Exhibit 4.10
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
CONVERTIBLE PREFERRED STOCK
OF
OWENS-ILLINOIS, INC.
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Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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Owens-Illinois, Inc., a Delaware corporation (the "Company"),
certifies that pursuant to the authority contained in Section A of ARTICLE IV of
its Restated Certificate of Incorporation (the "Certificate of Incorporation"),
and in accordance with the provisions of Section 151 of the General Corporation
Law of the State of Delaware (the "DGCL"), the Board of Directors of the Company
by unanimous written consent dated as of May 11, 1998, duly approved and adopted
the following resolution which resolution remains in full force and effect on
the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company by the Restated Certificate of Incorporation, the Board
of Directors does hereby designate, create, authorize and provide for the issue
of a series of preferred stock having a par value of $0.01 per share, with a
liquidation preference of $50.00 per share (the "Liquidation Preference") which
shall be designated as Convertible Preferred Stock (the "Convertible Preferred
Stock") consisting of 9,050,000 shares having the following powers,
designations, preferences and relative, participating, optional and other
special rights, and qualifications, limitations and restrictions:
1. Ranking. The Convertible Preferred Stock shall rank, with respect
to dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Company, (i) senior to the Common Stock, par value $0.01 per
share, of the Company (the "Common Stock"), to the Series A Exchangeable
Preferred Stock, par value $0.01 per share, of the Company, to the Series B
Exchangeable Preferred Stock, par value $0.01 per share, of the Company, to the
Series C Exchangeable Preferred Stock, par value $0.01 per share, of the Company
(together with the Series A Exchangeable Preferred Stock and the Series B
Exchangeable Preferred Stock, the "Exchangeable Preferred Stock") and to each
other class or series of stock of the Company (including any series of preferred
stock established after May 14, 1998 by the Board of Directors) the terms of
which do not
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expressly provide that it ranks senior to or on a parity with the Convertible
Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Company (collectively referred to
as "Junior Securities"); (ii) on a parity with any equity security, the terms of
which expressly provide that such class or series will rank on a parity with the
Convertible Preferred Stock as to dividend distributions and distributions upon
the liquidation, winding-up and dissolution of the Company (collectively
referred to as "Parity Securities"); and (iii) junior to any equity security,
the terms of which expressly provide that such class or series will rank senior
to the Convertible Preferred Stock as to dividend distributions and
distributions upon liquidation, winding-up and dissolution of the Company
(collectively referred to as "Senior Equity Securities").
2. Dividends.
(A) The holders of shares of the Convertible Preferred Stock shall be
entitled to receive, when, as and if dividends are declared by the Board of
Directors of the Company out of funds of the Company legally available therefor,
cash dividends, accruing from the date of issuance (the "Convertible Preferred
Stock Issue Date") or the most recent Dividend Payment Date on which dividends
have been paid at the rate per annum of 4.75% of the Liquidation Preference per
share (equivalent to $2.375 per annum per share of Convertible Preferred
Stock,), payable quarterly in arrears on each May 15, August 15, November 15 and
February 15, commencing on August 15, 1998 (each a "Dividend Payment Date"). If
any such date is not a Business Day, such payment shall be made on the next
succeeding Business Day, to the holders of record as of the preceding May 1,
August 1, November 1 and February 1 (each, a "Record Date"). Dividends payable
on the Convertible Preferred Stock will be computed on the basis of a 360-day
year consisting of twelve 30-day months and will be deemed to accrue on a daily
basis.
(B) On each Dividend Payment Date all dividends which shall have accrued
on each share of Convertible Preferred Stock outstanding on such Dividend
Payment Date shall accumulate and be deemed to become "due" whether or not there
shall be funds legally available for payment thereof. Any dividend which shall
not be paid on the Dividend Payment Date on which it shall become due (whether
because of the absence of legally available funds for the payment thereof or
otherwise) shall be deemed to be "past due" until such dividend shall be paid or
until the share of Convertible Preferred Stock with respect to which such
dividend became due shall no longer be outstanding, whichever is the earlier to
occur. No interest, sum of money in lieu of interest, or other property or
securities shall be payable in respect of any dividend payment or payments which
are past due. Dividends paid on shares of Convertible Preferred Stock in an
amount less than the total amount of such dividends at the time accumulated and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
(C) If dividends are not paid in full, or declared in full and sums set
aside for the payment thereof, upon the Convertible Preferred Stock and any
Parity Securities, subject to the prior rights of holders of any Senior Equity
Securities, all dividends declared upon shares of the Convertible Preferred
Stock and such Parity Securities will when, as and if declared, be declared pro
rata so that in all cases the amount of dividends declared and paid per share on
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the Convertible Preferred Stock and such Parity Securities will bear to each
other the same ratio that accumulated dividends per share on the shares of
Convertible Preferred Stock and such Parity Securities bear to each other.
Except as set forth above, unless full cumulative dividends on the Convertible
Preferred Stock have been paid, or declared and sums set aside for the payment
thereof, dividends (other than in Common Stock or other Junior Securities and
other than dividends or distributions on the Exchangeable Preferred Stock, so
long as such dividends or distributions accumulate on the Exchangeable Preferred
Stock and are not paid in cash) may not be paid, or declared and sums set aside
for payment thereof, and other distributions may not be made upon the Common
Stock or other Junior Securities; and no shares of Common Stock nor any other
Junior Securities may be redeemed, purchased or otherwise acquired for any
consideration by the Company (except by conversion into or exchange for other
Junior Securities and except for capital stock acquired by the Company in
connection with the payment of any amounts upon the exercise of the Company's
stock options).
(D) Dividends on the Convertible Preferred Stock shall accrue whether or
not the Company has earnings or profits, whether or not there are funds legally
available for the payment of such dividends and whether or not dividends are
declared. Dividends will accumulate to the extent they are not paid on the
Dividend Payment Date for the period to which they relate.
(E) Any reference to "distribution" contained in this Section 2 shall not
be deemed to include any distribution made in connection with any liquidation,
winding-up or dissolution of the Company.
3. Conversion.
(A) Subject to and upon compliance with the provisions of this Section 3,
each share of Convertible Preferred Stock shall, at the option of the holder
thereof, be convertible at any time (unless such share is called for redemption,
then to and including but not after the close of business on the date
immediately prior to the Redemption Date (as defined herein), unless the Company
shall default in payment due upon redemption thereof), into that number of fully
paid and non-assessable shares of Common Stock (calculated as to each conversion
to the nearest 1/100th of a share) obtained by dividing $50.00 by the Conversion
Price in effect at such time and by surrender of the certificate or certificates
representing such shares so to be converted in the manner provided in Section
3(B).
(B) To convert Convertible Preferred Stock, the holder of one or more
shares of Convertible Preferred Stock to be converted shall surrender the
certificate or certificates representing such shares at any of the offices or
agencies to be maintained for such purpose by the Company accompanied by the
funds, if any, required by the last paragraph of this Section 3(B) and shall
give written notice of conversion in the form provided on such shares of
Convertible Preferred Stock (or such other notice as is acceptable to the
Company) to the Company at such office or agency that the holder elects to
convert the shares of Convertible Preferred Stock specified in said notice. Such
notice shall also state the name or names, together with address or addresses,
in which the certificate or certificates for shares of
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Common Stock which shall be issuable in such conversion shall be issued. Each
certificate representing a share of Convertible Preferred Stock surrendered for
conversion shall, unless the shares issuable on conversion are to be issued in
the same name as the name in which such share is registered, be accompanied by
instruments of transfer, in form satisfactory to the Company, duly executed by
the holder or his duly authorized attorney and an amount sufficient to pay any
transfer or similar tax. As promptly as practicable after the surrender of
certificates representing such shares of Convertible Preferred Stock and the
receipt of such notice, instruments of transfer and funds, if any, as aforesaid,
the Company shall issue and shall deliver at such office or agency to such
holder, or as designated in such holder's written instructions, a certificate or
certificates for the number of full shares of Common Stock issuable upon the
conversion of such share of Convertible Preferred Stock in accordance with the
provisions of this Section 3 and a check or cash in respect of any fractional
interest in a share of Common Stock arising upon such conversion, as provided in
Section 3(C).
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which certificates representing such shares
of Convertible Preferred Stock shall have been surrendered and such notice (and
any applicable instruments of transfer and any required taxes) received by the
Company as aforesaid, and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby at such time on such date, and such conversion
shall be at the Conversion Price in effect at such time on such date, unless the
stock transfer books of the Company shall be closed on that date, in which event
such person or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion Price in
effect on the date upon which certificates representing such shares of
Convertible Preferred Stock shall have been surrendered and such notice received
by the Company.
Holders of Convertible Preferred Stock at the close of business on a
Record Date will be entitled to receive an amount equal to the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following such Record Date and prior to such Dividend
Payment Date; provided, however, that Convertible Preferred Stock surrendered
for conversion during the period between the close of business on any Record
Date and the opening of business on the corresponding Dividend Payment Date
(except shares converted after the issuance of a notice of redemption with
respect to a Redemption Date during such period or coinciding with such Dividend
Payment Date, which will be entitled to such dividend) must be accompanied by
payment of an amount equal to the dividend payable on such shares on such
Dividend Payment Date. A holder of Convertible Preferred Stock on a Record Date
who (or whose transferee) tenders any such shares for conversion into shares of
Common Stock on such Dividend Payment Date will receive the dividend payable by
the Company on such shares of Convertible Preferred Stock on such date, and the
converting holder need not include payment of the amount of such dividend upon
surrender of Convertible Preferred Stock for conversion. Except as provided
herein, the Company will make no payment or allowance for unpaid dividends,
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whether or not in arrears, on converted shares or for dividends on the Common
Stock issued upon such conversion.
(C) No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon conversion of Convertible Preferred Stock. If
more than one share of Convertible Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate of $50.00 for each such share so surrendered. In lieu of any
fractional interest in a share of Common Stock which would otherwise be
deliverable upon the conversion of any share of Convertible Preferred Stock, the
Company shall pay to the holder of such shares an amount in cash (computed to
the nearest cent) equal to the closing price (as defined in Section 5 hereof) on
the Business Day next preceding the day of conversion multiplied by the
fractional interest that otherwise would have been deliverable upon conversion
of such share.
(D) The "Conversion Price" shall mean and be $52.68, subject to adjustment
from time to time by the Company as follows:
(i) In case the Company shall (a) pay a dividend or make a
distribution on its Common Stock, each in shares of Common Stock, (b)
subdivide its outstanding shares of Common Stock into a greater number of
shares, (c) combine its outstanding shares of Common Stock into a smaller
number of shares, or (d) issue by reclassification of its Common Stock any
shares of capital stock of the Company, then in each such case the
Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of any share of Convertible Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock or other capital stock of the Company
which such holder would have owned or been entitled to receive immediately
following such action had such share been converted immediately prior to
the occurrence of such event. An adjustment made pursuant to this
subsection (i) shall become effective immediately after the record date,
in the case of a dividend or distribution, or immediately after the
effective date, in the case of a subdivision, combination or
reclassification. If, as a result of an adjustment made pursuant to this
subsection (i), the holder of any share of Convertible Preferred Stock
thereafter surrendered for conversion shall become entitled to receive
shares of two or more classes of capital stock or shares of Common Stock
and other capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a statement
filed by the Company with the Transfer Agent) shall determine the
allocation of the adjusted Conversion Price between or among shares of
such classes of capital stock or shares of Common Stock and other capital
stock.
(ii) In case the Company shall issue rights or warrants to all
holders of its outstanding shares of Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase shares of Common Stock at a price per share less
than the current market price per share (as determined pursuant to
subsection (iv) of this Section 3(D)) of the Common Stock
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(other than pursuant to any stock option, restricted stock or other
incentive or benefit plan or stock ownership or purchase plan for the
benefit of employees, directors or officers or any dividend reinvestment
plan of the Company in effect at the time hereof or any other similar plan
adopted or implemented hereafter), then the Conversion Price in effect
immediately prior thereto shall be adjusted so that it shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the record date by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding on the record date plus the
number of shares which the aggregate proceeds to the Company from the
exercise of such rights or warrants would purchase at such current market
price, and of which the denominator shall be the number of shares of
Common Stock outstanding on the record date plus the number of additional
shares of Common Stock offered for subscription or purchase. Such
adjustment shall be made successively whenever any rights or warrants are
issued, and shall become effective immediately after the record date for
the determination of stockholders entitled to receive such rights or
warrants; provided, however, in the event that all the shares of Common
Stock offered for subscription or purchase are not delivered upon the
exercise of such rights or warrants, upon the expiration of such rights or
warrants the Conversion Price shall be readjusted to the Conversion Price
which would have been in effect had the numerator and the denominator of
the foregoing fraction and the resulting adjustment been made based upon
the number of shares of Common Stock actually delivered upon the exercise
of such rights or warrants rather than upon the number of shares of Common
Stock offered for subscription or purchase. In determining whether any
rights or warrants entitle the holders to subscribe for or purchase shares
of Common Stock at less than such current market price, and in determining
the aggregate offering price of such shares of Common Stock, there shall
be taken into account any consideration received by the Company for such
rights or warrants, the value of such consideration, if other than cash,
to be determined by the Board of Directors (whose determination shall be
conclusive and shall be described in a statement filed by the Company with
the Transfer Agent).
(iii) In case the Company shall, by dividend or otherwise,
distribute to all holders of its outstanding Common Stock any capital
stock (other than Common Stock), evidences of its indebtedness or assets
or rights or warrants to subscribe for or purchase securities of the
Company (excluding those referred to in subsection (ii) of this Section
3(D) and dividends or distributions payable in stock for which adjustment
is made pursuant to subsection (i) of this Section 3(D) and dividends and
distributions or rights or warrants to subscribe for or purchase
securities of the Company paid in cash out of the retained earnings of the
Company and distributions upon mergers or consolidations to which Section
3(H) applies), then in each such case the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying
the Conversion Price in effective immediately prior to the record date of
such distribution by a fraction of which the numerator shall be the
current market price per share as determined pursuant to subsection (iv)
of this Section 3(D) of the Common Stock less the fair market value on
such record date (as determined by the Board of Directors, whose
determination shall be conclusive and shall be described in
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a statement filed by the Company with the Transfer Agent) of the portion
of the capital stock or assets or the evidences of indebtedness or assets
so distributed to the holder of one share of Common Stock or of such
subscription rights or warrants applicable to one share of Common Stock,
and of which the denominator shall be such current market price per share
of Common Stock. Such adjustment shall become effective immediately after
the record date for the determination of stockholders entitled to receive
such distribution.
The occurrence of a distribution or the occurrence of any other
event as a result of which holders of Convertible Preferred Stock shall
not be entitled to receive rights, including exchange rights (the
"Rights"), pursuant to any stockholders protective rights agreement (the
"Rights Agreement") that may be adopted by the Company as if such holders
had converted such shares into Common Stock immediately prior to the
occurrence of such distribution or event shall not be deemed a
distribution of securities for the purpose of any Conversion Price
adjustment pursuant to this subparagraph (iii) or otherwise give rise to
any Conversion Price adjustment pursuant to this Section 3; provided,
however, that in lieu of any adjustment to the Conversion Price as a
result of any such a distribution or occurrence, the Company shall make
provision so that Rights, to the extent issuable at the time of conversion
of any shares of Convertible Preferred Stock into shares of Common Stock,
shall issue and attach to such shares of Common Stock then issued upon
conversion in the amount and manner and to the extent and as provided in
the Rights Agreement in respect of issuances at the time of Common Stock
other than upon conversion.
(iv) For the purpose of any computation under subsections (ii)
and (iii) of this Section 3(D), the current market price per share of
Common Stock on any date shall be deemed to be the average of the closing
price (as defined in Section 5) for the shorter of (a) 20 consecutive
trading days (as defined in Section 5) ending on the last full trading day
prior to the Time of Determination or (b) the period commencing on the
date next succeeding the first public announcement of the issuance of such
rights or warrants or such distribution through such last full trading day
prior to the Time of Determination. For purposes of the foregoing, the
term "Time of Determination" shall mean the time and date of the earlier
of (I) the record date for determining stockholders entitled to receive
the rights, warrants or distributions referred to in Section 3(D)(ii) and
(iii) or (II) the commencement of "ex-dividend" trading on the exchange or
market referred to in the definition of "closing price."
(v) In any case in which this Section 3(D) shall require that
an adjustment be made immediately following a record date or an effective
date the Company may elect to defer (but only until the filing by the
Company with the Transfer Agent of the certificate required by subsection
(vii) of this Section 3(D)) issuing to the holder of any share of
Convertible Preferred Stock converted after such record date or effective
date the shares of Common Stock issuable upon such conversion over and
above the shares of Common Stock issuable upon such conversion on the
basis of the Conversion Price prior to adjustment, and paying to such
holder any amount of cash in lieu of a fractional share.
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(vi) No adjustment in the Conversion Price shall be required
to be made unless such adjustment would require an increase or decrease of
at least one percent of such price; provided, however, that any adjustment
which by reason of this subsection (vi) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 3(D) shall be made to the nearest cent
or to the nearest 1/100th of a share, as the case may be. Anything in this
Section 3(D) to the contrary notwithstanding, the Company shall be
entitled to make such reduction in the Conversion Price, in addition to
those required by this Section 3(D), as it in its discretion shall
determine to be advisable in order that any stock dividend, subdivision of
shares, distribution of rights to purchase stock or securities, or
distribution of securities convertible into or exchangeable for stock
hereafter made by the Company to its stockholders shall not be taxable to
the recipients. Except as set forth in subsections (i), (ii) and (iii)
above, the Conversion Price shall not be adjusted for the issuance of
Common Stock, or any securities convertible into or exchangeable for
Common Stock or carrying the right to purchase any of the foregoing, in
exchange for cash, property or services.
(vii) Whenever the Conversion Price is adjusted as herein
provided, (A) the Company shall promptly file with the Transfer Agent a
certificate setting forth the Conversion Price after such adjustment and a
brief statement of the facts requiring such adjustment and the manner of
computing the same, which certificate shall be conclusive evidence of the
correctness of such adjustment, and (B) the Company shall also mail or
cause to be mailed by first class mail, postage prepaid, as soon as
practicable to each holder of record of shares of Convertible Preferred
Stock a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price. The Transfer Agent shall not
be under any duty or responsibility with respect to the certificate
required by this subsection (vii) except to exhibit the same to any holder
of shares of Convertible Preferred Stock who requests to inspect it.
(viii) In the event that at any time, as a result of an
adjustment made pursuant to subsection (i) of this Section 3(D), the
holder of any share of Convertible Preferred Stock thereafter surrendered
for conversion shall become entitled to receive any shares of the Company
other than shares of Common Stock, thereafter the Conversion Price of such
other shares so receivable upon conversion of any share of Convertible
Preferred Stock shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to Common Stock contained in this Section.
(ix) The Company from time to time may decrease the Conversion
Price by any amount for any period of time if the period is at least 20
days and if the decrease is irrevocable during the period. Whenever the
Conversion Price is so decreased, the Company shall mail to holders of
record of shares of Convertible Preferred Stock a notice of the decrease
at least 15 days before the date the decreased Conversion Price takes
effect, and such notice shall state the decreased Conversion Price and the
period it will be in effect.
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(E) In Case:
(i) the Company shall take any action which would require an
adjustment in the Conversion Price pursuant to Section 3(D); or
(ii) the Company shall authorize the granting to the holders
of its Common Stock generally of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights (other
than Rights to which the second paragraph of subparagraph (D)(iii) of this
Section 3 applies); or
(iii) there shall be any reorganization or reclassification of
the Common Stock (other than an event to which subparagraph (D)(i) of this
Section 3 applies) or any merger or consolidation to which the Company is
a party or any sale or transfer of all or substantially all of the
property and assets of the Company, in each case for which approval of any
stockholders of the Company is required; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then in each such case the Company shall cause to be given to the holders of
shares of Convertible Preferred Stock and the Transfer Agent as promptly as
possible, but in any event at least 15 days prior to the applicable date
hereinafter specified, a notice stating (i) the date on which a record is to be
taken for the purpose of such action or granting of rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such distribution, rights or warrants are to be
determined, or (ii) the date on which such reorganization, reclassification,
merger, consolidation, sale, transfer, dissolution, liquidation or winding-up is
expected to become effective or occur, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property deliverable upon
such reorganization, reclassification, merger, consolidation, sale, transfer,
dissolution, liquidation or winding-up. Failure to give such notice or any
defect therein shall not affect the legality or validity or the proceedings
described in subsection (i), (ii), (iii) or (iv) of this Section 3(E).
(F) The Company covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversions of shares of
Convertible Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of Convertible
Preferred Stock not theretofore converted and on or before (and as a condition
of) taking any action that would cause an adjustment of the Conversion Price
resulting in an increase in the number of shares of Common Stock deliverable
upon conversion above the number thereof previously reserved and available
therefor, the Company shall take all such action so required. For purposes of
this Section 3(F), the number of shares of Common Stock which shall be
deliverable upon the conversion of all outstanding shares of Convertible
Preferred Stock shall
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be computed as if at the time of computation all outstanding shares of
Convertible Preferred Stock were held by a single holder.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the shares of Common Stock
deliverable upon conversion of the shares of Convertible Preferred Stock, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock at such adjusted Conversion
Price.
(G) The Company shall pay any and all documentary stamp, issue or transfer
taxes, and any other similar taxes payable in respect of the issue or delivery
of shares of Common Stock upon conversion of shares of Convertible Preferred
Stock pursuant hereto; provided, however, that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issue or delivery of shares of Common Stock in a name other than that of the
holder of the shares of Convertible Preferred Stock to be converted and no such
issue or delivery shall be made unless and until the person requesting such
issue or delivery has paid to the Company the amount of any such tax or has
established, to the satisfaction of the Company, that such tax has been paid.
(H) Notwithstanding any other provision herein to the contrary, in case of
any merger or consolidation to which the Company is a party (other than a merger
or consolidation in which the Company is the continuing entity and in which the
Common Stock outstanding immediately prior to the merger or consolidation is not
exchanged for cash, or the securities or other property of another entity), or
in the case of any sale or transferof all or substantially all of the Company's
property and assets to another entity, there will be no adjustment of the
Conversion Price, and lawful provision shall be made by the entity formed by
such consolidation or the entity whose securities, cash or other property will
immediately after the merger or consolidation be owned, by virtue of the merger
or consolidation, by the holders of Common Stock immediately prior to the merger
or consolidation, or the entity which shall have acquired such assets of the
Company, such that each share of Convertible Preferred Stock then outstanding
will, without the consent of the holder thereof become convertible into the kind
and amount of securities, cash or other property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which such share of Convertible Preferred Stock was convertible
immediately prior to such merger, consolidation, sale or transfer assuming such
holder of Common Stock did not exercise his rights of election, if any, as to
the kind or amount of securities, cash or other property receivable upon such
merger, consolidation, sale or transfer. In the case of a cash merger of the
Company into another entity or any other cash transaction of the type mentioned
in this Section 3(H), each share of Convertible Preferred Stock will thereafter
be convertible at the Conversion Price in effect at such time into the same
amount of cash per share into which each share of Convertible Preferred Stock
would have been convertible had such share been converted into Common Stock
immediately prior to the effective date of such cash merger or transaction.
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The above provisions of this Section 3(H) shall similarly apply to
successive mergers, consolidations, sales or transfers.
(I) The Company covenants that all shares of Common Stock which may be
delivered upon conversion of shares of Convertible Preferred Stock will upon
delivery be duly and validly issued and fully paid and non-assessable.
The Company covenants that if any shares of Common Stock to be provided
for the purpose of conversion of shares of Convertible Preferred Stock hereunder
require registration with or approval of any governmental authority under any
Federal or State law before such shares may be validly issued upon conversion,
the Company will in good faith and as expeditiously as possible endeavor to
secure such registration or approval, as the case may be.
The Company further covenants that so long as the Common Stock shall be
listed on the New York Stock Exchange or any other national securities exchange
or the Nasdaq National Market, the Company will, if permitted by the rules of
such exchange or market, list and keep listed so long as the Common Stock shall
be so listed on such exchange or market, all Common Stock issuable upon
conversion of the shares of Convertible Preferred Stock.
4. Liquidation Rights. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, each holder of shares of the
Convertible Preferred Stock will be entitled to payment out of the assets of the
Company available for distribution of an amount equal to the Liquidation
Preference per share of Convertible Preferred Stock held by such holder, plus an
amount equal to accrued and unpaid dividends, if any, to the date fixed for
liquidation, dissolution or winding-up before any distribution is made on any
Junior Securities, including, without limitation, the Common Stock. After
payment in full of the Liquidation Preference and an amount equal to all accrued
and unpaid dividends, if any, to which holders of Convertible Preferred Stock
are entitled, such holders will not be entitled to any further participation in
any distribution of assets of the Company. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the amounts payable with
respect to the Convertible Preferred Stock and all other Parity Securities are
not paid in full, the holders of the Convertible Preferred Stock and the Parity
Securities will share equally and ratably in any distribution of assets of the
Company in proportion to the full liquidation preference and accumulated and
unpaid dividends, if any, to which each is entitled. However, the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Company, or the consolidation or merger of the Company with or into one or
more Persons will not be deemed to be a voluntary or involuntary liquidation,
dissolution or winding-up of the Company, unless such sale, conveyance, exchange
or transfer shall be in connection with a liquidation, dissolution or winding-up
of the business of the Company.
The holder of any shares of Convertible Preferred Stock shall not be
entitled to receive any payment owed for such shares under this Section 4 until
such holder shall cause to be delivered to the Company (i) the certificate(s)
representing such shares of Convertible Preferred Stock and (ii) transfer
instrument(s) satisfactory to the Company and sufficient to transfer such shares
of Convertible Preferred Stock to the Company free of any adverse
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interest. As in the case of the Redemption Price referred to below, no interest
shall accrue on any payment upon liquidation after the date thereof.
5. Optional Redemption.
(A) The Company may not redeem the Convertible Preferred Stock prior to
May 15, 2001. Subject to the requirement of legally available funds therefor,
the Convertible Preferred Stock may be redeemed for shares of Common Stock, in
whole or from time to time in part, at the option of the Company on or after May
15, 2001, on any date set by the Board of Directors, at the redemption prices
specified below, if redeemed during the 12-month period commencing May 15 of
the year set forth below:
Year Price Per Share
---- ---------------
2001............................ $51.6625
2002............................ $51.4250
2003............................ $51.1875
2004............................ $50.9500
2005............................ $50.7125
2006............................ $50.4750
2007............................ $50.2375
and thereafter at $50.00 per share plus, in each case, an amount equal to all
dividends on the Convertible Preferred Stock accrued and unpaid thereon, whether
or not declared or due, to the date fixed for redemption, such sum being
hereinafter referred to as the "Redemption Price" (subject to the right of the
holder of record of shares of Convertible Preferred Stock on a Record Date to
receive the dividend due on such shares of Convertible Preferred Stock on the
corresponding Dividend Payment Date). At no time shall the Convertible Preferred
Stock be redeemable for cash.
(B) The Company shall issue in payment of the Redemption Price for each
share of Convertible Preferred Stock to be redeemed such number of shares of
Common Stock as equals (x) the then-current Redemption Price of the Convertible
Preferred Stock, divided by (y) the market price (the "Market Price") of the
Common Stock. The Market Price shall be equal to the lower of (i) the average of
the daily closing prices of the Common Stock for the 20 consecutive trading days
immediately preceding the first Business Day immediately preceding the date of
the applicable redemption notice, or (ii) the closing price of the Common Stock
on the trading day immediately preceding the first Business Day immediately
preceding the date of the applicable redemption notice. The "closing price" for
each day shall be the last reported sale price regular way of the Common Stock
on the New York Stock Exchange or, if the Common Stock is not listed on The New
York Stock Exchange, the
13
average of the closing sale prices on such day of the Common Stock on all
domestic exchanges on which the shares of Common Stock may at the time be
listed, or if there have been no sales on any such exchange on such day, the
average of the highest bid and lowest asked prices of the Common Stock on all
such exchanges or, if on such day such shares of Common Stock shall not be so
listed, the average of the comparative bid and asked prices quoted for the
Common Stock in the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System as of 4:00 P.M., New York City time on such day, or
if such shares shall not be quoted in the NASDAQ System, the average of the high
and low bid and asked price of the Common Stock on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any other successor organization. If at any time such shares of
Common Stock are not listed on any domestic exchange or quoted in the NASDAQ
System or the domestic over-the-counter market, the Market Price shall be the
fair market value thereof determined by the Board of Directors of the Company in
good faith. For the purposes of this Section 5, "trading day" shall mean a day
on which the securities exchange specified for purposes of this Section 5 shall
be open for business or, if the shares of Common Stock shall not be listed on
such exchange for such period, a day with respect to which quotations of the
character referred to in the next preceding sentence shall be reported. In lieu
of any fractional share of Common Stock which would otherwise be issued upon any
redemption of Convertible Preferred Stock, the Company shall pay a cash
adjustment in respect of such fractional interest in an amount in cash (computed
to the nearest cent) equal to the Market Price multiplied by the fractional
interest to the nearest 1/100th of a percent that otherwise would have been
deliverable upon such redemption of such Convertible Preferred Stock.
(C) In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the shares of Convertible Preferred Stock to be
redeemed shall be redeemed pro rata or by lot or in such other manner as the
Board of Directors may determine. Notwithstanding the foregoing, the Company
shall not redeem less than all of the Convertible Preferred Stock at any time
outstanding until all dividends accrued and in arrears upon all Convertible
Preferred Stock then outstanding shall have been paid for the current and all
past dividend periods.
(D) Not more than 60 nor less than 30 days prior to the date specified
therein for redemption (the "Redemption Date"), notice by first class mail,
postage prepaid, shall be given to each holder of record of the Convertible
Preferred Stock to be redeemed, at such holder's address as it shall appear upon
the stock transfer books of the Company. Each such notice of redemption shall
specify the date fixed for redemption, the Redemption Price, the place or places
of payment, that delivery of shares of Common Stock will be made upon
presentation and surrender of the certificate(s) evidencing the shares of
Convertible Preferred Stock to be redeemed, that on and after the redemption
date, dividends will cease to accrue on such shares, the then effective
Conversion Price pursuant to Section 3 and that the right of holders to convert
shall terminate at the close of business on the date immediately prior to the
redemption date (unless the Company defaults in the payment of the Redemption
Price).
(E) Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of the Convertible
Preferred Stock receives
14
such notice; and failure to give such notice by mail, or any defect in such
notice, to the holders of any shares designated for redemption shall not affect
the validity of the proceedings for the redemption of any other shares of
Convertible Preferred Stock. On or after the date fixed for redemption as stated
in such notice, each holder of the shares called for redemption shall surrender
the certificate evidencing such shares to the Company at the place designated in
such notice and shall thereupon be entitled to receive delivery of shares of
Common Stock as herein provided. If less than all the shares represented by any
such surrendered certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. If, on the date fixed for redemption, shares
of Common Stock and funds necessary for the redemption shall be available
therefor and shall have been irrecoverably deposited or set aside, then,
notwithstanding that the certificates evidencing any shares so called for
redemption shall not have been surrendered the dividends with respect to the
shares so called shall cease to accrue after the date fixed for redemption, the
shares shall no longer be deemed outstanding, the holders thereof shall cease to
be holders of Convertible Preferred Stock, and all rights whatsoever with
respect to the shares so called for redemption (except the right of the holders
to receive delivery of shares of Common Stock as herein provided without
interest or adjustment upon surrender of their certificates representing shares
of Convertible Preferred Stock) shall terminate. At the close of business on the
redemption date, each holder of Convertible Preferred Stock so redeemed (unless
the Company defaults on its obligations to deliver shares of Common Stock or
cash) shall be, without any further action, deemed a holder of the number of
shares of Common Stock for which such Convertible Preferred Stock is redeemable.
(F) The shares of Convertible Preferred Stock shall not be subject to the
operation of any purchase, retirement, mandatory redemption or sinking fund.
(G) The holder of any shares of Convertible Preferred Stock redeemed upon
any exercise of the Company's redemption right shall not be entitled to receive
shares of Common Stock for such shares until such holder shall cause to be
delivered to the place specified in the notice given with respect to such
redemption (i) the certificate(s) representing such shares of Convertible
Preferred Stock redeemed and (ii) transfer instrument(s) satisfactory to the
Company and sufficient to transfer such shares of Convertible Preferred Stock to
the Company free of any adverse interest.
(H) All shares of Common Stock which may be delivered upon redemption of
the Convertible Preferred Stock will upon delivery be duly and validly issued
and fully paid and non-assessable, and prior to giving any notice of redemption
the Company shall take any corporate action necessary therefor.
(I) In the event that any shares of Convertible Preferred Stock shall be
converted into Common Stock prior to any Redemption Date pursuant to Section 3,
then (i) the Company shall not have the right to redeem such shares and (ii)
shares of Common Stock and any funds which shall have been deposited for the
payment of the Redemption Price for such shares of Convertible Preferred Stock
shall be returned to the Company immediately after such conversion (subject to
declared dividends payable pursuant to Section 3(B) hereof).
15
6. Voting Rights
(A) The holders of record of shares of the Convertible Preferred Stock
shall have no voting rights, except as required by law and as hereinafter
provided in this Section 6. In exercising any such voting rights, each
outstanding share of Convertible Preferred Stock will be entitled to one vote,
excluding shares of its own capital stock belonging to the Company or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
Company, which shares will have no voting rights.
(B) Whenever dividends on the Convertible Preferred Stock shall be in
arrears in an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors of the Company
shall be increased by two, effective as of the time of election of such
directors as hereinafter provided, and (ii) the holders of the Convertible
Preferred Stock (voting separately as a class with all other affected classes or
series of the Parity Securities upon which like voting rights have been
conferred and are exercisable) will have the exclusive right to vote for and
elect such two additional directors of the Company at any meeting of
stockholders of the Company at which directors are to be elected held during the
period such dividends remain in arrears. The right of the holders of the
Convertible Preferred Stock to vote for such two additional directors shall
terminate when all accrued and unpaid dividends on the Convertible Preferred
Stock have been declared and paid or set aside for payment. The term of office
of all directors so elected shall terminate immediately upon the termination of
the right of the holders of the Convertible Preferred Stock and such Parity
Securities to vote for such two additional directors.
The foregoing right of the holders of the Convertible Preferred Stock with
respect to the election of two directors may be exercised at any annual meeting
of stockholders or at any special meeting of stockholders held for the purpose
of electing directors. If the right to elect directors shall have accrued to the
holders of the Convertible Preferred Stock more than 90 days preceding the date
established for the next annual meeting of stockholders, the Board of Directors
of the Company shall, within 20 days after the delivery to the Company at its
principal office of a written request for a special meeting signed by the
holders of at least twenty-five percent (25%) of the Convertible Preferred Stock
then outstanding, call a special meeting of the holders of the Convertible
Preferred Stock to be held within 60 days after the delivery of such request for
the purpose of electing such additional directors.
The holders of the Convertible Preferred Stock and any Parity Securities
referred to above voting as a class shall have the right to remove without cause
at any time and replace any directors such holders have elected pursuant to this
Section 6, and such directors shall not be removed without cause except by such
holders.
(C) So long as the Convertible Preferred Stock is outstanding, the Company
shall not, without the affirmative vote of the holders of at least 66 2/3
percent of all outstanding Convertible Preferred Stock (unless the vote of a
greater percentage is required by applicable
16
law or the Certificate of Incorporation), voting separately as a class, (i)
amend, alter or repeal (by merger, consolidation or otherwise) any provision of
the Certificate of Incorporation or the By-laws of the Company, as amended, so
as to affect materially and adversely the relative rights, preferences,
qualifications, limitations or restrictions of the Convertible Preferred Stock
or (ii) authorize, or increase the authorized amount of, any additional class or
series of Senior Equity Securities, or any security convertible into stock of
such class or series of Senior Equity Securities. Except as otherwise set forth
herein or in the Certificate of Incorporation or as otherwise required by law,
(i) the creation, authorization or issuance of any shares or series of preferred
stock or (ii) the increase or decrease in the amount of authorized capital stock
of any class or series, including any preferred stock, shall not require the
consent of the holders of Convertible Preferred Stock and shall not be deemed to
affect adversely the rights, preferences, privileges or voting rights of the
Convertible Preferred Stock.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of Convertible Preferred Stock shall have
been redeemed or called for redemption upon proper notice and sufficient shares
of Common Stock shall have been reserved by the Company to effect such
redemption.
7. Exclusion of Other Rights. Except as may otherwise be required by law,
the shares of Convertible Preferred Stock shall not have any voting powers,
preferences and relative, participating, optional or other special rights, other
than those specifically set forth in this Certificate of Designation or the
Certificate of Incorporation. The shares of Convertible Preferred Stock shall
have no preemptive or subscription rights.
8. Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
9. Severability of Provisions. If any of the voting powers, preferences
and relative, participating, optional and other special rights of the
Convertible Preferred Stock and qualifications, limitations and restrictions
thereof set forth herein is invalid, unlawful or incapable of being enforced by
reason of any rule of law or public policy, all other voting powers, preferences
and relative, participating, optional and other special rights of Convertible
Preferred Stock and qualifications, limitations and restrictions thereof set
forth herein which can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional
and other special rights of Convertible Preferred Stock and qualifications,
limitations and restrictions thereof shall, nevertheless, remain in full force
and effect, and no voting powers, preferences and relative, participating,
optional or other special rights of Convertible Preferred Stock and
qualifications, limitations and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Convertible Preferred Stock
and qualifications, limitations and restrictions thereof unless so expressed
herein.
17
10. Reissuance of Convertible Preferred Stock. Shares of Convertible
Preferred Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed or exchanged or converted, shall (upon compliance
with any applicable provisions of the laws of Delaware) have the status of
authorized but unissued shares of preferred stock of the Company undesignated as
to series and may be designated or redesignated and issued or reissued, as the
case may be, as part of any series of preferred stock of the Company, provided
that any issuance of such shares as Convertible Preferred Stock must be in
compliance with the terms hereof.
11. Mutilated or Missing Convertible Preferred Stock Certificates. If any
of the Convertible Preferred Stock certificates shall be mutilated, lost, stolen
or destroyed, the Company shall issue, in exchange and in substitution for and
upon cancellation of the mutilated Convertible Preferred Stock certificate, or
in lieu of and substitution for the Convertible Preferred Stock certificate
lost, stolen or destroyed, a new Convertible Preferred Stock certificate of like
tenor and representing an equivalent amount of shares of Convertible Preferred
Stock, but only upon receipt of evidence of such loss, theft or destruction of
such Convertible Preferred Stock certificate and indemnity, if requested,
satisfactory to the Company and the Transfer Agent.
12. Certain Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Business Day" means any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Transfer Agent" shall be the First Chicago Trust Company of New York
unless and until a successor is selected by the Company.
18
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed by Lee A. Wesselmann, Senior Vice President and Chief Financial Officer
of the Company, this 15th day of May, 1998.
OWENS-ILLINOIS, INC.
By: /s/ Lee A. Wesselmann
----------------------------------
Name: Lee A. Wesselmann
Title: Senior Vice President and Chief
Financial Officer