Exhibit 4.1
CERTIFICATE OF DESIGNATIONS OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF
SERIES B PARTICIPATING PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
Stratus Properties Inc. (formerly known as FM
Properties Inc.) (the "Corporation"), a corporation
organized and existing under the General Corporation Law of
the State of Delaware, does hereby certify that, pursuant to
authority conferred upon the board of directors of the
Corporation (the "Board of Directors") by its Amended and
Restated Certificate of Incorporation, as amended
(hereinafter referred to as the "Certificate of
Incorporation"), and pursuant to the provisions of
Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors, by unanimous vote at a
meeting duly called and held on May 14, 1998, duly approved
and adopted the following resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority
vested in the Board of Directors by its
Certificate of Incorporation, the Board of
Directors does hereby create, authorize and
provide for the issuance of Series B Participating
Preferred Stock, par value $0.01 per share, with a
stated value of $5.84 per share, consisting
initially of 1,712,328 shares, having the
designations, preferences, relative,
participating, optional and other special rights
and the qualifications, limitations and
restrictions thereof that are set forth in the
Certificate of Incorporation and in this
Resolution as follows:
(a) Designation. There is hereby created out of
the authorized and unissued shares of Preferred Stock of the
Corporation a class of Preferred Stock designated as the
"Series B Participating Preferred Stock." The number of
shares constituting such class shall be 1,712,328, and are
referred to as the "Series B Participating Preferred Stock."
The liquidation preference of the Series B Participating
Preferred Stock shall be $5.84 per share (the "Stated
Value").
(b) Rank. The Series B Participating Preferred
Stock shall, with respect to dividends and distributions
upon liquidation, winding-up and dissolution of the
Corporation, rank (i) on parity with respect to dividends
and senior with respect to liquidation, winding-up and
dissolution of the Corporation with the common stock, $0.01
par value ("Common Stock") of the Corporation; (ii) senior
to all other classes of Capital Stock of the Corporation
(other than the Common Stock) or series of Preferred Stock
of the Corporation hereafter created the terms of which
expressly provide that it ranks junior to the Series B
Participating Preferred Stock as to dividends and
distributions upon liquidation, winding-up and dissolution
of the Corporation (collectively referred to as "Junior
Stock"); (iii) on a parity with any class of Capital Stock
of the Corporation or series of Preferred Stock of the
Corporation hereafter created the terms of which expressly
provide that such class or series will rank on a parity with
the Series B Participating Preferred Stock as to dividends
and distributions upon liquidation, winding-up and
dissolution (collectively referred to as "Parity Stock");
(iv) junior with respect to dividends and on parity with
respect to distributions upon liquidation, winding-up and
dissolution of the Corporation with any class of Capital
Stock of the Corporation or series of Preferred Stock of the
Corporation hereafter created the terms of which expressly
provide that such class or series will rank senior to the
Series B Participating Preferred Stock as to dividends and
on parity with the Series B Participating Preferred Stock as
to distributions upon liquidation, winding-up and
dissolution of the Corporation (collectively referred to as
"Senior Dividend Stock"); and (v) junior to each class of
Capital Stock of the Corporation or series of Preferred
Stock of the Corporation hereafter created that has been
approved by the Holders in accordance with paragraph
(f)(ii)(a) hereof and the terms of which do not expressly
provide that such class or series will rank junior to, or on
a parity with, the Series B Participating Preferred Stock as
to both dividends and distributions upon liquidation,
winding-up and dissolution of the Company (collectively
referred to as "Senior Stock").
(c) Dividends.
i) Beginning on the Issue Date, the Holders of
the outstanding shares of Series B Participating
Preferred Stock shall be entitled to participate
ratably with the outstanding shares of Common Stock as
if all shares were of a single class, in all
distributions in the form of dividends in cash, stock
or other property, when, as and if declared by the
Board of Directors out of funds legally available
therefor, with each share of Series B Participating
Preferred Stock entitling the Holder thereof to receive
a distribution amount equal to (A) the distribution
amount per share on the Common Stock, multiplied by (B)
a fraction, the numerator of which is the Stated Value
and the denominator of which is the Conversion Price
(as it may be adjusted and in effect from time to time
as provided in paragraph (h) hereof); provided, that
the Series B Participating Preferred Stock shall not be
entitled to participate in any dividend reinvestment
plan that the Corporation may from time to time adopt
for the benefit of the holders of the Common Stock.
Any such dividend shall be payable to Holders of record
of the Series B Participating Preferred Stock as they
appear on the stock books of the Corporation on the
record date of such dividend when, as and if declared
by the Board of Directors.
ii) All dividends paid with respect to shares of
the Series B Participating Preferred Stock pursuant to
paragraph (c)(i) shall be paid pro rata to the Holders
entitled thereto.
iii) Nothing herein contained shall in any way or
under any circumstances be construed or deemed to
require the Board of Directors to declare, or the
Corporation to pay or set apart for payment, any
dividends on shares of the Series B Participating
Preferred Stock at any time.
iv) No dividends shall be declared, paid or set
apart for payment by the Corporation on the Common
Stock, any Parity Stock or any Junior Stock unless such
dividends have been or contemporaneously are declared
and paid in full, or, if payable in cash, a sum in cash
has been set apart sufficient for such payment, on the
Series B Participating Preferred Stock. If any
dividends are not so paid, all dividends declared upon
shares of the Series B Participating Preferred Stock
and the Common Stock and any Parity Stock shall be
declared pro rata so that the amount of dividends
declared per share on the Series B Participating
Preferred Stock and such Common Stock and Parity Stock
shall in all cases bear to each other the same ratio
that accrued and unpaid dividends per share on the
Series B Participating Preferred Stock and such Common
Stock and Parity Stock bear to each other. Accrued and
unpaid dividends shall not bear interest.
v) a) Holders of shares of the Series B
Participating Preferred Stock shall be entitled to
receive the dividends provided for in paragraph (c)(i)
hereof in preference to and in priority over any such
dividends upon any of the Junior Stock.
b) So long as any share of the Series B
Participating Preferred Stock is outstanding, the
Corporation shall not make any payment on account of,
or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption or other
retirement of, any of the Common Stock or Junior Stock
or any warrants, rights, calls or options exercisable
for or convertible into any of the Common Stock or
Junior Stock whether in cash, obligations or shares of
the Corporation or other property, and shall not permit
any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any
of the Common Stock or Junior Stock or any such
warrants, rights, calls or options; provided, however,
that this paragraph (c)(v)(b) shall not prohibit the
Corporation from purchasing, redeeming, or making any
payment on account of shares of Common Stock or
warrants, rights, calls or options exercisable for or
convertible into shares of Common Stock in an aggregate
amount not to exceed 20% of the fully-diluted number of
shares of Common Stock (including shares of Common
Stock issuable upon exercise or conversion of any
outstanding warrants, rights, calls or options
exercisable for or convertible into shares of Common
Stock) of the Corporation as of the Issue Date.
(d) Liquidation Preference.
i) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs
of the Corporation, the Holders of shares of Series B
Participating Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the
Corporation available for distribution to its
stockholders an amount in cash equal to the Stated
Value for each share outstanding, plus an amount in
cash equal to accrued and unpaid dividends thereon to
the date fixed for liquidation, dissolution or winding
up before any payment shall be made or any assets
distributed to the holders of any of the Common Stock
or Junior Stock of the Corporation. After (i) the
payment in full of the liquidation payments payable to
the Holders of outstanding shares of Series B
Participating Preferred Stock any Parity Stock and any
Senior Dividend Stock, and (ii) the payment in full to
the holders of the shares of Common Stock of an amount
equal to (A) the liquidation payment per share to the
Holders of Series B Participating Preferred Stock,
multiplied by (B) a fraction, the numerator of which is
the Stated Value and the denominator of which is the
Conversion Price (as it may be adjusted and in effect
from time to time as provided in paragraph (h) hereof)
for each share of Common Stock, then the Series B
Participating Preferred Stock and any Parity Stock
shall be entitled to participate ratably in an amount
per share equal to (A) the Stated Value, divided by,
(B) the Conversion Price, the result of which is
multiplied by (C) the amount per share of any
additional distributions on the Common Stock, in any
such distribution of cash, property or other assets of
the Corporation then remaining for distribution to the
stockholders of the Corporation. If the assets of the
Corporation are not sufficient to pay in full the
liquidation payments payable to the Holders of
outstanding shares of the Series B Participating
Preferred Stock, all Parity Stock and all Senior
Dividend Stock, then the holders of all such shares
shall share equally and ratably in such distribution of
assets in proportion to the full liquidation
preference, including, with respect to the Series B
Participating Preferred Stock and any Parity Stock, all
accrued and unpaid dividends to which each is entitled.
ii) For the purposes of this paragraph (d), the
sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of
all or substantially all of the property or assets of
the Corporation, the recapitalization or change in the
outstanding shares of Common Stock, or the
consolidation or merger of the Corporation with or into
one or more entities shall not be deemed to be a
liquidation, dissolution or winding up of the affairs
of the Corporation.
(e) Redemption.
i) Optional Redemption. a) The Corporation may,
at its option, redeem at any time on or after May 22,
2003, subject to contractual and other restrictions
with respect thereto and to the extent of funds legally
available therefor, in whole or in part, in the manner
provided for in paragraph (e)(iii) hereof, any or all
of the shares of the Series B Participating Preferred
Stock, at a Redemption Price per share equal to the
greater of (i) the Stated Value plus, without
duplication, an amount equal to all accumulated and
unpaid dividends per share, or (ii) the Participation
Price.
b) In the event of a redemption pursuant to
paragraph (e)(i)(a) hereof of only a portion of the
then outstanding shares of the Series B Participating
Preferred Stock, the Corporation shall effect such
redemption on a pro rata basis according to the number
of shares held by each Holder of the Series B
Participating Preferred Stock.
ii) Mandatory Redemption. On May 22, 2004, the
Corporation shall redeem, to the extent of funds
legally available therefor, in the manner provided for
in paragraph (e)(iii) hereof, and each Holder shall
surrender or redemption, all of the shares of the
Series B Participating Preferred Stock then outstanding
at a Redemption Price per share equal to the greater of
(i) the Stated Value, plus, without duplication, an
amount equal to all accumulated and unpaid dividends
per share, or (ii) the Participation Price.
iii) Procedures for Redemption. a) At least
thirty (30) days and not more than sixty (60) days
prior to the date fixed for any redemption of the
Series B Participating Preferred Stock, written notice
(the "Redemption Notice") shall be given by first class
mail, postage prepaid, to each Holder of record on the
record date fixed for such redemption of the Series B
Participating Preferred Stock at such Holder's address
as it appears on the stock books of the Corporation,
provided that no failure to give such notice nor any
deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Series B
Participating Preferred Stock to be redeemed except as
to the Holder or Holders to whom the Corporation has
failed to give said notice or except as to the Holder
or Holders whose notice was defective. The Redemption
Notice shall state:
(1) whether the redemption is pursuant to
paragraph (e)(i)(a) or (e)(ii) hereof;
(2) the Redemption Price (or method of
calculation thereof, if not then fixed);
(3) whether all or less than all the
outstanding shares of the Series B Participating
Preferred Stock are to be redeemed and the total
number of shares of the Series B Participating
Preferred Stock being redeemed;
(4) the Redemption Date; and
(5) that the Holder is to surrender to the
Corporation, in the manner, at the place or places
and at the price designated, his or its
certificate or certificates representing the
shares of Series B Participating Preferred Stock
to be redeemed.
b) Each Holder of Series B Participating
Preferred Stock called for redemption shall surrender
the certificate or certificates representing such
shares of Series B Participating Preferred Stock to the
Corporation, duly endorsed (or otherwise in proper form
for transfer, as determined by the Corporation), in the
manner and at the place designated in the Redemption
Notice, and on the Redemption Date, against delivery of
such certificate or certificates to the Corporation,
the full Redemption Price for such shares shall, except
as provided in paragraphs (iv)(b) or (c) below, be
payable in cash to the Person whose name appears on
such certificate or certificates as the owner thereof,
and each surrendered certificate shall be canceled and
retired. In the event that less than all of the shares
represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed
shares.
c) On and after the Redemption Date, unless the
Corporation defaults in the payment in full of the
applicable Redemption Price, all rights of the Holders
of redeemed shares shall terminate with respect thereto
on the Redemption Date, other than the right to receive
the redemption price thereon without interest.
iv) Payment of Redemption Price. a) Except as
otherwise set forth in paragraphs (b) or (c) of this
paragraph (iv), the Redemption Price for the shares of
Series B Participating Preferred Stock shall be paid in
cash to the Holders of record of the shares of Series B
Participating Preferred Stock shown on the records of
the Corporation as of the Redemption Date.
b) Notwithstanding the foregoing paragraph
(iv)(a) or anything in this Certificate of Designations
to the contrary, the Corporation may, upon written
notice to the Holders of record of the Series B
Participating Preferred Stock at least three Business
Days prior to the Redemption Date, elect to pay all or
a portion of the Redemption Price for the Series B
Participating Preferred Stock pursuant to paragraphs
(i) or (ii) above in Common Stock of the Corporation,
by delivering that number of whole shares of Common
Stock of the Corporation to each Holder of the Series B
Participating Preferred Stock equal to (x) the
Redemption Price per share, divided by (y) the average
Common Stock Price for the ten trading days immediately
preceding the Redemption Date, the result of which is
then multiplied by (z) the number of shares of Series B
Participating Preferred Stock to be so redeemed from
such Holder by payment in shares of Common Stock, and,
in the case of any fractional share of Common Stock,
rounded to the nearest number of whole shares;
provided, however, that the Corporation may only pay
any Redemption Price in shares of Common Stock if, as
of the Redemption Date, the Common Stock is then
registered under Section 12(b) or 12(g) under the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and listed on the New York Stock
Exchange or the American Stock Exchange, or approved
for quotation on the Nasdaq Stock Market's National
Market System.
c) In the event of a redemption of any or all of
the outstanding shares of Series B Participating
Preferred Stock for which the Corporation has elected
to pay the Redemption Price in whole or in part in
cash, the Corporation may, by written notice to the
Holders of record of the Series B Participating
Preferred Stock at least three Business Days prior to
the Redemption Date, elect to defer the Redemption
Date, solely with respect to the portion of shares of
Series B Participating Preferred Stock that the
Corporation elects to redeem in cash, for a period of
no longer than 180 days from the date of such written
notice for the purpose of effecting a public offering
(the "Offering") by the Corporation of shares of Common
Stock; provided that (i) the Corporation shall file
with the Securities and Exchange Commission within 45
days of the date of such Redemption Notice a
registration statement (the "Registration Statement")
under the Securities Act of 1933, as amended (the
"Securities Act") with respect to such Offering, (ii)
the Corporation shall designate the use of proceeds to
the Corporation from such Offering in the prospectus
forming a part of such Registration Statement for the
redemption in cash of the Series B Participating
Preferred Stock in accordance with this Certificate of
Designations, and (iii) the Offering shall be
consummated and the Redemption Date fixed on or prior
to 180 days following the date of such Redemption
Notice. In the event that (x) the Registration
Statement is not filed within 45 days following the
date of such Redemption Notice or (y) the Offering is
not consummated within 180 days following the date of
such Redemption Notice (each of (x) and (y) being
referred to herein as a "Deferral Default"), the
Corporation shall, within ten Business Days after such
Deferral Default, pay the Redemption Price on all
shares of Series B Participating Preferred Stock called
for redemption in accordance with paragraph (iv)(a)
above.
d) The obligation of the Corporation to pay the
Redemption Price in cash pursuant to paragraph
(e)(i)(a) or (e)(ii) shall be fully subordinated to the
Corporation's Senior Debt in accordance with the
provisions of this paragraph (e)(iv)(d). The
Corporation may not make any cash payments on account
of the Series B Participating Preferred Stock if there
shall have occurred and be continuing a default in the
payment of principal of (or premium, if any) or
interest on any Specified Senior Debt, the payment of
commitment or facility fees, letter of credit fees or
agency fees under any Specified Senior Debt, or
payments with respect to letter of credit reimbursement
arrangements with one or more lenders under the credit
or other agreement evidencing any Specified Senior Debt
when due (a "Senior Payment Default"). Following the
occurrence of an event of default (other than a Senior
Payment Default) under any Specified Senior Debt
permitting the holders of such Specified Senior Debt
(or a trustee or agent on behalf thereof) to accelerate
the maturity thereof, or the occurrence of an event
which with the passage of time or the giving of notice,
or both, could become such an event of default (a
"Senior Nonmonetary Default") and, in each case,
following the giving of notice thereof to Parent in
accordance with the terms governing the relevant
Specified Senior Debt (a "Blockage Notice"), Parent may
not make any payments on account of the Payment
Obligations for a period (a "Blockage Period")
commencing on the date the Corporation receives the
Blockage Notice, and ending on the earliest of (i) 179
days after such date, (ii) the date, if any, on which
such Senior Nonmonetary Default is waived or otherwise
cured and (iii) the date, if any, on which such
Blockage Period shall have been terminated by written
notice to the Corporation from the holders of the
relevant Specified Senior Debt (or a trustee or agent
on behalf thereof).
Upon any payment or distribution of assets of any
kind or character, whether in cash, property or
securities, to creditors upon any dissolution or
winding up or total or partial liquidation or
reorganization of the Corporation, whether voluntary or
involuntary, or upon bankruptcy, insolvency,
receivership or other proceedings, then and in such
event, all principal, premium (if any) and interest and
all other amounts due or to become due upon all the
Corporation's Senior Debt shall first be paid in full
before the Holders of the Series B Participating
Preferred Stock shall be entitled to receive or retain
any assets so paid or distributed in respect of the
Series B Participating Preferred Stock; and, upon any
such dissolution or winding up or liquidation or
reorganization, any payment or distribution of assets
of any kind or character, whether in cash, property or
securities, that the Holders of the Series B
Participating Preferred Stock would be entitled to,
except as otherwise provided herein, shall be paid by
the Corporation or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person
making such payment or distributions, or by the Holders
of the Series B Participating Preferred Stock if
received by them, directly and ratably to the holders
of the Corporation's Senior Debt, to the extent
necessary to pay in full all the Corporation's Senior
Debt, after giving effect to any concurrent payment or
distribution to or for the holders of the Corporation's
Senior Debt, before any payment or distribution is made
to the Holders of the Series B Participating Preferred
Stock.
Each Holder of shares of Series B Participating
Preferred Stock hereby irrevocably authorizes and
empowers (without imposing any obligation on) the
holders of the Corporation's Senior Debt (or any
trustee or agent on behalf thereof), under the
circumstances set forth in the immediately preceding
paragraph, to demand, sue for, collect and receive
every such payment or distribution described therein
and give acquittance therefor, to file claims and
proofs of claims in any statutory or nonstatutory
proceeding, to vote such the Corporation's Senior Debt
holder's ratable share of the full amount of the
Redemption Price on the Series B Participating
Preferred Stock in its sole discretion in connection
with any resolution, arrangement, plan of
reorganization, compromise, settlement or extension and
to take all such other action (including, without
limitation, the right to participate in any composition
of creditors and the right to vote such the
Corporation's Senior Debt holders' ratable share of the
Redemption Price at creditors' meetings for the
election of trustees, acceptances of plans and
otherwise), in the name of the Holder of the Series B
Participating Preferred Stock, as such the
Corporation's Senior Debt holder or its representative
may deem necessary or desirable for the enforcement of
these subordination provisions.
If any payment or distribution of assets of any
kind or character, whether in cash, property or
securities, shall be collected or received by any
Holder of the Series B Participating Preferred Stock
and such holder shall not be permitted under the terms
of this instrument to receive or retain such payment or
distribution, such holder shall forthwith turn over the
same to the Corporation's Senior Debt holders for their
ratable benefit in the form received (except for the
endorsement or the assignment of such holder when
necessary) and, until so turned over, the same shall be
held in trust by such holder as the property and for
the ratable benefit of the Corporation's Senior Debt
holders.
(f) Voting Rights.
i) The Holders of Series B Participating
Preferred Stock, except as otherwise required under
Delaware law or as set forth in paragraph (ii) below,
shall not be entitled or permitted to vote on any
matter required or permitted to be voted upon by the
stockholders of the Corporation.
ii) a) So long as any shares of the Series B
Participating Preferred Stock are outstanding, the
Corporation shall not authorize any class of Senior
Stock without the affirmative vote or consent of
Holders of at least two-thirds of the outstanding
shares of Series B Participating Preferred Stock,
voting or consenting, as the case may be, as one class,
given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting.
b) So long as any shares of the Series B
Participating Preferred Stock are outstanding, the
Corporation shall not amend its Certificate of
Incorporation or this Certificate of Designations so as
to affect adversely the specified rights, preferences,
privileges or voting rights of the Series B
Participating Preferred Stock without the affirmative
vote or consent of Holders of at least two-thirds of
the issued and outstanding shares of Series B
Participating Preferred Stock, voting or consenting, as
the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an
annual or special meeting.
iii) In any case in which the Holders of Series B
Participating Preferred Stock shall be entitled to vote
pursuant to this paragraph (f) or pursuant to Delaware
law, each Holder of Series B Participating Preferred
Stock entitled to vote with respect to such matter
shall be entitled to one vote for each share of Series
B Participating Preferred Stock held.
(g) Recapitalization, Merger, Consolidation or
Transfer of Assets.
i) In the event that the Corporation shall, in a
single transaction or series of related transactions,
recapitalize, reclassify or change the 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 provided for in paragraph (h) hereof),
consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, another Person or
adopt a plan of liquidation, the Holders of shares of
Series B Participating Preferred Stock shall be
entitled, upon written notice to the Corporation within
15 Business Days of the public announcement of such
transaction, to require the Corporation to exchange or
cause to be exchanged all or a portion of the shares of
Series B Participating Preferred Stock held by such
Holder for such securities, cash and other property
receivable upon the consummation of such transaction by
the holders of shares of Common Stock, as if each share
of Series B Participating Preferred Stock so exchanged
was that number of shares of Common Stock (rounded to
the nearest whole share) equal to (x) the Stated Value,
divided by (y) the Conversion Price, and outstanding
immediately prior to the consummation of the
recapitalization, reclassification, merger,
consolidation, asset transfer or liquidation.
ii) In the event that the Corporation shall, in a
single transaction or series of related transactions,
recapitalize, reclassify or change the 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 provided for in paragraph (h) hereof),
consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, another Person or
adopt a plan of liquidation, and any Holder of shares
of Series B Participating Preferred Stock shall not
have elected to exchange all shares of Series B
Participating Preferred Stock in accordance with
paragraph (g)(i) above, then the Corporation shall not
consummate such recapitalization, reclassification,
merger, consolidation, asset sale or liquidation
unless: (A) either (1) the Corporation is the
surviving or continuing Person or (2) the Person (if
other than the Corporation) formed by such
recapitalization, consolidation or into which the
Corporation is merged or the Person that acquires by
conveyance, transfer or lease the properties and assets
of the Corporation substantially as an entirety or in
the case of a plan of liquidation, the Person to which
assets of the Corporation have been transferred, shall
be a corporation, partnership, limited liability
company or trust organized and existing under the laws
of the United States or any State thereof or the
District of Columbia; (B) the Series B Participating
Preferred Stock shall be converted into or exchanged
for and shall become shares of such successor,
transferee or resulting Person, having in respect of
such successor, transferee or resulting Person the same
powers, preferences and relative, participating,
optional or other special rights and the
qualifications, limitations or restrictions thereon,
that the Series B Participating Preferred Stock had
immediately prior to such transaction; and (C) the
Corporation has delivered to the Holders of the Series
B Participating Preferred Stock prior to the
consummation of the proposed transaction an Officers'
Certificate and an Opinion of Counsel, each stating
that such recapitalization, reclassification, merger,
consolidation, asset transfer or liquidation complies
with the terms hereof and that all conditions precedent
herein relating to such transaction have been
satisfied.
iii) For purposes of the foregoing provisions of
this paragraph (g), the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of
related transactions) of all or substantially all of
the properties or assets of one or more Subsidiaries of
the Corporation, the Capital Stock of which constitutes
all or substantially all of the properties and assets
of the Corporation shall be deemed to be the transfer
of all or substantially all of the properties and
assets of the Corporation.
(h) Adjustment of Common Stock and Conversion
Price. In case the Corporation shall (i) pay a dividend or
make a distribution solely in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a
greater number of shares of Common Stock, or (iii) combine
its outstanding shares of Common Stock into a smaller number
of shares of Common Stock, then concurrently with the
effectiveness of each such event, the Conversion Price in
effect immediately prior thereto shall be adjusted by
multiplying the Conversion Price in effect immediately prior
to such adjustment by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding
immediately prior to such adjustment and the denominator
shall be the number of shares of Common Stock outstanding
immediately following such adjustment. Such adjustment to
the Conversion Price shall be made each time any such action
described in this paragraph (h) shall occur.
(i) Reissuance of Series B Participating
Preferred Stock. Shares of Series B Participating Preferred
Stock that have been issued and reacquired in any manner,
including shares purchased or redeemed or exchanged, shall
(upon compliance with any applicable provisions of the laws
of Delaware) have the status of authorized and unissued
shares of Preferred Stock undesignated as to series and may
be redesignated and reissued as part of any series of
Preferred Stock, provided that any issuance of such shares
as Series B Participating Preferred Stock must be in
compliance with the terms hereof.
(j) Business Day. If any payment, redemption or
exchange shall be required by the terms hereof to be made on
a day that is not a Business Day, such payment, redemption
or exchange shall be made on the immediately succeeding
Business Day.
(k) Definitions. As used in this Certificate of
Designations, the following terms shall have the following
meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Blockage Notice" shall have the meaning ascribed
to it in paragraph (e)(iv)(d) hereof.
"Blockage Period" shall have the meaning ascribed
to it in paragraph (e)(iv)(d) hereof.
"Board of Directors" shall have the meaning
ascribed to it in the first paragraph of this
Resolution.
"Business Day" means any day except a Saturday, a
Sunday, or any day on which banking institutions in New
York, New York are required or authorized by law or
other governmental action to be closed.
"Capital Stock" means (i) with respect to any
Person that is a corporation, any and all shares,
interests, participations or other equivalents (however
designated) of capital stock of such Person and
(ii) with respect to any Person that is not a
corporation, any and all partnership or other equity
interests of such Person.
"Common Stock" shall mean the common stock, $0.01
par value, of the Corporation, and any other security
into which such shares of Common Stock may be
hereinafter converted or exchanged.
"Common Stock Price" shall mean the last per share
sale price of the Common Stock of the Corporation as
reported by the Nasdaq National Market (or any national
stock exchange or interdealer quotation system on which
the Common Stock is then listed or quoted).
"Conversion Price" shall mean initially $5.84,
subject to adjustment as set forth in paragraph (h)
hereof.
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to
pay the deferred purchase price of property or
services, except accounts payable arising in the
ordinary course of business, (iv) all obligations of
such person as lessee under capital leases, (v) all
Debt of others secured by any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind on
any asset of such Person and (vi) all Debt of others
guaranteed by such Person.
"Holder" means a holder of shares of Series B
Participating Preferred Stock as reflected in the stock
books of the Corporation.
"Issue Date" means the date of original issuance
of the Series B Participating Preferred Stock.
"Junior Stock" shall have the meaning ascribed to
it in paragraph (b) hereof.
"Officers' Certificate" means a certificate signed
by two officers or by an officer and either an
Assistant Treasurer or an Assistant Secretary of the
Corporation which certificate shall include a statement
that, in the opinion of such signers all conditions
precedent to be performed by the Corporation prior to
the taking of any proposed action have been taken. In
addition, such certificate shall include (i) a
statement that the signatories have read the relevant
covenant or condition, (ii) a brief statement of the
nature and scope of such examination or investigation
upon which the statements are based, (iii) a statement
that, in the opinion of such signatories, they have
made such examination or investigation as is reasonably
necessary to express an informed opinion and (iv) a
statement as to whether or not, in the opinion of the
signatories, such relevant conditions or covenants have
been complied with.
"Opinion of Counsel" means an opinion of counsel
that, in such counsel's opinion, all conditions
precedent to be performed by the Corporation prior to
the taking of any proposed action have been taken.
Such opinion shall also include the statements called
for in the second sentence under "Officers'
Certificate".
"Parity Stock" shall have the meaning ascribed to
it in paragraph (b) hereof.
"Participation Price" shall mean, as of any
Redemption Date, an amount per share of the Series B
Participating Preferred Stock equal to (i) the Stated
Value, divided by (ii) the Conversion Price, the result
of which is then multiplied by (iii) the average of the
Common Stock Price for the ten trading days immediately
prior to the Redemption Date; provided, however, that
if all or any portion of the Participation Price is
paid by the Corporation in cash, the amount of the
Participation Price to be paid to the Holders in cash
shall be an amount equal to the Participation Price
multiplied by 0.95.
"Person" means an individual, partnership,
corporation, limited liability company, unincorporated
organization, trust or joint venture, or a governmental
agency or political subdivision thereof.
"Preferred Stock" of any Person means any Capital
Stock of such Person that has preferential rights to
any other Capital Stock of such Person with respect to
dividends or redemptions or upon liquidation.
"Redemption Date", with respect to any shares of
Series B Participating Preferred Stock, means the date
on which such shares of Series B Participating
Preferred Stock are redeemed by the Corporation.
"Redemption Notice" shall have the meaning
ascribed to it in paragraph (e) hereof.
"Redemption Price" shall mean, as of any
Redemption Date, the redemption price required to be
paid on shares the Series B Participating Preferred
Stock as calculated in accordance with paragraphs
(e)(i)(a) or (e)(ii) hereof, as applicable.
"Senior Debt" means all Debt of the Corporation,
including principal, premium, if any, and interest on
(including interest accruing after the filing of a
petition initiating any proceeding pursuant to any
bankruptcy law, whether or not allowed) or other
amounts payable in connection with any Debt of the
Corporation, whether presently outstanding or
subsequently created, incurred or assumed (other than
any other Debt of the Corporation which expressly
provides by its terms or the terms of the instrument
creating or evidencing it that it is subordinate in
right of payment in any respect to any other Debt of
the Corporation). Notwithstanding the foregoing, the
Corporation's Senior Debt shall not include any Debt of
the Corporation to any subsidiary of the Corporation or
any liability for federal, state or local taxes owed by
the Corporation.
"Senior Dividend Stock" shall have the meaning
ascribed to it in paragraph (b) hereof.
"Senior Nonmonetary Default" shall have the
meaning ascribed to it in paragraph (e)(iv)(d) hereof.
"Senior Payment Default" shall have the meaning
ascribed to it in paragraph (e)(iv)(d) hereof.
"Senior Stock" shall have the meaning ascribed to
it in paragraph (b) hereof.
"Specified Senior Debt" means (i) all Senior Debt
under the Corporation's primary bank credit facility
existing from time to time and (ii) any other issue of
Senior Debt having a principal amount of at least
$10,000,000.
"Stated Value" shall have the meaning ascribed to
it in paragraph (a) hereof.
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IN WITNESS WHEREOF, Stratus Properties Inc., has
caused this Certificate to be signed on its behalf by a duly
authorized officer this 22nd day of May, 1998.
STRATUS PROPERTIES INC.
(formerly known as FM Properties Inc.)
By: /s/ William H. Armstrong,III
------------------------------
Name: William H. Armstrong,III
Title: President and Chief Executive
Officer