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APPENDIX A
VICOM, INCORPORATED
CERTIFICATE OF DESIGNATION
OF THE
RELATIVE RIGHTS, RESTRICTIONS AND PREFERENCES
OF
10% CLASS C CUMULATIVE CONVERTIBLE STOCK
Pursuant to Section 302A.401 of the Minnesota Business Corporations Act
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The undersigned, as the Chief Executive Officer of Vicom, Incorporated,
a Minnesota corporation (the "Corporation"), hereby certifies that on the 14th
day of June, 2000, the following resolutions were adopted by the Board of
Directors of the Corporation for the purpose of designating a portion of the
Corporation's authorized but unissued capital stock as Preferred Stock and
establishing a third class of Preferred Stock designated as "10% Class C
Cumulative Convertible Preferred Stock":
"RESOLVED, that pursuant to authority granted to and vested in the
Board of Directors by the laws of the State of Minnesota and the Corporation's
Articles of Incorporation, as amended and restated, the Board of Directors
hereby establishes the following classes of capital stock:
A. Two Hundred Fifty Thousand (250,000) shares of the
Corporation's authorized but authorized but unissued capital
stock shall be Preferred Stock, with no par value per share,
designated as "10% Class C Cumulative Convertible Preferred
Stock";
B. The remaining balance of the Corporation's authorized but
unissued capital stock shall be undesignated as to class or
series.
FURTHER RESOLVED, that the 10% Class C Cumulative Convertible Preferred
Stock shall have the relative right, restrictions and preferences set
forth in APPENDIX A attached hereto."
IN WITNESS WHEREOF, I have hereunder subscriber my name this 14th day
of June, 2000.
--------------------------------
James L. Mandel
Chief Executive Officer
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VICOM, INCORPORATED
10% CLASS C CUMULATIVE CONVERTIBLE PREFERRED STOCK
The total number of shares of all classes of capital stock which the
Corporation is authorized to issue is Fifty Million (50,000,000). The shares of
capital stock of the Corporation shall include a class of preferred stock
consisting of Two Hundred Seventy-five Thousand (275,000) shares, which shall be
designated 8% Class A Cumulative Convertible Preferred Stock with no par value
per share ("Class A Preferred"), and a second class of preferred stock
consisting of Sixty Thousand (60,000) shares, which shall be designated 10%
Class B Cumulative Convertible Preferred Stock with no par value per share
("Class B Preferred"), and a third class of Preferred Stock consisting of two
hundred fifty thousand (250,000) shares which shall be designated 10% Class C
Cumulative Convertible Preferred Stock. The balance of the Corporation's
authorized but unissued capital stock shall be undesignated capital stock. The
rights, preferences, privileges, restrictions and other matters relating to the
Class A Preferred Stock and Class B Preferred Stock are as follows:
1. DIVIDENDS. Holders of the Class C Preferred shall be entitled
to receive, when and as declared by the Board of Directors out of funds
legally available therefor, cumulative cash dividends at the rate set
forth below in paragraph 1A. For purposes of calculating the dividends
payable on the Class C Preferred, each share of Class C Preferred shall
be valued at $10.00 per share approximately adjusted for stock
dividends, stock splits, reverse stock splits, and other subdivisions
and combinations of Class C Preferred (such per share price, as it may
be adjusted, for the Class C Preferred is referred to herein as the
"Dividend Price"). All dividends payable pursuant to this Section 1
shall be referred to as "Preferred Dividends."
A. CLASS C PREFERRED. The holders of shares of
Class A Preferred shall be entitled to receive, when
and as declared by the Board of Directors of the
Corporation out of assets of the Corporation legally
available for payment thereof, cumulative cash
dividends on the Dividend Price then in effect for
the Class A Preferred at the per annum rate, computed
on the basis of actual days over a 365-day year, of
ten percent (10%) per annum. Such dividends shall be
payable upon declaration quarterly on March 31, June
30, September 30 and December 31 of each year,
commencing for any share of Class A Preferred on the
first of such dates to occur after that share is
issued.
B. ACCRUAL; PAYMENT. The Preferred Dividends on
the Class C Preferred shall accrue cumulatively on a
daily basis from and as of the date of original
issuance of the Class C Preferred until such time as
the Class C Preferred are redeemed or converted,
whether or not declared and whether or not any funds
of the Corporation are legally available for the
payment of dividends. Preferred Dividends shall be
payable to holders of record of the Class C Preferred
as they appear on the books of the Corporation on the
record date determined by the Board of Directors.
Preferred Dividends payable for the initial dividend
period shall be based on the amount of dividends
accrued since the date of issuance of the Class C
Preferred.
2. DIVIDEND PRIORITIES. No dividend payments shall be paid or
declared and set apart for payment on any other shares of stock of the
Corporation, whether common or preferred, for any period, and no other shares of
the Corporation, whether common or preferred, shall be redeemed or purchased by
the Corporation, unless all Preferred Dividends have been paid or
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contemporaneously are declared and paid on the Class C Preferred for such
period. Except as provided in Section1 above, holders of the Class C Preferred
shall not be entitled to any dividends, whether payable in cash, property or
stock, in excess of the full Preferred Dividends for any period. No interest, or
sum of money in lieu of interest, shall be payable in respect of any Preferred
Dividend payments or payment which may be in arrears. If at any time the
Corporation pays less than the total amount of the Preferred Dividends then
accrued with respect to the Class C Preferred, such payment shall be distributed
ratably among the holders of Class C Preferred based upon the aggregate accrued
but unpaid dividends on the shares of Class C Preferred held by each such holder
on the record date fixed by the Board of Directors for the payment of such
dividend. The Board of Directors, in its discretion, may declare and pay
dividends on the common stock or capital stock of the Corporation, provided that
all accumulated Preferred Dividends on the Class C Preferred for the current and
all previous dividend periods have been paid in full. In the event that, for a
given year, the dividends declared on the common stock of the Corporation
exceed, on a per share basis, the year to date per share Preferred Dividends
accrued, declared and paid on the Class C Preferred, the Class C Preferred shall
participate in and shall receive a pro rate share of the excess amount. Such
allocation shall be adjusted as appropriate to account for any change in the
capitalization of the Corporation occurring after the date hereof, whether
resulting from a recapitalization, stock dividend, stock split, reverse stock
split or otherwise.
3. LIQUIDATION PREFERENCES.
A. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of the shares of
Class C Preferred shall be entitled, after payment or provision for all debts
and liabilities of the Corporation and before any distribution or payment is
made upon any other shares of capital stock of the Corporation, to be paid an
amount per share equal to the sum of (i) $10.00 per share (appropriately
adjusted for stock dividends, stock splits, reverse stock splits, and other
subdivisions and combinations of Class C Preferred (such per share price, as
adjusted, for the Class C Preferred is referred to herein as the "Preferred
Price") plus (ii) accrued and unpaid Preferred Dividends due under Section 1
above. (Such total sum of the amounts payable referred to in clauses (i) and
(ii) being sometimes referred to herein as the "Preferential Amount".) If upon
such liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the holders of
Class C Preferred shall be insufficient to permit payment to the holders of
Class C Preferred of the amount distributable as aforesaid, then all of the
assets of the Corporation remaining to be so distributed ratably (a) first among
the holders of the shares of Class C Preferred so that the same percentage of
the Preferred Price for each share of Class C Preferred is paid with respect to
each such share, until the full amount of the Preferred Price has been paid; and
(b) then among the holders of the shares of Class C Preferred so that the same
percentage of the Preferred Dividends for each share of Class C Preferred is
paid with respect to each such share, until the full amount of the Preferred
Dividends has been paid.
B. Upon any such liquidation, dissolution or winding up
of the Corporation, after the holders of Class C Preferred shall have been fully
paid in full the amounts to which they shall be entitled, the remaining net
assets of the Corporation may be distributed pro rate to the holders of shares
of common stock of the Corporation; provided that in the event that, upon
liquidation and dissolution of the Corporation, the amounts distributed to the
holders of the shares of common stock of the Corporation exceed, on a per share
basis, the amount of the Preferential Amount, the holders of the Class C
Preferred shall participate in and shall receive a pro rate share of the excess.
C. Written notice of such liquidation, dissolution or
winding up, stating a payment date, the amount of the Preferential Amount and
the place where said Preferential Amount shall be payable, shall be delivered in
person, mailed by certified or registered mail, return receipt requested, or
sent by telecopier or telex, not less than twenty (20) business days prior to
the payment date stated therein, to the holders of record of Class C Preferred,
such notice to be addressed to each such holder at its address as shown by the
records of the Corporation. The
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consolidation or merger of the Corporation into or with any other securitie4s or
other consideration issued or paid or caused to be issued or paid by any such
entity or affiliate thereof, and the sale, lease, abandonment, transfer or other
disposition by the Corporation of all or substantially all its assets, shall be
deemed to be a liquidation, dissolution or winding up of the Corporation within
the meaning of the provisions of this Section
4. VOTING RIGHTS. The Class C Preferred are non-voting, except as
may otherwise be required by law.
5. CONVERSIONS. The holders of shares of Class C Preferred shall
have the following conversion rights:
A. RIGHT TO CONVERT. Subject to the terms and conditions
of this Section 5, the holder of any share of shares of Class C Preferred shall
have the right, at his or her option at any time, to convert any such share or
shares of Class C Preferred (except that upon any liquidation of the Corporation
the right of conversion shall terminate at the close of business on the business
day prior to the date fixed for payment of the amount distributable on Class C
Preferred into two (2) fully paid and nonassessable shares of the Corporation's
common stock, no par value per share (the "Common Stock"), or, in case an
adjustment has taken place pursuant to the further provisions of this Section 5,
then by the conversion ratio as last adjusted and in effect at the date any
share of shares of Class C Preferred are surrendered for conversion (such ratio,
or such ratio as last adjusted, being referred to as the "Conversion Ratio").
Such rights of conversion shall be exercised by the holder thereof by giving
written notice that the holder elects to convert a stated number of shares of
Class C Preferred into Common Stock and by surrender of a certificate or
certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of Class C
Preferred) at any time during its usual business hours on the date set forth in
such notice, together with a statement of the name or names (with address) in
which the certificate or certificates for shares of Common Stock shall be
issued.
B. ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED.
Promptly after the receipt of the written notice referred to in paragraph 5A and
surrender of the certificate or certificates for the share of shares of Class C
Preferred to be converted, the Corporation shall issue and deliver, or cause to
be issued and delivered, to the holder, registered in such name or names as such
holder may direct, a certificate or certificates for the number of whole shares
of Common Stock issuable upon the conversion of such share of shares of Class C
Preferred. The extent permitted by law, such conversion shall be deemed to have
been effected and the Conversion Ratio shall be determined as of the close of
business on the date on which such written notice shall been received by the
Corporation and the certificate or certificates for such share or shares shall
have been surrendered as aforesaid, and at such time the rights of the holder of
such share of shares of Class C Preferred shall cease, and the person or persons
in whose name or names any certificate for shares of Common Stock shall be
deemed to have become the holder and holders of record of the shares represented
thereby.
C. FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No
fractional shares shall be issued upon conversion of Class C Preferred into
Common Stock and no payment or adjustment shall be made upon any conversion on
account of any cash dividends on the Common Stock issued upon such conversion.
At the time of each conversion, the Corporation shall pay in cash an amount
equal to all dividends declared pursuant to Section 1 above and unpaid on the
shares of Class C Preferred surrendered for conversion to the date upon which
such conversion is deemed to take place as provided in paragraph 5B. In case the
number of shares of Class C Preferred represented by this certificate or
certificates surrendered pursuant to Paragraph 5A exceeds the number of shares
converted the Corporation shall, upon the conversion, execute and deliver to the
holder, at the expense of the Corporation, a new certificate of certificates for
the number of shares of Class C Preferred represented by the certificate or
certificates surrendered
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which are not to be converted. If any fractional share of Common Stock would,
except for the provisions of the first sentence of this paragraph 5C, be
delivered upon such conversion, the Corporation, in lieu of delivering such
fractional share, shall pay to the holder surrendering Class C Preferred for
conversion an amount in cash equal to the current market price of such
fractional share as determined in good faith by the Board of Directors of the
Corporation.
D. STOCK DIVIDENDS; SUBDIVISION OR COMBINATION OF COMMON
STOCK. In case the Corporation shall, after the date on which the Class C
Preferred are first issued by the Corporation (the "Original Issue Date"), at
any time subdivide (by any stock split, stock dividend or otherwise) its
outstanding shares of Common Stock into a greater number of shares, the
Conversion Ratio in effect immediately prior to such subdivision shall be
proportionately increased, and, conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Conversion
Ratio in effect immediately prior to such combination shall be proportionately
reduced.
E. REORGANIZATION OR RECLASSIFICATION. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected after the Original Issue Date in such a way that holders 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, lawful and adequate provisions shall be made whereby each
holder of a share or shares of Class C Preferred shall thereupon 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 the conversion of such share of shares of Class C Preferred, such shares of
stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding share of such Common Stock equal to the
number of shares of such Common Stock immediately theretofore receivable upon
such conversion had such reorganization or reclassification not taken place, and
in any such case appropriate provisions shall be made with respect to the rights
and interest of such holder to that end that the provisions (including, without
limitation, provisions for adjustments of the Conversion Ratio) shall thereafter
be applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise of such conversion
rights.
F. NOTICE OF ADJUSTMENT. Upon any adjustment of the
Conversion Ratio, then and in each such case the Corporation shall give written
notice thereof, by delivery in person, certified or registered mail, return
receipt requested, telecopier or telex, addressed to each holder of shares of
Class C Preferred at the address of such holder as shown on the books of the
Corporation, which notice shall state the Conversion Ratio resulting from such
adjustment, setting forth in reasonable detail the method upon which such
calculation is based.
G. OTHER NOTICES. In case at any time:
(1) the Corporation shall declare any dividend
upon its Common Stock payable in stock or make any other
distribution to the holders of its Common Stock;
(2) the Corporation shall offer for subscription
pro rate to the holders of its Common Stock any additional
shares of stock of any class or other rights;
(3) there shall by any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation merger of the Corporation with or into another
entity or entities, or a sale, lease, abandonment, transfer or
other disposition of all or substantially all its assets; or
(4) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
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then, in any one or more of said cases, the Corporation shall give, by delivery
in person, certified or registered mail, return receipt requested, telecopier or
telex, addressed to each holder of any shares of Class C Preferred at the
address of such holder as shown on the books of the Corporation, (a) at least 20
days' prior written notice of the date on which the books of the Corporation
shall close or a record shall be taken for such dividend, distribution or
subscription righ5ts or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up, at least 20 days' prior written notice
of the date when the same shall take place. Such notice in accordance with the
foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto and such notice in accordance with the foregoing
clause (b) shall also specify the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, disposition, dissolution, liquidation or winding up, as the case may
be..
H. STOCK TO BE RESERVED. The Corporation will at all
times reserve and keep available out of its authorized Common Stock, solely for
the purpose of issuance upon the conversion of Class C Preferred as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Class C Preferred. The Corporation
covenants that all shares of Common Stock which shall be so issued shall by duly
and validly issued and fully paid and non assessable and free from all transfer
taxes, liens and charges with respect to the issue thereof. The Corporation will
take all such action as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
regulation, of if any requirement of any national securities exchange upon which
the Common Stock may be listed.
I. NO REISSUANCE OF CLASS A PREFERRED AND CLASS B
PREFERRED. Shares of Class C Preferred which are converted into shares of Common
Stock as provided herein shall not be reissued.
J. ISSUE TAX. The issuance of certificates of shares of
Common Stock upon conversion of Class C Preferred shall be made without charge
to the holders thereof for any issuance tax in respect thereof, provided that
the Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any certificate
in a name other than that of the holder of Class C Preferred which is being
converted.
K. CLOSING OF BOOKS. Except as required by an
underwriter in connection with a public offering, the Corporation will at no
time close its transfer books against the transfer of any Class C Preferred or
of any shares of Common Stock issued or issuable upon the conversion of any
shares of Class C Preferred in any manner which interferes with the timely
conversion of such Class C Preferred except as may otherwise be required to
comply with applicable securities laws.
6. REDEMPTION. The Corporation shall have the right to redeem the
outstanding shares of Class C Preferred, in whole or part, at a redemption price
of $10.00 per share (appropriately adjusted for stock dividends, stock splits,
reverse stock splits, and other subdivisions and combinations of Class C
Preferred) plus any earned and unpaid Preferred Dividends, on not less than
thirty (30) calendar days' notice ("Corporate Notice") to the holders of the
Class C Preferred. The Corporation shall be entitled to redeem the Class C
Preferred as provided in this Paragraph 6 only if the closing bid price of the
Common Stock exceeds $4.00 per share (appropriately adjusted for stock
dividends, stock splits, reverse stock splits and other subdivisions and
combinations of Common Stock) for any ten (10) consecutive trading days prior
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to the date of the Corporate Notice. Upon receipt of the Corporate Notice, the
holders of the Class C Preferred to be redeemed will have the option to convert
each share of Class C Preferred and Class B Preferred into two (2) shares of
Common Stock (subject to adjustment as set forth in Section 5 above) until the
close of business on the date fixed for redemption, unless extended by the
Corporation in its sole discretion. All shares of Class C Preferred called for
redemption which are not so converted will be redeemed. Each holder of shares of
Class C Preferred to be redeemed shall surrender the certificate or certificates
representing such shares to the Corporation at the place designated in the
Corporate Notice, and thereupon the applicable redemption price for such shares
as set forth in this Section 6 shall be paid to the order of the person whose
name appears on such certificate or certificates and each surrendered
certificate shall be canceled and retired. Holders of Class C Preferred shall
not have the right to require the Corporation to redeem their shares of Class C
Preferred.
