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Exhibit 4.4
CERTIFICATE OF THE DESIGNATIONS
OF THE
5% CUMULATIVE PREFERRED STOCK SERIES G
STATED VALUE $100.00 PER SHARE OF
DURAMED PHARMACEUTICALS, INC.
Duramed Pharmaceuticals, Inc., a corporation organized and
existing under the laws of the state of Delaware (the "COMPANY"), does hereby
certify as follows, pursuant to Section 151 of the Delaware General Corporation
Law:
1. Pursuant to the authority vested in the Board of Directors
of the Company (the "Board") by Article IV of the Certificate of Incorporation
of the Company, the Board, at a meeting duly convened and held on the 11th day
of May, 2000, adopted the resolution (the "RESOLUTION") attached hereto as
Exhibit 1, creating a series consisting of 100,000 shares of its preferred
stock, with a stated value of $100.00 per share, designated as 5% Cumulative
Convertible Preferred Stock, Series G.
2. The Resolution and the creation and authorization thereby
of the 5% Cumulative Convertible Preferred Stock, Series G, was duly adopted by
the Board pursuant to its authority as aforesaid and in accordance with Section
151 of the Delaware General Corporation Law and has not been amended, modified,
rescinded or superseded and remains in full force and effect.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be executed, delivered and filed this 11th day of May, 2000.
DURAMED PHARMACEUTICALS, INC.
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ATTEST:
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Exhibit 1
RESOLVED, that pursuant to the authority vested in the Board
of Directors in accordance with the provisions of the Company's Certificate of
Incorporation, the Board hereby authorizes the designation and issuance of up to
100,000 shares of a new series of preferred stock entitled 5% Cumulative
Convertible Preferred Stock, Series G (the "SERIES G PREFERRED SHARES") with
terms substantially as attached hereto as Exhibit A, and, pursuant thereto, the
Board hereby (a) authorizes the adoption and filing of a Certificate of
Designations of 5% Cumulative Convertible Preferred Stock, Series G with terms
substantially as attached hereto and with such final terms as may be approved by
the Chairman of the Board, and (b) authorizes and directs that the Company
initially reserve and keep available out of its authorized Common Stock
3,400,000 shares of Common Stock that may be deliverable upon conversion of all
outstanding shares of the Series G Preferred Shares and upon payment of
dividends in Common Stock on the Series G Preferred Shares.
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Exhibit A
(1) Designation. The series of preferred stock established
hereby shall be designated the "5% Cumulative Convertible Preferred
Stock, Series G" (and shall be referred to herein as the "SERIES G
PREFERRED SHARES") and the authorized number of Series G Preferred
Shares shall be 100,000. The stated value per share shall be $100.00
(the "STATED VALUE").
(2) Conversion of Series G Preferred Shares. A holder of
Series G Preferred Shares (collectively, the "HOLDERS" and each a
"HOLDER") shall have the right, at such holder's option, to convert the
Series G Preferred Shares into shares of the Company's common stock,
par value $.01 per share (the "COMMON STOCK"), on the following terms
and conditions:
(a) Conversion Right. Subject to the provisions of
Section 2(f) below, each Series G Preferred Share shall be convertible
at the option of the Holder thereof, at any time or from time to time
on or after the initial date of issuance of the Series G Preferred
Shares (the "INITIAL ISSUANCE DATE") into fully paid, validly issued
and nonassessable shares (rounded to the nearest whole share in
accordance with Section 2(g) below) of Common Stock, at the Conversion
Rate (as defined below). In no event shall the Company honor any
request by any Holder to convert Series G Preferred Shares in excess of
that number of Series G Preferred Shares which, upon giving effect to
such conversion, would cause the aggregate number of shares of Common
Stock beneficially owned by the Holder and its affiliates to exceed
4.99% of the outstanding shares of the Common Stock following such
conversion, provided, however, that a Holder may elect to waive this
restriction upon not less than sixty-one (61) days prior written notice
to the Company. For purposes of this paragraph "beneficial ownership"
shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended.
(b) Conversion Rate. The number of shares of Common
Stock issuable upon conversion of each of the Series G Preferred Shares
pursuant to Sections (2)(a) and 2(f) shall be determined in accordance
with the following formula (the "CONVERSION RATE"):
Stated Value + all accrued and unpaid dividends
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Conversion Price
For purposes of this Certificate of Designations, the
following terms shall have the following meanings:
(i) "ADDITIONAL SHARES OF COMMON STOCK"
shall mean, all shares (including treasury shares) of Common Stock
issued or sold (or, pursuant to Section (2)(d)(ii) or (2)(d)(iv),
deemed to be issued) by the Company after the date hereof, whether or
not subsequently reacquired or retired by the Company other than (a)
(i) shares of Common Stock issued upon conversion of the Series G
Preferred Shares, (ii)
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shares of Common Stock issued upon exercise of the Warrants, or (iii)
such number of additional shares of Common Stock as may become issuable
by conversion of the Series G Preferred Shares and exercise of the
Warrants by reason of adjustments required pursuant to the
anti-dilution provisions applicable to such Warrants or Series G
Preferred Shares as in effect on the date hereof; and (b) (i) shares of
Common Stock issued pursuant to Approved Stock Plans (as defined
herein), (ii) Dividend Shares (as defined herein), (iii) shares of
Common Stock issued pursuant to any right to purchase such shares in
existence as of April 24, 2000 and set forth on Schedule 3(c) to the
Purchase Agreement, and (iv) shares of Common Stock issued pursuant to
any Strategic Financing;
(ii) "ANNIVERSARY DATE" means May 12th of
each calendar year;
(iii) "APPROVED STOCK PLAN" means any
contract, plan or agreement which has been or shall be approved by the
Board of Directors of the Company, pursuant to which the Company's
securities may be issued to any employee, officer, director, consultant
or other service provider of the Company in an aggregate amount that
does not exceed 4,315,031 shares of Common Stock at any time (subject
to appropriate adjustment in the case of any stock split, stock
dividend, recapitalization, combination, reverse split or similar
event);
(iv) "AVERAGE MARKET PRICE" shall mean
the average of the Closing Bid Prices of the Common Stock for the five
(5) trading days immediately preceding the applicable date;
(vi) "CLOSING BID PRICES" shall mean for
any security as of any date, the closing bid price of such security on
the principal securities exchange or trade market where such security
is listed or traded as reported by Bloomberg, L.P. ("Bloomberg"), or if
the foregoing does not apply, the closing bid price of such security in
the over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg, or, if no closing bid price is
reported for such security by Bloomberg, the average of the bid prices
of any market makers for such security as reported in the "pink sheets"
by the National Quotation Bureau, Inc. If the Closing Bid Price cannot
be calculated for such security on such date, as set forth above, the
Closing Bid Price of such security shall be the fair market value as
determined in good faith by an investment banking firm selected jointly
by the Company and the Holders, with the fees and expenses of such
determination borne solely by the Company;
(vii) "CONVERSION PRICE" means $5.06,
subject to adjustment as provided herein;
(viii) "MARKET PRICE" shall mean, on any
date specified herein, the amount per share of the Common Stock equal
to (i) the last reported sale price of such Common Stock, regular way,
on such date or, in case no such sale takes place on such date, the
average of the closing bid and asked prices thereof, regular way, on
such date, in either case as officially reported on the principal
national securities exchange on which
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such Common Stock is then listed or admitted for trading, (ii) if such
Common Stock is not then listed or admitted for trading on any national
securities exchange but is designated as a national market system
security by the NASD, the last reported trading price of the Common
Stock on such date, or in case no such sale takes place on such date,
or if the Common Stock is not so designated, the average of the closing
bid and asked prices of the Common Stock on such date as shown by the
NASD automated quotations system, or (iii) if such Common Stock is not
then listed or admitted for trading on any national exchange or quoted
in the over-the-counter market, the fair value thereof (as of a date
which is within 20 days of the date as of which the determination is to
be made) determined in good faith jointly by the Board of Directors of
the Company and the Holders of a majority of the outstanding Series G
Preferred Shares, provided, however, that if such parties are unable to
reach agreement within a reasonable period of time, the Market Price
shall be determined in good faith by an independent investment banking
firm selected jointly by the Company and the Holders of a majority of
the outstanding Series G Preferred Shares or, if that selection cannot
be made within ten days, by an independent investment banking firm
selected by the American Arbitration Association in accordance with its
rules, and provided further, that the Company shall pay all of the fees
and expenses of any third parties incurred in connection with
determining the Market Price.
(ix) "PURCHASE AGREEMENT" means the
securities purchase agreement dated as of May 12, 2000 by and among the
Company and the Buyers signatory thereto;
(x) "STRATEGIC FINANCING" shall mean any
future equity financing whereby Common Stock or Convertible Securities
are issued for consideration other than cash or cash equivalents (e.g.,
notes) to any person or entity which has or is proposed to have a
material business, technology or commercial relationship with the
Company in addition to any equity financing provided by such person or
entity and it is determined by the Board of Directors of the Company
that such equity financing will result in or further develop a material
business, technology or commercial relationship with the Company.
(xi) "WARRANTS" shall mean the common
stock purchase warrants (and any such warrants issued in substitution
therefor) originally issued pursuant to the terms of the Purchase
Agreement.
(c) Effect of Failure to Obtain and Maintain
Effectiveness of Registration Statement. (i) If the registration
statement (the "REGISTRATION STATEMENT") covering the resale of the
shares of Common Stock issuable upon conversion of the Series G
Preferred Shares and required to be filed by the Company pursuant to
the Registration Rights Agreement between the Company and the initial
Holders of the Series G Preferred Shares (the "REGISTRATION RIGHTS
AGREEMENT") is not declared effective by the United States Securities
and Exchange Commission or any successor entity thereto (the "SEC") on
or before the 90th calendar day following the Initial Issuance Date
(the "SCHEDULED EFFECTIVE DATE"), then for each consecutive thirty (30)
day period following the
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Scheduled Effective Date, each Holder of Series G Preferred Shares
shall, until such time as the Registration Statement is declared
effective by the SEC (all such payments to be made in cash on the first
day of each thirty (30) day period (refundable pro rata for partial
months)), be entitled to an amount equal to the product of (A) one
percent multiplied by (B) the Stated Value plus all accrued and unpaid
dividends thereon, multiplied by (C) the number of Series G Preferred
Shares held by such Holder.
(ii) If the Registration Statement shall
not have been declared effective by the 90th day following the
Scheduled Effective Date, the Company shall be required, at the option
of the Holders, to redeem the Series G Preferred Shares in accordance
with Section 3(a) and in connection therewith the Company shall pay the
Holders who so elect, a price per Series G Preferred Share equal to the
Stated Value plus accrued and unpaid dividends (which dividends may
only be paid in cash).
(iii) If the Registration Statement shall
not have been declared effective by the 120th day following the
Scheduled Effective Date, the Company shall have the right, by
delivering notice of exercise to the Holders at least 15 days prior to
the date of such redemption (and during such 15 day notice period, the
Holders shall not be limited in any way in connection with their rights
of conversion), to redeem the Series G Preferred Shares in accordance
with Section 3(a) and in connection therewith the Company shall pay the
Holders, a price per Series G Preferred Share equal to the Triggering
Event Redemption Price (as defined in Section 3(a)(ii)).
(d) Adjustment to Conversion Price and the Closing
Bid Prices -- Dilution and Other Events. In order to prevent dilution
of the rights granted under this Certificate of Designations, the
Conversion Price and the Closing Bid Prices for any days during any
measuring period prior to any of the events set forth below (the
"ADJUSTING CLOSING BID PRICES") will be subject to adjustment from time
to time as provided in this Section 2(d). Any such adjustments to the
Conversion Price and the Adjusting Closing Bid Prices will be
applicable to Series G Preferred Shares not yet converted or redeemed.
(i) Dividends and Distributions. If the
Company shall declare or pay to the holders of the Common Stock a
dividend or other distribution payable in shares of Common Stock or any
other security convertible into or exchangeable for shares of Common
Stock, each Holder shall be entitled to receive the number of shares of
Common Stock or other securities convertible into or exchangeable for
shares of Common Stock, as applicable, which such Holder would have
owned or been entitled to receive after the declaration and payment of
such dividend or other distribution as if the Series G Preferred Shares
then held by such Holder had been converted at the Conversion Price in
effect immediately prior to the record date for the determination of
stockholders entitled to receive such dividend or other distribution.
(ii) Stock Splits and Combinations. If
the Company shall subdivide (by means of any stock split, stock
dividend, recapitalization or otherwise) the
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outstanding shares of Common Stock into a greater number of shares of
Common Stock, or combine (by means of any combination, reverse stock
split or otherwise) the outstanding shares of Common Stock into a
lesser number of shares, or issue by reclassification of shares of
Common Stock any shares of the Company, the Conversion Price and the
Adjusting Closing Bid Prices, each in effect immediately prior thereto
shall be adjusted so that each Holder shall receive the number of
shares of Common Stock which such Holder would have owned or been
entitled to receive after the happening of any and each of the events
described above if such Holder had converted the Series G Preferred
Shares held by such Holder immediately prior to the happening of each
such event on the day upon which such subdivision or combination, as
the case may be, becomes effective. Additional Shares of Common Stock
deemed to have been issued pursuant to this Section 2(d)(ii) shall be
deemed to have been issued for no consideration.
(iii) Organic Changes. Any
recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets (in
one or a series of related transactions) to another Person (as defined
below) or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, securities or assets with respect
to or in exchange for Common Stock is referred to herein as an "ORGANIC
CHANGE". In case the Company shall effect an Organic Change, then the
Holder shall be given a written notice from the Company informing such
Holder of the terms of such Organic Change and of the record date
thereof for any distribution pursuant thereto, at least twenty (20)
days in advance of such record date, and, if such record date shall
precede the Mandatory Redemption Date, each Holder shall have the right
thereafter to receive, upon conversion of the Series G Preferred
Shares, the number of shares of stock or other securities, property or
assets of the Company, or of its successor or transferee or any
affiliate thereof, or cash receivable upon or as a result of such
Organic Change that would have been received by a holder of the number
of shares of Common Stock equal to the number of shares each Holder
would have received had such Holder converted its Series G Preferred
Shares prior to such event at the Conversion Price in effect
immediately prior to such event. In any such case, the Company will
make appropriate provision (in form and substance reasonably
satisfactory to the Holders of a majority of the Series G Preferred
Shares then outstanding) to insure that the provisions of this Section
2(d)(iii) will thereafter be applicable to the Series G Preferred
Shares (including, in the case of any such Organic Change in which the
successor entity or purchasing entity is other than the Company, an
immediate adjustment of the Conversion Price to the value for the
Common Stock reflected by the terms of such Organic Change, if the
value so reflected is less than the Conversion Price in effect
immediately prior to such Organic Change). The Company will not effect
any such Organic Change unless prior to the consummation thereof the
successor entity (if other than the Company) resulting from such
Organic Change assumes, by written instrument (in form and substance
satisfactory to the Holders of a majority of the Series G Preferred
Shares then outstanding), the obligation to deliver to each Holder such
shares of stock, securities or assets as, in accordance with the
foregoing provisions, such Holder may be entitled to acquire or
receive. The provisions of this subparagraph (iii) shall similarly
apply to successive Organic Changes. "PERSON" means an individual, a
limited liability company,
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a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or
agency thereof.
(iv) Adjustment upon Issuance of Options
and Convertible Securities. If the Company at any time or from time to
time after the date hereof shall issue, sell, grant or assume, or shall
fix a record date for the determination of holders of any class of
securities of the Company entitled to receive, any rights or options to
subscribe for, purchase or otherwise acquire Additional Shares of
Common Stock or any stock or other securities convertible into or
exchangeable for Additional Shares of Common Stock (such rights or
options being herein called "OPTIONS" and such convertible or
exchangeable stock or securities being herein called "CONVERTIBLE
SECURITIES") (whether or not the rights thereunder are immediately
exercisable) and the price per share for which Common Stock is issuable
upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities (the "NEW OPTION ISSUANCE PRICE") is less
than the Average Market Price immediately prior to such time, then, and
in each such case, the maximum number of Additional Shares of Common
Stock (as set forth in the instrument relating thereto, without regard
to any provisions contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares
of Common Stock issued as of the time of such issue, sale, grant or
assumption or, in case such a record date shall have been fixed, as of
the close of business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the commencement
of ex-dividend trading).
For purposes of this Section
2(d)(iv), the New Option Issuance Price shall mean the amount
determined by dividing (A) the total amount, if any, received and
receivable by the Company as consideration for the issue, sale, grant
or assumption of the Options or Convertible Securities in question,
plus the minimum aggregate amount of additional consideration (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration to protect against dilution) payable to the Company upon
the exercise in full of such Options or the conversion or exchange of
such Convertible Securities or, in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and
the conversion or exchange of such Convertible Securities, by (B) the
total maximum number of shares of Common Stock (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such consideration to protect
against dilution) issuable upon exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No further adjustment of the Conversion
Price shall be made upon the actual issuance of such Common Stock or of
such Convertible Securities upon the exercise of such Options or upon
the actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.
(v) Change in Option Price or Rate of
Conversion. If the purchase price provided for in any Options, the
additional consideration, if any, payable
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upon the issue, conversion or exchange of any Convertible Securities,
or the rate at which any Convertible Securities are convertible into or
exchangeable for any class of Common Stock change at any time, the
Conversion Price at the time of such change shall be readjusted,
effective on and after the date of such change, to the Conversion Price
which would have been in effect on the date of such change had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or
sold; provided that no adjustment shall be made if such adjustment
would result in an increase of the Conversion Price then in effect.
(vi) Issuance of Additional Shares of
Common Stock. In case the Company at any time or from time to time
after the date hereof shall issue or sell Additional Shares of Common
Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Section 2(d)(ii), (iv) or (v)), without consideration or
for a consideration per share less than the Market Price in effect
immediately prior to such issue or sale, then, and in each such case,
the Conversion Price shall be reduced, to a price determined by
multiplying such Conversion Price by a fraction
(A) the numerator of which
shall be the sum of (i) the number of shares of Common Stock
outstanding immediately prior to such issue or sale and (ii) the number
of shares of Common Stock which the aggregate consideration received by
the Company for the total number of such Additional Shares of Common
Stock so issued or sold would purchase at the Average Market Price, and
(B) the denominator of which
shall be the number of shares of Common Stock outstanding immediately
after such issue or sale, provided that, for the purposes of this
Section 2(d)(vi), (x) immediately after any Additional Shares of Common
Stock are deemed to have been issued pursuant to Section 2(d)(ii), (iv)
or (v), such Additional Shares of Common Stock shall be deemed to be
outstanding, and (y) treasury shares of Common Stock shall not be
deemed to be outstanding.
(vii) Issuance of Convertible Securities
and Additional Shares of Common Stock. In case the Company at any time
or from time to time after the date hereof shall issue or sell
Additional Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to Section 2(d)(ii), (iv) or
(v)) or shall issue or sell any Options or Convertible Securities,
without consideration or for a consideration per share less than the
Conversion Price in effect immediately prior to such issue or sale
(such consideration referred to as the "TRIGGERING PRICE" and such
event referred to as a "TRIGGERING EVENT"), then, subject to Section
2(d)(v) and in each such case, the Conversion Price for a portion of
the Series G Preferred Shares held by each Holder shall be reduced,
concurrently with such issue or sale, to a price equal to the
Triggering Price for (A) 100% of the shares of Common Stock for which
the Series G Preferred Shares is then convertible if the issuance or
sale occurs prior to the first Anniversary Date, (B) 75% of the shares
of Common Stock for which the Series G Preferred Shares is then
convertible if the issuance or sale occurs on or after the first
Anniversary Date, but prior to the second Anniversary Date, (C) 50% of
the shares of
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Common Stock for which of the Series G Preferred Shares is then
convertible if the issuance or sale occurs on or after the second
Anniversary Date, but prior to the third Anniversary Date and (D) 25%
of the shares of Common Stock for which of the Series G Preferred
Shares is then convertible if the issuance or sale occurs on or after
the third Anniversary Date, but prior to the fourth Anniversary Date,
subject to further adjustment and readjustment from time to time as
provided in this Section 2(d), and, as so adjusted or readjusted, shall
remain in effect until a further adjustment or readjustment thereof is
required by this Section 2(d).
(viii) Other Dilutive Events. In case any
event shall occur as to which the provisions of this Section 2(d) are
not strictly applicable or if strictly applicable would not fairly
protect the conversion rights of the Holder in accordance with the
essential intent and principles of this Section 2(d), then, in each
such case, the Board of Directors of the Company shall make an
adjustment in the application of such provisions, in accordance with
such essential intent and principles, so as to preserve, without
dilution, the conversion rights represented by this Section 2.
(ix) No Dilution or Impairment. The
Company shall not, by amendment of its certificate of incorporation or
through any Organic Change or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms of this
Certificate of Designations, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the
rights of the Holders against dilution or other impairment. Without
limiting the generality of the foregoing, the Company (A) shall take
all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable
shares of Common Stock, free from all taxes, liens, security interests,
encumbrances, preemptive rights and charges on the conversion of the
Series G Preferred Shares, (B) shall not take any action which results
in any adjustment of the Conversion Price or the Adjusting Closing Bid
Prices if the total number of shares of Common Stock issuable after the
action upon the conversion of the Series G Preferred Shares would
exceed the total number of shares of Common Stock then authorized by
the Company's articles of incorporation and available for the purpose
of issue upon such exercise, (C) shall not permit the par value of any
shares of stock receivable upon the conversion of the Series G
Preferred Shares to exceed the amount payable therefor upon such
exercise, and (D) shall not issue any capital stock of any class which,
as to the Holders, is preferred as to dividends or as to the
distribution of assets upon voluntary or involuntary dissolution,
liquidation or winding-up, unless the rights of the holders thereof
shall be limited to a fixed sum or percentage of par value or a sum
determined by reference to a formula based on a published index of
interest rates, an interest rate publicly announced by a financial
institution or a similar indicator of interest rates in respect of
participation in dividends and to a fixed sum or percentage of par
value in any such distribution of assets.
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(x) Notices.
(A) Immediately upon any
adjustment pursuant hereto of the Conversion Price or the Adjusting
Closing Bid Prices, the Company will give immediate written notice
thereof to each Holder, setting forth in reasonable detail and
certifying the calculation of such adjustment.
(B) The Company will give
written notice to each Holder at least twenty (20) days prior to the
date on which the Company closes its books or takes a record (I) with
respect to any dividend or distribution upon the Common Stock, or (II)
for determining rights to vote with respect to any Organic Change,
dissolution or liquidation; provided, that in no event shall such
notice be provided to such Holder prior to such information being made
known to the public.
(C) The Company will also give
written notice to each Holder at least twenty (20) days prior to the
date on which any Organic Change, dissolution or liquidation will take
place.
(xi) Successive Adjustments. Successive
adjustments in the Conversion Price and the Adjusting Closing Bid
Prices shall be made whenever any event specified above shall occur.
All calculations under this Section 2(d) shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be. No
adjustment in the Adjusting Closing Bid Prices shall be made if the
amount of such adjustment would be less than $0.01, but any such amount
shall be carried forward and an adjustment with respect thereto shall
be made at the time of, and together with, any subsequent adjustment
which, together with such amount and any other amount or amounts so
carried forward, shall in the aggregate equal $0.01 or more.
(e) Mechanics of Conversion. Subject to the Company's
inability to fully satisfy its obligations under a Conversion Notice
(as defined below) as provided for in Section 5 below:
(i) Holder's Delivery Requirements.
To convert Series G Preferred Shares into full shares of Common Stock
on any date (the "CONVERSION DATE"), the Holder thereof shall (A)
deliver by courier or transmit by facsimile, for receipt on or prior to
11:59 p.m., Eastern Time on such date, a copy of a fully executed
notice of conversion in the form attached hereto as Exhibit I (the
"CONVERSION NOTICE"), to the Company or its designated transfer agent
(the "TRANSFER AGENT"), and (B) surrender to a common carrier for
delivery to the Company or the Transfer Agent as soon as practicable
following such date, the original certificates representing the Series
G Preferred Shares being converted (or an indemnification undertaking
with respect to such shares in the case of their loss, theft or
destruction pursuant to the provisions set forth in Section 12 hereof)
(the "PREFERRED STOCK CERTIFICATES") and the originally executed
Conversion Notice.
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(ii) Company's Response. Upon receipt by
the Company of a copy of a Conversion Notice, the Company shall
immediately send, via facsimile, a confirmation of receipt of such
Conversion Notice to such Holder. Upon receipt by the Company or the
Transfer Agent of the Preferred Stock Certificates to be converted
pursuant to a Conversion Notice (or an indemnification undertaking with
respect to such shares in the case of their loss, theft or destruction
pursuant to the provisions set forth in Section 12 hereof), together
with the originally executed Conversion Notice, the Company or the
Transfer Agent (as applicable) shall, on the next business day
following the date of such receipt (A) issue and surrender to a common
carrier for overnight delivery to the address as specified in the
Conversion Notice, a certificate, registered in the name of the Holder
or its designee, for the number of shares of Common Stock to which the
Holder shall be entitled, (B) credit such aggregate number of shares of
Common Stock to which the Holder shall be entitled to the Holder's or
its designee's balance account with The Depository Trust Company, or
(C) if the Holder requests, issue shares in electronic format (e.g. via
DWAC).
(iii) Dispute Resolution. In the case of a
dispute as to the determination of the Conversion Price, the Company
shall promptly issue to the Holder the number of shares of Common Stock
that is not disputed pursuant to the provision in this Section 2(e) and
shall submit the disputed determinations or arithmetic calculations to
the Holder via facsimile within one (1) business day of receipt of such
Holder's Conversion Notice. If such Holder and the Company are unable
to agree upon the determination of the Conversion Price within one (1)
business day of such disputed determination or arithmetic calculation
being submitted to the Holder, then the Company shall within one (1)
business day submit via facsimile the disputed determination of the
Conversion Price to an independent, reputable accounting firm of
national standing acceptable to the Company and such Holder of Series G
Preferred Shares. The Company shall cause such accounting firm to
perform the determinations or calculations and notify the Company and
the Holder of the results no later than forty-eight (48) hours from the
time it receives the disputed determinations or calculations. Such
accounting firm's determination, shall be binding upon all parties
absent manifest error. If as a result of such determination by the
accounting firm the Company is required to issue additional shares of
Common Stock to a Holder, the Company or the Transfer Agent, as
applicable, shall on the next business day following the date such
determination is made, issue such shares of Common Stock in accordance
with the options set forth in the last sentence of Section 2(e)(ii)
above. The reasonable fees and expenses of the accounting firm shall be
borne by the party whose calculations is furthest from the accounting
firm's determination.
(iv) Record Holder. The Person or Persons
entitled to receive the shares of Common Stock issuable upon a
conversion of Series G Preferred Shares shall be treated for all
purposes as the record Holder or Holders of such shares of Common Stock
on the Conversion Date.
(v) Company's Failure to Timely
Convert. If the Company shall fail (other than as a result of the
situations described in Section 4(a) with respect to
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which the Holder has elected, and the Company has satisfied its
obligations under, one of the options set forth in subparagraphs (i)
through (v) of Section 4(a)) to issue to a Holder on a timely basis as
described in this Section 2(e), a certificate for the number of shares
of Common Stock to which such Holder is entitled upon such Holder's
conversion of Series G Preferred Shares, the Company shall pay damages
to such Holder equal to the greater of (A) actual damages incurred by
such Holder as a result of such Holder's needing to "buy in" shares of
Common Stock to satisfy its securities delivery requirements ("BUY IN
ACTUAL DAMAGES") and (B) if the Company fails to deliver such
certificates within five days after the last possible date which the
Company could have issued such Common Stock to such Holder without
violating this Section 2(e), on each date such conversion is not timely
effected in an amount equal to 1% of the product of (A) the number of
shares of Common Stock not issued to the Holder on a timely basis and
to which such Holder is entitled and (B) the Closing Bid Price of the
Common Stock on the last possible date which the Company could have
issued such Common Stock to such Holder without violating this Section
2(e).
(f) Fractional Shares. The Company shall not issue
any fraction of a share of Common Stock upon any conversion. All shares
of Common Stock (including fractions thereof) issuable upon conversion
of more than one Series G Preferred Share by a Holder shall be
aggregated for purposes of determining whether the conversion would
result in the issuance of a fraction of a share of Common Stock. If,
after the aforementioned aggregation, the issuance would result in the
issuance of a fraction of a share of Common Stock, the Company shall
round such fraction of a share of Common Stock up or down to the
nearest whole share.
(g) Taxes. The Company shall pay any and all taxes
which may be imposed upon it with respect to the issuance and delivery
of Common Stock upon the conversion of the Series G Preferred Shares.
(3) Redemption.
(a) Voluntary Redemption.
(i) Major Transaction. In addition to
all other rights of the Holders of Series G Preferred Shares contained
in this Certificate of Designations (including, without limitation, the
provisions of Section 2), after a Major Transaction (as defined in
Section 3(b) below), each Holder shall have the right in accordance
with Section 3(e), at such Holder's option, to require the Company to
redeem all or a portion of such Holder's Series G Preferred Shares at a
price per Series G Preferred Share equal to (A) the product of the
Stated Value, multiplied by 115%, plus (B) all accrued and unpaid
dividends thereon ("MAJOR TRANSACTION REDEMPTION PRICE"). The
provisions of this Section 3(a)(i) shall not be deemed to restrict the
ability of a Holder to convert Series G Preferred Shares pursuant to
the provisions of Section 2 at any time and from time to time before
the consummation of a Major Transaction.
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(ii) Triggering Event. In addition to all
other rights of the Holders of Series G Preferred Shares contained in
this Certificate of Designations (including, without limitation, the
provisions of Section 2), after a Triggering Event (as defined in
Section 3(c) below), each Holder of Series G Preferred Shares shall
have the right in accordance with Section 3(e), at such Holder's
option, to require the Company to redeem all or a portion of such
Holder's Series G Preferred Shares at a price per Series G Preferred
Share equal to the greater of (x) product of (A) the aggregate number
of shares of Common Stock for which such Holder would be entitled to
receive if the Series G Preferred Shares that it holds would be
converted as of the date immediately preceding such Triggering Event on
which the exchange or market on which the Common Stock is traded is
open, multiplied by (B) the Average Market Price of the Common Stock on
such date and (y) the product of (A) the Stated Value plus all accrued
and unpaid dividends thereon, multiplied by (B) 125% (the "TRIGGERING
EVENT REDEMPTION PRICE"). The provisions of this Section 3(a)(ii) shall
not be deemed to restrict the ability of a Holder to convert the Series
G Preferred Shares pursuant to the provisions of Section 2 at any time
and from time to time before such Holder receives the Triggering Event
Redemption Price.
(b) "Major Transaction". A "MAJOR TRANSACTION"
means the occurrence at such time of any of the following events:
(i) the consolidation or merger of the
Company with or into another Person (other than pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company or pursuant to a merger after which the
holders of the Company's outstanding capital stock immediately prior to
the merger own a number of shares of the resulting company's
outstanding capital stock sufficient to elect a majority of the
resulting company's board of directors);
(ii) the sale, transfer, lease, disposal
or abandonment (whether in one transaction or in a series of
transactions) of all or substantially all of the Company's assets
(other than a sale or transfer to an entity controlling, controlled by
or under common control with the Company); or
(iii) a purchase, tender or exchange offer
for more than 50% of the outstanding shares of Common Stock or other
voting securities of the Company is made and accepted by the holders
thereof.
(c) "Triggering Event". A "TRIGGERING EVENT"
shall be deemed to have occurred at such time as any of the following
events:
(i) notice from the Company that Common
Stock issued or issuable upon conversion of the Series G Preferred
Shares cannot be sold under the Registration Statement covering such
Common Stock (the "SUSPENSION PERIOD"), for any period of ten
consecutive trading days or any twenty non-consecutive trading days
during any period of 180 consecutive days (or any 60 days in any 360
day period, if such Suspension Period is caused solely by the failure
of the Company to amend the
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Registration Statement covering the Registrable Securities to cure a
material misstatement therein, where the Board of Directors in good
faith decided that it was in the best interests of the Company not to
so amend the Registration Statement as such would cause disclosure of
material information which the Board of Directors believes would be
contrary to the best interests of the Company to disclose) that is (A)
after the date the Registration Statement has been declared effective
by the SEC and (B) prior to the time that the Conversion Stock issuable
upon conversion of the Series G Preferred Shares may be sold without
limitation in accordance with Rule 144(k) under the Securities Act of
1933, as amended (the "1933 ACT"); provided, that any demand for
redemption under this Section 3(c)(i) must be made by a Holder of
Series G Preferred Shares within 30 days after receipt of notice from
the Company of the termination of the Suspension Period; provided,
further, that if the aggregate number of days in all Suspension Periods
(the "SUSPENSION DAYS") is equal to or greater than thirty (30) days,
then the Mandatory Redemption Date may, at the option of the Holder, be
extended by the aggregate number of Suspension Days.
(ii) the failure of the Common Stock or
\ the Conversion Shares to be listed on the American Stock Exchange (the
"AMEX"), the New York Stock Exchange ("NYSE") or the NASDAQ for a
period of 10 days during any period of 12 months (the "DELISTING
PERIOD"); provided, however, that any demand for redemption under this
Section 3(c)(ii) must be made by a Holder within 30 days after receipt
of the Notice of Triggering Event (as defined in Section 3(e)); or
(iii) the Company's notice to any Holder
of Series G Preferred Shares, including by way of public announcement,
at any time, of its intention not to comply with proper requests for
conversion of any Series G Preferred Shares into shares of Common
Stock, including due to any of the reasons set forth in Section 4(a)
below, except in any case in which the basis for such intention by the
Company is a bona fide dispute as to the right of such Holder to such
conversion.
(d) Mandatory Redemption. If any of the Series G
Preferred Shares remain outstanding on May 12, 2004 (the "MANDATORY
REDEMPTION DATE") (subject to extension as provided in Section 3(c)(i)
above), then the Company shall be required to redeem all of such Series
G Preferred Shares at a price per Series G Preferred Shares equal to
the Stated Value plus all accrued and unpaid dividends thereon (the
"MANDATORY REDEMPTION PRICE" and together with the Major Transaction
Redemption Price, and the Triggering Event Redemption Price, each a
"REDEMPTION PRICE").
(e) Mechanics of Redemption. (i) Upon Major
Transaction. No sooner than fifteen (15) days nor later than ten (10)
days prior to the consummation of a Major Transaction, but not prior to
the public announcement of such Major Transaction, the Company shall
deliver written notice thereof via facsimile and overnight courier to
each Holder (each a "NOTICE OF MAJOR TRANSACTION"). At anytime after
receipt of a Notice of Major Transaction, any Holder of the Series G
Preferred Shares then outstanding may require the Company to redeem all
or any portion of its Series G Preferred Shares by delivering written
notice thereof via facsimile or overnight courier
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(each a "NOTICE OF VOLUNTARY REDEMPTION UPON MAJOR TRANSACTION") to the
Company, which Notice of Voluntary Redemption Upon Major Transaction
shall indicate (A) the number of Series G Preferred Shares that such
Holder is requesting redemption for and (B) the Major Transaction
Redemption Price as calculated pursuant to Section 3(a)(i) above.
(ii) Upon Triggering Event. Within one
day after the occurrence of a Triggering Event, the Company shall
deliver written notice thereof via facsimile and overnight courier to
each Holder (each a "NOTICE OF TRIGGERING EVENT"). At anytime after
receipt of a Notice of Triggering Event, but only for so long as the
facts giving rise to the Triggering Event continue to exist, any Holder
may require the Company to redeem all or any portion of its Series G
Preferred Shares by delivering written notice thereof via facsimile or
overnight courier (each a "NOTICE OF VOLUNTARY REDEMPTION UPON
TRIGGERING EVENT") to the Company, which Notice of Voluntary Redemption
Upon Triggering Event shall indicate (A) the number of Series G
Preferred Shares that such Holder is requesting redemption for and (B)
the Triggering Event Redemption Price as calculated pursuant to Section
3(a)(ii) above.
(iii) Upon Mandatory Redemption Date.
Within two business days after receipt of the Mandatory Redemption
Price in cash, the Holders shall surrender all Preferred Stock
Certificates, duly endorsed for cancellation, to the Company or the
Transfer Agent. As of the Mandatory Redemption Date, no Person shall
have any rights in respect of Series G Preferred Shares, except the
right to receive the Mandatory Redemption Price.
(f) Payment of Redemption Price Upon Voluntary
Redemption. Upon the Company's receipt of a Notice of Voluntary
Redemption Upon Major Transaction or Notice of Voluntary Redemption
Upon Triggering Event from any Holder, the Company shall immediately
notify such Holder by facsimile of the mechanics of the delivery of
each Holder's Preferred Stock Certificate and, if applicable, the
Company's receipt of such requisite notice necessary to effect a
redemption and such Holder of Series G Preferred Shares shall
thereafter promptly send such Holder's Preferred Stock Certificates to
be redeemed to the Company or its Transfer Agent (or an indemnification
undertaking with respect to such shares in the case of their loss, the
theft or destruction pursuant to the provisions set forth in Section 12
hereof). The Company shall deliver the applicable Redemption Price to
such Holder within ten (10) days after the Company's receipt of the
requisite notice required to affect a redemption; provided, that a
Holder's Preferred Stock Certificates shall have been so delivered to
the Company or its Transfer Agent (or an indemnification undertaking
with respect to such shares in the case of their loss, the theft or
destruction pursuant to the provisions set forth in Section 12 hereof);
provided further that if the Company is unable to redeem all of the
Series G Preferred Shares, the Company shall redeem an amount from each
Holder of Series G Preferred Shares equal to such Holder's pro rata
amount (based on the number of Series G Preferred Shares held by such
Holder relative to the number of Series G Preferred Shares outstanding)
of all Series G Preferred Shares being redeemed. If the Company shall
fail to redeem all of the Series G Preferred Shares submitted for
redemption (other than pursuant to a dispute as to the
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arithmetic calculation of the applicable Redemption Price), in addition
to any remedy such Holder of Series G Preferred Shares may have under
this Certificate of Designations and the Purchase Agreement, among the
Company and the initial Buyers named therein, the applicable Redemption
Price payable in respect of such unredeemed Series G Preferred Shares
shall bear interest at the rate of 1.25% per month (prorated for
partial months) until paid in full. Until the Company pays such unpaid
Redemption Price in full to each Holder, Holders of the Series G
Preferred Shares then outstanding, including shares of Series G
Preferred Shares submitted for redemption pursuant to this Section 3
and for which the applicable Redemption Price has not been paid, shall
have the option (the "VOID REDEMPTION OPTION") to, in lieu of
redemption, require the Company to promptly return to each Holder all
of the Series G Preferred Shares that were submitted for redemption by
such Holder under this Section 3 and for which the applicable
Redemption Price has not been paid, by sending written notice thereof
to the Company via facsimile or by courier (the "VOID REDEMPTION
NOTICE"). Upon the Company's receipt of such Void Redemption Notice and
prior to payment of the full applicable Redemption Price to each
Holder, (i) the Notice of Voluntary Redemption Upon Major Transaction
or Notice of Voluntary Redemption Upon Triggering Event, as applicable,
shall be null and void with respect to those Series G Preferred Shares
submitted for redemption and for which the applicable Redemption Price
has not been paid, and (ii) the Company shall immediately return any
Series G Preferred Shares submitted to the Company by each such Holder
for redemption under this Section 3(f) and for which the applicable
Redemption Price has not been paid. Notwithstanding the foregoing, in
the event of a dispute as to the determination of the arithmetic
calculation of the applicable Redemption Price, such dispute shall be
resolved pursuant to the provisions set forth in Section 2(e)(iii)
above. Payments provided for in this Section 3 in connection with a
Redemption Upon a Major Transaction shall have priority to payments to
other stockholders in connection with a Major Transaction.
(4) Inability to Fully Convert.
(a) Holder's Option if Company Cannot Fully Convert.
If, upon the Company's receipt of a Conversion Notice, the Company
cannot issue shares of Common Stock registered for resale under the
Registration Statement for any reason, including, without limitation,
because the Company (x) does not have a sufficient number of shares of
Common Stock authorized and available, (y) is otherwise prohibited by
applicable law or by the rules or regulations of any stock exchange,
interdealer quotation system or other self-regulatory organization with
jurisdiction over the Company or its securities, including without
limitation the NASDAQ, from issuing all of the Common Stock which is to
be issued to a Holder pursuant to a Conversion Notice or (z) fails to
have a sufficient number of shares of Common Stock registered for
resale under the Registration Statement, then the Company shall issue
as many shares of Common Stock as it is able to issue in accordance
with such Holder's Conversion Notice and pursuant to Section 2(e) above
and, with respect to the unconverted Series G Preferred Shares, the
Holder, solely at such Holder's option, can elect to (unless the
Company issues and delivers the Common Stock underlying the unconverted
Series G Preferred Shares prior to the
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Holder's election hereunder, in which case such Holder shall only be
entitled to receive Buy In Actual Damages under Section 2(e)(v)):
(i) require the Company to redeem from
such Holder those Series G Preferred Shares for which the Company is
unable to issue Common Stock in accordance with such Holder's
Conversion Notice ("DEFAULT REDEMPTION") at a price per Series G
Preferred Share equal to the Triggering Event Redemption Price as of
such Conversion Date ("DEFAULT REDEMPTION PRICE");
(ii) if the Company's inability to fully
convert Series G Preferred Shares is pursuant to Section 4(a)(z) above,
require the Company to issue restricted shares of Common Stock in
accordance with such Holder's Conversion Notice pursuant to Section
2(e) above;
(iii) void its Conversion Notice and
retain or have retained, as the case may be, the nonconverted Series G
Preferred Shares that were to be converted pursuant to such Holder's
Conversion Notice; or
(iv) if the Company's inability to fully
convert Series G Preferred Shares is pursuant to the rules and
regulations described in Section 4(a)(y) above, require the Company to
issue shares of Common Stock in accordance with such Holder's
Conversion Notice and pursuant to Section 2(e) above at a Conversion
Price equal to the Average Market Price of the Common Stock on the date
preceding such Holder's Notice in Response to Inability to Convert (as
defined below).
(b) Mechanics of Fulfilling Holder's Election. The
Company shall immediately send via facsimile to a Holder of Series G
Preferred Shares, upon receipt of a facsimile copy of a Conversion
Notice from such Holder which cannot be fully satisfied as described in
Section 4(a) above, a notice of the Company's inability to fully
satisfy such Holder's Conversion Notice (the "INABILITY TO FULLY
CONVERT NOTICE"). Such Inability to Fully Convert Notice shall indicate
(i) the reason why the Company is unable to fully satisfy such Holder's
Conversion Notice, (ii) the number of Series G Preferred Shares which
cannot be converted and (iii) the Default Redemption Price. Such Holder
must within five (5) business days of receipt of such Inability to
Fully Convert Notice deliver written notice via facsimile to the
Company ("NOTICE IN RESPONSE TO INABILITY TO CONVERT") of its election
pursuant to Section 4(a) above.
(c) Payment of Default Redemption Price. If such
Holder shall elect to have its shares redeemed pursuant to Section
4(a)(i) above, the Company shall pay the Default Redemption Price in
cash to such Holder within ten (10) days of the Company's receipt of
the Holder's Notice in Response to Inability to Convert. If the Company
shall fail to pay the Default Redemption Price to such Holder on a
timely basis as described in this Section 4(c) (other than pursuant to
a dispute as to the determination of the arithmetic calculation of the
Default Redemption Price), in addition to any remedy such Holder of
Series G Preferred Shares may have under this Certificate of
Designations and the Purchase Agreement, such unpaid amount shall bear
interest at the rate of 1.25% per
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month (prorated for partial months) until paid in full. Until the full
Default Redemption Price is paid in full to such Holder, such Holder
may void the Default Redemption with respect to those Series G
Preferred Shares for which the full Default Redemption Price has not
been paid and receive back such Series G Preferred Shares.
Notwithstanding the foregoing, if the Company fails to pay the Default
Redemption Price within such ten (10) day time period due to a dispute
as to the determination of the arithmetic calculation of the Default
Redemption Price, such dispute shall be resolved pursuant to Section
2(e)(iii) above.
(d) Pro-rata Conversion and Redemption. In the event
the Company receives a Conversion Notice from more than one Holder on
the same day and the Company can convert and redeem some, but not all,
of the Series G Preferred Shares pursuant to this Section 4, the
Company shall convert and redeem from each Holder electing to have
Series G Preferred Shares converted and redeemed at such time an amount
equal to such Holder's pro rata amount (based on the number of Series G
Preferred Shares held by such Holder relative to the number of Series G
Preferred Shares outstanding) of all Series G Preferred Shares being
converted and redeemed at such time.
(5) Reissuance of Certificates. In the event of a conversion
or redemption pursuant to this Certificate of Designations of less than
all of the Series G Preferred Shares represented by a particular
Preferred Stock Certificate, the Company shall promptly cause to be
issued and delivered to the Holder of such Series G Preferred Shares a
preferred stock certificate representing the remaining Series G
Preferred Shares which have not been so converted or redeemed.
(6) Reservation of Shares. The Company shall, so long as any
of the Series G Preferred Shares are outstanding, reserve and keep
available out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Series G Preferred
Shares, such number of shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all of the Series G
Preferred Shares then outstanding; provided, that the number of shares
of Common Stock so reserved shall at no time be less than 125% of the
aggregate number of shares of Common Stock for which (a) the Series G
Preferred Shares are at any time convertible and (b) the dividends on
the Series G Preferred Shares pursuant to Section 7 hereof are payable
(calculated as of any date by dividing (x) $2,000,000 (less any
dividends paid prior to such date) by (y) 90% times the amount equal to
the average of the Closing Bid Prices for the ten trading days
immediately preceding such date); provided, further, that such shares
of Common Stock so reserved shall be allocated for issuance upon
conversion of Series G Preferred Shares pro rata among the Holders of
Series G Preferred Shares based on the number of Series G Preferred
Shares held by such Holder relative to the total number of outstanding
Series G Preferred Shares.
(7) Dividends. The Holders of the outstanding Series G
Preferred Shares shall be entitled to receive cumulative dividends at
the rate of 5% per annum of the Stated Value per Series G Preferred
Share. Such dividends shall be payable quarterly in arrears on the last
day of March, June, September and December of each year, commencing on
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June 30, 2000 (each of such dates being a "DIVIDEND PAYMENT Date").
Such dividend shall accrue on each Series G Preferred Share from the
Initial Issuance Date (with appropriate proration for any partial
dividend period) and shall accrue from day-to-day, whether or not
earned or declared. Dividend payments made with respect to Series G
Preferred Shares shall be made, subject to the terms hereof, in cash
when and as declared by the Board of Directors out of funds legally
available therefor, or at the option and in the sole discretion of the
Board of Directors of the Company, in full or in part, by issuing
validly issued, fully paid and nonassessable shares of Common Stock
(such shares of Common Stock "DIVIDEND SHARES"); provided that the
shares of Common Stock so issued are covered by an effective
Registration Statement or may otherwise be sold without limitation in
accordance with Rule 144(k) under the 1933 Act. The number of shares of
Common Stock to be so issued shall be equal to the quotient of (a) the
amount of the dividend to be paid on such Dividend Payment Date which
is not being paid in cash, divided by (b) 90% times the amount equal to
the average of the Closing Bid Prices for the ten trading days
immediately preceding such date. If the Board of Directors shall elect
to pay any part of a dividend by such issuance of Common Stock, the
Company shall provide notice (the "COMMON STOCK ELECTION NOTICE") to
such effect to the Holders of the Series G Preferred Shares by no later
than thirty (30) days prior to the applicable Dividend Payment Date. If
the Company shall not provide a Common Stock Election Notice, the
applicable dividend shall be paid in cash. The issuance of such Common
Stock (plus the amount of cash dividend, if any, paid together
therewith) shall constitute full payment of such dividend. In no event
shall an election by the Board of Directors to pay dividends, in full
or in part, in cash on any Dividend Payment Dates preclude the Board of
Directors from electing any other available alternative in respect of
all or any portion of any subsequent dividend.
(8) Liquidation, Dissolution, Winding-Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Company, the Holders of the Series G Preferred Shares shall be entitled
to receive in cash out of the assets of the Company, whether from
capital or from earnings available for distribution to its stockholders
(the "PREFERRED FUNDS"), after payment to holders of indebtedness
specifically senior in rank to the Series G Preferred Stock but before
any amount shall be paid to the holders of any of the capital stock of
the Company of any class junior in rank to the Series G Preferred
Shares in respect of the preferences as to the distributions and
payments on the liquidation, dissolution and winding up of the Company,
an amount per Series G Preferred Share equal to the product of (x) 125%
and (y) the sum of (i) the Stated Value and (ii) all accrued and unpaid
dividends thereon (such sum being referred to as the "LIQUIDATION
VALUE"); provided, that if the Preferred Funds are insufficient to pay
the full amount due to the holders of Series G Preferred Shares and
holders of shares of other classes or series of preferred stock of the
Company that are of equal rank with the Series G Preferred Shares as to
payments of Preferred Funds (the "PARI PASSU SHARES"), then each holder
of Series G Preferred Shares and Pari Passu Shares shall receive a
percentage of the Preferred Funds equal to the full amount of Preferred
Funds payable to such holder as a liquidation preference, in accordance
with their respective Certificate of Designations, as a percentage of
the full amount of Preferred Funds payable to all holders
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of Series G Preferred Shares and Pari Passu Shares. The purchase or
redemption by the Company of stock of any class, in any manner
permitted by law, shall not, for the purposes hereof, be regarded as a
liquidation, dissolution or winding up of the Company. Neither the
consolidation or merger of the Company with or into any other Person,
nor the sale or transfer by the Company of less than substantially all
of its assets, shall, for the purposes hereof, be deemed to be a
liquidation, dissolution or winding up of the Company.
(9) Preferred Rank. All shares of Common Stock of the Company
shall be of junior rank to all Series G Preferred Shares in respect to
the preferences as to distributions and payments upon the liquidation,
dissolution and winding up of the Company. All other shares of
preferred stock shall not be of senior rank to all Series G Preferred
Shares in respect to the preferences as to distributions and payments
upon the liquidation, dissolution and winding up of the Company. As
long as the Series G Preferred Shares initially issued remain
outstanding, then without the prior express written consent of the
holders of not less than two-thirds (2/3) of the then outstanding
Series G Preferred Shares, the Company shall not hereafter authorize or
issue additional or other capital stock that is of senior rank or rank
pari passu to the Series G Preferred Shares in respect of the
preferences as to distributions and payments upon the liquidation,
dissolution and winding up of the Company. Without the prior express
written consent of the holders of not less than two-thirds (2/3) of the
then outstanding Series G Preferred Shares, the Company shall not
hereafter authorize or make any amendment to the Company's Articles of
Incorporation or bylaws, or file any resolution of the board of
directors of the Company with the Delaware Secretary of State
containing any provisions, which would adversely affect or otherwise
impair the rights or relative priority of the holders of the Series G
Preferred Shares relative to the holders of the Common Stock or the
holders of any other class of capital stock. In the event of the merger
or consolidation of the Company with or into another corporation, the
Series G Preferred Shares shall maintain their relative powers,
designations and preferences provided for herein and no merger shall
result inconsistent therewith.
(10) Restriction on Redemption and Cash Dividends with respect
to Other Capital Stock. Until all of the Series G Preferred Shares have
been converted or redeemed as provided herein, the Company shall not,
directly or indirectly, declare or pay any cash dividend or
distribution on its Common Stock without the prior express written
consent of the holders of not less than two-thirds (2/3) of the then
outstanding Series G Preferred Shares, unless full dividends on all
outstanding Series G Preferred Shares have been paid in full for all
past dividend periods and the dividends on all outstanding Series G
Preferred Shares for the then current dividend period shall have been
paid or declared and sufficient funds set apart for payment thereof and
there are no payments of any kind due to any holder of Series G
Preferred Shares.
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(11) Voting Rights and Related Matters.
(a) The Holders of the outstanding Series G Preferred
Shares shall have no voting rights, except as required by law,
including, but not limited to, the laws of the State of Delaware, and
as expressly provided in this Certificate of Designations.
(b) The affirmative vote at a meeting duly called for
such purpose or the written consent without a meeting, of the holders
of not less than two-thirds (2/3) of the then outstanding Series G
Preferred Shares, shall be required for any change to this Certificate
of Designations or the Company's Articles of Incorporation which would
amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Series G Preferred Shares.
(12) Lost or Stolen Certificates. Upon receipt by the Company
of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any Preferred Stock Certificates representing the
Series G Preferred Shares, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the holder to the
Company and, in the case of mutilation, upon surrender and cancellation
of the Preferred Stock Certificate(s), the Company shall execute and
deliver new Preferred Stock Certificate(s) of like tenor and date;
provided, however, the Company shall not be obligated to re-issue
Preferred Stock Certificates if the holder contemporaneously requests
the Company to convert such Series G Preferred Shares into Common
Stock.
-21-
23
EXHIBIT I
DURAMED PHARMACEUTICALS, INC.
CONVERSION NOTICE
Reference is made to the Certificate of the Designations, Preferences, Rights
and Privileges of the 5% Cumulative Preferred Stock, Series G Pursuant to
Section 151 of the Delaware General Corporation Law (the "CERTIFICATE OF
DESIGNATIONS"). In accordance with and pursuant to the Certificate of
Designations, the undersigned hereby elects to convert the number of shares of
Series G Convertible Preferred Stock, stated value $100.00 per share (the
"SERIES G PREFERRED SHARES"), of Duramed Pharmaceuticals, Inc., a Delaware
corporation (the "COMPANY"), indicated below into shares of Common Stock, par
value $.01 per share (the "COMMON STOCK"), of the Company, by tendering the
stock certificate(s) representing the share(s) of Series G Preferred Shares
specified below as of the date specified below.
Date of Conversion:
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Number of Series G
Preferred Shares to be converted:
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Stock certificate no(s). of Series G
Preferred Shares to be converted:
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Please confirm the following information:
Conversion Price:
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Number of shares of Common Stock
to be issued:
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Please issue and deliver the Common Stock and, if applicable, any check drawn on
an account of the Company into which the Series G Preferred Shares are being
converted in the following name and to the following address:
Issue to:
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Facsimile Number:
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Authorization:
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By:
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Title:
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Dated:
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