EXHIBIT 3.1
CERTIFICATE OF DESIGNATIONS OF THE
SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
(Par Value $0.01 Per Share)
of
MOTIENT CORPORATION
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Pursuant to Section 151(g) of the
General Corporation Law
of the State of Delaware
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The undersigned does hereby certify that the following
resolutions were duly adopted by the Board of Directors (the "Board") of Motient
Corporation, a Delaware corporation (the "Corporation"), in accordance with the
provisions of Section 151 of the Delaware General Corporation Law:
WHEREAS, the Restated Certificate of Incorporation of the
Corporation (the "Charter"), authorizes a total of 205,000,000 shares
of capital stock, consisting of (i) 200,000,000 shares of common stock,
par value $0.01 per share (the "Common Stock"), issuable from time to
time; and (ii) 5,000,000 shares of preferred stock, par value $0.01 per
share (the "Preferred Stock"), issuable from time to time in one or
more series;
WHEREAS, the Board has previously authorized the creation of
450,000 shares of Series A Cumulative Convertible Preferred Stock; and
WHEREAS, the Board wishes to designate a new series of
Preferred Stock.
NOW THEREFORE, BE IT
RESOLVED, that pursuant to the authority conferred to the
Board by the Charter, the Series B Preferred (as defined in Exhibit A
attached hereto), be, and it hereby is, established, created and
approved, and that the designation and number of shares thereof and the
voting and other powers, preferences and relative, participating,
optional and other rights of the shares of such series, and the
qualifications, limitations and restrictions thereof, be, and they
hereby are, as set forth on Exhibit A attached hereto and incorporated
herein by reference for all purposes; and further
RESOLVED, that the proper officers be, and each hereby is,
authorized, empowered and directed, by and on behalf of the Corporation
and in its name, to prepare, execute and deliver, and file with the
Secretary of State of the State of Delaware, a Certificate of
Designations of the terms, limitations, rights and preferences of the
Series B Cumulative Convertible Preferred Stock (the "Certificate of
Designations"), with the designations, voting and other powers,
preferences, relative, participating, optional and other rights, and
the qualifications, limitations and restrictions, set forth on Exhibit
A.
IN WITNESS WHEREOF, Motient Corporation has caused this Certificate of
Designations to be signed this 26th day of October, 2005.
MOTIENT CORPORATION
By: /s/ Christopher Downie
----------------------
Christopher Downie
Executive Vice President and Chief
Operating Officer
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EXHIBIT A
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Section 1. Number of Shares and Designation. This series of preferred
stock shall be designated as "Series B Cumulative Convertible Preferred Stock"
and the number of shares which shall constitute such series shall be 500,000
shares, par value $0.01 per share. For the purpose of this Certificate of
Designations, the Series B Cumulative Convertible Preferred Stock shall be
referred to as the "Series B Preferred."
Section 2. Rank. Series B Preferred shall, with respect to payment of
dividends, redemption payments, rights upon liquidation, dissolution or winding
up of the affairs of the Corporation, or otherwise (i) rank senior and prior to
the Common Stock, and each other class or series of equity securities of the
Corporation, whether currently issued or issued in the future, that by its terms
ranks junior to the Series B Preferred (whether with respect to payment of
dividends, redemption payments, rights upon liquidation, dissolution or winding
up of the affairs of the Corporation, or otherwise) (all of such equity
securities, including the Common Stock, are collectively referred to herein as
the "Junior Securities"), (ii) rank on a parity with the Series A Cumulative
Convertible Preferred Stock (the "Series A Preferred") and each other class or
series of equity securities of the Corporation, whether currently issued or
issued in the future, that does not by its terms expressly provide that it ranks
senior to or junior to the Series B Preferred (whether with respect to payment
of dividends, redemption payments, rights upon liquidation, dissolution or
winding up of the affairs of the Corporation, or otherwise) (all of such equity
securities are collectively referred to herein as the "Parity Securities"), and
(iii) rank junior to each other class or series of equity securities of the
Corporation, whether currently issued or issued in the future, that by its terms
ranks senior to the Series B Preferred (whether with respect to payment of
dividends, redemption payments, rights upon liquidation, dissolution or winding
up of the affairs of the Corporation, or otherwise) (all of such equity
securities are collectively referred to herein as the "Senior Securities"). The
respective definitions of Junior Securities, Parity Securities and Senior
Securities shall also include any rights or options exercisable or exchangeable
for or convertible into any of the Junior Securities, Parity Securities or
Senior Securities, as the case may be. At the date of the initial issuance of
the Series B Preferred, (i) there will be no Senior Securities authorized or
outstanding, (ii) the Series A Preferred, if any, will be the only Parity
Securities issued and outstanding and (iii) the shares of Common Stock
(including any rights or options exercisable or exchangeable for or convertible
into shares of Common Stock) are the only Junior Securities issued and
outstanding.
Section 3. Voting Rights. Except as required by law and as provided
herein, holders of Series B Preferred shall have no voting rights and their
consent shall not be required for taking any corporate actions. Upon (a) the
accumulation of accrued and unpaid dividends on the outstanding shares of Series
B Preferred for two or more six month periods ending on a Dividend Reference
Date (defined below), whether or not consecutive; (b) the failure of the
Corporation to comply with the provisions of Section 10(a) or Section 10(b)
below or (c) the failure of the Corporation to comply with any of the other
covenants or agreements set forth in this Certificate of Designations and the
continuance of such failure for 30 consecutive days or more after receipt of
notice of such failure from the holders of at least 25% of the Series B
Preferred then outstanding (each of the events described in clauses (a), (b) and
(c) being referred to herein as a "Voting Rights Triggering Event"), then the
holders of at least a majority of the then-outstanding shares of Series B
Preferred, and the holders of any Parity Securities upon which like voting
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rights have been conferred and are exercisable, voting as a single class, will
be entitled to elect a majority of members of the Corporation's Board of
Directors for successive one-year terms until all dividends in arrears on the
Series B Preferred have been paid or declared and set apart for payment, the
Corporation has complied with the provisions of Section 10(a) or Section 10(b)
of this Certificate of Designations, as applicable, or such failure to comply
with covenants or other agreements has been cured. Upon the Corporation's paying
or declaring and setting apart of funds for payment of all such dividends in
arrears, complying with the provisions of Section 10(a) or Section 10(b) of this
Certificate of Designations, as applicable, or curing such failure to comply
with covenants or other agreements, the term of office of each director elected
will terminate immediately and the number of directors constituting the entire
Board of Directors will be reduced by the number of directors elected by the
holders of the Series B Preferred and any Parity Securities pursuant to this
Section 3. Notwithstanding the foregoing, the Corporation shall not have the
right, as long any shares of Series B Preferred are outstanding, to modify the
rights, preferences or privileges of the Series B Preferred in a manner adverse
to the holders of Series B Preferred without first obtaining the approval (by
vote or written consent, as permitted by law) of the holders of at least a
majority of the then-outstanding shares of Series B Preferred, voting or acting,
as the case may be, as a single class.
Section 4. Dividends.
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(a) From April 15, 2005 or, if the Corporation first issues
any shares of Series B Preferred after the close of business on a record date
for the payment of dividends on the Series A Preferred, then from and after the
payment date for such dividend on the Series A Preferred relating to such record
date (in either case, the "Effective Initial Issuance Date") to April 15, 2007
(the "Second Anniversary Date"), each share of Series B Preferred, prior and in
preference to any shares of Junior Securities, shall be entitled to receive,
when and as declared by the Board out of funds legally available for the
purpose, dividends payable in cash in the amount of $52.50 per share per annum
(as appropriately adjusted for any recapitalizations, stock combinations, stock
dividends, stock splits and the like with respect to the shares of Series B
Preferred) (the "Cash Rate"). On April 15, 2005, the Corporation placed a cash
amount equal to $105.00 per share of Series A Preferred issued on such date into
an escrow account (the "Escrow Account") pursuant to the terms of the Escrow
Agreement (as it may be amended from time to time, the "Escrow Agreement") dated
such date by and between the Corporation and Equiserve Trust Company N.A., as
escrow agent. The shares of Series B Preferred initially issued pursuant hereto
are being issued in exchange for a like number of shares of Series A Preferred,
and the Escrow Agreement is being amended contemporaneously therewith, with the
consent of the holders of a majority of the outstanding shares of Series A
Preferred, to provide that the funds held in the Escrow Account will be for the
held thereunder for the benefit of the holders of the Series A Preferred and the
Series B Preferred. All dividends payable pursuant to this Section 4(a) will be
paid from the Escrow Account on the applicable Dividend Reference Date (defined
below). After such time as the dividend payment to be made on the Dividend
Reference Date that is the Second Anniversary Date (or such earlier date if all
amounts held in the Escrow Account have been paid pursuant to the terms hereof)
has been paid to the holders of Series B Preferred, any remaining amounts in the
Escrow Account shall be distributed to the Corporation. No dividends may be paid
on the shares of Series A Preferred or the shares of Series B Preferred unless
dividends are contemporaneously paid on each outstanding share of Series A
Preferred and Series B Preferred in accordance with the respective terms
thereof.
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(b) From the Second Anniversary Date to and including the
first to occur of the date on which (i) the Series B Liquidation Amount on such
share is paid to the holder thereof in connection with a Liquidation Event, (ii)
such share is redeemed by the Corporation pursuant to the provisions hereof, or
(iii) such share is converted into shares of Common Stock hereunder, and subject
to the rights of any shares of Senior Securities, each share of Series B
Preferred, prior and in preference to any shares of Junior Securities, shall be
entitled to receive, when and as declared by the Board out of funds legally
available for the purpose, dividends payable in cash or shares of Common Stock
at the option of the Corporation. Dividends on each share of Series B Preferred
shall accrue on a daily basis at the rate of (i) if the Corporation elects to
pay the dividend in cash, the Cash Rate or (ii) if the Corporation elects to pay
the dividend in shares of Common Stock, at a rate of $62.50 per share of Series
B Preferred Stock per annum (as appropriately adjusted for any
recapitalizations, stock combinations, stock dividends, stock splits and the
like with respect to the shares of Series B Preferred) (the "Stock Rate"), with
the number of shares of Common Stock to be issued as such dividend to be
determined by dividing the Stock Rate by the Trading Price on the last Trading
Day prior to the applicable Dividend Notice Date (defined below). Dividends may
be paid in shares of Common Stock only if a registration statement registering
the resale of the shares of Common Stock issuable on such Dividend Reference
Date (defined below) has been filed with the Securities and Exchange Commission
and such registration statement is effective on the date the Board declares such
dividend. The Corporation covenants that all shares of Common Stock that may be
issued upon payment of a dividend on the Series B Preferred will, when issued,
be fully paid and nonassessable and free of all taxes, liens and charges for the
issue thereof.
(c) The dividends to be paid pursuant to Section 4(a) and
Section 4(b) above on the shares of Series B Preferred shall accrue in each case
from and including the Effective Initial Issuance Date to and including the date
on which such dividends are no longer owed pursuant to the terms hereof. Such
dividends shall accrue whether or not they have been declared by the Board and
whether or not there are profits, surplus or other funds of the Corporation
legally available for the payment of dividends.
(d) To the extent the Corporation has funds legally
available to pay in full the dividend on all shares of Series B Preferred then
outstanding, dividends will be payable on October 15 and April 15 of each year
(each such date, a "Dividend Reference Date" and collectively, the "Dividend
Reference Dates"), with the first Dividend Reference Date beginning October 15,
2005. To the extent the Corporation does not have funds legally available to pay
in full the dividends on all shares of Series B Preferred then outstanding, all
dividends which have accrued on each share of Series B Preferred outstanding
during the six month period (or other period in the case of the initial Dividend
Reference Date) ending upon each such Dividend Reference Date shall be
accumulated at the Stock Rate and shall remain accumulated dividends with
respect to each such share until the next Dividend Reference Date on which the
Corporation has funds legally available to pay such accumulated dividends in
full. The record date (the "Record Date") for the payment of dividends on the
Series B Preferred shall be fixed by the Board and shall not be more than 60
days or less than 10 days preceding each Dividend Reference Date. Dividends
shall be payable to the holders of record as they appear on the stock transfer
books of the Corporation at the close of business on the Record Date. Five
Trading Days prior to each Record Date (the "Dividend Notice Date"), the
Corporation will give notice (the "Dividend Notice") to each holder of Series B
Preferred that shall set forth (i) the Record Date and (ii) if the dividend as
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to which the Dividend Notice relates shall be paid in cash or Common Stock and,
if paid in Common Stock, the applicable Trading Price for such dividend.
(e) Except as otherwise provided herein, if at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Series B Preferred, such payment shall be distributed pro rata
among the holders thereof based upon the aggregate accrued but unpaid dividends
on the shares of Series B Preferred held by each such holder as compared to all
holders of Series B Preferred.
(f) No dividends, including a dividend that constitutes a
return of capital, shall be declared or paid, and no funds shall be set apart
for payment, on any Junior Securities, unless (i) written notice of such
dividend is given to each holder of shares of Series B Preferred not less than
15 days prior to the record date for such dividend and (ii) a registration
statement registering the resale of the shares of Common Stock issuable upon
conversion of the Series B Preferred pursuant to the Securities Act of 1933, as
amended has been filed with the Securities and Exchange Commission and is
effective on the date the Board declares such dividend or other distribution.
(g) No fractional shares of Common Stock shall be issued
upon payment of a dividend in shares of Common Stock, and in lieu of any
fractional shares to which the holder would otherwise be entitled, such amount
shall be paid in cash equal to such fraction multiplied by the Trading Price on
the last Trading Day prior to the applicable Dividend Notice Date for such
dividend then in effect.
Section 5. Liquidation.
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(a) In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary (a "Liquidation Event"),
and subject to the rights of any Senior Securities with respect to distributions
upon a Liquidation Event, distributions to the holders of the Series B Preferred
shall be made in the manner set forth in this Section 5.
(b) The holders of the Series B Preferred shall be entitled
to receive, prior and in preference to any distribution of any of the assets of
the Corporation to the holders of Junior Securities by reason of their ownership
of such stock and pari passu with any distribution of the assets of the
Corporation to the holders of any Parity Securities by reason of their ownership
of such stock, an amount per share of Series B Preferred then held by them equal
to (i) $1,000 (as appropriately adjusted for any recapitalizations, stock
combinations, stock dividends, stock splits and the like with respect to such
shares) plus (ii) all accrued but unpaid dividends on such shares of Series B
Preferred that shall have accumulated at the Stock Rate pursuant to Section 4(b)
plus (iii) all accrued but unpaid dividends accruing from the most recent
Dividend Reference Date to the actual date of such Liquidation Event, Conversion
Date (as defined below) or Redemption Date (as defined below), as the case may
be, at the Cash Rate, plus (iv) the Escrow Premium (defined below) (the sum of
clauses (i), (ii), (iii) and (iv) with respect to such shares of Series B
Preferred, the "Series B Liquidation Amount") and such holders will not be
entitled to any further payment with respect to such shares of Series B
Preferred. To the extent a share of Series B Preferred is converted pursuant to
Section 6 or redeemed pursuant to Section 10 or the Series B Liquidation Amount
is payable to the holder of record of such share upon the consummation of a
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Liquidation Event pursuant to this Section 5, and the date of such conversion,
redemption or Liquidation Event is after any Record Date with respect to the
payment of a dividend but on or prior to the applicable Dividend Reference Date,
the dividend due on such Dividend Reference Date shall not be included in the
Series B Liquidation Amount but shall be payable to the holder of record as of
such Record Date of such share of Series B Preferred notwithstanding such
conversion, redemption or occurrence of a Liquidation Event prior to such
Dividend Reference Date. If upon a Liquidation Event the assets and funds
legally available for distribution among the holders of the Series B Preferred
and any Parity Securities shall be insufficient to permit the payment to such
holders of the full Series B Liquidation Amount and pari passu amounts due with
respect to such Parity Securities, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Series B Preferred and such Parity Securities in
proportion to the Series B Liquidation Amount and pari passu amounts due with
respect to such Parity Securities that each holder of Series B Preferred and
such Parity Securities is otherwise entitled to receive.
(c) After payment in full has been made to the holders of
the Series B Preferred of the full Series B Liquidation Amount (and with respect
to Parity Securities, such pari passu amounts) due pursuant to Section 5(b)
above, the entire remaining assets and funds of the Corporation legally
available for distribution to stockholders shall be distributed among the
holders of Junior Securities in proportion to their respective rights to same.
(d) If any of the assets of the Corporation are to be
distributed under this Section 5, or for any purpose, in a form other than cash,
the value of such assets will be its fair market value, as determined in good
faith by the Board. Any securities to be delivered to the holders of Series B
Preferred, Parity Securities or Junior Securities, as the case may be, shall be
valued as follows:
(1) If traded on a securities exchange or through the
Nasdaq National or Small Cap Markets, the value shall be deemed to be the
average of the Closing Prices of the securities on such exchange over the 10
Trading Day period ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the 10 Trading Day period ending three (3) days prior to the
closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as determined in good faith by the
Board.
The method of valuation of securities subject to investment
letter or other restrictions on free marketability (other than restrictions
arising solely by virtue of a stockholder's status as an affiliate or former
affiliate) shall be valued at an appropriate discount from the value determined
as provided in Section 5(e)(1) or (2) above to reflect the approximate fair
market value thereof, as reasonably determined in good faith by the Board.
(e) Prior to the occurrence of a Liquidation Event, the
Corporation shall give each holder of record of Series B Preferred written
notice (the "Liquidation Event Notice") not later than fifteen (15) days prior
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to the stockholders' meeting called to approve such transaction or event, or
fifteen (15) days prior to the closing of such transaction or event, whichever
is earlier, and shall also notify such holders in writing of the final approval
of such transaction or event. The first of such notices shall describe the
material terms and conditions of the impending transaction or event and the
provisions of this Section 5. The transaction or event shall not occur sooner
than 15 days after the Corporation has given the first notice provided for
herein.
Section 6. Conversion. The holders of the Series B Preferred have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series B Preferred shall
be convertible, at the option of the holder thereof, at any time after such
share is issued until the date such share of Series B Preferred shall have been
redeemed by the Corporation at the office of the Corporation or any transfer
agent for the Series B Preferred, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the Series B
Liquidation Amount by the Series B Conversion Price in effect at the time of
conversion (the "Optional Conversion Date"). The initial conversion price of the
Series B Preferred shall be $33.33 (the "Series B Conversion Price"). The Series
B Conversion Price shall be subject to adjustment as hereinafter provided.
(b) Mandatory Conversion. At any time after the Second
Anniversary Date, each share of Series B Preferred shall be converted into
shares of Common Stock at the Series B Conversion Price then in effect on the
date (the "Mandatory Conversion Date" and, together with the Optional Conversion
Date, the "Conversion Date"), if the Corporation shall so elect. Notice of such
election by the Corporation shall be set forth in a written notice that the
Corporation shall give to each record holder of Series B Preferred regarding the
conversion of all outstanding shares of Series B Preferred pursuant to this
Section 6(b) (the "Mandatory Conversion Notice"). Provided, however, that
conversion of shares of Series B Preferred into shares of Common Stock pursuant
to this Section 6(b) shall only occur if (i) during the 90 calendar day period
immediately preceding the Mandatory Conversion Date, the Closing Sale Price of
the Common Stock has been greater than $43.33 (as appropriately adjusted for any
recapitalizations, stock combinations, stock dividends, stock splits and the
like with respect to the shares of Common Stock) for a total of not less than 15
Trading Days within a period of 20 consecutive Trading Days during such 90
calendar day period and (ii) a registration statement registering the resale of
the shares of Common Stock issuable upon conversion of the Series B Preferred
pursuant to the Securities Act of 1933, as amended has been filed with the
Securities and Exchange Commission and such registration statement is effective
on the date the Corporation gives the Mandatory Conversion Notice.
(c) Mechanics of Conversion.
(1) No fractional shares of Common Stock shall be issued
upon conversion of the Series B Preferred. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Corporation shall pay cash
equal to such fraction based on the Closing Sale Price of the Common Stock on
the last Trading Day prior to the Conversion Date.
(2) Before any holder of Series B Preferred shall be
entitled to convert the same into shares of Common Stock pursuant to Section
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6(a) above and upon the occurrence of the event specified in Section 6(b) above,
as the case may be, and to receive certificates representing shares of Common
Stock therefor, such holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Series B Preferred and, if the conversion is effected pursuant to
Section 6(a) above, shall give written notice to the Corporation at such office
that such holder elects to convert the same and shall state therein the name or
names in which the certificate or certificates for shares of common stock are to
be issued; provided, however, that any failure by a holder to comply with these
provisions shall not have any effect on the automatic conversion of such
holder's shares, which shall in any event be deemed to have been converted,
automatically and without any further action on the part of the holder of the
Corporation, in accordance with Section 6(b) above. The Corporation shall, as
promptly as practicable thereafter, issue and deliver to such holder's address
of record a certificate or certificates for the number of shares of Common Stock
to which he shall be entitled as aforesaid and a check payable to the holder in
the amount of any cash amounts payable as the result of a conversion into
fractional shares of Common Stock. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date the certificates
representing shares of Series B Preferred to be surrendered are received by the
Corporation or any transfer agent for the shares of Series B Preferred, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date. The Corporation covenants
that all shares of Common Stock that may be issued upon conversion of the Series
B Preferred will, when issued, be fully paid and nonassessable and free of all
taxes, liens and charges for the issue thereof.
(d) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of the Series B Preferred such number of shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Series B Preferred, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all the then outstanding shares of the Series B
Preferred, in addition to such other remedies as shall be available to the
holder of such Series B Preferred, the Corporation will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes.
Section 7. Adjustment of Series B Conversion Price.
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(a) Adjustments for Stock Dividends, Subdivisions,
Combinations or Consolidations of Common Stock. In the event the outstanding
shares of Common Stock shall be subdivided (by stock dividend, stock split, or
otherwise), into a greater number of shares of Common Stock, the Series B
Conversion Price shall, concurrently with the effectiveness of such subdivision,
be proportionately decreased. In the event the outstanding shares of Common
Stock shall be combined or consolidated, by reclassification or otherwise, into
a lesser number of shares of Common Stock, the Series B Conversion Price shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased. The Series B Conversion Price, as so adjusted, shall
be readjusted in the same manner upon the happening of any successive event or
events described in this Section 7(a). For the purposes of clarity, no
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adjustment shall be made with respect to the payment of a dividend of stock
purchase rights in connection with the issuance of up to approximately $21.4
million of shares of Common Stock at a per share price of $8.57 pursuant to a
follow on rights offering to certain of the Corporation's existing common
stockholders, for which the record date for payment of such dividend was
December 14, 2004 but such dividend has not yet been paid.
(b) Reorganization, Reclassification, Exchange,
Substitution, Consolidation, Merger or Sale. Any recapitalization,
reorganization, reclassification, exchange, substitution, consolidation, merger,
sale of all or substantially all of the Corporation's assets or other
transaction, in each case which is effected in such a manner that the holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, is referred to herein as an "Organic Change". In any Organic
Change that is also a Change in Control, the holders of Series B Preferred shall
also have the rights set forth in Section 10(a) below. Prior to the consummation
of any Organic Change, the Corporation shall make appropriate provisions to
insure that each of the holders of Series B Preferred shall thereafter have the
right to acquire and receive, in lieu of the shares of Common Stock immediately
theretofor acquirable and receivable upon the conversion of such holder's Series
B Preferred, such shares of stock, securities or assets as such holder would
have received in connection with such Organic Change if such holder had
converted its Series B Preferred immediately prior to such Organic Change. The
Corporation shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof, the successor entity (if other than the
Corporation) resulting from consolidation or merger or the entity purchasing
such assets assumes by written instrument (in form and substance reasonably
satisfactory to the holders of a majority of the Series B Preferred then
outstanding), the obligation to deliver to each such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to acquire. The provisions of this Section 7(b)
shall apply similarly and equally to successive Organic Changes.
(c) No Impairment. The Corporation 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 Corporation but
will at all times in good faith assist in the carrying out of all the provisions
of Section 6 hereof and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred against impairment.
(d) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Series B Conversion Price pursuant to
Section 7 hereof, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each record holder of Series B Preferred a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series B Preferred, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Series B Conversion Price at the time in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
securities and property which at the time would be received upon the conversion
of Series B Preferred.
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Section 8. Change in Control.
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(a) "Change in Control" means the occurrence of one or more
of the following events:
(1) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the Corporation's assets to any Person or group of related Persons (other than
to any of the Corporation's majority owned subsidiaries) as defined in Section
13(d) of the Exchange Act;
(2) if any Person or group shall become the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) of shares representing
more than 50% of the aggregate ordinary voting power represented by issued and
outstanding voting stock of the Corporation; or
(3) any consolidation or merger by the Corporation where
Persons who were beneficial owners (as defined in Rule 13d-3 under the Exchange
Act) of the Corporation's shares of voting stock immediately prior to such
transaction no longer own at least a majority of the total voting power of the
continuing or surviving corporation or entity.
(b) Prior to the occurrence of a Change in Control, the
Corporation shall give each holder of record of Series B Preferred written
notice (the "Change in Control Notice") not later than 10 days prior to the
record date for the stockholders' meeting called to approve such transaction or
event, or 15 days prior to the closing of such transaction or event, whichever
is earlier, and shall also notify such holders in writing of the final approval
of such transaction or event. The first of such notices shall describe the
material terms and conditions of the Change in Control transaction or event and
the provisions of Section 10(a) below. The Change in Control transaction or
event shall not occur sooner than 15 days after the Corporation has given the
first notice provided for herein.
Section 9. Senior Security Cap.
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(a) If at any time after the Effective Initial Issuance Date
(i) any shares of Series B Preferred are outstanding, (ii) the Corporation
issues Senior Securities, Parity Securities or debt securities ("Debt
Securities" and, together with Senior Securities and Parity Securities,
"Additional Securities") and (iii) the aggregate gross proceeds from (A) the
issuance of such Additional Securities plus (B) the issuance of all other
Additional Securities issued after April 15, 2005 (but not including the shares
of Series A Preferred issued pursuant to the Securities Purchase Agreement dated
April 15, 2005 by and among the Corporation and the Purchasers listed on
Schedule A thereto or the shares of Series B Preferred issued in exchange for
such shares of Series A Preferred), exceeds $250,000,000 (the date of which such
events shall have occurred shall be defined as the "Senior Security Trigger
Date"), the holder of each share of Series B Preferred shall have the rights set
forth in Sections 9(b) and 10(a) below.
(b) Within 5 days following the Senior Security Trigger
Date, the Corporation shall give each holder of record of Series B Preferred
written notice (the "Senior Security Notice") of the occurrence of the Senior
Security Trigger Date. The Senior Security Notice shall notify such holder of
the occurrence of the Senior Security Trigger and describe the provisions of
Section 10(a) below.
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Section 10. Redemption.
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(a) Holder Redemption. Upon the occurrence of either a
Change in Control or the Senior Security Trigger Date, each holder of Series B
Preferred (each, a "Requesting Holder" and collectively, the "Requesting
Holders") may, by giving written notice to the Corporation, within 10 Trading
Days following the date the Corporation gives the Change in Control Notice
(defined below) or the Senior Security Notice, as applicable, require the
Corporation to redeem all or a portion of the shares of Series B Preferred then
held by such Requesting Holder. In such redemption the Corporation shall redeem,
out of lawfully available funds, shares of Series B Preferred, for an amount in
cash for each share of Series B Preferred requested to be redeemed by a
Requesting Holder equal to (i) $1,080 per share of Series B Preferred (as
appropriately adjusted for any recapitalizations, stock combinations, stock
dividends, stock splits and the like with respect to the shares of Series B
Preferred), plus (ii) all accrued but unpaid dividends on the shares of Series B
Preferred to be redeemed, plus (iii) an amount in cash for each share of Series
B Preferred equal to the Escrow Premium (defined below) for each such share of
Series B Preferred (the sum of clauses (i), (ii) and (iii) with respect to such
shares of Series B Preferred, the "Holder Redemption Price") on the date of the
redemption (the "Holder Redemption Date").
The "Escrow Premium" for a share of Series B Preferred shall be
equal to $105.00, minus the aggregate amount, if any, of dividends paid per
share of Series A Preferred for which the record date occurs prior to the
issuance date of any shares of Series B Preferred, minus the aggregate amount of
dividends paid per share of Series B Preferred since the Effective Initial
Issuance Date, minus all accrued but unpaid dividends per share of Series B
Preferred.
(b) Mandatory Redemption. The Corporation shall redeem all,
and not less than all, then outstanding shares of Series B Preferred on April
15, 2010 (the "Mandatory Redemption Date" and, together with the Holder
Redemption Date, a "Redemption Date"), for an amount in cash for each share of
Series B Preferred equal to 100% of the Series B Liquidation Amount then in
effect (the "Mandatory Redemption Price" and, together with the Holder
Redemption Price, the "Redemption Price").
(c) Redemption Payments. The Redemption Price shall be paid
in cash from any funds legally available therefor. If the funds of the
Corporation legally available for redemption of shares of Series B Preferred on
the Redemption Date are insufficient to redeem the total number of shares of
Series B Preferred to be redeemed on such date, those funds which are legally
available will be used to redeem the maximum possible number of such shares
ratably among the holders of such shares to be redeemed based upon their
holdings of Series B Preferred. The shares of Series B Preferred not redeemed
shall remain outstanding and entitled to all the rights and preferences provided
herein. At any time thereafter when additional funds of the Corporation are
legally available for the redemption of shares of Series B Preferred, such funds
will be used to redeem the balance of the shares that the Corporation has become
obliged to redeem on the Redemption Date but that it has not redeemed.
(d) Redemption Procedures. In the event the Corporation is
required to redeem shares of Series B Preferred, the Corporation shall send a
written notice (the "Redemption Notice") by first class mail to each holder of
record of Series B Preferred at such Holder's registered address, not more than
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60 days nor less than 10 days prior to the Redemption Date stating:
(1) the Redemption Date;
(2) the Redemption Price;
(3) that holders of Series B Preferred who want to
convert shares of Series B Preferred must satisfy the requirements set forth in
Section 6(c) hereof and that the date on which the right to convert the shares
of the Series B Preferred called for redemption will terminate shall be at the
close of business on the Trading Day immediately preceding the Redemption Date
(unless the Corporation shall default in making the payment of the Redemption
Price then due, in which case the right of the holder to convert such holder's
shares of Series B Preferred shall terminate on the date such default is cured
and such shares of Series B Preferred are redeemed);
(4) the date on which the right to convert the shares of
Series B Preferred called for redemption will terminate and the place or places
where and manner in which such shares of Series B Preferred may be surrendered
for conversion;
(5) that certificates representing shares of the Series
B Preferred called for redemption must be surrendered to the Corporation to
collect the Redemption Price;
(6) if fewer than all the outstanding shares of the
Series B Preferred are to be redeemed by the Corporation, the number of shares
to be redeemed; and
(7) any other information the Corporation wishes to
present.
(e) Payment of Redemption Price.
(1) If the Corporation gives a Redemption Notice
pursuant hereto, then, by 12:00 p.m., New York City time, on the Redemption
Date, to the extent sufficient funds are legally available, the Corporation
shall segregate or cause to be segregated cash sufficient to pay the Redemption
Price and shall pay the Redemption Price to holders of such shares of the Series
B Preferred upon surrender of their certificates evidencing their shares of
Series B Preferred at the office of the Corporation or of any transfer agent for
the Series B Preferred. On and after the Redemption Date, all rights of holders
of such shares of Series B Preferred that have been redeemed shall terminate,
other than the right of such holders to receive the Redemption Price upon
delivery of the certificates formerly evidencing such redeemed shares of Series
B Preferred, payable in accordance with the terms hereof, unless the Corporation
defaults in making payment of such Redemption Price.
(2) Payment of the Redemption Price for shares of the
Series B Preferred is conditioned upon transfer and delivery of certificates
representing, immediately prior to the Redemption Date, the shares of Series B
Preferred being redeemed, together with necessary endorsements, to the
Corporation at any time after delivery of the Redemption Notice by the
Corporation.
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(3) If fewer than all of the outstanding shares of
Series B Preferred are to be redeemed, the number of shares to be redeemed shall
be determined by the Board and the Corporation shall redeem from each Holder
such Holder's pro rata share of the number of shares of Series B Preferred to be
redeemed. If any Holder of shares of Series B Preferred selected for partial
redemption elects to convert any of such Holder's shares of Series B Preferred
after receipt of the Redemption Notice with respect to such partial redemption
and prior to the applicable Redemption Date, the number of shares of Series B
Preferred of such Holder that would have been redeemed pursuant to such partial
redemption shall be reduced by the number of shares of Series B Preferred so
converted.
(4) Upon surrender of a certificate or certificates
representing shares of Series B Preferred that is or are redeemed in part, the
Corporation shall execute and deliver to the holder of such shares a new
certificate or certificates representing shares of the Series B Preferred in an
amount equal to the unredeemed portion of the whole shares of Series B Preferred
surrendered for partial redemption.
(f) General. On and after any Redemption Date, provided that
the Corporation has made available at the office of the transfer agent for the
Series B Preferred a sufficient amount of cash to effect the redemption,
dividends will cease to accrue on the Series B Preferred called for redemption
(except for the Redemption Premium), such shares shall no longer be deemed to be
outstanding and all rights of the holders of such shares as holders of
Convertible Series B Preferred shall cease except the right to receive the cash
deliverable upon such redemption, without interest from the Redemption Date.
Section 11. Notice. Any notice required by the provisions of this
Certificate of Designations to be given to the holders of shares of Series B
Preferred shall be deemed given three (3) calendar days after deposit in the
United States mail, postage prepaid, and addressed to each holder of record at
such holder's address appearing on the books of the Corporation.
Section 12. Definitions. The following terms, as used herein, shall
have the following meanings:
(a) "Closing Price" means, for any security as of any date,
the last closing trade price for such security on the principal United States
securities market on which such security is traded as reported by Bloomberg
Financial Markets (or any successor thereto, "Bloomberg"), or, if such exchange
begins to operate on an extended hours basis and does not designate the closing
trade price, then the last trade price of such security prior to 4:00:00 p.m.
(New York City time) as reported by Bloomberg, or, if such exchange is not the
principal securities exchange or trading market for such security, the last
trade price of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the last trade price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no last trade price is reported for such security
by Bloomberg, the average of the highest bid prices and the lowest ask prices of
any market makers for such security as reported in the "pink sheets" by Pink
Sheets LLC.
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(b) "Closing Sale Price" means, with respect to the Common
Stock, for any day, the Closing Price per share of Common Stock.
(c) "Trading Day" means (x) if the applicable security is
quoted on the Nasdaq National Market System, a day on which trades may be made
thereon or (y) if the applicable security is listed or admitted for trading on
the New York Stock Exchange, Inc. (the "NYSE"), the American Stock Exchange LLC
("AMEX") or another national securities exchange, a day on which the NYSE, the
AMEX or such other national securities exchange is open for business or (z) if
the applicable security is not so listed, admitted for trading or quoted, any
day other than a Saturday or Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law or executive order to
close.
(d) "Trading Price" means, with respect to the Common Stock,
for any day, the average of the Closing Sale Price of the Common Stock on the
twenty consecutive Trading Days ending the last Trading Day before applicable
date.
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