Exhibit 99.5
FORM OF
HVOLT ENTERPRISES INC.
Certificate of Designations
for a Series of Preferred Stock
designated as "7.5% Convertible Preferred Stock"
(this "Certificate")
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
HVOLT Enterprises, Inc., a corporation of the State of Delaware
(hereinafter called the "Corporation") DOES HEREBY CERTIFY pursuant to Section
151(g) of the General Corporation Law of the State of Delaware that:
BE IT RESOLVED, that a new series of the Preferred Stock, $.001 par
value per share, of the Corporation be, and it hereby is, established;
FURTHER RESOLVED, that the following be, and it hereby is, a statement
of the designation and the powers, preferences and rights, and the
qualifications, limitations and restrictions, of such series, subject to
the provisions set forth in the Certificate of Incorporation of the
Corporation, as heretofore amended (the "Charter") (capitalized terms used
herein and not otherwise defined herein shall have the meanings given
thereto in the Charter; certain other terms used herein are defined in
Section 9 of this Certificate):
1. Designation. The Preferred Stock created and authorized hereby
shall be designated as the "7.5% Convertible Preferred Stock" (the "7.5%
Series"). The number of shares constituting the 7.5% Series shall be o and
more.
2. Dividends. The rate per annum of dividends on the 7.5% Series shall
be $7.50 per share and dividends thereon shall be cumulative from and
including the date of issuance. _________, 20__, shall be the first
dividend payment date for shares issued before such date, and dividends
shall be payable thereafter on the first day of January, April, July and
October of each year. For any period during which any share of such series
is outstanding less or more than a full quarterly dividend period, the
dividends payable shall be computed on the basis of twelve 30-day months
and the actual number of days elapsed in the period for which the dividends
are payable.
3. Optional Redemption. (a) The shares of the 7.5% Series shall not be
redeemable at the option of the Corporation prior to the fourth anniversary
of the date of original issue, and on or after such date, such shares shall
be redeemable in whole or in part at the option of the Corporation, subject
to the terms, provisions and effect as generally provided for redemption of
shares of the Corporation's Preferred Stock in the Charter, at the
Liquidation Preference, plus, in each case, an amount equal to the accrued
but unpaid dividends on said shares to the date of redemption. In the case
of an optional redemption of less than all of the shares of the 7.5% Series
at the time outstanding, the Corporation shall select by lot the shares so
to be redeemed. In lieu of exercising its right to redeem shares of the
7.5% Series under this Section 3, the Corporation may purchase shares from
the holder at the applicable redemption price, and such right to purchase
may be assigned.
(b) No sinking fund or redemption, purchase or similar account or fund
will be provided for shares of the 7.5% Series.
4. Liquidation, Dissolution or Winding Up. In the event of the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of the 7.5% Series shall be entitled to receive
(on a pro rata basis with holders of any other series of Preferred Stock,
from any assets and funds of the Corporation remaining after payment of the
debts and other liabilities of the Corporation) for each share an amount
equal to the Liquidation Preference, plus as to each share, an amount equal
to the accrued but unpaid dividends thereon to the dates of distribution.
5. Voting Rights. (a) Subject to the special voting rights provided to
holders of the Corporation's Preferred Stock below, holders of shares of
the 7.5% Series shall not be entitled, by virtue of their being holders
thereof, to vote in any election of directors to the Board of Directors or
with respect to any other matter submitted to the stockholders of the
Corporation. Where a vote of the holders of the 7.5% Series, voting as a
separate class may be required by applicable law or by this Section 5, each
share of the 7.5% Series shall carry one vote.
(b) The holders of all Preferred Stock shall be entitled to the
following special voting rights:
(i) If at any time, dividends payable on the Corporation's Preferred
Stock are in default in an amount equivalent to six or more full quarterly
dividends, whether or not consecutive, the holders of all outstanding
shares of the Corporation's Preferred Stock, voting separately as a class
and without regard to series shall be entitled until, but only until, all
dividends in default shall have been paid or deposited in trust with a bank
or trust company for payment on or before the next succeeding dividend
payment date, to elect two directors to the Board of Directors, and the
holders of the Common Stock shall be entitled to elect the remaining
directors. If and when all dividends then in default on the Preferred Stock
shall thereafter be paid (and such dividends shall be declared and paid out
of surplus or net profits legally available therefore as soon as reasonably
practicable) the Preferred Stock shall thereupon be divested of any special
rights to elect such two directors to the Board of Directors, but subject
always to the same provisions for vesting of special rights in the
Preferred Stock in the case of any similar future default or defaults.
(I) The foregoing right of the Preferred Stock to elect two
directors to the Board of Directors of the Corporation may be
exercised at any annual meeting of stockholders held for such purpose.
Upon the accrual of such special right of the holders of Preferred
Stock, a meeting (which may be a special meeting of the stockholders)
of the holders of the Preferred Stock shall be held upon notice
promptly given as provided in the By-laws for a special meeting, by
the Chairman of the Board, President or Secretary of the Corporation.
If, within fifteen (15) days after the accrual of such special right
of the Preferred Stockholders, the Chairman of the Board, President
and Secretary of the Corporation shall fail to call such meeting,
then, upon request signed by any holder of record of Preferred Stock
then outstanding delivered to the Corporation at its principal office,
the President of the Corporation shall call a special meeting of the
Preferred Stockholders (which may be a special meeting of the
stockholders) to be held within sixty (60) days after the receipt of
such request for the purpose of electing two directors to the Board of
Directors by a vote of the Preferred Stock as above provided, to serve
until the next annual meeting or until their successors shall be
elected and qualified. The term of office of two of the persons who
are directors of the Corporation at the time shall be designated by a
majority of the directors then in office as the directors whose terms
shall terminate upon the election of the two directors to the Board of
Directors by the Preferred Stockholders, notwithstanding that the term
for which such two directors have been elected shall not then have
expired.
(II) At such time as the Preferred Stock shall be divested of the
right to elect two directors to the Board of Directors, the term of
such directors so elected by the holders of the Preferred Stock shall
terminate and the vacancies in the Board of Directors effected thereby
may be filled by a majority of the remaining directors.
(III) At any annual or special meeting of stockholders held for
the purpose of electing directors at which the holders of the
Preferred Stock would be entitled to elect two directors to the Board
of Directors, the presence in person or by proxy of the holders of a
majority of the outstanding Preferred Stock shall be required to
constitute a quorum of Preferred Stock for the election by such class
of two directors to the Board of Directors; provided, however, that a
majority of the holders of the Preferred Stock who are present in
person or by proxy shall have the power to adjourn such meeting for
the purpose of the election of such two directors by such shares from
time-to-time without notice other than an announcement at the meeting.
No delay or failure by the holders of any class of shares to elect the
members of the Board of Directors which such holders are entitled to
elect shall invalidate the election of the remaining members of the
Board of Directors by the holders of such other class or classes of
shares, and a majority of the directors so elected shall, in such
case, constitute a quorum for the transaction of business by the Board
of Directors.
(IV) If, during any interval between the annual meeting of
stockholders for the election of directors and while the Preferred
Stock shall be entitled to elect two directors, a director in office
who has been elected by the holders of the Preferred Stock shall have
resigned, died or been removed, then (x) such vacancy shall be filled
by the remaining director then in office who was elected by the
Preferred Stockholders or who succeeded to the director so elected,
and (y) if both directors so representing the Preferred Stockholders
shall have resigned, died or been removed, or if any vacancy which
occurred more than six months prior to the date of the next ensuing
annual meeting is not so filled within forty (40) days after the
occurrence thereof, the President of the Corporation shall call a
special meeting of the holders of the Preferred Stock and such vacancy
shall be filled at such special meeting.
(V) Any director elected by the holders of Preferred Stock may be
removed from office only by vote of the holders of a majority of the
outstanding shares of Preferred Stock voted for his election or for
his predecessor in cases where such director was elected by the Board
of Directors.
(ii) So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, without the consent (given by vote in person or by
proxy at a meeting called for that purpose) of the holders of at least
two-thirds (2/3) of the shares of Preferred Stock then outstanding, voting
separately as a class and without regard to series,
(I) Amend, alter, change or repeal any of the express terms or
provisions of then outstanding Preferred Stock in a manner
substantially prejudicial to the holders thereof; provided, however,
that, if any such amendment, alteration, change or repeal adversely
affects the holders of some but not all of the outstanding shares of
Preferred Stock, only the consent of the holders of two-thirds (2/3)
of the total number of shares so affected shall be required; or
(II) Create any class of stock ranking prior to the Preferred
Stock as to dividends or upon liquidation, or securities convertible
into shares ranking prior to the Preferred Stock in respects
aforesaid.
6. Conversion Rights.
(a) Right to Convert. Each share of the 7.5% Series may be converted
at the option of the holder thereof at any time and from time to time, and
without the payment of any additional consideration therefor, into that
number of fully paid and nonassessable shares of Common Stock, $.001 par
value per share, of the Corporation (the "Common Stock") as provided
herein.
(b) Conversion Procedures. Each holder of the 7.5% Series who elects
to convert the same into shares of Common Stock shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or any transfer agent for the 7.5% Series as may be designated
by the Board of Directors (the "Transfer Agent"), and shall give written
notice to the Corporation at such office that such holder elects to convert
the same and shall state therein the number of shares of the 7.5% Series
being converted; provided, however, such number of shares shall not be
fewer than 25,000. Thereupon, the Corporation shall promptly issue and
deliver at such office to such holder a certificate or certificates for the
number of shares of Common Stock to which such holder is entitled upon such
conversion. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the
certificate or certificates representing the shares of the 7.5% Series to
be converted, and the person entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder of such shares of Common Stock on such date.
(c) Conversion Price. Each share of the 7.5% Series shall be
convertible in accordance with this Section 6 into the number of shares of
Common Stock that results from dividing the Liquidation Preference for the
7.5% Series (including the stated liquidation preference and accrued but
unpaid dividends) by the conversion price that is in effect at the time of
conversion (the "Conversion Price"). The initial Conversion Price for the
7.5% Series shall be $32.40 per share. The Conversion Price shall be
subject to adjustment from time to time as provided below.
(d) Adjustment of Conversion Price. The Conversion Price shall be
adjusted from time to time as follows:
(i) If the Corporation shall hereafter pay a dividend in or make a
distribution of Common Stock to all holders of any outstanding class or
series of Common Stock, the Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall
be reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the
close of business on the Record Date fixed for such determination and the
denominator shall be the sum of such number of outstanding shares and the
total number of shares constituting such dividend or other distribution,
such reduction to become effective immediately after the opening of
business on the day following the Record Date. If any dividend or
distribution of the type described in this Section 6(d)(i) is declared but
not so paid or made, the Conversion Price shall again be adjusted to the
Conversion Price which would then be in effect if such dividend or
distribution had not been declared.
(ii) If the Corporation shall offer to issue rights or warrants to all
holders of its outstanding Common Stock entitling them to subscribe for or
purchase Common Stock at a price per share less than the Current Market
Price on the Record Date fixed for the determination of stockholders
entitled to receive such rights or warrants, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying
the Conversion Price in effect at the opening of business on the date after
such Record Date by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the
Record Date plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock subject to
such rights or warrants would purchase at such Current Market Price and of
which the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the Record Date plus the total
number of additional shares of Common Stock subject to such rights or
warrants for subscription or purchase. Such adjustment shall become
effective immediately after the opening of business on the day following
the Record Date fixed for determination of stockholders entitled to
purchase or receive such rights or warrants. For the purposes of this
Section 6(d)(ii), the issuance of rights or warrants to subscribe for or
purchase securities convertible into Common Stock shall be deemed to be the
issuance of rights or warrants to purchase the shares of Common Stock into
which such securities are convertible at an aggregate offering price equal
to the aggregate offering price of such securities plus the minimum
aggregate amount (if any) payable upon conversion of such securities into
shares of Common Stock. To the extent that shares of Common Stock are not
delivered pursuant to such rights or warrants, upon the expiration or
termination of such rights or warrants the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on
the basis of delivery of only the number of shares of Common Stock actually
delivered. If such rights or warrants are not so issued, the Conversion
Price shall again be adjusted to be the Conversion Price which would then
be in effect if such date fixed for the determination of stockholders
entitled to receive such rights or warrants had not been fixed. In
determining whether any rights or warrants entitle the holders to subscribe
for or purchase Common Stock at less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common Stock,
there shall be taken into account any consideration received for such
rights or warrants, with the value of such consideration, if other than
cash, to be determined by the Board of Directors.
(iii) If the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and,
conversely, if the outstanding shares of Common Stock shall be combined
into a smaller number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(iv) If the Corporation shall, by dividend or otherwise, distribute to
all holders of its shares of Common Stock shares of any class of capital
stock of the Corporation (other than any dividends or distributions to
which Section 6(d)(i) applies) or evidences of its indebtedness, cash or
other assets (including securities, but excluding any rights or warrants of
a type referred to in Section 6(d)(ii) and excluding dividends and
distributions paid exclusively in cash and excluding any capital stock,
evidences of indebtedness, cash or assets distributed upon a merger or
consolidation to which Section 7(a) applies) (the foregoing hereinafter in
this Section 6(d)(iv) called the "Distributed Securities"), then, in each
such case, the Conversion Price shall be reduced so that the same shall be
equal to the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the Record Date with respect
to such distribution by a fraction of which the numerator shall be the
Current Market Price of the Common Stock on such date less the fair market
value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a resolution of the Board of Directors) on
such date of the portion of the Distributed Securities so distributed
applicable to one share of Common Stock and the denominator shall be such
Current Market Price, such reduction to become effective immediately prior
to the opening of business on the day following the Record Date; provided,
however, that, in the event the then fair market value (as so determined)
of the portion of the Distributed Securities so distributed applicable to
one share of Common Stock is equal to or greater than the Current Market
Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each holder of the 7.5% Series shall have
the right to receive upon conversion of a share of the 7.5% Series (or any
portion thereof) the amount of Distributed Securities such holder would
have received had such holder converted such share of the 7.5% Series (or
portion thereof) immediately prior to such Record Date. If such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared. If the Board of Directors
determines the fair market value of any distribution for purposes of this
Section 6(d)(iv) by reference to the actual or when issued trading market
for any securities comprising all or part of such distribution, it must in
doing so consider the prices in such market over the same period used in
computing the Current Market Price to the extent possible.
Rights or warrants distributed by the Corporation to all holders of
Common Stock entitling the holders thereof to subscribe for or
purchase shares of the Corporation's Capital Stock (either initially
or under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Dilution Trigger Event"):
(i) are deemed to be transferred with such Common Stock; (ii) are not
exercisable; and (iii) are also issued in respect of future issuances
of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 6(d)(iv) (and no adjustment to the Conversion
Price under this Section 6(d)(iv) shall be required) until the
occurrence of the earliest Dilution Trigger Event, whereupon such
rights and warrants shall be deemed to have been distributed and an
appropriate adjustment to the Conversion Price under this Section
6(d)(iv) shall be made. If any such rights or warrants, including any
such existing rights or warrants distributed prior to the date hereof,
are subject to subsequent events, upon the occurrence of each of which
such rights or warrants shall become exercisable to purchase different
securities, evidences of indebtedness or other assets, then the
occurrence of each such event shall be deemed to be such date of
issuance and record date with respect to new rights or warrants (and a
termination or expiration of the existing rights or warrants without
exercise by the holder thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any
Dilution Trigger Event with respect thereto, that was counted for
purposes of calculating a distribution amount for which an adjustment
to the Conversion Price under this Section 6(d)(iv) was made, (1) in
the case of any such rights or warrants which shall all have been
redeemed or repurchased without exercise by any holders thereof, the
Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Dilution Trigger
Event, as the case may be, as though it were a cash distribution,
equal to the per share redemption or repurchase price received by a
holder or holders of Common Stock with respect to such rights or
warrants (assuming such holder had retained such rights or warrants),
made to all holders of Common Stock as of the date of such redemption
or repurchase, and (2) in the case of such rights or warrants which
shall have expired or been terminated without exercise by any holders
thereof, the Conversion Price shall be readjusted as if such rights
and warrants had not been issued.
Notwithstanding any other provision of this Section 6(d)(iv) to the
contrary, capital stock, rights, warrants, evidences of indebtedness,
other securities, cash or other assets (including any rights
distributed pursuant to any shareholder rights plan) shall be deemed
not to have been distributed for purposes of this Section 6(d)(iv) if
the Corporation makes proper provision so that each holder of shares
of the 7.5% Series who converts a share of the 7.5% Series (or any
portion thereof) after the date fixed for determination of
stockholders entitled to receive such distribution shall be entitled
to receive upon such conversion, in addition to the Common Stock
issuable upon such conversion, the amount and kind of such
distributions that such holder would have been entitled to receive if
such holder had, immediately prior to such determination date,
converted such share of the 7.5% Series into Common Stock.
For purposes of this Section 6(d)(iv) and Sections 6(d)(i) and (ii),
any dividend or distribution to which this Section 6(d)(iv) is
applicable that also includes Common Stock, or rights or warrants to
subscribe for or purchase Common Stock to which Section 6(d)(ii)
applies (or both), shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, cash, assets, shares of
capital stock, rights or warrants other than (A) such shares of Common
Stock or (B) rights or warrants to which Section 6(d)(2) applies (and
any Conversion Price reduction required by this Section 6(d)(iv) with
respect to such dividend or distribution shall then be made)
immediately followed by (2) a dividend or distribution of such Common
Stock or such rights or warrants (and any further Conversion Price
reduction required by Section 6(d)(i) and (ii) with respect to such
dividend or distribution shall then be made), except that (x) the
Record Date of such dividend or distribution shall be substituted as
"the Record Date fixed for the determination of stockholders entitled
to receive such dividend or other distribution", "Record Date fixed
for such determination" and "Record Date" within the meaning of
Section 6(d)(i) and as "the Record Date fixed for the determination of
stockholders entitled to receive such rights or warrants", "the date
fixed for the determination of the stockholders entitled to receive
such rights or warrants" and "such Record Date" within the meaning of
Section 6(d)(ii), and (y) any share of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at the close
of business on the date fixed for such determination" within the
meaning of Section 6(d)(i).
(v) If the Corporation shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding any cash that is
distributed upon a merger or consolidation to which Section 7(a) applies or
as part of a distribution referred to in paragraph (6)(d)(iv)) in an
aggregate amount that, combined together with (1) the aggregate amount of
any other such distributions to all holders of its Common Stock made
exclusively in cash within the 12 months preceding the date of payment of
such distribution, and in respect of which no adjustment pursuant to this
Section 6(d)(v) has been made, and (2) the aggregate of any cash plus the
fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the
Board of Directors) of consideration payable in respect of any tender offer
by the Company or a Subsidiary of the Company for all or any portion of the
Common Stock concluded within the 12 months preceding the date of payment
of such distribution, and in respect of which no adjustment pursuant to
Section 6(d)(vi) has been made, exceeds 15% of the product of the Current
Market Price on the Record Date with respect to such distribution times the
number of shares of Common Stock outstanding on such date, then, and in
each such case, immediately after the close of business on such date, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the close of business on such Record Date by a fraction (i) the
numerator of which shall be equal to the Current Market Price on the Record
Date less an amount equal to the quotient of (x) the excess of such
combined amount over such 15% amount divided by (y) the number of shares of
Common Stock outstanding on the Record Date and (ii) the denominator of
which shall be equal to the Current Market Price on such Record Date;
provided, however, that, if the portion of the cash so distributed
applicable to one share of Common Stock is equal to or greater than the
Current Market Price of the Common Stock on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each holder
of the 7.5% Series shall have the right to receive upon conversion of a
share of the 7.5% Series (or any portion thereof) the amount of cash such
holder would have received had such holder converted such share of the 7.5%
Series (or portion thereof) immediately prior to such Record Date. If such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect
if such dividend or distribution had not been declared.
(vi) If a tender or exchange offer made by the Company or any of its
Subsidiaries for all or any portion of the Common Stock expires and such
tender or exchange offer (as amended upon the expiration thereof) requires
the payment to stockholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares (as defined
below)) of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) that,
combined together with (i) the aggregate of the cash plus the fair market
value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a resolution of the Board of Directors), as
of the expiration of such tender offer, of consideration payable in respect
of any other tender offers by the Company or any of its Subsidiaries for
all or any portion of the Common Stock expiring within the 12 months
preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to this Section 6(d)(vi) has been made and (ii) the
aggregate amount of any distributions to all holders of the Common Stock
made exclusively in cash within 12 months preceding the expiration of such
tender offer and in respect of which no adjustment pursuant to Section
6(d)(v) has been made, exceeds 15% of the product of the Current Market
Price as of the last time (the "Expiration Time") tenders could have been
made pursuant to such tender offer (as it may be amended) times the number
of shares of Common Stock outstanding (including any tendered shares) at
the Expiration Time, then, and in each such case, immediately prior to the
opening of business on the day after the date of the Expiration Time, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the close of business on the date of the Expiration Time by a fraction
of which the numerator shall be the number of shares of Common Stock
outstanding (including any tendered shares) at the Expiration Time
multiplied by the Current Market Price of the Common Stock on the Trading
Day next succeeding the Expiration Time and the denominator shall be the
sum of (x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender offer) of all shares validly
tendered and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) at the Expiration Time and the
Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, such reduction (if any) to become effective
immediately prior to the opening of business on the day following the
Expiration Time. If the Company is obligated to purchase shares pursuant to
any such tender offer, but the Company is permanently prevented by
applicable law from effecting any such purchases or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such tender offer had not
been made. If the application of this Section 6(d)(vi) to any tender offer
would result in an increase in the Conversion Price, no adjustment shall be
made for such tender offer under this Section 6(d)(vi).
(vii) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of this
Section 6(d)(vii) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 6(d) shall be made by the Corporation and shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may
be. No adjustment need be made for a change in the par value or no par
value of the Common Stock.
(viii) Whenever the Conversion Price is adjusted as herein provided,
the Corporation shall promptly file with the Transfer Agent an Officers'
Certificate setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
Promptly after delivery of such certificate, the Corporation shall prepare
a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion
Price to each holder of the 7.5% Series at such holder's last address
appearing on the register of holders maintained for that purpose within 20
days of the effective date of such adjustment. Failure to deliver such
notice shall not affect the legality or validity of any such adjustment.
(ix) In any case in which this Section 6(d) provides that an
adjustment shall become effective immediately after a Record Date for an
event, the Corporation may defer until the occurrence of such event issuing
to the holder of any share of the 7.5% Series converted after such Record
Date and before the occurrence of such event the additional Common Stock
issuable upon such conversion by reason of the adjustment required by such
event over and above the Common Stock issuable upon such conversion before
giving effect to such adjustment.
(x) For purposes of this Section 6(d), the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury
of the Corporation but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of Common Stock. The Corporation
shall not pay any dividend or make any distribution on Common Stock held in
the treasury of the Corporation.
7. Corporate Events.
(a) Merger. In case of (i) any reclassification or change of
outstanding shares of Common Stock (other than a change in par value or
from par value to no par value or from no par value to par value, or as a
result of a subdivision or combination) or (ii) any consolidation or merger
of the Corporation with one or more other corporations (other than any
consolidation or merger in which the Corporation is the continuing
corporation and which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock issuable
upon conversion of the 7.5% Series), (iii) any sale or conveyance to
another corporation or other entity of all or substantially all of the
property of the Corporation, or (iv) any other transaction which would
constitute a Change of Control of the Corporation, then the Corporation, or
such successor corporation or other entity, as the case may be, shall make
appropriate provision so that the holder of each share of the 7.5% Series
then outstanding shall have the right thereafter, to convert such share of
the 7.5% Series into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale,
reclassification, change or conveyance by a holder of the number of shares
of Common Stock into which such share of the 7.5% Series might have been
converted immediately prior to such consolidation, merger, sale,
reclassification, change or conveyance, subject to such adjustment which
shall be as nearly equivalent as may be practicable to the adjustments
provided in Section 6(d). The above provisions of this Section 7(a) shall
similarly apply to successive consolidations, mergers, conveyances or
transfers.
(b) Offer to Repurchase. In addition to the foregoing, upon the
occurrence of a Change of Control in which all or part of the consideration
payable to holders of Common Stock is in the form of cash, the Corporation
shall make an offer (a "Change of Control Offer") to each holder of shares
of the 7.5% Series to repurchase all or any part of each such holder's
shares of the 7.5% Series at an offer price in cash equal to 100% of the
Liquidation Preference as of the Change of Control Payment Date (the
"Change of Control Payment"); provided, however, such Change of Control
Offer shall be limited to that number of shares of the 7.5% Series equal to
the total number of outstanding shares of the 7.5% Series multiplied by a
quotient equal to the total cash consideration paid to stockholders
pursuant to such Change of Control transaction divided by the total
consideration paid to stockholders pursuant to such Change of Control
transaction. The Corporation shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of shares of the 7.5% Series as a result of
a Change of Control, and the Corporation shall not be in violation of this
Certificate of Designation by reason of any act required by such rule or
other applicable law.
Within 25 days following any Change of Control, the Corporation shall mail
a notice to each holder of shares of the 7.5% Series stating:
(i) that the Change of Control Offer is being made pursuant to this
Section 7 and that up to the stated number of all shares of the 7.5% Series
tendered will be accepted for payment;
(ii) the purchase price and the purchase date, which shall be at least
30 but no more than 60 days from the date on which the Corporation mails
notice of the Change of Control (the "Change of Control Payment Date");
(iii) that any shares of the 7.5% Series not tendered will continue to
accrue dividends as provided in this Certificate of Designation;
(iv) that, unless the Corporation defaults in the payment of the
Change of Control Payment, all shares of the 7.5% Series accepted for
payment pursuant to the Change of Control Offer shall cease to accrue
dividends after the Change of Control Payment Date;
(v) that holders of shares of the 7.5% Series electing to have any
shares of the 7.5% Series purchased pursuant to a Change of Control Offer
shall be required to surrender the shares of the 7.5% Series to the
Corporation or its designated agent (the "Paying Agent") for such purpose,
at the address specified in the notice prior to the close of business on
the third Business Day preceding the Change of Control Payment Date; and
(vi) that holders of shares of the 7.5% Series will be entitled to
withdraw their election if the Corporation or the Paying Agent receives,
not later than the close of business on the second Business Day preceding
the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the holder of shares of
the 7.5% Series, the number of shares of the 7.5% Series delivered for
purchase, and a statement that such holder is withdrawing his election to
have such shares purchased.
On the Change of Control Payment Date, the Corporation shall, to the extent
lawful, (i) accept for payment all shares of the 7.5% Series tendered
pursuant to the Change of Control Offer; provided, however, that if the
number of such tendered shares exceeds the limits set forth above, the
Corporation shall accept such shares pro rata and (ii) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of
all shares of the 7.5% Series so accepted for payment. The Corporation
shall promptly mail to each holder of shares of the 7.5% Series so tendered
the Change of Control Payment for such shares. The Corporation shall
publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.
(c) Notice of Record Date. In case at any time or from time to time
(i) the Corporation shall pay any stock dividend or make any other non-cash
distribution to the holders of its Common Stock, or offer for subscription
pro rata to the holders of its Common Stock any additional shares of stock
of any class or any other right, or (ii) there shall be any capital
reorganization or reclassification of the Common Stock of the Corporation
or consolidation or merger of the Corporation with or into another
corporation, or any sale or conveyance to another corporation of the
property of the Corporation as an entirety or substantially as an entirety,
or (iii) 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 at least 20 days' prior written notice (the time
of mailing of such notice shall be deemed to be the time of giving thereof)
to the registered holders of the 7.5% Series at the addresses of each as
shown on the books of the Corporation maintained by the Transfer Agent
thereof of the date on which (A) a record shall be taken for such stock
dividend, distribution or subscription rights or (B) such reorganization,
reclassification, consolidation, merger, sale or conveyance, dissolution,
liquidation or winding up shall take place, as the case may be; provided
that, in the case of any transaction to which clause (a) applies the
Corporation shall give at least 30 days' prior written notice as aforesaid.
Such notice shall also specify the date as of which the holders of the
Common Stock of record shall participate in said dividend, distribution or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale or conveyance or participate
in such dissolution, liquidation or winding up, as the case may be. Failure
to give such notice shall not invalidate any action so taken.
8. Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of the 7.5% Series, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of the 7.5% Series; and if at any
time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of
the 7.5% Series, the Corporation will take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
9. Definitions. Certain capitalized terms are used in this Certificate
as defined below:
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries controls or
is controlled by or is under common control with such Person. For the
purposes of this definition, "control," when used with respect to any
particular Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise.
"Beneficial Owner" (and with correlative meanings, "Beneficially Own"
and "Beneficial Ownership") of any interest means a Person who, together
with his, her or its Affiliates, is or may be deemed a beneficial owner of
such interest for purposes of Rule 13d-3 or 13d-5 under the Exchange Act,
or who, together with his, her, or its Affiliates, has the right to become
such a beneficial owner of such interest (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise, conversion or exchange
of any warrant, right or other instrument, or otherwise.
"Board of Directors" shall mean the board of directors of the
Corporation.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in The City of New York or at a place of
payment are authorized by law, regulation or executive order to remain
closed.
"Change of Control" means the occurrence of any of the following: (i)
any Person becoming the Beneficial Owner, directly or indirectly, of Voting
Securities, pursuant to the consummation of a merger, consolidation, sale
of all or substantially all of the Corporation's assets, share exchange or
similar form of transaction that requires the approval of the Corporation's
stockholders, whether for such transaction or the issuance of securities in
such transaction, so as to cause such Person's Voting Ownership Percentage
to exceed 50% of the Total Voting Power; provided however, that the event
described in this clause (i) shall not be deemed to be a Change of Control
if it occurs as a result of the following acquisitions: (A) by any employee
benefit plan sponsored or maintained by the Corporation or any Affiliate,
or (B) by any underwriter temporarily holding securities pursuant to an
offering of such securities; (ii) the consummation of a merger,
consolidation, sale of all or substantially all of the Corporation's
assets, share exchange or similar form of corporate transaction involving
the Corporation or any of its subsidiaries that requires the approval of
the Corporation's shareholders whether for such transaction or the issuance
of securities in such transaction, unless immediately following such
transaction more than 50 percent of the total voting power of (x) the
corporation resulting from such transaction, or (y) if applicable, the
ultimate parent corporation that directly or indirectly has Beneficial
Ownership of 100 percent of the voting securities eligible to elect
directors of such resulting corporation, is represented by Voting
Securities that were outstanding immediately prior to such transaction in
substantially the same proportion as the voting power of such Voting
Securities among the holders thereof immediately prior to such transaction;
or (iii) the consummation of a plan of complete liquidation or dissolution
of the Corporation.
"closing price" with respect to any securities on any day means the
last sale price on such day or, if no such sale takes place on such day,
the average of the reported high bid and low ask prices on such day, in
each case on the Nasdaq National Market or the New York Stock Exchange, as
applicable, or, if such security is not listed or admitted to trading on
such national market or exchange, on the principal national securities
exchange or quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to trading on
any national securities exchange or quotation system, the average of the
high bid and low ask prices of such security on the over-the-counter market
on the day in question as reported by the National Quotation Bureau
Incorporated or a similar generally accepted reporting service, or, if not
so available, in such manner as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of Directors for that
purpose, or a price determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of
the Board of Directors.
"Current Market Price" means the average of the daily closing prices
per share of Common Stock for the 20 consecutive Trading Days immediately
prior to the date in question; provided, however, that (A) if the "ex" date
(as hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 6(d)(i), (ii), (iii) or (iv) occurs
during such 20 consecutive trading days, the closing price for each trading
day prior to the "ex" date for such other event shall be adjusted by
multiplying such closing price by the same fraction by which the Conversion
Price is so required to be adjusted as a result of such other event, (B) if
the "ex" date for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Conversion
Price pursuant to Section 6(d)(i), (ii), (iii) or (iv) occurs on or after
the "ex" date for the issuance or distribution requiring such computation
and prior to the date in question, the closing price for each trading day
on and after the "ex" date for such other event shall be adjusted by
multiplying such closing price by the reciprocal of the fraction by which
the Conversion Price is so required to be adjusted as a result of such
other event and (C) if the "ex" date for the issuance or distribution
requiring such computation is prior to the day in question, after taking
into account any adjustment required pursuant to clause (A) or (B) of this
proviso, the closing price for each trading day on or after such "ex" date
shall be adjusted by adding thereto the amount of any cash and the fair
market value (as determined by the Board of Directors in a manner
consistent with any determination of such value for purposes of Section
6(d)(iv), whose determination shall be conclusive and described in a
resolution of the Board of Directors) of the evidence of indebtedness,
shares of Capital Stock or assets being distributed applicable to one
Common Stock as of the close of business on the day before such "ex" date.
For purposes of this paragraph, the term "ex" date (I) when used with
respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way on the relevant exchange or in the relevant
market from which the closing price was obtained without the right to
receive such issuance or distribution,(II) when used with respect to any
subdivision or combination of Common Stock, means the first date on which
the Common Stock trades regular way on such exchange or in such market
after the time at which such subdivision or combination becomes effective
and (III) when used with respect to any tender or exchange offer means the
first date on which the Common Stock trades regular way on such exchange or
in such market after the Expiration Time of such offer. Notwithstanding the
foregoing, whenever successive adjustments to the Conversion Price are
called for pursuant to this Section 6(d), such adjustments shall be made to
the Current Market Price as may be necessary or appropriate to effectuate
the intent of this Section 6(d) and to avoid unjust or inequitable results,
as determined in good faith by the Board of Directors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include
reference to the comparable section, if any, of any such successor federal
statute.
"fair market value" shall mean the amount which a willing buyer would
pay a willing seller in an arm's-length transaction.
"Liquidation Preference" with respect to a share of the 7.5% Series
shall mean, as at any date, $100.00 per share (as adjusted for any stock
dividends, combinations or splits with respect to such share), plus an
amount equal to all accrued but unpaid dividends (whether or not declared)
on such share as at such date.
"Person" means any individual, "group" (as such term is used in
sections 13(d) and 14(d) of the Exchange Act), corporation, partnership,
joint venture, trust, unincorporated organization, government or any agency
or political subdivision thereof, or any other entity.
"Record Date" shall mean, with respect to any dividend, distribution
or other transaction or event in which the holders of Common Stock have the
right to receive any cash, securities or other property or in which the
Common Stock (or other applicable security) is exchanged for or converted
into any combination of cash, securities or other property, the date fixed
for determination of stockholders entitled to receive such cash, securities
or other property (whether such date is fixed by the Board of Directors or
by statute, contract or otherwise).
"Total Voting Power" shall mean, calculated at a particular point in
time, the aggregate votes represented by then outstanding Voting
Securities.
"Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business.
"Voting Ownership Percentage" shall mean, calculated at a particular
point in time, the Voting Power represented by the Voting Securities
Beneficially Owned by the Person whose Voting Ownership Percentage is being
determined.
"Voting Power" shall mean, calculated at a particular point in time,
the ratio, expressed as a percentage, of (a) the votes represented by the
Voting Securities with respect to which the Voting Power is being
determined to (b) Total Voting Power.
"Voting Securities" shall mean the Common Stock and shares of any
class of capital stock of the Corporation then entitled to vote generally
in the election of any member of the Board of Directors, as elected in
accordance with the provisions of the By-laws and Charter of the
Corporation and shall not include the shares of the 7.5% Series prior to
its conversion into Common Stock.
10. Conflicts. In the event of a conflict between any provision of this
Certificate and the Charter, the Charter shall take precedence and shall control
the resolution of such conflict.
IN WITNESS WHEREOF, Western Resources, Inc. has made this Certificate under
its seal and the hand of the President and Chief Executive Officer, an officer
authorized to exercise the duties ordinarily exercised by a Vice President, and
an Assistant Secretary this ____ day of _____________, 20___.
HVOLT ENTERPRISES, INC.
By:______________________________
Name:____________________________
Title:___________________________
ATTEST:
______________________________
Name:_________________________
Title:________________________