CERTIFICATE OF DESIGNATION
OF
SERIES C 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 C
Preferred Stock, $0.01 par value per share, which shall consist of
[insert number up to 15,000] 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
C Preferred Stock shall be [insert number up to 15,000]. The Series C
Preferred Stock shall rank senior to the Company's Series A Preferred Stock
with respect to the payment of dividends and distributions on Liquidation and
on parity with the Series B 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 C
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 C 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
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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 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 $____, as adjusted from time to time in
accordance with SECTION 7. [Note - this is to be determined as set forth
in the definition of Series C Preferred Stock in the Purchase Agreement]
"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.
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"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 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 C 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.][Delete if not applicable]
"INITIAL CONVERSION DATE" means the first to occur of any of the
following: (i) _____________, 2002 [third anniversary of the Issue Date for
the Series B Preferred Stock], (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 C Preferred
Stock the original date of issuance of such shares of Series C Preferred
Stock.
"JUNIOR SECURITIES" means Capital Stock that, with respect to
dividends and distributions upon Liquidation, ranks junior to the Series C
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
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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 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 C 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 C
Preferred Stock.
"PERMITTED PARITY SECURITIES" means up to 35,000 shares of Preferred
Stock of the Company (less the number of shares of Series C Preferred Stock
issued in accordance the Purchase Agreement) constituting no more than one
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 C Preferred Stock and Series B Preferred Stock
and other Permitted Parity Securities as a single class and (iv) is PARI
PASSU with the Series C Preferred Stock and Series B Preferred Stock with
respect to the payment of dividends and distributions upon Liquidation.
"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
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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.
"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 May ___, 1999 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 C
Preferred Stock.
"SERIES B PREFERRED STOCK" means the Series B Preferred Stock of the
Company issued to Purchaser pursuant to the Purchase Agreement.
"STATED VALUE" is an amount equal to $1,000.00 per share of Series C
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 C 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 C 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 the first such Dividend Payment
Date following the Issue Date; 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 C 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.
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(C) So long as any shares of the Series C Preferred Stock
shall be outstanding, (i) 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 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 C 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 C 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 C
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 C Preferred Stock:
(A) Subject to applicable law, the shares of Series C
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][delete if not applicable], Holders of shares of the
Series C 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 C
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 C 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 C Preferred Stock][delete if
not applicable], voting together with the Series B Preferred Stock and
any Permitted Parity Securities as a separate class with one vote per
share of Series C 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
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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 C Preferred 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 C Preferred Stock, the 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 C Preferred Stock, voting together with the Series B
Preferred Stock and the 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 C 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 C 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 C 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
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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 Liquidation Preference on all outstanding shares
of the Series C Preferred Stock and all outstanding Senior Securities or
Parity Securities, in each case ranking on parity with the Series C 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 C Preferred Stock and holders of such
Senior Securities or Parity Securities will be distributed ratably among the
Holders of the Series C 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 C
Preferred Stock at their respective addresses as the same shall appear on the
books of the Company.
6. CONVERSION RIGHTS. The Series C Preferred Stock shall be
convertible as follows:
(A) CONVERSION AT HOLDER'S OPTION. The Holder of any shares
of Series C 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 C
Preferred Stock into a number of fully paid and nonassessable shares of
Common Stock for each such share of Series C Preferred Stock equal to
the Conversion Ratio, upon the terms hereinafter set forth.
(B) MANDATORY CONVERSION. On _______________, 2004 [insert
fifth anniversary of the Issue Date for the Series B Preferred Stock]
(the "MANDATORY CONVERSION DATE"), each outstanding share of Series C
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 C 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 C 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:
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(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 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 C 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 C 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 C Preferred Stock are to be issued in a
name other than the name on the face of the certificates representing
such shares of Series C 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 C
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 C 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 C Preferred
Stock. If more than one share of Series C 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 C
Preferred Stock so surrendered. Instead of any fractional share of
Common Stock which would otherwise be issuable upon conversion of any
shares of Series C Preferred Stock, the Company shall pay
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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 C Preferred Stock will be
deemed to have been issued to the Person 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 C 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 C 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 C 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 C 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 C 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 C Preferred Stock or of
any share of Common Stock issued or issuable upon the conversion
of the Series C Preferred Stock in any manner which interferes
with the timely conversion of the Series C Preferred Stock.
(G) RIGHTS. Whenever the Company issues shares of Common
Stock upon conversion of Series C 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
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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 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 C
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 C Preferred
Stock for all past dividend periods, the Company may offer to redeem for
cash any or all of such shares of Series C 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 C 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 C 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 C 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 C 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 C 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
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conversion of the Series B Preferred Stock, the Series C 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 C
Preferred Stock are submitted for conversion such that the NYSE
Limitation would be 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 C 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;
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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
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
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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 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 C 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 C Preferred Stock
been converted or
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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 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 C 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 C
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
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necessary, the provisions set forth herein with respect to the rights
and interests thereafter of the Holders of the shares of Series C
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 C 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 C Preferred Stock shall have the right to make a
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 C 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 C 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 C
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
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property to be delivered upon a conversion or exchange of Series C
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 C Preferred Stock.
In the case of any action which would require the fixing or a record
date, such notice shall be given at 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 C 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 C PREFERRED STOCK. No share or shares of
Series C Preferred Stock the Company acquires through redemption, option,
exchange or otherwise will be reissued as Series C Preferred Stock, and all
such shares will be canceled, retired and eliminated from the shares of
Series C 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 C Preferred Stock.
9. WAIVERS. With the written consent of Holders of a Majority of
the Series C 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 C 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
_____ day of _________, 1999.
INPUT/OUTPUT, INC.
By:
----------------------------
President
ATTEST:
By:
-------------------------
Secretary
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