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EXHIBIT 4.1
3CI COMPLETE COMPLIANCE CORPORATION
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PREFERRED STOCK
We, Charles D. Crochet and Curtis W. Crane, the President and
Secretary, respectively, of 3CI Complete Compliance Corporation, a Delaware
corporation (the "Corporation") do hereby certify that the following resolution
of the Board of Directors of the Corporation has been duly adopted in
accordance with authority expressly accorded to the Board of Directors by
Article 4 of the Certificate of Incorporation, as amended, of the Corporation
(the "Certificate of Incorporation"), and in accordance with the provisions of
Section 151 of the Delaware General Corporation Law:
RESOLVED, that the Board of Directors of the Corporation, pursuant to
authority expressly vested in it by the provisions of the Certificate of
Incorporation of the Corporation, hereby establishes a series of preferred
stock of the Corporation, authorizes the issuance thereof, and hereby fixes the
designations, rights, preferences, privileges and voting powers, in addition to
those set forth in the Certificate of Incorporation, as follows:
1. Designation of Series. One million shares of the preferred
stock, without par value, of the Corporation shall constitute a series of
preferred stock designated as Series A Preferred Stock (the "Series A Preferred
Stock") with the designations, rights, preferences, privileges and voting
powers set forth below:
2. Dividends.
(a) The holders of Series A Preferred Stock shall not be
entitled to receive any fixed dividends and shall be entitled to
receive such cash dividends as may be declared from time to time by
the Board of Directors in its discretion, from any assets legally
available for the payment of dividends; however, for so long as any
shares of Series A Preferred Stock shall be outstanding, without the
written consent of the holders of a majority in interest of the Series
A Preferred Stock, the Corporation shall not (i) purchase or redeem
any shares of its common stock, par value $.01 per share ("Common
Stock"), or (ii) declare, pay or set apart for any payment any
dividend on its Common Stock. Notwithstanding the foregoing, the
holders of shares of Series A Preferred Stock shall be entitled to
receive, when, and if declared by the Corporation's Board of Directors
out of assets of the Corporation legally available for such payment,
cumulative dividends from the second anniversary of the original
issuance date of the Series A Preferred Stock, at the rate of $.5775
per share per annum, and no more, payable quarterly on the 15th day of
July, October, January and April of each year, commencing with a
payment on July 15, 1999, accrued from the second anniversary of the
original issuance date of the Series A Preferred Stock. Such dividends
shall be cumulative
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from the second anniversary of the original issuance date of the
Series A Preferred Stock. Accruals of dividends shall not bear
interest.
(b) Before any dividends (other than dividends payable in
capital stock ranking junior to the Series A Preferred Stock both as
to dividends and upon liquidation) on, or any distribution in respect
of, any class or classes of stock of the Corporation ranking junior to
the Series A Preferred Stock as to dividends or upon liquidation,
shall be declared or paid or set apart for payment, and before any
purchase or redemption of any such stock, the holders of Series A
Preferred Stock shall have received payment in full of all dividends,
if any, in arrears on the Series A Preferred Stock. No dividend shall
be declared on any series of preferred stock ranking on a parity with
the Series A Preferred Stock as to dividends unless there shall
likewise be or have been declared on the shares of Series A Preferred
Stock at the time outstanding a dividend of like kind for all
dividends periods coinciding with or ending before such dividend
period, ratably in proportion to the respective annual dividend rates
per annum fixed therefor as herein or in the Certificate of
Incorporation provided.
3. Redemption. The Series A Preferred Stock shall be subject to
redemption by the Corporation as follows:
(a) The shares of Series A Preferred Stock may be
redeemed at any time on or after the second anniversary of the
original issuance date of the Series A Preferred Stock at the option
of the Corporation in whole or, from time to time, in part, in any
such case at a per share redemption price equal to $7.00, plus accrued
dividends, if any.
(b) Notice of every redemption of Series A Preferred
Stock shall be given by mailing notice not less than 30 days before
the date fixed for such redemption to each holder of record of shares
of Series A Preferred Stock so to be redeemed, and shall be
sufficiently given if the Corporation shall cause a copy thereof to be
mailed to such holders of record at their respective addresses as the
same shall appear on the books of the Corporation, by first class
mail, postage prepaid; provided, however, that the failure to mail
such notice to one or more of such holders shall not affect the
validity of such redemption as to the other holders.
(c) In case of redemption of only a part of the Series A
Preferred Stock at the time outstanding, the shares to be redeemed
shall be selected by lot.
(d) If any notice of redemption shall have been duly
given or if the Corporation shall have granted to a bank or trust
company irrevocable written authorization promptly to give or complete
such notice, and if, on or before the redemption date specified
therein, all funds necessary for such redemption shall have been
deposited by the Corporation with the bank or trust company designated
in such notice, in trust for the pro rata benefit of the holders of
the shares so called for redemption, then, notwithstanding that any
certificate for shares so called for redemption shall not have been
surrendered for cancellation, from and after the time of such deposit
(or from and after the redemption date if such notice shall fail to
state that the holders of the shares so called for redemption may
receive their redemption price at any time after such deposit) all
shares with respect to which such deposit shall have
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been made shall no longer be deemed to be outstanding, and all rights
with respect to such shares forthwith shall cease and terminate,
except only the right of the holders of the certificates therefor,
upon surrender thereof, to receive the redemption price thereof out of
the funds so deposited, without interest, and the right to exercise,
on or before the close of business on the date fixed for redemption,
any privileges of conversion applicable to the Series A Preferred
Stock. Any interest accrued on such funds shall be paid to the
Corporation from time to time.
(e) All funds so set aside or deposited, as the case may
be, and unclaimed at the end of one year from such redemption date
shall be released or repaid to the Corporation, after which the
holders of the shares so called for redemption shall look only to the
Corporation for the payment thereof; provided, however, that any funds
set aside or deposited which shall not be required for redemption
because of the exercise of any privilege of conversion after the date
of setting aside or deposit, as the case may be, shall be released or
repaid to the Corporation immediately after such exercise.
(f) Any shares of the Series A Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation or into Common
Stock shall be deemed retired and shall be canceled and may not under
any circumstances thereafter be reissued or otherwise disposed of by
the Corporation, and the Corporation shall from time to time and at
least once each year cause all such shares to be retired in the manner
provided by law.
4. Conversion of Series A Preferred Stock.
(a) The Series A Preferred Stock shall be convertible at
the option of the record holder thereof, at any time after the second
anniversary of the original issuance thereof, in whole, or from time
to time in part, in the manner hereinafter provided, into Common
Stock. Except as otherwise specifically provided herein, no payment or
adjustment shall be made upon such conversion for dividends on any
shares of Series A Preferred Stock which shall be converted or for the
declaration or payment of any dividend on or other distribution in
respect of any shares of Common Stock issuable upon such conversion.
(b) The Series A Preferred Stock may be converted at any
time on or after the second anniversary of the original issuance
thereof into full shares of Common Stock of the Corporation based on a
Conversion Rate (defined below) of Series A Preferred Stock to Common
Stock equal to $7.00 divided by the Market Price (defined below) of
the Common Stock on the date of the related Conversion Notice (defined
below) (the conversion rate from time to time in effect being
hereinafter referred to as the "Conversion Rate"); provided, however,
that the Conversion Rate of Series A Preferred Stock to Common Stock
shall never be greater than 1 to 7 (i.e., all 1,000,000 shares of
Series A Preferred Stock shall be convertible into an aggregate of no
more than 7,000,000 shares of Common Stock); and provided further that
the Conversion Rate of Series A Preferred Stock to Common Stock shall
never be less than 7 to 1 (i.e., all 1,000,000 shares of Series A
Preferred Stock shall be convertible into no fewer than an aggregate
of 1,000,000 shares of Common Stock), subject to such adjustments, if
any, of the Conversion Rate and the securities or other property
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issuable upon such conversion pursuant to the provisions of
subparagraph (f) hereof. If at any time shares of Series A Preferred
Stock are presented for conversion, the Company does not have
sufficient shares of Common Stock authorized for issuance upon
conversion thereof, then the converting holder shall receive the
maximum number of shares of Common Stock available for issuance by the
Company upon such conversion, and with respect to the remaining shares
of Series A Preferred Stock that the Company is unable to convert to
Common Stock, the converting holder shall receive a note of the
Company (a "Conversion Note") in a principal amount equal to the
number of shares of Series A Preferred Stock that remains unconverted
times $7.00, such Conversion Note to bear interest at the rate of
8.25% per annum, with such interest to be cumulative from the date of
original issuance of the Series A Preferred Stock. If more than one
holder of Series A Preferred Stock presents shares of Series A
Preferred Stock for conversion, and the Company does not have
sufficient shares of Common Stock authorized for issuance upon such
conversion, then the number of shares of Common Stock issuable to each
such converting holder shall be allocated pro rata among all
converting holders based on the number of shares of Series A Preferred
Stock presented for conversion, and each such converting holder shall
receive a Conversion Note in the principal amount determined as
provided in this paragraph (b).
(c) To convert Series A Preferred Stock into Common
Stock, a holder of Series A Preferred Stock shall send to the
Secretary of the Company a dated notice (a "Conversion Notice")
setting for the number of shares of Series A Preferred Stock to be
converted, along with the certificate representing the Series A
Preferred Stock to be converted. Upon receipt of a Conversion Notice
and the surrendered certificate representing the Series A Preferred
Stock to be converted into Common Stock, the Corporation shall cause a
certificate representing the Common Stock issued pursuant to such
conversion (and, if applicable, a Conversion Note in the principal
amount determined as set forth in paragraph (b) above) to be delivered
to the converting holder, along with a certificate representing any
shares of Series A Preferred Stock that were not converted into Common
Stock.
(d) All shares of Series A Preferred Stock that have not
been redeemed or converted into Common Stock on or before the fifth
anniversary of the original issuance of the Series A Preferred Stock
shall automatically, without further action of the Company or any
holder of Series A Preferred Stock, be converted into Common Stock
based on the Conversion Rate then in effect. Upon such automatic
conversion, the Company shall send a notice to each record holder of
Series A Preferred Stock that such shares of Series A Preferred Stock
have been converted into Common Stock, along with appropriate
instructions for the surrender of certificates representing Series A
Preferred Stock in exchange for certificates representing the Common
Stock into which such Series A Preferred Stock has been converted.
Upon automatic conversion of Series A Preferred Stock pursuant to this
paragraph, the shares of Series A Preferred Stock shall no longer be
considered outstanding, and the certificates representing such Series
A Preferred Stock shall be void for all purposes except for the
purpose of surrender to the Company in exchange for the certificates
representing the Common Stock into which such Series A Preferred Stock
was converted.
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(e) Market Price means (i) the closing sale price on the
date of a Conversion Notice of a share of Common Stock as reported on
the principal securities exchange on which the shares of Common Stock
are then listed or admitted to trading or (ii) if not so listed, the
average of the closing bid and ask prices for a share of Common Stock
on that date as quoted on the Nasdaq National Market System or Nasdaq
Small-Cap Market or (iii) if not quoted on Nasdaq, the average of
closing bid and ask prices for a share of Common Stock as quoted by
the National Quotations Bureau's pink sheets or the National
Association of Securities Dealer's OTC Bulletin Board System. If the
price of a share of Common Stock shall not be so quoted, "Market
Price" shall mean the fair market value of a share of Common Stock as
the holders of the Series A Preferred Stock of the Corporation shall
mutually agree or, in the absence of such an agreement, as determined
by an investment banking firm, with expertise in the Corporation's
area of business, selected by the holders of the Series A Preferred
Stock and approved by the Corporation, such approval not to be
unreasonably withheld.
(f) The Conversion Rate shall be subject to the following
adjustments:
(i) While any shares of Series A Preferred Stock
are outstanding, in case the Corporation shall subdivide the
outstanding shares of Common Stock into a greater number of
shares of Common Stock or combine the outstanding shares of
Common Stock into a smaller number of shares of Common Stock,
the Conversion Rate in effect immediately before such
subdivision or combination, as the case may be, shall be
proportionately increased or decreased (adjusted to the
nearest, or if there shall be no nearest, then to the next
lower, thousandth of a share of Common Stock), as the case may
require, such increase or decrease, as the case may be, to
become effective at the opening of business on the day
following the day upon which such subdivision or combination
becomes effective.
(ii) No adjustment of the Conversion Rate shall be
made by reason of the issuance of shares of Common Stock in
exchange for cash, property, or services.
(iii) In case of any reclassification or change of
outstanding shares of Common Stock, or in case of any
consolidation or merger of the Corporation with or into
another corporation, or in case of any sale or conveyance to
another corporation of all or substantially all of the
property of the Corporation, each holder of shares of the
Series A Preferred Stock then outstanding shall have the right
thereafter, so long as his conversion right hereunder shall
exist, to convert such shares into the kind and number or
amount of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation,
merger, sale or conveyance, by a holder of the number of
shares of Common Stock of the Corporation into which such
shares of the Series A Preferred Stock might have been
converted immediately before such reclassification, change,
consolidation, merger, sale, or conveyance, and shall have no
other conversion rights under these provisions; provided, that
effective provision shall be made, in the articles or
certificate of incorporation of the resulting or surviving
corporation or otherwise, so that the
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provisions set forth herein for the protection of the
conversion rights of the Series A Preferred Stock shall
thereafter be applicable, as nearly as reasonably may be, to
any such other shares of stock and other securities and
property deliverable upon conversion of the Series A Preferred
Stock remaining outstanding or other convertible preferred
stock received by the holders in place thereof; and provided,
further, that any such resulting or surviving corporation
shall expressly assume the obligation to deliver, upon the
exercise of the conversion privilege, such shares, securities
or property as the holders of the Series A Preferred Stock
remaining outstanding, or other convertible preferred stock
received by the holders in place thereof, shall be entitled to
receive pursuant to the provisions hereof, and to make
provisions for the protection of the conversion right as above
provided. The subdivision or combination of shares of Common
Stock at any time outstanding into a greater or lesser number
of shares of Common Stock (whether with or without par value)
shall not be deemed to be a reclassification of the shares of
Common Stock of the Corporation for the purposes of this
subparagraph (iii).
(g) No fraction of a share of Common Stock shall be
issued upon any conversion, but, in lieu thereof, there shall be paid,
to the holder of shares of Series A Preferred Stock surrendered for
conversion as soon as practicable after the date such shares of Series
A Preferred Stock are surrendered for conversion, an amount in cash
equal to the same fraction of the market value of a full share of
Common Stock as shall be determined, in good faith by the board of
directors of the Corporation.
5. Dissolution. In the event of the dissolution, liquidation or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
or in the event of its insolvency, the assets of the Corporation shall be
distributed among the holders of its capital stock in accordance with the
following schedule of priorities and preferences:
(a) There shall be paid to the holders of the Series A
Preferred Stock an amount equal to that which would have been payable
pursuant to Section 3(a) if the Series A Preferred Stock had been
redeemed on the date of such payment before any distribution of assets
or payment shall be made to the holders of any other class of capital
stock of the Corporation. If the assets of the Corporation available
for distribution to the holders of Series A Preferred Stock shall be
insufficient to permit payment to the holders of the Series A
Preferred Stock of the full amount or amounts aforesaid, then the
entire assets of the Corporation shall be distributed ratably among
the holders of the Series A Preferred Stock then outstanding according
to the number of shares held by each.
(b) After the amounts provided by subparagraph (a) above
have been paid or distributed, any assets remaining shall be paid to
or distributed among the holders of Common Stock pro rata on a
per-share basis.
(c) Neither the consolidation, nor merger of the
Corporation into or with another corporation or corporations, nor the
merger or consolidation of another corporation or corporations with or
into the Corporation, nor a reorganization of the Corporation, nor the
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purchase or redemption of all or part of the outstanding shares of any
class or classes of the stock of the Corporation, nor a sale or
transfer of the property and business of the Corporation as, or
substantially as, an entity, shall be deemed a liquidation,
dissolution, or winding up of the affairs of the Corporation, within
the meaning of any of the provisions of this Section 5.
6. Voting Rights.
(a) Generally. Except as otherwise required by law or
expressly provided for herein, the holders of Series A Preferred Stock shall
have no voting rights.
(i) Defaults on Series A Preferred Stock. If and
when the Corporation shall be in default in the payment of dividends
on the Series A Preferred Stock, and such default continues for a
period of two fiscal quarters, then the holders of the outstanding
shares of Series A Preferred Stock, voting separately as a single
class, shall become entitled to elect two directors of the
Corporation, such additional directors to serve in addition to the
directors then in office. Such right to elect additional directors
may be exercised (A) by action taken by the written consent of the
holders of a majority of the shares of Series A Preferred Stock then
outstanding, (B) at any annual meeting of stockholders or (C) within
the limitations hereinafter provided, at a special meeting of
stockholders held for such purpose. If such default shall occur more
than two fiscal quarters preceding the date of the next annual meeting
of stockholders as fixed by the Bylaws of the Corporation, then a
special meeting of the holders of the Series A Preferred Stock may,
and upon the written request of the holders of not less than
one-fourth of the number of shares of Series A Preferred Stock then
outstanding, addressed to the Secretary of the Corporation, shall, be
called by the Secretary of the Corporation, such meeting to be held
within 60 days after such call and within 60 days after the delivery
to the Secretary of such request. Such additional directors, whether
elected by written consent or at an annual or a special meeting, shall
serve until the next annual meeting and until their successors shall
be duly elected and qualified, unless their term shall sooner
terminate pursuant to the provisions of this subparagraph. At any
meeting for the purpose of electing such additional directors, the
holders of a majority of the shares of Series A Preferred Stock then
outstanding shall constitute a quorum, and any such meeting shall be
valid notwithstanding that a quorum of the outstanding shares of any
other class or classes shall be present, the number of directors
constituting the whole board of directors shall be deemed to be
increased by a number sufficient to carry out the provisions of this
subparagraph. If a vacancy shall occur in the board of directors by
reason of the death, resignation, or inability to act of any such
additional director, such vacancy shall be filled only by vote of the
holders of the outstanding shares of Series A Preferred Stock, voting
separately as a single class, acting by written consent or at any
annual meeting or at a special meeting of the holders of shares of the
Series A Preferred Stock requested, called and held in the same manner
as the special meeting hereinabove referred to. Whenever a default in
the Corporation's obligations to pay dividends on the Series A
Preferred Stock has been cured by the Corporation, then the right of
the holders of the Series A Preferred Stock to elect directors shall
thereupon cease, and, if any such additional directors were elected by
the holders of shares of Series A Preferred Stock, voting separately
as a class, the term of
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such directors shall then terminate, and the number of directors
constituting the whole board of directors shall be reduced by the
number of such terminated directors. The above provisions for the
vesting of such voting rights in the holders of Series A Preferred
Stock shall apply, however, in case of any subsequent default under
this subparagraph.
7. Exclusion of Other Rights. Except as otherwise required by
law, the shares of Series A Preferred Stock shall not have any preferences or
relative participating, optional or other special rights except as specifically
set forth herein. No shares of any class of the corporation's capital stock
shall have more preemptive or subscription rights.
IN WITNESS WHEREOF, this Certificate of Designation has been signed by
Charles D. Crochet and Curtis W. Crane, the President and the Secretary,
respectively, of the Corporation, as of the 24 day of June, 1997.
3CI COMPLETE COMPLIANCE CORPORATION
By: /s/ Charles D. Crochet
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Charles D. Crochet, President
ATTEST:
/s/ Curtis W. Crane
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Curtis W. Crane, Secretary