1
EXHIBIT 4.1
GETTY REALTY CORP.
FORM OF ARTICLES SUPPLEMENTARY
____________ SHARES
SERIES ___ PARTICIPATING CONVERTIBLE REDEEMABLE PREFERRED STOCK
Section (1) Number of Shares and Designation. ____________ shares of
Preferred Stock shall be designated as Series ___ Participating Convertible
Redeemable Preferred Stock (the "Series ___ Preferred Stock"), subject, however,
to increase or decrease upon further action of the Board of Directors in the
future as permitted by the Charter and applicable law.
Section (2) Definitions. For purposes of the Series ___ Preferred Stock,
the following terms shall have the meanings indicated:
"Affiliate" of a person means a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the person specified.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to perform
any of its responsibilities with respect to the Series ___ Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York, New
York are not required to be open.
"Call Date" shall have the meaning set forth in paragraph (b) of
Section 5 hereof.
"Capital Gains Amount" shall have the meaning set forth in paragraph
(d) of Section 3 hereof.
"Code" shall have the meaning set forth in paragraph (d) of Section 3
hereof.
"Common Stock" shall mean the Common Stock, $.01 par value per share,
of the Corporation.
"Conversion Rate" shall initially mean ________, subject to adjustment
pursuant to paragraph (d) of Section 7 hereof.
"Cumulative Dividends" shall mean all accumulated, accrued and unpaid
dividends.
"Current Market Price" of publicly traded shares of Common Stock or
any other class or series of stock or other security of the Corporation or of
any similar security of any other issuer for any day shall mean the last
reported sales price, regular way on
2
such day, or, if no sale takes place on such day, the average of the reported
closing, bid and asked prices regular way on such day, in either case as
reported on the New York Stock Exchange, Inc. ("NYSE") or, if such security is
not listed or admitted for trading on the NYSE, on the principal national
securities exchange on which such security is listed or admitted for trading or,
if not listed or admitted for trading on any national securities exchange, on
the National Market of the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or, if such security is not quoted on such
National Market, the average of the closing bid and asked prices on such day in
the over-the-counter market as reported by NASDAQ or, if bid and asked prices
for such security on such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished by any NYSE member
firm regularly making a market in such security selected for such purpose by the
Chief Executive Officer or the Board of Directors or if any class or series of
securities are not publicly traded, the fair value of the shares of such class
as determined reasonably and in good faith by the Board of Directors of the
Corporation.
"Distribution" shall have the meaning set forth in paragraph (d)(iii)
of Section 7 hereof.
"Dividend Payment Date" shall have the meaning set forth in Section 3
hereof.
"Dividend Record Date" shall have the meaning set forth in Section 3
hereof.
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of Common Stock during five (5) consecutive Trading Days
selected by the Corporation commencing not more than twenty (20) Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex" date with respect to the issuance or distribution requiring
such computation. The term "'ex' date", when used with respect to any issuance
or distribution, means the first day on which the share of Common Stock trades
regular way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that day's
Current Market Price.
"Issue Date" shall mean _______________, 20__.
"Junior Stock" shall mean the Common Stock and any other class or
series of stock of the Corporation designated by the Board of Directors over
which the shares of Series ___ Preferred Stock have preference or priority in
the payment of dividends or in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
"MGCL" shall mean the Maryland General Corporation Law, as amended
from time to time.
"Parity Stock" shall have the meaning set forth in paragraph (a) of
Section 8 hereof.
"Permitted Common Stock Cash Distributions" shall mean cash dividends
or cash distributions out of current or accumulated funds from operations (as
determined by the Board of Directors on a basis consistent with the policies and
practices adopted by the Corporation for reporting publicly its results of
operations and financial condition), and cash dividends which result in a
payment of an equal cash dividend to holders of the Series ___ Preferred Stock
and Parity Stock pursuant to clause (ii) of paragraph (a) of Section 3 hereof.
2
3
"Person" shall mean any individual, firm, partnership, corporation or
other entity and shall include any successor (by merger or otherwise) of such
entity.
"Redemption Price" shall have the meaning set forth in paragraph (a)
of Section 5 hereof.
"Senior Stock" shall have the meaning set forth in Section 8 hereof.
"Series ___ Preferred Stock" shall have the meaning set forth in
Section 1 hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to an
authorization of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of stock of the
Corporation.
"Total Dividends" shall have the meaning set forth in paragraph (d) of
Section 3 hereof.
"Trading Day", as to any securities, shall mean any day on which such
securities are traded on the NYSE or, if such securities are not listed or
admitted for trading on the NYSE, on the principal national securities exchange
on which such securities are listed or admitted or, if such securities are not
listed or admitted for trading on any national securities exchange, on the
National Market of NASDAQ or, if such securities are not quoted on such National
Market, in the securities market in which such securities are traded.
"Transfer Agent" means Registrar & Transfer Company or such other
entity as may be designated by the Board of Directors or their designee as the
transfer agent for the Series ___ Preferred Stock.
Section (3) Dividends.
(a) The holders of Series ___ Preferred Stock shall be entitled to
receive, when, as and if authorized by the Board of Directors out of assets
legally available for that purpose, cumulative dividends in cash in an amount
per share of Series ___ Preferred Stock equal to the greater of (i) $________
per annum (measured by the fiscal year of the Corporation) or (ii) the cash
dividends declared on the number of shares of Common Stock, or portion thereof,
into which a share of Series ___ Preferred Stock is convertible, during any
fiscal year of the Corporation or portion thereof that the Series ___ Preferred
Stock was outstanding. Such dividends shall be payable quarterly in arrears, on
or before ____________, ____________, ____________ and ____________ (each a
"Dividend Payment Date") to holders of record on such date, not more than sixty
nor less than ten days preceding such Dividend Payment Date, fixed for such
purpose by the Board of Directors (a "Dividend Record Date"). Dividends payable
on each Dividend Payment Date shall be computed by dividing the annual dividend
rate by four. In the event that dividends declared on the number of shares of
Common Stock, or portion thereof, into which a share of Series ___ Preferred
Stock is convertible, in any quarter exceed $________, then such amount (less
any dividends paid per share to holders of Series ___ Preferred Stock in
previous quarters of the fiscal year, to the extent that such amounts exceed the
3
4
dividends declared on the number of shares of Common Stock, or portion thereof,
into which a share of Series ___ Preferred Stock is convertible for such
quarters) shall be paid with respect to each share of Series ___ Preferred Stock
on the Dividend Payment Date for the quarter. For any remaining quarters in the
fiscal year, holders of Series ___ Preferred Stock shall receive an amount per
share equal to the dividends declared on the number of shares of Common Stock,
or portion thereof, into which a share of Series ___ Preferred Stock is
convertible. In the event that dividends declared on the number of shares of
Common Stock, or portion thereof, into which a share of Series ___ Preferred
Stock is convertible, do not in any quarter exceed $________, any excess in the
fiscal year of the dividends declared on the number of shares of Common Stock,
or portion thereof, into which a share of Series ___ Preferred Stock is
convertible over $________ shall be paid with respect to each share of Series
___ Preferred Stock in lieu of the fourth quarter dividend otherwise payable.
Such dividends shall be cumulative from the Issue Date, whether or not such
dividends shall be authorized or there shall be assets of the Corporation
legally available for the payment of such dividends. Each such dividend shall be
payable to the holders of record of the Series ___ Preferred Stock, as they
appear on the stock records of the Corporation at the close of business on the
Dividend Record Date. The amount of Cumulative Dividends on any share of Series
___ Preferred Stock, or fraction thereof, at any date shall be the amount of any
dividends thereon calculated at the applicable rate to and including such date,
whether or not earned or authorized, which have not been paid in cash.
(b) If the Series ___ Preferred Stock is outstanding for less than any
full fiscal year of the Corporation, the holders shall be entitled to receive
the greater of the amount set forth in clause (i) or (ii) of paragraph (a) of
this Section 3 multiplied by a fraction the numerator of which equals the number
of days during such fiscal year that such shares of Series ___ Preferred Stock
were outstanding and the denominator of which is 360. Holders of Series ___
Preferred Stock shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of cumulative dividends, as herein provided, on the
Series ___ Preferred Stock. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the Series
___ Preferred Stock that may be in arrears.
(c) So long as any of the shares of Series ___ Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of or options, warrants or rights to subscribe for or purchase shares of Junior
Stock) shall be authorized or paid or set apart for payment by the Corporation
or other distribution of cash or other property authorized or made directly or
indirectly by the Corporation with respect to any shares of Junior Stock or
Parity Stock, nor shall any shares of Junior Stock or Parity Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any
shares of any such stock) directly or indirectly by the Corporation (except by
conversion into or exchange for Junior Stock), nor shall any other cash or other
property otherwise be paid or distributed to or for the benefit of any holder of
shares of Junior Stock or Parity Stock in respect thereof, directly or
indirectly, by the Corporation unless in each case the full Cumulative Dividends
on all outstanding shares of Series ___ Preferred Stock and any other Parity
Stock of the Corporation shall have been paid or such dividends have been
authorized and set apart for payment with respect to the Series ___ Preferred
Stock and all past dividend periods with respect to such Parity Stock. [series A
clause (ii) omitted]
4
5
(d) If, for any taxable year, the Corporation elects to designate as
"capital gain dividends" (as defined in Section 857 (or any successor provision)
of the Internal Revenue Code of 1986, as amended (the "Code")), any portion (the
"Capital Gains Amount") of the dividends paid or set apart for payment for the
year to holders of all classes of stock of the Corporation (the "Total
Dividends"), the portion of the Capital Gains Amount that shall be allocable to
the holders of Series ___ Preferred Stock shall be the amount that the total
dividends (within the meaning of the Code) paid or set apart for payment to the
holders of the Series ___ Preferred Stock for the year bears to the Total
Dividends.
Section (4) Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, before any assets
of the Corporation shall be distributed, paid or set aside for the holders of
Junior Stock, the Corporation shall pay to the holders of shares of Series ___
Preferred Stock $________ per share of Series ___ Preferred Stock plus an amount
equal to all Cumulative Dividends (whether or not earned or authorized) to the
date of final distribution to such holders; but such holders shall not be
entitled to any further payment. Until the holders of the Series ___ Preferred
Stock and holders of Parity Stock have been paid this liquidation preference in
full, no payment will be made to any holder of Junior Stock upon the
liquidation, dissolution or winding up of the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of Series ___
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series of
Parity Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of Series ___ Preferred Stock and any such other Parity Stock
ratably in the same proportion as the respective amounts that would be payable
on such Series ___ Preferred Stock and any such other Parity Stock if all
amounts payable thereon were paid in full. For the purposes of this Section 4,
(i) a consolidation or merger of the Corporation with one or more corporations,
(ii) a sale or transfer of all or substantially all of the Corporation's assets,
or (iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of any shares of Parity
Stock, upon any liquidation, dissolution or winding up of the Corporation, after
payment shall have been made in full to the holders of Series ___ Preferred
Stock and any Parity Stock, as provided in this Section 4, any other series or
class or classes of Junior Stock shall, subject to the respective terms thereof,
be entitled to receive any and all assets remaining to be paid or distributed,
and the holders of the Series ___ Preferred Stock and any Parity Stock shall not
be entitled to share therein.
(c) In determining whether a distribution (other than upon voluntary
or involuntary liquidation) by dividend, redemption or other acquisition of
shares of stock of the Corporation or otherwise is permitted under the MGCL, no
effect shall be given to amounts that would be needed, if the Corporation were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of holders of shares of stock of the Corporation whose
preferential rights upon dissolution are superior to those receiving the
distribution.
5
6
Section (5) Redemption at the Option of the Corporation.
(a) Shares of Series ___ Preferred Stock shall not be redeemable by
the Corporation prior to ______________, 20__. On and after ______________,
20__, the Corporation, at its option, may redeem shares of Series ___ Preferred
Stock as set forth herein. Shares of Series ___ Preferred Stock may be redeemed,
in whole or in part, at the option of the Corporation at any time on or after
______________, 20__ out of assets legally available therefor at a redemption
price payable in cash equal to $________ per share of Series ___ Preferred Stock
(plus an amount equal to all Cumulative Dividends, if any, to the Call Date,
whether or not earned or authorized, as provided below) (the "Redemption
Price").
(b) Shares of Series ___ Preferred Stock shall be redeemed by the
Corporation on the date specified in the notice to holders required under
paragraph (d) of this Section 5 (the "Call Date"). The Call Date shall be
selected by the Corporation, shall be specified in the notice of redemption and
shall be not less than 30 days nor more than 60 days after the date notice of
redemption is sent by the Corporation. Upon any redemption of shares of Series
___ Preferred Stock pursuant to paragraph (a) of this Section 5, the Corporation
shall pay in cash to the holder of such shares an amount equal to all Cumulative
Dividends, if any, to the Call Date, whether or not earned or authorized.
Immediately prior to authorizing any redemption of the Series ___ Preferred
Stock, and as a condition precedent for such redemption, the Company, by
resolution of its Board of Directors, shall authorize a mandatory dividend on
the Series ___ Preferred Stock payable in cash on the Call Date in an amount
equal to all Cumulative Dividends as of the Call Date on the Series ___
Preferred Stock to be redeemed, which amount shall be added to the redemption
price. If the Call Date falls after a dividend payment record date and prior to
the corresponding Dividend Payment Date, then each holder of Series ___
Preferred Stock at the close of business on such dividend payment record date
shall be entitled to the dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the redemption of such shares prior to
such Dividend Payment Date. Except as provided above, the Corporation shall make
no payment or allowance for accumulated or accrued dividends on shares of Series
___ Preferred Stock called for redemption or on the shares of Common Stock
issued upon such redemption.
(c) If full Cumulative Dividends on all outstanding shares of Series
___ Preferred Stock have not been paid or authorized and set apart for payment,
no shares of Series ___ Preferred Stock may be redeemed unless all outstanding
shares of Series ___ Preferred Stock are simultaneously redeemed.
(d) If the Corporation shall redeem shares of Series ___ Preferred
Stock pursuant to paragraph (a) of this Section 5, notice of such redemption
shall be given to each holder of record of the shares to be redeemed. Such
notice shall be provided by first class mail, postage prepaid, at such holder's
address as the same appears on the stock records of the Corporation not less
than 30 days nor more than 60 days prior to the Call Date. If the Corporation
elects to provide such notice by publication, it shall also promptly mail notice
of such redemption to the holders of the shares of Series ___ Preferred Stock to
be redeemed. Neither the failure to mail any notice required by this paragraph
(d), nor any defect therein or in the mailing thereof, to any particular holder,
shall affect the sufficiency of the notice or the validity of the proceedings
for redemption with respect to the other holders. Any notice which
6
7
was mailed in the manner herein provided shall be conclusively presumed to have
been duly given on the date mailed whether or not the holder receives the
notice. Each such mailed or published notice shall state, as appropriate: (1)
the Call Date; (2) the number of shares of Series ___ Preferred Stock to be
redeemed and, if fewer than all such shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (3) the
Redemption Price; [replaces series A clause (4) "the then-current Conversion
Rate"] (4) the place or places at which certificates for such shares are to be
surrendered for certificates representing shares of Common Stock; (5) that
dividends on the shares of Series ___ Preferred Stock to be redeemed shall cease
to accrue on such Call Date except as otherwise provided herein; and (6) the
date upon which such holder's conversion rights as to the shares of Series ___
Preferred Stock to be redeemed shall terminate. Notice having been published or
mailed as aforesaid, from and after the Call Date (unless the Corporation shall
fail to issue and make available the amount of cash necessary to effect such
redemption, including all Cumulative Dividends to the Call Date, whether or not
earned or authorized), (i) except as otherwise provided herein, dividends on the
shares of Series ___ Preferred Stock so called for redemption shall cease to
accumulate or accrue on the shares of Series ___ Preferred Stock called for
redemption (except that, in the case of a Call Date after a dividend record date
and prior to the related Dividend Payment Date, holders of Series ___ Preferred
Stock on the dividend record date will be entitled on such Dividend Payment Date
to receive the dividend payable on such shares), (ii) said shares shall no
longer be deemed to be outstanding, and (iii) all rights of the holders thereof
as holders of Series ___ Preferred Stock of the Corporation shall cease (except
the rights to receive the cash payable upon such redemption, without interest
thereon, upon surrender and endorsement of their certificates if so required and
to receive any dividends payable thereon). The Corporation's obligation to
provide cash in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the Call Date, the Corporation shall deposit with a bank or
trust company (which may be an affiliate of the Corporation) that has an office
in the Borough of Manhattan, The City of New York, and that has, or is an
affiliate of a bank or trust company that has, a capital and surplus of at least
$50,000,000, such amount of cash as is necessary for such redemption, in trust,
with irrevocable instructions that such cash be applied to the redemption of the
shares of Series ___ Preferred Stock so called for redemption. No interest shall
accrue for the benefit of the holders of shares of Series ___ Preferred Stock to
be redeemed on any cash so set aside by the Corporation. Subject to applicable
escheat laws, any such cash unclaimed at the end of two years from the Call Date
shall revert to the general funds of the Corporation, after which reversion the
holders of shares of Series ___ Preferred Stock so called for redemption shall
look only to the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and if the notice
shall so state), such certificates shall be exchanged for cash (without interest
thereon) for which such shares have been redeemed in accordance with such
notice. If fewer than all the outstanding shares of Series ___ Preferred Stock
are to be redeemed, shares to be redeemed shall be selected by the Corporation
from outstanding shares of Series ___ Preferred Stock not previously called for
redemption by lot or by any other method as may be determined by the Board of
Directors in its discretion to be equitable. If fewer than all the shares of
Series ___ Preferred Stock represented by any certificate are redeemed, then a
new certificate representing the unredeemed shares shall be issued without cost
to the holders thereof.
7
8
Section (6) Status of Shares. All shares of Series ___ Preferred Stock
which shall have been issued and redeemed, converted or reacquired in any manner
by the Corporation shall be restored to the status of authorized, but unissued
shares of Preferred Stock, without designation as to series.
Section (7) Conversion. Holders of shares of Series ___ Preferred Stock
shall have the right to convert all or a portion of such shares into shares of
Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this Section
7, a holder of shares of Series ___ Preferred Stock shall have the right, at
such holder's option, at any time to convert such shares, in whole or in part,
into the number of fully paid and nonassessable shares of authorized but
previously unissued shares of Common Stock obtained by multiplying the number of
shares of Series ___ Preferred Stock to be converted and the Conversion Rate (as
in effect at the time and on the date provided for in the last clause of
paragraph (b) of this Section 7) by surrendering such shares to be converted,
such surrender to be made in the manner provided in paragraph (b) of this
Section 7; provided, however, that the right to convert shares of Series ___
Preferred Stock called for redemption pursuant to Section 5 shall terminate at
the close of business on the Call Date fixed for such redemption, unless the
Corporation shall default in making payment upon such redemption under Section 5
hereof.
(b) In order to exercise the conversion right, the holder of each
share of Series ___ Preferred Stock to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Corporation that the holder thereof elects to convert such
share of Series ___ Preferred Stock. Unless the shares issuable on conversion
are to be issued in the same name as the name in which such share of Series ___
Preferred Stock is registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have been paid).
Except as set forth in the following sentence, holders of shares of
Series ___ Preferred Stock at the close of business on a dividend payment record
date shall be entitled to receive the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding the conversion thereof
following such dividend payment record date and prior to such Dividend Payment
Date. However, shares of Series ___ Preferred Stock surrendered for conversion
during the period between the close of business on any dividend payment record
date and the opening of business on the corresponding Dividend Payment Date
(except shares converted after the issuance of notice of redemption with respect
to a Call Date during such period, such shares of Series ___ Preferred Stock
being entitled to such dividend on the Dividend Payment Date) must be
accompanied by payment of an amount equal to the dividend payable on such shares
on such Dividend Payment Date. A holder of shares of Series ___ Preferred Stock
on a dividend payment record date who (or whose transferee) tenders any such
shares for conversion into shares of Common Stock on such Dividend Payment Date
will receive the dividend payable by the Corporation on such shares of Series
___ Preferred Stock on such date, and the converting holder need not include
payment of the amount of such dividend upon surrender of shares of Series ___
Preferred Stock for conversion. Except as provided above, the
8
9
Corporation shall make no payment or allowance for unpaid dividends, whether or
not in arrears, on converted shares or for dividends on the shares of Common
Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates for
shares of Series ___ Preferred Stock as aforesaid, the Corporation shall issue
and shall deliver at such office to such holder, or send on such holder's
written order, a certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of such shares of Series ___ Preferred
Stock in accordance with the provisions of this Section 7, and any fractional
share of Common Stock arising upon such conversion shall be settled as provided
in paragraph (c) of this Section 7.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for shares
of Series ___ Preferred Stock shall have been surrendered and such notice
received by the Corporation as aforesaid, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date
and such conversion shall be at the Conversion Rate in effect at such time on
such date unless the stock transfer books of the Corporation shall be closed on
that date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such conversion shall be at
the Conversion Rate in effect on the date on which such shares shall have been
surrendered and such notice received by the Corporation.
(c) No fractional share of Common Stock or scrip representing
fractions of a share of Common Stock shall be issued upon conversion of the
shares of Series ___ Preferred Stock. Instead of any fractional interest in a
share of Common Stock that would otherwise be deliverable upon the conversion of
shares of Series ___ Preferred Stock, the Corporation shall pay to the holder of
such share an amount in cash based upon the Current Market Price of the Common
Stock on the Trading Day immediately preceding the date of conversion. If more
than one share 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 of
Series ___ Preferred Stock so surrendered.
(d) The Conversion Rate shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its shares of Common Stock in shares of
Common Stock, (B) subdivide its outstanding Common Stock into a greater
number of shares, (C) combine its outstanding Common Stock into a smaller
number of shares or (D) issue any shares of stock by reclassification of
its Common Stock, the Conversion Rate in effect at the opening of business
on the day
9
10
following the date fixed for the determination of stockholders entitled to
receive such dividend or distribution or at the opening of business on the
day following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted
so that the holder of any share of Series ___ Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of
shares of Common Stock (or fraction of a share of Common Stock) that such
holder would have owned or have been entitled to receive after the
happening of any of the events described above had such share of Series ___
Preferred Stock been converted immediately prior to the record date in the
case of a dividend or distribution or the effective date in the case of a
subdivision, combination or reclassification. An adjustment made pursuant
to this paragraph (d)(i) of this Section 7 shall become effective
immediately after the opening of business on the day next following the
record date (except as provided in paragraph (h) below) in the case of a
dividend or distribution and shall become effective immediately after the
opening of business on the day next following the effective date in the
case of a subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Stock entitling them (for a
period expiring within 45 days after the record date described below in
this paragraph (d)(ii) of this Section 7) to subscribe for or purchase
Common Stock at a price per share less than the Fair Market Value per share
of the Common Stock on the record date for the determination of
stockholders entitled to receive such rights or warrants, then the
Conversion Rate in effect at the opening of business on the day next
following such record date shall be adjusted to equal the rate determined
by multiplying (A) the Conversion Rate in effect immediately prior to the
opening of business on the day following the date fixed for such
determination by (B) a fraction, the numerator of which shall be the sum of
(X) the number of shares of Common Stock outstanding on the close of
business on the date fixed for such determination and (Y) the number of
additional shares of Common Stock offered for subscription or purchase
pursuant to such rights or warrants, and the denominator of which shall be
the sum of (XX) the number of shares of Common Stock outstanding on the
close of business on the date fixed for such determination and (YY) the
number of shares that the aggregate proceeds to the Corporation from the
exercise of such rights or warrants for Common Stock would purchase at such
Fair Market Value. Such adjustment shall become effective immediately after
the opening of business on the day next following such record date (except
as provided in paragraph (h) below). In determining whether any rights or
warrants entitle the holders of Common Stock to subscribe for or purchase
Common Stock at less than such Fair Market Value, there shall be taken into
account any consideration received by the Corporation upon issuance and
upon exercise of such rights or warrants, the value of such consideration,
if other than cash, to be determined in good faith by the Board of
Directors.
(iii) If the Corporation shall distribute to all holders of its
Common Stock any shares of stock of the Corporation (other than Common
Stock) or evidence of its indebtedness or assets (including cash, but
excluding Permitted Common Stock Cash Distributions) or rights or warrants
to subscribe for or purchase any of its securities (excluding those rights
and warrants issued to
10
11
all holders of Common Stock entitling them for a period expiring within 45
days after the record date referred to in paragraph (d)(ii) of this Section
7 above to subscribe for or purchase Common Stock, which rights and
warrants are referred to in and treated under such paragraph (d)(ii) above)
(any of the foregoing being hereinafter in this paragraph (d)(iii) called
the "Distribution"), then in each such case the Conversion Rate shall be
adjusted so that it shall equal the rate determined by multiplying (A) the
Conversion Rate in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to receive such
Distribution by (B) a fraction, the numerator of which shall be the Fair
Market Value per share of Common Stock on the record date mentioned below,
and the denominator of which shall be the Fair Market Value per share of
Common Stock on the record date mentioned below less the then fair market
value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board resolution), of the portion of the
stock or assets or evidences of indebtedness so distributed or of such
rights or warrants applicable to one share of Common Stock. Such adjustment
shall become effective immediately at the opening of business on the
Business Day next following (except as provided in paragraph (h) below) the
record date for the determination of stockholders entitled to receive such
Distribution. For the purposes of this paragraph (d)(iii), the distribution
of a right or warrant to subscribe for or purchase any of the Corporation's
securities, which is distributed not only to the holders of the Common
Stock on the date fixed for the determination of stockholders entitled to
such Distribution of such right or warrant, but also is distributed with
shares of Common Stock delivered to a Person converting shares of Series
___ Preferred Stock after such determination date, shall not require an
adjustment of the Conversion Rate pursuant to this paragraph (d)(iii);
provided that if on the date, if any, on which a person converting shares
of Series ___ Preferred Stock such person would no longer be entitled to
receive such right or warrant with shares of Common Stock (other than as a
result of the termination of all such right or warrant), a distribution of
such rights or warrants shall be deemed to have occurred and the Conversion
Rate shall be adjusted as provided in this paragraph (d)(iii) and such day
shall be deemed to be "the date fixed for the determination of the
stockholders entitled to receive such distribution" and "the record date"
within the meaning of the two preceding sentences.
(iv) No adjustment in the Conversion Rate shall be required
unless such adjustment would require a cumulative increase or decrease of
at least 1% in such rate; provided, however, that any adjustments that
by reason of this paragraph (d)(iv) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment until
made; and provided, further, that any adjustment shall be required and made
in accordance with the provisions of this Section 7 (other than this
paragraph (d)(iv)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of shares of
Common Stock. Notwithstanding any other provisions of this Section 7, the
Corporation shall not be required to make any adjustment of the Conversion
Rate for the issuance of any shares of Common Stock pursuant to any
11
12
plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional
amounts in shares of Common Stock under such plan. All calculations under
this Section 7 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-tenth of a share (with .05 of a share being
rounded upward), as the case may be. Anything in this paragraph (d) of this
Section 7 to the contrary notwithstanding, the Corporation shall be
entitled, to the extent permitted by law, to make such reductions in the
Conversion Rate, in addition to those required by this paragraph (d), as it
in its discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, reclassification or combination of
shares, distribution of rights or warrants to purchase stock or securities,
or a distribution of other assets (other than cash dividends) hereafter
made by the Corporation to its stockholders shall not be taxable, or if
that is not possible, to diminish any taxes that are otherwise payable
because of such event.
(e) If:
(i) the Corporation shall authorize a dividend (or any other
distribution) on the Common Stock (other than cash dividends and cash
distributions to the extent the same constitute Permitted Common Stock Cash
Distributions); or
(ii) the Corporation shall authorize the granting to the holders
of the Common Stock of rights or warrants to subscribe for or purchase any
shares of any class or series of stock or any other rights or warrants; or
(iii) there shall be any reclassification of the Common Stock or
any consolidation or merger to which the Corporation is a party and for
which approval of any stockholders of the Corporation is required, or a
statutory share exchange, or an issuer or self tender offer by the
Corporation for all or a substantial portion of its outstanding shares of
Common Stock (or an amendment thereto changing the maximum number of shares
sought or the amount or type of consideration being offered therefor) or
the sale or transfer of all or substantially all of the assets of the
Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to each holder of shares of Series ___ Preferred Stock at
such holder's address as shown on the stock records of the Corporation, as
promptly as possible, but at least 15 days prior to the applicable date
hereinafter specified, a notice stating (A) the record date for the payment of
such dividend, distribution or rights or warrants, or, if a record date is not
established, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders
12
13
of Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up or (C) the date on which such
tender offer commenced, the date on which such tender offer is scheduled to
expire unless extended, the consideration offered and the other material terms
thereof (or the material terms of any amendment thereto). Failure to give or
receive such notice or any defect therein shall not affect the legality or
validity of the proceedings described in this Section 7.
(f) Whenever the Conversion Rate is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Rate after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Rate setting forth the
adjusted Conversion Rate and the date such adjustment becomes effective and
shall mail such notice of such adjustment of the Conversion Rate to each holder
of shares of Series ___ Preferred Stock at such holder's last address as shown
on the stock records of the Corporation.
(g) In any case in which paragraph (d) of this Section 7 provides that
an adjustment shall become effective on the day next following the record date
for an event, the Corporation may defer until the occurrence of such event (A)
issuing to the holder of any share of Series ___ Preferred Stock converted after
such record date and before the occurrence of such event the additional Common
Stock issuable upon such conversion by reason of the adjustment required by such
event over and above the Common Stock issuable upon such conversion before
giving effect to such adjustment and (B) paying to such holder any amount of
cash in lieu of any fraction pursuant to paragraph (c) of this Section 7.
(h) There shall be no adjustment of the Conversion Rate in case of the
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 7. If
any action or transaction would require adjustment of the Conversion Rate
pursuant to more than one paragraph of this Section 7, only one adjustment shall
be made and such adjustment shall be the amount of adjustment that has the
highest absolute value.
(i) If the Corporation shall take any action affecting the Common
Stock, other than action described in this Section 7, that in the opinion of the
Board of Directors would materially and adversely affect the conversion rights
of the holders of Series ___ Preferred Stock, the Conversion Rate for the Series
___ Preferred Stock may be adjusted, to the extent permitted by law, in such
manner, if any, and at such time as the Board of Directors, in its sole
discretion, may determine to be equitable under the circumstances.
(j) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion or redemption of
shares of Series ___ Preferred Stock pursuant hereto; provided, however, that
the Corporation shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock or other securities or property in a name other than that of the holder of
the shares of
13
14
Series ___ Preferred Stock to be converted or redeemed, and no such issue or
delivery shall be made unless and until the person requesting such issue or
delivery has paid to the Corporation the amount of any such tax or established,
to the reasonable satisfaction of the Corporation, that such tax has been paid.
Section (8) Ranking. So long as any shares of Series ___ Preferred Stock
are outstanding, the Corporation shall not issue any class or series of stock
which would entitle the holders thereof to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of Series ___ Preferred Stock
("Senior Stock"). Any other class or series of stock of the Corporation shall be
deemed to rank:
(a) on a parity with the Series ___ Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Series ___ Preferred Stock, if the holders of such class of stock or series
and the Series ___ Preferred Stock shall be entitled to the receipt of dividends
and of amounts distributable upon liquidation, dissolution or winding up in
proportion to their respective amounts of accrued and unpaid dividends per share
or liquidation preferences, without preference or priority one over the other
("Parity Stock"); and
(b) junior to the Series ___ Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Stock or if the holders of
Series ___ Preferred Stock shall be entitled to receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of shares of such class or
series ("Junior Stock").
Notwithstanding the foregoing, the Corporation may issue Senior Stock if
such issuance is approved by the affirmative vote of at least two-thirds of the
votes entitled to be cast by the holders of the Series ___ Preferred Stock given
in person or by proxy, at any meeting, called for such purpose, or the
affirmative vote of at least two-thirds of such holders delivered by written
consent.
Section (9) Voting Rights.
(a) The holders of Series ___ Preferred Stock shall be entitled to
vote together with the holders of Common Stock on any matter upon which the
holders of Common Stock are entitled to vote. For the purposes of this
paragraph, each share of Series ___ Preferred Stock shall have one vote per
share multiplied by the Conversion Rate in effect at the time of the vote.
(b) Whenever dividends on any shares of Series ___ Preferred Stock
shall be in arrears for six or more consecutive quarterly periods, the holders
of such shares of Series ___ Preferred Stock (voting separately as a class with
all other classes of preferred stock upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of a
total of two additional directors of the Corporation at a special meeting
14
15
called by the holders of record of at least 10% of the Series ___ Preferred
Stock or the holders of any other classes of preferred stock so in arrears
(unless such request is received less than 90 days before the date fixed for the
next annual or special meeting of stockholders) or at the next annual meeting of
stockholders, and at each subsequent annual meeting until all dividends
accumulated on such shares of Series ___ Preferred Stock for the past dividend
periods and the then current dividend period shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment. In
such case, the entire Board of Directors of the Corporation will be increased by
two directors.
(c) So long as any shares of Series ___ Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by the Charter of the Corporation or required by the MGCL, the affirmative vote
of at least two-thirds of the votes entitled to be cast by the holders of the
Series ___ Preferred Stock given in person or by proxy, at any meeting, called
for the purpose, or the affirmative vote of at least two-thirds of such holders
delivered by written consent, shall be necessary for effecting or validating any
amendment, alteration or repeal, whether by merger, consolidation or otherwise,
of any of the provisions of the Charter of the Corporation (including the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications and terms
and conditions of redemption of the Series ___ Preferred Stock) that materially
and adversely affects the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of the Series ___
Preferred Stock; provided, however, that the amendment of the provisions of the
Charter so as to authorize or create, or to increase the authorized amount of,
any Parity Stock or Junior Stock shall not be deemed to materially and adversely
affect the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of the Series ___
Preferred Stock.
For purposes of the foregoing provisions of this paragraph (b), each share
of Series ___ Preferred Stock shall have one vote per share, except that when
any other series of preferred stock shall have the right to vote with the Series
___ Preferred Stock as a single class on any matter, then the Series ___
Preferred Stock and such other series shall have with respect to such matters
one vote per $________ of stated liquidation preference, and fractional votes
shall be ignored.
(d) Nothing contained in paragraph (c) of this Section 9 shall require
a vote of the holders of the Series ___ Preferred Stock (i) in connection with
any merger or consolidation in which the Corporation is the surviving entity if,
immediately after the merger or consolidation, there are outstanding no shares
and no securities convertible into shares of any class ranking as to
distribution rights or liquidation preference senior to the Series ___ Preferred
Stock or (ii) in connection with any merger or consolidation in which the
Corporation is not the surviving entity if, as result of the merger or
consolidation, the holders of Series ___ Preferred Stock receive shares of stock
or beneficial interest or other equity securities with preferences, rights and
privileges not materially inferior to the preferences, rights and privileges of
the Series ___ Preferred Stock.
Section (10) Severability of Provisions. If any preference, conversion or
other right, voting power, restriction, limitation as to dividends or other
distributions, qualification or term or
15
16
condition of redemption of the Series ___ Preferred Stock set forth herein is
invalid, unlawful or incapable of being enforced by reason of any rule of law or
public policy, all other preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption of the Series ___ Preferred Stock set forth
herein which can be given effect without the invalid, unlawful or unenforceable
provision thereof shall, nevertheless, remain in full force and effect, and no
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications or terms or
conditions of redemption of the Series ___ Preferred Stock herein set forth
shall be deemed dependent upon any other provision thereof unless so expressed
therein.
16