State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE
STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE
AND CORRECT COPY OF THE CERTIFICATE OF DESIGNATION OF "XCL
LTD.", FILED IN THIS OFFICE ON THE SECOND DAY OF NOVEMBER,
A.D. 1995, AT 10 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS SEEN
FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR
RECORDING.
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7698022
2147839 8100
950254226 DATE: 11-02-95
CERTIFICATE OF DESIGNATION
OF
SERIES E, CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
XCL LTD.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
XCL LTD., a corporation organized and existing
under the laws of the State of Delaware (the "Company" or
"XCL"), HEREBY CERTIFIES that the resolutions set forth
below were duly adopted by the Board of Directors of the
Company pursuant to authority conferred upon the Board of
Directors by the provisions of the Certificate of
Incorporation of the Company, which authorizes the issuance
of up to 1,200,000 shares of Preferred Stock, par value
$l.00 per share, to be designated in one or more series, and
in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware,
respectively:
RESOLVED: That the Company establish a new series
of Preferred Stock, par value $1.00 per share, to be
designated as Series E, Cumulative Convertible Preferred
Stock ("Series E Preferred Stock"); and it was
RESOLVED FURTHER: That the powers, preferences
and relative, participating, optional or other special
rights, and the qualifications, limitations and restrictions
thereof, of the Series E Preferred Stock, in addition to
those stated in Article FOURTH of the Certificate of
Incorporation which are applicable to all series of
Preferred Stock, are hereby established substantially as set
forth in the attached Exhibit A; and it was
RESOLVED FURTHER: That the Company be, and it hereby is
authorized to issue, from time to time, up to 80,000 shares
of Series E Preferred Stock.
IN WITNESS WHEREOF, the Company has caused its
corporate seal to be hereunto affixed and this Certificate
to be signed by David A. Melman, its Executive Vice
President, and attested by Lisha C. Falk, its Assistant
Secretary, this 1st day of November, 1995.
XCL LTD.
/s/ David A. Melman
- -------------------
David A. Melman
Executive Vice President
[Corporate Seal)
ATTEST:
/s/ Lisha C. Falk
- -----------------
Lisha C. Falk
Assistant Secretary
STATE OF LOUISIANA )
:ss:
PARISH OF LAFAYETTE )
BE IT REMEMBERED that on this 1st day of November,
1995, personally came before me, a Notary Public in and for the
State and Parish aforesaid, David A. Melman and Lisha C. Falk,
the Executive Vice President and the Assistant Secretary,
respectively, of XCL Ltd., the corporation described in the
foregoing instrument and known to me personally to be such, and
acknowledged the said instrument to be their own act and deed
and the act and deed of said corporation; that the signatures
are in their own handwriting, and that the facts stated in said
instrument are true.
/s/ Suzanne Marse Bourque
- ---------------------------
Notary Public
My commission expires: At Death
EXHIBIT "A"
DESIGNATION OF THE
SERIES E, CUMULATIVE CONVERTIBLE
PREFERRED STOCK
Paragraph 1. Designation and Amount. The shares of
this series of Preferred Stock, par value $1.00 per share
("Preferred Stock"), shall be designated as Series E, Cumulative
Convertible Preferred Stock, par value of $1.00 per share
("Series E Preferred Stock"), and the number of shares
constituting such series shall be 80,000.
Paragraph 2. Definitions and Rules of Construction.
(a) The following terms, not defined
elsewhere herein, shall have the following meanings:
"The American Stock Exchange" means the American Stock
Exchange, Inc.
"Board of Directors" means the Board of Directors of
the Company as may be constituted from time to time.
"Business Day" means any day (other than a Saturday,
Sunday or public holiday in the Borough of Manhattan, City of
New York, New York) on which banking institutions in New York
City are not authorized or obligated by law or executive order
to
close.
"Closing Price" of a security on any day means the
last sales price, regular way, per share of such security on
such day as reported in die principal consolidated reporting
system with respect to such security listed on the principal US
stock exchange on which such security was listed for trading or,
if the shares of such security are not listed or admitted to
trading on a US stock exchange, the middle market quotations for
the shares of such security (derived from The London Stock
Exchange Daily Official List) listed or admitted to trading on
The London Stock Exchange, or if the shares of such security are
not listed or admitted to trading on The London Stock Exchange,
the last sales price as reported, in the National Market System
("NMS") of the National Association of Securities Dealers Inc.
Automated Quotation System ("NASDAQ"), or if the shares of such
security are not listed or admitted to trading in NMS, the
average of the high bid and low asked prices in the over-the-
counter market as reported by NASDAQ, or if the bid and asked
prices on each such day shall not have been reported through
NASDAQ, the average of the bid and asked prices for such day as
furnished by any American Stock Exchange member firm regularly
making a market in such security selected for such purpose by
the Board of Directors or a committee thereof on each Trading
Day. In any of such alternate cases when such security is not
traded in prices expressed in Dollars, such Closing Price shall
be converted into Dollars at the then spot market exchange rate
of pounds sterling (UK) into Dollars as quoted by Chemical
Banking Corporation on the date of determination.
"Common Stock" means the shares of common stock, par
value $.01 per share, of the Company.
"Company" means XCL Ltd., a Delaware corporation.
"Conversion Commencement Date" means the earlier of
(i) the date of the initial Redemption Notice (as defined in
subparagraph 5(a)) issued by the Company for shares of Series E
Preferred Stock or (ii) December 31, 1996.
"Conversion Stock" means the shares of Common Stock
issuable upon conversion of the Series E Preferred Stock in
accordance with Paragraph 6.
"Directors" means the directors of the Company.
"Dividend Stock" means the shares of Series E
Preferred Stock paid to holders of Series E Preferred Stock in
lieu of a cash dividend.
"$" means Dollars.
"Dollars" means the freely transferable currency of
the USA.
"Forced Conversion Date" means that date which is the
later of the second anniversary of the initial Issuance Date (as
defined in subparagraph 3(a)) or the first anniversary of the
date on which the Conversion Stock is first registered under the
Securities Act.
"Parity Stock" means all other series of preference
stock ranking on a parity with the Series E Preferred Stock as
to the right to receive any dividends and any payment or
distribution of assets upon a liquidation or winding up of the
Company. The Series A and Series B Preferred Stock shall be
deemed Parity Stock for all purposes herein.
"Securities Act" means the Securities Act of 1933, as
amended.
"Series A Preferred Stock" means the shares of the
Company's Series A, Cumulative Convertible Preferred Stock, par
value $1.00 per share.
"Series B Preferred Stock" means the shares of the
Company's Series B, Cumulative Preferred Stock, par value $1.00
per share.
"Shareholders" means the holders of the Common Stock.
"Stock Option Plans" means the employee stock option
plans adopted by the Company and approved by Shareholders, in
effect from time to time, for employees and certain other
individuals rendering services to the Company.
"The London Stock Exchange" means The International
Stock Exchange of the United Kingdom and the Republic of Ireland
Limited.
"Trading Day" shall mean a day on which the market
used for calculating the closing Price is open for the
transaction of business or, if the shares of such security are
not so listed or admitted to trading, a Business Day.
"Transfer Agent" means the transfer agent for the
Series E Preferred Stock from time to time obtaining.
"UK" and "United Kingdom" mean the United Kingdom of
Great Britain and Northern Ireland.
"USA" and "US" mean the United States of America.
"Warrants" means an aggregate of 24,543,900 issued and
outstanding and to be issued warrants to purchase Common Stock.
(b) References herein to Paragraphs and
subparagraphs are to Paragraphs and subparagraphs of this
Designation of the Series E Preferred Stock ("Designation")
unless otherwise indicated. The words "hereof", "herein",
"hereunder" and comparable terms refer to the entirety of this
Designation and not to any particular Paragraph or other
subdivision hereof. Words in the singular include the plural and
in the plural include the singular. Words in the neuter gender
shall include the masculine and feminine and vice versa. The
word "or" is not exclusive. The word "including" shall be deemed
to mean "including, without limitation." The Paragraph headings
contained in this Designation are for reference purposes only
and shall not affect in any way the meaning or interpretation of
this Designation.
Paragraph 3. Dividends and Distributions.
(a) Each share of Series E Preferred Stock
shall entitle the record holder to receive, out of funds legally
available therefor, when, as and if declared by the Board of
Directors, dividends in cash at the annual rate of $10.00 per
share, which shall be payable in arrears in equal semi-annual
installments on June 30th and December 31st, or in the event any
such date is a Saturday, Sunday or public holiday in the Borough
of Manhattan, in the City of New York, New York, on the first
Business Day following such date (hereinafter a "Dividend
Payment
Date") in each year, provided, however, that the dividend
payable on the first such Dividend Payment Date shall be equal
to the product obtained by multiplying $5.00 by a fraction, the
denominator of which shall be 182 and the numerator of which
shall be the number of days expired in the period between the
date of issuance of the share of Series E Preferred Stock (the
"Issuance Date") and such first Dividend Payment Date (inclusive
of both such dates).
(b)The Company may, at its option exercised by written
notice to the holders of the Series E Preferred Stock given at
least ten (10) Business Days prior to the Dividend Payment Date,
elect to pay any dividend due and payable hereunder, in kind in
additional shares of Series E Preferred Stock in lieu of a
dividend payment in cash. The amount of shares of Dividend Stock
issuable to each holder of Series E Preferred Stock pursuant to
this subparagraph 3(b) on each such Dividend Payment Date shall
equal .05 share of Series E Preferred Stock for each share of
Series E Preferred Stock registered in the name of each such
holder of the Series E Preferred Stock on the record date for
the payment of the dividend. Fractional shares of Series E
Preferred Stock arising in respect of the payment of any
dividend in shares of Dividend Stock shall not be issued to the
holders of Series E Preferred Stock.
(c) Dividends shall be cumulative, whether or
not earned and whether or not surplus shall be available
therefor and shall commence to accrue and accumulate from day to
day from the Issuance Date. Such accumulation shall include, if
not paid, the dividend payable on each Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Such
dividends shall be declared and set apart or paid before any
dividends (other than dividends payable in Common Stock or any
other series or class of the Company's stock hereafter issued
which ranks junior as to dividends and as to distributions upon
the dissolution, liquidation or winding up of the Company to the
Series E Preferred Stock, such junior securities being
hereinafter referred to as "Junior Securities") shall be paid on
the Common Stock or such other series or class of Junior
Securities. No cash dividend shall be paid upon or set apart for
shares of any other class of stock of the Company (other than
shares of preference stock ranking pari passu with the Series E
Preferred Stock in respect of the payment of dividends) until
all dividend arrears on the Series E Preferred Stock shall be
fully paid. The shares of Series E Preferred Stock shall rank
pari passu with the shares of the Series A Preferred Stock and
Series B Preferred Stock with respect to the payment of
dividends.
(d) Dividends paid on the shares of Series E Preferred
Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be
allocated pro-rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of Series E
Preferred Stock entitled to receive payment of a dividend
declared thereon, which record date shall be no more than sixty
days prior to the date fixed for the payment thereof.
(e) In the event the Company (i) fails to register
the Conversion Stock under the Securities Act by the Conversion
Commencement Date, then the annual dividend rate on the Series E
Preferred Stock shall be increased effective on such date, to an
annual rate of $12.00 per share of Series E Preferred Stock (or
.12 share of Series E Preferred Stock if such dividend is paid
in kind) until such time as such Conversion Stock is so
registered, at which time the dividend rate will revert to the
initial
dividend rate; and (ii) fails to declare and pay any dividend on
a Dividend Payment Date (the "Defaulted Date"), the dividend
rate on the outstanding shares of Series E Preferred Stock in
effect on the Defaulted Date shall be increased effective such
Date so that the aggregate dividend payable on the next
succeeding Dividend Payment Date shall equal the dividend that
would have been paid on all then outstanding shares of Series E
Preferred Stock had the Company declared and paid the dividend
on the Defaulted Date in Dividend Stock. Upon payment of all
such dividend arrearages in cash or with shares of Dividend
Stock (or some combination of both), the dividend rate shall
revert to the dividend rate in effect on the initial Defaulted
Date. The Company shall notify all holder's of Series E
Preferred Stock in writing (1) of the date on which the
Conversion Stock has been registered under the Securities Act
and (2) at least fifteen (15) days prior to the payment by the
Company of any dividend arrearages in cash, in which case such
holders may elect to receive such dividend arrearage payment in
shares of Dividend Stock (computed based upon the annual cash
dividend rate then applicable divided by l00) in lieu of such
cash payment by notice in writing delivered to the Company
within five (5) days after receipt of the Company's dividend
payment notice, provided that such notice is received by the
Company from the holders of at least a majority of the
outstanding shares of Series E Preferred Stock.
Paragraph 4. Dissolution. Liquidation or Winding Up.
In the event of any dissolution, liquidation or
winding up of the affairs of the Company, after payment or
provision for payment of the debts and other liabilities of the
Company, the registered holders of Series E Preferred Stock
shall be entitled to share on a pro rata basis with the holders
of shares of Series A Preferred Stock and Series B Preferred
Stock and all other series of the Company's preference stock
ranking on a parity with the Series E Preferred Stock in respect
of distributions upon dissolution, liquidation or winding up of
the Company, after payment or provision for payment of the debts
and other liabilities of the Company, the registered holders of
Series E Preferred Stock shall be entitled on a pro rata basis
with the holders of shares of Series A Preferred Stock and
Series B Preferred Stock and all other series of the Company's
preference stock ranking on a parity with the series E Preferred
Stock in respect of distributions upon dissolution, liquidation
or winding up of the Company, and to receive, out of the net
assets of the Company, $100.00 per share, plus an amount equal
to all the dividend arrears on each such share up to the date
fixed for distribution and no more, before distribution shall be
made to the holders of the Common Stock or any Junior
Securities. Neither the merger or consolidation of the Company,
nor the sale, lease or conveyance of all or a part of its
assets, shall be deemed to be a dissolution, liquidation or
winding up of the affairs of the Company within the meaning of
this Paragraph 4.
Paragraph 5. Redemption.
The Series E Preferred Stock shall be redeemable at
the redemption price specified below and on the following terms
and conditions:
(a) The Series E Preferred Stock shall be redeemable
at the election of the Company, in whole or in part at any time
and from time to time, at a redemption price ("Redemption
Price") of, at any time (i) prior to March 31, 1996, $125.00 per
share, (ii) between April 1, 1996 and June 30, 1996, $120.00 per
share, (iii) between July 1, 1996 and September 30, 1996,
$116.00 per share,
(iv) between October 1, 1996 and December 31, 1996, $112.00 per
share, (v) between January 1, 1997 and March 31, 1997, $108.00
per share; (vi) between April 1, and June 29, 1997, $104.00 per
share, and (vii) on or after June 30, 1997, $100.00 per share,
in each case plus all accrued and unpaid dividends to and
including the redemption date. The Company shall notify each
holder of record of shares of Series E Preferred Stock in
writing (the "Redemption Notice") mailed by first class mail,
postage prepaid, at least twenty (20) days and not more than
sixty (60) days, prior to the date fixed by the Company for
redemption, mailed to his address as the same shall appear on
the hooks of the Company. The Redemption Notice shall state the
redemption date, the Redemption Price and the place and manner
of payment thereof. If less than all of the outstanding shares
of Series E Preferred Stock are to be redeemed, the Company
shall select those shares to be redeemed pro rata or by lot or
in such other manner as the Board of Directors may determine.
(b) The Company may deposit the aggregate Redemption
Price in trust with a bank or trust company (in good standing,
organized under the laws of the United States of America or of
the State of New York, doing business in the Borough of
Manhattan, in the City of New York, New York, and having capital
surplus and undivided profits aggregating at least $25,000,000)
as the "Redemption Agent", for payment to the holders of the
shares so to be redeemed, upon surrender (and endorsement, if
required by the Board of Directors) of the certificates for such
shares. At the close of business on a redemption date (unless
the Company shall fail to make payment or deposit of the
Redemption Price as above set forth), dividends shall cease to
accrue on the shares of Series E Preferred Stock called for
redemption (except on any such shares of Series E Preferred
Stock in respect of which, upon due presentation of the
certificate(s) relating thereto, payment of the money due at
such redemption shall be refused in which case the dividend
shall be deemed to have continued and shall continue to accrue
from the relevant date of redemption to the date of payment);
each holder of the shares of Series E Preferred Stock so to be
redeemed shall cease to be a shareholder with respect to such
shares and shall have no interest in, or claim against, the
Company and shall have no voting or other rights with respect to
such shares, except the right to receive the moneys payable upon
such redemption from such bank or trust company, or from the
Company, without interest thereon, upon surrender (and
endorsement if required by the Board of Directors) of the
certificates; and the shares represented thereby shall no longer
be deemed to be outstanding. In the case of a call for
redemption by the Company pursuant subparagraph 5(a) above, the
right of conversion shall cease and terminate as to the shares
designated for redemption on the close of business on the third
Business Day preceding the redemption date unless default shall
be made in the payment of the Redemption Price. In the event the
holder of any shares of Series E Preferred Stock shall not,
within six years after such deposit, claim the amount deposited
as above stated for the redemption thereof the depositary shall.
upon demand, pay over to the Company such unclaimed amount so
deposited, and the depositary shall thereupon be relieved of all
responsibility therefor to such holder.
(c) So long as any shares of Series E Preferred Stock
are outstanding, the Company shall not redeem, purchase or
otherwise acquire, or permit any subsidiary to purchase or
otherwise acquire, any shares of Common Stock or any Junior
Securities if at the time of making such redemption, purchase or
acquisition the Company shall be in default with respect to any
dividend payable on, or any obligation to purchase shares of,
Series E Preferred Stock; provided, however, that,
notwithstanding the foregoing the Company may at any time
redeem, purchase or otherwise acquire shares of Common Stock or
any Junior Securities in exchange for, or out of the net cash
proceeds from the sale of, Common Stock or other shares of
Junior Securities. If in any case the amounts payable with
respect to the Company's obligation to retire shares of
Preferred Stock are not paid in fall in the case of all series
with respect to which such obligations exist, the number of
shares of the various series to be retired shall be in
proportion to the respective amounts which would be payable on
account of such obligations if all amounts payable were
discharged in fail. Any dividend arrears on the Series E
Preferred Stock tendered to the Company shall be payable in fall
to the respective last holders of record of the shares of Series
E Preferred Stock so tendered to the Company pro rata with
payment of corresponding dividend arrears on the Series ES
Preferred Stock remaining outstanding.
Paragraph 6. Conversion
(a) Subject as hereinafter provided, at any
time after the Conversion Commencement Date at the option of the
record holder of the Series E Preferred Stock, the Series E
Preferred Stock shall be convertible, in whole or in part, at
the office of the Transfer Agent into fully paid and
nonassessable shares of Common Stock at a rate (the "Conversion
Rate") per share of Series E Preferred Stock equal to that
number of shares of Common Stock as shall equal the quotient of
$100 divided by $.50 (the "Conversion Price") (subject in any
case to adjustment as hereinafter provided in Paragraph 7),
provided that if a Conversion Notice (as hereinafter defined in
subparagraph 6(c) below) is given in respect of only a part of a
holding of Series E Preferred Stock so that there would remain
following conversion three or fewer such shares in that holding,
all the Series E Preferred Stock in the holding shall be
converted notwithstanding the figure inserted in the Conversion
Notice.
(b) For the purposes of the provisions hereof
a "Conversion Date" shall be the date falling 90 days after the
date of the Conversion Notice (or such sooner date as the
Company may notify the converting holder of Series E Preferred
Stock in writing) and provided always that If any Conversion
Date would otherwise fall on a day which is not a Business Day
such Conversion Date shall be the first Business Day following
such date.
(c) The right to convert shall be exercisable
at any time and from time to time after the Conversion
Commencement Date by completing the notice of conversion
endorsed on the share certificate relating to the Series E
Preferred Stock to be converted or a notice in such other form
as may from time to time be prescribed by the Board of Directors
in lieu thereof (any such notice being herein called a
"'Conversion Notice") and delivering the same to the Transfer
Agent together with such other evidence (if any) as the Board of
Directors may reasonably require to prove title of the person
exercising such right to convert. The Conversion Notice shall be
deemed dated as of the date of receipt thereof by the Transfer
Agent. A Conversion Notice once given may not be withdrawn
without the consent In writing of the Company.
(d) On conversion the dividend on the Series
E Preferred Stock so converted shall cease to accrue with effect
from the close of business on the date preceding the Conversion
Date. The Common Stock issued on such conversion shall entitled
the holder to all dividends and other distributions payable on
the Common Stock by reference to a record date after the
applicable Conversion Date.
(e) Any dividend arrears on the Series E
Preferred Stock surrendered for conversion shall be payable in
full to the respective last holders of record of the shares of
Series E Preferred Stock surrendered for conversion
(notwithstanding any subsequent transfer of the shares of Common
Stock into which such shares have been converted), pro rata with
payment of corresponding dividend arrears on the Series E
Preferred Stock remaining outstanding.
(f) Conversion shall be deemed to have been
effected on the Conversion Date, and the holder shall as of the
close of business on such date have the full rights of the
Common Stock resulting from such conversion.
(g) On the Conversion Date all shares of
Series E Preferred Stock in respect of which a Conversion Notice
has been delivered ("relevant shares") shall be converted into
shares of Common Stock at the Conversion Rate. Upon issuance of
the Common Stock, the relevant shares shall be retired and
cancelled. Within 28 days after the Conversion Date, the Company
shall, or shall cause, the forwarding to each holder of the
relevant shares, at his own risk, free of charge, a definitive
certificate for the appropriate number of fully paid shares of
Common Stock and a new certificate for any unconverted Series E
Preferred Stock comprised in the certificate(s) surrendered by
him.
(h) Fractions of Common Stock arising on
conversion shall not be issued to the holders of the relevant
shares otherwise entitled thereto but (if arrangements can be so
made) such fractions shall be aggregated and sold in the market
on behalf of such holders at the best price reasonably
obtainable and the net proceeds of sale shall be distributed pro
rata among such holders unless in respect of any holding of the
relevant shares the amount to be distributed would be less than
$2.00 in which case such amount shall not be distributed but
shall be retained for the benefit of the Company. For the
purpose of implementing the provisions of this sub-paragraph
(h), the Board of Directors may appoint a person to execute
transfers on behalf of persons otherwise entitled to any such
fractions and generally may make all arrangements which appear
to the Board necessary or appropriate for the settlement and
disposal of fractional entitlements.
(i) In case of the voluntary dissolution,
liquidation or winding up of the Company, all conversion rights
relating to the Series E Preferred Stock shall terminate 45 days
after the mailing of a notice of such action to all record
holders of Series E Preferred Stock; provided that such date of
termination of conversion rights shall be not more than sixty
(60) days nor less than twenty (20) days prior to the date on
which such dissolution is to become effective or such
liquidation or winding up is to commence. Any such notice shall
call attention to the date of such termination of the conversion
rights, the per share amount payable on the Common Stock, the
per share amount payable on the Series E Preferred Stock held by
such holder in connection with such action, (in each case, if
then known, or, a reasonable estimate if such amount is not
known with any reasonable degree of certainty), and the then
current Conversion Rate of the Series E Preferred Stock held by
such holder of record.
(j) At any time after the Forced Conversion
Date that at least seventy five percent (75%) of the aggregate
number of shares of Series E Preferred Stock originally issued
on the Issuance Date have been purchased or redeemed by the
Company or converted into Common Stock by the holders thereof,
the Company may, at its option, cause the conversion of all the
remaining issued and outstanding shares of the Series E
Preferred Stock at the then current Conversion Rate upon at
least 45 days written notice to all holders of record.
(k) The Company shall use its best efforts to
ensure that the shares of Conversion Stock are listed on all the
principal stock exchanges on which the Company's Common Stock is
listed for trading.
Paragraph 7. Adjustments of Conversion Rate.
The Conversion Rate for the Series E Preferred Stock
shall be subject to adjustment from time to time as follows:
(a) If the Company shall at any time or from
time to time pay a dividend or other distribution on its
outstanding shares of Common Stock in shares of Common Stock,
subdivide its outstanding shares of Common Stock into a larger
number of shares or combine its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Rate in
effect immediately prior to the record date for such dividend or
the effective date for such subdivision or combination shall be
adjusted so that each share of Series E Preferred Stock shall
thereafter be convertible into the number of shares of Common
Stock which the holder of a share of Series E Preferred Stock
would have been entitled to receive after the happening of any
of the events described above had such share been converted
immediately prior to the happening of such event. An
adjustment made pursuant to this subparagraph (a) shall become
effective immediately after the close of business on such a
record date in the case of a dividend and shall become effective
on the close of business on the day immediately prior to the
effective date in the case of a sub-division or combination.
(b) If the Company shall issue rights or
warrants to all holders of Common Stock (expiring within 45 days
after the record date for determining stockholders entitled to
receive them) for the purpose of entitling them to subscribe for
or purchase shares of Common Stock at a price per share less
than the average of the Closing Prices per share for the 30
consecutive Trading Days ending on the record date for the
determination of the stockholders entitled to receive such
rights or warrants, then at the discretion of the Board of
Directors, either (i) the Company shall make a like issue at the
same time to each holder of the Series E Preferred Stock as if
his conversion rights had been exercisable in full on the record
date for such issue on the basis of the Conversion Rate; or (ii)
the number of shares of Common Stock into which each share of
the Series E Preferred Stock shall thereafter be convertible
shall be adjusted by multiplying the number of shares of Common
Stock into which each share of Series E Preferred Stock was
convertible on the day immediately preceding such record date by
a fraction the numerator of which shall be the sum of the number
of shares of Common Stock outstanding on such record date and
the number of additional shares of Common Stock so offered for
subscription or purchase, and the denominator of which shall be
the sum of the number of shares of Common Stock outstanding on
such record date and the number of shares of Common Stock which
the aggregate offering price of the total number of shares so
offered would purchase at such average of the Closing Prices for
such 30 Trading Days. Such adjustment shall become effective
immediately after the close of business on such record date.
Notwithstanding
anything in the foregoing to the contrary, no such issue or
adjustment shall be made in respect of the shares of Common
Stock issuable upon exercise of the Warrants, any stock options
granted pursuant to the Company's Stock Option Plans approved
by Shareholders (provided that option exercise price shall not
be less than the fair market value of the Common Stock on the
date of grant of the options), the Series A Preferred Stock and
the shares of Common Stock issuable as dividends on or upon
conversion of the Series A Preferred Stock or the Series B
Preferred Stock and the shares of Common Stock issuable as
dividends on or upon redemption of the Series B Preferred
Stock.
(c) If any offer or invitation by way of
rights or otherwise (not being an offer or invitation to which
the provisions of subparagraph 7(b) apply) is made to all the
Shareholders by the Company, the Company shall make or, so far
as it is able, cause that there be made a like offer at the
same time to each holder of Series E Preferred Stock as if his
conversion rights had been exercisable and had been exercised
in full on the record date for such offer or invitation on the
basis of the Conversion Rate.
(d) If the Company shall distribute to all
holders of Common Stock any assets (other than any ordinary
dividend payable solely in cash in an amount not excessive in
comparison to its current earnings),. any rights to subscribe
(other than those referred to in sub-paragraph 7(b) above) or
any evidence of indebtedness or other securities (other than
Common Stock or Junior Securities), then in each such case the
number of shares of Common Stock into which each share of
Series E Preferred Stock shall thereafter be convertible shall
be adjusted by multiplying the number of shares of Common Stock
into which each share of Series E Preferred Stock was
convertible on the date immediately preceding the record date
for the determination of the stockholders entitled to receive
such distribution by a fraction the numerator of which shall be
the average of the Closing Prices per share of Common Stock for
the thirty (30) consecutive Trading Days ending on such
record date and the denominator of which shall be such average
of the Closing Prices per share less the then fair market value
(as determined in a resolution adopted by the Board and
reviewed and approved by the Company's auditors for the time
being) of the portion of the assets or evidences of
indebtedness or securities so distributed or of such
subscription rights applicable to one share of Common Stock.
Such adjustment shall become effective immediately after the
close of business on such record date.
(e) Whenever the Conversion Rate is adjusted
as herein provided, the Company shall forthwith file with the
Transfer Agent a certificate stating the adjusted Conversion
Rate determined as provided in this Paragraph 7. Such
certificate shall show in detail the facts requiring such
adjustment. The calculation of such adjustment shall have been
reviewed and approved the Company's auditors for the time
being. Whenever the Conversion Rate is adjusted, the Company
will forthwith cause a notice stating the adjustment and the
resulting Conversion Rate to be mailed to the respective
holders of record of Series E Preferred Stock.
(f) In case of any capital reorganization or
any reclassification of the capital stock of the Company or in
case of the consolidation or merger of the Company with another
corporation or in case of any sale or conveyance of all or
substantially all of the property of the Company, each share of
the Series E Preferred Stock shall thereafter be convertible
into the number of shares of stock or other securities or
property
receivable upon such capital reorganization,. reclassification
of capital stock,. consolidation, merger, sale or conveyance,
as the case may be, by a holder of the number of shares of
Common Stock into which such share of Series E Preferred Stock
was convertible immediately prior to such capital
reorganization, reclassification of capital stock,
consolidation, merger, sale or conveyance; and, in any case,
appropriate adjustment (as determined by the Board of Directors
and reviewed and approved by the Company's auditors for the
time being) shall be made in the application of the provisions
herein set forth with respect to rights and interests
thereafter of the holders of the Series E Preferred Stock
, to the end that provisions set forth herein (including the
specified changes in and other adjustments of the Conversion
Rate) shall thereafter be applicable, as near as reasonably may
be, in relation to any shares of stock or other securities or
other property thereafter deliverable upon the conversion of
the Series E Preferred Stock.
(g) No adjustment shall be made hereunder
unless by reason of the happening of any one or more of the
events herein specified, the Conversion Rate then in effect
would be changed by 1 % or more, but any adjustment of less
than 1% that would otherwise be required to be made shall be
carried forward and shall be made at the time of and together
with any subsequent adjustment which, together with any
adjustment or adjustments so carried forward, amounts to 1 % or
more, provided that such adjustment shall be made in any case
(regardless of whether or not the amount thereof or the
cumulative amount thereof amounts to 1 % or more) upon the
happening of one or more of the events specified in
subparagraph (f) of this Paragraph 7.
Paragraph 8. Voting Rights.
Except as may be otherwise provided herein or in the
Certificate of Incorporation of the Company. as amended from
time to time with the consent of the holders of Series E
Preferred Stock, provided such consent is required to be
obtained hereunder, or as required by applicable law:
(a) the Series E Preferred Stock shares
shall not entitle the holders thereof to receive notice of or
attend or vote at any meeting of stockholders except in the
following circumstances:
(i) The Series E Preferred Stock shall vote
as a separate class on any resolution proposed for adoption by
the stockholders of the Company which seeks to amend, alter or
repeal, the provisions of the Company's Certificate of
Incorporation or of the resolutions contained in the
Certificate of Designation of the Series E Preferred Stock
designating the Series E Preferred Stock and the preferences
and privileges, relative, participating, optional or other
special rights and qualifications, limitations and restrictions
thereof so as to adversely affect any right, preference,
privilege or voting power of the Series E Preferred Stock or
the holders thereof; provided, however, that any increase in
the amount of the issued Series E Preferred Stock or the
creation and issue of any other series of preference stock
(whether or not denominated in Dollars, or any increase in the
amount of authorized shares of Series E Preferred Stock, in
each case either being Parity Stock or Junior Securities and
with or without similar voting rights) will not be deemed to
affect adversely such rights. preferences, privileges or voting
powers of the Series E Preferred Stock;
(ii) Except in the event that arrangements are or
have been offered to the holders of the Series E Preferred
Stock which ensure that the rights of such holders would not be
prejudiced, the Company will ensure that no plan of compromise or
arrangement affecting the Common Stock shall become effective
unless the holders of the Series E Preferred Stock shall be
parties to the plan and unless the plan shall be approved by
the holders of at least a majority of the then issued and
outstanding shares of Series E Preferred Stock, voting as a
class together with all other Parity Stock;
(iii) In the case of a vote on a resolution regarding
(1) the capital reorganization, dissolution or liquidation of
the Company; or (2) any matter for which the consent of the
holders of Series E Preferred Stock is sought in accordance
with the provisions of subparagraphs 8(a)(i) and 8(a)(ii) and
Paragraphs 9 or 10; every record holder of Series E Preferred
Stock who is present at that meeting in person or by proxy
shall be entitled to cast one (1) vote for each share of Series
E Preferred Stock registered in his name (voting (A) as a
separate class with respect to the matters set forth in
subparagraph 8(a)(i) and (B) together with all other Parity
Stock with respect to the matters set forth in subparagraphs
8(a)(ii) and 8(a)(iii)(1) and Paragraphs 9 and 10) and the
decision of at least two thirds of the outstanding shares of
Series E Preferred Stock (as to any matters set forth in clause
(A) above) and a majority of the outstanding shares of Series E
Preferred Stock and any Parity Stock, voting separately as a
class (as to any matters set forth in clause (B) above) shall
be determinative of the matter so long as a quorum (as defined
in subparagraph 8(b) below) is present; or
(iv) if at the date of the notice convening a
meeting of Shareholders the dividend on the Series E Preferred
Stock has not been paid in an aggregate amount equal to at
least two (2) consecutive semi-annual dividends on such shares,
the number of Directors of the Company will be increased by two
and a majority of votes cast by the holders of the Series E
Preferred Stock together with the holders of Parity Stock on
which like voting rights have been conferred and are
exercisable, present in person by proxy at such meeting, will
be entitled to elect such two additional Directors to the Board
of Directors, with each holder being entitled to cast one vote
for each share of Series E Preferred Stock registered in his
name. The right to elect such Directors and the term of office
of all such Directors so elected shall terminate when all such
accrued and unpaid dividends are paid in full or set apart for
payment, subject to such right being reinstated in the case of
future unpaid dividends as hereinabove provided. In case any
vacancy shall occur among the Directors elected by the holders
of Series E Preferred Stock and Parity Stock as herein
provided, such vacancy may be filled for the unexpired portion
of the term by vote of the remaining Director elected by such
stockholders, or such Director's successor in office, or by the
vote of such stockholders given at a special meeting of such
stockholders called for such purpose.
(b) At each meeting of stockholders at which the
holders or the Series E Preferred Stock shall have the right to
vote as a separate class or together with any other class of
stock. the presence in person or by proxy of the holders of
record of a majority of the total number of shares of stock
entitled to vote as a single class then outstanding shall be
necessary and sufficient to constitute a quorum of such class
for the transaction of business by such stockholders as a
class. At any such meeting or adjournment thereof.
(i) the absence of a quorum of the holders of the
Series E Preferred Stock shall not prevent the election of
Directors or the transaction of business other than the
transaction of business with respect to which the holders of
the Series E Preferred Stock are entitled to vote as a separate
class and the absence of a quorum of the holders of any other
class of stock for the election of Directors or the conduct of
such other business shall not prevent the conduct of business
on which the Series E Preferred Stock is entitled to vote as a
separate class, and
(ii) in the absence of any such quorum, the
holders present in person or by proxy of the class or classes
which lack a quorum shall have the power to adjourn (for a
period of up to 30 days) the meeting for the election of
Directors which they are entitled to elect from time to time,
or for the conduct of such business, without notice other than
announcement at the meeting, until a quorum shall be present.
(c) Any action required or permitted to be taken by
the holders of Series E Preferred Stock pursuant to this
Paragraph 8 or Paragraphs 9 or 10, voting either separately as
a class or together with all Parity Stock at any annual or
special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken,
shall be signed by the holders of such stock having not less
than the minimum number of votes that would be necessary to
authorize to take such action at a meeting at which all such
shares entitled to vote thereon were present and voted.
Paragraph 9. Further Issues; Par Value
So long as any shares of Series E Preferred Stock
remain outstanding, the Company shall not without the
affirmative vote or consent of the holders of the Series E
Preferred Stock and any Parity Stock, in each case outstanding
at the time, given in person or by proxy, either in writing or
at a meeting, (i) authorize, create or issue, or increase the
authorized or issued amount, of any class or series of stock
ranking senior to the Series E Preferred Stock with respect to
payment of dividends or distribution of assets on dissolution,
liquidation or winding up or which may be convertible into any
class of shares ranking as regards participation in dividends
or the distribution of assets on dissolution, liquidation or
winding up senior to the Series E Preferred Stock; or (ii)
increase or decrease the par value of the Common Stock. The
holders of Series E Preferred Stock shall not be entitled to
any preemptive rights with respect to any further issuances of
securities by the Company.
Paragraph 10. Other Matters.
So long as any Series E Preferred Stock remains
issued and outstanding then:
(a) except as authorized by the adoption of
an appropriate resolution by the affirmative vote or consent of
the holders of a majority of the outstanding shares of the
Series E Preferred Stock and any Parity Stock, voting or consenting
separately as a class, the Company shall not:
(i) sell, lease or convey all or
substantially all of the assets of the Company; or
(ii) approve any merger, consolidation or
compulsory share exchange to which the Company is a party,
unless (1) the terms of such merger, consolidation or
compulsory share exchange do not provide for a change in the
terms of the Series E Preferred Stock and (2) the Series E
Preferred Stock is on a parity with or prior to (in respect of
dividends and upon liquidation, dissolution or winding up) any
other class or series of capital stock authorized by the surviving
corporation, other than any class or series of stock of the
Company ranking senior to the Series E Preferred Stock either
as to dividends or upon liquidation, dissolution or winding up
of the Company and previously authorized with the consent of
the holders of the Series E Preferred Stock (or other than any
capital stock into which such prior stock is converted as a
result of such merger, consolidation or compulsory share
exchange).
(b) the Company shall concurrently send a
copy of every communication or other information, including
annual reports and proxy materials, sent to its Shareholders to
every holder of Series E Preferred Stock.
Paragraph 11. Reacquired Shares.
Any shares of the Series E Preferred Stock redeemed
or purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Series E
Preferred Stock, and may be reissued as Series E Preferred
Stock or part of a new series of preference stock to be created
by resolution or resolutions of the Board of Directors, subject
to the conditions or restrictions on issuance set forth herein.
Paragraph 12 Miscellaneous
(a) All notices referred to herein shall be in
writing, and all notices hereunder shall be deemed to have been
given upon the earlier of receipt thereof or three (3) Business
Days after the mailing thereof if sent by registered or
certified mail (unless first-class mail shall be specifically
permitted for such notice under the terms hereof) with postage
prepaid, addressed: (i) if to the Company, to its office as
specified in its most recent Annual Report on Form l0-K (or any
successor report or form) or to the Transfer Agent or other
agent of the Company designated as permitted hereby or (ii) if
to any holder of the Series E Preferred Stock or Common Stock,
as the case may be, to such holder at the address of such
holder as listed in the stock record hooks of the Company
(which may include the records of any Transfer Agent for the
Series E Preferred Stock or Common Stock, as the case may be)
or (iii) to such other address as the Company or any such
holder. as the case may be, shall have designated by notice
similarly given.
(b) The Company shall pay any and all stock
transfer and documentary stamp taxes that may be payable in
respect of any original issuance or delivery of shares of
Series E Preferred Stock or shares of Common Stock or other
securities issued on account of Series E Preferred Stock
pursuant hereto or certificates representing such shares or
securities The Company shall not, however, be required to pay
any such tax which may be payable in respect of any transfer
involved in the issuance or delivery of shares of Series E
Preferred Stock or Common Stock or other securities in a name
other than that in which the shares of Series E Preferred Stock
with respect to which such shares or other securities are
issued or delivered were registered, or in respect of any
payment to any person with respect to any such shares or
securities other than a payment to the registered holder
thereof, and shall not be required to make any such issuance,
delivery or payment unless and until the person otherwise
entitled to such issuance, delivery or payment has made
arrangements satisfactory to the Transfer Agent for the payment
to the Company of the amount of any such tax or has
established, to the satisfaction of the Company, that such tax
has been paid or is not payable.
(d) In the event that a holder of shares of
Series E Preferred Stock shall not by written notice designate
to whom payment upon redemption of shares of Series E Preferred
Stock should be made or the address to which such payment
should be sent, the Company shall be entitled to make such
payment, in the name of the holder of such Series E Preferred
Stock as shown on the records of the Company, and to send such
payment, to the address of such holder shown on the records of
the Company.
(e) Unless otherwise provided in the
Certificate of Incorporation, as amended, of the Company, all
payments in the form of dividends, distributions on voluntary
or involuntary dissolution. liquidation or winding-up or
otherwise made upon the shares of Series E Preferred Stock and
any other stock ranking on a parity with the Series E Preferred
Stock with respect to such dividend or distribution shall be
made pro rata, so that amounts paid per share on the Series E
Preferred Stock and such other stock shall in all cases bear to
each other the same. ratio that the required dividends,
distributions or payments, as the case may be, then payable per
share on the shares of the Series E Preferred Stock and such
other stock bear to each other.
(f) The Company may appoint, and from time
to time discharge and change, the Transfer Agent for the Series
E Preferred Stock. Upon any such appointment or discharge of a
Transfer Agent, the Company shall send notice thereof by first
class mail, postage prepaid to each holder of record of Series
E Preferred Stock. The initial Transfer Agent for the Series E
Preferred Stock shall be the Company.
(g) The Company covenants that it will at
all times on and after the Conversion Commencement Date reserve
and keep available out of its authorized Common Stock and/or
shares of its Common Stock then owned or held by or for the
account of the Company, solely for the purpose of delivery upon
conversion of the Series E Preferred Stock as herein provided,
such number of shares of Common Stock as shall then be
deliverable upon conversion of all shares of Series E Preferred
Stock from time to time outstanding.