EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES,
AND RELATIVE RIGHTS AND LIMITATIONS
OF
SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
CONTANGO OIL & GAS COMPANY
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
Contango Oil & Gas Company.
2. The Certificate of Incorporation of the Corporation authorizes the issuance
of preferred stock of the Corporation in series and expressly vests in the Board
of Directors of the Corporation the authority provided therein to determine the
rights, preferences, privileges of preferred stock and to fix the number of
shares and designation of such series.
3. At a meeting of the Board of Directors of the Corporation held on December
12, 2003, the following resolutions were adopted authorizing the creation and
issuance of 4,000 shares of a series of preferred stock designated as "Series C
Cumulative Convertible Preferred Stock":
NOW THEREFORE, BE IT RESOLVED, that the Board of Directors
does hereby create, authorize and provide for the issuance of up to
Four Thousand (4,000) shares of Series C Cumulative Convertible
Preferred Stock, having the designations, preferences and relative and
other special rights, qualifications, limitations and restrictions set
forth on the Certificate of Designations attached hereto as Exhibit A.
FURTHER RESOLVED, that the statements contained in the
foregoing resolutions creating and designating the said Series C
Cumulative Convertible Preferred Stock, and fixing the number,
preferences and relative, and other special rights, qualifications,
limitations and restrictions thereof shall, upon the effective date of
said series, be deemed to be included in and be a part of the
certificate of incorporation of the Corporation pursuant to the
provisions of Sections 104 and 151 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
December 12, 2003.
/s/ Kenneth R. Peak
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Kenneth R. Peak, Secretary
EXHIBIT A
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RELATIVE RIGHTS AND LIMITATIONS OF THE
Series C Cumulative Convertible Preferred Stock
OF contango oil & gas company (the "Corporation")
1. Designation and Amount; Ranking.
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(a) There shall be created from the 5,000,000 shares of preferred stock, par
value $0.04 per share, of the Corporation authorized to be issued pursuant to
the Certificate of Incorporation, a series of preferred stock, designated as the
"Series C Cumulative Convertible Preferred Stock" par value $0.04 per share (the
"Series C Preferred Stock"), and the number of shares of such series shall be
4,000. Such number of shares may be decreased by resolution of the Board of
Directors; provided that no decrease shall reduce the number of shares of Series
C Preferred Stock to a number less than that of the shares of Series C Preferred
Stock then outstanding plus the number of shares issuable in accordance with the
provisions of Section 3(a) below. Except for shares of Series C Preferred Stock
issuable in accordance with Section 3(a), the Corporation shall not issue any
shares of Series C Preferred Stock after the initial issuance of Series C
Preferred Stock.
(b) The Series C Preferred Stock will, with respect to dividend rights,
redemption rights or rights upon the liquidation, winding-up or dissolution of
the Corporation or otherwise rank (i) senior to all Junior Stock, (ii) on a
parity with all Parity Stock and (iii) junior to all Senior Stock.
2. Definitions. As used herein, the following terms shall have the following
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meanings:
(a) "Accrued Dividends" shall mean, with respect to any share of Series C
Preferred Stock, as of any date, the accrued and unpaid dividends on such share
from and including the most recent Dividend Payment Date (or the Issue Date, if
such date is prior to the first Dividend Payment Date) to but not including such
date.
(b) "Accumulated Dividends" shall mean, with respect to any share of Series C
Preferred Stock, as of any date, the aggregate accumulated and unpaid dividends
on such share from the Issue Date until the most recent Dividend Payment Date on
or prior to such date. There shall be no Accumulated Dividends with respect to
any share of Series C Preferred Stock prior to the first Dividend Payment Date.
(c) "AMEX" shall mean the American Stock Exchange.
(d) "Board of Directors" shall mean the Board of Directors of the Corporation
or, with respect to any action to be taken by the Board of Directors, any
committee of the Board of Directors duly authorized to take such action.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or other day
on which commercial banks in Houston, Texas are authorized or required by law or
executive order to close.
(f) "Cash Dividend Rate" shall have the meaning set forth in Section 3(a).
(g) "Certificate of Incorporation" shall mean the Certificate of Incorporation
of the Corporation, as amended from time to time.
(h) "Common Stock" shall mean the common stock, par value $0.04 per share, of
the Corporation, or any other class of stock resulting from successive changes
or reclassifications of such common stock consisting solely of changes in par
value, or from par value to no par value, or as a result of a subdivision,
combination, or merger, consolidation or similar transaction in which the
Corporation is a constituent corporation.
(i) "Corporation" shall have the meaning set forth in the introduction.
(j) "Conversion Price" shall mean $6.00, subject to adjustment as set forth in
Section 6(c).
(k) "Conversion Ratio" shall mean the quotient of the Liquidation Preference
divided by the Conversion Price in effect at the time of determination.
(l) "Conversion Shares" shall have the meaning set forth in Section 6(c)(ii).
(m) "Dividend Payment Date" shall mean March 31, June 30, September 30 and
December 31 of each year, commencing March 31, 2004.
(n) "Dividend Rate" shall have the meaning set forth in Section 3(a).
(o) "Dividend Record Date" shall mean a date fixed by the Board of Directors, or
a duly authorized committee thereof, for determining the Holders who are
entitled to receive dividends on a Dividend Payment Date. The Dividend Record
Date for a Dividend Payment Date shall be a date not less than 15 days nor more
than 45 days prior to the Dividend Payment Date.
(p) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
(q) "Holder" or "holder" shall mean a holder of record of the Series C Preferred
Stock.
(r) "Issue Date" shall mean the original date of issuance of the Series C
Preferred Stock.
(s) "Junior Stock" shall mean the Common Stock and each other class of capital
stock or series of preferred stock established after the Issue Date, by the
Board of Directors, the terms of which do not expressly provide that such class
or series ranks senior to or on a parity with the Series C Preferred Stock as to
dividend rights, redemption rights or rights upon the liquidation, winding-up or
dissolution of the Corporation or otherwise.
(t) "Liquidation Preference" shall mean, with respect to each share of Series C
Preferred Stock, $5,000 (as adjusted for stock splits, reverse stock splits,
subdivisions, combinations, and the like of Series C Preferred Stock).
(u) "Mandatory Conversion Date" shall have the meaning set forth in Section
7(b).
(v) "Market Value" shall mean the average closing price of the Common Stock for
a five consecutive trading day period on the AMEX (or such other national
securities exchange or automated quotation system on which the Common Stock is
then listed or authorized for quotation) or, if
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the Common Stock is not so listed or authorized for quotation, an amount
determined in good faith by the Board of Directors to be the fair value of the
Common Stock.
(w) "Officer" means the Chairman of the Board of Directors, the President, any
Vice President, the Treasurer, the Secretary or any Assistant Secretary of the
Corporation.
(x) "Parity Stock" shall mean any class of capital stock or series of preferred
stock established after the Issue Date by the Board of Directors, the terms of
which expressly provide that such class or series will rank on a parity with the
Series C Preferred Stock as to dividend rights, redemption rights or rights upon
the liquidation, winding-up or dissolution of the Corporation or otherwise.
(y) "Person" shall mean any individual, corporation, general partnership,
limited partnership, limited liability partnership, joint venture, association,
joint-stock company, trust, limited liability company, unincorporated
organization or government or any agency or political subdivision thereof.
(z) "PIK Dividend Rate" shall have the meaning set forth in Section 3(a).
(aa) "SEC" or "Commission" shall mean the Securities and Exchange Commission.
(bb) "Securities Act" means the Securities Act of 1933, as amended.
(cc) "Senior Stock" shall mean the Series A Preferred Stock, the Series B
Preferred Stock and each class of capital stock or series of preferred stock
established after the Issue Date by the Board of Directors, the terms of which
expressly provide that such class or series will rank senior to the Series C
Preferred Stock as to dividend rights, redemption rights or rights upon the
liquidation, winding-up or dissolution of the Corporation or otherwise.
(dd) "Series A Preferred Stock" shall mean the Series A Senior Cumulative
Convertible Preferred Stock, par value $0.04 per share, of the Corporation.
(ee) "Series B Preferred Stock" shall mean the Series B Senior Cumulative
Convertible Preferred Stock, par value $0.04 per share, of the Corporation.
(ff) "Series C Preferred Stock" shall have the meaning set forth in Section
1(a).
(gg) "Transaction" shall have the meaning set forth in Section 6(g).
(hh) "Voting Stock" shall mean, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of contingency) to vote in the election of members of the Board
of Directors or other governing body of such Person. For purposes of this
definition, "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
corporate stock or partnership interests and any and all warrants, options and
rights with respect thereto (whether or not currently exercisable), including
each class of common stock and preferred stock of such Person.
3. Dividends.
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(a) The holders of shares of the outstanding Series C Preferred Stock shall be
entitled, when, as and if declared by the Board of Directors out of funds of the
Corporation legally available therefor, to
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receive cumulative dividends at the rate per annum of (i) 6% per share on the
Liquidation Preference if paid in cash (the "Cash Dividend Rate") or, (ii) 7.5%
per share on the Liquidation Preference if paid in shares of Series C Preferred
Stock (the "PIK Dividend Rate") (the applicable dividend rate being hereafter
referred to as the "Dividend Rate"). Dividends payable for each full dividend
period will be computed by dividing the Dividend Rate by four and shall be
payable in arrears on each Dividend Payment Date (commencing March 31, 2004) for
the quarterly period ending immediately prior to such Dividend Payment Date, to
the holders of record of Series C Preferred Stock at the close of business on
the Dividend Record Date applicable to such Dividend Payment Date. Such
dividends shall be cumulative from the most recent date as to which dividends
shall have been paid or, if no dividends have been paid, from the Issue Date
(whether or not in any dividend period or periods there shall be funds of the
Corporation legally available for the payment of such dividends) and shall
accrue on a day-to-day basis, whether or not earned or declared, from and after
the Issue Date. Dividends payable for any partial dividend period shall be
computed on the basis of actual days elapsed in the period and a 360-day year
consisting of twelve 30-day months. Accumulations of dividends on shares of
Series C Preferred Stock shall not bear interest.
If, on any Dividend Payment Date, the holders of the Series C Preferred
Stock shall not have received the full dividends provided for in this Section
3(a) in cash or in kind, then such dividends shall cumulate, whether or not
earned or declared, with additional dividends thereon, at the PIK Dividend Rate
applicable to the Series C Preferred Stock as provided in this Section 3(a), for
each succeeding full quarterly dividend period during which such dividends shall
remain unpaid.
(b) As long as any shares of Series A Preferred Stock or
Series B Preferred Stock remain outstanding, no
dividend may be declared or paid or set apart for
payment on the Series C Preferred Stock unless at the
time of such declaration or payment or setting apart
for payment:
(i) full cumulative dividends have been or
contemporaneously are declared and paid in cash (or
declared and a sum sufficient for payment set apart
for such payment) on the Series A Preferred Stock and
Series B Preferred Stock for all quarterly dividend
periods for the Series A Preferred Stock and Series B
Preferred Stock terminating on or prior to the
Dividend Payment Date for the Series C Preferred
Stock;
(ii) an amount equal to the dividends accrued on the
Series A Preferred Stock and Series B Preferred Stock
from the last dividend payment date for the Series A
Preferred Stock and Series B Preferred Stock to the
Dividend Payment Date for the Series C Preferred
Stock has been declared and set apart in cash for
payment on the Series A Preferred Stock and Series B
Preferred Stock; and
(iii) the dividend payment for the most recent quarterly
dividend period on the Series A Preferred Stock and
Series B Preferred Stock has been paid entirely in
cash.
(c) When dividends are not paid in full on the Series C Preferred Stock and
any Parity Stock, all dividends declared on the Series C Preferred Stock and any
Parity Stock shall be declared pro rata so that the amount of dividends declared
per share on the Series C Preferred Stock and such Parity Stock shall in all
cases bear to each other the same ratio that the accumulated and unpaid
dividends per share on the Series C Preferred Stock and such Parity Stock bear
to each other. Except as set forth in the preceding sentence, unless full
dividends on the Series C Preferred Stock have been paid for all past dividend
periods, no dividends (other than in Common Stock or other shares of Junior
Stock) shall be declared or paid or set aside for payment, nor shall any other
distribution be made, on the Common Stock, any other Junior Stock or any Parity
Stock.
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(d) Unless full dividends on the Series C Preferred Stock have been paid,
or declared and a sum sufficient for payment thereof set apart for such payment,
for all past dividend periods, the Corporation may not redeem, repurchase or
otherwise acquire for any consideration (nor may the Corporation pay or make
available any moneys for a sinking fund for the redemption of) any shares of
Common Stock, any Junior Stock or any Parity Stock except by conversion into or
exchange for shares of Junior Stock.
(e) Holders shall not be entitled to any dividends on the Series C
Preferred Stock, whether payable in cash, property or stock, in excess of full
cumulative dividends.
(f) The Board of Directors may declare dividends payable in shares of
Series C Preferred Stock in lieu of cash dividends on a Dividend Payment Date.
In the event the Board of Directors elects to declare a dividend payable in
shares of Series C Preferred Stock, each holder of shares of Series C Preferred
Stock shall be entitled to receive such additional shares of Series C Preferred
Stock (or cash in lieu of a fraction thereof) equal to the product of (x) the
number of shares of Series C Preferred Stock held by such holder multiplied by
(y) the PIK Dividend Rate.
(g) The Holders at the close of business on a Dividend Record Date will be
entitled to receive the dividend payment on those shares on the corresponding
Dividend Payment Date notwithstanding the subsequent conversion thereof or the
Corporation's default in payment of the dividend due on that Dividend Payment
Date. However, shares of Series C Preferred Stock surrendered for conversion
pursuant to Section 6 during the period between the close of business on any
Dividend Record Date and the close of business on the day immediately preceding
the applicable Dividend Payment Date must be accompanied by payment of an amount
equal to the dividend payable on the shares on that Dividend Payment Date. A
Holder on a Dividend Record Date who (or whose transferee) tenders any shares
for conversion on the corresponding Dividend Payment Date will receive the
dividend payable by the Corporation on the Series C Preferred Stock on that
date, and the converting holder need not include payment in the amount of such
dividend upon surrender of shares of Series C Preferred Stock for conversion.
Except as provided above with respect to a voluntary conversion pursuant to
Section 6, the Corporation shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or for dividends on
the shares of Common Stock issued upon conversion.
4. Voting Rights.
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(a) The shares of Series C Preferred Stock shall have no voting rights
except as set forth below or as otherwise required by Delaware law from time to
time:
(i) So long as any shares of Series C Preferred Stock remain
outstanding, unless a greater percentage shall then be required
by law, the affirmative vote or consent of the holders of at
least a majority of the outstanding shares of the Series C
Preferred Stock, voting as a single class, shall be required to
(A) amend, alter or repeal, in any manner whatsoever, the
designations, powers, preferences, relative, participating,
optional or other special rights, qualifications, limitations and
restrictions of the Series C Preferred Stock, (B) issue any
shares of, or any securities convertible into shares of, Series A
Preferred Stock or Series B Preferred Stock (whether or not
issued in the form of a dividend on such shares) which, together
with the Series A Preferred Stock and Series B Preferred Stock
outstanding on the Issue Date, have an aggregate Liquidation
Preference in excess of $10 million, or (C) amend or repeal any
provision of or add any provision to, the Certificate of
Incorporation if that action would adversely alter or change the
rights, preferences or privileges of the Series C Preferred
Stock. In
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exercising the voting rights set forth in this Section 4(a)(i),
each share of Series C Preferred Stock shall be entitled to one
vote.
(ii) Holders shall be entitled to vote, together with the holders of
Common Stock, as one class on all matters submitted to a vote of
stockholders of the Corporation, in the same manner and with the
same effect as the holders of Common Stock. In any such vote,
each share of Series C Preferred Stock shall entitle the holder
thereof to one vote per share for each share of Common Stock
(including fractional shares) into which each share of Series C
Preferred Stock is then convertible, rounded to the nearest
one-tenth of a share.
(b) The Corporation may authorize, increase the authorized amount of, or
issue any shares of Parity Stock or Junior Stock, without the consent of the
holders of Series C Preferred Stock, and in taking such actions the Corporation
shall not be deemed to have affected adversely the rights, preferences,
privileges or voting rights of Holders.
5. Liquidation Preference.
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(a) In the event of any liquidation, winding-up or dissolution of the
Corporation, whether voluntary or involuntary, each Holder shall be entitled to
receive and to be paid out of the assets of the Corporation available for
distribution to its stockholders the Liquidation Preference plus Accumulated
Dividends and Accrued Dividends thereon in preference to the holders of, and
before any payment or distribution is made on, any Junior Stock, including,
without limitation, on any Common Stock.
(b) Neither the sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all the assets
or business of the Corporation (other than in connection with the liquidation,
winding-up or dissolution of its business) nor the merger or consolidation of
the Corporation into or with any other Person shall be deemed to be a
liquidation, winding-up or dissolution, voluntary or involuntary, for the
purposes of this Section 5.
(c) After the payment to the Holders of full preferential amounts provided
for in this Section 5, the Holders as such shall have no right or claim to any
of the remaining assets of the Corporation.
(d) In the event the assets of the Corporation available for distribution
to the Holders upon any liquidation, winding-up or dissolution of the
Corporation, whether voluntary or involuntary, shall be insufficient to pay in
full all amounts to which such holders are entitled pursuant to Section 5(a), no
such distribution shall be made on account of any shares of Parity Stock upon
such liquidation, winding-up or dissolution unless proportionate distributable
amounts shall be paid on account of the shares of Series C Preferred Stock,
ratably, in proportion to the full distributable amounts for which holders of
all Series C Preferred Stock and of any Parity Stock are entitled upon such
liquidation, winding-up or dissolution.
(e) Upon any voluntary or involuntary liquidation, winding-up or
dissolution of the Corporation, Holders will not be entitled to receive any
liquidating distributions until all amounts payable upon any such event to
holders of outstanding shares of Series A Preferred Stock, Series B Preferred
Stock and any other class or series of Senior Stock have been paid in full.
6. Conversion Rights.
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(a) Each Holder shall have the right, at its option, exercisable at any
time and from time to time from the Issue Date to convert, subject to the terms
and provisions of this Section 6, any or all of
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such Holder's shares of Series C Preferred Stock. In such case, the shares of
Series C Preferred Stock shall be converted into such whole number of fully paid
and nonassessable shares of Common Stock as is equal, subject to Section 6(g),
to the product of the number of shares of Series C Preferred Stock being so
converted multiplied by the Conversion Ratio then in effect. The conversion
right of a Holder shall be exercised by the Holder by the surrender to the
Corporation of the certificates representing shares to be converted at any time
during usual business hours at its principal place of business, accompanied by
duly executed written notice to the Corporation in that the Holder elects to
convert all or a portion of the shares of Series C Preferred Stock represented
by such certificate and specifying the name or names (with address) in which a
certificate or certificates for shares of Common Stock are to be issued and (if
so required by the Corporation) by a written instrument or instruments of
transfer in form reasonably satisfactory to the Corporation duly executed by the
Holder or its duly authorized legal representative and transfer tax stamps or
funds therefor, if required pursuant to Section 6(i). Immediately prior to the
close of business on the date of receipt by the Corporation of notice of
conversion of shares of Series C Preferred Stock, each converting Holder shall
be deemed to be the Holder of record of Common Stock issuable upon conversion of
such Holder's Series C Preferred Stock notwithstanding that the share register
of the Corporation shall then be closed or that certificates representing such
Common Stock shall not then be actually delivered to such Holder. Upon notice
from the Corporation, each Holder of Series C Preferred Stock so converted shall
promptly surrender to the Corporation certificates representing the shares so
converted, duly endorsed in blank or accompanied by proper instruments of
transfer. On the date of any conversion, all rights with respect to the shares
of Series C Preferred Stock so converted, including the rights, if any, to
receive notices, will terminate, except only the rights of Holders thereof to
(i) receive dividends on the shares of Series C Preferred Stock so converted in
accordance with Section 3(f); (ii) receive certificates for the number of whole
shares of Common Stock into which such shares of Series C Preferred Stock have
been converted and cash, in lieu of any fractional shares as provided in Section
6(f); and (iii) exercise the rights to which they are entitled as holders of
Common Stock.
(b) If the last day for the exercise of the conversion right shall not be a
Business Day, then such conversion right may be exercised on the next preceding
Business Day.
(c) The Conversion Price shall be subject to adjustment as follows:
(i) In case the Corporation shall at any time or from time to time
(A) pay a dividend (or other distribution) on the Common Stock
payable in shares of Common Stock (other than the issuance of
shares of Common Stock in connection with the conversion of the
Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock or any other series of preferred stock
of the Corporation that is convertible into Common Stock); (B)
subdivide or split the outstanding shares of Common Stock into a
larger number of shares; (C) combine the outstanding shares of
Common Stock into a smaller number of shares; or (D) issue any
shares of its capital stock in a reclassification of the Common
Stock, then, and in each such case, the Conversion Price in
effect immediately prior to such event shall be adjusted (and any
other appropriate actions shall be taken by the Corporation) so
that the Holder of any share of Series C Preferred Stock
thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock that such Holder
would have owned or would have been entitled to receive upon or
by reason of any of the events described above, had such share of
Series C Preferred Stock been converted into shares of Common
Stock immediately prior to the occurrence of such event. An
adjustment made pursuant to this Section 6(c)(i) shall become
effective retroactively (x) in the case of any such dividend or
distribution, to the day
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immediately following the close of business on the record date
for the determination of holders of Common Stock entitled to
receive such dividend or distribution or (y) in the case of any
such subdivision, split, combination or reclassification, to the
close of business on the day upon which such corporate action
becomes effective.
(ii) In case the Corporation shall at any time or from time to time
issue to all holders of its Common Stock rights, options or
warrants entitling the holders thereof to subscribe for or
purchase shares of Common Stock (or securities convertible into
or exchangeable for shares of Common Stock) at a price per share
less than the Market Value for the period ending on the date of
issuance (treating the price per share of any security
convertible, or exchangeable or exercisable into Common Stock as
equal to (A) the sum of the price paid to acquire such security
convertible, exchangeable or exercisable into Common Stock plus
any additional consideration payable (without regard to any
anti-dilution adjustments) upon the conversion, exchange or
exercise of such security into Common Stock divided by (B) the
number of shares of Common Stock into which such convertible,
exchangeable or exercisable security is initially convertible,
exchangeable or exercisable), other than (I) issuances of such
rights, options or warrants if the Holder would be entitled to
receive such rights, options or warrants upon conversion at any
time of shares of Series C Preferred Stock into Common Stock and
(II) issuances that are subject to certain triggering events
(until such time as such triggering events occur), then, and in
each such case, the Conversion Price then in effect shall be
adjusted by dividing the Conversion Price in effect on the day
immediately prior to the record date of such issuance by a
fraction (y) the numerator of which shall be the sum of the
number of shares of Common Stock outstanding on such record date
plus the number of additional shares of Common Stock issued or to
be issued upon or as a result of the issuance of such rights,
options or warrants (or the maximum number into or for which such
convertible or exchangeable securities initially may convert or
exchange or for which such options, warrants or other rights
initially may be exercised) and (z) the denominator of which
shall be the sum of the number of shares of Common Stock
outstanding on such record date plus the number of shares of
Common Stock which the aggregate consideration for the total
number of such additional shares of Common Stock so issued (or
into or for which such convertible or exchangeable securities may
convert or exchange or for which such options, warrants or other
rights may be exercised plus the aggregate amount of any
additional consideration initially payable upon the conversion,
exchange or exercise of such security) would purchase at the
Market Value for the period ending on the date of conversion;
provided, that if the Corporation distributes rights or warrants
(other than those referred to above in this paragraph (c)(ii))
pro rata to the holders of Common Stock, so long as such rights
or warrants have not expired or been redeemed by the Corporation,
(y) the holder of any Series C Preferred Stock surrendered for
conversion shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock then issuable upon such
conversion (the "Conversion Shares"), a number of rights or
warrants to be determined as follows: (i) if such conversion
occurs on or prior to the date for the distribution to the
holders of rights or warrants of separate certificates evidencing
such rights or warrants (the "Distribution Date"), the same
number of rights or warrants to which a holder of a number of
shares of Common Stock equal to the number of Conversion Shares
is entitled at the time of such conversion in
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accordance with the terms and provisions applicable to the rights
or warrants, and (ii) if such conversion occurs after the
Distribution Date, the same number of rights or warrants to which
a holder of the number of shares of Common Stock into which such
Series C Preferred Stock was convertible immediately prior to
such Distribution Date would have been entitled on such
Distribution Date had such Series C Preferred Stock been
converted immediately prior to such Distribution Date in
accordance with the terms and provisions applicable to the rights
and warrants, and (z) the Conversion Price shall not be subject
to adjustment on account of any declaration, distribution or
exercise of such rights or warrants.
(iii)In case the Corporation shall at any time or from time to time
(A) make a pro rata distribution to all holders of shares of its
Common Stock consisting exclusively of cash (excluding any cash
distributed upon a merger or consolidation to which paragraph (g)
below applies), that, when combined together with (x) all other
such all-cash distributions made within the then-preceding 12
months in respect of which no adjustment has been made and (y)
any cash and the fair market value of other consideration paid or
payable in respect of any tender offer by the Corporation or any
of its subsidiaries for shares of Common Stock concluded within
the then-preceding 12 months in respect of which no adjustment
pursuant to this Section 6(c) has been made, in the aggregate
exceeds 10% of the Corporation's market capitalization (defined
as the product of the Market Value for the period ending on the
record date of such distribution times the number of shares of
Common Stock outstanding on such record date) on the record date
of such distribution; (B) complete a tender or exchange offer by
the Corporation or any of its subsidiaries for shares of Common
Stock that involves an aggregate consideration that, together
with (I) any cash and other consideration payable in a tender or
exchange offer by the Corporation or any of its subsidiaries for
shares of Common Stock expiring within the then-preceding 12
months in respect of which no adjustment pursuant to this Section
6(c) has been made and (II) the aggregate amount of any such
all-cash distributions referred to in clause (A) above to all
holders of shares of Common Stock within the then-preceding 12
months in respect of which no adjustments have been made, exceeds
10% of the Corporation's market capitalization on the expiration
of such tender offer; or (C) make a distribution to all holders
of its Common Stock consisting of evidences of indebtedness,
shares of its capital stock other than Common Stock or assets
(including securities, but excluding those dividends, rights,
options, warrants and distributions referred to in paragraph
(c)(i) or (c)(ii) above or clause (A) of this paragraph
(c)(iii)), then, and in each such case, the Conversion Price then
in effect shall be adjusted by dividing the Conversion Price in
effect immediately prior to the date of such distribution or
completion of such tender or exchange offer, as the case may be,
by a fraction (x) the numerator of which shall be the Market
Value for the period ending on the record date referred to below,
or, if such adjustment is made upon the completion of a tender or
exchange offer, on the payment date for such offer, and (y) the
denominator of which shall be such Market Value less the then
fair market value (as determined by the Board of Directors of the
Corporation) of the portion of the cash, evidences of
indebtedness, securities or other assets so distributed or paid
in such tender or exchange offer, applicable to one share of
Common Stock (but such denominator shall not be less than one);
provided, however, that no adjustment shall be made with respect
to any distribution of rights to purchase securities of the
Corporation
9
if the Holder would otherwise be entitled to receive such rights
upon conversion at any time of shares of Series C Preferred Stock
into shares of Common Stock unless such rights are subsequently
redeemed by the Corporation, in which case such redemption shall
be treated for purposes of this Section 6(c)(iii) as a dividend
on the Common Stock. Such adjustment shall be made whenever any
such distribution is made or tender or exchange offer is
completed, as the case may be, and shall become effective
retroactively to a date immediately following the close of
business on the record date for the determination of stockholders
entitled to receive such distribution.
(iv) Notwithstanding anything herein to the contrary, no adjustment
under this Section 6(c) need be made to the Conversion Price
unless such adjustment would require an increase or decrease of
at least 1% of the Conversion Price then in effect. Any lesser
adjustment shall be carried forward and shall be made at the time
of and together with the next subsequent adjustment, if any,
which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at least 1%
of such Conversion Price.
(d) If the Corporation shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter (and before the dividend or distribution has
been paid or delivered to stockholders) legally abandon its plan to pay or
deliver such dividend or distribution, then thereafter no adjustment in the
Conversion Price then in effect shall be required by reason of the taking of
such record.
(e) Upon any increase or decrease in the Conversion Price, then, and in
each such case, the Corporation promptly shall deliver to each Holder a
certificate signed by an authorized officer of the Corporation, setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased
Conversion Price then in effect following such adjustment.
(f) No fractional shares or securities representing fractional shares of
Common Stock shall be issued upon the conversion of any shares of Series C
Preferred Stock, whether voluntary or mandatory. If more than one share of
Series C Preferred Stock shall be surrendered for conversion at one time by the
same holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate Liquidation Preference
of the shares of Series C Preferred Stock so surrendered. If the conversion of
any share or shares of Series C Preferred Stock results in a fraction, an amount
equal to such fraction multiplied by the last reported sale price of the Common
Stock on the AMEX (or on such other national securities exchange or automated
quotation system on which the Common Stock is then listed for trading or
authorized for quotation) or, if the Common Stock is not then so listed or
authorized for quotation, an amount determined in good faith by the Board of
Directors to be the fair value of the Common Stock at the close of business on
the trading day next preceding the day of conversion shall be paid to such
holder in cash by the Corporation.
(g) In the event of any reclassification of outstanding shares of Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value), or in the event of any consolidation or merger
of the Corporation with or into another Person or any merger of another Person
with or into the Corporation (other than a consolidation or merger in which the
Corporation is the resulting or surviving Person and which does not result in
any reclassification or change of outstanding Common Stock), or in the event of
any sale or other disposition to another Person of all or substantially all of
the assets of the Corporation (computed on a consolidated basis) (any of the
foregoing, a "Transaction"), each share of Series C Preferred Stock then
outstanding shall, without the consent of any
10
Holder, become convertible at any time, at the option of the Holder thereof,
only into the kind and amount of securities (of the Corporation or another
issuer), cash and other property receivable upon such Transaction by a holder of
the number of shares of Common Stock into which such share of Series C Preferred
Stock could have been converted immediately prior to such Transaction, after
giving effect to any adjustment event. The provisions of this Section 6(g) and
any equivalent thereof in any such securities similarly shall apply to
successive Transactions. The provisions of this Section 6(g) shall be the sole
right of Holders in connection with any Transaction and such Holders shall have
no separate vote thereon.
(h) The Corporation shall at all times reserve and keep available for
issuance upon the conversion of the Series C Preferred Stock such number of its
authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the conversion of all outstanding shares of Series C
Preferred Stock, and shall take all action required to increase the authorized
number of shares of Common Stock if at any time there shall be insufficient
unissued shares of Common Stock to permit such reservation or to permit the
conversion of all outstanding shares of Series C Preferred Stock.
(i) The issuance or delivery of certificates for Common Stock upon the
conversion of shares of Series C Preferred Stock shall be made without charge to
the converting holder of shares of Series C Preferred Stock for such
certificates or for any tax in respect of the issuance or delivery of such
certificates or the securities represented thereby, and such certificates shall
be issued or delivered in the respective names of, or in such names as may be
directed by, the Holders of the shares of Series C Preferred Stock converted;
provided, however, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the Holder of the
shares of Series C Preferred Stock converted, and the Corporation shall not be
required to issue or deliver such certificate unless or until the Person or
Persons requesting the issuance or delivery thereof shall have paid to the
Corporation the amount of such tax or shall have established to the reasonable
satisfaction of the Corporation that such tax has been paid.
7. Mandatory Conversion.
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(a) At any time on or after June 12, 2005, the Corporation shall have the
right, at its option, to cause the Series C Preferred Stock, in whole but not in
part, to be automatically converted into that number of whole shares of Common
Stock for each share of Series C Preferred Stock equal to the Conversion Ratio
then in effect, with any resulting fractional shares of Common Stock to be
settled in accordance with Section 6(f). The Corporation may exercise its right
to cause a mandatory conversion pursuant to this Section 7(a) only if the
closing price of the Common Stock equals or exceeds 130% of the Conversion Price
then in effect for at least 20 trading days in any consecutive 30-day trading
period on the AMEX (or another national securities exchange or the Nasdaq
National Market), including the last trading day of such 30-day period.
(b) To exercise the mandatory conversion right described in Section 7(a),
the Corporation shall give notice by mail or by publication (with subsequent
prompt notice by mail) to the Holders (not more than four Business Days after
the date of the notice) of the mandatory conversion announcing the Corporation's
intention to convert the Series C Preferred Stock. The conversion date will be a
date selected by the Corporation (the "Mandatory Conversion Date") and will be
no more than five Business Days after the date on which the Corporation issues
the notice described in this Section 7(b).
(c) In addition to any information required by applicable law or
regulation, the notice of a mandatory conversion described in Section 7(b) shall
state, as appropriate: (i) the Mandatory Conversion Date; (ii) the number of
shares of Common Stock to be issued upon conversion of each share of Series C
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Preferred Stock, and (iii) that dividends on the Series C Preferred Stock to be
converted will cease to accrue on the Mandatory Conversion Date.
(d) On and after the Mandatory Conversion Date, dividends will cease to
accrue on the Series C Preferred Stock called for a mandatory conversion
pursuant to Section 7(a) and all rights of Holders will terminate except for the
right to receive the whole shares of Common Stock issuable upon conversion
thereof and cash, in lieu of any fractional shares of Common Stock in accordance
with Section 6(f). The dividend payment with respect to the Series C Preferred
Stock called for a mandatory conversion pursuant to Section 7(a) on a date
during the period between the close of business on any Dividend Record Date to
the close of business on the corresponding Dividend Payment Date will be payable
on such Dividend Payment Date to the record holder of such share on such
Dividend Record Date if such share has been converted after such Dividend Record
Date and prior to such Dividend Payment Date. Except as provided in the
immediately preceding sentence with respect to a mandatory conversion pursuant
to Section 7(a), no payment or adjustment will be made upon conversion of Series
C Preferred Stock for Accrued Dividends or for dividends with respect to the
Common Stock issued upon such conversion.
(e) The Corporation may not authorize or give notice of any mandatory
conversion pursuant to Section 7(a) unless, prior to giving the conversion
notice, all Accumulated Dividends on the Series C Preferred Stock for periods
ended prior to the date of such conversion notice shall have been paid in full.
(f) In addition to the mandatory conversion right described in Section
7(a), if the number of shares of Series C Preferred Stock outstanding is less
than 10% of the number of shares of Series C Preferred Stock issued on the Issue
Date, the Corporation shall have the right, at any time on or after December 12,
2007, at its option, to cause the Series C Preferred Stock, in whole but not in
part, to be automatically converted into that number of whole shares of Common
Stock equal to the quotient of (i) the Liquidation Preference divided by (ii)
the lesser of (A) the Conversion Price then in effect and (B) the Market Value
for the five trading day period ending on the second trading day immediately
prior to the Mandatory Conversion Date, with any resulting fractional shares of
Common Stock to be settled in cash in accordance with Section 6(f). The
provisions of clauses (b), (c), (d) and (e) of this Section 7 shall apply to any
mandatory conversion pursuant to this clause (f); provided, that (i) the
Mandatory Conversion Date described in Section 7(b) shall not be less than 15
days nor more than 30 days after the date on which the Corporation issues a
notice pursuant to Section 7(b) announcing such mandatory conversion, and (ii)
the notice of mandatory conversion described in Section 7(c) will not state the
number of shares of Common Stock to be issued upon conversion of each share of
Series C Preferred Stock, but instead will state the basis for determining the
number of shares of Common Stock to be issued as set forth in this Section 7(f).
8. Consolidation, Merger and Sale of Assets.
- --------------------------------------------
(a) The Corporation, without the consent of the Holders, may consolidate
with or merge into any other Person or convey, transfer or lease all or
substantially all its assets to any Person or may permit any Person to
consolidate with or merge into, or transfer or lease all or substantially all
its properties to, the Corporation; provided, however, that (a) the successor,
transferee or lessee is organized under the laws of the United States or any
political subdivision thereof, and (b) the shares of Series C Preferred Stock
will become shares of such successor, transferee or lessee, having in respect of
such successor, transferee or lessee the same powers, preferences and relative
participating, optional or other special rights and the qualification,
limitations or restrictions thereon, the Series C Preferred Stock had
immediately prior to such transaction.
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(b) Upon any consolidation by the Corporation with, or merger by the
Corporation into, any other person or any conveyance, transfer or lease of all
or substantially all the assets of the Corporation as described in Section 8(a),
the successor resulting from such consolidation or into which the Corporation is
merged or the transferee or lessee to which such conveyance, transfer or lease
is made, will succeed to, and be substituted for, and may exercise every right
and power of, the Corporation under the shares of Series C Preferred Stock, and
thereafter, except in the case of a lease, the predecessor (if still in
existence) will be released from its obligations and covenants with respect to
the Series C Preferred Stock.
9. Redemption.
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(a) The Corporation may not redeem the shares of Series C Preferred Stock
prior to December 12, 2006. At any time on or after December 12, 2006 and prior
to December 12, 2008, the Corporation may, at its option, redeem all, but not a
portion, of the shares of Series C Preferred Stock at a cash redemption price
per share equal to (i) 105% of the Liquidation Preference, plus (ii) all
Accumulated Dividends and Accrued Dividends to the date of redemption. The date
of redemption shall be a date fixed by the Corporation not less than 30 nor more
than 60 days after the date of the notice referred to in Section 9(c).
(b) At any time on or after December 12, 2008, the Corporation may, at its
option, redeem all, but not a portion, of the outstanding shares of Series C
Preferred Stock at a cash redemption price per share equal to the Liquidation
Preference plus all Accumulated Dividends and Accrued Dividends to the date of
redemption. The date of redemption shall be a date fixed by the Corporation not
less than 30 nor more than 60 days after the date of the notice referred to in
Section 9(c).
(c) If the Corporation elects to redeem the Series C Preferred Stock in
accordance with either Section 9(a) or Section 9(b), it will notify the Holders
of its intention to redeem the Series C Preferred Stock by mailing a notice of
its intention to redeem the Series C Preferred Stock to all Holders.
(d) In addition to any information required by applicable law, regulation
or stock exchange rule, the notice of redemption will state:
(i) the redemption date;
(ii) the redemption price to be paid in respect of each share of
Series C Preferred Stock;
(iii)that dividends on the Series C Preferred Stock will cease
to be payable on the redemption date, unless the Corporation
defaults in making payment of any cash payable upon
redemption;
(iv) that the option of holders of Series C Preferred Stock to
convert shares of Series C Preferred Stock into Common Stock
will terminate at the close of business on the Business Day
immediately preceding the redemption date, unless the
Corporation defaults in making payment of any cash payable
upon redemption;
(v) the Conversion Price then in effect; and
(vi) that shares of Series C Preferred Stock must be surrendered
to the Corporation in order to receive the redemption
payment and the procedures for surrendering shares of Series
C Preferred Stock.
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(e) Notice having been given as provided above, from and after the date
fixed for the redemption (unless the Corporation shall fail to make available
the money necessary to effect such redemption), the Holders shall cease to be
stockholders with respect to the Corporation's shares of Series C Preferred
Stock and shall have no interest in or claim against the Corporation by virtue
thereof and shall have no voting or other right with respect to such shares,
except the right to receive the moneys payable upon such redemption from the
Corporation, less any required tax withholding amount, without interest thereon,
upon surrender (and endorsement or assignment of transfer, if required by the
Corporation and so stated in the notice) of their certificates, and the shares
represented thereby shall no longer be deemed to be outstanding. The Corporation
may, at its option, at any time after a notice of redemption has been given,
deposit the redemption price for the shares of Series C Preferred Stock, plus
any Accumulated Dividends and Accrued Dividends thereon to the date fixed for
redemption, with an escrow agent, as a trust fund for the benefit of the
Holders, together with irrevocable instructions and authority to such escrow
agent that such funds be delivered upon redemption of such shares and to pay, on
and after the date fixed for redemption or prior thereto, the redemption price
of the shares to their respective Holders upon the surrender of their share
certificates. From and after the making of such deposit, the Holders shall cease
to be stockholders with respect to such shares and shall have no interest in or
claim against the Corporation by virtue thereof and shall have no voting or
other rights with respect to such shares, except the right to receive from such
trust fund the moneys payable upon such redemption, without interest thereon,
upon surrender (and endorsement, if required by the Corporation) of their
certificates, and the shares represented thereby shall no longer be deemed to be
outstanding. Any balance of such moneys remaining unclaimed at the end of the
two-year period commencing on the date fixed for redemption shall be repaid to
the Corporation upon its request expressed in a resolution of its Board of
Directors.
(f) The right of Holders to convert shares of Series C Preferred Stock will
terminate at the close of business on the Business Day immediately preceding the
redemption date, unless the Corporation defaults in making payment of any cash
payable upon redemption.
10. Other Provisions.
- ---------------------
(a) With respect to any notice to a Holder required to be provided
hereunder, neither failure to mail such notice, nor any defect therein or in the
mailing thereof, to any particular holder shall affect the sufficiency of the
notice or the validity of the proceedings referred to in such notice with
respect to the other holders or affect the legality or validity of any
distribution, rights, warrant, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up, or the vote upon
any such action. Any notice which was mailed in the manner herein provided shall
be conclusively presumed to have been duly given whether or not the holder
receives the notice.
(b) Shares of Series C Preferred Stock issued and reacquired will be
retired and canceled promptly after reacquisition thereof and, upon compliance
with the applicable requirements of Delaware law, have the status of authorized
but unissued shares of preferred stock of the Corporation undesignated as to
series and may with any and all other authorized but unissued shares of
preferred stock of the Corporation be designated or redesignated and issued or
reissued, as the case may be, as part of any series of preferred stock of the
Corporation, except that any issuance or reissuance of shares of Series C
Preferred Stock must be in compliance with this Certificate of Designation.
(c) The shares of Series C Preferred Stock shall be issuable only in whole
shares.
(d) All notice periods referred to herein shall commence on the date of the
mailing of the applicable notice.
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