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SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
EXHIBIT 99.6
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF SERIES E
REDEEMABLE CONVERTIBLE PREFERRED STOCK
OF
AMERICAN ECOLOGY CORPORATION
American Ecology Corporation, a corporation organized and existing
under the Delaware General Corporation Law, (the "Corporation") DOES HEREBY
CERTIFY:
That, effective October 31, 1996, pursuant to the authority conferred
upon the Board of Directors by the Amended and Restated Certificate of
Incorporation of the Corporation and pursuant to the provisions of Section
151(a) and other applicable provisions of the Delaware General Corporation Law,
the Board of Directors (or, as and to the extent authorized pursuant to
applicable law, a committee acting with the authority of the Board of
Directors) duly adopted, by all necessary action on the part of the
Corporation, the following resolution creating a series of 300,000 shares of
preferred stock designated as Series E Redeemable Convertible Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Amended
and Restated Certificate of Incorporation, a series of preferred stock of the
Corporation be and it hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
Series E Redeemable Convertible Preferred Stock.
1. Designation. The series shall be designated as the "Series E
Redeemable Convertible Preferred Stock" (the "Series E Preferred Stock").
2. Number. The number of shares of the Series E Preferred Stock
authorized to be issued is 300,000.
3. Dividends.
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(a) The Corporation shall pay to the holders of the
Series E Preferred Stock, a mandatory quarterly dividend at an annual rate of
11.25% of the Stated Amount (as such term is defined in Section 4 below)
payable solely in the form of Common Stock of the Corporation, subject only to
the Corporation being able to lawfully pay such dividend in accordance with
applicable law. Dividends on the Series E Preferred Stock shall commence to
accrue and are cumulative (whether or not declared) from the date on which such
shares shall have been issued until the date on which such shares are redeemed,
converted or exchanged. Such dividends shall be mandatorily payable as stated
above, in Common Stock of the Corporation at its Current Market Price (as
defined below) on the date of payment, in equal quarterly payments in arrears
on the last day of each fiscal quarter of the Corporation of each year or such
earlier date on which a share of Series E Preferred Stock is redeemed,
converted or exchanged (each such date being referred to herein as a "Dividend
Payment Date"), commencing December 31, 1996, or if not paid on such Dividend
Payment Date by reason of a prohibition against such payment pursuant to the
first sentence of this Subsection (a) (a "Payment Prohibition"), then promptly
when and to the extent no such Payment Prohibition continues to apply;
provided, however, that the dividend payable in respect of the quarter ended on
the first dividend payment date after the date on which such shares shall have
been issued and in respect of any other quarter in which some or all of the
Series E Preferred Stock was not outstanding for the entire quarter shall be
reduced in proportion to the portion of such quarterly period in which such
shares were not outstanding; and provided further, however, that if and to the
extent that, at any dividend payment date, the Corporation shall fail to make
any quarterly dividend payment on the Series E Preferred Stock (which failure
shall only be permitted to the extent a Payment Prohibition applies), such
unpaid dividend amount shall accumulate without interest until paid. Such
dividends shall be paid to the Series E Preferred Stock stockholders of record
on the last business day immediately preceding the date of payment. All
partial dividends paid with respect to shares of the Series E Preferred Stock
shall be paid pro rata to the holders entitled thereto in proportion to the
total amount of dividends to which each is entitled. The "Current Market
Price" of the Corporation's Common Stock on any given day shall be: (i) if the
Common Stock is listed or admitted to unlisted trading privileges on any
exchange registered with the Securities and Exchange Commission as a "national
securities exchange" under the Securities Exchange Act of 1934 (a "National
Securities Exchange"), the arithmetic average of the last sales price of the
shares of Common Stock on the National Securities Exchange in or nearest the
City of New York on which the shares of Common Stock shall be listed or
admitted to unlisted trading privileges (or the quoted closing bid if there be
no sales on such National Securities Exchange) on the ten most recently
completed trading days prior to such day; or (ii) if the Common Stock is not so
listed or admitted, the arithmetic average of the closing sales price of a
share of Common Stock as quoted in The Nasdaq Stock Market on the ten most
recently completed trading days prior to the day in question; or (iii) if the
Common Stock is not
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so quoted, the arithmetic average of the mean between the high and low bid
prices of a share of Common Stock in the over-the-counter market on the ten
most recently completed trading days prior to the day in question as reported
by National Quotation Bureau Incorporated or a similar organization.
(b) So long as any shares of the Series E Preferred Stock are
outstanding, unless all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series E Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) pay or declare any dividends, or make any
other distributions, on any shares of stock ranking junior to the Series E
Preferred Stock in respect of dividends or distribution of assets upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary (a "Liquidation");
(ii) pay or declare any dividends, or make any
other distributions, on any shares of stock ranking on a parity to the Series E
Preferred Stock in respect of dividends or distribution of assets upon
Liquidation, except dividends paid ratably on the Series E Preferred Stock and
all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled; or
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior to the Series E Preferred
Stock in respect of dividends or distribution of assets upon Liquidation,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the Corporation raking junior to the Series E Preferred Stock in respect of
dividends or distribution of assets upon Liquidation.
Except as otherwise provided in this Subsection (b), the Board of
Directors may declare and the Corporation may pay or set apart for payment
dividends and other distributions on the common stock (the "Common Stock") and
the preferred stock (the "Preferred Stock") of the Corporation ranking junior
to or on a parity with the Series E Preferred Stock in respect of dividends or
distributions of assets upon Liquidation, and may redeem, purchase, retire or
otherwise acquire for consideration shares of Common Stock or Preferred Stock
ranking junior to or on a parity with the Series E Preferred Stock in respect
of dividends or distributions of assets upon Liquidation, and the holders of
the Series E Preferred Stock shall not be entitled to share therein.
(c) In the event the Corporation, not being in violation
of the provisions of the preceding paragraph, shall distribute to all holders
of its Common Stock (x) evidences of indebtedness or assets and property other
than cash, (y) capital stock of the Corporation other than Common Stock, or (z)
rights to purchase only (i)
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Common Stock (except in a Rights Offering as defined in Subsection 5(b) below)
or (ii) units consisting of shares of Common Stock and warrants to purchase
shares of Common Stock (all of such distributions collectively hereinafter
called "Shared Distributions"), then the holders of the Series E Preferred
Stock shall participate in such Shared Distributions as if immediately prior to
the record date for determination of stockholders entitled to receive such
Shared Distribution such holders had converted their shares of the Series E
Preferred Stock in to shares of Common Stock.
4. Liquidation Rights. In the event of the Liquidation of the
Corporation, the holders of the Series E Preferred Stock shall be entitled to
have paid to them out of the assets of the Corporation, before any distribution
is made to or set apart for the holders of Common Stock or of any other class
or series of stock of the Corporation ranking junior to the Series E Preferred
Stock in respect of distribution of assets upon Liquidation, an amount equal to
$10. 00 per share (the " Stated Amount"), plus unpaid dividends and Shared
Distributions which have accrued but have not been paid on or prior to the date
of final distribution to holders of the Series E Preferred Stock, and no more.
The liquidation payment with respect to each outstanding fractional share of
the Series E Preferred Stock shall be equal to a ratably proportionate amount
of the liquidation payment with respect to each outstanding share of the Series
E Preferred Stock.
If upon any Liquidation of the Corporation the assets of the
Corporation or proceeds thereof distributable among the holders of shares of
the Series E Preferred Stock and the holders of any stock on a parity with the
Series E Preferred Stock shall be insufficient to pay in full the preferential
amounts payable to such holders, then such assets or the proceeds thereof shall
be distributed among such holders ratably in accordance with the respective
amounts that would be payable on such shares if all amounts payable thereon
were paid in full.
For purposes of this Section 4, the voluntary sale, lease, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Corporation to, or a
consolidation or merger of the Corporation with, one or more corporations shall
not be deemed to be a Liquidation.
5. Redemption.
(a) Shares of the Series E Preferred Stock shall be redeemed by
the Corporation on the first business day (the "Redemption Date") following
the issuance of Common Stock in a Rights Offering (as defined in Subsection
5(b) below) from the proceeds of such Rights Offering at the Stated Amount of
such Series E Preferred Stock (in addition to the payment in Common Stock
pursuant to Subsection 1 (a) above of dividends to the Redemption Date on the
Series E Preferred Stock redeemed) to the extent that the purchase price of the
Common Stock sold in the
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Rights Offering plus the Stated Amount of the Series E Preferred outstanding on
the Redemption Date is in excess of $5,000,000. If less than all of the Series
E Preferred Stock outstanding is redeemed, the Series E Preferred Stock to be
redeemed shall be determined pursuant to the agreement for the initial purchase
of the Series E Preferred Stock. Except as provided in the Subsection 5(a),
the Series E Preferred Stock shall not be subject to redemption. Any Series E
Preferred Stock called for redemption pursuant to this Subsection 5(a) but not
tendered by the holder thereof for redemption shall be deemed cancelled and
shall no longer be treated as outstanding and no dividends or Shared
Distributions thereon or interest on the redemption price shall be paid in
regard to the period on or after the Redemption Date.
(b) The term "Rights Offering" shall refer to any
offering of rights to acquire the Corporation's Common Stock made after October
31, 1996 and prior to June 30, 1997. The Corporation shall not make a Rights
Offering without the consent of all the holders of the Series E Preferred Stock
except on the terms set forth in this Subsection 5(b). Any Rights Offering
shall be an offer, to all holders of record of the Corporation's Common Stock
on or about the second business day preceding the date the registration of the
Rights Offering is declared effective by the Securities and Exchange
Commission, to purchase one share of Common Stock for each share of Common
Stock held of record on such date at a purchase price of $1.00 per share
payable, within 30 days after the effective date of such Rights Offering,
either in cash or by tender of Series E Preferred Stock for exchange for such
Common Stock at the Stated Amount of such Series E Preferred Stock. Any Series
E Preferred Stock tendered in payment of the purchase price of Common Stock in
the Rights Offering at its Stated Amount shall be cancelled but dividends in
Common Stock shall be paid thereon pursuant to Section l(a) to the date of
exchange. Nothing herein or in any other document shall obligate the
Corporation to make any Rights Offering. Other than pursuant to a Rights
Offering or to options, warrants, or other rights outstanding prior to November
1, 1996, the Corporation shall not issue any shares of Common Stock in addition
to these outstanding on October 3 1, 1996 prior to July 1, 1997.
6. Conversion Rights.
(a) If there is a Rights Offering and less than 5,000,000
shares of Common Stock are sold pursuant to the Rights Offering, one share of
Series E Preferred Stock shall be converted into 10 shares of fully paid and
nonassessable Common Stock for each 10 shares or portion thereof of Common
Stock less than 5,000,000 sold in the Rights Offering. Such conversion shall
occur on the first business day (the "Mandatory Conversion Date") immediately
following the expiration of the Rights Offering. If less than all of the
Series E Preferred Stock is required to be converted, the Series E Preferred
Stock to be converted shall be determined pursuant to the agreement for the
initial purchase of the Series E Preferred Stock. Any Series E Preferred Stock
required to be converted pursuant to this Subsection 6(a) but not tendered for
conversion shall
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be deemed cancelled on the Mandatory Conversion Date and shall no longer be
treated as outstanding. Dividends accrued to the Mandatory Conversion Date
shall be paid pursuant to Subsection l(a) on the Series E Preferred Stock
converted but no dividends or Shared Distributions thereon shall be paid in
regard to the period on and after the Mandatory Conversion Date. For all
purposes the holders of record of the Series E Preferred Stock required to be
converted on the Mandatory Conversion Date shall be deemed to have become the
record holder or holders of the Common Stock in to which such Series E
Preferred Stock is convertible on the Mandatory Conversion Date.
(b) Subject to the provisions for adjustment hereinafter
set forth, shares of Series E Preferred Stock may be converted, at the option
of the holder thereof, at any time or from time to time after June 30, 1997
into fully paid and nonassessable whole shares of Common Stock at rate of 10
shares of Common Stock for each share of the Series D Preferred Stock duly
surrendered for conversion. Dividends accrued to the Date of Conversion (as
defined below), shall be paid pursuant to Subsection 1(a) on the Series E
Preferred Stock converted but no dividends or Shared Distributions with respect
to the shares of Series D Preferred Stock converted shall be paid in regard to
the period on and after the Date of Conversion.
(c) Each holder of the Series E Preferred Stock desiring to
exercise such holder's right of conversion pursuant to Subsection 6(b) shall
deliver written notice of election to convert, stating the names and addresses
of the persons to whom the Common Stock is to be issued, and shall surrender
the certificate or certificates for the shares of Series E Preferred Stock to
be converted, duly endorsed or accompanied by proper instruments of transfer
(unless such endorsement or instruments are waived by the Corporation) to the
Corporation during usual business hours at the office of the transfer agent of
the Corporation for the transfer of its Common Stock in Dallas, Texas (or such
other place as may be designated by the Corporation upon written notice to all
holders of the Series E Preferred Stock). Upon receipt by the Corporation of
any such notice of election to convert shares of the Series E Preferred Stock,
and upon surrender of the certificate or certificates therefor, the Corporation
shall execute and deliver, as soon as practicable, to the converting holder, or
to such holder's nominee or nominees, a certificate or certificates for the
number of shares of Common Stock resulting from such conversion, together with
any cash adjustment in lieu of fractional shares as provided in Subsection (e).
For all purposes, the rights of a converting holder, as such, shall cease, and
the person or persons in whose name or names the certificate or certificates
for Common Stock issuable upon such conversion are to be issued shall be deemed
to have become the record holder or holders of such Common Stock at the close
of business on the day (the "Date of Conversion") on which delivery of such
notice or the surrender of the certificate or certificates for such shares
(whichever shall later occur) shall be made.
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(d) The Corporation shall pay all issue costs, if any,
incurred in respect to the Common Stock delivered on conversion; provided,
however, that the Corporation shall not be required to pay transfer or other
taxes, if any, incurred by reason of the issuance or delivery of such Common
Stock in names other than those in which the shares surrendered for conversion
are registered, and no delivery of certificates for such Common Stock shall be
made unless and until there has been paid to the Corporation the amount of any
such taxes, or there shall have been established to the satisfaction of the
Corporation that such taxes have been or are not required to be paid. The
Corporation shall not close its books against the transfer of Series E
Preferred Stock or of Common Stock issued or issuable upon conversion of Series
E Preferred Stock in any manner which interferes with the timely conversion of
Series E Preferred Stock. The Corporation shall assist and cooperate with any
holder of shares of Series E Preferred Stock required to make any required
governmental filings or obtain any governmental approval prior to or in
connection with any conversion of such shares hereunder (including, without
limitation, making any filings required to be made by the Corporation). All
shares of Common Stock which are so issuable shall, when issued, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges. The Corporation shall take all such actions as may be necessary to
assure that all such shares of Common Stock may be so issued without violation
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Common Stock may be listed
(except for official notice of issuance which shall be immediately delivered by
the Corporation upon each such issuance).
(e) The Corporation shall not be required to issue
fractional shares of Common Stock upon conversion of shares of the Series E
Preferred Stock. If more than one share of the Series E Preferred Stock shall
be surrendered for conversion at one time by the same holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of shares so surrendered. If any
fractional interest in a share of Common Stock would be deliverable upon the
conversion of any shares, the Corporation shall, in lieu of delivering such
fractional share, make a cash payment, as an adjustment in respect of such
undelivered fraction of a share, in an amount equal to the same fraction of the
Current Market Price of one share of the Common Stock on the last business day
before the Date of Conversion.
(f) The number of shares of Common Stock into which each
share of the Series E Preferred Stock is convertible (the "Conversion Rate")
shall be subject to adjustment from time to time as follows:
(i) In case the Corporation shall (A) pay a
dividend in or make a distribution of Common Stock on outstanding Common Stock,
(B) subdivide outstanding Common Stock into a larger number of shares of Common
Stock by
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reclassification or otherwise, or (C) combine outstanding Common Stock into a
smaller number of shares of Common Stock by reclassification or otherwise, the
Conversion Rate in effect immediately prior thereto shall be adjusted
proportionately so that the holder of a share of the Series E Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number
of shares of Common Stock that such holder would have owned after the happening
of any of the events described above had such share been converted immediately
prior to the happening of such event. An adjustment made pursuant to this
subparagraph (i) shall become effective retroactively to immediately after the
record date in the case of a share dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination.
(ii) In case of any capital reorganization or
reclassification of the shares of Common Stock (except as provided in
subparagraph (i) above), or in case of any consolidation or merger to which the
Corporation is a party (other than a merger in which the Corporation is the
surviving corporation and which does not result in any capital reorganization
or reclassification of Common Stock), or in case of any sale or conveyance to
another corporation of all or substantially all of the property and assets of
the Corporation, and if, in connection with any such consolidation, merger,
sale or conveyance, shares or other securities or property shall be issuable or
deliverable in exchange for shares of Common Stock, provision shall be made as
part of the terms of such capital reorganization or reclassification,
consolidation, merger, sale or conveyance that the holder of each share of the
Series E Preferred Stock thereafter surrendered for conversion shall have the
right to convert such share into the same kind and amount of stock and other
securities and property as would have been receivable upon such capital
reorganization or reclassification, consolidation, merger, sale or conveyance
by a holder of the number of shares of Common Stock into which such share might
have been converted immediately prior thereto. In any such case, appropriate
provision (as determined to be equitable in the business judgment of the Board
of Directors) shall be made for the application of Section 6 with respect to
the rights and interest thereafter of the holders of the Series E Preferred
Stock to the end that such Section (including adjustments of the Conversion
Rate) shall be reflected thereafter, as nearly as reasonably practicable, in
all subsequent conversions of the Series E Preferred Stock. The Corporation
shall not effect any such consolidation, merger or sale, unless prior to the
consummation thereof, the successor corporation (if other than the Corporation)
resulting from consolidation or merger or the corporation purchasing such
assets assumes by written instrument (in a manner determined to be equitable in
the business judgment of the Board of Directors to the holders of the Series E
Preferred Stock then outstanding), the obligation to deliver to each such
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
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(iii) In case the Corporation shall issue, other
than pursuant to a Rights Offering, pro rata to the holders of shares of its
Common Stock rights or warrants entitling them, during a period not exceeding
30 days after the record date mentioned below, to subscribe for or purchase
only shares of its Common Stock at a price per share less than the average of
the Current Market Price (as defined above) of the Common Stock determined as
of such record date, the number of shares of its Common Stock into which each
share of the Series E Preferred Stock shall be convertible thereafter shall be
determined by multiplying the number of shares of Common Stock into which each
such share was convertible theretofore by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding immediately prior to
such record date plus the number of additional shares of Common Stock offered
for subscription or purchase, and of which the denominator shall be the number
of shares of Common Stock outstanding immediately prior to such record date
plus the number of shares of Common Stock which the aggregate offering price of
the total number of shares being offered would purchase at such Current Market
Price. Such adjustment shall be made whenever such rights or warrants are
issued and shall become retroactively effective immediately after the record
date for the determination of the stockholders entitled to receive such rights
or warrants. To the extent that shares of Common Stock are not delivered after
the expiration of such rights or warrants, the Conversion Rate shall be
readjusted to the Conversion Rate that would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made upon
the basis of delivery of only the number of shares of Common Stock actually
delivered.
(iv) In case the Corporation shall issue, other
than pursuant to a Rights Offering, pro rata to the holders of shares of its
Common Stock rights or warrants to subscribe for or purchase only (A) shares of
its Common Stock except as described in subparagraph (iii) above, or (B) units
consisting of shares of Common Stock and warrants to purchase shares of Common
Stock, the number of shares of its Common Stock into which each share of the
Series E Preferred Stock shall be convertible thereafter shall be determined by
multiplying the number of shares of Common Stock into which each such share was
convertible theretofore by a fraction, of which the numerator shall be the
Current Market Price for a share of Common Stock determined as of the record
date mentioned below, and of which the denominator shall be such Current Market
Price less the fair market value (as determined in the business judgment of the
Board of Directors) as of such record date of the rights or warrants
distributed pro rata to one of the outstanding shares of Common Stock. Such
adjustment shall be made whenever such distribution is made and shall become
retroactively effective immediately after the record date for the determination
of stockholders entitled to receive such rights or warrants.
(v) In case the Corporation shall issue or sell
any shares (including treasury shares) of Common Stock ("Additional Shares of
Common Stock"),
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whether or not subsequently reacquired or retired by the Corporation, other
than shares of Common Stock issued (A) upon exercise of warrants to purchase
shares of Common Stock issued prior to or substantially simultaneously with the
first issuance of shares of the Series E Preferred Stock, (B) pursuant to any
stock option plan or other stock incentive or stock ownership plan for
employees or management of the Corporation, (C) pursuant to a Rights Offering,
or (D) in payment of dividends on the Series E Preferred Stock, for a cash
purchase price per share that is less than the quotient of $10.00 divided by
the number of shares of Common Stock into which each share of Series E
Preferred Stock was theretofore convertible (such quotient, the "Conversion
Price"), the number of shares of Common Stock into which each share of the
Series E Preferred Stock shall be convertible thereafter shall be determined by
multiplying the number of shares of Common Stock into which each such share was
convertible theretofore by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding immediately after such issuance or
sale, and of which the denominator shall be the number of shares of Common
Stock outstanding immediately prior to such issuance or sale plus the number of
shares of Common Stock that the aggregate consideration received by the
Corporation for such Additional Shares of Common Stock so issued or sold would
purchase at the Conversion Price. Such adjustment shall be made whenever any
such Additional Shares of Common Stock are so issued or sold.
The foregoing provisions for adjustment of the Conversion Rate shall
apply in each successive instance in which an adjustment is required thereby.
No adjustment in the Conversion Rate resulting from the application of the
foregoing provisions is to be given effect unless, by making such adjustment,
the Conversion Rate in effect immediately prior to such adjustment would be
changed thereby by 1% or more, but any adjustment that would change the
Conversion Rate by less than 1% is to be carried forward and given effect in
making future adjustments; provided, however, that each adjustment of the
conversion Rate shall in all events be made not later than three years from the
date such adjustment would have been required to be made except for the
provisions of this sentence. All calculations under this Section 6 shall be
made to the nearest one-hundredth (1/100th) of a share. Shares of Common Stock
owned by or held for the account of the Corporation shall not be deemed to be
outstanding for the purposes of any computation made under this Section 6.
Whenever the number of shares of Common Stock deliverable upon the
conversion of shares of the Series E Preferred Stock shall be adjusted pursuant
to the provisions hereof, the Corporation shall forthwith file at its principal
office and with any transfer agent for the Series E Preferred Stock and for the
Common Stock a statement, signed by the President or one of the Vice-Presidents
of the Corporation and by its Treasurer or one of its Assistant Treasurers,
stating the adjusted number of shares of Common Stock deliverable per share of
the Series E Preferred Stock and setting forth in reasonable detail, the method
of calculation and the facts requiring such adjustment
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and upon which such calculation is based, and shall mail a notice of such
adjustment to each holder of record of the Series E Preferred Stock. Each
adjustment shall remain in effect until a subsequent adjustment hereunder is
required.
In the event:
(x) of the occurrence of any of the events referred to in
subparagraphs (i), (ii), (iii) and (iv) above; or
(y) of the Liquidation of the Corporation;
then the Corporation shall cause to be mailed to any transfer agent for the
Series E Preferred Stock and to the holders of record of the outstanding shares
of the Series E Preferred Stock at least 20 days prior to the applicable date
hereinafter specified, a notice describing the event and stating the effect, if
any, that such event will have upon the Conversion Rate, and (A) the date on
which a record is to be taken for the purpose of a distribution referred to in
subparagraphs (i), (iii) or (iv) above, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to such
distribution are to be determined, or (B) the date on which any subdivision,
combination or other capital reorganization or reclassification or any
consolidation, merger, sale or conveyance referred to in subparagraphs (i) or
(ii) above or such Liquidation is expected to become effective.
The Corporation will at all times reserve and keep available for
issuance upon conversion of the Series E Preferred Stock the number of shares
of Common Stock that is equal to the number of shares of the Series E Preferred
Stock outstanding multiplied by the Conversion Rate; provided, however, that
nothing contained herein shall be construed to preclude the Corporation from
satisfying its obligations in respect of the conversion of the outstanding
shares of the Series E Preferred Stock by delivery of shares of Common Stock
that are held in the treasury of the Corporation. The Corporation covenants
that all shares of Common Stock that shall be issued upon conversion of the
shares of the Series E Preferred Stock will, upon issue, be fully paid and
nonassessable and not subject to any preemptive rights.
The shares of Common Stock issuable upon conversion of the shares of
the Series E Preferred Stock when the same shall be issued in accordance with
the terms of the Series E Preferred Stock are hereby declared to be and shall
be fully paid nonassessable shares of Common Stock and not liable to any calls
or assessments thereon, and the holders thereof shall not be liable for any
further payments in respect thereof.
"Common Stock" when used in Section 6 with reference to the Common
Stock into which the Series E Preferred Stock is convertible and when used in
Section 8 below, shall mean only Common Stock as authorized by the Restated
Certificate of
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Incorporation of the Corporation, as amended to the date hereof, and any shares
into which such Common Stock may thereafter have been changed, and, when
otherwise used in Section 6 and when used in Section 3, shall also include
shares of the Corporation of any other class or series, whether now or
hereafter authorized, that ranks or is entitled to participation, as to payment
of assets upon Liquidation and payment of dividends, substantially on a parity
with such Common Stock or other class of shares into which such Common Stock
may have been changed.
The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 6
and in the taking of all such action as may be necessary or appropriate in
order to protect the conversion privilege of the holders of the Series E
Preferred Stock against dilution or other impairment. Without limiting the
generality of the foregoing, the Corporation (1) will not increase the par
value of any shares of stock receivable upon conversion of the Series E
Preferred Stock above the Conversion Price then in effect, and (2) will take
all such actions as may be necessary or appropriate in order that the
Corporation may validly and legally issue fully paid and nonassessable shares
of stock upon the conversion in full of all Series E Preferred Stock from time
to time outstanding.
7. Voting Rights. Except as otherwise required by applicable
law, the holders of the Series E Preferred Stock shall have no voting rights or
powers.
8. Ranking. The Series E Preferred Stock shall rank senior to
the Common Stock (as defined in Section 6) and to all other series of the
Corporation's preferred stock as to the payment of dividends and Shared
Distributions, and as to the distribution of the Corporation's assets, unless
the terms and designations of any such series of preferred stock shall provide
otherwise, provided, however, that in no event shall the Series E Preferred
Stock rank junior to any other class or series of the Corporation's capital
stock.
9. Other Rights. The holders of the Series E Preferred Stock
shall not have any other preferences or special rights.
10. Registration of Transfer. The Corporation shall keep at its
principal office a register for the registration of Series E Preferred Stock.
Upon the surrender of any certificate representing Series E Preferred Stock at
such place, the Corporation shall, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefor representing in the aggregate
the number of shares of Series E Preferred Stock
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represented by the surrendered certificate. Each such new certificate shall be
registered in such name (upon satisfactory compliance with all applicable
securities laws) and shall represent such number of Shares as is requested by
the holder of the surrendered certificate and shall be substantially identical
in form to the surrendered certificate, and dividends shall accrue on the
Series E Preferred Stock represented by such new certificate from the date to
which dividends have been fully paid on such Series E Preferred Stock
represented by the surrendered certificate.
11. Replacement. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation
of any certificate evidencing shares of any class of Series E Preferred Stock,
and in the case of any such loss, theft or destruction, upon receipt of
indemnity reasonably satisfactory to the Corporation (provided that the
holder's own agreement shall be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Corporation shall (at its
expense) execute and deliver in lieu of such certificate a new certificate of
like kind representing the number of shares of such class represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate, and dividends shall accrue on
the Series E Preferred Stock represented by such new certificate from the date
to which dividends have been fully paid on such lost, stolen, destroyed or
mutilated certificate.
12. Amendment and Waiver. Any amendment, modification or waiver
shall be binding or effective with respect to any provision of Sections 1 to 12
hereof with the prior written consent of all the holders of the Series E
Preferred Stock outstanding at the time such action is taken.
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IN WITNESS WHEREOF, the undersigned officers of the Corporation have
executed and subscribed this Certificate this _____ day of November, 1996.
AMERICAN ECOLOGY CORPORATION
By:
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Name:
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Title:
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ATTEST:
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Name:
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Title:
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