CERTIFICATE OF DESIGNATION
OF
SERIES B PREFERRED STOCK
OF
INPUT/OUTPUT, INC.
Pursuant to Section 151(g) of the Delaware General Corporation Law,
Input/Output, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "COMPANY"), hereby certifies that the following
resolution was duly adopted by the Board of Directors of the Company on April
21, 1999, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Company (the "CERTIFICATE OF
INCORPORATION"), which authorizes the issuance of up to 5,000,000 shares of
preferred stock, $0.01 par value.
RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors of the Company and pursuant to the provisions of
the Certificate of Incorporation, the Board of Directors hereby creates a
series of preferred stock, herein designated and authorized as the Series B
Preferred Stock, $0.01 par value per share, which shall consist of 40,000 of
the 5,000,000 shares of preferred stock which the Company now has authority
to issue, and the Board of Directors hereby fixes the powers, designations,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations and
restrictions thereof as follows:
1. NUMBER AND RANK. The number of shares constituting the Series B
Preferred Stock shall be 40,000. The Series B Preferred Stock shall rank
senior to the Company's Series A Preferred Stock with respect to the payment
of dividends and distributions on Liquidation.
2. DEFINITIONS. Unless the context otherwise requires, when used
herein the following terms shall have the meaning indicated.
"ADJUSTED STATED VALUE" with respect to each share of Series B
Preferred Stock means the Stated Value (a) increased at an annual rate of 8%
thereof, compounded quarterly, less (b) the amount of cash dividends actually
paid with respect to such share, in each case commencing on the Issue Date
and accruing through the applicable Conversion Date, or, in the case of a
redemption being effected pursuant to SECTIONS 6(H) OR 6(I), through the date
of payment of the redemption price.
"AFFILIATE" means with respect to any Person, any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person. For purposes of this
definition, the term "control" (and correlative terms "controlling,"
"controlled by" and "under common control with") means possession of the
power, whether by contract, equity ownership or otherwise, to direct the
policies or management of a Person.
"AVERAGE MARKET PRICE" means, for a given security, the average
Market Price for such security for the ten Trading Day period ending on and
including the Trading Day prior to the date of determination; PROVIDED,
HOWEVER, that if during such period the Company takes any action or an action
becomes effective that would require an adjustment to the Conversion Price
pursuant to SECTION 7 hereof, then such Average Market Price shall be
appropriately adjusted to reflect such action in a manner consistent with the
adjustments set forth in SECTION 7.
"BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" has the meaning set forth
in Rules 13d-3 and 13d-5 of the Exchange Act.
"BOARD" means the Board of Directors of the Company.
"BUSINESS COMBINATION" means (i) any consolidation or merger of the
Company with or into any Person or (ii) any Change of Control Stock Issuance,
or (iii) the sale, assignment conveyance, transfer, lease or other
disposition by the Company of all or substantially all of its assets followed
by a liquidation of the Company.
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in Houston,
Texas generally are authorized or required by law or other governmental
actions to close.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other
equivalents (however designated) of capital or capital stock of such Person
and (ii) with respect to any Person that is not a corporation, any and all
partnership or other equity interests of such Person.
"CERTIFICATE" means the Certificate of Incorporation of the Company,
as amended (including any certificate of designation establishing a series of
preferred stock).
"CERTIFICATE OF DESIGNATION" means this Certificate of Designation of
the Series B Preferred Stock.
"CHANGE OF CONTROL STOCK ISSUANCE" shall mean any issuance, in a
single transaction or series of related transactions, by the Company of
shares of Common Stock or Common Stock Equivalents in connection with the
acquisition of assets (including cash) or securities by the Company or a
Subsidiary of the Company (including by way of a merger of a Subsidiary of
the Company with or into a Person), except where (i) the shareholders of the
Company immediately prior to such issuance own (in substantially the same
proportion relative to each other as such shareholders owned the Common Stock
or Voting Stock of the Company, as the case may be, immediately prior to such
consummation) (x) more than 50% of the Voting Stock of the Company
immediately after such issuance, and (y) more than 50% of the outstanding
Common Stock immediately after such issuance, (ii) the members of the Board
immediately prior to entering into the agreement relating to such issuance
(or if no such agreement is entered into, then immediately prior to the
consummation of such issuance) constitute at least a majority of the Board
immediately after such issuance, with no agreements or arrangements in place
immediately after such consummation that would result in the members of the
Board immediately prior to the entering into the agreement relating to such
issuance
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ceasing to constitute at least a majority of the Board and (iii) no Person or
Group of Persons immediately after such issuance is the Beneficial Owner of
40% or more of the total outstanding Voting Stock of the Company or Common
Stock. In calculating the percentage of the Voting Stock of the Company
owned by the shareholders of the Company immediately prior to an issuance of
Common Stock or Common Stock Equivalents in which there is more than one
class or series of Voting Stock, the percentage of the Voting Stock shall be
calculated based on the number of votes eligible to be cast in the election
of the directors of the Company generally. In calculating the percentages of
Voting Stock and Common Stock owned for purposes of this definition, such
calculation shall be calculated on a basis assuming the exercise or
conversion in full of all Common Stock Equivalents and on a basis
disregarding all Common Stock Equivalents, and the percentage which results
in the lower percentage owned by the shareholders of the Company shall apply
in the application of clause (i) above.
"COMMON STOCK" means the Company's common stock, par value $.01 per
share, and any Capital Stock for or into which such Common Stock hereafter is
exchanged, converted, reclassified or recapitalized by the Company or
pursuant to a Business Combination to which the Company is a party.
"COMMON STOCK EQUIVALENTS" means (without duplication with any other
Common Stock or Common Stock Equivalents) rights, warrants, options,
convertible securities or exchangeable securities, exercisable for or
convertible or exchangeable into, directly or indirectly, Common Stock,
whether at the time of issuance or upon the passage of time or the occurrence
of some future event.
"COMPANY" means Input/Output, Inc. a Delaware corporation.
"CONVERSION DATE" is defined in SECTION 6(D).
"CONVERSION PRICE" means $8.00, as adjusted from time to time in
accordance with SECTION 7.
"CONVERSION RATIO" is defined in SECTION 6(C).
"DGCL" means the General Corporation Law of the State of Delaware, as
amended, or any successor statute or other legislation.
"DIVIDEND PAYMENT DATE" is defined in SECTION 3(A).
"DIVIDEND PERIOD" is defined in SECTION 3(A).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor statute, and the rules and regulations promulgated
thereunder.
"EXCLUDED STOCK" means (i) shares of Common Stock issued by the
Company as a stock dividend payable in shares of Common Stock, or upon any
subdivision or split-up of the outstanding shares of Capital Stock in each
case which is subject to SECTION 7(B), or upon conversion of shares of
Capital Stock (but not the issuance of such Capital Stock which will be
subject to the provisions
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of SECTION 7(A)(iii)), (ii) shares of Common Stock
to be issued to employees, directors, consultants and advisors of the Company
pursuant to Stock Plans in accordance with their respective terms.
"GROUP" means a group as contemplated by Section 13(d)(3) of the
Exchange Act.
"HOLDER" means a holder of record of Series B Preferred Stock.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"HSR EXPIRATION DATE" shall mean the expiration or earlier termination
of the applicable waiting period under the HSR Act relating to the
transaction described in the filings referred to in Section 5.4 of the
Purchase Agreement.
"INITIAL CONVERSION DATE" means the first to occur of any of the
following: (i) the third anniversary of the date on which shares of Series B
Preferred Stock are first issued pursuant to the Purchase Agreement, (ii) an
agreement providing for a Business Combination is approved by the Board or a
Business Combination is consummated, (iii) a Tender Offer for Common Stock is
approved or recommended by the Board or (iv) there is a redemption,
repurchase or reacquisition by the Company of Rights issued pursuant to the
Rights Agreement or any waiver of the application of the Rights Agreement to
any Beneficial Owner other than Purchaser or its Affiliates except in the
case of this clause (iv) as approved by the Purchaser's representative to the
Board.
"ISSUE DATE" means with respect to any shares of Series B Preferred
Stock the original date of issuance of such shares of Series B Preferred
Stock.
"JUNIOR SECURITIES" means Capital Stock that, with respect to
dividends and distributions upon Liquidation, ranks junior to the Series B
Preferred Stock.
"LIQUIDATION" means the voluntary or involuntary liquidation,
dissolution or winding up of the Company; PROVIDED, HOWEVER, that a merger or
consolidation shall not be deemed a Liquidation nor shall the sale of assets
not requiring shareholder approval be deemed to be a Liquidation.
"LIQUIDATION PREFERENCE" is defined in SECTION 5.
"MANDATORY CONVERSION DATE" is defined in SECTION 6(B).
"MARKET PRICE" means, with respect to a particular security, on any
given day, the last reported sale price regular way or, in case no such
reported sale takes place on such day, the average of the last closing bid
and asked prices regular way, in either case on the principal national
securities exchange on which the applicable security is listed or admitted to
trading, or if not listed or admitted to trading on any national securities
exchange, (i) the closing sale price for such day reported by the Nasdaq
Stock Market if such security is traded over-the-counter and quoted in the
Nasdaq Stock Market, or (ii) if such security is so traded, but not so
quoted, the average of the closing reported bid and asked prices of such
security as reported by the Nasdaq Stock Market or any comparable system, or
(iii) if such security is not listed on the Nasdaq Stock Market or any
comparable system but is actively traded, the average of the closing bid and
asked prices as furnished by two members of the
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National Association of Securities Dealers, Inc. selected from time to time
by the Company for that purpose. If such security is not listed and traded
in a manner that the quotations referred to above are available for the
period required hereunder, the Market Price shall be deemed to be the fair
value per share of such security as determined by a nationally recognized
investment banking firm selected by the Board and reasonably acceptable to
the Holders of a majority of the outstanding shares of Series B Preferred
Stock.
"ORDINARY CASH DIVIDENDS" means any cash dividend or distribution
which, when combined on a per share of Common Stock basis with the per share
amounts of all other cash dividends and distributions paid on the Common
Stock during the 365-day period ending on the date of declaration of such
dividend or distribution (as adjusted to appropriately reflect any of the
events referred to in SECTION 7 and excluding cash dividends or distributions
that resulted in an adjustment to the Conversion Price), does not exceed 5%
of the Market Price of a share of Common Stock on the Trading Day immediately
preceding the date of declaration of such dividend or distribution.
"PARITY SECURITIES" means Capital Stock that, with respect to
dividends or distributions upon Liquidation, is PARI PASSU with the Series B
Preferred Stock.
"PERMITTED PARITY SECURITIES" means up to 35,000 shares of Preferred
Stock of the Company constituting no more than two series of Preferred Stock,
each share of which (i) has a liquidation preference of not more than $1,000
per share exclusive of accrued and unpaid dividends, (ii) has a dividend rate
of not more than one percent per annum, (iii) has no more than one vote per
share with respect to matters on which it votes together with the Series B
Preferred Stock and other Permitted Parity Securities as a single class and
(iv) is PARI PASSU with the Series B Preferred Stock with respect to the
payment of dividends and distributions upon Liquidation. The Series C
Preferred Stock that may be issued pursuant to the Purchase Agreement shall
be considered Permitted Parity Securities for purposes of the foregoing.
"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"PRO RATA REPURCHASE" means any purchase of shares of Common Stock by
the Company or any Affiliate thereof pursuant to any tender offer or exchange
offer subject to Section 13(e) of the Exchange Act, or pursuant to any other
offer available to substantially all holders of Common Stock, whether for
cash, shares of capital stock of the Company, other securities of the
Company, evidences of indebtedness of the Company or any other person or any
other property (including, without limitation, shares of capital stock, other
securities or evidences of indebtedness of a subsidiary of the Company), or
any combination thereof; PROVIDED, HOWEVER, that "Pro Rata Repurchase" shall
not include any purchase of shares by the Company or any Affiliate thereof
made in accordance with the requirements of Rule 10b-18 as in effect under
the Exchange Act. The "effective date" of a Pro Rata Repurchase shall mean
the date of acceptance of shares for purchase or exchange under any tender or
exchange offer which is a Pro Rata Repurchase or the date of purchase with
respect to any Pro Rata Repurchase that is not a tender or exchange offer.
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"PURCHASE AGREEMENT" means the Purchase Agreement dated as of April
21, 1999 between the Company and the Purchaser providing for the purchase by
the Purchaser of 40,000 shares of Series B Preferred Stock and up to 15,000
shares of Series C Preferred Stock from the Company, including all schedules
and exhibits thereto.
"PURCHASER" means SCF-IV, L.P., a Delaware limited partnership.
"RECORD DATE" is defined in SECTION 3(A).
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated as of the date of the Initial Closing under the Purchase
Agreement between the Company and the Purchaser providing for certain
registration rights under the Securities Act with respect to the Common Stock
into which the Series B Preferred Stock and Series C Preferred Stock may be
converted.
"RIGHTS AGREEMENT" has the meaning set forth in SECTION 6(G).
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
"SENIOR SECURITIES" means Capital Stock that, with respect to
dividends or distributions upon Liquidation, ranks senior to the Series B
Preferred Stock.
"SERIES C PREFERRED STOCK" means the Series C Preferred Stock of the
Company that may be issued to Purchaser pursuant to the Purchase Agreement.
"STATED VALUE" is an amount equal to $1,000.00 per share of Series B
Preferred Stock.
"STOCK PLANS" means the Company's stock option, stock incentive,
restricted stock, employee stock purchase or other similar plans, in each
case that have been approved by the Company's shareholders.
"SUBSIDIARY" of a Person means (i) a corporation, a majority of whose
stock with voting power, under ordinary circumstances, to elect directors is
at the time of determination, directly or indirectly, owned by such Person or
by one or more Subsidiaries of such Person, or (ii) any other entity (other
than a corporation) in which such Person or one or more Subsidiaries of such
Person, directly or indirectly, at the date of determination thereof has a
majority ownership interest or, with respect to a limited partnership, is a
general partner of such limited partnership.
"TENDER OFFER" means any transaction to which Regulation 14D of the
Exchange Act applies.
"TRADING DAY" means a day on which the principal market with respect
to the security in question is regularly scheduled to be open for trading, or
if there is not such principal market, then a day on which the New York Stock
Exchange is regularly scheduled to be open for trading.
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"VOTING STOCK" of a Person means Capital Stock of such Person of the
class or classes pursuant to which the holders thereof have the general
voting power under ordinary circumstances to vote in the election of the
board of directors, managers or trustees of such Person.
The foregoing definitions will be equally applicable to both the
singular and plural forms of the defined terms.
3. DIVIDENDS AND DISTRIBUTIONS.
(A) The holders of Series B Preferred Stock shall be entitled
to receive out of the assets of the Company legally available for that
purpose, cumulative preferential cash dividends at a rate per annum of
one percent (1%) of the Stated Value (equivalent to $10 per annum or
$2.50 per quarter) for each share of Series B Preferred Stock, and,
except as provided in SECTION 3(B), no more, to be paid in accordance
with the terms of this SECTION 3. Such dividends shall be cumulative
from the Issue Date and shall be payable in arrears, when and as
declared by the Board, on March 31, June 30, September 30 and
December 31 of each year (each such date being herein referred to as a
"DIVIDEND PAYMENT DATE"), commencing on June 30, 1999; PROVIDED that if
any Dividend Payment Date shall not be a Business Day, then the Dividend
Payment Date shall be on the next succeeding day that is a Business Day.
The period from the Issue Date to the next Dividend Payment Date and
each quarterly period between consecutive Dividend Payment Dates shall
hereinafter be referred to as "DIVIDEND PERIODS." Dividends for the
initial Dividend Period shall be pro rated on a daily basis commencing
on and including the Issue Date on the basis of a 360-day year. Each
such dividend shall be paid to the holders of record of the Series B
Preferred Stock as their names appear on the share register of the
Company on the corresponding Record Date. As used above, the term
"RECORD DATE" means, with respect to the dividend payable on March 31,
June 30, September 30 and December 31, respectively, of each year, the
preceding March 15, June 15, September 15 and December 15, or such other
record date designated by the Board with respect to the dividend payable
on such respective Dividend Payment Date not exceeding 30 days preceding
such Dividend Payment Date. Dividends on account of arrears for any
past Dividend Periods may be declared and paid, together with any
accrued but unpaid interest thereon to and including the date of
payment, at any time, without reference to any Dividend Payment Date, to
holders of record on a date designated by the Board, not exceeding 30
days preceding the payment date thereof, as may be fixed by the Board.
(B) If, on any Dividend Payment Date, the Company fails to pay
dividends, then until the dividends that were scheduled to be paid on
such date are paid, such dividends shall cumulate and shall accrue
additional dividends with respect to such unpaid dividends to and
including the date of payment thereof at the rate of one percent (1%)
per annum, compounded on a quarterly basis. Dividends for any period
less than a full quarterly Dividend Period or for a period commencing
on a Dividend Payment Date and ending on a Conversion Date shall
cumulate on a day-to-day basis and shall be computed on the basis of a
360-day year.
(C) So long as any shares of the Series B Preferred Stock
shall be outstanding, (i) the Company shall not declare or pay any
dividend whatsoever, whether in cash, property
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or otherwise, set aside any cash or property for the payment of
dividends, or make any other distribution on any Junior Securities
(except a dividend or distribution payable solely in shares of Junior
Securities), (ii) the Company shall not declare or pay any dividend
whatsoever, whether in cash, property or otherwise, set aside any cash
or property for the payment of dividends, or make any other
distribution on any Parity Securities ranking on parity with the
Series B Preferred Stock with respect to dividends or distributions
(except a dividend or distribution payable solely in shares of Junior
Securities), unless declared and paid PRO RATA with the Series B
Preferred Stock in proportion to the full amount to which they would
otherwise be respectively entitled, and (iii) the Company shall not
and shall cause its Subsidiaries not to repurchase, redeem or
otherwise acquire or set aside any cash or property for the repurchase
or redemption of any Junior Securities or Parity Securities, unless in
each such case all dividends to which the holders of the Series B
Preferred Stock shall have been entitled for all previous Dividend
Periods shall have been paid or declared and a sum of money sufficient
for the payment thereof shall have been set aside.
4. VOTING RIGHTS. The Holders shall have the following voting
rights with respect to the Series B Preferred Stock:
(A) Subject to applicable law, the shares of Series B Preferred
Stock shall have no voting rights other than as set forth in this
SECTION 4.
(B) After the HSR Expiration Date, but only after the HSR
Expiration Date, Holders of shares of the Series B Preferred Stock
shall be entitled to vote upon all matters upon which holders of
Common Stock have the right to vote, and Holders shall have that
number of votes on all such matters as is equal to the Conversion
Ratio that would apply if such Holder's shares of Series B Preferred
Stock were to be converted pursuant to SECTION 6(A) (using the
calculation of such Conversion Ratio specified in SECTION 6(C)(i) and
not SECTION 6(C)(ii) for such purpose) as of the record date for the
determination of the shareholders entitled to vote on such matters,
or, if no such record date is established as of the date such vote is
taken or any written consent of shareholders is solicited, such votes
to be counted together with all other shares of capital stock having
general voting powers and not separately as a class. Fractional votes
shall not, however, be permitted and any fractional voting rights
resulting from the above formula (after aggregating all shares into
which shares of Series B Preferred Stock held by each Holder could be
converted) shall be rounded up to the nearest whole number.
(C) After the HSR Expiration Date, but only after the HSR
Expiration Date, the Holders of the Series B Preferred Stock, voting
together with Permitted Parity Securities as a separate class with one
vote per share of Series B Preferred Stock, shall be entitled to elect
one member of the Board at each meeting or pursuant to each consent of
the Company's shareholders for the election of directors (unless the
term of the director previously elected by the Holders pursuant to
this Section 4(C) would continue after such election). If the
director so elected by the Holders shall cease to serve as director
before his term shall expire, the Holders may, at a special meeting of
such Holders, elect a successor to hold office for the unexpired term
of such director. The Secretary of the Company may call, and upon
written request of the Holders of ten percent (10%) or more of the
outstanding Series B Preferred
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Stock addressed to him at the principal office of the Company shall
call, such a special meeting of the Holders for the election of such
director as provided herein. Such meeting shall be held within fifty
(50) days after delivery of such request to such Secretary, at the
place and upon the notice provided by law and in the Bylaws of the
Company for the holding of meetings of its shareholders. Any director
who shall have been elected pursuant to this SECTION 4(C), may be
removed during the aforesaid term of office, with or without cause,
only by the affirmative vote of a majority votes entitled to be cast
by the Holders of Series B Preferred Stock and the holders of then
outstanding Permitted Parity Securities.
(D) (i) The consent of the Holders of at least a majority of
the Series B Preferred Stock, voting together with Permitted Parity
Securities as a single class with one vote per share, in person or by
proxy, either in writing without a meeting or at an annual or a
special meeting of shareholders called for the purpose, shall be
necessary to:
(A) amend, alter or repeal, by way of merger or
otherwise, any of the provisions of the Certificate, so as
to authorize, create or issue any shares of Parity
Securities (other than Permitted Parity Securities) or
Senior Securities (or amend the provisions of any existing
class of Capital Stock to make such class of Capital Stock
a class of Parity Securities or Senior Securities),
(B) issue any Parity Securities (other than Permitted
Parity Securities) or Senior Securities, or
(C) consummate any Business Combination.
(ii) The consent of the Holders of at least a majority
of the Series B Preferred Stock, voting separately as a single
class with one vote per share, in person or by proxy, either in
writing without a meeting or at an annual or a special meeting of
shareholders called for the purpose, shall be necessary to amend,
alter or repeal, by way of merger or otherwise, any of the
provisions of (x) the Certificate of Designation or any
certificate of designation of terms of any Parity Securities, or
(y) the Certificate, so as to affect adversely any of the rights,
preferences or privileges of Holders.
5. LIQUIDATION PREFERENCE. In the event of any Liquidation, after
payment or provision for payment by the Company of the debts and other
liabilities of the Company and the liquidation preference of any Senior
Securities that rank senior to the Series B Preferred Stock with respect to
distributions on Liquidation, each Holder shall be entitled to receive an
amount in cash for each share of the then outstanding Series B Preferred
Stock held by such Holder equal to the Stated Value per share, plus an amount
equal to all accrued but unpaid dividends thereon, whether or not earnings
are available in respect of such dividends or such dividends have been
declared, to and including the date full payment is tendered to the Holders
with respect to such Liquidation, and no more (such amount being referred to
herein as the "LIQUIDATION PREFERENCE"), before any distribution shall be
made to the holders of any Junior Securities upon the Liquidation of the
Company. In case the assets of the Company available for payment to the
Holders upon a Liquidation are insufficient to pay the full
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Liquidation Preference on all outstanding shares of the Series B Preferred
Stock and all outstanding Senior Securities or Parity Securities, in each
case ranking on parity with the Series B Preferred Stock as to distributions
on Liquidation, in the amounts to which the holders of such shares are
entitled, then the entire assets of the Company available for payment to the
Holders of Series B Preferred Stock and holders of such Senior Securities or
Parity Securities will be distributed ratably among the Holders of the Series
B Preferred Stock and the holders of such Senior Securities or Parity
Securities, based upon the aggregate amount due on such shares upon
Liquidation. Written notice of any Liquidation of the Company, stating a
payment date and the place where the distributable amounts shall be payable,
shall be given by mail, postage prepaid, not less than 30 days prior to the
payment date stated therein, to the Holders of record of the Series B
Preferred Stock at their respective addresses as the same shall appear on the
books of the Company.
6. CONVERSION RIGHTS. The Series B Preferred Stock shall be
convertible as follows:
(A) CONVERSION AT HOLDER'S OPTION. The Holder of any shares of
Series B Preferred Stock shall have the right at such Holder's option,
at any time after the Initial Conversion Date and prior to the
Mandatory Conversion Date and without the payment of any additional
consideration, to convert any or all of such shares of Series B
Preferred Stock into a number of fully paid and nonassessable shares
of Common Stock for each such share of Series B Preferred Stock equal
to the Conversion Ratio, upon the terms hereinafter set forth.
(B) MANDATORY CONVERSION. On the fifth anniversary of the
date on which shares of Series B Preferred Stock are first issued
pursuant to the Purchase Agreement (the "MANDATORY CONVERSION DATE"),
each outstanding share of Series B Preferred Stock shall, without any
action on the part of the Holder of such share, be converted
automatically into a number of fully paid and nonassessable shares of
Common Stock equal to the Conversion Ratio, upon the terms hereinafter
set forth; PROVIDED, HOWEVER, that if the shares of Common Stock
issuable upon conversion of the Series B Preferred Stock are not
immediately freely transferrable under the Securities Act by the
Holders thereof, the Mandatory Conversion Date shall be delayed until
such time as the resale of the Common Stock issuable upon conversion
of such Series B Preferred Stock has been registered under the
Securities Act in accordance with the terms of the Registration Rights
Agreement.
(C) CONVERSION RATIO. In the event of a conversion pursuant
to SECTION 6(A) OR 6(B), the Conversion Ratio shall be a number of
shares of Common Stock calculated using either of the following methods
at the option of the Holder as may be specified by the Holder at the
time of conversion, or, if no such specification is made, using the
method that results in the highest number:
(i) the amount determined by dividing (a) the Stated
Value plus any accrued and unpaid dividends to and including the
applicable Conversion Date by (b) the Conversion Price in effect
on the applicable Conversion Date; or
(ii) the amount determined by dividing (a) the Adjusted
Stated Value as of the applicable Conversion Date by (b) the
Average Market Price determined as of the
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applicable Conversion Date (but not less than the lesser of
$.01 or the par value per share of the Common Stock at the
time of conversion).
(D) MECHANICS OF CONVERSION. The Holder of any shares of
Series B Preferred Stock may exercise the conversion right specified
in SECTION 6(A) by surrendering to the Company or any transfer agent
of the Company the certificate or certificates representing the shares
of Series B Preferred Stock to be converted, accompanied by written
notice specifying the number of such shares to be converted. If the
certificates representing shares of Common Stock issuable upon
conversion of shares of Series B Preferred Stock are to be issued in a
name other than the name on the face of the certificates representing
such shares of Series B Preferred Stock, such certificates shall be
accompanied by such evidence of the assignment and such evidence of
the signatory's authority with respect thereto as deemed appropriate
by the Company or its transfer agent. Conversion shall be deemed to
have been effected (i) with respect to conversions pursuant to SECTION
6(A), on the date when the notice of an election to convert pursuant
to SECTION 6(A) and certificates representing the shares being
converted are actually received by the Company or any transfer agent
of the Company, or (ii) with respect to mandatory conversion pursuant
to SECTION 6(B), on the Mandatory Conversion Date. Such dates that
the conversion shall be deemed to be effective shall be referred to
herein as the "CONVERSION DATE." Subject to the provisions of SECTION
7(G), as promptly as practicable after the Conversion Date, the
Company shall issue and deliver to or upon the written order of such
Holder a certificate or certificates for the number of shares of
Common Stock to which such Holder is entitled upon such conversion and
a check or cash with respect to any fractional interest in a share of
Common Stock, as provided in SECTION 6(E). The person in whose name
the certificate or certificates for shares of Common Stock are to be
issued shall be deemed to have become a holder of record of such
shares of Common Stock on the applicable Conversion Date. Upon
conversion of only a portion of the shares covered by a certificate
representing shares of Series B Preferred Stock surrendered for
conversion pursuant to SECTION 6(A), the Company shall issue and
deliver to or upon the written order of the Holder of the certificate
so surrendered for conversion, at the expense of the Company, a new
certificate representing the number of shares of Series B Preferred
Stock representing the unconverted portion of the certificate so
surrendered.
(E) FRACTIONAL SHARES. No fractional shares of Common Stock or
scrip shall be issued upon conversion of shares of Series B Preferred
Stock. If more than one share of Series B Preferred Stock shall be
surrendered for conversion at any one time by the same Holder, the
number of shares of Common Stock issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares of
Series B Preferred Stock so surrendered. Instead of any fractional
share of Common Stock which would otherwise be issuable upon
conversion of any shares of Series B Preferred Stock, the Company
shall pay a cash adjustment in respect of such fractional interest in
an amount equal to that fractional interest of the Market Price of the
Common Stock on the Conversion Date.
(F) AUTHORIZATION AND ISSUANCE. The Company covenants and
agrees that:
(i) the shares of Common Stock issuable upon any
conversion of any shares of Series B Preferred Stock will be
deemed to have been issued to the Person
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exercising such conversion rights set forth herein on the
Conversion Date, and the Person exercising such conversion rights
will be deemed for all purposes to have become the record holder
of such shares of Common Stock on the Conversion Date;
(ii) all shares of Common Stock which may be issued
upon any conversion of any Series B Preferred Stock will, upon
issuance, be fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue thereof;
(iii) the Company will take all such action as may be
necessary to assure that all shares of Common Stock issuable upon
conversion of shares of Series B Preferred Stock may be issued
without violation of any applicable law or regulation or of any
requirements of any domestic securities exchange upon which
securities of the same class may be listed and shall endeavor to
list the shares of Common Stock required to be delivered upon
conversion of the shares of Series B Preferred Stock, prior to
such delivery, upon each national securities exchange, if any,
upon which the outstanding Common Stock is listed at the time of
such delivery;
(iv) the Company will not take any action which would
result in any adjustment of the Conversion Price if the total
number of shares of Common Stock issuable after such action upon
conversion of all shares of Series B Preferred Stock, together
with all shares of Common Stock then outstanding and all shares
of Common Stock then issuable upon the exercise of all
outstanding Common Stock Equivalents, would exceed the total
number of shares of Common Stock then authorized by the
Certificate of Incorporation;
(v) the Company will at all times reserve and keep
available, out of its authorized but unissued shares of Common
Stock or out of shares of Common Stock held in its treasury, the
full number of shares of Common Stock into which all shares of
the Series B Preferred Stock having conversion privileges from
time to time outstanding are convertible; and
(vi) the Company will at no time close its transfer
books against the transfer of the Series B Preferred Stock or of
any share of Common Stock issued or issuable upon the conversion
of the Series B Preferred Stock in any manner which interferes
with the timely conversion of the Series B Preferred Stock.
(G) RIGHTS. Whenever the Company issues shares of Common Stock
upon conversion of Series B Preferred Stock, the Company will issue,
together with each such share of Common Stock, one right to purchase
Series A Preferred Stock of the Company (or other securities in lieu
thereof) pursuant to the Rights Agreement dated as of January 17, 1997
by and between the Company and Harris Trust and Savings Bank, as
amended (the "RIGHTS AGREEMENT"), or any similar rights, if any,
issued to holders of Common Stock in addition thereto or in the
replacement therefor (such rights, together with any additional or
replacement rights, being collectively referred to as the "RIGHTS"),
whether or not such rights shall be exercisable at such time, but only
if such Rights are issued and outstanding and held
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by other holders of Common Stock (or are evidenced by outstanding
share certificates representing Common Stock) at such time and have
not expired or been redeemed.
(H) CASH REDEMPTION OPTION. Notwithstanding the provisions of
SECTIONS 6(A) OR 6(B), in the event of a conversion of Series B
Preferred Stock pursuant to which the Conversion Ratio is determined
using SECTION 6(C)(ii) (rather than SECTION 6(C)(i)), then, provided
that full cumulative dividends shall have been paid or declared and
set apart for payment upon all outstanding shares of Series B
Preferred Stock for all past dividend periods, the Company may offer
to redeem for cash any or all of such shares of Series B Preferred
Stock at a redemption price per share equal to the Adjusted Stated
Value (a "REDEMPTION OFFER"), in lieu of effecting such conversion.
To effect a Redemption Offer, the Company must give notice of such
election, specifying the redemption price, (a "REDEMPTION OFFER
NOTICE") to the Holder of such shares of Series B Preferred Stock (i)
with respect to conversions pursuant to SECTION 6(A), within three
Business Days after the notice of an election to convert pursuant to
SECTION 6(A) is received by the Company or any transfer agent of the
Company, or (ii) with respect to mandatory conversion pursuant to
SECTION 6(B), on the Mandatory Conversion Date. If the Company fails
to give a Redemption Offer Notice within the foregoing time periods,
it may not make a Redemption Offer. If the Company has given a
Redemption Offer Notice with respect to more than 50% of the shares of
Series B Preferred Stock to be converted, then within three Business
Days following receipt of a Redemption Offer Notice, the Holder may
give notice to the Company declining the Company's offer to redeem up
to 50% of the shares of Series B Preferred Stock to be converted, in
which event the Company will not be entitled to redeem such shares as
specified and must convert such shares into Common Stock in accordance
with the terms hereof effective as of the Conversion Date. The
Company shall be entitled to redeem all of the shares subject to the
Redemption Offer Notice at the redemption price set forth above to the
extent the Holder does not properly decline such redemption in
accordance with the prior sentence. The Company shall make any such
redemption payment by wire transfer to an account specified by the
Holder on the first Business Day following the expiration of the three
Business Day period after the Holder's receipt of the Redemption Offer
Notice, failing which payment the Company shall not be entitled to
redeem such shares but shall be obligated to convert all of such
Shares into Common Stock in accordance with the terms hereof.
(I) LIMITATION ON NUMBER OF CONVERSION SHARES. Notwithstanding
the provisions of SECTIONS 6(A) OR 6(B), if the Company ever issues
Common Stock upon conversion of Series B Preferred Stock pursuant to
which the Conversion Ratio is calculated pursuant to SECTION 6(C)(ii)
rather than SECTION 6(C)(i), the Company shall not be obligated to
issue, in the aggregate, a number of shares of Common Stock in excess
of the NYSE Limitation upon conversion of the Series B Preferred
Stock. The "NYSE Limitation" shall mean the maximum number of shares
of Common Stock that could be issued by the Company pursuant to the
conversion of the Series B Preferred Stock and any substantially
similar series of Permitted Parity Securities issued to the Holder
pursuant to the terms of the Purchase Agreement without triggering a
requirement to obtain the approval of the Company's shareholders of
such issuance pursuant to Section 312.03(c) of the New York Stock
Exchange Listed Company Manual as in effect on the Issue Date. To the
extent that any shares of Series B Preferred Stock are submitted for
conversion such that the NYSE Limitation would be
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exceeded, such excess shares shall, in lieu of being converted into
Common Stock, be redeemed in exchange for a cash payment equal to the
Adjusted Stated Value per share. The Company shall make any such
redemption payment by wire transfer to an account specified by the
Holder on the second Business Day following the Conversion Date on
which the shares of Series B Preferred Stock would otherwise be
converted into Common Stock.
7. CONVERSION PRICE ADJUSTMENTS. The Conversion Price shall be
subject to adjustment from time to time as follows:
(A) COMMON STOCK ISSUED AT LESS THAN MARKET PRICE OR CONVERSION
PRICE. If the Company issues or sells any Common Stock other than
Excluded Stock without consideration or for a consideration per share
less than the Market Price per share of Common Stock, on the Trading
Day immediately preceding such issuance or sale or less than the
Conversion Price in effect immediately prior to such issuance or sale,
the Conversion Price in effect immediately prior to each such issuance
or sale will immediately (except as provided below) be reduced to the
price determined by multiplying the Conversion Price in effect
immediately prior to such issuance or sale, by a fraction, (1) the
numerator of which shall be (i) the number of shares of Common Stock
outstanding immediately prior to such issuance or sale plus (ii) the
number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such additional shares
of Common Stock so issued or sold would purchase at the higher of (x)
the Market Price per share of Common Stock on the Trading Day
immediately preceding such issuance or sale and (y) the Conversion
Price in effect immediately prior to such issuance or sale and (2) the
denominator of which shall be the number of shares of Common Stock
outstanding immediately after such issue or sale. For the purposes of
any adjustment of the Conversion Price pursuant to this SECTION 7(A),
the following provisions shall be applicable:
(i) in the case of the issuance of Common Stock for
cash, the amount of the consideration received by the Company
shall be deemed to be the amount of the cash proceeds received by
the Company for such Common Stock before deducting therefrom any
discounts or commissions allowed, paid or incurred by the Company
for any underwriting or otherwise in connection with the issuance
and sale thereof;
(ii) in the case of the issuance of Common Stock
(otherwise than upon the conversion of shares of Capital Stock or
other securities of the Company) for a consideration in whole or
in part other than cash, including securities acquired in
exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be deemed
to be the fair value thereof as reasonably determined by the
Board, irrespective of any accounting treatment; PROVIDED,
HOWEVER, that such fair value as determined by the Board shall
not exceed the aggregate Market Price of the shares of Common
Stock being issued as of the date the Board authorizes the
issuance of such shares;
(iii) in the case of the issuance of (a) options,
warrants or other rights to purchase or acquire Common Stock
(whether or not at the time exercisable), (b) securities by their
terms convertible into or exchangeable for Common Stock (whether
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or not at the time so convertible or exchangeable) or options,
warrants or rights to purchase such convertible or exchangeable
securities (whether or not at the time exercisable):
(1) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of
such options, warrants or other rights to
purchase or acquire Common Stock shall be
deemed to have been issued at the time
such options, warrants or rights are
issued and for a consideration equal to
the consideration (determined in the
manner provided in SECTION 7(A)(i) AND
(ii)), if any, received by the Company
upon the issuance of such options,
warrants or rights plus the minimum
purchase price provided in such options,
warrants or rights for the Common Stock
covered thereby;
(2) the aggregate maximum number of shares of
Common Stock deliverable upon conversion
of or in exchange for any such convertible
or exchangeable securities, or upon the
exercise of options, warrants or other
rights to purchase or acquire such
convertible or exchangeable securities and
the subsequent conversion or exchange
thereof, shall be deemed to have been
issued at the time such securities were
issued or such options, warrants or rights
were issued and for a consideration equal
to the consideration, if any, received by
the Company for any such securities and
related options, warrants or rights
(excluding any cash received on account of
accrued interest or accrued dividends),
plus the additional consideration
(determined in the manner provided in
SECTION 7(A)(i) AND (ii)), if any, to be
received by the Company upon the
conversion or exchange of such securities,
or upon the exercise of any related
options, warrants or rights to purchase or
acquire such convertible or exchangeable
securities and the subsequent conversion
or exchange thereof;
(3) on any change in the number of shares of
Common Stock deliverable upon exercise of
any such options, warrants or rights or
conversion or exchange of such convertible
or exchangeable securities or any change
in the consideration to be received by the
Company upon such exercise, conversion or
exchange, but excluding changes resulting
from the anti-dilution provisions thereof
(to the extent comparable to the
anti-dilution provisions contained
herein), the Conversion Price as then in
effect shall forthwith be readjusted to
such Conversion Price as would have been
obtained had an adjustment been made upon
the issuance of such options, warrants or
rights not exercised prior to such change,
or of
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such convertible or exchangeable securities
not converted or exchanged prior to such
change, upon the basis of such change;
(4) on the expiration or cancellation of any
such options, warrants or rights (without
exercise), or the termination of the right
to convert or exchange such convertible or
exchangeable securities (without
exercise), if the Conversion Price shall
have been adjusted upon the issuance
thereof, the Conversion Price shall
forthwith be readjusted to such Conversion
Price as would have been obtained had an
adjustment been made upon the issuance of
such options, warrants, rights or such
convertible or exchangeable securities on
the basis of the issuance of only the
number of shares of Common Stock actually
issued upon the exercise of such options,
warrants or rights, or upon the conversion
or exchange of such convertible or
exchangeable securities; and
(5) if the Conversion Price shall have been
adjusted upon the issuance of any such
options, warrants, rights or convertible
or exchangeable securities, no further
adjustment of the Conversion Price shall
be made for the actual issuance of Common
Stock upon the exercise, conversion or
exchange thereof;
PROVIDED, HOWEVER, that no increase in the Conversion Price shall
be made pursuant to subclauses (1) or (2) of this SECTION
7(A)(iii).
(B) STOCK SPLITS, SUBDIVISIONS, RECLASSIFICATIONS OR
COMBINATIONS. If the Company shall (1) declare a dividend or make a
distribution on its Common Stock in shares of Common Stock, (2)
subdivide or reclassify the outstanding shares of Common Stock into a
greater number of shares, or (3) combine or reclassify the outstanding
Common Stock into a smaller number of shares, the Conversion Price in
effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Holder
of any shares of Series B Preferred Stock surrendered for conversion
or exchange after such date shall be entitled to receive the number of
shares of Common Stock which such holder would have owned or been
entitled to receive after such date had such Series B Preferred Stock
been converted or exchanged immediately prior to such date. Successive
adjustments in the Conversion Price shall be made whenever any event
specified above shall occur.
(C) OTHER DISTRIBUTIONS. In case the Company shall fix a
record date for the making of a distribution to all holders of shares
of its Common Stock (1) of shares of any class other than its Common
Stock or (2) of evidence of indebtedness of the Company or any
Subsidiary or (3) of assets (including cash but excluding Ordinary
Cash Dividends, and dividends or distributions referred to in SECTION
7(B)), or (4) of rights or warrants, then in
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each such case the Conversion Price in effect immediately prior
thereto shall be reduced to the price determined by multiplying the
Conversion Price in effect immediately prior to such record date by a
fraction, (i) the numerator of which shall be an amount equal to the
difference resulting from (A) the number of shares of Common Stock
outstanding on such record date multiplied by the Market Price per
share of Common Stock on such record date, less (B) the fair market
value (as reasonably determined by the Board) of said shares or
evidences of indebtedness or assets or rights or warrants to be so
distributed, and (ii) the denominator of which shall be equal to the
number of shares of Common Stock outstanding on such record date
multiplied by the Market Price per share of Common Stock on such
record date. Such adjustment shall be made successively whenever such
a record date is fixed. In the event that such distribution is not so
made, the Conversion Price then in effect shall be readjusted,
effective as of the date when the Board determines not to distribute
such shares, evidences of indebtedness, assets, rights or warrants, as
the case may be, to the Conversion Price that would then be in effect
if such record date had not been fixed.
(D) CERTAIN REPURCHASES OF COMMON STOCK. In case the Company
effects a Pro Rata Repurchase of Common Stock, then the Conversion
Price shall be reduced to the price determined by multiplying the
Conversion Price in effect immediately prior to the effective date of
such Pro Rata Repurchase by a fraction of which (1) the numerator
shall be (i) the product of (x) the number of shares of Common Stock
outstanding immediately before such Pro Rata Repurchase and (y) the
Market Price per share of Common Stock on the Trading Day immediately
preceding the first public announcement of the intent to effect such
Pro Rata Repurchase, minus (ii) the aggregate purchase price of the
Pro Rata Repurchase, and of which (2) the denominator shall be the
product of (a) the number of shares of Common Stock outstanding
immediately prior to such Pro Rata Repurchase minus the number of
shares of Common Stock so repurchased and (b) the Market Price per
share of Common Stock on the Trading Day immediately preceding the
first public announcement of such Pro Rata Repurchase.
(E) BUSINESS COMBINATIONS. In case of any Business Combination
in which the holders of shares of Common Stock are entitled to receive
stock, securities or property by virtue of their ownership of Common
Stock or a reclassification of Common Stock (other than a
reclassification of Common Stock referred to in SECTION 7(B)), each
share of Series B Preferred Stock shall after the date of such
Business Combination or reclassification be convertible into the
number of shares of stock or other securities or property (including
cash) to which the Common Stock issuable upon conversion of such share
of Series B Preferred Stock immediately prior to such Business
Combination or reclassification would have been entitled upon such
Business Combination or reclassification; and in any such case, if
necessary, the provisions set forth herein with respect to the rights
and interests thereafter of the Holders of the shares of Series B
Preferred Stock shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of stock or
other securities or property thereafter deliverable on the conversion
of the shares of Series B Preferred Stock. In determining the kind
and amount of stock, securities or the property receivable upon
consummation of such Business Combination, if the holders of Common
Stock have the right to elect the kind or amount of consideration
receivable upon consummation of such Business Combination, then the
Holder of the Series B Preferred Stock shall have the right to make a
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similar election as of the Conversion Date with respect to the number
of shares of stock or other securities or property into which the
Series B Preferred Stock shall be convertible.
(F) ROUNDING OF CALCULATIONS; MINIMUM ADJUSTMENTS. All
calculations under this SECTION 7 shall be made to the nearest one
tenth (1/10th) of a cent or to the nearest one hundredth (1/100th) of
a share, as the case may be. Any provision of this SECTION 7 to the
contrary notwithstanding, no adjustment in the Conversion Price shall
be made if the amount of such adjustment would be less than $0.01, but
any such amount shall be carried forward and an adjustment with
respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate $0.01 or more.
In addition, in no event shall be Conversion Price be adjusted to less
than the lesser of $.01 per share or the par value of the Common
Stock.
(G) TIMING OF ISSUANCE OF ADDITIONAL COMMON STOCK UPON CERTAIN
ADJUSTMENTS. In any case in which the provisions of this SECTION 7
shall require that an adjustment shall become effective immediately
after a record date for an event, the Company may defer until the
occurrence of such event (1) issuing to the Holder of any share of
Series B Preferred Stock converted after such record date and before
the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by
such event over and above the shares of Common Stock issuable upon
such conversion before giving effect to such adjustment and (B) paying
to such Holder any amount of cash in lieu of a fractional share of
such Common Stock; PROVIDED, HOWEVER, that the Company upon request
shall deliver to such Holder a due bill or other appropriate
instrument evidencing such Holder's right to receive such additional
shares, and such cash, upon the occurrence of the event requiring such
adjustment.
(H) STATEMENT REGARDING ADJUSTMENTS. Whenever the Conversion
Price shall be adjusted as provided in SECTION 7 the Company shall
forthwith file, at the office of any transfer agent for the Series B
Preferred Stock and at the principal office of the Company a
statement showing in reasonable detail the facts requiring such
adjustment and the Conversion Price that shall be in effect after such
adjustment and the Company shall also cause a copy of such statement
to be sent by mail, first class postage prepaid, to each Holder at its
address appearing in the Company's records.
(I) NOTICES. In the event that the Company shall propose to
take any action of the type described in SECTION 7 (but only if the
action of the type described in SECTION 7 would result in an
adjustment in the Conversion Price or a change in the type of
securities or property to be delivered upon a conversion or exchange
of Series B Preferred Stock), the Company shall give notice to each
Holder, in the manner set forth in SECTION 7(H), which notice shall
specify the record date, if any, with respect to any such action and
the approximate date on which such action is to take place. Such
notice shall also set forth the facts with respect thereto as shall be
reasonably necessary to indicate the effect on the Conversion Price
and the number, kind or class of shares or other securities or
property which shall be deliverable upon conversion of shares of the
Series B Preferred Stock. In the case of any action which would
require the fixing or a record date, such notice shall be given at
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least 10 days prior to the date so fixed, and in case of all other
action, such notice shall be given at least 15 days prior to the
taking of such proposed action. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of any such
action.
(J) NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of SECTIONS 6
and 7 and in taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Holders
of the Series B Preferred Stock against impairment.
(K) NO DUPLICATION OF ADJUSTMENTS. If any action would require
adjustment of the Conversion Price pursuant to more than one of the
provisions of this SECTION 7, only one adjustment shall be made and
such adjustment shall be the adjustment that results in the lowest
Conversion Price after giving effect to such adjustment.
8. LIMITATIONS ON SERIES B PREFERRED STOCK. No share or shares of
Series B Preferred Stock the Company acquires through redemption, option,
exchange or otherwise will be reissued as Series B Preferred Stock, and all
such shares will be canceled, retired and eliminated from the shares of
Series B Preferred Stock which the Company will be authorized to issue, and
will be restored to the status of authorized but undesignated preferred stock
of the Company eligible for designation and reissuance subject to the terms
hereof and the Certificate. The Company will not issue any further shares of
Series B Preferred Stock.
9. WAIVERS. With the written consent of Holders of a Majority of
the Series B Preferred Stock, the obligations of the Company and the rights
of the Holders under this Certificate of Designation may be waived (either
generally or in a particular instance, either retroactively or prospectively
and either for a specified period of time or indefinitely). Upon the
effectuation of each such waiver, the Company will promptly give written
notice thereof to the Holders who have not previously consented thereto in
writing.
10. REDEMPTION. Except as expressly set forth herein, the Company
shall have no right or obligation to redeem the Series B Preferred Stock.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF, this Certificate has been signed on behalf of the
Company by its President and attested to by its Secretary, all as of the 6th
day of May, 1999.
INPUT/OUTPUT, INC.
By: /s/ Axel M. Sigmar
-------------------------
President
ATTEST:
By: /s/ Ronald A. Harris
-----------------------------
Assistant Secretary
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