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EXHIBIT 4.1
CERTIFICATE OF RIGHTS AND PREFERENCES
OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF
NEWPARK RESOURCES, INC.
Pursuant to Section 151(g) of the Delaware General Corporation Law,
NEWPARK RESOURCES, INC., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), hereby certifies that the following
resolution was duly adopted by the Board of Directors of the Company on December
27, 2000, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Company, which authorizes the issuance of up
to 1,000,000 shares of preferred stock, $0.01 par value.
RESOLVED, that pursuant to authority expressly granted to and vested in
the Board of Directors of the Company and pursuant to the provisions of the
Certificate of Incorporation, the Board of Directors hereby creates a series of
preferred stock, herein designated and authorized as the Series C Convertible
Preferred Stock, $0.01 par value per share, which shall consist of 120,000 of
the 1,000,000 shares of preferred stock which the Company now has authority to
issue, and the Board of Directors hereby fixes the powers, designations,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations and restrictions
thereof as follows:
1. Number. The number of shares constituting the Series C Convertible
Preferred Stock (the "Series C Preferred Stock") shall be 120,000.
2. Definitions. Unless the context otherwise requires, when used herein
the following terms shall have the meaning indicated.
"Acquiring Person" means, in connection with any Business Combination,
the continuing or surviving corporation of a consolidation or merger with the
Company (if other than the Company), the transferee of substantially all of the
properties or assets of the Company, the corporation consolidating with or
merging into the Company in a consolidation or merger in connection with which
the Common Stock is changed into or exchanged for stock or other securities of
any other Person or cash or any other property, or, in the case of a capital
reorganization or reclassification, the Company.
"Acquisition Price" means (i) the Market Price of the Common Stock on
the date immediately preceding the date on which a Business Combination is
consummated, or (ii) if a purchase, tender or exchange offer is made by the
Acquiring Person (or by any of its affiliates) to the holders of the Common
Stock and such offer is accepted by the holders of more than 50% of the
outstanding shares of Common Stock, the greater of (x) the price determined in
accordance with the provisions of the foregoing clause (i) of this sentence and
(y) the Market Price on the date immediately preceding the acceptance of such
offer by the holders of more than 50% of the outstanding shares of Common Stock.
"Board" means the Board of Directors of the Company.
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"Business Combination" is defined in Section 6(E)(i).
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in New York, New
York, or New Orleans, Louisiana generally are authorized or required by law or
other governmental actions to close.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital or capital stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Certificate" means the Certificate of Incorporation of the Company, as
amended.
"Certificate of Rights and Preferences" means this Certificate of
Rights and Preferences of the Series C Preferred Stock.
"Common Stock" means the Company's common stock, par value $.01 per
share, and any Capital Stock for or into which such Common Stock hereafter is
exchanged, converted, reclassified or recapitalized by the Company or pursuant
to a Business Combination to which the Company is a party.
"Common Stock Equivalents" means (without duplication with any other
Common Stock or common stock, as the case may be, or Common Stock Equivalents)
rights, warrants, options, convertible securities or exchangeable securities,
exercisable for or convertible or exchangeable into, directly or indirectly,
Common Stock, or common stock, as the case may be, whether at the time of
issuance or upon the passage of time or the occurrence of some future event.
"Company" means Newpark Resources, Inc. a Delaware corporation.
"Conversion Price" means, on any date, the average of the daily Market
Prices of the Common Stock for the period of forty Trading Days ending and
excluding five Trading Days before and excluding that date, but no less than
$4.3125 (the "Floor Price") and no greater than the lowest of the following: (i)
$11.2125 (the "Ceiling Price"); (ii) the average of the daily Market Prices of
the Common Stock for the first three Trading Days of that forty day period; and
(iii) the average of the daily Market Prices of the Common Stock for the last
three Trading Days of that forty day period. The foregoing notwithstanding, if
the Company shall combine, subdivide or reclassify its Common Stock, or shall
declare any dividend payable in shares of its Common Stock, or shall take any
other action of a similar nature affecting such shares, the Conversion Price,
the Floor Price and the Ceiling Price shall be adjusted to the extent
appropriate to reflect such event, including appropriate adjustments to account
for any such event that occurs during any of the measurement periods set forth
in the previous sentence.
"Conversion Rate" means the Stated Value of one share of Series C
Preferred Stock plus accrued and unpaid dividends divided by the Conversion
Price.
"Dividend Payment Date" is defined in Section 3(A).
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"Dividend Period" is defined in Section 3(A).
"Dividend Rate" means a rate equal to 4.5% per annum times the Stated
Value, payable quarterly commencing February 28, 2001.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute, and the rules and regulations promulgated thereunder.
"Fletcher" means Fletcher International, Ltd., a company organized
under the laws of Bermuda, together with its successors.
"Holder" means a holder of record of the Series C Preferred Stock.
"Indenture" means the Indenture dated as of December 17, 1997, among
the Company, the "Guarantors," as defined in the Indenture, and State Street
Bank and Trust Company, a Massachusetts banking and trust company, as Trustee,
with respect to the Company's 8 5/8% Senior Subordinated Notes due 2007.
"Investment Banking Firm" shall mean a nationally recognized investment
banking firm.
"Issue Date" means with respect to any shares of Series C Preferred
Stock the original date of issuance of such shares of Series C Preferred Stock.
"Junior Securities" means Capital Stock that, with respect to dividends
and distributions upon Liquidation, ranks junior to the Series C Preferred
Stock, including but not limited to Common Stock and any other class or series
of Capital Stock issued by the Company or any Subsidiary of the Company on or
after the Issue Date (other than the Series C Preferred Stock and any Parity
Securities and Senior Securities issued with the approval of the Holders of a
Majority of the Series C Preferred Stock).
"Liquidation" means the voluntary or involuntary liquidation,
dissolution or winding up of the Company; provided, however, that a
consolidation, merger or share exchange shall not be deemed a Liquidation, nor
shall a sale, assignment, conveyance, transfer, lease or other disposition by
the Company of all or substantially all of its assets, which does not involve a
distribution by the Company of cash or other property to the holders of Common
Stock, be deemed to be a Liquidation.
"Liquidation Preference" is defined in Section 4.
"Main Agreement" means the Agreement dated as of December 27, 2000,
among the Company and Fletcher pursuant to which 120,000 shares of Series C
Preferred Stock and certain other securities are to be issued by the Company,
including all schedules and exhibits thereto.
"Majority of the Series C Preferred Stock" means more than 50% of the
then outstanding shares of Series C Preferred Stock.
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"Market Price" means, on any date, the amount per share of the Common
Stock (or, for purposes of determining the Market Price of the common stock of
an Acquiring Person or its Parent under Section 6(E), the common stock of such
Acquiring Person or such Parent), equal to (i) the daily volume-weighted average
price on the NYSE (as defined in the Main Agreement) or, if no such sale takes
place on such date, the average of the closing bid and asked prices on the NYSE
thereof on such date, in each case as reported by Bloomberg, L.P. (or by such
other Person as the Holder and the Issuer may agree), or (ii) if such Common
Stock is not then listed or admitted to trading on the NYSE, the higher of (x)
the book value thereof as determined by any firm of independent public
accountants of recognized standing selected by the Board of Directors of the
Issuer as of the last day of any month ending within 60 days preceding the date
as of which the determination is to be made or (y) the fair value thereof
determined in good faith by the Board of Directors of the Issuer as of a date
which is within 18 days of the date as of which the determination is to be made.
"NYSE" shall have the meaning set forth in the Main Agreement.
"Other Securities" means any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
Holders of the Series C Preferred Stock at any time shall be entitled to
receive, or shall have received, upon conversion of the Series C Preferred Stock
in lieu of or in addition to Common Stock, or which at any time shall be
issuable or shall have been issued in exchange for or in replacement of Common
Stock or Other Securities.
"Parent" means, as to any Acquiring Person any corporation which (i)
controls the Acquiring Person directly or indirectly through one or more
intermediaries, (ii) is required to include the Acquiring Person in the
consolidated financial statements contained in such Parent's Annual Report on
Form 10-K (if the Parent is required to file such a report) and (iii) is not
itself included in the consolidated financial statements of any other Person
(other than its consolidated subsidiaries).
"Parity Securities" means the Series B Preferred Stock (which ranks
pari passu with the Series C Preferred Stock with respect to both dividends and
distributions upon Liquidation) and any other class or series of Capital Stock
that, with respect to dividends or distributions upon Liquidation, ranks pari
passu with the Series C Preferred Stock.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Record Date" is defined in Section 3(A).
"Registered Common Stock" means Common Stock that has been registered
under the Securities Act and is freely tradable.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
"Senior Securities" means the Series A Preferred Stock (which ranks
senior to the Series C Preferred Stock with respect to both dividends and
distributions upon Liquidation) and any other
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class or series of Capital Stock that, with respect to dividends or
distributions upon Liquidation, ranks senior to the Series C Preferred Stock.
"Series A Preferred Stock" means the Series A Cumulative Perpetual
Preferred Stock of the Company the powers, designations, preferences and
relative, participating, optional and other special rights of which are
specified in a Certificate of Designation filed in the office of the Secretary
of State of Delaware on April 14, 1999.
"Series B Preferred Stock" means the Series B Convertible Preferred
Stock of the Company the powers, designations, preferences and relative,
participating, optional and other special rights of which are specified in a
Certificate of Rights and Preferences of Series B Convertible Preferred Stock
filed in the office of the Secretary of State of Delaware on May 31, 2000.
"Series C Preferred Stock" means the Series C Convertible Preferred
Stock of the Company or successor as contemplated by Section 6(E)(ii) as well as
any series of preferred stock of the Company issued under Section 6(b) of the
Main Agreement.
"Stated Value" is an amount equal to $250.00 per share of Series C
Preferred Stock.
"Subsidiary" of a Person means (i) a corporation, a majority of whose
stock with voting power, under ordinary circumstances, to elect directors is at
the time of determination, directly or indirectly, owned by such Person or by
one or more Subsidiaries of such Person, or (ii) any other entity (other than a
corporation) in which such Person or one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has at least a
majority ownership interest.
"Trading Day" means any day on which the Common Stock is quoted on the
NYSE.
The foregoing definitions will be equally applicable to both the
singular and plural forms of the defined terms.
3. Dividends and Distributions.
(A) After payment or provision for all unpaid dividends on the
Series A Preferred Stock and any other Senior Securities that rank
senior to the Series C Preferred Stock with respect to dividends, the
Holders shall be entitled to receive out of the assets of the Company
legally available for that purpose, dividends at the Dividend Rate, and
no more, to be paid in accordance with the terms of this Section 3.
Such dividends shall be fully cumulative from the Issue Date, shall
accumulate regardless of whether the Company earns a profit and shall
be payable in arrears, when and as declared by the Board, on February
28, May 31, August 31 and November 30 of each year (each such date
being herein referred to as a "Dividend Payment Date"), commencing on
February 28, 2001. The period from the Issue Date to February 28, 2001,
and each quarterly period between consecutive Dividend Payment Dates
shall hereinafter be referred to as a "Dividend Period." The dividend
for any Dividend Period for any share of Series C Preferred Stock that
is not outstanding on every day of the Dividend Period shall be
prorated based on the number of days such share was outstanding during
the period. Each such dividend shall be paid to the holders of record
of the Series C
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Preferred Stock as their names appear on the share register of the
Company on the corresponding Record Date. As used above, the term
"Record Date" means, with respect to the dividend payable on February
28, May 31, August 31 and November 30, respectively, of each year, the
preceding February 15, May 15, August 15 and November 15, or such other
record date designated by the Board with respect to the dividend
payable on such respective Dividend Payment Date not exceeding 30 days
preceding such Dividend Payment Date. Dividends on account of arrears
for any past Dividend Periods may be declared and paid at any time,
without reference to any Dividend Payment Date, to Holders of record on
a date designated by the Board, not exceeding 30 days preceding the
payment date thereof, as may be fixed by the Board. For purposes of
determining the amount of dividends accrued (i) as of the first
Dividend Payment Date and as of any date that is not a Dividend Payment
Date, such amount shall be calculated on the basis of the Dividend Rate
for the actual number of days elapsed from and including the Issue Date
(in case of the first Dividend Payment Date and any date prior to the
first Dividend Payment Date) or the last preceding Dividend Payment
Date (in case of any other date) to the date as of which such
determination is to be made, based on a 360-day year of twelve 30-day
months and (ii) as of any Dividend Payment Date after the first
Dividend Payment Date, such amount shall be calculated on the basis of
such Dividend Rate based on a 360-day year of twelve 30-day months. The
Company shall have the right to withhold from any such dividend such
amounts as are required to be withheld pursuant to applicable federal,
state, local or foreign tax laws.
(B) Dividends payable on the Series C Preferred Stock may be paid,
at the option of the Company, either in cash or by the issuance of
Registered Common Stock, provided, however, that the Company's right to
pay dividends on any Dividend Payment Date by the issuance of
Registered Common Stock shall continue only so long as at least one of
the following conditions exists: (x) the payment in cash of the
dividend payable on such Dividend Payment Date would violate the terms
of the Indenture; or (y) the Company shall have obtained the Required
Consent (as defined in the Main Agreement); or (z) the number of shares
of Common Stock issued and issuable under the Main Agreement (including
one year of dividends from such Dividend Payment Date, assuming that
all such dividends will be paid in shares of Common Stock as they
accrue) and all previously issued shares of Common Stock and all
unconverted shares of Series C Preferred Stock on an as-converted and
as-exercised basis as of that date) does not exceed 17.5% of the
Original Number (as defined in the Main Agreement), or, if such number
of shares exceeds 17.5% of the Original Number and does not exceed
19.99% of the Original Number, the Company has notified its
stockholders of a stockholder's meeting for the purpose of voting on a
Required Consent in accordance with the Main Agreement and has used and
is using its best efforts to obtain the Required Consent. Subject to
the foregoing, payments on any Dividend Payment Date shall be made in
Registered Common Stock unless the Company notifies the Holders in
writing of its intention to pay cash on or before (but no more than
fifteen days before) the immediately preceding Dividend Payment Date.
The number of shares of Registered Common Stock to be issued shall be
determined by dividing the cash amount of the dividend otherwise
payable by the average of the daily Market Prices of the Common Stock
for the five Trading Days ending on and including the third Trading Day
before the designated payment date of such dividend; provided, however,
if the Company shall combine, subdivide or reclassify its Common Stock,
or shall declare any dividend payable in shares of its
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Common Stock, or shall take any other action of a similar nature
affecting such shares, the number of shares of Registered Common Stock
to be issued shall be adjusted to the extent appropriate to reflect
such event, including appropriate adjustments to account for any such
event that occurs during the period of five Trading Days set forth in
the previous sentence. The number of shares of Registered Common Stock
to be issued as a dividend shall be rounded to the nearest whole share
after aggregating all shares of Series C Preferred Stock owned by a
Holder.
(C) If, on any Dividend Payment Date, the Company fails to pay
dividends, then until the dividends that were scheduled to be paid on
such date are paid, such dividends shall cumulate and shall accrue
additional dividends to and including the date of payment thereof at
the Dividend Rate then in effect, compounded quarterly on each
subsequent Dividend Payment Date. Unpaid dividends for any period less
than a full Dividend Period shall cumulate on a day-to-day basis and
shall be computed on the basis of a 360-day year of twelve 30-day
months.
(D) So long as any shares of the Series C Preferred Stock shall be
outstanding, (i) the Company shall not and shall not allow its
Subsidiaries to declare or pay any dividend whatsoever, whether in
cash, property or otherwise, set aside any cash or property for the
payment of dividends, or make any other distribution on any Junior
Securities (except a dividend or distribution payable in shares of
Common Stock), (ii) the Company shall not and shall not allow its
Subsidiaries to declare or pay any dividend whatsoever, whether in
cash, property or otherwise, set aside any cash or property for the
payment of dividends, or make any other distribution on any Parity
Securities (except for the Series B Preferred Stock and except a
dividend or distribution payable in shares of Common Stock), except for
dividends paid to the Company or any of its wholly-owned Subsidiaries
and (iii) the Company shall not and shall not allow its Subsidiaries to
repurchase, redeem or otherwise acquire for value or set aside any cash
or property for the repurchase or redemption of any Junior Securities
or Parity Securities other than as the Company may be contractually
obligated as of the date of this Agreement, which obligations were
disclosed in writing to Fletcher before the date of the Main Agreement,
unless in each such case all dividends to which the Holders of the
Series C Preferred Stock shall have been entitled to receive for all
previous Dividend Periods shall have been paid.
4. Liquidation Preference. In the event of any Liquidation, after
payment or provision for payment by the Company of the debts and other
liabilities of the Company and the liquidation preference of the Series A
Preferred Stock and any other Senior Securities that rank senior to the Series C
Preferred Stock with respect to distributions upon Liquidation, each Holder
shall be entitled to receive an amount in cash for each share of the then
outstanding Series C Preferred Stock held by such Holder equal to the Stated
Value per share plus an amount equal to all accrued but unpaid dividends
thereon, whether or not earnings are available in respect of such dividends or
such dividends have been declared, to and including the date full payment is
tendered to the Holders with respect to such Liquidation and no more (such
amount being referred to herein as the "Liquidation Preference") before any
distribution shall be made to the holders of any Junior Securities (and any
Senior Securities or Parity Securities that, with respect to distributions upon
Liquidation, rank junior to the Series C Preferred Stock) upon the Liquidation
of the Company. In case the assets of the
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Company available for payment to the Holders are insufficient to pay the full
Liquidation Preference on all outstanding shares of the Series C Preferred Stock
and all outstanding shares of Parity Securities and Senior Securities that, with
respect to distributions upon Liquidation, are pari passu with the Series C
Preferred Stock in the amounts to which the holders of such shares are entitled,
then the entire assets of the Company available for payment to the Holders and
to the holders of such Parity Securities and Senior Securities shall be
distributed ratably among the Holders of the Series C Preferred Stock and the
holders of such Parity Securities and Senior Securities, based upon the
aggregate amount due on such shares upon Liquidation. Written notice of any
Liquidation of the Company, stating a payment date and the place where the
distributable amounts shall be payable, shall be given by facsimile and
overnight delivery not less than ten days prior to the payment date stated
therein, to the Holders of record of the Series C Preferred Stock, if any, at
their respective addresses as the same shall appear on the books of the Company.
5. Voting Rights. The Holders shall have the following voting rights
with respect to the Series C Preferred Stock:
(A) Each share of Series C Preferred Stock shall entitle the
holder thereof to the voting rights specified in Sections 5(B), 5(C),
5(D) and 5(E) and no other voting rights except as required by law.
(B) Whenever, at any time or times, dividends payable on the
Series C Preferred Stock shall be in arrears in an aggregate amount
greater than (2) quarterly dividends, there shall be vested in the
Holders, voting as a separate class and with one vote for each share,
the right, at their option, to elect and appoint to the Board of
Directors of the Company, and the Company shall otherwise take
appropriate action as necessary to permit the inclusion on the Board of
Directors of, a number of persons (not to be less than a minimum of one
designee) designated by the Holders such that, following such election,
such designees represent a percentage of the total members of the Board
of Directors (assuming no vacancies) that most nearly approximates
(regardless of any limits imposed by the 65 Day Notice and Issuance
Blockage restrictions) the proportion that (i) the sum of (A) the total
number of then outstanding shares of Series C Preferred Stock
(calculated on an as-if-converted to Common Stock basis as of the date
such election is held as if such date were the Conversion Date) plus
(B) the total number of then outstanding shares of Common Stock held by
such Holders bears to (ii) the total outstanding shares of the voting
capital stock of the Company (including outstanding shares of Series C
Preferred Stock, calculated on an as-if-converted to Common Stock
basis). Such right of the Holders to vote for the election of a
director or directors may be exercised, at their option, at any annual
meeting or at any special meeting called for such purpose, or at any
adjournment thereof, until all arrearages in dividends on the
outstanding shares of Series C Preferred Stock shall have been paid in
full, and when so paid, then all rights of the Holders under this
Section 5(B) shall cease until the next such arrearage, if any. So long
as such right to vote continues, upon written request of the Holders of
ten percent (10%) or more of the outstanding Series C Preferred Stock
addressed to the Company at the address set forth in the Main
Agreement, the Secretary of the Company shall call a special meeting of
the Holders for the election of such director or directors as provided
herein.
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(C) Such meeting shall be held within twenty (20) days after
delivery of such request to such Secretary, at the place and upon the
notice provided by law and in the Bylaws of the Company for the holding
of meetings of its stockholders. If such notice of meeting is not given
within ten (10) days of the request described in the prior sentence,
the Holders of Series C Preferred Stock requesting such meeting may
also call such meeting or may act by written consent and for such
purposes shall have access to the stock books and records of the
Company. At any meeting so called or at any other meeting held while
the Holders of shares of Series C Preferred Stock shall have the voting
power provided in Section 5(B), the Holders of a majority of the shares
of Series C Preferred Stock present in person or by proxy or voting by
written consent, shall be sufficient to constitute a quorum of the
Holders for the election of directors as herein provided. If at any
such meeting or any adjournment thereof the Holders of at least a
majority of the then outstanding shares of Series C Preferred Stock
then entitled to vote in such election shall be present or represented
by proxy or acting by written consent, then, by vote (or action by
written consent) of the Holders of at least the majority of all such
shares of Series C Preferred Stock present or represented in such
meeting, the then authorized number of directors of the Company shall
be increased by the number necessary to allow all directors elected by
the Holders to be seated (less any vacancies then existing on the
Board) and the Holders of such shares of Series C Preferred Stock shall
be entitled to elect such additional director or directors (or fill
such vacancy or vacancies).
(D) The director or directors so elected shall serve until the
next annual meeting of the Company's stockholders for the election of
directors or until his or her successor(s) shall be elected and shall
qualify; provided, however, that whenever all arrearages in dividends
on all outstanding shares of Series C Preferred Stock shall have been
paid, the term of office of the person(s) so elected as director(s)
shall forthwith terminate, and, if the size of the Board shall have
been increased as provided herein, the number of the whole Board shall
be reduced accordingly. If any director so elected by the Holders shall
cease to serve as director before his or her term shall expire, the
Holders, at a special meeting of such Holders called as provided above,
may elect a successor to hold office for the unexpired term of such
director.
(E) The consent of the Holders of at least a Majority of the
Series C Preferred Stock, voting separately as a single class with one
vote per share, in person or by proxy, either in writing without a
meeting or at an annual or a special meeting of such Holders called for
the purpose, shall be necessary to:
(i) amend, alter or repeal, by way of merger or
otherwise, any of the provisions of the Certificate, including
the Certificate of Rights and Preferences, or Bylaws of the
Company so as to:
(A) change any of the rights, preferences or
privileges of Holders. Without limiting the
generality of the preceding sentence, such change
includes any action that would:
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(1) Reduce the dividend rates on
the Series C Preferred Stock, or make such
dividends non-cumulative, or defer the date
from which dividends will accrue, or cancel
accrued and unpaid dividends, or change the
relative seniority rights of the holders of
Series C Preferred Stock as to the payment
of dividends in relation to the holders of
any other capital stock of the Company;
(2) Reduce the amount payable to
the holders of the Series C Preferred Stock
upon the voluntary or involuntary
liquidation, dissolution, or winding up of
the Company, or change the relative
seniority of the liquidation preferences of
the holders of the Series C Preferred Stock
to the rights upon liquidation of the
holders of any other capital stock of the
Company;
(3) Make the Series C Preferred
Stock redeemable at the option of the
Company; or
(4) Change the authorized number of
directors of the Company at any time when
the Holders of shares of Series C Preferred
Stock have the voting power provided in
Section 5(B).
(B) authorize, create or issue any shares of
Parity Securities or Senior Securities (or amend the
provisions of any existing class of Capital Stock to
make such class of Capital Stock a class of Parity
Securities or Senior Securities); or
(ii) Permit any Subsidiary of the Company to issue or
sell, or obligate itself to issue or sell, except to the
Company or any wholly owned Subsidiary, any security of such
Subsidiary or all or substantially all of the assets of any
Subsidiary; or
(iii) Increase or decrease (other than by redemption
or conversion) the total number of authorized shares of
Preferred Stock or amend any provisions of any Capital Stock
so as to make such Capital Stock redeemable by the Company.
6. Conversion.
(A) Procedure for Conversion
(i) Shares of Series C Preferred Stock are
convertible into Common Stock at the Conversion Rate per share
at the option of the Holders thereof at any time. Conversion
of shares of Series C Preferred Stock may be effected by
delivering a duly executed written Conversion Notice, in form
and substance as attached to the Main Agreement, by facsimile,
mail or overnight courier delivery, to the Company's address
set forth in Section 19 of the Main Agreement. The closing of
such exercise
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shall take place (a) on the third Trading Day following and
excluding the date the Conversion Notice is delivered, (b)
such later date as the conditions set forth in Section
6(A)(ii) have been waived or satisfied or (c) any other date
upon which the exercising Holder and the Issuer mutually agree
(the "Conversion Closing Date").
(ii) It shall be a condition of the converting
Holder's obligation to close that each of the following are
satisfied, unless waived by such Holder:
(A) (1) the representations and
warranties made by the Company in the Main
Agreement shall be true and correct as of
the Conversion Closing Date, except as
otherwise disclosed prior to the date of the
Conversion Notice to the registered Holders
of the Series C Preferred Stock either in
writing directed to them or in a periodic or
current report filed with the SEC; (2) the
Company shall have complied fully with all
of the covenants and agreements in the Main
Agreement; (3) all shares to be issued upon
such conversion are duly listed and admitted
to trading on the principal securities
exchange, if any, on which the Company's
Common Stock is listed; and such Holder
shall have received a certificate of the
Chief Executive Officer or the Chief
Financial Officer of the Company dated such
date and to the effect of clauses (1), (2)
and (3).
(B) On the Conversion Closing Date,
the Company shall have delivered to the
Holder an opinion of Ervin, Cohen & Jessup
LLP (or such other counsel reasonably
satisfactory to such Holder) reasonably
satisfactory to such Holder, dated the date
of delivery, confirming in substance the
matters covered in paragraphs (a), (b), (c),
(d), (e) and (f) of Section 3 of the Main
Agreement, subject to any changes required
to reflect the exceptions referred to in
clause (ii)(A)(1) above.
The Company shall use commercially reasonable efforts to cause
each of the foregoing conditions to be satisfied at the
earliest possible date. If such conditions are not satisfied
or waived prior to the third Trading Day following the date
the Conversion Notice is delivered, then the Holder may, at
its sole option, and at any time, withdraw the Conversion
Notice by written notice to the Company regardless of whether
such conditions have been satisfied or waived as of the
withdrawal date and, after such withdrawal, shall have no
further obligations with respect to such Conversion Notice and
may submit a Conversion Notice with respect to the shares
referenced in the original Conversion Notice at any time.
Withdrawal of such Conversion Notice shall be the exercising
Holder's sole remedy for the Issuer's failure to cause such
conditions to be satisfied, except to the extent that such
failure constitutes a breach of the provisions of the Main
Agreement.
(iii) Each Conversion of Series C Preferred Stock
shall be deemed to have been effected immediately prior to the
close of business on the Trading Day on which
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<PAGE> 12
the Conversion Notice is delivered as provided in Section
6(A)(i), and at such time the Person or Persons in whose name
or names any certificate or certificates for shares of Common
Stock (or Other Securities) shall be issuable upon such
conversion as provided in Section 6(A)(iv) shall be deemed to
have become the holder or holders of record thereof. The
foregoing notwithstanding, such conversion shall not be deemed
effective if and as of the date that the Holder delivers
written notice of withdrawal to the Company as set forth in
Section 6(A)(ii) above.
(iv) On the Conversion Closing Date, the Holder shall
surrender the certificate representing the shares of Series C
Preferred Stock to be converted to the Company at the address
set forth for notices to the Company in Section 19 of the Main
Agreement, and such Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully
paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder is entitled upon such
conversion.
(v) On the Conversion Closing Date, the Company at
its expense (including the payment by it of any applicable
issue taxes) will cause to be issued in the name of and
delivered to the Holder whose Series C Preferred Stock is
being converted via book-entry transfer (if available to the
Company), or if such Holder shall direct, at such address
specified by the Holder via reputable overnight courier, one
or more certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common
Stock (or Other Securities) to which such Holder shall be
entitled upon such conversion, plus, in lieu of any fractional
share to which such Holder would otherwise be entitled, cash
in an amount equal to the same fraction of the Market Price
per share on the Trading Day immediately preceding the date of
such conversion, and, in case such conversion is for only part
of the shares represented by the certificate surrendered, at
such address specified by the Holder via reputable overnight
courier, a new Preferred Stock certificate of like tenor,
calling in the aggregate on the face or faces thereof for the
number of shares of Series C Preferred Stock which have not
been converted into Common Stock upon such conversion.
(B) The Company shall at all times reserve for issuance such
number of its shares of Common Stock as shall be required under the
Main Agreement.
(C) The Company will procure, at its sole expense, the listing
of the Common Stock issuable upon conversion of the Series C Preferred
Stock and shares issuable as dividends hereunder, subject to issuance
or notice of issuance, on all stock exchanges on which the Common Stock
is then listed, no later than the date on which such Series C Preferred
Stock is issued to the Holder and thereafter shall use its best efforts
to prevent delisting of such shares. The Company will pay any and all
documentary stamp or similar issue or transfer taxes that may be
payable in respect of the issuance or delivery of shares of Common
Stock on conversion of shares of the Series C Preferred Stock. The
Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involving the issue and delivery of
shares of Common Stock in a name other than that in which the shares of
Series C Preferred Stock so converted were registered, and no such
issue
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<PAGE> 13
and delivery shall be made unless and until the person requesting such
issue has paid to the Company the amount of any such tax, or has
established, to the reasonable satisfaction of the Company, that such
tax has been paid.
(D) No fractional shares or scrip representing fractional
shares shall be issued upon the conversion of the Series C Preferred
Stock. If any such conversion would otherwise require the issuance of a
fractional share of Common Stock, an amount equal to such fraction
multiplied by the current Market Price per share of Common Stock on the
date of conversion shall be paid to the Holder in cash by the Company.
If more than one share of Series C Preferred Stock shall be surrendered
for conversion at one time by or for the same Holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series C
Preferred Stock so surrendered.
(E) Business Combinations.
(i) In case the Company after the date hereof (a) is
party to any acquisition of the Company by means of merger or
other form of corporate reorganization in which outstanding
shares of the Company are exchanged for securities or other
consideration issued, or caused to be issued, by the Acquiring
Person or its Parent, Subsidiary or affiliate, (b) a sale of
all or substantially all of the assets of the Company (on a
consolidated basis) in a single transaction or series of
related transactions, (c) any other transaction or series of
related transactions by the Company in which the power to cast
the majority of the eligible votes at a meeting of the
Company's stockholders at which directors are elected is
transferred to a single entity or group acting in concert, or
(d) shall effect a capital reorganization or reclassification
of the Common Stock or Other Securities (other than a
reorganization or reclassification in which the Common Stock
or Other Securities are not converted into or exchanged for
cash or other property, and, immediately after consummation of
such transaction, the stockholders of the Company immediately
prior to such transaction own the Common Stock, Other
Securities or other voting stock of the Company in
substantially the same proportions relative to each other as
such stockholders owned immediately prior to such
transaction), then, and in the case of each such transaction
(each of which is referred to herein as "Business
Combination"), proper provision shall be made so that, upon
the basis and the terms and in the manner provided herein, the
Holder of each unconverted share of Series C Preferred Stock,
upon conversion hereof at any time after the consummation of
such Business Combination, shall be entitled to receive upon
such conversion, in lieu of the Common Stock or Other
Securities issuable upon such conversion prior to such
consummation, either of the following, as shall be elected, in
whole or in part, from time to time, by such Holder (for
purposes of this Section 6(E) only, the Floor Price shall be
deemed to be zero dollars ($0.00)):
(A) the stock and other securities, cash and
property to which such Holder would have been
entitled upon such consummation if such Holder had
converted such Series C Preferred Stock immediately
prior thereto;
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<PAGE> 14
(B) the number of shares of common stock of
the Acquiring Person or its Parent, at the election
of the Holder, determined by dividing (A) the amount
equal to the product obtained by multiplying (1) the
number of shares of the Company's Common Stock (or
Other Securities) to which such Holder would have
been entitled had such holder converted such Series C
Preferred Stock immediately prior to such
consummation, times (2) the greater of the
Acquisition Price and the Conversion Price in effect
on the Trading Day immediately preceding the date of
such consummation, by (B) the Market Price per share
of the common stock of the Acquiring Person or its
Parent, as the case may be, on the Trading Day
immediately preceding the date of such consummation;
or
(C) the number of shares of common stock of
the Acquiring Person or its Parent, at the election
of the Holder, determined by dividing (A) the Stated
Value of the converted share by (B) the lesser of (1)
the average of the daily Market Prices of the common
stock of the Acquiring Person or its Parent, as the
case may be, for the period of forty Trading Days
ending and excluding five Trading Days before and
excluding that date, but no greater than the lowest
of the following: (a) the average of the daily Market
Prices of the common stock of the Acquiring Person or
its Parent, as the case may be, for the first three
Trading Days of that forty day period; and (b) the
average of the daily Market Prices of the common
stock of the Acquiring Person or its Parent, as the
case may be, for the last three Trading Days of that
forty day period, and (2) the quotient of (a) the
product of (i) the Ceiling Price (but if before such
consummation the Company shall combine, subdivide or
reclassify its Common Stock, or shall declare any
dividend payable in shares of Common Stock, or shall
take any other action of a similar nature affecting
such shares, this amount shall be adjusted to the
extent appropriate to reflect such event or events)
and (ii) the Market Price per share of the common
stock of the Acquiring Person or its Parent, as the
case may be, on the Trading Day immediately preceding
the date of such consummation divided by (b) the
Market Price per share of the Company's Common Stock
on the Trading Day immediately preceding the date of
such consummation. The foregoing notwithstanding, if
the Acquiring Person or its Parent, as the case may
be, shall combine, subdivide or reclassify its Common
Stock, or shall declare any dividend payable in
shares of its Common Stock, or shall take any other
action of a similar nature affecting such shares, the
conversion price in this clause (C) shall be adjusted
to the extent appropriate to reflect such event,
including appropriate adjustments to account for any
such event that occurs during any of the measurement
periods set forth in the previous sentence.
(D) cash in an amount equal to 133% of the
Stated Value of such share of Series C Preferred
Stock, provided, however, that the Company shall not
under any circumstances be obligated to pay cash to
any Holder, the Company's obligation being limited to
the obligation to require any
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<PAGE> 15
Acquiring Person to agree to pay such cash in
circumstances where a cash payment would be required.
(ii) Notwithstanding anything contained herein or in
the Main Agreement to the contrary, the Company will not
effect any Business Combination unless the requirements of
Section 10 of the Main Agreement have been met and unless,
prior to the consummation thereof, each Person (other than the
Company) which may be required to deliver any stock,
securities, cash or property upon conversion of Series C
Preferred Stock as provided herein shall assume, by written
instrument delivered to, and reasonably satisfactory to, the
Holders of a Majority of the Series C Preferred Stock, (A) the
obligations of the Company under this Certificate of Rights
and Preferences (and if the Company shall survive the
consummation of such transaction, such assumption shall be in
addition to, and shall not release the Company from, any
continuing obligations of the Company under this Certificate
of Rights and Preferences) and (B) the obligation to deliver
to the Holders of Series C Preferred Stock such shares of
stock, securities, cash or property as, in accordance with the
foregoing provisions of this Section 6(E), such Holders may be
entitled to receive, and such Person shall have similarly
delivered to such Holders an opinion of counsel for such
Person, which counsel shall be reasonably satisfactory to
Holders of a Majority of the Series C Preferred Stock, stating
that the rights of such Holders under this Certificate of
Rights and Preferences shall thereafter continue in full force
and effect and the terms hereof, including, without
limitation, all of the provisions of this Section 6(E) shall
be applicable to the stock, securities, cash or property which
such Person may be required to deliver upon any conversion of
Preferred Stock or exercise of any rights pursuant hereto.
7. Status of Converted Shares; Limitations on Series C Preferred Stock.
The Company shall return to the status of unauthorized and undesignated shares
of Preferred Stock each share of Series C Preferred Stock which shall be
converted or for any other reason acquired by the Company, and such shares
thereafter may have such characteristics and designations as the Board may
determine (subject to Section 5), provided, however, no share of Series C
Preferred Stock which shall be converted or otherwise acquired by the Company
shall thereafter be reissued, sold or transferred by the Company as Series C
Preferred Stock. The Company will not issue any further shares of Series C
Preferred Stock. The Company shall have no right to redeem the shares of Series
C Preferred Stock without the consent of a Majority of the Holders.
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<PAGE> 16
IN WITNESS WHEREOF, this Certificate of Rights and Preferences has been
signed on behalf of the Company by its President and attested to by its
Secretary, all as of the 27th day of December, 2000.
NEWPARK RESOURCES, INC.
By: /s/ Matthew W. Hardey
---------------------------------
Matthew W. Hardey, Vice President
ATTEST:
By: /s/ Edah Keating
-----------------------
Edah Keating, Secretary
