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EXHIBIT 4
CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES
AND PRIVILEGES OF
10% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
AMERICAS GAMING INTERNATIONAL, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware:
We, Bill R. Williams, the President, and Connie L. Benger, the
Secretary, respectively, of Americas Gaming International, Inc., a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "Corporation"), in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, as
amended, the said Board of Directors on February 14, 1996, adopted the
following resolution creating a series of shares of Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Corporation by the Certificate of Incorporation, as
amended (the "Amended Certificate"), the Board of Directors does hereby
provide for the issuance of a series of Preferred Stock, $.001 par
value, of the Corporation, to be designated "10% Cumulative Convertible
Preferred Stock", consisting of 1,000,000 shares and, to the extent
that the designations, powers, preferences and relative and other
special rights and the qualifications, limitations and restrictions of
the 10% Cumulative Convertible Preferred Stock are not stated and
expressed in the Amended Certificate, does hereby fix and herein state
and express such designations, powers, preferences and relative and
other special rights and the qualifications, limitations and
restrictions thereof, as follows:
1. Designation and Amount. The shares of such series shall be
designated as "10% Cumulative Convertible Preferred Stock", par value
$.001 per share (hereinafter referred to as the "10% Cumulative
Convertible Preferred"), and the number of shares constituting such
series shall be 1,000,000.
2. Ranking. The 10% Cumulative Convertible Preferred shall
rank senior to the common stock ("Common Stock") of the Corporation in
dividend rights and liquidation preference.
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3. Dividends. Subject to the superior rights of the holders of
any class or series of preferred stock ranking superior to the 10%
Cumulative Convertible Preferred with respect to dividends and
distributions:
3.1 Dividend Amount. The holders of the 10%
Cumulative Convertible Preferred shall be entitled to receive, out of
any assets of the Corporation legally available therefor, cumulative
dividends at a rate of 10% per annum (the "Dividend Rate") on the total
dollar amount of the consideration paid (the "Original Purchase Price")
to the Corporation for each share of 10% Cumulative Convertible
Preferred (the "Dividend Amount"). Such dividends shall be payable
quarterly on the Quarterly Dividend Payment Date (as hereinafter
defined), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share of 10% Cumulative Convertible Preferred.
Dividends on each share of 10% Cumulative Convertible Preferred shall
accrue and be cumulative from the date of issuance thereof to the
Redemption Date (as hereinafter defined) or the Conversion Date (as
hereinafter defined) of each such share, as applicable and whichever
first occurs, whether or not there shall be profits, surplus or other
funds of the Corporation legally available for the payment of such
dividends at the time such dividends shall accrue or become due and
whether or not such dividends are declared.
3.2 Quarterly Dividend Payment Date. Dividends shall
be payable on each share of 10% Cumulative Convertible Preferred on the
first day of each July, October, January and April of each year (the
"Quarterly Dividend Payment Date"), commencing July 1, 1996, to the
holder of record on the date thirty (30) days prior to such Quarterly
Dividend Payment Date.
3.3 Method of Payment. Dividends on the 10%
Cumulative Convertible Preferred shall be paid in cash. An amount of
cash from the proceeds of the sale of the 10% Cumulative Convertible
Preferred that is sufficient to pay dividends on the 10% Cumulative
Convertible Preferred for the first four (4) quarters following the
Original Issue Date shall be held in an escrow account for that
purpose. Following the first four Quarterly Dividend Payment Dates, the
Corporation shall pay all future dividends from funds of the
Corporation legally available therefor. If there are not legally
available funds sufficient to pay the entire Dividend Amount owing, the
legally available funds shall be distributed ratably to the record
holders and the balance of the Dividend Amount shall be in arrears and
shall be paid as soon as sufficient legal funds become available.
4. Voting Rights. The holders of 10% Cumulative Convertible
Preferred shall have the following voting rights:
4.1 Separate Class Voting. The Corporation shall not,
without first obtaining the affirmative vote or written consent of the
holders of not less than a majority of the outstanding shares of the
10% Cumulative Convertible Preferred voting as a separate class:
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(a) alter or change any rights, privileges or
preferences of the 10% Cumulative Convertible Preferred;
(b) increase or decrease the authorized number of
shares of 10% Cumulative Convertible Preferred; or
(c) amend or waive any provision of the Amended
Certificate or Bylaws of the Corporation relative to the 10% Cumulative
Convertible Preferred.
4.2 Other Voting Rights. Except as set forth herein and except
where voting rights are required by law, holders of 10% Cumulative Convertible
Preferred shall have no voting rights and their consent shall not be required
for taking any corporate action.
5. Certain Restrictions. Whenever quarterly dividends or other
dividends or distributions payable on the 10% Cumulative Convertible Preferred
as provided in Section 3 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of 10%
Cumulative Convertible Preferred outstanding shall have been paid in full or set
aside for payment, the Corporation shall not:
(a) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the 10% Cumulative Convertible Preferred;
(b) declare or pay dividends on, make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the 10% Cumulative
Convertible Preferred, except dividends paid ratably on the 10% Cumulative
Convertible Preferred and all such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which the holders of all
such shares are then entitled; or
(c) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the 10% Cumulative Convertible
Preferred, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the 10% Cumulative Convertible
Preferred.
6. Reacquired Shares. Any shares of 10% Cumulative Convertible
Preferred purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
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All such shares shall upon their cancellation become authorized but unissued
shares of the Corporation's Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance set
forth herein.
7. Conversion
7.1 Right to Convert. The holders of the 10% Cumulative Convertible
Preferred shall have the right, at their option, to convert any number of shares
of 10% Cumulative Convertible Preferred into shares of Common Stock, in
accordance with the procedures set forth in this Section 7 and subject to the
terms and conditions of this Section 7 at any time.
7.2 Conversion Ratio. Each share of 10% Cumulative Convertible
Preferred to be converted shall be convertible at the office of the transfer
agent of the Corporation, as designated from time to time by the Corporation
(the "Transfer Agent"), and at such other office or offices, if any, as the
Board of Directors of the Corporation may designate, into the number of fully
paid and nonassessable shares of Common Stock determined by dividing the
Original Purchase Price (plus accrued but unpaid dividends) by $3.333 (the
"Conversion Price").
7.3 Conversion Notice. In order to convert shares of the 10% Cumulative
Convertible Preferred, the holder thereof shall deliver to the Corporation's
Transfer Agent a notice of intention to convert such shares and dividends
together with the certificate or certificates for the 10% Cumulative Convertible
Preferred to be converted, duly endorsed to the Corporation or in blank, or with
stock power(s) attached. Shares of the 10% Cumulative Convertible Preferred
shall be deemed to have been converted on the day on which notice of intention
to convert (including all required accompanying materials as set forth above)
was delivered to the Transfer Agent (the "Conversion Date") and the person or
persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes, including voting such Common Stock, as the record
holder or holders of such Common Stock at such time. As promptly as practicable
on or after the Conversion Date, the Corporation's Transfer Agent shall issue
and deliver to the record holder or holders of such 10% Cumulative Convertible
Preferred a certificate or certificates for the number of shares of Common Stock
issuable upon such conversion, to the person or persons entitled to receive the
same. No fractional shares will be issued, and any conversion shall be rounded
to the nearest whole number of shares of Common Stock.
7.4 Automatic Conversion. Commencing on the one year anniversary of the
Original Issue Date, each share of 10% Cumulative Convertible Preferred Stock
(plus all accrued but unpaid dividends) will automatically convert into that
number of shares of Common Stock provided in
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Section 7.2 in the event that the "Fair Market Value" of the Common Stock equals
or exceeds 300% of the Conversion Price for ten (10) consecutive trading days.
"Fair Market Value" shall mean the average of the closing bid and asked prices
of the Common Stock of the Corporation as reported in the Wall Street Journal
for any trading day (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotation System or other
principal market for the Common Stock) or, in the event the Common Stock is
listed on a stock exchange, the Fair Market Value shall be the closing price of
the Common Stock of the Corporation on such exchange as reported in the Wall
Street Journal for the trading day. In the event of an automatic conversion
pursuant to this Section 7.4, the Corporation shall promptly notify each record
holder of 10% Cumulative Convertible Preferred thereof. Thereafter, the transfer
agent and/or the Corporation may deliver certificates representing Common Stock
to such record holders and the certificates representing shares of 10%
Cumulative Preferred shall be deemed cancelled, or, alternatively, the
Corporation may notify such record holders that their certificates representing
shares of 10% Cumulative Convertible Preferred are thereafter deemed to
represent that number of shares of Common Stock determined by application of
Section 7.2 hereof.
7.5 Adjustments to Conversion Price. The Conversion Price shall be
subject to adjustment from time to time as follows:
(a) In the event the outstanding shares of Common Stock shall
be subdivided by stock split, stock dividends or otherwise, into a greater
number of shares of Common Stock, the Conversion Price then in effect shall,
concurrently with the effectiveness of such subdivision, be proportionately
decreased. In the event the outstanding shares of Common Stock shall be combined
or consolidated, by reclassification or otherwise, into a lesser number of
shares of Common Stock, the Conversion Price then in effect shall, concurrently
with the effectiveness of such combination or consolidation, be proportionately
increased.
(b) In the event that the Corporation from time to time makes
or fixes a record date for the determination of holders of Common Stock entitled
to receive any distribution (excluding any repurchases of securities by the
Corporation not made on a pro rata basis from all holders of any class of the
Corporation's securities) payable in property or in securities of the
Corporation other than shares of Common Stock, and other than as otherwise
adjusted in this Section 7 or as provided in Section 3, then and in each such
event the holders of 10% Cumulative Convertible Preferred shall receive at the
time of such distribution, the amount of property or the number of securities of
the Corporation that they would have received had their 10% Cumulative
Convertible Preferred been converted into Common Stock on the date of such
event.
(c) Except as provided in this Section 7, upon any
liquidation, dissolution or winding up of the Corporation, if the Common Stock
issuable upon conversion of the 10% Cumulative Convertible Preferred shall be
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changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares provided for
above), each share of 10% Cumulative Convertible Preferred and all accrued but
unpaid dividends shall thereafter be convertible into the number of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock deliverable upon such conversion shall have been entitled upon
such reorganization or reclassification. In any such event, effective provision
shall be made, in the certificate or articles of incorporation of the resulting
or surviving corporation or otherwise, so that the provisions set forth herein
for the protection of the conversion rights of the 10% Cumulative Convertible
Preferred shall thereafter be applicable to any such other shares of stock,
other securities, cash or property deliverable upon conversion of the shares of
the 10% Cumulative Convertible Preferred remaining outstanding or other
convertible stock or securities received by the holders in place thereof, and
any such resulting or surviving corporation shall expressly assume the
obligation to deliver, upon the exercise of the conversion privilege, such
shares, other securities, cash or property as the holders of the 10% Cumulative
Convertible Preferred remaining outstanding, or other convertible stock or
securities received by the holders in place thereof, shall be entitled to
receive pursuant to the provisions hereof, and to make provision for the
protection of the conversion right as above provided.
(d) No adjustment in the number of shares of Common Stock into
which the shares of 10% Cumulative Convertible Preferred are convertible shall
be required unless such adjustment would require an increase or decrease of at
least 1/10th of a share; provided, however, that any adjustment which by reason
hereof is not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
7.6 Notice of Adjustment. Whenever any adjustment is required to be
made as provided in Section 7.5, the Corporation shall promptly notify each
record holder of 10% Cumulative Convertible Preferred thereof, describing in
reasonable detail the adjustment and method of calculation used.
7.7 Reservation of Shares. The Corporation shall at all times reserve
and keep available free from preemptive rights, out of its authorized but
unissued Common Stock, for the purpose of effecting the conversion of the 10%
Cumulative Convertible Preferred, the full number of shares of Common Stock then
deliverable upon the conversion of all shares of 10% Cumulative Convertible
Preferred then outstanding.
7.8 Fractional Shares. No fractional shares will be issued, and any
conversion shall be rounded to the nearest whole number of shares of Common
Stock.
7.9 Accrued But Unpaid Dividends. Upon the receipt of a Conversion
Notice, the Corporation may in its discretion, either pay to the holder
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of the 10% Cumulative Convertible Preferred submitting such Conversion Notice
all accrued but unpaid dividends on the 10% Cumulative Convertible Preferred
such holder has elected to convert through the date of the Conversion Notice or
convert the dollar amount of any accrued but unpaid dividends on such shares of
10% Cumulative Convertible Preferred Stock into Common Stock at the
Conversion Price.
8. Liquidation, Dissolution or Winding Up. Subject to the superior
rights of the holders of any class or series of preferred stock ranking superior
to the 10% Cumulative Convertible Preferred with respect to any liquidation,
dissolution or winding up of the Corporation:
8.1 Liquidation Preference. Upon any voluntary liquidation,
dissolution or winding up of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (either as to payment of dividends
or with respect to distributions upon liquidation, dissolution or winding up) to
the 10% Cumulative Convertible Preferred unless, prior thereto, the holders of
10% Cumulative Convertible Preferred shall have received an amount equal to the
Original Purchase Price of the shares of 10% Cumulative Convertible Preferred
purchased, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"10% Cumulative Convertible Preferred Liquidation Preference"). Following the
payment of the full amount of the 10% Cumulative Convertible Preferred
Liquidation Preference, no additional distributions shall be made to the holders
of 10% Cumulative Convertible Preferred.
8.2 Partial Distribution. In the event, however, that there
are not sufficient assets available to permit payment in full of the 10%
Cumulative Convertible Preferred Liquidation Preference and the liquidation
preferences of all other classes and/or series of Preferred Stock, if any, which
rank on a parity with the 10% Cumulative Convertible Preferred, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences.
9. Consolidation, Merger, etc. In the event of any consolidation or
merger of the Corporation with or into another corporation, or of any sale or
conveyance to another corporation of all or substantially all the property of
the Corporation, in any of which transactions the holders of Common Stock
receive shares of stock, other securities, cash or property receivable upon such
consolidation, merger, sale or conveyance other than Common Stock, each holder
of 10% Cumulative Convertible Preferred then outstanding and thereafter
remaining outstanding shall have the right to convert each share of 10%
Cumulative Convertible Preferred held by him into the kind and amount of shares
of stock, other securities, cash or property receivable upon such consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
into which such share of 10% Cumulative Convertible Preferred could have been
converted immediately prior to the record date applicable to such
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consolidation, merger, sale or conveyance, and shall have no other conversion
rights. In any such event, effective provision shall be made, in the certificate
of incorporation of the resulting or surviving corporation or otherwise, so that
the provisions set forth herein for the protection of the conversion rights of
the holders of the 10% Cumulative Convertible Preferred shall thereafter be
applicable to any such other shares of stock, other securities, cash or property
deliverable upon conversion of the shares of the 10% Cumulative Convertible
Preferred remaining outstanding or other convertible stock or securities
received by the holders in place thereof, and any such resulting or surviving
corporation shall expressly assume the obligation to deliver, upon the exercise
of the conversion privilege, such shares, other securities, cash or property as
the holders of the 10% Cumulative Convertible Preferred remaining outstanding,
or other convertible stock or securities received by the holders in place
thereof, shall be entitled to receive pursuant to the provisions hereof, and to
make provision for the protection of the conversion rights as above provided.
10. Redemption.
10.1 Redemption Right. Beginning on the one year anniversary
of the Original Issue Date, unless previously converted, all or any portion of
the 10% Cumulative Convertible Preferred together with all dividends accrued but
unpaid on such 10% Cumulative Convertible Preferred computed to the Redemption
Date (as defined below) may be redeemed on a pro rata basis by the Corporation
at its election from the holders of such 10% Cumulative Convertible Preferred at
any time and from time to time. Notwithstanding the foregoing, the holders of
the 10% Cumulative Convertible Preferred will have the right to convert the 10%
Cumulative Convertible Preferred to Common Stock for a period of twenty (20)
days following notice of redemption.
10.2 Redemption Notice. Before redeeming the 10% Cumulative
Convertible Preferred as provided in Section 10.1, the Corporation shall mail by
certified or registered mail to each record holder thereof at least twenty (20)
days prior to the Redemption Date (as defined below), at the address shown on
the Corporation's records, a written notice (a "Redemption Notice") stating:
(a) the number of shares of 10% Cumulative
Convertible Preferred held by such holder which the Corporation proposes to
redeem, including the amount of any accrued but unpaid dividends;
(b) the price at which such shares may be redeemed,
which shall be an amount equal to the Original Purchase Price (as equitably
adjusted consistent with Section 7 hereof) and all accrued and unpaid dividends
and distributions thereon, whether declared or not declared, to the date of
redemption (the "Redemption Price");
(c) the date on which the Corporation will pay the
Redemption Price (the "Redemption Date"); and
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(d) the place at which the shares of 10% Cumulative
Convertible Preferred to be redeemed must be surrendered in exchange for the
Redemption Price.
Each holder of shares of the 10% Cumulative Convertible Preferred to whom an
Redemption Notice is mailed shall be entitled to receive in cash on the
Redemption Date the full Redemption Price for each share of 10% Cumulative
Convertible Preferred to be redeemed upon surrender by such holder at the place
designated in such Redemption Notice of the certificate representing such 10%
Cumulative Convertible Preferred duly endorsed in blank or accompanied by an
appropriate form of assignment duly endorsed in blank with signature guaranteed.
In case less than the total number of securities represented by any certificate
are redeemed on the Redemption Rate, a new certificate representing the number
of unredeemed securities will be issued to the holder thereof without cost to
the holder as promptly as practicable following surrender of the certificate
representing the redeemed securities. All rights arising hereunder, other than
the right to receive the Redemption Price, shall terminate on the Redemption
Date.
10.3 If the Corporation shall pay less than the aggregate
redemption price due on such date for all shares of all series of Preferred
Stock being redeemed having the same priority on liquidation as the 10%
Cumulative Convertible Preferred, then shares shall be redeemed from, and
payment shall be distributed among, the holders of the shares of all such series
on the same pro rata basis that such holders would share in payments of the
aggregate redemption price due on such date for all shares of Preferred Stock
being redeemed.
11. Other Notices. If at any time:
(a) The Corporation shall declare any dividend on the
Common Stock payable in shares of capital stock of the Corporation, cash or
other property; or
(b) The Corporation shall authorize the issue of any
options, warrants or rights pro rata to all holders of Common Stock entitling
them to subscribe for or purchase any shares of stock of the Corporation or to
receive any other rights; or
(c) The Corporation shall authorize the distribution
pro rata to all holders of Common Stock of a cash dividend payable otherwise
than out of earnings of surplus legally available therefor under the laws of the
State of Delaware, shares of its capital stock (other than Common Stock), stock
or other securities of other persons, evidences of indebtedness issued by the
Corporation or other persons, assets (excluding cash dividends) or options or
rights (excluding options to purchase and rights to subscribe for Common Stock
or other securities of the Corporation convertible into or exchangeable for
Common Stock); or
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(d) There shall occur any reclassification of the
Common Stock, or any consolidation or merger of the Corporation with or
into another Corporation or a sale, conveyance or other disposition to
another entity of all or substantially all of the properties of the
Corporation; or
(e) There shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation;
then, and in each of such cases, the Corporation shall deliver to each
holder of 10% Cumulative Convertible Preferred at its last address
appearing on the books of the Corporation as promptly as practicable
but in any event at least ten (10) days prior to the applicable record
date (or determination date) mentioned below, a notice stating, to the
extent such information is available, (i) the date on which a record is
to be taken for the purpose of such dividend, distribution or rights,
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 are to be determined, or (ii) the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is expected to become effective and the date
as of which it is expected that holders of Common Stock of record shall
be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 15th day
of May, 1996.
/s/ Bill R. Williams
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BILL R. WILLIAMS, President
ATTEST:
/s/ Connie L. Benger
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CONNIE L. BENGER, Secretary
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