EXHIBIT 4.1
CERTIFICATE OF DESIGNATION
OF
SERIES A-1 CONVERTIBLE PREFERRED STOCK
OF
MAYOR'S JEWELERS, INC.
A DELAWARE CORPORATION (THE "CORPORATION")
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Pursuant to Section 151(g) of the General Corporation Law
of the State of Delaware
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1. THE UNDERSIGNED, being, respectively, the Senior Vice-President and
the Secretary of Mayor's Jewelers, Inc., a Delaware corporation (the
"Corporation"), DO HEREBY CERTIFY that, pursuant to the provisions of Section
151(g) of the General Corporation Law of the State of Delaware the following
resolutions were duly adopted by the Board of Directors of the Corporation and
pursuant to authority conferred upon the Board of Directors by the provisions of
the Restated Certificate of Incorporation of the Corporation (the "Certificate
of Incorporation"), the Board of Directors of the Corporation, at a meeting duly
held on February 20, 2004, adopted resolutions providing for the issuance of a
series of its preferred stock and fixing the relative powers, preferences,
rights, qualifications, limitations and restrictions of such stock. These
resolutions are as follows:
2. RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors of the Corporation by the provisions of the
Certificate of Incorporation, the issuance of a series of preferred stock, par
value $.0001 per share, which shall consist of 15,050 shares of preferred stock
which the Corporation now has authority to issue, be, and the same hereby is,
authorized, and the Board hereby fixes the powers, designations, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof, of each share of such
series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Certificate of
Incorporation which may be applicable to the preferred stock of this series) as
follows:
1. DESIGNATION. 15,050 shares of Preferred Stock of the
Corporation are hereby constituted as a series of Preferred
Stock designated as "Series A-1 Convertible Preferred Stock"
(the "Preferred Stock"). The Board of Directors of the
Corporation is authorized to increase (but not above the total
number of authorized shares of Preferred Stock) or decrease
(but not below the number of shares of Preferred Stock then
outstanding) the number of shares of authorized Preferred
Stock.
2. DIVIDENDS OR DISTRIBUTIONS.
(a) On the date on which the Preferred Stock is first
issued, the holders of the outstanding shares of
Preferred Stock (each a "Holder," together the
"Holders") shall be entitled to receive, out of funds
legally available therefor, a dividend on the
Preferred Stock in the aggregate amount of
$2,185,755.00 (the "Initial Dividend"), as, when, and
if declared by the Board of Directors. In addition to
the Initial Dividend, beginning on February 28, 2005,
the Holders shall be entitled to receive, out of
funds legally available therefor, dividends on each
share of Preferred Stock at a rate per annum equal to
$80 per share, as, when, and if declared by the Board
of Directors. All dividends shall be cumulative,
whether or not earned or declared, on a daily basis,
and shall accrue from February 28, 2005, and shall be
payable, if declared by the Board of Directors,
quarterly in arrears each January 15, April 15, July
15 and October 15 of each year (the "Dividend Payment
Date"), commencing on April 15, 2005. Dividends shall
cease to accumulate in respect of shares of the
Preferred Stock on the Date of Conversion (as defined
in paragraph 6(f) hereof) unless the Corporation
shall have failed to issue the appropriate number of
Converted Shares (as defined in paragraph 6(b)) on
the Date of Conversion.
(b) All dividends paid with respect to shares of the
Preferred Stock pursuant to paragraph 2(a) hereof
shall be paid pro rata to the Holders entitled
thereto.
(i) Dividends that are in arrears and unpaid for
any past Dividend Period (a "Dividend
Period" being herein defined as a period
commencing on each Dividend Payment Date and
ending on the day before the next Dividend
Payment Date; provided, however, that the
first such period shall commence on February
28, 2005) may be declared and paid at any
time, without reference to any regular
Dividend Payment Date, to the Holders of
record on such date, not more than 45 days
prior to the payment thereof, as may be
fixed by the Board of Directors.
(ii) No full dividends shall be declared by the
Board of Directors or paid or funds set
apart for payment of dividends by the
Corporation on any other securities of the
Corporation for any period unless full
cumulative dividends shall have been or
contemporaneously shall be declared and paid
in full or declared and a sum in cash shall
be set apart sufficient for such payment on
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the Preferred Stock for all Dividend Periods
terminating on or prior to the date of
payment of such full dividends on such other
securities of the Corporation.
(iii) So long as any shares of the Preferred Stock
are outstanding, the Corporation shall not
make any payment on account of, or set apart
for payment money for a sinking or other
similar fund for, the repurchase, redemption
or other retirement of any of the securities
of the Corporation, that rank pari passu or
junior to the Preferred Stock and shall not
permit any corporation or other entity
directly or indirectly controlled by the
Corporation to purchase or redeem any other
securities of the Corporation that rank pari
passu or junior to the Preferred Stock, and
excluding a refinancing of the Corporation's
senior credit facilities, unless full
cumulative dividends determined in
accordance herewith on the Preferred Stock
have been paid in full.
(iv) Dividends payable on shares of the Preferred
Stock for any period less than a year shall
be computed on the basis of a 360-day year
of twelve 30-day months and the actual
number of days elapsed in the period for
which dividends are payable. If any Dividend
Payment Date occurs on a day that is not a
Business Day, any accrued dividends
otherwise payable on such Dividend Payment
Date shall be paid on the next succeeding
Business Day.
3. NO REDEMPTION; NO SINKING FUND.
(a) The Preferred Stock shall not be subject to redemption by the
Corporation or at the option of the Holder.
(b) The Preferred Stock shall not be subject to or entitled to the
operation of a retirement or sinking fund.
4. LIQUIDATION RIGHTS.
(a) In the event of the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, each Holder
shall be entitled to receive out of the assets of the
Corporation available for distribution to the stockholders, an
amount equal to $1000 per share of Preferred Stock, plus any
accumulated and unpaid dividends, before any distribution is
made on the Common Stock of the Corporation (the "Common
Stock") or any other stock ranking junior to the Preferred
Stock as to distribution of assets upon voluntary or
involuntary liquidation (which amount shall be subject to
equitable adjustment whenever there shall occur a stock
dividend, stock split, combination, reorganization,
recapitalization, reclassification or other similar event
involving the Preferred Stock). After payment of the full
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amount of the liquidation preference of the Preferred Stock,
the Holders shall not be entitled to any further participation
in any distribution of assets of the Corporation.
(b) For the purposes of this Section 4, both (i) the sale,
conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all
of the property or assets of the Corporation or a majority of
its capital stock and (ii) the consolidation or merger of the
Corporation with or into one or more other entities in which
the stockholders of the Corporation do not retain a majority
of the voting power in the surviving or successor corporation,
shall be deemed to be a voluntary or involuntary liquidation.
5. VOTING RIGHTS. The Holders shall have the following voting rights:
(a) ELECTION OF DIRECTORS. The Holders shall vote together as a
single class for the election of directors of the Corporation
and shall be entitled to elect a percentage of the total
authorized directors of the Corporation, rounded to the next
highest whole number, corresponding to the percentage of
Common Stock that would be held by the Holders on the record
date of such election if the Holders converted all of the
Preferred Stock then outstanding into shares of Common Stock.
The directors (the "Series A Directors") elected by the
holders of the Series A Convertible Preferred Stock, par value
$.0001 per share (the "Series A Stock"), of the Corporation
and in office immediately prior to the exchange (the
"Exchange") of the Preferred Stock for the outstanding shares
of Series A Stock shall be deemed to be the initial directors
elected by the Holders and shall continue to serve the same
terms of office applicable to such person in their capacity as
Series A Directors immediately prior to the Exchange. All
other stockholders of the Corporation shall vote together as a
separate class and shall be entitled to elect the remainder of
the directors of the Corporation, then authorized, not elected
by the Holders. Prior to a meeting of stockholders of the
Corporation at which (i) the Holders, (ii) the other
stockholders of the Corporation, or (iii) both the Holders and
the other stockholders, will be entitled elect directors of
the Corporation, notice will be given to such class or
classes, as applicable, entitled to vote at such meeting
setting forth the number of such directors such class will be
entitled to elect at such meeting.
(b) OTHER MATTERS. Except in matters relating to the election of
the directors of the Corporation, the Holders shall be
entitled to vote on each matter on which holders of Common
Stock or stockholders generally are entitled to vote, and each
Holder shall be entitled to cast on each such matter a number
of votes equal to the number of votes that such Holder could
cast if such Holder had converted all of its shares of
Preferred Stock into shares of Common Stock immediately prior
to the votes being cast. Except as otherwise provided in
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paragraph 5(a) herein or by applicable law, the holders of
Common Stock and the Holders shall vote as one class on all
other matters submitted to a vote of stockholders of the
Corporation.
6. CONVERSION OF PREFERRED STOCK.
(a) Subject to and upon compliance with the provisions of this
Section 6, at the option of the Holder thereof, each share of
Preferred Stock may, at any time be converted into a number of
fully paid and nonassessable shares of Common Stock.
(b)
(i) Except as provided in (ii) below, if the Holder
converts or elects to convert any of their Preferred
Stock on or prior to February 28, 2005, the conversion
rate shall be calculated by multiplying 3,333.33 by the
sum of (a) one (1), minus (b) the Conversion
Adjustment.
i. "CONVERSION ADJUSTMENT" shall be an amount, the
numerator of which is three thousand two hundred
ninety eight dollars and sixty three cents
($3,298.63) multiplied by the number of days from
the date of conversion through and including
February 28, 2005, and the denominator of which is
an amount equal to the product of (1) the number
of preferred shares then owned by the converting
Holder multiplied by 3333.33, multiplied by (2)
the Current Market Value (as defined in Section 7
below).
For example, if a Holder converted 15,050 shares of
Preferred Stock on January 1, 2005, and the Current
Market Price was $0.85, the conversion rate would be
calculated as follows:
(3,298.63 X 59)
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Conversion rate = 3333.33 X 1 - (15050 X 3333.33 X .85)
Conversion rate = 3333.33 X (1 - .0046)
Conversion rate = 3333.33 X .9954
Conversion rate = 3318
(ii) Notwithstanding subsection (i) above, a Holder may
elect, on or prior to February 28, 2005, to convert all
or part of the Preferred Stock at a conversion rate of
1 share of Preferred Stock to 3,333.33 shares of Common
Stock; provided, such Holder pays the Corporation for
each share of Preferred Stock converted, a cash payment
equal to an amount, the numerator of which is the
product of (a) three thousand two hundred ninety eight
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dollars and sixty three cents ($3,298.63) and (b) the
number of days from the Conversion Date through and
including February 28, 2005, and the denominator of
which is the number of shares of outstanding Preferred
Stock on the Conversion Date. "CONVERSION DATE" shall
be defined as the date of conversion by the Holders of
the Preferred Stock.
For example, if a Holder converted 1,000 shares of
Preferred Stock on January 1, 2005, and 15,050 shares
of Preferred Stock were outstanding, the cash payment
would be calculated as follows:
(3,298.63 X 59)
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Cash Payment = 1,000 X 15,050
Cash Payment = 1,000 X 12.93
Cash Payment = $12,931.51
(iii) On or after March 1, 2005, the Preferred Stock shall be
convertible into Common Stock at a rate of 1 share of
Preferred Stock to 3,333.33 shares of Common Stock,
subject to adjustment as set out in Section 9 below.
The number of shares of Common Stock into which shares
of Preferred Stock shall be convertible into is
hereinafter referred to as the "Converted Shares".
(c) In order to exercise the conversion rights, any Holder of
shares of Preferred Stock to be converted shall surrender such
shares to the Corporation at its principal corporate offices
at any time during usual business hours, accompanied by a
fully executed written notice, in substantially the form set
forth on the reverse of the certificate representing shares of
Preferred Stock, that the Holder elects to convert such
shares. Such notice shall also state the name or names (with
address) in which the certificate or certificates for shares
of Common Stock shall be issued.
(d) Shares of Preferred Stock surrendered for conversion shall (if
so required by the Corporation) be properly endorsed or
assigned for transfer by the Holder or his attorney duly
authorized in writing. The Holders at the close of business on
any record date for the payment of dividends on such shares
will receive the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding the
conversion thereof or the Corporation's default in the payment
of the dividend due on such Dividend Payment Date. Shares of
Preferred Stock surrendered for conversion during the period
from the close of business on any record date for the payment
of dividends on such shares to the opening of business on the
corresponding Dividend Payment Date must be accompanied by
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payment of an amount equal to the dividend payable on such
shares on such Dividend Payment Date. A Holder on a record
date for the payment of dividends on shares of Preferred Stock
who converts such shares on a Dividend Payment Date will
receive the dividend payable on such shares by the Corporation
on such date, and the converting holder need not include a
payment in the amount of any such dividend upon surrender of
such shares for conversion.
(e) As promptly as practicable after the receipt of such notice
and the surrender of such shares of Preferred Stock as
aforesaid, the Corporation shall, subject to the provisions of
Paragraph 6(i) hereof, issue and deliver at such place or
places referred to in Paragraph 6(c) above to such Holder, or
on such Holder's written order, a certificate or certificates
for the number of full shares of Common Stock issuable on such
conversion of shares of Preferred Stock in accordance with the
provisions of this Section 6, and cash, as provided in Section
7 hereof, in respect of any fraction of a share of Common
Stock otherwise issuable upon such conversion.
(f) Such conversion shall be deemed to have been effected
immediately prior to the close of business on the date (the
"Date of Conversion") on which such notice shall have been
received by the Corporation and such shares of Preferred Stock
shall have been surrendered 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 on the Date of
Conversion the holder or holders of record of the shares of
Common Stock represented thereby; PROVIDED, that any such
surrender on any date when the registry books of the
Corporation shall be closed shall constitute the person or
persons in whose name or names the certificate or certificates
for such shares are to be issued as the record holder or
holders thereof for all purposes at the opening of business on
the next succeeding day on which such registry books are open,
but such conversion shall nevertheless be at the conversion
rate in effect at the close of business on the date when such
shares of Preferred Stock shall have been so surrendered with
the conversion notice.
(g) Preferred Stock may be converted by a Holder in whole or in
part. In the case of conversion of a portion, but less than
all, of the shares of Preferred Stock represented by a
certificate surrendered for conversion, the Corporation shall
execute, and deliver to the Holder thereof, or on such
Holder's written order, a certificate or certificates
representing the shares of Preferred Stock which the Holder
has not elected to convert into shares of Common Stock. No
payment or adjustment shall be made for dividends accrued on
the shares of Preferred Stock converted as provided in this
paragraph 6(g) or for dividends or distributions accrued on
any Common Stock.
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(h) The Corporation covenants that all shares of Common Stock
which may be issued upon conversion of shares of Preferred
Stock will upon issuance be duly and validly issued, fully
paid and nonassessable by the Corporation, and except as
provided in Paragraph 6(i) hereof free from all taxes, liens
and charges with respect to the issue thereof.
(i) The Corporation shall pay any and all documentary, stamp or
similar taxes payable to the United States of America or any
political subdivision or taxing authority thereof or therein
in respect of the issue or delivery of certificates for shares
of Common Stock on conversion of shares of Preferred Stock
pursuant to Section 6 hereof; PROVIDED, that the Corporation
shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of
certificates for shares of Preferred Stock or Common Stock, as
the case may be, in a name other than that of the Holder of
shares of Preferred Stock to be converted 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 has established, to the satisfaction of the
Corporation, that such tax has been paid. The Corporation
extends no protection with respect to any other taxes imposed
in connection with [such redemption] or conversion of shares
of Preferred Stock.
7. FRACTIONAL SHARES. The Corporation shall not be required to issue
fractional shares of Common Stock on the conversion of the Preferred
Stock. If any fraction of a share of Common Stock would be issuable on
the conversion of the Preferred Stock (or specified portion thereof),
the Corporation shall pay an amount in cash calculated by it to be
equal to the then Current Market Value per share of Common Stock
multiplied by such fraction computed to the nearest whole cent. For the
purposes of any computation under the Preferred Stock, the Current
Market Value per share of Common Stock or of any other equity security
(herein collectively referred to as a "security") at the date herein
specified shall be:
(i) if the security is not registered under the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the "Current Market Value" per share
of the security shall be determined in good faith by
the Board of Directors of the Corporation, or
(ii) if the security is registered under the Exchange Act,
the "Current Market Value" per share of the security
shall be deemed to be the average of the daily Market
Prices (as hereinafter defined) of the security for
the 10 consecutive trading days immediately preceding
the day as of which Current Market Value is being
determined or, if the security has been registered
under the Exchange Act for less than 10 consecutive
trading days before such date, then the average of
the daily Market Prices for all of the trading days
before such date for which daily Market Prices are
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available. The Market Price for each such trading day
shall be: (A) in the case of a security listed or
admitted to trading on the New York Stock Exchange,
American Stock Exchange or the Nasdaq Stock Market,
the closing price on the primary exchange or stock
market on which the security is then listed or quoted
on, on such day, or if no sale takes place on such
day, the average of the closing bid and asked prices
on such day, (B) in the case of a security not then
listed or admitted to trading on any securities
exchange or stock market, the last reported sale
price on such day, or if no sale takes place on such
day, the average of the closing bid and asked prices
on such day, as reported by a reputable quotation
source designated by the Corporation, (C) in the case
of a security not then listed or admitted to trading
on any securities exchange or stock market and as to
which no such reported sale price or bid and asked
prices are available, the average of the reported
high bid and low asked prices on such day, as
reported by a reputable quotation service, or a
newspaper of general circulation in the Borough of
Manhattan, City and State of New York, customarily
published on each business day, designated by the
Corporation, or if there shall be no bid and asked
prices on such day, the average of the high bid and
low asked prices, as so reported, on the most recent
day (not more than 10 days prior to the date in
question) for which prices have been so reported, and
(D) if there are no bid and asked prices reported
during the 10 days prior to the date in question, the
Current Market Value of the security shall be
determined as if the security were not registered
under the Exchange Act.
8. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF CERTIFICATES.
(a) A certificate or a new certificate is exchangeable, without
expense, at the option of the Holder, upon presentation and
surrender hereof to the Corporation or at the office of its
stock transfer agent for other certificates of different
denomination, entitling the Holder thereof to convert in the
aggregate the same number of Converted Shares and carrying the
same rights as the Preferred Stock.
(b) Upon receipt by the Corporation of evidence satisfactory to it
of the loss, theft, destruction or mutilation of the
certificate or a new certificate, and (in the case of loss,
theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of the
certificate or a new certificate, if mutilated, the
Corporation shall execute and deliver a new certificate for
Preferred Stock of like tenor and date.
9. ANTIDILUTION PROVISIONS AND OTHER ADJUSTMENTS.
(a) SPECIAL DEFINITIONS. For purposes of this Section 9, the
following definitions shall apply:
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(i) "OPTIONS" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities, except for
options to purchase Common Stock outstanding on
August 20, 2002, with an conversion price of $2.25
per share or greater.
(ii) "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares (other than Common Stock) or
other securities convertible into or exchangeable for
Common Stock.
(iii) "ADDITIONAL SHARES OF COMMON STOCK" shall mean any
shares of Common Stock (i) issued (or, pursuant to
Section 9(b), deemed to be issued) by the Corporation
after August 20, 2002, or (ii) sold or exchanged by
the Corporation in conjunction with an acquisition of
the Corporation after August 20, 2002, other than
shares of Common Stock issued or issuable upon
conversion of any Convertible Securities, or exercise
of any Option, in each case existing on August 20,
2002.
(iv) "EXERCISE PRICE" shall have the meaning given to it
in the certain Warrant Agreement dated on August 20,
2002 between the Corporation and Henry Birks & Sons,
Inc., a Canadian corporation.
(v) "WARRANT SHARES" shall have the meaning given to it
in that certain Warrant Agreement dated on August 20,
2002 between the Corporation and Henry Birks & Sons,
Inc., a Canadian corporation.
(b) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK. In the
event that the Corporation at any time or from time to time
after August 20, 2002 shall issue any Options or Convertible
Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for
a subsequent adjustment of such number) of Common Stock
issuable upon the conversion of such Options or, in the case
of Convertible Securities and Options therefor, the conversion
or exchange of such Convertible Securities, shall be deemed to
be Additional Shares of Common Stock issued as of the time of
such issue or, in case such a record date shall have been
fixed, as of the close of business on such record date,
PROVIDED that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(i) no further adjustment in the Exercise Price for the
Warrant Shares shall be made upon the subsequent
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issue of (1) Convertible Securities or shares of
Common Stock upon the exercise of such Options or (2)
conversion or exchange of such Convertible
Securities;
(ii) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise,
for any increase in the consideration payable to the
Corporation, or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion
or exchange thereof, the Exercise Price for the
Warrant Shares computed upon the original issue
thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments
based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such
Options or the rights of conversion or exchange under
such Convertible Securities; and
(iii) on the expiration or cancellation of any Options or
the termination of the right to convert or exchange
any Convertible Securities which shall have not been
exercised, if the Exercise Price shall have been
adjusted upon the original issuance thereof or shall
have been subsequently adjusted pursuant to clause
(2) above, the Exercise Price shall be recomputed as
if:
i. in the case of Convertible Securities or
Options for Common Stock, the only
Additional Shares of Common Stock issued
were shares of Common Stock, if any,
actually issued upon the exercise of such
Options or the conversion or exchange of
such Convertible Securities, and the
consideration received therefor was the
consideration actually received by the
Corporation for the issuance of all such
Options, whether or not exercised, plus the
consideration actually received by the
Corporation upon such exercise, or for the
issuance of all such Convertible Securities
which were actually converted or exchanged
plus the consideration actually received by
the Corporation upon such conversion or
exchange, if any, and
ii. in the case of Options for Convertible
Securities, only the Convertible Securities,
if any, actually issued upon the exercise
thereof were issued at the time of issue of
such Options and the consideration received
by the Corporation for the Additional Shares
of Common Stock deemed to have been then
issued was the consideration actually
received by the Corporation for the issuance
of all such Options, whether or not
exercised, plus the consideration deemed to
have been received by the Corporation upon
the issuance of the Convertible Securities
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with respect to which such Options were
actually exercised;
(iv) no readjustment pursuant to clause 2 or 3 above shall
have the effect of increasing the Exercise Price to
an amount which exceeds the Exercise Price on the
original adjustment date.
(c) ADJUSTMENT OF NUMBER OF CONVERTED SHARES UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event that the
Corporation shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be
issued pursuant to Section 9(b) and excluding shares of Common
Stock issued upon conversion of any Convertible Security or
exercise of any Option provided that the number of Converted
Shares was adjusted pursuant to Section 9(b) upon the issuance
of the Convertible Security or the Option), then and in such
event, the number of Converted Shares shall be increased,
concurrently with such issuance, to an amount (calculated to
the nearest Converted Share) determined by multiplying the
number of Converted Shares by a fraction (x) the numerator of
which shall be the sum of (1) the number of shares of Common
Stock outstanding immediately prior to such issuance, plus (2)
the number of such Additional Shares of Common Stock so issued
or deemed to be issued and (y) the denominator of which shall
be the number of shares of Common Stock outstanding
immediately prior to such issuance; PROVIDED that, for the
purposes of this Section 9(c), all shares of Common Stock
issuable (i) upon conversion of the Preferred Stock, (ii) upon
conversion of all outstanding Convertible Securities, and
(iii) upon the conversion of all outstanding Options, shall be
deemed to be outstanding, and immediately after any Additional
Shares of Common Stock are deemed issued pursuant to clause
9(b), such Additional Shares of Common Stock shall be deemed
to be outstanding.
(d) ADJUSTMENTS FOR STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS,
OR CONSOLIDATIONS. In the event that the Corporation shall pay
a stock dividend on the Common Stock, or the outstanding
shares of Common Stock shall be subdivided, combined or
consolidated, by reclassification, stock split or otherwise,
into a greater or lesser number of shares of Common Stock, the
number of Converted Shares in effect immediately prior to such
dividend, subdivision, combination or consolidation shall,
concurrently with the effectiveness of such dividend,
subdivision, combination or consolidation, be proportionately
decreased or increased, as appropriate.
10. RECLASSIFICATION, REORGANIZATION, CONSOLIDATION OR MERGER. Subject to
Section 11, in the event of any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of
the Corporation (other than a subdivision or combination of the
outstanding Common Stock, a change in the par value of the Common Stock
or a transaction subject to Section 9) or in the event of any
consolidation or merger of the Corporation with or into another
corporation (other than a merger in which merger the Corporation is the
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continuing corporation and that does not result in any
reclassification, capital reorganization or other change of outstanding
shares of Common Stock of the class issuable upon conversion of the
Preferred Stock) or in the event of any sale, lease, transfer or
conveyance to another corporation of the property and assets of the
Corporation as an entirety or substantially as an entirety, the
Corporation shall, as a condition precedent to such transaction, cause
effective provisions to be made so that such other corporation shall
assume all of the obligations of the Corporation hereunder and the
Holder shall have the right thereafter, by exercising the Preferred
Stock, to purchase the kind and amount of shares of stock and other
securities and property (including cash) receivable upon such
reclassification, capital reorganization and other change,
consolidation, merger, sale, lease, transfer or conveyance by a holder
of the number of shares of Common Stock that would have been received
upon conversion of the Preferred Stock immediately prior to such
reclassification, capital reorganization, change, consolidation,
merger, sale, lease or conveyance. Any such provision shall include
provision for adjustments in respect of such shares of stock and other
securities and property that shall be as nearly equivalent as may be
practicable to the adjustments provided for in the Preferred Stock. The
foregoing provisions of this Section 10 shall similarly apply to
successive reclassification, capital reorganizations and changes of
shares of Common Stock and to successive changes, consolidations,
mergers, sales, leases, transfers or conveyances. In the event that in
connection with any such capital reorganization, or reclassification,
consolidation, merger, sale, lease, transfer or conveyance, additional
shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, as a whole or in part, for, or of, a security
of the Corporation other than Common Stock, any such issue shall be
treated as an issue of Common Stock covered by the provisions of
Section 7.
11. PURCHASE OF PREFERRED STOCK BY THE CORPORATION.
(a) SPECIAL DEFINITIONS. For purposes of this Section 11, the
following definitions shall apply:
(i) "EVENT DATE" shall be defined as the date of a
purchase by the Corporation of the Preferred Stock.
(b) If prior to February 28, 2005, the Corporation desires to
purchase or otherwise acquire (or is deemed to acquire in any
business combination or otherwise) any of the shares of the
Preferred Stock, for the shares of Preferred Stock acquired,
the Holder shall pay the Corporation a cash payment equal to
an amount calculated by multiplying (1) the number of shares
purchased by the Corporation by (2) a fraction, the numerator
of which is the product of (a) three thousand two hundred
ninety eight dollars and sixty three cents ($3,298.63) and (b)
the number of days from the Event Date through and including
February 28, 2005, and the denominator of which is the number
of shares of outstanding of Preferred Stock.
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For example, if the Corporation purchases 1,000
shares of Preferred Stock on January 1, 2005, and
15,050 shares of Preferred Stock were outstanding,
the cash payment shall be calculated as follows:
(3,298.63 X 59)
-----------------
Cash Payment = 1,000 X 15,050
Cash Payment = 1,000 X 12.93
Cash Payment = $12,931.51
12. TRANSFER TO COMPLY WITH THE SECURITIES ACT. Neither the Preferred
Stock, nor any of the Converted Shares, nor any interest therein, may
be sold, assigned, pledged, hypothecated, encumbered or in any other
manner transferred or disposed of, as a whole or in part, except in
compliance with applicable United States federal and state securities
or Blue Sky laws and the terms and conditions hereof. Each certificate
shall bear a legend in substantially the same form as the legend set
forth below. Each certificate for Converted Shares issued upon
conversion of the Preferred Stock, unless at the time of conversion
such conversion is registered under the Securities Act of 1933, as
amended (the "Securities Act"), shall bear a legend substantially in
the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") NOR REGISTERED OR QUALIFIED UNDER THE SECURITIES OR
BLUE SKY LAWS OF ANY STATE. THE SECURITIES ARE "RESTRICTED"
AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES UNLESS THE
SECURITIES ARE REGISTERED UNDER THE ACT OR PURSUANT TO
AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
ACT AND THE CORPORATION WILL BE PROVIDED WITH AN OPINION OF
COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE.
13. Any certificate for any Converted Shares issued at any time in exchange
or substitution for any certificate for any Converted Shares bearing
such legend (except a new certificate for any Converted Shares issued
after registration of such Converted Shares under the Securities Act)
shall also bear such legend unless, in the opinion of counsel for the
Corporation, the Converted Shares represented thereby need no longer be
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subject to the restriction contained herein. The provisions of this
Section 11 shall be binding upon all subsequent holders of certificates
for Converted Shares bearing the above legend and all subsequent
Holders of the Preferred Stock, if any.
14. LISTING ON SECURITIES EXCHANGES. The Corporation shall use its
reasonable efforts to list on each national securities exchange or
inter-dealer quotation system on which any Common Stock may at any time
be listed all shares of Common Stock from time to time issuable upon
conversion of the Preferred Stock and the Corporation shall maintain
such listing of all shares of Common Stock issuable upon the conversion
of the Preferred Stock so long as any shares of its Common Stock shall
be so listed on such national securities exchange or inter-dealer
quotation system. Any such listing shall be at the Corporation's
expense.
15. AVAILABILITY OF INFORMATION. The Corporation shall provide to Holders
the same information that it provides to holders of its Common Stock.
16. RANKING. The Preferred Stock shall rank senior to the Common Stock of
the Corporation and equal to all other series of Preferred Stock of the
Corporation.
17. WAIVER. No waiver with respect to any provision of this Certificate of
Designation shall be binding or effective without the prior written
consent of the Holders of at least a majority of the Preferred Stock
outstanding at the time such action is taken.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Mayor's Jewelers, Inc. has caused this Certificate
of Designation to be executed in its corporate name by Joseph Keifer, III, its
Senior Vice President, Chief Operating Officer, and attested by Marc Weinstein,
its Secretary, this 20th day of February, 2004.
MAYOR'S JEWELERS, INC.
/s/ JOSEPH KEIFER, III
---------------------------------------------------
By: Joseph Keifer, III
Its: Senior Vice President, Chief Operating Officer
Attest:
By:
/s/ MARC WEINSTEIN
- -------------------------
Marc Weinstein, Secretary
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