EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND OTHER RIGHTS AND QUALIFICATIONS OF
SERIES A PREFERRED STOCK
WHX CS Corp., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "CORPORATION"),
DOES HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of Directors of the
Corporation (the "BOARD") by the Certificate of Incorporation of said
Corporation, and pursuant to the provisions of Section 151(g) of the Delaware
General Corporation Law, the Board has duly determined that one thousand (1,000)
shares of preferred stock, $0.01 par value per share, shall be designated
"Series A Preferred Stock," and to that end the Board has adopted a resolution
providing for the designations, preferences and relative, participating,
optional or other rights, and the qualifications, limitations and restrictions,
of the Series A Preferred Stock, which resolution is as follows:
RESOLVED, that the Certificate of Designations, Preferences and Other
Rights and Qualifications of Series A Preferred Stock dated October 25, 2005
(the "CERTIFICATE OF DESIGNATIONS") be, and hereby is, authorized and approved,
which Certificate of Designations shall be filed with the Secretary of State of
the State of Delaware in the form as follows:
1. DESIGNATION AND AMOUNT. One thousand (1,000) shares of the preferred
stock of the Corporation, $0.01 par value per share, shall constitute a class of
preferred stock designated as "Series A Preferred Stock" (the "SERIES A
PREFERRED STOCK"). The relative rights, preferences and limitations of the
Series A Preferred Stock shall be in all respects identical, share for share, to
the Common Stock of the Corporation, except as otherwise provided herein.
2. DIVIDENDS.
(a) The holders of shares of Series A Preferred Stock shall be
entitled to receive, out of assets of the Corporation legally available for
payment, an annual cash dividend at the rate of 6% of the Original Issue Price
(as hereinafter defined) (or $306) per share of Series A Preferred Stock (the
"PREFERRED DIVIDENDS"), payable as provided in Section 2(b) hereof. The
Preferred Dividends shall accrue and compound annually and shall be cumulative
from the date of initial issuance of shares of Series A Preferred Stock (the
"SERIES A ISSUANCE Date"), whether or not declared by the Board of Directors of
the Corporation (the "BOARD"). The amount of the Preferred Dividends shall
accrue and be computed on the basis of the actual number of days elapsed in any
period. The dividend rights of the holders of Series A Preferred Stock shall be
senior in all respects to the dividend rights of all other holders of capital
stock now or hereafter outstanding of the Corporation.
(b) The Preferred Dividends shall be payable in cash or in kind,
whether or not declared by the Board, upon the effective date of the earliest of
(i) a Liquidation (as hereinafter defined) or (ii) a Disposition Transaction (as
hereinafter defined) or (iii) a Redemption pursuant to Section 5.
(c) The Corporation may not declare or pay any dividend or make any
distribution of assets on, or redeem, purchase or otherwise acquire, shares of
capital stock of the Corporation ranking pari passu or junior to the Series A
Preferred Stock as to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up, unless all accrued but unpaid
Preferred Dividends have been or are contemporaneously paid.
3. RIGHTS ON LIQUIDATION, MERGER, SALE, ETC.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation (each, a "LIQUIDATION"), the assets
of the Corporation available for distribution to its stockholders, whether from
capital, surplus or earnings, shall be distributed in the following order of
priority:
(i) The holders of Series A Preferred Stock shall be entitled to
receive, prior and in preference to any distribution to the holders of
Common Stock or any other class of the Corporation's capital stock,
whether now existing or hereafter created, for each share of Series A
Preferred Stock held by such holders, an amount equal to the sum of
(A) $5,100 (the "ORIGINAL ISSUE PRICE"), subject to adjustment as
provided below, plus (B) an amount equal to all accrued but unpaid
Preferred Dividends on such share of Series A Preferred Stock (whether
or not declared by the Board) as of the date such payment is made to
the holders thereof. If upon any Liquidation, the assets of the
Corporation available for distribution to its stockholders are
insufficient to pay the holders of Series A Preferred Stock the full
preference amount to which they shall be entitled, the holders of
Series A Preferred Stock shall share pro rata in any distribution of
assets in accordance with their applicable full preference amounts.
(ii) After distribution of the amounts set forth in Section
3(a)(i) hereof, the remaining assets of the Corporation available for
distribution, if any, to the stockholders of the Corporation shall be
distributed to the holders of issued and outstanding shares of Common
Stock.
(b) For purposes of this Section 3, any of the following (each, a
"DISPOSITION TRANSACTION") shall be treated as a Liquidation (unless otherwise
determined by the holders of at least a majority of the outstanding shares of
Series A Preferred Stock, voting as a separate class): (i) a merger or
consolidation of the Corporation with or into any other Person (as hereinafter
defined) (but excluding any merger effected solely for the purpose of
reincorporating into another state) or the merger of any other Person into the
Corporation, in either case in which the stockholders of the Corporation receive
distributions in cash or securities of another Person as a result of such
consolidation or merger, or a sale of capital stock of the Corporation, and in
which the stockholders of the Corporation immediately prior to such event hold,
immediately after such event, less than a majority of the outstanding shares of
capital stock or a majority of the outstanding voting power of the then
outstanding securities ordinarily (apart from rights occurring under special
circumstances) having the right to vote in the election of directors of the
surviving or successor entity or its parent, or (ii) the direct or indirect
sale, lease, exchange or other transfer of all or substantially all of the
property and assets of the Corporation. For purposes of this Certificate of
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this Certificate of Designatons, "PERSON" shall mean an individual, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, governmental authority or
other entity of whatever nature.
(c) Upon consummation of a Disposition Transaction, the Corporation
shall pay or cause to be paid to the holders of Series A Preferred Stock an
amount equal to the amount they would be entitled to receive pursuant to Section
3(a) hereof out of any and all assets of the Corporation available for
distribution, including but not limited to amounts paid to the Corporation in
connection with such Disposition Transaction. The amount payable pursuant to
this Section 3(c) shall be payable in full to the holders of the Series A
Preferred Stock immediately following the closing of the Disposition
Transaction, notwithstanding any delay in the receipt of the Disposition
Proceeds or any part thereof by virtue of any escrow arrangement, promissory
note, deferred payment of proceeds or otherwise; PROVIDED, HOWEVER, that in the
event the Corporation does not have sufficient assets available for distribution
to pay the holders of Series A Preferred Stock the entire amount owed to them
pursuant to Section 3(a), then the Corporation shall pay such holders the
maximum amount available to the Corporation for distribution at the time of the
closing and the remaining amounts owed to such holders shall be payable by the
Corporation as soon as such funds become available for distribution.
4. VOTING RIGHTS. (a) So long as any shares of Series A Preferred Stock remain
outstanding, in addition to the rights specified in Section 4(b) hereof, the
holders of shares of Series A Preferred Stock shall be entitled voting
separately as a class (with no other stockholders voting), to approve all
matters that affect the rights, value, or ranking of the Series A Preferred
Stock.
(b) The Corporation shall not, so long as any shares of Series A
Preferred Stock remain outstanding, without the affirmative consent or approval
of the holders of a majority of the shares of the Series A Preferred Stock then
outstanding, voting as a separate class, given at a meeting called for such
purpose, for which notice shall have been given to the holders of Series A
Preferred Stock, or by written consent:
(i) in any manner alter or change the designations, powers,
preferences or rights, or the qualifications, limitations or
restrictions of the Series A Preferred Stock;
(ii) take any action to increase or decrease the number of
authorized shares of any preferred stock of the Corporation;
(iii) in any manner authorize, create or issue any class or
series of capital stock ranking, in any respect including, without
limitation, as to payment of dividends, distribution of assets or
redemptions, senior to or PARI PASSU with the Series A Preferred
Stock; or authorize, create or issue any shares of any class or
series of any bonds, debentures, notes or other obligations
convertible into or exchangeable for, or having optional rights to
purchase, or any options, warrants or other rights to acquire, any
shares having any such preference or priority;
(iv) set aside assets for a sinking or other similar fund for
the purchase, redemption, or retirement of, or redeem, purchase,
retire, or otherwise acquire any shares of the Common Stock or of
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any other capital stock of the Corporation, whether now or hereafter
outstanding;
(v) make or declare, directly or indirectly, any dividend (in
cash, return of capital, or any other form of assets) on, or make
any other payment or distribution on account of, the Common Stock or
of any other capital stock of the Corporation ranking junior to the
Series A Preferred Stock as to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up,
whether now or hereafter outstanding;
(vi) take any action to amend, modify, alter or repeal any
provision of its Certificate of Incorporation or By-laws that would
in any way adversely affect the holders of Series A Preferred Stock;
(vii) reclassify the shares of Common Stock or any other shares
or any class or series of capital stock hereafter created junior to
the Series A Preferred Stock into shares of any class or series of
capital stock (A) ranking, either as to payment of dividends,
distribution of assets or redemptions, senior to or PARI PASSU with
the Series A Preferred Stock, or (B) which in any manner adversely
affects the holders of Series A Preferred Stock;
(viii) make or permit to remain outstanding any investment in
any Person, except investments in (x) direct obligations of the
United States of America or any agency thereof; (y) certificates of
deposit issued by any commercial bank operating within the United
States of America having capital and surplus in excess of
$500,000,000; and (z) money market instruments (or interests
therein) or money market fund units purchased through a national
bank or securities brokerage firm registered with the SEC and SIPC;
(ix) directly or indirectly, create, incur, assume, or permit to
continue in existence, any mortgage, deed of trust, lien, charge or
encumbrance on, or security interest in, or pledge or deposit of, or
conditional sale or other title retention agreement with respect to,
any property or asset now owned or leased or hereafter acquired or
leased by the Corporation or any subsidiary, except:
(A) liens in connection with indebtedness or for which
approval of the holders of the Series A Preferred Stock has been
obtained;
(B) liens for taxes, assessments and governmental charges,
the payment of which is being contested by the Corporation in good
faith by appropriate proceeds promptly instituted and diligently
conducted and for which the Corporation has established such
reserves as shall be required by generally accepted accounting
principles and approved by the Corporation's auditors;
(C) liens in connection with workers' compensation,
unemployment insurance or other social security obligations;
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(D) statutory mechanic's, workmen's, materialmen's or other
like liens arising in the ordinary course of business of the
Corporation in respect of obligations which are not yet due or which
are being contested in good faith with appropriate reserves having
been established therefor;
(E) other liens or encumbrances upon the assets of the
Corporation incidental to the conduct of the business of the
Corporation or to the ownership of the properties or assets of the
Corporation, which were not incurred in connection with the
borrowing of money or the obtaining of credit and which do not
materially detract from the value of the properties or assets of the
Corporation or materially adversely affect the operations of the
Corporation;
(x) enter into or permit any subsidiary to enter into any
transaction with any of the Corporation's officers, directors or
employees or any Person directly or indirectly controlled by or
under common control with the Corporation or any of its officers,
directors or employees (a "RELATED PARTY") including, without
limitation, any transaction for the purchase, sale or exchange of
property or the rendering of any service to or by any Related Party,
except for transactions entered into in the ordinary course to
employees approved by the Board; and
(xi) engage in any activity other than purchasing, holding or
selling shares of CoSine Communications, Inc., a Delaware
Corporation;
5. REDEMPTION.
(a) REDEMPTION. Series A Preferred Stock shall be redeemed by the
Corporation out of funds lawfully available therefor at a price (the "REDEMPTION
PRICE") equal to the Original Issuance Price per share, plus an amount equal to
all accrued but unpaid Preferred Dividends thereon (whether or not declared) on
the first anniversary of the Series A Issuance Date, or at the sole option of
the Board of Directors, on any earlier date. The Redemption Price shall be
payable on the date of redemption. Except as provided in the next sentence, the
redemption shall be of all outstanding Series A Preferred Stock. If the
Corporation does not have sufficient funds legally available to redeem on any
redemption date all Series A Preferred Stock and of any other class or series of
stock to be redeemed on such redemption date, the Corporation shall redeem a pro
rata portion of each holder's redeemable shares of such stock out of funds
legally available therefor, based on the respective amounts which would
otherwise be payable in respect of the shares to be redeemed if the legally
available funds were sufficient to redeem all such shares, and shall redeem the
remaining shares to have been redeemed as soon as practicable after the
Corporation has funds legally available therefor. At any time at which the
Corporation is obligated to redeem any shares hereunder and fails to redeem such
shares (whether as a result of legal prohibition or otherwise) the holders of
majority of the then outstanding Series A Preferred Stock shall immediately be
entitled, by written action and without need for notice of meeting, to elect and
add to the Board of Directors such number of directors as is necessary to
constitute a majority of the board, which directors shall serve until all future
redemption payments have been made.
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(b) REDEMPTION NOTICE. Written notice of the redemption (the
"REDEMPTION NOTICE") shall be mailed, postage prepaid, to each holder of record
of Series A Preferred Stock, at its post office address last shown on the
records of the Corporation, or given by electronic communication in compliance
with the provisions of the General Corporation Law of the State of Delaware, not
less than 10 days prior to the redemption date. Each Redemption Notice shall
state:
(i) the number of shares of Series A Preferred Stock held by the
holder that the Corporation shall redeem on the redemption date
specified in the Redemption Notice;
(ii) the redemption date and the Redemption Price; and
(iii) that the holder is to surrender to the Corporation, in the
manner and at the place designated, his, her or its certificate or
certificates representing the Series A Preferred Stock to be
redeemed.
(c) SURRENDER OF CERTIFICATES; PAYMENT. On or before the redemption
date, each holder of Series A Preferred Stock to be redeemed shall surrender the
certificate or certificates representing such shares to the Corporation, in the
manner and at the place designated in the Redemption Notice, and thereupon the
Redemption Price for such shares shall be payable to the order of the person
whose name appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled and retired. In the event that
less than all of the Series A Preferred Stock represented by a certificate are
redeemed, a new certificate representing the unredeemed Series A Preferred Stock
shall promptly be issued to such holder.
(d) RIGHTS SUBSEQUENT TO REDEMPTION. If the Redemption Notice shall
have been duly given, and if on the applicable redemption date the Redemption
Price payable upon redemption of the Series A Preferred Stock to be redeemed on
the redemption date is paid or tendered for payment or deposited with an
independent payment agent so as to be available therefor, then notwithstanding
that the certificates evidencing any of the Series A Preferred Stock so called
for redemption shall not have been surrendered, dividends with respect to such
shares of Series A Preferred Stock shall cease to accrue after the redemption
date and all rights with respect to such shares shall forthwith after the
redemption date terminate, except only the right of the holders to receive the
Redemption Price without interest upon surrender of their certificate or
certificates therefor.
(e) REDEEMED OR OTHERWISE ACQUIRED SHARES. Any shares of Series A
Preferred Stock that are redeemed or otherwise acquired by the Corporation or
any of its subsidiaries shall be automatically and immediately canceled and
shall not be reissued, sold or transferred. Neither the Corporation nor any of
its subsidiaries may exercise any voting or other rights granted to the holders
of Series A Preferred Stock following redemption.
(6) WAIVER. Any right or privilege of the Series A Preferred Stock may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the written consent of the holders of at least a majority of
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the Series A Preferred Stock then outstanding and any such waiver shall be
binding upon each holder of Series A Preferred Stock.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO THE CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND OTHER RIGHTS AND QUALIFICATIONS OF SERIES A PREFERRED STOCK]
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designations as of this 25th day of October, 2005.
WHX CS CORP.
By: /s/ Glen M. Kassan
-------------------------------
Name: Glen M. Kassan
Title: President
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