1
EXHIBIT 3.1
SHAMAN PHARMACEUTICALS, INC.
CERTIFICATE OF DESIGNATION
OF
SERIES D CONVERTIBLE PREFERRED STOCK
(Pursuant to Section 151 of the General Corporation
Law of the State of Delaware)
--------------
Shaman Pharmaceuticals, Inc., a Delaware corporation (the
"Corporation"), in accordance with the provisions of Section 103 of the General
Corporation Law of the State of Delaware DOES HEREBY CERTIFY:
That pursuant to authority vested in the Board of Directors of
the Corporation (the "Board of Directors" or the "Board") by paragraph (B) of
Article IV of the Corporation's Amended and Restated Certificate of
Incorporation (the "Certificate"), the Board of Directors, at a meeting duly
called and held on October 20, 1998, adopted certain recitals and resolutions
providing for the creation of a series of the Corporation's Preferred Stock,
$0.001 par value, which series is designated "Series D Convertible Preferred
Stock", which recitals and resolution are as follows:
WHEREAS, the Certificate provides for a class of shares known as
Preferred Stock, issuable from time to time in one or more series;
WHEREAS, the Board is granted the power in the Certificate to
determine the powers, rights, preferences, qualifications, limitations and
restrictions granted to or imposed upon any wholly unissued series of Preferred
Stock, to fix the number of shares constituting any such series, and to
determine the designation thereof;
WHEREAS, the Board of Directors of the Corporation desires,
pursuant to its authority as aforesaid, to determine and fix the powers, rights,
preferences, qualifications, limitations and restrictions relating to a new
series of Preferred Stock, designated Series D Preferred Stock, and the number
of shares constituting such series:
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority
vested in the Board of Directors of the Corporation in accordance with the
provisions of the Certificate, the Board of Directors does hereby create a
series of Preferred Stock, par value $0.001 per share (hereinafter called the
"Preferred Stock"), of the Corporation, and the Board of Directors hereby fixes
and determines the designation of, the number of shares constituting, and the
rights, preferences, privileges and restrictions relating to, such series of
Preferred Stock as follows:
2
SERIES D CONVERTIBLE PREFERRED STOCK
1. CERTAIN DEFINED TERMS.
(a) All the agreements or instruments defined in this
Certificate of Designation shall mean such agreements or instruments as the same
may from time to time be supplemented or amended or the terms thereof waived or
modified to the extent permitted by, and in accordance with, the terms thereof
and of this Certificate of Designation.
(b) The following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Adjustment Notice" means an Adjustment Notice substantially in the form
set forth in Section 13(f).
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the subject Person. For purposes
of the term "Affiliate," the term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to direct or to cause the direction of the management and
policies of a Person, whether through the ownership of securities, by contract
or otherwise.
"Aggregated Person" means, with respect to any holder of shares of
Series D Preferred Stock, any Person whose beneficial ownership of shares of
Common Stock would be aggregated with such holder's beneficial ownership of
shares of Common Stock for purposes of Section 13(d) of the 1934 Act and
Regulation 13D-G thereunder.
"AMEX" means the American Stock Exchange, Inc.
"Arrearage Interest" means interest at the rate of 12% per annum on any
dividend on shares of Series D Preferred Stock which dividend is not paid on a
Dividend Payment Date, whether or not declared, from such Dividend Payment Date.
"Auditors" means Ernst & Young LLP or such other firm of independent
public accountants of recognized national standing as shall have been engaged by
the Corporation to audit its financial statements.
"Auditors' Determination" means a determination requested by the
Corporation and signed by the Auditors concurring with the Corporation's
conclusion that a requirement of the Corporation to redeem, or a right of any
holder of shares of Series D Preferred Stock to require redemption of, shares of
Series D Preferred Stock by reason of the occurrence of a specified Optional
Redemption Event which occurs by reason of an event described in clause (1), (2)
or (3) of the definition of Optional Redemption Event would result in the
Corporation being required to classify the Series D Preferred Stock as
redeemable preferred stock on a balance sheet of the Corporation in accordance
with Generally Accepted Accounting Principles. The Auditors' Determination shall
(i) set forth in reasonable detail all relevant facts considered by the Auditors
in connection therewith, (ii) set forth all applicable accounting principles and
assumptions used,
2
3
and (iii) set forth in reasonable detail or attach copies of all legal, expert
and other advice or information used by the Auditors in reaching their
conclusion. To the extent any facts are assumed for purposes of either the
Corporation's conclusion or the Auditor's Determination, the validity of such
conclusion or determination shall depend upon such assumed facts being true and
complete in all material respects.
"Blackout Period" means the period of up to 20 consecutive days after
the date the Corporation notifies the holders of shares of Series D Preferred
Stock that they are required, pursuant to Section 3.c.(4) of the Exchange
Agreement, to suspend offers and sales of Registrable Securities as a result of
an event or circumstance described in Section 3.b.(5)(A) of the Exchange
Agreement, which period commences after the date which is 90 days after the date
of the Closing and during which period, by reason of Section 3.b.(5)(B) of the
Exchange Agreement, the Corporation is not required to amend any Registration
Statement or to supplement the Prospectus relating to any Registration
Statement; provided, however, that such period may be up to 30 consecutive days
if the Corporation so elects in accordance with Section 3.b.(5)(B) of the
Exchange Agreement, subject to the limitations provided therein.
"Board of Directors" or "Board" means the Board of Directors of the
Corporation.
"Business Combination Redemption Percentage" means 118% with respect to
a redemption of shares of Series D Preferred Stock in accordance with Section
9(b)(6).
"Business Combination Redemption Price" means an amount in cash equal to
the product obtained by multiplying (A) the sum of (i) $1,000 plus (ii) an
amount equal to the accrued but unpaid dividends on the share of Series D
Preferred Stock to be redeemed and any Arrearage Interest on dividends thereon
in arrears to the date of payment of the redemption price pursuant to Section
9(b)(6) times (B) the Business Combination Redemption Percentage.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or required by
law to remain closed.
"Cash and Cash Equivalent Balances" of any Person on any date shall be
determined from such Person's books maintained in accordance with Generally
Accepted Accounting Principles, and means, without duplication, the sum of (1)
the cash accrued by such Person and its subsidiaries on a consolidated basis on
such date and available for use by such Person and its subsidiaries on such date
and (2) all assets which would, on a consolidated balance sheet of such Person
and its subsidiaries prepared as of such date in accordance with Generally
Accepted Accounting Principles, be classified as cash or cash equivalents.
"Common Stock" means the Common Stock, $0.001 par value, of the
Corporation or any shares of capital stock into which such stock shall be
changed or reclassified after the Issuance Date.
"Control Notice" means a Control Notice substantially in the form set
forth in Section 13(e).
3
4
"Conversion Agent" means BankBoston, N.A., as Conversion Agent for the
Series D Preferred Stock.
"Conversion Date" means the date on which a Conversion Notice is
actually received by the Conversion Agent, whether by mail, courier, personal
service, telephone line facsimile transmission or other means, in case of a
conversion of shares of Series D Preferred Stock pursuant to Section 9(a).
"Conversion Notice" means a Notice of Conversion of Series D Convertible
Preferred Stock substantially in the form set forth in Section 13(a).
"Conversion Price" means the lesser of (a) $1.125 per share (subject to
equitable adjustments from time to time on terms reasonably acceptable to the
Majority Holders for (i) stock splits, (ii) stock dividends, (iii) combinations,
(iv) capital reorganizations, (v) issuance to all holders of Common Stock of
rights or warrants to purchase shares of Common Stock, (vi) distribution by the
Corporation to all holders of Common Stock of evidences of indebtedness of the
Corporation or cash (other than regular quarterly cash dividends), (vii) Tender
Offers by the Corporation or any Subsidiary for, or other repurchases of shares
of, Common Stock in one or more transactions which, individually or in the
aggregate, result in the purchase of more than 10% of the Common Stock
outstanding, and (viii) similar events relating to the Common Stock, in each
case which occur, or with respect to which "ex-" trading of the Common Stock
begins, on or after the date this Certificate of Designation is filed with the
Secretary of State of the State of Delaware and on or before the applicable
Conversion Date) and (b) on any Conversion Date, 90% of the lowest per share
Trading Price during the applicable Measurement Period for such Conversion Date
in a trade in which neither the Holder nor any of its Affiliates was the seller,
subject to adjustment in the case of such clause (a) and clause (b) in
accordance with Section 10 (b).
"Converted Restriction Amount" means on any date of determination a
number of shares of Common Stock equal to 4.9% of the shares of Common Stock
outstanding on such date.
"Corporation Notice" means a Corporation Notice substantially in the
form set forth in Section 13(c).
"Dividend Payment Date" means each February 1, May 1, August 1 and
November 1.
"Exchange Agreement" means the Exchange Agreement, dated as of December
10, 1998, by and between the Corporation and the several original holders of the
Senior Subordinated Convertible Notes pursuant to which such Senior Subordinated
Convertible Notes will be exchanged for shares of Series D Preferred Stock.
"Generally Accepted Accounting Principles" for any Person means the
generally accepted accounting principles and practices applied by such Person
from time to time in the preparation of its audited financial statements.
4
5
"Holder Notice" means a Holder Notice substantially in the form set
forth in Section 13(d).
"Indebtedness" as used in reference to any Person means all indebtedness
of such Person for borrowed money, the deferred purchase price of property,
goods and services and obligations under leases which are required to be
capitalized in accordance with Generally Accepted Accounting Principles and
shall include all such indebtedness guaranteed in any manner by such Person or
in effect guaranteed by such Person through a contingent agreement to purchase
and all indebtedness for the payment or purchase of which such Person has
contingently agreed to advance or supply funds and all indebtedness secured by
mortgage or other lien upon property owned by such Person, although such Person
has not assumed or become liable for the payment of such indebtedness, and, for
all purposes hereof, such indebtedness shall be treated as though it has been
assumed by such Person.
"Initial Reserve Amount" means 6,285,000 shares of Common Stock reserved
by the Corporation for issuance upon conversion of the shares of Series D
Preferred Stock.
"Issuance Date" means the date of original issuance of the shares of
Series D Preferred Stock pursuant to the Exchange Agreement.
"Junior Dividend Stock" means, collectively, the Series A Preferred
Stock, the Common Stock and any other class or series of capital stock of the
Corporation ranking junior as to dividends to the Series D Preferred Stock.
"Junior Liquidation Stock" means, collectively, the Series A Preferred
Stock, the Common Stock and any other class or series of capital stock of the
Corporation ranking junior as to liquidation rights to the Series D Preferred
Stock.
"Liquidation Preference" means, for each share of Series D Preferred
Stock, the sum of (i) $1,000, plus (ii) an amount equal to the accrued but
unpaid dividends and any Arrearage Interest on dividends thereon in arrears with
respect to each such share to the date of final distribution to the holders of
shares of Series D Preferred Stock in connection with the liquidation,
dissolution or winding up of the Corporation.
"Majority Holders" means at any time the holders of shares of Series D
Preferred Stock which shares constitute a majority of the outstanding shares of
Series D Preferred Stock outstanding at such time.
"Market Price" of any security on any date means the closing bid price
of such security on such date on the Nasdaq or such other securities exchange or
other market on which such security is listed for trading which constitutes the
principal securities market for such security, as reported by Bloomberg, L.P.
"Measurement Period" means with respect to any Conversion Date, the
period consisting of 12 consecutive Trading Days ending on and including the
Trading Day immediately preceding such Conversion Date.
5
6
"Nasdaq" means The Nasdaq National Market.
"Nasdaq SmallCap" means The Nasdaq SmallCap Market.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
"NYSE" means the New York Stock Exchange, Inc.
"Optional Redemption Date" means the date which is three Business Days
after a holder of shares of Series D Preferred Stock who is entitled to
redemption rights under Section 10(a) and 10(b) gives a Holder Notice.
"Optional Redemption Event" means any one of the following events:
(1) For any period of five consecutive Trading Days following
the Issuance Date there shall be no reported sale price of the Common Stock on
any of the Nasdaq, the Nasdaq SmallCap, the NYSE or the AMEX;
(2) The Common Stock ceases to be listed for trading on the
Nasdaq, the Nasdaq SmallCap, the NYSE or the AMEX;
(3) Any consolidation or merger of the Corporation or any
subsidiary of the Corporation with or into another entity or other business
combination transaction involving the Corporation or any subsidiary of the
Corporation (other than a merger or consolidation of a subsidiary of the
Corporation into the Corporation or a wholly-owned subsidiary of the
Corporation) where the stockholders of the Corporation immediately prior to such
transaction do not collectively own at least 51% of the outstanding voting
securities of the surviving corporation of such transaction immediately
following such transaction or the common stock of such surviving corporation is
not listed for trading on the Nasdaq, the Nasdaq SmallCap, the NYSE or the AMEX;
or the sale of all or substantially all of the assets of the Corporation and its
subsidiaries;
(4) The adoption of any amendment to the Certificate of
Incorporation of the Corporation (other than any certificate designating a
series of preferred stock of the Corporation which does not contravene the
rights of the holders of shares of Series D Preferred Stock) which materially
and adversely affects the rights of the holders of shares of Series D Preferred
Stock in respect of their interest in the Common Stock in a different and more
adverse manner than it affects the rights of holders of Common Stock generally
or the taking of any other action which materially and adversely affects the
rights of the holders of Series D Preferred Stock;
(5) The inability of any holder of shares of Series D Preferred
Stock for (x) (i) 20 days (whether or not consecutive) or (ii) if in accordance
with Section 3.b.(5)(B) of the Exchange Agreement the Corporation elects a
Blackout Period of up to 30 consecutive days
6
7
which commences more than 90 days after the Issuance Date, such greater number
of days as shall equal the number of days the Blackout Period so elected is in
effect (but in no event more than 30 days), in either the case of such clause
(i) or such clause (ii) during the period commencing on the Issuance Date and
ending on the first anniversary of the Issuance Date or (y) 60 days (whether or
not consecutive) subsequent to August 29, 1997, to sell shares of Common Stock
issued or issuable upon conversion of shares of Series D Preferred Stock
pursuant to any Registration Statement (1) by reason of the requirements of the
1933 Act, the 1934 Act or any of the rules or regulations under either thereof
or (2) due to such Registration Statement containing any untrue statement of
material fact or omitting to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or any other failure
of such Registration Statement to comply with the rules and regulations of the
SEC; or
(6) The Corporation shall fail or default in the timely
performance of any material obligation to a holder of shares of Series D
Preferred Stock under the terms of this Certificate of Designation or under the
Exchange Agreement or any other agreement or document entered into in connection
with the issuance of shares of Series D Preferred Stock, as such agreements and
instruments may be amended from time to time.
"Optional Redemption Percentage" means 118%.
"Optional Redemption Price" means an amount in cash equal to the product
obtained by multiplying (a) the sum of (i) $1,000 plus (ii) an amount equal to
the accrued but unpaid dividends on the share of Series D Preferred Stock to be
redeemed and any Arrearage Interest on dividends thereon in arrears to the
applicable Optional Redemption Date times (b) the Optional Redemption
Percentage.
"Parity Dividend Stock" means any class or series or the Corporation's
capital stock ranking, as to dividends, on a parity with the Series D Preferred
Stock.
"Parity Liquidation Stock" means any class or series of the
Corporation's capital stock ranking, as to liquidation rights, on a parity with
the Series D Preferred Stock.
"Permitted Indebtedness" means (i) Indebtedness which is outstanding and
which would be reflected on a balance sheet of the Corporation as of the
Issuance Date prepared in accordance with Generally Accepted Accounting
Principles and (ii) Indebtedness incurred to finance (A) inventory or (B) the
lease or purchase of equipment (which Indebtedness shall be secured by such
equipment) used in the Corporation's business, the outstanding amount thereof
which does not exceed $10,000,000 during the first year after the Issuance Date,
$15,000,000 during the second year after the Issuance Date and $30,000,000
during the third year after the Issuance Date.
"Person" means an individual, partnership, corporation, limited
liability company, trust, incorporated organization, unincorporated association,
joint stock company, government, governmental agency or political subdivision.
"Redemption Date" means December 30, 1998.
7
8
"Redemption Notice" means a Redemption Notice substantially in the form
set forth in Section 13(d).
"Redemption Price" means an amount in cash equal to the product obtained
by multiplying (i) the sum of (A) $1,000 plus (B) an amount equal to the accrued
but unpaid dividends on such share of Series D Preferred Stock to be redeemed
and any Arrearage Interest on dividends thereon in arrears to the date of
payment of the Redemption Price times (ii) 130%.
"Registrable Securities" means the shares of Common Stock issuable upon
conversion of shares of Series D Preferred Stock and the shares of Common Stock
issuable as dividends on the Series D Preferred Stock, and any stock or other
securities into which or for which the Common Stock may hereafter be changed,
converted or exchanged by the Corporation or its successor, as the case may be,
and any other securities issued to holders of such Common Stock (or such shares
into which or for which such shares are so changed, converted or exchanged) upon
any reclassification, share combination, share subdivision, share dividend,
merger, consolidation or similar transaction or event.
"Registration Statement" shall have the meaning provided in the Exchange
Agreement.
"SEC" means the United States Securities and Exchange Commission.
"Senior Dividend Stock" means the Series C Preferred Stock of the
Corporation and any other class or series of capital stock of the Corporation
ranking senior as to dividends to the Series D Preferred Stock.
"Senior Liquidation Stock" means the Series C Preferred Stock of the
Corporation and any other class or series of capital stock of the Corporation
ranking senior as to liquidation rights to the Series D Preferred Stock.
"Series D Preferred Stock" means the Series D Convertible Preferred
Stock of the Corporation.
"Stockholder Approval" shall have the meaning provided in the Exchange
Agreement.
"Tender Offer" means a tender offer or exchange offer.
"Trading Day" means a day on whichever of (x) the national securities
exchange or (y) the Nasdaq which at the time constitutes the principal
securities market for the Common Stock is open for general trading of
securities.
"Trading Price" on any date means the lowest sale price (regular way)
for one share of the Common Stock on such date, on the first applicable among
the following: (a) the national securities exchange on which the shares of
Common Stock are listed which constitutes the principal securities market for
the Common Stock, (b) Nasdaq, (c) Nasdaq SmallCap or (d)
8
9
such other securities market which constitutes the principal securities market
for the Common Stock, in any such case as reported by Bloomberg, L.P. or if no
such sale prices are so reported, then the representative bid price of the
Common Stock as quoted by a broker or dealer which is a member firm of the NASD
(in each such case subject to equitable adjustment from time to time on terms
reasonably acceptable to the Majority Holders for (i) stock splits, (ii) stock
dividends, (iii) combinations, (iv) capital reorganizations, (v) issuance to all
holders of Common Stock of rights or warrants to purchase shares of Common Stock
at a price per share less than the Trading Price which would otherwise be
applicable, (vi) the distribution by the Corporation to all holders of Common
Stock of evidences of indebtedness of the Corporation or cash (other than
regular quarterly cash dividends), (vii) Tender Offers by the Corporation or any
subsidiary of the Corporation or other repurchases of shares of Common Stock in
one or more transactions which, individually or in the aggregate, result in the
purchase of more than 10% of the Common Stock outstanding, and (viii) similar
events relating to the Common Stock, in each such case which occur on or after
the Issuance Date); provided, however, that if on any Trading Day there shall be
no reported sale price (regular way) of such security, the "Trading Price" on
such Trading Day shall be the lowest sale price (regular way) of such security
on the Trading Day next preceding such Trading Day on which a sale price
(regular way) for such security has been so reported.
2. DESIGNATION AND AMOUNT. The shares of such series shall be designated
as "Series D Convertible Preferred Stock", and the number of shares constituting
the Series D Preferred Stock shall be 6,285 and shall not be subject to
increase. The Corporation shall not issue any shares of Series D Preferred Stock
after the Issuance Date, except that on or prior to May 31, 1999 the Corporation
may issue up to 1,500 shares of Series D Preferred Stock (and no more) to
MMC/GATX in exchange for indebtedness of the Corporation to MMC/GATX on a basis
of one share of Series D Preferred Stock for each $1,000 of such indebtedness.
3. SERIES D PREFERRED STOCK CAPITAL. The amount to be represented in the
capital account for the Series D Preferred Stock at all times for each
outstanding share of Series D Preferred Stock shall be an amount at least equal
to the sum of (1) $1,000 plus (2) to the extent that the Corporation has surplus
in its capital account, an amount equal to the accrued but unpaid dividends on
such share of Series D Preferred Stock and any Arrearage Interest on dividends
thereon in arrears to the date of determination plus (3) to the extent that the
Corporation has surplus in its capital account, an amount equal to the product
obtained by multiplying (a) the sum of (1) $1,000 plus (2) an amount equal to
the accrued but unpaid dividends on such share of Series D Preferred Stock and
any Arrearage Interest on dividends thereon in arrears to the date of
determination times (b) 18%. Upon original issuance of each share of Series D
Preferred Stock, an amount equal to $1,000 shall be credited to the Series D
Preferred Stock capital account of the Corporation and, to the extent at such
time the Corporation has surplus in its capital account, an amount equal to the
amount specified in the preceding clause (3) (or so much thereof as is in
surplus) shall be transferred from surplus to the Series D Preferred Stock
capital account. If at any time the Corporation shall have credited to the
Series D Preferred Stock capital account less than the full amount required by
the preceding clauses (1) through (3), then (x) if at any time thereafter the
Corporation has surplus in its capital account, the Corporation immediately
shall transfer surplus to the Series D Preferred Stock capital account to the
extent available and necessary to satisfy the requirements of the preceding
clauses (1) through (3), (y)
9
10
notwithstanding the particular shares of Series D Preferred Stock in respect of
which an amount in excess of $1,000 per share of Series D Preferred Stock shall
have been transferred to the Series D Preferred Stock capital account, any
amount in excess of $1,000 for each outstanding share of Series D Preferred
Stock shall be treated as Series D Preferred Stock capital pro rata for all
outstanding shares of Series D Preferred Stock and (z) upon any conversion of a
share of Series D Preferred Stock, an amount equal to $0.001 per share of Common
Stock issued upon such conversion shall be credited to the Common Stock capital
account and the balance in the Series D Preferred Stock capital account in
respect of such converted share of Series D Preferred Stock shall be retained in
the Series D Preferred Stock capital account, to the extent required under the
preceding clauses (1) through (3). Nothing in this Section 3 shall require the
Corporation in a balance sheet prepared in accordance with Generally Accepted
Accounting Principles to reflect more than $1,000 per share in Series D
Preferred Stock capital for purposes of such balance sheet, if such presentation
would not be in accordance with Generally Accepted Accounting Principles, so
long as the notes to any such balance sheet make adequate disclosure of the
requirements of this Section 3 and the capital accounts of the Corporation for
purposes of the General Corporation Law of the State of Delaware.
4. RANK. The shares of Series D Preferred Stock shall rank junior to the
Series C Preferred Stock of the Corporation, but senior to the Series A
Preferred Stock and the Common Stock of the Corporation, and senior to any
shares of any other series of Preferred Stock or any shares of any other class
of preferred stock of the Corporation, now issued or hereafter issued (unless
otherwise consented to in writing by the Majority Holders in advance of the
issuance thereof), as to payment of dividends and distribution of assets upon
liquidation, dissolution, or winding up of the Corporation, whether voluntary or
involuntary.
5. DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of shares of Series D Preferred Stock shall be
entitled to receive, when, as, and if declared by the Board of Directors out of
funds legally available for such purpose, dividends at the rate of $55 per annum
per share, and no more (except as otherwise provided herein), which shall be
fully cumulative, shall accrue without interest (except as otherwise provided
herein as to dividends in arrears) from the date of original issuance of each
share of Series D Preferred Stock and shall be payable quarterly on each
Dividend Payment Date of each year commencing February 1, 1999 (except that if
any such date is not a Business Day, then such dividend shall be payable on the
next succeeding day that is a Business Day) to holders of record as they appear
on the stock books of the Corporation on such record dates, not more than ten
nor less than five days preceding the payment dates for such dividends, as shall
be fixed by the Board. Notwithstanding any other provision hereof, the rate of
dividends on the shares of Series D Preferred Stock shall be subject to increase
in accordance with Section 10(b)(4).
Dividends on the Series D Preferred Stock shall be paid in cash or,
subject to the limitations in Section 5(b), shares of Common Stock or any
combination of cash and shares of Common Stock, at the option of the Corporation
as hereinafter provided. The amount of the dividends payable per share of Series
D Preferred Stock for each quarterly dividend period shall be computed by
dividing the annual dividend amount by four. The amount of dividends payable
10
11
for the initial dividend period and any period shorter than a full quarterly
dividend period shall be computed on the basis of a 360-day year of twelve
30-day months. Dividends not paid on a Dividend Payment Date, whether or not
such dividends have been declared, will bear Arrearage Interest until paid. No
dividends or other distributions, other than dividends payable solely in shares
of any Junior Dividend Stock, shall be paid or set apart for payment on any
shares of Junior Dividend Stock, and no purchase, redemption, or other
acquisition shall be made by the Corporation of any shares of Junior Dividend
Stock unless and until all accrued and unpaid dividends on the Series D
Preferred Stock and Arrearage Interest on dividends in arrears at the rate
specified herein shall have been paid or declared and set apart for payment.
If at any time any dividend on any Senior Dividend Stock shall be in
default, in whole or in part, no dividend shall be paid or declared and set
apart for payment on the Series D Preferred Stock unless and until all accrued
and unpaid dividends with respect to the Senior Dividend Stock, including the
full dividends for the then current dividend period, shall have been paid or
declared and set apart for payment, without interest. No full dividends shall be
paid or declared and set apart for payment on any Parity Dividend Stock for any
period unless all accrued but unpaid dividends (and Arrearage Interest on
dividends in arrears) have been, or contemporaneously are, paid or declared and
set apart for such payment on the Series D Preferred Stock. No full dividends
shall be paid or declared and set apart for payment on the Series D Preferred
Stock for any period unless all accrued but unpaid dividends have been, or
contemporaneously are, paid or declared and set apart for payment on the Parity
Dividend Stock for all dividend periods terminating on or prior to the date of
payment of such full dividends. When dividends are not paid in full upon the
Series D Preferred Stock and the Parity Dividend Stock, all dividends paid or
declared and set apart for payment upon shares of Series D Preferred Stock (and
Arrearage Interest on dividends in arrears) and the Parity Dividend Stock shall
be paid or declared and set apart for payment pro rata, so that the amount of
dividends paid or declared and set apart for payment per share on the Series D
Preferred Stock and the Parity Dividend Stock shall in all cases bear to each
other the same ratio that accrued and unpaid dividends per share on the shares
of Series D Preferred Stock and the Parity Dividend Stock bear to each other.
Any references to "distribution" contained in this Section 5 shall not
be deemed to include any stock dividend or distributions made in connection with
any liquidation, dissolution, or winding up of the Corporation, whether
voluntary or involuntary.
(b) If the Corporation elects in the exercise of its sole
discretion to issue shares of Common Stock in payment of dividends on the Series
D Preferred Stock with respect to any Dividend Payment Date, the Corporation
shall (1) give notice to the holders of the Series D Preferred Stock at least 14
days prior to the applicable Dividend Payment Date of the Corporation's election
to exercise such right and (2) deliver, or cause to be delivered, by the third
Trading Day after such Dividend Payment Date to each holder of such shares the
number of whole shares of Common Stock arrived at by dividing the per share
Conversion Price (determined as if the applicable Dividend Payment Date were a
Conversion Date) of such shares of Common Stock into the total amount of cash
dividends such holder would be entitled to receive if the aggregate dividends on
the Series D Preferred Stock held by such holder which are
11
12
being paid in shares of Common Stock were being paid in cash; provided, however,
that if shares of Common Stock for such dividend are not delivered to holders of
Series D Preferred Stock on or prior to the third Trading Day after a Dividend
Payment Date, then the Corporation shall not be entitled to pay such dividend in
shares of Common Stock and such dividend, together with Arrearage Interest from
the applicable Dividend Payment Date, shall be payable solely in cash. No
fractional shares of Common Stock shall be issued in payment of dividends. In
lieu thereof, the Corporation shall pay cash in an amount equal to the product
of (x) the Trading Price of the Common Stock for the 12 consecutive Trading Days
ending on and including the Trading Day immediately preceding such Dividend
Payment Date times (y) the fraction of a share of Common Stock which would
otherwise be issuable by the Corporation. The Corporation shall not exercise its
right to issue shares of Common Stock in payment of dividends on Series D
Preferred Stock if:
(1) the number of shares of Common Stock at the time authorized,
unissued and unreserved for all purposes, together with the number of shares of
Common Stock held in the Corporation's treasury, is insufficient to pay the
portion of such dividends to be paid in shares of Common Stock;
(2) the issuance or delivery of shares of Common Stock as a
dividend payment would require registration with or approval of any governmental
authority under any law or regulation, and such registration or approval has not
been effected or obtained;
(3) the shares of Common Stock to be issued as a dividend
payment have not been authorized for listing, upon official notice of issuance,
on any securities exchange or market on which the Common Stock is then listed;
or have not been approved for quotation if the Common Stock is traded in the
over-the-counter market;
(4) the Conversion Price (determined as if the applicable
Dividend Payment Date were a Conversion Date) is less than the par value of one
share of Common Stock;
(5) the shares of Common Stock to be issued as a dividend (A)
cannot be sold or transferred without restriction by holders of shares of Series
D Preferred Stock who receive such shares of Common Stock as a dividend payment
and who are not Affiliates of the Corporation or (B) are no longer listed on the
NYSE, the AMEX or the Nasdaq;
(6) the issuance of shares of Common Stock in payment of
dividends on Series D Preferred Stock held by any holder of shares of Series D
Preferred Stock would result in such holder (including all Aggregated Persons of
such holder) beneficially owning more than 4.9% of the Common Stock, determined
as provided in the proviso to the second sentence of Section 9(a)(1) or would
result in the issuance to such holder (including all Aggregated Persons of such
holder) of an aggregate number of shares of Common Stock upon conversion of
shares of Series D Preferred Stock or in payment of dividends on shares of
Series D Preferred Stock in excess of the 4.9% limitation provided in Section
9(a)(2);
(7) an Optional Redemption Event shall have occurred and on the
applicable Dividend Payment Date any holder of shares of Series D Preferred
Stock shall be
12
13
entitled to exercise optional redemption rights under Section 10 hereof by
reason of such Optional Redemption Event or shall have exercised such optional
redemption rights and the Corporation shall not have paid the applicable
Optional Redemption Price.
Shares of Common Stock issued in payment of dividends on Series D
Preferred Stock pursuant to this Section shall be, and for all purposes shall be
deemed to be, validly issued, fully paid and nonassessable shares of Common
Stock of the Corporation; the issuance and delivery thereof is hereby
authorized; and the dispatch in full thereof will be, and for all purposes shall
be deemed to be, payment in full of the cumulative dividends to which holders
are entitled on the applicable Dividend Payment Date.
(c) Neither the Corporation nor any subsidiary of the
Corporation shall (1) make any Tender Offer for outstanding shares of Common
Stock, unless the Corporation contemporaneously therewith makes an offer, or (2)
enter into an agreement regarding a Tender Offer for outstanding shares of
Common Stock by any Person other than the Corporation or any subsidiary of the
Corporation, unless such Person agrees with the Corporation to make an offer, in
either such case to each holder of outstanding shares of Series D Preferred
Stock to purchase for cash at the time of purchase in such Tender Offer the same
percentage of shares of Series D Preferred Stock held by such holder as the
percentage of outstanding shares of Common Stock offered to be purchased in such
Tender Offer at a price per share of Series D Preferred Stock equal to the
greater of (i) the quotient obtained by dividing (a) the sum of (1) $1,000 plus
(2) an amount equal to the accrued but unpaid dividends on such share of Series
D Preferred Stock and any Arrearage Interest on dividends thereon in arrears to
the date of purchase pursuant to this Section 5(c) by (b) 0.9 and (ii) an amount
equal to the product obtained by multiplying (x) the number of shares of Common
Stock which would, but for the purchase pursuant to such Tender Offer, be
issuable on conversion in accordance with Section 9(a) of one share of Series D
Preferred Stock if a Conversion Notice were given by the holder of such share of
Series D Preferred Stock on the date of purchase pursuant to such Tender Offer
(determined without regard to any limitation on beneficial ownership contained
in the second sentence of Section 9(a)(1) or in Section 9(a)(2) times (y) the
price per share of Common Stock offered in such Tender Offer.
6. LIQUIDATION PREFERENCE. In the event of a liquidation, dissolution,
or winding up of the Corporation, whether voluntary or involuntary, the holders
of Series D Preferred Stock shall be entitled to receive out of the assets of
the Corporation, whether such assets constitute stated capital or surplus of any
nature, an amount per share of Series D Preferred Stock equal to the Liquidation
Preference, and no more, before any payment shall be made or any assets
distributed to the holders of Junior Liquidation Stock; provided, however, that
such rights shall accrue to the holders of Series D Preferred Stock only in the
event that the Corporation's payments with respect to the liquidation preference
of the holders of Senior Liquidation Stock are fully met. After the liquidation
preferences of the Senior Liquidation Stock are fully met, the entire assets of
the Corporation available for distribution shall be distributed ratably among
the holders of the Series D Preferred Stock and any Parity Liquidation Stock in
proportion to the respective preferential amounts to which each is entitled (but
only to the extent of such preferential amounts). After payment in full of the
liquidation price of the
13
14
shares of the Series D Preferred Stock and the Parity Liquidation Stock, the
holders of such shares shall not be entitled to any further participation in any
distribution of assets by the Corporation. Neither a consolidation or merger of
the Corporation with another corporation nor a sale or transfer of all or part
of the Corporation's assets for cash, securities, or other property in and of
itself will be considered a liquidation, dissolution, or winding up of the
Corporation.
7. NO SINKING FUND. The shares of Series D Preferred Stock shall not be
entitled to the benefits of any sinking fund for the redemption or repurchase of
shares of Series D Preferred Stock.
8. REDEMPTION AT OPTION OF CORPORATION.
(a) Optional Redemption.
(1) So long as (x) the Corporation shall be in compliance in all
material respects with its obligations to the holders of the Series D Preferred
Stock (including, without limitation, its obligations under the Exchange
Agreement and this Certificate of Designation) and (y) on the date the
Corporation gives the Redemption Notice and on the Redemption Date, the
Corporation has Cash and Cash Equivalent Balances (excluding investment
securities) which are sufficient, after taking into account the Corporation's
cash requirements during the period from the date the Redemption Notice is given
to the Redemption Date, to pay the Redemption Price of the shares of Series D
Preferred Stock to be redeemed, the Corporation shall have the right to redeem
all or any part of the outstanding shares of Series D Preferred Stock pursuant
to this Section 8(a) at the Redemption Price. In order to exercise it right of
redemption under this Section 8(a), the Corporation shall give a Redemption
Notice to the holders of shares of Series D Preferred Stock not less than 20 or
more than 30 days prior to the Redemption Date.
(2) On the Redemption Date (or such later date as a holder of
shares of Series D Preferred Stock shall surrender to the Corporation the
certificate(s) for the shares of Series D Preferred Stock redeemed), the
Corporation shall pay to or upon the order of each holder of shares of Series D
Preferred Stock by wire transfer of immediately available funds to such account
as shall be specified for such purpose by such holder in an amount equal to the
Redemption Price of all of such holder's shares of Series D Preferred Stock to
be redeemed. A holder of shares of Series D Preferred Stock which are redeemed
pursuant to this Section 8(a) shall not be entitled to payment of the Redemption
Price of such shares of Series D Preferred Stock until such holder shall have
surrendered the certificate(s) for such shares of Series D Preferred Stock to
the Corporation or, in the case of the loss, theft or destruction of any such
certificate, given indemnity in accordance with Section 14(b). If the
Corporation shall fail to pay the Redemption Price of any shares of Series D
Preferred Stock in full when due, then the amount thereof shall bear interest to
the extent not prohibited by applicable law at the rate of 12% per annum from
the due date thereof until paid in full.
(3) Notwithstanding the giving of a Redemption Notice, each
holder of shares of Series D Preferred Stock shall be entitled to convert in
accordance with Section 9 any shares of Series D Preferred Stock which are to be
redeemed at any time prior to (1) the
14
15
Redemption Date or (2) if the Corporation fails to pay the Redemption Price in
full to such holder on the Redemption Date, the date on which the Corporation
pays the Redemption Price in full to such holder for all shares of Series D
Preferred Stock to be redeemed from such holder.
(4) Any redemption of shares of Series D Preferred Stock
pursuant to this Section 8(a) shall be made as nearly as practical pro rata from
all holders of shares of Series D Preferred Stock outstanding, subject to
reduction of the shares of Series D Preferred Stock to be redeemed from any
holder by reason of conversions of shares of Series D Preferred Stock of such
holder between the date the Redemption Notice is given and the Redemption Date.
(5) Upon receipt by the Corporation from a holder of shares of
Series D Preferred Stock of certificates for shares of Series D Preferred Stock
evidencing a greater number of shares of Series D Preferred Stock than the
number of shares of Series D Preferred Stock to be redeemed in accordance with
this Section 8(a), the Corporation shall, within three Trading Days after such
surrender, issue and deliver to or upon the order of such holder a new
certificate for the balance of shares of Series D Preferred Stock, if any.
(b) No Other Redemption at the Option of the Corporation. Except
as otherwise specifically provided in Section 8(a), the Corporation shall not
have any right to redeem any shares of Series D Preferred Stock at the option of
the Corporation.
9. CONVERSION.
(a) Conversion at Option of Holder.
(1) Conversion Right. The holders of the Series D Preferred
Stock may convert at any time all or from time to time any part of their
outstanding shares of Series D Preferred Stock into fully paid and nonassessable
shares of Common Stock and such other securities and property as hereinafter
provided. Commencing on the Issuance Date, and at any time thereafter, each
share of Series D Preferred Stock may be converted at the office of the
Corporation or at such additional office or offices, if any, as the Board of
Directors may designate, into such number of fully paid and nonassessable shares
of Common Stock (calculated as to each conversion to the nearest 1/100th of a
share) determined by dividing (x) the sum of (i) $1,000 plus (ii) an amount
equal to the accrued but unpaid dividends on the share of Series D Preferred
Stock being converted and any Arrearage Interest on dividends thereon in arrears
to the applicable Conversion Date by (y) the Conversion Price on the applicable
Conversion Date; provided, however, that in no event shall any holder of shares
of Series D Preferred Stock be entitled to convert any shares of Series D
Preferred Stock in excess of that number of shares of Series D Preferred Stock
upon conversion of which the sum of (1) the number of shares of Common Stock
beneficially owned by such holder (including shares of Common Stock beneficially
owned by all Aggregated Persons of such holder) (other than shares of Common
Stock deemed beneficially owned by such holder or any Aggregated Person of such
holder through the ownership of (x) unconverted shares of Series D Preferred
Stock and (y) the unconverted or unexercised portion of any instrument which
contains limitations similar to those set forth in this sentence) and (2) the
number of shares of Common Stock issuable upon the conversion of the number of
shares of Series D Preferred Stock with respect to which the
15
16
determination in this proviso is being made, would result in beneficial
ownership by such holder and all Aggregated Persons of such holder of more than
4.9% of the outstanding shares of Common Stock.
(2) Certain Limitations on Conversion Rights. Notwithstanding
any other provision of this Certificate of Designation, in no event shall any
holder of shares of Series D Preferred Stock be entitled on any date to convert
a number of shares of Series D Preferred Stock in excess of that number of
shares of Series D Preferred Stock upon conversion of which such holder and any
Aggregated Person of such holder would have acquired, through conversion of
shares of Series D Preferred Stock or otherwise, a number of shares of Common
Stock in excess of the Converted Restriction Amount during the 30-day period
ending on and including the date of the determination being made pursuant to
this Section 9(a)(2) (other than shares of Common Stock deemed beneficially
owned by such holder or any Aggregated Person of such holder through the
ownership of (x) unconverted shares of Series D Preferred Stock and (y) the
unconverted or unexercised portion of any instrument which contains limitations
similar to those set forth in this sentence).
(3) Beneficial Ownership. For purposes of the proviso to the
second sentence of Section 9(a)(1) and for purposes of Section 9(a)(2), (x)
beneficial ownership shall be determined in accordance with Section 13(d) of the
1934 Act and Regulation 13D-G thereunder, except as otherwise provided in clause
(1) of the proviso to the second sentence of Section 9(a)(1) or as provided in
Section 9(a)(2) and (y) the Corporation shall be entitled to rely, and shall be
fully protected in relying, on any statement or representation made by a holder
of shares of Series D Preferred Stock to the Corporation in connection with a
particular conversion, without any obligation on the part of the Corporation to
make any inquiry or investigation or to examine its records or the records of
any transfer agent for the Common Stock and without any liability of the
Corporation with respect thereto.
(b) Other Provisions.
(1) The holders of shares of Series D Preferred Stock at the
close of business on the record date for any dividend payment to holders of
Series D Preferred Stock shall be entitled to receive the dividend payable on
such shares on the corresponding dividend payment date notwithstanding the
conversion thereof after the record date for such dividend payment date or the
Corporation's default in payment of the dividend due on such dividend payment
date; provided, however, that the holder of shares of Series D Preferred Stock
converted during the period between the close of business on any record date for
a dividend payment and the opening of business on the corresponding dividend
payment date must pay to the Corporation, within five days after receipt by such
holder, an amount equal to the dividend payable on such shares on such dividend
payment date if such dividend is paid by the Corporation to such holder. A
holder of shares of Series D Preferred Stock on a record date for a dividend
payment who (or whose transferee) converts any of such shares into shares of
Common Stock on or after such dividend payment date will receive the dividend
payable by the Corporation on such shares of Series D Preferred Stock on such
dividend payment date, and the converting holder need not make any payment of
the amount of such dividend in connection with
16
17
such conversion of shares of Series D Preferred Stock. Except as provided above,
no adjustment shall be made in respect of cash dividends on Common Stock or
Series D Preferred Stock that may be accrued and unpaid at the date of
conversion of shares of Series D Preferred Stock.
(2) The right of the holders of Series D Preferred Stock to
convert their shares shall be exercised by delivering (which may be made by
telephone line facsimile transmission, which shall be conclusively deemed for
all purposes of this Certificate of Designation to have been given on the date
sent if the sender shall have received electronic confirmation of the receipt by
the Conversion Agent of such facsimile transmission) to the Conversion Agent a
Conversion Notice at the address or telephone line facsimile number provided in
the form of Conversion Notice set forth in Section 13(a) (or such other address
or facsimile number of the Conversion Agent as shall be provided by the
Corporation by notice to the holders of the shares of Series D Preferred Stock),
with a copy to the Corporation at its address or telephone line facsimile number
provided in or pursuant to Section 14 (a); provided, however, that any failure
or delay in giving a copy of a Conversion Notice to the Corporation shall not
affect the validity of or Conversion Date for such Conversion Notice. The number
of shares of Common Stock to be issued upon each conversion of shares of Series
D Preferred Stock shall be the number set forth in the applicable Conversion
Notice, which number shall be conclusive absent manifest error. The Corporation
shall notify a holder who has given a Conversion Notice of any claim of manifest
error within three Trading Days after such holder gives such Conversion Notice,
and no such claim of error shall limit or delay performance of the Corporation's
obligation to issue upon such conversion the number of shares of Common Stock
which are not in dispute. A Conversion Notice shall be deemed for all purposes
to be in proper form unless the Corporation notifies a holder of shares of
Series D Preferred Stock being converted within three Trading Days after a
Conversion Notice has been given (which notice shall specify all defects in such
Conversion Notice), and any Conversion Notice containing any such defect shall
nonetheless be effective on the date given if the converting holder agrees to
correct all such defects promptly.
(3) If a holder of Series D Preferred Stock elects to convert
any shares of Series D Preferred Stock in accordance with Section 9(a), such
holder shall not be required to surrender the certificate(s) representing such
shares of Series D Preferred Stock physically to the Corporation unless all of
the shares of Series D Preferred Stock represented thereby are so converted.
Each holder of shares of Series D Preferred Stock and the Corporation shall
maintain records showing the number of shares so converted and the dates of such
conversions or shall use such other method, satisfactory to such holder and the
Corporation, so as to not require physical surrender of such certificates upon
each such conversion. In the event of any dispute or discrepancy, such records
of the Corporation shall be controlling and determinative in the absence of
manifest error. Notwithstanding the foregoing, if any shares of Series D
Preferred Stock evidenced by a particular certificate therefor are converted as
aforesaid, the holder of Series D Preferred Stock may not transfer the
certificate(s) representing such shares of Series D Preferred Stock unless such
holder first physically surrenders such certificate(s) to the Corporation,
whereupon the Corporation will forthwith issue and deliver upon the order of
such holder of shares of Series D Preferred Stock new certificate(s) of like
tenor, registered as such holder of shares of Series D Preferred Stock (upon
payment by such holder of shares of Series D
17
18
Preferred Stock of any applicable transfer taxes) may request, representing in
the aggregate the remaining number of shares of Series D Preferred Stock
represented by such certificate(s). Each holder of shares of Series D Preferred
Stock, by acceptance of a certificate for such shares, acknowledges and agrees
that (1) by reason of the provisions of this paragraph, following conversion of
any shares of Series D Preferred Stock represented by such certificate, the
number of shares of Series D Preferred Stock represented by such certificate may
be less than the number of shares stated on such certificate and (2) the
Corporation may place one or more legends on the certificates for shares of
Series D Preferred Stock which refers to or describes the provisions of this
paragraph. The Corporation may by notice to any holder of shares of Series D
Preferred Stock require such holder to surrender the certificate(s) for such
holder's shares of Series D Preferred Stock in exchange for issuance by the
Corporation of one or more new certificates for the number of shares evidenced
by the certificate(s) so surrendered.
(4) The Corporation shall pay any transfer tax arising in
connection with any conversion of shares of Series D Preferred Stock except that
the Corporation shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery upon
conversion of shares of Common Stock or other securities or property in a name
other than that of the holder of the shares of the Series D Preferred Stock
being converted, and the Corporation shall not be required to issue or deliver
any such shares or other securities or property unless and until the Person or
Persons requesting the issuance thereof shall have paid to the Corporation the
amount of any such tax or shall have established to the satisfaction of the
Corporation that such tax has been paid. A holder of shares of Series D
Preferred Stock who converts such shares shall be responsible for the amount of
any withholding tax payable in connection with such conversion.
(5) (A) The Corporation shall duly reserve and at all times
prior to the Stockholder Approval will continue to reserve 6,285,000 shares of
its authorized and unissued Common Stock, free from preemptive rights, for
issuance upon conversion of the shares of Series D Preferred Stock (subject to
reduction from time to time for shares of Common Stock issued upon conversion of
shares of Series D Preferred Stock). From and after the date of the Stockholder
Approval, the Corporation will duly reserve, free from preemptive rights, for
issuance upon conversion of the shares of Series D Preferred Stock a number of
shares of its authorized and issued Common Stock equal to 175% of the number of
shares of Common Stock which would be issuable on conversion of all authorized
shares of Series D Preferred Stock on the Issuance Date if all of such shares of
Series D Preferred Stock were outstanding on such date (determined without
regard to the limitations on conversion continued in Section 9(a)), subject to
reduction from time to time for shares of Common Stock issued upon conversion of
shares of Series D Preferred Stock. The Corporation (and any successor
corporation) shall take all action necessary so that a number of shares of the
authorized but unissued Common Stock (or common stock in the case of any
successor corporation) equal to the number of shares of Common Stock (or such
common stock) issuable upon conversion of the Series D Preferred Stock
outstanding, determined without regard to any limitation on beneficial ownership
contained in Section 9(a), are at all times reserved by the Corporation (or any
successor corporation), free from preemptive rights, for such conversion,
subject to the provisions of the next succeeding paragraph. If the Corporation
shall issue any securities or make any change in its capital structure which
would
18
19
change the number of shares of Common Stock into which each share of the Series
D Preferred Stock shall be convertible as herein provided, the Corporation shall
at the same time also make proper provision so that thereafter there shall be a
sufficient number of shares of Common Stock authorized and reserved, free from
preemptive rights, for conversion of the outstanding Series D Preferred Stock on
the new basis. If at any time the number of authorized but unissued shares of
Common Stock shall be insufficient to permit the Corporation to reserve such
number of shares of Common Stock, the Corporation promptly shall seek such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient to meet such requirement.
(B) The Initial Reserve Amount shall be allocated among the
shares of Series D Preferred Stock at the time of initial issuance thereof pro
rata based on the total number of authorized shares of Series D Preferred Stock
provided in Section 2. Each certificate for shares of Series D Preferred Stock
initially issued shall bear a notation as to the number of shares constituting
the portion of the Initial Reserve Amount allocated to the shares of Series D
Preferred Stock represented by such certificate for purposes of conversion
thereof. Upon surrender of any certificate for shares of Series D Preferred
Stock for transfer or re-registration thereof (or, at the option of the holder
of such certificate, for conversion pursuant to Section 9(a) of less than all of
the shares of Series D Preferred Stock represented thereby), the Corporation
shall make a notation on the new certificate issued upon such transfer or
re-registration or evidencing such unconverted shares, as the case may be, as to
the number of shares of Common Stock from the Initial Reserve Amount remaining
available for conversion of the shares of Series D Preferred Stock evidenced by
such new certificate. If any certificate for shares of Series D Preferred Stock
is surrendered for division into two or more certificates representing an
aggregate number of shares of Series D Preferred Stock equal to the number of
shares of Series D Preferred Stock represented by the certificate so surrendered
(as reduced by any contemporaneous conversion of shares of Series D Preferred
Stock represented by the certificate so surrendered), each certificate issued on
such division shall bear a notation of the portion of the Initial Reserve Amount
allocated thereto determined by pro rata allocation of the remaining portion of
the Initial Reserve Amount allocated to the certificate so surrendered. If any
shares of Series D Preferred Stock represented by a single certificate are
converted in full pursuant to Section 9, all of the portion of the Initial
Reserve Amount allocated to such shares of Series D Preferred Stock which
remains unissued after such conversion shall be re-allocated pro rata to the
outstanding shares of Series D Preferred Stock held of record by the holder of
record at the close of business on the date of such conversion of the shares of
Series D Preferred Stock so converted, and if there shall be no other shares of
Series D Preferred Stock held of record by such holder at the close of business
on such date, then such portion of the Initial Reserve Amount shall be allocated
pro rata among the shares of Series D Preferred Stock outstanding at the close
of business on such date. The provisions of this Section 9(b)(5)(B) shall be
inapplicable after the Stockholder Approval is obtained. If shares of Series D
Preferred Stock are not issued to MMC/GATX in accordance with Section 2, the
shares from the Initial Reserve Amount which were available for allocation to
such shares of Series D Preferred Stock shall be allocated to the issued shares
of Series D Preferred Stock pro rata based on the amounts thereof initially
issued.
19
20
(6) (A) In case of any consolidation or merger of the
Corporation with any other corporation (other than a wholly-owned subsidiary of
the Corporation) in which the Corporation is not the surviving corporation, or
in case of any sale or transfer of all or substantially all of the assets of the
Corporation, or in the case of any share exchange pursuant to which all of the
outstanding shares of Common Stock are converted into other securities or
property, the Corporation shall make appropriate provision or cause appropriate
provision to be made so that each holder of shares of Series D Preferred Stock
then outstanding shall have the right thereafter to convert such shares of
Series D Preferred Stock into the kind of shares of stock and other securities
and property receivable upon such consolidation, merger, sale, transfer, or
share exchange by a holder of shares of Common Stock into which such shares of
Series D Preferred Stock could have been converted immediately prior to the
effective date of such consolidation, merger, sale, transfer, or share exchange
and on a basis which preserves the economic benefits of the conversion rights of
the holders of shares of Series D Preferred Stock on a basis as nearly as
practical as such rights exist hereunder prior thereto. If, in connection with
any such consolidation, merger, sale, transfer, or share exchange, each holder
of shares of Common Stock is entitled to elect to receive securities, cash, or
other assets upon completion of such transaction, the Corporation shall provide
or cause to be provided to each holder of Series D Preferred Stock the right to
elect prior to the completion of such transaction the securities, cash, or other
assets into which the Series D Preferred Stock held by such holder shall be
convertible after completion of any such transaction on the same terms and
subject to the same conditions applicable to holders of the Common Stock
(including, without limitation, notice of the right to elect, limitations on the
period in which such election shall be made, and the effect of failing to
exercise the election). Notwithstanding the forgoing, in connection with any
such merger, consolidation, sale, transfer or exchange, the Corporation shall
have the right, in lieu of making provision for preservation of economic
benefits of the conversion rights of the holders of shares of Series D Preferred
Stock, to redeem all outstanding shares of Series D Preferred Stock immediately
after completion of such transaction at a redemption price per share of Series D
Preferred Stock in cash equal to the Business Combination Redemption Price. Such
right of redemption shall be exercised by notice from the Corporation to the
holders of shares of Series D Preferred Stock stating that the Corporation is
exercising its redemption right under this Section 9(b)(5), which notice shall
be given at least 20 days and not more than 30 days prior to completion of such
transaction and shall specify that such redemption shall occur on the Business
Day immediately following the date of completion of such transaction. On the
date specified in such notice (or such later date as a holder of shares of
Series D Preferred Stock surrenders such holder's certificates for shares of
Series D Preferred Stock redeemed) the Corporation shall make payment in
immediately available funds of the applicable Business Combination Redemption
Price to each holder of shares of Series D Preferred Stock to be redeemed to
such account as specified by such holder in writing to the Corporation at least
one Business Day prior to such payment of the Business Combination Redemption
Price. A holder of shares of Series D Preferred Stock which are redeemed
pursuant to this Section 9(b)(5) shall not be entitled to payment of the
Business Combination Redemption Price of such shares of Series D Preferred Stock
until such holder shall have surrendered the certificate(s) for such shares of
Series D Preferred Stock to the Corporation or, in the case of the loss, theft
or destruction of any such certificate, given indemnity in accordance with
Section 13(b). If the Corporation shall fail to pay the Business Combination
Redemption Price of any shares of Series
20
21
D Preferred Stock in full when due, then the amount thereof shall bear interest
to the extent not prohibited by applicable law at the rate of 12% per annum from
the due date thereof until paid in full. Notwithstanding the giving of a notice
of redemption pursuant to this Section 9(b)(6), each holder of shares of Series
D Preferred Stock shall be entitled to convert in accordance with this Section 9
any shares of Series D Preferred Stock which are to be redeemed at any time
prior to (1) the redemption date specified in the notice of redemption or (2) if
the Corporation fails to pay the Business Combination Redemption Price in full
to such holder when due, the date on which the Corporation pays the Business
Combination Redemption Price in full to such holder for all shares of Series D
Preferred Stock to be redeemed from such holder. The Corporation shall not
effect any such transaction unless it shall have complied with the provisions of
this paragraph. The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers, or share exchanges.
(B) Whenever the Corporation shall propose to take any of the
actions specified in this Section 9(b)(6), the Corporation shall cause a notice
to be mailed, at least 20 days prior to the date on which the books of the
Corporation will close or on which the security holders entitled to participate
in such transaction will be determined, to the holders of record of the
outstanding Series D Preferred Stock on the date of such notice. Such notice
shall specify the action proposed to be taken by the Corporation and the date as
of which holders of record of the Common Stock shall participate in any such
actions or be entitled to exchange their Common Stock for securities or other
property, as the case may be.
(7) Upon receipt by the Conversion Agent from a holder of shares
of Series D Preferred Stock of a Conversion Notice, the Corporation shall issue
and deliver or cause to be issued and delivered to or upon the order of such
holder certificates for the Common Stock issuable upon such conversion by the
close of business on the third Trading Day after such Conversion Notice is
received, and as of the close of business on the date of such receipt such
holder (or such holder's assignee) shall be deemed to be the holder of record of
the Common Stock issuable upon such conversion, and all rights with respect to
the shares of Series D Preferred Stock so converted shall forthwith terminate
except the right to receive the Common Stock or other securities, cash, or other
assets, as herein provided, on such conversion. If a holder of Series D
Preferred Stock shall have given a Conversion Notice in accordance with the
terms of this Certificate of Designation, the Corporation's obligation to issue
and deliver the certificates for Common Stock issuable upon such conversion
shall be absolute and unconditional, irrespective of any action or inaction by
the converting holder to enforce the same, any waiver or consent with respect to
any provision thereof, the recovery of any judgment against any Person or any
action to enforce the same, any failure or delay in the enforcement of any other
obligation of the Corporation to the holder of record, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the holder or any other Person of any obligation to the Corporation,
or any violation or alleged violation of law by such holder or any other Person,
and irrespective of any other circumstance which might otherwise limit such
obligation of the Corporation to such holder in connection with such conversion;
provided, however, that nothing herein shall limit or prejudice the right of the
Corporation to pursue any such claim in any other manner permitted by applicable
law.
21
22
The occurrence of an event which requires an equitable adjustment of the
Trading Price as contemplated by the definition thereof in Section 1 shall in no
way restrict or delay the right of any holder of shares of Series D Preferred
Stock to receive shares of Common Stock upon conversion of shares of Series D
Preferred Stock, and the Corporation shall use its best efforts to implement
each such adjustment on terms reasonably acceptable to the Majority Holders
within two Trading Days after such occurrence.
If the Corporation fails to issue and deliver the certificates for the
Common Stock to the holder converting shares of Series D Preferred Stock as and
when required to do so, in addition to any other liabilities the Corporation may
have hereunder and under applicable law (1) the Corporation shall pay or
reimburse such holder on demand for all out-of-pocket expenses, including,
without limitation, reasonable fees and expenses of legal counsel, incurred by
such holder as a result of such failure, (2) the Conversion Price applicable to
such conversion shall be reduced by one-tenth of a percentage point from the
Conversion Price otherwise applicable to such conversion for each Trading Day
during the period from the date the Corporation was required to deliver such
shares of Common Stock to the date the Corporation so delivers such shares of
Common Stock; provided, however, that in no event shall any such reduction be
made for any Trading Day in such period which is after the date which is 120
days after the date the Corporation was required to deliver such shares of
Common Stock in connection with such conversion, and (3) such holder may by
written notice or oral notice (promptly confirmed in writing) given at any time
prior to delivery to such holder of the certificates for the shares of Common
Stock issuable upon such conversion of shares of Series D Preferred Stock,
rescind such conversion, whereupon such holder shall have the right to convert
such shares of Series D Preferred Stock thereafter in accordance herewith;
provided, however, that the Corporation shall not be liable to any holder of
shares of Series D Preferred Stock under the preceding clause (1) or clause (2)
to the extent the failure of the Corporation to deliver or to cause to be
delivered such shares of Common Stock results from fire, flood, storm,
earthquake, shipwreck, strike, war, acts of terrorism, crash involving
facilities of a common carrier, acts of God, or any similar event outside the
control of the Corporation (it being understood that the action or failure to
act of the Conversion Agent shall not be deemed an event outside the control of
the Corporation except to the extent resulting from fire, flood, storm,
earthquake, shipwreck, strike, war, acts of terrorism, crash involving
facilities of a common carrier, acts of God, the bankruptcy, liquidation or
reorganization of the Conversion Agent under any bankruptcy, insolvency or other
similar law or any similar event outside the control of the Conversion Agent). A
holder of shares of Series D Preferred Stock who has given a Conversion Notice
shall notify the Corporation in writing (or by telephone conversation, confirmed
in writing) as promptly as practicable after becoming aware that shares of
Common Stock issued upon such conversion have not been received as provided in
this Section 9(b)(7).
(8) No fractional shares of Common Stock shall be issued upon
conversion of Series D Preferred Stock but, in lieu of any fraction of a share
of Common Stock and the related right which would otherwise be issuable in
respect of the aggregate number of shares of Series D Preferred Stock
surrendered for conversion at one time by the same holder, the Corporation shall
pay in cash to such holder at the time of issuance of shares of Common Stock in
connection with such conversion an amount equal to the product of (i) the
arithmetic average
22
23
of the Market Price of a share of Common Stock on the three consecutive Trading
Days ending on the Trading Day immediately preceding the Conversion Date times
(ii) such fraction of a share of Common Stock
10. REDEMPTION UPON AN OPTIONAL REDEMPTION EVENT.
(a) Redemption Right Upon Optional Redemption Event. If an
Optional Redemption Event occurs, then each holder of shares of Series D
Preferred Stock shall have the right, at such holder's option, to require the
Corporation to redeem all of such holder's shares of Series D Preferred Stock,
or any portion thereof, on the date that is three Business Days after the date
of the Holder Notice given with respect to such Optional Redemption Event. Each
holder of shares of Series D Preferred Stock shall have the right to require the
Corporation to redeem all or any such portion of such holder's shares of Series
D Preferred Stock if an Optional Redemption Event occurs at any time while any
of such holder's shares of Series D Preferred Stock are outstanding at a price
per share of Series D Preferred Stock equal to the Optional Redemption Price.
(b) Notices; Method of Exercising Optional Redemption Rights,
Etc.
(1) On or before the fifth Business Day after the occurrence of
an Optional Redemption Event, the Corporation shall give to each holder of
outstanding shares of Series D Preferred Stock a Corporation Notice of the
occurrence of such Optional Redemption Event and of the redemption right set
forth herein arising as a result thereof. The Corporation Notice shall set
forth:
(A) the date by which the optional redemption right must be
exercised, which date shall be at least 30 days after the date such Corporation
Notice is given, and
(B) a description of the procedure (set forth below) which each
such holder must follow to exercise such holder's optional redemption right.
No failure of the Corporation to give a Corporation Notice or defect
therein shall limit the right of any holder of shares of Series D Preferred
Stock to exercise the optional redemption right or affect the validity of the
proceedings for the redemption of such holder's shares of Series D Preferred
Stock.
(2) To exercise its optional redemption right, each holder of
outstanding shares of Series D Preferred Stock shall deliver to the Corporation
on or before the thirtieth day after a Corporation Notice is given to such
holder (or if no Corporation Notice has been given to such holder, within forty
days after such holder first learns of the Optional Redemption Event) a Holder
Notice to the Corporation setting forth the name of such holder and the number
of such holder's shares of Series D Preferred Stock to be redeemed. A Holder
Notice may be revoked by such holder giving such Holder Notice by giving notice
of such revocation to the Corporation at any time prior to the time the
Corporation pays the Optional Redemption Price to such holder.
23
24
(3) If a holder of shares of Series D Preferred Stock shall have
given a Holder Notice, on the date which is three Business Days after the date
such Holder Notice is given (or such later date as such holder surrenders such
holder's certificates for the shares of Series D Preferred Stock redeemed) the
Corporation shall make payment in immediately available funds of the applicable
Optional Redemption Price to such account as specified by such holder in writing
to the Corporation at least one Business Day prior to the applicable redemption
date. A holder of shares of Series D Preferred Stock which are redeemed pursuant
to this Section shall not be entitled to payment of the Optional Redemption
Price of such shares of Series D Preferred Stock until such holder shall have
surrendered the certificate(s) for such shares of Series D Preferred Stock to
the Corporation or, in the case of the loss, theft or destruction of any such
certificate, given indemnity in accordance with Section 14(b).
(4) Notwithstanding any other provision of this Certificate of
Designation, if an Optional Redemption Event occurs by reason of the occurrence
of an event described in clause (1), (2) or (3) of the definition of the term
Optional Redemption Event, and such occurrence is by reason of events which are
not solely within the control of the Corporation, the Corporation shall have the
right to give a Control Notice to the holders of shares of Series D Preferred
Stock at any time after such Optional Redemption Event occurs and prior to the
earlier of (1) the date on which all holders of shares of Series D Preferred
Stock who had the right (other than as limited by this Section 10(b)(4)) to
require redemption of any shares of Series D Preferred Stock by reason of the
occurrence of such Optional Redemption Event no longer have such right and (2)
the applicable Optional Redemption Date by reason of the earliest Holder Notice
given by any holder of shares of Series D Preferred Stock by reason of such
Optional Redemption Event. If the Corporation timely gives such Control Notice
and an Adjustment Notice (which may be combined in a single notice) to the
holders of shares of Series D Preferred Stock, then in lieu of payment of the
Optional Redemption Price by reason of any such Optional Redemption Event and
commencing on the first date on which such Optional Redemption Event occurs the
following adjustments shall take effect:
(A) In the case of an Optional Redemption Event described in
clause (1) of the definition of the term Optional Redemption Event, for a period
of 180 days after the occurrence of such Optional Redemption Event (i) the
Conversion Price will be 80% of the amount which the Conversion Price would
otherwise be and (ii) the cumulative dividend shall accrue on each share of the
Series D Preferred Stock at the rate of $180 per annum.
(B) In the case of an Optional Redemption Event described in
clause (2) of the definition of the term Optional Redemption Event, for so long
as such Optional Redemption Event continues (i) the Conversion Price will be 80%
of the amount which the Conversion Price would otherwise be and (ii) the
cumulative dividend shall accrue on each share of Series D Preferred Stock at
the rate of $180 per annum.
(C) In the case of an Optional Redemption Event described in
clause (3) of the definition of the term Optional Redemption Event, for so long
as any shares of Preferred Stock are outstanding (i) the Conversion Price will
be 70% of the amount which the
24
25
Conversion Price would otherwise be and (ii) the cumulative dividend shall
accrue on each share of Series D Preferred Stock at the rate of $300 per annum.
For purposes of this Section 10(b)(4), an Optional Redemption Event
described in clause (1), (2) or (3) of the definition of the term Optional
Redemption Event shall be deemed to have occurred by reason of events which are
not solely within the control of the Corporation if a requirement of the
Corporation to redeem, or a right of any holder of shares of Series D Preferred
Stock to require redemption of, shares of Series D Preferred Stock by reason
thereof would result in the Corporation being required to classify the Series D
Preferred Stock as redeemable preferred stock on a balance sheet of the
Corporation prepared in accordance with Generally Accepted Accounting
Principles, and, in the case of an Optional Redemption Event described in clause
(3) of the definition of the term Optional Redemption Event, the Board or the
stockholders of the Corporation do not have the right to approve or disapprove
the transactions resulting in such event.
(c) Other.
(1) If the Corporation fails to pay in full when due the
Optional Redemption Price for the number of shares of Series D Preferred Stock
specified in a Holder Notice, then the amount thereof shall bear interest to the
extent not prohibited by applicable law at the rate of 12% per annum from the
due date thereof until paid in full.
(2) In connection with a redemption pursuant to this Section 10
of less than all of the shares of Series D Preferred Stock evidenced by a
particular certificate, promptly, but in no event later than three Business Days
after surrender of such certificate to the Corporation, the Corporation shall
issue and deliver to such holder a replacement certificate for the shares of
Series D Preferred Stock evidenced by such certificate which have not been
redeemed.
(3) A Holder Notice given by a holder of shares of Series D
Preferred Stock shall be deemed for all purposes to be in proper form unless the
Corporation notifies such holder in writing within three Business Days after
such Holder Notice has been given (which notice shall specify all defects in the
Holder Notice), and any Holder Notice containing any such defect shall
nonetheless be effective on the date given if such holder promptly undertakes in
writing to correct all such defects. Notwithstanding the absence of any such
undertaking from such holder, no such claim of error shall limit or delay
performance of the Corporation's obligation to redeem all shares of Series D
Preferred Stock not in dispute.
11. VOTING RIGHTS; CERTAIN RESTRICTIONS.
(a) Voting Rights. Except as otherwise required by law or
expressly provided herein, shares of Series D Preferred Stock shall not be
entitled to vote on any matter.
(b) Certificate of Incorporation; Certain Stock. The affirmative
vote or written consent of the Majority Holders, voting separately as a class,
will be required for (1) any amendment, alteration, or repeal, whether by merger
or consolidation or otherwise, of the
25
26
Corporation's Certificate of Incorporation if the amendment, alteration, or
repeal materially and adversely affects the rights, preferences or privileges of
the Series D Preferred Stock, or (2) the creation or issuance of any Senior
Dividend Stock or Senior Liquidation Stock; provided, however, that any increase
in the authorized Preferred Stock of the Corporation or the creation and
issuance of any stock which is both Junior Dividend Stock and Junior Liquidation
Stock shall not be deemed to affect materially and adversely such rights,
preferences or privileges and any such increase or creation and issuance may be
made without any such vote by the holders of Series D Preferred Stock except as
otherwise required by law; and provided further, however, that no such
amendment, alteration or repeal shall (i) reduce the Optional Redemption Price,
Redemption Price or the amount payable to a holder of shares of Series D
Preferred Stock pursuant to Section 5(c), (ii) reduce the percentage in, or
otherwise change the definition of Majority Holders, (iii) change the method of
calculating the Conversion Price in a manner adverse to the holders of shares of
Series D Preferred Stock or reduce the number of shares of Common Stock issuable
upon any conversion of shares of Series D Preferred Stock or (iv) amend, modify
or repeal any provision of this Section 11(b), unless in each such case referred
to in the preceding clauses (i) through (iv) such amendment, modification or
repeal has been approved by the affirmative vote or written consent of the
holders of all outstanding shares of Series D Preferred Stock, voting separately
or as a class.
(c) Repurchases of Series D Preferred Stock. The Corporation
shall not repurchase or otherwise acquire any shares of Series D Preferred Stock
(other than pursuant to Section 8(a)) unless the Corporation offers to
repurchase or otherwise acquire simultaneously a pro rata portion of each
holder's shares of Series D Preferred Stock for cash at the same price per
share.
(d) Other. So long as any shares of Series D Preferred Stock are
outstanding:
(1) Limitation on Indebtedness. The Corporation will not itself,
and will not permit any subsidiary of the Corporation to, create, assume, incur,
in any manner become liable in respect of, including, without limitation, by
reason of any business combination transaction, or suffer to exist (all of which
are referred to herein as "incurring"), any Indebtedness other than Permitted
Indebtedness.
(2) Payment of Obligations. The Corporation will pay and
discharge, and will cause each subsidiary of the Corporation to pay and
discharge, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings.
(3) Maintenance of Property; Insurance.
(A) The Corporation will keep, and will cause each subsidiary of
the Corporation to keep, all material property useful and necessary in its
business in good working order and condition, ordinary wear and tear excepted.
26
27
(B) The Corporation will maintain, and will cause each
subsidiary of the Corporation to maintain, with financially sound and
responsible insurance companies, insurance in at least such amounts and against
such risks as are usually insured against in the same geographic region by
companies of comparable size that are engaged in the same or a similar business,
subject to customary deductibles.
(4) Conduct of Business and Maintenance of Existence. The
Corporation will continue, and will cause each subsidiary of the Corporation to
continue, to engage in business of the same general type as conducted by the
Corporation and such subsidiaries at the time this Certificate of Designation is
filed with the Secretary of State of the State of Delaware, and will preserve,
renew and keep in full force and effect, and will cause each subsidiary of the
Corporation to preserve, renew and keep in full force and effect, their
respective corporate existence and their respective material rights, privileges
and franchises necessary or desirable in the normal conduct of business.
(5) Compliance with Laws. The Corporation will comply, and will
cause each subsidiary of the Corporation to comply, in all material respects
with all applicable laws, ordinances, rules, regulations, decisions, orders and
requirements of governmental authorities and courts (including, without
limitation, environmental laws) except (i) where compliance therewith is
contested in good faith by appropriate proceedings or (ii) where non-compliance
therewith could not reasonably be expected to have a material adverse effect on
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Corporation and its subsidiaries taken as a
whole.
(6) Investment Company Act. The Corporation will not be or
become an open-end investment trust, unit investment trust or face-amount
certificate company that is or is required to be registered under Section 8 of
the Investment Company Act of 1940, as amended, or any successor provision.
(7) Transactions with Affiliates. The Corporation will not, and
will not permit any subsidiary of the Corporation to, directly or indirectly,
pay any funds to or for the account of, make any investment (whether by
acquisition of stock or Indebtedness, by loan, advance, transfer of property,
guarantee or other agreement to pay, purchase or service, directly or
indirectly, any Indebtedness, or otherwise) in, lease, sell, transfer or
otherwise dispose of any assets, tangible or intangible, to, or participate in,
or effect any transaction in connection with, any joint enterprise or other
joint arrangement with, any Affiliate of the Corporation, except, on terms to
the Corporation or such subsidiary no less favorable than terms that could be
obtained by the Corporation or such subsidiary from a Person that is not an
Affiliate of the Corporation, as determined in good faith by the Board of
Directors.
12. OUTSTANDING SHARES. For purposes of this Certificate of Designation,
all shares of Series D Preferred Stock shall be deemed outstanding except (i)
from the date a Conversion Notice is given by a holder of Series D Preferred
Stock, all shares of Series D Preferred Stock converted into Common Stock and
(ii) from the date of registration of transfer, all shares of Series D Preferred
Stock held of record by the Corporation or any subsidiary or
27
28
Affiliate (as defined herein) of the Corporation (other than any original holder
of shares of Series D Preferred Stock) and (iii) from the applicable Redemption
Date, Optional Redemption Date or date of redemption pursuant to Section
9(b)(6)(A), all shares of Series D Preferred Stock which are redeemed, so long
as in each case the Redemption Price, Optional Redemption Price or Business
Combination Redemption Price, as the case may be, of such shares of Series D
Preferred Stock shall have been paid by the Corporation as and when due
hereunder.
28
29
13. FORMS OF NOTICES.
(a) Notice of Conversion of Series D Convertible
Preferred Stock.
NOTICE OF CONVERSION
OF
SERIES D CONVERTIBLE PREFERRED STOCK
OF
SHAMAN PHARMACEUTICALS, INC.
TO: BankBoston, N.A.,
as Conversion Agent
150 Royall Street
Canton, Massachusetts 02021
Attention: Client Administration
Facsimile No.: (781) 575-2549
cc: Shaman Pharmaceuticals, Inc.
213 East Grand Avenue
South San Francisco, California 94080
Attention: Chief Financial Officer
Facsimile No.: (650) 873-8367
(1) Pursuant to the terms of the Series D Convertible Preferred Stock
(the "Preferred Stock"), of Shaman Pharmaceuticals, Inc., a Delaware corporation
(the "Corporation"), the undersigned (the "Holder") hereby elects to convert
_______________ shares of the Preferred Stock, including accrued and unpaid
dividends per share of $________ and Arrearage Interest per share of $________
into shares of Common Stock, $0.001 par value (the "Common Stock"), of the
Corporation, at a Conversion Price per share of Common Stock of $________ or
such other securities into which the Preferred Stock is currently convertible.
Capitalized terms used in this Notice and not otherwise defined herein have the
respective meanings provided in the Certificate of Designation of Series D
Convertible Preferred Stock.
(2) The number of shares of Common Stock issuable upon the conversion of
the shares of Preferred Stock to which this Notice relates is _________________.
(3) Check (and complete, if applicable) one of the following:
/__/ (A) Set forth below or on a schedule which accompanies this
Notice are the Trading Prices during the Measurement Period
applicable to this Notice and an indication of the Trading Price
used to determine the Conversion Price set forth above.
29
30
Date Trading Price
1. __________________________ $____________________
2. __________________________ $____________________
3. __________________________ $____________________
4. __________________________ $____________________
5. __________________________ $____________________
6. __________________________ $____________________
7. __________________________ $____________________
8. __________________________ $____________________
9. __________________________ $____________________
10. __________________________ $____________________
11. __________________________ $____________________
12. __________________________ $____________________
/__/ (B) The conversion to which this Notice relates is based on the
fixed Conversion Price specified in clause (a) of the definition of
such term in the Certificate of Designation.
(4) Please issue certificates for the number of shares of Common
Stock or other securities into which such number of shares of Preferred Stock is
convertible in the name(s) specified immediately below or, if additional space
is necessary, on an attachment hereto:
- ----------------------------------- -----------------------------------------
Name Name
- ----------------------------------- -----------------------------------------
Address Address
- ----------------------------------- -----------------------------------------
SS or Tax ID Number SS or Tax ID Number
30
31
(5) The undersigned hereby represents to the Corporation that the
exercise of conversion rights contained in this Notice does not violate the
provisions of Section 9(a) of this Certificate of Designation relating to
beneficial ownership in excess of 4.9% of the Common Stock.
(6) If the shares of Common Stock issuable upon conversion of the
Preferred Stock have not been registered for resale under the 1933 Act, as
amended (the "1933 Act") and are not being offered or sold pursuant to Rule 144
under the 1933 Act (or any successor or replacement rule or provision), the
Holder represents and warrants that (i) the shares of Common Stock not so
registered are being acquired for the account of the Holder for investment, and
not with a view to, or for resale in connection with, the public distribution
thereof other than pursuant to registration under the 1933 Act or an exemption
from registration under the 1933 Act, and that the Holder has no present
intention of distributing or reselling the shares of Common Stock not so
registered other than pursuant to registration under the 1933 Act or an
exemption from registration under the 1933 Act and (ii) the Holder is an
"accredited investor" as defined in Regulation D under the 1933 Act. The Holder
further agrees that (A) the shares of Common Stock not so registered shall not
be sold or transferred unless (i) they first shall have been registered under
the 1933 Act, (ii) the Corporation first shall have been furnished with an
opinion of legal counsel reasonably satisfactory to the Corporation to the
effect that such sale or transfer is exempt from the registration requirements
of the 1933 Act or (iii) such shares are offered or sold pursuant to Rule 144
under the 1933 Act (or any successor or replacement rule or provision), and (B)
until such shares are registered for resale under the 1933 Act, the Corporation
may place a legend on the certificate(s) for the shares of Common Stock not so
registered to that effect and place a stop-transfer restriction in its records
relating to the shares of Common Stock not so registered, all in accordance with
the Exchange Agreement by which the Holder is bound.
Date _________________________ ____________________________________________
Signature of Holder
(Must be signed exactly as name
appears on the Preferred Stock Certificate.)
31
32
(b) Form of Redemption Notice.
REDEMPTION NOTICE
(SECTION 8(a) OF CERTIFICATE OF DESIGNATION OF
SERIES D CONVERTIBLE PREFERRED STOCK)
TO:
------------------------------
(Name of Holder)
(1) Pursuant to the terms of the Series D Convertible Preferred Stock
(the "Preferred Stock"), Shaman Pharmaceuticals, Inc., a Delaware corporation
(the "Corporation"), hereby notifies the above-named holder (the "Holder") that
the Corporation is exercising its right to redeem _____________ shares of
Preferred Stock held by the Holder in accordance with Section 8(a) of the
Certificate of Designation of the Series D Convertible Preferred Stock (the
"Certificate of Designation"):
(2) The Redemption Date is December 30, 1998.
(3) The Redemption Price per share of Preferred Stock is $___________.
(4) Upon surrender to the Corporation of the certificate(s) for the
shares of Preferred Stock to be redeemed (but in no event earlier than the
Redemption Date), the Corporation will make payment of the applicable Redemption
Price in accordance with the Certificate of Designation.
(5) Capitalized terms used herein and not otherwise defined herein have
the respective meanings provided in the Certificate of Designation.
SHAMAN PHARMACEUTICALS, INC.
By
--------------------------------------
Title:
32
33
(c) Form of Corporation Notice.
CORPORATION NOTICE
(SECTION 10(b)(1) OF CERTIFICATE OF DESIGNATION OF
SERIES D CONVERTIBLE PREFERRED STOCK)
TO:
------------------------------
(Name of Holder)
(1) An Optional Redemption Event described in the Certificate of
Designation (the "Certificate of Designation") of Series D Convertible Preferred
Stock, par value $0.001 per share (the "Preferred Stock"), of Shaman
Pharmaceuticals, Inc., a Delaware corporation (the "Corporation"), occurred on
____________________, ____. As a result of such Optional Redemption Event, the
above-named holder (the "Holder") is entitled to exercise its optional
redemption rights pursuant to Section 10(b)(2) of the Certificate of
Designation.
(2) The Holder's optional redemption right must be exercised on
or before ____________, ____.
(3) At or before the date set forth in the preceding paragraph
(2), the Holder must deliver to the Corporation:
(a) a Holder Notice, in the form set forth in Section 13(d) of
the Certificate of Designation; and
(b) the certificates for the shares of Preferred Stock to be
redeemed, duly endorsed for transfer to the Corporation the shares to be
redeemed.
(4) Capitalized terms used herein and not otherwise defined
herein have the respective meanings provided in the Certificate of Designation.
Date SHAMAN PHARMACEUTICALS, INC.
-----------------------------
By
---------------------------------------
Title:
33
34
(d) Form of Holder Notice.
HOLDER NOTICE
(SECTION 10(b)(2) OF CERTIFICATE OF DESIGNATION OF
SERIES D CONVERTIBLE PREFERRED STOCK)
TO: SHAMAN PHARMACEUTICALS, INC.
(1) Pursuant to the terms of the Series D Convertible Preferred Stock,
par value $0.001 per share (the "Preferred Stock"), of Shaman Pharmaceuticals,
Inc., a Delaware corporation (the "Corporation"), the undersigned hereby elects
to exercise its right to require redemption by the Corporation pursuant to
Sections 10(a) and 10(b) of the Certificate of Designation of Series D
Convertible Preferred Stock (the "Certificate of Designation") of __________
shares of Preferred Stock at an Optional Redemption Price per share in cash
equal to the product obtained by multiplying (a) the sum of (i) $1,000 plus (ii)
an amount equal to $____ for the accrued but unpaid dividends on each share of
Series D Preferred Stock to be redeemed and any Arrearage Interest on dividends
thereon in arrears to the date of redemption times (b) 118%.
(2) The aggregate Optional Redemption Price of all shares of Preferred
Stock to be redeemed from the undersigned is $____.
(3) Capitalized terms used herein and not otherwise defined herein have
the respective meanings provided in the Certificate of Designation.
Date: NAME OF HOLDER:
--------------------------
By
---------------------------------------
Signature of Registered Holder
(Must be signed exactly as name
appears on the stock certificate.)
34
35
(e) Form of Control Notice.
CONTROL NOTICE
(SECTION 10(b)(4) OF CERTIFICATE OF DESIGNATION OF
SERIES D CONVERTIBLE PREFERRED STOCK)
TO:
------------------------------
(Name of Holder)
(1) Pursuant to the terms of the Series D Convertible Preferred Stock,
par value $0.001 per share (the "Preferred Stock"), Shaman Pharmaceuticals,
Inc., a Delaware corporation (the "Corporation"), hereby notifies the
above-named holder (the "Holder") that in accordance with the Certificate of
Designation of the Series D Convertible Preferred Stock (the "Certificate of
Designation") and by reason of events which are not solely within the control of
the Corporation, on _____________(fill in date) an Optional Redemption Event
subject to Section 10(b)(4) of the Certificate of Designation occurred.
(2) Attached to this Notice is an Auditors' Determination with respect
to the occurrence referred to in paragraph (1).
(3) Capitalized terms used herein and not otherwise defined herein have
the respective meanings provided in the Certificate of Designation.
Date SHAMAN PHARMACEUTICALS, INC.
-----------------------------
By
---------------------------------------
Title:
35
36
(f) Form of Adjustment Notice.
ADJUSTMENT NOTICE
(SECTIONS 10(b)(4) OF CERTIFICATE OF DESIGNATION OF
SERIES D CONVERTIBLE PREFERRED STOCK)
VIA FACSIMILE
TO:
------------------------------
(Name of Holder)
(1) Pursuant to the terms of the Series D Convertible Preferred Stock,
par value $0.001 per share (the "Preferred Stock"), Shaman Pharmaceuticals,
Inc., a Delaware corporation (the "Corporation"), confirms to the above-named
holder (the "Holder") of shares of Preferred Stock that on ___________ (fill in
date) the Corporation gave the Holder and each other holder of shares of
Preferred Stock a Control Notice in accordance with the Certificate of
Designation of the Preferred Stock (the "Certificate of Designation"), and
hereby notifies the Holder of the adjustments set forth below.
(2) Effective on _________(fill in date), the Conversion Price of the
Preferred Stock is ____% (fill in percentage) of the amount the Conversion Price
would otherwise be without regard to adjustments pursuant to Section 10(b)(4) of
the Certificate of Designation.
(3) Effective on _________(fill in date), cumulative dividends shall
accrue on each outstanding share of Preferred Stock in the amount of $______ per
annum.
(4) The foregoing adjustments to the Conversion Price and the cumulative
annual dividend amount will continue in effect until a subsequent Adjustment
Notice is given to the Holder.
(5) Capitalized terms used herein and not otherwise defined herein have
the respective meanings provided in the Certificate of Designation.
Date SHAMAN PHARMACEUTICALS, INC.
-----------------------------
By
---------------------------------------
Title:
36
37
14. MISCELLANEOUS.
(a) Notices. Any notices required or permitted to be given under
the terms of this Certificate of Designation shall be in writing and shall be
delivered personally (which shall include telephone line facsimile transmission)
or by courier, and shall be deemed given upon receipt, (a) in the case of the
Corporation, addressed to the Corporation at 213 East Grand Avenue, South San
Francisco, California 94080, Attention: President and Chief Executive Officer
(telephone line facsimile transmission number (650) 873-8367), or (b) in the
case of any holder of shares of Series D Preferred Stock, at such holder's
address or telephone line facsimile transmission number shown on the stock books
maintained by the Corporation with respect to the Series D Preferred Stock or
such other address as the Corporation shall have provided by notice to the
holders of shares of Series D Preferred Stock in accordance with this Section or
any holder of shares of Series D Preferred Stock shall have provided to the
Corporation in accordance with this Section.
(b) Replacement of Certificates. Upon receipt by the Corporation
of evidence reasonably satisfactory to the Corporation of the ownership of and
the loss, theft, destruction or mutilation of any certificate for shares of
Series D Preferred Stock and (1) in the case of loss, theft or destruction, of
indemnity from the record holder of the certificate for such shares of Series D
Preferred Stock reasonably satisfactory in form to the Corporation (and without
the requirement to post any bond or other security) or (2) in the case of
mutilation, upon surrender and cancellation of the certificate for such shares
of Series D Preferred Stock, the Corporation will execute and deliver to such
holder a new certificate for such shares of Series D Preferred Stock without
charge to such holder.
37
38
IN WITNESS WHEREOF, Shaman Pharmaceuticals, Inc. has caused this
certificate to be signed by one of its officers thereunto duly authorized as of
the 9th day of December, 1998.
SHAMAN PHARMACEUTICALS, INC.
By: /s/ Lisa A. Conte
--------------------------------------
Lisa A. Conte, President and Chief
Executive Officer