SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Date of Report: March 3, 1997
NATIONAL DATACOMPUTER, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-15885 04-2942832
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
900 Middlesex Turnpike, Bldg. 5, Billerica, Massachusetts 01821
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(Address of Principal Executive Offices)
(508) 663-7677
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(Registrant's Telephone Number Including Area Code)
TABLE OF CONTENTS
FORM 8-K
March 3, 1997
Item Page
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Item 5. Other Events 1
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Item 7. Exhibits 1
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Signatures 2
ITEM 5. OTHER EVENTS
On January 23, 1997, the Registrant raised $1,500,000 through a private
equity placement (the "Placement") involving the issuance of nine hundred (900)
shares of Series C Convertible Preferred Stock and a six percent (6%)
Convertible Promissory Note in the principal amount of $600,000.
On February 25, 1997, the Placement was amended to involve an issuance
of nine hundred (900) shares of Series C Convertible Preferred, Stock, three
hundred fifty (350) shares of Series D Convertible Preferred Stock, and a six
percent (6%) Convertible Promissory Note in the principal amount of $250,000.
Filed herewith as Exhibit 99c are certain unaudited financial
statements of the Registrant as of December 29, 1996. Also filed herewith as
Exhibit 99d are certain unaudited financial statements of the Registrant as of
January 26, 1997, which reflect the Placement, as amended.
ITEM 7. EXHIBITS
The following exhibits are filed herewith:
Exhibit
No. Title
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99a Statement of Designation of Series C Convertible
Preferred Stock of the Registrant, as filed with the
Secretary of the State of Delaware on March 3, 1997.
99b Statement of Designation of Series D Convertible
Preferred Stock of the Registrant, as filed with the
Secretary of the State of Delaware on March 3, 1997.
99c Unaudited Balance Sheet of the Registrant as of
December 29, 1996, Unaudited Statement of Operations
of the Registrant for the twelve months ended
December 29, 1996, Statement of Cash Flows of the
Registrant for the twelve months ended December 29,
1996, and Statement of Stockholders' Equity as of
December 29, 1996.
99d Unaudited Balance Sheet of the Registrant as of
January 26, 1997, Unaudited Statement of Operations
of the Registrant for the one month ended January 26,
1997, Statement of Cash Flows of the Registrant for
the one month ended January 26, 1997, and Statement
of Stockholders' Equity as of January 26, 1997.
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
NATIONAL DATACOMPUTER, INC.
By: /s/ Malcolm M. Bibby
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Malcolm M. Bibby, Ph.D.
President
Date: March 3, 1997
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EXHIBIT INDEX
Exhibit Page
No. Title No.
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99a Statement of Designation of Series C Convertible Preferred
Stock of the Registrant, as filed with the Secretary of the
State of Delaware on March 3, 1997.
99b Statement of Designation of Series D Convertible Preferred
Stock of the Registrant, as filed with the Secretary of the
State of Delaware on March 3, 1997.
99c Unaudited Balance Sheet of the Registrant as of December 29,
1996, Unaudited Statement of Operations of the Registrant for
the twelve months ended December 29, 1996, Statement of Cash
Flows of the Registrant for the twelve months ended December
29, 1996, and Statement of Stockholders' Equity as of December
29, 1996.
99d Unaudited Balance Sheet of the Registrant as of January 26,
1997, Unaudited Statement of Operations of the Registrant for
the one month ended January 26, 1997, Statement of Cash Flows
of the Registrant for the one month ended January 26, 1997,
and Statement of Stockholders' Equity as of January 26, 1997.
3
STATEMENT OF DESIGNATION
OF
SERIES C CONVERTIBLE PREFERRED STOCK
NATIONAL DATACOMPUTER, INC.
NATIONAL DATACOMPUTER, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware
(hereinafter the "Corporation"), DOES HEREBY CERTIFY:
That by unanimous written consent, dated January 23, 1997, the
directors of the Corporation adopted the following resolution setting forth the
designations, powers, preferences and rights of its Series C Convertible
Preferred Stock:
RESOLVED: That the designations, powers, preferences and rights of
the Series C Convertible Preferred Stock be, and hereby
are, as set forth below:
1. NUMBER OF SHARES OF SERIES C CONVERTIBLE PREFERRED STOCK. Of the
50,000 shares of authorized and unissued Preferred Stock, $.001 par value per
share ("Preferred Stock") of the Corporation, nine hundred (900) shares shall be
designated and known as "Series C Convertible Preferred Stock."
2. VOTING.
(a) Each holder of outstanding shares of Series C Convertible
Preferred Stock at each meeting of stockholders of the Corporation (and written
actions of stockholders in lieu of meetings) with respect to any and all matters
presented to the stockholders of the Corporation for their action or
consideration shall be entitled to the number of votes equal to the number of
whole shares of Common Stock, as hereinafter defined, into which the shares of
Series C Convertible Preferred Stock held by such holder are convertible on the
record date established for such meeting. Except as provided by law, by the
provisions of Subparagraph 2(b) below, or by the provisions establishing any
other series of Preferred Stock, holders of Series C Convertible Preferred Stock
shall vote together with the holders of all other classes and series of
securities of the Corporation as a single class.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series C Convertible
Preferred Stock so as to affect adversely the Series C Convertible Preferred
Stock, without the written consent or affirmative vote of the holders of at
least a majority of the then outstanding shares of Series C Convertible
Preferred Stock to be affected by amendment, alteration or repeal, given in
writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a class. For this purpose, without limiting the generality of the
foregoing, the authorization or issuance of any series of Preferred Stock with
preference or priority over the Series C Convertible Preferred Stock as to the
right to receive either dividends or amounts distributable upon liquidation,
dissolution or winding up of the Corporation shall be deemed to affect adversely
the designated class of Series C Convertible Preferred Stock, and the
authorization or issuance of any series of Preferred Stock on a parity with
Series C Convertible Preferred Stock as to the right to receive either dividends
or amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall not be deemed to affect adversely the Series C Convertible
Preferred Stock. The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares then outstanding) by
the affirmative vote of the holders of a majority of the then outstanding shares
of all other classes or series of stock of the Corporation entitled to vote
thereon, voting as a single class.
3. DIVIDENDS.
(a) The holders of shares of Series C Convertible Preferred
Stock shall be entitled to receive, before any cash dividend shall be declared
and paid upon or set aside for the Common Stock in any fiscal year of the
Corporation, only when, as and if declared by the Board of Directors of the
Corporation out of the funds legally available for that purpose, dividends
payable in cash or Common Stock in an amount per share for such fiscal year
equal to the product of (i) the per share amount, if any, of the cash dividend
declared, paid or set aside for the Common Stock during such fiscal year,
multiplied by (ii) the number of whole shares of Common Stock into which each
such share of Series C Convertible Preferred Stock is then convertible as
determined by Paragraph 7 below.
(b) The Corporation shall not declare or pay any dividends or
any other distributions of property or assets on shares of Common Stock, other
than dividends payable solely in cash or Common Stock, without the prior written
consent or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series C Preferred Stock given in writing or by vote at a
meeting, voting as a single class.
4. ADDITIONAL PAYMENTS.
(a) In addition to any dividends for which holders of shares
of Series C Convertible Preferred Stock shall be entitled to receive pursuant to
Subparagraph 3(a) above, holders of shares of Series C Convertible Preferred
Stock shall be entitled to receive interest equal to six percent (6%) per annum
of the stated value (the "Stated Value") of such Series C Convertible Preferred
Stock. The Stated Value for all of the shares of Series C Convertible Preferred
Stock as of the Original Issuance Date (defined below) is $900,000 (the
"Original Aggregate Stated Value") and the Stated Value of each share of Series
C Convertible Preferred Stock is $1,000. Such interest accrue from the Original
Issuance Date, and shall be payable, in cash or Common Stock, on a quarterly
basis, as described in Subparagraph 4(b) below, commencing with the
Corporation's fiscal quarter ending March 31, 1997. In the event that the
Corporation decides to make payment of such interest in Common Stock, the amount
of shares of Common Stock to be issued to make such
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payment shall be that number of shares equal to (i) the amount of interest due
and payable, divided by (ii) the Average Closing Price (defined in Subparagraph
7(a) below) of the Common Stock, as reported by the Nasdaq SmallCap Market or in
the "Pink Sheets" during the ten trading days immediately preceding the date of
delivery to the holders of the Series C Convertible Preferred Stock of the
Common Stock as required by Subparagraph 4(b) as payment for the interest due
hereunder.
(b) Interest hereunder shall accrue and be calculated and
payable with respect to (i) those shares of Series C Convertible Preferred Stock
that remain issued and outstanding at the end of each of the Corporation's
fiscal quarters (ii) and any shares of Series C Convertible Preferred Stock that
are converted during a fiscal quarter for which interest is calculated and paid.
With respect to those shares of Series C Convertible Preferred Stock that remain
issued and outstanding at the end a fiscal quarter, interest shall be calculated
based on the Stated Value of such remaining issued and outstanding shares of
Series C Convertible Preferred Stock as set forth in the Corporation's Annual
Reports on Form 10-K(SB) or Quarterly Reports on Form 10-Q(SB) to be filed with
the Securities and Exchange Commission ("SEC"). With respect to any shares of
Series C Convertible Preferred Stock that are converted during a fiscal quarter,
interest shall be calculated based on the Stated Value of such shares up to and
including the Conversion Date (defined in Subparagraph 7(f)).
(c) Payment of interest due hereunder with respect to those
shares of Series C Convertible Preferred Stock that remain issued and
outstanding at the end of each of the Corporation's fiscal quarters shall be
made within 15 business days after the filing with the SEC of the applicable
report. Payment of interest due hereunder with respect to any shares of Series C
Convertible Preferred Stock that are converted during a fiscal quarter shall be
calculated and made within 30 days of the Conversion Date of such shares.
Payment of interest upon such converted shares of Series C Convertible Preferred
Stock shall be accompanied by the Company's calculation of the interest.
(d) With respect to the payment of interest due hereunder upon
those shares of Series C Convertible Preferred Stock that remain issued and
outstanding at the end of a fiscal quarter, the Corporation shall notify the
holders of the Series C Convertible Preferred Stock in writing not less than 10
days prior to the end of such fiscal quarter of whether the Corporation shall
pay the interest due hereunder in cash or Common Stock. With respect to the
payment of interest due hereunder upon those shares of Series C Convertible
Preferred Stock that are converted during a fiscal quarter, the Corporation
shall notify the holders of the Series C Convertible Preferred Stock in writing
not less than 10 days after the Conversion Date whether the Corporation shall
pay the interest due hereunder in cash or Common Stock.
5. LIQUIDATION. In the event of a voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the holders of shares of Series C
Convertible Preferred Stock shall be entitled to receive out of the assets of
the Corporation legally available for distribution to holders of its capital
stock, before any payment or distribution shall be made to holders of Common
Stock or any other class of stock ranking junior to Series C Convertible
Preferred Stock, an amount per
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share equal to the Stated Value of such shares of Series C Convertible Preferred
Stock plus all dividends which have accrued and are unpaid and therefore are in
arrears. If upon such liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the assets to be distributed among the holders
of Series C Convertible Preferred Stock shall be insufficient to permit payment
to the holders of Series C Convertible Preferred Stock of the amount
distributable as aforesaid, then the entire assets of the Corporation to be so
distributed shall be distributed ratably among the holders of Series C
Convertible Preferred Stock. Upon any such liquidation, dissolution or winding
up of the Corporation, after the holders of Series C Convertible Preferred Stock
shall have been paid in full the amounts to which they shall be entitled, the
remaining net assets of the Corporation may be distributed to the holders of
stock ranking on liquidation junior to the Series C Convertible Preferred Stock.
Written notice of such liquidation, dissolution or winding up, stating a payment
date, the amount of the liquidation payments and the place where said
liquidation payments shall be payable, shall be given by mail, postage prepaid,
or by telex to non-U.S. residents, not less than 10 days prior to the payment
date stated therein, to the holders of record of Series C Convertible Preferred
Stock, such notice to be addressed to each such holder at its address as shown
by the records of the Corporation. For purposes hereof, the Common Stock shall
rank on liquidation junior to the Series C Convertible Preferred Stock.
6. RESTRICTIONS. At any time when shares of Series C Convertible
Preferred Stock are outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Corporation's Certificate of Incorporation, as amended, without the
approval of the holders of at least a majority of the then outstanding shares of
Series C Convertible Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a series, the
Corporation will not create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series C
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation; or increase the authorized amount
of the Series C Convertible Preferred Stock or increase the authorized amount of
any additional class or series of shares of stock unless the same ranks junior
to the Series C Convertible Preferred Stock as to the distribution of assets on
the liquidation, dissolution or winding up of the Corporation; or create or
authorize any obligation or security convertible into shares of Series C
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, whether any such creation,
authorization or increase shall be by means of amendment to the Corporation's
Certificate of Incorporation or by merger, consolidation or otherwise.
7. OPTIONAL CONVERSION. The holders of shares of Series C Convertible
Preferred Stock shall have the following conversion rights:
(a) Right to Convert; Conversion Price. Subject to the terms,
conditions, and restrictions of this Paragraph 7, the holder of any share or
shares of Series C Convertible Preferred Stock shall have the right to convert
each such share of Series C Convertible Preferred Stock (except that upon any
liquidation of the Corporation, the right of conversion shall terminate at the
close of business on the business day fixed for payment of the amount
distributable on the Series C
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Convertible Preferred Stock) into an amount of shares of Common Stock equal to
the Stated Value of such share or shares of Series C Convertible Preferred Stock
divided by $3.20.
(b) Restrictions on Conversion. The holder of any share or
shares of Series C Convertible Preferred Stock may not convert any of such
shares for a period of at least three hundred sixty-five (365) days following
the date upon which the Series C Convertible Preferred Stock was originally
issued (the "Original Issuance Date").
(c) Notice of Conversion. The right of conversion shall be
exercised by the holder thereof by giving written notice (the "Conversion
Notice") to the Corporation that the holder elects to convert a specified number
of shares of Series C Convertible Preferred Stock representing a specified
Stated Value thereof 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 the Series C
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in the Conversion 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. The Conversion Notice shall include therein the
Stated Value of shares of Series C Convertible Preferred Stock to be converted,
and the number of shares of Common Stock to be issued in connection with such
conversion. The Corporation shall have the right to review the calculations
included in the Conversion Notice, and shall provide notice of any discrepancy
or dispute therewith within three business days of the receipt thereof.
(d) Issuance of Certificates; Time Conversion Effected.
Promptly, but in no event more than ten business days, after the receipt of the
Conversion Notice referred to in Subparagraph 7(e) and surrender of the
certificate or certificates for the share or shares of Series C Convertible
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock into which such shares of Series C Convertible
Preferred Stock are converted. To the extent permitted by law, such conversion
shall be deemed to have been effected as of the close of business on the date
(the "Conversion Date") on which such Conversion Notice shall have been received
by the Corporation and the certificate and certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Series C Convertible Preferred Stock shall
cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby.
(e) Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series C Convertible
Preferred Stock into Common Stock. In case the number of shares of Series C
Convertible Preferred Stock represented by the certificate or certificates
surrendered pursuant to Subparagraph 7(a) exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a
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new certificate or certificates for the number of shares of Series C Convertible
Preferred Stock represented by the certificate or certificates surrendered which
are not to be converted.
(f) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected 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 Series C Convertible Preferred Stock 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 or shares of Series C Convertible 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
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 interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the conversion rights) 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.
(g) Adjustments for Splits, Combinations, etc. The Conversion
Price and the number of shares of Common Stock into which the Series C
Convertible Preferred Stock shall be convertible shall be adjusted appropriately
for stock splits, combinations, or other similar events (other than employee
benefit plans and stock option plans for employees or consultants to the
Company). Additionally, an adjustment will be made in the case of an exchange of
Common Stock, consolidation or merger of the Company with or into another
corporation or sale of all or substantially all of the assets of the Company in
order to enable the holder of Series C Convertible Preferred Stock to acquire
the kind and the number of shares of stock or other securities or property
receivable in such event by a holder of the Series C Convertible Preferred Stock
of the number of shares that might otherwise have been purchased upon the
conversion of the Series C Convertible Preferred Stock. No adjustment to the
Conversion Price will be made for dividends (other than stock dividends), if
any, paid on the Common Stock or for securities issued pursuant to exercise of
the currently outstanding options, warrants, or options that may be granted or
shares issued in connection with the acquisition of another business by the
Company.
8. MANDATORY CONVERSION.
(a) Mandatory Conversion Date. If at January 24, 2000 (the
"Mandatory Conversion Date"), there remains issued and outstanding any shares of
Series C Convertible Preferred Stock, then the Corporation shall be entitled to
require all (but not less than all) holders of shares of Series C Convertible
Preferred Stock then outstanding to convert their shares of Series C Convertible
Preferred Stock into shares of Common Stock pursuant to Subparagraph 7(a). The
Corporation shall provide written notice (the "Mandatory Conversion Notice") to
the holders of
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shares of Series C Convertible Preferred Stock of such mandatory conversion. The
Mandatory Conversion Notice shall include the Stated Value of the shares of
Series C Convertible Preferred Stock to be converted, and the number of shares
of the Corporation's Common Stock to be issued upon such mandatory conversion.
(b) Surrender of Certificates. On or before the Mandatory
Conversion Date, each holder of shares of Series C Convertible Preferred Stock
shall surrender his, her or its certificate or certificates for all such shares
to the Corporation at the place designated in such Mandatory Conversion Notice,
and shall thereafter receive certificates for the number of shares of Common
Stock to which such holder is entitled. On the Mandatory Conversion Rate, all
rights with respect to the Series C Convertible Preferred Stock so converted,
including the rights, if any, to receive notices and vote, will terminate. All
certificates evidencing shares of Series C Convertible Preferred Stock that are
required to be surrendered for conversion in accordance with the provisions
hereof, from and after the Mandatory Conversion Date, shall be deemed to have
been retired and cancelled and the shares of Series C Convertible Preferred
Stock represented thereby converted into Common Stock for all purposes,
notwithstanding the failure of the holder or holders thereof to surrender such
certificates on or prior to such date. The Corporation may thereafter take such
appropriate action as may be necessary to reduce the authorized Series C
Convertible Preferred Stock accordingly.
9. REDEMPTION OF SERIES C CONVERTIBLE PREFERRED STOCK.
(a) Right to Redeem Series C Convertible Preferred Stock. At
any time, and from time to time, on and after the expiration of the restrictions
of conversion contained in Subparagraph 7(b), if the closing bid price of the
Company's Common Stock as reported by the Nasdaq SmallCap Market or in the "Pink
Sheets" equals or exceeds $20.00 for 20 consecutive trading days, then the
Corporation may, in its sole discretion, but shall not be obligated to, redeem,
in whole or in part, the then issued and outstanding shares of Series C
Convertible Preferred Stock, at a price of $1,000 per share of such Series C
Convertible Preferred Stock (the "Redemption Price"), subject to adjustment as
provided in Paragraph 7.
(b) Notice of Redemption. The Corporation shall provide each
holder of record of the Series C Convertible Preferred Stock with written notice
of redemption (the "Redemption Notice") not less than 30 days prior to any date
stipulated by the Corporation for the redemption of the Series C Convertible
Preferred Stock (the "Redemption Date"). The Redemption Notice shall contain (i)
the Redemption Date, (ii) the number of shares of Series C Convertible Preferred
Stock to be redeemed from the holder to whom the Redemption Notice is delivered,
(iii) instructions for surrender to the Corporation of the certificate or
certificates representing the shares of Series C Convertible Preferred Stock to
be redeemed, and (iv) instructions as to how to specify to the Corporation the
number of shares of Series C Convertible Preferred Stock to be redeemed as
provided in this Paragraph 9, and the number of shares of Series C Convertible
Preferred Stock to be converted into Common Stock pursuant to Paragraph 7.
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(c) Right to Convert Series C Convertible Preferred Stock upon
Receipt of Redemption Notice. Upon receipt of the Redemption Notice, the
recipient thereof shall have the option, at is sole election, to specify what
portion of the Series C Convertible Preferred Stock called for redemption in the
Redemption Notice shall be redeemed as provided in this Paragraph 8 or converted
into Common Stock in the manner provided in Paragraph 7. If the holder of the
Series C Convertible Preferred Stock called for redemption elects to convert
such shares, then such conversion shall take place on the Redemption Date, in
accordance with the terms of Paragraph 7.
(d) Surrender of Certificates; Payment of Redemption Price. On
or before the Redemption Date, each holder of the shares of Series C Convertible
Preferred Stock to be redeemed shall surrender the required certificate or
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be paid by the Corporation via check to
the order of the person whose name appears on such certificate or certificates
as the owner thereof, and each such surrendered certificate shall be canceled
and retired. If a certificate is surrendered and all the shares evidenced
thereby are not being redeemed, the Corporation shall issue new certificates to
be registered in the names of the person(s) whose name(s) appear(s) as the
owners on the respective surrendered certificates and deliver such certificate
to such person(s).
(e) Deposit of Redemption Price. On the Redemption Date in
respect to any shares of Series C Convertible Preferred Stock, or prior thereto,
the Corporation shall deposit with any bank or trust company (the "Depository")
having a capital and surplus of at least $50,000,000, a sum equal to (i) the
aggregate Redemption Price of all such shares called for redemption, less (ii)
the aggregate Redemption Price for those shares of Series C Convertible
Preferred Stock in respect of which the Corporation has received notice from the
holder thereof of its election, pursuant to Subparagraph 8(c), to convert shares
of Series C Convertible Preferred Stock into Common Stock. The Corporation shall
provide instructions and authority to the Depository to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon the
surrender of their share certificates. The deposit of the Redemption Price by
the Corporation with the Depository shall constitute full payment for the shares
of Series C Convertible Preferred Stock to be redeemed, and from and after that
date of the deposit, the redeemed shares shall be deemed to be no longer issued
and outstanding, and the holders thereof shall cease to be holders with respect
to such shares and shall have no rights with respect thereto, except the right
to receive from the Depository payment of the Redemption Price, without
interest, upon surrender of their certificates therefor. Any funds so deposited
and unclaimed at the end of one year from the Redemption Date shall be released
and delivered to the Corporation, after which the former holders of shares of
Series C Convertible Preferred Stock called for redemption shall be entitled to
receive payment of the Redemption Price in respect of their shares only from the
Corporation.
10. NOTICES. In case at any time:
(a) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other pro rata distribution to the
holders of its Common Stock; or
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(b) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights; or
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all
its assets to, another entity or entities; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by telex to non-U.S. residents, addressed to
each holder of any shares of Series C Convertible Preferred Stock at the address
of such holder as shown on the books of the Corporation, (i) at least 10 days'
prior to written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 10
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and (ii) 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, sale, dissolution,
liquidation or winding up, as the case may be.
11. STOCK TO BE RESERVED. The Corporation, upon the effective date of
this Statement of Designation, has a sufficient number of shares of Common Stock
available to reserve for issuance upon the conversion of all outstanding shares
of Series C Convertible Preferred Stock. 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 Series C Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series C Convertible
Preferred. The Corporation covenants that all shares of Common Stock which shall
be so issued shall be duly and validly issued. The Corporation will take all
such action as may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon which
the Common Stock may be listed. The Corporation will not take any action which
results in any adjustment of the conversion rights if the total number of shares
of Common Stock issued and issuable after such action upon conversion of the
Series C Convertible Preferred Stock would exceed the total number of shares of
Common Stock then authorized by the Corporation's Certificate of Incorporation,
as amended.
12. NO REISSUANCE OF SERIES C CONVERTIBLE PREFERRED STOCK. Shares of
Series C Convertible Preferred Stock which are converted into shares of Common
Stock as provided herein shall not be reissued.
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13. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of Series C Convertible Preferred Stock shall be made without
charge to the holder 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 the Series C Convertible
Preferred Stock which is being converted.
14. CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Series C Convertible Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series C Convertible Preferred Stock in any manner which interferes
with the timely conversion of such Series C Convertible Preferred Stock, except
as may otherwise be required to comply with applicable securities laws.
15. DEFINITION OF COMMON STOCK. As used in this Statement of
Designation, the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, $.08 par value per share, as constituted on the date of
filing of these terms of the Series C Convertible Preferred Stock, and shall
also include any capital stock of any class of the Corporation thereafter
authorized which shall neither be limited to a fixed sum or percentage of par
value in respect of the rights of the holders thereof to participate in
dividends nor entitled to a preference in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; provided that the shares of Common Stock receivable upon conversion
of shares of Series C Convertible Preferred Stock shall include only shares
designated as Common Stock of the Corporation on the date of filing of this
instrument, or in case of any reorganization, reclassification, or stock split
of the outstanding shares thereof, the stock, securities or assets provided for
in Subparagraph 7(f).
16. AMENDMENTS. No provision of these terms of the Series C Convertible
Preferred Stock may be amended, modified or waived without the written consent
or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series C Convertible Preferred Stock.
RESOLVED: That the President and Secretary be, and hereby are,
authorized and directed to execute and file a Statement
of Designation with the Delaware Secretary of State.
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IN WITNESS HEREOF, the said National Datacomputer, Inc. has caused its
corporate seal to be hereunto affixed and this Statement of Designation to be
signed by Malcolm M. Bibby, its President and Secretary, this 24th day of
January, 1997.
NATIONAL DATACOMPUTER, INC.
By:/s/ Malcolm M. Bibby, Ph.D.
---------------------------
Malcolm M. Bibby, Ph.D.
President
/s/ Malcolm M. Bibby, Ph.D.
- -----------------------------
Malcolm M. Bibby, Ph.D.
Secretary
[SEAL]
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STATEMENT OF DESIGNATION
OF
SERIES D CONVERTIBLE PREFERRED STOCK
NATIONAL DATACOMPUTER, INC.
NATIONAL DATACOMPUTER, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware
(hereinafter the "Corporation"), DOES HEREBY CERTIFY:
That by unanimous written consent, dated February 25, 1997, the
directors of the Corporation adopted the following resolution setting forth the
designations, powers, preferences and rights of its Series D Convertible
Preferred Stock:
RESOLVED: That the designations, powers, preferences and rights
of the Series D Convertible Preferred Stock be, and
hereby are, as set forth below:
1. NUMBER OF SHARES OF SERIES D CONVERTIBLE PREFERRED STOCK. Of the
50,000 shares of authorized and unissued Preferred Stock, $.001 par value per
share ("Preferred Stock") of the Corporation, three hundred fifty (350) shares
shall be designated and known as "Series D Convertible Preferred Stock."
2. VOTING.
(a) Each holder of outstanding shares of Series D Convertible
Preferred Stock at each meeting of stockholders of the Corporation (and written
actions of stockholders in lieu of meetings) with respect to any and all matters
presented to the stockholders of the Corporation for their action or
consideration shall be entitled to the number of votes equal to the number of
whole shares of Common Stock, as hereinafter defined, into which the shares of
Series D Convertible Preferred Stock held by such holder are convertible on the
record date established for such meeting. Except as provided by law, by the
provisions of Subparagraph 2(b) below, or by the provisions establishing any
other series of Preferred Stock, holders of Series D Convertible Preferred Stock
shall vote together with the holders of all other classes and series of
securities of the Corporation as a single class.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series D Convertible
Preferred Stock so as to affect adversely the Series D Convertible Preferred
Stock, without the written consent or affirmative vote of the holders of at
least a majority of the then outstanding shares of Series D Convertible
Preferred Stock to be affected by amendment, alteration or repeal, given in
writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a class. For this purpose, without limiting the generality of the
foregoing, the authorization or issuance of any series of Preferred Stock with
preference or priority over the Series D Convertible Preferred Stock as to the
right to receive either dividends or amounts distributable upon liquidation,
dissolution or winding up of the Corporation shall be deemed to affect adversely
the designated class of Series D Convertible Preferred Stock, and the
authorization or issuance of any series of Preferred Stock on a parity with
Series D Convertible Preferred Stock as to the right to receive either dividends
or amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall not be deemed to affect adversely the Series D Convertible
Preferred Stock. The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares then outstanding) by
the affirmative vote of the holders of a majority of the then outstanding shares
of all other classes or series of stock of the Corporation entitled to vote
thereon, voting as a single class.
3. DIVIDENDS.
(a) The holders of shares of Series D Convertible Preferred
Stock shall be entitled to receive, before any cash dividend shall be declared
and paid upon or set aside for the Common Stock in any fiscal year of the
Corporation, only when, as and if declared by the Board of Directors of the
Corporation out of the funds legally available for that purpose, dividends
payable in cash or Common Stock in an amount per share for such fiscal year
equal to the product of (i) the per share amount, if any, of the cash dividend
declared, paid or set aside for the Common Stock during such fiscal year,
multiplied by (ii) the number of whole shares of Common Stock into which each
such share of Series D Convertible Preferred Stock is then convertible as
determined by Paragraph 7 below.
(b) The Corporation shall not declare or pay any dividends or
any other distributions of property or assets on shares of Common Stock, other
than dividends payable solely in cash or Common Stock, without the prior written
consent or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series D Preferred Stock given in writing or by vote at a
meeting, voting as a single class.
4. ADDITIONAL PAYMENTS.
(a) In addition to any dividends for which holders of shares
of Series D Convertible Preferred Stock shall be entitled to receive pursuant to
Subparagraph 3(a) above, holders of shares of Series D Convertible Preferred
Stock shall be entitled to receive interest equal to six percent (6%) per annum
of the stated value (the "Stated Value") of such Series D Convertible Preferred
Stock. The Stated Value for all of the shares of Series D Convertible Preferred
Stock as of the Original Issuance Date (defined below) is $350,000 (the
"Original Aggregate Stated Value") and the Stated Value of each share of Series
D Convertible Preferred Stock is $1,000. Such interest accrue from the Original
Issuance Date, and shall be payable, in cash or Common Stock, on a quarterly
basis, as described in Subparagraph 4(b) below, commencing with the
Corporation's fiscal quarter ending March 31, 1997. In the event that the
Corporation decides to make payment of such interest in Common Stock, the amount
of shares of Common Stock to be issued to make such
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payment shall be that number of shares equal to (i) the amount of interest due
and payable, divided by (ii) the Average Closing Price (defined in Subparagraph
7(a) below) of the Common Stock, as reported by the Nasdaq SmallCap Market or in
the "Pink Sheets" during the ten trading days immediately preceding the date of
delivery to the holders of the Series D Convertible Preferred Stock of the
Common Stock as required by Subparagraph 4(b) as payment for the interest due
hereunder.
(b) Interest hereunder shall accrue and be calculated and
payable with respect to (i) those shares of Series D Convertible Preferred Stock
that remain issued and outstanding at the end of each of the Corporation's
fiscal quarters (ii) and any shares of Series D Convertible Preferred Stock that
are converted during a fiscal quarter for which interest is calculated and paid.
With respect to those shares of Series D Convertible Preferred Stock that remain
issued and outstanding at the end a fiscal quarter, interest shall be calculated
based on the Stated Value of such remaining issued and outstanding shares of
Series D Convertible Preferred Stock as set forth in the Corporation's Annual
Reports on Form 10-K(SB) or Quarterly Reports on Form 10-Q(SB) to be filed with
the Securities and Exchange Commission ("SEC"). With respect to any shares of
Series D Convertible Preferred Stock that are converted during a fiscal quarter,
interest shall be calculated based on the Stated Value of such shares up to and
including the Conversion Date (defined in Subparagraph 7(f)).
(c) Payment of interest due hereunder with respect to those
shares of Series D Convertible Preferred Stock that remain issued and
outstanding at the end of each of the Corporation's fiscal quarters shall be
made within 15 business days after the filing with the SEC of the applicable
report. Payment of interest due hereunder with respect to any shares of Series D
Convertible Preferred Stock that are converted during a fiscal quarter shall be
calculated and made within 30 days of the Conversion Date of such shares.
Payment of interest upon such converted shares of Series D Convertible Preferred
Stock shall be accompanied by the Company's calculation of the interest.
(d) With respect to the payment of interest due hereunder upon
those shares of Series D Convertible Preferred Stock that remain issued and
outstanding at the end of a fiscal quarter, the Corporation shall notify the
holders of the Series D Convertible Preferred Stock in writing not less than 10
days prior to the end of such fiscal quarter of whether the Corporation shall
pay the interest due hereunder in cash or Common Stock. With respect to the
payment of interest due hereunder upon those shares of Series D Convertible
Preferred Stock that are converted during a fiscal quarter, the Corporation
shall notify the holders of the Series D Convertible Preferred Stock in writing
not less than 10 days after the Conversion Date whether the Corporation shall
pay the interest due hereunder in cash or Common Stock.
5. LIQUIDATION. In the event of a voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the holders of shares of Series D
Convertible Preferred Stock shall be entitled to receive out of the assets of
the Corporation legally available for distribution to holders of its capital
stock, before any payment or distribution shall be made to holders of Common
Stock or any other class of stock ranking junior to Series D Convertible
Preferred Stock, an amount per
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share equal to the Stated Value of such shares of Series D Convertible Preferred
Stock plus all dividends which have accrued and are unpaid and therefore are in
arrears. If upon such liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the assets to be distributed among the holders
of Series D Convertible Preferred Stock shall be insufficient to permit payment
to the holders of Series D Convertible Preferred Stock of the amount
distributable as aforesaid, then the entire assets of the Corporation to be so
distributed shall be distributed ratably among the holders of Series D
Convertible Preferred Stock. Upon any such liquidation, dissolution or winding
up of the Corporation, after the holders of Series D Convertible Preferred Stock
shall have been paid in full the amounts to which they shall be entitled, the
remaining net assets of the Corporation may be distributed to the holders of
stock ranking on liquidation junior to the Series D Convertible Preferred Stock.
Written notice of such liquidation, dissolution or winding up, stating a payment
date, the amount of the liquidation payments and the place where said
liquidation payments shall be payable, shall be given by mail, postage prepaid,
or by telex to non-U.S. residents, not less than 10 days prior to the payment
date stated therein, to the holders of record of Series D Convertible Preferred
Stock, such notice to be addressed to each such holder at its address as shown
by the records of the Corporation. For purposes hereof, the Common Stock shall
rank on liquidation junior to the Series D Convertible Preferred Stock.
6. RESTRICTIONS. At any time when shares of Series D Convertible
Preferred Stock are outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Corporation's Certificate of Incorporation, as amended, without the
approval of the holders of at least a majority of the then outstanding shares of
Series D Convertible Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a series, the
Corporation will not create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series D
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation; or increase the authorized amount
of the Series D Convertible Preferred Stock or increase the authorized amount of
any additional class or series of shares of stock unless the same ranks junior
to the Series D Convertible Preferred Stock as to the distribution of assets on
the liquidation, dissolution or winding up of the Corporation; or create or
authorize any obligation or security convertible into shares of Series D
Convertible Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, whether any such creation,
authorization or increase shall be by means of amendment to the Corporation's
Certificate of Incorporation or by merger, consolidation or otherwise.
7. OPTIONAL CONVERSION. The holders of shares of Series D Convertible
Preferred Stock shall have the following conversion rights:
(a) Right to Convert; Conversion Price. Subject to the terms,
conditions, and restrictions of this Paragraph 7, the holder of any share or
shares of Series D Convertible Preferred Stock shall have the right to convert
each such share of Series D Convertible Preferred Stock (except that upon any
liquidation of the Corporation, the right of conversion shall terminate at the
close of business on the business day fixed for payment of the amount
distributable on the Series D
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Convertible Preferred Stock) into an amount of shares of Common Stock equal to
the Stated Value of such share or shares of Series D Convertible Preferred Stock
divided by $2.74.
(b) Restrictions on Conversion. The holder of any share or
shares of Series D Convertible Preferred Stock may not convert any of such
shares for a period of at least three hundred sixty-five (365) days following
the date upon which the Series D Convertible Preferred Stock was originally
issued (the "Original Issuance Date").
(c) Notice of Conversion. The right of conversion shall be
exercised by the holder thereof by giving written notice (the "Conversion
Notice") to the Corporation that the holder elects to convert a specified number
of shares of Series D Convertible Preferred Stock representing a specified
Stated Value thereof 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 the Series D
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in the Conversion 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. The Conversion Notice shall include therein the
Stated Value of shares of Series D Convertible Preferred Stock to be converted,
and the number of shares of Common Stock to be issued in connection with such
conversion. The Corporation shall have the right to review the calculations
included in the Conversion Notice, and shall provide notice of any discrepancy
or dispute therewith within three business days of the receipt thereof.
(d) Issuance of Certificates; Time Conversion Effected.
Promptly, but in no event more than ten business days, after the receipt of the
Conversion Notice referred to in Subparagraph 7(e) and surrender of the
certificate or certificates for the share or shares of Series D Convertible
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock into which such shares of Series D Convertible
Preferred Stock are converted. To the extent permitted by law, such conversion
shall be deemed to have been effected as of the close of business on the date
(the "Conversion Date") on which such Conversion Notice shall have been received
by the Corporation and the certificate and certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Series D Convertible Preferred Stock shall
cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby.
(e) Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series D Convertible
Preferred Stock into Common Stock. In case the number of shares of Series D
Convertible Preferred Stock represented by the certificate or certificates
surrendered pursuant to Subparagraph 7(a) exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a
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new certificate or certificates for the number of shares of Series D Convertible
Preferred Stock represented by the certificate or certificates surrendered which
are not to be converted.
(f) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected 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 Series D Convertible Preferred Stock 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 or shares of Series D Convertible 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
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 interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the conversion rights) 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.
(g) Adjustments for Splits, Combinations, etc. The Conversion
Price and the number of shares of Common Stock into which the Series D
Convertible Preferred Stock shall be convertible shall be adjusted appropriately
for stock splits, combinations, or other similar events (other than employee
benefit plans and stock option plans for employees or consultants to the
Company). Additionally, an adjustment will be made in the case of an exchange of
Common Stock, consolidation or merger of the Company with or into another
corporation or sale of all or substantially all of the assets of the Company in
order to enable the holder of Series D Convertible Preferred Stock to acquire
the kind and the number of shares of stock or other securities or property
receivable in such event by a holder of the Series D Convertible Preferred Stock
of the number of shares that might otherwise have been purchased upon the
conversion of the Series D Convertible Preferred Stock. No adjustment to the
Conversion Price will be made for dividends (other than stock dividends), if
any, paid on the Common Stock or for securities issued pursuant to exercise of
the currently outstanding options, warrants, or options that may be granted or
shares issued in connection with the acquisition of another business by the
Company.
8. MANDATORY CONVERSION.
(a) Mandatory Conversion Date. If at February 26, 2000 (the
"Mandatory Conversion Date"), there remains issued and outstanding any shares of
Series D Convertible Preferred Stock, then the Corporation shall be entitled to
require all (but not less than all) holders of shares of Series D Convertible
Preferred Stock then outstanding to convert their shares of Series D Convertible
Preferred Stock into shares of Common Stock pursuant to Subparagraph 7(a). The
Corporation shall provide written notice (the "Mandatory Conversion Notice") to
the holders of
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shares of Series D Convertible Preferred Stock of such mandatory conversion. The
Mandatory Conversion Notice shall include the Stated Value of the shares of
Series D Convertible Preferred Stock to be converted, and the number of shares
of the Corporation's Common Stock to be issued upon such mandatory conversion.
(b) Surrender of Certificates. On or before the Mandatory
Conversion Date, each holder of shares of Series D Convertible Preferred Stock
shall surrender his, her or its certificate or certificates for all such shares
to the Corporation at the place designated in such Mandatory Conversion Notice,
and shall thereafter receive certificates for the number of shares of Common
Stock to which such holder is entitled. On the Mandatory Conversion Rate, all
rights with respect to the Series D Convertible Preferred Stock so converted,
including the rights, if any, to receive notices and vote, will terminate. All
certificates evidencing shares of Series D Convertible Preferred Stock that are
required to be surrendered for conversion in accordance with the provisions
hereof, from and after the Mandatory Conversion Date, shall be deemed to have
been retired and cancelled and the shares of Series D Convertible Preferred
Stock represented thereby converted into Common Stock for all purposes,
notwithstanding the failure of the holder or holders thereof to surrender such
certificates on or prior to such date. The Corporation may thereafter take such
appropriate action as may be necessary to reduce the authorized Series D
Convertible Preferred Stock accordingly.
9. REDEMPTION OF SERIES D CONVERTIBLE PREFERRED STOCK.
(a) Right to Redeem Series D Convertible Preferred Stock. At
any time, and from time to time, on and after the expiration of the restrictions
of conversion contained in Subparagraph 7(b), if the closing bid price of the
Company's Common Stock as reported by the Nasdaq SmallCap Market or in the "Pink
Sheets" equals or exceeds $20.00 for 20 consecutive trading days, then the
Corporation may, in its sole discretion, but shall not be obligated to, redeem,
in whole or in part, the then issued and outstanding shares of Series D
Convertible Preferred Stock, at a price of $1,000 per share of such Series D
Convertible Preferred Stock (the "Redemption Price"), subject to adjustment as
provided in Paragraph 7.
(b) Notice of Redemption. The Corporation shall provide each
holder of record of the Series D Convertible Preferred Stock with written notice
of redemption (the "Redemption Notice") not less than 30 days prior to any date
stipulated by the Corporation for the redemption of the Series D Convertible
Preferred Stock (the "Redemption Date"). The Redemption Notice shall contain (i)
the Redemption Date, (ii) the number of shares of Series D Convertible Preferred
Stock to be redeemed from the holder to whom the Redemption Notice is delivered,
(iii) instructions for surrender to the Corporation of the certificate or
certificates representing the shares of Series D Convertible Preferred Stock to
be redeemed, and (iv) instructions as to how to specify to the Corporation the
number of shares of Series D Convertible Preferred Stock to be redeemed as
provided in this Paragraph 9, and the number of shares of Series D Convertible
Preferred Stock to be converted into Common Stock pursuant to Paragraph 7.
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(c) Right to Convert Series D Convertible Preferred Stock upon
Receipt of Redemption Notice. Upon receipt of the Redemption Notice, the
recipient thereof shall have the option, at is sole election, to specify what
portion of the Series D Convertible Preferred Stock called for redemption in the
Redemption Notice shall be redeemed as provided in this Paragraph 8 or converted
into Common Stock in the manner provided in Paragraph 7. If the holder of the
Series D Convertible Preferred Stock called for redemption elects to convert
such shares, then such conversion shall take place on the Redemption Date, in
accordance with the terms of Paragraph 7.
(d) Surrender of Certificates; Payment of Redemption Price. On
or before the Redemption Date, each holder of the shares of Series D Convertible
Preferred Stock to be redeemed shall surrender the required certificate or
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be paid by the Corporation via check to
the order of the person whose name appears on such certificate or certificates
as the owner thereof, and each such surrendered certificate shall be canceled
and retired. If a certificate is surrendered and all the shares evidenced
thereby are not being redeemed, the Corporation shall issue new certificates to
be registered in the names of the person(s) whose name(s) appear(s) as the
owners on the respective surrendered certificates and deliver such certificate
to such person(s).
(e) Deposit of Redemption Price. On the Redemption Date in
respect to any shares of Series D Convertible Preferred Stock, or prior thereto,
the Corporation shall deposit with any bank or trust company (the "Depository")
having a capital and surplus of at least $50,000,000, a sum equal to (i) the
aggregate Redemption Price of all such shares called for redemption, less (ii)
the aggregate Redemption Price for those shares of Series D Convertible
Preferred Stock in respect of which the Corporation has received notice from the
holder thereof of its election, pursuant to Subparagraph 8(c), to convert shares
of Series D Convertible Preferred Stock into Common Stock. The Corporation shall
provide instructions and authority to the Depository to pay, on or after the
Redemption Date, the Redemption Price to the respective holders upon the
surrender of their share certificates. The deposit of the Redemption Price by
the Corporation with the Depository shall constitute full payment for the shares
of Series D Convertible Preferred Stock to be redeemed, and from and after that
date of the deposit, the redeemed shares shall be deemed to be no longer issued
and outstanding, and the holders thereof shall cease to be holders with respect
to such shares and shall have no rights with respect thereto, except the right
to receive from the Depository payment of the Redemption Price, without
interest, upon surrender of their certificates therefor. Any funds so deposited
and unclaimed at the end of one year from the Redemption Date shall be released
and delivered to the Corporation, after which the former holders of shares of
Series D Convertible Preferred Stock called for redemption shall be entitled to
receive payment of the Redemption Price in respect of their shares only from the
Corporation.
10. NOTICES. In case at any time:
(a) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other pro rata distribution to the
holders of its Common Stock; or
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(b) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights; or
(c) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all
its assets to, another entity or entities; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by telex to non-U.S. residents, addressed to
each holder of any shares of Series D Convertible Preferred Stock at the address
of such holder as shown on the books of the Corporation, (i) at least 10 days'
prior to written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 10
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and (ii) 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, sale, dissolution,
liquidation or winding up, as the case may be.
11. STOCK TO BE RESERVED. The Corporation, upon the effective date of
this Statement of Designation, has a sufficient number of shares of Common Stock
available to reserve for issuance upon the conversion of all outstanding shares
of Series D Convertible Preferred Stock. 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 Series D Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series D Convertible
Preferred. The Corporation covenants that all shares of Common Stock which shall
be so issued shall be duly and validly issued. The Corporation will take all
such action as may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon which
the Common Stock may be listed. The Corporation will not take any action which
results in any adjustment of the conversion rights if the total number of shares
of Common Stock issued and issuable after such action upon conversion of the
Series D Convertible Preferred Stock would exceed the total number of shares of
Common Stock then authorized by the Corporation's Certificate of Incorporation,
as amended.
12. NO REISSUANCE OF SERIES D CONVERTIBLE PREFERRED STOCK. Shares of
Series D Convertible Preferred Stock which are converted into shares of Common
Stock as provided herein shall not be reissued.
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13. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of Series D Convertible Preferred Stock shall be made without
charge to the holder 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 the Series D Convertible
Preferred Stock which is being converted.
14. CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Series D Convertible Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series D Convertible Preferred Stock in any manner which interferes
with the timely conversion of such Series D Convertible Preferred Stock, except
as may otherwise be required to comply with applicable securities laws.
15. DEFINITION OF COMMON STOCK. As used in this Statement of
Designation, the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, $.08 par value per share, as constituted on the date of
filing of these terms of the Series D Convertible Preferred Stock, and shall
also include any capital stock of any class of the Corporation thereafter
authorized which shall neither be limited to a fixed sum or percentage of par
value in respect of the rights of the holders thereof to participate in
dividends nor entitled to a preference in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; provided that the shares of Common Stock receivable upon conversion
of shares of Series D Convertible Preferred Stock shall include only shares
designated as Common Stock of the Corporation on the date of filing of this
instrument, or in case of any reorganization, reclassification, or stock split
of the outstanding shares thereof, the stock, securities or assets provided for
in Subparagraph 7(f).
16. AMENDMENTS. No provision of these terms of the Series D Convertible
Preferred Stock may be amended, modified or waived without the written consent
or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series D Convertible Preferred Stock.
RESOLVED: That the President and Secretary be, and hereby are,
authorized and directed to execute and file a Statement
of Designation with the Delaware Secretary of State.
-10-
IN WITNESS HEREOF, the said National Datacomputer, Inc. has caused its
corporate seal to be hereunto affixed and this Statement of Designation to be
signed by Malcolm M. Bibby, its President and Secretary, this 26th day of
February, 1997.
NATIONAL DATACOMPUTER, INC.
By: /s/ Malcolm M. Bibby, Ph.D.
--------------------------
Malcolm M. Bibby, Ph.D.
President
/s/ Malcolm M. Bibby, Ph.D.
- -----------------------------
Malcolm M. Bibby, Ph.D.
Secretary
[SEAL]
-11-
EXHIBIT 99-C
<TABLE>
<CAPTION>
NATIONAL DATACOMPUTER, INC.
BALANCE SHEET
AS OF DECEMBER 29, 1996
(Unaudited)
<S> <C>
Assets
Current Assets:
Cash and cash equivalents $ 722,285
Accounts receivable, less allowance for doubtful accounts 621,037
Inventories 1,479,153
Other current assets 143,741
----------------------
Total current assets 2,966,216
Property and equipment, net 244,530
----------------------
$ 3,210,746
======================
Liabilities and stockholders' equity (deficit)
Current Liabilities:
Accounts payable $ 125,454
Accrued payroll and related taxes 171,104
Accrued commissions 34,695
Accrued expenses 556,631
Deferred revenues, current portion 486,228
Capital lease, current portion 21,424
----------------------
Total current liabilities $ 1,395,536
Capital Lease 114,828
Deferred revenues 267,540
----------------------
$ 1,777,904
----------------------
Stockholders' equity (deficit)
Common Stock $ 99,052
Preferred Stock 3,685,206
Additional Paid in Capital 9,673,059
Stock Compensation (124,769)
Notes receivable - employees (351,269)
Accumulated deficit (9,505,847)
Y.T.D. Net Loss (1996) (2,042,590)
----------------------
Total stockholders' equity (deficit) $ 1,432,842
----------------------
$ 3,210,746
======================
</TABLE>
<TABLE>
<CAPTION>
NATIONAL DATACOMPUTER, INC.
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 29, 1996
(Unaudited)
<S> <C>
Revenues
Net product revenue $ 4,003,376
Service and other revenue 1,028,638
----------------------
5,032,014
Cost of sales and services 2,445,911
----------------------
2,586,103
----------------------
Operating expenses:
Research and development 1,302,678
Selling, general and administrative 3,333,966
----------------------
4,636,644
----------------------
Income (loss) from operation $ (2,050,541)
Other income (expense):
Interest income 33,865
Interest expense (25,914)
----------------------
Net loss $ (2,042,590)
======================
Adjusted net loss per share $ (1.86)
======================
Weighted average shares and dilutive
shares equivalent outstanding 1,207,026
======================
</TABLE>
<TABLE>
<CAPTION>
NATIONAL DATACOMPUTER, INC.
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
FOR THE 12 MONTHS ENDED DECEMBER 29, 1996
(Unaudited)
<S> <C>
Cash flows from operating activities:
Net income (loss) $ (2,042,590)
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and amortization 83,973
Stock compensation 31,192
Gain on sale of property and equipment (1,780)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 577,857
(Increase) decrease in inventories (206,229)
(Increase) decrease in other current assets (126,609)
(Decrease) increase in accounts payable (208,537)
(Decrease) increase in accrued expenses
and deferred compensation (567,463)
(Decrease) increase in deferred revenues (122,344)
--------------------
Net cash provided by (used for) operating activities (2,582,530)
--------------------
Cash flow from investing activities:
Purchase of property and equipment (24,294)
Proceeds from sale of property and equipment 5,650
--------------------
Net cash used for investing activities ($18,644)
--------------------
Cash flow from financing activities:
Proceeds from Series B preferred stock, net of issuance costs 3,685,206
Repayment of borrowings (456,102)
Proceeds from issuance of stock 50,000
Investment receivable 50,268
Stock offering cost (6,383)
--------------------
Net cash provided by (used for) finincing activities 3,322,989
--------------------
Net increase (decrease) in cash and cash equivalent 721,815
Cash at beginning of year 470
--------------------
Cash and cash equivalent at end of period $ 722,285
====================
</TABLE>
<TABLE>
<CAPTION>
NATIONAL DATACOMPUTER, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
AS OF DECEMBER 29, 1996
NOTES (UNAUDITED)
RECEIVABLE STOCK TOTAL
FROM STOCK SUBSCRIPTION ACCUMULATED
PREFERRED STOCK COMMON STOCK EMPLOYEES COMP RECEIVABLE DEFICIT
------------------- -------------------------- ---------- ----- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ISSUANCE PAR APIC
SHARES PRICE SHARES VALUE
Balance at 12/31/95 4,677,743 $93,555 $9,438,978 ($351,269) ($50,268) ($9,297,847) ($166,851)
- ------------------------------------------------------------------------------------------------------------------------------------
Net loss (2,042,590) ($2,042,590)
- ------------------------------------------------------------------------------------------------------------------------------------
Cost for previous placem ($6,383) ($6,383)
- ------------------------------------------------------------------------------------------------------------------------------------
Payment $50,268 $50,268
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of preferred 4,200 $3,685,206 $3,685,206
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of shares 260,612 $5,212 $200,749 $0 ($124,769) $81,192
- ------------------------------------------------------------------------------------------------------------------------------------
Accr interest on preferred ($208,000) ($208,000)
- ------------------------------------------------------------------------------------------------------------------------------------
Payment of interest 14,230 $285 $39,715 $40,000
- ------------------------------------------------------------------------------------------------------------------------------------
Adj 31 $0
- ------------------------------------------------------------------------------------------------------------------------------------
Reverse stock split (3,714,462) $0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Balance 12/29/96 4,200 $3,685,206 1,238,154 $99,052 $9,673,059 ($351,269) ($124,769) $0 ($11,548,437) $1,432,842
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT 99-D
<TABLE>
<CAPTION>
NATIONAL DATACOMPUTER, INC.
BALANCE SHEET
AS OF JANUARY 26, 1997
ORIGINAL SUBSEQUENT ADJUSTED
(UNAUDITED) EVENT (UNAUDITED)
<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 2,058,843 $ 2,058,843
Accounts receivable, less allowance for doubtful accounts 829,582 829,582
Inventories 1,487,884 1,487,884
Other current assets 149,589 149,589
------------------- -------------- -------------------
Total current assets 4,525,898 4,525,898
Property and equipment, net 243,288 243,288
------------------- -------------- -------------------
$ 4,769,186 $ 4,769,186
=================== ============== ===================
Liabilities and stockholders' equity (deficit)
Current Liabilities:
Accounts payable $ 199,030 $ 199,030
Accrued payroll and related taxes 170,726 170,726
Accrued commissions 18,786 18,786
Accrued expenses 701,038 701,038
Deferred revenues, current portion 532,587 532,587
Capital lease, current portion 17,290 17,290
------------------- -------------- -------------------
Total current liabilities $ 1,639,457 $ 1,639,457
Convertible Debt 600,000 (350,000) 250,000
Capital Lease 114,828 114,828
Deferred revenues 267,540 267,540
------------------- -------------- -------------------
$ 2,621,825 (350,000) $ 2,271,825
------------------- -------------- -------------------
Stockholders' equity (deficit)
Common Stock $ 99,052 $ 99,052
Preferred Stock 4,585,206 350,000 4,935,206
Additional Paid in Capital 9,673,059 9,673,059
Stock Compensation (124,769) (124,769)
Notes receivable - employees (351,269) (351,269)
Accumulated deficit (11,576,437) (11,576,437)
Y.T.D. Net Loss (1997) (157,481) (157,481)
------------------- -------------- -------------------
Total stockholders' equity (deficit) $ 2,147,361 350,000 $ 2,497,361
------------------- -------------- -------------------
$ 4,769,186 $ 4,769,186
=================== ============== ===================
</TABLE>
<TABLE>
<CAPTION>
NATIONAL DATACOMPUTER, INC.
STATEMENT OF OPERATIONS
FOR THE ONE MONTH ENDED JANUARY 26, 1997
(Unaudited)
<S> <C>
Revenues
Net product revenue $ 295,551
Service and other revenue 91,467
----------------------
387,018
Cost of sales and services 184,578
----------------------
202,440
----------------------
Operating expenses:
Research and development 124,677
Selling, general and administrative 233,830
----------------------
358,507
----------------------
Income (loss) from operation $ (156,067)
Other income (expense):
Interest income
Interest expense (1,414)
----------------------
Net loss $ (157,481)
======================
Adjusted net loss per share $ (0.15)
======================
Weighted average shares and dilutive
shares equivalent outstanding 1,238,154
======================
</TABLE>
<TABLE>
<CAPTION>
NATIONAL DATACOMPUTER, INC.
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
FOR THE 1 MONTH ENDED JANUARY 26, 1997
(Unaudited)
<S> <C>
Cash flows from operating activities:
Net income (loss) $ (157,481)
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and amortization 6,633
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (208,545)
(Increase) decrease in inventories (8,731)
(Increase) decrease in other current assets (5,848)
(Decrease) increase in accounts payable 73,576
(Decrease) increase in accrued expenses
and deferred compensation 100,120
(Decrease) increase in deferred revenues 46,359
--------------------
Net cash provided by (used for) operating activities (153,917)
--------------------
Cash flow from investing activities:
Purchase of property and equipment (5,391)
Proceeds from sale of property and equipment
--------------------
Net cash used for investing activities ($5,391)
--------------------
Cash flow from financing activities:
Proceeds from Series C preferred stock 1,500,000
Repayment of borrowings (4,134)
Proceeds from issuance of stock
Investment receivable
Stock compensation
Stock offering cost
--------------------
Net cash provided by (used for) finincing activities 1,495,866
--------------------
Net increase (decrease) in cash and cash equivalent 1,336,558
Cash at beginning of year 722,285
--------------------
Cash and cash equivalent at end of period $ 2,058,843
====================
</TABLE>
<TABLE>
<CAPTION>
NATIONAL DATACOMPUTER, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
AS OF JANUARY 26, 1997
NOTES (UNAUDITED)
RECEIVABLE TOTAL
FROM STOCK ACCUMULATED
PREFERRED STOCK COMMON STOCK EMPLOYEES COMP DEFICIT
--------------------- --------------------------- ---------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ISSUANCE PAR APIC
SHARES PRICE SHARES VALUE
Balance 12/29/96 4,200 $3,685,206 1,238,154 $99,052 $9,673,059 ($351,269) ($124,769) ($11,548,437) $1,432,842
- ------------------------------------------------------------------------------------------------------------------------------------
Net loss (157,481) ($157,481)
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of preferred 900 $900,000 $900,000
- ------------------------------------------------------------------------------------------------------------------------------------
Subsequent Event 350 $350,000 $350,000
- ------------------------------------------------------------------------------------------------------------------------------------
Accr interest on preferred ($28,000) ($28,000)
- ------------------------------------------------------------------------------------------------------------------------------------
Payment of interest $0
- ------------------------------------------------------------------------------------------------------------------------------------
$0
- ------------------------------------------------------------------------------------------------------------------------------------
Balance 1/26/97 5,450 $4,935,206 1,238,154 $99,052 $9,673,059 ($351,269) ($124,769) ($11,733,918) $2,497,361
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
