EXHIBIT 3.1
MERCURY WASTE SOLUTIONS, INC.
CERTIFICATE OF DESIGNATION OF
SERIES A CONVERTIBLE PREFERRED STOCK
Pursuant to Section 401(3)(b) of the Business Corporation Act of the
State of Minnesota, Mercury Waste Solutions, Inc. (the "Company"), a corporation
organized and existing under the Business Corporation Act of the State of
Minnesota, DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of
the Company by the Articles of Incorporation of the Company, and in accordance
with the provisions of Section 401(3)(a) of the Business Corporation Act of the
State of Minnesota, the Board of Directors of the Company as of August 7, 2000,
adopted the following resolution creating a series of preferred stock designated
as Series A Convertible Preferred Stock:
RESOLVED: That pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of its Articles of
Incorporation, as amended, a series of preferred stock, $.01 par value, to be
titled the Series A Convertible Preferred Stock (the "Preferred Shares") of the
Company is hereby created and designated. The number of shares of Preferred
Shares shall be 600 shares. The voting powers, preferences and relative,
participating, optional and other special rights of the Preferred Shares, and
the qualifications, limitations and restrictions thereof, are as follows:
1. Designation. The series of preferred stock established hereby shall be
designated the Series A Convertible Preferred Stock (and shall be referred to
herein as the "Preferred Shares") and the authorized number of Preferred Shares
shall be 600.
2. Voting Rights. Except as otherwise provided by law or pursuant to Section
6(c) hereof, the holders of Preferred Shares shall have no voting rights and
their consent shall not be required (except to the extent required by law) for
taking any corporate action.
3. Dividends.
(a) Dividend Terms. The holders of Preferred Shares shall be entitled
to receive out of funds legally available for such purpose, monthly cumulative
dividends paid in arrears at the rate of 12% of the Liquidation Value per annum
per share payable in cash. The first payment shall occur on the first business
day of the month following the date of the issuance of the Preferred Shares and
on the first business day of every month thereafter. Such dividends shall accrue
from day to day and shall be payable before any dividends on any shares of
Common Stock shall be declared or paid or set apart for payment, and shall be
cumulative, so
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that if at any time dividends on the outstanding Preferred Shares at such rate
have not been paid thereon, or funds set apart for the payment thereof, with
respect to all preceding dividend periods, the amount of such deficiency shall
be fully paid, or set apart for payment, before any distribution by way of
dividend or otherwise shall be declared or paid upon, or set apart for, the
shares of Common Stock or any other class of shares of the Company ranking
junior to the Preferred Shares with respect to the payment of dividends or upon
liquidation, dissolution or winding up of the Company.
(b) Dividend Preferences. In no event shall any dividend be paid or
declared, other than dividends paid solely in shares of Common Stock, on the
Common Stock or any other class of shares of the Company ranking junior to the
Preferred Shares, nor shall any distribution be made on the Common Stock or any
other class of shares of the Company ranking junior to the Preferred Shares, nor
shall any Common Stock or any other class of shares of the Company ranking
junior to the Preferred Shares, be purchased, redeemed or otherwise acquired by
the Company for value, unless all dividends on the Preferred Shares for all past
dividend periods and for the then current dividend period shall have been paid
or declared and a sum sufficient for the payment thereof set apart for payment.
In the event that the Company thereafter declares or pays any dividends upon the
Common Stock (whether payable in cash, securities or other property), other than
dividends payable solely in shares of Common Stock, the Company shall also
declare and pay to the holders of the Preferred Shares at the same time that it
declares and pays such dividends to the holders of the Common Stock, the
dividends which would have been declared and paid with respect to the Common
Stock issuable upon conversion of the Preferred Shares had all of the
outstanding Preferred Shares been converted immediately prior to the record date
for such dividend, or if no record date is fixed, the date as of which the
record holders of Common Stock entitled to such dividends are to be determined.
(c) Stock Split, Stock Dividend, Recapitalization, etc. If the Company,
at any time while any Preferred Shares are outstanding, (a) shall pay a stock
dividend or otherwise make a distribution or distributions payable in shares of
its capital stock (whether payable in shares of its Common Stock or of capital
stock of any class), (b) subdivide outstanding shares of Common Stock into a
larger number of shares, (c) combine outstanding shares of Common Stock into a
smaller number of shares, or (d) issue by reclassification of shares of Common
Stock any shares of capital stock of the Company, the number of issued and
outstanding Preferred Shares, the Maximum Conversion Price designated in Section
5(d) and the Maximum Common Stock issuance designated in Section 5(e) shall be
appropriately adjusted in proportion to the change in the outstanding shares of
Common Stock. Any adjustment made pursuant to this Section shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification.
4. Liquidation Right and Preference. In the event of the liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary, the
holders of Preferred Shares
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shall be entitled to receive in cash, out of the assets of the Company, an
amount equal to $1,000 per share (the "Liquidation Value") for each outstanding
Preferred Share (appropriately adjusted to reflect stock splits, stock
dividends, reorganizations, consolidations and similar changes hereafter
effected) plus all accumulated but unpaid dividends, before any payment shall be
made or any assets distributed to the holders of Common Stock or any other class
of shares of the Company ranking junior to Preferred Shares. If, upon any
liquidation, dissolution or winding up of the Company, the assets of the Company
are insufficient to pay such $1,000 per share, plus all accumulated but unpaid
dividends, the holders of such Preferred Shares shall share pro rata with pari
passu securities issued by the Company in any such distribution in proportion to
the full amounts to which they would otherwise be respectively entitled. For
purposes of this joint distribution of assets to the holders of Common Stock and
the holders of Preferred Shares, the holders of Preferred Shares should be
regarded as owning that number of Common Stock into which the Preferred Shares
would then be convertible.
5. Conversion Rights.
(a) Optional Conversion. Each Preferred Share shall be convertible at
the option of the holder thereof into Common Stock of the Company at any time
following the earlier of (a) the consummation of a third party tender offer for
the Company's Common Stock, or (b) six months from the date of issuance of the
Preferred Shares in accordance with the terms hereof.
(b) Conversion Mechanics. In order to exercise the conversion
privilege, a holder of Preferred Shares shall 1) notify the Company via
facsimile of such holder's intent to convert a specified portion of such shares
(the "Conversion Notice" and the date of such notice, the "Conversion Notice
Date") and 2) send via express mail on the Conversion Notice Date to the Company
at its principal office the certificate evidencing the Preferred Shares being
converted, duly endorsed to the Company and accompanied by written notice to the
Company that the holder elects to convert a specified portion or all of such
shares. Preferred Shares converted at the option of the holder shall be deemed
to have been converted on the day of receipt by the Company of the certificate
representing such shares for conversion in accordance with the foregoing
provisions (the "Conversion Date"), and at such time the rights of the holder of
such Preferred Shares other than the right to receive shares of Common Stock
upon conversion of the Preferred Shares pursuant to the terms hereof, as such
holder, shall cease and such holder shall be treated for all purposes as the
record holder of Common Stock issuable upon conversion. As promptly as
practicable on or after the Conversion Date, but in any event within three (3)
business days, the Company shall issue and mail or deliver to such holder a
certificate or certificates for the number of Common Stock issuable upon
conversion, computed to the nearest full share, and a certificate or
certificates for the balance of Preferred Shares surrendered, if any, not so
converted into Common Stock.
(c) Automatic Conversion. Subject to Section 5(a) hereof, Preferred
Shares, and any accrued but unpaid Dividends, shall be automatically converted
into Common Stock thirty-six (36) months after issuance of such shares at the
Conversion Price (as defined herein).
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(d) Conversion Price and Adjustments. The number of shares of Common
Stock issuable in exchange for Preferred Shares upon either optional or
automatic conversion shall be equal to the Liquidation Value of the Preferred
Shares being converted divided by the conversion price then in effect (the
"Conversion Price"). The Conversion Price on any Conversion Date shall equal 75%
of the average of the consecutive closing bid prices of the Company's Common
Stock as reported by Bloomberg, L.P., or if Bloomberg, L.P. is not reporting
such information, any other reporting firm mutually acceptable to the holder of
Preferred Shares being converted and the Company, over the 20 trading days prior
to the Conversion Notice Date; provided, however, that the Conversion Price
shall not exceed $1.82 (the "Maximum Conversion Price").
(e) Maximum Common Stock Issuance. The Company may not issue more than
696,000 shares of Common Stock (the "Maximum Common Stock Issuance") at the
Conversion Price upon conversion of the Preferred Shares unless the Company
receives shareholder approval from the holders of the Company's Common Stock.
(f) Inability to Fully Convert. If, upon the Company's receipt of a
Conversion Notice, the Company cannot issue shares of Common Stock in
satisfaction of such Conversion Notice because (i) the Company has issued the
Maximum Common Stock Issuance and has not received the approval of the holders
of the Company's Common Stock pursuant to Section 5(e) hereof or (ii) the
Company is otherwise prohibited by applicable law or by the rules or regulations
of any stock exchange, interdealer quotation system or other self-regulatory
organization with jurisdiction over the Company or its securities, including
without limitation NASDAQ from issuing all of the Common Stock which is to be
issued to a holder of Preferred Shares pursuant to a Conversion Notice at the
Conversion Price, then the Company shall issue as many shares of Common Stock as
it is able to issue in accordance with such holder's Conversion Notice and
pursuant to Section 5(e) above and, with respect to the unconverted Preferred
Shares, the Company will create and issue Series B Convertible Preferred Stock
("Series B Convertible Preferred Stock") in an amount equal to (a) the
difference of (i) the number of shares of Common Stock that would have been
issued at the Conversion Price, and (ii) the number of shares of Common Stock
issued pursuant to Section 5(d) above multiplied by (b) the Conversion Date
Price.
6. Other Terms of Series A Convertible Preferred Shares.
(a) Merger, Consolidation, Exchange. In case of any reclassification of
the Common Stock, any consolidation or merger of the Company with or into
another person, the sale or transfer of all or substantially all of the assets
of the Company or any compulsory share exchange pursuant to which the Common
Stock is converted into other securities, cash or property, the holders of the
Preferred Shares then outstanding shall have the right thereafter to convert
such shares only into the shares of stock and other securities and property
receivable upon or deemed to be held by holders of Common Stock following such
reclassification, consolidation, merger, sale, transfer or share exchange, and
the holders of the Preferred Shares shall be entitled upon
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such event to receive such amount of securities or property as the shares of the
Common Stock of the Company into which such shares of Preferred Shares could
have been converted immediately prior to such reclassification, consolidation,
merger, sale, transfer or share exchange would have been entitled.
(b) Notice of Certain Events. This provision shall similarly apply to
successive reclassifications, consolidations, mergers, sales, transfers or share
exchanges. If:
i. the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
ii. the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
iii. the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock
of any class or of any rights; or
iv. the approval of any shareholders of the Company shall
be required in connection with any reclassification
of the Common Stock of the Company (other than a
subdivision or combination of the outstanding shares
of Common Stock), any consolidation or merger to
which the Company is a party, any sale or transfer of
all of substantially all of the assets of the
Company, or any compulsory share exchange whereby the
Common Stock is converted into other securities, cash
or property; or
v. the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding-up of
the affairs of the Company;
then the Company shall mail to the holders of Preferred Shares at their last
addresses as shall appear upon the stock books of the Company, at least 10
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, 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, distributions, redemption, rights or
warrants are to be determined, or (y) the date of which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding-up is expected to become effective, and the date as of which it is
expected that holders of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding-up; provided, however, that
the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.
(c) Special Voting Rights. Without the affirmative vote of the holders
(acting together as a class) of at least seventy-five percent of the Preferred
Shares at the time outstanding given in person or by proxy at any annual
meeting, or at such special meeting
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called for that purpose and/or other purposes, or, if permitted by law, in
writing without a meeting, the Company shall not alter or amend the rights or
preferences of Preferred Shares as stated in this Certificate of Designation.
IN WITNESS WHEREOF, Mercury Waste Solutions, Inc. has caused this
Certificate to be duly executed in its corporate name on this 11th day of
August, 2000.
MERCURY WASTE SOLUTIONS, INC.
By: /s/ Brad J. Buscher
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Brad J. Buscher
Its: Chairman and Chief Executive Officer
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