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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
PATINA OIL & GAS CORPORATION
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
70322 4105 8
-------------------------
(CUSIP Number)
Harvey M. Eisenberg, Esq.
O'Sullivan, Graev & Karabell, LLP
30 Rockefeller Plaza
24th Floor
New York, New York 10112
(212) 408-2400
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 21, 1997
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject to this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) and (4), check the following box / /.
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 11 Pages
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CUSIP No. 7032241058
SCHEDULE 13D
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Chase Venture Capital Associates, L.P.
13-337-6808
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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7 SOLE VOTING POWER
1,585,916
------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY Not applicable
OWNED BY ------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 1,585,916
------------------------------------------------------
10 SHARED DISPOSITIVE POWER
Not applicable
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,585,916
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.14%
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14 TYPE OF REPORTING PERSON*
PN
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Page 2 of 11 Pages
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SCHEDULE 13D
Company: Patina Oil & Gas Corporation CUSIP Number: 70322 4105 8
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Item 1. Security and Company.
This statement relates to the Common Stock, par value $0.01
per share (the "Common Stock"), of Patina Oil & Gas Corporation, a Delaware
corporation (the "Company"). The Company's principal executive offices are
located at1625 Broadway, Suite 2000, Denver, Colorado 80208.
Item 2. Identity and Background.
This statement is being filed by Chase Venture Capital
Associates, L.P. (hereinafter referred to as "CVCA"), whose principal business
office is located at 380 Madison Avenue, 12th Floor, New York, New York 10017.
The general partner of CVCA is Chase Capital Partners, a New York general
partnership ("CCP"), whose principal business office is located at the same
address as CVCA.
Set forth below are the names of each general partner of CCP
who is a natural person. Each such general partner is a U.S. citizen, whose
principal occupation is general partner of CCP and whose principal business
office address (except for Mr. Soghikian) is c/o Chase Capital Partners, 380
Madison Avenue, 12th Floor, New York, New York 10017.
John R. Baron
Mitchell J. Blutt, M.D.
Arnold L. Chavkin
Michael R. Hannon
Donald J. Hofmann
Stephen P. Murray
John M.B. O'Connor
Brian J. Richmand
Shahan D. Soghikian
Jeffrey C. Walker
Damion E. Wicker, M.D.
Mr. Soghikian's principal business office address is c/o Chase
Capital Partners, 125 London Wall, London EC2Y5AJ, England.
Jeffrey C. Walker is the managing general partner of CCP. The
remaining general partners of CCP are Chase Capital Corporation, a New York
corporation ("Chase Capital"), CCP Principals, L.P., a Delaware limited
partnership ("Principals") and CCP European Principals, L.P., a Delaware limited
partnership ("European Principals"), each of whose principal business office is
located at the same address as CVCA. Chase Capital is a wholly owned subsidiary
of The Chase Manhattan Corporation, a Delaware corporation, whose principal
business office is located at the same address as CVCA. The general partner of
each of Principals and European Principals is Chase Capital. Set forth in
Schedule A hereto and incorporated herein by reference are the names, business
addresses, principal occupations of each executive officer of Chase Capital,
each of whom is a U.S. citizen.
The Chase Manhattan Corporation ("Chase") is a Delaware
corporation engaged (primarily through subsidiaries) in the commercial banking
business with its principal office located at 270 Park Avenue, New York, New
York 10017. Set forth in Schedule B hereto and incorporated herein
Page 3 of 11 Pages
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Company: Patina Oil & Gas Corporation CUSIP Number: 70322 4105 8
by reference are the names, business addresses, principal occupations and
employments of each executive officer and director of Chase, each of whom is a
U.S. citizen.
To CVCA's knowledge, the response to Items 2(d) and (e) of
Schedule 13D is negative with respect to CVCA and all persons regarding whom
information is required hereunder by virtue of CVCA's response to Item 2.
Insofar as the requirements of Items 3-6 inclusive of this
Schedule 13D Statement require that, in addition to CVCA, the information called
for therein should be given with respect to each of the persons listed in this
Item 2, including CCP, CCP's individual general partners, Chase Capital, Chase
Capital's executive officers and directors, Principals, and Principals'
controlling partner, European Principals and European Principals' controlling
partner, Chase and Chase's executive officers and directors, the information
provided in Items 3-6 with respect to CVCA should also be considered fully
responsive with respect to the aforementioned persons who have no separate
interests in the Company's Common Stock which is required to be reported
thereunder. Although the definition of "beneficial ownership" in Rule 13d-3
under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"),
might also be deemed to constitute these persons beneficial owners of the
Company's Common Stock acquired by CVCA, neither the filing of this statement
nor any of its contents shall be deemed an admission that any of such persons is
a beneficial owner of the Company's Common Stock acquired by CVCA or a member of
a group together with CVCA either for the purpose of Schedule 13D of the
Exchange Act or for any other purpose with respect to the Company's Common
Stock.
Item 3. Source and Amount of Funds or Other Consideration.
The source of funds for CVCA's acquisition of beneficial ownership of
the Common Stock of the Company is money held for investment by CVCA.
Item 4. Purpose of Transaction.
As more fully described in Item 6, pursuant to the Stock
Purchase Agreement (the "Purchase Agreement"), dated September 19, 1997, by and
among the Company, CVCA and others (collectively with CVCA, the "Preferred
Investors"), CVCA acquired from the Company 571,429 shares of 8.5% Convertible
Preferred Stock ("Preferred Stock"), and 57,143 shares of Common Stock. At a
second closing of the Purchase Agreement (not to occur later than December 31,
1997) CVCA could be required to purchase up to 328,571 additional shares of
Preferred Stock. In addition, also as more fully described in Item 6, pursuant
to the Stock Option Agreement (the "Option"), dated September 19, 1997, by and
among Snyder Oil Corporation ("SOCO"), CVCA and various Preferred Investors,
CVCA acquired 25,000 shares of Common Stock from SOCO.
As described in the Company's Certificate of Designations for
the Preferred Stock, incorporated herein by reference as Exhibit C, the
Preferred stock is convertible into 2.6316 shares of Common Stock. The holders
of Preferred Stock have the right to appoint two members to the Board of
Directors (the "Board") of the Company, which two members may be designated by
the largest and second-largest holders of Preferred Stock, respectively. CVCA,
as the second largest holder of Preferred Stock, appointed Arnold L. Chavkin to
the Board.
Under the Purchase Agreement, CVCA is restricted from
acquiring additional shares of Common Stock without the Company's consent if
such acquisition would result in CVCA's beneficial
Page 4 of 11 Pages
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Company: Patina Oil & Gas Corporation CUSIP Number: 70322 4105 8
ownership of the Company's Common Stock to be greater than 20% of the combined
voting power of all outstanding capital stock of the Company.
The acquisition of the Company's equity securities has been
made by CVCA for investment purposes. Although CVCA has no present intention to
do so, CVCA may make additional purchases of common Stock either in the open
market or in privately negotiated transactions, including transactions with the
Company, depending on an evaluation of the Company's business prospects and
financial condition, the market for the Common Stock, other available investment
opportunities, money and stock market conditions and other future developments.
Depending on these factors, CVCA may decide to sell all or part of its holdings
of the Company's Common Stock in one or more public or private transactions.
Except as set forth in this Item 4, CVCA has no present plans
or proposals that relate to or would result in any of the actions specified in
clauses (a) through (j) of Item 4 of Schedule 13D. However, CVCA reserves the
right to propose or participate in future transactions which may result in one
or more of such actions, including but not limited to, an extraordinary
corporate transaction, such as a merger, reorganization or liquidation, of a
material amount of assets of the Company or its subsidiaries, or other
transactions which might have the effect of causing the Company's common Stock
to cease to be listed on the NASDAQ National Market System or causing the Common
Stock to become eligible for termination of registration, under Section 12(g) of
the Exchange Act.
Item 5. Interest in Securities of the Company.
CVCA is deemed to be the beneficial owner of 1,585,916 shares
of the Company's Common Stock. CVCA's deemed beneficial ownership represents
9.14% of the Company's Common Stock on a fully diluted basis. Except as set
forth in Item 4, CVCA has sole voting power and dispositive power with respect
to its shares of Common Stock.
Except as reported in Item 6 below and incorporated herein by
reference, there have been no transactions in the Common Stock during the past
sixty days which are required to be reported in this Statement. No person other
than CVCA has the right to receive or the power to direct the receipt of
dividends from or the proceeds from the sale of the Common Stock owned
beneficially by CVCA.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Company.
Reference is made to the information disclosed under Items 3
and 4 of this Statement which is incorporated by reference in response to this
Item. In addition to such information, the following contracts, arrangements,
understandings or relationships are reported hereunder.
CVCA acquired beneficial ownership of the Common Stock
pursuant to (i) the Purchase Agreement, originally executed on July 31, 1997,
and as amended by the First Amendment dated as of September 19, 1997, attached
hereto as Exhibit A and incorporated by reference, and (ii) the Option,
originally executed on July 31, 1997, and as amended by the First Amendment
dated as of September 19, 1997 attached hereto as Exhibit B and incorporated by
reference. Under the Purchase Agreement, CVCA and the other investor parties
thereto ("Investors") are obligated to purchase up to $63,000,000 of the
Preferred Stock. As of the first closing on October 21, 1997, the Investors were
obligated to purchase $40,000,000 of Preferred Stock, or 1,600,000 shares, of
which CVCA purchased 571,429 shares. As additional consideration, the Investors
each received a pro rata share of an aggregate of 160,000 shares of Common Stock
from the Company pursuant to the Purchase Agreement (of which 57,143 shares were
issued to CVCA), and 70,000 shares
Page 5 of 11 Pages
<PAGE>
Company: Patina Oil & Gas Corporation CUSIP Number: 70322 4105 8
of Common Stock from the Company's former principal stockholder, SOCO, pursuant
to the Option (of which 25,000 shares were transferred to CVCA). The Investors
may be obligated to purchase the additional 920,000 shares of Preferred Stock at
the second closing of the Purchase Agreement, which is scheduled to occur, if at
all, at the Company's election prior to December 31, 1997.
The Certificate of Designation for the Preferred Stock,
attached hereto as Exhibit C and incorporated by reference, sets forth
additional rights and privileges of the Preferred Stock, including the right to
appoint two members to the Board, and to vote as a class on certain corporate
transactions.
The Purchase Agreement grants to the Investors registration
rights with respect to the Common Stock beneficially owned by them, and also
restricts sales and purchases of the Preferred and Common Stock by such
Investors. In particular, the Investors may not dispose of any shares of
Preferred or Common Stock for a period of one year, may dispose of such shares
between one and two years only with the approval of the Company and in
accordance with applicable securities laws, and may dispose of such shares after
two years only in accordance with applicable securities laws. In addition, such
Investors are prohibited for two years from acquiring additional shares which
would result in beneficial ownership of greater than 20% of the combined
voting power of all
outstanding capital stock of the Company without the prior approval of the
Company.
Item 7. Material to be Filed as Exhibits.
Exhibit A Stock Purchase Agreement, dated July 31, 1997, as
amended by the First Amendment dated as of September
19, 1997, attached as Annex B to the Company's
Schedule 14A (Amendment 3), as filed with the
Securities and Exchange Commission on September 19,
1997 File No. 001-14344, and incorporated by
reference herein.
Exhibit B Stock Option Agreement, dated July 31, 1997, as
amended by the First Amendment dated as of September
19, 1997, attached as Annex E to the Company's
Schedule 14A (Amendment 3), as filed with the
Securities and Exchange Commission on September 19,
1997 File No. 001-14344, and incorporated by
reference herein.
Exhibit C Form of Certificate of Designations of 8.5%
Convertible Preferred Stock of the Company, as filed
with the Secretary of State of the State of Delaware
on October 17, 1997.
SCHEDULE A
Item 2 information for executive officers and directors of
Chase Capital.
SCHEDULE B
Item 2 information for executive officers and directors of
Chase.
Page 6 of 11 Pages
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Company: Patina Oil & Gas Corporation CUSIP Number: 70322 4105 8
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: October 31, 1997
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
By: CHASE CAPITAL PARTNERS,
its General Partner
By: /s/ Jeffrey C. Walker
------------------------------------
Name: Jeffrey C. Walker
Title: Managing General Partner
Page 7 of 11 Pages
<PAGE>
Company: Patina Oil & Gas Corporation CUSIP Number: 70322 4105 8
SCHEDULE A
CHASE CAPITAL CORPORATION
Executive Officers
President Jeffrey C. Walker**
Executive Vice President Mitchell J. Blutt, M.D.**
Vice President & Secretary Gregory Meridith*
Vice President George E. Kelts**
Assistant Secretary Robert C. Carroll*
Directors
William B. Harrison, Jr.*
Jeffrey C. Walker**
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* Principal occupation is employee and/or officer of Chase. Business
address is c/o The Chase Manhattan Corporation, 270 Park Avenue, New
York, New York 10017.
** Principal occupation is employee of Chase and/or general partner of
Chase Capital Partners. Business address is c/o CCP, 380 Madison
Avenue, 12th Floor, New York, NY 10017.
Page 8 of 11 Pages
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Company: Patina Oil & Gas Corporation CUSIP Number: 70322 4105 8
SCHEDULE B
THE CHASE MANHATTAN CORPORATION
Executive Officers*
Walter V. Shipley, Chairman and CEO
Edward D. Miller, Senior Vice Chairman
Thomas G. Labrecque, President and COO
William B. Harrison, Jr., Vice Chairman
Directors**
Principal Occupation or Employment;
Name Business or Residence Address
- ---- -----------------------------
Frank A. Bennack, Jr. President and Chief Executive Officer
The Hearst Corporation
959 Eighth Avenue
New York, NY 10019
Susan V. Berresford President
The Ford Foundation
320 East 43rd Street
New York, NY 10017
M. Anthony Burns Chairman, President and CEO
Ryder System, Inc.
3600 N.W. 2nd Avenue
Miami, FL 33166
H. Laurance Fuller Chairman of the Board and Chief Executive Officer
Amoco Corporation
200 East Randolph Drive
Chicago, IL 60601
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* Principal occupation is executive officer and/or employee of The Chase
Manhattan Bank. Business address is c/o The Chase Manhattan Bank, 270
Park Avenue, New York, New York 10017. Each executive officer of Chase
is a U.S. citizen.
** Each of the persons named below is a citizen of the United States of
America.
Page 9 of 11 Pages
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Company: Patina Oil & Gas Corporation CUSIP Number: 70322 4105 8
Principal Occupation or Employment;
Name Business or Residence Address
- ---- -----------------------------
Melvin R. Goodes Chairman of the Board and
Chief Executive Officer
Warner-Lambert Company
201 Tabor Road
Morris Plains, NJ 07950
William H. Gray, III President and Chief Executive Officer
United Negro College Fund, Inc.
8260 Willow Oaks Corporate Drive
P.O. Box 10444
Fairfax, VA 22031
George V. Grune Retired Chairman and Chief Executive
Officer the Reader's Digest
Association, Inc.
Chairman of the Board
The DeWitt Wallace-Reader's Digest Fund
Lila Wallace-Reader's Digest Fund
2 Park Avenue, 23rd Floor
New York, NY 10016
William B. Harrison, Jr. Vice Chairman of the Board
The Chase Manhattan Corporation
270 Park Avenue, 8th Floor
New York, NY 10017-2070
Harold S. Hook Chairman of the Board
American General Corporation
2929 Allen Parkway
Houston, TX 77019
Helene L. Kaplan Of Counsel
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue - Room 29-72
New York, NY 10022
Thomas G. Labrecque President and Chief Operating Officer
The Chase Manhattan Corporation
270 Park Avenue, 8th Floor
New York, NY 10017-2070
J. Bruce Llewellyn Chairman of the Board
The Philadelphia Coca-Cola Bottling Company,
The Coca-Cola Bottling Company of Wilmington, Inc.
and Queen City Broadcasting, Inc.
The Philadelphia Coca-Cola Bottling Company
30 Rockefeller Plaza, 29th Floor
New York, New York 10112
Page 10 of 11 Pages
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Company: Patina Oil & Gas Corporation CUSIP Number: 70322 4105 8
Principal Occupation or Employment;
Name Business or Residence Address
- ---- -----------------------------
Edward D. Miller Senior Vice Chairman of the Board
The Chase Manhattan Corporation
270 Park Avenue, 8th Floor
New York, NY 10017-2070
Edmund T. Pratt, Jr. Chairman Emeritus
Pfizer Inc.
Astors Lane
Port Washington, NY 11050
Henry B. Schacht Chairman of the Board and
Chief Executive Officer
Lucent Technologies, Inc.
600 Mountain Avenue - Room 6A511
Murray Hill, NJ 07974
Walter V. Shipley Chairman of the Board and Chief
Executive Officer
The Chase Manhattan Corporation
270 Park Avenue, 8th Floor
New York, NY 10017-2070
Andrew C. Sigler Retired Chairman of the Board
and Chief Executive Officer
Champion International Corporation
1 Champion Plaza
Stamford, CT 06921
John R. Stafford Chairman, President and Chief
Executive Officer
American Home Products Corporation
Five Giralda Farms
Madison, NJ 07940
Marina v.N. Whitman Professor of Business Administration
and Public Policy
The University of Michigan
School of Public Policy
411 Lorch Hall, 611 Tappan Street
Ann Arbor, MI 48109-1220
Page 11 of 11 Pages
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EXHIBIT C
PATINA OIL & GAS CORPORATION
CERTIFICATE OF DESIGNATION
OF
8.5% CONVERTIBLE PAY-IN-KIND PREFERRED STOCK
Pursuant to Section 151 of the Delaware General Corporation Law, Patina Oil
& Gas Corporation, a Delaware corporation (the "Corporation"), hereby certifies
that the following resolutions were duly adopted by its Board of Directors on
July 31, 1997 and supplemented on September 19, 1997 to set forth the powers,
designations, preferences and relative, participating, optional or other rights
of its 8.5% Convertible Pay-In-Kind Preferred Stock;
RESOLVED, that, pursuant to the authority granted to the Board of Directors
in the Certificate of Incorporation, there is hereby created, and the
Corporation is hereby authorized to issue, a series of Preferred Stock (as
defined in the Certificate of Incorporation) having the following powers,
designations, preferences and rights:
I. Designation of Series and Number of Shares. The series of the Preferred
Stock shall be designated 8.5% Convertible Pay-In-Kind Preferred Stock (the
"Convertible PIK Preferred Stock") and shall consist of 2,520,000 shares plus up
to 500,000 additional shares of Convertible PIK Preferred Stock to be issued as
dividends on the Convertible PIK Preferred Stock pursuant to Section III hereof.
The initial liquidation preference of the Convertible PIK Preferred Stock shall
be $25 per share (the "Liquidation Value").
II. Rank. All shares of Convertible PIK Preferred Stock shall rank prior,
both as to payment of dividends and as to distributions of assets upon
Liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, to all of the Corporation's now or hereafter issued Common Stock,
par value $.01 per share ("Common Stock"), and to all of the Corporation's
hereafter issued capital stock which by its terms ranks junior to the
Convertible PIK Preferred Stock both as to the payment of dividends and as to
distributions of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, when and if issued (the Common
Stock and any such other capital stock being herein referred to as "Junior
Stock"). The Convertible PIK Preferred Stock shall, with respect to payment of
dividends and the distribution of assets upon liquidation, dissolution or
winding up of the Corporation, rank on a parity with the Corporation's
outstanding 7.125% Convertible Preferred Stock.
III. Dividends. The holders of Convertible PIK Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds at the time legally available therefor, dividends at an annual rate of $2.
125 per share. Such dividends shall be cumulative and shall accrue and be
payable in equal quarterly payments of $0.53125 per share on March 31, June 30,
September 30 and December 31 of each year (each of such dates being a "Dividend
Payment Date") (except that if any such date is a Saturday, Sunday or legal
holiday, then such dividend shall be payable on the next day that is not a
Saturday, Sunday or legal holiday), to holders of record at the close of
business on the date specified by the Board of Directors (or, to the extent
permitted by applicable law, a duly authorized committee thereof) at the time
such dividend is declared, in preference to dividends on the Junior Stock,
commencing
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2
on the Dividend Payment Date next succeeding October 21, 1997, the
issuance date of the Convertible PIK Preferred Stock (the "Issue Date"). Any
such dividend record date shall be not less than ten days and not more than
sixty days prior to the relevant Dividend Payment Date. Dividend payments with
respect to shares of Convertible PIK Preferred Stock in respect of each
quarterly dividend period ending on or prior to the second anniversary of the
Issue Date (or portion of such quarterly dividend period in the case of the
dividend period in which the second anniversary of the Issue Date occurs)
relating to such shares shall be made in additional shares of Convertible PIK
Preferred Stock. On and after the second anniversary of the Issue Date relating
to shares of Convertible PIK Preferred Stock, dividends on such Convertible PIK
Preferred Stock shall be paid only in cash. Dividend payments made in shares of
Convertible PIK Preferred Stock sha1l be made by issuing shares (or fractions
thereof) with an aggregate Liquidation Value equal to the amount of such
dividends. All dividends paid with respect to shares of Convertible PIK
Preferred Stock pursuant to this Section III shall be paid pro rata to the
holders entitled thereto. All shares of Convertible PIK Preferred Stock issued
as a dividend will thereupon be duly authorized, validly issued, fully paid and
nonassessable.
Holders of Convertible PIK Preferred Stock will not be entitled to any
dividends, whether payable in cash, property or stock, in excess of the full
cumulative dividends provided for herein. Dividend payments which are in arrears
shall bear interest at an annual rate of 8.5%, compounded quarterly from the
date of the related Dividend Payment Date to the date such dividend is paid.
Dividends payable on the Convertible PIK Preferred Stock for the first quarterly
dividend period following the Issue Date (or any other dividend payable for a
period less than a full quarterly period) shall be computed on the basis of a
360-day year of twelve 30-day months. In the case of shares of Convertible PIK
Preferred Stock issued on the Issue Date, dividends shall accrue and be
cumulative from such date. In the case of shares of Convertible PIK Preferred
Stock issued as a dividend on shares of Convertible PIK Preferred Stock,
dividends shall accrue and be cumulative from the Dividend Payment Date in
respect of which such shares were issued as a dividend.
Each fractional share of Convertible PIK Preferred Stock outstanding shall
be entitled to a ratably proportionate amount of all dividends accruing with
respect to each outstanding share of Convertible PIK Preferred Stock pursuant to
this Section III, and all such dividends with respect to such outstanding
fractional shares shall be cumulative and shall accrue (whether or not
declared), and shall be payable in the same manner and at such times as provided
for in this Section III with respect to dividends on each outstanding share of
Convertible PIK Preferred Stock. Each fractional share of Convertible PIK
Preferred Stock outstanding shall also be entitled to a ratably proportionate
amount of any other distributions made with respect to each outstanding share of
Convertible PIK Preferred Stock, and all such distributions shall be payable in
the same manner and at the same time as distributions on each outstanding share
of Convertible PIK Preferred Stock.
For purposes hereof, the term "legal holiday" shall mean any day on which
banking institutions are authorized to close in New York, New York and the term
"business day" shall mean any day other than a Saturday, Sunday or legal
holiday. No dividend record date shall be the same as a date set for the
redemption of any shares of Convertible PIK Preferred Stock under Section V. If
a dividend record date fixed by the Board of Directors is prior to a
<PAGE>
3
redemption date then or theretofore set under Section V, it shall be at
least six business days prior to such redemption date. Nothing contained herein
shall limit the Board of Directors' discretion to establish a dividend record
date that is subsequent to a redemption date then or theretofore established,
without regard to the effect of such record date on the dividend rights of
holders of Convertible PIK Preferred Stock who elect to convert under Section VI
prior to the redemption date. Holders of shares of Convertible PIK Preferred
Stock that are redeemed under Section V on a redemption date that falls between
the record date and the payment date for a dividend shall be entitled to receive
the dividend, except to the extent the price paid upon redemption reflects such
dividend as an accrued dividend as provided in Section V. Subject to the next
paragraph or this Section III, dividends on account of arrears for any past
dividend period may be declared and paid at any time, without reference to any
Dividend Payment Date.
No dividend or other distributions, other than dividends payable solely in
shares of Junior Stock, shall be declared, paid or set apart for payment on
shares of Junior Stock or any other capital stock of the Corporation which by
its terms ranks junior as to dividends to the Convertible PIK Preferred Stock
(the Junior Stock and any such other class or series of the Corporation's
capital stock being herein referred to as "Junior Dividend Stock"), unless and
until all accrued and unpaid dividends on the Convertible PIK Preferred Stock
for all Dividend Payment Dates occurring on or before the payment date of such
dividends or other distributions on Junior Dividend Stock shall have been paid
or declared and set apart for payment.
No payment on account of the purchase, redemption, retirement or other
acquisition of shares of Junior Dividend Stock or any class or series of the
Corporation's capital stock which by its terms ranks junior to the Convertible
PIK Preferred Stock as to distributions of assets upon liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary (the Junior
Stock and any class or series of the Corporation's capital stock which by its
terms rank junior to the Convertible PIK Preferred Stock as to such
distributions being herein referred to as "Junior Liquidation Stock"), shall be
made unless and until accrued and unpaid dividends on the Convertible PIK
Preferred Stock for all Dividend Payment Dates occurring on or before such
payment for such Junior Dividend Stock or Junior Liquidation Stock shall have
been paid or declared and set apart for payment.
No full dividends shall be declared, paid or set apart for payment on
shares of any class or series of the Corporation's capital stock whether
existing or hereafter issued and which by its terms ranks, as to dividends, on a
parity with the Convertible PIK Preferred Stock, including the Corporation's
7.125% Convertible Preferred Stock (any such class or series of the
Corporation's capital stock being herein referred to as "Parity Dividend Stock")
for any period unless full cumulative dividends have been, or contemporaneously
are, paid or declared and set apart for payment on the Convertible PIK Preferred
Stock for all Dividend Payment Dates occurring on or before the payment date of
such dividends on Parity Dividend Stock. No dividends shall be paid on Parity
Dividend Stock except on dates on which dividends are paid on the Convertible
PIK Preferred Stock. All dividends paid or declared and set apart for payment on
the Convertible PIK Preferred Stock and any Parity Dividend Stock shall be paid
or declared and set apart for payment pro rata so that the amount of dividend
paid or declared and set apart for payment per share on the Convertible PIK
Preferred Stock and the Parity Dividend Stock on any date shall in all cases
bear to each other the same ratio that accrued and unpaid dividends
<PAGE>
4
to the date of payment on the Convertible PIK Preferred Stock and the
Parity Dividend Stock bear to each other.
No payment on account of the purchase, redemption, retirement or other
acquisition of shares of Parity Dividend Stock or any class or series of the
Corporation's capital stock which by its terms ranks on a parity with the
Convertible PIK Preferred Stock as to distributions of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
including the Corporation's 7.125% Convertible Preferred Stock (any such class
or series of the Corporation's capital stock being herein referred to as "Parity
Liquidation Stock"), shall be made, and, other than dividends to the extent
permitted by the preceding paragraph, no distributions shall be declared, paid
or set apart for payment on shares on the Convertible PIK Preferred Stock for
all Dividend Payment Dates occurring on or before such payment for, or the
payment date of such distributions on, such Parity Dividend Stock or Parity
Liquidation Stock shall have been paid or declared and set apart for payment.
Any reference to "distribution" contained in this Section III shall not be
deemed, except as expressly stated, to include any distribution made in
connection with any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.
IV. Liquidation Preference. In the event of a liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
shares of Convertible PIK Preferred Stock shall be entitled to receive out of
the assets of the Corporation available for distribution to stockholders an
amount equal to the dividends accrued and unpaid on such shares on the date of
final distribution to such holders, whether or not declared, without interest,
plus a sum equal to $25.00 per share, and no more, before any payment shall be
made or any assets distributed to the holders of shares of Junior Liquidation
Stock. The entire assets of the Corporation available for distribution to
stockholders shall be distributed ratably among the holders of the Convertible
PIK Preferred Stock and any Parity Liquidation Stock in proportion to the
respective preferential amounts to which each is entitled (but only to the
extent of such preferential amounts). After payment in full of the liquidation
preferences of the shares of the Convertible PIK Preferred Stock, the holders of
such shares shall not be entitled to any further participation in any
distribution of assets by the Corporation. The voluntary sale, lease, exchange
or transfer of all or substantially all of the Corporation's property or assets
to, or its consolidation or merger with, one or more corporations shall not be
deemed to be a voluntary or involuntary liquidation, dissolution or winding up
of the Corporation.
V. Redemption at Option of the Corporation. Convertible PIK Preferred Stock
may not be redeemed by the Corporation prior to September 30, 2000. Subject to
the foregoing, Convertible PIK Preferred Stock may be redeemed by the
Corporation, at its option on any date set by the Board of Directors, in whole
or in part at any time, subject to the limitations, if any, imposed by
applicable law, for an amount in cash equal to the following redemption prices
per share if redeemed during the 12-month period beginning on September 30 of
any year indicated below:
<PAGE>
5
Year Redemption Price
Per Share
---- ---------
2000 . . . . . . . . . . . . . . . . . . . . . . . $ 26.50
2001 . . . . . . . . . . . . . . . . . . . . . . . $ 26.00
2002 . . . . . . . . . . . . . . . . . . . . . . . $ 25.50
2003 and thereafter. . . . . . . . . . . . . . . . $ 25.00
plus, in each case, an amount in cash equal to all per share dividends on
the Convertible PIK Preferred Stock accrued and unpaid thereon, whether or not
declared, through the date prior to the date fixed for redemption, such sum
being hereinafter referred to as the "Redemption Price."
No redemption date shall be the same as a dividend record date fixed under
Section III. If a redemption date established by the Board of Directors is after
a dividend record date then or theretofore fixed under Section III, it shall be
at least six business days after such dividend record date. Nothing contained
herein shall limit the Board of Directors' discretion to establish a redemption
date that is prior to a dividend record date then or theretofore fixed, without
regard to the effect of such redemption date on the dividend rights of holders
of Convertible PIK Preferred Stock who elect to convert under Section VI prior
to the redemption date.
In the case of the redemption of less than all of the then outstanding
Convertible PIK Preferred Stock, the Corporation shall designate by lot, or in
such other manner as the Board of Directors may determine to be fair, the shares
to be redeemed, or shall affect such redemption pro rata. Notwithstanding the
foregoing, the Corporation shall not redeem less than all of the Convertible PIK
Preferred Stock at any time outstanding until all dividends accrued and in
arrears upon all Convertible PIK Preferred Stock then outstanding shall have
been paid in full for all past dividend periods.
Not more than ninety nor less than thirty days prior to the date fixed for
redemption by the Board of Directors, notice thereof by first class mail,
postage prepaid, shall be given to the holders of record of the shares of
Convertible PIK Preferred Stock to be redeemed, addressed to such holders at
their last addresses as shown upon the stock transfer books of the Corporation.
Each such notice of redemption shall specify, the shares being redeemed, the
date fixed for redemption, the Redemption Price, the place or places of payment,
that payment will be made upon presentation and surrender of the shares of
Convertible PIK Preferred Stock, that on and after the date fixed for redemption
dividends will cease to accrue on such shares, the conversion price pursuant to
Section VI and that the right of holders to convert shares of Convertible PIK
Preferred Stock shall terminate at the close of business on the fifth business
day prior to the date fixed for redemption (unless the Corporation defaults in
the payment of the Redemption Price).
If and only if there are more than ten holders of Convertible PIK Preferred
Stock, any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of shares of
Convertible PIK Preferred Stock receives such
<PAGE>
6
notice. If there are less than ten holders of Convertible PIK Preferred
Stock, notice shall be effective if given in accordance with Section 9.02 of the
Stock Purchase Agreement pursuant to which the Convertible PIK Preferred Stock
is issued. Failure to give such notice by mail or any defect in such notice to
the holders of any shares designated for redemption shall not affect the
validity of the proceedings for the redemption of any other shares of
Convertible PIK Preferred Stock. On or after the date fixed for redemption as
stated in such notice, each holder of the shares called for redemption shall
surrender the certificate evidencing such shares to the Corporation at the place
designated in such notice and shall thereupon be entitled to receive payment of
the Redemption Price. If less than all the shares evidenced by any such
surrendered certificate are redeemed, a new certificate shall be issued
evidencing the unredeemed shares.
Notice having been given as aforesaid, if, on the date fixed for
redemption, funds necessary for the redemption shall be available therefor and
shall have been deposited with a bank or trust company with irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Convertible PIK Preferred Stock, then, notwithstanding that the certificates
evidencing any shares so called for redemption shall not have been surrendered,
dividends with respect to the shares so called shall cease to accrue on and
after the date fixed for redemption, such shares shall no longer be deemed
outstanding, the holders thereof shall cease to be stockholders of the
Corporation and all rights whatsoever with respect to the shares so called for
redemption (except the right of the holders to receive the Redemption Price
without interest upon surrender of their certificates therefor) shall terminate.
If funds legally available for such purpose are not sufficient for redemption of
the shares of Convertible PIK Preferred Stock which were to be redeemed, then
the certificates evidencing such shares shall be deemed not to be surrendered,
such shares shall remain outstanding and the right of holders of shares of
Convertible PIK Preferred Stock thereafter shall continue to be only those of a
holder of shares of the Convertible PIK Preferred Stock.
The shares of Convertible PIK Preferred Stock shall not be subject to the
operation of any mandatory purchase, retirement or sinking fund.
VI. Conversion Provisions.
(a) Right of Conversion. Each full or fractional share of Convertible PIK
Preferred Stock shall be convertible at the option of the holder thereof, at any
time from the issue date until the close of business on the fifth business day
prior to any date fixed for redemption of such share as herein provided, into
fully paid and nonassessable shares of Common Stock, at a rate per full share of
Convertible PIK Preferred Stock equal to the aggregate Liquidation Value of the
Convertible PIK Preferred Stock to be converted divided by a conversion price
which shall initially be $9.50 (the "Conversion Price").
(b) Conversion Procedures. Any holder of shares of Convertible PIK
Preferred Stock desiring to convert such shares into Common Stock shall
surrender the certificate or certificates evidencing such shares of Convertible
PIK Preferred Stock at the office of the transfer agent for the Convertible PIK
Preferred Stock which certificate or certificates, if the Corporation shall so
require, shall be duly endorsed to the Corporation or in blank, or accompanied
by proper instruments of transfer to the Corporation or in blank, accompanied by
irrevocable written notice
<PAGE>
7
to the Corporation that the holder elects to convert such shares of Convertible
PIK Preferred Stock and specifying the name or names (with address or addresses)
in which a certificate or certificates evidencing shares of Common Stock are to
be issued.
Except as otherwise described in this paragraph, no payments or
adjustments in respect of dividends on shares of Convertible PIK
Preferred Stock surrendered for conversion, whether paid or unpaid and
whether or not in arrears, or on account of any dividend on the Common
Stock issued upon conversion shall be made by the Corporation upon the
conversion of any shares of Convertible PIK Preferred Stock. The holder
of record of shares of Convertible PIK Preferred Stock on a dividend
record date who surrenders such shares for conversion during the period
between such dividend record date and the corresponding dividend payment
date will be entitled to receive the dividend on such dividend payment
date.
The Corporation shall, as soon as practicable after such surrender
of certificates evidencing shares of Convertible PIK Preferred Stock
accompanied by the written notice and compliance with any other
conditions herein contained, deliver at such office of such transfer
agent to the person for whose account such shares of Convertible PIK
Preferred Stock were so surrendered, or to the nominee of such person,
certificates evidencing the number of full shares of Common Stock to
which such person shall be entitled as aforesaid, together with a cash
adjustment in respect of any fraction of a share of Common Stock as
hereinafter provided. Such conversion shall be deemed to have been made
as of the date of such surrender of the shares of Convertible PIK
Preferred Stock to be converted, and the person or persons entitled to
receive the Common Stock deliverable upon conversion of such Convertible
PIK Preferred Stock shall be treated for all purposes as the record
holder or holders of such Common Stock on such date.
(c) Adjustment of Conversion Price. The Conversion Price at which a
share of Convertible PIK Preferred Stock is convertible into Common
Stock shall be subject to adjustment from time to time as follows:
(i) in case the Corporation shall pay or make a dividend or other
distribution on its Common Stock exclusively in Common Stock or shall pay or
make a dividend or other distribution on any other class or series of
capital stock of the Corporation which dividend or distribution includes or
is convertible into Common Stock, the Conversion Price in effect at the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares
and the total number of shares constituting or included in such dividend or
other distribution (or in the case of a dividend consisting of securities
convertible into Common Stock, the number of shares of Common Stock into
which such securities are convertible), such reduction to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For the purposes of this subparagraph (i), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Corporation. The Corporation shall not
pay
<PAGE>
8
any dividend or make any distribution on shares of Common Stock held in
the treasury of the Corporation.
(ii) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall
otherwise issue (a) Common Stock (excluding any restricted stock issued to
management of the Company and approved by the Board), (b) rights or warrants
(excluding incentive stock options approved by the Board) entitling the
holders thereof to subscribe for or purchase shares of Common Stock or (c)
any security convertible into Common Stock at a price per share less than
the current market price per share (determined as provided in subparagraph
(vi) of this Section VI(c)) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights or warrants,
the Conversion Price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by
multiplying such Conversion Price by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the close of business
on the date fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription, exercise, conversion or
purchase would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares
of Common Stock so offered for subscription or purchase, such reduction to
become effective immediately after the opening of business on the day
following the date fixed for such determination. In case any rights,
warrants or convertible securities referred to in this subparagraph (ii) in
respect of which an adjustment shall have been made shall expire unexercised
within 45 days after the same shall have been distributed or issued by the
Corporation, the Conversion Price shall be readjusted at the time of such
expiration to the Conversion Price that would have been in effect if no
adjustment had been made on account of the distribution or issuance of such
expired rights or warrants.
(iii) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(iv) Subject to the last sentence of this subparagraph (iv), in case
the Corporation shall, by dividend or otherwise, distribute to all holders
of its CommonStock evidences of its indebtedness, shares of any class or
series of capital stock, cash or assets (including securities, but excluding
any rights, warrants or convertible securities referred to in subparagraph
(ii) of this Section VI(c), any dividend or distribution paid exclusively
<PAGE>
9
in cash and any dividend or distribution referred to in subparagraph (i) of this
Section VI (c)), the Conversion Price in effect on the day following the date
fixed for the payment of such distribution (the date fixed for payment being
referred to as the "Reference Date") shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the current
market price per share (determined as provided in subparagraph (vi) of this
Section VI (c)) of the Common Stock on the Reference Date less the fair market
value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors) on the Reference Date of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock, and the denominator shall be such current market
price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the Reference
Date. If the Board of Directors determines the fair market value of any
distribution for purposes of this subparagraph (iv) by reference to the actual
or when issued trading market for any securities comprising such distribution,
it must in doing so consider the prices in such market over the same period used
in computing the current market price per share of Common Stock pursuant to
subparagraph (vi) of this Section VI(c). For purposes of this subparagraph (iv),
any dividend or distribution that includes shares of Common Stock or rights or
warrants to subscribe for or purchase shares of Common Stock shall be deemed to
be (1) a dividend or distribution of the evidences of indebtedness, cash, assets
or shares of capital stock other than such shares of Common Stock or rights or
warrants (making any conversion price reduction required by this subparagraph
(iv)) immediately followed by (2) a dividend or distribution of such shares of
Common Stock or such rights or warrants (making any further Conversion Price
reduction required by subparagraph (i) or (ii) of this Section VI(c)), except
(A) the Reference Date of such dividend or distribution as defined in this
subparagraph (iv) shall be substituted as "the date fixed for the determination
of stockholders entitled to receive such dividend or other distribution," "the
date fixed for the determination of stockholders entitled to receive such rights
or warrants" and "the date fixed for such determination" within the meaning of
subparagraphs (i) and (ii) of this Section VI(c)) and (B) any shares of Common
Stock included in such dividend or distribution shall not be deemed "outstanding
at the close of business on the date fixed for such determination" within the
meaning of subparagraph (i) of this Section VI(c)).
(v) In case the Corporation shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding (A) cash that is
part of a distribution referred to in (iv) above and (B) in the case of any
quarterly cash dividend on the Common Stock, the portion thereof that does not
exceed the per share amount of the next preceeding quarterly cash dividend on
the Common Stock (as adjusted to appropriately reflect any of the events
referred to in subparagraphs (i), (ii), (iii), (iv) and (v) of this Section
VI(c)), or all of such quarterly cash dividend if the amount thereof per share
of Common Stock multiplied by four does not exceed 5% of the current market
price per share (determined as provided in paragraph (vi) of this Section VI(c))
of the Common Stock on the Trading Day (as defined in Section VI(h)) next
preceding the date of declaration of such dividend), the Conversion Price in
effect immediately prior to the opening of business on the day following the
date fixed for the payment of such
<PAGE>
10
distribution shall be reduced by multiplying such Conversion Price by a fraction
of which the numerator shall be the current market price per share (determined
as provided in subparagraph (vi) of this Section VI(c)) of the Common Stock on
the date fixed for the payment of such distribution less the amount of cash so
distributed and not excluded as provided above applicable to one share of Common
Stock, and the denominator shall be such current market price per share of the
Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following the date fixed for the payment of such
distribution.
(iv) For the purposes of any computation under subparagraph (ii), (iv) or
(v) of this Section VI(c)), the current market price per share of Common Stock
on any date shall be deemed to be the average of the daily Closing Prices (as
defined in Section VI(h)) for the five consecutive Trading Days ending with and
including the date in question; provided, however, that (1) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Conversion Price
pursuant to subparagraph (i), (ii), (iii), (iv) and (v) above ("Other Event")
occurs after the fifth Trading Day prior to the date in question and prior to
the "ex" date for the issuance or distribution requiring such computation (the
"Current Event"), the Closing Price for each Trading Day prior to the "ex" date
for such Other Event shall be adjusted by multipying such Closing Price by the
same fraction by which the Conversion Price is so required to be adjusted as a
result of such Other Event, (2) if the "ex" date for any Other Event occurs
after the "ex" date for the Current Event and on or prior to the date in
question, the Closing Price for each Trading Day on and after the "ex" date for
any Other Event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Price is so required to be
adjusted as a result of such Other Event, (3) if the "ex" date for any Other
Event occurs on the "ex" date for the Current Event, one of those events shall
be deemed for purposes of clauses (1) and (2) of this proviso to have an "ex"
date occuring prior to the "ex" date for the other event, and (4) if the "ex"
date for the Current Event is on or prior to the date in question, after taking
into account any adjustment required pursuant to clause (2) of this proviso, the
Closing Price for each Trading Day on or after such "ex" date shall be adjusted
by adding thereto the amount of any cash and the fair market value on the date
in question (as determined in good faith by the Board of Directors in a manner
consistent with any determination of such value for purposes of paragraph (iv)
or (v) of Section VI(c), whose determination shall be conclusive and described
in a resolution of the Board of Directors) of the portion of the rights,
warrants, evidences of indebtedness, shares of capital stock or assets being
distributed applicable to one share of Common Stock. For purposes of this
paragraph, the term "ex" date, (x) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the relevant exchange or in the relevant market from which the Closing Price
was obtained without the right to receive such issuance or distribution and (y)
when used with respect to any subdivision or combination of shares of Common
Stock, means the first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective.
<PAGE>
11
(vii) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
the Conversion Price; provided, however, that any adjustments which by
reason of this subparagraph (vii) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment or
in any conversion pursuant to this Section VI.
(viii) Whenever the Conversion Price is adjusted as herein provided:
(1) the Corporation shall compute the adjusted Conversion Price
and shall prepare a certificate signed by the Treasurer of the
Corporation setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed with the transfer agent for
the Convertible PIK Preferred Stock; and
(2) as soon as practicable after the adjustment, the Corporation
shall mail to all record holders of Convertible PIK Preferred Stock
at their last address as they shall appear upon the stock transfer
books of the Corporation a notice stating that the Conversion Price
has been adjusted and setting forth the adjusted Conversion Price.
(ix) The Corporation from time to time may reduce the Conversion Price
by any amount for any period of time if the period is at least twenty days,
the reduction is irrevocable during the period and the Board of Directors
of the Corporation shall have made a determination that such reduction
would be in the best interest of the Corporation, which determination shall
be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Corporation shall mail to holders of record of the
Convertible PIK Preferred Stock a notice of the reduction at least
fifteen days prior to the date the reduced Conversion Price takes effect,
and such state the reduced Conversion Price and the period it will be in
effect.
(d) No Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of Convertible PIK Preferred Stock. If more than one
certificate evidencing shares of Convertible PIK Preferred Stock shall be
surrendered for conversion at such time by the holder, the number of full shares
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares of Convertible PIK Preferred Stock so surrendered. Instead of
any fractional share of Common Stock that would otherwise be issuable to a
holder upon conversion of any shares of Convertible PIK Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fractional share in
an amount equal to the fraction of the Closing Price of the Common Stock on the
day of conversion or, if the day of conversion is not a Trading Day, on the next
preceding Trading day.
(e) Reclassification Consolidation, Merger or Sale of Assets. In the event
that the Corporation shall be a party to any transaction pursuant to which the
Common Stock is converted into the right to receive other securities, cash or
other property (including without limitation any capitalization or
reclassification of the 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 as a result of
a
<PAGE>
12
subdivision or combination of the Common Stock), any consolidation of the
Corporation with, or merger of the Corporation into, any other person, any
merger of another person into the Corporation (other than a merger which does
not result in a reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock), any sale or transfer of all or
substantially all of the assets of the Corporation or any share exchange), then
lawful provisions shall be made as part of the terms of such transaction whereby
the holder of each share of Convertible PIK Preferred Stock then outstanding
shall have the right thereafter to convert such share only into the kind and
amount of securities, cash and other property receivable upon such transaction
by a holder of the number of shares of Common Stock into which such share of
Convertible PIK Preferred Stock might have been converted immediately prior to
such transaction. The Corporation or the person formed by such consolidation or
resulting from such merger or which acquires such shares or which acquires the
Corporation's shares, as the case may be, shall make provisions in its
certificate or articles of incorporation or other constituting document to
establish such right. Adjustments for events subsequent to the effective date of
such a consolidation, merger, sale or transfer of assets shall be as nearly
equivalent as may be practicable to the adjustments provided for herein. In any
such event, effective provisions shall be made in the certificate or articles of
incorporation of the resulting or surviving corporation, in any contract of
sale, conveyance, lease, transfer or otherwise so that the provisions set forth
herein for the protection of the rights of the holder of Convertible PIK
Preferred Stock shall thereafter continue to be applicable, and any such
resulting or surviving corporation shall expressly assume the obligation to pay
dividends and deliver, upon conversion, such shares of common stock, other
securities, or cash as set forth herein. The above provisions shall similarly
apply to successive transactions of the foregoing type.
(f) Reservation of Shares, Etc. The Corporation shall at all times reserve
and keep available, free from preemptive rights out of its authorized and
unissued stock, solely for the purpose of effecting the conversion of the
Convertible PIK Preferred Stock, such number of shares of its Common Stock as
shall from time to time be sufficient to effect the conversion of all shares of
Convertible PIK Preferred Stock from time to time outstanding. The Corporation
shall from time to time, in accordance with the laws of the State of Delaware,
in good faith and as expeditiously as possible endeavor to cause the authorized
number of shares of Common Stock to be increased if at any time the number of
shares of authorized and unissued Common Stock shall not be sufficient to
permit the conversion of all the then outstanding shares of Convertible PIK
Preferred Stock.
If any shares of Common Stock required to be reserved for purposes of
conversion of the Convertible PIK Preferred Stock hereunder require registration
with or approval of any governmental authority under any Federal or State law
before such shares may be issued upon conversion, the Corporation will in good
faith and as expeditiously as possible endeavor to cause such shares to be duly
registered or approved as the case may be. If the Common Stock is listed on any
national securities exchange, the Corporation will, if permitted by the rules of
such exchange, list and keep listed on such exchange, upon official notice of
issuance, all shares of Common Stock issuable upon conversion of the Convertible
PIK Preferred Stock, for so long as the Common Stock continues to be so listed.
<PAGE>
13
(g) Prior Notice of Certain Events. In case:
(i) the Corporation shall (1) declare any dividend (or any
other distribution) on its Common Stock, other than (A) a dividend
payable in shares of Common Stock or (B) a dividend payable in cash out
of its retained earnings other than any special or nonrecurring or other
extraordinary dividend or (2) declare or authorize a redemption or
repurchase of in excess of 10% of the then outstanding shares of Common
Stock;
(ii) the Corporation shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or series or of any other
rights or warrants;
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change
in par value, or from par value to no par value, or from no par value to
par value), or of any consolidation or merger to which the Corporation
is a party and for which approval of any stockholders of the Corporation
shall be required, or of the sale or merger of all or substantially all
of the assets of the Corporation or of any share exchange whereby the
Common Stock is converted into other securities, cash or other property;
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation; or
(v) of any other event which would require an adjustment to
the Conversion Price under subparagraph VI(c);
then the Corporation shall cause to be filed with the transfer agent for the
Convertible PIK Preferred Stock, and shall cause to be mailed to the holders of
record of the Convertible PIK Preferred Stock, at their last addresses as they
shall appear upon the stock transfer books of the Corporation, at least fifteen
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, redemption, repurchase, or grant of
rights or warrants or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution,
redemption, repurchase, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation, winding up or other event is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation,
winding up or other event (but no failure to mail such notice or any defect
therein or in the mailing thereof shall effect the validity of the corporate
action required to be specified in such notice).
(h) Definitions. The following definitions shall apply to
terms used in this Section VI:
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14
(i) "Closing Price" of any common stock on any day shall mean the
last reported sale price regular way on such day or, in case no such sale
takes place on such day, the average of the reported closing bid and asked
prices regular way of the common stock in each case on the principal
national securities exchange or quotation system on which the common stock
is listed or admitted to trading or quoted, or, if not listed or admitted
to trading or quoted on any national securities exchange or quotation
system, the average of the closing bid and asked prices of the common
stock in the over-the-counter market on the day in question as reported by
the National Quotation Bureau Incorporated, or a similarly generally
accepted reporting service, or, if not so available in such manner, as
furnished by any New York Stock Exchange member firm selected from time to
time by the Board of Directors of the Corporation for that purpose.
(ii) "Trading Day" shall mean a day on which securities are traded
on the national securities exchange or quotation system or in the
over-the-counter market used to determine the Closing Price.
VII. Voting Rights. (a) General. The holders of shares of
Convertible PIK Preferred Stock shall not have any voting rights except
as set forth below or as otherwise from time to time required by law. In
connection with any right to vote, each holder of shares of Convertible
PIK Preferred Stock shall be entitled to a number of votes which is
equal to the whole number of shares of Common Stock that could be
obtained upon conversion of one share of Convertible PIK Preferred Stock
at the then applicable Conversion Price. Any shares of Convertible PIK
Preferred Stock owned, directly or indirectly, by any entity of which
the Corporation owns, directly or indirectly, a majority of the shares
entitled to vote for directors, shall not have voting rights hereunder
and shall not be counted in determining the presence of a quorum.
(b) Designated Director Voting Rights. On the Issue Date,
in addition to any other rights to elect directors which the holders of
Convertible PIK Preferred Stock may have, the two holders with the
greatest number of shares held of record of Convertible PIK Preferred
Stock shall have the right to each elect a director of the Corporation
to fill the vacancies that occur at such date who shall continue to
serve during the period in which any shares of Convertible PIK Preferred
Stock remain outstanding. If there is only one holder of outstanding
Convertible PIK Preferred Stock, such holder shall elect both directors.
The right of the holders of shares of Convertible Preferred Stock to
vote for and elect such two additional directors shall terminate when
all outstanding shares of Convertible PIK Preferred Stock shall have
been redeemed or otherwise retired. The term of office of all directors
so elected shall terminate as provided in the Corporation's by-laws.
The foregoing right of the holders of shares of Convertible
Preferred Stock with respect to the election of two directors may be
exercised initially at any annual meeting of stockholders or at any
special meeting of stockholders held for such purpose, or by the written
consent of the holders of Convertible PIK Preferred Stock without a
meeting pursuant to Section 228 of the Delaware General Corporation Law
and thereafter at such annual meeting or by written consent. The
president of the Corporation shall within twenty days after the delivery
to the Corporation at its principal office of a written request for a
special meeting signed by the
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15
holders of at least 10% of all outstanding shares of Convertible PIK Preferred
Stock, call a special meeting of the holders of Convertible PIK Preferred
Stock to be held within 60 days after the delivery of such request for the
purpose of electing such additional directors.
The holders of shares of convertible PIK Preferred Stock referred to
above voting as a class shall have the right to remove without cause at any time
and replace any directors such holders shall have elected pursuant to this
Section VII(b). In case of a vacancy occurring in the office of any director so
elected pursuant to this Section VII(b), the holder of Convertible PIK Preferred
Stock referred to above who elected the director which created such vacancy may,
at a special meeting of the holders or by written consent as provided above,
elect a successor to hold office for the unexpired term of such director.
(c) Default Voting Rights. Whenever dividends on the Convertible
PIK Preferred Stock or any other class or series of Preferred Stock shall be in
arrears in an aggregate amount equal to at least four quarterly dividends
(whether or not consecutive), (i) the number of members of the Board of
Directors of the Corporation shall be increased by two, effective as of the time
of election of such directors as hereinafter provided and (ii) in addition to
any other rights to elect directors which the hodlers of Convertible PIK
Preferred Stock may have, the holders of shares of Convertible PIK Preferred
Stock (voting separately as a class with all other affected classes or series of
Preferred Stock upon which like voting rights have been conferred and are
exercisable) shall have the exclusive right to vote for and elect such two
additional directors of the Corporation who shall continue to serve during the
period such dividends remain in arrears. The right of the holders of shares of
Convertible PIK Preferred Stock to vote for such two additional directors shall
terminate when all accrued and unpaid dividends on the Convertible PIK Preferred
Stock and all other affected classes or series of Preferred Stock have been
declared and paid or set apart for payment. The term of office of all directors
so elected shall terminate immediately upon the termination of the right of the
holders of shares of Convertible PIK Preferred Stock and such Preferred Stock to
vote for such two additional directors, and the number of directors of the Board
of Directors of the Corporation shall immediately thereafter be reduced by two.
The foregoing right of the holders of shares of Convertible PIK
Preferred Stock with respect to the election of two directors may be exercised
at any annual meeting of stockholders or at any special meeting of stockholders
held for such purpose. If the right to elect directors shall have accrued to the
holders of shares of Convertible PIK Preferred Stock more than ninety days
preceding the date established for the next annual meeting of stockholders,
the president of the Corporation shall within twn days after the delivery to the
Corporation at its principal office of a written request for a special meeting
signed by the holders of at least 10% of all outstanding shares of Convertible
PIK Preferred Stock, call a special meeting of the holders of Convertible PIK
Preferred Stock to be held within forty-five days after the delivery of such
request for the purpose of electing such additional directors.
The holders of shares of Convertible PIK Preferred Stock and any
Preferred Stock referred to above voting as a class shall have the right to
remove without cause at any time and replace any directors such holders shall
have elected pursuant to this Section VII (c).
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16
(d) Class Voting. So long as any shares of the Corporation's
Convertible PIK Preferred Stock are outstanding the Corporation shall not,
without the affirmative vote or consent of the hodlers of at least 66-2/3% of
all outstanding shares of the Corporation's Convertible PIK Preferred Stock,
voting or consenting separately as a class without regard to series:
(i) create any class of stock convertible into Common Stock that by
its terms ranks prior to any outstanding Convertible PIK Preferred Stock of
the Corporation as to dividends or upon liquidation or increase the
authorized number of shares of any such class;
(ii) alter or change any of the provisions of the Corporation's
Certificate of Incorporation so as adversely to affect the relative
rights and preferences of any outstanding Convertible PIK Preferred Stock
of the Corporation (including, without limitation an increase in the size
of the Board); provided, however that the creation, amendment or
reclassification of any class of stock, that by its terms ranks junior to
shares of Convertible PIK Preferred Stock of the Corporation as to
dividends or upon liquidation or an increase in the authorized number of
shares of any such class shall not give rise to any such voting right; or
(iii) increase the authorized number of shares of the Corporation's
Preferred Stock.
VIII. Outstanding Shares; Status of Acquired Shares.
(a) Outstanding Shares. For purposes of this Certificate of
Designation, all shares of Convertible PIK Preferred Stock issued by the
Corporation shall be deemed outstanding except; (i) from the date fixed for
redemption pursuant to Section V, all shares of Convertible PIK Preferred Stock
that have been so called for redemption under Section V, to the extent provided
thereunder; (ii) from the date surrender of certificates evidencing shares of
Convertible PIK Preferred Stock, all shares of Convertible PIK Preferred Stock
converted into Common Stock; and (iii) from the date of registration of
transfer, all shares of Convertible PIK Preferred Stock owned, directly or
indirectly, by any entity of which the Corporation owns, directly or indirectly,
a majority of the shares entitled to vote for directors.
(b) Reacquired Shares. Shares of Convertible PIK Preferred Stock
redeemed by the Corporation, received upon conversion pursuant to Section VI or
otherwise acquired by the Corporation shall be restored to the status of
authorized but unissued shares of Preferred Stock, without designation as to
series, and may thereafter be issued, but not as shares of Convertible PIK
Preferred Stock.
IX. Partial Payments. Upon an optional redemption by the
Corporation, if at any time the Corporation does not pay amounts sufficient to
redeem all Convertible PIK Preferred Stock, then such funds which are paid shall
be applied to redeem such shares of Convertible PIK Preferred Stock as the
Corporation may designate by lot or in such other manner as the Board of
Directors may determine to be fair, or such redemption shall be effected pro
rata.
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17
X. Severability of Provisions. Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity,
without invalidating or otherwise adversely affecting the remaining
provisions hereof. If a court of competent jurisdiction should determine
that a provision hereof would be valid or enforceable if a period of
time were extended or shortened or a particular percentage were
increased or decreased, then such court may make such change as shall be
necessary to render the provision in question effective and valid under
applicable law.
XI. Miscellaneous. (a) Transfer Taxes. The Corporation shall pay
any and all stock transfer and documentary stamp taxes that may be
payable in respect of any issuance of delivery of shares of Convertible
PIK Preferred Stock or shares of Common Stock or other securities issued
on account of Convertible PIK Preferred Stock pursuant hereto or
certificates or instruments evidencing such shares or securities. The
Corporation shall not, however, be required to pay any such tax which
may be payable in respect of any transfer involved in the issuance or
delivery of shares of Convertible PIK Preferred Stock or Common Stock or
other securities in a name other than that in which the shares of
Convertible PIK Preferred Stock with respect to which such shares or
other securities are issued or delivered were registered, or in respect
of any payment to any person with respect to any such shares or
securities other than a payment to the registered holder thereof, and
shall not be required to make any such issuance, delivery or payment
unless and until the person otherwise entitled to such issuance,
delivery or payment has paid to the Corporation the amount of any such
tax or has established, to the satisfaction of the Corporation, that
such tax has been paid or is not payable.
(b) Failure to Designate Stockholder or Payee. In the event that a
holder of shares of Convertible PIK Preferred Stock shall not by written
notice designate the name in which shares of Common Stock to be issued
upon conversion of such shares should be registered or to whom payment
upon redemption of shares of Convertible PIK Preferred Stock should be
made or the address to which the certificates or instruments evidencing
such shares or such payment, should be sent, the Corporation shall be
entitled to register such shares and or such payment in the name of the
holder of such Convertible PIK Preferred Stock as shown on the
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18
records of the Corporation and to send the certificates or instruments
evidencing such shares or such payment, to the address of such holder
shown on the records of the Corporation.
IN WITNESS WHEREOF, Patina Oil & Gas Corporation has caused this
Certificate of Designation to be signed on its behalf by Thomas J.
Edelman, its President, and Keith M. Crouch, its Secretary, this 17th
day of October, 1997.
PATINA OIL & GAS CORPORATION
By: /s/ Thomas J. Edelman
---------------------------------
Thomas J. Edelman, President
ATTEST:
/s/ Keith M. Crouch
- -----------------------------
Keith M. Crouch, Secretary
