Exhibit 4.10
CERTIFICATE OF DESIGNATION
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SETTING FORTH RESOLUTION CREATING A SERIES
OF PREFERRED STOCK DESIGNATED AS 1998
JUNIOR CONVERTIBLE PREFERRED STOCK
ADOPTED BY THE BOARD OF DIRECTORS OF
PETROLEUM HEAT AND POWER CO., INC.
Pursuant to the Provisions of Section 302A.401 of the
Minnesota Business Corporation Act, as amended
We, the undersigned, JAMES BOTTIGLIERI and ALAN SHAPIRO, respectively
a Vice President and Assistant Secretary of Petroleum Heat and Power Co., Inc.,
a Minnesota corporation (hereinafter sometimes referred to as the Corporation ),
hereby certify as follows:
FIRST: That under the Restated and Amended Articles of Incorporation
of the Corporation ( Restated Articles ) the total number of authorized shares
of Preferred Stock which the Corporation may issue is 5,000,000 and under said
Restated Articles the Board of Directors of the Corporation ( Board ) is
authorized to issue such shares of the Preferred Stock from time to time in one
or more series and to determine in the resolution providing for the issuance of
any series of Preferred Stock the rights and preferences of shares of such
series not fixed and determined by the Restated Articles.
SECOND: That the Board, pursuant to the authority so vested in it by
the Restated Articles and in accordance with the provisions of Section 302 A.401
of the Minnesota Business Corporation Act, as amended, adopted the following
resolution creating a series of Preferred Stock designated as 1998 Junior
Convertible Preferred Stock ("Junior Preferred Stock"), which resolution has not
been amended, modified, rescinded or revoked and is in full force and effect.
WHEREAS, the Restated and Amended Articles of Incorporation (the
Restated Articles ) of Petroleum Heat and Power Co., Inc., a Minnesota
corporation (the Corporation ), authorize the issuance of 5,000,000 shares of
Preferred Stock of the Corporation; and
WHEREAS, pursuant to agreements entered into with the holders of its
10 1/8% Subordinated Notes due 2003, its 9 3/8% Subordinated Debentures due
2006, its 12 1/4% Subordinated Debentures due 2005 and its 12 7/8% Series B
Exchangeable Preferred Stock due 2009, this Corporation may issue up to
1,000,000 shares of its 1998 Junior Convertible Preferred Stock,
NOW, THEREFORE, be it, and it hereby is, resolved by the Board that a
series of Preferred Stock is hereby designated 1998 Junior Convertible Preferred
Stock consisting of 1,000,000 shares (the Junior Preferred Stock ), having the
relative rights and preferences as set forth below:
1. Ranking. The shares of the Junior Preferred Stock shall rank junior to the
Corporation's Class B Common Stock, the Corporation's 1989 Preferred Stock and
the Corporation's Series B Exchangeable Preferred Stock, with respect to the
payment of dividends and upon liquidation, dissolution, winding up or otherwise.
The shares of Junior Preferred Stock shall rank pari passu with the
Corporation's Class A and Class C Common Stock with respect to the payment of
dividends and shall rank senior to such Class A and Class C Common Stock upon
liquidation, dissolution and winding up or otherwise to the extent set forth in
paragraph 4. Except as specified in the two preceding sentences and as provided
in paragraph 4(b), all other series of Preferred Stock, all other classes of
Preferred Stock and all other capital stock of the Corporation shall rank senior
to the Junior Preferred Stock with respect to the payment of dividends or upon
liquidation, dissolution, winding-up or otherwise.
2. Dividends. (a) The holders of the shares of the Junior Preferred Stock shall
be entitled to receive dividends thereon when and as declared by the Board of
Directors of this Corporation, out of funds legally available therefor.
Dividends shall not accrue or accumulate except if and to the extent they are
declared but unpaid. Accumulation of declared but unpaid dividends on any shares
of the Junior Preferred Stock shall not bear interest.
3. Priority as to Dividends. (a) No dividends or other distributions (other than
dividends or other distributions payable in Class A Common Stock or Class C
Common Stock) shall be declared or paid or set apart for payment on the Junior
Preferred Stock for any period, and no Junior Preferred Stock may be
repurchased, redeemed or otherwise retired, nor may funds be set apart for
payment with payment with respect thereto, unless at the time thereof (i) full
cumulative dividends have been or simultaneously are declared and paid (or
declared and a sum sufficient for the payment thereof set apart for such
payment) on all Senior Securities for all quarterly dividend periods terminating
on or prior to the date of payment of such dividends on the Junior Preferred
Stock, (ii) an amount equal to the dividends accrued on the Senior Securities as
of the date of each proposed distribution or payment on the Junior Preferred
Stock has been declared and set apart in cash for payment on the Senior
Securities and (iii) any redemption payment required to be made pursuant hereto
on or prior to the date of payment of such dividends on the Junior Preferred
Stock and all Parity Securities shall have been paid or a sum sufficient for the
payment thereof set apart for such payment.
(b) No dividends or other distributions other than dividends or other
distributions payable in Class A Common Stock or Class C Common Stock) shall be
declared or paid or set apart for payment on the Class A Common Stock or the
Class C Common Stock unless at the time there shall have been declared and paid
(or declared and a sum sufficient for the payment thereof set apart) dividends
on the Junior Preferred Stock.
(c) If the Corporation proposes to pay to the holders of the outstanding Junior
Preferred Stock and the holders of all outstanding Parity Securities an amount
less than full unpaid dividends declared thereon, then the amount actually paid
shall be distributed among such holders ratably per share in proportion to the
amount of such unpaid dividends. No Parity Securities may be repurchased,
redeemed or otherwise retired, nor may funds be set apart for payment with
respect thereto, if full unpaid dividends which have been declared have not been
paid in cash on the Junior Preferred Stock.
(d) To calculate the dividends to be paid on the Junior Preferred Stock pursuant
to subparagraph (b) and (c), each share of Junior Preferred Stock shall be
deemed to be the equivalent of the whole number of shares of Class A Common
Stock which the holder of such share of Junior Preferred Stock would have been
entitled to receive had such share of Junior Preferred Stock been converted into
Class A Common Stock pursuant to paragraph 5 on the record date for payment of
such dividend.
4. Payment on Liquidation. (a) In the event of any liquidation, dissolution or
winding-up of the affairs of the Corporation, whether voluntary or involuntary,
after payment or provision for payment of the debts and other liabilities of the
Corporation, the holders of shares of the Junior Preferred Stock shall not be
entitled to receive any distribution of assets of the Corporation unless there
has been set aside for distribution to the holders of the Senior Securities the
full amounts to which they are entitled under the Restated Articles.
(b) Subject to the payment in full to the holders of the Senior Securities of
all amounts to which they are entitled under the Restated Articles, the holders
of the Junior Preferred Stock shall be entitled to receive a distribution equal
to $.01 per share ("Liquidation Preference"); provided, however, that if there
are insufficient assets to pay the Liquidation Preference with respect to all
shares of Junior Preferred Stock, then the amount actually distributed shall be
paid ratably per share to the holders of the Junior Preferred Stock.
(c) Subject to the payment in full (i) to the holders of the Senior Securities
of all amounts to which they are entitled under the Restated Articles and (ii)
to the holders of the Junior Preferred Stock of the Liquidation Preference, the
remaining assets shall be distributed ratably to the holders of the Junior
Preferred Stock and the Parity Securities and each share of Junior Preferred
Stock shall be deemed to be the equivalent of the number of whole shares of
Class A Common Stock which the holder of such share of Junior Preferred Stock
would have been entitled to receive had such share of Junior Preferred Stock
been converted pursuant to paragraph 5 immediately prior to such time.
5. Conversion. (a) Shares of Junior Preferred Stock shall be convertible at the
office of the transfer agent for such shares, and at such other place or places,
if any, as the Board of Directors of the Corporation may designate, into fully
paid and non-assessable shares of a Class A Common Stock at any time at the
election of the holder subject the provisions of this paragraph. The Junior
Preferred Stock shall be convertible into shares of Class A Common Stock at the
rate of one share of Class A Common Stock for each share of Junior Preferred
Stock ("Conversion Ratio"). The Conversion Ratio shall be subject to adjustment
from time to time as hereinafter provided. No adjustment shall be made in
respect of dividends on the Class A Common Stock or the Junior Preferred Stock
upon conversion of shares of the Junior Preferred Stock. No fractional shares of
Class A Common Stock will be issued; and a cash payment will be paid in lieu of
any fractional share in an amount equal to the same fraction of the closing
price of the Class A Common Stock on the business day which next precedes the
day of conversion.
(b) Before any holder of the Junior Preferred Stock shall be entitled to convert
the same into Class A Common Stock, such holder shall surrender the certificate
or certificates therefor, duly endorsed to the Corporation or in blank, at the
office of the transfer agent for such series or at such other place or places,
if any, as the Board of Directors of the Corporation shall have designated, and
shall give written notice to the Corporation at said office or place that he
elects to convert the same and shall state in writing therein the name or names
(with addresses) in which he wishes the certificate or certificates for Class A
Common Stock to be issued. The Corporation, as soon as practicable thereafter,
shall issue and deliver at said office or place to such holder of shares of
Junior Preferred Stock, or to his nominee or nominees, certificates for the
number of full shares of Class A Common Stock to which he shall be entitled as
aforesaid together with cash in lieu of any fraction of a share to which he
would otherwise be entitled. Shares of Junior Preferred Stock shall be deemed to
have been converted as of the close of business on the date of the surrender of
such shares for conversion as provided above, and the person or persons entitled
to receive the Class A Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such Class A Common
Stock as of the close of business on such date.
(c) The Conversion Ratio in effect at any time shall be subject to adjustment as
follows: In case the Corporation shall (A) declare a dividend on the Class A
Common Stock in shares of its capital stock, (B) subdivide the outstanding
shares of Class A Common Stock, (C) combine the outstanding shares of Class A
Common Stock into a smaller number of shares, or (D) issue by reclassification
of the Class A Common Stock (including any such reclassification in connection
with a consolidation or merger in which the Corporation is the continuing
corporation) any shares of its capital stock, the Conversion Ratio in effect on
the record date for such dividend or on the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that the
holder of any shares of Junior Preferred Stock surrendered for conversion after
such time shall be entitled to receive the kind and amount of shares which such
holder would have owned or have been entitled to receive had such shares of
Junior Preferred Stock been converted immediately prior to such time. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(d) In any case in which this Paragraph 5 shall require that an adjustment in
the Conversion Ratio be made effective as of a record date for a specified
event, the Corporation may elect to defer until the occurrence of such event the
issuing to the holder of any Junior Preferred Stock converted after such record
date the shares of Class A Common Stock and other shares, if any, issuable upon
such exercise over and above the shares of Class A Common Stock, if any,
issuable upon such exercise on the basis of the Conversion Ratio in effect prior
to such adjustment; provided, however, that the Corporation shall deliver to
such holder an appropriate instrument evidencing such holder's right to receive
such additional shares if any, upon the occurrence of the event requiring such
adjustment.
(e) In case of any consolidation or merger to which the Corporation is a party
(other than a consolidation or merger in which the Corporation is the continuing
corporation and the Junior Preferred Stock is not changed or exchanged), or in
case of any sale or conveyance to another corporation of the property of the
Corporation as an entirety or substantially as an entirety, (any such merger,
consolidation, sale or conveyance a "Transfer") there shall be no adjustment of
the Conversion Ratio, but the holder of each share of Junior Preferred Stock
shall have the right to convert such share into the kind and amount of shares of
stock and other securities and property which such holder would have been
entitled to receive upon such consolidation, merger, sale or conveyance if such
holder had held the Class A Common Stock issuable upon the conversion of such
share immediately prior to such consolidation, merger, sale or conveyance
assuming such holder of Class A Common Stock failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash or other property
receivable upon such Transfer. Thereafter, holders of the Junior Preferred Stock
shall be entitled to appropriate adjustments with respect to their conversion
rights so that the provisions set forth in this Paragraph 5 shall
correspondingly be made applicable, as nearly as may reasonably be, in relation
to any shares of stock or other securities or property thereafter deliverable on
conversion of the Junior Preferred Stock. Any such adjustment shall be approved
by the Board of Directors (whose determination shall be conclusive and shall be
set forth in a board resolution filed by the Corporation with the transfer agent
for the Junior Preferred Stock). Notwithstanding the foregoing, if the
Corporation shall participate in a transaction with Star Gas Partners LP or an
entity which is controlling, controlled by or under common control with Star Gas
Partners LP involving a Transfer, each share of the Junior Preferred Stock shall
be exchanged for no less than .13064 Common Units of Star Gas Partners LP as
equitably adjusted for dividends in the form of Units, unit splits, unit
recapitalizations and like transactions ("Common Units"); provided, however,
that no fractional Common Units shall be issued and in lieu of fractional Common
Units, holders shall be entitled to receive a cash payment.
(f) The Corporation shall at all times reserve and keep available, free from
preemptive rights, out of the aggregate of the authorized but unissued shares of
Class A Common Stock and the issued shares of Class A Common Stock held in its
treasury, solely for the purpose of effecting the conversion of the Junior
Preferred Stock, the full number of shares of Class A Common Stock then issuable
upon the conversion of all the outstanding share of Preferred Stock. For the
purpose of this Paragraph 5(f), the full number of shares of Class A Common
Stock issuable upon the conversion of all the outstanding shares of Junior
Preferred Stock shall be computed as if at the time of computation of such
number of shares of Class A Common Stock all outstanding shares of Junior
Preferred Stock were held by a single holder. The Corporation shall from time to
time, in accordance with the laws of the State of Minnesota, increase the
authorized amount of Class A Common Stock if at any time the aggregate of the
authorized amount of Class A Common Stock remaining unissued and the issued
shares of Class A Common Stock held in its treasury (other than any such shares
reserved for issuance in any other connection) shall not be sufficient to permit
the conversion of all shares of Junior Preferred Stock at the time outstanding.
If any shares of Class A Common Stock required to be reserved for issuance upon
conversion of shares of Junior Preferred Stock hereunder require registration
with or approval of any governmental authority under any Federal or state law
before such may be issued upon such conversion, the Corporation will in good
faith and as expeditiously as possible endeavor to cause such shares to be so
registered or approved.
(g) The Corporation shall pay any and all documentary, stamp or similar issue or
transfer taxes that may be payable in respect of the issue or delivery of shares
of Class A Common Stock on conversion of shares of Junior Preferred Stock
pursuant hereto. The Corporation shall not, however, be required to pay any such
tax which may be payable in respect of any transfer involved in the issue or
transfer and delivery of shares of Class A Common Stock in a name other than
that in which the shares of Junior Preferred Stock so converted were registered,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount of any such tax or
has established to the satisfaction of the Corporation that such tax has been
paid.
(h) The registered holder of such shares of Junior Preferred Stock as the close
of business on a dividend payment record date shall be entitled to receive the
dividend payable on such shares on the corresponding dividend payment date
notwithstanding the conversion thereof. A holder of Junior Preferred Stock on a
dividend record date who (or whose transferee) converts shares of Junior
Preferred Stock on a dividend payment date will receive the dividend payable on
such Junior Preferred by the Corporation on such date, and the converting holder
need not include payment in the amount of such dividend upon surrender of shares
of Junior Preferred Stock for conversion.
6. Required Conversion. (a) On and after April 1, 1999, the Corporation may
elect to require the conversion of all, but not less than all, of the Junior
Preferred Stock into Class A Common Stock at the Conversion Ratio at the time in
effect plus a payment in cash equal to all declared and unpaid dividends to the
date fixed for conversion. Notice of such conversions specifying the date fixed
for conversion (the "Conversion Date"), the Conversion Ratio and the place where
shares of Junior Preferred Stock are to be surrendered plus the amount of any
cash to be paid with respect to declared and unpaid dividends shall be mailed,
postage prepaid at least thirty but not more than 45 days prior to the
Conversion Date to the holders of record of Junior Preferred Stock at their
addresses as the same shall appear on the books of the Corporation's transfer
agent for Junior Preferred Stock. If such Conversion Notice shall have been so
mailed and if on or before the Conversion Date all shares of Class A Common
Stock and all cash necessary to effect the conversion have been set aside by the
Corporation, so as to be and continue to be available therefore, then on and
after the Conversion Date, notwithstanding that any certificate for Junior
Preferred Stock shall not have been surrendered for cancellation, the shares of
Junior Preferred Stock represented hereby shall be deemed to be no longer
outstanding, the right to receive dividends thereon shall cease and terminate,
and the only right of the holders thereof shall be to receive shares of Class A
Common Stock and the cash payment, if any, to which such holder may be entitled
upon surrender of the certificate representing such Junior Preferred Stock.
(b) Junior Preferred Stock may be beneficially owned only by a holder who
acquired such Junior Preferred Stock from the Corporation (a "Direct Acquirer")
and when beneficial ownership of any share of Junior Preferred Stock is
transferred by a Direct Acquirer, such share of Junior Preferred Stock shall be
immediately converted into shares of Class A Common Stock at the Conversion
Ratio then in effect.
(c) No fraction of shares of Class A Common Stock will be issued pursuant to a
conversion pursuant to this Paragraph 6; and a cash payment will be made in lieu
of any fractional share in an amount equal to the same fraction of the closing
price of the Class A Common Stock as reported on the principal exchange or
market in which the Class A Common Stock shall then trade (i) in the case of a
conversion pursuant to subparagraph 6(a), on the date the notice of conversion
is first mailed to holders and (ii) in all other cases, such date as the Board
of Directors may reasonably select.
7. Voting Holders of the Junior Preferred Stock shall not been titled to any
voting rights with respect to the Junior Preferred Stock, except as required by
the laws of the State of Minnesota. On all matters upon which holders of the
Junior Preferred Stock are entitled to vote or give their consent, each such
holder shall been titled to one vote per each share of the Junior Preferred
Stock held by such holder.
8. Certain Definitions. "Parity Securities" means the Class A and Class C Common
Stock of the Corporation and each other Class of Common Stock of the
Corporation, other than Class B Common Stock. "Senior Securities" means the 1989
Preferred Stock, the 12 7/8% Series B Exchangeable Preferred Stock, the Class B
Common Stock and each other series or class of Preferred Stock.