
be subject to adjustment from time to time as set forth below.
(i) If the Corporation shall issue, after the initial issuance
date of the Series B Preferred Stock, any Additional Stock (as
defined below) without consideration or for a consideration per
share less than the Conversion Price for the Series B Preferred
Stock in effect immediately prior to the issuance of such
Additional Stock, the Conversion Price for such series in effect
immediately prior to each such issuance shall forthwith (except
as otherwise provided in this clause (i)) be reduced
to such lower purchase price (or in the case of options and
similar securities, the consideration received for the option and
the consideration to be received upon exercise of such option)
or, if for no consideration, $.01.
(ii) "Additional Stock" as used herein shall mean any shares of
Common Stock issued (or deemed to have been issued) or rights,
warrants, options or other exchangeable securities convertible
into Common Stock (including shares of Common Stock held in the
Corporation's Treasury) by the Corporation after November 27,
1995 other than:
(A) Common Stock issued or issuable (i) upon conversion of the
Series A Preferred Stock or the Series B Preferred Stock or (ii)
pursuant to any warrant issued to the Argentum Group or its
permitted assigns; and
(B) Common Stock issuable or issued to employees, advisors,
consultants or outside directors of the Corporation directly or
pursuant to the Corporation's stock option plans and restricted
stock plans approved by the Board of Directors of the Corporation
and existing as of November 27, 1995, but only to the extent of
the number of shares of Common Stock authorized to be issued
under such plans as of the date of this Certificate of
Designation.
(iii) Except to the limited extent provided for in subsection
8(e)(viii), no adjustment of such Conversion Price pursuant to
this subsection 8(e) shall have the effect of increasing the
Conversion Price for the Series B Preferred Stock above the
Conversion Price for the Series B Preferred Stock in effect
immediately prior to such adjustment.
(iv) No adjustment in the Conversion Price for the Series B
Preferred Stock shall be required unless such adjustment would
require an increase or decrease of at least one cent ($0.01) in
such price; provided, however, that any adjustments which by
reason of this subsection (iv) are not required to be made shall
be carried forward and taken into account in any subsequent
adjustment required to be made hereunder. All calculations under
this Section 8(e) shall be made to the nearest one cent ($0.01).
In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions
or other expenses allowed, paid or incurred by the Corporation
for any underwriting or otherwise in connection with the issuance
and sale thereof.
(v) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
value thereof as determined in good faith by the Board of
Directors.
(vi) In the case of the issuance (whether before, on or after
the original issuance date of the Series B Preferred Stock) of
options to purchase or rights to subscribe for Common Stock,
securities by their terms convertible into or exchangeable for
Common Stock or options to purchase or rights to subscribe for
such convertible or exchangeable securities, the following
provisions shall apply for all purposes of this Section 8(e):
(A) The aggregate maximum number of shares of Common Stock
deliverable upon exercise (assuming the satisfaction of any
conditions to exercisability, including without limitation, the
passage of time, but without taking into account potential
antidilution adjustments) of such options to purchase or rights
to subscribe for Common Stock shall be deemed to have been issued
at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the
manner provided in subsections 8(e)(v) and 8(e)(vi), if any,
received by the Corporation upon the issuance of such options or
rights plus the minimum exercise price provided in such options
or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
(B) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange (assuming the
satisfaction of any conditions to convertibility or
exchangeability, including, without limitation, the passage of
time, but without taking into account potential antidilution
adjustments) for any such convertible or exchangeable securities
or upon the exercise of options to purchase or rights to
subscribe for such convertible or exchangeable securities and
subsequent conversion or exchange thereof, shall be deemed to
have been issued at the time such securities were issued or such
options or rights were issued and for a consideration equal to
the consideration, if any, received by the Corporation for any
such securities and related options or rights (excluding any cash
received on account of accrued interest or accrued dividends),
plus the minimum additional consideration, if any, to be received
by the Corporation (without taking into account potential
antidilution adjustments) upon the conversion or exchange of such
securities or the exercise of any related options or rights (the
consideration in each case to be determined in the manner
provided in subsections 8(e)(v) and 8(e)(vi).
(c) In the event of any change in the number of shares of Common
Stock deliverable or in the consideration payable to the
Corporation upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable
securities (excluding a change resulting solely from the
antidilution provisions thereof if such change results from an
event which gives rise to an antidilution adjustment under this
subsection 8(e)), the Conversion Price of the Series B Preferred
Stock, to the extent in any way affected by or computed using
such options, rights or securities, shall be recomputed to
reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such
consideration upon the exercise of any such options or rights or
the conversion or exchange of such securities.
(D) Upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible
or exchangeable securities, the Conversion Price of the Series B
Preferred Stock, to the extent in any way affected by or computed
using such options, rights or securities or options or rights
related to such securities, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and
convertible or exchangeable securities which remain in effect)
actually issued upon the exercise of such options or rights, upon
the conversion or exchange of such securities or upon the
exercise of the options or rights related to such securities.
(E) The number of shares of Common Stock deemed issued and the
consideration deemed paid therefor pursuant to subsections
8(e)(vi)(A) and 8(e)(vi)(B) shall be appropriately adjusted to
reflect any change, termination or expiration of the type
described in either subsection 8(e)(vi)(C) or 8(e)(vi)(D).
(vii) In the event the Corporation should at any time or from
time to time after the date of purchase of the Series B Preferred
Stock (the "Series B Purchase Date") fix a record date for the
effectuation of a split or subdivision of the outstanding shares
of Common Stock or the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or Common Stock Equivalents
without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or
the date of such dividend distribution, split or subdivision if
no record date is fixed), the Conversion Price of the Series B
Preferred Stock shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of each
share of such Series B Preferred Stock shall be increased in
proportion to such increase in the aggregate of shares of Common
Stock outstanding and those issuable with respect to such Common
Stock Equivalents.
(viii) If the number of shares of Common Stock outstanding at
any time after the Series B Purchase Date is decreased by a
combination of the outstanding shares of Common Stock, then,
following the record date of such combination, the Conversion
Price for the Series B Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable
on conversion of each share of each series shall be decreased in
proportion to such decrease in outstanding shares.
(f) In the event the Corporation shall declare a distribution
payable in securities of other persons, evidences of indebtedness
issued by the Corporation or other persons, assets (excluding
cash dividends) or options or rights not referred to in
subsection 8(e) to the holders of the Corporation's Common Stock,
then, in each such case for the purpose of this subsection 8(f),
the holders of the Series B Preferred Stock shall be entitled to
a proportionate share of any such distribution as though they
were the holders of the number of shares of Common Stock of the
Corporation into which their shares of Series B Preferred Stock
are convertible as of the record date fixed for the determination
of the holders of Common Stock of the Corporation entitled to
receive such distribution.
(g) If at any time or from time to time there shall be a
recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for
elsewhere in this Section 8 or Section 6(c)) provision shall be
made so that the holders of the Series B Preferred Stock shall
thereafter be entitled to receive upon conversion of the Series B
Preferred Stock the number of shares of stock or other securities
or property of the Corporation or otherwise, to which a holder of
Common Stock deliverable upon conversion would have been entitled
on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of
this Section 8 with respect to the rights of the holders of the
Series B Preferred Stock after the recapitalization to the end
that the provisions of this Section 8 (including adjustment of
the Conversion Price for the Series B Preferred Stock then in
effect and the number of shares issuable upon conversion of the
Series B Preferred Stock) shall be applicable after that event as
nearly equivalent as may be practicable.
(h) The Corporation will not, by amendment of its Amended and
Restated Articles of Incorporation, as amended, or through any
reorganization, recapitalization, transfer of assets,
consolidation, merger, 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 to be observed or
performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of
this Section 8 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion
rights of the holders of the Series B Preferred Stock against
impairment.
(i) If any capital reorganization or reclassification of the
capital stock of the Corporation, or consolidation or merger of
the Corporation with and into another corporation, or the sale of
all or substantially all of its assets to another corporation,
shall be effected while any shares of Series B Preferred Stock
are outstanding in such a manner that holders of shares of Common
Stock shall be entitled to receive stock, securities or assets
with respect to or in exchange for Common Stock, then, as a
condition of such reorganization or reclassification,
consolidation, merger or sale, lawful and adequate provision
shall be made whereby each holder of Series B Preferred Stock
shall thereafter have the right to receive upon the basis and
upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore receivable upon
conversion of Series B Preferred Stock, such shares of stock,
securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock
immediately theretofore so receivable had such reorganization or
reclassification, consolidation, merger or sale not taken place,
and in such case appropriate provision shall be made with respect
to the rights and interests of the holders of Series B Preferred
Stock to the end that the provisions hereof (including, without
limitation, provisions for adjustment of the Conversion Price of
the Series B Preferred Stock and of the number of shares of
Common Stock issuable upon conversion thereof) shall thereafter
be applicable, as nearly as may be possible, in relation to any
shares of stock, securities or assets thereafter deliverable upon
the conversion of such shares of Series B Preferred Stock. The
Corporation shall not effect any such consolidation, merger or
sale unless approved by the holders of Series B Preferred Stock
as provided in Section 6(c) and prior to or simultaneously with
the consummation thereof the survivor or successor corporation
(if other than the Corporation) resulting from such consolidation
or merger or the corporation purchasing such assets shall assume
by written instrument executed and mailed or delivered to each
holder of Series B Preferred Stock, the obligation to deliver to
such holders of Series B Preferred Stock such shares of stock,
securities or assets as, in accordance with the foregoing
provisions, such holder of Series B Preferred Stock may be
entitled to receive, and containing the express assumption of
such successor corporation of the due and punctual performance
and observance of every provision of these Articles of
Incorporation to be performed and observed by the Corporation and
of all liabilities and obligations of the Corporation hereunder
with respect to the Series B Preferred Stock.
(j) (i) No fractional shares shall be issued upon the conversion
of any share or shares of the Series B Preferred Stock, and the
number of shares of Common Stock to be issued shall be rounded to
the nearest whole share. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Corporation
shall made a cash payment equal to the Current Market Price of
the Common Stock as of two business days prior to payment
multiplied by such fraction.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series B Preferred Stock pursuant to this
Section 8, the Corporation, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series B
Preferred Stock a statement, signed by its independent certified
public accountants, setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series B Preferred Stock,
furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment,
(B) the Conversion Price for such Series B Preferred Stock at the
time in effect, and (C) the number of shares of Common Stock and
the amount, if any, of other property which at the time would be
received upon the conversion of a share of such Series B
Preferred Stock.
(k) In the event of any 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 (other than a cash dividend) or other distribution, 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, the Corporation shall mail to each
holder of Series B Preferred Stock, at least twenty (20) days
prior to the date specified therein, a notice specifying the date
on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of
such dividend, distribution or right.
(l) The Corporation shall at all times 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 Series B Preferred Stock, such number of its shares
of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series B
Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series B
Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Series B Preferred Stock, the
Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes, including, without
limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to these
provisions. The Corporation shall pay all documentary, stamp or
other transactional taxes attributable to the issuance or
delivery of shares of capital stock of the Corporation upon
conversion of any shares of Series B Preferred Stock; provided,
however, that the Corporation shall not be required to pay any
taxes which may be payable in respect of any transfer involved in
the issuance or delivery of any certificate for such shares in a
name other than that of the holder of the shares of Series B
Preferred Stock in respect of which such shares are being issued.
All shares of Common Stock which may be issued in connection with
the conversion provisions set forth herein will, upon issuance by
the Corporation, be validly issued, fully paid and nonassessable
and free from all taxes, liens or charges with respect thereto.
(m) Any notice required by the provisions of this Section 8 to
be given to the holders of shares of Series B Preferred Stock
shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his
address appearing on the books of the Corporation.
(n) In the event any shares of Series B Preferred Stock shall be
converted pursuant to Section 8 hereof, the shares so converted
shall be cancelled. The Amended and Restated Articles of
Incorporation of the Corporation, as amended, may be
appropriately amended from time to time to effect the
corresponding reduction in the Corporation's authorized capital
stock.
9. Definitions.
The term "Current Market Price" at any date of one share of
Common Stock means the daily closing price on the day before the
day in question. The closing price shall be the last reported
sales price regular way or, in case no such reported sales took
place on such day, the average of the last reported bid and asked
prices regular way, in either case on the principal national
securities exchange on which the common stock is listed or
admitted to trading (or if the common stock is not at the time
listed or admitted for trading on any such exchange, then such
price as shall be equal to the average of the last reported bid
and asked prices, as reported by the National Association of
Securities Dealers Automated Quotations Systems ("NASDAQ") on
such day, or if, on any day in question, the security shall not
be quoted on the NASDAQ, then such price shall be equal to the
last reported bid and asked prices on such day as reported by the
National Quotation Bureau, Inc. or any similar reputable
quotation and reporting service, if such quotation is not
reported by the National Quotation Bureau, Inc.).
3. Miscellaneous.
The foregoing resolution was duly adopted by the Board of
Directors of the Corporation on November 27, 1995.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]<PAGE>
Such resolution was signed by the President and
Secretary of the Corporation.
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.,
a Nebraska corporation
By: /S/MITCHEL J. LASKEY
Mitchel J. Laskey, President
By: /S/DAVID M. POMERANCE
David M. Pomerance, Secretary
<PAGE>
PRESS RELEASE
For Immediate Release Media Contact: Mary Lu Lander
Vice President,
Marketing
Investor Contact: Mitchel J. Laskey
President and
Chief Operating
Officer
Dynamic Healthcare Technologies, Inc.
101 Southhall Lane Suite 210
Maitland, FL 32751
1-800-832-3020
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
QUALIFIES FOR RELISTING ON NASDAQ STOCK MARKET
Maitland, Florida - November 28, 1995 -- Dynamic Healthcare
Technologies, Inc. ("the Company", DHTI) today announced
completion of the conversion of all of the previously
outstanding subordinated Convertible Notes to Series A Preferred
Shares of the Company. This transaction reclassifies $775,000 of
debt financing as equity financing, and establishes compliance
with the NASDAQ's continuing capital surplus maintenance
requirement. This positions the Company's Common Stock for
relisting on the NASDAQ stock market.
Dynamic Healthcare Technologies, Inc. is a software developer and
marketer of imaging, laboratory, anesthesiology and other
specialty products and services in the healthcare information
systems industry. The Company's mission is to provide its
clients with the software, technologies and services which
leverage their investment in existing information systems, and to
aggressively bring to market emerging solutions that support the
new and diverse healthcare environments and business strategies
of the nineties.
####
<PAGE>
PRESS RELEASE
For Immediate Release Media Contact: Mary Lu Lander
Vice President,
Marketing
Investor Contact: Mitchel J. Laskey
President and
Chief Operating
Officer
Dynamic Healthcare Technologies, Inc.
101 Southhall Lane Suite 210
1-800-832-3020
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
CLOSES $2.7 MILLION OF PRIVATE PLACEMENT
Maitland, Florida - December 5, 1995 -- Dynamic Healthcare
Technologies, Inc. (NASDAQ: DHTI) today announced the initial
closing of a Private Placement resulting in $2.7 million of new
equity investment in the Company in exchange for 3,375,000 Series
B Preferred Shares. The Company also reported an
oversubscription to the Offering. Although the Offering has been
completed, final closing is expected to provide $350,000 of
additional proceeds on or before December 31, 1995.
The Company has now entered the final phase of the Refinancing
Plan begun during the second quarter of 1995. During this phase,
the Company expects to effectively refinance its current
demand Line of Credit as a Long Term Note as permitted under the
October 20, 1995 Loan Commitment from the Bank. Since inception
of the Refinancing Plan, the Company has raised $3,475,000 in
equity through the issuance of Series A and B Preferred Shares.
David M. Pomerance, Chief Executive Officer commented,
"Completion of the Refinancing Plan will mark the culmination of
the restructuring process begun in August of 1994. The new
Dynamic is positioned to emerge as a leading supplier of software
and services in the healthcare industry."
(more)
<PAGE>
DYNAMIC CLOSES $2.7 MILLION OF PRIVATE PLACEMENT
Page 2
Mitchel J. Laskey, President and Chief Operating Officer stated,
"We have now turned our attention to many opportunities that
exist in the evolving healthcare industry. Our efforts will
center on increasing revenues by growing market share for
existing products, exploring new opportunities when presented,
and structuring innovative business relationships."
Dynamic Healthcare Technologies, Inc. develops, markets, installs
and supports clinical information systems, document imaging
solutions and DynamicVision , an enterprise-wide, multi-media
software and services solution that integrates health-related
data from many sources into a comprehensive electronic health
record.
####
<PAGE>
PRESS RELEASE
For Immediate Release Media Contact: Mary Lu Lander
Vice President,
Marketing
Investor Contact: Mitchel J. Laskey
President and Chief
Operating Officer
Dynamic Healthcare Technologies, Inc.
101 Southhall Lane Suite 210
1-800-832-3020
DYNAMIC HEALTHCARE TECHNOLOGIES, INC. COMPLETES REFINANCING PLAN
Maitland, Florida - December 8, 1995 -- Dynamic Healthcare
Technologies, Inc. (NASDAQ: DHTI) announced completion of the
Company's Refinancing Plan today. The final phase resulted
in the retirement of the previously outstanding $3.4 million
demand Line of Credit by a $600,000 cash payment and the issuance
of a Term Note in the amount of $2.8 million in favor of the
Bank.
The Term Note is payable in fixed monthly payments of principal
and interest of $29,911 beginning January 1, 1996 and a balloon
payment on March 31, 1998. The Term Note bears a floating
interest rate equal to the Bank's prime rate plus two percent
(2%) per annum, which was 10.75% as of December 8, 1995.
Completion of this phase of the Refinancing Plan significantly
improves the Company's working capital ratio and solidifies its
total capitalization. Since inception of its Refinancing Plan,
the Company has raised $3,850,000 in equity through the issuance
of Series A and B Preferred Shares and warrants, refinanced the
$3.4 million demand Line of Credit on a long term basis, and
regained listing on the NASDAQ stock market.
(more)
DYNAMIC HEALTHCARE TECHNOLOGIES, INC. COMPLETES REFINANCING PLAN
Page 2
Dynamic Healthcare Technologies, Inc. develops, markets, installs
and supports clinical information systems, document imaging
solutions and DynamicVision , an enterprise-wide, multi-media
software and services solution that integrates health-related
data from many sources into a comprehensive electronic health
record.
####
DynamicVision of a trademark of
Dynamic Healthcare Technologies, Inc.
PRESS RELEASE
For Immediate Release Media Contact: Mary Lu Lander
Vice President,
Marketing
Investor Contact: Mitchel J. Laskey
President and Chief
Operating Officer
Dynamic Healthcare Technologies, Inc.
101 Southhall Lane Suite 210
1-800-832-3020
DYNAMIC HEALTHCARE TECHNOLOGIES INC. ANNOUNCES
PLANS TO ACQUIRE DIMENSIONAL MEDICINE, INC.
Maitland, Florida - December 8, 1995 -- Dynamic Healthcare
Technologies, Inc.(Dynamic) (NASDAQ: DHTI) has announced the
signing of a Letter of Intent agreeing in principle to
acquire, for approximately $550,000, all outstanding common
shares of Dimensional Medicine, Inc. (DMI)(LOTC: DIMM) of
Minnetonka, Minnesota. In addition, the Letter of Intent
provides that, upon closing, Dynamic will retire $600,000 of
senior debt of DMI. The transaction is subject to definitive
agreements and approvals of the Boards of both companies and the
shareholders of DMI.
Founded in 1982, DMI develops and markets radiology information
management solutions for hospitals, clinics, and independent
diagnostic imaging centers. DMI's two major products are
Maxifile , which computerizes the clerical and administrative
functions in the radiology department; and Maxiview , an advanced
imaging and graphics workstation.
Modular in design, Maxifile applications include patient
scheduling and processing, film management, statistical
reporting, quality control, and patient billing. Maxiview
accommodates two and three dimensional image processing and is
compatible with imaging equipment from all major manufacturers.
(more)
DYNAMIC HEALTHCARE TECHNOLOGIES INC. ANNOUNCES PLANS TO ACQUIRE
DIMENSIONAL MEDICINE, INC.
Page 2
It enables a physician to observe interrelationships of soft
tissue and bone, locate lesions and tumors more precisely, and
perform a variety of measurements. Additionally, the Workstation
can display three-dimensional anatomical images on a conventional
high resolution monitor.
The Company also sells an image review workstation, Maxiview
Powerstation (MVP), which allows a physician to access and review
images from a remote location. Remote access to the images may
be obtained either through the use of a modem or through a
network that may already be functioning at the installation's
site.
For the fiscal year ended March 31, 1995, DMI reported revenues
of approximately $6 million and net income of approximately
$175,000. For the six months ended September 30, 1995, DMI
reported revenues of approximately $2.5 million and a net loss of
approximately $44,000.
David M. Pomerance, Dynamic s Chief Executive Officer stated,
"Strategically, DMI is a perfect fit for us. Their diagnostic
imaging products are complementary to our own imaging solutions,
and give Dynamic an entree into the radiology information systems
market -- one that we believe offers a significant opportunity
in the next few years."
John P. Paumen, President and Chief Executive Officer of DMI
added, "We are very happy and enthusiastic about joining the
Dynamic team. By combining our respective resources and
technologies, we will be able to offer our customers a broader
range of solutions for their information system needs."
Mitchel J. Laskey, Dynamic s President and Chief Operating
Officer added, "We are excited about the opportunity to integrate
DMI s diagnostic imaging capabilities into our recently announced
DynamicVision multi-media electronic health record strategy.
Physicians will be able to view review quality images on the same
workstation with chart documents, textual data and other
components of a patient's electronic health record."
(more)
DYNAMIC HEALTHCARE TECHNOLOGIES INC. ANNOUNCES PLANS TO ACQUIRE
DIMENSIONAL MEDICINE, INC.
Page 3
Dynamic Healthcare Technologies, Inc. develops, markets, installs
and supports clinical information systems, document imaging
solutions and DynamicVision, an enterprise-wide, multi-media
software and services solution that integrates health-related
data from many sources into a comprehensive electronic health
record.
####
DynamicVision is a trademark of Dynamic
Healthcare Technologies, Inc.
Maxifile is a registered trademark and Maxiview is a trademark
of Dimensional Medicine, Inc.
