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Exhibit 3.3
CERTIFICATE OF AMENDMENT
TO DESIGNATE
SERIES I REDEEMABLE CONVERTIBLE PREFERRED STOCK
$.0001 PAR VALUE PER SHARE
OF
EMCORE CORPORATION
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Pursuant to Sections 14A:9-2(2) and 14A:7-2
of the New Jersey Business Corporations Act
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The undersigned duly authorized officers of EMCORE
CORPORATION, a New Jersey corporation (the "Company"), do hereby certify that
the following resolution was duly adopted as of November 11, 1998, by the Board
of Directors of the Company pursuant to authority conferred by the provisions of
the Restated Certificate of Incorporation of the Company and in accordance with
the provisions of the New Jersey Business Corporations Act:
RESOLVED, that pursuant to authority conferred on the Board of
Directors by the provisions of the Restated Certificate of Incorporation of the
Company (the "Certificate of Incorporation") and recognizing that no shares of
Series A Preferred Stock, $.0001 par value per share of the Company ("Series A
Preferred") have been issued by the Company, the Board of Directors hereby
decreases the number of authorized shares of Series A Preferred to zero; and it
is further
RESOLVED, that pursuant to authority conferred on the Board of
Directors by the provisions of the Certificate of Incorporation of the Company,
both the authorization of a series of Series I Preferred Stock, $.0001 par value
per share, of the Company (the "Series I Preferred Stock"), which shall consist
of 2,000,000 of the 5,882,353 shares of preferred stock which the Company
presently has authority to issue and the issuance of 1,550,000 shares of such
Series I Preferred Stock, be, and the same hereby is, authorized, and the Board
of Directors hereby fixes the powers, designations, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualification, limitation and restrictions thereof (in addition to the
powers, designations, preferences and relative, participating, optional or other
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special rights, and the qualifications, limitations or restrictions thereof, set
forth in the Certificate of Incorporation which may be applicable to the Series
I Preferred Stock) as follows:
1. NUMBER OF SHARES AND DESIGNATION. 2,000,000 shares of the
Preferred Stock, $.0001 par value per share, of the Company are hereby
constituted as a series of the Preferred Stock designated as Series I Preferred
Stock (the "Series I Preferred Stock"). The Series I Preferred Stock will rank
senior to the Common Stock with respect to the payment of dividends and upon
liquidation, dissolution or winding up of the Company.
2. DEFINITIONS. For purposes of the Series I Preferred Stock,
the following terms shall have the meanings indicated.
"Board of Directors" shall mean the board of
directors of the Company or any committee authorized by such
Board of Directors to perform any of its responsibilities with
respect to the Series I Preferred Stock.
"Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the
city of New York are authorized or obligated by law or
executive order to close.
"Change in Control" shall have the meaning set forth
in Section 8 hereof.
"Closing Price" of the Common Stock on any day shall
mean on such day the reported last sales price, regular way,
for the Common Stock or, in case no sale takes place on such
day, the average of the reported closing bid and asked prices,
regular way, for the Common Stock, in either case, as reported
on the National Market system of the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ
National Market") or, if the Common Stock is not quoted on the
NASDAQ National Market, on such national securities exchange
on which the Common Stock is listed or admitted to trading or,
if the Common Stock is not listed or admitted to trading on
any national securities exchange, the average of the closing
bid and asked prices for the Common Stock on such day in the
over-the-counter market as reported by NASDAQ or, if bid and
asked prices for the Common Stock on each such date shall not
have been reported by NASDAQ, the average of the bid and asked
prices of the Common Stock for such day as furnished by any
NASD member firm regularly making a market in the Common Stock
selected for such purpose by the Board of Directors or, if no
such quotations are available, the fair market value of the
Common Stock furnished by any NASD member firm selected from
time to time by the Board of Directors for that purpose.
"Common Stock" shall mean the common stock of the
Company, no par value per share.
"Conversion Price" shall mean the conversion price
per share of Common Stock into which the Series I Preferred
Stock is convertible, as such Conversion
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Price may be adjusted pursuant to Section 7 hereof. The
initial Conversion Price will be $14.00 (equivalent to the
conversion rate of one share of Common Stock for each share of
Series I Preferred Stock).
"Current Market Price" per share of Common Stock on
any date shall mean the average of the daily Closing Prices
for the 20 consecutive Trading Dates commencing 30 Trading
Dates before the date of determination.
"dividend payment date" shall have the meaning set
forth in Section 3(a) hereof.
"dividend payment record date" shall have the meaning
set forth in Section 3(a) hereof.
"Dividend Period" shall mean quarterly dividend
periods commencing on March 31, June 30, September 30 and
December 31, and continuing through and including the day
preceding the first day of the next succeeding Dividend Period
(other than the initial Dividend Period, which shall commence
on the Issue Date).
"Issue Date" shall mean the first date on which
shares of Series I Preferred Stock are issued.
"Person" shall mean any individual, firm,
partnership, corporation or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Trading Date" or "Trading Day" with respect to
Common Stock means (i) if the Common Stock is quoted on the
NASDAQ National Market, or any similar system of automated
dissemination of quotations of securities prices, a day on
which trades may be made on such system, (ii) if the Common
Stock is listed or admitted for trading on a national
securities exchange, a day or on which such national
securities exchange is open for business, (iii) if not quoted
as described in clauses (i) or (ii), days on which quotations
are reported by the National Quotation Bureau Incorporated, or
(iv) otherwise, any Business Day.
"Transaction" shall have the meaning set forth in
Section 7(a) hereof.
"Transfer Agent" means the Company or such other
agent or agents of the Company as may be designated by the
Board of Directors from time to time as the transfer agent for
the Series I Preferred Stock.
3. DIVIDENDS.
(a) The holders of shares of the Series I Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available therefor, cumulative cash dividends at
an annual rate of 2% of the liquidation preference per share (an amount
initially equivalent to $.28 per annum per share) of Series I
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Preferred Stock, payable at the option of the Company in cash or additional duly
and validly issued, fully paid and non-assessable shares of Series I Preferred
Stock, free from all taxes, liens and charges with respect to the issuance
thereof, which will be valued at the liquidation preference (without giving
effect to accrued and unpaid dividends) as of the relevant dividend payment
record date. Notwithstanding the foregoing, the Company shall not be required to
issue fractional shares of Series I Preferred Stock; the Company may elect, in
its sole discretion, independently for each holder, whether such number of
shares (on an aggregated basis) will be rounded up to the nearest whole share or
whether such holder will be given cash in lieu of any fractional shares. Such
dividends shall be cumulative from the Issue Date, whether or not in any
Dividend Period or Periods there shall be funds of the Company legally available
for the payment of such dividends and whether or not such dividends are declared
and shall be payable quarterly, when, as and if declared by the Board of
Directors on March 31, June 30, September 30 and December 31 in each year (each
a "dividend payment date"), commencing on December 31, 1998. If December 31,
1998 or any other dividend payment date shall be on a day other than a Business
Day, then the dividend shall be payable on the next following Business Day.
Dividends are payable in arrears to the holders of record of shares of the
Series I Preferred Stock, as they appear on the stock records of the Company at
the close of business on those dates (each such date, a "dividend payment record
date"), not less than 10 days nor more than 60 days preceding the dividend
payment dates thereof, as shall be fixed by the Board of Directors. Dividends on
the Series I Preferred Stock shall accrue (whether or not declared) on a daily
basis from the Issue Date and accrued dividends for each Dividend Period shall
accumulate to the extent not paid on the dividend payment date first following
the Dividend Period for which they accrue. As used herein, the term "accrued"
with respect to dividends includes both accrued and accumulated dividends.
Accrued and unpaid dividends for any past Dividend Periods may be declared and
paid at any time, without reference to any regular dividend payment date, to
holders of record on the record date, not less than 10 nor more than 60 days
preceding the payment date thereof, as may be fixed by the Board of Directors.
(b) The amount of dividends payable for each full
Dividend Period for the Series I Preferred Stock shall be computed by dividing
the annual dividend rate by four (rounded to the nearest tenth of a cent). The
amount of dividends payable for the initial Dividend Period on the Series I
Preferred Stock, or any other period shorter or longer than a full Dividend
Period on the Series I Preferred Stock, shall be computed on the basis of a
360-day year consisting of twelve 30-day months. Holders of shares of Series I
Preferred Stock called for redemption on a redemption date falling between the
close of business on a dividend payment record date and the close of business on
the corresponding dividend payment date shall, in lieu of receiving such
dividend on the dividend payment date fixed therefor, receive such dividend
payment together with all other accrued and unpaid dividends on the date fixed
for redemption (unless such holder converts such shares in accordance with
Section 7 hereof). Holders of shares of Series I Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or securities, in
excess of cumulative dividends, as herein provided, on the Series I 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 I Preferred Stock
which are in arrears.
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(c) So long as any shares of the Series I Preferred
Stock are outstanding, no dividends, except as described in the next succeeding
sentence, shall be declared or paid or set apart for payment on any class or
series of stock of the Company ranking, as to dividends, on a parity with the
Series I Preferred Stock, for any period unless full cumulative dividends have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof is set apart for such payment on the Series I Preferred
Stock for all Dividend Periods terminating on or prior to the date of payment,
or setting apart for payment, of such dividends on such parity stock. When
dividends are not paid in full or a sum sufficient for such payment is not set
apart, as aforesaid, upon the shares of the Series I Preferred Stock and any
other class or series of stock ranking on a parity as to dividends with the
Series I Preferred Stock, all dividends declared upon shares of the Series I
Preferred Stock and all dividends declared upon such other stock shall be
declared pro rata so that the amounts of dividends per share declared on the
Series I Preferred Stock and such other stock shall in all cases bear to each
other the same ratio that accrued dividends per share on the shares of the
Series I Preferred Stock and on such other stock bear to each other.
(d) So long as any shares of the Series I Preferred
Stock are outstanding, no other stock of the Company ranking on a parity with
the Series I Preferred Stock as to dividends or upon liquidation, dissolution or
winding up shall be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund or
otherwise for the purchase or redemption of any shares of any such stock) by the
Company (except by conversion into or exchange for stock of the Company ranking
junior to the Series I Preferred Stock as to dividends and upon liquidation,
dissolution or winding up) unless (i) the full cumulative dividends, if any,
accrued on all outstanding shares of the Series I Preferred Stock shall have
been paid or set apart for payment for all past Dividend Periods and (ii)
sufficient funds shall have been set apart for the payment of the dividend for
the current Dividend Period with respect to the Series I Preferred Stock and for
the current dividend period with respect to any other stock of the Company
ranking on a parity with the Series I Preferred Stock as to dividends.
(e) So long as any shares of the Series I 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, Common Stock or other stock ranking junior to the Series I Preferred Stock
as to dividends and upon liquidation, dissolution or winding up) shall be
declared or paid or set apart for payment and no other distribution shall be
declared or made or set apart for payment, in each case, upon the Common Stock
or other stock of the Company ranking junior to the Series I Preferred Stock as
to dividends or upon liquidation, dissolution or winding up, nor shall any
Common Stock nor any other such stock of the Company ranking junior to the
Series I Preferred Stock as to dividends or upon liquidation, dissolution or
winding up be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund or otherwise for
the purchase or redemption of any shares of any such stock) by the Company
(except by conversion into or exchange for stock of the Company ranking junior
to the Series I Preferred Stock as to dividends and upon liquidation,
dissolution or winding up) unless, in each case (i) the full cumulative
dividends, if any, accrued on all outstanding shares of the Series I Preferred
Stock and any other
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stock of the Company ranking on a parity with the Series I Preferred Stock as to
dividends shall have been paid or set apart for payment for all past Dividend
Periods and all past dividend periods with respect to such other stock and (ii)
sufficient funds shall have been set apart for the payment of the dividend for
the current Dividend Period with respect to the Series I Preferred Stock and for
the current dividend period with respect to any other stock of the Company
ranking on a parity with the Series I Preferred Stock as to dividends.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, the holders of the
shares of Series I Preferred Stock shall be entitled to receive out of assets of
the Company available for distribution to shareholders $14.00 per share (as
adjusted for any stock combinations or splits with respect to the Series I
Preferred Stock) plus an amount per share equal to all dividends (whether or not
earned or declared) accrued and unpaid thereon to the date of final distribution
to such holders (collectively, the "Liquidation Preference") before any payment
or distribution of the assets of the Company (whether capital or surplus) shall
be made to or set apart for the holders of Common Stock or any other series or
class or classes of stock of the Company ranking junior to the Series I
Preferred Stock upon liquidation, dissolution or winding up of the Company and
no payments or distributions of any assets of the Company shall be made to the
holders of any class or series of stock ranking on a parity with the Series I
Preferred Stock in respect of the distribution of assets upon dissolution,
liquidation or winding up unless there shall likewise be paid at the same time
to the holders of the Series I Preferred Stock a like proportionate amount
determined ratably in proportion to the full amounts to which the holders of all
outstanding shares of Series I Preferred Stock and the holders of all
outstanding shares of such parity stock are respectively entitled with respect
to such distribution. If, upon any liquidation, dissolution or winding up of the
Company, the assets of the Company, or proceeds thereof, distributable among the
holders of the shares of Series I Preferred Stock shall be insufficient to pay
in full the preferential amount aforesaid and liquidating payments on any other
shares of stock ranking, as to the liquidation, dissolution or winding up, on a
parity with the Series I Preferred Stock, then such assets, or the proceeds
thereof, shall be distributed among the holders of shares of Series I Preferred
Stock and any such other stock ratably in accordance with the respective amounts
which would be payable on such shares of Series I Preferred Stock and any such
other stock if all amounts payable thereon were paid in full. For the purposes
of this Section 4, (i) a consolidation or merger of the Company with one or more
corporations or other entities, (ii) a sale, lease, exchange or transfer of all
or any part of the Company's assets or (iii) a statutory share exchange shall
not be deemed to be a liquidation, dissolution or winding up of the Company,
voluntary or involuntary.
(b) Subject to the rights of the holders of shares of
any series or class of stock ranking on a parity with the Series I Preferred
Stock upon liquidation, dissolution or winding up, upon any liquidation,
dissolution or winding up of the Company, after payment shall have been made in
full to the holders of Series I Preferred Stock, as provided in this Section 4,
any other series or class or classes of stock ranking junior to the Series I
Preferred Stock upon liquidation, dissolution or winding up shall, subject to
the respective terms and provisions (if
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any) applying thereto, be entitled to receive any and all assets remaining to be
paid or distributed, and the holders of Series I Preferred Stock shall not be
entitled to share therein.
(c) Written notice of any liquidation, dissolution or
winding up of the Company, stating the payment date or dates when and the place
or places where the amounts distributable in such circumstances shall be
payable, shall be given by first class mail, postage prepaid, not less than 30
days prior to any payment date stated therein, to the holders of record of the
Series I Preferred Stock at their respective addresses as the same shall appear
on the books of the Transfer Agent.
5. REDEMPTION.
(a) Except as provided in Section 5(b) hereof, the
shares of Series I Preferred Stock may not be redeemed by the Company prior to
such date as the Closing Price of the Company's Common Stock is $28.00 or more
per share for 30 consecutive Trading Dates, on or after which the Company, at
its option, may redeem the shares of the Series I Preferred Stock, in whole or
in part, at any time or from time to time out of funds legally available
therefor, subject to the notice provisions and provisions for partial redemption
described below, at a price equal to $14.00 per share (as adjusted for any stock
combinations or splits with respect to the Series I Preferred Stock) plus a cash
amount equal to accrued and unpaid dividends, if any, to (and including) the
date of redemption.
(b) The Company shall redeem all outstanding shares
of the Series I Preferred Stock on November 17, 2003 at a price of $14.00 per
Share (as adjusted for any stock combinations or splits with respect to the
Series I Preferred Stock), plus accrued and unpaid dividends.
(c) In the event the Company shall redeem shares of
Series I Preferred Stock pursuant to Section 5(a) or 5(b) hereof, notice of such
redemption shall be given not less than 30 nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at such
holder's address as the same appears on the stock records of the Company. Each
such notice shall state: (i) the redemption date; (ii) the number of shares of
Series I Preferred Stock to be redeemed and, if less than all the shares held by
such holder are to be redeemed, the number of such shares to be redeemed from
such holder; (iii) the redemption price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the redemption
price; (v) the then current conversion price; (vi) that dividends on the shares
to be redeemed shall cease to accrue on such redemption date and (vii) that
shares of Series I Preferred Stock called for redemption may be converted at any
time prior to the close of business on the date of redemption. Notice having
been given as aforesaid, from and after the redemption date, unless the Company
shall be in default in providing money for the payment of the redemption price
(including any accrued and unpaid dividends to (and including) the date fixed
for redemption), (i) dividends on the shares of the Series I Preferred Stock so
called for redemption shall cease to accrue, (ii) said shares shall be deemed no
longer outstanding, and (iii) all rights of the holders thereof as shareholders
of the Company (except the right to receive from the Company the moneys payable
upon redemption without interest thereon) shall cease. The
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Company's obligation to provide moneys in accordance with the preceding sentence
shall be deemed fulfilled if, on or before the redemption date, the Company
shall deposit with a bank or trust company having a capital and surplus of at
least $50,000,000, funds necessary for such redemption, in trust for the account
of the holders of the shares to be redeemed (and so as to be and continue to be
available therefor), with irrevocable instructions and authority to such bank or
trust company that such funds be applied to the redemption of the shares of
Series I Preferred Stock so called for redemption. Any interest accrued on such
funds shall be paid to the Company from time to time. Any funds so deposited and
unclaimed at the end of three years from such redemption date shall be released
or repaid to the Company, after which, subject to any applicable laws relating
to escheat or unclaimed property, the holder or holders of such shares of Series
I Preferred Stock so called for redemption shall look only to the Company for
payment of the redemption price.
(d) Upon surrender in accordance with said notice of the
certificates for any such shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors shall so require and the notice shall so
state), such shares shall be redeemed by the Company at the applicable
redemption price aforesaid. If fewer than all the outstanding shares of Series I
Preferred Stock are to be redeemed, shares to be redeemed shall be selected by
the Company from outstanding shares of Series I Preferred Stock not previously
called for redemption by lot or pro rata (as near as may be). If fewer than all
the shares represented by any certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares without cost to the holder thereof.
(e) Notwithstanding the foregoing, if notice of redemption has
been given pursuant to this Section 5 and any holder of shares of Series I
Preferred Stock shall, prior to the close of business on the redemption date,
give written notice to the Company pursuant to Section 7(b) hereof of the
conversion of any or all of the shares to be redeemed held by such holder
(accompanied by a certificate or certificates for such shares, duly endorsed or
assigned to the Company), then the conversion of such shares to be redeemed
shall become effective as provided in Section 7.
6. SHARES TO BE RETIRED. All shares of Series I Preferred
Stock purchased, redeemed, exchanged or converted by the Company shall be
retired and canceled and shall be restored to the status of authorized but
unissued shares of Preferred Stock, without designation as to series, and may
thereafter be reissued.
7. CONVERSION. Holders of shares of Series I Preferred Stock
shall have the right to convert all or a portion of such shares (including
fractions 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 I Preferred Stock
shall have the right, at such holder's option, at any time (except that, with
respect to any shares called for redemption or exchange, such right shall
terminate at the close of business on the date fixed for redemption or exchange
of such shares) to convert any of such shares (or fractions thereof) into the
number of fully paid and non-
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assessable shares of Common Stock (as such shares shall then be constituted)
obtained by dividing the aggregate liquidation preference of the shares to be
converted by the Conversion Price and by surrender of such shares, such
surrender to be made in the manner provided in Section 7(b). Subject to the
following provisions of this Section 7(a), any shares of Series I Preferred
Stock may be converted, at the option of its holder, in part into Common Stock
under the procedure set forth above. If a part of a share of Series I Preferred
Stock is converted, then the Company will convert such share into the
appropriate number of shares of Common Stock (subject to Section 7(c)). No
fractional shares or securities representing fractional shares of Common Stock
will be issued upon conversion; in lieu of fractional shares of Common Stock,
the Company will pay a cash adjustment based upon the Closing Price of the
Common Stock at the close of business on the first Trading Date preceding the
date of conversion.
(b) In order to exercise the conversion right, the
holder of each share of Series I Preferred Stock (or fraction thereof) to be
converted shall surrender the certificate representing such share, duly endorsed
or assigned to the Company or in blank, at the office of the Transfer Agent,
which shall initially be the Company, accompanied by funds, if any, required by
the last paragraph of this Section 7(b), and shall give written notice to the
Company in the form set forth on the reverse of the stock certificates for the
Series I Preferred Stock that the holder thereof elects to convert such Series I
Preferred Stock or a specified portion thereof. Such notice shall also state the
name or names (with address) in which the certificate or certificates for shares
of Common Stock which shall be issuable upon such conversion shall be issued,
and shall be accompanied by funds in an amount sufficient to pay any transfer or
similar tax resulting from the issuance of certificates in a name other than the
name of the holder of the Series I Preferred Stock. Each share surrendered for
conversion shall, unless the shares issuable on conversion are to be issued in
the same name as the name in which such share of Series I Preferred Stock is
registered, be duly endorsed by, or be accompanied by instruments of transfer
(in each case, in form satisfactory to the Company), duly executed by the holder
or such holder's duly authorized attorney.
As promptly as practicable after the surrender of
certificates for shares of Series I Preferred Stock for conversion and the
receipt of such notice and funds, if any, as aforesaid, the Company shall issue
and shall deliver at such office to such holder, or 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 I Preferred Stock in
accordance with the provisions of this Section 7, a certificate or certificates
representing any shares of Series I Preferred Stock not so surrendered for
conversion but previously evidenced by the stock certificate representing shares
of Series I Preferred Stock surrendered for conversion and a check or cash in
respect of any fractional interest in respect of a share of Common Stock arising
upon such conversion, as provided in Section 7(c).
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 I Preferred Stock shall have been surrendered (accompanied
by the funds, if any, required by the last paragraph of this section 7(b)) and
such notice shall have been received by the Company as aforesaid, and the person
or persons in whose name or names any certificate or certificates for shares of
Common
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Stock shall be issuable upon such conversion shall be deemed to have become on
said date the holder or holders of record of the shares represented thereby;
provided, however, that any surrender on any date when the stock transfer books
of the Company shall be closed shall cause the person or persons in whose name
or names the certificates are to be issued to become the holder or holders of
record thereof for all purposes on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion Price in
effect on the date upon which such shares shall have been surrendered. All
shares of Common Stock delivered upon conversion of the Series I Preferred Stock
will, upon delivery, be duly and validly issued, fully paid and nonassessable,
free from all taxes, liens and charges with respect to the issuance thereof.
If a Holder shall surrender a share of Series I
Preferred Stock for conversion during the period from the close of business on
any dividend payment record date to the close of business on the following
dividend payment date, such holder shall nevertheless be entitled to receive the
dividend payable on such shares on such dividend payment date notwithstanding
the conversion thereof following the close of business on such former dividend
payment record date and prior to the close of business on such latter dividend
payment date. However, shares of Series I Preferred Stock surrendered for
conversion during the period between the close of business on any dividend
payment record date and the close of business on the corresponding dividend
payment date (except shares called for redemption or exchange on a redemption
date or exchange date during such period) must be accompanied by payment of an
amount equal to the dividend payment for the then current Dividend Period with
respect to such share of Series I Preferred Stock presented for conversion on
such dividend payment date; provided, however, that no such payment need be made
if, at the time of conversion, dividends payable on the shares of Series I
Preferred Stock outstanding shall be in arrears for more than 30 days beyond the
previous dividend payment date. The dividend payment with respect to shares of
Series I Preferred Stock which are called for redemption on a redemption date
during the period from the close of business on a dividend payment record date
to the close of business on the corresponding dividend payment date shall be
payable on such dividend payment date to the holder of record of such shares on
the books of the Company at the close of business on the dividend payment record
date notwithstanding the conversion of such shares during the period between the
close of business on such dividend payment record date and the close of business
on such dividend payment date, and the holder of such shares need not make a
payment equal to the dividend payment amount upon surrender of such shares for
conversion. A holder of shares of Series I Preferred Stock on a dividend payment
record date will receive the dividend payable by the Company on such shares of
Series I Preferred Stock surrendered for conversion. Except as provided above,
the Company shall make no payment or allowances for unpaid dividends, whether or
not in arrears, on converted shares or for dividends on the shares of Common
Stock issued upon such conversion.
(c) In connection with the conversion of any shares
of Series I Preferred Stock, fractions of such shares may be converted; however,
no fractional shares or scrip representing fractions of shares of Common Stock
shall be issued upon conversion of the Series I Preferred Stock. If more than
one share (or fraction thereof) shall be surrendered for conversion at one time
by the same holder, the number of full shares of Common Stock issuable upon
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conversion thereof shall be computed on the basis of the aggregate number of
shares of Series I Preferred Stock so surrendered. If any fractional share of
Common Stock would otherwise be issuable upon the conversion of a share of
Series I Preferred Stock (or fraction thereof), the Company shall make an
adjustment therefor in cash (computed to the nearest cent) equal to the Closing
Price of Common Stock on the Trading Date immediately preceding the date of
conversion multiplied by the fraction of a share of Common Stock otherwise
issuable.
(d) The Conversion Price shall be adjusted from time
to time by the Company as follows:
(i) This section intentionally omitted.
(ii) In case the Company shall issue after
the Issue Date rights or warrants to all holders of Common Stock
entitling them to subscribe for or purchase Common Stock at a price per
share less than the Current Market Price per share of Common Stock at
the record date for the determination of shareholders entitled to
receive such rights or warrants, then the Conversion Price in effect
immediately prior thereto shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect
immediately prior to the date of issuance of such rights or warrants by
(B) a fraction, the numerator of which shall be the sum of (1) the
number of shares of Common Stock outstanding on the date of issuance of
such rights or warrants (without giving effect to any such issuance)
and (2) the number of shares of Common Stock which the aggregate
proceeds from the exercise of such rights or warrants for Common Stock
would purchase at such Current Market Price, and the denominator of
which shall be the sum of (1) the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants (without
giving effect to any such issuance) and (2) the number of additional
shares of Common Stock offered for subscription or purchase. Such
adjustment shall be made successively whenever any such rights or
warrants are issued, and shall become effective immediately after such
record date. In determining whether any rights or warrants entitle the
holder of Common Stock to subscribe for or purchase shares of Common
Stock at less than such Current Market Price, there shall be taken into
account any consideration received by the Company upon issuance and
upon exercise of such rights or warrants, the value of such
consideration, if other than cash, to be reasonably determined in good
faith by the Board of Directors.
(iii) In case the Company shall pay a
dividend or make a distribution to all holders of its Common Stock
after the Issue Date of any shares of capital stock of the Company or
its subsidiaries (other than Common Stock, which shall be subject to
adjustment pursuant to Section 7(d)(vi)) or evidences of indebtedness
of the Company or its subsidiaries or assets (including securities, but
excluding those rights, warrants, dividends and distributions referred
to in subparagraph (ii) and (vi) of this Section 7(d)), excluding
dividends or distributions in connection with the liquidation,
dissolution or winding up of the Company and excluding cash dividends
referred to in subparagraph (v) of this Section 7(d) then in each such
case, the Conversion Price shall be adjusted so that it shall equal the
price determined by multiplying (A) the Conversion
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Price in effect on the record date mentioned below by (B) a fraction,
the numerator of which shall be the Current Market Price per share of
the Common Stock on the record date mentioned below less the then fair
market value (as determined by the Board of Directors, whose
determination shall, if made in good faith, be conclusive) as of such
record date of the portion of the capital stock or evidences of
indebtedness or assets so distributed or of such rights or warrants
applicable to one share of Common Stock, and the denominator of which
shall be the Current Market Price per share of the Common Stock on such
record date. Such adjustment shall become effective immediately, except
as provided in Section 7(h) below, after the record date for the
determination of shareholders entitled to receive such distribution.
(iv) Notwithstanding anything in
subparagraphs (ii) and (iii) of this Section 7(d), if such rights or
warrants shall by their terms provide for an increase or increases (or
decrease or decreases) with the passage of time or otherwise in the
price payable to the Company upon the exercise thereof, the Conversion
Price upon any such increase or decrease becoming effective shall
forthwith be readjusted (but, in case of an increase or increases in
exercise price, to no greater extent than originally adjusted by reason
of such issuance or sale) to reflect the same. Upon the expiration or
termination of such rights or warrants, if any such rights or warrants
shall not have been exercised, then the Conversion Price shall
forthwith be readjusted and thereafter be the rate which it would have
been had an adjustment been made on the basis that (A) the only rights
or warrants issued or sold were those so exercised and they were issued
or sold for the consideration actually received by the Company for the
granting of all such options, rights or warrants whether or not
exercised and (B) the Company issued and sold a number of shares of
Common Stock equal to those actually issued upon exercise of such
rights, and such shares were issued and sold for a consideration equal
to the aggregate exercise price in effect under the exercise rights
actually exercised at the respective dates of their exercise. For
purposes of subparagraphs (ii) and (iii) of this Section 7(d), the
aggregate consideration received by the Company in connection with the
issuance of shares of Common Stock or of rights or warrants shall be
deemed to be equal to the sum of the aggregate offering price (before
deduction of underwriting discounts or commissions and expenses payable
to third parties) of all such securities plus the minimum aggregate
amount, if any, payable upon the exercise of such rights or warrants
into shares of Common Stock.
(v) In case the Company shall, by dividend
or otherwise, at any time distribute to all holders of the Common Stock
cash (excluding any cash that is distributed as part of a distribution
referred to in subparagraph (iii) of this Section 7(d) or in connection
with a transaction to which Section 7(e) applies) in an aggregate
amount that, together with (A) the aggregate amount of any other
distributions to all holders of the Common Stock made exclusively in
cash within the 12 months preceding the date fixed for the
determination of shareholders entitled to such distribution and in
respect of which no Conversion Price adjustment has been made
previously and (B) the aggregate amount of any cash plus the fair
market value (as determined by the Board of Directors, whose
determination shall, if made in good faith, be conclusive) as of such
date of
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determination of any other consideration payable in respect of any
tender or exchange offer or other purchase by the Company or a
subsidiary of the Company for all or any portion of the Common Stock
consummated within 12 months preceding such date of determination and
in respect of which no Conversion Price adjustment has been made
previously, exceeds 5.0% of the product of the Current Market Price per
share of Common Stock multiplied by the number of shares of Common
Stock outstanding on such date, then in each such case the Conversion
Price shall be reduced (but not increased) so that it shall equal the
price obtained by multiplying the Conversion Price in effect
immediately prior to the close of business on such date of
determination by a fraction of which the numerator shall be (x) the
product of the Current Market Price per share of Common Stock on such
date, multiplied by the number of shares of Common Stock outstanding on
such date, less (y) the sum of (i) the aggregate amount of cash to be
distributed at such time, (ii) the aggregate amount of any other
distributions to holders of Common Stock made exclusively in cash
within the preceding 12 months, in respect of which no Conversion Price
adjustment has been made previously, and (iii) the aggregate amount of
any cash plus the fair market value (determined as aforesaid) of any
other consideration payable in respect of any tender or exchange offer
or other purchase by the Company or a subsidiary of the Company for all
or any portion of the Common Stock within the preceding 12 months, in
respect of which no Conversion Price adjustment has been made
previously; and the denominator shall be the product of such Current
Market Price, multiplied by the number of shares of Common Stock
outstanding on such date. Such reduction shall become effective
immediately prior to the opening of business on the date after such
determination.
(vi) In case outstanding shares of Common
Stock shall be subdivided into a greater number of shares of Common
Stock or in case the Company effects a dividend of Common Stock to the
holders of its Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such
subdivision becomes effective or the record date of such dividend, as
the case may be, shall be proportionately reduced, and, conversely in
case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the conversion price in
effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become
effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes
effective.
(vii) The reclassification of Common Stock
into securities which include securities other than Common Stock (other
than any reclassification upon a consolidation or merger) shall be
deemed to involve (i) a distribution of such securities other than
Common Stock to all holders of Common Stock (and the effective date of
such reclassification shall be deemed to be the "date fixed for a
determination of shareholders entitled to such distribution" within the
meaning of paragraph (iii) of this Section and (ii) a subdivision or
combination, as the case may be, of the number of shares of Common
Stock outstanding immediately prior to such reclassification into the
number of shares of
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Common Stock outstanding immediately thereafter (and the effective date
of such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination
becomes effective," as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of
paragraph (vi) of this Section). Rights or warrants issued by the
Company to all holders of the Common Stock that entitle the holders
thereof to subscribe for or purchase shares of Common Stock (either
initially or under certain circumstances), which rights or warrants (i)
are deemed to be transferred with such shares of Common Stock, (ii) are
not exercisable and (iii) are also issued in respect of future
issuances of Common Stock, in each case in clauses (i) through (iii)
until the occurrence of a specified event or events ("Trigger Event"),
shall for purposes of this Section 7(d)(vii) not be deemed issued until
the occurrence of the earliest Trigger Event.
(viii) In case a tender or exchange offer or
other purchase made by the Company or any subsidiary of the Company for
all or any portion of the Common Stock shall be consummated and such
tender or exchange offer or purchase shall involve an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose determination shall, if made in good faith, be
conclusive) as of the last time (the "Expiration Time") that tenders or
exchanges may be made pursuant to such tender or exchange offer (as it
shall have been amended) or the date of such other purchase, as the
case may be, that, together with (A) the aggregate amount of the cash
plus the fair market value (as determined by the Board of Directors,
whose determination shall, if made in good faith, be conclusive) as of
the Expiration Time of any other consideration paid in respect of any
other tender or exchange offer or other purchase by the Company or a
subsidiary of the Company for all or any portion of the Common Stock
consummated within 12 months preceding the Expiration Time and in
respect of which no Conversion Price adjustment has been made
previously and (B) the aggregate amount of any distributions to all
holders of the Common Stock made exclusively in cash within the 12
months preceding the Expiration Time and in respect of which no
Conversion Price adjustment has been made previously, exceeds 5.0% of
the product of the Current Market Price per share of Common Stock
immediately prior to the Expiration Time times the number of shares of
Common Stock outstanding (including any tendered, exchanged or
purchased shares) at the Expiration Time, then in each such case the
Conversion Price shall be reduced (but not increased) so that it shall
equal the price obtained by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction of which the
numerator shall be (x) the product of the Current Market Price per
share of Common Stock immediately prior to the Expiration Time,
multiplied by the number of shares of Common Stock outstanding
(including any tendered, exchanged or purchased shares) at the
Expiration Time less (y) the sum of (i) the aggregate amount of cash
plus the fair market value (determined as aforesaid) of any other
consideration payable in respect of such tender or exchange offer or
other purchase, (ii) the aggregate amount of any distributions to
holders of Common Stock made exclusively in cash within the preceding
12 months, in respect of which no Conversion Price adjustment has been
made previously, and (iii) the aggregate amount of any cash plus the
fair market value (determined as aforesaid) of any other consideration
payable in respect to any other
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tender or exchange offer or other purchase by the Company or a
subsidiary of the Company for all or any portion of the Common Stock
within the preceding 12 months, in respect of which no Conversion Price
adjustment has been made previously; and the denominator shall be the
product of such Current Market Price, multiplied by the number of
shares of Common Stock outstanding (excluding any tendered, exchanged
or purchased shares) at the Expiration Time. Such reduction shall
become effective immediately prior to the opening of business on the
date following the Expiration Time; provided, however, that if the
number of tendered, exchanged or purchased shares or the aggregate
consideration payable therefor has not been finally determined by such
opening of business, the adjustment required by this subparagraph
(viii) shall be made based upon the number of tendered, exchanged or
purchased shares and the aggregate consideration payable therefor as so
finally determined.
(ix) No adjustment in the Conversion Price
shall be required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that any
adjustments which by reason of this subparagraph (ix) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment; and provided, further, that any adjustment
required in order to preserve the tax-free nature of a distribution to
the holders of shares of Common Stock shall be made when so required.
All calculations under this Section 7 shall be made to the nearest cent
(with $.005 being rounded upward). Anything in this Section 7(d) to the
contrary notwithstanding, the Company shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in
addition to those required by this Section 7(d), as it in its
discretion shall determine to be advisable in order that any stock
dividends, subdivision or combination of shares, distribution of
capital stock or rights or warrants to purchase stock or securities,
distribution of evidences of indebtedness or assets or any other
transaction which could be treated as any of the foregoing transactions
pursuant to Section 305 of the Internal Revenue Code of 1986, as
amended (and any successor provision), hereafter made by the Company to
its shareholders shall not be taxable to such shareholders.
(e) Subject to the provisions of Section 8, in case
the Company shall be a party to any transaction (including, without limitation,
a merger, consolidation, sale of all or substantially all of the Company's
assets, or recapitalization of the Common Stock and excluding any transaction as
to which paragraph (d)(iii), (vi) or (vii) of this Section 7 applies) (each of
the foregoing being referred to as a "Transaction"), in each case as a result of
which shares of Common Stock shall be converted into the right to receive stock,
securities or other property (including cash or any combination thereof), then
each share of the Series I Preferred Stock will thereafter no longer be subject
to conversion into Common Stock pursuant to Section 7, but instead shall be
convertible into the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such Transaction
by a holder of that number of shares or fraction thereof of Common Stock into
which one share of Series I Preferred Stock was convertible immediately prior to
such Transaction. The Company shall not be a party to any Transaction unless the
terms of such Transaction are consistent with the provisions of this Section
7(e) and it shall not consent or agree to the occurrence of any
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Transaction until the Company has entered into an agreement with the successor
or purchasing entity, as the case may be, for the benefit of the holders of the
Series I Preferred Stock which will contain provisions enabling the holders of
the Series I Preferred Stock which remains outstanding after such Transaction to
convert into the kind and amount of stock, securities or other property
(including cash or any combination thereof) which such holder would have been
entitled to receive if such holder had held the Common Stock issuable upon
conversion of such Series I Preferred Stock immediately prior to such
Transaction. In the event that at any time, as a result of an adjustment made
pursuant to this Section 7, the Series I Preferred Stock shall become subject to
conversion into any securities other than shares of Common Stock, thereafter the
number of such other securities so issuable upon conversion of the shares of
Series I Preferred Stock shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares of Series I Preferred Stock contained in this Section 7.
The provisions of this Section 7(e) shall similarly apply to successive
Transactions.
(f) If:
(i) the Company shall take any action which would
require an adjustment in the Conversion Price pursuant to Section 7(d);
or
(ii) the Company shall authorize the granting to the
holders of its Common Stock generally of rights or warrants to
subscribe for or purchase any shares of any class or any other rights
or warrants; or
(iii) there shall be any reclassification or change
of the Common Stock (other than a subdivision or combination of its
outstanding Common Stock or a change in par value) or any
consolidation, merger or statutory share exchange to which the Company
is a party and for which approval of any shareholders of the Company is
required, or the sale or transfer of all or substantially all of the
assets of the Company or any Change in Control (each as defined in
Section 8 below) or any Transaction; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, except as provided otherwise in Section 8, the Company shall
cause to be filed with the Transfer Agent (if different than the
Company) and shall cause to be given to the holders of shares of the
Series I Preferred Stock, as promptly as possible, but at least 30 days
prior to the applicable date hereinafter specified, a notice stating
(A) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or rights
or warrants are to be determined or (B) the date on which such
reclassification, change, consolidation, merger, statutory share
exchange, sale, Change in Control, transfer, dissolution, Transaction,
liquidation or winding up is expected to become effective or occur, and
the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable
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upon such reclassification, change, consolidation, merger, statutory
share exchange, sale, Change in Control, transfer, dissolution,
liquidation or winding up. Failure to give such notice or any defect
therein shall not affect the legality or validity of the proceedings
described in this Section 7(f).
(g) Whenever the Conversion Price is adjusted as
herein provided, the Company shall promptly file with the Transfer Agent (if
different than the Company) or, if the Transfer Agent is the Company, shall
provide to all holders of Series I Preferred Stock an officer's certificate
signed by the President or a Vice President and the Chief Financial Officer or
the Treasurer setting forth a brief statement of the facts requiring such
adjustment and upon which such adjustments are based. Promptly after delivery of
such certificate, the Company shall prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price, the facts
requiring such adjustment and upon which such adjustments are based, the
calculation of the Conversion Price adjustment and the date on which such
adjustment becomes effective and shall give such notice of such adjustment of
the Conversion Price to the holder of each share of Series I Preferred Stock.
(h) In any case in which Section 7(d) provides that
an adjustment shall become effective immediately after a record date for an
event and the date fixed for such adjustment pursuant to Section 7 occurs after
such record date but before the occurrence of such event, the Company may defer
until the actual occurrence of such event (i) issuing to the holder of any
shares of Series I Preferred Stock converted after such record date and before
the occurrence of such event the additional shares of 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 (ii) paying to such holder any amount in cash in lieu of any
fraction pursuant to Section 7(c).
(i) For purposes of this Section 7, the number of
shares of Common Stock at any time outstanding shall not include any shares of
Common Stock then owned or held by or for the account of the Company or any
corporation controlled by the Company.
(j) Notwithstanding any other provision herein to the
contrary, the issuance of any shares of Common Stock pursuant to any plan
providing for the reinvestment of dividends or interest payable on securities of
the Company and the investment of additional optional amounts of shares of
Common Stock under any such plan shall not be deemed to constitute an issuance
of Common Stock. In case of the issuance of any stock of the Company in a
reorganization, acquisition or other similar transaction which would require
adjustment of the Conversion Price 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 which has the highest absolute value to the holders of
Series I Preferred Stock.
(k) The Board of Directors may in its discretion,
decrease the Conversion Price to the extent permitted by law, in such manner, if
any, and at such time, as the Board of Directors determines to be equitable in
the circumstances; provided, however, that in no event shall the Board of
Directors be required to take any such action.
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(l) The Company shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
shares of Common Stock, sufficient shares of Common Stock to provide for the
conversion of the Series I Preferred Stock from time to time as such Series I
Preferred Stock is presented for conversion. For purposes of this Section 7(l),
the number of shares of Common Stock which shall be deliverable upon the
conversion of all outstanding shares of Series I Preferred Stock shall be
computed as if at the time of computation all such outstanding shares were held
by a single holder.
Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value of the shares
of Common Stock deliverable upon conversion of the Series I Preferred Stock, the
Company will take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock at such adjusted Conversion Price.
The Company will, pursuant to the Registration Rights
Agreement relating to the Series I Preferred Stock, list the shares of Common
Stock required to be delivered upon conversion of the Series I Preferred Stock,
prior to delivery, upon each national securities exchange, the NASDAQ National
Market or any similar system of automated dissemination of securities prices, if
any, upon which the Common Stock is listed at the time of delivery.
Prior to the delivery of any securities which the
Company shall be obligated to deliver upon conversion of the Series I Preferred
Stock, the Company will use its best efforts to comply with all federal and
state laws and regulations thereunder requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by, any
governmental authority.
(m) The Company will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the issue or
delivery of the shares of Series I Preferred Stock (or any other securities
issued on account of the Series I Preferred Stock pursuant hereto) or shares of
Common Stock issued upon conversion of the Series I Preferred Stock pursuant
hereto; provided, however, that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issue or
delivery of shares of Series I Preferred Stock pursuant hereto or shares of
Common Stock in a name other than the name in which the shares of Series I
Preferred Stock with respect to which such shares of Common Stock are issued
were registered and the Company shall not be required to make any issue or
delivery unless and until the person requesting such issue or delivery has paid
to the Company the amount of any such tax or has established, to the reasonable
satisfaction of the Company, that such tax has been paid or is not required to
be paid.
8. SPECIAL CONVERSION RIGHTS UPON CHANGE IN CONTROL.
(a) If a Change in Control (as defined below) should
occur with respect to the Company, each holder of shares of the Series I
Preferred Stock shall have the right, at the holder's option, for a period of 45
days after the giving of notice by the Company that a Change in Control has
occurred, to convert all, but not less than all, of such holder's shares of the
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Series I Preferred Stock into the kind and amount of cash, securities, property
or other assets receivable upon such Change in Control by a holder of the number
of shares of Common Stock into which such holder's Series I Preferred Stock
would have been convertible immediately prior to the Change in Control at an
adjusted conversion price equal to the Special Conversion Price (as defined
below). Shares of the Series I Preferred Stock that are not converted as
provided above will remain convertible into the kind and amount of cash,
securities, property or other assets that the holders of the shares of the
Series I Preferred Stock would have owned immediately after the Change in
Control if the holders had converted the shares of the Series I Preferred Stock
immediately before the effective date of the Change in Control. The Company will
notify the holders of the Series I Preferred Stock of any pending Change in
Control as soon as practicable and in any event at least 30 days in advance of
the effective date of such Change in Control. In the event of a pending Change
in Control, the Company (or any successor corporation) shall take all action
necessary to provide for sufficient amounts of cash, securities, property or
other assets for the conversion of the Series I Preferred Stock as provided
herein.
(b) If a Change in Control shall occur, then, as soon
as practicable and in any event within five (5) business days after the
occurrence of such Change in Control, the Company shall provide notice to each
registered holder of a share of Series I Preferred Stock a notice (the "Special
Conversion Notice") setting forth details regarding the Special Right of the
holders to convert their shares of Series I Preferred Stock as a result of such
Change in Control. A holder of a share of Series I Preferred Stock must exercise
such conversion right within the 45-day period after the giving of the Special
Conversion Notice by the Company or such Special Right shall expire. The
conversion date for shares so converted shall be the 45th day after the giving
of the Special Conversion Notice or, if the merger, consolidation,
reorganization, liquidation or dissolution related to such Change in Control has
not become effective within 45 days of the giving of the Special Conversion
Notice but becomes effective within 90 days after the giving of the Special
Conversion Notice, then on the date of such effectiveness. If such merger,
consolidation, reorganization, liquidation or dissolution shall not occur within
90 days after the date on which the Special Conversion Notice is given, the
Company shall be required to give a new Special Conversion Notice. Within five
Business Days following the conversion date, the Company shall deliver a
certificate for the Common Stock together with a check for any fractional shares
issuable or the cash, securities, property or other assets receivable by a
holder. Exercise of such conversion right to the extent permitted by law
(including, if applicable, Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") shall be irrevocable and no dividends on the
shares of Series I Preferred Stock tendered for conversion shall accrue from and
after the conversion date.
(c) The Special Conversion Notice shall state:
(i) The event constituting the Change in
Control;
(ii) the last date upon which holders may
submit shares of Series I Preferred Stock for conversion at the Special
Conversion Price;
(iii) the Special Conversion Price;
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(iv) the Conversion Price then in effect
under Section 7 and the continuing conversion rights, if any, under
Section 7;
(v) the name and address of any paying agent
and conversion agent;
(vi) that holders who wish to convert shares
of Series I Preferred Stock must satisfy the requirements of Section 7
and must exercise such conversion right within the 45-day period after
giving of such notice by the Company;
(vii) that exercise of such conversion right
shall be irrevocable and no dividends on shares of Series I Preferred
Stock tendered for conversion shall accrue from and after the
conversion date; and
(viii) that the consideration to be received
shall be delivered within the five Business Days after the last date
upon which holders may submit Series I Preferred Stock for conversion.
(d) (i) As used herein, a "Change in Control" with
respect to the Company means (A) the acquisition by a person, entity or "group,"
within the meaning of Section 13(d)(3) of the Exchange Act, (excluding, for this
purpose, the Company or any of its subsidiaries and any of Thomas Russell, The
AER Trust 1997, Robert Louis-Dreyfus, Gallium Enterprises, Inc. and Reuben
Richards which acquires beneficial ownership of voting securities of the
Company) of securities of the Company that result in such person, entity or
group having beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of (x) 50% or more of either the then outstanding shares
of Common Stock or the combined voting power of the Company's then outstanding
voting securities entitled to vote generally in the election of directors or (y)
35% or more of either the then outstanding shares of Common Stock or the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors, unless Thomas Russell,
The AER Trust 1997, Robert Louis-Dreyfus, Gallium Enterpises, Inc. and Reuben
Richards collectively beneficially own a greater percentage than such person,
entity or "group"; (B) approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to which
persons who were the shareholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than 50% of the combined voting power entitled to vote generally in the election
of directors of the reorganized, merged or consolidated company's then
outstanding voting securities (a "Control Transaction"); or (C) approval of the
Board of Directors and, if required, of the shareholders of the Company of a
liquidation or dissolution of the Company (other than pursuant to the United
States Bankruptcy Code) or the sale of all or substantially all of the assets of
the Company.
(ii) As used herein, a person shall be
deemed to have "beneficial ownership" with respect to, and shall be
deemed to "beneficially own," any securities of the Company in
accordance with the definitions of such terms in Section 13 of the
Exchange Act and rules and regulations (including Rule 13d-3, Rule
13d-5, and any successor rules) promulgated by the Securities and
Exchange Commission
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thereunder; PROVIDED, HOWEVER, that a person shall be deemed to have
beneficial ownership of all securities that any such person has a right
to acquire whether such right is exercisable immediately or only after
the passage of time and without regard to the 60-day limitation
referred to in Rule 13d-3.
(iii) As used herein, the "Market Value" of
a share of the Common Stock shall be the average of the Closing Prices
of the Common Stock for the five Trading Dates ending on the last
Trading Day preceding the date of the Change in Control provided that,
in the event the Change in Control was not announced at least ten (10)
Trading Dates prior to its occurrence, then five Trading Dates ending
ten (10) Trading Dates after a public announcement of such Change in
Control.
(iv) As used herein, the "Special Conversion
Price" shall mean the lower of the Market Value of the Common Stock or
$14.00 per share (which amount will, each time the Conversion Price is
adjusted, be likewise adjusted).
9. REPURCHASE AT OPTION OF HOLDERS UPON CHANGE IN CONTROL.
(a) Upon the occurrence of a Change in Control (as
defined in Section 8(d)) each holder of Series I Preferred Stock shall
have the right (the "Repurchase Right") to require the Company to
repurchase all of such holder's Series I Preferred Stock, or any
portion thereof which is 100 shares or any integral multiple thereof at
a price equal to 101% of the liquidation preference of the Series I
Preferred Stock, plus accrued and unpaid dividends, if any, to the
Repurchase Date. Such repurchase shall occur on the date (the
"Repurchase Date") that is 45 days after the date of the Company Notice
(as defined below). The Company will give a notice containing the
information set forth in Section 9(b) below (the "Company Notice") to
all holders within five (5) business days following any Change in
Control, and the Company will purchase all tendered shares of Series I
Preferred Stock by making payment of 101% of the liquidation preference
plus accrued and unpaid dividends, if any, on the Repurchase Date. The
Company shall promptly deliver a copy of the Company Notice to the
Transfer Agent and shall cause a copy of such notice to be published in
the Wall Street Journal or another newspaper of national circulation.
The Company intends not to treat for tax purposes the Preferred Stock
as having a redemption premium which is required to be treated as
distributed pursuant to Section 305(c) of the Internal Revenue code.
(b) The Company Notice shall state
(i) that a Change in Control has occurred
and that each holder has the right to require the Company to repurchase
such holder's shares of Series I Preferred Stock for cash at a price
equal to 101% of the liquidation preference of the Series I Preferred
Stock, plus accrued and unpaid dividends, if any, to the Repurchase
Date and the amount of such repurchase price;
(ii) the circumstances and relevant facts
regarding the Change in Control;
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(iii) the Repurchase Date and the
instructions a holder must follow in order to have such holder's
securities repurchased in accordance with this Section 9.
(iv) that any shares of Series I Preferred
Stock not tendered will continue to accrue dividends.
(v) that on the Repurchase Date any share of
Series I Preferred Stock tendered for payment pursuant to the terms
hereof and for which money sufficient to repurchase the shares of
Series I Preferred Stock has been deposited by the Company as required
by Section 9(c) hereof, shall cease to accrue dividends after the
Repurchase Date;
(vi) that holders electing to have shares of
Series I Preferred Stock repurchased pursuant to this Section 9 will be
required to surrender such shares, duly endorsed for transfer, together
with irrevocable notice of such holder's intent to exercise such
Repurchase Right, to the Company at the address specified in the
Company Notice on or prior to the close of business on the 35th day
after the date the Company's Notice is given; and
(vii) such other information as may be
required by applicable law or regulations;
PROVIDED that no failure of the Company to give the foregoing notices and no
defect therein shall limit the holder's Repurchase Right or affect the validity
of the proceedings for the repurchase of the shares of Series I Preferred Stock
pursuant to this Section 9.
(c) Following a Change in Control, the Company shall
accept for payment shares of Series I Preferred Stock properly tendered pursuant
to this Section 9. Prior to the Repurchase Date, the Company shall deposit with
a bank or trust company having a capital and surplus of at least $50,000,000,
funds sufficient to pay the redemption price for all shares of Series I
Preferred Stock tendered and shall deliver, or cause to be delivered to such
bank or trust company, the shares of Series I Preferred Stock properly tendered
pursuant to this Section 9 and accepted together with an officer's certificate
describing the shares of Series I Preferred Stock so tendered to and being
purchased by the Company. On the Repurchase Date, the bank or trust company
shall, to the extent that monies deposited with such bank or trust company are
available therefor, give to the holders of shares of Series I Preferred Stock so
tendered and accepted payment in an amount equal to the redemption price and, as
soon as possible after such payment, the bank or trust company shall cancel the
shares of Series I Preferred Stock so tendered and accepted. The Company will
publicly announce the results of the Change in Control tender offer as soon as
practicable after the Repurchase Date. The Company will issue to holders whose
shares of Series I Preferred Stock are purchased only in part new shares of
Series I Preferred Stock equal in principal amount to the unpurchased portion of
the shares of Series I Preferred Stock surrendered.
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(d) Notwithstanding the foregoing, in repurchasing
the shares of Series I Preferred Stock pursuant to this Section 9, the Company
will comply with all applicable tender offer rules, including but not limited to
Sections 13(e) and 14(e) under the Exchange Act and Rules 13c-1 and 14c-1
thereunder.
10. RANKING. Any class or classes of stock of the Company
shall be deemed to rank:
(i) prior to the Series I Preferred Stock,
as to dividends or as to the distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class shall be
entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution winding up, as the case may be, in preference
or priority to the holders of Series I Preferred Stock.
(ii) on a parity with the Series I Preferred
Stock, as to dividends or as to the 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 I Preferred Stock,
if the holders of such class of stock and the Series I Preferred Stock
shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case
may be, in proportion to their respective amount of accrued and unpaid
dividends per share or liquidation prices, without preference or
priority of one over the other, and
(iii) junior to the Series I Preferred
Stock, as to dividends or as to the distribution of assets upon
liquidation, dissolution or winding up, if such stock shall be Common
Stock or if the holders of Series I 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 stock.
11. VOTING.
(a)(i) Except as herein provided or as otherwise from
time to time required by law, holders of Series I Preferred Stock shall have one
vote per share of Common Stock issuable upon conversion thereof on all matters
submitted to the holders of the Common Stock, and shall vote with the Common
Stock as a single class. Whenever, at any time or times, dividends payable on
the shares of Series I Preferred Stock shall be cumulatively in arrears in an
amount equal to or greater than the amount payable in respect of six complete
Dividend Periods; the holders of Series I Preferred Stock shall have the
exclusive right, voting separately as a class to elect two directors of the
Company at the Company's next annual meeting of shareholders and at each
subsequent annual meeting of shareholders until such dividends have been paid.
If such voting rights shall become vested more than 90 days or less than 20 days
before the date prescribed for the annual meeting of shareholders, thereupon the
holders of the shares of Series I Preferred Stock shall be entitled to exercise
their voting rights at a special meeting of the holders of Series I Preferred
Stock as set forth in paragraphs (ii) and (iii) of this Section 11(a). At
elections for such directors, each holder of Series I Preferred Stock shall be
entitled to one vote
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for each share held by such holder. Upon the vesting of such right of the
holders of the Series I Preferred Stock, the maximum authorized number of
members of the Board of Directors shall automatically be increased by two, the
size of the Board of Directors shall automatically be increased by two directors
and the two vacancies so created shall be filled by vote of the holders of
outstanding Series I Preferred Stock as hereinabove set forth. The right of
holders of the Series I Preferred Stock, voting separately as a class, to elect
members of the Board of Directors as aforesaid shall continue until such time as
all dividends accumulated on the Series I Preferred Stock shall have been paid,
or declared and funds or additional shares of Series I Preferred Stock set aside
for payment in full, at which time such right shall terminate, except as herein
or by law expressly provided, subject to revesting in the event of each and
every such subsequent default. Notwithstanding the foregoing, in the event the
holders of Preferred Stock are entitled to elect a director as provided in
Section 11(b), the number of directors which the holders of the Series I
Preferred Stock may elect pursuant to this Section 11(a) shall be one, and the
number of directors which the holders of the Series I Preferred Stock may elect
pursuant to Section 11(b) shall be one.
(ii) Whenever such voting right shall have
vested, such right may be exercised initially either, as provided in
Section 11(a)(i) or 11(b), at a special meeting of the holders of
shares of the Series I Preferred Stock called as hereinafter provided,
or at any annual meeting of shareholders held for the purposes of
electing directors, and thereafter at such meetings or by the written
consent of such holders pursuant to the Business Corporation Act of the
State of New Jersey.
(iii) At any time when such voting rights
shall have vested in the holders of shares of the Series I Preferred
Stock and if such right shall not already have been initially
exercised, an officer of the Company shall, upon the written request of
holders of record of 10% or more of shares of the Series I Preferred
Stock then outstanding, addressed to the Chief Financial Officer of the
Company, call a special meeting of holders of shares of the Series I
Preferred Stock. Such meeting shall be held at the earliest practicable
date upon the notice required for annual meetings of shareholders at
the place for holding annual meetings of shareholders of the Company
or, if none, at a place designated by the Chief Financial Officer of
the Company. If such meeting shall not be called by the proper officers
of the Company within 30 days after the personal service of such
written request upon the Chief Financial Officer of the Company, or
within 30 days after giving notice, then the holders of record of 10%
of the shares of the Series I Preferred Stock then outstanding may
designate in writing any person to call such meeting at the expense of
the Company, and such meeting may be called by such person so
designated upon the notice required for annual meetings of shareholders
and shall be held at the location requested by the person calling the
meeting. Any holder of shares of the Series I Preferred Stock then
outstanding that would be entitled to vote at such meeting shall have
access to the stock record books of the Company for the purpose of
causing a meeting of shareholders to be called pursuant to the
provisions of this paragraph. Notwithstanding the provisions of this
paragraph, however, no such special meeting shall be called or held
during a period within 45 days immediately preceding the date fixed for
the next annual meeting of shareholders.
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(iv) The directors elected pursuant to this
Section 11(a) shall serve until the earlier of (A) the next annual
meeting or until their respective successors shall be elected and shall
qualify or (B) the date that the Company has paid all accrued and
unpaid dividends on the Series I Preferred Stock. Any director elected
by the holders of Series I Preferred Stock may be removed by, and shall
not be removed otherwise than by, the vote of the holders of a majority
of the outstanding shares of the Series I Preferred Stock, as
applicable, voting as a separate class, at a meeting called for such
purpose or by written consent as permitted by law and the Certificate
of Incorporation and By-laws of the Company; provided, that upon
payment of all accrued, but unpaid dividends, such person shall
automatically and without further action cease to be members of the
Company's Board of Directors. If the office of any director elected by
the holders of the Series I Preferred Stock, as applicable, voting as a
class, becomes vacant by reason of death, resignation, retirement,
disqualification or removal from office or otherwise, the remaining
director elected by the holders of the Series I Preferred Stock may
choose a successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. Upon any termination of the
right of the holders of the Series I Preferred Stock to vote for
directors as herein provided, the term of office of all directors then
in office elected by the holders of the Series I Preferred Stock shall
terminate immediately. Whenever the terms of office of the directors
elected by the holders of the Series I Preferred Stock shall so
terminate and the special voting powers vested in the holders of the
Series I Preferred Stock shall have expired, the number of directors
shall be such number as may be provided for pursuant to the By-laws of
the Company irrespective of any increase made pursuant to the
provisions of this Section 11.
(b) Until such time as there are outstanding a number
of shares of Series I Preferred Stock less than that number of shares equal to
two-thirds of the number of shares of Series I Preferred Stock issued in
November 1998 to Hakuto Co., Ltd., Union Miniere, Inc. and Uniroyal Technology
Corporation (as adjusted for any stock combinations or splits with respect to
such shares) (the "Threshold Amount"), if the Company materially breaches a
substantive provision of one of the Strategic Agreements (as defined below), the
holders of Series I Preferred Stock who are a party to one or more of the
Strategic Agreements that have been breached by the Company shall collectively
have the right, voting separately as a class, to elect one director of the
Company at the Company's next annual meeting of the shareholders; provided,
however, that if such voting rights shall become vested more than 90 days or
less than 20 days before the date of the prescribed annual meeting of
shareholders, such holders of the shares of Series I Preferred Stock shall be
entitled to exercise their voting rights at a special meeting of the holders of
the shares of Series I Preferred Stock as set forth in Sections 11(a)(ii) and
(iii). At such elections for directors, each such holder of Series I Preferred
Stock shall be entitled to one vote for each share held. Upon the vesting of
such right of the holders of Series I Preferred Stock, the maximum authorized
number of members of the Board shall automatically be increased by one, the size
of the Board of Directors shall automatically be increased by one director and
the one vacancy so created shall be filled by vote of the holders of Series I
Preferred Stock as hereinabove set forth. The right of holders of Series I
Preferred Stock, voting separately as a class, to elect a member of the Board of
Directors pursuant to this Section 11(b) shall continue until the earlier of (i)
the cure of each material breach giving rise such right or (ii) the
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date that less than the Threshold Amount of shares of Series I Preferred Stock
is outstanding. As used herein the term "Strategic Agreements" shall mean the
following agreements as each may be amended and any material agreements related
thereto: distributorship agreements with Hakuto Co., Ltd.; the Joint-Venture
Agreement between the Company and Union Miniere Inc., the Limited Liability
Company Agreement of Umcore LLC, the Management and Services Agreement between
Umcore LLC and the Company, the Party IP License Agreement between the Company
and Umcore LLC, the New Application License Agreement between the Company and
Umcore LLC, the Amended and Restated Joint Venture Agreement, dated November
1998 among the Company, Uniroyal Technology Corporation and Uniroyal
Optoelectronics, Inc. and the Amended and Restated Technology License Agreement,
dated November 1998 among the Company, Uniroyal Technology Corporation and
Uniroyal Optoelectronics, Inc.
(c) So long as any shares of the Series I Preferred
Stock remain outstanding, the consent of the holders of at least two-thirds of
the shares of Series I Preferred Stock outstanding at the time, given in person
or by proxy either in writing (as permitted by law and the Certificate of
Incorporation and By-laws of the Company) or at any special or annual meeting,
shall be necessary to permit, effect or validate any one or more of the
following:
(i) the authorization, creation or issuance,
or any increase in the authorized or issued amount of any class or
series of stock, or any security convertible into stock of such class
or series, ranking prior to or on parity with the Series I Preferred
Stock (including the authorization or issuance of additional shares of
Series I Preferred Stock other than issuances of Series I Preferred
Stock as a dividend on any then outstanding shares of Series I
Preferred Stock) as to dividends or the distribution of assets upon
liquidation, dissolution or winding up;
(ii) the amendment, alteration or repeal,
whether by merger, consolidation or otherwise, of any of the provisions
of the Certificate of Incorporation (including this Certificate) or the
Bylaws of the Company which would adversely affect any right,
preference, privilege or voting power of the Series I Preferred Stock
or of the holders thereof; provided, however, that the creation and
issuance of other series of preferred stock, or any increase in the
amount of authorized shares of such series or of any other series of
preferred stock, in each case ranking junior to the Series I Preferred
Stock with respect to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up, shall not be deemed
to adversely affect such rights, preferences, privileges or voting
powers; or
(iii) the authorization of any
reclassification of the Series I Preferred Stock.
The unanimous consent of the Series I Preferred Stock
is required to modify or eliminate the mandatory redemption provisions in
Section 5(b) hereof. The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of Series I
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Preferred Stock shall have been redeemed or sufficient funds shall have been
deposited in trust to effect such redemption, scheduled to be consummated within
three months after such time.
12. PREEMPTIVE RIGHTS. Subject to Section 12(d), for so long
as at least the Threshold Amount of shares of Series I Preferred Stock is
outstanding, each time the Company proposes to sell shares of its capital stock
or options, warrants or other rights to buy capital stock for cash, the Company
shall also make an offering of such securities to the holders of Series I
Preferred Stock in accordance with the following provisions:
(a) The Company shall deliver a notice to each holder
of Series I Preferred Stock stating the number of securities to be offered and
the price and the terms on which it proposes to offer such securities. Such
notice shall be sent to the addresses set forth in the records of the Company.
(b) Each holder of Series I Preferred Stock may elect
to purchase, at the price and on the terms specified in the notice, up to its
Pro Rata Portion of such securities by delivering written notice of such
election to the Company within 14 calendar days of the giving of such notice.
Such election to purchase shall state that it is a binding commitment to
purchase the securities. "Pro Rata Portion" shall mean the number of securities
determined by multiplying the number of securities subject to the notice in
Section 12(a) above by a fraction the numerator of which is the number of shares
of Series I Preferred Stock held by such holder and the denominator of which is
the number of shares of Series I Preferred Stock held by all holders provided,
however, that if any of the holders of Series I Preferred Stock shall not elect
to purchase their full Pro Rata Portion, the Pro Rata Portion of each holder
electing to purchase its full Pro Rata Portion (without giving effect to this
oversubscription adjustment) shall be increased by a proportionate amount of
such unsubscribed shares.
(c) Any shares referred to in the notice that are not
elected to be purchased as provided in subsection (b) above may, during the
180-day period thereafter, be offered by the Company to any other person or
persons at a price not less than, and on terms not materially more favorable to
the offeree than, those specified in the notice.
(d) The preemptive rights set forth in this Section
12 shall not be applicable to the issuance of (i) securities to directors,
officers, or employees of the Company as a form of compensation or in connection
with their initial employment, (ii) shares of common stock issuable upon
exercise of any options or warrants, (iii) capital stock in connection with a
merger, acquisition, plan of exchange or consolidation of another company, (iv)
capital stock in connection with a joint venture, (v) securities pursuant to a
registration statement filed pursuant to the Securities Act with the Securities
and Exchange Commission, (vi) Common Stock or other securities issued upon
conversion of the Series I Preferred Stock or (vii) Series I Preferred Stock
issued as a dividend on the Series I Preferred Stock.
13. RECORD HOLDERS. The Company and the Transfer Agent may
deem and treat the record holder of any shares of Series I Preferred Stock as
the true and lawful owner thereof for all purposes, and neither the Company nor
the Transfer Agent shall be affected by any notice to the contrary.
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14. NOTICE. Except as may otherwise be provided for herein,
all notices referred to herein shall be in writing, and all notices hereunder
shall be deemed to have been given upon receipt, in the case of a notice of
conversion given to the Company as contemplated in Section 7(b) hereof, or, in
all other cases, upon the earlier of receipt of such notice or three Business
Days after the giving of such notice if sent by registered mail (unless
first-class mail shall be specifically permitted for such notice under the terms
of this Certificate) with postage prepaid, addressed: if to the Company, to its
offices at 394 Elizabeth Avenue, Somerset, New Jersey 08873, Attention: Chief
Financial Officer, or other agent of the Company designated as permitted by this
Certificate, or, if to any holder of the Series I Preferred Stock, to such
holder at the address of such holder of the Series I Preferred Stock as listed
in the stock record books of the Company (which may include the records of any
Transfer Agent for the Series I Preferred Stock); or to such other address as
the Company or holder, as the case may be, shall have designated by notice
similarly given, provided, that, any notice given to Hakuto Co., Ltd. shall be
given by facsimile at the facsimile number provided to the Company followed by a
confirmation copy by mail, postage prepaid.
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IN WITNESS WHEREOF, this Certificate has been signed by the
President and Chief Executive Officer of the Company and attested to by the
Secretary of the Company, as of the 18th day of November, 1998.
EMCORE CORPORATION
By: /s/ REUBEN F. RICHARDS
--------------------------------------
Reuben F. Richards, Jr.
President and Chief Executive Officer
Attest:
By: /s/ THOMAS G. WERTHAN
----------------------------
Thomas G. Werthan
Secretary